UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Amendment No. 1
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities and Exchange Act 1934
Date of Report: May 26, 1998
0-20260 and 1-11440 06-1150326
- --------------------------------------------------------------------------------
(Commission File Numbers) (IRS Employer Identification No.)
One Manhattanville Road, Purchase, NY 10577
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone no. including area code: (914) 253-8000
Registrant's former name: IVF America, Inc.
2
<PAGE>
INTEGRAMED AMERICA, INC.
FORM 8-K/A
TABLE OF CONTENTS
Items 7 (a) and (b)
PAGE
FINANCIAL INFORMATION
Shady Grove Fertility Centers, P.C. Financial Statements
Report of Independent Accountants.......................................3
Balance Sheet as of March 12, 1998 (unaudited)
and December 31, 1997 and 1996........................................4
Statement of Operations for the interim-period ended March 12, 1998
(unaudited) and the years ended December 31, 1997 and 1996............5
Statement of Stockholders' Deficit for the interim-period ended
March 12, 1998 (unaudited) and the years ended December 31, 1997
and 1996.............................................................6
Statement of Cash Flows for the interim-period ended March 12, 1998
(unaudited) and the years ended December 31, 1997 and 1996...........7
Notes to Financial Statements....................................... 8-11
IntegraMed America, Inc.
Pro Forma Consolidated Financial Information (unaudited)
Basis of Presentation..................................................12
Pro Forma Consolidated Statement of Operations for the three-month
period ended March 31, 1998..........................................13
Pro Forma Consolidated Statement of Operations for the year ended
December 31, 1997....................................................14
SIGNATURES..................................................................15
INDEX TO EXHIBITS...........................................................16
2
<PAGE>
Report of Independent Accountants
To the Stockholders of
Shady Grove Fertility Centers, P.C.
In our opinion, the accompanying balance sheet and related statements of
operations, of stockholders' equity and of cash flows present fairly, in all
material respects, the financial position of Shady Grove Fertility Centers, P.C.
(the "Company") at December 31, 1997 and 1996, and the results of its operations
and its cash flows for the years then ended in conformity with generally
accepted accounting principles. These financial statements are the
responsibility of the Company's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed above.
As discussed in Note 10 to the financial statements, on March 12, 1998,
the Company entered into agreements to sell its outstanding stock to IntegraMed
America, Inc. and give IntegraMed America, Inc. the right to manage the Company
for a twenty-five year period.
Price Waterhouse LLP
Stamford, Connecticut
May 1, 1998
3
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
BALANCE SHEET
<TABLE>
<CAPTION>
ASSETS
March 12, December 31,
--------- ----------------------
1998 1997 1996
--------- ------- ------
(unaudited)
Current assets:
<S> <C> <C> <C>
Cash and cash equivalents............................................. $ 9,884 $ 50 $ 50
Patient accounts receivable, less allowances of $758,360,
$753,857 and $324,098 in 1998, 1997 and 1996, respectively.......... 1,411,670 1,416,243 684,798
Other current assets.................................................. 29,129 5,029 3,150
---------- ---------- ---------
Total current assets............................................. 1,450,683 1,421,322 687,998
Fixed assets, net.................................................... 642,621 627,614 233,482
Long-term accounts receivable........................................ 100,000 100,000 --
Other assets......................................................... 46,553 41,523 25,387
---------- ---------- ---------
Total assets..................................................... $2,239,857 $2,190,459 $ 946,867
========== ========== =========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities............................. $ 740,230 $ 787,709 $ 182,898
Accrued physician compensation....................................... -- -- 229,930
Loans payable to stockholders'....................................... 200,000 -- --
Accrued profit sharing............................................... 91,231 99,400 90,072
Line of credit....................................................... -- 270,000 120,000
Current portion of long-term debt.................................... 84,342 97,620 39,330
Deferred revenue..................................................... 1,134,781 1,103,322 389,456
---------- ---------- ---------
Total current liabilities........................................ 2,250,584 2,358,051 1,051,686
Long-term debt....................................................... 222,509 222,509 62,456
Commitments and contingencies........................................ -- -- --
Stockholders' deficit:
Common stock (2,000 shares issued and outstanding at
March 12, 1998 and December 31, 1997 and 1996)...................... 2,000 2,000 2,000
Accumulated deficit.................................................. (235,236) (392,101) (169,275)
---------- ---------- ---------
Total stockholders' deficit...................................... (233,236) (390,101) (167,275)
---------- ---------- ---------
Total liabilities and stockholders' deficit...................... $2,239,857 $2,190,459 $ 946,867
========== ========== =========
</TABLE>
See accompanying notes to the financial statements.
