Northstar Healthcare Announces Third Quarter Results



    HOUSTON, TX and TORONTO, ON, Nov. 14 /CNW/ - Northstar Healthcare Inc.
(TSX:NHC) announced today its financial results for the three months ended
September 30, 2007 as well as the period since completion of its initial
public offering on May 17, 2007. There are no comparable financial statements
for the corresponding periods in 2006, which were prior to the formation of
Northstar. All dollar amounts are in United States currency unless otherwise
stated. Percentage calculations are based on the numbers in the financial
statements and may not correspond to rounded figures presented in this
release.
    During the third quarter, continuing solid performance at Northstar's
operations was more than offset in its reported revenues and earnings by a
$0.8 million reduction in net patient service revenues in respect of the
previous 45-day period ended June 30, 2007, in accordance with Canadian GAAP.
This resulted from the Company's introduction of new reporting and trending
software that provides management with a significantly improved method of
estimating net patient service revenues, and resulted in a change in
management's estimates. Cash flow from operations remained positive and
dividends were not affected by the change.
    For the three months ended September 30, 2007, Northstar reported net
patient service revenues of $12.5 million, income from operations of
$8.1 million and net income of $0.3 million or $0.02 per share on a weighted
average of 13,900,852 shares outstanding. Revenue, income from operations and
net income were each reduced by $0.8 million, attributable to the change in
management's estimates related to the previous period.
    Net income was positively affected by a $4.0 million unrealized gain
relating to foreign currency exchange contracts during the quarter. This gain
relates to the change in fair value of the remaining 4.5 years of foreign
currency exchange contracts entered into by the Company to hedge exposure to
fluctuations between the U.S. dollar and the Canadian dollar for future common
share dividends, as a result of the strengthening of the Canadian dollar
during the period.
    A $7.3 million non-cash change in the fair value of other liabilities,
non-controlling interest, reduced net income in the quarter. This represents
the change in fair value of the retained interest held by Healthcare Ventures
during the three months ended September 30, 2007 as a result of the increase
in the Company's common share price during the quarter.
    Cash flows provided by operating activities for the quarter were
$8.1 million.
    Northstar reported cash available for dividends of $4.8 million or Cdn.
$5.2 million for the three months ended September 30, 2007. Dividends declared
during the quarter were Cdn.$4.2 million, resulting in a payout ratio of 79.5%
for the period, based on calculations in common use . In its report for the 45
days of its second quarter, the Company calculated cash available for
dividends net of current and future taxes. Using this method, Northstar's cash
available for dividends in the third quarter would be $4.0 million or Cdn.
$4.3 million and its payout ratio would be 96.3%.
    Third quarter cash available for dividends also reflects a $0.8 million
reduction attributable to the change in management's estimates related to the
previous 45-day period, but accounted for prospectively in the third quarter.
Had this reduction been attributed to the previous period, cash available for
dividends in the third quarter net of current taxes would have been
$5.6 million or Cdn. $6.1 million. Based on dividends of Cdn. $ 4.2 million,
this would have resulted in a payout ratio of 68.7% for the third quarter.
    The Company reports EBITDA which, while non-GAAP, is a useful measure of
Northstar's profitability. During the third quarter, EBITDA net of
non-controlling interests, capital expenditures, and before unrealized gain on
foreign exchange contracts and change in fair value of other liabilities and
non-controlling interest, was $4.8 million, providing an EBITDA margin of
38.5%.
    Northstar also provides comparative operating statistics such as cases
and procedures completed in its Management Discussion and Analysis. During the
three months to September 30, 2007, Northstar's ambulatory surgical centres
(ASCs) performed 9,848 procedures, a 4.9% increase from the 9,385 procedures
conducted during the same period in 2006.
    Northstar includes net patient service revenues reported at the estimated
net realizable amounts from patients, third-party payors, and others for
services rendered. In determining net patient service revenue, management
periodically reviews and evaluates historical payment data, payor mix and
current economic conditions and adjusts, as required, the estimated
collections as a percentage of gross billings in subsequent periods based on
final settlements and collections.
    "While accounting for the change to the estimating system reduced third
quarter income, we are pleased with the continued strength of our cases and
procedures during the quarter." said Dr. Donald Kramer, Chief Executive
Officer of Northstar. "The fundamentals of Northstar's business continue to be
sound and provide a solid platform for future dividends."

    
    Financial Highlights

    -------------------------------------------------------------------------
    US$000 (except per share or        Three months ended    May 17, 2007 to
     where indicated)                  September 30, 2007  September 30, 2007
    -------------------------------------------------------------------------
    Net patient service revenue              $12,508             $19,326
    -------------------------------------------------------------------------
    Income from operations                    $8,120             $12,891
    -------------------------------------------------------------------------
    Net income                                  $322              $1,691
    -------------------------------------------------------------------------
    Net income per share                       $0.02               $0.12
    -------------------------------------------------------------------------
    EBITDA(1)                                 $4,817              $7,576
    -------------------------------------------------------------------------
    EBITDA margin of above                     38.5%               39.2%
    -------------------------------------------------------------------------
    Cash available for dividends(2)           $4,818              $7,443
    -------------------------------------------------------------------------
    Cash available for dividends $Cdn.(2)     $5,245              $8,104
    -------------------------------------------------------------------------
    Dividends declared $Cdn.                  $4,170              $6,228
    -------------------------------------------------------------------------
    Payout ratio(2)                            79.5%               76.9%
    -------------------------------------------------------------------------

    1: EBITDA is net of non-controlling interests, capital expenditures, and
       before unrealized gain on foreign currency exchange contracts and
       change in fair value of other liabilities, non-controlling interest.

