-----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, Ehq6g4VjsKOD4GCUDBS64Z/etZrXt4xeKsnCFdChno0OyWkYnr7gq3ibvmpANPeF 3bptMpuujtZBXn9Nd/Xc7g== 0000885988-08-000107.txt : 20080806 0000885988-08-000107.hdr.sgml : 20080806 20080806150148 ACCESSION NUMBER: 0000885988-08-000107 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20080630 FILED AS OF DATE: 20080806 DATE AS OF CHANGE: 20080806 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-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-20260 FILM NUMBER: 08994607 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-Q 1 q210q2008.txt INTEGRAMED AMERICA, INC. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2008 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 0-20260 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) 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 whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one): Large Accelerated Filer |_| Accelerated Filer |X| Non-Accelerated Filer |_| Smaller Reporting Company|_| Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act. Yes |_| No |X| The aggregate number of shares of the Registrant's Common Stock, $.01 par value, outstanding on July 21, 2008 was 8,668,376. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- INTEGRAMED AMERICA, INC. FORM 10-Q TABLE OF CONTENTS PAGE PART I - FINANCIAL INFORMATION Item 1. Financial Statements Consolidated Balance Sheets at June 30, 2008 and December 31, 2007......................................... 3 Consolidated Statements of Operations for the three- and six-month periods ended June 30, 2008 and 2007 ........... 4 Consolidated Statement of Shareholders' Equity for the six-month period ended June 30, 2008 ..................... 5 Consolidated Statements of Cash Flows for the six-month period ended June 30, 2008 and 2007 ...................... 6 Notes to Condensed Consolidated Financial Statements ...... 7-14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations................................. 15-23 Item 3. Quantitative and Qualitative Disclosures About Market Risk... 23-24 Item 4. Controls and Procedures........................................ 24 PART II - OTHER INFORMATION Item 1. Legal Proceedings.............................................. 25 Item 1A. Risk Factors................................................... 25 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.... 25 Item 3. Defaults Upon Senior Securities................................ 25 Item 4. Submission of Matters to a Vote of Security Holders............ 25 Item 5. Other Information.............................................. 25 Item 6. Exhibits ...................................................... 25 SIGNATURES .................................................... 26 CERTIFICATIONS PURSUANT TO RULE 13A-14(A), AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002...................................... EXHIBITS CERTIFICATIONS PURSUANT TO 18 U.S.C ss.1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002...................................... EXHIBITS 2 PART I -- FINANCIAL INFORMATION Item 1. Financial Statements INTEGRAMED AMERICA, INC. CONSOLIDATED BALANCE SHEETS (all dollars in thousands, except share amounts) ASSETS
June 30, December 31, 2008 2007 ---------- ------------ (unaudited) Current assets: Cash and cash equivalents ................................................. $ 22,271 $ 23,740 Patient and other receivables, net ........................................ 6,396 5,511 Deferred taxes ............................................................ 3,335 4,460 Other current assets ...................................................... 5,379 4,669 --------- --------- Total current assets .................................................. 37,381 38,380 Fixed assets, net ......................................................... 17,545 16,912 Intangible assets, Business Service Rights, net ........................... 22,607 22,305 Goodwill .................................................................. 29,478 29,359 Trademarks ................................................................ 4,586 4,492 Other assets .............................................................. 1,799 1,619 --------- --------- Total assets .......................................................... $ 113,396 $ 113,067 ========= ========= LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable .......................................................... $ 2,855 $ 1,895 Accrued liabilities ....................................................... 16,456 16,679 Current portion of long-term notes payable and other obligations .......... 3,778 3,661 Due to Fertility Medical Practices ........................................ 7,325 9,043 Shared Risk Revenue Patient Deposits ...................................... 10,609 9,668 --------- --------- Total current liabilities ............................................. 41,023 40,946 Deferred and other tax liabilities ........................................... 1,535 1,819 Long-term notes payable and other obligations ................................ 20,385 21,799 --------- --------- Total liabilities ..................................................... 62,943 64,564 Commitments and Contingencies Shareholders' equity: Common Stock, $.01 par value - 15,000,000 shares authorized in 2008 and 2007, respectively, 8,668,376 and 8,572,258 shares issued and outstanding in 2008 and 2007, respectively ................. 87 86 Capital in excess of par .................................................. 54,399 53,890 Accumulated other comprehensive income (loss) ............................. (221) (82) Treasury stock, at cost - 22,682 and 14,175 shares in 2008 and 2007, respectively ............................................................ (212) (165) Accumulated deficit ....................................................... (3,600) (5,226) --------- --------- Total shareholders' equity ............................................ 50,453 48,503 --------- --------- Total liabilities and shareholders' equity ............................ $ 113,396 $ 113,067 ========= =========
