Northstar Healthcare Reports Financial Results




    
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    US $000 (except per    Actual 45  Pro forma combined  Pro forma combined
     share or where       days ended  three months ended    six months ended
     indicated)        June 30, 2007       June 30, 2007       June 30, 2007
    -------------------------------------------------------------------------
    Net patient
     service revenue          $6,818             $13,879             $25,886
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    Income from
     operations               $4,772              $9,850             $18,152
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    Net income                $1,369              $3,795              $7,567
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    Net income per share       $0.10             $0.29(1)            $0.58(1)
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    EBITDA net of
     non-controlling
     interests, capital
     expenditures before
     unrealized gain on
     foreign currency
     exchange in fair
     value of other
     liabilities,
     non-controlling
     interest                 $2,761              $6,113             $11,171
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    EBITDA margin of above     40.5%               44.0%               43.1%
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    Cash available for
     dividends(2)             $2,218              $4,846              $8,933
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    Cash available for
     dividends $Cdn.(3)       $2,415              $5,276              $9,726
    -------------------------------------------------------------------------
    Dividends declared
     $Cdn.                    $2,057              $4,170              $8,341
    -------------------------------------------------------------------------
    Payout ratio               85.2%               79.0%               85.8%
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        (1) Based on weighted average shares outstanding for 45-day period
            ended June 30, 2007
        (2) EBITDA net of non-controlling interests, before unrealized gain
            on foreign currency exchange contracts and change in fair value
            of other liabilities, non-controlling interest less current and
            future income taxes and capital expenditures
        (3) Based on foreign currency exchange contract exchange rate of
            US$1.00 = Cdn$1.0888
    

    TORONTO and HOUSTON, Aug. 13 /CNW/ - Northstar Healthcare Inc. (TSX:NHC)
today announced its financial results for the period ended June 30, 2007. All
dollar amounts are in United States currency unless otherwise stated.
    Northstar completed its Initial Public Offering (IPO) on May 17, 2007,
giving rise to a 45-day period of operations to June 30, 2007. In order to
assist investors in assessing the Company's operating performance for the full
three and six-month periods ended June 30, 2007, Northstar also released pro
forma combined financial results for the periods, comprised of the actual
results for the 45-day period following completion of the IPO combined with
pro forma results for the periods prior to the IPO.
    In addition, while there are no comparable financial statements for the
corresponding periods in the 2006 fiscal year, which was prior to the
formation of Northstar, the Company also provided some key statistics relating
to the operations of its ambulatory surgical centers (ASC). Specifically,
Northstar provided information relating to the number and mix of surgical
procedures performed in both the three-month and six-month periods ended
June 30, 2007 and the corresponding periods in 2006, to enhance investors'
understanding of the results of year-to-date operations. A detailed breakdown
of the ASC case and procedure data is available in the second quarter
Management's Discussion and Analysis (MD&A), which can be accessed on the
Company's web site at www.northstar-healthcare.com or www.sedar.com. This
information is not intended to provide a comprehensive comparison of financial
results, as net patient service revenues vary by patient, insurance carrier
and procedure.
    In the 45-day period following the completion of the IPO, Northstar
generated net patient service revenue of $6.8 million. Income from operations
was $4.8 million, while net income was $1.4 million, or $0.10 per share.
EBITDA net of non-controlling interests, capital expenditures before
unrealized gain on foreign currency exchange contracts and change in fair
value of other liabilities, non-controlling interest -- which the Company
believes is a useful measure of the profitability of its business -- was
$2.8 million, which represented an EBITDA margin of 40.5%.
    During the 45-day period, Northstar reported cash available for dividends
totaling $2.2 million, or Cdn$2.4 million. Dividends actually paid by the
Company in respect of the 45-day period ended June 30, 2007 were
Cdn$2.1 million. This represents a payout ratio for the 45-day period of
85.2%.
    The Company noted that there were two non-cash accounting items that
affected net income, a $2.3 million unrealized gain on foreign currency and a
$3.0 million expense for the change in fair value of other liabilities and
non-controlling interest. These items also impacted the pro forma combined
results for the three and six-month periods ended June 30, 2007.
    In the second quarter of 2007, Northstar generated pro forma net patient
service revenue totaling $13.9 million. Pro forma income from operations was
$9.9 million, while pro forma net income was $3.8 million, or $0.29 per share,
based on the weighted average number of shares outstanding for the 45-day
period ended June 30, 2007.
    The Northstar ASCs performed 9,913 procedures during the second quarter,
an increase of 15.3% over the comparable 2006 level. Importantly, Northstar's
focus on improving revenue per procedure was enhanced by the year-over-year
change in procedure mix. Specifically, higher margin procedures including
podiatry and ENT (ear, nose and throat) represented a combined 15.2% of
Q2 2007 procedures, compared with 8.5% in 2006.
    Pro forma EBITDA, net of non-controlling interests, capital expenditures
before unrealized gain on foreign currency exchange contracts and change in
fair value of other liabilities, non-controlling interest was $6.1 million in
the second quarter of 2007. This represents an EBITDA margin of 44.0%. Second
quarter pro forma cash available for dividends totaled $4.8 million, or
Cdn$5.3 million. Based on the current monthly dividend of Cdn$0.10 per share,
the total pro forma dividend requirement for the quarter would have been
Cdn$4.2 million. This represents a pro forma payout ratio for the quarter of
79.0%.
    The second quarter of 2007 was also characterized by an overall
improvement from the first quarter of 2007. Consolidated pro forma net patient
service revenues in Q2 were 15.6% higher than Q1 2007 levels. Net revenues
increased at both Northstar ASCs, resulting from a 4.1% increase in cases and
16.1% increase in procedures relative to the preceding quarter. The increase
in procedures is primarily due to a shift in focus to more complex cases,
resulting in increased procedures and collections per case. The specialties
with the greatest growth in both cases and procedures were pain, orthopedics,
ENT and podiatry.
    "We are focused on generating organic growth in our ASCs, by increasing
the number of cases and procedures, optimizing our procedure mix and
generating improvements in billing and operations," said Dr. Donald Kramer,
Chief Executive Officer of Northstar Healthcare Inc. "We are pleased with the
progress we have made this year in each of these areas."
    For the six months ended June 30, 2007, Northstar generated pro forma net
patient service revenue totaling $25.9 million. Pro forma income from
operations was $18.2 million, while pro forma net income was $7.6 million, or
$0.58 per share.
    The Company performed 18,453 procedures during the first half of the
year, an increase of 11.9% compared with 2006. As in Q2 2007, the procedure
mix reflected the Company's focus on improving revenue per procedure, as
year-over-year ENT and podiatry procedures increased significantly.
    Pro forma EBITDA, net of non-controlling interests, capital expenditures
before unrealized gain on foreign currency exchange contracts and change in
fair value of other liabilities, non-controlling interest was $11.2 million in
the first half of 2007. This represents an EBITDA margin of 43.1%. Northstar
generated six-month pro forma cash available for dividends totaling
$8.9 million, or Cdn$9.7 million. Based on the current monthly dividend of
Cdn$0.10 per share, the total pro forma dividend requirement for the six
months would have been Cdn$8.3 million. This represents a pro forma payout
ratio for the six-month period of 85.8%.
    Total assets at June 30, 2007 were $176.5 million and Northstar had no
long-term debt. The Company had net working capital of $16.5 million,
including cash and cash equivalents of $3.9 million and patient accounts
receivable of $16.4 million. Accounts payable and accrued liabilities totaled
$2.7 million. Full Financial Statements are available on the Company's web
site at: www.northstar-healthcare.com and at www.sedar.com.

