- --------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File No. 0-20260
Commission File No. 1-11440
INTEGRAMED AMERICA, INC.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
One Manhattanville Road
Purchase, New York
(Address of principal executive offices)
06-1150326
(I.R.S. employer identification no.)
10577
(Zip code)
(914) 253-8000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes [X] No [ ]
The aggregate number of shares of the Registrant's Common Stock, $.01
par value, outstanding on August 13, 1997 was 9,774,152.
- --------------------------------------------------------------------------------
<PAGE>
INTEGRAMED AMERICA, INC.
FORM 10-Q
TABLE OF CONTENTS
PAGE
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet at June 30, 1997
(unaudited) and December 31, 1996..................... 3
Consolidated Statement of Operations for the
three and six-month period ended June 30, 1997
and 1996 (unaudited)................................. 4
Consolidated Statement of Cash Flows for the
six-month period ended June 30, 1997
and 1996 (unaudited)................................ 5
Notes to Consolidated Financial Statements (unaudited).6-11
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................12-17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................... 18
Item 2. Changes in Securities...................................... 18
Item 3. Defaults upon Senior Securities............................ 18
Item 4. Submission of Matters to a Vote of Security Holders........ 18
Item 5. Other Information.......................................... 19
Item 6. Exhibits and Reports on Form 8-K........................... 19
SIGNATURES .................................................... 20
INDEX TO EXHIBITS..........................................................21-23
2
<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
<TABLE>
INTEGRAMED AMERICA, INC.
CONSOLIDATED BALANCE SHEET
(all dollars in thousands)
ASSETS
<CAPTION>
June 30, December 31,
1997 1996
--------- -----------
(unaudited)
Current assets:
<S> <C> <C>
Cash and cash equivalents .......................................................... $2,755 $ 3,761
Short term investments.............................................................. -- 2,000
Patient accounts receivable, less allowance for doubtful accounts of $149 and $113
in 1997 and 1996, respectively.................................................... 3,522 2,770
Management fees receivable, less allowance for doubtful accounts of $168 and $50
in 1997 and 1996, respectively.................................................... 1,827 1,249
Research fees receivable............................................................ 359 232
Other current assets ............................................................... 1,293 897
Controlled assets of Medical Practices (see Note 2):
Cash.............................................................................. 109 191
Patient accounts receivable, less allowance for doubtful accounts of $2 and $146
in 1997 and 1996, respectively.................................................. 357 459
------- -------
Total controlled assets of Medical Practices.................................... 466 650
------- -------
Total current assets............................................................ 10,222 11,559
------- -------
Fixed assets, net ................................................................ 2,925 3,186
Intangible assets, net............................................................ 9,047 5,894
Other assets...................................................................... 385 211
------- -------
Total assets.................................................................... $22,579 $20,850
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable.................................................................... $ 1,022 $ 1,020
Accrued liabilities................................................................. 1,606 1,652
Due to Medical Practices (see Note 2)............................................... 351 326
Dividends accrued on Preferred Stock................................................ 397 331
Current portion of exclusive management rights obligation........................... 472 222
Note payable and current portion of long-term debt.................................. 609 426
Patient deposits ................................................................... 723 490
------- -------
Total current liabilities....................................................... 5,180 4,467
------- -------
Exclusive management rights obligation................................................ 1,430 1,213
Long-term debt ....................................................................... 627 692
Shareholders' equity
Preferred Stock, $1.00 par value -
3,165,644 shares authorized in 1997 and 1996, respectively - 2,500,000
undesignated; 665,644 shares designated as Series A Cumulative Convertible
of which 165,644 shares were issued and outstanding in 1997 and
1996, respectively................................................................ 166 166
Common Stock, $.01 par value - 25,000,000 shares authorized; 9,774,152 and
9,230,557 shares issued and outstanding in 1997 and 1996, respectively............ 97 92
Capital in excess of par ........................................................... 36,220 35,410
Accumulated deficit ................................................................ (21,141) (21,190)
------- -------
Total shareholders' equity ..................................................... 15,342 14,478
------- -------
Total liabilities and shareholders' equity...................................... $22,579 $20.850
======= =======
See accompanying notes to the consolidated financial statements.
</TABLE>
3
<PAGE>
<TABLE>
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(all amounts in thousands, except per share amounts)
<CAPTION>
For the three-month For the six-month
period ended June 30, period ended June 30,
1997 1996 1997 1996
--------- --------- -------- -------
(unaudited) (unaudited)
<S> <C> <C> <C> <C> <C>
Revenues, net (see Note 2)........................................ $5,466 $4,822 $10,554 $8,998
Medical Practice retainage (see Note 2)........................... 460 720 856 1,514
------- -------- -------- -------
Revenues after Medical Practice retainage (see Note 2)............ 5,006 4,102 9,698 7,484
Costs of services rendered ....................................... 3,699 2,986 7,314 5,550
------- -------- -------- -------
Network Sites' contribution ...................................... 1,307 1,116 2,384 1,934
------- -------- -------- -------
General and administrative expenses .............................. 988 960 1,906 1,815
Clinical service development expenses............................. 58 62 117 128
Amortization of intangible assets................................. 144 49 281 91
Interest income................................................... (33) (102) (67) (222)
Interest expense.................................................. 23 9 33 14
------- -------- -------- -------
Total other expenses.............................................. 1,180 978 2,270 1,826
------- -------- -------- -------
Income before income taxes........................................ 127 138 114 108
Provision for income and capital taxes........................... 33 53 65 97
------- -------- -------- -------
Net income........................................................ 94 85 49 11
Less: Dividends accrued on Preferred Stock........................ 33 155 66 309
------- -------- -------- -------
Net income (loss) applicable to Common Stock...................... $ 61 $ (70) $ (17) $ (298)
======= ======== ======= =======
Net income (loss) per share of Common Stock....................... $ 0.01 $ (0.01) $(0.00) $ (0.05)
======= ======== ======= =======
Weighted average number of shares of Common Stock
outstanding....................................................... 9,630 6,267 9,587 6,177
======= ======== ======= =======
See accompanying notes to the consolidated financial statements.
