Vancouver, BC, July 23, 2014 - Zacks Small-Cap Research has updated coverage on Northstar Healthcare (TSX:NHC). Following the release of the 2nd quarter estimated results, analyst Steven Ralston has reiterated his outperform rating and raised his target price to $2.30 a premium of 100% to the $1.15 price on July 17th, the day the report was issued.
On a consolidated basis, Northstar’s estimated revenue for the 2nd quarter totaled $15.1 million, an increase of $9.2 million from the 2013 2nd quarter revenue of $5.9 million.
Northstar Healthcare is a Canadian healthcare company that develops, acquires, owns and manages Ambulatory Surgical Centers or ASCs in the United States. Currently, the company holds equity interests in four ASCs, two in Houston, one in Dallas and one in Scottsdale, along with two MRI Centers and one Urgent Care center in the metropolitan Houston area.
Harry Fleming, Northstar’s CFO stated: “We are particularly happy with these results since they include no material revenue from our Phoenix center as our acquisition from the bankruptcy court was delayed by three months. Additionally, we are just coming on line this month with our MRI centers in which we acquired an interest this past February. We are confident that we are well positioned as we move into the second half of the year where revenues have a natural increase due to seasonality.”
Management’s growth strategy entails generating organic growth through physician referrals and targeted direct-to-consumer marketing campaigns, augmented by acquisitions. During 2012, Northstar Healthcare developed an innovative Direct-to-Consumer Marketing Campaign. The Direct-to-Consumer marketing program, consisting of an on-line presence with a dedicated websites, listings on local online directories, social media pages, informative YouTube videos and paid search-engine keywords, helped contribute to the 49% increase in net patient revenues.
Northstar Healthcare’s acquisition strategy entails building a network of ASCs and other complementary healthcare facilities in metropolitan areas of the United States. The domestic ASC industry is highly fragmented, and with an estimated 5,900 ASCs, only about 1,300 are managed by multi-facility chains, and the largest chain controls only 239 centers.
The company has a complex history that includes difficulties in connection with a rapidly changing reimbursement environment in the first two years of its existence, which were exacerbated by a conflict with a major insurer.
Analyst Steven Ralston stated, “While the company s recovery is still in an early stage, management has taken some positive and innovative steps to initiate the turnaround. Given management’s stated business plan of becoming a creator, owner and operator of health care networks in multiple metropolitan areas, Northstar Healthcare is expected to expand its revenue base significantly.”
The company currently trades at $1.18, and with 43.4 million shares outstanding, the company is capitalized at $51.2 million.
For a copy of the Zacks Small-Cap Research report, please visit www.scr.zacks.com.
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