See accompanying notes to the condensed consolidated financial statements. 3 INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (all amounts in thousands, except per share amounts) (unaudited)
For the For the three-month period six-month period ended June 30, ended June 30, ------------------- ------------------- 2008 2007 2008 2007 ------- ------- -------- ------- Revenues, net Fertility Centers .................................... $ 35,051 $ 29,727 $ 67,797 $ 58,819 Consumer Services .................................... 4,707 4,285 8,772 7,577 Vein Clinics ......................................... 10,062 -- 18,904 -- -------- -------- -------- -------- Total revenues ................................... 49,820 34,012 95,473 66,396 -------- -------- -------- -------- Costs of services, net: Fertility Centers .................................... 34,481 27,246 62,923 54,068 Consumer Services .................................... 3,343 3,038 6,287 5,505 Vein Clinics ......................................... 9,349 -- 17,869 -- -------- -------- -------- -------- Total costs of services and sales ................ 45,173 30,284 87,079 59,573 -------- -------- -------- -------- Contribution Fertility Centers .................................... 2,570 2,481 4,874 4,751 Consumer Services .................................... 1,364 1,247 2,485 2,072 Vein Clinics ......................................... 713 -- 1,035 -- -------- -------- -------- -------- Total contribution ............................... 4,647 3,728 8,394 6,823 -------- -------- -------- -------- General and administrative expenses ..................... 2,735 2,690 5,098 5,086 Interest income ......................................... (68) (359) (229) (694) Interest expense ........................................ 365 158 805 277 -------- -------- -------- -------- Total other expenses ............................. 3,032 2,489 5,674 4,669 -------- -------- -------- -------- Income before income taxes .............................. 1,615 1,239 2,720 2,154 Income tax provision .................................... 644 422 1,094 722 -------- -------- -------- -------- Net income .............................................. $ 971 $ 817 $ 1,626 $ 1,432 ======== ======== ======== ======== Basic and diluted net earnings per share of Common Stock: Basic earnings per share ............................. $ 0.11 $ 0.10 $ 0.19 $ 0.18 Diluted earnings per share ........................... $ 0.11 $ 0.10 $ 0.19 $ 0.17 Weighted average shares - basic ...................... 8,600 8,155 8,570 8,147 Weighted average shares - diluted .................... 8,684 8,253 8,652 8,246
See accompanying notes to the condensed consolidated financial statements. 4 INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY (all amounts in thousands) (unaudited)
Accumulated Total Common Stock Capital in Comprehensive Treasury Stock Accumulated Shareholders' Shares Amount Excess of Par Income (loss) Shares Amount Deficit Equity ------ ------ ------------- ------------ ------ ------ ----------- ------------ BALANCE AT DECEMBER 31, 2007 8,572 $86 $53,890 $ (82) 14 $(165) $(5,226) $48,503 Stock awards issued, net 99 1 (1) - - - - - Stock award amortization - - 378 - - - - 378 Exercise of common stock options 11 1 297 - (2) (24) - 274 Gain (loss) on hedging transaction - - - (139) - - - (139) Treasury stock transactions, net (14) (1) (165) - (35) (23) - (189) Net income for the six months ended June 30, 2008 - $ - $ - $ - - $ - $ 1,626 $ 1,626 -------------------------------------------------------------------------------------- BALANCE AT JUNE 30, 2008 8,668 $87 $54,399 $(221) (23) $(212) $(3,600) $50,453 ======================================================================================
See accompanying notes to the condensed consolidated financial statements. 5 INTEGRAMED AMERICA, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (all amounts in thousands)