</TABLE>
4
<PAGE>
<TABLE>
INTEGRAMED AMERICA, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(all amounts in thousands)
<CAPTION>
For the six-month
period ended June 30,
1997 1996
------ ------
(unaudited)
Cash flows from operating activities:
<S> <C> <C>
Net income ................................................................. $49 $ 11
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization.............................................. 759 489
Writeoff of fixed assets in 1997 and deferred rent in 1996................. 95 (120)
Changes in assets and liabilities-- (Increase) decrease in assets:
Patient accounts receivable........................................... (752) (884)
Management fees receivable............................................ (578) (77)
Research fees receivable.............................................. (127) --
Other current assets.................................................. (396) (359)
Intangible assets..................................................... (2) (14)
Other assets.......................................................... (174) 32
Decrease in controlled assets of Medical Practices:
Patient accounts receivable........................................... 102 577
Other current assets.................................................. -- 5
Increase (decrease) in liabilities:
Accounts payable...................................................... 2 397
Accrued liabilities................................................... (46) (295)
Due to Medical Practices.............................................. 25 59
Patient deposits...................................................... 233 (42)
------ ------
Net cash used in operating activities....................................... (810) (221)
------ ------
Cash flows provided by (used in) investing activities:
Proceeds from (purchase of) short term investments....................... 2,000 (500)
Purchase of net assets of acquired businesses............................ (61) (431)
Payments for exclusive management rights and related acquisition costs... (2,165) (183)
Purchase of fixed assets and leasehold improvements...................... (258) (650)
Proceeds from sale of fixed assets....................................... 139 --
------ ------
Net cash used in investing activities....................................... (345) (1,764)
------ ------
Cash flows provided by (used in) by financing activities:
Proceeds from bank under Credit Facility................................. 250 --
Principal repayments on debt............................................. (131) (46)
Principal repayments under capital lease obligations..................... (66) (113)
Repurchase of Convertible Preferred Stock................................ -- (84)
Proceeds from exercise of Common Stock options........................... 14 3
------ ------
Net cash provided by (used in) financing activities........................... 67 (240)
------ ------
Net decrease in cash.......................................................... (1,088) (2,225)
Cash at beginning of period................................................... 3,952 8,179
------ ------
Cash at end of period......................................................... $2,864 $5,954
====== ======
See accompanying notes to the consolidated financial statements.
</TABLE>
5
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 -- INTERIM RESULTS:
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-Q and, accordingly, do
not include all of the information and footnotes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, the accompanying unaudited interim financial statements contain all
adjustments (consisting only of normal recurring accruals) necessary to present
fairly the financial position at June 30, 1997, and the results of operations
and cash flows for the interim period presented. Operating results for the
interim period are not necessarily indicative of results that may be expected
for the year ending December 31, 1997. These financial statements should be read
in conjunction with the financial statements and notes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1996.
NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Revenue and cost recognition -
Reproductive Science Center Division ("RSC Division")
The operations of the RSC Division are currently conducted pursuant to nine
management agreements.
Under five of the Company's management agreements, the Company receives as
compensation for its management services a three-part management fee comprised
of: (i) a fixed percentage of net revenues, generally equal to 6%, (ii)
reimbursed cost of services (costs incurred in managing a Medical Practice and
any costs paid on behalf of the Medical Practice) and (iii) a fixed or variable
percentage of earnings after the Company's management fees and any guaranteed
physician compensation, or an additional fixed or variable percentage of net
revenues, which generally results in the Company receiving up to an additional
15% of net revenues. All management fees are reported as revenues, net by the
Company. Direct costs incurred by the Company in performing its management
services and costs incurred on behalf of the Medical Practice are recorded in
costs of services rendered. The physicians receive as compensation all earnings
remaining after payment of the Company's management fee.
Under the Company's management agreements for the Boston and Long Island
Network Sites, the Company displays the patient service revenues of the Medical
Practices which are reflected as revenues, net on its consolidated statement of
operations. Under these agreements, the Company records all patient service
revenues and, out of such revenues, the Company pays the Medical Practices'
operating expenses, physicians' and other medical compensation and direct
materials (the "Medical Practice retainage"). Approximately 70%-80% of Medical
Practice retainage is fixed and the balance is primarily comprised of certain
physician compensation. Specifically, under the management agreement for the
Boston Network Site, the Company guarantees a minimum physician compensation
based on an annual budget primarily determined by the Company. Remaining
revenues, if any, which represent the Company's management fee, are used by the
Company for other direct administrative expenses which are recorded as costs of
services. Under the management agreement for the Long Island Network Site, the
Company's management fee is payable only out of the remaining revenues, if any,
after the payment of all expenses of the Medical Practice. Under these
arrangements, the Company is liable for payment of all liabilities incurred by
the Medical Practices and is at risk for any losses incurred in the operations
thereof.
Under the Company's management agreement for the New Jersey Network Site,
the Company primarily provides endocrine testing and administrative and finance
services for a fixed percentage of revenues, equal to 15% of net revenues, and
reimbursed costs of services. Under the management agreement for the Walter Reed
Network Site, the Company's revenues are derived from certain ART laboratory
services performed, and directly billed to the patients by the Company; out of
these patient service revenues, the Company pays its direct costs and the
remaining balance represents the Company's Network Site contribution. All direct
costs incurred by the Company are recorded as costs of services.
6
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Adult Women's Medical Division ("AWM Division")
The AWM Division's operations are currently comprised of one Network Site
with three locations which are directly owned by the Company and a 51% interest
in the National Menopause Foundation ("NMF"), a company which develops
multifaceted educational programs regarding women's health care and publishes a
quarterly women's health digest. The Network Site is also involved in clinical
trials with major pharmaceutical companies.
The Company bills and records all clinical revenues of the AWM Division and
records all direct costs incurred as cost of services rendered. The Company
retains as Network Site contribution an amount determined using the three-part
management fee calculation described above. The remaining balance is paid as
compensation to the employed physicians and is recorded by the Company as cost
of services rendered. The employed physicians receive a fixed monthly draw which
may be adjusted quarterly by the Company based on the Network Site's actual
operating results.
Revenues in the AWM Division also include amounts earned under contracts
relating to clinical trials performed by the AWM Division. The AWM Division has
contracted with major pharmaceutical companies to participate in clinical trials
to determine the safety and efficacy of drugs under development. Research
revenues are recognized pursuant to each respective contract in the period in
which the medical services (as stipulated by the clinical trial protocol) are
performed and collection of such fees is considered probable. Net realization is
dependent upon final approval by the sponsor that procedures were performed
according to trial protocol. Payments collected from sponsors in advance for
services are included in accrued liabilities, and costs incurred in performing
the clinical trials are included as cost of services rendered.
The Company's 51% interest in NMF is included in the Company's consolidated
financial statements. The Company records 100% of the revenues and costs of NMF
and reports 49% of any profits of NMF as minority interest on the Company's
consolidated balance sheet. Minority interest at June 30, 1997 and December 31,
1996 was $0.
Patient accounts receivable--
Patient accounts receivable represent receivables from patients for medical
services provided by the Medical Practices. Such amounts are recorded net of
contractual allowances and estimated bad debts and risk of loss due to non-
collectibility is borne by the Company. As of June 30, 1997 and December 31,
1996, of total patient accounts receivable of $3,522,000 and $2,770,000,
respectively, approximately $994,000 and $836,000 of patient accounts receivable
were a function of Network Site revenue (i.e., the Company purchased the
accounts receivable from the Medical Practice) and the remaining balances of
$2,528,000 and $1,934,000, respectively, were a function of net revenues of the
Company (see -- "Revenue and cost recognition" above).
Management fees receivable --
Management fees receivable represent fees owed to the Company pursuant to
its management agreements with certain Medical Practices (see -- "Revenue and
cost recognition" above).
Research fees receivable --
Research fees receivable represent receivables from pharmaceutical
companies for medical services provided by the Medical Practices at the Network
Site under the AWM Division to patients pursuant to protocols stipulated under
contracts relating to clinical trials between the pharmaceutical companies and
the AWM Division.