4
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
For the
interim- For the
period ended years ended
March 12, December 31,
----------- -------------------------
1998 1997 1996
----------- -------- -------
(unaudited)
<S> <C> <C> <C>
Revenues, net............................................... $1,915,580 $7,090,695 $3,962,081
Costs of services rendered.................................. 1,115,781 5,093,057 2,810,792
----------- ----------- ----------
Contribution................................................ 799,799 1,997,638 1,151,289
General and administrative expenses......................... 638,769 2,211,967 1,103,480
Interest expense............................................ 4,561 28,766 14,113
Interest income............................................. 396 6,529 5,564
----------- ----------- ----------
Total other expenses........................................ 642,934 2,234,204 1,112,029
----------- ----------- ----------
Income (loss) before income taxes........................... 156,865 (236,566) 39,260
(Benefit) provision for taxes............................... -- (13,740) 13,740
----------- ----------- ----------
Net income (loss)........................................... $ 156,865 $ (222,826) $ 25,520
=========== =========== ==========
</TABLE>
See accompanying notes to the financial statements.
5
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
STATEMENT OF STOCKHOLDERS' DEFICIT
<TABLE>
<CAPTION>
Total
Common Stock Accumulated Stockholders'
Shares Amount Deficit Deficit
------ ------ --------- ---------
<S> <C> <C> <C> <C>
BALANCE AS OF JANUARY 1, 1996.................. 2,000 $2,000 $(194,795) $(192,795)
Net income..................................... -- -- 25,520 25,520
----- ------ --------- ---------
BALANCE AS OF DECEMBER 31, 1996................ 2,000 2,000 (169,275) (167,275)
Net loss....................................... -- -- (222,826) (222,826)
----- ------ --------- ---------
BALANCE AS OF DECEMBER 31, 1997................ 2,000 2,000 (392,101) (390,101)
Net income (unaudited)......................... -- -- 156,865 156,865
----- ------ --------- ---------
BALANCE AS OF MARCH 12, 1998 (unaudited)....... 2,000 $2,000 $(235,236) $(233,236)
===== ====== ========= =========
</TABLE>
See accompanying notes to the financial statements.
6
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
For the
interim- For the
period ended years ended
March 12, December 31,
---------- -----------------------
1998 1997 1996
---------- ---------- ---------
(unaudited)
Cash flows from operating activities:
<S> <C> <C> <C>
Net income (loss).................................................. $156,865 $ (222,826) $ 25,520
Adjustments to reconcile net income (loss) to net cash provided by
operating activities:
Depreciation and amortization................................... 22,000 87,000 52,785
Contractual allowance and bad debt reserve...................... 4,503 428,949 230,278
Changes in assets and liabilities:
(Increase) decrease in assets:
Patient accounts receivable................................... 70 (1,160,394) (540,747)
Long-term accounts receivable................................. -- (100,000) --
Other assets.................................................. (29,130) (18,015) (1,539)
Increase (decrease) in liabilities:
Accounts payable and accrued liabilities...................... (47,479) 604,811 (83,436)
Accrued physician compensation................................ -- (229,930) (43,027)
Accrued profit sharing........................................ (8,169) 9,328 14,826
Deferred revenue.............................................. 31,459 713,866 389,456
-------- ---------- ---------
Net cash provided by operating activities............................ 130,119 112,789 44,116
-------- ---------- ---------
Cash flows used in investing activities:
Purchase of fixed assets and leasehold improvements................ (37,007) (481,132) (17,628)
-------- ---------- ---------
Cash flows (used in) provided by financing activities:
Net (decrease) increase in line of credit.......................... (270,000) 150,000 120,000
Note receivable.................................................... -- -- 44,000
Repayment of debt.................................................. ( 13,278) (82,121) (190,488)
Proceeds from stockholders' loans.................................. 200,000 -- --
Proceeds from issuance of debt..................................... -- 300,464 --
-------- ---------- ---------
Net cash (used in) provided by financing activities.................. (83,278) 368,343 (26,488)
-------- ---------- ---------
Net increase in cash................................................ 9,834 -- --
Cash at beginning of period.......................................... 50 50 50
-------- ---------- ---------
Cash at end of period................................................ $ 9,884 $ 50 $ 50
======== ========== =========
Interest paid...................................................... $ 4,561 $ 28,766 $ 14,113
======== ========== =========
</TABLE>
See accompanying notes to the financial statements.
