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Conference call: Today, Thursday, February 14, 2008 at 10:00 a.m. EST
Dial-in numbers: 800-374-0146 or 706-634-1307 (international)
Webcast / Replay URL: www.integramed.com or www.earnings.com
Phone Replay 800-642-1687 or 706-645-9291 through Feb. 21
Conference ID# 33268502
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IntegraMed(R) Reports Improved Q4 and 2007
Earnings Before Income Taxes
PURCHASE, NEW YORK--February 14, 2008 -- IntegraMed America, Inc. (NASDAQ:
INMD), the leading operator of fertility centers and vein clinics in the United
States, today announced results for the fourth quarter (Q4) and the year ended
December 31, 2007, as highlighted below. The results reflect strength in the
Company's traditional fertility center and consumer businesses as well as the
contribution from its recently acquired Vein Clinics division.
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Summary Financial Results
(in thousands, except per share data)
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Q4 2007 Q4 2006 Year 2007 Year 2006
(4) (1) (2)(4) (1)
- --------------------- --------- -------- -------- -------- --------- ----------
Total revenues $45,290 $32,341 +40% 151,998 $126,438 +20%
- --------------------- --------- -------- -------- -------- --------- ----------
Total contribution $4,003 $3,281 +22% $15,368 $12,733 +21%
- --------------------- --------- -------- -------- -------- --------- ----------
Income before Taxes $1,229 $1,145 +7% $4,952 $3,731 +33%
- --------------------- --------- -------- -------- -------- --------- ----------
Tax provision $365 $333 +10% $1,695 $1,328 +28%
- --------------------- --------- -------- -------- -------- --------- ----------
Tax benefit (1) 0 ($821) Nm 0 ($821) nm
- --------------------- --------- -------- -------- -------- --------- ----------
Net income $864 $1,633 -47% $3,257 $3,224 +1%
- --------------------- --------- -------- -------- -------- --------- ----------
EPS (3) $0.10 $0.20 -50% $0.39 $0.39 0%
- --------------------- --------- -------- -------- -------- --------- ----------
Diluted shares (3) 8,643 8,220 +5% 8,410 8,194 3%
- --------------------- --------- -------- -------- -------- --------- ----------
(1) Net income for Q4 and the full year 2006 benefited from an $821,000, or
$0.10 per diluted share, reduction in the provision for income taxes caused
principally by the elimination of a valuation allowance on deferred tax
assets.
(2) Effective with Q3 2007 reporting, IntegraMed has reclassified certain costs
in order to give investors a clearer view of divisional and corporate
operating results in the current and year-ago periods. Prior periods have
been restated to reflect this reclassification.
(3) EPS and weighted average share figures reflect the 25% stock split paid May
4, 2007.
(4) Includes results of Vein Clinics of America from the August 8,
2007 date of acquisition.
Q4 2007 revenues grew 40% versus the prior year's period, reflecting
contributions from all three operating divisions, including a full period's
contribution from the new Vein Clinics division acquired in August 2007.
IntegraMed's Fertility Centers division grew by 10%, and its Consumer Services
division grew by 13% compared to Q4 2006.
Q4 2007 total contribution rose 22% to $4.0 million compared to Q4 2006 total
contribution of $3.3 million. Contribution rates in all three divisions were
impacted by the previously announced strategic program to make additional
infrastructure investments to position the Company for accelerated long-term
growth and the reclassification of certain costs in order to give investors a
clearer view of divisional and corporate operating results in the current and
year-ago periods. IntegraMed expects to continue making infrastructure
investments through the middle of 2008. Corporate G&A expenses increased
Page 1 of 7
year-over-year related to costs to support the divisions, however they declined
as a percent of revenue and of total contribution. The modest increase in G&A
expense is also expected to continue through mid-2008. Q4 2007 results were also
impacted by net interest expense caused by lower average cash balances available
for investing and increased borrowing related to the Vein Clinics acquisition.
Q4 and full year 2006 net income and earnings per share benefited from an
$821,000, or $0.10 per diluted share, reduction in the provision for income
taxes caused principally by the elimination of a valuation allowance on deferred
tax assets that reduced the Company's 2006 effective tax rate to 13.6%. After
eliminating the effect of the 2006 tax adjustment, Q4 2007 net income of
$864,000 represented a 6% improvement over Q4 2006 adjusted net income of
$812,000. On a reported basis, IntegraMed's Q4 2007 net income was $864,000, or
$0.10 per diluted share, compared to Q4 2006 net income of $1.6 million, or
$0.20 per diluted share. The weighted average of diluted shares outstanding rose
5% to 8.64 million in Q4 2007, compared to 8.22 million in the year-ago Q4
period.
