8-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Date of Report (Date of earliest event reported): August 2, 2007

MEDCATH CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	000-33009	56-2248952
(State or other jurisdiction of	(Commission File Number)	(IRS Employer Identification No.)
incorporation or organization)

10720 Sikes Place
Charlotte, North Carolina 28277
(Address of principal executive offices, including zip code)

(704) 708-6600
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

     o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

     o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

     o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

     o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13d-4(c))

Item 2.02. Results of Operations and Financial Condition

The information contained herein is being furnished pursuant to Item 2.02 of Form 8-K, “Results of Operations and Financial Condition.” This information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

On August 2, 2007, MedCath Corporation (“MedCath” or the “Company”) issued a press release announcing the Company’s results of operations for the fiscal quarter ended June 30, 2007. A copy of the press release and financial update are furnished as Exhibits 99.1 and 99.2.

Included in the press release and the supplemental financial information issued by the Company and furnished herewith as Exhibits 99.1 and 99.2, are certain non-GAAP financial measures, including Adjusted EBITDA. Adjusted EBITDA represents MedCath’s income from continuing operations before interest expense; loss on early extinguishment of debt; income tax expense; depreciation; amortization; impairment of long-lived assets; share-based compensation expense; loss (gain) on disposal of property, equipment and other assets; interest and other income, net; equity in net earnings of unconsolidated affiliates; and minority interest share of earnings of consolidated subsidiaries. MedCath’s management uses Adjusted EBITDA to measure the performance of the company’s various operating entities, to compare actual results to historical and budgeted results, and to make capital allocation decisions. Management provides Adjusted EBITDA to investors to assist them in performing their analyses of MedCath’s historical operating results. Further, management believes that many investors in MedCath also invest in, or have knowledge of, other healthcare companies that use Adjusted EBITDA as a financial performance measure. Because Adjusted EBITDA is a non-GAAP measure, Adjusted EBITDA, as defined above, may not be comparable to other similarly titled measures of other companies. MedCath has included a supplemental schedule with the financial statements that accompanies this press release that reconciles historical Adjusted EBITDA to MedCath’s income from continuing operations.

Item 9.01. Financial Statements and Exhibits

Exhibit 99.1 Press Release dated August 2, 2007
Exhibit 99.2 Financial Update dated August 2, 2007

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	MEDCATH CORPORATION
Date: August 2, 2007	By:	/s/ James E. Harris
		James E. Harris Executive Vice President and Chief Financial Officer

EX-99.1

Exhibit 99.1

MEDCATH CONTACTS:
O. Edwin French	James E. Harris
President/Chief Executive Officer	Chief Financial Officer
(704) 708-6600	(704) 708-6600

MEDCATH CORPORATION REPORTS THIRD QUARTER EARNINGS

     CHARLOTTE, N.C., Aug 2, 2007 — MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused on high acuity healthcare services including the diagnosis and treatment of cardiovascular disease, today announced its operating results for its third fiscal quarter, which ended June 30, 2007.

     Third quarter highlights:

• Net revenue increased 5.6% to $192.3 million

• Adjusted EBITDA rose 3.5% to $29.8 million

• Adjusted admissions increased 2.4%

Third Quarter 2007 Results

     MedCath’s net revenue increased 5.6% to $192.3 million in the third quarter of fiscal 2007 from $182.0 million in the third quarter of fiscal 2006. Income from operations was $20.2 million in the third quarter of fiscal 2007, compared to income from operations of $17.9 million in the third quarter of fiscal 2006. Adjusted EBITDA in the third quarter of fiscal 2007 increased 3.5% to $29.8 million from $28.8 million in the third quarter of fiscal 2006. Income from continuing operations was $8.6 million, or $0.39 per diluted share, in the third quarter of fiscal 2007, compared to income from continuing operations of $5.9 million, or $0.30 per diluted share, in the third quarter of fiscal 2006.

     MedCath’s third quarter of fiscal 2007 financial results contain a $385,000, or a net impact of $0.01 per diluted share, decrease in net revenue and Adjusted EBITDA due to the settlement of Medicare cost reports related to prior periods.

