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): May 21, 2009

MEDCATH CORPORATION

(Exact name of registrant as specified in its charter)

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

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 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On May 21, 2009, MedCath issued a press release announcing the Company’s results of operations for the fiscal quarter ended March 31, 2009. A copy of the press release is furnished as Exhibit 99.1.

Included in the press release and the supplemental financial information issued by the Company and furnished herewith as Exhibits 99.1 and 99.2, is a certain non-GAAP financial measure, 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; minority interest share of earnings of consolidated subsidiaries; and pre-opening expenses. 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 May 21, 2009

Exhibit 99.2   Financial Update dated May 21, 2009

Exhibits 99.1 and 99.2 listed in this Item 9.01 are being furnished under Item 2.02 and shall not be deemed “filed” for purpose of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

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: May 22, 2009	By:	/s/ Jeffrey L. Hinton
		Jeffrey L. Hinton
		Executive Vice President and Chief Financial Officer

INDEX TO EXHIBITS

Exhibit No.	Description
Exhibit 99.1	Press Release dated May 21, 2009
Exhibit 99.2	Financial Update dated May 21, 2009

EX-99.1

Exhibit 99.1

MEDCATH CONTACT:
O. Edwin French	Jeff Hinton
President/Chief Executive Officer	Chief Financial Officer
(704) 708-6600	(704) 708-6600

MEDCATH CORPORATION REPORTS SECOND QUARTER EARNINGS AND
PROVIDES UPDATE TO INTERNAL ASSESSMENT

     CHARLOTTE, N.C., May 21, 2009 — MedCath Corporation (Nasdaq: MDTH), a healthcare provider focused on high acuity healthcare services, predominately the diagnosis and treatment of cardiovascular disease, today announced its operating results for its second quarter of fiscal 2009, which ended March 31, 2009.

Highlights

• Net revenue up 3.0% compared with second quarter of fiscal 2008; same facility hospital net revenue up 4.0%

• Adjusted EBITDA of $20.8 million

• Operating cash flow from continuing operations of $17.6 million

• EPS from continuing operations of $0.28; or $0.31, excluding pre-opening expenses and share-based compensation expense

Second Quarter 2009 Results

     MedCath’s reported net revenue increased 3.0% to $158.9 million in the second quarter of fiscal 2009 from $154.2 million in the second quarter of fiscal 2008. Income from operations decreased to $11.7 million from $14.4 million in the second quarter of fiscal 2008 and Adjusted EBITDA decreased 8.9% to $20.8 million from $22.8 million in the same period of the prior year. MedCath’s income from continuing operations was

$5.4 million, or $0.28 per diluted share, in the second quarter of fiscal 2009 compared to $5.5 million, or $0.28 per diluted share, in the second quarter of fiscal 2008.

     Adjusted EBITDA in this release does not include share-based compensation or pre-opening expenses, but these items are included as a component of income from continuing operations. Share-based compensation expense totaled $0.8 million in the second quarter of fiscal 2009, or $0.03 per diluted share, compared with a $0.2 million expense, or $.01 per diluted share, in the second quarter of fiscal 2008. Pre-opening expenses totaled $0.4 million in the second quarter of fiscal 2009, compared with $0.2 million in the second quarter of fiscal 2008.

     As shown below, EPS for the quarter, adjusted for share-based compensation expense and pre-opening expenses totaled $0.31 for the quarter:

EPS from continuing operations	$	0.28
Adjustments (net of tax effect)
Pre-opening expenses	$	0.01
Share-based compensation expense	$	0.03
EPS, adjusted for above items 1)	$	0.31

¹⁾ does not add due to rounding

     “We experienced improved operating momentum this quarter in comparison to the first quarter as Adjusted EBITDA and Adjusted EBITDA margin grew meaningfully and cash flow from operations remained strong,” said Ed French, MedCath’s President and Chief Executive Officer. “In addition to earnings momentum, we’re continuing to execute on our growth strategy and anticipate opening the expansion of our Louisiana Medical Center and Heart Hospital next week.”

