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Conference Call: Today, Thursday, August 6, 2009 at 10:00 a.m. EDT
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Dial-in Numbers: 866-395-2657 or 706-902-0717 (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 13
Conference ID#: 20509862
INTEGRAMED(R) REPORTS Q2 EPS OF $0.13 AS
NET INCOME ROSE 23% ON 13% REVENUE GAIN
PURCHASE, NEW YORK -- August 6, 2009 -- IntegraMed America, Inc. (NASDAQ: INMD),
the nation's leading provider of specialty healthcare services in emerging,
technology-focused segments, today announced its Q2 2009 revenue increased 13%
to $56.1 million, contribution increased 21% to $5.5 million, and net income
rose 23% to $1.1 million, or $0.13 per share on a diluted basis, versus Q2 2008.
IntegraMed's strong Q2 2009 performance reflects continued consumer demand
across IntegraMed's Fertility Centers, Consumer Services and Vein Clinics
segments as well as improved contribution margins from Fertility Centers and
Vein Clinics.
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Summary Financial Results
(in thousands, except per share data)
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Three Three Six Months Six Months
Months Months % Ended Ended %
Ended Ended Change 6/30/09 6/30/08(1) Change
6/30/09 6/30/08(1)
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Revenue:
Fertility Centers $37,290 $35,051 +6% $73,574 $67,797 +9%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Consumer Services 5,004 4,612 +8% 10,230 8,635 +18%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Vein Clinics 13,821 10,062 +37% 24,667 18,904 +30%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Total Revenue $56,115 $49,725 +13% $108,471 $95,336 +14%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Contribution:
Fertility Centers 3,057 2,570 +19% 5,699 4,874 +17%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Consumer Services 1,161 1,255 -7% 2,674 2,320 +15%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Vein Clinics 1,282 713 +80% 2,036 1,035 +97%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Total contribution $5,500 $4,538 +21% $10,409 $8,229 +26%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
G&A Costs $3,431 $2,735 +25% $6,569 $5,098 +29%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Net Interest expense 202 297 -32% 423 576 -27%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Income before Inc Taxes 1,867 1,506 +24% 3.417 2,555 +34%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Income Taxes 753 602 +25% 1,382 1,030 +34%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Net income $1,114 $904 +23% $2,035 $1,525 +33%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
EPS $0.13 $0.10 +30% $0.23 $0.18 +28%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
Diluted shares 8,831 8,684 +2% 8,829 8,652 +2%
- ---------------------------------- ----------- ------------- ----------- ------------- ------------ ------------
(1) As noted in our 2008 Form 10-K, IntegraMed's 2008 results have been restated
to reflect an accounting policy change implemented in Q1 2009 with respect to
the timing of revenue recognition for the Attain IVF program within the
Consumer Services Division.
IntegraMed's Chief Executive Officer, Jay Higham, commented, "IntegraMed
delivered solid second-quarter results despite the ongoing economic weakness.
Our Vein Clinics segment continued to post strong top- and bottom-line growth,
confirming healthy demand for our vein care services as well as our strategy to
diversify our business into this specialty in 2007. Our Fertility Center
business also contributed to our improved Q2 performance, as we were able to
leverage the segment's modest top-line growth directly to the bottom line.
"We have, however, recently seen a slight deceleration in Fertility Center
revenue growth, reflecting both the impact of the economy as well as demographic
trends we have noted for several years. We also saw some softening in our
Consumer Services segment as we experienced a mild decline in Attain(TM) IVF
Program volume, largely due to the impact of our move to new third-party
provider of consumer credit for this program. We are working to address this
situation and are confident that we will be able to improve the availability and
cost of third-party patient financing over the coming months.
"Looking across the business, we remain bullish on our prospects and committed
to expanding our fertility business via acquisitions and growing our Vein
Clinics business via new clinic openings. The silver lining of the current
environment is that it has helped expand our base of dialogues with potential
acquisition targets in fertility, and we are achieving a range of cost benefits
and concessions in the build-out of new Vein Clinics."
John Hlywak, CFO of IntegraMed, added, "We are pleased to report that our
ongoing cost management efforts have reduced operating expenses as a percent of
sales by 70 basis points for the quarter, compared to the same quarter in the
prior year. Additionally, we are continuing to see the benefit from the
strategic investments made in our personnel and business infrastructure over the
past year as total contribution grew at a faster rate than revenue. While many
of our investments are reflected in ongoing G&A, which increased by 25% over
last year, we held our G&A levels to 62% of contribution, roughly in line with
last year."