     MedCath’s third quarter of fiscal 2006 financial results were impacted by certain unusual items that collectively had a $1.4 million unfavorable impact to net revenue and

Adjusted EBITDA and a $0.1 million, or $0.01 per diluted share, unfavorable impact to income from continuing operations.

     Share-based compensation expense totaled $0.7 million or $0.02 per diluted share in the third quarter of fiscal 2007, compared to $1.8 million or $0.05 per diluted share in the third quarter of fiscal 2006. Adjusted EBITDA disclosed above does not include this expense but the expense is included as a component of income from continuing operations.

     “Our third quarter results reflect our continued efforts to improve our operating margins and efficiency while maintaining our commitment to providing quality health care,” said Ed French, MedCath’s president and chief executive officer. “Our opportunities to add new facilities and services continue to increase and we look forward to announcing a new project in the foreseeable future.”

Operating Statistics and Cash Flow

     Hospital adjusted admissions for the third quarter of fiscal 2007 increased 2.4% from the third quarter of the previous fiscal year. Same facility hospital net revenue increased 7.5%. Net cash provided by operating activities of continuing operations for the third quarter of fiscal 2007 was $21.5 million, down from $26.7 million for the third quarter of fiscal 2006. Capital expenditures totaled $9.1 million in the third quarter of fiscal 2007 in comparison to $6.3 million in the third quarter of fiscal 2006.

Use of Non-GAAP Financial Measures

     This release contains measures of MedCath’s historical financial performance that are not calculated and presented in conformity with generally accepted accounting principles (“GAAP”), including Adjusted EBITDA. Adjusted EBITDA represents MedCath’s income from continuing operations before interest expense; interest and other income, net; income tax expense; depreciation; amortization; share-based compensation expense; loss (gain) on disposal of property, equipment and other assets; loss on early extinguishment of debt; impairment of long-lived assets; equity in net earnings of unconsolidated affiliates; and minority interest share of earnings of consolidated subsidiaries. MedCath’s management uses Adjusted EBITDA to measure the performance of the company’s various operating entities, to compare actual results to historical and budgeted results, and to make capital allocation decisions. Management provides Adjusted EBITDA to investors to assist them in performing their analyses of MedCath’s historical operating results. Further, management believes that many investors in MedCath also invest in, or have knowledge of, other healthcare companies that use Adjusted EBITDA as a financial performance measure. Because Adjusted EBITDA is a non-GAAP measure, Adjusted EBITDA, as defined above, may not be comparable to other similarly titled measures of other companies. MedCath has included a supplemental schedule with the financial statements that accompanies this press release that reconciles historical Adjusted EBITDA to MedCath’s income from continuing operations.

     Management will discuss and answer questions regarding MedCath’s quarterly results today during a 10 a.m. ET conference call. In the United States, you may participate by dialing (877) 697-5351. International callers should dial (706) 634-0602.

The conference ID for both domestic and international callers is “MedCath.” A live web cast will also be available on the company’s web site, www.medcath.com. This information will be available on the web site on or immediately following the conference call for 30 days. A recorded replay of the call will be available until 11:59 p.m. ET, August 8, 2007. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 10112053. This press release and the financial information included therewith will be accessible on the web, by going to www.medcath.com, “Investor Relations,” then clicking on “News.”

     MedCath Corporation, headquartered in Charlotte, N.C., is a healthcare provider focused on high acuity services with the diagnosis and treatment of cardiovascular disease being a primary service offering. MedCath owns interests in and operates eleven hospitals with a total of 667 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, Ohio, South Dakota, and Texas. In addition, MedCath and its subsidiary MedCath Partners manage the cardiovascular program at various hospitals and provide services in diagnostic and therapeutic facilities in various states.

# # #

     Parts of this announcement contain forward-looking statements that involve risks and uncertainties. Although management believes that these forward-looking statements are based on reasonable assumptions, these assumptions are inherently subject to significant economic, regulatory and competitive uncertainties and contingencies that are difficult or impossible to predict accurately and are beyond our control. Actual results could differ materially from those projected in these forward-looking statements. We do not assume any obligation to update these statements in a news release or otherwise should material facts or circumstances change in ways that would affect their accuracy.

