- Cash position increased to $6.2 million
- Positive settlement agreement with Kirby physician partners
- Critical arbitration process on Dr. Kramer claims underway
TORONTO, and HOUSTON, March 15 /CNW/ - Northstar Healthcare Inc. (TSX:NHC) today announced its financial results for the fourth quarter and year ended December 31, 2009. All dollar amounts are in United States currency; percentage calculations are based on the numbers in the financial statements and may not correspond to rounded figures presented in this release.
Detailed information relating to the fourth quarter and year ended December 31, 2009 is available in the Management's Discussion and Analysis (MD&A) and Consolidated Financial Statements, which are available on the company's web site at: www.northstar-healthcare.com and at www.sedar.com. This information is not intended to provide a comprehensive comparison of financial results.
In the fourth quarter ended December 31, 2009, Northstar generated net patient service revenue of $5.9 million compared with $11.5 million in the corresponding period of 2008. Revenue in Q4/2009 includes $2.3 million related to collections during the quarter that were attributable to earlier periods but either exceeded then-recorded collections or were not recognized. Excluding these amounts, Q4/09 revenue would have been $3.6 million. Northstar does not anticipate the additional similar recovery of material amounts in future periods.
The fourth quarter revenue decline was attributable to a 46.2% decrease in case volume accompanied by a 23.8% decrease in the overall reimbursement rate. The overall case volume decline reflected decreases of 8.6% at the Kirby Center and 76.7% at Palladium-Houston. The large case decline at Palladium-Houston is primarily due to the loss of 'Exclusive Use' physician billings and the company's inability to date to re-build revenues in the facility by re-syndicating the partnership.
The reduced reimbursement rate primarily reflects the fact that the bulk of these lost cases were those with higher reimbursement rates. The signing of an in-network contract at Kirby on January 1, 2009 also contributed to the lower overall rate.
Northstar recorded Q4/09 income from operations of $1.1 million compared with $0.2 million in the 2008 period. In the 2009 period, income from operations was reduced by $0.7 million, attributable to recent collection difficulty from some non-partner surgeons, who received requests by a third-party private payor to claw back reimbursements previously made to them for past cases at Palladium-Houston. Excluding the impact in Q4/09 of the $2.3 million in revenue attributable to earlier periods, Northstar would have had a $1.3 million operating loss in the period.
In the quarter ended December 31, 2009, the Company recorded non-cash impairment charges of $13.7 million for goodwill and $1.2 million for other intangible assets. A similar non-cash charge of $52.2 million was taken in the corresponding 2008 period. As a result, the company recorded a net loss in the 2009 period of $13.3 million, or $0.95 per share fully diluted, compared with a loss of $75.8 million, or $5.45 per share fully diluted in 2008. The Q4/09 net income figure includes a $1.6 million non-cash gain related to the change in fair value of other liabilities, non-controlling interest. The Q4/08 period includes a similar $5.8 million gain, offset by a $5.2 million non-cash loss on foreign currency.
Cash flows provided by operating activities in the fourth quarter of 2009 were $2.5 million, compared with $3.9 million in the corresponding period in 2008. The Company's cash position at the end of 2009 was $6.2 million, up from $3.7 million at year-end 2008 and $5.4 million at the end of the previous quarter.
Northstar reports Adjusted EBITDA which, while non-GAAP, is a useful measure of the performance of the Company. During the fourth quarter of 2009, the company's Adjusted EBITDA net of capital expenditures was $0.3 million compared with negative $0.2 million in the corresponding 2008 period. Northstar noted that the 2009 amount included the $2.3 million in revenue attributable to earlier periods.
During the fourth quarter Northstar reached a settlement agreement with the physician partners at the Kirby Partnership relating to past accounts receivable collection claims. Under the terms of the settlement, the physician partners agreed to pay approximately $1.0 million, the majority of which is to be spent on marketing initiatives at the Kirby Center over the next two years. The claims related to the difference between the reported accounts receivable and the actual collections for certain pre-IPO periods.