7
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
Controlled assets of Medical Practices--
Controlled cash represents segregated cash held in the name of certain
Medical Practices; controlled patient accounts receivable represent patient
receivables due to certain Medical Practices, and controlled other current
assets represent assets owned by and held in the name of certain Medical
Practices, all of which are reflected on the Company's consolidated balance
sheet due to the Company's unilateral control of such assets.
At June 30, 1997 and December 31, 1996, of the $466,000 and $650,000
controlled assets of Medical Practices, $69,000 and $117,000, respectively, were
restricted for payment of the amounts due to Medical Practices and the balances
of $397,000 and $533,000, respectively, were payable to the Company.
NOTE 3 -- REVENUES, MEDICAL PRACTICE RETAINAGE AND COSTS OF SERVICES:
The following table sets forth for the three and six months ended June 30,
1997 and 1996, revenues, Medical Practice retainage and costs of services for
each of the Company's three types of management agreements (patient service
revenues, three-part management fee and percent of revenues and reimbursed costs
of services) and revenues and costs of services for the AWM Division (000's
omitted):
<TABLE>
<CAPTION>
For the three-month For the six-month
period ended June 30, period ended June 30,
1997 1996 1997 1996
------ ------ ------- -------
<S> <C> <C> <C> <C>
Revenues, net:
RSC Division --
Patient service revenues............................. $2,563 $3,262 $ 4,926 $5,996
Management fees-- three part management fee.......... 1,312 711 2,490 1,414
Management fees-- percent of revenues and
reimbursed costs of services of the New Jersey..... 974 753 1,853 1,492
------ ------ ------- -------
Network Site.......................................
Total RSC Division revenues, net................. 4,849 4,726 9,269 8,902
------ ------ ------- -------
AWM Division -- revenues............................... 617 96 1,285 96
------ ------ ------- -------
Total revenues, net.............................. $5,466 $4,822 $10,554 $8,998
====== ====== ======= ======
Medical Practice retainage:
RSC Division --
Medical practice retainage related to patient
service revenues................................... $ 460 $ 720 $ 856 $1,514
====== ====== ======= ======
Costs of services:
RSC Division --
Costs related to patient service revenues............ $1,439 $1,921 $ 2,936 $3,614
Costs related to three part management fees.......... 1,216 690 2,389 1,362
Costs related to New Jersey Network Site............. 389 302 738 501
------ ------ ------- -------
Total RSC Division costs of services............. 3,044 2,913 6,063 5,477
------ ------ ------- -------
AWM Division -- Costs of services...................... 655 73 1,251 73
------ ------ ------- -------
Total costs of services.......................... $3,699 $2,986 $ 7,314 $5,550
====== ====== ======= ======
</TABLE>
8
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
For the six months ended June 30, 1997 and 1996, the New Jersey Network
Site, which management fee is based upon a percentage of revenues, provided
17.6% and 16.6% of the Company's revenues, net, respectively. For the six months
ended June 30, 1997 and 1996, the New Jersey Network Site provided 46.8% and
51.2% of the Company's Network Site contribution, respectively.
For the six months ended June 30, 1997 and 1996, the Boston Network Site,
which is included in patient service revenues under the RSC Division, provided
32.2% and 42.6% of the Company's revenues, net, respectively. For the six months
ended June 30, 1997 and 1996, the Boston Network Site provided 39.7% and 59.6%
of the Company's Network Site contribution, respectively.
Summary financial information for the Boston Network Site is as follows
(000's omitted):
<TABLE>
<CAPTION>
For the three-month For the six-month
period ended June 30, period ended June 30,
1997 1996 1997 1996
------- ------- ------- -------
<S> <C> <C> <C> <C>
Revenues, net...................................... $1,748 $2,022 $3,402 $3,835
Medical practice retainage......................... 300 267 558 543
------- ------- ------- -------
Revenues after Medical Practice retainage.......... 1,448 1,755 2,844 3,292
Costs of services rendered......................... 912 1,171 1,897 2,140
------- ------- ------- -------
Network Site's contribution........................ $ 536 $ 584 $ 947 $1,152
======= ======= ======= ======
</TABLE>
NOTE 4 -- NOTE PAYABLE:
In November 1996, the Company obtained a $1.5 million revolving credit
facility (the "Credit Facility") issued by First Union National Bank (the
"Bank"). Borrowings under the Credit Facility bear interest at the Bank's prime
rate plus 0.75% per annum, which at June 30, 1997, was 9.25%. The Credit
Facility terminates on April 1, 1998 and is secured by the Company's assets. At
June 30, 1997, $250,000 was outstanding under the Credit Facility and is
included in "Note payable and current portion of long-term debt" in the
accompanying consolidated balance sheet. At December 31, 1996, no amounts were
outstanding under the Credit Facility.
In June 1997, the Company obtained a commitment from the Bank for a new
$4.0 million non-restoring credit facility (the "New Credit Facility").
Borrowings under the New Credit Facility will bear interest at the Bank's prime
rate plus 1.0% per annum. Borrowings outstanding under the New Credit Facility
at September 30, 1998 will convert into a four year term loan. Any amounts
borrowed under the New Credit Facility will permanently reduce amounts available
for future borrowings under the New Credit Facility. The New Credit Facility
will be cross-collateralized and cross-defaulted with the Credit Facility. The
Bank's commitment under the New Credit Facility is subject to, among other
things, the consummation of the Pending Acquisition. At June 30, 1997, no
amounts were outstanding under the New Credit Facility.
NOTE 5 -- RECENT AND PENDING ACQUISITIONS:
In June 1997, the Company acquired certain assets of and the right to
manage Reproductive Sciences Medical Center ("RSMC"), a physician group practice
comprised of two physicians and two locations in the San Diego, CA area (the
"San Diego Acquisition"). The aggregate purchase price for the San Diego
Acquisition was approximately $900,000, partially consisting of $50,000 in cash
and 145,454 shares of Common Stock. An additional $650,000 is payable upon the
achievement of certain specified milestones, at RSMC's option, in cash or in
shares of the Company's Common Stock, based on the closing market price of the
Common Stock on the third business day prior to issuance.
The aggregate purchase price was allocated to exclusive management rights.
9
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
In January 1997, the Company acquired certain assets of the Bay Area
Fertility and Gynecology Medical Group, a California partnership (the
"Partnership"), and acquired the right to manage the Bay Area Fertility and
Gynecology Medical Group, Inc., a California professional corporation which is
the successor to the Partnership's medical practice. The aggregate purchase
price was approximately $2.1 million, consisting of $1.5 million in cash and
333,333 shares of Common Stock. The aggregate purchase price was allocated as
follows: $500,000 to the name "Bay Area Fertility", $29,000 to fixed assets, and
the balance of approximately $1.6 million to exclusive management rights. All
intangible assets related to this acquisition will be amortized over the
twenty-year term of the management agreement.
In February 1997, the Company entered into agreements to acquire certain
fixed assets of and the right to manage Fertility Centers of Illinois, S.C.
("FCI"), a physician group practice comprised of five physicians and six
locations (the "Pending Acquisition") in the Chicago, Illinois area. The
aggregate purchase price for the Pending Acquisition is approximately $8.6
million of which $8.0 million is for the exclusive management right and $600,000
is for certain fixed assets. Approximately $6.6 million of the aggregate
purchase price is payable in cash and approximately $2.0 million is payable in
shares of Common Stock, the exact number of which will be determined based on
the average market price of the Common Stock for the ten trading day period
prior to the third business day prior to closing of the Pending Acquisition,
subject to a minimum and maximum price per share.
