-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RW/VBeajVZCD/BENgM7y/5p3QyDjpHSW/aXRcjKXejlmREbRzCMqdQmkv9LsJ9S2 YNrjMp4FBeJx4QnTVYeDwA== 0000885988-04-000026.txt : 20040319 0000885988-04-000026.hdr.sgml : 20040319 20040319165118 ACCESSION NUMBER: 0000885988-04-000026 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 13 CONFORMED PERIOD OF REPORT: 20031231 FILED AS OF DATE: 20040319 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTEGRAMED AMERICA INC CENTRAL INDEX KEY: 0000885988 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-OFFICES & CLINICS OF DOCTORS OF MEDICINE [8011] IRS NUMBER: 061150326 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-20260 FILM NUMBER: 04680496 BUSINESS ADDRESS: STREET 1: TWO MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577-2100 BUSINESS PHONE: 9142538000 MAIL ADDRESS: STREET 1: 2 MANHATTANVILLE RD CITY: PURCHASE STATE: NY ZIP: 10577-2100 FORMER COMPANY: FORMER CONFORMED NAME: IVF AMERICA INC DATE OF NAME CHANGE: 19950720 10-K 1 form10k2003.txt INTEGRAMED AMERICA, INC. ============================================================================== UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ----------------- FORM 10-K [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2003 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] For the transition period from _____ to _____ Commission File No. 0-20260 INTEGRAMED AMERICA, INC. (Exact name of registrant as specified in its charter) Delaware 06-1150326 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) Two Manhattanville Road Purchase, New York 10577 (Address of principal executive offices) (Zip Code) (914) 253-8000 (Registrant's telephone number, including area code) ---------------------------- Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.01 par value 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 ------ Indicate by check mark if disclosure of delinquent filer pursuant to Item 405 of Regulation S-K (17 CFR 229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K [X] Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes No X ---- Aggregate market value of voting stock (Common Stock, $.01 par value) held by non-affiliates of the Registrant was approximately $13.8 million on June 30, 2003 based on the closing sales price of the Common Stock on such date. The aggregate number of shares of the Registrant's Common Stock, $.01 par value, outstanding was approximately 3,578,000 on March 6, 2004. ================================================================================ DOCUMENTS INCORPORATED BY REFERENCE See Part III hereof with respect to incorporation by reference from the Registrant's definitive proxy statement for the fiscal year ended December 31, 2003 to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934 and the Exhibit Index hereto. PART I ITEM 1. Business Company Overview IntegraMed America, Inc. (the "Company") offers products and services to patients and providers in the fertility industry. The IntegraMed Network is comprised of twenty-three fertility centers in major markets across the United States, pharmaceutical products and services, a financing subsidiary, the Council of Physicians and Scientists, and a leading fertility portal (www.integramed.com). Sixteen Affiliate fertility centers purchase discrete service packages provided by the Company and seven fertility centers have access to the entire portfolio of products and services under the comprehensive FertilityPartners(TM) program. All twenty-three fertility centers have access to the Company's consumer services, principally pharmaceutical products and patient financing products. The Company was incorporated in Delaware on June 4, 1985. We maintain a website at www.integramed.com to provide information to the general public and our shareholders on our products, resources and services, along with general information on IntegraMed and its management, career opportunities, financial results and press releases. Copies of our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q or our other reports filed with the Securities and Exchange Commission, or SEC, can be obtained, free of charge as soon as reasonably practicable after such material is electronically filed with, or furnished to the SEC, from our Investor Relations Department by calling 914-253-8000, through an e-mail request from our Investor Information web page at www.integramed.com, through the SEC's website by clicking the direct link from our website at www.integramed.com or directly from the SEC's website at www.sec.gov. Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K. Our Board of Directors has adopted a Code of Business Conduct that is applicable to all of our directors, officers and employees, a copy of which is attached as an exhibit to this annual report. Any material changes made to our Code of Business Conduct or any waivers granted to any of our directors and executive officers will be publicly disclosed by filing a current report on Form 8-K within five business days of such material change or waiver. We intend to make a copy of the Code of Business Conduct as well as charters for our Audit Committee and Nominating and Corporate Governance Committee, which comply with the recently adopted corporate governance rules of NASDAQ, available on our website at www.integramed.com. In addition, a copy of such documents will also be made available to our shareholders upon request by contacting our Investor Relations Department by calling 914-253-8000 or through an e-mail request from our website at www.integramed.com. Industry -- Reproductive Medicine Reproductive medicine encompasses the medical discipline that focuses on male and female reproductive systems and processes. There are many reasons why couples have difficulty conceiving, and accurate identification of a specific cause of infertility can be time consuming, expensive and requires access to specialized diagnostic and treatment services. Many gynecologists do not have the time or interest to perform a complete evaluation of the infertile couple and therefore often bypass detailed diagnostic testing. Instead, they often provide initial medical treatment of infertility, without extensive diagnosis, by prescribing a drug called clomiphene citrate, which helps to correct ovulatory problems. This treatment is fairly inexpensive and often resolves the problem if the only obstacle to pregnancy is, in fact, an ovulatory problem. It is generally recommended that women receive this therapy for no more than three to six ovulatory cycles. If pregnancy has not occurred, referral should be made to a fertility specialist who can offer more advanced treatments. Fertility specialists are gynecologists who perform more sophisticated medical and surgical fertility diagnosis and treatments. Reproductive endocrinology refers to the diagnosis and treatment of all hormonal problems that lead to abnormal reproductive function or have an effect on the reproductive organs. Reproductive endocrinologists are physicians who have completed four years of residency training in obstetrics and gynecology and have at least two years of additional training in an approved subspecialty fellowship program. Conventional fertility services include diagnostic tests performed on the female, such as endometrial biopsy, laparoscopy/hysteroscopy examinations and hormone screens, and diagnostic tests performed on the male, such as semen analysis. Depending on the results of the diagnostic tests performed, treatment options may include, among others, fertility drug therapy to stimulate regular and predictable ovulation, artificial insemination and fertility surgeries to 2 correct anatomical problems. Procedures that require gametes (sperm and eggs) to be handled in vitro (outside the body) are classified as assisted reproductive technology ("ART") services. Current types of ART services include in vitro fertilization ("IVF"), gamete intrafallopian transfer ("GIFT"), zygote intrafallopian transfer ("ZIFT"), tubal embryo transfer, frozen embryo transfer and donor egg programs. IVF represents the most frequently employed form of ART. Current techniques used in connection with IVF services include intracytoplasmic sperm injection ("ICSI"), assisted hatching, cryopreservation of embryos and blastocyst culture and transfer. There are currently approximately 45,000 obstetricians/gynecologists in the United States of which approximately 900 concentrate on providing fertility services as reproductive endocrinologists. There are currently approximately 421 centers across the country that provide ART services. These centers are predominantly staffed by reproductive endocrinologists. Approximately one-third of the ART centers are hospital-based and two-thirds are physician-office based. As ART has become more sophisticated, more predictable and less experimental, there has been a clear shift of services out of hospitals and into physician offices. Compared to other medical niches, the fertility services industry is concentrated among relatively few providers and few manufacturers of medications and devices. Infertility is generally defined as the inability to conceive after one or more years of a couple having unprotected intercourse. According to The American Society for Reproductive Medicine in its most recent published data, it is estimated that in 1996 approximately 10% of couples, or 6.1 million couples, had impaired fertility. According to the 1999-2000 Dorland Biomedical Healthcare Marketplace Guide, the annual expenditures relating to fertility services are approximately $2 billion. The Company believes that multiple factors over the past several decades have affected fertility levels. A demographic shift in the United States toward the deferral of marriage and first birth has increased the age at which women are first having children. This, in turn, increases the incidence of infertility, making conception more difficult, thereby increasing the demand for ART services. Fortunately, technological advances in the treatment of infertility, especially IVF, have enhanced treatment outcomes and the prognoses for many couples. According to the latest survey on the subject, the William M. Mercer/Foster-Higgins' National Survey of Employer-sponsored Health Plans/1995, approximately one quarter of all health plan sponsors with at least 10 employees provide some coverage for the treatment of infertility. Because patients seeking fertility treatment often have other gynecological symptoms, health plans may cover diagnostic expenses even when infertility treatment itself, is not a covered benefit. Currently, there are several states that mandate offering benefits of varying degrees for fertility services, including ART services. In some states, the mandate is limited to an obligation on the part of the payer to offer the benefit to employers. In Massachusetts, Rhode Island, Maryland, Arkansas, Illinois, Hawaii and New Jersey the mandate requires coverage of conventional fertility services, as well as ART services. In addition to payer driven initiatives to broaden coverage, several legislative initiatives are emerging as a driving force behind making fertility services more readily available. Finally, the 1998 Supreme Court ruling that reproduction is a major life activity covered under the Americans with Disability Act (the "ADA") led to an Equal Employment Opportunity Commission administrative ruling that a New York company discriminated against one of its employees by not providing insurance coverage for fertility services. ART services are the most rapidly growing segment of the fertility market. According to the Society of Assisted Reproductive Technology ("SART"), approximately 10,000 ART procedures were performed in 1987. In 2001, the most recent year for which data are available, approximately 108,000 ART procedures were performed. There is reason to believe that the market will continue to grow in the future for the following reasons: (i) the quality of ART treatments is improving, making outcomes much more acceptable; (ii) improvements in embryo culture media and implantation rates are leading to the capability of reducing high order multiple pregnancies - one of the greatest risk factors of ART services; (iii) with improving pregnancy rates, the cost of treatment is decreasing thereby making high technology services more affordable; (iv) new ART services that improve embryo quality and the likelihood of pregnancy, such as blastocyst culture and transfer, continue to emerge fueling an expansion of the industry; (v) the improving relationship between cost and quality is causing physicians to substitute more effective ART treatments for less effective conventional fertility services; (vi) public policy initiatives including legislative mandates for insurance coverage and the definition of reproduction as a major life activity covered by the ADA are producing a more favorable reimbursement climate; and (vii) demand for ART services is increasing through greater public awareness and acceptance of ART services. The market conditions producing business opportunities for the Company include: (i) the high level of specialized skills and technology required for comprehensive patient treatment; (ii) the capital-intensive nature of acquiring and maintaining state-of-the-art medical equipment, laboratory and clinical facilities; (iii) the need to develop and maintain specialized management information systems to meet the increasing demands of technological advances, patient monitoring and third-party payers; (iv) the need for seven-days-a-week service to respond to patient needs and to optimize the outcomes of patient treatments; (v) the high cost of treatment with inadequate insurance benefits in most markets; and (vi) the high cost of pharmaceutical products requiring patient education and support. 3 Company Strategy The Company's strategy is to align information, technology and finance for the benefit of fertility patients, providers, and payers. The primary elements of the Company's strategy include: (i) expanding the IntegraMed Provider Network into new major markets; (ii) increasing the number and value of service packages purchased by members of the IntegraMed Provider Network; (iii) entering into additional FertilityPartners(TM) contracts; (iv) increasing revenues at contracted FertilityPartners(TM) centers; (v) increasing the number of Shared Risk Refund(TM) treatment packages (as defined below) sold to patients of the IntegraMed Provider Network and managing the risk associated with the Shared Risk Refund program; (vi) increasing sales of pharmaceutical products and services; and (vii) developing Internet-based access to personalized health information. (i) Expand the IntegraMed Provider Network The Company will seek to expand the IntegraMed Provider Network to cover additional major market areas across the country. The Company will primarily focus the IntegraMed Provider Network development activities on major markets with populations in excess of one million because the demographics of consumers who access fertility services are consistent with the demographics of most major metropolitan markets. In addition, the relatively low incidence of infertility requires a large population base to support a sophisticated fertility center. The Company believes high quality fertility centers are capable of drawing consumers from approximately a one hundred mile radius or more if alternatives are unavailable. It is the Company's belief that these market dynamics would allow the Company to cover a large percentage of the national population by expanding the IntegraMed Provider Network to the fifty largest metropolitan markets across the country. The entry point for fertility centers participating in the IntegraMed Provider Network is the Affiliate. Contracted fertility centers that become Affiliates have access to the Company's products and services that support patient recruitment. Included in this program are (i) Shared Risk Refund treatment packages (as described below), (ii) treatment financing and (iii) Internet marketing. The Company licenses these programs to a select number of leading fertility centers in each market. (ii) Increase the Number and Value of Service Packages sold to Participating Fertility Centers The Company has a portfolio of discrete service packages that are sold to fertility centers participating in the IntegraMed Provider Network. The Company's service offerings include: FertilityWeb(TM) - a Web Site development, hosting and marketing service that helps contracted fertility centers develop and maintain a modern, transaction oriented Web Site. Web Sites for contracted fertility centers are built with a technology known as Dynamic Site Rendering Engine ("DSRE"). DSRE also contains a web editing tool that permits anyone with a common web browser to maintain the Web Site to ensure it is up to date. Contracted fertility centers also gain access to additional web site visitors by virtue of their placement on www.integramed.com, the Company's industry leading web site. FertilityPurchase(TM) - a group purchasing program exclusively available to fertility centers participating in the IntegraMed Provider Network. The focus of the FertilityPurchase program is on high cost disposable supplies, laboratory reagents and capital equipment used by fertility centers in diagnosing and treating infertility. The Company intends to extend this program to include other products and services that fertility centers commonly purchase in the ordinary course of business, including malpractice insurance, computers and medical supplies. FertilityMarKit(TM) - a package of award-winning marketing and sales programs that have helped contracted fertility centers to grow at three times the average rate for the industry. This service includes access to the Company's proprietary marketing collateral material library of ads, brochures, fliers and announcements. In addition, the Company conducts quarterly sales and marketing training seminars, offers a media buying service and produces radio and television ads and educational videos. ARTWorks(R) Clinical Information System - a proprietary clinical information system focused exclusively on the unique requirements of providing clinical care to patients seeking fertility treatment. Owned and maintained by the Company, ARTWorks Clinical Information System is distributed on an application services provider ("ASP") model. Under this model, the Company maintains the application in its dedicated data center in New York. Contracted fertility centers only need to gain access to the application with an appropriate telecommunication link and maintain their own local area network to utilize the application. The benefit of the ASP model is that the Company's customers do not need to invest in expensive hardware or licensing fees to gain 4 access to the application. The Company has also optimized the application by developing and maintaining an interface with commonly used laboratory equipment and the Company's chosen practice management and financial information systems. ARTWorks Practice Management Information System - based on the Misys Vision system, is an information system that enables contracted fertility centers to have a sophisticated scheduling, billing and accounts receivable system. The Misys system is also offered on an ASP model, which permits contracted fertility centers to gain access to a powerful practice management system at a fraction of the cost of traditional installation. This system has been customized to the unique requirements of fertility centers and has helped contracted fertility centers to maintain excellent performance on managing accounts receivable. FertilityPartners(TM) - fertility centers that contract for this program, receive a comprehensive, turnkey fertility center operation, may use the "Reproductive Science Center" designation and have access to the Company's entire portfolio of services including: (i) administrative services, including accounting and finance, human resource functions, and purchasing of supplies and equipment; (ii) access to capital and servicing and financing patient accounts receivable; (iii) marketing and sales; (iv) integrated information systems; and (v) assistance in identifying best clinical practices. (iii) Entering in to FertilityPartners(TM) Contracts Fertility centers participating in the FertilityPartners program are entitled to the Company's full service support. The Company will primarily focus its FertilityPartners contracting efforts on fertility centers participating as Affiliates in the IntegraMed Provider Network. These Affiliate fertility centers have contracted with the Company for more limited, discrete service packages and have developed a good working relationship with the Company. This good working relationship mitigates risk associated with capital investments that are part of the FertilityPartners program. The Company believes that a number of factors will contribute to the successful transition of certain Affiliate fertility centers in the IntegraMed Provider Network to the FertilityPartners program. These factors include: (i) the high quality reputation of the Company in providing services in the areas of fertility and ART services; (ii) the Company's expertise in assisting its customers in increasing revenues and maintaining cost efficient operations; (iii) the Company's success in improving patient outcomes by providing laboratory support services to the FertilityPartners program; and (iv) the capital intensive nature of operating modern, sophisticated fertility centers and the difficulty most physician groups have in accessing sufficient capital. (iv) Increasing Revenues from FertilityPartners(TM) Contracts The Company expects to increase revenues derived under its FertilityPartners contracts by: (i) sponsoring mergers with smaller fertility physician group practices; (ii) making available expanded laboratory and ART services at the fertility centers, thereby increasing revenues per patient; and, (iii) making available increased marketing and sales support to fertility centers. (v) Increasing the Number of Shared Risk Refund Treatment Packages Sold and Managing the Associated Risk The Company will seek to increase the number of Shared Risk Refund treatment packages sold directly to consumers. The Shared Risk Refund program was established at Shady Grove Fertility Reproductive Science Center ("Shady Grove") - the leading fertility center in the metropolitan Washington, DC area, a FertilityPartner and a member of the IntegraMed Provider Network. Based on the experience at Shady Grove, the Company developed an actuarial model that allows pricing a treatment package to consumers. The Shared Risk Refund program consists of a package that includes up to three cycles of in vitro fertilization for one fixed price with a significant refund if the patient does not deliver a baby. Under this innovative financial program, the Company receives payment directly from consumers who qualify for the program and pays contracted fertility centers a defined reimbursement for each treatment cycle performed. To manage the risk associated with the Shared Risk Refund program, the Company has developed a pre-authorization and a case management program. The pre-authorization is a structured process of collecting pre-treatment diagnostic information on each patient seeking enrollment in the Shared Risk Refund program. By evaluating clinical information the Company can assess the likelihood of any individual achieving pregnancy. In addition, each patient enrolled in the Shared Risk Refund program is evaluated as part of a case management program to continually assess response to treatment. Both the pre-authorization program and the case management program help to manage the risk fundamental to the Shared Risk Refund program. (vi) Increasing Sales of Pharmaceutical Products and Services The Company will continue its efforts to expand the pharmaceutical products and services line by: (i) providing Education Matters(TM) - a comprehensive patient educational support program; (ii) packaging products in the Cycle Kit(TM)- a unique packaging system that provides patients with all supplies and 5 instructions for proper utilization of medication; (iii) minimizing cost to patients and payers by implementing Cycle Track(TM) - a fertility pharmaceutical case management system that dispenses only the required amount of medication for patients to complete their treatment; (iv) implementing an aggressive marketing and sales program in cooperation with ivpcare, inc. (the supplier of pharmaceuticals to IntegraMed Pharmaceutical Services, Inc., a wholly-owned subsidiary of the Company ("IPSI")); and (v) expanding the offering beyond the six FertilityPartners centers to the entire IntegraMed Provider Network. (vii) Developing Internet-Based Access to Personalized Health Information The Company will continue to develop www.integramed.com as a leading fertility portal. The web site has provided a direct marketing infrastructure that allows the Company to offer efficient transaction processing capability for consumers and affiliated fertility centers. Currently consumers can participate in an on-line tutorial, subscribe to a bi-weekly newsletter, apply for an appointment, apply for treatment financing, apply for the Shared Risk Refund program and apply to become an egg donor. All transactions are logged to an Oracle database housed in the Company's data center. In addition, contracted fertility centers receive patient inquiries and referrals as appropriate. Core Competencies The Company's service packages are constructed from core competencies. In particular, the Company's core competencies include: (i) administrative services, including accounting and finance, human resource functions, and purchasing of supplies and equipment; (ii) access to capital and servicing and financing patient accounts receivable; (iii) marketing and sales; and (iv) integrated information systems. By providing fertility centers with access to these resources, the Company enables contracted fertility centers to achieve improved efficiencies and business outcomes. (i) Administrative Services The Company provides administrative services to fertility centers, including: (i) accounting and finance services, such as billing and collections, accounts payable, payroll, and financial reporting and planning; (ii) recruiting, hiring, training and supervising all non-medical personnel; and (iii) purchasing of supplies, pharmaceuticals, equipment, services and insurance. (ii) Access to Capital The Company provides fertility centers with a significant competitive advantage through immediate access to capital for expansion and growth. The Company also offers physician providers in its network rapid access to the latest technologies and facilities in order for them to provide a full spectrum of services and compete effectively for patients in the marketplace. For example, the Company has built a new facility that includes an embryology laboratory for certain fertility centers, thereby enabling them to expand their service offerings to include a number of services (including laboratory and ART services) which had previously been outsourced. The Company believes that access to these facilities and new technologies has improved the ability of the fertility centers to offer comprehensive high quality services, expand the revenue base per patient, and compete effectively. The Company provides fertility centers with accelerated operating capital through its receivable financing program. For a fertility center, this means access to funds upon billing for services rather than waiting for the collection of the accounts receivable which occurs within 15 to 60 days. (iii) Marketing and Sales The Company's marketing and sales department specializes in the development of sophisticated marketing and sales programs giving fertility centers access to business-building techniques to facilitate growth and development. In today's highly competitive health care environment, marketing and sales are essential for the growth and success of fertility centers. However, these marketing and sales efforts are often too expensive for many physician practice groups. Affiliation with the IntegraMed Provider Network provides physicians access to significantly greater marketing and sales capabilities than would otherwise be available. The Company's marketing services focus on revenue and referral enhancement, relationships with local physicians, media and public relations and managed care contracting. (iv) Integrated Information System The Company is using its established base of fertility centers to continuously develop a nationwide, integrated information system, called ARTWorks(TM), to collect and analyze clinical, patient, financial and marketing data. The Company believes it is able to use this data to control expenses, measure patient outcomes, improve patient care, develop and manage utilization rates and maximize reimbursements. The Company also believes this integrated 6 information system allows the fertility centers to more effectively compete for and price managed care contracts, in large part because an information network can provide these managed care organizations with access to patient outcomes and cost data. FertilityPartners Contracts The Company has a FertilityPartners contract with seven fertility centers, which in turn employ and/or contract with the physicians. Current FertilityPartners Contracts The Company currently has contracts with seven fertility centers consisting of 30 locations in 10 states and the District of Columbia. There are 56 physicians and Ph.D. scientists, including physicians and Ph.D. scientists employed and/or contracted by the fertility centers, as well as physicians who have arrangements to utilize the Company's facilities. The following table describes in detail each fertility center:
Number of Initial Number of Physicians and Business Services Fertility Centers State Locations Ph.D. Scientists Contract Date ----------------- ----- --------- ---------------- ------------- Reproductive Science Center of Boston........ MA, NH & RI 5 10 July 1988 Reproductive Science Center of the Bay Area Fertility and Gynecology Medical Group.... CA 3 6 January 1997 Fertility Centers of Illinois................ IL 10 12 August 1997 Shady Grove Fertility Reproductive Science Centers........................... MD, VA & DC 6 13 March 1998 IVF Florida ................................. FL 3 5 April 2002 Reproductive Endocrine Associates of Charlotte NC 1 6 September 2003 To be disclosed.............................. tbd 2 4 January 2004
Establishing FertilityPartners Contracts In establishing a FertilityPartners contract, the Company typically: (i) acquires certain assets of a fertility center; (ii) enters into a long-term services agreement with the fertility center under which the Company provides comprehensive services; and (iii) assumes the principal administrative and financial functions of the fertility center. In addition, the Company typically requires (a) that the fertility center enter into long-term employment agreements containing non-compete provisions with the affiliated physicians and (b) that each of the physician shareholders of the fertility center enter into a personal responsibility agreement with the Company. Typically, the fertility center's related medical practice contracting with the Company is a professional corporation in which certain of, or all of, the physicians are the shareholders. Typically, the FertilityPartners contracts obligate the Company to pay a fixed sum for the exclusive right to service the fertility center, a portion or all of which is paid at the contract signing with any balance to be paid in future annual installments. The agreements are typically for terms of 10 to 25 years and are generally subject to termination due to insolvency, bankruptcy or material breach of contract. Generally, no shareholder of the fertility center may assign his interest in the fertility center without the Company's prior written consent. The FertilityPartners contract provides that all patient medical care at a contracted fertility center is to be provided by the physicians of the fertility center and that the Company generally is responsible for providing defined services to the fertility center. The Company provides the equipment, facilities and support necessary to operate the fertility center and employs substantially all such other non-physician personnel as are necessary to provide technical, consultative and administrative support for the patient services at the fertility center. Under certain agreements, the Company is committed to provide a clinical laboratory. Under the agreements, the Company may also advance funds to the fertility center for providing new services, utilize new technologies, fund projects, purchase the net accounts receivable, provide working capital or fund mergers with other physicians or physician groups. Under all seven FertilityPartners agreements, the Company receives as compensation for its services a three-part fee comprised of: (i) a variable 7 percentage of net revenues generally up to 6%; (ii) reimbursed costs of services (costs incurred in providing services to a fertility center and any costs paid on behalf of the fertility center); and (iii) a fixed percentage of earnings after the initial service fees which currently ranges from 10% to 19%. Recent additions to the FertilityPartners program follow: On April 26, 2002, the Company signed a FertilityPartners agreement with the Margate, Florida based Northwest Center for Infertility and Reproductive Endocrinology ("NCIRE"). Under the terms of the 15-year agreement, the Company's service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of NCIRE earnings. On September 1, 2003, the Company signed a FertilityPartners agreement with the Charlotte, North Carolina based Reproductive Endocrinology and Andrology of Charlotte ("REACh") physician practice. Under the terms of this 15-year agreement, the Company's service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of REACh's earnings. In January 2004, the Company signed a FertilityPartner agreement to supply a complete range of business, marketing and facility services to group of fertility physicians in the Company's Western Region. Under the terms of the 15-year agreement, IntegraMed will be paid a fixed services fee commencing in January of 2004 paid monthly until the new facility is open, which is anticipated to be in Q4 of 2004. At that time, IntegraMed service fees will be comprised of the Company's standard reimbursed costs of services, a fixed percentage of revenues, plus an additional fixed percentage of the new center's earnings. IntegraMed, on November 25, 2002, announced the ending of its FertilityPartners agreement with RSA of New York. The agreement ended on November 15, 2003. RSA of New York serves the Long Island market and revenues for the four quarterly periods ending prior to the announcement were $9.1 million. The program had a contribution of $750,000 for the same period. The Company reports all fees as "Revenues, net." Direct costs incurred by the Company in performing its services and costs incurred on behalf of the fertility centers are recorded in "cost of services incurred". The physicians receive as compensation all remaining earnings after payment of the Company's compensation. Physician Employment Agreements Employment agreements between the fertility centers and physicians generally provide for an initial term ranging from three to five years. The term may be automatically renewed at successive intervals unless the physician or the fertility center elects not to renew or such agreement is otherwise terminated for cause or the death or disability of a physician. The physicians are paid based upon either the number of procedures performed or other negotiated formulas agreed upon between the physicians and the fertility center, and the fertility centers provide the physicians with health, death and disability insurance and other benefits. The fertility centers are obligated to