IntegraMed America, Inc. (INMD)

Q1 2011 Earnings Call

May 03, 2011 10:00 am ET

Executives

Norberto Aja - IR

Jay Higham - President and CEO

Tim Sheehan - VP and Interim CFO

Analysts

Deepak Chaulagai - Dougherty & Company

Frank Dilorenzo - Singular Research

Presentation

Operator

At this time, I would like to welcome everyone to the IntegraMed America first quarter investor conference call. (Operator Instructions)

Norberto Aja, you may begin.

Norberto Aja

Good morning everyone and thank you for participating in IntegraMed's first quarter 2011 conference call. I'm joined today by Jay Higham, our President and CEO; as well as by Tim Sheehan, Vice President and Interim CFO.

Before we begin, I would like to caution that comments made during this conference call may contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of IntegraMed. I encourage you to review the company's filings with the Securities and Exchange Commission including, without limitation, the company's Form-10K and Form-10Qs which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements.

The content of this conference call contains time-sensitive information that is accurate only as of today, May 5, 2011. IntegraMed undertakes no obligation to revise or update any statements to reflect events or circumstances occurring after the date of this conference call.

With that, I would now like to turn the call over to Jay Higham, President and CEO.

Jay Higham

Thank you, Norberto, and good morning everyone. We appreciate your joining us today and hope you've had a chance to read our Q1 release which was issued this morning and is available on our Investor Relations website. Our first quarter results demonstrate the strength of our core business and our success in building a larger and more diversified company.

Both our divisions achieved solid growth in revenue during the first quarter. And on a pro forma basis, the company would have shown strong growth in operating income after removing the impact of the new clinic startup losses.

Our Attain Fertility Centers achieved solid topline growth, driven by healthy results across our partner centers and by a significant improvement in the results from our Attain IVF Program. New patient traffic grew at a healthy pace as did year-over-year IVF and IVF procedures.

Our 14 partner centers and their many satellite locations continue to outperform the overall IVF market, especially those in the West Coast and Mid-Atlantic region. Other markets such as Florida and the south continue to experience challenges largely due to the slower economic recovery in those regions. There are centers that still perform better than general fertility market.

Supporting our centers' ability to outperform in their markets are our hosted capabilities we bring to physicians in addition to their medical expertise that enable the optimal performance of each center.

Areas of IntegraMed support include patient acquisition where we provide cutting-edge patient recruitment capabilities such as direct marketing and advertising, as well as helping to form referral relationships.

Care coordination involves the implementation of our proprietary electronic medical record system, which enables physicians to improve clinical outcomes. Revenue cycle management addresses the critical issues of actively managing accounts receivable and collections across all payers.

This discipline is clearly seen in our ongoing progress, lowering DSOs at our centers. A host of other services such as administrative support, volume purchasing efficiencies and growth capital also help our centers achieve industry-leading performance.

Through the partnership between the centers and IntegraMed, they were able to penetrate markets in a more efficient manner and help centers optimize their performance despite ongoing demographic and economic challenges.

To address changes in the market, we have expanded the ways we can encourage fertility center prospects and bring them on board as partners. For example, earlier this year, we executed what we refer to as an in-market merger, in which we acquired Northwest Center for Reproductive Sciences and folded that operation into our existing Seattle-based practice, Seattle Reproductive Medicine.

By doing so, we're able to achieve economies of scale across all administrative, marketing and treatment functions. At the same time, we expanded our market share in that area. Seattle Reproductive Medicine is now the largest fertility center west of the Mississippi.

In-market merges are an attractive and efficient means for IntegraMed to expand its footprint through an immediately accretive investment. This type of transaction coupled with new business development efforts and the potential to launch new products and services across our Fertility division are all avenues to support our growth objectives.

As an example of a new initiative, we are looking at the potential to introduce a fertility drug financing program in conjunction with our Attain IVF financing program.

Drug costs are a significant part of overall fertility treatment expenses. An option to include these costs in a broader fertility treatment financing program would present a very attractive option for patients and for our contracted provider network as this reduces the barrier to treatment and helps enable more patients who could benefit from treatment to actually access that treatment.

While on the topic of the Attain IVF program, let me point out that the first quarter results benefited from a strong rise in pregnancies during the period in addition to achieving a 22% increase in program enrollments in Q1 with a modest increase in applications, underscoring the improving efficiencies in these programs' patient marketing efforts.

In summary, our Attain Fertility Center segment continues to perform well and we are optimistic about its future given our history, scale and leadership position. Fertility remains a healthcare segment that's sufficiently large to offer substantial opportunities for growth while also having meaningful barriers to entry.

Read the rest of this transcript for free on seekingalpha.com