Operating Statistics, Cash Flow and Capital Expenditures

     Same facility hospital admissions in the second quarter of fiscal 2009 were 7,052, down 10.2% compared with the second quarter of fiscal 2008. Adjusted admissions totaled 10,556, down 2.4% compared with the second quarter of fiscal 2008. Same facility hospital outpatient visits totaled 8,004 in the second quarter of fiscal 2009, up 17.9% in comparison with the second quarter of fiscal 2008.

     MedCath’s commercial admissions equaled 22.6% of total admissions and were unchanged from the year earlier period. Self-pay admissions equaled 1.9% of total admissions in the second quarter of fiscal 2009, in comparison to 2.4% of total admissions in the second quarter of fiscal 2008. Total uncompensated care, which includes charity care plus bad debt expense, equaled 8.3% of hospital division net patient revenue before the deduction for charity care in the second quarter of fiscal 2009 compared to 10.6% in the second quarter of fiscal 2008 and 8.5% in the first quarter of fiscal 2009.

     Net cash provided by operating activities of continuing operations for the second quarter of fiscal 2009 was $17.6 million compared to $16.6 million in the second quarter of fiscal 2008. Cash paid for capital expenditures during the quarter totaled $23.8 million, which included $7.4 million related to maintenance expenditures and $16.4 million related to MedCath’s construction projects.

Internal Assessment Update

     On May 6, 2009, MedCath announced that it was undertaking an internal assessment, under the supervision of its Audit Committee, of certain aspects of its operations and controls. MedCath has completed its internal assessment with the assistance of its professional advisors, and determined that there was no material impact on its current and previously issued financial statements, results of operations or cash flows. In addition, MedCath is in compliance with all reporting and other requirements contained in the credit agreement related to its $75 million term loan and $85 million revolver.

Use of Non-GAAP Financial Measures

     This release contains a measure of MedCath’s historical financial performance that is not calculated and presented in conformity with generally accepted accounting principles (“GAAP”), 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; pre-opening expenses; loss on disposal of property, equipment and other assets; loss on early extinguishment of debt; 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 and the results of its internal assessment Friday, May 22, 2009, 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 11062123. 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, June 5, 2009. To access the replay, domestic callers should dial (800) 642-1687 and international callers should dial (706) 645-9291. The archived conference ID is 11062123. 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 an interest in and operates nine hospitals with a total of 676 licensed beds, located in Arizona, Arkansas, California, Louisiana, New Mexico, South Dakota, and Texas. MedCath is in the process of developing its tenth hospital, which is anticipated to open in fall 2009, in Kingman, Ariz. In addition, MedCath and its subsidiary MedCath Partners 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 including, but not limited to, enactment of changes in federal law that would limit physician hospital ownership. 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. The preparation of MedCath’s second quarter operating results required management to make estimates and assumptions that affect reported amounts of revenues and expenses. There is a reasonable possibility that actual results may vary significantly from those estimates.

     These various risks and uncertainties are described in detail in “Risk Factors” in MedCath’s Annual Report or Form 10-K for the year ended September 30, 2008 filed with the Securities and Exchange Commission on December 15, 2008, as updated in our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2009. Copies of this form 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 March 31,						Six Months Ended March 31,
	2009			2008			2009			2008
Net revenue	$	158,867		$	154,200		$	311,970		$	300,895
Operating expenses:
Personnel expense		52,127			49,156			102,783			99,540
Medical supplies expense		43,811			41,656			86,462			80,398
Bad debt expense		10,618			10,332			22,011			21,617
Other operating expenses		32,344			30,424			64,580			59,442
Pre-opening expenses		380			245			587			493
Depreciation		7,565			7,689			15,400			15,030
Amortization		210			135			359			262
Loss on disposal of property, equipment and other assets		91			138			164			166
Total operating expenses		147,146			139,775			292,346			276,948
Income from operations		11,721			14,425			19,624			23,947
Other income (expenses):
Interest expense		(1,338	)		(3,864	)		(4,194	)		(7,796	)
Gain (loss) on early extinguishment of debt		259			—			(6,702	)		—
Interest and other income, net		73			485			173			1,646
Equity in net earnings of unconsolidated affiliates		2,714			2,181			4,779			4,206
Total other expenses, net		1,708			(1,198	)		(5,944	)		(1,944	)
Income from continuing operations before minority interest and income taxes		13,429			13,227			13,680			22,003
Minority interest share of earnings of consolidated subsidiaries		(4,639	)		(4,642	)		(7,415	)		(8,779	)
Income from continuing operations before income taxes		8,790			8,585			6,265			13,224
Income tax expense		3,372			3,099			2,463			5,448
Income from continuing operations		5,418			5,486			3,802			7,776
Income from discontinued operations, net of taxes		164			199			4,026			973
Net income	$	5,582		$	5,685		$	7,828		$	8,749
Earnings per share, basic
Continuing operations	$	0.28		$	0.28		$	0.19		$	0.38
Discontinued operations		0.01			0.01			0.21			0.05
Earnings per share, basic	$	0.28		$	0.29		$	0.40		$	0.43
Earnings per share, diluted
Continuing operations	$	0.28		$	0.28		$	0.19		$	0.37
Discontinued operations		0.01			0.01			0.21			0.05
Earnings per share, diluted	$	0.28		$	0.29		$	0.40		$	0.42
Weighted average number of shares, basic		19,664			19,841			19,631			20,438
Dilutive effect of stock options and restricted stock		26			121			—			202
Weighted average number of shares, diluted		19,690			19,962			19,631			20,640