obtain and maintain professional liability insurance coverage, procured on behalf of the physicians. Pursuant to the employment agreements, the physicians agree not to compete with the fertility center with which they have contracted during the term of the agreement and for a certain period following the termination of such employment agreement. In addition, the agreements contain customary confidentiality provisions. Affiliate Care/Satellite Service Agreements Fertility centers may also have affiliate care agreements and satellite service agreements with physicians who are not employed by the fertility center. Under an affiliate care agreement, the fertility center contracts with a physician to provide certain services for the fertility center's patients, such as endocrine/ultrasound monitoring, or ART services. Pharmaceutical Services IPSI markets fertility-related pharmaceutical products to certain participating providers in the IntegraMed Provider Network. IPSI contracts with ivpcare, inc., a licensed pharmacy specializing in dispensing pharmaceutical products, which provides certain business services to IPSI. Financing Subsidiary IntegraMed Financial Services, Inc. ("IFS"), a wholly owned subsidiary of the Company, arranges financing to qualified patients of the IntegraMed Provider Network at rates significantly lower than credit cards and other finance companies. IFS is administered by AmeriFee LLC, a third party vendor, which provides administrative management services to IFS. The loans are made to qualified patients by a third party bank. The patient makes payment directly to 8 the medical practice. The bank pays a placement fee to the Company. Such revenue is recorded when the Company receives the cash at the time of closing the transaction. Council of Physicians and Scientists The Company's Council of Physicians and Scientists (the "Council"), comprised mostly of representatives from the IntegraMed Provider Network, was established in 1996 to bring together leaders in reproductive medicine and embryology to promote a high quality clinical environment in the IntegraMed Provider Network. The Council meets twice each year and conducts monthly teleconferences on topics related to improving infertility treatment and diagnosis. The Council publishes its recommendations and the Company's staff follows up on implementing Council recommendations. The Council reviews and recommends accepting or denying additional physicians who want to join the IntegraMed Provider Network based on objective clinical credentialing criteria. Reliance on Third-Party Vendors IPSI, as well as all medical providers who deliver services requiring fertility medication, are dependent on three third-party vendors that produce such medications (including but not limited to: Lupron, Follistim, Repronex, GonalF and Pregnyl) that are vital to treating infertility and ART services. Should any of these vendors experience a supply shortage, it may have an adverse impact on the operations of the IntegraMed Provider Network. To date, the IntegraMed Provider Network has not experienced any such adverse impacts. Competition The business of providing health care services is intensely competitive and providers strive to find the most cost-effective method of providing quality health care. Although the Company focuses on medical groups that provide fertility and ART services, it competes for contracts with other health care services and management companies, as well as hospitals and hospital-sponsored management services organizations. If federal or state governments enact laws that attract other health care providers to the managed care market, the Company may encounter increased competition from other institutions seeking to increase their presence in the managed care market and which have substantially greater resources than the Company. There can be no assurance that the Company will be able to compete effectively with its current competitors. Nor can there be assurance that additional competitors will not enter the market, or that such competition will not make it more difficult to acquire the assets and service rights of fertility centers on terms beneficial to the Company. The fertility industry is highly competitive and characterized by technological improvements. New ART services and techniques may be developed that may render obsolete the ART services and techniques currently employed at the fertility centers. Competition in the areas of fertility and ART services is largely based on pregnancy and other patient outcomes. Accordingly, the ability of a fertility center to compete is largely dependent on its ability to achieve adequate pregnancy rates and patient satisfaction levels. Government Regulation As a participant in the health care industry, the Company's operations and its relationships with the FertilityPartners centers and the IntegraMed Provider Network are subject to extensive and increasing regulation by various governmental entities at the Federal, state and local levels. These include, but are not limited to, Federal and State Anti-Kickback Laws, Federal and State Self-Referral Laws, False Claim Laws, Federal and State Controlled Substances laws and regulations and Anti-Trust Laws. The Company believes its operations and those of the FertilityPartners centers are in material compliance with applicable health care laws. Nevertheless, the laws and regulations in this area are extremely complex and subject to changing interpretation and many aspects of the Company's business and business opportunities have not been the subject of federal or state regulatory review or interpretation. Accordingly, there is no assurance that the Company's operations have been in compliance at all times with all such laws and regulations. In addition, there is no assurance that a court or regulatory authority will not determine that the Company's past, current or future operations violate applicable laws or regulations. If the Company's interpretation of the relevant laws and regulations is inaccurate, there could be a material adverse effect on the Company's business, financial condition and operating results. There can be no assurance that such laws will be interpreted in a manner consistent with the Company's practices. There can be no assurance that a review of the Company or the fertility centers by courts or regulatory authorities will not result in a determination that would require the Company or the fertility centers to change their practices. There also can be no assurance that the health care regulatory environment will not change so as to restrict the Company's or the fertility centers' existing operations or their expansion. Any significant restructuring or restriction could have a material adverse effect on the Company's business, financial condition and operating results. 9 Corporate Medical Practice Laws. The Company's operations may be subject to state laws relating to corporations practicing medicine. State laws may prohibit corporations other than medical professional corporations or associations from practicing medicine or exercising control over physicians, and may prohibit physicians from practicing medicine in partnership with, or as employees of, any person not licensed to practice medicine. Furthermore, operations in California, Maryland and Illinois may be subject to fee-splitting prohibitions. State law may also prohibit a corporation other than professional corporations or associations (or, in some states, limited liability companies) from acquiring the goodwill of a medical practice. The Company believes its operations are in material compliance with applicable state laws relating to the corporate practice of medicine. The Company performs only non-medical administrative services, and in certain circumstances, clinical laboratory services. The Company does not represent to the public that it offers medical services. In each state, the fertility center is the sole employer of the physicians, and the fertility center retains the full authority to direct the medical, professional and ethical aspects of its medical practice. However, although the Company believes its operations are in material compliance with applicable state corporate practice of medicine laws, the laws and their interpretations vary from state to state, and are enforced by regulatory authorities who have broad discretionary authority. There can be no assurance that these laws will be interpreted in a manner consistent with the Company's practices or that other laws or regulations will not be enacted in the future that could have a material adverse effect on the Company's business, financial condition and operating results. Health Insurance Portability and Accountability Act. Recently, the healthcare industry began to focus on the impact that the Health Insurance Portability and Accountability Act ("HIPAA") regulations and implementation might have on their operations and information systems. HIPAA was designed to reduce the amount of administrative waste in healthcare today and to further protect the privacy of any patient's medical information. HIPAA regulations identify certain standards for both manual processes and automated processes and systems handling patient medical information. The HIPAA regulations relating to privacy of medical information were implemented on April 14, 2003. HIPAA regulations related to standard data formats and data sets for electronic transaction processing were implemented on October 16, 2003. Additional HIPAA regulations for security are scheduled to be implemented in April 2005. The HIPAA regulations may impose the need for additional required enhancements of the Company's internal systems. While the Company will incur costs to become compliant with the HIPAA regulations, management believes the regulations will not have a significant overall impact on the Company's results of operations. Liability and Insurance Providing health care services entails a substantial risk of potential medical malpractice and similar claims. The Company does not itself engage in the practice of medicine or assume responsibility for compliance with regulatory requirements directly applicable to physicians, and therefore requires associated fertility centers to maintain medical malpractice insurance. In general, the Company has established a program that provides the fertility centers with such required insurance. However, in the event that services provided at the fertility centers or any affiliated medical practice are alleged to have resulted in injury or other adverse effects, the Company is likely to be named as a party in a legal proceeding. Although the Company currently maintains liability insurance that it believes is adequate in risk and amount, successful malpractice claims could exceed the limits of the Company's insurance and could have a material adverse effect on the Company's business. Moreover, there is no assurance that the Company will be able to obtain such insurance on commercially reasonable terms in the future or that any such insurance will provide adequate coverage against potential claims. In addition, a malpractice claim asserted against the Company could be costly to defend, could consume management resources and could adversely affect the Company's reputation and business, regardless of the merit or eventual outcome of such claim. In addition, in connection with the asset acquisition of certain fertility centers, the Company may assume some of the fertility center's stated liabilities. Therefore, an entity may assert claims against the Company for events related to the fertility center prior to its becoming a FertilityPartner. The Company maintains insurance coverage related to those risks that it believes is adequate as to the risks and amounts, although there is no assurance that any successful claims will not exceed applicable policy limits. There are inherent risks specific to the provision of ART services. Currently, fertility medication is critical to most ART services and a ban by the United States Food and Drug Administration or any limitation on its use would have a material adverse effect on the Company. Furthermore, ART services increase the likelihood of multiple births, which are often premature and may result in increased costs and complications. Employees As of March 14, 2004, the Company had 700 employees. Of these, 664 are employed at the FertilityPartners contracted fertility centers and 36 are employed at the Company's headquarters, including 7 who are executive management. Of the Company's employees, 140 persons at the FertilityPartners contracted fertility centers and one at the Company's headquarters are employed on a part-time basis. The Company is not a party to any collective bargaining agreement and believes its employee relationships are good. 10 Segment Information The Company is principally engaged in providing products and services to the fertility market. For disclosure purposes, the Company recognizes services offered to its network of fertility centers and its pharmaceutical distribution operations as separate reporting segments. The services segment includes revenue and costs categorized as FertilityPartners Service Fees and FertilityDirect revenue, as follows (000's omitted):
Pharmaceutical Corporate Services Distribution Consolidated --------- -------- ------------ ------------ For the Year ended December 31, 2003 Percentage of total revenues........... (0.2)% 82.8% 17.4% 100.0% Revenues............................... $ (182) $77,571 $16,301 $93,690 Cost of Services....................... -- 67,403 15,830 83,233 -- ------- ------- ------- Contribution........................... (182) 10,168 471 10,457 General and administrative costs....... 8,761 Interest, net.......................... (16) ------- Income before income taxes............. 1,712 ------- Depreciation expense included above.... 2,163 Capital expenditures................... 440 7,195 -- 7,635 Total assets........................... 9,068 43,491 3,050 55,609 For the Year ended December 31, 2002 Percentage of total revenues........... (0.4)% 78.0% 22.4% 100.0% Revenues............................... $ (322) $68,813 $19,709 $88,200 Cost of Services....................... -- 59,953 18,396 78,349 -------- ------- ------- ------- Contribution........................... (322) 8,860 1,313 9,851 General and administrative costs....... 8,097 Interest, net.......................... 52 ------- Income before income taxes............. 1,702 ------- Depreciation expense included above.... 2,162 Capital expenditures................... 238 1,792 -- 2,030 Total assets........................... 10,214 35,403 1,827 47,444 For the Year ended December 31, 2001 Percentage of total revenues........... 0% 79.6% 20.4% 100.0% Revenues............................... $ -- $58,791 $15,107 $73,898 Cost of Services....................... -- 49,510 14,503 64,013 -------- ------- ------- ------- Contribution........................... -- 9,281 604 9,885 General and administrative costs....... 7,827 Interest, net.......................... 102 -------- Income before income taxes............. $ 1,956 ======== Depreciation expense included above.... $ 1,652 Capital expenditures................... $ 161 $ 1,504 $ -- $ 1,665 Total assets........................... $11,325 $31,138 $ 2,158 $ 44,621
11 Significant Service Contracts For the years ended December 31, 2003, 2002, and 2001 the following fertility centers each individually provided greater than 10% of the Company's Revenues, net and/or contribution as follows:
Percent of Company Percent of Revenues, net Contribution --------------------------- --------------------------- 2003 2002 2001 2003 2002 2001 ------- ------ ------ ------- ------ ------ Boston......................... 10.4 10.8 10.9 13.9 14.2 12.6 Long Island.................... 5.1 10.0 10.8 6.4 5.2 6.9 New Jersey..................... -- -- 1.9 -- -- 12.0 Illinois....................... 27.9 27.7 29.3 26.4 31.0 29.5 Shady Grove.................... 20.7 17.7 17.3 25.0 26.3 21.2 Bay Area....................... 7.7 7.4 8.4 8.6 10.9 10.6
ITEM 2. Properties The Company's headquarters and executive offices are in Purchase, New York, where it occupies approximately, 18,600 square feet under a lease expiring in 2012 at a monthly rental ranging from $29,500 to $51,100. The Company leases, subleases, and/or occupies, pursuant to its FertilityPartners agreements, each fertility center location from third-party landlords. Costs associated with these agreements are included in "Cost of services rendered" and are reimbursed to the Company as part of its fee; reimbursed costs are included in "Revenues, net". The Company believes its executive offices and the space occupied by the fertility centers are adequate. ITEM 3. Legal Proceedings In June 2002, the Company was served with a complaint, captioned WINFertility, Inc. vs. IntegraMed America, Inc., in which the plaintiff filed an action in the Supreme Court of New York, Westchester County, alleging breach of contract and seeking damages in excess of $5 million. The Company had retained WINFertility in April 2001 to provide claims management services in connection with the Company's Shared Risk Refund Program. WINFertility failed to provide the services for which the Company contracted and the Company terminated the contract in May 2002. The Company has served and filed an answer denying all material allegations of the complaint and asserting affirmative defenses. The Company has also filed a counterclaim against the plaintiff demanding an accounting and return of certain fees paid to plaintiff by the Company. The Company believes it has meritorious defenses to the claims, and based on opinion of counsel, believes that the likelihood of the suit having a material adverse effect on the financial position, results of operations or the cash flow of the Company is remote. On June 6, 2003 the Company filed a lawsuit against Pediatric Physician Alliance, Inc. and its parent company, Integrated Physician Solutions, in the United States District Court for the District of New Jersey asserting, among other things, that the defendants, long after the Company's adoption and use of the INTEGRAMED and INTEGRAMED AMERICA(R) trademarks, began using the mark INTEGRIMED in connection with the sale, offering for sale, distribution and advertising of business management and consultation services for office-based medical practices and organizations in the field of health care. The Company is also asserting, in the lawsuit, that the defendants' use of the IntegriMed mark is a colorable imitation of the Company's registered mark INTEGRAMED AMERICA and is likely to cause confusion, or to cause mistake, or to deceive, in violation of the Lanham Act. The Company is seeking relief against defendants, among other things, declaring that the defendants have infringed the Company's trademarks, enjoining defendants from using the IntegriMed mark, and compensatory and punitive damages. On November 12, 2003 an action captioned South Broward Hospital District vs. Wayne S. Maxson, M.D. et. al. was filed against, among others, the Company and one of its FertilityPartners, in the Broward County Florida Circuit Court alleging that the Company had interfered with the contractual relationship between the Hospital and certain individuals. The Company and the other defendants have filed a motion to dismiss the Complaint. Moreover, the Company believes that if the Company's motion to dismiss is denied, the Company has meritorious defenses to the claims and that the likelihood of the suit having a material adverse effect on the financial position, results of operations or the cash flow of the Company is remote. 12 There are other minor legal proceedings to which the Company is a party. In the Company's opinion, the claims asserted and the outcome of such proceedings will not have a material adverse effect on the financial position, results of operations or the cash flow of the Company. ITEM 4. Submission of Matters to a Vote of Security Holders None. 13 PART II ITEM 5. Market for Registrant's Common Equity and Related Stockholder Matters The Company's Common Stock has been traded on The NASDAQ National Market under the symbol "INMD" since the Company's formal name change in June 1996 and prior to the name change under the symbol "IVFA" since May 21, 1993. Prior thereto, the Company's Common Stock had been trading on the NASDAQ Small Cap Market since October 8, 1992. The following table sets forth the high and low closing sales price for the Common Stock, as reported on The NASDAQ National Market. Common Stock --------------- High Low ---- ----- 2002 First Quarter...................... 6.28 4.04 Second Quarter..................... 8.89 5.65 Third Quarter...................... 8.05 5.00 Fourth Quarter..................... 6.93 4.02 2003 First Quarter...................... 6.60 4.75 Second Quarter..................... 6.35 4.76 Third Quarter...................... 7.50 5.03 Fourth Quarter..................... 7.30 6.00 On March 6, 2004, there were approximately 87 holders of record of the Common Stock and approximately 1,205 beneficial owners of shares registered in nominee or street name. The Company has not paid dividends on its Common Stock during the last two fiscal years. The Company currently anticipates that it will retain all available funds for use in the operation and expansion of its business, and therefore, does not anticipate paying any cash dividends on its Common Stock for the foreseeable future. The Company has two stock option plans all of which have been approved by the Company's shareholders. The following table sets forth certain information relative to our stock option plans.
Number of securities Number of Securities remaining available for to be issued upon Weighted-average future issuance under exercise of exercise price of equity compensation plans outstanding options, outstanding options, (excluding securities Plan Category warrants and rights warrants and rights reflected in column (a) ------------- ------------------- ------------------- ----------------------- (a) (b) (c) Equity compensation plans approved by security holders........ 701,247 $5.00 101,297 Equity compensation plans not approved by security holders..... -- -- -- ------- ----- ------- Total................ 701,247 $5.00 101,297 ======= ===== =======
On October 15, 2002, the Company completed its redemption of the outstanding 165,644 shares of the Series A Cumulative Convertible Preferred Stock (the "Preferred Stock") for $10.30 per share in accordance with the Certificate of Designation for the Preferred Stock. Unregistered shares of Common Stock and warrants to purchase shares of Common Stock were issued during 2002, as described in the following paragraphs in reliance of Section 4(2) of the Securities Act of 1933. In 2002, the Company issued an aggregate of 37,640 shares of restricted Common Stock to members of the Company's Board of Directors and officers of the Company. These shares had a market value on the date of issuance of $249,000. 14 In 2002, the Company issued an aggregate of 7,089 shares of restricted Common Stock to the physician partners of the Northwest Center for Fertility and Reproductive Endocrinology, in connection with the FertilityPartners agreement. These shares had a market value of $45,000 on the date of issuance. During 2002, the Company took advantage of market conditions and engaged in a private placement of its Common Stock and issued 220,000 shares of Common Stock and 88,000 warrants to purchase Common Stock with a net market value of $1,375,000. The warrants became exercisable on January 31, 2003 and expire on January 31, 2006. The Company filed a registration statement to cover the resale of the Common Stock and the resale of the Common Stock underlying the warrants. The additional equity raised is intended for general corporate purposes. In addition, 17,600 warrants were issued to the underwriter of the private placement, which become exercisable July 30, 2002 and expire July 30, 2007. In 2003, the Company issued an aggregate of 58,345 shares of restricted Common Stock to members of the Company's Board of Directors and officers of the Company. These shares had a market value on the date of issuance of $417,000. ITEM 6. Selected Financial Data The following selected financial data (for the years ended December 31, 2003, 2002, 2001, 2000 and 1999 are derived from the Company's consolidated financial statements and should be read in conjunction with the financial statements, related notes, and other financial information included elsewhere in this Annual Report on Form 10-K. Statement of Operations Data (1):
December 31, ----------------------------------------------------- 2003 2002 2001 2000 1999 ------- ------ ------ ------ ------- (in thousands, except per share amounts) Revenues, net ........................ $ 93,690 $ 88,200 $ 73,898 $ 56,999 $ 43,545 Costs of services incurred ........... 83,233 78,349 64,013 48,805 36,556 -------- -------- -------- -------- -------- Contribution ......................... 10,457 9,851 9,885 8,194 6,989 General and administrative expenses .. 8,761 8,097 7,827 5,880 6,084 Total other expenses, net ............ (16) 52 102 210 347 -------- -------- -------- -------- -------- Income (loss) before taxes ........... 1,712 1,702 1,956 2,104 558 Provision (benefit) for income taxes . 668 562 (4,557) 187 240 -------- -------- -------- -------- -------- Net income (loss) .................... 1,044 1,140 6,513 1,917 318 Less: Dividends paid and/or accrued on Preferred Stock ................... -- 69 133 133 133 -------- -------- -------- -------- -------- Net income (loss) applicable to Common Stock ............................. $ 1,044 $ 1,071 $ 6,380 $ 1,784 $ 185 ======== ======== ======== ======== ======== Basic EPS ............................ $ 0.31 $ 0.33 $ 2.07 $ 0.43 $ 0.04 ======== ======== ======== ======== ======== Diluted EPS .......................... $ 0.29 $ 0.31 $ 2.01 $ 0.43 $ 0.04 ======== ======== ======== ======== ======== Weighted average shares - basic ...... 3,413 3,195 3,081 4,110 4,874 ======== ======== ======== ======== ======== Weighted average shares - diluted ... 3,586 3,468 3,175 4,172 4,951 ======== ======== ======== ======== ========
Balance Sheet Data:
December 31, ------------------------------------------------------------- 2003 2002 2001 2000 1999 ------ -------- --------- -------- ------- (in thousands) Working capital (2).......................... $2,688 $2,939 $ 4,208 $ 4,943 $ 5,705 Total assets ................................ 55,609 47,444 44,621 38,845 39,047 Total indebtedness........................... 7,511 1,410 2,691 3,569 5,410 Accumulated deficit.......................... (14,616) (15,660) (16,800) (23,313) (25,230) Shareholders' equity......................... 33,165 31,557 30,615 25,987 26,639
(1) Certain amounts for the years ended December 31, 2002 and prior, have been reclassified to conform with the presentation adopted for the year ended December 31, 2003. (2) Represents current assets less current liabilities. 15 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following is a discussion of the financial condition and results of operations of the Company for the three years ended December 31, 2003. It should be read in conjunction with the Company's Consolidated Financial Statements, the related notes thereto and other financial and operating information included in this Form 10-K. Overview IntegraMed America, Inc. (the "Company") offers products and services to patients and providers in the fertility industry. The IntegraMed Network is comprised of twenty-three fertility centers in major markets across the United States, pharmaceutical products and services, a financing subsidiary, the Council of Physicians and Scientists, and a leading fertility portal (www.integramed.com). Sixteen Affiliate fertility centers purchase discrete service packages provided by the Company and seven fertility centers have access to the entire portfolio of products and services under the comprehensive FertilityPartners(TM) program. All twenty-three fertility centers have access to the Company's consumer services, principally pharmaceutical products and patient financing products. The Company's strategy is to align information, technology and finance for the benefit of fertility patients, providers, and payers. The primary elements of the Company's strategy include: (i) expanding the IntegraMed Provider Network into new major markets; (ii) increasing the number and value of service packages purchased by members of the IntegraMed Provider Network; (iii) entering into additional FertilityPartners(TM) contracts; (iv) increasing revenues at contracted FertilityPartners(TM) centers; (v) increasing the number of Shared Risk Refund treatment packages sold to patients of the IntegraMed Provider Network and managing the risk associated with the Shared Risk Refund program; (vi) increasing sales of pharmaceutical products and services; and (vii) developing Internet-based access to personalized health information. Major events impacting financial condition and results of operations In December 2000, the Company's agreement with the St. Barnabas Medical Center based fertility center was terminated early. The Company received $1.44 million in liquidated damages pursuant to an early termination agreement. These funds were recorded as revenue by the Company during 2001 as compensation for certain performance obligations contained in the termination agreement. During 2001, the Company negotiated revised fee structures on all five of its then existing major FertilityPartners contracts. On four of these contracts in which service fees are comprised of (a) a tiered percentage of revenue, (b) a fixed percentage of fertility center earnings and (c) reimbursed cost of services. The Company negotiated lower percentages on the revenue and fertility center earnings components. These lower revenue percentages were to be phased in over an approximate five-year period. In 2003, fee structures on three of these contracts were revised as described below. On the remaining FertilityPartners contract, the Company negotiated higher service fees, which were assessed at a fixed amount each month independent of the fertility center's underlying revenue or earnings. The Company terminated its FertilityPartner agreement with this fertility center effective June 30, 2003, and currently maintains a relationship with this center under its FertilityDirect program. On April 26, 2002, the Company signed a FertilityPartners agreement with the Margate, Florida based Northwest Center for Infertility and Reproductive Endocrinology ("NCIRE"). Under the terms of the 15-year agreement, the Company's service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of NCIRE earnings. The Company has budgeted up to $2 million to fund the development and equipping of a new state-of-the-art facility to house the clinical practice and embryology laboratory for NCIRE and its patients. On July 30, 2002, the Company completed a private placement of 220,000 shares of its Common Stock at $6.25 per share and warrants to purchase 88,000 shares of Common Stock at an exercise price of $9.00 per share, resulting in gross proceeds of $1,375,000. The warrants become exercisable commencing January 31, 2003 and will expire on January 31, 2006. Additionally, warrants to purchase 17,600 shares of Common Stock at an exercise price of $6.25 per share were issued to the underwriter in connection with the private placement. These warrants become exercisable July 30, 2002 and will expire on July 30, 2007. On November 25, 2002, the Company announced the ending of its FertilityPartners agreement with RSA of New York. The agreement ended on November 15, 2003. RSA of New York serves the Long Island market and revenues for the four quarterly periods ending prior to the announcement were $9.1 million. The program had a contribution of $750,000 for the same period. At the time of the announcement, the Company evaluated its exclusive business rights asset associated with RSA of New York and reduced that asset to its realizable value by adjusting the asset downward by $350,000. 16 During 2003, the Company again negotiated revised fee structures on three of its existing FertilityPartner contracts. In all three of these contracts, the timetable for the phase-in of that portion of the fee reductions which are based on the earnings of the underlying fertility centers, and which were negotiated in 2001 and are described above, were delayed by one year. Beginning in the year 2006, two of these revised contracts, also contain a maximum limit on the amount of fees the Company can earn, which are based on the earnings of the underlying fertility centers. These maximum limitations are below the fees earned by the Company on these portions of the contracts in 2003. The third contract contains no maximum limitation. The Company believes that these fee limitations will be offset by volume based increases in fees earned in other areas of its existing contracts, the sale of new FertilityPartner contracts and growth in its FertilityDirect business unit. In July 2003, the Company amended its existing credit agreements with Fleet Bank, N.A. The amended agreement is comprised of a renewal of the Company's $7.0 million three-year working capital revolver and a new $5.75 million three year term loan, of which $0.75 million was used to retire the outstanding balance on the Company's previous term loan. The Company believes that these credit facilities will be sufficient to fund its current operational, capital investment and acquisition plans. On September 1, 2003, the Company signed a FertilityPartners agreement with the Charlotte, North Carolina based Reproductive Endocrinology and Andrology of Charlotte ("REACh") physician practice. Under the terms of this 15-year agreement, the Company's service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of REACh's earnings. The Company has also committed up to $2 million to fund the development and equipping of a new state-of-the-art facility to house the clinical practice and embryology laboratory for REACh and its patients. In January 2004, the Company signed a FertilityPartner agreement to supply a complete range of business, marketing and facility services to a group of fertility physicians in the Company's Western Region. Under the terms of the 15-year agreement, IntegraMed will build a new facility and help the group to establish a private, full service fertility center. IntegraMed has committed up to $2 million to fund the development and equipping of a new state-of-the-art facility to house the clinical practice and embryology laboratory for the group and its patients. Upon its completion, the facility will accommodate the existing patient volume and future anticipated growth. Based on the terms of the transaction, IntegraMed will be paid a fixed services fee commencing in January of 2004 paid monthly until the new facility is open, which is anticipated to be in Q4 of 2004. At that time, IntegraMed service fees will be comprised of the Company's standard reimbursed costs of services, a fixed percentage of revenues, plus an additional fixed percentage of the new center's earnings. Critical Accounting Policies In December 2001, the SEC requested that all registrants list their most "critical accounting policies" in MD&A. The SEC indicated that a "critical accounting policy" is one which is both important to the portrayal of the company's financial condition and results and requires management's most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We believe that the following accounting policies fit this definition: Basis of consolidation -- The consolidated financial statements comprise the accounts of IntegraMed America, Inc. and its wholly owned subsidiaries. All significant inter-company transactions have been eliminated. The Company principally derives its revenues from FertilityPartners contracts, the sale of pharmaceutical products and patients enrolling in its Shared Risk Refund program. The Company does not have a controlling financial interest in any of the medical practices to which it provides services and as such does not consolidate their results. Use of Estimates-- The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. 17 Revenue and cost recognition -- FertilityPartners service fees As of December 31, 2003, the Company provided comprehensive services to fertility centers under six FertilityPartners contracts. Under all six agreements, the Company receives as compensation for its services a three-part fee comprised of: (i) a tiered percentage of net revenues, (ii) reimbursed costs of services (costs incurred in servicing a fertility center and any costs paid on behalf of the fertility center) and (iii) a fixed percentage of earnings after services fees. All revenues from FertilityPartners service fees are recorded in the period services are rendered. Direct costs incurred by the Company in performing its services and costs incurred on behalf of the medical practices are reported as costs of services. Revenue and costs are recognized in the same period in which the related services have been performed. Pharmaceutical Sales The Company distributes fertility related pharmaceutical products through IPSI. The Company has a servicing arrangement with ivpcare, inc., to fulfill the purchase and distribution of those pharmaceuticals. IPSI accepts patient orders, verifies patient insurance coverage where applicable and ships prescription-based pharmaceuticals directly to patients of certain affiliated fertility centers. Revenue is derived from the sales of these pharmaceuticals and is recorded, along with the related costs including the fee due ivpcare, when shipments are made. The cost of pharmaceutical products purchased is recorded as a cost of sales and is not offset against revenues. Pharmaceutical sales accounts receivable represent receivables held by IPSI for medications sold directly to patients. Risk of loss in connection with uncollectibility of these accounts receivable is borne by the Company. Shared Risk Refund Program The Shared Risk Refund program consists of a fertility treatment package that includes up to three cycles of in vitro fertilization for one fixed price with a significant refund if the patient does not deliver a baby. Under this innovative financial program, the Company receives payment directly from consumers who qualify for the program and pays contracted fertility centers a defined reimbursement for each treatment cycle performed. Expenses related to the program are recorded as incurred. Potentially refundable revenues are deferred until the pregnancy outcome is determined. The Company manages the risk associated with the Shared Risk Refund program through a case management program. This case management program authorizes patient care and provides information to be used in recognizing revenue. A reserve for estimated refunds due to pregnancy loss is maintained and based on historical averages of pregnancy losses applied to the revenues recorded within the applicable periods. Due from Medical Practices -- Due from Medical Practices represents the net amounts owed to the Company by the medical practices. This balance is comprised of amounts owed to the Company by the medical practices for funds, which the Company has advanced to the practices for use in financing their accounts receivable, less balances owed to the medical practices by the Company for undistributed amounts earned by their physicians. Due from Medical Practices excludes amounts owed by the Company to medical practices for acquired exclusive services rights since the Financial Accounting Standards Board Interpretation 39 conditions for offset are not met for these obligations. Such acquired rights are reported as intangible assets. Income taxes -- The Company accounts for income taxes utilizing the asset and liability approach in accordance with Financial Accounting Standards No. 109, "Accounting For Income Taxes" (FAS 109). The income tax (benefit) provision is determined under the asset and liability approach. Deferred tax assets and liabilities are recognized on differences between the book and tax basis of assets and liabilities using presently enacted tax rates. The income tax (benefit) provision is the sum of the amount of income tax paid or payable for the year as determined by applying the provisions of enacted tax laws to the taxable income for that year and the net change during the year in the Company's deferred tax assets and liabilities. 18 Exclusive Service Rights -- Exclusive service rights represent costs incurred by the Company for the right to service certain fertility centers and are valued at cost less accumulated amortization, which is provided on a straight-line basis over the length of the contract, usually ten to twenty-five years. The Company periodically reviews exclusive business service rights to assess recoverability; any impairment would be recognized in the consolidated statement of operations if a permanent impairment was determined to have occurred. Recoverability is determined based on undiscounted expected earnings from the related business over the remaining amortization period. Results of Operations The following table shows the percentage of net revenue represented by various expenses and other income items reflected in the Company's Consolidated Statement of Operations for the years ended December 31, 2003, 2002 and 2001:
2003 2002 2001 ---- ---- ---- Revenues, net (see Note 2): FertilityPartners service fees ......................... 79.4% 75.8% 79.1% Pharmaceutical Sales.................................... 17.4% 22.3% 20.4% FertilityDirect revenues................................ 3.2% 1.9% 0.5% ---- ---- ---- Total revenues........................................ 100% 100% 100% Costs of services incurred: FertilityPartners service fees........................... 69.9% 66.0% 66.1% Pharmaceutical Sales..................................... 16.9% 21.5% 19.6% FertilityDirect revenues................................. 2.1% 1.3% 0.9% ---- ---- ---- Total costs of services incurred....................... 88.9% 88.8% 86.6% Contribution: FertilityPartners service fees........................... 9.5% 9.8% 12.9% Pharmaceutical Sales..................................... 0.5% 0.9% 0.8% FetilityDirect revenues.................................. 1.1% 0.5% (0.3)% ---- ---- ---- Total contribution..................................... 11.1% 11.2% 13.4% General and administrative expenses........................... 9.3% 9.2% 10.6% Interest income............................................... (0.1)% (0.1)% (0.2)% Interest expense.............................................. 0.1% 0.2% 0.4% ------ ---- ------- Total other expenses................................... 9.3% 9.3% 10.8% Income from operations before income taxes.................... 1.8% 1.9% 2.6% Income tax (benefit) provision................................ 0.7% 0.6% (6.2)% ------ ---- ------ Net income (a)................................................ 1.1% 1.3% 8.8%
(a) Excluding the effect of the adjustment related to reducing the valuation allowance on deferred tax assets, net income as a percentage of net revenues would have been 2.3% for the year ended December 31, 2001 (See Note 10 to the Consolidated Financial Statements). Calendar Year 2003 Compared to Calendar Year 2002 Revenues for the year ended December 31, 2003 increased by a net $5.5 million, or 6.2%, from the year ended 2002. The main factors contributing to this net increase were: (i) Revenues at FertilityPartner centers increased by $7.6 million, or 11.3%. This increase was largely driven by increased patient volume resulting from intensified marketing campaigns, above average pregnancy rates for infertility treatment, in some cases, the addition of new physicians to the practice and new agreements. The mature (FertilityPartner agreement established prior to 2002) centers grew $6.6 million. The FertilityPartners agreement signed with NCIRE in April 2002, contributed a full years revenue of $6.1 million vs. approximately $2.3 million in the year ended December 31, 2002. The FertilityPartners agreement signed with REACh in September 2003 contributed $1.2 million in revenues in 2003. Revenues from these new FertilityPartner agreements were partially offset by the termination of our FertilityPartner agreement with RSA of New York in June of 2003. The RSA agreement generated revenues of $4.8 million in 2003 vs. revenues of $8.8 million in 2002. 19 (ii) Revenue at the Company's pharmaceutical unit decreased by $3.4 million, or 17.3%. This reduction in revenue was the result of the Company's decision to de-emphasize the sale of certain high volume products due to the lack of profitability resulting from pricing pressures within the market. The Company believes that these pricing issues have been resolved by price changes agreed to by the payers and that revenues and volume will increase in future periods. (iii) FertilityDirect revenues, which are comprised primarily of the Company's Shared Risk Refund program and membership fees from affiliated clinics, increased by $1.3 million, or 80.2% from prior year levels. The Company anticipates continued growth of its FertilityDirect programs will become a significant component of it's direct to consumer orientation. Contribution of $10.5 million in 2003 was up $0.6 million, or 6.1% from 2002 levels. As a percentage of revenue, the contribution margin remained unchanged at 11.2% for both 2003 and 2002 results. The following factors had a significant effect on contribution in 2003: (i) Contribution generated by the Company's FertilityPartners increased by $0.3 million in 2003, despite a decline in margin to 12.0% from a 12.9% level in 2002. Higher aggregate contributions levels were generated by strong patient volume growth among the FertilityPartner clinics. However margin rates declined slightly due to the effect of the Company's previously disclosed fee structure, negotiated in 2001, which called for reduced fees to be phased in over a number of years. The mature centers contribution fell $0.2 million. The FertilityPartners agreement signed with NCIRE in April 2002, contributed a full years contribution of $0.6 million vs. approximately $0.3 million in the year ended December 31, 2002. The FertilityPartners agreement signed with REACh in September 2003 contributed $0.1 million in contribution in 2003. Contribution for the terminated FertilityPartner agreement with RSA of New York generated contribution $0.6 million in 2003 vs. contribution of $0.5 million in 2002. (ii) Pharmaceutical contribution declined by $0.3 million, or 39.1%, during 2003 and margin rates slipped to 2.9% from 3.9% in the prior year. The decline in contribution was a result of the Company's decision to de-emphasize certain specific high volume pharmaceuticals products, which became unprofitable due to manufacturer pricing increases coupled with insurance reimbursement reductions. The Company believes these pricing issues are resolved by payers acceptance of increased prices and anticipates its pharmaceutical margin to improve in 2004. (iii) Contribution in the Company's FertilityDirect program increased $0.6 million, or 143.5% during 2003. These increases were driven by increased Shared Risk Refund patient volume, additional fertility clinics participating in the FertilityDirect program as well as a higher monthly fee structure for these clinics. General and Administrative expenses increased by $0.7 million, to $8.8 million in 2003 from $8.1 million in 2002. This increase is mainly the result of additional marketing costs in support of the Company's FertilityDirect program, and costs associated with new regulatory compliance requirements. Interest income rose to $125,000 for the year ended December 31, 2003, from $103,000 in 2002. This increase is attributable to additional interest income earned on capital investments at some FertilityPartner clinics. Interest expense declined to $109,000 for the year ended December 31, 2003 from $155,000 for 2002 as a result of scheduled debt reductions in the first two quarters of 2003. The provisions for income tax were approximately $0.7 million and $0.6 million for the years ended December 31, 2003 and 2002, respectively. There were no Federal income tax payments during 2003 due to the utilization of the Company's net operating loss carry forwards. The Company's effective tax rate for 2003 was approximately 39% and reflects a provision for current state taxes as well as amortization of the Company's deferred Federal tax asset. Calendar Year 2002 Compared to Calendar Year 2001 Revenues for the year ended December 31, 2002 increased by $14.3 million, or 19.4%, from the year ended 2001. The main factors contributing to this increase were: (i) Revenues increased at the core FertilityPartners centers as a result of increased patient volume. Same center growth was 17.1% over the prior year. The volume increase was the result of intensified marketing initiatives, improved pregnancy rates for infertility treatment, and, in some cases, the addition of new physicians to the practice. In addition, the FertilityPartners agreement signed with NCIRE in April 2002, contributed 20 approximately $2.3 million of revenue for the year ended December 31, 2002. (ii) The Company's pharmaceutical division experienced a 30.5% increase in revenue. This increase was driven by increases in patient volume at the IntegraMed Provider Network, as well as increased participation and penetration of the pharmaceutical product line among the IntegraMed Provider Network. (iii) FertilityDirect revenues, comprised primarily of the Company's Shared Risk Refund program, increased from $0.4 million for the year ended December 31, 2001 to $1.7 million for 2002. The Company anticipates that continued growth of this program, driven in part by focused marketing efforts, will become a significant component of its direct to consumer orientation. Contribution of $9.9 million in 2002 remained unchanged from 2001. As a percentage of revenue, the contribution margin decreased to 11.2% in 2002 from 13.4% in 2001. The following factors contributed to the stability of the contribution: (i) As previously disclosed, the Company's revised fee structure with its FertilityPartners contracts provides for reduced fees and margins on the incremental earnings of those Centers. During 2002, while continued growth of the FertilityPartners contracts resulted in greater aggregate revenues for the Company, several components of this revenue stream were at the lower contractual incremental margins. During 2002, the Company adopted EITF 01-9, Accounting for Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's Products, which required the Company to report its revenue net of the amortization of its services rights. While revenue for all years presented has been restated to reflect this change, results for 2002 include a $350,000 write-down of service rights related to the mutual termination of the Company's New York based FertilityPartners agreement. (ii) The Company's pharmaceutical sales, which grew by $4.6 million, or 30.5%, during the year ended December 31, 2002, have a margin of approximately 4%, which is substantially below the margin of the Company's other revenue components. As the Company's pharmaceutical segment continues to expand faster than the Company's other product lines, the weighted impact will be an anticipated reduction in the Company's margins. (iii) As previously discussed, the Company's agreement with the medical center based fertility center generated a payment for damages that was recorded in 2001. This approximately $1.4 million payment had minor costs associated with it and the $1.4 million resulted in gross contribution dollars in 2001. There was no similar payment in 2002. General and Administrative expenses increased by $0.3 million, to $8.1 million in 2002 from $7.8 million in 2001. This increase was mainly attributable to increasing costs associated with the Company's efforts to expand the base of fertility centers participating in its FertilityDirect program and to support the growth of its Shared Risk Refund product line. Interest expense declined from $281,000 for the year ended December 31, 2001 to $155,000 for 2002 as a result of scheduled debt reductions as well as declining interest rates as the Company's debt carries interest at rates that use LIBOR as a base. Interest income declined from $179,000 for the year ended December 31, 2001 to $103,000 in 2002 as a result of falling interest rates. Income tax provisions (benefits) were approximately $0.6 million and ($4.6) million for the years ended December 31, 2002 and 2001, respectively. The 2001 benefit was a result of reducing the valuation allowance for deferred tax assets due to sustained profitability over an extended period and the increased likelihood of realization of the deferred tax assets. There have been no current Federal income tax payments due to the utilization of the net operating loss carry forwards. The Company's effective tax rate for 2002 was approximately 33% and reflects credits for the reversal of state taxes provided in prior periods. The 2001 effective tax rate was approximately 12%, excluding the effects of the change in the valuation allowance, and reflects credits for the utilization of net operating loss carry forwards not previously provided. Off-balance Sheet Arrangements As part of our ongoing business, we do not participate in transactions that generate relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities ("SPE's"), which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. As of December 31, 2003, we are not involved in any material unconsolidated SPE transactions. 21 Liquidity and Capital Resources Historically, the Company has financed its operations by the sale of equity securities, issuance of notes and internally generated resources. In addition, the Company also uses bank financing for working capital and business development. The Company's working capital decreased slightly during 2003 to $2.7, million as of December 31, 2003 from $2.9 million as of December 31, 2002. The Company believes that working capital and, specifically, cash and cash equivalents remain at adequate levels to fund the Company's operations. As of December 31, 2003, the Company did not have any significant purchase commitments for the acquisition of fixed assets, however, it has budgeted upcoming capital expenditures of approximately $8.8 million for 2004. These expenditures are primarily related to the expansion of the Company's FertilityPartners centers, including the construction of new clinics in North Carolina and on the West Coast. . The Company believes that the cash flows from its operations plus its credit facility and new term loan (see below) will be sufficient to provide for its future liquidity needs for the next twelve months. On July 31, 2003, the Company amended its existing credit facility with Fleet Bank, N.A. The amended facility is comprised of a $7.0 million three-year working capital revolver and a $5.75 million three-year term loan, of which approximately $5.0 million was used for the acquisition of fixed assets and to fund the payment for Exclusive Business Rights in connection with the North Carolina transaction and $0.75 million was used to repay the remaining outstanding balance of the previous credit facility. Each component bears interest by reference to Fleet's prime rate or LIBOR, at the Company's option, plus a margin, which is dependent upon a leverage test, ranging from 2.25% to 2.75% in the case of LIBOR-based loans. Prime based loans are made at Fleet Bank's prime rate and do not contain an additional margin. Interest on the prime-based loans is payable monthly and interest on LIBOR-based loans is payable on the last day of each applicable interest period. Unused amounts under the working capital revolver bear a commitment fee of 0.25% and are payable quarterly. Availability of borrowings under the working capital revolver is based on eligible accounts receivable as defined. As of December 31, 2003, the Company had borrowed $2.0 million under its working capital revolver agreement for general corporate purposes, The remaining working capital revolver balance of $5.0 million is available to the Company. The Fleet credit facility is collateralized by all of the Company's assets. The Company is also continuously reviewing its credit agreements and may renew, revise or enter into new agreements from time to time as deemed necessary. Significant Contractual Obligations and Other Commercial Commitments: The following summarizes the Company's contractual obligations and other commercial commitments at December 31, 2003, and the effect such obligations are expected to have on its liquidity and cash flows in future periods.
Payments Due by Period Total Less than 1 year 1 - 3 years 4 - 5 years After 5 years -------------- ---------------- ---------------- ----------- ------------- Notes Payable................. $ 7,238,000 $3,213,000 $ 4,025,000 $ -- $ -- Capital lease obligations..... 302,000 71,000 231,000 -- -- Operating leases.............. 27,107,000 4,561,000 12,309,000 6,354,000 3,883,000 Total contractual cash obligations............... $34,647,000 $7,845,000 $16,565,000 $6,354,000 $3,883,000
Amount of Commitment Expiration Per Period Total Less than 1 year 1 - 3 years 4 - 5 years After 5 years ------------- ---------------- ------------- ------------- ------------- Lines of credit............... $ 7,000,000 $ -- $7,000,000 $ -- $ -- Total commercial commitments............... $ 7,000,000 $ -- $7,000,000 $ -- $ --
The Company also has commitments to provide accounts receivable financing under its FertilityPartners agreements. The Company's financing of this receivable occurs on the 15th of each month. The medical practice's repayment priority consists of the following: (i) Reimbursement of expenses that the Company has incurred on their behalf; 22 (ii) Payment of the fixed or, if applicable, the variable portion of the Service Fee which relates to the FertilityPartners revenues; and (iii) Payment of the variable portion of the Service Fee. The Company is responsible for the collection of the practice's receivables, which are financed with full recourse. The Company has continuously funded these needs from cash flow from operations and the collection of the prior month's receivables. If delays in repayment are incurred, which have not as yet been encountered, the Company could draw on its existing working capital line of credit. The Company makes payments on behalf of the FertilityPartners for which it is reimbursed in the short-term. Other than these payments, as a general course, the Company does not make other advances to the medical practice. The Company has no other funding commitments to the FertilityPartners. New Accounting Standards Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51". Interpretation No. 46 clarifies Accounting Research Bulletin No. 51, "Consolidated Financial Statements" related to whether companies should consolidate certain entities, called variable interest entities. Under Interpretation No. 46, the Company is required to evaluate whether its affiliated fertility groups, for which it provides business services under long-term service agreements, are variable interest entities. Pursuant to Interpretation No. 46, an enterprise that absorbs a majority of the economic risks and rewards of a variable interest entity is required to consolidate the variable interest entity for financial reporting purposes. Interpretation No. 46 is effective immediately for variable interest entities created after January 31, 2003 and for interim periods ending after September 15, 2003 for which a variable interest was in place prior to February 1, 2003. In October 2003, the FASB issued Financial Staff Position 46-6, "Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities," deferring the effective date under certain circumstances until the first interim or annual period ending after December 15, 2003. In December 2003, the FASB issued Interpretation No. 46(R) revising Interpretation No. 46 and deferring the effective date under certain circumstances until the first interim or annual period ending after March 15, 2004. The Company has deferred the effective date in accordance with Interpretation No. 46(R) and continues to evaluate Interpretation No. 46 and assess the impact on its consolidated financial statements. Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities In April, 2003, the Financial Accounting Standards Board (FASB or the "Board") issued FASB 149 which amends Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, and establishes accounting and reporting standards for derivative instruments including derivatives embedded in other contracts (collectively referred to as derivatives) and for hedging activities. The Company does not believe the adoption of FASB 149 will have an impact on its financial statements. Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity In May 2003 the Board issued FASB 150, which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. The remaining provisions of this Statement are consistent with the Board's proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity shares, depending on the nature of the relationship established between the holder and the issuer. The Company does not believe the adoption of FASB 150 will have an impact on its financial statements. Forward Looking Statements This Form 10-K and discussions and/or announcements made by or on behalf of the Company, contain certain forward-looking statements regarding events and/or anticipated results within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, the attainment of which 23 involve various risks and uncertainties. Forward-looking statements may be identified by the use of forward-looking terminology such as, "may", "will", "expect", "believe", "estimate", "anticipate", "continue", or similar terms, variations of those terms or the negative of those terms. The Company's actual results may differ materially from those described in these forward-looking statements due to the following factors: the Company's ability to acquire additional FertilityPartners agreements, including the Company's ability to raise additional debt and/or equity capital to finance future growth, the loss of significant FertilityPartners agreement(s), the profitability or lack thereof at fertility centers serviced by the Company, increases in overhead due to expansion, the exclusion of fertility and ART services from insurance coverage, government laws and regulation regarding health care, changes in managed care contracting, the timely development of and acceptance of new fertility, and ART and/or genetic technologies and techniques. ITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Our interest expense is sensitive to changes in the general level of interest rates. At December 31, 2003 we had an oustanding balance of $2,000,000 under a working capital revolver and $5,175,000 under a term loan. Both borrowings have a remaining term of approximately 2.5 years. Each borrowing bears interest at LIBOR plus a margin. At December 31, 2003, both borrowings had an interest rate of approximately 4.00%. The Company has not entered into any interest rate swap transactions. ITEM 8. Financial Statements and Supplementary Data See Index to Financial Statements on page F-1. ITEM 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. ITEM 9A. Controls and Procedures Evaluation of Disclosure Controls and Procedures - Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) as of December 31, 2003 (the "Evaluation Date"). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that as of the Evaluation Date, our disclosure controls and procedures are effective in timely alerting them to the material information relating to us (or our consolidated subsidiaries) required to be included in our periodic SEC filings. Changes in Internal Controls - There were no significant changes made in our internal controls during the period covered by this report or, to our knowledge, in other factors that could significantly affect these controls subsequent to the date of their evaluation. PART III ITEM 10. Directors and Executive Officers of the Registrant Information with respect to the executive officers and directors of the Company is incorporated by reference from the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004. The Company has an Audit Committee comprised solely of independent directors, one of whom is a financial expert, as defined by Item 401 of Regulation S-K. The members of the Audit Committee are identified under the Committees of the Board Section of the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004 and is incorporated herein by reference. The Company has adopted a Code of Ethics applicable to directors and principal executive, financial and accounting officers of the Company. Such Code of Ethics is filed as an Exhibit to this Form 10-K and is available at the Company's website http://www.integramed.com. ITEM 11. Executive Compensation This information is incorporated by reference from the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004. 24 ITEM 12. Security Ownership of Certain Beneficial Owners and Management, and Related Stockholder Matters This information is incorporated by reference to the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004. ITEM 13. Certain Relationships and Related Transactions This information is incorporated by reference to the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004. ITEM 14. Principal Accounting Fees and Services This information is incorporated by reference to the Company's Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 18, 2004. PART IV ITEM 15. Exhibits, Financial Statements, Schedule, and Reports on Form 8-K (a) (1) Financial Statements. (3) The exhibits that are listed on the Index to Exhibits herein which are filed herewith as a management agreement or compensatory plan or arrangement are: 10.61(f); 10.95(d); 10.105(g); 10.113(j); 10.118(c); 14.1. (b) Reports on Form 8-K. For the quarter ended December 31, 2003, Registrant filed a Form 8-K dated: October 6, 2003 announcing the Company at number 12 on Crain's list of fastest growing New York companies; October 27, 2003 announcing an investment community conference call on October 31, 2003 to discuss the Company's third quarter of 2003 financial results; October 30, 2003 reporting the public dissemination of a press release announcing the Company's financial results for the third quarter ended September 30, 2003; and, November 3, 2003 announcing the Company's exclusive agreement with a Kansas City-based Reproductive Resource Center. Subsequent to December 31, 2003, Registrant filed a Form 8-K dated: January 14, 2004 announcing that it had signed a FertilityPartner agreement with a fertility center in its Western Region; February 12, 2004 announcing an investment community conference call on February 18, 2004 to discuss the Company's fourth quarter and full year results for 2003; February 19, 2004 reporting the public dissemination of a press release announcing the Company's financial results for the fourth quarter and year ended December 31, 2003; March 12, 2004 announcing the Company's exclusive agreement with the Southern California-based Reproductive Partner Medical Group; and March 16, 2004 announcing the Company's exclusive agreement with the Mobile, Alabama backed Center for Reproductive Medicine. (c) Exhibits. The list of exhibits required to be filed with this Annual Report on Form 10-K is set forth in the Index to Exhibits herein. 25 FINANCIAL STATEMENTS Item 8 and 15 (a)(1) Contents Page INTEGRAMED AMERICA, INC. Report of Independent Auditors...................................... F-2 Consolidated Balance Sheets as of December 31, 2003 and 2002........ F-3 Consolidated Statements of Operations for the years ended December 31, 2003, 2002 and 2001................................. F-4 Consolidated Statements of Shareholders' Equity for the years ended December 31, 2003, 2002 and 2001..................... F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2002 and 2001................................. F-6 Notes to Consolidated Financial Statements.......................... F-7 F-1 Report of Independent Auditors To the Board of Directors and Shareholders of IntegraMed America, Inc.: In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of shareholders' equity and of cash flows present fairly, in all material respects, the financial position of IntegraMed America, Inc. and its subsidiaries at December 31, 2003 and 2002, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2003 in conformity with accounting principles generally accepted in the United States of America. 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 auditing standards generally accepted in the United States of America, 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 our opinion. /s/ PricewaterhouseCoopers LLP Boston, Massachusetts February 12, 2004 F-2
INTEGRAMED AMERICA, INC. CONSOLIDATED BALANCE SHEETS (all amounts in thousands, except share amounts) December 31, -------------- 2003 2002 ------ ----- ASSETS Current assets: Cash and cash equivalents.................................................................. $ 6,885 $ 8,693 Due from Medical Practices, net (see Note 2)............................................... 8,918 5,297 Pharmaceutical sales accounts receivable, net.............................................. 1,484 1,637 Deferred taxes (see Note 9)................................................................ 984 872 Prepaids and other current assets.......................................................... 3,579 2,588 ------- ------- Total current assets................................................................... 21,814 19,087 Fixed assets, net (see Note 6)............................................................. 10,218 5,141 Exclusive Service Rights, net (see Note 5)................................................. 20,504 19,529 Deferred taxes (see Note 9)................................................................ 2,795 3,408 Other assets............................................................................... 278 279 ------- ------- Total assets........................................................................... $55,609 $47,444 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable........................................................................... $ 1,260$ $ 823 Accrued liabilities (see Note 7)........................................................... 4,181 6,446 Current portion of long-term notes payable and other obligations (see Note 8).............. 3,272 1,099 Patient deposits (see Note 2).............................................................. 9,492 7,208 ------- ------- Total current liabilities.............................................................. 18,205 15,576 ------- ------- Long-term notes payable and other obligations (see Note 8).................................... 4,239 311 ------- ------- Commitments and Contingencies (see Note 14) Shareholders' equity: Common Stock, $.01 par value - 50,000,000 shares authorized in 2003 and 2002; 3,544,292 and 3,353,884 shares issued in 2003 and 2002, respectively... 35 34 Capital in excess of par................................................................... 48,172 47,183 Treasury stock, at cost - 89,595 and 0 shares in 2003 and 2002, respectively.............. (426) -- Accumulated deficit........................................................................ (14,616) (15,660) ------- ------- Total shareholders' equity............................................................. 33,165 31,557 ------- ------- Total liabilities and shareholders' equity............................................. $55,609 $47,444 ======= =======
See accompanying notes to the consolidated financial statements. F-3
INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all amounts in thousands, except per share amounts) For the years ended December 31, -------------------------------- 2003 2002 2001 -------- ------- --------- Revenues, net (see Note 2) FertilityPartners service fees (including termination payment of $1,440 in 2001) .............................................. $ 74,408 $ 66,837 $ 58,394 Pharmaceutical sales ............................................... 16,301 19,709 15,107 FertilityDirect revenues ........................................... 2,981 1,654 397 -------- -------- -------- Total revenues .................................................. 93,690 88,200 73,898 -------- -------- -------- Costs of services and sales: FertilityPartners center costs ..................................... 65,479 58,193 48,867 Pharmaceutical costs ............................................... 15,830 18,936 14,503 FertilityDirect costs .............................................. 1,924 1,220 643 -------- -------- -------- Total costs of services and sales ............................... 83,233 78,349 64,013 -------- -------- -------- Contribution FertilityPartners center contribution .............................. 8,929 8,644 9,527 Pharmaceutical contribution ........................................ 471 773 604 FertilityDirect contribution ....................................... 1,057 434 (246) -------- -------- -------- Total contribution .............................................. 10,457 9,851 9,885 -------- -------- -------- General and administrative expenses ................................... 8,761 8,097 7,827 Interest income ....................................................... (125) (103) (179) Interest expense ...................................................... 109 155 281 -------- -------- -------- Total other expenses ............................................... 8,745 8,149 7,929 -------- -------- -------- Income before income taxes ............................................ 1,712 1,702 1,956 Income tax (benefit) provision (see Note 9) ........................... 668 562 (4,557) -------- -------- -------- Net income ............................................................ 1,044 1,140 6,513 Less: Dividends paid and/or accrued on Preferred Stock ................ -- 69 133 -------- -------- -------- Net income applicable to Common Stock ................................. $ 1,044 $ 1,071 $ 6,380 ======== ======== ======== Basic and diluted net earnings per share of Common Stock (see Note 10): Basic earnings per share ......................................... $ 0.31 $ 0.33 $ 2.07 Diluted earnings per share ....................................... $ 0.29 $ 0.31 $ 2.01 Weighted average shares - basic ....................................... 3,413 3,195 3,081 ======== ======== ======== Weighted average shares - diluted ..................................... 3,586 3,468 3,175 ======== ======== ========
See accompanying notes to the consolidated financial statements. F-4 INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (all amounts in thousands)
Cumulative Convertible Preferred Stock Common Stock Capital in Accumulated Treasury Stock ------------------ --------------- ---------------- Shares Amount Shares Amount Excess of Par Deficit Shares Amount ------ ------ ------ ------ ------------- ------- ------ ------ BALANCE AT DECEMBER 31, 2000 166 $166 5,414 $54 $54,149 $(23,313) 1,600 $(5,069) Issuance of Restricted Stock Grants -- -- 33 -- 164 -- -- -- Options Exercised -- -- 31 1 109 -- -- -- Warrants Exercised -- -- 60 1 2 Dividends paid to preferred shareholders.. -- -- -- -- (133) -- -- -- Purchase of Treasury Stock -- -- -- -- -- -- 880 (2,029) Retirement of Treasury Stock -- -- (2,480) (25) (7,073) -- (2,480) 7,098 Net income -- -- -- -- -- 6,513 -- -- ---- ---- ----- --- ------- -------- ------ ----- BALANCE AT DECEMBER 31, 2001 166 $166 3,058 $31 $47,218 $(16,800) --$ -- Issuance of Common Stock -- -- -- -- 45 -- -- -- Issuance of Restricted Stock Grants -- -- 45 -- 248 -- -- -- Options Exercised -- -- 31 1 100 -- -- -- Secondary Offering -- -- 220 2 1,136 -- -- -- Dividends paid to preferred shareholders.. -- -- -- -- (69) -- -- -- Purchase of Preferred Stock (166) (166) -- -- (1,495) -- -- -- Net income -- -- -- -- -- 1,140 -- -- ---- ---- ----- --- ------- -------- ------ ----- BALANCE AT DECEMBER 31, 2002 -- $ -- 3,354 $34 $47,183 ($15,660) -- $ -- Issuance of Restricted Stock Grants -- -- 58 -- 417 -- -- -- Options and warrants exercised -- -- 132 1 146 -- -- -- Issuance of Treasury Stock -- -- -- -- 426 -- 90 (426) Net income -- -- -- -- -- 1,044 -- -- ---- ---- ----- --- ------- -------- ------ ----- BALANCE AT DECEMBER 31, 2003 -- $ -- 3,544 $35 $48,172 $(14,616) 90 $ (426) ===== ===== ===== === ======= ======== ====== ======
See accompanying notes to the consolidated financial statements. F-5
INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (all amounts in thousands) For the years ended December 31, ------------------------------- 2003 2002 2001 ------- -------- -------- Cash flows from operating activities: Net income ..................................................... $ 1,044 $ 1,140 $ 6,513 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................ 3,342 3,590 3,023 Deferred income tax provision (benefit) ...................... 537 811 (4,791) Changes in assets and liabilities Decrease (increase) in assets: Due from Medical Practices ................................ (3,621) (351) 2,634 Pharmaceutical sales accounts receivable .................. 153 (126) (316) Prepaids and other current assets ......................... (574) (1,227) (608) Other assets .............................................. 1 284 239 Increase (decrease) in liabilities: Accounts payable .......................................... 437 (613) (264) Accrued liabilities ....................................... (2,265) 1,144 (208) Patient deposits .......................................... 2,284 2,557 2,121 ------- ------- ------- Net cash provided by operating activities .......................... 1,338 7,209 8,343 ------- ------- ------- Cash flows from investing activities: Payment for exclusive FertilityPartners service rights ......... (2,290) (3,586) (295) Proceeds from sale of fixed assets ............................. 395 -- -- Proceeds from sale of intangible assets ........................ 136 -- -- Purchase of fixed assets and leasehold improvements ............ (7,635) (2,030) (1,665) ------- ------- ------- Net cash used in investing activities .............................. (9,394) (5,616) (1,960) ------- ------- ------- Cash flows from financing activities: Proceeds from issuance of Common Stock ......................... -- 1,532 113 Proceeds from issuance of debt ................................. 8,028 -- -- Principal repayments on debt ................................... (1,884) (1,062) (1,000) Principal repayments under capital lease obligations ........... (43) (145) (135) Repurchase of Common Stock ..................................... -- -- (2,029) Repurchase of Preferred Stock .................................. -- (1,661) -- Exercise of common stock options and warrants .................. 147 -- -- Dividends paid on Convertible Preferred Stock .................. -- (69) (133) ------- ------- ------- Net cash provided by (used in) financing activities ................ 6,248 (1,405) (3,184) ------- ------- ------- Net increase (decrease) in cash .................................... (1,808) 188 3,199 Cash at beginning of period ........................................ 8,693 8,505 5,306 ------- ------- ------- Cash at end of period .............................................. $ 6,885 $ 8,693 $ 8,505 ======= ======= =======
See accompanying notes to the consolidated financial statements. F-6 INTEGRAMED AMERICA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 -- THE COMPANY: IntegraMed America, Inc. (the "Company") offers products and services to patients and providers in the fertility industry. The IntegraMed Network is comprised of twenty-three (twenty-two at December 31, 2003 as one was added on January 1, 2004) fertility centers in major markets across the United States, pharmaceutical products and services, a financing subsidiary, the Council of Physicians and Scientists, and a leading fertility portal (www.integramed.com). Sixteen Affiliate fertility centers purchase discrete service packages provided by the Company and seven (six at December 31, 2003, see Note 17) fertility centers have access to the entire portfolio of products and services under the comprehensive FertilityPartners(TM) program. All twenty-three fertility centers have access to the Company's consumer services, principally pharmaceutical products and patient financing products. NOTE 2 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: Basis of consolidation -- The consolidated financial statements comprise the accounts of IntegraMed America, Inc. and its wholly owned subsidiaries. All significant inter-company transactions have been eliminated. The Company principally derives its revenues from Services contracts and the sale of pharmaceutical products. The Company does not have a controlling financial interest in any of the medical practices, including the FertilityPartners, and as such does not consolidate their results. Use of estimates -- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions in certain circumstances that affect amounts reported in the accompanying consolidated financial statements and related footnotes. In preparing these financial statements, management has made its best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. The Company does not believe there is a great likelihood that materially different amounts would be reported related to the accounting policies described below. However, application of these accounting policies involves the exercise of judgment and use of assumptions as to future uncertainties and, as a result, actual results could differ from these estimates. Revenue and cost recognition -- FertilityPartners Service fees As of December 31, 2003, the Company provided comprehensive services to the fertility centers under six FertilityPartners contracts. During the year ended December 31, 2003, the Company provided services under a FertilityPartner contract which was terminated effective June 30, 2003, and commenced providing services under a new FertilityPartner agreement on September 1, 2003. As of December 31, 2003, under all six of the current agreements, the Company receives as compensation for its services a three-part fee comprised of: (i) a tiered percentage of net revenues, (ii) reimbursed costs of services (costs incurred in servicing a FertilityPartner and any costs paid on behalf of the FertilityPartner) and (iii) a fixed percentage of earnings after services fees. Under the agreement which terminated effective June 30, 2003, as compensation for its services, the Company received a fixed fee plus reimbursed costs of services. F-7 INTEGRAMED AMERICA, INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS F-16 All revenues from FertilityPartners service fees are recorded in the period services are rendered. Direct costs incurred by the Company in performing services and costs incurred on behalf of the FertilityPartners are reported as costs of services. Revenue and costs are recognized in the same period in which the related services have been performed. The physicians receive as compensation all remaining earnings of the fertility practice after payment of the Company's fees. The Company agreed to terminate its contract with its hospital based FertilityPartner effective December 31, 2000. As compensation for certain performance obligations in the termination agreement, the Company received a total of $1,440,000 from this FertilityPartner. This balance was recognized as FertilityPartners revenue during the fiscal year ended December 31, 2001. Pharmaceutical Sales The Company distributes fertility related pharmaceutical products through IntegraMed Pharmaceutical Services, Inc. (IPSI), a wholly owned subsidiary. The Company has an arrangement with ivpcare, inc. to fulfill the purchase and distribution of pharmaceuticals. The Company and ivpcare have no common ownership or management. IPSI accepts patient orders, verifies patient insurance coverage where applicable and ships prescription-based pharmaceuticals directly to patients of the IntegraMed Provider Network. Revenue is derived from the sales of these pharmaceuticals and is recorded, along with the related costs including the fee due ivpcare, when shipments are made. Shared Risk(TM) Refund Program The Shared Risk Refund program was established at the Shady Grove Fertility Reproductive Science Center ("Shady Grove"), the leading fertility center in the metropolitan Washington, DC area, a member of the IntegraMed Provider Network and a FertilityPartner. Based on the experience at Shady Grove, the Company developed an actuarial model that allows pricing a treatment package to consumers. The Shared Risk Refund program consists of a package that includes up to three cycles of in vitro fertilization for one fixed price with a significant refund if the patient does not deliver a baby. Under this innovative financial program, the Company receives payment directly from consumers who qualify for the program and pays contracted fertility centers a defined reimbursement for each treatment cycle performed. Expenses related to the program are recorded as incurred. Revenues related to refundable amounts are deferred until the pregnancy outcome is determined. The Company manages the risk associated with the Shared Risk Refund program through a case management program. This case management program authorizes patient care and provides information to be used in recognizing revenue. A reserve for estimated refunds due to pregnancy loss is maintained and based on historical averages of pregnancy losses applied to the revenues recorded within the applicable periods. Actual results relating to the recording of revenue, expenses and refunds to date have not varied materially from the estimates used in the actuarial model. Patient Financing IntegraMed Financial Services, Inc. ("IFS"), a wholly owned subsidiary of the Company, arranges financing to qualified patients of the IntegraMed Provider Network at rates significantly lower than credit cards and other finance companies. IFS is administered by AmeriFee LLC, a third party vendor, which provides administrative management services to IFS. The loans are made to qualified patients by a third party bank. The patient makes payment directly to the medical practice. The bank pays a negotiated percentage of the financing amount as a placement fee to the Company. Such revenue is recorded within FertilityDirect revenues when the Company receives the cash at the time of closing the transaction. Cash and cash equivalents -- Cash and cash equivalents primarily include all highly liquid debt instruments with original maturities of three months or less, recorded at cost, which approximates market. F-8 Due from Medical Practices -- Due from Medical Practices represents the net amounts owed to the Company by the medical practices. This balance is comprised of amounts owed to the Company by the medical practices for funds which the Company has advanced to the practices for use in financing their accounts receivable, less balances owed to the medical practices by the Company for undistributed amounts earned by their physicians. Due from Medical Practices excludes amounts owed by the Company to medical practices for acquired exclusive services rights since the Financial Accounting Standards Board Interpretation 39 conditions for offset are not met for these obligations. Such acquired rights are reported as intangible assets. Pharmaceutical sales accounts receivable -- Pharmaceutical sales accounts receivable represent receivables held by IPSI for medications sold directly to patients. Risk of loss in connection with uncollectibility of these accounts receivable is borne by the Company. As of December 31, 2003 the allowance for uncollectibles was $195,000. 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 five years. Leasehold improvements are amortized over the shorter of the asset life or the remaining term of the lease. Assets under capital leases are amortized over the term of the lease agreements. The Company periodically reviews the fair value of fixed assets for impairment, the results of which have had no material effect on the Company's financial position or results of operations. 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 gain or loss. Routine maintenance and repairs are charged to FertilityPartners cost of services or General and Administrative expenses as incurred, while costs of betterments and renewals are capitalized. Exclusive Service Rights -- Exclusive service rights represent costs incurred by the Company for the right to service certain fertility centers and are valued at cost less accumulated amortization, which is provided on a straight-line basis over the length of the contract, usually ten to twenty-five years. The Company periodically reviews exclusive service rights to assess recoverability; any impairments would be recognized in the consolidated statement of operations if a permanent impairment was determined to have occurred. Recoverability is determined based on undiscounted expected earnings from the related business over the remaining amortization period. No impairment was noted during 2003 or 2002. Patient Deposits -- Patient deposits represent advanced payment for services made by patients of the fertility centers. Such amounts are held by the Company until the time service is rendered, at which point the fertility center records the revenue. Patient deposits also include revenue deferred under the Shared Risk Refund program. Stock based employee compensation -- The Company adopted Financial Accounting Standards No. 123, "Accounting for Stock Based Compensation" (FAS 123), on January 1, 1996. Under FAS 123, companies can, but are not required to, elect to recognize compensation expense for all stock based awards, using a fair value method. F-9 The following table illustrates the effect on net income and earnings per share as if the Company had applied the fair value recognition provisions of FASB No. 123, Accounting for Stock-Based Compensation, to stock-based employee compensation. (000's omitted, except per share amounts). There were no stock options granted during fiscal year 2003. For the twelve-month period ended December 31, ------------------- 2003 2002 ------ ------ Net Income, as reported ........................... 1,044 1,071 Add: Stock-based employee compensation expense included in reported net income, net of related tax effects ........................................... -- -- Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects ........ (307) (334) ----- ----- Pro forma net income .............................. 737 737 Earnings per share: Basic-as reported ............................ .31 .33 Basic-pro forma .............................. .22 .23 Diluted-as reported .......................... .29 .31 Diluted-pro forma ................................. .21 .21 Prior to the third quarter of 2003, the Company accounted for its stock option plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Under this standard, no stock option-based employee compensation cost is reflected in net income, as all options granted under the plans had an exercise price equal to the market value of the underlying Common Stock on the date of grant. Effective January 1, 2003, the Company adopted the fair value recognition provisions of FAS No. 148. Under the Prospective transition method selected by the Company, fair value accounting is applied to all new stock grants and modifications to old grants. Disclosure of pro-forma net income and EPS is continued for any pre-adoption grants. Concentrations of credit risk -- Financial instruments, which potentially expose the Company to concentrations of credit risk consist primarily of trade accounts receivable. Income taxes -- The Company accounts for income taxes utilizing the asset and liability approach in accordance with Financial Accounting Standards No. 109, "Accounting For Income Taxes" (FAS 109). The income tax (benefit) provision is determined under the asset and liability approach. Deferred tax assets and liabilities are recognized on differences between the book and tax basis of assets and liabilities using presently enacted tax rates. The income tax (benefit) provision is the sum of the amount of income tax paid or payable for the year as determined by applying the provisions of enacted tax laws to the taxable income for that year and the net change during the year in the Company's deferred tax assets and liabilities. (See Note 9). Earnings per share -- The Company determines earnings per share in accordance with Financial Accounting Standards No. 128, "Earnings Per Share" (FAS 128), which the Company adopted in December 1997. F-10 Fair value of financial instruments-- At December 31, 2003 and 2002, the carrying values of all financial instruments, both short and long-term, approximated their fair value. New accounting pronouncements -- Financial Accounting Standards Board Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51 In January 2003, the FASB issued Interpretation No. 46, "Consolidation of Variable Interest Entities, an interpretation of ARB No. 51". Interpretation No. 46 clarifies Accounting Research Bulletin No. 51, "Consolidated Financial Statements" related to whether companies should consolidate certain entities, called variable interest entities. Under Interpretation No. 46, the Company is required to evaluate whether its affiliated fertility groups, for which it provides business services under long-term service agreements, are variable interest entities. Pursuant to Interpretation No. 46, an enterprise that absorbs a majority of the economic risks and rewards of a variable interest entity is required to consolidate the variable interest entity for financial reporting purposes. Interpretation No. 46 is effective immediately for variable interest entities created after January 31, 2003 and for interim periods ending after September 15, 2003 for which a variable interest was in place prior to February 1, 2003. In October 2003, the FASB issued Financial Staff Position 46-6, "Effective Date of FASB Interpretation No. 46, Consolidation of Variable Interest Entities," deferring the effective date under certain circumstances until the first interim or annual period ending after December 15, 2003. In December 2003, the FASB issued Interpretation No. 46(R) revising Interpretation No. 46 and deferring the effective date under certain circumstances until the first interim or annual period ending after March 15, 2004. The Company has deferred the effective date in accordance with Interpretation No. 46(R) and continues to evaluate Interpretation No. 46 and assess the impact on its consolidated financial statements. Statement of Financial Accounting Standards No. 149, Amendment of Statement 133 on Derivative Instruments and Hedging Activities In April, 2003, the Financial Accounting Standards Board (FASB or the "Board") issued FASB 149 which amends Statements No. 133, Accounting for Derivative Instruments and Hedging Activities, and No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, and establishes accounting and reporting standards for derivative instruments including derivatives embedded in other contracts (collectively referred to as derivatives) and for hedging activities. The Company does not believe the adoption of FASB 149 will have an impact on its financial statements. Statement of Financial Accounting Standards No. 150, Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity In May 2003 the Board issued FASB 150, which establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. Some of the provisions of this Statement are consistent with the current definition of liabilities in FASB Concepts Statement No. 6, Elements of Financial Statements. The remaining provisions of this Statement are consistent with the Board's proposal to revise that definition to encompass certain obligations that a reporting entity can or must settle by issuing its own equity shares, depending on the nature of the relationship established between the holder and the issuer. The Company does not believe the adoption of FASB 150 will have an impact on its financial statements. F-11 NOTE 3 -- SEGMENT INFORMATION: The Company is principally engaged in providing products and services to the fertility market. For disclosure purposes, the Company recognizes services offered to its network of fertility centers and its pharmaceutical distribution operations as separate reporting segments. The services segment includes revenue and costs categorized as FertilityPartners Service Fees and FertilityDirect revenue, as follows (000's omitted):
Pharmaceutical Corporate Services Distribution Consolidated --------- -------- ------------ ------------ For the Year ended December 31, 2003 Revenues............................... $ (182) $77,571 $16,301 $93,690 Cost of Services....................... -- 67,403 15,830 83,233 ------- ------- ------- ------- Contribution........................... (182) 10,168 471 10,457 General and administrative costs....... 8,761 Interest, net.......................... (16) ------- Income before income taxes............. $ 1,712 ======= Depreciation expense included above.... 2,163 Capital expenditures................... 440 7,195 -- 7,635 Total assets........................... 9,068 43,491 3,050 55,609 For the Year ended December 31, 2002 Revenues............................... $ (322) $68,813 $19,709 $88,200 Cost of Services....................... -- 59,953 18,396 78,349 ------- ------- ------- ------- Contribution........................... (322) 8,860 1,313 9,851 General and administrative costs....... 8,097 Interest, net.......................... 52 ------- Income before income taxes............. $ 1,702 ======= Depreciation expense included above.... 2,152 Capital expenditures................... 238 1,792 -- 2,030 Total assets........................... 10,214 35,403 1,827 47,444 For the Year ended December 31, 2001 Revenues............................... $ -- $58,791 $15,107 $73,898 Cost of Services....................... -- 49,510 14,503 64,013 ------- ------- ------- ------- Contribution........................... -- 9,281 604 9,885 General and administrative costs....... 7,827 Interest, net.......................... 102 ------- Income before income taxes............. $ 1,956 ======= Depreciation expense included above.... $ 1,652 Capital expenditures................... $ 161 $ 1,504 $ -- $ 1,665 Total assets........................... $11,325 $31,138 $ 2,158 $44,621
NOTE 4 -- SIGNIFICANT SERVICE CONTRACTS: For the years ended December 31, 2003, 2002, and 2001 the following fertility centers each individually provided greater than 10% of the Company's revenues, net and/or contribution as follows: F-12
Percent of Company Percent of Revenues, net Contribution --------------------------- --------------------------- 2003 2002 2001 2003 2002 2001 ------- ------ ------ ------- ------ ------ Boston......................... 10.4 10.8 10.9 13.9 14.2 12.6 Long Island.................... 5.1 10.0 10.8 6.4 5.2 6.9 New Jersey..................... -- -- 1.9 -- -- 12.0 Illinois....................... 27.9 27.7 29.3 26.4 31.0 29.5 Shady Grove.................... 20.7 17.7 17.3 25.0 26.3 21.2 Bay Area....................... 7.7 7.4 8.4 8.6 10.9 10.6
NOTE 5 -- EXCLUSIVE SERVICE RIGHTS: Exclusive Service Rights at December 31, 2003 and 2002 consisted of the following (000's omitted): 2003 2002 ------- -------- Exclusive Service rights.............. $26,076 $24,533 Less accumulated amortization......... (5,572) (5,004) ------- ------- Total............................. $20,504 $19,529 ======= ======= On September 1, 2003, the Company acquired the right to provide business services to Reproductive Endocrinology and Andrology of Charlotte (REACh), a four physician fertility practice in the Charlotte, North Carolina area, for $2.3 million in cash. On April 26, 2002, the Company acquired the right to provide Services to the Northwest Center for Infertility and Reproductive Endocrinology (NCIRE), a physician corporation providing fertility services in the Margate, Florida area, for $2.4 million in cash. The practice is comprised of 5 physicians practicing in three locations. On June 14, 2002, the Company financed the acquisition of the fertility practice of Sheridan Healthcare Corp., Inc, by NCIRE. The aggregate investment was $625,000, all of which was allocated to exclusive service rights. On November 25, 2002, the Company announced the ending of its FertilityPartners agreement with RSA of New York. The agreement ended on November 15, 2003. RSA of New York serves the Long Island market and revenues for the four quarterly periods ending prior to the announcement were $9.1 million. The program had a contribution of $750,000 for the same period. At the time of the announcement, the Company evaluated its exclusive business rights asset associated with RSA of New York and reduced that asset to its realizable value by adjusting the asset downward by $350,000. Based upon subsequent discussions with representatives from RSA of New York, the Company terminated its FertilityPartners agreement effective June 30, 2003. In consideration for the earlier contract termination, the Company recognized as revenue a one-time termination payment of approximately $320,000, and related costs of approximately $82,000 in the second quarter of 2003. The Company continues an ongoing relationship with this medical practice under its FertilityDirect program. On January 1, 2001, the Company amended its FertilityPartners agreement with the Bay Area Fertility and Gynecology Medical Group, Inc., to encompass the medical practice of Susan P. Willman, M.D., Inc. In consideration for the right to provide additional Services and the acquisition of certain assets, the Company paid Dr. Willman approximately $515,000, of which approximately $332,000 was in cash and approximately $183,000 in the form of a promissory note. Approximately $368,000 of the purchase price was allocated to exclusive service rights. On January 1, 2001, the Company amended its FertilityPartners agreement with Shady Grove, to encompass the medical practice of David S. Saffan, M.D. In consideration for the right to provide additional Services and the acquisition of certain assets, the Company agreed to pay Dr. Saffan amounts to be determined based upon Dr. Saffan achieving certain performance targets through December 31, 2003. The total purchase price as of December 31, 2003 was approximately $519,000. F-13 NOTE 6 -- FIXED ASSETS, NET: Fixed assets, net at December 31, 2003 and 2002 consisted of the following (000's omitted):
2003 2002 ------ ------- Furniture, office and computer equipment............... $ 4,502 $ 5,139 Medical equipment...................................... 3,205 3,520 Leasehold improvements................................. 8,890 5,936 Construction in process................................ 619 133 Assets under capital leases............................ 810 1,260 ------- -------- Total................................................ 18,026 15,988 Less -- Accumulated depreciation and amortization...... (7,808) (10,847) ------- -------- $10,218 $ 5,141 ======= ========
Depreciation expense on fixed assets for the years ended December 31, 2003, 2002 and 2001 was $ 2,163,000, $2,152,000, and $1,652,000, respectively. Assets under capital leases primarily consist of computer and medical equipment. Accumulated amortization related specifically to capital leases at December 31, 2003, 2002 and 2001 was $461,000, $1,100,000, and $977,000, respectively. NOTE 7 -- ACCRUED LIABILITIES: Accrued liabilities at December 31, 2003 and 2002 consisted of the following (000's omitted):
2003 2002 ------ ------ Accrued costs on behalf of Medical Practices......... $1,933 $3,473 Reserves for estimated refunds....................... 391 422 Accrued incentives and benefits...................... 733 1,655 Accrued state taxes.................................. 211 338 Accrued rent ........................................ 207 0 Other................................................ 706 558 ------ ------ Total accrued liabilities............................ $4,181 $6,446 ====== ======
NOTE 8 -- NOTES PAYABLE AND OTHER OBLIGATIONS: Debt at December 31, 2003 and 2002 consisted of the following (000's omitted):
2003 2002 ------ ------ Note payable to bank................................. $7,175 $1,250 Acquisition notes payable............................ 63 122 Obligations under capital lease...................... 273 38 ------- ------ Total notes payable and other obligations............ 7,511 1,410 Less -- Current portion.............................. (3,272) (1,099) ------- ------ Long-term notes payable and other obligations........ $ 4,239 $ 311 ======= =======