NOTE 6 -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH
TRANSACTIONS:
In connection with its acquisition of the exclusive right to manage RSMC
in June 1997, the Company issued 145,454 shares of Common Stock with an
aggregate fair value equal to $200,000.
In connection with its acquisition of the exclusive right to manage Bay
Area Fertility in January 1997, the Company issued 333,333 shares of Common
Stock with an aggregate fair value equal to $583,000.
In the six-month period ended June 30, 1997, the Company entered into a
capital lease obligation in the amount of $105,000 for medical equipment.
In the six-month period ended June 30, 1997, the Company assigned two
capital lease obligations for medical equipment with an aggregate book value of
$60,000 to two related parties.
Accrued dividends on Convertible Preferred Stock outstanding increased
$66,000 and $309,000 during the six- month periods ended June 30, 1997 and 1996,
respectively.
Controlled cash of Medical Practices decreased $82,000 and $81,000 during
the six-month periods ended June 30, 1997 and 1996, respectively.
State taxes, which primarily reflect Massachusetts income taxes and New
York capital taxes, of $66,000 and $65,000 were paid in the six-month periods
ended June 30, 1997 and 1996, respectively.
Interest paid in cash in the six-month periods ended June 30, 1997 and
1996 amounted to $33,000 and $13,000, respectively. Interest received in the
six-month periods ended June 30, 1997 and 1996 amounted to $67,000 and $221,000,
respectively.
10
<PAGE>
INTEGRAMED AMERICA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(unaudited)
NOTE 7 -- SUBSEQUENT EVENT:
On August 11, 1997, the Company's pending registration statement covering
an offering of 6,400,000 shares of common stock for gross proceeds of $9.6
million (net proceeds of approximately $8.4 million) was declared effective by
the Securities and Exchange Commission. The offering is a direct placement to
selected institutional and other investors and is being managed by Vector
Securities International, Inc. as Placement Agent. Closing is scheduled for
Friday, August 15, 1997. Approximately $6.6 million of the proceeds will be used
for the previously announced asset purchase and right-to-manage agreement with
Fertility Centers of Illinois, S.C., one of the largest providers of the
infertility and assisted reproductive technology services in the United States.
The balance of the proceeds of this offering will be used for working capital
and other general corporate purposes, including possible future acquisitions of
the assets of, and the right to manage, additional physician practices.
11
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction with
the consolidated financial statements and notes thereto included in this
quarterly report and with the Company's Annual Report on Form 10-K for the year
ended December 31, 1996.
Overview
The Company has historically focused its efforts on providing management
support services to Medical Practices in the area of infertility and assisted
reproductive technology ("ART") services. During 1996, the Company broadened its
focus from infertility and ART services to include adult women's health care
services. In connection therewith, the Company established two divisions: the
Reproductive Science Center Division ("RSC Division"), which concentrates on
infertility and ART services, and the Adult Women's Medical Division ("AWM
Division"), which concentrates on comprehensive diagnostic and treatment
alternatives for peri- and post-menopausal women.
The RSC Division currently consists of nine Network Sites. During the
six-month period ended June 30, 1997, the RSC Division derived its revenues
pursuant to nine management agreements, including one which was acquired in
January 1997 and one which was acquired in June 1997. During the six-month
period ended June 30, 1996, the RSC Division principally derived its revenues
pursuant to six management agreements including one which was acquired in May
1996 and one which was terminated in November 1996.
The AWM Division currently consists of one Network Site which was
established in June 1996 and is directly owned by the Company.
In January 1997, the Company acquired certain assets of the Bay Area
Fertility and Gynecology Medical Group, a California partnership (the
"Partnership"), a physician group practice comprised of three physicians and one
location in San Ramon, CA and acquired the right to manage the Bay Area
Fertility and Gynecology Medical Group, Inc., a California professional
corporation which is the successor to the Partnership's medical practice (the
"Bay Area Acquisition"). The aggregate purchase price was approximately $2.1
million, consisting of $1.5 million in cash and 333,333 shares of Common Stock.
In February 1997, the Company entered into agreements to acquire certain
fixed assets of and the right to manage Fertility Centers of Illinois, S.C.
("FCI"), a physician group practice comprised of five physicians and six
locations (the "Pending Acquisition") in the Chicago, Illinois area. The
aggregate purchase price for the Pending Acquisition is approximately $8.6
million of which $8.0 million is for the exclusive management right and $600,000
is for certain fixed assets. Approximately $6.6 million of the aggregate
purchase price is payable in cash and approximately $2.0 million is payable in
shares of Common Stock (an estimated 956,938 shares based on a per share price
of $2.09), the exact number of which will be determined based on the average
market price of the Common Stock for the ten trading day period prior to the
third business day prior to closing of the Pending Acquisition; but not more
than $3.25 per share or less than $1.75 per share.
In June 1997, the Company acquired certain assets of and the right to
manage Reproductive Sciences Medical Center ("RSMC"), a physician group practice
comprised of two physicians and two locations in the San Diego, CA area (the
"San Diego Acquisition"). The aggregate purchase price for the San Diego
Acquisition was approximately $900,000, partially consisting of $50,000 in cash
and 145,454 shares of Common Stock. An additional $650,000 is payable upon the
achievement of certain specified milestones, at RSMC's option, in cash or in
shares of the Company's Common Stock, based on the closing market price of the
Common Stock on the third business day prior to issuance.
12
<PAGE>
Results of Operations
Three Months Ended June 30, 1997 Compared to Three Months Ended June 30, 1996
Revenues for the three months ended June 30, 1997 (the "second quarter of
1997") were approximately $5.5 million as compared to approximately $4.8 million
for the three months ended June 30, 1996 (the "second quarter of 1996"), an
increase of 13.4%. In the second quarter of 1997, the Company's RSC Division and
AWM Division contributed 88.7% and 11.3%, respectively, of the Company's total
revenues.
RSC Division revenues for the second quarter of 1997 were approximately
$4.8 million as compared to $4.7 million for the second quarter of 1996, an
increase of 2.6%. Revenues under the RSC Division were comprised of (i) patient
service revenues, (ii) three-part management fees and (iii) at the New Jersey
Network Site, management fees based on a percentage of revenues and reimbursed
costs of services. Patient service revenues were approximately $2.6 million in
the second quarter of 1997 compared to approximately $3.3 million for the second
quarter of 1996, a decrease of 21.4%. Patient service revenues decreased due to
the absence of the Westchester Network Site agreement which the Company
terminated in November 1996 and due to a 13.6% decrease in revenues related to
the Boston Network Site attributable to lower volume at such Network Site.
Three-part management fee revenues were $1.3 million in the second quarter of
1997 compared to $711,000 in the second quarter of 1996, an increase of 84.5%.