For the six-month period ended June 30, ------------------- 2008 2007 -------- -------- (unaudited) Cash flows from operating activities: Net income ...................................................................... $ 1,626 $ 1,432 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization ................................................. 3,623 3,017 Deferred income tax provision ................................................. (284) (20) Stock-based compensation ...................................................... 378 225 Changes in assets and liabilities -- Decrease (increase) in assets Patient and other accounts receivable ...................................... (885) 25 Prepaids and other current assets .......................................... 415 324 Other assets ............................................................... (180) 38 (Decrease) increase in liabilities Accounts payable ........................................................... 960 (745) Accrued liabilities ........................................................ (223) (378) Due to medical practices ................................................... (1,718) 1,534 Shared Risk and other patient deposits ..................................... 941 1,951 -------- -------- Net cash provided by operating activities ........................................... 4,653 7,403 Cash flows from investing activities: Purchase of business service rights ............................................. (950) (500) Cash paid to purchase VCA ....................................................... (119) -- Purchase of other intangibles ................................................... (94) (37) Purchase of fixed assets and leasehold improvements, net ........................ (3,608) (2,094) -------- -------- Net cash used in investing activities ............................................... (4,771) (2,631) Cash flows from financing activities: Proceeds from issuance of debt .................................................. 380 -- Debt repayments ................................................................. (1,816) (751) Common Stock transactions, net .................................................. 85 62 -------- -------- Net cash (used in) in financing activities .......................................... (1,351) (689) -------- -------- Net increase (decrease) in cash and cash equivalents ................................ (1,469) 4,083 Cash and cash equivalents at beginning of period .................................... 23,740 32,184 -------- -------- Cash and cash equivalents at end of period .......................................... $ 22,271 $ 36,267 ======== ======== Supplemental Information: Interest paid .................................................................. $ 472 $ 263 Income taxes paid .............................................................. $ 736 $ 517
See accompanying notes to the condensed consolidated financial statements. 6 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 1 -- INTERIM RESULTS: The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and, accordingly, do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying unaudited condensed interim financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the financial position at June 30, 2008, and the results of operations and cash flows for the interim periods presented. Operating results for the interim period are not necessarily indicative of results that may be expected for the year ending December 31, 2008. These financial statements should be read in conjunction with the audited financial statements and notes thereto included in IntegraMed America's Annual Report on Form 10-K for the year ended December 31, 2007. NOTE 2 -- BASIS OF PRESENTATION With the acquisition of Vein Clinics of America, Inc. ("VCA"), in the third quarter of 2007, we reorganized our service offerings into three major product lines: Fertility Centers, Consumer Services and Vein Clinics. Each of these operating segments includes an element of overhead with their Cost of Services which is specifically associated with that segment's operation. Their overhead costs had previously been reported as General and Administrative costs. The result of this change is to reduce overall contribution margins and unallocated General and Administrative costs, as reported in previous periods. We believe this presentation provides a clearer view of each division's performance and operating efficiency. All periods disclosed in this filing have been restated to reflect this new presentation. The following pro forma data reflects the consolidated revenue and earnings of IntegraMed America, and subsidiaries had the VCA acquisition date been January 1, 2007, and had investments to position the revenue cycle management, financial management, marketing and sales and regional management infrastructure to provide for sustainable growth not been immediately implemented: (000's omitted, except per share amounts): Supplemental pro forma results of operations for the three and six-month periods ended June 30, 2007 For the For the three months six months ended June 30, 2007 ended June 30, 2007 ------------------- ------------------- Revenue............................... $43,167 $82,951 Net Income............................ $ 1,581 $ 2,380 Basic Earnings per share.............. $ 0.19 $ 0.29 NOTE 3 -- COMMON SHARES OUTSTANDING: All common share numbers reported herein reflect the 25% stock split effected in the form of a stock dividend declared by the Board of Directors on March 19, 2007 and paid on May 4, 2007 . 7 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) NOTE 4 -- EARNINGS PER SHARE: The reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the three and six month periods ended June 30, 2008 and 2007 is as follows (000's omitted, except for per share amounts):
