IntegraMed America, Inc. (NASDAQ: INMD), the leader in developing and managing specialty healthcare facilities in the fertility and vein care markets, today announced strong results for the first quarter ended March 31, 2010.
Jay Higham, IntegraMed's CEO, commented, "Our Q1 financial performance reflects our ability to drive growth in all three segments of the business as well as margin expansion and infrastructure leverage across the company. Our Fertility Division enjoyed a strong quarter at both the revenue and operating income level. In our Consumer Services Division, our Attain IVF family of treatment financing solutions achieved very solid rebound in demand with both applications and enrollments up significantly, providing added confirmation of the programs' appeal and high growth prospects. Our Vein Clinic business continued to generate attractive top and bottom line results as it achieved double digit increases in inquiries, new patient visits and first leg starts.
"In summary, the investments we made over the last few years are paying off with continued growth and margin expansion. We believe our businesses will continue to profit from the improving external environment and ongoing operational initiatives focused on patient recruitment, efficiency initiatives and new clinic development. The additional financial strength and flexibility provided by our successful follow on common stock offering in February is enabling us to aggressively pursue acquisitions in our fertility center business as well as more extensive direct to consumer marketing of Attain IVF and the development of more new vein clinics. We believe that the benefits from these investments will help push the company to its next stage of growth and development."
Fertility Centers top-line improvement was driven by both same store patient revenue growth of 2.2% in Q1, as well as a full quarter's benefit from the three fertility contracts acquired in late 2009. Improved operating efficiencies resulted in operating income growing at three times the rate of revenue.
Though operating efficiencies continued to have a positive effect on results, the previously discussed loss of a payer contract in the Chicago market a year ago, had a significant impact on the comparison of overall patient traffic to the first quarter of 2009. In addition, inclement weather in the Mid-Atlantic States in January and February affected access to our partner centers, thereby dampening new patient visits and procedure volumes.
IntegraMed manages the most extensive consolidated network of contracted fertility centers in the U.S., encompassing 14 partner centers with 66 locations in 12 major markets across the country. This growing geographic breadth and diversity plays an important role in enabling the Company to deliver solid financial performance.
The Consumer Services Division continued to achieve top-line growth with a 16% increase in revenue. Operating income from this business experienced a small negative variance compared to last year primarily due to the unusual and unsustainably high pregnancy rates experienced in Q1 '09, which led to a record operating margin in the business. This quarter, pregnancy rates and operating margin reverted to more normal levels. It should also be noted that this business is the focus of an intensive new direct to consumer marketing effort, which will likely result in stronger growth, but modestly lower margins.
The strong growth in both applications and enrollments was largely driven by the ongoing success of the Attain IVF (in-vitro fertilization) Refund Program as well as the growing popularity of the Attain IVF Multi Cycle program launched in Q2 '09. The Attain IVF Multi Cycle program, which has a lower price point than the Attain IVF Refund Program, broadens the pool of potential patients who are able to enroll in the program.
The Consumer Services Division is expected to achieve continued growth as the benefits of new marketing and consumer outreach initiatives begin to affect operating results. In addition, IntegraMed remains active in its pursuit of additional affiliates who will offer the program.
The Attain IVF Refund Program was pioneered by IntegraMed to fund the financial cost of a patient's decision to embark on a series of IVF treatments. The program is available in a flexible format that combines various treatment and refund options of up to six treatments and up to a 100% refund in the event that treatment does not result in the patient taking a baby home. The Attain IVF family of programs has strong consumer appeal and represent an important competitive advantage for IntegraMed affiliated fertility centers.
Q1 '10 revenues for IntegraMed's Vein Clinics business grew by 20%, reflecting the benefit of consumer outreach initiatives commenced in 2009 as well as improving clinic performance and new clinic openings. Vein Clinics contribution margin remained flat at 7% as we continue to invest in consumer outreach programs to drive patient volumes.
IntegraMed announced the opening two additional clinics during the first quarter, bringing the total number of announced clinics to 36, with as many as six more clinics slated to open during the balance of 2010. The recruiting for new physicians to staff the additional 2010 scheduled openings is going well with 3 signed to contracts and a number of others in the contract discussion stage.
IntegraMed recently announced the incorporation of Interventional Radiology (IR) into a forthcoming new clinic in Columbia, MD. This enhanced treatment option is expected to bring substantial synergies to the current VCA platform, allowing future clinics with this capability to deliver a broader base of treatments across a wider patient population and thereby enhance their potential revenue opportunities.
Cash Flow and Balance Sheet
IntegraMed's total assets grew to $146.5 million in Q1 '10, with cash and equivalents increasing by 62% to $46.6 million versus $28.9 million in Q1 '09. The increase in cash was achieved by our public sale of 2.8 million common shares on February 18, 2010 and the generation of cash flow from operations of over $1 million in Q1 2010. We have invested an additional $1.8 million in fixed assets for anticipated growth and have repaid $0.9 million of outstanding debt. We expect to use a significant portion of our available cash resources to fund acquisitions within our fertility centers division as well as to fund consumer services marketing initiatives and the opening of new vein clinics over the next 12-24 months.
IntegraMed CFO, John Hlywak, added, "As we look ahead to the balance of 2010, we see a range of growth opportunities across all three of our businesses. As a national operator and a leader in the fertility and vein care categories, we are uniquely positioned to leverage that platform to create value for patients and doctors and to drive top and bottom line growth."