Northstar Healthcare Reports 2010 Second Quarter Results

Recent agreement for $5 million equity infusion addresses liquidity concern

TORONTO, ON and HOUSTON, TX, Aug. 13 /CNW/ - Northstar Healthcare Inc. (TSX:NHC) today announced its financial results for the second quarter and six months ended June 30, 2010. 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.

Detailed information relating to the second quarter and six months ended June 30, 2010 is available in 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.

    
    Second Quarter Results
    ----------------------
    

In the second quarter ended June 30, 2010, Northstar generated net patient service revenue of $4.4 million compared with $6.6 million in the corresponding period of 2009. The 2010 amount included $0.6 million in revenue collected in 2010 but attributable to prior periods, compared with $1.5 million in such revenue in the corresponding 2009 period. Excluding these amount, the company generated revenue of $3.8 million in the second quarter of 2010 compared with $5.1 million in the prior year quarter.

The year-over-year reduction in revenue - excluding revenue attributable to prior periods - was attributable to a 27.8% decrease in case volume, partially offset by a 2.9% increase in revenue per case. The overall case volume decline was the result of a 4.9% decrease at the Kirby Center and a 66.0% decrease at Palladium-Houston. The decrease at Palladium-Houston was due to a lack of cases by non-partner physicians under Exclusive Use (EU) agreements. The EU model has experienced difficulties due to the refusal by virtually all major third party payors to reimburse such procedures.

Northstar recorded a second quarter 2010 loss from operations of $1.2 million compared with a nominal profit in the 2009 period. These amounts include the $0.6 million and $1.5 million in revenue attributable to prior periods in 2010 and 2009 respectively. The net loss in the 2010 period was $2.1 million, or $0.15 per share fully diluted, compared with a profit of $1.7 million, or $0.12 per share fully diluted. The 2010 net loss figure included a $0.3 million loss on fair value changes and the 2009 figure included a $2.6 million gain on foreign currency.

Cash flow used in operating activities in the second quarter of 2010 was $1.4 million, compared with cash flow provided by operating activities of $1.6 million in the corresponding period in 2009.

As reported on July 30, 2010, Northstar has agreed to a $5 million non-brokered private placement of common shares to Canada Healthcare Acquisition Inc., a corporation indirectly controlled by Dr. Donald L. Kramer, M.D., a former CEO and former director of Northstar. Closing of the financing, which is subject to certain conditions, is expected to occur by September 7, 2010 or as soon as practicable thereafter. The current moratorium on Northstar's arbitration and litigation claims against Dr. Kramer and related entities will remain in place through closing of the private placement. Pursuant to an amendment to the Private Placement Agreement, the parties have agreed that all five current directors will resign on closing of the private placement and be replaced by nominees of Canada Healthcare Acquisition Inc.

Northstar also announced that it has applied to the Toronto Stock Exchange, pursuant to Section 604(e) of the TSX Company Manual, for an exemption from the requirement to seek shareholder approval for the private placement (which would otherwise be required because the private placement, if completed, will result in a change in control of Northstar), on the basis of Northstar's serious financial hardship. Approval of the private placement and the use of this exemption are subject to TSX approval.

    
    Six Months Results
    ------------------
    

In the six months ended June 30, 2010, Northstar generated net patient service revenue of $7.5 million compared with $12.2 million in the corresponding period of 2009. The 2010 figure included $1.2 million in revenue attributable to earlier periods, while the corresponding 2009 period included $1.5 million in such revenue. The year-over-year reduction in revenue was primarily attributable to a 33.8% decrease in case volume and a 10.5% reduction in revenue per case.

Northstar incurred a loss from operations for the six months ended June 30, 2010 of $2.8 million compared with a loss of $0.3 million in the comparable 2009 period. These amounts include the $1.2 million and $1.5 million in revenue attributable to prior periods in 2010 and 2009 respectively.

Northstar reported a net loss in the 2010 six-month period of $3.5 million, or $0.25 per share fully diluted, compared with a nominal profit in the corresponding 2009 period. The 2010 net income figure included a $0.2 million gain from fair value changes while the 2009 period included a $1.2 million foreign currency gain.

Cash flow used in operating activities in the first six months of 2010 was $1.4 million compared with cash flow provided by operating activities of $4.5 million in the corresponding prior year period.

At June 30, 2010, Northstar had consolidated working capital of $4.7 million, including cash of $3.6 million. This compares with $8.3 million and $6.2 million, respectively, at year-end 2009. Of the $3.6 million cash at June 30, 2010, only $1.6 million is available cash at the Northstar corporate level, with the balance being cash held at the operating level by the Palladium and Kirby Partnerships. Since June 30, 2010, a substantial portion of this cash has been spent to satisfy various expenses, including expenses associated with the takeover bid that expired on July 26, 2010 and the private placement.

"Northstar's results in the first half of 2010 reflected the ongoing revenue issues at Palladium-Houston," said Steve Linehan, CEO of Northstar. "We are optimistic that the agreement with Dr. Kramer will be a necessary first step in returning to profitability at the facility."

In connection with the previously announced private placement, Northstar also announced that its board of directors had agreed to defer the occurrence of the "Separation Time", as defined in Northstar's Shareholder Rights Plan, and to terminate the Shareholder Rights Plan immediately prior to the completion of the private placement.

    
    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. At June 30, 2010, the Company held 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.

    
    Forward-looking statements
    --------------------------
    

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.

%SEDAR: 00025141E

SOURCE Northstar Healthcare Inc.

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.

More on this organization


Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890