In January 2010, Northstar filed for binding arbitration of its subsidiaries' claims against Dr. Donald Kramer and related entities. These claims were made under agreements relating to Northstar's acquisition of its interests in the Palladium Partnership. The filing for arbitration is in compliance with the terms of those agreements, which also state that the arbitration is to be completed within six months of filing. The Company believes that the successful resolution of these claims is critical to the re-syndication or sale of Palladium-Houston.
In the year ended December 31, 2009, Northstar recorded net patient service revenue of $24.9 million compared with $42.8 million in the corresponding period of 2008. Full year 2009 revenue included $6.4 million attributable to earlier periods.
The reduction in revenue was primarily attributable to a 32.9% decrease in cases - 1.3% at Kirby and 57.9% at Palladium-Houston - and a 26.7% reduction in the overall reimbursement rate. The reduction in the reimbursement rate is related to the same issues identified above in the discussion of the fourth quarter results.
Income from operations for the year ended December 31, 2009 - including the $6.4 million in revenue attributable to earlier periods - was $2.4 million, compared with $16.8 million in the comparable 2008 period. Full-year 2009 income from operations was reduced by $1.9 million, attributable to recent collection difficulty from some non-partner surgeons, as described above.
The net loss in 2009 was $10.4 million, or $0.75 per share fully diluted, compared with a loss of $104.2 million, or $7.50 per share fully diluted, the previous year. The 2009 net loss includes a foreign currency gain of $3.9 million, $14.9 million of impairment charges and a $1.6 million non-cash gain related to fair value changes. The 2008 period includes an $8.8 million non-cash loss on foreign currency, a $131.1 million charge for impairment to goodwill and intangibles and a $24.8 million non-cash gain related to fair value changes.
Cash flows provided by operating activities in 2009 were $9.2 million, compared with $22.2 million in 2008. Adjusted EBITDA net of capital expenditures in 2009 - including the $6.4 million in revenue attributable to earlier periods - was negative $1.2 million. This compares with positive Adjusted EBITDA net of capital expenditures of $9.4 million in 2008.
Northstar announced that its CFO, Ken Klein, will be leaving the Company to assume the position of Senior Vice President and CFO with a prestigious specialty hospital. Steve Linehan, CEO of Northstar, said, "While we're disappointed that Ken is leaving the Company, we recognize the great opportunity that he has accepted and thank him for his many contributions to Northstar."
Northstar also announced that David Richardson has been appointed as the Company's new Chief Financial Officer. Mr. Richardson joins Northstar from National Cardiovascular Partners where he served as CFO. "We're very pleased that Dave has accepted the position," added Mr. Linehan. "Not only does he bring a background as CFO with another ASC, he has also worked as a consultant to Northstar in the past. As a result, Dave is ideally positioned to step into the role without missing a beat."
The Company responded to a news release issued this morning on behalf of Lake Breeze Surgical Affiliates, P.A. Northstar said that it believes that the lawsuit against The Palladium For Surgery - Houston, Ltd. is meritless. The Palladium For Surgery - Houston, Ltd. intends to move to dismiss the lawsuit once it has been served and to refer the suit to binding arbitration, as provided in the billing agreement in question.
A conference call for the investment community will be held Tuesday, March 16, 2010 at 10:00 a.m. (ET). The call-in numbers for participants are 647-427-7450 or 888-231-8191. A live audio feed of the call will also be available on the Internet at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2993540
A replay of the call will be available from 1:00 p.m. (ET) on March 16, 2010 until 11:59 p.m. on March 23, 2010. To access the replay, call 416-849-0833 or 800-642-1687, enter pass code number 61652334, and then press the pound (No.) key. The replay can also be accessed over 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.
Northstar was founded and sponsored by Donald Kramer, M.D. 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.
This news 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.
SOURCE Northstar Healthcare Inc.
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