7
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - THE COMPANY:
Shady Grove Fertility Centers, P.C. (the "Company") is a six physician
group practice with four locations in the Washington D.C. area. Three of the
physicians (the "Stockholders") own 100% of the common stock of the Company. The
Company specializes in providing assisted reproductive technology and related
infertility services in the Washington D.C. area (see Note 10).
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Basis of presentation --
The accompanying financial statements of the Company comprise the accounts
of Shady Grove Fertility Centers, P.C.
Revenues and cost recognition --
Revenues consist of services rendered for patients and are recognized upon
performance of such services. Revenues are recorded on a net realizable basis
after deducting contractual allowances and consist of patient fees for
infertility and related services performed by the Company. Related direct costs
are recognized in the period in which the clinical and/or laboratory services
are rendered. Net realization is dependent upon benefits provided by the
patient's insurance policy or agreements between the Company and third-party
payors. Payments collected from patients in advance for services are included in
deferred revenue and revenue is recognized as the services are performed.
Cash and cash equivalents --
The Company considers all highly liquid instruments with original
maturities of three months or less to be cash equivalents.
Patient accounts receivable --
Patient accounts receivable represent receivables from patients and
insurance companies for medical services provided by the Company. Such amounts
are recorded net of contractual allowances and estimated bad debts.
Deferred revenue --
Deferred revenue represents payments collected from patients in advance
for services to be rendered. Revenue is recognized as the services are
performed.
Fixed assets --
Fixed assets are valued at cost less accumulated depreciation and
amortization. Depreciation is computed on a straight-line basis over the
estimated useful lives of the related assets, generally three to ten years.
Leasehold improvements are amortized over the shorter of the asset life or the
remaining term of the lease.
When assets are retired or otherwise disposed of, the costs and related
accumulated depreciation are removed from the accounts. The difference between
the net book value of the assets and proceeds from disposition is recognized as
a gain or loss. Routine maintenance and repairs are charged to expense as
incurred, while costs of betterments and renewals are capitalized.
8
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
NOTES TO FINANCIAL STATEMENTS (continued)
Income taxes --
The Company accounts for income taxes utilizing the asset and liability
approach. Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities
and are measured using the enacted tax rates and laws.
Financial instruments --
The carrying value of the Company's financial instruments, including cash
and cash equivalents, accounts receivable, accounts payable, and long-term debt,
as reported in the accompanying balance sheet, approximates fair value.
Common Stock --
The Company had 2,000 shares of common stock outstanding at March 12, 1998
and December 31, 1997 and 1996 with a par value of $1 per share.
Use of estimates in the preparation of the financial statements --
The preparation of these financial statements in conformity with generally
accepted accounting principles requires management of the Company to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities, at the date of
the financial statements, and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
NOTE 3 - FIXED ASSETS, NET:
Fixed assets, net at December 31, 1997 and 1996 consisted of the
following:
1997 1996
---------- --------
Furniture, office and other equipment...... $ 861,454 $482,569
Leasehold improvements..................... 243,572 141,325
---------- --------
Total .................................... 1,105,026 623,894
Less - accumulated depreciation and
amortization.............................. (477,412) (390,412)
---------- --------
$ 627,614 $233,482
========== ========
Depreciation and amortization expense totaled $87,000 and $52,785,
respectively, for the years ended December 31, 1997 and 1996.