For the full year 2007, IntegraMed reported total revenues grew 20% to $152.0
million, compared to total revenues of $126.4 million in 2006. 2007 results
reflect a partial year's contribution from the Vein Clinics division acquired
August 8, 2007. Total contribution in 2007 increased 21% to $15.4 million
compared to 2006 total contribution of $12.7 million.
Full year 2007 net income was $3.3 million, representing a 36% increase over
full year 2006 net income, before the tax benefit, of $2.4 million. The 2007 EPS
of $0.39 represented a 34% increase over the tax adjusted 2006 EPS of $0.29. On
a reported basis, IntegraMed's 2007 net income was $3.3 million, or $0.39 per
diluted share, compared to 2006 net income of $3.2 million, also $0.39 per
diluted share.
IntegraMed CEO, Jay Higham commented, "IntegraMed has embarked on a long-term
strategy which we believe will deliver faster growth for the next several years.
With the VCA acquisition and the ensuing realignment into three business
divisions behind us, we are supporting our growth goals with selected
infrastructure and personnel investments. As we have previously stated, these
investments are required to extend a strong management platform to support
accelerated expansion for the Vein Clinics business and allow us to identify and
implement specific growth and profitability initiatives within each business.
This includes putting into place in Vein Clinics all of the financial controls
and reporting that are required within a public company.
"We have demonstrated our ability to drive growth in contribution margins
through the tight control of expenses, and we do not intend to lose that focus
now, however this transition and integration will require a few quarters of
assembling all of the pieces before these investments will begin to yield the
intended results. We are approximately halfway through this new investment cycle
and, as such, anticipate making some additional infrastructure investments in
our businesses through the middle of 2008."
"Our growth rate and financial results continue to demonstrate the `value-add'
we provide our customers in terms of new patient recruitment and operational
efficiency," continued Mr. Higham. "Given the value we provide to physicians and
patient outcomes, we believe IntegraMed is particularly well positioned for
growth. Though our business has not been affected in any meaningful way by
previous economic downturns, we continue to actively monitor and manage each
Page 2 of 7
business. So far, we have not seen any significant economic impact in any of our
divisions, and we remain confident in our ability to drive increases in revenues
and contribution in all of our divisions in 2008."
Fertility Centers
Our Fertility Centers division continues to achieve above-industry growth rates,
reflecting the value of our suite of services. Patient volume increased 16% in
Q4 2007 at the practice level leading to a 15% increase in Contribution compared
to the same quarter in 2006. These results include same store growth as well as
contributions from the recently announced service agreements for facilities in
Baltimore (6 months) and Orlando (4 months). Full year Fertility Center
contribution margin increased to 8.3% from 7.5% a year ago as a result of
continued efforts to improve Partner performance and practice efficiency.
Consumer Services
Shared Risk Refund enrollments for 2007 rose 22% over 2006, demonstrating
expanding consumer interest and awareness of this program across the country.
Growth in Shared Risk Refund enrollments should translate into incremental
revenue and contribution throughout the year as treatment progresses on these
patients.
Contribution margin from Consumer Services declined versus year-ago levels
reflecting infrastructure investments, a decrease in contribution from the
low-margin pharmaceutical sales, which has effectively been phased out, and from
a small dip in pregnancy rates within the Shared Risk Refund program to 39.2% in
2007 from 41.6% in 2006. Pregnancy rates are expected to naturally vary period
over period, and this decrease remains within the anticipated range and much
higher than the national average. The Company expects that variances in
pregnancy rates should moderate over time as the scope of the Shared Risk Refund
program expands.
Vein Clinics
Results in the Vein Clinics division reflect a full quarter's contribution in Q4
2007 and a partial year's (since the August 8, 2007 date of acquisition)
contribution in 2007; there was no contribution from Vein Clinics in the prior
year's periods. Vein Clinics continues to achieve record patient volumes at the
same time it has been bolstering its senior management ranks in the areas of new
clinic development, regional management and revenue cycle management and
upgrading clinic equipment and facilities to improve productivity. The division
is also looking to recruit marketing and other leadership positions in early
2008, rounding out its senior management team. The Vein Clinics division met its
goal of three new clinics in 2007, the most recent in Sterling, Virginia on
December 4 and expects to open five additional centers in 2008. Notwithstanding
the incremental investments being made in senior personnel, equipment and new
clinic development, IntegraMed still expects the addition of the Vein Clinics
division to be neutral to slightly accretive during 2008, with greater accretion
in 2009 and beyond.
Cash Flow and Balance Sheet
Operating cash flow was $1.9 million in Q4 2007 and $16 million for the full
year 2007. $6.2 million was invested in fixed assets during 2007 and $28 million
of cash was spent in 2007 on the Vein Clinics and Orlando transactions. The
Company also borrowed $25 million to support these transactions and retire $15.1
million in previously outstanding debt. Reflecting these investments and
borrowing, IntegraMed experienced a net decrease in cash of $8.4 million in 2007
ending the year with cash and equivalents totaling $23.7 million.