The increase in three-part management fee revenues was attributable to new
management agreements entered into in the second quarter of 1996 and the first
half of 1997. Management fees based on a percentage of revenues and reimbursed
costs of services of the New Jersey Network Site were approximately $974,000 in
the second quarter of 1997 compared to approximately $753,000 in the second
quarter of 1996, an increase of 29.3%, due to an increase in volume at such
Network Site. AWM Division revenues for the second quarter of 1997 were
approximately $617,000 as compared to $96,000 for the second quarter of 1996 due
to the acquisitions in early June and late December of 1996 which established
this Division.
Medical Practice retainage, which represents physicians' and other medical
fees and direct materials related to the Boston and Long Island Network Sites in
the second quarter of 1997 and to the Boston, Long Island and Westchester
Network Sites in the second quarter of 1996, was approximately $460,000 in the
second quarter of 1997 as compared to approximately $720,000 in the second
quarter of 1996, a decrease of 36.1%, primarily due to the absence of the
Westchester Network Site agreement.
Revenues after Medical Practice Retainage were approximately $5.0 million
in the second quarter of 1997 as compared to approximately $4.1 million in the
second quarter of 1996, an increase of 22.0%. The increase was attributable to
new management agreements entered into in the second quarter of 1996 and the
first half of 1997. The increase in revenues was partially offset by the net
decrease in management fees related to the Boston, Westchester and Long Island
Network Sites. Management fees (i.e. patient service revenues less Medical
Practice retainage) related to the Boston and Long Island Network Sites (for
which the Company displayed the patient service revenues on its consolidated
statement of operations for the second quarter of 1997) were approximately $2.3
million in the second quarter of 1997 compared to management fees related to the
Boston, Long Island and Westchester Network Sites (for which the Company
displayed the patient service revenues on its consolidated statement of
operations for the second quarter of 1996) which were approximately $3.2 million
in the second quarter of 1996, a decrease of 27.6%. The decrease in management
fees at these Network Sites was primarily due to the absence of the Westchester
Network Site agreement during the second quarter of 1997 and the decrease in
patient service revenues at the Boston Network Site, partially offset by the
increase in patient service revenues at the Long Island Network Site.
Costs of services rendered were approximately $3.7 million in the second
quarter of 1997 as compared to approximately $3.0 million in the first quarter
of 1996, an increase of 23.9%. This increase was directly attributable to new
management agreements entered into in the second quarter of 1996 and the first
half of 1997 under the RSC Division and to the establishment of the AWM
Division. This increase was partially offset by the absence of costs from the
Westchester Network Site agreement. As a percentage of revenues, net, costs of
services rendered increased to 67.7% in the second quarter of 1997 compared to
61.9% in the second quarter of 1996.
13
<PAGE>
Network Sites' contribution was approximately $1.3 million in the second
quarter of 1997 compared to $1.1 million in the second quarter of 1996, an
increase of 17.1%, as a result of the revenue and cost variances discussed
above. As a percentage of revenues, Network Sites' contribution increased to
23.9% in the second quarter of 1997 as compared to 23.1% in the second quarter
of 1996.
General and administrative expenses for the second quarter of 1997 were
$988,000 compared to $960,000 in the second quarter of 1996, an increase of
2.9%. Such increase was primarily attributable to increases in travel and
communication costs associated with the new Network Sites and the AWM Division,
partially offset by the absence of costs associated with the closing of a
regional office in late 1996.
Clinical service development expenses were $58,000 in the second quarter of
1997 compared to $62,000 in the second quarter of 1996, a decrease of 6.5%. Such
decrease was primarily due to a decrease in development costs related to genetic
and immature oocyte testing.
Amortization of intangible assets was $144,000 in the second quarter of
1997 as compared to $49,000 in the second quarter of 1996. This increase was
attributable to the Company's acquisitions in the second and fourth quarter of
1996 and the first half of 1997.
Interest income for the second quarter of 1997 was $33,000 compared to
$102,000 in the second quarter of 1996. This decrease was primarily due to a
lower cash balance.
The provision for income taxes primarily reflected Massachusetts income
taxes and New York capital taxes in the second quarter of 1997 and in the second
quarter of 1996, respectively.
Net income was $94,000 in the second quarter of 1997 compared to net income
of $85,000 in the second quarter of 1996. This increase in net income was
primarily due to a $191,000 increase in contribution, partially offset by a
$95,000 increase in amortization of intangible assets and a $69,000 decrease in
interest income.
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Revenues for the six months ended June 30, 1997 (the "first half of 1997")
were approximately $10.6 million as compared to approximately $9.0 million for
the six months ended June 30, 1996 (the "first half of 1996"), an increase of
17.3%. In the first half of 1997, the Company's RSC Division and AWM Division
contributed 87.8% and 12.2%, respectively, of the Company's total revenues.
RSC Division revenues for the first half of 1997 were approximately $9.3
million as compared to $8.9 million for the first half of 1996, an increase of
4.1%. Revenues under the RSC Division were comprised of (i) patient service
revenues, (ii) three-part management fees and (iii) at the New Jersey Network
Site, management fees based on a percentage of revenues and reimbursed costs of
services. Patient service revenues were approximately $4.9 million in the first
half of 1997 compared to approximately $6.0 million for the first half of 1996,
a decrease of 17.8%. Patient service revenues decreased due to the absence of
the Westchester Network Site agreement which the Company terminated in November
1996 and due to an 11.3% decrease in revenues related to the Boston Network Site
attributable to lower volume at such Network Site. Three-part management fee
revenues were $2.5 million in the first half of 1997 compared to $1.4 million in
the first half of 1996, an increase of 76.1%. The increase in three-part
management fee revenues was attributable to new management agreements entered
into in the second quarter of 1996 and the first half of 1997. Management fees
based on a percentage of revenues and reimbursed costs of services of the New
Jersey Network Site were approximately $1.9 million in the first half of 1997
compared to approximately $1.5 million in the first half of 1996, an increase of
24.2%, due to an increase in volume at such Network Site. AWM Division revenues
for the first half of 1997 were approximately $1.3 million as compared to
$96,000 for the first half of 1996 due to the acquisitions in early June and
late December of 1996 which established this Division.
Medical Practice retainage, which represents physicians' and other medical
fees, direct materials, and certain hospital contract fees related to the Boston
and Long Island Network Sites in the first half of 1997 and to the Boston, Long
Island and Westchester Network Site in the first half of 1996, was approximately
$856,000 in the first half of 1997 as compared to approximately $1.5 million in
the first half of 1996, a decrease of 43.5%, primarily due to the absence of the
Westchester Network Site agreement.
14
<PAGE>
Revenues after Medical Practice Retainage were approximately $9.7 million
in the first half of 1997 as compared to approximately $7.5 million in the first
half of 1996, an increase of 29.6%. The increase was attributable to new
management agreements entered into in the second quarter of 1996 and the first
half of 1997. The increase in revenues was partially offset by the net decrease
in management fees related to the Boston, Westchester and Long Island Network
Sites. Management fees (i.e. patient service revenues less Medical Practice
retainage) related to the Boston and Long Island Network Sites (for which the
Company displayed the patient service revenues on its consolidated statement of
operations for the second quarter of 1997) were approximately $4.4 million in
the first half of 1997 compared to management fees related to the Boston, Long
Island and Westchester Network Sites (for which the Company displayed the
patient service revenues on its consolidated statement of operations for the
first half of 1996) which were approximately $5.9 million in the first half of
1996, a decrease of 24.9%. The decrease in management fees at these Network
Sites was primarily due to the absence of the Westchester Network Site agreement
during the first half of 1997 and the decrease in patient service revenues at
the Boston Network Site, partially offset by the increase in patient service
revenues at the Long Island Network Site.