9
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 4 - DEBT:
Long-term debt at December 31, 1997 and 1996 consisted of the following:
1997 1996
-------- -------
Business term loans.............. $216,892 $75,000
Equipment loans.................. 103,237 26,786
-------- -------
Total debt....................... 320,129 101,786
Less - current portion........... 97,620 39,330
-------- -------
Long-term debt................... $222,509 $62,456
======== =======
Two business term loans existed as of December 31, 1997. The first loan
was issued in March 1996 for $100,000 and requires monthly principal payments
through March 1999. This loan bears interest at a rate of 9.25%. The second loan
was issued in April 1997 for $210,000 and requires monthly payments through
April 2002. This loan bears interest at a rate of 9.5%. Both loans are
collateralized by accounts receivable and equipment of the Company.
The equipment loans represent loans for two automobiles which are payable
over a 5 year period and are collateralized by the automobiles. The first loan
was issued in December 1995 for $32,718 and bears interest at a rate of 8.75%.
The second loan was issued in May 1997 for $90,464 and bears interest at a rate
of 9.25%.
The Company also maintains a $325,000 line of credit arrangement with a
local bank. This line of credit bears a variable rate of interest which is equal
to the prime rate plus 1%. The total amount outstanding under the line of credit
was $270,000 and $120,000 at December 31, 1997 and 1996, respectively. The line
of credit was paid in full on January 22, 1998.
In January 1998, the Stockholders of the Company loaned $200,000 to the
Company which was used towards repaying the line of credit. The Company repaid
in full the non-interest bearing loan in early April 1998.
As of December 31, 1997, the annual maturities of the long-term debt
during each of the next five years were as follows:
1998........................................... $ 97,620
1999........................................... 71,462
2000........................................... 68,559
2001........................................... 62,759
2002 and thereafter............................ 19,729
------
Total debt payments............................ $320,129
========
NOTE 5 - OPERATING LEASES:
The Company leases certain office space and equipment under operating
lease agreements which extend for one to five years. Effective March 12, 1998,
in conjunction with the sub-management agreement with IntegraMed America, Inc.,
these leases became the obligations of IntegraMed America, Inc. (see Note 10).
Rent expense under operating leases was $348,881 and $200,579 for the
years ended December 31, 1997 and 1996, respectively.
10
<PAGE>
SHADY GROVE FERTILITY CENTERS, P.C.
NOTES TO FINANCIAL STATEMENTS (continued)
NOTE 6 - INCOME TAXES:
The Company did not record a tax provision for the interim period ended
March 12, 1998 due to its utilization of operating loss carryforwards. The
Company's 1997 tax benefit primarily represents an operating loss carryback for
federal and state income taxes which is partially offset by a valuation
allowance. The 1996 tax provision represents current federal and state income
taxes. The Company had no deferred tax assets or liabilities at December 31,
1997 and an insignificant deferred tax liability at December 31, 1996.
NOTE 7 - COMMITMENTS AND CONTINGENCIES:
The Company is subject to certain federal and state laws and regulations,
many of which have not been the subject of judicial or regulatory
interpretation. Management believes the Company's operations are in substantial
compliance with applicable laws and regulations. Although an adverse review or
determination by any such authority could be significant to the Company,
management believes the effects of any such review or determination would not be
material to the Company's financial condition or results of operations.
NOTE 8 - RELATED PARTY TRANSACTIONS:
Physician compensation and benefits were $513,542, $2,408,162 and
$1,265,486 for the interim period ended March 12, 1998 and the years ended
December 31, 1997 and 1996, respectively.
NOTE 9 - EMPLOYEE BENEFIT PLANS:
The Company maintains a profit sharing plan for certain physicians and
employees of the Company. The Company provided $93,000 and $90,366 to the plan
for the years ended December 31, 1997 and 1996, respectively.
NOTE 10 - SUBSEQUENT EVENT:
On March 11, 1998, the Company entered into a twenty-year management
agreement with Levy, Sagoskin and Stillman, M.D., P.C. (the "Shady Grove,
P.C."). Effective March 12, 1998, the Company changed to a Maryland business
corporation from a Maryland professional corporation and transferred its medical
practice operations to the Shady Grove, P.C. Contemporaneously, IntegraMed
America, Inc., a publicly held physician practice management company
("IntegraMed"), acquired the majority of the capital stock of the Company and
entered into a twenty-year sub-management agreement with the Shady Grove, P.C.