Note payable to Bank -- In July 2003, the Company amended its existing credit facility with Fleet Bank, N.A. The amended facility is comprised of a renewal of the Company's $7.0 million three-year working capital revolver and a new $5.75 million 3 year term loan, of which approximately $5.175 million remained outstanding with a remaining term of approximately 2.5 years as of December 31, 2003. Proceeds of $0.75 million from the new $5.75 million term loan were immediately used to F-14 repay the outstanding balance of $0.75 million on the Company's previous term loan with Fleet Bank, N.A. Each component of this credit facility bears interest by reference to Fleet's prime rate or LIBOR, at the Company's option, plus a margin, which is dependent upon a leverage test, ranging from 2.25% to 2.75% in the case of LIBOR-based loans. Prime based loans are made at Fleet Bank's prime rate and do not contain an additional margin. Interest on the prime-based loans is payable monthly and interest on LIBOR-based loans is payable on the last day of each applicable interest period. As of December 31, 2003, interest on both the term loan and working capital revolver was payable at a rate of approximately 4.00%. Unused amounts under the working capital revolver bear a commitment fee of 0.25% and are payable quarterly. Availability of borrowings under the working capital revolver is based on eligible accounts receivable, as defined in the credit facility. As of December 31, 2003, under the working capital revolver the full amount of $7.0 million was available, of which the Company had drawn $2.0 million for general corporate purposes. The credit facility is collateralized by all of the Company's assets. As of December 31, 2003, the Company was in full compliance with all applicable debt covenants. Acquisition notes payable -- Acquisition notes payable represent the liability owed by the Company to certain medical providers for the cost of acquiring the exclusive right to supply services to their fertility practices. The acquisition obligation at December 31, 2003 represents amounts owed by the Company to acquire the additional service rights at the Bay Area Fertility practice. The acquisition obligation at December 31, 2002 represents amounts owed by the Company to acquire these same rights. This obligation bears interest at a rate of 4.86%. Debt Maturities -- At December 31, 2003, aggregate note payments, including capital lease obligation payments, in future years were as follows (000's omitted): 2004........................................... $3,272 2005........................................... 1,218 2006........................................... 2,946 Thereafter..................................... 75 ------- Total payments................................. $7,511 ====== Leases -- Capital lease obligations relate primarily to computer and medical equipment for the FertilityPartners. The Company has operating leases for its corporate headquarters and for medical office space for its FertilityPartners centers. The Company also has operating leases for certain medical equipment. Aggregate rental expense under operating leases was $4,817,000, $3,533,000, and $3,665,000 for the years ended December 31, 2003, 2002 and 2001, respectively. At December 31, 2003, the minimum lease payments for assets under capital and non-cancelable operating leases in future years were as follows (000's omitted): Capital Operating ------- --------- 2004.................................... $ 71 $ 4,561 2005.................................... 77 4,231 2006.................................... 77 4,232 2007.................................... 77 3,846 2008.................................... -- 2,414 Thereafter.............................. -- 7,823 ---- ------- Total minimum lease payments............ $302 $27,107 ======= Less -- Amount representing interest.... 29 ---- Present value of minimum lease payments $273 ==== F-15 NOTE 9 -- INCOME TAXES The provision for income taxes consisted of: For the years ended December 31, ------------------------------- 2003 2002 2001 --------- ------- -------- Current taxes (benefits): Federal ................ $ -- $ -- $ -- State .................. 104 51 34 ------- ------- ------- Total Current Taxes .. $ 104 $ 51 234 ------- ------- ------- Deferred taxes (benefits): Federal ................ $ 599 $ 595 $ -- State .................. (35) (90) -- Valuation Allowance .... -- 6 (4,791) ------- ------- ------- Total Deferred Taxes . $ 564 $ 511 $(4,791) ------- ------- ------- Total tax provision ...... $ 668 $ 562 $(4,557) ======= ======= ======= The financial statement income tax (benefit) provision differed from income taxes determined by applying the statutory federal income tax rate to the financial statement income before income taxes for the years ended December 31, 2003, 2002 and 2001 primarily as a result of the following (000's omitted): For the years ended December 31, -------------------------------- 2003 2002 2001 ------- ------- ------- Tax expense at Federal statutory rate $ 582 $ 579 $ 585 State income taxes .................. 60 (39) 234 Non-deductible expenses ............. 34 31 -- Other ............................... (8) (15) -- Net operating loss utilization ...... -- -- (585) Change in valuation allowance ....... -- 6 (4,791) ------- ------- ------- Income tax (benefit) expense ........ $ 668 $ 562 $(4,557) ======= ======= ======= Significant components of the deferred tax assets (liabilities) at December 31, 2003 and 2002 were as follows (000's omitted): December 31, ------------------ 2003 2002 ------- ------- Deferred tax assets Net operating loss carry forwards $ 4,618 $ 5,180 Doubtful accounts ................ 1,093 954 Other ............................ 40 43 ------- ------- Total deferred tax assets .... 5,751 6,177 ------- ------- Deferred tax liabilities Depreciation and amortization .... (414) (303) ------- ------- Total deferred tax liabilities (414) (303) ------- ------- Deferred tax asset ................. 5,337 5,875 Valuation allowance ................ (1,594) (1,594) ------- ------- Net total deferred tax asset ....... $ 3,743 $ 4,280 ======= ======= At December 31, 2003, the Company had Federal net operating loss carry forwards of approximately $13.6 million, which expire in 2004 through 2019. For tax purposes, there is an annual limitation of approximately $2.0 million on the utilization of approximately $10.4 million of net operating losses resulting from changes in ownership attributable to the Company's May 1993 Preferred Stock Offering and the August 1997 Common Stock Offering and FertilityPartners agreements. For the years ended December 2003, 2002 and 2001, the Company F-16 utilized net operating loss carry forwards of approximately $1.1 million, $2.0 million and $2.5 million, respectively. Valuation allowances have been recorded for net operating loss carry forwards that may expire prior to utilization due to the annual limitation. In the fourth quarter of 2001, the Company recorded a reduction of its deferred tax asset valuation allowance as a result of the Company's sustained profitability and likelihood of net operating loss utilization. NOTE 10 - EARNINGS PER SHARE: The reconciliation of the numerators and denominators of the basic and diluted EPS computations for the years ended December 31, 2003, 2002 and 2001 is a follows (000's omitted, except for per share amounts): For the years ended December 31, ---------------------- 2003 2002 2001 ---- ---- ---- Numerator Net Income ........................................ $1,044 $1,140 $6,513 Less: Preferred stock dividends paid and/or accrued -- 69 133 ------ ------ ------ Net Income applicable to Common Stock ............. $1,044 $1,071 $6,380 ====== ====== ====== Denominator Weighted average shares outstanding ............... 3,413 3,195 3,081 Effect of dilutive options and warrants ........... 173 273 94 ------ ------ ------ Weighted average shares and dilutive potential Common shares ................................... 3,586 3,468 3,175 ====== ====== ====== Basic earnings per common share ................... $ 0.31 $ 0.33 $ 2.07 ====== ====== ====== Diluted earnings per common share ................. $ 0.29 $ 0.31 $ 2.01 ====== ====== ====== For the years ended December 31, 2003, 2002 and 2001, options to purchase approximately 119,500, 52,500, and 297,000, shares, respectively, of Common Stock at exercise prices ranging from $5.98 to 6.15, $6.15 to $8.57, and $4.50 to $5.38 per share, respectively, were excluded in computing the diluted per share amounts as they were antidilutive. For the years ended December 31, 2003, 2002 and 2001, warrants to purchase approximately 105,600, 144,350, and 25,000, shares, respectively, of Common Stock at exercise prices ranging from $6.25 to $9.00, $6.25 to $9.00 and $5.13 to $7.24, per share, respectively, were excluded in computing the diluted per share amounts as they were antidilutive. For the year ended December 31, 2001 approximately 133,000 shares of Common Stock from the assumed conversion of Preferred Stock were excluded in computing the diluted per share amounts as they were antidilutive. NOTE 11 -- SHAREHOLDERS' EQUITY: In 2003, 2002 and 2001, the Company issued 58,345, 37,640 and 33,265 shares, respectively, of restricted Common Stock to several officers and directors of the Company for an aggregate amount of $417,000 and $248,000 and $164,000 respectively. During 2003, the Company issued 89,595 shares of Common Stock as Treasury Stock in conjunction with the income tax withholdings on the officer and director stock awards granted during the years 2003, 2002, 2001 and 2000. As of December 31, 2003, the Company had not immediate plans to sell, award or retire these shares. During 2002, the Board of Directors authorized the redemption of all outstanding shares of the Company's Series A Preferred Stock. Effective October 15, 2002, the Company had redeemed all 165,644 outstanding shares at a cost of approximately $1.7 million. F-17 In 2002, the Company issued an aggregate of 7,089 shares of restricted Common Stock to the physician partners of the Northwest Center for Fertility and Reproductive Endocrinology, in connection with the FertilityPartners agreement. These shares had a market value of $45,000 on the date of issuance. The Board of Directors had previously authorized the repurchase of shares of the Company's outstanding Common Stock. As of December 31, 2001, the Company had repurchased and retired 2,480,085 shares of its Common Stock for an aggregate cost of approximately $7.1 million. No repurchases or retirements of Common Stock were made during the years 2003 or 2002, and the Company currently does not anticipate any additional Common Stock repurchases. As of December 31, 2003 and 2002, warrants to purchase an aggregate of 105,600 and 144,350 shares of Common Stock were outstanding at weighted average exercise prices of $8.54 and $7.39 respectively. NOTE 12 -- STOCK-BASED EMPLOYEE COMPENSATION: Under the 1992 Stock Option Plan (as amended) (the "1992 Plan") and the 2000 Stock Option Plan (the "2000 Plan"), 500,000 and 600,000 shares, respectively, were reserved for issuance of incentive and non-incentive stock options. Under the 1992 and 2000 Plans, incentive stock options, as defined in Section 422 of the Internal Revenue Code, may be granted only to employees and non-incentive stock options may be granted to employees, directors and such other persons as the Board of Directors (or a committee (the "Committee") appointed by the Board) determines will contribute to the Company's success at exercise prices equal to at least 100%, or 110% for a ten percent shareholder, of the fair market value of the Common Stock on the date of grant with respect to incentive stock options and at exercise prices determined by the Board of Directors or the Committee with respect to non-incentive stock options. Stock options issued under the 2000 Plan are exercisable, subject to such conditions and restrictions as determined by the Board of Directors or the Committee, during a ten-year period, or a five-year period for incentive stock options granted to a ten percent shareholder, following the date of grant; however, the maturity of any incentive stock option may be accelerated at the discretion of the Board of Directors or the Committee. Under the 1992 Plan, the Board of Directors or the Committee determines the exercise dates of options granted; however, in no event may incentive stock options be exercised prior to one year from date of grant. Under the 1992 and 2000 Plans, the Board of Directors or the Committee selects the optionees, determines the number of shares of Common Stock subject to each option and otherwise administers the Plans. Under the 1992 and 2000 Plans, options expire three months from the date of the holder's termination of employment with the Company or twelve months in the event of disability or death. Under the 1994 Outside Director Stock Purchase Plan ("Outside Director Plan"), 31,250 shares of Common Stock are reserved for issuance. Under the Outside Director Plan, directors who are not full-time employees of the Company may elect to receive all or a part of their annual retainer fees, the fees payable for attending meetings of the Board of Directors and the fees payable for serving on committees of the Board, in the form of shares of Common Stock rather than cash, provided that any such election be made at least six months prior to the date that the fees are to be paid. As of December 31, 2003, 2002, and 2001, there were no options outstanding, respectively, under the Outside Director Plan. F-18 Stock option activity, under the 1992 and 2000 Plans combined, is summarized as follows: Number of shares of Common Stock underlying Weighted Average options exercise price ------------- ---------------- Options outstanding at December 31, 2000... 613,849 $3.63 Granted.................................... 192,500 $4.77 Exercised.................................. (36,126) $3.39 Canceled................................... (14,177) $4.04 --------- ----- Options outstanding at December 31, 2001... 756,046 $3.92 Granted.................................... 250,487 $5.90 Exercised.................................. (83,266) $2.75 Canceled................................... (70,627) $5.79 --------- ----- Options outstanding at December 31, 2002... 852,640 $4.29 Granted.................................... 0 $0.00 Exercised.................................. (27,468) $3.06 Canceled................................... (191,376) $5.15 Options outstanding at December 31, 2003... 633,796 $4.35 Options exercisable at: December 31, 2001..................... 386,868 $3.91 December 31, 2002..................... 512,124 $3.92 December 31, 2003..................... 533,541 $4.18 Included in options that were canceled during 2003, 2002, and 2001, were forfeitures of 59,785, 27,627, and 14,177 with weighted average exercise prices of $5.12, $5.79, and $4.04, respectively. As of December 31, 2003, stock options outstanding and exercisable by price range were as follows:
OPTIONS OUTSTANDING OPTIONS EXERCISABLE ----------------------------------------------------------------------- -------------------------------- Outstanding Weighted-Average Exercisable Range of as of Remaining Weighted-Average as of Weighted-Average Exercise Prices 12/31/2003 Contractual Life Exercise Price 12/31/2003 Exercise Price --------------- ---------- ---------------- -------------- ---------- -------------- $0.00 - $3.00 85,001 5.7 $2.76 76,251 $2.80 $3.00 - $5.00 429,309 4.3 $4.21 404,981 $4.20 $5.00 - $7.60 119,486 8.1 $6.00 52,309 $5.99 ------- -------- 633,796 5.2 $4.35 533,541 $4.18
Prior to the third quarter of 2003, the Company accounted for its stock option plans under the recognition and measurement principles of APB Opinion No. 25, Accounting for Stock Issued to Employees, and related Interpretations. Under this standard, no stock option-based employee compensation cost is reflected in net income, as all options granted under the plans had an exercise price equal to the market value of the underlying Common Stock on the date of grant. Effective July 1, 2003, the Company adopted the fair value recognition provisions of FAS No. 148. Under the Prospective transition method selected by the Company, fair value accounting is applied to all new stock grants and modifications to old grants. Disclosure of pro-forma net income and EPS is continued for any pre-adoption grants. No options were granted subsequent to the adoption of FAS No. 148. F-19 Assumptions used to calculate pro forma values include:
For the twelve-month period ended December 31, -------------------------------- 2003 2002 2001 --------- --------- -------- Weighted average fair value of options granted......................... $0.00 $4.29 $3.11 Dividend yield......................................................... 0.0% 0.0% 0.0% Volatility............................................................. N/A 75.3% 55.2% Risk free rate......................................................... N/A 1.06% 2.00% Expected term.......................................................... N/A 10 yrs 10 yrs
The Company recognizes compensation cost for stock-based employee compensation plans over the vesting period based on the difference, if any, between the quoted market price of the stock and the amount an employee must pay to acquire the stock. There was no compensation cost recognized in income for the years ended December 31, 2003, 2002 and 2001. Under restricted stock grant agreements with several officers of the Company, for the years beginning in 2001 and 2002, shares vested at the grant date. The Company recognizes compensation expense in the period the grants are awarded for years 2001 and 2002 (in 2000 the grants were amortized over a three-year period, but the change in vesting required the balance of the unamortized 2000 grant to be expensed in 2001). For stock grants issued during the year 2003, shares vest over a three-year period and compensation expense is recognized ratably over the period which ranges from zero to three years. Compensation expense recognized in connection with the restricted stock grants for the years ended December 31, 2003, 2002 and 2001 was $125,000, $336,000 and $422,000, respectively. After withholding applicable taxes, Common Stock with aggregate market values of $417,000 (of which $294,000 has been recorded as an expense and $123,000 is a prepaid charge at December 31, 2003), $248,000 and $164,000 was issued in the years ended December 31, 2003, 2002 and 2001, respectively. NOTE 13 -- QUARTERLY FINANCIAL DATA (UNAUDITED): Summarized quarterly financial data for continuing operations for 2003 and 2002 (in thousands, except per share data) appear below:
Diluted net Revenues, net Contribution Net income income per share ----------------- ------------------ ----------------- ----------------- 2003 2002 2003 2002 2003 2002 2003 2002 ------ -------- ------- ------- ------ ------ ------ ------ First quarter........ $23,710 $20,051 $ 2,313 $2,280 $ 140 $ 291 $0.04 $0.08 Second quarter ...... 24,501 21,171 2,958 2,391 377 310 0.11 0.08 Third quarter........ 22,257 23,273 2,649 2,741 261 325 0.07 0.09 Fourth quarter....... 23,222 23,705 2,537 2,439 266 214 0.07 0.06 Total year .......... $93,690 $88,200 $10,457 $9,851 $1,044 $1,140 $0.29 $0.31
NOTE 14 -- COMMITMENTS AND CONTINGENCIES: Operating Leases -- Refer to Note 8 for a summary of lease commitments. Reliance on Third Party Vendors -- The FertilityPartners centers, as well as all other medical providers who deliver services requiring fertility medication, are dependent on third-party vendors that produce such medications (including but not limited to: Lupron, Follistim, Repronex, GonalF and Pregnyl) that are vital to the provision of F-20 fertility and assisted reproduction technology services. Should any of these vendors experience a supply shortage, it may have an adverse impact on the operations of the fertility centers. To date, the fertility centers have not experienced any such adverse impacts. Employment Agreements -- The Company has entered into employment and change in control severance agreements with certain of its management employees, which include, among other terms, noncompetitive provisions and salary and benefits continuation. The Company's minimum aggregate commitment under these agreements at December 31, 2003 was approximately $10 million. Commitments to FertilityPartners -- Pursuant to the majority of the Company's FertilityPartners agreements, the Company is obligated to perform the following: (i) advance funds to the fertility centers to fund operations and provide services; and (ii) on or before the fifteenth business day of each month finance the net accounts receivable of the fertility center arising during the previous month and to transfer or pay to the fertility centers such amount of funds equal to the net accounts receivable less any amounts owed to the Company for Services fees and/or advances. Litigation -- In June 2002, the Company was served with a complaint, captioned WINFertility, Inc. vs. IntegraMed America, Inc., in which the plaintiff filed an action in the Supreme Court of New York, Westchester County, alleging breach of contract and seeking damages in excess of $5 million. The Company had retained WINFertility in April 2001 to provide claims management services in connection with the Company's Shared Risk Refund Program. WINFertility failed to provide the services for which the Company contracted and the Company terminated the contract in May 2002. The Company has served and filed an answer denying all material allegations of the complaint and asserting affirmative defenses. The Company has also filed a counterclaim against the plaintiff demanding an accounting and return of certain fees paid to the plaintiff by the Company. The Company believes it has meritorious defenses to the claims, and based on opinion of counsel, believes that the likelihood of the suit having a material adverse effect on the financial position, results of operations or the cash flow of the Company is remote. On June 6, 2003 the Company filed a lawsuit against Pediatric Physician Alliance, Inc. and its parent company, Integrated Physician Solutions, in the United States District Court for the District of New Jersey asserting, among other things, that the defendants, long after the Company's adoption and use of the INTEGRAMED and INTEGRAMED AMERICA(R) trademarks, began using the mark INTEGRIMED in connection with the sale, offering for sale, distribution and advertising of business management and consultation services for office-based medical practices and organizations in the field of health care. The Company is also asserting, in the lawsuit, that the defendants' use of the IntegriMed mark is a colorable imitation of the Company's registered mark INTEGRAMED AMERICA and is likely to cause confusion, or to cause mistake, or to deceive, in violation of the Lanham Act. The Company is seeking relief against defendants, among other things, declaring that the defendants have infringed the Company's trademarks, enjoining defendants from using the IntegriMed mark, and compensatory and punitive damages. On November 12, 2003 an action captioned South Broward Hospital District vs. Wayne S. Maxson, M.D. et. al. was filed against, among others, the Company and one of its FertilityPartners, in the Broward County Florida Circuit Court alleging that the Company had interfered with the contractual relationship between the Hospital and certain individuals. The Company and the other defendants have filed a motion to dismiss the Complaint. Moreover, the Company believes that if the Company's motion to dismiss is denied, the Company has meritorious defenses to the claims and that the likelihood of the suit having a material adverse effect on the financial position, results of operations or the cash flow of the Company is remote. There are other minor legal proceedings to which the Company is a party. In the Company's opinion, the claims asserted and the outcome of such proceedings will not have a material adverse effect on the financial position, results of operations or the cash flow of the Company. F-21 Insurance -- The Company and its affiliated fertility centers are insured with respect to medical malpractice risks on a claims made basis. Management believes it will be able to obtain renewal coverage in the future. Management is not aware of any claims against it or its affiliated medical practices, which would expose the Company, or its affiliated medical practices to liabilities in excess of insured amounts. Therefore, none of these claims is expected to have a material impact on the Company's financial position, results of operations or cash flows. NOTE 15 -- RELATED PARTY TRANSACTIONS: SDL Consultants, a company owned by Sarason D. Liebler, who became a director of the Company in August, 1994, rendered consulting services to the Company during 2003, 2002 and 2001 for aggregate fees of approximately $83,000, $78,000, and $96,000, respectively. Pursuant to the Company's FertilityPartners agreement with Shady Grove, Michael J. Levy, M.D., an employed shareholder physician of the P.C., became a member of the Company's Board of Directors effective March 12, 1998. The medical practice at Shady Grove paid the Company $2,909,000, $2,940,000 and $2,360,000 in 2003, 2002 and 2001, respectively in service fees. Pursuant to the Company's FertilityPartners agreement with FCI (the Illinois practice), Aaron Lifchez, M.D., an employed shareholder physician of FCI, became a member of the Company's Board of Directors in August 1997. The medical practice FCI paid the Company $3,215,000, $3,500,000 and $3,270,000 in 2003, 2002 and 2001, respectively in Service Fees. NOTE 16 -- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION AND NON-CASH TRANSACTIONS: Income tax payments of $117,000, $271,000, and $12,800 were paid in the years ended December 31, 2003, 2002 and 2001, respectively. Interest paid in cash during the year ended December 31, 2003, 2002 and 2001, amounted to $104,000, $155,000, and $281,000, respectively. Interest received during the years ended December 31, 2003, 2002 and 2001 amounted to approximately $125,000, $103,000, and $179,000, respectively. NOTE 17 --- SUBSEQUENT EVENT: In January 2004, the Company signed a FertilityPartner agreement to supply a complete range of business, marketing and facility services to a group of fertility physicians in the Company's Western Region. Under the terms of the 15-year agreement, IntegraMed will build a new facility and help the group to establish a private, full service fertility center. IntegraMed has committed up to $2 million to fund the development and equipping of a new state-of-the-art facility to house the clinical practice and embryology laboratory for the group and its patients. Upon its completion, the facility will accommodate the existing patient volume and future anticipated growth. Based on the terms of the transaction, IntegraMed will be paid a fixed services fee commencing in January of 2004 paid monthly until the new facility is open, which is anticipated to be in fourth quarter of 2004. At that time, IntegraMed service fees will be comprised of the Company's standard reimbursed costs of services, a fixed percentage of revenues, plus an additional fixed percentage of the new center's earnings. F-22 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) 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. Dated: March 19, 2004 By/s/JOHN W. HLYWAK, JR. ---------------------- John W. Hlywak, Jr. Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Signature Title Date /s/ GERARDO CANET - ----------------------------- Gerardo Canet President, Chief Executive Officer and Director (Principal Executive Officer) March 19, 2004 /s/ JOHN W. HLYWAK, JR - ----------------------------- John W. Hlywak, Jr. Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer March 19, 2004 /s/ MICHAEL J. LEVY, M.D. - ----------------------------- Michael J. Levy, M.D. Director March 19, 2004 /s/ SARASON D. LIEBLER - ----------------------------- Sarason D. Liebler Director March 19, 2004 /s/ AARON S. LIFCHEZ, M.D. - ----------------------------- Aaron S. Lifchez, M.D. Director March 19, 2004 /s/ WAYNE R. MOON - ----------------------------- Wayne R. Moon Director March 19, 2004 /s/ LAWRENCE J. STUESSER - ----------------------------- Lawrence J. Stuesser Director March 19, 2004 /s/ ELIZABETH E. TALLETT - ----------------------------- Elizabeth E. Tallett Director March 19, 2004 14 INDEX TO EXHIBITS Item 14(c) Exhibit Number Exhibit 3.1(a) -- Amended and Restated Certificate of Incorporation of Registrant effecting, inter alia, reverse stock split (ii) 3.1(b) -- Amendment to Certificate of Incorporation of Registrant increasing authorized capital stock by authorizing Preferred Stock (ii) 3.1(c) -- Certificate of Designations of Series A Cumulative Convertible Preferred Stock (ii) 3.1(d) -- Certificate of Amendment to Amended and Restated Certificate of Incorporation increasing authorized Common Stock to 50,000,000 shares (xxiv) 3.2 -- Copy of By-laws of Registrant (i) 3.2(a) -- Copy of By-laws of Registrant (As Amended and Restated on December 12, 1995) (xi) 3.2(b) -- Copy of By-laws of Registrant (As Amended and Restated on March 4, 1997) (xxi) 4.1 -- Warrant Agreement of Robert Todd Financial Corporation. (i) 4.2 -- Copy of Warrant, as amended, issued to IG Labs. (i) 4.3 -- RAS Securities Corp. and ABD Securities Corporation's Warrant Agreement. (ii) 4.4 -- Form of Warrants issuable to Raymond James & Associates, Inc. (vii) 4.6 -- Warrant issued to Morgan Stanley Venture Partners III, L.P. (xviii) 4.7 -- Warrant issued to Morgan Stanley Venture Partners III, L.P. (xviii) 4.8 -- Warrant issued to the Morgan Stanley Venture Partners Entrepreneur Fund, L.P. (xxi) 4.9 (a) -- Warrant issued to Brian Kaplan, M.D. (xxii) 4.9 (b) -- Warrant issued to Aaron S. Lifchez, M.D. (xxii) 4.9 (c) -- Warrant issued to Jacob Moise, M.D. (xxii) 4.9 (d) -- Warrant issued to Jorge Valle, M.D. (xxii) 4.10 (a) -- Warrant issued to Donald Galen, M.D. (xxii) 4.10 (b) -- Warrant issued to Arnold Jacobson, M.D. (xxii) 4.10 (c) -- Warrant issued to Louis Weckstein, M.D. (xxii) 4.11 (a) -- Warrant issued to Michael J. Levy, M.D. (xxii) 4.11 (b) -- Warrant issued to Arthur W. Sagoskin, M.D. (xxii) 4.11 (c) -- Warrant issued to Robert J. Stillman, M.D. (xxii) 4.11 (d) -- Warrant issued to Robert J. Stillman, M.D. dated January 6, 1999 (xxvi) 1 4.12 (a) -- Warrant issued to Patricia M. McShane, M.D. dated November 18, 1998 (xxvi) 4.12 (b) -- Warrant issued to Samuel C. Pang, M.D. dated November 18, 1998 (xxvi) 4.12 (c) -- Warrant issued to Issac Glatstein, M.D. dated November 18, 1998 (xxvi) 4.13 -- Warrant issued to Vector Securities International, Inc. (xxvi) 4.14 -- Registration Rights Ageement dated July 20, 2002 (l) 4.14(a) -- Form of Warrant issued on July 30, 2002 (l) 10.1 -- Copy of Registrant's 1988 Stock Option Plan, including form of option (i) 10.2 -- Copy of Registrant's 1992 Stock Option Plan, including form of option (i) 10.2 (a) -- Copy of Amendment to Registrant's 1992 Stock Option Plan (xxii) 10.4 -- Severance arrangement between Registrant and Vicki L. Baldwin (i) 10.4(a) -- Copy of Change in Control Severance Agreement between Registrant and Vicki L. Baldwin (vii) 10.5(a) -- Copy of Severance Agreement with Release between Registrant and David J. Beames (iv) 10.6 -- Severance arrangement between Registrant and Donald S. Wood (i) 10.6(a) -- Copy of Executive Retention Agreement between Registrant and Donald S. Wood, Ph.D. (viii) 10.7(a) -- Copy of lease for Registrant's executive offices relocated to Purchase, New York (viii) 10.8 -- Copy of Lease Agreement for medical office in Mineola, New York (i) 10.8(a) -- Copy of new 1994 Lease Agreement for medical office in Mineola, New York (v) 10.8(b) -- Copy of Letter of Credit in favor of Mineola Pavilion Associates, Inc. (viii) 10.9 -- Copy of Service Agreement for ambulatory surgery center in Mineola, New York (i) 10.10 -- Copy of Agreement with MPD Medical Associates, P.C. for Center in Mineola, New York (i) 10.10 -- Copy of Agreement with MPD Medical Associates, P.C. for Center in Mineola, New York dated September 1, 1994 (vii) 10.10(a) -- Copy of Agreement with MPD Medical Associates, P.C. for Center in Mineola, New York dated September 1, 1994 (vii) 10.11 -- Copy of Service Agreement with United Hospital (i) 10.12 -- Copy of Service Agreement with Waltham Weston Hospital and Medical Center (i) 10.15(a) -- Copy of post-Dissolution Consulting Agreement between Registrant and Allegheny General Hospital (vi) 10.18(a) -- Copy of post-Dissolution Consulting, Training and License Agreement between Registrant and Henry Ford Health Care Systems (iii) 10.19 -- Copy of Guarantee Agreement with Henry Ford Health System (i) 10.20 -- Copy of Service Agreement with Saint Barnabas Outpatient Centers for center in Livingston, New Jersey (i) 10.21 -- Copy of Agreement with MPD Medical Associates, P.C. for center in Livingston, New Jersey (i) 10.22 -- Copy of Lease Agreement for medical offices in Livingston, New Jersey (i) 10.23 -- Form of Development Agreement between Registrant and IG Laboratories, Inc. (i) 2 10.24 -- Copy of Research Agreement between Registrant and Monash University (i) 10.24(a) -- Copy of Research Agreement between Registrant and Monash University (ix) 10.28 -- Copy of Agreement with Massachusetts General Hospital to establish the Vincent Center for Reproductive Biology and a Technical Training Center (ii) 10.29 -- Copy of Agreement with General Electric Company relating to Registrant's training program (ii) 10.30 -- Copy of Indemnification Agreement between Registrant and Philippe L. Sommer (vii) 10.31 -- Copy of Employment Agreement between Registrant and Gerardo Canet (vii) 10.31(a) -- Copy of Change in Control Severance Agreement between Registrant and Gerardo Canet (vii) 10.31(b) -- Copy of the Amendment of Change in Control Severance Agreement between Registrant and Gerardo Canet (viii) 10.33 -- Copy of Change in Control Severance Agreement between Registrant and Dwight P. Ryan (vii) 10.35 -- Revised Form of Dealer Manager Agreement between Registrant and Raymond James & Associates, Inc. (vii) 10.36 -- Copy of Agreement between MPD Medical Associates, P.C. and Patricia Hughes, M.D. (vii) 10.37 -- Copy of Agreement between IVF America (NJ) and Patricia Hughes, M.D. (vii) 10.38 -- Copy of Management Agreement between Patricia M. McShane, M.D. and IVF America (MA), Inc. (vii) 10.39 -- Copy of Sublease Agreement for medical office in North Tarrytown, New York (viii) 10.40 -- Copy of Executive Retention Agreement between Registrant and Patricia M. McShane, M.D. (viii) 10.41 -- Copy of Executive Retention Agreement between Registrant and Lois Dugan (viii) 10.42 -- Copy of Executive Retention Agreement between Registrant and Jay Higham (viii) 10.43 -- Copy of Service Agreement between Registrant and Saint Barnabas Medical Center (ix) 10.43 (a) -- Termination Agreement between IntegraMed America, Inc. and Saint Barnabas Medical Center dated December 7, 2000. (xxxvi) 10.44 -- Asset Purchase Agreement among Registrant, Assisted Reproductive Technologies, P.C. d/b/a Main Line Reproductive Science Center, Reproductive Diagnostics, Inc. and Abraham K. Munabi, M.D. (ix) 10.44(a) -- Management Agreement among Registrant and Assisted Reproductive Technologies, P.C. d/b/a Main Line Reproductive Science Center and Reproductive Diagnostics, Inc. (ix) 10.44(b) -- Physician Service Agreement between Assisted Reproductive Technologies P.C. d/b/a Main Line Reproductive Science Center and Abraham K. Munabi, M.D. (ix) 10.44(c) -- Stipulation of Settlement and Compromise of all Claims Among IntegraMed America, Inc. and Assisted Reproductive Technologies, P.C., d/b/a Mainline Reproductive Science Center, Reproductive Diagnostics, Abraham Munabi, M.D., Reproductive Science Center of Suburban Philadelphia (xxv) 10.45 -- Copy of Executive Retention Agreement between Registrant and Stephen Comess (x) 10.46 -- Copy of Executive Retention Agreement between Registrant and Peter Callan (x) 3 10.47 -- Management Agreement between Registrant and Robert Howe, M.D., P.C. (x) 10.47 (a) -- P.C. Funding Agreement between Registrant and Robert Howe, M.D. (x) 10.48 -- Management Agreement among Registrant and Reproductive Endocrine & Fertility Consultants, P.A. and Midwest Fertility Foundations & Laboratory, Inc. (x) 10.48 (a) -- Asset Purchase Agreement among Registrant and Reproductive Endocrine & Fertility Consultants, Inc. and Midwest Fertility Foundations & Laboratory, Inc. (x) 10.48 (b) -- Amendment No. 2 to Management Agreement among IntegraMed America, Inc. and Reproductive Endocrine & Fertility Consultants, P.A. and Midwest Fertility Foundations & Laboratory, Inc. dated July 1, 1998 (xxiv) 10.48 (c) -- Management Agreement among IntegraMed America, Inc. and Reproductive Endocrine & Fertility Consultants, P.A. and Midwest Fertility Foundations & Laboratory, Inc. (xxvii) 10.49 -- Copy of Sublease Agreement for office space in Kansas City, Missouri (x) 10.50 -- Copy of Lease Agreement for office space in Charlotte, North Carolina (x) 10.51 -- Copy of Contract Number DADA15-96-C-0009 as awarded to IVF America by the Department of the Army, Walter Reed Army Medical Center for In Vitro Fertilization Laboratory Services (xi) 10.52 -- Agreement and Plan of Merger By and Among IVF America, Inc., INMD Acquisition Corp., The Climacteric Clinic, Inc., Midlife Centers of America, Inc., Women's Research Centers, Inc., America National Menopause Foundation, Inc. and Morris Notelovitz (xii) 10.52 (a) -- Agreement dated September 1, 1998 By and Among Women's Medical & Diagnostic Center, Inc., IntegraMed America, Inc. and Florida Medical and Research Institute, P.A. (xxv) 10.53 -- Employment Agreement between Morris Notelovitz, M.D., Ph.D. and IVF America, Inc., d/b/a IntegraMed America (xii) 10.54 -- Physician Employment Agreement between Morris Notelovitz, M.D., Ph.D., and INMD Acquisition Corp. ("IAC"), a Florida corporation and wholly owned subsidiary of IVF America, Inc. ("INMD") (xii) 10.55 -- Management Agreement between IVF America, Inc., d/b/a IntegraMed America, Inc. and W.F. Howard, M.D., P.A. (xii) 10.56 -- Asset Purchase Agreement between IVF America, Inc., d/b/a/ IntegraMed America, Inc. and W.F. Howard M.D., P.A. (xii) 10.57 -- Business Purposes Promissory Note dated September 8, 1993 in the amount of $100,000 (xiii) 10.58 -- Business Purposes Promissory Note dated November 18, 1994 in the amount of $64,000 (xiii) 10.59 -- Guaranty Agreement (xiii) 10.60 -- Security Agreement (Equipment and Consumer Goods) (xiii) 10.61 -- Management Agreement dated January 7, 1997 by and between the Registrant and Bay Area Fertility and Gynecology Medical Group, Inc. (xiv) 10.61 (a) -- Amendment No. 1 to Management Agreement between IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group, Inc. (xxii) 10.61 (b) -- Amendment No. 2 to Management Agreement between IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group, Inc. (xxvii) 10.61 (c) -- Amendment No. 3 to Management Agreement between IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group, Inc. dated April 1, 2000 (xxxi) 10.61 (d) -- Amendment No. 4 to Management Agreement between IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group, P.C. (xxxx) 10.61 (e) -- Amendment No. 5 to Management Agreement between IntegraMed America, Inc. and Bay Area Fertility and Gynecology Medical Group, P. C. (xxxx) 4 10.61 (f) -- Amendment No. 6 to Service Agreement between IntegraMed America, Inc. and Reproductive Science Center of the San Francisco Bay Area, a medical corporation. 