MEDCATH CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)

	March 31,			September 30,
	2009			2008
	(Unaudited)
Current assets:
Cash and cash equivalents	$	42,883		$	93,836
Restricted cash		3,166			3,154
Accounts receivable, net		89,638			83,875
Income tax receivable, net		1,275			3,091
Medical supplies		17,661			15,479
Deferred income tax assets		8,643			9,769
Prepaid expenses and other current assets		10,545			9,796
Current assets of discontinued operations		12,531			20,776
Total current assets		186,342			239,776
Property and equipment, net		357,285			323,729
Investments in affiliates		12,676			15,285
Goodwill		60,174			60,174
Other intangible assets, net		6,266			6,063
Other assets		7,767			8,378
Long-term assets of discontinued operations		—			51
Total assets	$	630,510		$	653,456
Current liabilities:
Accounts payable	$	41,513		$	41,642
Accrued compensation and benefits		19,596			16,872
Other accrued liabilities		22,265			24,054
Current portion of long-term debt and obligations under capital leases		11,991			31,920
Current liabilities of discontinued operations		9,465			10,184
Total current liabilities		104,830			124,672
Long-term debt		112,038			115,628
Obligations under capital leases		1,845			2,087
Deferred income tax liabilities		12,170			12,352
Other long-term obligations		3,006			4,454
Total liabilities		233,889			259,193
Minority interest in equity of consolidated subsidiaries		18,929			24,667
Stockholders’ equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized; none issued		—			—
Common stock, $0.01 par value, 50,000,000 shares authorized; 21,684,780 issued and 19,730,419 outstanding at March 31, 2009; 21,553,054 issued and 19,598,693 outstanding at September 30, 2008		216			216
Paid-in capital		456,035			455,494
Accumulated deficit		(33,310	)		(41,138	)
Accumulated other comprehensive loss		(452	)		(179	)
Treasury stock, at cost;
1,954,361 shares at March 31, 2009
1,954,361 shares at September 30, 2008		(44,797	)		(44,797	)
Total stockholders’ equity		377,692			369,596
Total liabilities and stockholders’ equity	$	630,510		$	653,456

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

	Three Months Ended March 31,							Six Months Ended March 31,
	2009		2008		% Change			2009		2008		% Change
Statement of Operations Data:
Net revenue	$	158,867	$	154,200		3.0	%	$	311,970	$	300,895		3.7	%
Adjusted EBITDA (1)	$	20,806	$	22,845		(8.9	)%	$	37,971	$	43,820		(13.3	)%
Income from operations	$	11,721	$	14,425		(18.7	)%	$	19,624	$	23,947		(18.1	)%
Income from continuing operations	$	5,418	$	5,486		(1.2	)%	$	3,802	$	7,776		(51.1	)%
Earnings per share from continuing operations, basic	$	0.28	$	0.28		—		$	0.19	$	0.38		(50.0	)%
Earnings per share from continuing operations, diluted	$	0.28	$	0.28		—		$	0.19	$	0.37		(48.6	)%

(1) See Supplemental Financial Disclosure—Reconciliation of GAAP Financial Measures to Non-GAAP Financial Measures.

