Heart hospital-operator MedCath (NASDAQ:MDTH) is on its final heartbeats and the financially struggling firm is preparing to dissolve itself as a company.
Charlotte, North Carolina-based MedCath said in a securities filing that when shareholders receive their proxy statements this quarter, the documents will contain information about recent sales of hospital assets as well as a plan of dissolution. Shareholders will be asked to approve both.
“Upon adoption of the plan of dissolution, the company will wind up its affairs and distribute its assets in the form of a distribution to shareholders,” MedCath said in the filing.
The disclosure follows four transactions in the span of five days. Last week, MedCath sold its stakes in its North Carolina cardiac catheterization laboratory operations to DLP Healthcare and Coastal Carolina Heart, two deals worth $30 million. On May 9, MedCath announced agreements to sell its ownership in hospitals in New Mexico and Arkansas in deals valued at $192 million.
The dissolution plans do not come as a surprise. Last year, MedCath formed a strategic committee to consider a sale of the company or its assets. At that point, MedCath’s interests spanned seven states, including ownership in 10 hospitals with a total of 825 licensed beds. The company had a majority stake in eight of those hospitals. The company last year commenced a string of sales of its hospitals or ownership stakes in hospital operations. Including the Arkansas and New Mexico hospitals, whose sales have not yet been completed, MedCath’s remaining holdings are ownership stakes in six hospitals with a total of 533 licensed beds located in Arizona, Arkansas, California, Louisiana, New Mexico and Texas.
MedCath’s business model was to operate specialty hospitals focusing on cardiac care. But the company has been losing money since 2008, according to its financial statements. In fiscal 2010, the company reported a net loss of $48.3 million.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
Fiscal second-quarter 2011 earnings released on May 9 showed that MedCath lost $13.5 million, a more than 20 percent increase compared to the same period a year ago. Revenue in the quarter was $97.2 million, up just 0.4 percent compared to the second quarter of fiscal 2010.