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. (xiv) 10.63 -- Physician Employment Agreement between Robin E. Markle, M.D. and Women's Medical & Diagnostic Center, Inc. (xv) 10.64 -- Physician Employment Agreement between W. Banks Hinshaw, Jr., M.D. and Women's Medical & Diagnostic Center, Inc. (xv) 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. (xv) 10.66 -- Personal Responsibility Agreement between IntegraMed America, Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and Donald I. Galen, M.D. (xv) 10.67 -- Personal Responsibility Agreement between IntegraMed America, Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and Louis N. Weckstein, M.D. (xv) 10.68 -- Personal Responsibility Agreement between IntegraMed America, Inc., Bay Area Fertility and Gynecology Medical Group, Inc. and Arnold Jacobson, M.D. (xv) 10.69 -- Copy of Executive Retention Agreement between Registrant and Glenn G. Watkins (xv) 10.70 -- Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated February 28, 1997 (xvi) 10.71 -- Asset Purchase Agreement between Registrant and Fertility Centers of Illinois, S.C. dated February 28, 1997 (xvi) 10.72 -- Physician-Shareholder Employment Agreement between Fertility Centers of Illinois, S.C. and Aaron S. Lifchez, M.D. dated February 28, 1997 (xvi) 10.73 -- Physician-Shareholder Employment Agreement between Fertility Centers of Illinois, S.C. and Brian Kaplan, M.D. dated February 28, 1997 (xvi) 10.74 -- Physician-Shareholder Employment Agreement between Fertility Centers of Illinois S.C. and Jacob Moise, M.D. dated February 28, 1997 (xvi) 10.75 -- Physician-Shareholder Employment Agreement between Fertility Centers of Illinois, S.C. and Jorge Valle, M.D. dated February 28, 1997 (xvi) 10.76 -- Personal Responsibility Agreement among Registrant, Fertility Centers of Illinois, S.C. and Aaron S. Lifchez, M.D. dated February 28, 1997 (xvi) 10.77 -- Personal Responsibility Agreement among Registrant, Fertility Centers of Illinois, S.C. and Jacob Moise, M.D. dated February 28, 1997 (xvi) 10.78 -- Personal Responsibility Agreement among Registrant, Fertility Centers of Illinois, S.C. and Brian Kaplan, M.D. dated February 28, 1997 (xvi) 10.79 -- Personal Responsibility Agreement among Registrant, Fertility Centers of Illinois, S.C. and Jorge Valle, M.D. dated February 28, 1997 (xvi) 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 (xvi) 10.80(a) -- Amendment Effective January 29, 1998 to Contract Number DADA 15-96-C-009 between INMD and the Department of the Army, Walter Reed Army Medical Center for In Vitro Fertilization Laboratory Services (xxii) 10.81 -- Management Agreement between Registrant and Reproductive Sciences Medical Center, Inc. (xvii) 10.81 (a) -- Amendment Dated July 11, 1997 to Agreement with Reproductive Sciences Medical Center, Inc. (xxiv) 5 10.81 (b) -- Stipulation of Settlement and Compromise of all Claims Among IntegraMed America, Inc. and Reproductive Sciences Medical Center, Inc. and Samuel H. Wood, M.D. (xxv) 10.82 -- Asset Purchase Agreement between Registrant and Samuel H. Wood, M.D., Ph.D. (xvii) 10.83 -- Personal Responsibility Agreement between Registrant and Samual H. Wood, M.D., Ph.D. (xvii) 10.84 -- Physician-Shareholder Employment Agreement between Reproductive Sciences Medical Center, Inc. and Samuel H. Wood, M.D., Ph.D. (xvii) 10.85 -- Physician-Shareholder Employment Agreement between Reproductive Endocrine & Fertility Consultants, P.A. and Elwyn M. Grimes, M.D. (xvii) 10.86 -- Amendment to Management Agreement between Registrant and Reproductive Endocrine & Fertility Consultants, P.A. (xvii) 10.87 -- Amendment to Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated May 2, 1997 (xvii) 10.88 -- Management Agreement between Registrant and MPD Medical Associates, P.C. dated June 2, 1997 (xvii) 10.88 (a) -- Amendment to Management Agreement between IntegraMed America, Inc. and MPD Medical Associates, P.C. dated as of January 1, 1998 (xxiv) 10.88 (b) -- Management Agreement between IntegraMed America, Inc. and MPD Medical Associates, P.C. dated July 1, 1999 (xxix) 10.88 (c) -- Amendment No. 1 dated as of October 1, 2000 to the Management Agreement dated as of July 1, 1999 by and between IntegraMed America, Inc. and MPD Medical Associates, P.C. (xxxii) 10.88 (d) -- Amendment No. 2 to Management Agreement between IntegraMed America, Inc. and MPD Medical Associates, P.C. dated December 3, 2001. (lxiv) 10.89 -- Physician-Shareholder Employment Agreement between MPD Medical Associates P.C. and Gabriel San Roman, M.D. (xvii) 10.90 -- Amendment No. 2 to Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated June 18, 1997 (xvii) 10.91 -- Commitment Letter dated June 30, 1997 between Registrant and First Union National Bank (xvii) 10.92 -- Amendment No. 3 to Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated August 19, 1997 (xviii) 10.93 -- Amendment No. 4 to Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated January 9, 1998 (xx) 10.94 -- Investment Agreement between Registrant and Morgan Stanley Venture Partners III, L.P.., Morgan Stanley Venture Investors III, L.P. and the Morgan Stanley Venture Partners Entrepreneur Fund, L.P. (xix) 10.95 -- Amendment No. 5 to Management Agreement between Registrant and Fertility Centers of Illinois, S.C. dated March 5, 1998 (xxi). 10.95 (a) -- Amendment No. 6 to Management Agreement between IntegraMed America, Inc. and Fertility Centers of Illinois, S.C. dated July 1, 1999 (xxiii) 10.95 (b) -- Amendment No. 7 to Management Agreement between IntegraMed America, Inc. and Fertility Centers of Illinois, P.C. dated April 1, 2000. (xxxi) 10.95 (c) -- Amendment No. 8 to Management Agreement between IntegraMed America, Inc. and Fertility Centers of Illinois, S.C. (xxxx) 10.95 (d) -- Amendment No. 9 to Service Agreement between IntegraMed America, Inc. and Fertility Centers of Illinois, S.C. 10.96 -- Termination Agreement by and among Women's Medical & Diagnostic Center, Inc., W. Banks Hinshaw, Jr., Ph.D., M.D., and Robin E. Markle, M.D. (xxi) 10.97 -- Loan Agreement between First Union National Bank and IntegraMed America, Inc. dated November 13, 1997. (xxi) 6 10.96 -- Termination Agreement by and among Women's Medical & Diagnostic Center, Inc., W. Banks Hinshaw, Jr., Ph.D., M.D., and Robin E. Markle, M.D. (xxi) 10.97 -- Loan Agreement between First Union National Bank and IntegraMed America, Inc. dated November 13, 1997. (xxi) 10.98 -- Management Agreement between IntegraMed America, Inc. and MPD Medical Associates (MA), P.C. dated October 1, 1997 (xxi) 10.98 (a) -- Amendment No. 1 to Management Agreement between IntegraMed America, Inc. and MPD Medical Associates (MA) P.C. and Patricia M. McShane, M.D. dated November 11, 1998 (xxvi) 10.98 (b) -- Service Agreement between IntegraMed America, Inc. and MPD Medical Associates (MA) P.C. dated May 25, 2001. (xxxvii) 10.98 (c) -- Amendment No. 1 to Service Agreement between IntegraMed America, Inc. and MPD Medical Associates (MA), P.C. dated March 5, 2002. (lxiv) 10.99 -- Physician-Shareholder Employment Agreement between MPD Medical Associates (MA), P.C. and Patricia McShane, M.D. dated October 1, 1997 (xxi) 10.100 -- Asset Purchase and Sale Agreement by and among IntegraMed America, Inc. and Fertility Centers of Illinois, S.C., Advocate Medical Group, S.C. and Advocate MSO, Inc. dated January 9, 1998 (xxi) 10.101 -- Physician Employment Agreement between Fertility Centers of Illinois, S.C. and Laurence A. Jacobs, M.D. dated January 9, 1998 (xxi) 10.102 -- Physician Employment Agreement between Fertility Centers of Illinois, S.C. and John J. Rapisarda, M.D. dated January 9, 1998 (xxi) 10.103 -- Personal Responsibility Agreement entered into by and among IntegraMed America, Inc., Fertility Centers of Illinois, S.C. and John J. Rapisarda, M.D. dated January 9, 1998 (xxi) 10.104 -- Personal Responsibility Agreement entered into by and among IntegraMed America, Inc., Fertility Centers of Illinois, S.C. and Laurence A. Jacobs, M.D. dated January 9, 1998 (xxi) 10.105 -- Management Agreement between Shady Grove Fertility Centers, P.C. and Levy, Sagoskin and Stillman, M.D., P.C. dated March 11, 1998 (xxi) 10.105(a) -- Amendment No. 1 to Management Agreement between Shady Grove Fertility Centers, Inc. and Levy Sagoskin and Stillman, M.D., P.C (xxii) 10.105(b) -- Amendment No. 2 to Management Agreement between Shady Grove Fertility Centers, Inc. and Levy Sagoskin and Stillman, M.D., P.C. dated May 6, 1998 (xxvi) 10.105(c) -- Amendment No. 3 to the Management Agreement between IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C. dated September 1, 1999 (xxix) 10.105(d) -- Amendment No. 4 to Management Agreement between IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C. dated April 1, 2000. (xxxi) 10.105 (e)-- Amendment No. 5 to Management Agreement between IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C. (xxxx) 10.105 (f)-- Amendment No. 6 to Management Agreement between IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C. (xxxx) 10.105 (g) -- Amendment No. 7 to Service Agreement between IntegraMed America, Inc. and Shady Grove Reproductive Science Center, P.C. 7 10.106 -- Submanagement Agreement between Shady Grove Fertility Centers, Inc. and IntegraMed America, Inc. dated March 12, 1998 (xxi) 10.107 -- Stock Purchase and Sale Agreement among IntegraMed America, Inc. and Michael J. Levy, M.D., Robert J. Stillman, M.D. and Arthur W. Sagoskin, M.D. dated March 12, 1998 (xxi) 10.108 -- Personal Responsibility Agreement by and among IntegraMed America, Inc. and Arthur W. Sagoskin, M.D. dated March 12, 1998 (xxi) 10.109 -- Personal Responsibility Agreement by and among IntegraMed America, Inc. and Michael J. Levy, M.D. dated March 12, 1998 (xxi) 10.110 -- Physician-Stockholder Employment Agreement between Levy, Sagoskin and Stillman, M.D., P.C. and Michael J. Levy, M.D. dated March 11, 1998 (xxi) 10.111 -- Physician-Stockholder Employment Agreement between Levy, Sagoskin and Stillman, M.D., P.C. and Arthur W. Sagoskin, M.D. dated March 11, 1998 (xxi) 10.112 -- Physician-Stockholder Employment Agreement between Levy, Sagoskin and Stillman, M.D., P.C. and Robert J. Stillman, M.D. dated March 11, 1998 (xxi) 10.113 -- Commitment letter with Fleet Bank, National Association (xxiv) 10.113 (a)-- Loan Agreement dated September 11, 1998 between IntegraMed America, Inc. and Fleet Bank, National Association (xxv) 10.113 (b)-- Master Lease Agreement between Fleet Capital Corporation and IntegraMed America, Inc. (xxix) 10.113 (c)-- Amendment Number One to Loan Agreement dated September 11, 1998 between IntegraMed America, Inc. and Fleet Bank, National Association. (xxx) 10.113 (d)-- Amendment Number Two to Loan Agreement dated September 11, 1998 between IntegraMed America, Inc. and Fleet Bank, National Association. (xxx) 10.113 (e)-- Amendment Number Three to Loan Agreement dated September 11, 1998 between IntegraMed America, Inc. and Fleet Bank, National Association. (xxxvi) 10.113 (f)-- Amendment Number Four to Loan Agreement dated September 11, 1998 between IntegraMed America, Inc. and Fleet Bank, National Association. (xxxvi) 10.113 (g)-- Amended and Restated Loan Agreement dated as of September 28, 2001 between IntegraMed America, Inc. and Fleet National Bank. (xxxx) 10.113 (h) -- Amendment to Amended and Restated Loan Agreement between IntegraMed America, Inc. and Fleet National Bank dated September 20, 2002 (liv) 10.113(i) -- Second Amendment to Amended and Restated Loan Agreement dated July 31, 2003. (lxiv) 8 10.113(j) -- Third Amendment to Amended and Restated Loan Agreement dated November 14, 2003 10.114 -- Management Agreement Among IntegraMed Pharmaceutical Services, Inc., IVP Pharmaceutical Care, Inc., and IntegraMed America, Inc. (xxvii) 10.114(a) -- Service Agreement among IntegraMed Pharmaceutical Services, Inc., ivpcare, Inc. and IntegraMed America, Inc. dated January 16, 2002. (lxiv) 10.115 -- Management Agreement between IntegraMed America, Inc. and David R. Corley, M.D., P.C. dated July 1, 1999 (xxviii) 10115 (a) -- Personal Responsibility Agreement among Registrant and David R. Corley, M.D. (xxviii) 10.116 -- Form of Retention Agreement between Registrant and Kathi Baginski, Peter Cucchiara, Dan Desmarais, Anders Engen, Jay Higham, John Hlywak, Jr., Mark Segal, Claude E. White, and Donald S. Wood, Ph.D. (xxviii) 10.117 -- Form of Indemnification Agreement dated June 1, 2000 between IntegraMed America, Inc. and M. Fazle Husain, Michale Levy, M.D., Aaron Lifchez, M.D., Sarason Liebler, Larry Stuesser, Elizabeth E. Tallett, Gerardo Canet, Peter Cucchiara, Jay Higham, John Hlywak, Jr., Claude E. White, and Donald S. Wood, Ph.D. (xxxi) 10.118 -- Service Agreement between IntegraMed America, Inc. and Northwest Center for Infertility and Reproductive Endocrinology dated April 26, 2002. (xxxxvi) 10.118 (a) -- Amendment No. 1 to Service Agreement between IntegraMed America, Inc. and Northwest Center for Infertility and Reproductive Endocrinology dated June 14, 2002. (liv) 10.118 (b) -- Amendment No. 2 to Service Agreement between IntegraMed America, Inc. and Northwest Center for Infertility and Reproductive Endocrinology dated November 1, 2002. (lxv) 10.118 (c) -- Amerndment No. 3 to Service Agreement between IntegraMed America, Inc. and Northwest Center for Infertility and Reproductive Endocrinology 10.119 -- Copy of Registrant's 2000 LongTerm Compensation Plan (l) 10.120 -- Service Agreement between IntegraMed America, Inc and Reproductive Endocrine Associates of Charlotte, P.C. (lxix) 14.1 -- Code of Ethics 21 -- List of Subsidiaries 23.1 -- Consent of PricewaterhouseCoopers LLP 31.1 -- CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 dated August 14, 2003. 31.2 -- CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 dated August 14, 2003. 32.1 -- CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 dated August 14, 2003. 32.2 -- CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Section 906 of the Sarbanes Oxley Act of 2002 dated August 14, 2003. 9 99.1 Registrant's Press Release dated November 1, 2000. (xxxiii) 99.2 Registrant's Press Release dated December 13, 2000 (xxxiv) 99.3 Registrant's Press Release dated January 26, 2001. (xxxv) 99.4 Registrant's Press Release dated May 2, 2001 (xxxviii) 99.5 Registrant's Press Release dated August 1, 2001 (xxxix) 99.6 Registrant's Press Release dated November 1, 2001 (xxxxi) 99.7 Registrant's Press Release dated November 30, 2001 (xxxxii) 99.8 Registrant's Press Release dated January 29, 2002 (xxxxiii) 99.9 Registrant's Press Release dated February 14, 2002 (xxxxiv) 99.10 Registrant's Press Release dated February 21, 2002 (xxxxv) 99.11 Registrant's Press Release dated March 25, 2002 (xxxxvii) 99.12 Registrant's Press Release dated May 2, 2002 (xxxxviii) 99.13 Registrant's Press Release dated May 9, 2002 (xxxxix) 99.14 Registrant's Press Release dated June 18, 2002 (li) 99.15 Registrant's Press Release dated July 25, 2002 (lii) 99.16 Registrant's Press Release dated July 20, 2002 (liii) 99.17 CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 (l) 99.18 CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 (l) 99.19 Registrant's Press Release dated October 25, 2002 (lv) 99.20 Registrant's Press Release dated October 30, 2002 (lvi) 99.21 CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 dated November 13, 2002 (liv) 99.22 CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 dated November 13, 2002 (liv) 99.23 Registrant's Press Release dated November 19, 2002 (lvii) 99.24 Registrant's Press Release dated November 27, 2002(lviii) 99.25 Registrant's Press Release dated December 11, 2002(lix) 99.26 Registrant's Press Release dated December 30, 2002(lx) 99.27 Registrant's Press Release dated February 19, 2003(lxi) 99.28 Registrant's Press Release dated March 17, 2003(lxii) 99.29 Registrant's Press Release dated March 24, 2003 (lxiii) 99.30 CEO Certification Pursuant to 18 U.S.C.ss.1350, as Adopted Pursuant to Section 302 of the Sarbanes Oxley Act of 2002 99.31 CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 302 of the Sarbanes Oxley Act of 2002 99.32 CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 99.33 CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 99.34 Registrant's Press Release dated April 23, 2003. (lxvi) 99.35 Registrant's Press Release dated May 5, 2003. (lxvii) 99.36 CEO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 dated May 15, 2003. (lxviii) 99.37 CFO Certification Pursuant to 18 U.S.C.ss.1350 as Adopted Pursuant to Sections 906 of the Sarbanes Oxley Act of 2002 dated May 15, 2003. (lxviii) 10 99.38 Notice to Directors and Officers dated July 14, 2003. (lxv) 99.39 Registrant's Press Release dated July 10, 2003. (lxvi) 99.40 Registrant's Press Release dated August 4, 2003. (lxvii) 99.41 Registrant's Press Release dated August 5, 2003. (lxvii) 99.44 Registrant's Press Release dated August 8, 2003. (lxviii) 99.45 Registrant's Press Release dated September 8, 2003. (lxx) 99.46 Registrant's Press Release dated September 22, 2003. (lxxi) 99.47 Registrant's Press Release dated September 29, 2003. (lxxii) 99.48 Registrant's Press Release dated October 6, 2003. (lxxiii) 99.49 Registrant's Press Release dated October 27, 2003. (lxxiv) 99.50 Registrant's Press Release dated October 30, 2003. (lxxv) 99.51 Registrant's Press Release dated November 3, 2003. (lxxvi) 99.52 Registrant's Press Release dated January 12, 2004 (lxxvii) 99.53 Registrant's Press Release dated February 11, 2004 (lxxviii) 99.54 Registrant's Press Release dated February 18, 2004 (lxxix) 99.55 Registrant's Press Release dated March 11, 2004 (lxxx) 99.56 Registrant's Press Release dated March 16, 2004 (lxxxi) - ----------------------------------------------------- (i) Filed as Exhibit with identical exhibit number to Registrant's Statement on Form S-1 (Registration No. 33-47046) and incorporated herein by reference thereto. (ii) Filed as Exhibit with identical exhibit number to Registrant's Statement on Form S-1 (Registration No. 33-60038) and incorporated herein by reference thereto. (iii) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 1994 and incorporated herein by reference thereto. (iv) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1994 and incorporated herein by reference thereto. (v) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1994 and incorporated herein by reference thereto. (vi) Filed as Exhibit with identical exhibit number to Registrant's Statement on Form 10-K for the year ended December 31, 1993. (vii) Filed as Exhibit with identical exhibit number to Registrant's Statement on Form S-4 (Registration No. 33-82038) and incorporated herein by reference thereto. (viii) Filed as Exhibit with identical exhibit number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1994. (ix) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1995. (x) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the year ended September 30, 1995. (xi) Filed as Exhibit with identical number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1995. (xii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated June 20, 1996. (xiii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K/A dated August 20, 1996. (xiv) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated January 20, 1997. (xv) Filed as Exhibit with identical exhibit number to Annual Report on Form 10-K for the year ended December 31, 1996. 11 (xvi) 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. (xvii) 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. (xviii) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1997 and incorporated herein by reference thereto. (xix) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated January 23, 1998. (xx) Filed as Exhibit with identical exhibit number to Schedule 13D dated February 11, 1998. (xxi) Filed as Exhibit with identical exhibit number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1997. (xxii) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 1998. (xxiii) Incorporated by reference to the Registrant's Definitive Proxy Statement filed on May 5, 1997. (xxiv) Filed as Exhibit with identical number to Registrant's Quarterly Report on form 10-Q for the period ended June 30, 1998. (xxv) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1998. (xxvi) Filed as Exhibit with identical number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1998. (xxvii) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 1999. (xxviii) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 1999. (xxix) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 1999. (xxx) Filed as Exhibit with identical number to Registrant's Annual Report on Form 10-K for the year ended December 31, 1999. (xxxi) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2000. (xxxii) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2000. (xxxiii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 1, 2000. (xxxiv) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated December 13, 2000. 12 (xxxv) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated January 26, 2001. (xxxvi) Filed as Exhibit with identical exhibit number to Registrant's Annual Report on Form 10-K for the year ended December 31, 2000. (xxxvii) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2001. (xxxviii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated May 2, 2001 (xxxix) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated August 1, 2001. (xxxx) Filed as Exhibit with identical exhibit number to Registrant's Quarterly Report on Form 10-Q for the period ended September 30, 2001. (xxxxi) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 1, 2001. (xxxxii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 30, 2001. (xxxxiii) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated January 29, 2002. (xxxxiv) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated February 14, 2002 (xxxxv) Filed as Exhibit with identical exhibit number to Registrant's Report on Form 8-K dated February 21, 2002. (xxxxvi) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 2002 (xxxxvii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated March 25, 2002. (xxxxviii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated May 3, 2002. (xxxxix) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated May 10, 2002. (l) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2002 (li) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated June 19, 2002. (lii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated July 29, 2002. (liii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated July 31, 2002. (liv) Filed as Exhibit with identical number to Registrant's Quarterly Report on form 10Q for the period ended September 30, 2002. 13 (lv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated October 28, 2002. (lvi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated October 31, 2002. (lvii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 21, 2002 (lviii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 27, 2002 (lix) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated December 13, 2002 (lx) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated December 31, 2002 (lxi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated dated February 21, 2003 (lxii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated March 18, 2003 (lxiii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated March 25, 2003 (lxiv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 10-K for the year ended December 31, 2001. (lxv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 10-K for the year ended December 31, 2002. (lxvi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K April 28, 2003 and incorporated by reference thereto. (lxvii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K May 6, 2003 and incorporated by reference thereto. (lxviii) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended March 31, 2003. (lxiv) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended June 30, 2003 14 (lxv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated July 14, 2003 and incorporated by reference thereto. (lxvi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated July 15, 2003 and incorporated by reference thereto. (lxvii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated August 7, 2003 and incorporated by reference thereto. (lxviii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated August 11, 2003 and incorporated by reference thereto. (lxix) Filed as Exhibit with identical number to Registrant's Quarterly Report on Form 10-Q for the period ended September 31, 2003 (lxx) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated September 8, 2003 and incorporated by reference thereto. (lxxi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated September 23, 2003 and incorporated by reference thereto. (lxxii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated September 30, 2003 and incorporated by reference thereto. (lxxiii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated October 6, 2003 and incorporated by reference thereto. (lxxiv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated October 27, 2003 and incorporated by reference thereto. (lxxv) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated October 30, 2003 and incorporated by reference thereto. (lxxvi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated November 3, 2003 and incorporated by reference thereto. (lxxvii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated January 14, 2004 and incorporated by reference thereto. (lxxviii) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated February 12, 2004 and incorporated by reference thereto. (lxxix) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated February 19, 2004 and incorporated by reference thereto. (lxxx) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated March 12, 2004 and incorporated by reference thereto. (lxxxi) Filed as exhibit with identical exhibit number to Registrant's Report on Form 8-K dated March 16, 2004 and incorporated by reference thereto. 15 EX-10.61F 4 exhibit1061f.txt INTEGRAMED AMERICA, INC. AMENDMENT NO. 6 TO SERVICE AGREEMENT BETWEEN INTEGRAMED AMERICA, INC. AND REPRODUCTIVE SCIENCE CENTER OF THE SAN FRANCISCO BAY AREA, a Medical Corporation THIS AMENDMENT NO. 6 TO MANAGEMENT AGREEMENT ("Amendment No. 6"), dated December ___, 2003 by and between IntegraMed America, Inc., a Delaware corporation, with its principal place of business at One Manhattanville Road, Purchase, New York 10577 ("IntegraMed") and Reproductive Science Center of the San Francisco Bay Area, a California medical corporation, with its principal place of business at 3160 Crow Canyon Road, Suite 150, San Ramon, California 94583 ("RSC"). RECITALS: WHEREAS, IntegraMed and RSC are parties to a Service Agreement dated January 7, 1997, as amended (the "Agreement");and WHEREAS, IntegraMed and RSC wish to amend further the Agreement, in pertinent part to clarify certain financial and other terms and conditions; NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, and as contained in the Agreement, IntegraMed and RSC agree as follows: 1. 1. Sections 6.1.3 is hereby deleted in their entirety and the following substituted therefor: "6.1.3 effective January 1, 2004, during each year of this Agreement, an Additional Service Fee, paid monthly but reconciled quarterly, in accordance with the following table: Applicable Year Additional Service Fee 2004 16% of PDE 2005 12% of PDE 2006 and thereafter 10% of PDE Notwithstanding anything in this Section 6.1.3 to the contrary, beginning January 1, 2006, the minimum annual Additional Service Fee paid to IntegraMed under this Agreement shall not be less than $322,000.00 per year but in no event shall exceed 20% of PDE, and the maximum annual Additional Service Fee paid to IntegraMed shall not exceed $644,000.00." 2. All other provisions of the Agreement, as amended, not in conflict with this Amendment No. 6 remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment No. 6 as the date first written above. INTEGRAMED AMERICA, INC. By: /s/Gerardo Canet -------------------------- Gerardo Canet, President REPRODUCTIVE SCIENCE CENTER OF THE SAN FRANCISCO BAY AREA, A MEDICAL CORPORATION By: /s/Arnold Jacobson, M.D. ------------------------------ Arnold Jacobson, M.D., President EX-10.95D 5 exhibit1095d.txt INTEGRAMED AMERICA, INC. AMENDMENT NO. 9 TO SERVICE AGREEMENT BETWEEN INTEGRAMED AMERICA, INC. AND FERTILITY CENTERS OF ILLINOIS, S.C. THIS AMENDMENT NO. 9 TO SERVICE AGREEMENT ("Amendment No. 9"), dated December ___, 2003 by and between IntegraMed America, Inc., a Delaware corporation, with its principal place of business at Two Manhattanville Road, Purchase, New York 10577 ("INMD") and Fertility Centers of Illinois, an Illinois Medical Service corporation, with a place of business at 3703 West Lake Avenue, Suite 310, Glenview, Illinois corporation, ("PC"). RECITALS: WHEREAS, INMD and PC are parties to a Service Agreement dated February 28, 1997, as amended (the "Agreement");and WHEREAS, INMD and PC wish to amend further the Agreement, in pertinent part to clarify certain financial and other terms and conditions; NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, and as contained in the Agreement, as amended, INMD and PC agree as follows: 1. Section 6.1.4 of the Agreement is hereby deleted in its entirety and the following substituted therefor: "6.1.4 effective January 1, 2004, during each year of this Agreement, an Additional Service Fee, paid monthly but reconciled quarterly, in accordance with the following table: Applicable Year Additional Service Fee --------------- ---------------------- 2004 12% of Revenue, not to exceed16% of PDE 2005 12% of Revenue, not to exceed 12% of PDE 2006 12% of Revenue, not to exceed 8 % of PDE 2007 and thereafter 12% of Revenue, not to exceed 10% of PDE Notwithstanding anything in this Section 6.1.4 to the contrary, beginning January 1, 2007, the minimum annual Additional Service Fee paid to IntegraMed under this Agreement shall not be less than $932,484 per year but in no event shall exceed 20% of PDE, and the maximum annual Additional Service Fee paid to IntegraMed shall not exceed $1,865,000." 2. All other provisions of the Agreement, as amended, not in conflict with this Amendment No. 9 remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment No. 9 as the date first written above. INTEGRAMED AMERICA, INC. By: /s/Gerardo Canet ------------------------------------- Gerardo Canet, President FERTILITY CENTERS OF ILLINOIS, S.C. By: /s/Aaron S. Lifchez ------------------------------------ Aaron S. Lifchez, M.D., President EX-10.105G 6 exhibit10105g.txt INTEGRAMED AMERICA, INC. - - AMENDMENT NO. 7 TO SERVICE AGREEMENT BETWEEN INTEGRAMED AMERICA, INC. AND SHADY GROVE REPRODUCTIVE SCIENCE CENTER, P.C. THIS AMENDMENT NO. 7 TO SERVICE AGREEMENT ("Amendment No. 7") is dated November ___, 2003 by and between IntegraMed America, Inc., a Delaware corporation, with its principal place of business at Two Manhattanville Road, Purchase, New York 10577 ("INMD") and Shady Grove Reproductive Science Center, P.C., a Maryland professional corporation, with its principal place of business at 15001 Shady Grove Road, Suite 310, Rockville, Maryland 20850 ("PC"). RECITALS: WHEREAS, INMD and PC are parties to a Service Agreement dated March 12, 1998, as amended (the "Agreement");and WHEREAS, INMD and PC wish to amend further the Agreement, in pertinent part to clarify certain financial and other terms and conditions; NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, and as contained in the Agreement, as amended, INMD and PC agree as follows: 1. Section 7.1.4 of the Agreement, as amended to date, is hereby deleted in its entirety and the following substituted therefor: "7.1.4 Effective as of January 1, 2004, during each year of this Agreement, an Additional Service Fee, paid monthly but reconciled quarterly, in accordance with the following table: Applicable Year Additional Service Fee Maximum Additional Service Fee 2004 16% of PDE None 2005 14% of PDE None 2006 10% of PDE $1,000,000.00 2007 10% of PDE $ 900,000.00 2008 10% of PDE $ 800,000.00 2009 and thereafter 10% of PDE $1,080,000.00 Notwithstanding anything in this Section 7.1.4 to the contrary, beginning January 1, 2006, the minimum annual Additional Service Fee paid to IntegraMed under this Agreement shall not be less than $540,000 per year, and the maximum annual Additional Service Fee paid to IntegraMed shall not exceed the amounts set forth above for the indicated years; but in no event shall the annual Additional Service Fee exceed 20% of PDE. 2. All other provisions of the Agreement, as amended, not in conflict with this Amendment No. 7 remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment No.7 as the date first written above. INTEGRAMED AMERICA, INC. By: /s/Gerardo Canet -------------------------- Gerardo Canet, President SHADY GROVE REPRODUCTIVE SCIENCE CENTER, P.C. By: /s/Michael J. Levy --------------------------- Michael J. Levy, M.D., President EX-10.113J 7 exhibit10113j.txt INTEGRAMED AMERICA, INC. THIRD AMENDMENT AND WAIVER TO AMENDED AND RESTATED LOAN AGREEMENT Third Amendment and Waiver (this "Amendment") entered into as of November 14, 2003 between INTEGRAMED AMERICA, INC. (the "Borrower") and FLEET NATIONAL BANK (the "Bank"). WHEREAS, the Borrower and the Bank are parties to an Amended and Restated Loan Agreement dated as of September 28, 2001, as amended by a First Amendment thereto dated as of September 16, 2002 and a Second Amendment dated as of July 31, 2003 (as so amended, the "Agreement"); and WHEREAS, the Borrower has requested that the Bank amend and waive, and the Bank has agreed to amend and waive, certain provisions of the Agreement. NOW, THEREFORE, the parties hereto hereby agree as follows: 1. All capitalized terms used herein, unless otherwise defined herein, have the same meanings provided therefor in the Agreement. 