     These various risks and uncertainties are described in detail in “Risk Factors” in MedCath’s Registration Statement on Form S-3/A filed with the Securities and Exchange Commission on March 29, 2007 and its Quarterly Report or Form 10-Q for the quarter ended June 30, 2007. Copies of this registration statement and Form 10-Q, including exhibits, are available on the internet site of the Securities and Exchange Commission at http://www.sec.gov.

EX-99.2

Exhibit 99.2

MEDCATH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

	Three Months Ended June 30,						Nine Months Ended June 30,
	2007			2006			2007			2006
Net revenue	$	192,278		$	182,047		$	560,319		$	528,930
Operating expenses:
Personnel expense		59,338			55,362			177,869			172,878
Medical supplies expense		50,310			50,497			149,129			148,362
Bad debt expense		15,881			13,840			45,157			42,450
Other operating expenses		37,650			35,316			111,439			106,489
Depreciation		8,629			8,725			26,270			25,930
Amortization		126			252			505			756
Loss (gain) on disposal of property, equipment and other assets		188			(296	)		1,047			(237	)
Impairment of long-lived assets		—			451			—			451
Total operating expenses		172,122			164,147			511,416			497,079
Income from operations		20,156			17,900			48,903			31,851
Other income (expenses):
Interest expense		(5,224	)		(7,583	)		(18,450	)		(23,888	)
Loss on early extinguishment of debt		—			—			(5,142	)		(1,370	)
Interest and other income, net		1,752			2,971			6,285			5,704
Equity in net earnings of unconsolidated affiliates		1,175			1,408			4,095			3,883
Total other expenses, net		(2,297	)		(3,204	)		(13,212	)		(15,671	)
Income from continuing operations before minority interest, income taxes and discontinued operations		17,859			14,696			35,691			16,180
Minority interest share of earnings of consolidated subsidiaries		(3,914	)		(4,742	)		(10,354	)		(12,350	)
Income from continuing operations before income taxes and discontinued operations		13,945			9,954			25,337			3,830
Income tax expense		5,315			4,060			10,642			1,609
Income from continuing operations		8,630			5,894			14,695			2,221
Income (loss) from discontinued operations, net of taxes		635			(984	)		(4,076	)		(584	)
Net income	$	9,265		$	4,910		$	10,619		$	1,637
Earnings (loss) per share, basic
Continuing operations	$	0.41		$	0.31		$	0.70		$	0.11
Discontinued operations		0.03			(0.05	)		(0.19	)		(0.03	)
Earnings (loss) per share, basic	$	0.44		$	0.26		$	0.51		$	0.08
Earnings (loss) per share, diluted
Continuing operations	$	0.39		$	0.30		$	0.69		$	0.11
Discontinued operations		0.03			(0.05	)		(0.19	)		(0.03	)
Earnings (loss) per share, diluted	$	0.42		$	0.25		$	0.50		$	0.08
Weighted average number of shares, basic		21,144			18,630			20,760			18,583
Dilutive effect of stock options and restricted stock		682			661			650			921
Weighted average number of shares, diluted		21,826			19,291			21,410			19,504

MEDCATH CORPORATION
SELECTED OPERATING DATA
(In thousands, except per share data and selected operating data)
(Unaudited)

