SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 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) July 1, 1996
MEDCATH INCORPORATED
(Exact name of registrant
as specified in its charter)
North Carolina 33-85458 56-1635096
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
7621 Little Avenue, Suite 106, Charlotte, North Carolina 28226
(Address of principal executive offices)
Registrant's telephone number, including area code (704) 541-3228
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Item 5. Other Events
On June 27, 1996, MedCath Incorporated announced results for the third
quarter ended June 30, 1996, and also responded to an article published June 26,
1996 in the Wall Street Journal.
Exhibits:
99 - Press Release dated June 27, 1996
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SIGNATURE
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
MEDCATH INCORPORATED
Date: July 1, 1996 By: /s/ Daniel L. Belongia
----------------------------
Daniel L. Belongia
Secretary and Chief Financial
Officer
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MEDCATH INCORPORATED ANNOUNCES
ANTICIPATED THIRD QUARTER RESULTS
COMPANY RESPONDS TO ARTICLE IN WALL STREET JOURNAL
Charlotte, North Carolina (June 27, 1996) - MedCath Incorporated
(Nasdaq/NM:MCTH) today announced that its financial results for the third
quarter and nine months ending June 30, 1996, will be adversely affected by two
factors relating to the Company's heart hospital located in McAllen, Texas,
which opened in January 1996. As a result of these two factors, the Company
expects its earnings for the fiscal quarter ending June 30, 1996, to be in the
range of $0.08 to $0.11 per share.
The McAllen Heart Hospital is operated by a limited partnership in which MedCath
owns an approximately 51% interest and serves as the general partner. The
Company recently learned that the partnership's losses during the third quarter
will be greater than expected, primarily as a result of seasonal population
shifts. Because the cumulative losses that have been allocated to the limited
partners exceed their capital contribution of $705,000, the Company can no
longer allocate any losses to its minority partners and must begin recognizing
100% of the partnership's operating losses. The effect of recognizing losses
that would otherwise have been allocated to the minority partners is a reduction
in earnings of approximately $0.05 per share in the Company's third quarter. The
Company will have to continue recognizing 100% of the partnership's losses until
such time as the partnership begins operating profitably, at which time the
Company will be entitled to recognize 100% of the partnership's earnings to the
extent it has previously recognized a disproportionate share of the
partnership's losses.
Stephen R. Puckett, president of MedCath Incorporated, said, "Although we
expected losses during the initial operation of the McAllen Heart Hospital,
these losses are larger than we anticipated. The population of the McAllen area
and the utilization of the hospital are significantly affected by the migration
of retirees out of and into the McAllen area during the summer and winter
months. The McAllen market is traditionally at its peak between October and
April when the population expands because of the milder weather. We expect that
the hospital's operating results, which will continue to be adversely impacted
through the Company's fourth quarter by the seasonal migration of retirees out
of the area, will improve when the seasonal migration patterns are reversed. We
remain committed to the McAllen Heart Hospital and stand willing to provide the
capital necessary to support its operations until the hospital becomes
profitable."
-MORE-
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MCTH Announces Anticipated Third Quarter
Results and Responds to Wall Street Journal
Page 2
June 27, 1996
In response to an article that appeared yesterday in some editions of the Wall
Street Journal, Mr. Puckett also went on to comment, "While the article
mentioned some positive aspects of our MedCath operating strategy, we believe
that there were a number of points which require a response."
MANAGEMENT BELIEVES IN THE VIABILITY OF THE HEART HOSPITAL CONCEPT
"We strongly believe in our concept of developing specialized, cost-effective
heart hospitals. The suggestion in the article that MedCath's heart hospitals
will only be able to treat a narrow range of cardiac patients is not accurate.
We are today in McAllen consistently delivering quality medical services with a
fully staffed facility addressing the full range of medical problems being
experienced by cardiac patients. Although we are incurring greater than expected
operating losses, our initial experience in McAllen, Texas, confirms our high
level of confidence."
THE TWO CARDIOLOGISTS WHO HAVE LEFT THE HOSPITAL STAFF WERE RESPONSIBLE
FOR ONLY A LIMITED NUMBER OF ADMISSIONS AND PROCEDURES
"The two physicians mentioned in the article as having opened their own practice
represent only two of the thirteen cardiologists with admitting privileges at
the hospital. Among those thirteen cardiologists, the two physicians ranked in
the bottom half both by number of patients who had procedures performed in the
hospital's cath lab and by patient admissions to the hospital."
MEDCATH'S MEDICARE REVENUE RECOGNITION POLICIES ARE SOUND
"MedCath's heart hospital records revenue in accordance with GAAP and industry
standards whereby revenues are recorded in the period in which the related
services are rendered."
In closing, Mr. Puckett said, "The fundamentals of our business have not changed
and our strategy is sound. We expect to aggressively develop heart hospitals
that will be recognized as leaders in the provision of cardiovascular care. In
addition, our other divisions continue to perform extremely well by making
substantial contributions to the profitability of the Company. The decline in
the price of our stock yesterday will not change the way we do business nor wil1
it affect the efforts of our highly motivated and experienced management team."
MedCath Incorporated is a provider of cardiology and cardiovascular services
through the operation of specialized facilities and the management of physician
practices. The Company operates one specialty heart hospital and has three
additional heart hospitals under development, manages two medical practices
comprised of a total of 63 physicians, manages fixed-site cardiac diagnostic and
therapeutic centers, and owns and operates mobile cardiac catheterization
laboratories serving networks of hospitals.
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