2. The Agreement is hereby amended as follows: (a) The following definitions set forth in Section 1.1 of the Agreement are amended to read in their entirety as follows: "Acquisition" shall mean the acquisition by purchase or otherwise of (i) the business or assets of or Capital Stock of another Person and/or (ii) of the right to manage and/or service certain aspects of the business of a Practice Group, whether pursuant to a Management Agreement or otherwise. "Permitted Acquisition" shall mean any Acquisition that satisfies each of the following conditions: (i) the entire business or assets acquired or business of the entity whose Capital Stock is acquired shall be substantially similar to the Borrower's line of business as conducted on the date of this Agreement; (ii) (a) the Acquisition Cost with respect to any one Acquisition shall not exceed $1,000,000 and (b) the Acquisition Cost with respect to all Acquisitions in any one calendar year shall not exceed $3,000,000; (iii) neither the Borrower nor such acquiree has incurred any additional Indebtedness to finance, or otherwise in connection with, such Acquisition, whether in the form of seller notes, third party Indebtedness or otherwise to the extent same would cause the Acquisition Cost to exceed the limitations set forth in "(ii)" of this definition; (iv) if the Acquisition is of the Capital Stock of another Person, said Acquisition shall either be of all of such Capital Stock or shall be structured by merger, consolidation or otherwise; (v) at the time of such Acquisition no Default or Event of Default exists and no Default or Event of Default would occur after giving effect to such Acquisition; (vi) the Borrower shall have delivered to the Bank, not less than 10 days prior to the consummation of such Acquisition, (A) a certificate of a financial officer of the Borrower, in all respects reasonably satisfactory to the Bank and dated the date of such consummation, attaching a pro-forma compliance certificate (in a format satisfactory to the Bank) evidencing compliance with Section 6 of this Agreement (subsections 6(a), 6(b), 6(c), 6(d) and 6(e) of this Agreement; as the same may be amended from time to time) after giving effect to such Acquisition and based on the most recent financial statements delivered to the Bank pursuant to this Agreement; provided, that, as to such financial covenants (and any other financial covenants now or hereafter applying to the facilities described in this Agreement), all of such covenants shall be deemed amended to require compliance as to the Borrower with the entity acquired in the Acquisition, (B) copies of the purchase or merger agreement or any other material documents executed in connection with the Acquisition, (C) if the Acquisition is an Acquisition of the Capital Stock of a Person, (w) copies of the resolutions of the of the Board of Directors (or similar governing body) of such new Subsidiary authorizing the execution, delivery and performance of its respective Guarantee, security agreement and other Loan Documents to which it is a party, certified respectively by an authorized officer of such new Subsidiary, (x) a certificate of an authorized officer of such new Subsidiary certifying the names and true signatures of the officers of new Subsidiary to sign any and all documents to be delivered by new Subsidiary or as required or contemplated hereunder, (y) the organizational documents of such new Subsidiary, all of which shall be in form and substance satisfactory to the Bank and certified as true and correct by an authorized officer of such new Subsidiary and (z) a good standing certificate as of the dates not more than twenty (20) days prior to the date of delivery thereof to the Bank from the Secretary of State of the respective state of organization of such new Subsidiary and each state in which it is qualified to do business, (D) if the Acquisition is of the right to manage and/or service certain aspects of the business of a Practice Group, each such applicable Practice Group shall have executed and delivered to the Bank a security agreement, in form and substance substantially similar to those delivered by the Practice Groups in connection with the Second Amendment and the Bank shall have received an opinion of counsel to the Borrower, in form and substance substantially similar to that delivered in connection with the Second Amendment, with respect to each such Practice Group's security agreement and (E) satisfactory Uniform Commercial Code and other searches with respect to the acquiree and/or applicable Practice Group; (vii) the Acquisition shall have the approval of the target company's board of directors (or similar governing body); (viii) the Bank shall have filed all applicable Uniform Commercial Code financing statements and shall have received such other information or documents as it shall have reasonably requested in connection with such Acquisition; (ix) the Acquisition shall have been consummated in accordance with the definitive acquisition agreement, without any waiver or amendment of any material term or condition therein not consented to by the Bank and in compliance with all applicable laws and all necessary approvals, except where the failure to so comply could not reasonably be expected to have a material adverse effect on the acquiree or on the Borrower; (x) the Borrower shall have complied with any applicable state takeover law and any applicable supermajority charter provisions and (xi) all governmental and third-party consents and approvals necessary in connection with each aspect of the Acquisition shall have been obtained (without the imposition of any unreasonable conditions) and shall remain in effect, except where the failure to obtain same could not reasonably be expected to have a material adverse effect on the acquiree or on the Borrower; all applicable waiting periods shall have expired or been terminated or waived without any material adverse action being taken by any authority having jurisdiction; and no law or regulation shall be applicable that restrains, prevents or imposes material adverse conditions upon any aspect of the Acquisition. (b) Section 7.2 of the Agreement is amended by replacing the phrase "or acquire by purchase or otherwise the business or assets of, or stock of, another business entity" with the phrase "or make any Acquisition or enter into any Management Agreement". (c) Section 7.3(iv) of the Agreement is amended to read in its entirety as follows: (iv) purchases of accounts receivable pursuant to Management Agreements to which the Borrower or any Subsidiary is party; provided such Management Agreement exists as of the date hereof or is entered into in connection with a Permitted Acquisition, (d) Section 7.9 of the Agreement is amended to read in its entirety as follows: 7.9 [Intentionally Omitted.] (e) Section 9.2 of the Agreement is amended to read in its entirety as follows: 9.2 Additional Collateral Security. In addition to the collateral described in Section 9.1 hereof, payment of the Obligations is also secured by a first priority (subject to Liens permitted by this Agreement) security interest in (i) all assets and personal property and fixtures of the Borrower and each Guarantor, (ii) assignments of all financing statements in favor of the Borrower and/or the Guarantors in connection with its (their) purchase of accounts receivable, (iii) all accounts receivable of each Practice Group (to the extent same are subject to any purchase agreement between such Practice Group, as seller, and the Borrower, as purchaser), (iv) all the issued and outstanding Capital Stock of each Subsidiary that is or becomes a Guarantor, and (v) all proceeds and products of the forgoing, whether now owned or hereafter acquired, as provided in a Security Agreement executed or to be executed and delivered by the Borrower and each Guarantor to the Bank. 3. Pursuant to the Agreement, the Borrower is not permitted to enter into any Acquisition other than Permitted Acquisitions and the Borrower acquired certain assets of Reproductive Endocrine Associates of Charlotte, P.C. in a transaction that was not a Permitted Acquisition. The Bank hereby agrees to waive compliance with the Agreement, but solely with respect to the Borrower's Acquisition of certain assets of Reproductive Endocrine Associates of Charlotte, P.C. and its entering into a Management Agreement with Reproductive Endocrine Associates of Charlotte, P.C. and such transaction shall be deemed a Permitted Acquisition for purposes of the Agreement. 4. The Borrower hereby represents and warrants to the Bank that: (a) Each and every of the representations and warranties set forth in the Agreement and/or the documents executed pursuant thereto or in connection therewith is true as of the date hereof and with the same effect as though made on the date hereof, and is hereby incorporated herein in full by reference as if fully restated herein in its entirety. (b) No Default or Event of Default and no event or condition which, with the giving of notice or lapse of time or both, would constitute such a Default or Event of Default, now exists or would exist, except those that are being waived pursuant to this Amendment. 5. All obligations in connection with the Agreement are and shall continue to be (i) secured by the collateral referenced in the Agreement and more fully described in one or more security agreements in favor of the Bank and (ii) guaranteed by the Guarantors referenced in the Agreement pursuant to Guarantees in favor of the Bank. 6. By their execution of this Amendment in the space provided below, each of the guarantors indicated below hereby consent to this Amendment and reaffirm their continuing liability under their respective guarantees, in respect of the Agreement as amended hereby and all the documents, instruments and agreements executed pursuant thereto or in connection therewith, without offset, defense or counterclaim (any such offset, defense or counterclaim as may exist being hereby irrevocably waived by such guarantors). 7. The waiver provided in this Amendment is effective only in this one instance and only with respect to the Borrower's Acquisition of certain assets of Reproductive Endocrine Associates of Charlotte, P.C. and its entering into a Management Agreement with Reproductive Endocrine Associates of Charlotte, P.C.. Furthermore, the amendments and waiver set forth herein are limited precisely as written and shall not be deemed to (a) be a consent to or a waiver of any other term or condition of the Agreement or any of the documents referred to therein or (b) prejudice any right or rights which the Bank may now have or may have in the future under or in connection with the Agreement or any documents referred to therein. Whenever the Agreement is referred to in the Agreement or any of the instruments, agreements or other documents or papers executed and delivered in connection therewith, it shall be deemed to mean the Agreement as modified by this Amendment. 8. This Amendment shall be effective as of the date first above written; provided that this Amendment shall not be effective unless and until the Bank shall have received counterparts of this Amendment duly signed by the Borrower and the guarantors indicated below. 9. This Amendment may be executed by the parties hereto individually or in any combination, in one or more counterparts, each of which shall be an original and all of which shall together constitute one and the same agreement. [Balance of page intentionally left blank] IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective duly authorized officers as of the date first above written. INTEGRAMED AMERICA, INC. By:/s/John W. Hlywak, Jr. ----------------------------- Name: John W. Hlywak, Jr. Title: Senior Vice President and Chief Financial Officer FLEET NATIONAL BANK By: /s/Thomas G. Carley ----------------------------- Name: Thomas G. Carley Title: Senior Vice President Each of the guarantors indicated below hereby consent to this Amendment and reaffirm their continuing liability under their respective guarantees in respect of the Agreement as amended hereby and all the documents, instruments and agreements executed pursuant thereto or in connection therewith, without offset, defense or counterclaim (any such offset, defense or counterclaim as may exist being hereby irrevocably waived by such guarantors). INTEGRAMED PHARMACEUTICAL SERVICES, INC. By: /s/John W. Hlywak, Jr. ----------------------------- Name: John W. Hlywak, Jr. Title: Vice President INTEGRAMED FINANCIAL SERVICES, INC. By: /s/John W. Hlywak, Jr. ----------------------------- Name: John W. Hlywak, Jr. Title: Vice President EX-10.118C 8 exhibit10118c.txt INTEGRAMED AMERICA, INC. - - AMENDMENT NO. 3 TO SERVICE AGREEMENT BETWEEN INTEGRAMED AMERICA, INC. AND NORTHWEST CENTER FOR INFERTILITY AND REPRODUCTIVE ENDOCRINOLOGY THIS AMENDMENT NO. 3 TO SERVICE AGREEMENT ("Amendment No. 3"), is dated January 1, 2003 by and between IntegraMed America, Inc., a Delaware corporation with its principal place of business at Two Manhattanville Road, Purchase, New York 10577 ("IntegraMed") and Northwest Center for Infertility and Reproductive Endocrinology, a Florida partnership of professional associations, with its principal place of business at 2825 North State Road 7, Suite 302, Margate, Florida 33063 ("NCIRE"). RECITALS: IntegraMed and NCIRE entered into a Service Agreement dated April 26, 2002, as amended by Amendment No.1 dated June 14, 2002 and Amendment No. 2 dated November 1, 2002 (collectively, the "Service Agreement"); and IntegraMed and NCIRE wish to amend further the Service Agreement, in pertinent part, in light of IntegraMed employing certain personnel as of January 1, 2003. NOW THEREFORE, in consideration of the mutual promises and covenants herein contained, and as contained in the Service Agreement, IntegraMed and NCIRE agree as follows: 1. Section 3.3 of the Service Agreement is hereby deleted in its entirety and the following is substituted therefor: "3.3.1 EXECUTIVE DIRECTOR. IntegraMed will hire an Executive Director, subject to the approval of the Joint Practice Management Board, to manage and administer all of the day-to-day business functions of the Facilities. The Executive Director, subject to the terms of this Agreement, shall implement the policies agreed upon by the Joint Practice Management Board and will perform the administrative duties assigned by IntegraMed. 3.3.2 PERSONNEL. IntegraMed shall provide all Other Employees, who shall include non-professional support personnel and administrative personnel, clerical, secretarial, bookkeeping, billing and collection personnel reasonably necessary for the operation of NCIRE at the Facilities. Such personnel shall be under the direction, supervision and control of IntegraMed. IntegraMed's obligations to utilize non-professional personnel shall be governed by the overriding principle and goal of facilitating the NCIRE's provision of high quality medical care and laboratory services. IntegraMed shall make every effort, consistent with sound business practices, to honor the specific requests of NCIRE with regard to the assignment of IntegraMed's employees, including the Executive Director." 2. All other provisions of the Service Agreement, as amended, not in conflict with this Amendment No. 2 remain in full force and effect. IN WITNESS WHEREOF, the parties have signed this Amendment No. 2 the date first above written. INTEGRAMED AMERICA, INC. By: /s/ Gerardo Canet ---------------------------------- Gerardo Canet, President & CEO NORTHWEST CENTER FOR INFERTILITY AND REPRODUCTIVE ENDOCRINOLOGY By: WAYNE S. MAXSON, M.D., P.A., a general partner By: /s/Wayne S. Maxon ----------------------------------- Wayne S. Maxson, M.D., President EX-14.1 9 exhibit14.txt INTEGRAMED AMERICA, INC. - - INTEGRAMED(R) AMERICA CORPORATE COMPLIANCE PROGRAM IntegraMed America Mission And Values Statement IntegraMed America, Inc. ("IntegraMed") offers products and services to patients, providers, payers and pharmaceutical manufacturers in the fertility industry. The IntegraMed Network is comprised of fertility centers in major markets across the United States, a pharmaceutical services subsidiary, a financial services subsidiary, the Council of Physicians and Scientists, and a leading fertility portal (http://www.integramed.com). Fertility centers have access to the Company's FertilityDirect,(TM) FertilityWeb, FertilityPurchase, FertilityMarKit, ARTWorks(R) Clinical, ARTWorks Financial and FertilityPracticeOps services.. Certain of the fertility centers, in addition to having access to these services, have access to a full range of services, under the Company's FertilityPartner Program, including: (i) administrative services, including accounting and finance, human resources functions, and purchasing of supplies and equipment; (ii) access to capital; (iii) marketing and sales; (iv) integrated information systems; (v) assistance in identifying best clinical practices; and (vi) laboratory services (collectively, "Business Services"). IntegraMed expects its Board of Directors, officers and employees ("IntegraMed Representatives") to recognize their duty to comply with applicable laws and regulations. While IntegraMed must compete vigorously to maximize profits, it must at the same time do so in strict compliance with all laws and regulations applicable to its activities. The long-term economic well-being of IntegraMed ultimately depends on respect and confidence in the manner in which IntegraMed Representatives conduct IntegraMed business. Our success and integrity in the marketplace is dependent upon adhering to the highest standards of conduct and is ultimately the best assurance that IntegraMed will continue to grow and remain profitable. Copyright(C)2002-2004 IntegraMed America, Inc. All Rights Reserved. PURPOSE OF CORPORATE COMPLIANCE PROGRAM Our Corporate Compliance Program provides guidance to all IntegraMed Representatives in carrying out our daily activities within appropriate ethical and legal standards. These obligations apply to relationships with shareholders, customers, patients, providers, third-party Payers, subcontractors, independent contractors, suppliers and one another. The Corporate Compliance Program is an all-encompassing effort to ensure that IntegraMed is in compliance with all applicable federal and state laws. The Compliance Program requires that all IntegraMed Representatives abide by the Compliance Program and all IntegraMed policies and procedures. Under the Corporate Compliance Program, a Compliance Officer has been appointed to ensure that IntegraMed Representatives adhere to this Corporate Compliance Program and the additional IntegraMed policies and procedures contained within the Corporate Compliance Program. The Corporate Compliance Officer shall take appropriate action against violators of any such laws, regulations, this Corporate Compliance Program or any IntegraMed policies and procedures. The Compliance Officer may appoint a Compliance Committee to assist him or her in ensuring compliance with this Corporate Compliance Program. This Corporate Compliance Program is intended to be a statement that is comprehensive and easily understood. In some instances the Corporate Compliance Program deals fully with the subject covered; in some instances there are additional IntegraMed policies and procedures referenced where additional guidance is provided. Any doubts whatsoever as to the propriety of a particular situation, whether or not it is addressed in this Corporate Compliance Program, should be reported. Decisions regarding requests for interpretation of or exception to this Corporate Compliance Program may be made only below the Board of Directors by the Compliance Officer. Every IntegraMed Representative is required to understand and comply fully with both the rules and approval procedures established by this Corporate Compliance Program. Any IntegraMed Representative violating any provision of this Corporate Compliance Program will be subject to disciplinary action, up to and including discharge from employment. In addition, promotion of and adherence to this Corporate Compliance Program and to the Corporate Compliance Program will be one criteria used in evaluating the performance of supervisors, managers and other employees. To the extent that any additional policies are set forth in any IntegraMed manual, those policies should be consistent with the Corporate Compliance Program. In event of any inconsistency, this Corporate Compliance Program shall govern. The Corporate Compliance Program shall be periodically revised to reflect any changes in the law. It shall be the responsibility of the Compliance Officer to ensure that such information is disseminated to IntegraMed Representatives and IntegraMed Representatives will be responsible for familiarizing themselves with such changes. LEADERSHIP RESPONSIBILITIES While all IntegraMed Representatives are obligated to follow the Corporate Compliance Program and any other IntegraMed policies and procedures, we expect our leaders to set the example. They must ensure that those under their supervision have sufficient information to comply with laws, regulations, and policies. They must help to foster a culture within IntegraMed, which promotes the highest standards of ethics and compliance. This culture must 2 encourage everyone in the organization to raise concerns when they arise. We must never sacrifice ethical and compliant behavior in the pursuit of business objectives. Any questions concerning this Corporate Compliance Program should be directed to IntegraMed's Corporate Compliance Officer or the General Counsel who will answer questions regarding this Corporate Compliance Program and any other IntegraMed policies and procedures contained within the Corporate Compliance Program. COMPLIANCE AND RELATIONSHIPS WITH OUR HEALTHCARE PARTNERS A. PATIENTS 1. Patient Care and Rights IntegraMed is committed to conducting its business in a manner that values the rights of fertility center patients. IntegraMed shall only provide products and services to physician groups that provide quality healthcare to all patients. We believe that all patients should be treated with respect and dignity. IntegraMed Representatives at Reproductive Science Centers are expected to assist physicians in obtaining appropriate informed consents. Consistent with its insurance carrier requirements, IntegraMed works with Reproductive Science Centers to facilitate the informed consent process. Any new consents or revisions to existing consents need to be approved by IntegraMed's Director of Clinical Services and General Counsel, if the Reproductive Science Center is insured under IntegraMed's medical malpractice coverage. IntegraMed recommends that all Reproductive Science Centers provide patients with a patient satisfaction survey. References: Reproductive Science Center Book #7 "Consents" PSP #5201 "Consents" 2. Patient Information Reproductive Science Centers collect information about patients' medical condition, history, medication, and family illnesses to provide the best possible care. IntegraMed realizes the sensitive nature of this information and is committed to maintaining its confidentiality. IntegraMed Representatives, on behalf of Reproductive Science Centers, are not to release or discuss patient specific information with others unless it is authorized by a patient or required by law. One of the Reproductive Science Centers' patient's basic rights, among others, is the right to privacy. IntegraMed takes this right very seriously. So does the Federal government. The Health Insurance Portability and Accountability Act (HIPAA) is a Federal statute which mandates that a patient's Protected Health Information ("PHI") be protected by Reproductive Science Centers. As an IntegraMed Representative, it is imperative that you honor each patient's right to privacy and protect each patient's PHI according to the policies and procedures established for your Reproductive Science Center. 3 As a part of IntegraMed America's Corporate Compliance Program, IntegraMed has established a HIPAA Code of Conduct, which sets forth the standards of conduct that all IntegraMed Representatives are expected to follow. Everyone should adhere to both the spirit and the language of the HIPAA Code in order to avoid any conduct that might violate HIPAA or give the appearance of violating HIPAA. IntegraMed America does not, and will not, tolerate any form of unlawful behavior by anyone associated with the Company. We expect and require all IntegraMed Representatives to maintain the confidentiality and security of each patient's PHI in accordance with HIPAA standards and company policies and procedures. To ensure that these expectations are met, the HIPAA Code of Conduct is an integral part of IntegraMed America's corporate mission and business operations. It is your duty to: o Understand the HIPAA Privacy and Security Rules o Understand your responsibilities under IntegraMed's HIPAA-related policies and procedures o Understand Patient's Privacy rights and your role in protecting Patient Health Information o Not use or disclose a patient's PHI except as permitted under HIPAA and as required to do your job. o Understand the penalties for not complying IntegraMed has appointed a Corporate Privacy Officer and local Privacy Officers at each Reproductive Science Center under the Company's HIPAA Code. If you have any questions or concerns about protecting each patient's health information, please contact your supervisor, your local Privacy officer, or the IntegraMed America Corporate Privacy Officer. References: HIPAA Code of Conduct and HIPAA PSPs B. AFFILIATED PHYSICIANS Any business arrangement with a physician must be structured to ensure compliance with all federal and state legal requirements. Such arrangements must be in writing and approved by the General Counsel. C. CLINICAL LABORATORIES Any business arrangement with a clinical laboratory must be structured to ensure compliance with all federal and state requirements. Such arrangements must be in writing and approved by the General Counsel. D. HEALTHCARE PROVIDERS 1. Self Referrals and Kickbacks As a participant in the health care industry, IntegraMed's operations and its relationship with the Reproductive Science Centers and other fertility centers are subject to extensive and increasing regulations by various 4 governmental entities at the Federal, state and local levels. These include, but are not limited to, Federal and state Anti-kickback Laws, Federal and state Self-Referral Laws, False Claim Laws, Federal and State Controlled Substances laws and regulations and Anti-Trust Laws. The Stark Bill, 42 U.S.C. 1395nn, prohibits a physician from making a referral to an entity for the furnishing of a designated health service reimbursed by a federal or state healthcare program, including but not limited to Medicare and Medicaid, if the physician or a member of the physician's immediate family has a financial relationship with that entity. The Stark Bill also prohibits an entity from presenting or causing to be presented a claim for a designated health service that has been rendered as a result of a prohibited referral. The federal anti-kickback statute, Section 1128B(b) of the Social Security Act makes it a felony, punishable by both criminal and civil penalties, including exclusion from Medicare or other federal and state healthcare programs, for IntegraMed and IntegraMed Representatives to offer, pay, solicit or receive "remuneration" as an inducement to generate business payable by Medicare or other federal and state healthcare programs. Any business arrangements with physicians and suppliers must be structured to ensure compliance with all federal and state legal requirements. Such arrangements must be in writing and reviewed by the General Counsel. Some states have enacted legislation similar to the Stark Bill which allows states to pursue individuals and businesses at the state level for violations of state Anti-Kickback or Anti-Referral Statues. Therefore, even though Reproductive Science Centers are not participants in the Medicare or Medicaid Programs, it should not be assumed that a kickback or self-referral is acceptable. All such conduct is prohibited and is a violation of IntegraMed's Business Conduct Policy. 2. License and Certification Renewals All IntegraMed Representatives in positions which require professional licenses, certifications or other credentials are responsible for maintaining the current status of their licensure and credentials as mandated by federal and state law. Periodically, IntegraMed will verify that all physicians employed at Reproductive Science Centers are properly licensed and are authorized by the United States Drug Enforcement Agency to prescribe all pharmaceuticals required in connection with the provision of infertility services. 3. Ethical Guidelines for Assisted Reproductive Technology Ethical considerations involving assisted reproductive technology should be made according to the American Society of Reproductive Medicine for all medical procedures practiced throughout the Reproductive Science Centers. In accordance with our Agreements with Reproductive Science Centers, Reproductive Science Centers are obligated to account to patients and arrange for the storage or disposal of tissue specimens, embryos or biological material in accordance with patient consent forms and the ethical guidelines of the American Society of Reproductive Medicine. References: Reproductive Science Center Management or Service Agreement Reproductive Science Center Book #7 "Consents" 5 PSP # 5201 "Consents" PSP #5402 "Management of Cryopreserved Embryos" PSP #5101 "Ethical Guidelines for ART" DEALING WITH ACCREDITING BODIES IntegraMed is committed to cooperating with and satisfying the standards of applicable accrediting bodies. IntegraMed Representatives will deal with all accrediting bodies in a direct, open and honest manner. No action should ever be taken in relationships with accrediting bodies that would mislead the accrediting agency or its survey team, either directly or indirectly. THIRD-PARTY PAYERS IntegraMed Representatives are expected to ensure that all billings to government and private insurance payers reflect truth and accuracy and conform to all pertinent federal and state laws and regulations. IntegraMed prohibits any IntegraMed Representative from knowingly to present or cause to be presented claims for payment or approval which are false, fictitious or fraudulent. IntegraMed Representatives at Reproductive Science Centers are expected to assist physicians in ensuring that the CPT codes used, diagnosis and treatment rendered are consistent and accurate. IntegraMed Representatives shall cooperate with the Corporate office regarding the billing process and shall participate in any audits conducted to ensure proper billing. GENERAL MATTERS All IntegraMed Representatives shall comply with all federal, state and local laws and regulations. Examples of laws applicable to IntegraMed's business include, but are not limited to, the following subjects: certificates of need, licenses, permits, accreditation, access to treatment, consent to treatment, medical-record keeping, access to medical records and confidentiality, patients' rights, quality assurance, corporate practice of medicine restrictions, and fee splitting. Additionally, IntegraMed is subject to and shall comply with the numerous other laws, including, but not limited to Laws prohibiting discrimination, the Occupational Safety and Health Act (OSHA), the Fair Labor Standards Act (FLSA), the Equal Pay Act (EPA), etc., which are addressed throughout this Corporate Compliance Program and in the other IntegraMed policies and procedures. IntegraMed shall review all material contracts to which it is a party, biennially or sooner in the event of any legal or regulatory change, to ensure compliance with applicable federal and state laws. IntegraMed's General Counsel or his or her designee shall be responsible for conducting such contract review. When considering entering into an affiliation, merger or acquisition, or joint venture, IntegraMed's General Counsel shall conduct due diligence to ensure that any potential business partner is in compliance with all applicable federal and state laws. 6 References: Due Diligence Manual PSP #3040 "Contract Legal Review" TAX LAWS IntegraMed is a taxpayer. For example, it pays taxes on its income, on the privilege of doing business, payroll taxes, and on the value of the property it owns. Taxes are paid to federal, state, county, and local governments. As a taxpayer, IntegraMed is required by law to file accurate reports and tax returns with applicable federal, state and local governments. Because it is required to pay taxes, IntegraMed must maintain proper records that accurately explain its activities that are subject to taxes. Any IntegraMed Representatives whose job it is to prepare and submit tax reports and tax returns on behalf of IntegraMed is expected to exercise due care in the collection of information included in the reports and returns. "Due care" means making certain that the information is complete and accurate. Employees and agents are expected to include accurately and correctly this information in the filings to avoid misrepresentations or inaccuracies. Tax returns and filings are to be made on a timely basis, by the date required by applicable law for filing, unless an extension of the due date has been obtained on behalf of IntegraMed. In connection with those business activities of IntegraMed that are subject to taxes, employees and agents of IntegraMed are expected to create and maintain accurate and complete records of their business activities that explain the amount of tax which IntegraMed may owe. IntegraMed Representatives will at all time conduct their dealings with government taxing authorities in an honest and ethical manner. POLITICAL ACTIVITY No IntegraMed Representatives is to engage in any political activity on behalf of IntegraMed. No IntegraMed Representative may make any agreement to contribute any money, property or services of any IntegraMed Representative at IntegraMed's expense to any political candidate, party, organization, committee or individual. IntegraMed Representatives may personally participate in and contribute to political organizations or campaigns, but they must do so as individuals, not as representatives of IntegraMed, and they must use their own funds. 7 BUSINESS INFORMATION AND INFORMATION SYSTEMS A. CONFIDENTIAL INFORMATION Confidential information about IntegraMed's strategies and operations is a valuable asset. It is IntegraMed's policy to control closely the dissemination of IntegraMed's proprietary information, including but not limited to, technical, scientific and business information. Except as authorized by IntegraMed's Senior Management, General Counsel or required by law, IntegraMed Representatives shall not disclose any confidential information to any outside party including, but not limited to, the following: personnel data, patient lists and clinical information, pricing and cost data, information pertaining to acquisitions, affiliations and mergers, financial data, strategic plans, marketing strategies, employee lists, supplier and subcontractor information, fee books and proprietary computer software. In the event an IntegraMed Representative is requested or required (by oral questions, interrogatories, subpoena, civil investigative demand or similar process) to disclose any information relating to IntegraMed's operations, the IntegraMed Representative will provide IntegraMed's General Counsel with notice of such request(s) within twenty-four (24) hours (or sooner, if possible) so that IntegraMed may seek an appropriate protective order and/or waive the IntegraMed Representative's compliance with this standard. If an IntegraMed Representative is required to disclose the information or else stand liable for contempt or suffer other censure or penalty, and in the absence of either a protective order or receipt of a waiver from IntegraMed's Compliance Officer or General Counsel, the IntegraMed Representative may disclose such information. IntegraMed also works with proprietary data of suppliers, affiliates and joint venture partners. This is an important trust that must be discharged with due care for IntegraMed to be afforded the continued confidence of its suppliers, affiliates and joint venture partners. No IntegraMed Representative shall disclose confidential or proprietary information of such suppliers, affiliates and joint venture partners without IntegraMed's Senior Management authorization, after consultation with IntegraMed's General Counsel. Any information that an IntegraMed Representative obtained from a prior employer that an IntegraMed Representative believes is confidential and proprietary to that employer can neither be used in the course of an IntegraMed Representative's duties at IntegraMed nor disclosed to any of the business personnel. If an IntegraMed Representative has a question as to whether certain information previously obtained from a prior employer is confidential and proprietary to that employer, such concerns or questions should be raised only with the General Counsel and not reveal such information to any other business personnel. B. TRADE NAMES IntegraMed Representatives shall not use any service names, trademark names and logos of IntegraMed for any unapproved uses. IntegraMed Representatives shall not use any service names, trademark names and logos of any other company or entity unless proper approval is obtained from the applicable owner. 