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Conference call: Today, Thursday, July 31, 2008 at 10:00 a.m. EDT
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Dial-in numbers: 800-374-0146 or 706-634-1307 (international)
Webcast / Replay URL: www.integramed.com or www.earnings.com
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Phone Replay: 800-642-1687 or 706-645-9291 through August 6
Conference ID#: 57025445
IntegraMed(R) Q2 Revenue Grows 46%, Drives 19% Rise in Net Income
PURCHASE, NEW YORK -- July 31, 2008 -- IntegraMed America, Inc. (NASDAQ: INMD),
the nation's leading provider of specialty healthcare services in emerging,
technology-focused segments, today announced results for the second quarter and
six months ended June 30, 2008. IntegraMed's results demonstrate continuing
growth and margin improvement in its three business units - Fertility Centers,
Consumer Services and Vein Clinics.
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Summary Financial Results
(in thousands, except per share data)
Three Three Six Six
Months Months Months Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Fertility Centers $35,051 $29,727 +18% $67,797 $58,819 +15%
Consumer Services 4,707 4,285 +10% 8,772 7,577 +16%
Vein Clinics 10,062 - 18,904 - -
Total Revenues $49,820 $34,012 +46% $95,473 $66,396 +44%
Contribution:
Fertility Centers 2,570 2,481 +4% 4,874 4,751 +3%
Consumer Services 1,364 1,247 +9% 2,485 2,072 +20%
Vein Clinics 713 - 1,035 - -
Total contribution $4,647 $3,728 +25% $8,394 $6,823 +23%
G&A Costs $2,735 $2,690 +2% $5,098 $5,086 +0%
Net Interest exp./(inc.) 297 (201) +248% 576 (417) +238%
Income before Inc Taxes 1,615 1,239 +30% 2,720 2,154 +26%
Taxes 644 422 +53% 1,094 722 +52%
Net income $ 971 $817 +19% $1,626 $1,432 +14%
EPS (1) $ 0.11 $ 0.10 +10% $ 0.19 $0.17 +12%
Diluted shares (1) 8,707 8,253 +6% 8,675 8,246 +5%
(1) EPS and weighted average share figures reflect a 25% stock split paid May
4, 2007.
Revenues, contribution, and net income for Q2 2008 increased over Q1 2008 and
last year's second quarter as the Company continued the implementation of its
previously announced strategic program to make additional investments to better
position itself for accelerated long-term growth.
IntegraMed was successful in implementing operating efficiencies on the G&A
line, as G&A expense as a percentage of total contribution was 59% in Q2 2008,
versus 63% of total contribution in Q1 2008 and 72% of total contribution in Q2
2007.
IntegraMed's improved Q2 2008 bottom-line results versus the year ago period
were achieved despite a $498,000 ($0.03 per share after tax) negative swing in
net interest income/expense as a result of higher debt levels from the Vein
Clinics of America (VCA) acquisition and lower rates of return on investable
cash. Additionally, the company's Q2 2008 results reflect an increase in its
effective tax rate to 40% compared to a 34% rate last year, reflecting the
absence of any significant tax-exempt earnings in 2008 as attractive, liquid,
tax-exempt income investments have not been available in the volatile credit
markets of today. (Had taxes remained at the 2007 rate, resulting EPS would have
been $0.01 higher.) Fully diluted share count increased by 6% over last year,
mostly reflecting stock issued as part of the VCA acquisition.
Fertility Centers
IntegraMed's managed network of 32 fertility centers is the largest consolidated
group of its kind. These centers continue to achieve above-industry growth
rates. Same center new patient visit volume was up 15.3% and same center revenue
increased 9.8% quarter over quarter. Fertility Centers Q2 and YTD 2008
contribution rose slightly to $2.6 and $4.9 million, respectively, over prior
year periods. Prior to the aforementioned investments in divisional expenses,
the Fertility Centers contribution would have increased 13% as compared to Q2
2007. This reflects continued strong demand for fertility services, improved
margins, and the addition of the Orlando fertility center in September 2007.
