- $2.2 million in operating cash flow in Q3
- Cash position improved
- Resolution of a major payor dispute
- Claim settled with former managers and negotiations to settle with
Dr. Kramer continue
TORONTO and HOUSTON, Nov. 11 /CNW/ - Northstar Healthcare Inc. (TSX:NHC) today announced its financial results for the third quarter and nine months ended September 30, 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 third quarter and nine months ended September 30, 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 third quarter ended September 30, 2009, Northstar generated net patient service revenue of $6.8 million compared with $9.4 million in the corresponding period of 2008. In September 2009, after comparing historical payment data to the estimated net patient service revenues reported in 2008 and the first quarter of 2009, management determined that actual collections as of September 30, 2009 had exceeded the reported revenues by $1.3 million. This amount was therefore included in the Company's third quarter 2009 revenues.
The year-over-year reduction in revenue was attributable to a 29.7% decrease in case volume - to 1,561 cases in the third quarter of 2009 from 2,219 in the 2008 period - and an 8.9% decrease in the overall reimbursement rate. The case volume decline was attributable to a 60.9% decrease at Palladium-Houston, which was partially offset by a 9.3% increase at the Kirby Center and the 2008 impact of Hurricane Ike. The reduction in the overall reimbursement rate is a result of the decrease in cases with higher reimbursement rates at Palladium-Houston during the current collection difficulty with one of the center's major payors, as well as the lower reimbursement levels at the Kirby Center that resulted from the in-network contract that took effect January 1, 2009.
Northstar recorded Q3/2009 income from operations of $1.5 million compared with $4.3 million in the 2008 period. Net income in the 2009 period was $2.9 million, or $0.19 per share fully diluted, compared with a reported loss of $33.4 million, or $2.40 per share fully diluted. The Q3/09 net income figure includes a foreign currency gain of $2.7 million. The Q3/08 period includes a $2.4 million loss on foreign currency, a $78.9 million charge for impairment to goodwill and intangibles and an $18.2 million gain related to fair value changes.
Cash flows provided by operating activities in the third quarter of 2009 were $2.2 million, compared with $5.2 million in the corresponding period in 2008. The Company's cash position at the end of the third quarter of 2009 was $5.4 million, up from $3.7 million at year-end 2008 and $4.7 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 third quarter of 2009, Adjusted EBITDA net of non-controlling interests, capital expenditures, and before an unrealized gain on foreign exchange contracts and non-controlling interest, was $0.1 million. This compares with $2.9 million in the corresponding 2008 period.
"During the third quarter we continued to make steady progress on management's major initiatives, as outlined earlier in the year," said Steve Linehan, CEO of Northstar. "In this regard, last week we announced a complete resolution to Palladium-Houston's dispute with one of its largest payors, a major private health insurance provider. This resolution included two major components: an agreement to release each other from any past or present claims related to the dispute and an in-network contract that takes effect December 1, 2009."
Northstar also said that the planned Palladium-Houston re-syndication efforts have not proceeded as quickly as planned and case volumes at the Palladium partnership have declined. It is necessary for Dr. Kramer to approve the re-syndication proposals that have been developed, and to date he has not done so.
The Company is continuing to pursue its claims against Dr. Kramer, and after two mediation sessions in September and October 2009, no resolution was achieved. As of November 11, 2009, the Company has not reached a settlement with Dr. Kramer and continues to pursue these claims and discussions to achieve a resolution. The claims made against three former managers were settled.
In the nine months ended September 30, 2009, Northstar generated net patient service revenue of $19.0 million compared with $31.2 million in the corresponding period of 2008. The 2009 figure included $2.9 million in revenue attributable to 2008 and Q1 2009 operations, as the company's final 2008 collections exceeded the reported figures.
The year-over-year reduction in revenue was primarily attributable to a 27.9% decrease in case volume - to 5,058 cases in the first nine months of 2009 from 7,014 in the corresponding 2008 period - and a 26.5% 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 third quarter results.
Income from operations for the nine months ended September 30, 2009 was $1.2 million, compared with $16.6 million in the comparable 2008 period. Net income in the 2009 nine-month period was $2.9 million, or $0.20 per share fully diluted, compared with a loss of $28.4 million, or $2.04 per share fully diluted, in the 2008 period. The 2009 net income figure includes a foreign currency gain of $3.9 million. The 2008 period includes a $3.6 million loss on foreign currency, a $78.9 million charge for impairment to goodwill and intangibles and a $19.0 million gain related to fair value changes.
Cash flows provided by operating activities in the first nine months of 2009 were $6.7 million, compared with $18.3 million in the corresponding period in 2008. Adjusted EBITDA net of non-controlling interests, capital expenditures, and before an unrealized loss on foreign exchange contracts and non-controlling interest, was negative $1.5 million in the 2009 nine month period. This compares with positive Adjusted EBITDA of $9.7 million in the corresponding 2008 period.
A conference call for the investment community will be held Thursday, November 12, 2009 at 10:00 a.m. (ET). The call-in numbers for participants are 416-644-3433 or 877-974-0454. A live audio feed of the call will also be available on the Internet at: http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2869680
A replay of the call will be available from 12:00 p.m. (ET) on November 12, 2009 until 11:59 p.m. on November 19, 2009. To access the replay, call 416-640-1917 or 877-289-8525, enter pass code number 4180291, 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.
For further information: For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235, E-mail: email@example.com