- Binding arbitration of Kramer claims expected to be completed in late
- Quarter-end cash position of $5.7 million
- Company examining new revenue streams
TORONTO and HOUSTON, May 14 /CNW/ - Northstar Healthcare Inc. (TSX:NHC) today announced its financial results for the first quarter ended March 31, 2010. 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 first quarter ended March 31, 2010 is available in Northstar's 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 first quarter ended March 31, 2010, Northstar reported net patient service revenue of $3.1 million, compared with $5.5 million in the corresponding period of 2009. The 2010 amount included $0.6 million in revenue collected in 2010 but attributable to prior periods. Excluding this amount, the company generated revenue of $2.5 million in the first quarter of 2010. The year-over-year reduction in revenue was attributable to a 39.8% decrease in case volume and a 23.9% decrease in the overall reimbursement rate.
Case volume declined 12.2% at the Kirby Center and 72.9% at Palladium-Houston, where non-partner physicians are no longer performing cases, reflecting the difficulty in receiving reimbursements for these cases. The decrease in the reimbursement rate at both ASCs is attributable to volume decreases in case specialties with higher reimbursement rates.
Northstar recorded a loss from operations of $1.6 million and a net loss of $1.4 million, or $0.10 per share, in the first quarter of 2010. These amounts include the $0.6 million revenue attributable to prior periods. In the corresponding 2009 period, the loss from operations was $0.3 million and the net loss was $1.7 million, or $0.12 per share.
Cash flows provided by operating activities in the first quarter of 2010 were nominal. This compares with positive $3.0 million in the corresponding period in 2009. The company noted that cash flow from operating activities in both periods included positive changes in working capital, which amounted to $1.5 million in 2010 and $2.7 million in 2009. At March 31, 2010, the company had working capital of $6.4 million, including cash of $5.7 million, with no long-term debt.
The positive cash flow related to changes in working capital reflects management's efforts to effectively manage cash while it awaits resolution to the binding arbitration claims against Northstar's founder, Dr. Donald Kramer, and related entities. As previously reported, these claims were made under agreements relating to the company's acquisition of its interests in Palladium-Houston. The arbitration is being held before the American Arbitration Association in Texas.
"We expect the arbitration proceedings to conclude in the late third quarter or early fourth quarter," said Steve Linehan, CEO of Northstar. "The successful resolution of these claims is critical for Northstar. It would be an important first step in enabling us to re-syndicate or sell the Palladium-Houston facility, which would represent a major factor in determining the future value and direction of Northstar."
Northstar also indicated that the company is examining the potential for new sources of revenue. "Amongst our strategic growth opportunities, we're reviewing proposals to leverage Northstar's core competency in ASC management by offering our services - on a fee basis - to third party ASCs or to doctors' business offices that are underperforming," added Mr. Linehan. "There are a number of interested parties, including several with which we're already in discussions."
As previously reported, Dr. Donald Kramer, the former CEO of Northstar, has announced that he intends to make an offer to acquire all of the issued and outstanding common shares of Northstar. As of this date, Dr. Kramer has requested lists of Northstar's securityholders (which will be provided in accordance with applicable laws) but has not made a formal offer for Northstar. Should one be received from him or from any other party, the company's board will, consistent with its fiduciary duties and in consultation with its financial and legal advisors, review and consider it and respond in the appropriate manner. Dr Kramer has also issued a claim against the members of Northstar's board of directors in their personal capacities. This claim alleges that Northstar's public disclosure included defamatory statements relating to the resyndication of Palladium - Houston partnership. The Company notes that the issuance of this claim followed Dr. Kramer's announcement of his intention to make the above offer. Northstar and its board of directors intend to vigorously contest Dr. Kramer's claim.
A conference call for analysts and interested listeners will be held Tuesday, May 18, 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=3062840
A replay of the call will be available from 1:00 p.m. ET on May 18, 2010 until 11:59 p.m. ET on May 25, 2010. To access the replay, call 416-849-0833 or 800-642-1687, enter pass code number 72695945, 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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