MedCath Announces Completion of Sale of Arkansas Heart Hospital

CHARLOTTE, N.C., Aug. 1, 2011 /PRNewswire/ -- MedCath Corporation (Nasdaq: MDTH) announced today the completion of the sale of its ownership interest and management rights in Arkansas Heart Hospital to AR-MED, LLC., which is majority owned by Dr. Bruce Murphy, a physician affiliated with Little Rock Cardiology Clinic, P.A., and a current investor in the Arkansas Heart Hospital. The transaction was announced in May and was subject to MedCath stockholder approval and other customary closing conditions listed in the Equity Purchase Agreement. Navigant Capital Advisors provided advisory services to MedCath related to the transaction.

Together with the sale of the majority of the assets of Heart Hospital of New Mexico also announced today, MedCath has completed nine transactions since announcing in March 2010 it had formed a Strategic Options Committee to consider the sale either of the entire company or its assets. Since October, MedCath has announced the completion of sales involving the following four hospitals: Arizona Heart Hospital, Avera Heart Hospital of South Dakota, Heart Hospital of Austin and TexSan Heart Hospital. In addition, MedCath's Partners division sold its minority interest it held in Southwest Arizona Heart and Vascular, LLC in November, and in May, it completed the sale of its ownership interest and management agreement in Coastal Carolina Heart, as well as the sale of the majority of its assets to DLP Healthcare, a joint venture of LifePoint Hospitals and Duke University Health System.

For 14 years, MedCath worked closely with the Arkansas Heart Hospital's physician leadership, expanding the number of beds by 33 percent and helping the hospital earn several honors. Those include a Health Grades 2011 Outstanding Patient Experience Award, and two awards from the Arkansas Foundation for Medical Care in 2005, one for Hospital Quality Achievement and one for Innovation in Healthcare. In addition, a USA Today analysis of Medicare data in 2009 showed that Arkansas Heart Hospital was one of the state's top-performers, with the lowest death rate from heart attacks of any hospital in the state.

"We will always be proud of how after working with our physician partners, we were able to help establish a culture that emphasizes caring for the individual needs of patients and their families," said O. Edwin French, MedCath's president and CEO. "That culture will continue with Dr. Murphy and his team, and we wish them continued success."

Purchase terms are based on the hospital's valuation of $73.0 million plus a percentage of the hospital's available cash.  The transaction is anticipated to net approximately $60.0 million to MedCath after closing costs and taxes. The net amount anticipated to be received by MedCath includes repayment of inter-company debt owed by Arkansas Heart Hospital to MedCath. The purchaser and Dr. Murphy have agreed to indemnify MedCath for liabilities arising from the pre-closing operations of the hospital, including not limited any liabilities that may arise from the pending ICD investigation.

About MedCath

MedCath Corporation, headquartered in Charlotte, N.C., is a health care 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 four hospitals with a total of 366 licensed beds, located in Arizona, California, Louisiana, and Texas.

SOURCE MedCath Corporation