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About IntegraMed America, Inc. (www.integramed.com)
IntegraMed America, Inc. is the leading operator of fertility centers and vein
care clinics in the United States. The Company supports its provider networks
with state-of-the art information systems; marketing and payer contracting;
financial planning, reporting and analysis; organizational planning and
development; quality assurance initiatives; human resources administration; and
purchasing services. IntegraMed also offers consumer treatment-financing
programs and operates www.integramed.com, a leading fertility portal.
The IntegraMed Fertility network consists of 29 contracted centers in 96
locations across the United States, including 166 physicians and Ph.D.
scientists. Network membership is limited to one practice per metropolitan area,
yet one of every five IVF procedures in the U.S. is performed in an IntegraMed
fertility practice. The Vein Care network is the leading provider of vein care
services in the US and operates 28 centers in 11 states, principally in the
Midwest and Southeast and operates www.veinclinics.com, a leading vein care
portal.
Statements contained in this press release that are not based on historical
fact, including statements concerning future results, performance, expectations
and expansion of IntegraMed are forward-looking statements that may involve a
number of risks and uncertainties. Actual results may differ materially from the
statements made as a result of various factors, including, but not limited to,
the risks associated with IntegraMed's ability to finance future growth; the
loss of significant business services contract(s); profitability at Reproductive
Science Centers serviced by IntegraMed; changes in insurance coverage,
government laws and regulations regarding health care or managed care
contracting; and other risks, including those identified in the company's most
recent Form 10-K and in other documents filed by IntegraMed with the U.S.
Securities and Exchange Commission. All information in this press release is as
of February 14, 2008 and IntegraMed undertakes no duty to update this
information.
CONTACT:
Investors:
John W. Hlywak, Jr., EVP and CFO Steven Hecht, David Collins
IntegraMed America, Inc. Jaffoni & Collins Incorporated
jhlywak@integramed.com inmd@jcir.com
914-251-4143 212/835-8500
Media and Physicians:
Scott Soifer, VP Marketing and Development
IntegraMed America, Inc.
scott.soifer@integramed.com
914-251-4186
(tables follow)
Page 4 of 7
IntegraMed America, Inc.
Consolidated Statement of Operations
(all amounts in thousands, except per share amounts)
For the For the
three-month period year
ended December 31, ended December 31,
------------------ ------------------
2007 2006 2007 2006
------ ------ ------ ------
(unaudited) (unaudited)
Revenues:
Fertility Centers ................ $ 31,212 $ 28,366 $ 121,078 $ 112,767
Consumer Services ................ 4,481 3,975 16,636 13,671
Vein Clinics ..................... 9,597 -- 14,284 --
--------- --------- --------- ---------
Total Revenues ................... 45,290 32,341 151,998 126,438
--------- --------- --------- ---------
Costs of services and sales:
Fertility Centers ................ 28,748 26,221 111,059 104,357
Consumer Services ................ 3,394 2,839 12,267 9,348
Vein Clinics ..................... 9,145 -- 13,304 --
--------- --------- --------- ---------
Total Cost of Services and Sales . 41,287 29,060 136,630 113,705
--------- --------- --------- ---------
Contribution
Fertility Centers ................ 2,464 2,145 10,019 8,410
Consumer Services ................ 1,087 1,136 4,369 4,323
Vein Clinics ..................... 452 -- 980 --
--------- --------- --------- ---------
Total Contribution ............... 4,003 3,281 15,368 12,733
--------- --------- --------- ---------
General and administrative expenses, .. 2,511 2,296 10,536 9,380
Interest income ....................... (268) (323) (1,256) (1,073)
Interest expense ...................... 531 163 1,136 695
--------- --------- --------- ---------
Total other expenses ............. 2,774 2,136 10,416 9,002
--------- --------- --------- ---------
Income before income taxes ............ 1,229 1,145 4,952 3,731
Income tax provision (1) .............. 365 (488) 1,695 507
--------- --------- --------- ---------
Net income (1) ........................ $ 864 $ 1,633 $ 3,257 $ 3,224
========= ========= ========= =========
Basic and diluted earnings per share:
Basic earnings per share (1) (2) . $ 0.10 $ 0.20 $ 0.39 $ 0.40
========= ========= ========= =========
Diluted earnings per share (1) (2) $ 0.10 $ 0.20 $ 0.39 $ 0.39
========= ========= ========= =========
Weighted average shares - basic (2) ... 8,551 8,111 8,310 8,090
========= ========= ========= =========
Weighted average shares - diluted (2) . 8,643 8,220 8,410 8,194
========= ========= ========= =========
1. Net income for Q4 and the full year 2006 benefited from an $821,000, or
$0.10 per diluted share, reduction in the provision for income taxes caused
principally by the elimination of a valuation allowance on deferred tax
assets.