Fertility Centers
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Q2 2009 Q2 2008 Change % Change
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Revenue: $37.3M $35.1M + $2.2M +6%
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Operating Income: $3.1M $2.6M +$0.5M +19%
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New Patient Visits: 7,087 6,516 +571 +9%
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IVF Cycles: 3,547 3,430 117 +3%
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Fertility Center revenue grew 6% in Q2 `09 versus Q2 '08 and increased 3% versus
Q1 '09. The year-over-year improvement was mainly driven by an increase in new
patient visits at existing centers as well as from the contribution of revenue
from the addition of two new centers - Southeastern Fertility in April 2008 and
Arizona Reproductive Medical Associates in July 2008. The growth in new patient
visits in Q2 '09 continued to exceed the growth rate of the overall industry,
though it did reflect some moderation in demand growth that is attributable to
the prolonged recession. These factors served to more than offset a reduction in
business at one of our top fertility centers as a result of a previously
disclosed contract loss with one of the center's third-party payers.
Fertility Center contribution margin increased to 8.2% in Q2 '09 compared to
7.3% in Q2 '08, reflecting aggressive cost controls as well as growing operating
leverage obtained from recently added centers.
IntegraMed has the most extensive consolidated network of fertility centers in
the U.S., spanning across 57 locations in 13 major markets. IntegraMed continues
to target the acquisition of one or two mid-sized fertility center contracts
each year and is currently in dialogue with a range of prospective centers and
remains confident in its ability to achieve this goal.
Consumer Services (Attain IVF Program)
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Q2 2009 Q2 2008 Change % Change
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Revenue: $5.0M $4.6M +$0.4M +8%
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Operating Income: $1.2M $1.3M -$0.1M -7%
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Applications: 519 546 -27 -5%
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Enrollments: 239 280 -41 -15%
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Consumer Services revenue, which principally reflects revenue from the company's
Attain In Vitro Fertilization (IVF) program, grew by 8% in Q2 '09 versus Q2 '08
and declined 4% versus Q1 `09. Contribution margin in the Consumer Services
sector declined to 23% in Q2 '09 versus 27% in Q2 '08 and 29% in Q1 '09. The
decrease in contribution margin reflects a shift in revenue timing related to
higher than normal pregnancy rates during Q1 that affected revenue levels in Q2
2009. Looking at segment performance on a six-month basis, revenue and
contribution margin were on trend.
The results reflect a relatively steady level of outcomes and a slight decline
in success rates versus the year ago period. A transition during Q2 '09 to a new
third-party lender for Attain IVF patients and a related tightening of lending
standards and higher interest rates caused a decline in new patient enrollments
as well as a reduction in the ratio of enrolled patients to applications from
51% in Q2 '08 to 46% in Q2 `09. IntegraMed is working to improve the
availability and cost of consumer-lending options for Attain IVF program
patients. However, the credit environment remains challenging and will likely
have an impact on program volume in the coming months for the approximately 30%
of patients who seek such financing.
The Attain IVF Program facilitates patients in managing the financial risk
associated with embarking on a series of IVF treatments by offering refunds of
70% to 100% of the fees in the event their treatments do not result in a take
home baby. The multiple-treatment package and refund provisions of this unique
program are an important competitive advantage for IntegraMed affiliated
centers.
IntegraMed provides its Attain IVF program through the Fertility Center Division
as well as a network of 22 affiliate providers with 52 locations in 29 states.
In addition to supporting the marketing and patient recruitment efforts of its
affiliate providers, IntegraMed targets the addition of four new affiliates to
its network during 2009.
Vein Clinics (VCA)
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Q2 2009 Q2 2008 Change % Change
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Revenue: $13.8M $10.1M +$3.7M +37%
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Operating Income: $1.3M $0.7M +$0.6M +80%
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New Consultations: 4,585 3,423 +1,162 +34%
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First Leg Starts: 2,085 1,573 +512 +33%
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The strong growth in Vein Clinics revenue reflected the benefit of patient
marketing programs, robust patient demand, improving clinic performance and new
clinic openings over the past year. Contribution margin from the Vein Clinics
segment increased to 9% in Q2 `09 from 7% in Q2 '08 and Q1 '09, demonstrating
the business's growing operating leverage and improvement in patient yield
management wherein average revenue per patient increased by 5% year over year.