In April 1998, IntegraMed issued warrants to the Stockholders to acquire an
aggregate of 45,000 shares of IntegraMed Common Stock in consideration of
extending IntegraMed's sub-management agreement with the Shady Grove, P.C. from
twenty to twenty-five years. IntegraMed will acquire the balance of the capital
stock of the Company on or about November 1, 1998.
11
<PAGE>
INTEGRAMED AMERICA, INC.
Unaudited Pro Forma Consolidated Financial Information
Basis of Presentation
The transaction detailed below was accounted for by the purchase method of
accounting and the purchase price has been allocated to the tangible and
intangible assets acquired and liabilities assumed based upon the estimated fair
values at the date of acquisition. The unaudited consolidated financial
statements include the results of this transaction from the respective date of
acquisition.
On March 12, 1998, IntegraMed America, Inc. ("IntegraMed") acquired the
majority of the capital stock of Shady Grove Fertility Centers, Inc. ("Shady
Grove"), currently a Maryland business corporation which provides management
services, and formerly a Maryland professional corporation engaged in providing
infertility services. Prior to the closing of the transaction, Shady Grove had
entered into a twenty-year management agreement with Levy, Sagoskin and
Stillman, M.D., P.C. (the "Shady Grove, P.C."), an infertility physician group
practice comprised of six physicians (the "Physicians") and four locations
surrounding the greater Washington, D.C. area. In April 1998, IntegraMed issued
warrants to the shareholders of the Shady Grove, P.C. to acquire an aggregate of
45,000 shares of IntegraMed Common Stock in consideration of extending
IntegraMed's management agreement with the Shady Grove, P.C. from twenty to
twenty-five years. IntegraMed will acquire the balance of the Shady Grove
capital stock on or about November 1, 1998.
The aggregate purchase price for all of the Shady Grove capital stock was
approximately $5.7 million, consisting of approximately $2.8 million in cash,
$1.4 million in Common Stock, and $1.5 million in promissory notes. On March 12,
1998, the first closing date, the following consideration was paid to two of the
three shareholder physicians: (i) approximately $1.8 million in cash, (ii)
approximately $1.2 million in stock or 639,551 shares of IntegraMed's Common
Stock, and (iii) approximately $1.1 million in promissory notes. The promissory
notes are payable in two equal annual installments due on April 1, 1999 and
2000, respectively, and bear interest at an annual rate of 8.5%. IntegraMed will
pay the balance of the aggregate purchase price on or about November 1, 1998
(the "Second Closing Date"), when the balance of the Shady Grove capital stock
is transferred to IntegraMed. The number of shares of Common Stock of IntegraMed
to be issued on the Second Closing Date, which will have a fair market value of
approximately $200,000, will be determined based upon the average closing price
of IntegraMed's Common Stock for the ten-day trading period prior to the third
business day before the Second Closing Date; provided, however, that in no event
will the price per share exceed $2.00 or be less than $1.70 for purposes of this
calculation.
Under long term employment agreements with the Shady Grove, P.C., the
Physicians will provide medical services, as defined.
The following unaudited pro forma consolidated statements of operations
have been prepared by management based on the unaudited information for the
interim-period ended March 12, 1998 and audited information for the year ended
December 31, 1997 of Shady Grove adjusted where necessary, with respect to
pre-acquisition periods, to the basis of accounting used in the historical
financial statements of IntegraMed. Such adjustments include modifying the
results to reflect operations as if the related acquisition had been consummated
on January 1, 1998 and January 1, 1997, respectively. Additional general
corporate expenses which would have been required to support the operations of
the Shady Grove Network Site are not included in the pro forma results. The
unaudited pro forma results may not be indicative of the results that would have
occurred if the acquisition and management agreement had been in effect on the
dates indicated or which may be obtained in the future.
12
<PAGE>
<TABLE>
INTEGRAMED AMERICA, INC.
