TORONTO and HOUSTON, May 15 /CNW/ - Northstar Healthcare Inc. (TSX:NHC)
today announced its financial results for the first quarter ended March 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 first quarter ended March 31, 2009
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.
In the first quarter ended March 31, 2009, Northstar generated net
patient service revenue of $5.5 million, compared with $11.0 million in the
corresponding period of 2008. The year-over-year reduction in revenue was
attributable to a 23.9% decrease in case volume and a 22.7% decrease in the
reimbursement rate. The change in the reimbursement rate was attributable to
two factors: the decreased volume of higher reimbursement rate cases at
Palladium-Houston, which was the result of the ongoing collection difficulty
with one of the center's major payors, and a rate decline at the Kirby Center,
resulting from the in-network contract that took effect January 1, 2009.
Northstar recorded a loss from operations of $0.3 million and a net loss
of $1.7 million in the first quarter of 2009. In the corresponding 2008
period, income from operations was $6.3 million and net income was $2.1
Cash flows provided by operating activities in the first quarter of 2009
were $3.0 million, compared with $6.5 million in the corresponding period in
Northstar reports adjusted EBITDA which, while non-GAAP, is a useful
measure of the performance of the Company. During the first quarter of 2009,
adjusted EBITDA net of non-controlling interests, capital expenditures, and
before an unrealized loss on foreign exchange contracts and non-controlling
interest, was negative $0.7 million, compared with $3.5 million in the 2008
"We continue to work toward a resolution of the payor issue at
Palladium-Houston and negotiations are ongoing," said Steve Linehan, CEO of
Northstar. "At the same time, we are actively working with our physician
partners to re-syndicate the Palladium Partnership. We look forward to
reporting on our progress on these matters throughout the year."
As announced on February 9, 2009, Northstar's Board of Directors
initiated a process to identify and evaluate strategic alternatives available
to maximize shareholder value and has appointed a committee of independent
directors to oversee the process. This process continues and includes
dialogues with parties interested in considering a potential transaction with
Northstar, including parties that have entered into non-disclosure agreements.
Given the challenging business environment and conditions, the independent
committee expects the evaluation of alternatives will take time to effectively
conclude and further notes that there can be no assurance that the strategic
review process will result in any transaction. In connection with the
strategic review process, the Toronto Stock Exchange has granted Northstar an
extension from the requirement to hold its annual general meeting prior to
June 30, 2009. The Board of Directors has set September 3, 2009 as the date of
its annual meeting.
In March 2009, Northstar selected an independent third party valuator to
conduct a formal valuation in connection with the announcement by Dr. Donald
Kramer, Northstar's former chief executive officer, in February, 2009 that he
intended to lead a group of physicians, through an acquisition company, to
make an offer to acquire all the issued and outstanding common shares of
Northstar for Cdn$0.95 per common share in cash. The valuation process
requested by Dr. Kramer has not yet been initiated as Dr. Kramer has not yet
advanced a retainer to cover the expenses for the valuator, which expenses are
required to be paid by Dr. Kramer under applicable securities laws.
Northstar also announced that it has made claims against Dr. Kramer,
related entities, and certain former managers, under agreements relating to
Northstar's acquisition of its interests in the Palladium Partnership. The
Company has also given notice of these claims to the escrow agent and has
instructed it to not release any of the approximately $8.3 million currently
held in escrow for such parties. Although Northstar intends to vigorously
pursue these claims, there can be no assurance that it will be successful or
that it will recover any material amounts under such claims. The expenses
involved in investigating and pursuing such claims could have a material
adverse affect on the operations and cash flows at the Palladium Partnership
and Northstar as a whole.
Northstar also announced today that it is eliminating the position of
Chief Operating Officer and, as a result, Donna Alexander is leaving the
Company. Northstar would like to thank her for her service.
A conference call for analysts and interested listeners will be held
Tuesday, May 19, 2009 at 10:00 a.m. (ET). The call-in numbers for participants
are 416-644-3425 or 800-731-5319. A live audio feed of the call will also be
available on the Internet at:
A replay of the call will be available from 12:00 p.m. (ET) on May 19,
2009 until 11:59 p.m. on May 26, 2009. To access the replay, call 416-640-1917
or 877-289-8525, enter pass code number 21306116, and then press the pound
(No.) key. The replay can also be accessed over the Internet at the above
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. 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.
For further information:
For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235,