In addition, second quarter results do not fully incorporate the anticipated
benefit from two recent Fertility Center contract acquisitions in Charleston and
Phoenix, acquired in late April and July 2008, respectively, as it's too early
in the transition to show any meaningful contribution from these transactions.
IntegraMed has met the upper range of its forecast of 1-2 new Fertility Center
contract acquisitions for 2008 and is reviewing additional opportunities.
Consumer Services
Applications for the Shared Risk Refund program rose 23% and enrollments climbed
16% in Q2 2008. Consumer Services Q2 2008 contribution margin of 29% equaled the
level achieved in Q2 2007 and rose from 27.6% in Q1 2008. Pregnancy success
rates in Q2 2008 improved 16% over the prior year results and remain above the
national average.
During the second quarter, IntegraMed announced that it has expanded the scope
of services available for donor egg recipients under its Shared Risk(R) Refund
program for in vitro fertilization (IVF). Donor egg recipients enrolling in the
program now have the option to include additional fees for egg donor
recruitment, screening, and compensation, as well as donor medications,
anesthesia services, and the cryopreservation and storage of embryos. Typically,
almost half of the total IVF expense for donor egg recipients is due to such
out-of-pocket expenditures. As a result of these changes, donor treatments
represent 20.3% of total Shared Risk enrollments year to date versus 16.7%
enrollments in the first half of 2007.
Also in the second quarter, IntegraMed announced two additions to its Affiliate
fertility provider network: the OU Physicians Reproductive Health center in
Oklahoma City, Oklahoma and the University of North Carolina School of
Medicine's Department of Obstetrics and Gynecology in Chapel Hill, NC. Through
the first half of 2008, IntegraMed has added three Affiliates to its network,
making it solidly on track to reach its stated annual goal of four.
Vein Clinics
The integration of the Vein Clinics business unit is progressing on schedule and
nearing completion. IntegraMed has installed new revenue cycle management,
financial management, marketing and sales and regional management infrastructure
into the business. While these planned enhancements have lowered contribution
from this business over the short term, they have improved the capability to
grow this business in a controlled and predictable manner, and bottom line
financial performance is already improving. Revenue increased by 14% and
contribution improved by 121% compared to the seasonally slower Q1 of this year.
These results demonstrate the strong leverage available in this business.
Results for the quarter and year to date period were also impacted by two new
vein clinics that opened in the second quarter, one in Alexandria, VA and the
second in Marietta, GA., bringing the total of new vein clinics opened this year
to three. One more opening is planned for later this year. The Company
anticipates opening 5-6 new clinics in 2009.
Cash Flow and Balance Sheet
IntegraMed increased cash by $6.8 million in the second quarter of 2008 ending
the period with cash and equivalents totaling $22.3 million. Cash provided by
operating activities was $11.0 million in Q2 2008 compared to $5.1 million in Q2
2007. The improved cash position over Q1 2008 was the result of better timing of
payments to fertility practices, increases in Shared Risk Refund deposits and
the fact that some normal Q2 disbursements had been accelerated to Q1 2008.
Management Comments
"Our business performance and operating metrics continue to show that the
company's services are in demand in a challenging economic environment,"
commented IntegraMed CEO Jay Higham. "We have never noted any correlation
between demand for fertility services and the economic cycle previously. We
believe the main reasons for this are because couples in need of fertility care
do not view required medical treatment as discretionary and that 70% of our
fertility patient volume comes from patients with insurance. Also, in the vein
care business, there has been a complete transformation of that business over
the last several years from 80% self-pay to 80% insurance," continued Mr.
Higham.
"We are satisfied with the progress in the Vein Clinic division and it's
integration into IntegraMed, which we anticipate will be largely complete by the
end of 2008.
"As fertility practices nationwide are increasingly searching for ways to
increase patient volumes and productivity, more and more practices are seeking
IntegraMed's services to help foster growth and drive new efficiencies. The
inquiries from practices seeking to partner with us in our Fertility Center
division are growing, and as the preeminent company in the fertility industry,
we are in a unique position to capitalize on them. Accordingly, we are reviewing
these opportunities and are very optimistic about the growth potential of our
fertility division.