Pro Forma Consolidated Statement of Operations
for the Three-Month Period Ended March 31, 1998
(all amounts in thousands, except per share amounts)
(unaudited)
<CAPTION>
Transaction Pro Forma
Historical Adjustments Consolidated
---------- ----------- ------------
<S> <C> <C> <C>
Revenues, net................................................ $8,746 $1,468(a) $10,214
Operating expenses incurred on behalf of Network Sites....... 7,009 1,241(b) 8,250
------ ------ -------
Network Sites' contribution ................................. 1,737 227 1,964
------ ------ -------
General and administrative expenses.......................... 1,185 -- 1,185
Intangible asset amortization................................ 233 45(c) 278
Interest expense, net........................................ 60 -- 60
------ ------ -------
Total other expenses......................................... 1,478 45 1,523
------ ------ -------
Income before income taxes .................................. 259 182 441
Provision for income taxes .................................. 49 34 83
------ ------ -------
Net income................................................... 210 148 358
Less: Dividends accrued on Preferred Stock................... 33 -- 33
------ ------ -------
Net income applicable to Common Stock........................ $ 177 $ 148 $ 325
====== ====== =======
Basic earnings per share of Common Stock..................... $ 0.01 $ 0.02
====== =======
Diluted earnings per share of Common Stock................... $ 0.01 $ 0.02
====== =======
Weighted average shares-- Basic.............................. 20,024 505(d) 20,529
====== ====== =======
Weighted average shares-- Diluted............................ 20,401 505(d) 20,906
====== ====== =======
Note: Under the Shady Grove management agreement, IntegraMed receives as
compensation for its management services a three-part management fee comprised
of: (i) a fixed percentage of net revenues, (ii) reimbursed operating expenses
(expenses incurred in managing Shady Grove and any expenses paid on behalf of
Shady Grove), and (iii) a variable percentage of earnings. Pursuant to Amendment
No. 2 dated May 6, 1998 to the Shady Grove Management Agreement, the third
component of the management fee was changed to a variable percentage of earnings
from a percentage of revenues effective March 11, 1998.
(a) To record net revenues earned for the interim-period ended March 12, 1998
under the Shady Grove management agreement.
(b) To record operating expenses incurred during the interim-period ended March
12, 1998 under the Shady Grove management agreement.
(c) To record amortization of exclusive management rights, which are amortized
over the twenty-five year term of the Shady Grove management agreement, for
the interim-period ended March 12, 1998.
(d) Represents the balance of 639,551 shares which were assumed to be issued on
January 1, 1998 as opposed to March 12, 1998.
</TABLE>
13
<PAGE>
INTEGRAMED AMERICA, INC.
<TABLE>
Pro Forma Consolidated Statement of Operations
for the Year Ended December 31, 1997
(all amounts in thousands, except per share amounts)
(unaudited)
<CAPTION>
Transaction Pro Forma
Historical Adjustments Consolidated
---------- ----------- ------------
<S> <C> <C> <C>
Revenues, net................................................ $22,638 $5,683(a) $28,321
Operating expenses incurred on behalf of Network Sites....... 17,251 4,905(b) 22,156
------- ------ -------
Network Sites' contribution ................................. 5,387 778 6,165
------- ------ -------
General and administrative expenses.......................... 4,192 -- 4,192
Intangible asset amortization................................ 766 228(c) 994
Interest income, net......................................... (49) -- (49)
------- ------ -------
Total other expenses......................................... 4,909 228 5,137
------- ------ -------
Income before income taxes .................................. 478 550 1,028
Provision for income taxes .................................. 104 117 221
------- ------ -------
Net income................................................... 374 433 807
Less: Dividends accrued on Preferred Stock................... 133 -- 133
------- ------ -------
Net income applicable to Common Stock........................ $ 241 $ 433 $ 674
======= ====== =======
Basic earnings per share of Common Stock..................... $ 0.02 $ 0.05
======= =======
Diluted earnings per share of Common Stock................... $ 0.02 $ 0.05
======= =======
Weighted average shares-- Basic.............................. 12,405 640(d) 13,045
======= ====== =======
Weighted average shares-- Diluted............................ 12,616 640(d) 13,256
======= ====== =======
Note: Under the Shady Grove management agreement, IntegraMed receives as
compensation for its management services a three-part management fee comprised
of: (i) a fixed percentage of net revenues, (ii) reimbursed operating expenses
(expenses incurred in managing Shady Grove and any expenses paid on behalf of
Shady Grove), and (iii) a variable percentage of earnings. Pursuant to Amendment
No. 2 dated May 6, 1998 to the Shady Grove Management Agreement, the third
component of the management fee was changed to a variable percentage of earnings
from a percentage of revenues effective March 11, 1998.