    2: The payout ratio is based on cash available for dividends net of
       current taxes but not future taxes, as noted in the text of this
       release.
    

    Financial results since inception

    Northstar also reported financial results for the period from inception
of operations on May 17, 2007 to September 30, 2007. Net patient service
revenues for the period were $19.3 million. Income from operations was
$12.9 million and net income was $1.7 million or $0.12 per common share.
    Results from the period since inception were positively affected by an
unrealized gain on foreign exchange contracts. The results were negatively
affected by the non-cash change in the fair value of other liabilities,
non-controlling interest as well as by the reduction in net patient revenue
resulting from the change in estimating software and in the three months ended
September 30, 2007.
    Cash flows provided by operating activities since inception were
$11.1 million.
    The Company generated cash available for dividends, net of current tax
payable, of $7.4 million or Cdn. $8.1 million in the period since inception.
Dividends declared were Cdn. $6.2 million, resulting in a payout ratio for the
period of 76.9%. Including future tax payable, cash available for dividends
would have been $6.2 million or Cdn. $6.7 million and the payout ratio would
be 92.3%.
    EBITDA, net of non-controlling interests, capital expenditures, and
before unrealized gain on foreign currency exchange contracts and change in
fair value of other liabilities, non-controlling interest, was $7.6 million,
resulting in an EBITDA margin of 39.2%.
    During the first nine months of 2007 to September 30, 2007, Northstar
performed a total of 27,140 procedures, an increase of 1,550 procedures or
6.1% over the same period in 2006. The increase was primarily related to an
increase in ear, nose and throat specialty procedures of 1,176, an increase of
535 podiatry procedures and a shift to more complex cases overall.
    "Seasonal trends indicate that the fourth quarter of 2007 will be
stronger than earlier periods while, longer term, we are confident that demand
for healthcare services will continue to grow in the United States," said Dr.
Kramer. "We believe our strategic direction of increasing efficiencies,
growing organically and further acquisitions will continue to provide strong
cash flows."
    Total assets at September 30, 2007 were $179.4 million. Total long-term
liabilities were $29.6 million. Northstar had net working capital of
$13.8 million, including cash balances of $4.6 million and accounts receivable
of $12.8 million. Accounts payable, dividends payable, income tax payable and
accrued liabilities totaled $4.9 million.
    Full financial statements and Management's Discussion & Analysis are
available on the Company's website at: www.northstar-heathcare.com and at
www.sedar.com.

    Management Conference Call - November 15 at 9:00 a.m.

    Northstar will hold a conference call for analysts and interested
listeners with CEO Dr. Donald Kramer and Chief Financial Officer Ken Klein to
discuss the results of the third quarter on Thursday November 15 at 9:00 a.m.

    Details of the Conference Call:

    Date: November 15, 2007
    Time: 9:00 a.m. ET
    Call in number: 416-644-3425 or 800-595-8550.

    A live audio feed of the call will also be available on the Internet at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2090440

    A replay of the call will be available from 11:00 a.m. (ET) on November
15, 2007 until 11:59 p.m. on November 22, 2007.

    Replay number: 416-640-1917 or 877-289-8525,
    Pass code 21253103 followed by the number sign.

    The replay can also be accessed through the Internet at the above
address.

    About Northstar Healthcare Inc.

    Northstar owns and/or manages ambulatory surgery centres in the United
States, focusing initially on Houston and other metropolitan areas in Texas.
The Company currently holds interests in two ambulatory surgery centres in
Houston - a 70% partnership interest in The Palladium for Surgery - Houston
and a 60% partnership interest in Medical Ambulatory Surgical Suites. In
addition, Northstar manages an ambulatory surgery centre in Dallas and three
pain management clinics in Houston.
    Northstar was founded and sponsored by Donald Kramer, M.D., its Chief
Executive Officer, and Stewart A. Feldman. Mr. Feldman also served as the
co-principal and Chairman and Chief Executive Officer of Healthcare Ventures,
Ltd., which sponsored Northstar, with Dr. Kramer serving as its President.

    Forward-looking statements

    This press release may contain forward-looking statements (within the
meaning of applicable securities laws) relating to business of Northstar
Healthcare Inc. (the "Company") and the environment in which it operates.
Forward-looking statements are identified by words such as "believe",
"anticipate", "expect", "intend", "plan", "will", "may" and other similar
expressions. These statements are based on the Company's expectations,
estimates, forecasts and projections. They are not guarantees of future
performance and involve risks and uncertainties that are difficult to control
or predict. These risks and uncertainties are discussed in the Company's
regulatory filings available on the Company's web site at
www.Northstar-Healthcare.com or at www.sedar.com. There can be no assurance
that forward-looking statements will prove to be accurate as actual outcomes
and results may differ materially from those expressed in these
forward-looking statements. Readers, therefore, should not place undue
reliance on any such forward-looking statements. Further, a forward-looking
statement speaks only as of the date on which such statement is made. The
Company undertakes no obligation to publicly update any such statement or to
reflect new information or the occurrence of future events or circumstances.

    %SEDAR: 00025141E




For further information:

For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235,
E-mail: info@northstar-healthcare.com

Organization Profile

Northstar Healthcare Inc.

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