IntegraMed® Q2 Revenue Grew 10.3% to $76.2M

PURCHASE, N.Y.--(BUSINESS WIRE)--

IntegraMed America, Inc. INMD, a leader in developing, marketing and managing specialty healthcare facilities in the fertility and vein care markets, announced today results for the second quarter and the six months ended June 30, 2012. Second quarter and six months 2012 results include pre-tax costs of approximately $1.5 million (approximately $1.1 million after tax) associated with the pending acquisition of IntegraMed by affiliates of Sagard Capital Partners, L.P. Results in the year-ago periods include a pre-tax medical malpractice settlement of $1.65 million (approximately $1.0 million after tax).

Summary Financial Results (in thousands, except per share data)
			Three			Three						Six			Six
			Months			Months			%			Months			Months			%
			Ended			Ended			Change			Ended			Ended			Change
			6/30/12			6/30/11						6/30/12			6/30/11
Revenues:
Attain Fertility Centers			$ 53,131			$ 49,653			7.0%			$ 104,388			$ 98,251			6.3%
Vein Clinics			23,060			19,398			18.9%			42,629			35,059			21.6%
Total Revenues			$ 76,191			$ 69,051			10.3%			$ 147,017			$ 133,310			10.3%
Operating Income:
Attain Fertility Centers			4,594			4,172			10.1%			8,863			8,606			3.0%
Vein Clinics			1,068			1,192			(10.4)%			1,919			1,441			33.2%
Total Operating Income			$ 5,662			$ 5,364			5.6%			$ 10,782			$ 10,047			7.3%
Corporate G&A Costs (1)			$ 4,537			$ 3,001			51.2%			$ 7,422			$ 6,042			22.8%
Legal Settlement (2)			$ 0.0			$ 1,650			nm			$ 0.0			$ 1,650			nm
Net Interest Expense			60			83			(27.7)%			123			177			(30.5)%
Income before Inc. Taxes			1,065			630			69.1%			3,238			2,178			48.7%
Income Taxes			589			282			108.9%			1,454			872			66.7%
Net income			$ 476			$ 348			36.8%			$ 1,784			$ 1,306			36.6%
Diluted EPS			$ 0.04			$ 0.03			33.3%			$ 0.15			$ 0.11			36.4%
Diluted Shares			12,053			11,878			1.5%			12,037			11,873			1.4%
Adjusted EBITDA (3)			$ 3,682			$ 3,211			14.7%			$ 8,337			$ 7,166			16.3%

(1) Included in the 2012 Q2 and six months G&A expenses are approximately $1.5 million in pre-tax costs related to the pending acquisition of IntegraMed by affiliates of Sagard Capital Partners, L.P.

(2) Pre-tax provision reflects IntegraMed's portion of a medical malpractice settlement, net of insurance coverage and Partner physician contributions.

(3) IntegraMed uses the term "Adjusted EBITDA" when reporting financial results in accordance with SEC rules regarding the use of financial measures not calculated in accordance with generally accepted accounting principles (GAAP). Adjusted EBITDA is used as a management tool to measure and monitor financial performance, and certain of covenants in the Company's credit facility are tied to Adjusted EBITDA. While providing useful information, Adjusted EBITDA should not be considered in isolation as a measure of financial performance under GAAP. Investors should be aware that Adjusted EBITDA may not be comparable to similarly titled measures presented by other companies and comparisons could be misleading unless all companies and analysts calculate this measure in the same fashion. A reconciliation to Adjusted EBITDA is provided below.

IntegraMed President and CEO, Jay Higham, commented, “Our Q2 and first half results continue to reflect overall strength across the business on both the top and bottom line. The Q2 revenue improvement was fueled by contributions from both mature and new vein clinics as well as from a solid performance in our Attain Fertility Centers segment, which achieved a modest increase in IVF Cycles volume and a double-digit increase in pregnancies in our Attain IVF Program. Excluding non-recurring acquisition-related costs, we were able to hold corporate G&A expenses roughly in line with the year ago period. Excluding deal and litigation costs in the second quarters of 2012 and 2011, respectively, we achieved solid net income and EPS gains year over year.”