    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 indirectly owns a controlling interest in two ambulatory surgery
centers in Houston, The Palladium for Surgery - Houston and Medical Ambulatory
Surgical Suites In addition, Northstar manages an ambulatory surgery centre in
Dallas, an ambulatory surgical centre in Houston and three pain management
clinics in Houston.
    Northstar was founded and sponsored by Donald Kramer, M.D., its Chief
Executive Officer, and Stewart A. Feldman. Mr. Feldman also served as the
co-principal in and Chairman and Chief Executive Officer of Healthcare
Ventures, Ltd., which sponsored Northstar, with Dr. Kramer serving as its
President.

    Conference call
    ---------------
    A conference call for analysts and interested listeners will be held
Tuesday, August 14, 2007 at 3:00 p.m. (ET). The call-in numbers for
participants are 416-644-3433 or 800-587-1893. A live audio feed of the call
will also be available on the Internet at:
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1971420
    A replay of the call will be available from 5:00 p.m. (ET) on August 14,
2007 until 11:59 p.m. on August 21, 2007. To access the replay, call
416-640-1917 or 877-289-8525, enter pass code number 21243325, and then press
the pound (No.) key. The replay can also be accessed over the Internet at the
above address.

    Non-GAAP Financial Measures
    ---------------------------
    Northstar Healthcare uses both Canadian generally accepted accounting
principles (GAAP) and certain non-GAAP measures to assess performance. Readers
are cautioned that non-GAAP measures do not have a standardized meaning under
GAAP and are unlikely to be comparable to similar measures used by other
companies. This news release contains references to EBITDA (earnings before
interest, taxes, depreciation and amortization). Management believes that
EBITDA is a useful supplemental measure of cash available for distribution
prior to debt service, capital expenditures and income taxes. However, EBITDA
is not a recognized earnings measure under Canadian GAAP and does not have a
standardized meaning prescribed by Canadian GAAP. Therefore, EBITDA may not be
comparable to similar measures presented by other issuers. Investors are
cautioned that EBITDA should not be construed as an alternative to net income
or loss (which are determined in accordance with Canadian GAAP) as an
indicator of the performance or as a measure of liquidity and cash flows.
Northstar's method of calculating EBITDA may differ materially from the
methods used by other public companies and accordingly, may not be comparable
to similarly titled measures used by other public companies. This news release
also contains references to net patient service revenue, which represents
actual payments received from third-party payors and patients, less refunds.
Net patient service revenue is not a recognized earnings measure under
Canadian GAAP and does not have a standardized meaning prescribed by Canadian
GAAP.

    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.





For further information:

For further information: Philip Koven, Tel: (416) 447-4740 Ext. 235,
E-mail: info@northstar-healthcare.com

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Northstar Healthcare Inc.

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