(a) To record net revenues earned for the year ended December 31, 1997 under
the Shady Grove management agreement.
(b) To record operating expenses incurred during the year ended December 31,
1997 under the Shady Grove management agreement.
(c) To record amortization of exclusive management rights, which are amortized
over the twenty-five year term of the Shady Grove management agreement, for
the year ended December 31, 1997.
(d) Assumes 639,551 shares were issued on January 1, 1997.
</TABLE>
14
<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: May 26, 1998 By: /s/ Eugene R. Curcio
--------------------
Eugene R. Curcio
Vice President and
Chief Financial Officer
(Principal Financial and Accounting Officer)
15
<PAGE>
INDEX TO EXHIBITS
Exhibit
Number Exhibit
- ------- -------
10.105(b) -- Amendment No. 2 to Management Agreement between Shady Grove
Fertility Centers, Inc. and Levy, Sagoskin and Stillman, M.D.,P.C.
16
AMENDMENT NO. 2 TO MANAGEMENT AGREEMENT
BETWEEN
SHADY GROVE FERTILITY CENTERS, INC.
AND
LEVY, SAGOSKIN AND STILLMAN, M.D., P.C.
This Amendment No. 2 to Management Agreement ("Amendment No. 2") is dated
as of May 6, 1998 by and among IntegraMed America, Inc., a Delaware corporation,
with its principal place of business at One Manhattanville Road, Purchase, New
York 10577 ("IntegraMed"), Shady Grove Fertility Centers, Inc., a Maryland
corporation, having a place of business at One Manhattanville Road, Purchase,
New York 10577 ("Shady Grove") and Levy, Sagoskin and Stillman, M.D., P.C., a
Maryland professional corporation, with a place of business at 9707 Medical
Center Drive, Suite 230, Rockville, Maryland 20850 ("PC").
RECITALS
WHEREAS, Shady Grove and PC entered into a Management Agreement
("Management Agreement") dated March 11, 1998; and
WHEREAS, IntegraMed acquired the majority of the issued and outstanding
capital stock of Shady Grove on March 12, 1998; and
WHEREAS, Shady Grove and IntegraMed entered into a Submanagement Agreement
("Submanagement Agreement"), with PC's consent, dated March 12, 1998, pursuant
to which IntegraMed agreed to perform certain duties and responsibilities of
Shady Grove under the Management Agreement; and
WHEREAS, the Management Agreement was amended by agreement dated April 16,
1998; and
WHEREAS, the parties desire to amend further the Management Agreement, in
pertinent part, to provide for a revised Additional Management Fee, as defined
in the Management Agreement.
<PAGE>
NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, and as contained in the Management and Submanagement
Agreements, IntegraMed, Shady Grove and PC agree as follows:
1. Section 7.1.4 of the Management Agreement is hereby deleted in its
entirety and the following is hereby substituted therefore, retroactive to March
11, 1998:
"7.1.4 an Additional Management Fee, paid monthly but reconciled
quarterly, in accordance with the following table:
Years 1 through 5 of this Agreement
-----------------------------------
Cost of Services plus the Base
Management Fee as a % of Revenues Additional Management Fee
--------------------------------- -------------------------
Below 76% 20% of PDE
76% to 81% 17.5% of PDE
81% or more 15% of PDE
Years 6 through 25 of this Agreement
------------------------------------
Below 76% 25% of PDE
76% to 81% 22.5% of PDE
81% or more 20% of PDE
2. Section 7.4.2 of the Management Agreement is hereby deleted in its
entirety.
3. All other provisions of the Management Agreement, as amended, not in
conflict with this Amendment No. 2 remain in full force and effect.
4. This Amendment No. 2 may be executed in any number of separate
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have signed this Amendment No. 2 the date
first above written.
INTEGRAMED AMERICA, INC. LEVY, SAGOSKIN AND STILLMAN, MD., P.C.
By: /s/Gerardo Canet By: /s/Michael J. Levy
------------------------ ---------------------------
Gerardo Canet, President Michael J. Levy, President
SHADY GROVE FERTILITY CENTERS, INC.
By: /s/Gerardo Canet
------------------------
Gerardo Canet, President