Attain Fertility Centers Division

			Q2 2012			Q2 2011			Change			% Change
Revenue:			$53.1M			$49.7M			$3.4M			7.0%
Operating Income:			$4.6M			$4.2M			$0.4M			10.1%
Fertility Partner Data:
New Patient Visits:			7,340			7,458			(118)			(1.6)%
IVF Cycles:			4,013			3,886			127			3.3%
IUI Cycles:			6,445			6,410			35			0.5%
Attain IVF Program Data:
Applications:			603			719			(116)			(16.1)%
Enrollments:			403			457			(54)			(11.8)%
Pregnancies:			311			269			42			15.6%

Fertility Centers' revenue reflected the benefit of new partner center agreements in North Carolina and Florida that were completed in the first half of 2012. Key fertility center performance metrics (including New Patient visits and the number of IUI and IVF procedures) have held relatively steady in an overall fertility market that has experienced slight declines largely due to overall demographic trends.

The Attain IVF program saw a decline in applications and enrollments during the quarter, while, pregnancies, which are a marker for revenue recognition in the Attain IVF program, rose 15.6% versus the prior year. IntegraMed is undertaking a number of initiatives to increase the number of applications and enrollments going forward, both on an individual customer basis, but also by seeking to increase the number of facilities that offer the Attain Program.

An example of these new business development initiatives was the July launch of the “Attain Rx Discount Card” that will provide up to 75% in fertility medication savings for those enrolled in an Attain IVF Program. The program was created based on patient feedback and is designed to help patients with the costs of an array of fertility medications. To promote the launch Attain is giving away 100 cards in a contest running through August 17, 2012.

Vein Clinics (VCA)

Q2 2012

Q2 2011

Change

% Change

Revenue Mature Clinics (1)

$20.1M

$18.0M

$2.1M

11.7%

Revenue New Clinics (2)

$3.0M

$1.3M

$1.7M

130.8%

Total Vein Clinics Revenue:

$23.1M

$19.4M

$3.7M

18.9%

Operating Income Mature Clinics

$4.0M

$3.1M

$0.9M

29.0%

Operating Income New Clinics

$(1.0M)

$(0.3M)

$(0.7M)

n/a

Division Overhead Expenses

$(2.0M)

$(1.8M)

$(0.2M)

n/a

Total Vein Clinics Operating Income:

$1.1M

$1.2M

$(0.1M)

(10.4)%

Inquiries:

9,667

8,912

755

8.5%

New Consultations:

6,382

5,604

778

13.9%

First Leg Starts:

3,096

2,759

337

12.2%

Total Clinics (net):

50

44

6

13.6%

(1) Defined as clinics opened prior to January 1, 2011.

(2) Defined as clinics opened after January 1, 2011.

Continued strength in vein clinic revenue growth reflected solid demand at mature clinics, complemented by revenues from new clinics. The revenue improvement was achieved despite the impact of higher than usual physician turnover during Q2 2012. Total division operating income declined modestly versus the prior year as a result of a higher level of new clinic development activity and related start up expenses in Q2 2012 which more than offset solid improvement in mature clinic operating income.

IntegraMed continues to pursue its expansion strategy in the vein clinics division, with plans to open an additional 3 clinics prior to year-end.

Cash Flow and Balance Sheet

Net cash and cash equivalents declined to $56.7 million from $57.9 million at year-end 2011. Net cash provided by operating activities declined nearly 37% in the first six months of 2012 versus the same period a year ago due primarily to a substantial decrease in accrued liabilities coupled with a decrease in patient deposits related to Attain IVF Refund program (as higher pregnancy rates in the quarter resulted in more revenue being recognized). The outstanding balance of the Company's credit facility was reclassified to current during the quarter as it is scheduled to expire in the second quarter of 2013, if not extinguished sooner. The 2013 maturity date resulted in the current portion of long-term notes rising to $9.1 million during the quarter.