"Escalating enrollments in our Shared Risk Refund consumer financing program
demonstrate expanding consumer interest across the country. In Q2, we expanded
the program's scope of services available for donor egg recipients and believe
this latest enhancement makes the Shared Risk Refund Program even more
attractive and will help drive the growth of the program," concluded Mr. Higham.
About IntegraMed America, Inc.
IntegraMed America, Inc. is a leading provider of specialty health care services
in emerging, technology-driven, niche segments of the health care market. The
Company currently operates in such markets - the fertility and varicose vein
care segments. The Company supports its provider networks with clinical and
business information systems, marketing and sales, facilities and operations
management, finance and accounting, human resources, legal services, risk
management and quality assurance. IntegraMed also offers treatment-financing
programs for self-pay patients. Please visit www.integramed.com for more
information.
The IntegraMed Fertility network consists of 32 contracted centers in 104
locations across the United States, including 175 physicians and Ph.D.
scientists. Nearly one of every four IVF procedures in the U.S. is performed in
an IntegraMed fertility practice. The IntegraMed Vein Clinic network is the
leading provider of varicose vein care services in the US and operates 31
centers in 11 states, principally in the Midwest and Southeast. Please visit
www.veinclinics.com for more information.
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; 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 July 31, 2008 and IntegraMed undertakes no duty to update this
information.
CONTACT:
Investors: Media/Investors:
John W. Hlywak, Jr., EVP and CFO Steven Hecht, David Collins
IntegraMed America, Inc. Jaffoni & Collins Incorporated
jhlywak@integramed.com inmd@jcir.com
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914-251-4143 212/835-8500
Physicians:
Scott Soifer, Senior VP, Administration and Development
IntegraMed America, Inc.
scott.soifer@integramed.com
914-251-4186
(tables follow)
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(all amounts in thousands, except per share amounts)
For the For the
three-month period six-month period
ended June 30, ended June 30,
------------------- -------------------
2008 2007 2008 2007
--------- ------- ------ --------
(unaudited) (unaudited)
Revenues
Fertility Centers .............................. $ 35,051 $ 29,727 $ 67,797 $ 58,819
Consumer Services .............................. 4,707 4,285 8,772 7,577
Vein Clinics ................................... 10,062 -- 18,904 --
-------- -------- -------- --------
Total Revenues ................................. 49,820 34,012 95,473 66,396
-------- -------- -------- --------
Costs of services and sales
Fertility Centers .............................. 32,481 27,246 62,923 54,068
Consumer Services .............................. 3,343 3,038 6,287 5,505
Vein Clinics ................................... 9,349 -- 17,869 --
-------- -------- -------- --------
Total Cost of Services and Sales ............... 45,173 30,284 87,079 59,573
-------- -------- -------- --------
Contribution
Fertility Centers .............................. 2,570 2,481 4,874 4,751
Consumer Services .............................. 1,364 1,247 2,485 2,072
Vein Clinics ................................... 713 -- 1,035 --
-------- -------- -------- --------
Total Contribution ............................. 4,647 3,728 8,394 6,823
-------- -------- -------- --------
General and administrative expenses ................. 2,735 2,690 5,098 5,086
Interest income ..................................... (68) (359) (229) (694)
Interest expense .................................... 365 158 805 277
-------- -------- -------- --------
Total other expenses ........................... 3,032 2,489 5,674 4,669
-------- -------- -------- --------
Income before income taxes .......................... 1,615 1,239 2,720 2,154
Income tax provision ................................ 644 422 1,094 722
-------- -------- -------- --------
Net income .......................................... $ 971 $ 817 $ 1,626 $ 1,432
======== ======== ======== ========
Basic and diluted earnings per share of Common Stock:
Basic earnings per share ....................... $ 0.11 $ 0.10 $ 0.19 $ 0.18
======== ======== ======== ========
Diluted earnings per share ..................... $ 0.11 $ 0.10 $ 0.19 $ 0.17
======== ======== ======== ========
Weighted average shares - basic ..................... 8,623 8,155 8,593 8,147
======== ======== ======== ========
Weighted average shares - diluted ................... 8,707 8,253 8,675 8,246
======== ======== ======== ========
(more)
INTEGRAMED AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(all amounts in thousands)
(Unaudited)
June 30, December 31,
2008 2007
-------- -----------
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 22,271 $ 23,740
Patient and other receivables, net ............................. 6,396 5,511
Deferred taxes ................................................. 3,335 4,460