	Three Months Ended June 30,									Nine Months Ended June 30,
	2007			2006			% Change			2007			2006			% Change
Statement of Operations Data:
Net revenue	$	192,278		$	182,047			5.6	%	$	560,319		$	528,930			5.9	%
Adjusted EBITDA (1)	$	29,799		$	28,788			3.5	%	$	80,574		$	71,131			13.3	%
Income from operations	$	20,156		$	17,900			12.6	%	$	48,903		$	31,851			53.5	%
Income from continuing operations	$	8,630		$	5,894			46.4	%	$	14,695		$	2,221			561.6	%
Earnings per share from continuing operations, basic	$	0.41		$	0.31			32.3	%	$	0.70		$	0.11			536.4	%
Earnings per share from continuing operations, diluted	$	0.39		$	0.30			30.0	%	$	0.69		$	0.11			527.3	%
(1) See Supplemental Financial Disclosure—Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.
	Three Months Ended June 30,									Nine Months Ended June 30,
	2007			2006			% Change			2007			2006			% Change
Selected Operating Data (a):
Number of hospitals		9			9						9			9
Licensed beds (b)		580			580						580			580
Staffed and available beds (c)		563			563						563			563
Admissions (d)		10,339			10,606			(2.5	)%		30,740			31,415			(2.1	)%
Adjusted admissions (e)		14,156			13,829			2.4	%		41,943			40,808			2.8	%
Patient days (f)		34,291			34,131			0.5	%		105,601			104,287			1.3	%
Adjusted patient days (g)		46,679			44,518			4.9	%		143,348			135,505			5.8	%
Average length of stay (days) (h)		3.32			3.22			3.1	%		3.44			3.32			3.6	%
Occupancy (i)		66.9	%		66.6	%					68.7	%		67.9	%
Inpatients with a catheterization procedures (j)		5,247			5,549			(5.4	)%		15,463			16,137			(4.2	)%
Inpatient surgical procedures (k)		2,780			2,759			0.8	%		8,055			8,093			(0.5	)%
Hospital net revenue	$	180,135		$	167,563			7.5	%	$	519,137		$	485,031			7.0	%

(a)	Selected operating data includes consolidated hospitals in operation as of the end of the period reported in continuing operations but does not include hospitals which are accounted for using the equity method or as discontinued operations in our consolidated financial statements.
(b)	Licensed beds represent the number of beds for which the appropriate state agency licenses a facility regardless of whether the beds are actually available for patient use.
(c)	Staffed and available beds represent the number of beds that are readily available for patient use at the end of the period.
(d)	Admissions represent the number of patients admitted for inpatient treatment.
(e)	Adjusted admissions is a general measure of combined inpatient and outpatient volume. We computed adjusted admissions by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by admissions.
(f)	Patient days represent the total number of days of care provided to inpatients.
(g)	Adjusted patient days is a general measure of combined inpatient and outpatient volume. We computed adjusted patient days by dividing gross patient revenue by gross inpatient revenue and then multiplying the quotient by patient days.
(h)	Average length of stay (days) represents the average number of days inpatients stay in our hospitals.
(i)	We computed occupancy by dividing patient days by the number of days in the period and then dividing the quotient by the number of staffed and available beds.
(j)	Inpatients with a catheterization procedure represent the number of inpatients with a procedure performed in one of the hospitals’ catheterization labs during the period.
(k)	Inpatient surgical procedures represent the number of surgical procedures performed on inpatients during the period.

MEDCATH CORPORATION
SUPPLEMENTAL FINANCIAL DISCLOSURE — RECONCILIATION OF GAAP FINANCIAL MEASURES
TO NON-GAAP FINANCIAL MEASURES
(Unaudited)

     The following table reconciles Adjusted EBITDA with MedCath’s income from continuing operations as derived directly from MedCath’s consolidated financial statements for the three and nine months ended June 30, 2007 and 2006.

	Three Months Ended June 30,						Nine Months Ended June 30,
	2007			2006			2007			2006
	(in thousands)
Income from continuing operations	$	8,630		$	5,894		$	14,695		$	2,221
Add:
Income tax expense		5,315			4,060			10,642			1,609
Minority interest share of earnings of consolidated subsidiaries		3,914			4,742			10,354			12,350
Equity in net earnings of unconsolidated affiliates		(1,175	)		(1,408	)		(4,095	)		(3,883	)
Interest and other income, net		(1,752	)		(2,971	)		(6,285	)		(5,704	)
Loss on early extinguishment of debt		—			—			5,142			1,370
Interest expense		5,224			7,583			18,450			23,888
Impairment of long-lived assets		—			451			—			451
Loss (gain) on disposal of property, equipment and		188			(296	)		1,047			(237	)
other assets Amortization		126			252			505			756
Depreciation		8,629			8,725			26,270			25,930
Share-based compensation expense		700			1,756			3,849			12,380
Adjusted EBITDA	$	29,799		$	28,788		$	80,574		$	71,131