IntegraMed has opened two new vein clinics in 2009, bringing the total number of
vein clinics to 34. IntegraMed targets the opening of two or three new VCA
locations in New Jersey and Maryland during the balance of the year.
VCA has more than 25 years of experience specializing in all aspects of vein
disease. VCA uses minimally invasive techniques for diagnosing and treating
patients' chronic vein problems. All procedures are performed in
state-of-the-art facilities, requiring no hospitalization or surgery and
allowing patients to be back on their feet the same day.
Cash Flow and Balance Sheet
IntegraMed made further progress in revenue cycle management in its fertility
and vein clinics segments, reducing consolidated days sales outstanding (DSO) by
3.9 days (9.7%) compared to Q2 `08. The Company achieved a net increase in cash
of $3.2 million in the first half of 2009 compared to a $1.5 million decrease in
cash in the same 2008 period. Cash and cash equivalents at June 30, 2009 were
$31.5 million compared to $22.3 million a year ago and $28.3 million at December
31, 2008. IntegraMed expects to continue building cash from operations for the
remainder of the year.
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:
currently the fertility and vein care segments. IntegraMed 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.
IntegraMed is the leading provider of fertility services in the US through its
fertility network of 33 contracted centers with 109 locations in 13 states.
Nearly one of every four IVF procedures in the U.S. is performed in an
IntegraMed fertility practice. The IntegraMed Vein Care network is the leading
provider of varicose vein care services in the US and operates 34 centers in 13
states, principally in the Midwest and Southeast.
Please visit www.integramed.com for investor background
www.integramedfertility.com, a leading fertility portal or www.veinclinics.com,
a leading vein care portal, 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 identify, consummate and finance future growth,
including larger-scale acquisitions; 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 August 6, 2009 and
IntegraMed undertakes no duty to update this information.
(tables follow)
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(all amounts in thousands, except per share amounts)
(Unaudited)
For the For the
three-month period six-month period
ended June 30, ended June 30,
------------------- ------------------
2009 2008 2009 2008
------- ------ ------ ------
Revenue
Fertility Centers .............................. $ 37,290 $ 35,051 $ 73,574 $ 67,797
Consumer Services .............................. 5,004 4,612 10,230 8,635
Vein Clinics ................................... 13,821 10,062 24,667 18,094
--------- --------- --------- ---------
Total Revenue .................................. 56,115 49,725 108,471 95,396
--------- --------- --------- ---------
Costs of services and sales
Fertility Centers .............................. 34,233 32,481 67,875 62,923
Consumer Services .............................. 3,843 3,357 7,556 6,315
Vein Clinics ................................... 12,539 9,349 22,631 17,869
--------- --------- --------- ---------
Total Cost of Services and Sales ............... 50,615 45,187 98,062 87,107
--------- --------- --------- ---------
Contribution
Fertility Centers .............................. 3,057 2,570 5,699 4,874
Consumer Services .............................. 1,161 1,255 2,674 2,320
Vein Clinics ................................... 1,282 713 2,036 1,035
--------- --------- --------- ---------
Total Contribution ............................. 5,500 4,538 10,409 8,229
--------- --------- --------- ---------
General and administrative expenses ................. 3,431 2,735 6,569 5,098
Interest income ..................................... (67) (112) (143) (273)
Interest expense .................................... 269 409 566 849
--------- --------- --------- ---------
Total other expenses ........................... 3,633 3,032 6,992 5,674
--------- --------- --------- ---------
Income before income taxes .......................... 1,867 1,506 3,417 2,555
Income tax provision ................................ 753 602 1,382 1,030
--------- --------- --------- ---------
Net income .......................................... $ 1,114 $ 904 $ 2,035 $ 1,525
========= ========= ========= =========
Basic and diluted earnings per share of Common Stock:
Basic earnings per share ....................... $ 0.13 $ 0.11 $ 0.23 $ 0.18
========= ========= ========= =========
Diluted earnings per share ..................... $ 0.13 $ 0.10 $ 0.23 $ 0.18
========= ========= ========= =========
Weighted average shares - basic ..................... 8,772 8,600 8,797 8,570
========= ========= ========= =========
Weighted average shares - diluted ................... 8,831 8,684 8,829 8,652
========= ========= ========= =========
(more)
INTEGRAMED AMERICA, INC.