Other current assets ........................................... 5,379 4,669
--------- ---------
Total current assets ......................................... 37,381 38,380
Fixed assets, net .............................................. 17,545 16,912
Intangible assets, Business Service Rights, net ................ 22,607 22,305
Goodwill ....................................................... 29,478 29,359
Trademarks ..................................................... 4,586 4,492
Other assets ................................................... 1,799 1,619
--------- ---------
Total assets ................................................. $ 113,396 $ 113,067
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................... $ 2,855 $ 1,895
Accrued liabilities ............................................ 16,456 16,679
Current portion of long-term notes payable and other obligations 3,778 3,661
Due to Fertility Medical Practices, net ........................ 7,325 9,043
Shared Risk Revenue patient deposits ........................... 10,609 9,668
--------- ---------
Total current liabilities .................................. 41,023 40,946
Deferred tax liabilities .......................................... 1,535 1,819
Long-term notes payable and other obligations ..................... 20,385 21,799
--------- ---------
62,943 64,564
Commitments and Contingencies
Shareholders' equity:
Common stock ................................................... 87 86
Capital in excess of par ....................................... 54,399 53,890
Other comprehensive income (loss) .............................. (221) (82)
Treasury stock ................................................. (212) (165)
Accumulated deficit ............................................ (3,600) (5,226)
--------- ---------
Total shareholders' equity ................................. 50,453 48,503
--------- ---------
Total liabilities and shareholders' equity ................. $ 113,396 $ 113,067
========= =========
(more)
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(all amounts in thousands)
For the For the
Three-month period Six-month period
ended June 30, ended June 30,
------------------- -------------------
2008 2007 2008 2007
-------- ------ ------- -------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income ....................................................... $ 971 $ 817 $ 1,626 $ 1,432
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .................................. 1,828 1,509 3,623 3,017
Deferred income tax provision .................................. (35) -- (284) (20)
Deferred compensation .......................................... 217 115 378 225
Changes in assets and liabilities ? Decrease (increase) in assets:
Patient and other accounts receivable ....................... (202) 143 (885) 25
Prepaids and other current assets ........................... 1,441 466 (415) 324
Other assets ................................................ (100) (24) (180) 38
(Decrease) increase in liabilities:
Accounts payable ............................................ 1,052 (35) 960 (745)
Accrued liabilities ......................................... 3,047 1,101 (223) (378)
Due to medical practices .................................... 1,996 613 (1,718) 1,534
Shared Risk Refund patient deposits ......................... 794 405 941 1,951
-------- -------- -------- --------
Net cash provided by operating activities ............................ 11,009 5,110 4,653 7,403
-------- -------- -------- --------
Cash flows used in investing activities:
Purchase of business service rights .................................. (950) (500) (950) 500
Cash paid to purchase VCA, net of cash acquired ...................... (78) -- (119) --
Other intangibles .................................................... (19) (37) (94) 37
Purchase of fixed assets and leasehold improvements .................. (2,377) (944) (3,608) (2,094)
-------- -------- -------- --------
Net cash used in investing activities ................................ (3,424) (1,481) (4,771) (2,631)
-------- -------- -------- --------
Cash flows used in financing activities:
Proceeds from issuance of debt ....................................... 380 -- 380 --
Principle repayments on debt ......................................... (905) (376) (1,816) (751)
Common stock transactions ............................................ (228) 18 85 62
-------- -------- -------- --------
Net cash used in financing activities ................................ (753) (358) (1,351) (689)
-------- -------- -------- --------
Net increase in cash ................................................. 6,832 3,271 1,469 4,083
Cash at beginning of period .......................................... 15,439 32,996 23,740 32,184
-------- -------- -------- --------
Cash at end of period ................................................ $ 22,271 $ 36,267 $ 22,271 $ 36,267
======== ======== ======== ========
Supplemental Information:
Interest paid ................................................... 106 144 472 263
Income taxes paid ............................................... 124 192 736 517
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