Costs of services rendered were approximately $7.3 million in the first
half of 1997 as compared to approximately $5.6 million in the first half of
1996, an increase of 31.8%. This increase was directly attributable to new
management agreements entered into in the first half of 1996 and the first half
of 1997 under the RSC Division and to the establishment of the AWM Division.
This increase was partially offset by the absence of costs from the Westchester
Network Site agreement. As a percentage of revenues, net, costs of services
rendered increased to 69.3% in the first half of 1997 compared to 61.7% in the
first half of 1996.
Network Sites' contribution was approximately $2.4 million in the first
half of 1997 compared to $1.9 million in the first half of 1996, an increase of
23.3%, as a result of the revenue and cost variances discussed above. As a
percentage of revenues, Network Sites' contribution increased to 22.6% in the
first half of 1997 as compared to 21.5% in the first half of 1996.
General and administrative expenses for the first half of 1997 were $1.9
million compared to $1.8 million in the first half of 1996, an increase of 5.0%.
Such increase was primarily attributable to increases in travel and
communication costs associated with the new Network Sites and the AWM Division,
partially offset by the absence of costs associated with the closing of a
regional office in late 1996.
Clinical service development expenses were $117,000 in the first half of
1997 compared to $128,000 in the first half of 1996, a decrease of 8.6%. Such
decrease was primarily due to a decrease in development costs related to genetic
and immature oocyte testing.
Amortization of intangible assets was $281,000 in the first half of 1997 as
compared to $91,000 in the first half of 1996. This increase was attributable to
the Company's acquisitions in the second and fourth quarter of 1996 and the
first half of 1997.
Interest income for the first half of 1997 was $67,000 compared to $222,000
in the first half of 1996. This decrease was primarily due to a lower cash
balance.
The provision for income taxes primarily reflected Massachusetts income
taxes and New York capital taxes in the first half of 1997 and in the first half
of 1996, respectively.
Net income was $49,000 in the first half of 1997 compared to a net income
of $11,000 in the first half of 1996. This increase in net income was primarily
due to a $450,000 increase in contribution, partially offset by an increase of
$190,000 in amortization of intangible assets, an $155,000 decrease in interest
income, and a $91,000 increase in general and administrative expenses.
15
<PAGE>
Liquidity and Capital Resources
Historically, the Company has financed its operations primarily through
sales of equity securities. At June 30, 1997, the Company had working capital of
approximately $5.0 million (including $466,000 of controlled assets of Medical
Practices), approximately $2.9 million of which consisted of cash and cash
equivalents (including $109,000 of controlled cash), compared to working capital
of $7.1 million at December 31, 1996 (including $650,000 of controlled assets of
Medical Practices), approximately $6.0 million of which consisted of cash and
cash equivalents (including $191,000 of controlled cash) and short term
investments. The net decrease in working capital at June 30, 1997 was
principally due to payments of $1.5 million in cash as part of the purchase
price of the Bay Area Acquisition in addition to cash payments for operating
activities, partially offset by an aggregate increase in receivables and other
current assets.
In January 1997, the Company consummated the Bay Area Acquisition for an
aggregate purchase price of approximately $2.1 million, consisting of $1.5
million in cash and 333,333 shares of Common Stock. In February 1997, the
Company entered into agreements with respect to the Pending Acquisition. The
aggregate purchase price for the Pending Acquisition is approximately $8.6
million of which $8.0 million is for the exclusive management right and $600,000
is for certain fixed assets. Approximately $6.6 million of the aggregate
purchase price is payable in cash and approximately $2.0 million is payable in
shares of Common Stock based on the average market price of the Common Stock for
the ten trading day period prior to closing, subject to a minimum and maximum
price per share. In June 1997, the Company consummated the San Diego Acquisition
for an aggregate purchase price of $900,000, partially consisting of $50,000 in
cash and 145,454 shares of Common Stock. An additional $650,000 is payable upon
the achievement of certain specified milestones, at RSMC's option, in cash or in
shares of the Company's Common Stock, based on the closing market price of the
Common Stock on the third business day prior to issuance.
On August 11, 1997, the Company's pending registration statement covering
an offering of 6,400,000 shares of common stock for gross proceeds of $9.6
million (net proceeds of approximately $8.4 million) was declared effective by
the Securities and Exchange Commission. The offering is a direct placement to
selected institutional and other investors and is being managed by Vector
Securities International, Inc. as Placement Agent. Closing is scheduled for
Friday, August 15, 1997. Approximately $6.6 million of the proceeds will be used
for the previously announced asset purchase and right-to-manage agreement with
Fertility Centers of Illinois, S.C., one of the largest providers of the
infertility and assisted reproductive technology services in the United States.
The balance of the proceeds of this offering will be used for working capital
and other general corporate purposes, including possible future acquisitions of
the assets of, and the right to manage, additional physician practices.
The Company anticipates that its acquisition strategy will continue to
require substantial capital investment. Capital is needed not only for
additional acquisitions, but also for the effective integration, operation and
expansion of the existing Network Sites. The Medical Practices may require
capital for renovation and expansion and for the addition of medical equipment
and technology. The Company intends to obtain significant additional financing
over the next two years to fund its acquisition strategy.
Under certain of its management agreements, the Company is obligated to
advance funds to the Medical Practices to provide a minimum physician draw (up
to an aggregate of approximately $1.3 million per annum) and to provide new
services, utilize new technologies, fund projects, purchase the net accounts
receivable of the Medical Practices and for other purposes. Any advances are to
be repaid monthly and will bear interest at the prime rate used by the Company's
primary bank in effect at the time of the advance.
In November 1996, the Company obtained a $1.5 million revolving credit
facility (the "Credit Facility") issued by First Union National Bank (the
"Bank"). Borrowings under the Credit Facility bear interest at the Bank's prime
rate plus 0.75% per annum, which at June 30, 1997, was 9.25%. The Credit
Facility terminates on April 1, 1998 and is secured by the Company's assets. On
a short-term basis, the Company will continue to finance its operations from its
current working capital and may, from time to time, make additional borrowings
under the Credit Facility. At June 30, 1997, $250,000 was outstanding under the
Credit Facility. At July 16, 1997, $250,000 was outstanding under the Credit
Facility. In June 1997, the Company obtained a commitment from the Bank for a
new $4.0 million non-restoring credit facility (the "New Credit Facility").
Borrowings under the New Credit Facility will bear interest at the Bank's prime
rate plus 1.0% per annum. Borrowings outstanding under the New Credit Facility
at September 30, 1998 will convert into a four year term loan. Any amounts
borrowed under the New Credit Facility will permanently reduce amounts available
for future borrowings under the New Credit Facility. The New Credit Facility
will be cross-collateralized and cross-defaulted with the Credit Facility. The
Bank's commitment under the New Credit Facility is subject to, among other
things, the consummation of the Pending Acquisition. On a short-term basis, the
Company will continue to finance its operations from its current working capital
and may, from time to time, make additional borrowings under the Credit Facility
and the New Credit Facility.
