Stock price plunge for healthcare company

5/13/2008 12:30:48 PM | Buzz on the Boards

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Financial results push stock price to new lows: Northstar Healthcare.

Share price drops don’t come much more precipitous than this: Northstar Healthcare Inc. (TSX: T.NHC, Bullboard) is down almost 26% as of 11:40am EST, from a $10.25 open to a current price of near $7.75. The company released financial results for Q1, 2008, and investors didn’t like what they saw. Negative language in the release was present in excerpts such as this:

During the first quarter, the Company maintained its strong performance at Palladium-Houston, while results at the Kirby Center continue to be affected by a negative shift in payor mix. In addition, the Company's general and administrative expenses in the quarter reflected significant consulting fees associated with the recruitment of Ms Alexander and two new board members.

Northstar began trading on the TSX on May 17, 2007, at about $12.75. It climbed steadily to reach a high of near $19.00 in October, before beginning its drop, stair-step style, to current levels.

The first post this morning came from Tobuyornot, who said, “I'm in for a small amount -- no buyers! I saw Blackmont likes it.” moneydigger responded, “if it gets to $8, im [sic] doubling up, hopefully it bounces up from there.”

On a question from newcoin, who wanted to know if the company had cut the dividend, moneydigger said, “not cut, but i [sic] think people are worried since they were at 103% means they will not be able to keep it up if the returns don't get better. So lots of worries that it will get cut.” newcoin followed up by pointing out the company has “lots of cash and no long term debt,” and that today’s share price plunge might be “quite an overreaction.”

A dividend yield calculation came through from moneydigger, who said, “The share is now $8, at this price it gives a yield of 15%. Will this be sustainable??? Usually if yield goes up, dividend is brought down to adjust the yield. Hopefully the bleeding stops cause chances are, the dividend will be cut.”

Are investors on to something, or will the knife continue to fall? Follow the story on the Northstar Bullboard.

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