2. EPS and weighted average share figures reflect the 25% stock split paid May
4, 2007.
Page 5 of 7
INTEGRAMED AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(all amounts in thousands)
(Unaudited)
December 31, December31,
----------- -----------
2007 2006
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 23,740 $ 32,184
Patient and other receivables, net ............................. 5,811 445
Deferred taxes ................................................. 4,460 2,472
Other current assets ........................................... 4,669 2,927
Total current assets ......................................... 38,680 38,028
Fixed assets, net .............................................. 16,912 13,900
Intangible assets, Business Service Rights, net ................ 22,305 22,892
Goodwill ....................................................... 29,059 0
Trademarks ..................................................... 4,492 13
Other assets ................................................... 1,619 689
--------- ---------
Total assets ................................................. $ 113,067 $ 75,522
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................... $ 1,895 $ 1,507
Accrued liabilities ............................................ 16,679 11,850
Current portion of long-term notes payable and other obligations 3,661 1,505
Due to Fertility Medical Practices, net ........................ 9,043 4,299
Shared Risk Revenue patient deposits ........................... 9,668 6,526
--------- ---------
Total current liabilities .................................. 40,946 25,687
Deferred and other tax liabilities ................................ 1,819 1,732
Long-term notes payable and other obligations ..................... 21,799 7,269
--------- ---------
64,564 34,688
Commitments and Contingencies
Shareholders' equity:
Common stock ................................................... 86 81
Capital in excess of par ....................................... 53,890 49,245
Other comprehensive income (loss) .............................. (82) (9)
Treasury Stock ................................................. (165) --
Accumulated deficit ............................................ (5,226) (8,483)
--------- ---------
Total shareholders' equity ................................. 48,503 40,834
--------- ---------
Total liabilities and shareholders' equity ................. $ 113,067 $ 75,522
========= =========
Page 6 of 7
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all amounts in thousands)
(Unaudited)
For the For the
Three-month period Year
ended December 31, ended December 31,
------------------- ------------------
2007 2006 2007 2006
------- -------- ------ -------
Cash flows from operating activities:
Net income ......................................................... $ 864 $ 1,633 $ 3,257 $ 3,224
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .................................... 1,768 1,490 6,450 5,705
Deferred income tax provision .................................... 489 (984) 469 (799)
Deferred or stock based compensation ............................. 200 192 558 492
Changes in assets and liabilities ?
Decrease (increase) in assets, net of assets acquired
from VCA :
Patient and other accounts receivable ......................... 193 (90) (378) 45
Prepaid and other current assets .............................. (1,792) 566 (736) (159)
Other assets .................................................. (944) (15) (122) (99)
(Decrease) increase in liabilities, net of liabilities acquired
from VCA:
Accounts payable .............................................. (418) 742 (271) 590
Accrued liabilities ........................................... 900 2,002 (56) 3,827
Due to Fertility Medical Practices ............................ 715 451 4,744 (650)
Shared Risk Refund and Vein Clinic patient deposits ........... (85) 43 2,041 1,787
------ ------- ------ -------
Net cash provided by operating activities .............................. 1,890 6,030 15,956 13,963
------ ------- ------ -------
Cash flows used in investing activities:
Purchase of business service rights .................................... -- -- (2,653) --
Other Intangibles ...................................................... (36) (12) (40) (12)
Cash paid to purchase VCA, net of cash acquired ........................ (1,967) -- (25,409) --
Purchase of fixed assets and leasehold improvements .................... (2,009) (1,497) (6,222) (3.233)
------ ------- ------ -------
Net cash used in investing activities .................................. (4,012) (1,509) (34,324) (3.245)
------ ------- ------ -------
Cash flows used in financing activities:
Principal repayments on debt ........................................... (31) (256) (15,163) (1,382)
Debt issuance .......................................................... -- -- 25,000 --
Common stock transactions .............................................. 25 120 87 327
------ ------- ------ -------
Net cash provided by (used in) financing activities .................... (6) (136) 9,924 (1,055)
------ ------- ------ -------
Net increase (decrease) in cash ........................................ (2,128) 4,385 (8,444) 9,663
Cash at beginning of period ............................................ 25,868 27,799 32,184 22,521
------ ------- ------ -------
Cash at end of period .................................................. 23,740 32,184 23,740 32,184
====== ======= ====== =======
Supplemental Information:
Interest paid ..................................................... 710 169 1,024 695
Income taxes paid ................................................. 488 80 1,130 327
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