16
<PAGE>
The Company has commitments to fund clinical services development pursuant
to various collaboration agreements. Effective July 1, 1995, the Company entered
into a new three-year agreement with Monash University that provides for Monash
to conduct research in ART services and techniques to be funded by a minimum
annual payment of 220,000 Australian dollars, the results of such research to be
jointly owned by the Company and Monash. If certain milestones are met as
specified in this agreement, the Company's annual payment may be a maximum of
300,000 Australian dollars in year two and 380,000 Australian dollars in year
three. Minimum payments of 55,000 Australian dollars and payments for the
attainment of certain research milestones will be made quarterly throughout the
term of this agreement. The Company expensed approximately $72,000 and $80,000
under this agreement in the first half of 1997 and in the first half of 1996,
respectively.
As of June 30, 1997, dividend payments of $397,000 on the Series A
Cumulative Convertible Preferred Stock (the "Convertible Preferred Stock") were
in arrears. The Company does not anticipate the payment of any dividends on the
Convertible Preferred Stock in the foreseeable future.
New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, "Earnings Per Share" ("SFAS 128"). The Company will adopt SFAS No. 128 for
its fiscal year ending December 31, 1997. The Company does not anticipate the
effect on earnings to be material.
Fluctuations in Quarterly Results
The Company's revenues are typically lower during the first quarter of the
Company's fiscal year. This lower level of revenues is primarily attributable to
the commencement of fertility treatment by the patients of the Medical Practices
at the beginning of the calendar year. Quarterly results also may be materially
affected by the timing of acquisitions and the timing and magnitude of costs
related to acquisitions. Therefore, results for any quarter are not necessarily
indicative of the results that the Company may achieve for any subsequent fiscal
quarter or for a full fiscal year.
Forward Looking Statements
The Company wishes to caution readers that the information in this Form
10-Q contains certain forward-looking statements within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act of 1995, the
attainment of which involve risks and uncertainties. The Company's actual
results may differ materially from those described in these forward-looking
statements due to certain factors including, but not limited to, the following:
The success of the Company in acquiring additional management agreements,
including the Company's ability to finance future growth, increases in overhead
due to expansion, the possibility of loss of significant management contract(s),
the profitability or lack thereof at Network Sites, the exclusion of
infertility, ART, and adult women's health care services from third party
reimbursement, government laws and regulation regarding health care, changes in
managed care contracting, and the timely development of and acceptance of new
infertility, ART and adult women's health care technologies and techniques.
17
<PAGE>
Part II - OTHER INFORMATION
Item 1. Legal Proceedings.
Not applicable.
Item 2. Changes in Securities.
In June 1997, the Registrant consummated the acquisition
of certain assets of and the right to manage the
Reproductive Sciences Medical Center, Inc. The
Registrant issued 145,454 shares of Common Stock as
partial payment of the consideration for this
acquisition.
In June 1997, the Registrant issued 41,058 shares of
Common Stock to the MPD Medical Associates, P.C., as
partial payment of the consideration for entering into a
new management agreement relating to the Long Island
Network Site.
Item 3. Defaults Upon Senior Securities.
As of August 12, 1997, dividend payments of $397,000 on
the Convertible Preferred Stock were in arrears.
Item 4. Submission of Matters to Vote of Security Holders.
At an annual shareholders' meeting held on June 10,
1997, the following matters were approved: 1) election
of six directors, 2) approval and ratification of an
amendment to the Company's 1992 Incentive and
Non-Incentive Stock Option Plan, 3) the appointment of
Price Waterhouse LLP as the independent accountants of
the Company.
The respective vote tabulations are detailed below:
<TABLE>
<CAPTION>
Shares Voted
Proposal 1 - Directors For Against Abstained Non-Votes
---------------------- --- ------- --------- ---------
<S> <C> <C> <C> <C>
Gerardo Canet 7,032,028 303,558 -- --
Vicki L. Baldwin 7,032,637 302,949 -- --
Elliott D. Hillback, Jr. 7,031,937 303,649 -- --
Sarason D. Liebler 7,032,337 303,249 -- --
Patricia M. McShane, M.D. 7,032,237 303,349 -- --
Lawrence Stuesser 7,032,337 303,249 -- --
Proposal 2
----------
Amendment to the Company's
1992 Incentive and Non-Incentive
Stock Option Plan 6,574,657 529,831 10,977 220,121
Proposal 3
----------
Reappointment of Price
Waterhouse LLP 7,305,687 14,260 15,639 --
</TABLE>
18
<PAGE>
Item 5. Other Information.
On August 11, 1997, the Company's pending registration
statement covering an offering of 6,400,000 shares of
common stock for gross proceeds of $9.6 million (net
proceeds of approximately $8.4 million) was declared
effective by the Securities and Exchange Commission. The
offering is a direct placement to selected institutional
and other investors and is being managed by Vector
Securities International, Inc. as Placement Agent.
Closing is scheduled for Friday, August 15, 1997.
Approximately $6.6 million of the proceeds will be used
for the previously announced asset purchase and
right-to-manage agreement with Fertility Centers of
Illinois, S.C., one of the largest providers of the
infertility and assisted reproductive technology
services in the United States. The balance of the
proceeds of this offering will be used for working
capital and other general corporate purposes, including
possible future acquisitions of the assets of, and the
right to manage, additional physician practices.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
See Index to Exhibits on pages 15-16.
(b) Reports on Form 8-K.
On March 24, 1997, the Company filed with the Securities
and Exchange Commission a Form 8-K/A reporting the
required audited financial statements and pro forma
information associated with the business acquired by the
Company in January 1997.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
INTEGRAMED AMERICA, INC.
(Registrant)
Date: August 13, 1997 By: /s/ Dwight P. Ryan
------------------
Dwight P. Ryan
Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer)
20
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
10.61 -- Management Agreement dated January 7, 1997 by and between the
Registrant and Bay Area Fertility and Gynecology Medical Group,
Inc. (1)
10.62 -- Asset Purchase Agreement dated January 7, 1997 by and between the
Registrant and Bay Area Fertility and Gynecology Medical Group, a
California Partnership. (1)
10.63 -- Physician Employment Agreement between Robin E. Markle, M.D. and
Women's Medical & Diagnostic Center, Inc. (2)
10.64 -- Physician Employment Agreement between W. Banks Hinshaw, Jr., M.D.