CONSOLIDATED BALANCE SHEETS
(all amounts in thousands)
June 30, December 31,
2009 2008
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ASSETS (unaudited)
Current assets:
Cash and cash equivalents ...................................... $ 31,454 $ 28,275
Patient and other receivables, net ............................. 7,646 6,681
Deferred taxes ................................................. 4,352 5,744
Other current assets ........................................... 6,463 6,468
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Total current assets ......................................... 49,915 47,168
Fixed assets, net .............................................. 17,328 16,618
Intangible assets, Business Service Rights, net ................ 21,308 21,956
Goodwill ....................................................... 29,478 29,478
Trademarks ..................................................... 4,442 4,442
Other assets ................................................... 3,274 1,781
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Total assets ................................................. $ 125,745 $ 121,443
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ............................................... $ 1,864 $ 2,853
Accrued liabilities ............................................ 17,407 16,676
Current portion of long-term notes payable and other obligations 11,329 11,351
Due to Fertility Medical Practices, net ........................ 10,141 6,354
Attain IVF and other patient deposits .......................... 14,432 13,892
--------- ---------
Total current liabilities .................................. 55,173 51,126
Deferred tax liabilities .......................................... 271 696
Long-term notes payable and other obligations ..................... 16,836 18,868
--------- ---------
72,280 70,690
Commitments and Contingencies
Shareholders' equity:
Common stock ................................................... 88 87
Capital in excess of par ....................................... 55,702 54,943
Other comprehensive (loss) .................................... (293) (375)
Treasury stock ................................................. (375) (211)
Accumulated deficit ............................................ (1,657) (3,691)
--------- ---------
Total shareholders' equity ................................. 53,465 50,753
--------- ---------
Total liabilities and shareholders' equity ................. $ 125,745 $ 121,443
========= =========
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,
----------------- -----------------
2009 2008 2009 2008
------ ------ ------ ------
(unaudited) (unaudited)
Cash flows from operating activities:
Net income ....................................................... $ 1,114 $ 904 $ 2,034 $ 1,525
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization .................................. 1,795 1,828 3,598 3,623
Deferred income tax provision .................................. (247) (35) (590) (284)
Deferred compensation .......................................... 355 217 739 378
Changes in assets and liabilities ? Decrease (increase) in assets:
Patient and other accounts receivable ....................... (385) (202) (965) (885)
Other current assets ........................................ 1,336 1,399 5 351
Other assets ................................................ (152) 208 13 (180)
(Decrease) increase in liabilities:
Accounts payable ............................................ 49 1,052 (989) 960
Accrued liabilities ......................................... 2,082 3,061 567 (195)
Due to medical practices .................................... 2,810 1,996 3,787 (1,718)
Attain IVF patient deposits ................................. 565 889 540 1,078
-------- -------- -------- --------
Net cash provided by operating activities ............................ 9,322 11,317 8,739 4,653
-------- -------- -------- --------
Cash flows used in investing activities:
Purchase of business service rights .................................. -- (950) -- (950)
Cash paid to purchase VCA, net of cash acquired ...................... -- (78) -- (119)
Other intangibles .................................................... -- (19) -- (94)
Purchase of fixed assets and leasehold improvements .................. (1,094) (2,377) (3,660) (3,608)
-------- -------- -------- --------
Net cash used in investing activities ................................ (1,094) (3,424) (3,660) (4,771)
-------- -------- -------- --------
Cash flows used in financing activities:
Proceeds from issuance of debt ....................................... -- 380 -- 380
Principle repayments on debt ......................................... (1,008) (895) (1,921) (1,816)
Common stock transactions ............................................ 185 (536) 21 85
-------- -------- --------
Net cash used in financing activities ................................ (823) (1,051) (1,900) (1,351)
-------- -------- -------- --------
Net increase in cash and cash equivalents ............................ 7,405 6,842 3,179 (1,469)
Cash at beginning of period .......................................... 24,049 15,429 28,275 23,740
-------- -------- -------- --------
Cash at end of period ................................................ $ 31,454 $ 22,271 $ 31,454 $ 22,271
======== ======== ======== ========
Supplemental Information:
Interest paid ................................................... 223 106 520 472
Income taxes paid ............................................... 930 124 3,593 736
CONTACT:
Investors: Media/Investors:
John W. Hlywak, Jr., EVP and CFO Norberto Aja, 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, EVP Administration, Strategy and Development
IntegraMed America, Inc.
scott.soifer@integramed.com
914-251-4186
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