IntegraMed CFO, Tim Sheehan, said, “Operationally, Q2 was another solid quarter where we continued to drive top-line growth across our fertility and vein clinic businesses. At the same time, we continued to closely manage corporate G&A expenses, which, when excluding deal-related costs were roughly in line with the year ago period and represented a smaller percentage of a growing base of revenue. IntegraMed remains well funded to support the growth of its businesses at the same time we seek to achieve further operating improvements in the business going forward.”

About IntegraMed America, Inc.

IntegraMed is a leader in developing, marketing and managing specialty outpatient healthcare facilities, with a current focus on the fertility and vein care markets. IntegraMed supports its provider networks with clinical and business information systems, marketing and sales, facilities and operations management, finance and accounting, human resources, legal, risk management, quality assurance, and fertility treatment financing programs.

Attain Fertility Centers, an IntegraMed Specialty, is the nation's largest fertility center network, with 15 company-managed partner centers and 20 affiliate centers, comprising over 130 locations across 34 states and the District of Columbia. Nearly one of every four IVF procedures in the U.S. is performed in an Attain Fertility Centers network practice.

Vein Clinics of America, an IntegraMed Specialty, is the leading provider of specialty vein care services in the U.S. The IntegraMed Vein Clinic network operates 50 centers across 14 states, principally in the Midwest and Southeast.

For more information about IntegraMed please visit: www.integramed.com for investor background, www.attainfertility.com for fertility, or www.veinclinics.com for vein care.

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, 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 2, 2012 and IntegraMed undertakes no duty to update this information.

INTEGRAMED AMERICA, INC.
SUPPLEMENTARY DATA
(all amounts in thousands)
(unaudited)

Adjusted EBITDA Reconciliation

Adjusted EBITDA represents net income plus interest, taxes, depreciation, amortization and amortization of deferred compensation. The Company believes that the most directly comparable financial measure to Adjusted EBITDA in accordance with GAAP is net income. The following table provides a reconciliation of Adjusted EBITDA to net income for the periods presented:

			Three months ended, June 30,								Six months ended, June 30,
			2012				2011				2012				2011
Net Income			$	476			$	348			$	1,784			$	1,306
Adjustments:
Interest Expense				96				131				200				273
Income Tax Expense				589				282				1,454				872
Depreciation & Amortization				2,227				2,023				4,313				3,935
Amortization of Deferred Compensation				294				427				586				780
Adjusted EBITDA			$	3,682			$	3,211			$	8,337			$	7,166

Normalized Earnings Reconciliation

Normalized Earnings represents Income before taxes plus the add-back of certain expenses. In Q2 2012 the expenses consist of those relating to the pending acquisition of the Company, and in Q2 2011 the expenses related to the settlement of a medical malpractice claim. The Company believes that by excluding these expenses from earnings investors will have an understanding of the earnings associated with the Company's on-going business. The Company believes that the most directly comparable financial measure to Normalized Earnings in accordance with GAAP is Income before taxes. The following table provides a reconciliation of Normalized Earnings to Income before taxes for the periods presented:

			Three months ended, June 30,										Six months ended, June 30,
			2012					2011					2012					2011
Income before income taxes			$	1,065				$	630				$	3,238				$	2,178
Adjustments:
Acquisition Expenses				1,495					0					1,495					0
Legal Settlement				0					1,650					0					1,650
Adjusted income before taxes				2,560					2,280					4,733					3,828
Less estimated taxes				(1,037	)				(912	)				(1,917	)				(1,531	)
Normalized Earnings			$	1,523				$	1,368				$	2,816				$	2,297
Diluted Shares				12,053					11,878					12,037					11,873
Normalized Diluted EPS			$	0.13				$	0.12				$	0.23				$	0.19

INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENT OF OPERATIONS (all amounts in thousands, except per share amounts) (unaudited)
			For the Three-month period Ended June 30,										For the Six-month period Ended June 30,
			2012					2011					2012					2011
Revenue
Attain Fertility Centers			$	53,131				$	49,653				$	104,388				$	98,251
Vein Clinics				23,060					19,398					42,629					35,059
Total Revenues				76,191					69,051					147,017					133,310
Costs of services and sales
Attain Fertility Centers				48,537					45,481					95,525					89,645
Vein Clinics				21,992					18,206					40,710					33,618
Total Cost of Services and Sales				70,529					63,687					136,235					123,263
Contribution
Attain Fertility Centers				4,594					4,172					8,863					8,606
Vein Clinics				1,068					1,192					1,919					1,441
Total Contribution				5,662					5,364					10,782					10,047
General and administrative expenses				4,537					3,001					7,422					6,042
Legal Settlement				-					1,650					-					1,650
Interest income				(36	)				(48	)				(78	)				(96	)
Interest expense				96					131					200					273
Total other expenses				4,597					4,734					7,544					7,869
Income before income taxes				1,065					630					3,238					2,178
Income tax provision				589					282					1,454					872
Net income			$	476				$	348				$	1,784				$	1,306
Basic and diluted earnings per share of Common Stock:
Basic earnings per share			$	0.04				$	0.03				$	0.15				$	0.11
Diluted earnings per share			$	0.04				$	0.03				$	0.15				$	0.11
Weighted average shares – basic				11,987					11,836					11,981					11,825
Weighted average shares – diluted				12,053					11,878					12,037					11,873

INTEGRAMED AMERICA, INC. CONSOLIDATED BALANCE SHEETS (all amounts in thousands) (unaudited)
	June 30,					December 31,
	2012					2011
ASSETS
Current assets:
Cash and cash equivalents	$	56,669				$	57,909
Patient and other receivables, net		7,233					6,372
Other current assets		10,277					8,602
Deferred taxes		2,523					2,222
		76,702					75,105
Total current assets
Fixed assets, net		24,482					21,288
Intangible assets, Business Service Rights, net		24,845					24,114
Goodwill		30,334					30,334
Trademarks		4,442					4,442
Other assets		2,375					2,221
Total assets	$	163,180				$	157,504
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable		2,573					4,037
Accrued liabilities		18,530					17,074
Current portion of long-term notes payable & other obligations		9,070					3,816
Due to Fertility Medical Practices, net		19,483					14,229
Attain IVF Refund Program and other patient deposits		16,960					16,342
Total current liabilities		66,616					55,498
Deferred tax liabilities		4,587					5,277
Long-term notes payable and other obligations		--					7,187
Total liabilities		71,203					67,962
Commitments and Contingencies
Shareholders' equity:
Common stock		120					119
Capital in excess of par		78,794					78,156
Other comprehensive (loss)		(30	)				(42	)
Treasury stock		(330	)				(330	)
Retained Earnings		13,423					11,639
Total shareholders' equity		91,977					89,542
Total liabilities and shareholders' equity	$	163,180				$	157,504

INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (all amounts in thousands) (unaudited)
			For the Six-month period Ended June 30,
			2012					2011
Cash flows from operating activities:
Net income			$	1,784				$	1,306
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization				4,313					3,935
Deferred income tax provision				(998	)				223
Stock based compensation				586					780
Changes in assets and liabilities
(Decrease) increase in assets:
Patient and other accounts receivable				(861	)				(927	)
Other current assets				(1,675	)				(763	)
Other assets				(154	)				(174	)
(Decrease) increase in liabilities:
Accounts payable				(1,463	)				(1,327	)
Accrued liabilities				1,456					5,752
Due to medical practices				5,254					2,911
Attain IVF Refund patient deposits				618					2,325
Net cash provided by operating activities				8,860					14,041
Cash flows used in investing activities:
Purchase of business service rights				(1,380	)				(2,395	)
Purchase of fixed assets and leasehold improvements				(6,858	)				(6,212	)
Net cash used in investing activities				(8,238	)				(8,607	)
Cash flows used in financing activities:
Principle repayments on debt				(1,914	)				(1,834	)
Proceeds from stock option exercises				52					92
Net cash used in financing activities				(1,862	)				(1,742	)
Net increase (decrease) in cash				(1,240	)				3,692
Cash and cash equivalents at beginning of period				57,909					50,183
Cash and cash equivalents at end of period			$	56,669				$	53,875
Supplemental Information:
Interest paid			$	188				$	285
Income taxes paid			$	1,584				$	211