company outlook april 1, 2014 harry fleming, cfo [email protected] 1
TRANSCRIPT
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Forward Looking Statements
This presentation contains forward-looking information (within the meaning of applicable securities laws) relating to the business of Northstar Healthcare Inc. (the "Company") and the environment in which it operates. Forward-looking information may include statements regarding the objectives, business strategies to achieve those objectives, expected financial results, economic or market conditions, and the outlook of or involving the Company and its business. Such forward looking information or statements are typically identified by words such as "believe", "anticipate", "expect", "intend", "plan", "will", "may" and other similar expressions.
Forward-looking information, including any financial outlooks, is provided for the purpose of providing information about management's expectations and plans about the future and may not be appropriate for other purposes. Forward-looking information herein is based on various assumptions and expectations that the Company believes are reasonable in the circumstances. No assurance can be given that these assumptions and expectations will prove to be correct and the forward-looking information, including the financial outlooks included in this Presentation, should not be unduly relied upon. Those assumptions and expectations are based on information currently available to the Company, including the historic performance of the Company's business. Such assumptions include anticipated financial performance, current business and economic trends, and business prospects and are subject to the risks and uncertainties which 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.
The Company’s management has approved the financial outlooks contained in this presentation.
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Agenda
I. Northstar
II. ASC Industry
III. Revenue/Growth _Programs
IV. Financials
V. M&A
VI. Investment Highlights
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Northstar - Overview
Northstar partners strategically with physicians in the development and management of ASCs with the mission of providing superior medical care, increased patient satisfaction, lower costs for healthcare delivery and revenue enhancement through innovative marketing campaigns.
NHC is a publicly listed company on the Toronto Stock Exchange (Ticker: NHC), although all of its operations are located in the U.S.
Outstanding Shares to date are 43 Million
Management Team collectively owns approximately 20 Million shares
Institutional Ownership Approximately 25%
NHC is in the process of positioning the company so that it can effect a listing on a U.S. exchange such as the NASDAQ or the NYSE during the calendar year 2014. Upon the occurrence of such event NHC will also remain on the TSX as a dual listed company.
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Outpatient SurgeryProfits
Bari,
Spine, DPM
Gyn, Pain
Gen Surgery, Ortho
Focus of Our Business
Most profitable part of the healthcare delivery system
Low costs if well managed
Profit margins can exceed 50% on a center level
ASCs better serve surgeons, patients and payors
Outpatient Surgery
Inpatient Surgery
X Rays
Labs
Medical Admissions
Hospital Profits
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Our Locations
Own and Operate 4 ASC’s:• 2 in Houston
• 1 in Dallas
• 1 in Scottsdale
Manage Clinical Operations:• Spine/pain management
• Bariatric
• Podiatry
Own and Operate 2 MRI and 1 Urgent Care Centers
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Focus: Surgical excellence and maximizing efficient use of facilities and resources
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KIRBY Surgical Center
Houston
Our ASCs
18 operating/procedure rooms
150+ surgeons on staff
Focus on high allowable and high margin outpatient surgical procedures
10,000+ cases per year
Close to major medical centers
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Ambulatory Surgery Centers (ASCs)
Outpatient surgery facilities No overnight stay required Lower cost structure to patient
and insurance companies Better patient outcomes and
satisfaction Higher physician satisfaction Reduced patient risk factors
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Average charges – 33% lower
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ASC Industry Overview
Combined revenue of about $18 billion Untouched by Federal Healthcare Reform Act Fragmented market 50 largest companies generate 30% of the revenue U.S. ASC industry includes about 3,500 companies that operate
about 5,000 centers 75 independent ASCs in Houston; 350 in Texas High growth expected over next two years, driven largely by patients
seeking lower-cost alternatives to hospital care, better clinical outcomes and patient satisfaction, and physician steerage of patient care
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U.S. Healthcare Trends
Growth in outpatient surgeries due to Technology and Technique
National number of ASC’s has quadrupled in 30 years
Over 60% of all U.S. surgeries are as outpatients
More procedures suitable for ASCs
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19721975
19781981
19841987
19901993
19961999
20022005
20082011
20142017
20200
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Num
ber
of A
SCs
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Revenue Growth Programs
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Physician Contracting• Accretive revenues for ASC• Surgeon does not need to purchase equity• Northstar’s ownership is not diluted
Direct to Consumer Marketing• Current Campaigns:
• NueStepSM (Podiatric nerve decompression)
• CuraSpineSM (Spine)
• Bariatrics
• Upcoming Campaigns:• Peripheral Bariatric Campaigns
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Direct to Consumer Marketing
Launched first campaign spring 2013
Marketing infrastructure• Campaign production
• Call center
• Media components
• Online presence
• Analytics for campaign optimization
Clinical Management
Lead Management
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Consolidated Revenue & Operating EBITDA* (000s)
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*Operating EBITDA is net of non-controlling interest but not including the corporate expense
2010 2011 2012 2013 2014E 2015E 2016E 2010 2011 2012 2013 2014E 2015E 2016E
Revenue 12329 14380 20897 31127 74000 113436 184377
EBITDA -3534 -1090 2049 2147 9917 20055 38648
Operating EBITDA 2487 2368 5999 5252 15168 25771 44876
$15,000
$65,000
$115,000
$165,000
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Growth Formula
Existing Centers• Continue to optimize current marketing plans and introduce new
marketing programs
• Project 20% annual growth in revenue
Seasonal Revenue: Revenue is seasonal where the first quarter revenues are significantly less than those of the 4th quarter.
New Business Development• Enter two new markets in 2015 and four markets in 2016;
• Leverage current marketing campaigns and other revenue generating programs
• Implement cost containment strategies with increased economies of scale
• Each market should target $1.9 - $2.5M EBITDA
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Accelerated Growth Beyond Organic
Future Acquisition Targets
Acquire ownership of local surgical hospital(s) to complement current marketing programs
A small-size ASC to service current in-network marketing leads
ASC(s) beyond current market area: San Antonio
Ancillary healthcare facilities to diversify revenues and develop referrals
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Investment Highlights
Northstar Healthcare = Significant growth opportunity
Compelling value proposition for surgeons, patients, and payors
Strong position in high growth ASC industry
Proven track record of performance
Acquisition environment – accretive and accelerated market entry
Platform for scalable growth into multiple markets