and Women's Medical & Diagnostic Center, Inc. (2)
10.65 -- Agreement between IntegraMed America, Inc., f/k/a IVF America
Inc.; Women's Medical & Diagnostic Center, Inc., f/k/a INMD
Acquisition Corp, and Morris Notelovitz, M.D. (2)
10.66 -- Personal Responsibility Agreement between IntegraMed America,
Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and
Donald I. Galen, M.D. (2)
10.67 -- Personal Responsibility Agreement between IntegraMed America,
Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and
Louis N. Weckstein, M.D. (2)
10.68 -- Personal Responsibility Agreement between IntegraMed America,
Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and
Arnold Jacobson, M.D. (2)
10.69 -- Copy of Executive Retention Agreement between Registrant and Glenn
G. Watkins (2)
10.70 -- Management Agreement between Registrant and Fertility Centers of
Illinois, S.C. dated February 28, 1997 (3)
10.71 -- Asset Purchase Agreement between Registrant and Fertility Centers
of Illinois, S.C. dated February 28, 1997 (3)
10.72 -- Physician-Shareholder Employment Agreement between Fertility
Centers of Illinois, S.C. and Aaron S. Lifchez, M.D. dated
February 28, 1997 (3)
10.73 -- Physician-Shareholder Employment Agreement between Fertility
Centers of Illinois, S.C. and Brian Kaplan, M.D. dated February
28, 1997 (3)
10.74 -- Physician-Shareholder Employment Agreement between Fertility
Centers of Illinois S.C. and Jacob Moise, M.D. dated February 28,
1997 (3)
10.75 -- Physician-Shareholder Employment Agreement between Fertility
Centers of Illinois, S.C. and Jorge Valle, M.D. dated February 28,
1997 (3)
10.76 -- Personal Responsibility Agreement among Registrant, Fertility
Centers of Illinois, S.C. and Aaron S. Lifchez, M.D. dated
February 28, 1997 (3)
21
<PAGE>
10.77 -- Personal Responsibility Agreement among Registrant, Fertility
Centers of Illinois, S.C. and Jacob Moise, M.D. dated February 28,
1997 (3)
10.78 -- Personal Responsibility Agreement among Registrant, Fertility
Centers of Illinois, S.C. and Brian Kaplan, M.D. dated February
28, 1997 (3)
10.79 -- Personal Responsibility Agreement among Registrant, Fertility
Centers of Illinois, S.C. and Jorge Valle, M.D. dated February 28,
1997 (3)
10.80 -- Amendment to Contract Number DADA15-96-C-009 between Registrant
and the Department of the Army, Walter Reed Army Medical Center
for In Vitro Fertilization Laboratory Services dated February 11,
1997 (3)
10.81 -- Management Agreement between Registrant and Reproductive Sciences
Medical Center, Inc. (4)
10.82 -- Asset Purchase Agreement between Registrant and Samuel H. Wood,
M.D., Ph.D. (4)
10.83 -- Personal Responsibility Agreement between Registrant and Samual H.
Wood, M.D., Ph.D. (4)
10.84 -- Physician-Shareholder Employment Agreement between Reproductive
Sciences Medical Center, Inc. and Samuel H. Wood, M.D., Ph.D. (4)
10.85 -- Physician-Shareholder Employment Agreement between Reproductive
Endocrine & Fertility Consultants, P.A. and Elwyn M. Grimes, M.D.
(4)
10.86 -- Amendment to Management Agreement between Registrant and
Reproductive Endocrine & Fertility Consultants, P.A. (4)
10.87 -- Amendment to Management Agreement between Registrant and Fertility
Centers of Illinois, S.C. dated May 2, 1997 (4)
10.88 -- Management Agreement between Registrant and MPD Medical
Associates, P.C. dated June 2, 1997 (4)
10.89 -- Physician-Shareholder Employment Agreement between MPD Medical
Associates P.C. and Gabriel San Roman, M.D. (4)
10.90 -- Amendment No. 2 to Management Agreement between Registrant and
Fertility Centers of Illinois, S.C. dated June 18, 1997 (4)
10.91 -- Commitment Letter dated June 30, 1997 between Registrant and First
Union National Bank (3)
11 -- Computation of Net Loss Per Share of Common Stock
27 -- Financial Data Schedule
(1) Incorporated by reference to the Exhibit with the identical exhibit
number to Registrant's current Report on Form 8-K dated January 20,
1997.
(2) Incorporated by reference to the Exhibit with the identical number to
Registrant's Annual Report on Form 10-K for the year ended December 31,
1996.
22
<PAGE>
(3) Incorporated by reference to the Exhibit with the identical exhibit
number to Registrant's Registration Statement on Form S-1 (Registration
No. 333-26551) filed with the Securities and Exchange Commission on May
6, 1997.
(4) Incorporated by reference to the Exhibit with the identical exhibit
number to Registrant's Registration Statement on Form S-1 (Registration
No. 333-26551) filed with the Securities and Exchange Commission on
June 20, 1997.
23
<TABLE>
EXHIBIT 11
INTEGRAMED AMERICA, INC.
COMPUTATION OF NET LOSS PER SHARE OF COMMON STOCK
All amounts in thousands, except per share amounts
<CAPTION>
For three-month For the six-month
period ended June 30 ,period ended June 30,
1997 1996 1997 1996
------- ------ -------- -------
<S> <C> <C> <C> <C>
Primary
Net income................................................ $ 94 $ 85 $ 49 $ 11
Less: Dividends accrued on Preferred Stock............... 33 155 66 309
------- ------ -------- -------
Adjusted net (loss)....................................... $ 61 $ (70) $ (17) $ (298)
======= ====== ======== =======
Weighted average number of shares of Common Stock
outstanding........................................... 9,630 6,267 9,587 6,177
======= ====== ======== =======
Net loss per share of Common Stock........................ $ 0.01 $(0.01) $ (0.00) $(0.05)
======= ====== ======== =======
Fully Diluted
Net income................................................ $ 94 $ 85 $ 49 $ 11
======= ====== ======== =======
Weighted average number of shares of Common Stock
outstanding............................................ 9,630 6,267 9,587 6,177
Add: Common equivalent shares (determined using the
"treasury stock" method) representing incremental shares
issuable upon assumed exercise of options and warrants
using average market price............................. 142 450 165 525
Shares of Common Stock issued upon assumed conversion of
Series A Preferred Stock............................... 277 1,122 277 1,122
------- ------ -------- -------
Average number of shares of Common Stock and Common
Stock equivalents outstanding.......................... 10,049 7,839 10,029 7,824
======= ====== ======== =======
Net income per share of Common Stock and Common
Stock equivalents...................................... $ 0.01 $ 0.01 $ 0.00 $ 0.00
======= ====== ======== =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-mos
<FISCAL-YEAR-END> Dec-31-1997
<PERIOD-END> Jun-30-1997
<CASH> 2,864
<SECURITIES> 0
<RECEIVABLES> 6,384
<ALLOWANCES> 319
<INVENTORY> 0
<CURRENT-ASSETS> 10,222
<PP&E> 2,925 <F1>
<DEPRECIATION> 0
<TOTAL-ASSETS> 22,579
<CURRENT-LIABILITIES> 5,180
<BONDS> 0
0
166
<COMMON> 97
<OTHER-SE> 15,079
<TOTAL-LIABILITY-AND-EQUITY> 22,579
<SALES> 10,554
<TOTAL-REVENUES> 10,554
<CGS> 8,170
<TOTAL-COSTS> 8,170
<OTHER-EXPENSES> 117
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 33
<INCOME-PRETAX> 114
<INCOME-TAX> 65
<INCOME-CONTINUING> 49
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 49
<EPS-PRIMARY> (0.00)
<EPS-DILUTED> 0.00
<FN>
<F1>
PP&E is net of accumulated depreciation
</FN>
</TABLE>