	Three Months Ended March 31,									Six Months Ended March 31,
	2009			2008			% Change			2009			2008			% Change
Selected Operating Data (a):
Number of hospitals		7			7						7			7
Licensed beds ( c )		509			449						509			449
Staffed and available beds ( d )		462			433						462			433
Admissions ( e )		7,052			7,855			(10.2	)%		13,814			15,005			(7.9	)%
Adjusted admissions ( f )		10,556			10,817			(2.4	)%		20,436			20,645			(1.0	)%
Patient days ( g )		28,075			29,039			(3.3	)%		53,208			54,499			(2.4	)%
Adjusted patient days ( h )		42,117			40,247			4.6	%		79,028			75,381			4.8	%
Average length of stay (days) ( i )		3.98			3.70			7.6	%		3.85			3.63			6.1	%
Occupancy ( j )		67.5	%		73.7	%					63.3	%		68.8	%
Inpatient catheterization procedures ( k )		3,451			4,225			(18.3	)%		7,006			8,274			(15.3	)%
Inpatient surgical procedures ( l )		2,087			2,120			(1.6	)%		4,087			4,069			0.4	%
Hospital net revenue	$	150,567		$	144,778			4.0	%	$	294,792		$	281,929			4.6	%
Combined Operating Data (b):
Number of hospitals		9			9						9			9
Licensed beds ( c )		676			616						676			616
Staffed and available beds ( d )		625			596						625			596
Admissions ( e )		10,000			10,539			(5.1	)%		19,744			20,308			(2.8	)%
Adjusted admissions ( f )		15,255			15,164			0.6	%		29,880			29,326			1.9	%
Patient days ( g )		37,341			37,812			(1.2	)%		71,479			71,537			(0.1	)%
Adjusted patient days ( h )		56,658			54,130			4.7	%		107,679			102,599			5.0	%
Average length of stay (days) ( i )		3.73			3.59			3.9	%		3.62			3.52			2.8	%
Occupancy ( j )		66.4	%		69.7	%					62.8	%		65.6	%
Inpatient catheterization procedures ( k )		4,259			5,025			(15.2	)%		8,647			9,801			(11.8	)%
Inpatient surgical procedures ( l )		2,720			2,754			(1.2	)%		5,332			5,442			(2.0	)%
Hospital net revenue	$	191,468		$	186,045			2.9	%	$	376,491		$	362,751			3.8	%

(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)	Combined operating data includes hospitals in operation as of the end of the period reported in continuing operations including hospitals which are accounted for using the equity method in our consolidated financial statements.
(c)	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.
(d)	Staffed and available beds represent the number of beds that are readily available for patient use at the end of the period.
(e)	Admissions represent the number of patients admitted for inpatient treatment.
(f)	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.
(g)	Patient days represent the total number of days of care provided to inpatients.
(h)	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.
(i)	Average length of stay (days) represents the average number of days inpatients stay in our hospitals.
(j)	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.
(k)	Inpatients with a catheterization procedure represent the number of inpatients with a procedure performed in one of the hospitals’ catheterization labs during the period.
(l)	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 six months ended March 31, 2009 and 2008.

	Three Months Ended March 31,						Six Months Ended March 31,
	2009			2008			2009			2008
	(in thousands)						(in thousands)
Income from continuing operations	$	5,418		$	5,486		$	3,802		$	7,776
Add:
Income tax expense		3,372			3,099			2,463			5,448
Minority interest share of earnings of consolidated subsidiaries		4,639			4,642			7,415			8,779
Equity in net earnings of unconsolidated affiliates		(2,714	)		(2,181	)		(4,779	)		(4,206	)
Interest and other income, net		(73	)		(485	)		(173	)		(1,646	)
(Gain) loss on early extinguishment of debt		(259	)		—			6,702			—
Interest expense		1,338			3,864			4,194			7,796
Loss on disposal of property, equipment and other assets		91			138			164			166
Amortization		210			135			359			262
Depreciation		7,565			7,689			15,400			15,030
Pre-opening expenses		380			245			587			493
Share-based compensation expense		839			213			1,837			3,922
Adjusted EBITDA	$	20,806		$	22,845		$	37,971		$	43,820