8 C. ACCURATE BOOKS AND RECORDS IntegraMed shall maintain accurate books and records. IntegraMed shall comply with all federal and state laws concerning maintaining accurate books and records. D. FINANCIAL REPORTING AND RECORDS IntegraMed's financial records serve as a basis for managing IntegraMed and are important in meeting our obligations to our affiliates, joint venture partners, shareholders and suppliers. Applicable laws and IntegraMed policy require that all books and records accurately and fairly reflect transactions and the dispositions of assets. All financial information must reflect actual transactions and conform to generally accepted accounting principles. IntegraMed expects and requires that any and all of its Representatives, contractors, subcontractors, and agents engaged in the auditing and reporting of its financial statements will conduct themselves in an ethical manner and in accordance with generally accepted auditing and professional standards. IntegraMed expects and requires that any and all of its Representatives, contractors, subcontractors, and agents involved in the reporting of financial information, including periodic reports filed with the Securities and Exchange Commission (the "SEC"), earnings press releases and financial information and earnings guidance provided to analysts and rating agencies, fairly present in all material respects the financial condition and results of operations of IntegraMed and that such disclosures are made in a full, fair, accurate, timely, and understandable way. IntegraMed cannot and will not tolerate behavior by any of its Representatives, contractors, subcontractors, or agents that would result or does result in a financial report that contains untrue statements of a material fact or omits material facts that render any portion of that report misleading. IntegraMed cannot and will not tolerate behavior by any of its Representatives, contractors, subcontractors, or agents that violates or is intended to violate any rule or regulation of the SEC, or any provision of applicable state or Federal law relating to fraud against shareholders. All financial records and documents are to be maintained in accordance with the retention periods provided for in the Company's Document Retention Policy. References: PSP #2003 "Accounts Payable Policy" PSP #3070 "Document Retention Policy" 9 E. ELECTRONIC SYSTEMS Electronic forms of communication and information exchange are an integral part of our business. IntegraMed encourages the use of these electronic systems because they facilitate the work which IntegraMed does. All communications systems, electronic mail, intranet, Internet access, or voice mail are the property of IntegraMed and are to be primarily used for business purposes. All electronic communication systems and all information transmitted by, received from, or stored in these systems are the property of IntegraMed. IntegraMed Representatives shall have no expectation of privacy in connection with the use of this equipment or with the transmission, receipt, or storage of information in this equipment. Highly limited reasonable personal use of the IntegraMed communications systems is permitted; however, one should assume that these communications are not private. Patient or confidential information should not be sent through the intranet or the Internet until such time that its confidentiality can be assured. Similarly, IntegraMed's business information and Confidential Information, as defined above, should not be sent through the Internet to the Representative's home or to any personal e-mail addresses. IntegraMed reserves the right to access periodically, monitor, and disclose the contents of e-mail and voice mail messages. Access to and disclosure of individual employee messages may only be done with the approval of the Corporate Compliance Officer. IntegraMed does not tolerate the use of internal communication channels or access to the Internet at work to post, store, transmit, download, or distribute any threatening; knowingly, recklessly, or maliciously false; or obscene materials including anything constituting or encouraging a criminal offense, giving rise to civil liability, or otherwise violating any laws. Additionally, these channels of communication may not be used to send chain letters, personal broadcast messages, or copyrighted documents that are not authorized for reproduction; nor are they to be used to conduct a job search or open misaddressed mail. WORKPLACE CONDUCT AND EMPLOYMENT PRACTICES A. REPORTING TIME AND EXPENSES All IntegraMed Representatives who submit time sheets, or sign a time log in/log out form must be careful to do so in a complete, accurate and timely manner to ensure that such forms accurately reflect the hours worked. This requirement also applies to e-time recording. No employee shall log in/log out for another employee. An IntegraMed Representative's signature on a time sheet or log in/log out form or use of any e-time recording method is a representation that the time sheet, log in/log out form or e-time recording accurately reflects the number of hours worked. All Representatives who submit expense reports shall do so in a complete, accurate, and timely manner in accordance with IntegraMed's policies and procedures. A manager's signature on a time sheet or expense report is a representation that it has been reviewed and that safeguards have been put in place to verify the validity of the hours or expenses reported and the correctness of the allocation of the hours. Reference: PSP #2002 "Travel and Entertainment Policy" 10 B. CONTROLLED SUBSTANCES Some IntegraMed Representatives routinely have access to prescription drugs, controlled substances, and other medical supplies. Many of these substances are governed by state and federal laws and regulations. It is extremely important that these items be administered, stored and disposed of properly and only by authorized individuals to minimize risks. If you become aware of the diversion of drugs from a Reproductive Science Center or other location, or illegal use, you should report the incident immediately to your Supervisor or the Corporate Compliance Officer. Some IntegraMed Representatives routinely have access to prescription pads. All such IntegraMed Representatives are strictly prohibited from prescribing any medication except under the specific authorization of a medical doctor unless the IntegraMed Representative is licensed to prescribe medication. Under the circumstances where an IntegraMed Representative is licensed to prescribed medications, the IntegraMed Representative's prescriptive authority is limited to and dictated by those medications delineated in the IntegraMed Representative's Collaborative Agreement with the particular physician. Under no circumstances shall an IntegraMed Representative prescribe any medication for personal or family use by written prescription, fax or telephone order. C. CONFLICT OF INTEREST IntegraMed Representatives owe a duty of undivided and unqualified loyalty to IntegraMed. Such individuals may not use their positions to profit personally or to assist others in profiting in any way at the expense of IntegraMed. IntegraMed Representatives are expected to regulate their activities so as to avoid actual impropriety and/or the appearance of impropriety which might arise from the influence of those activities on business decisions of IntegraMed, or from disclosure or private use of business affairs or plans of IntegraMed. Reference: PSP #3020- Conflicts of Interest 1. Outside Financial Interests While not all inclusive, the following will serve as a guide to the types of activities by an IntegraMed Representative, or household member of such person, which might cause conflicts of interest: (a) Ownership in or employment by any outside concern which does business with IntegraMed. This does not apply to stock or other investments held in a publicly held corporation, provided the value of the stock or other investments does not exceed 5% of the corporation's stock. IntegraMed may, following a review of the relevant facts, permit ownership interests which will not adversely impact IntegraMed's business interest or the judgment of the IntegraMed Representative. 11 (b) Conduct any business not on behalf of IntegraMed, with any vendor, supplier, contractor, or agency, or any of their officers or employees. (c) Representation of IntegraMed by an IntegraMed Representative in any transaction in which he or she or a household member has a substantial personal interest. (d) Disclosure or use of confidential, special or inside information of or about IntegraMed, particularly for personal profit or advantage of the IntegraMed Representative or a household member. (e) Competition with IntegraMed by an IntegraMed Representative, directly or indirectly, in the purchase, sale or ownership of property or property rights or interests, or business investment opportunities. 2. Services for Competitors/Vendors No IntegraMed Representative shall perform work or render services for any competitor of IntegraMed or for any organization with which IntegraMed does business or which seeks to do business with IntegraMed outside of the normal course of his/her employment with IntegraMed without the approval of the President of IntegraMed. Nor shall any such IntegraMed Representative be a director, officer, or consultant of such an organization, nor permit his/her name to be used in any fashion that would tend to indicate a business connection with such organization. 3. Participation on Boards of Directors/Trustees An IntegraMed Representative must obtain approval from IntegraMed's President prior to serving as a member of the Board of Directors/Trustees of any organization whose interests may conflict with those of IntegraMed. Officers, Directors and employees must also confer with the President of IntegraMed prior to serving on the Board of any SEC reporting company. An IntegraMed Representative who is asked, or seeks to serve on the Board of Directors/Trustees of any organization whose interest would not impact IntegraMed (for example, civic, charitable, fraternal and so forth) will not be required to obtain such approval. IntegraMed retains the right to prohibit membership on any Board of Directors/Trustees where such membership might conflict with the best interests of IntegraMed. Questions regarding whether Board participation might present a conflict of interest should be discussed with IntegraMed's Corporate Compliance Officer. 12 D. HONORARIA IntegraMed Representatives are, with the approval of the applicable IntegraMed Vice President, encouraged to participate as faculty and speakers at educational programs and functions. However, any honoraria in excess of One Thousand Dollars ($1,000.00) shall be turned over to IntegraMed unless the employee used paid time off to attend the program or for that portion of the program for which the honoraria is paid. References: PSP #3020 Conflict of Interest Conflict of Interest Disclosure Statement E. ANTI- HARASSMENT OR DISCRIMINATION IntegraMed shall not tolerate harassment in the workplace. It is the policy of IntegraMed to promote a productive work environment and not to tolerate verbal or physical conduct by any employee that harasses, disrupts, or interferes with another's work performance or that creates an intimidating, offensive or hostile environment. There shall be no form of discrimination on the basis of sex, race, disability, age, religion, ethnic origin or any other classification prohibited by law. Each allegation of harassment or discrimination will be promptly investigated in accordance with IntegraMed policies and procedures. IntegraMed shall comply with all laws, regulations, and policies relating to non-discrimination in all personnel actions. Such actions include hiring, transfers, terminations, evaluations, recruiting, compensation, corrective action, discipline, and promotion. No one shall discriminate against any individual with a disability with respect to a qualified individual regarding any offer, or term or condition, of employment. IntegraMed shall make reasonable accommodations to the known disabilities of otherwise qualified individuals. F. HEALTH AND SAFETY IntegraMed is committed to providing a safe environment for IntegraMed Representatives and patients. All IntegraMed Representatives should be familiar with all safety policies relevant to their specific job responsibilities. All IntegraMed Representatives must promptly advise Reproductive Science Center Managers or in the case of the Corporate Office, the Director of Human Resources, of any workplace injury or any situation presenting danger to ensure that corrective action is taken. Reference: Medsafe Hazard Communication & Exposure Control Program Manual G. COMMITMENT TO FAIRNESS IntegraMed recognizes that its greatest strength lies in the talent and ability of its IntegraMed Representatives. It is IntegraMed's policy to provide equal opportunity for employment and advancement on the basis of ability and aptitude without regard to race, sex, disability, age, religion, ethnic origin or any other classification prohibited by law, except where age, sex or physical status is a bona fide occupational qualification. 13 H. ENVIRONMENTAL IntegraMed is committed to conducting its business in a manner that values the environment. We will comply with all applicable environmental laws and operate with the necessary permits, approvals and contracts. Representatives must use company equipment and handle, including the transportation thereof in Interstate Commerce, store and dispose of hazardous materials and bio-hazardous waste (including medical waste) in accordance with applicable law and with IntegraMed's established policies and procedures. Representatives should immediately notify IntegraMed's Director of Risk Management of any conditions that are perceived to violate environmental, safety or health laws or regulations, or that pose a danger to the environment, our employees or the communities in which we operate. Reference: Medsafe Hazard Communication & Exposure Control Program Manual I. REFRAINING FROM SUBSTANCE ABUSE AND WORKPLACE VIOLENCE It is the policy of IntegraMed to provide IntegraMed Representatives and patients with a working environment that is free of alcohol and substance abuse, and physical abuse. J. SECURITIES/INSIDER TRADING Because IntegraMed's stock is publicly traded, IntegraMed Representatives are prohibited from trading or recommending the trading of IntegraMed's stock or other securities, or the securities of other companies with which IntegraMed has business relationships, when they possess "material inside information" about IntegraMed or the other company. Material inside information is non-public information about IntegraMed that a reasonable investor would consider important in making a decision to buy, sell or hold IntegraMed stock. This includes, for example, non-public information on earnings, changes in dividend rates, significant gains or losses of business, tender offers, significant acquisition or divestiture negotiations, or the hiring or firing or resignation of a Director or Officer of the company. Disclosing nonpublic material information, acting on such information, or recommending others to act based on the information may violate rules covering insider trading laws and could subject a violator to civil and/or criminal liability. To avoid this risk: 1. Do not buy or sell IntegraMed stock or options when you have material inside information about IntegraMed. 2. Do not transfer account balances or change allotments or investment directions if you invest in IntegraMed stock through any company plans when you have material inside information about IntegraMed. 14 3. Do not pass on material inside information about IntegraMed to friends, relatives, or others. If you do pass on inside information and the listener uses it to trade in securities, it may violate an insider trading law and could subject you to civil and/or criminal liability. 4. Do not suggest to friends, relatives, or others that they should trade in IntegraMed stock or options when you have material inside information about IntegraMed. 5. Do not discuss material inside information with co-workers, except to the extent that it is necessary for you to do your job. These same rules apply if you have material inside information about another publicly- traded company. Any questions you may have regarding the applicability of the securities laws to our business practices should be referred immediately to the General Counsel. Because IntegraMed's stock is publicly traded, employees should not discuss any matters concerning IntegraMed with members of the financial community or press. Improper dissemination of information concerning IntegraMed can subject IntegraMed or the individual to civil or criminal liability for fraudulent, manipulative or deceptive practices in connection with the purchase and sale of IntegraMed's stock. Therefore, no IntegraMed Representative should have any conversations with members of the financial community, including analysts, brokers, dealers, traders, shareholders and others, or members of the press, including newspaper, radio, television and Internet, concerning any matters affecting IntegraMed. In particular, no IntegraMed Representative should have any conversations with the financial community or press concerning favorable or adverse developments affecting IntegraMed, including information on earnings, changes in dividend rates, significant gains or losses of businesses, tender offers, significant acquisition or divestiture negotiations, or the hiring, firing or resignation of a Director or Officer of the company. If you receive a phone call or are approached by a member of the financial community or press, you should refer that person to the President & Chief Executive Officer or the Senior Vice President & Chief Financial Officer who are the spokespersons for IntegraMed and shall have all conversations and dealings with the financial community and press concerning IntegraMed. Any questions you may have concerning dealings with the financial community or press should be referred immediately to the President or Chief Financial Officer. Reference: PSP #3100 "Insider Trading in Company Securities" K. COMPANY INFORMATION SYSTEM AND HUMAN RESOURCES INFORMATION SYSTEM Most employees have access to the Company's Information System in connection with performing their jobs. The Company's Information System requires a password in order for persons to access the system. It is against Company policy for employees to share passwords used to access this Information System or to use another's password to access the System. 15 Some employees have access to the Company's Human Resources Information System ("HRIS") as part of their job responsibilities. Such employees are expected to guard with the highest level of confidentiality all information in the HRIS. Persons responsible for imputing information in HRIS are expected to input such information in a timely fashion so that required new hire and terminated employee information can be managed properly. RESEARCH AND DEVELOPMENT PROGRAMS All Reproductive Science Centers are encouraged to participate in network-wide or multi-site clinical projects that advance new technology from research environments to clinical settings. We expect all IntegraMed Representatives to follow high ethical standards in any research conducted. We do not tolerate intentional research misconduct. Research misconduct includes making up or changing results or copying results from other studies without performing the research. Informed consent must be obtained from any patient asked to participate in a research project. All IntegraMed Representatives applying for or performing research of any type are responsible for maintaining the highest ethical standards in any written or oral communications regarding their research projects as well as following appropriate research guidelines. As in all accounting and financial record keeping, our policy is to submit only true, accurate, and complete costs related to research grants. Information, know-how, data and analysis from or about research and development projects are proprietary to, and owned by, IntegraMed and are not to be discussed, disseminated to, or shared with, any one outside IntegraMed without specific written authorization from an officer of IntegraMed qualified to make such authorization. References: PSP #6001 "Research and Development Project Policy" PSP #6002 "Approval of Material From IntegraMed Employees Prior to Publication or Distribution" PSP #6003 "Approval of Materials from Outside Investigators for Publication" FRAUD AND SIMILAR IRREGULARITIES IntegraMed Representatives are expected to conduct themselves with honesty and integrity. Fraudulent activity is prohibited. Fraud includes, but is not limited to, such actions as any: 1. Dishonest or deceptive act; 2. Embezzlement; 3. Forgery or alteration of negotiable instruments such as IntegraMed checks and drafts; 4. Misappropriation of IntegraMed, employee, customer, Reproductive Science Center or supplier assets; 16 5. Conversion to personal use of cash, securities, supplies or any other IntegraMed asset; 6. Unauthorized handling or reporting of IntegraMed transactions; and 7. Falsification of IntegraMed records or financial statements for personal or other reasons. Prohibited fraudulent activity includes actions committed by any person who injures suppliers and customers, as well as those which injure IntegraMed. Any employee or agent who suspects that any fraudulent activity may have occurred is required to report such concern to the Telesentry Hotline at 1-888-883-1499. RELATIONSHIPS WITH SUPPLIERS It is the policy of IntegraMed do deal with suppliers with honesty and integrity. We shall maintain the highest level of integrity in our source, selection, and negotiation of contracts, and administration of such contracts. IntegraMed Representatives shall maintain the confidentiality of suppliers' confidential information, including pricing, unless specifically authorized to disclose such information by the suppliers. Reference: PSP #3010 "Business Conduct" A. ACCEPTANCE OF BUSINESS COURTESY IntegraMed Representatives may not accept any gifts of money from anyone doing business with IntegraMed or a FertilityPartner or whose services are subject to review by IntegraMed or a FertilityPartner. IntegraMed Representatives must report to the Compliance Hotline if any supplier offers a gift of money to the IntegraMed Representative. To avoid the appearance of impropriety, never accepts gifts of more than nominal value. Representatives may accept meals, drinks, or entertainment only if such courtesies are unsolicited and reasonable in amount. Any item of more than nominal value, or offers of trips, payments for educational seminars, etc. must be approved by the applicable IntegraMed Vice President. References: PSP #3010 "Business Conduct" PSP #3020 "Conflict of Interest" B. PROVIDING BUSINESS COURTESIES TO VENDORS IntegraMed's success in the community is based in part on its reputation. IntegraMed does not want to tarnish that reputation by seeking to gain an improper economic advantage by offering commercial bribes, kickbacks and other similar payoffs and benefits to suppliers, affiliates and joint venture partners. To avoid the appearance of impropriety, IntegraMed Representatives shall not provide any supplier, affiliate or joint venture partner with gifts or promotional items of more than nominal value (i.e. hats, calendars). 17 IntegraMed Representatives may pay for reasonable meal, refreshment and/or entertainment expenses for suppliers, affiliates and joint venture partners which are incurred in the normal course of business, if they are otherwise lawful. Expenditures of this type should be included on expense reports and approved under standard procedures. If, however, the individual is a government employee (i.e. from the Heath Care Financing Administration ("HCFA") or the Food and Drug Administration ("FDA")) permission must be obtained from the Corporate Compliance Officer prior to providing any meals, refreshments, or entertainment. C. ANTITRUST Fair competition is a fundamental principle of our free enterprise system. The purpose of antitrust laws is to protect the competitive market system. All IntegraMed Representatives shall comply with state and federal laws concerning antitrust and unfair competition. IntegraMed will not engage in or support activities that improperly restrain trade or that constitute unfair business practices or predatory economic conduct. The competition laws are complex and many of the concepts are subject to varying interpretations. IntegraMed Representatives are expected to seek advice from the General Counsel when confronted with business decisions involving a risk of violating the antitrust laws. Examples of conduct prohibited by the laws include: (1) agreements to fix prices and related activities, intended to facilitate price fixing; (2) boycotts, certain exclusive dealing and price discrimination agreements; and (3) unfair trade practices including bribery, misappropriation of trade secrets, deception, intimidation and similar unfair practices. Improper agreements may involve not only express commitments, but also informal understandings. Those understandings sometimes are inferred merely from the actions of competitors, including conversations with competitors on the subjects identified above. Consequently no IntegraMed Representative should ever discuss with competitors the activities described above or other matters that might be construed as seeking to improperly restrict or limit competition. In addition, relationships with distributors and other customers, whether embodied within written agreements and understandings or otherwise, must reflect a commitment to proper trade practices and compliance with applicable laws. Reference: PSP # 3050- Antitrust Policy MARKETING IntegraMed assists individual Reproductive Science Centers in the development of marketing material upon request of a Reproductive Science Center. IntegraMed Representatives are expected to use only truthful, informative, and non-deceptive information in such marketing materials. References: Marketing and Sales Tool Kit PSP #4000 "Marketing Index" 18 PSP #4003 "Corporate and Division Name Usage" PSP #4100 "Placement of Commercial Advertisements" PSP #4300 "Development of Printing Material" PSP #4400 "Distribution of Generic Collateral Material" PSP #4500 "Development of Collateral Material for Use in Communicating with External Audiences" ADMINISTRATION AND APPLICATION OF THIS CORPORATE COMPLIANCE PROGRAM A. CORPORATE COMPLIANCE OFFICER IntegraMed, through its Board of Directors, has designated the Senior Vice President & Chief Financial Officer as the individual within IntegraMed responsible for overall implementation and operation of the compliance program (the "Compliance Officer"). The term of such Compliance Officer's tenure shall be determined in the sole discretion of IntegraMed's Board of Directors. The Compliance Officer may designate responsibility for implementation of and operation of the compliance program to a Compliance Committee. Notwithstanding the foregoing, the Compliance Officer remains responsible for overall implementation and operation of the Compliance Program. The Compliance Officer in conjunction with the Compliance Committee shall be responsible to ensure that: 1. Standards and policies are reviewed and updated as necessary; 2. IntegraMed Representatives are receiving adequate education and training and that such education and training is documented; 3. Audit procedures are implemented in accordance with IntegraMed's audit policies; 4. IntegraMed Representatives' complaints and other concerns regarding compliance are promptly investigated; and 5. Adequate steps are taken to correct any identified problems and prevent the reoccurrence of such problems. IntegraMed expects each individual to whom the Corporate Compliance Program applies, to adhere to the principles set forth herein and to all other IntegraMed policies and procedures. B. EMPLOYEE REPORTING/DISCIPLINE Failure to abide by this Corporate Compliance Program and the policies referenced herein and attached hereto may lead to disciplinary action. Reported violations of this Corporate Compliance Program will be investigated pursuant to 19 the Enforcement and Prevention Policy and Procedure. Discipline for failure to abide by this Corporate Compliance Program and all other IntegraMed policies and procedures will range from a verbal correction to termination. All IntegraMed Representatives are required to report conduct which they reasonably believe constitutes a violation of this Corporate Compliance Program and the policies referenced herein. Reporting is on an anonymous basis, if the reporting person chooses to do so through the Telesentry Hotline at 1-888-883-1499 which is maintained and operated 24 hours per day, 7 days a week, 365 days a year and is toll free. Although, persons are encouraged to identify themselves, they need not do so, and anonymity is protected, where possible. If an individual elects to identify himself or herself, IntegraMed, at the request of such individual, will provide such individual anonymity, as is reasonable under the circumstances in the judgment of IntegraMed, consistent with its obligations to investigate alleged violations and concerns and to take necessary corrective action. It is important that as much information be given as possible to assist IntegraMed in conducting an investigation. IntegraMed is committed to maintaining an environment in which people feel free to report all suspected violations of any of the policies of this Corporate Compliance Program. IntegraMed shall not take, nor permit to be taken, any retaliatory action, including, but not limited to, discharge, demotion, suspension, threats, harassment, or discrimination against an IntegraMed Representative due to good faith reporting of conduct which such Representative reasonably believes constitutes a violation of IntegraMed's Corporate Compliance Program. In calling the toll-free hotline identified above, you will reach a specially trained and experienced intake person who will obtain a report from you and assign a unique file identification number to your report that will allow you to follow-up on an anonymous basis. - ------------------------------------------------------------------------------- THE TELESENTRY HOTLINE - ------------------------------------------------------------------------------- Available 24/7/365 888-883-1499 Nothing in this Corporate Compliance Program or the policies referenced herein or attached hereto shall be construed as providing any additional employment or contractual rights to employees or other persons. No contractual obligation or liability on the part of IntegraMed is intended; no promise of any kind is made. IntegraMed retains the right, in its sole discretion, to change any policy, procedure, term of employment or working condition at any time to the extent permitted by laws. While IntegraMed will attempt to disseminate and communicate changes concurrent with or prior to the implementation of such changes, IntegraMed reserves the right to modify, amend or alter this Corporate Compliance Program and all IntegraMed policies and procedures without notice to any person or IntegraMed Representatives. 20 INVESTIGATIONS IntegraMed will promptly investigate all reported Corporate Compliance Program violations and expects Representatives shall cooperate with all government investigators, in the event the reported violation is one that results in a government investigation.. An IntegraMed Representative who is approached by any federal or state law enforcement agency seeking information about any aspect of the operations of IntegraMed or the job-related activities of any IntegraMed officers, employees or agents must notify the General Counsel who will have oversight for the releasing of any IntegraMed information or FertilityPartners' information to which IntegraMed has been entrusted. During a government inspection or investigation, IntegraMed Representatives must never conceal, destroy, or alter any documents, lie, or make misleading statements to a government representative. COMPLIANCE OFFICER REPORT The Corporate Compliance officer shall report in writing to the Audit Committee of the Board of Directors on a regular basis on the status of compliance with IntegraMed's Corporate Compliance Program. This report shall include reports of alleged violations reported and investigated, except that all complaints regarding accounting, internal accounting controls and auditing matters shall be promptly provided to all members of the Audit Committee. An annual report shall also be provided to the Audit Committee of the results of any audit conducted of the Compliance Program, which shall be conducted at least once a year. 21 EX-21 10 exhibit21.txt INTEGRAMED AMERICA, INC. Exhibit 21 List of Subsidiaries IntegraMed Pharmaceutical Services, Inc. IntegraMed Financial Services, Inc. IntegraMed Reproductive Genetics, Inc. IVF America (NJ), Inc. Women's Medical & Diagnostic Center, Inc. EX-23.1 11 exhibit23.txt INTEGRAMED AMERICA, INC. Exhibit 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-3 (No. 333-98947) of IntegraMed America, Inc. of our report dated February 12, 2004 relating to the financial statements, which appears in the Annual Report to Shareholders, which is incorporated in this Annual Report on Form 10-K. /s/PricewaterhouseCoopers LLP Boston, Massachusetts March 19, 2004 EX-31 12 exhibit311.txt INTEGRAMED AMERICA, INC. Exhibit 31.1 Certification Pursuant To 18 U.S.C. ss. 1350, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 I, Gerardo Canet, certify that: 1. I have reviewed this annual report of IntegraMed America, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 19, 2004 By: /s/Gerardo Canet --------------------- Gerardo Canet Chief Executive Officer and Director (Principal Executive Officer) EX-31 13 exhibit312.txt INTEGRAMED AMERICA, INC. Exhibit 31.2 Certification Pursuant To 18 U.S.C. ss. 1350, As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 I, John W. Hlywak, Jr., certify that: 1. I have reviewed this annual report of IntegraMed America, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (c) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and 5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. March 19, 2004 By: /s/ John W. Hlywak, Jr. ------------------------- John W. Hlywak, Jr Senior Vice President and Chief Financial Officer (Principal Financial and Accounting Officer EX-32 14 exhibit321.txt INTEGRAMED AMERICA, INC. EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTIONS 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of IntegraMed America, Inc. (the "Company") on Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I Gerardo Canet, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. /s/ 1350, as adopted pursuant to section 906 of the Sarbanes--Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company. /s/Gerardo Canet ------------------------- Gerardo Canet Chief Executive Officer March 19, 2004 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to IntegraMed America, Inc.. and will be furnished to the Securities and Exchange Commission or its staff upon request. EX-32 15 exhibit322.txt INTEGRAMED AMERICA, INC. EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTIONS 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Annual Report of IntegraMed America, Inc. (the "Company") on Form 10-K for the period ended December 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I John W. Hlywak, Jr., Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. /s/ 1350, as adopted pursuant to section 906 of the Sarbanes--Oxley Act of 2002, that: 1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and 2. The information contained in the Report fairly presents, in all materials respects, the financial condition and results of operations of the Company. /s/John W. Hlywak, Jr. ---------------------- John W. Hlywak, Jr. Chief Financial Officer March 19, 2004 A signed original of this written statement required by Section 906 of the Sarbanes-Oxley Act of 2002 has been provided to IntegraMed America, Inc. and will be furnished to the Securities and Exchange Commission or its staff upon request. -----END PRIVACY-ENHANCED MESSAGE-----