For the For three-month period six-month period ended June 30, ended June 30, ------------------ ------------------- 2008 2007 2008 2007 -------- ------- ------ -------- Numerator Net Income ................................... $ 971 $ 817 $1,626 $1,432 Denominator Weighted average shares outstanding (basic) .. 8,600 8,155 8,570 8,147 Effect of dilutive options and warrants ...... 84 98 82 99 ------ ------ ------ ------ Weighted average shares and dilutive potential Common shares (diluted) ................. 8,684 8,253 8,652 8,246 Basic earnings per share ..................... $ 0.11 $ 0.10 $ 0.19 $ 0.18 ====== ====== ====== ====== Diluted earnings per share ................... $ 0.11 $ 0.10 $ 0.19 $ 0.17 ====== ====== ====== ======
For the three and six month periods ended June 30, 2008 there were 118,525 and 123,252, respectively, outstanding options to purchase shares of Common Stock which were excluded from the computation of the diluted earnings per share amount as the exercise prices of these outstanding options were greater than the average market price of the shares of Common Stock. For the three and six month periods ended June 30, 2007 there were no outstanding options to purchase shares of Common Stock which were excluded from the computation of the diluted earnings per share amount as the exercise prices of all outstanding options were less than the average market price of the shares of Common Stock. NOTE 5 -- SEGMENT INFORMATION: We currently report three major operating divisions and a corporate office that provides shared services. Our Fertility Centers Division is comprised of a provider network of 10 contracted fertility centers located in major markets across the United States. We offer products and services to these providers designed to support the fertility centers' growth. This division also supports a Council of Physicians and Scientists, as well as ARTIC, a captive insurance company which provides malpractice insurance to member physicians. Our Consumer Services Division offers products directly to fertility patients. The division's Shared Risk(R) Refund and financing programs are designed to make the treatment process easier and more affordable for patients. As of June 30, 2008, the division maintained a contracted network of 22 independent fertility clinics under its Affiliate program which is designed to distribute the division's products and services to a wider group of patients than just those serviced by our Fertility Center locations. The division also offers fertility medications directly to patients via a competitively priced mail-order pharmacy. 8 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) Our Vein Clinics Division, formed on August 8, 2007, with the purchase of VCA, provides business and management services to a network of 31 (as of June, 2008) clinics located in 11 states which specialize in the treatment of vein disease and disorders. We also maintain a Shared Services group within the Corporate office. In addition to their corporate responsibilities, this group assists the Fertility Centers, Consumer Services and Vein Clinics Divisions with administrative services such as finance, accounting, human resources and purchasing support; access to capital for financing clinic operations and expansion; traditional marketing; internet marketing and website support and integrated information systems. Performance by segment, for the three and six-month periods ended June 30, 2008 and 2007 are presented below.
Fertility Consumer Vein Centers Services Clinics Corp G&A Consolidated ------- -------- ------- -------- ------------ For the three months ended June 30, 2008 Revenues .......................... $ 35,051 $ 4,707 $ 10,062 $ -- $ 49,820 Cost of Services .................. 32,481 3,343 9,349 -- 45,173 -------- -------- -------- -------- -------- Contribution ...................... 2,570 1,364 713 -- 4,647 Operating margin .................. 7.3% 29.0% 7.1% 0.0% 9.3% General and Administrative ........ -- -- -- 2,735 2,735 Interest, net ..................... (43) -- 3 337 297 -------- -------- -------- -------- -------- Income before income taxes ........ $ 2,613 $ 1,364 $ 710 $ (3,072) $ 1,615 ======== ======== ======== ======== ======== Depreciation expense included above $ 1,114 $ -- $ 190 $ 200 $ 1,504 Capital Expenditures .............. $ 2,053 $ -- $ 150 $ 174 $ 2,377 Total Assets ...................... $ 43,101 $ 932 $ 45,658 $ 23,705 $113,396 For the six-months ended June 30, 2008 Revenues .......................... $ 67,797 $ 8,772 $18,904 $ -- $ 95,473 Cost of Services .................. 62,923 6,287 17,869 -- 87,079 -------- -------- -------- -------- -------- Contribution ...................... 4,874 2,485 1,035 -- 8,394 Operating margin .................. 7.2% 28.3% 5.5% 0.0% 8.8% General and Administrative ........ -- -- -- 5,098 5,098 Interest, net ..................... (109) -- 2 683 576 -------- -------- -------- -------- -------- Income before income taxes ........ $ 4,983 $ 2,485 $ 1,033 $ (5,781) $ 2,720 ======== ======== ======== ======== ======== Depreciation expense included above $ 2,191 $ 1 $ 373 $ 410 $ 2,975 Capital Expenditures .............. $ 2,718 $ -- $ 597 $ 293 $ 3,608 Total Assets ...................... $ 43,101 $ 932 $ 45,658 $ 23,705 $113,396
9 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
Fertility Consumer Vein Centers Services Clinics Corp G&A Consolidated ------- -------- ------- -------- ------------ For the three months ended June 30, 2007 Revenues........................... $ 29,727 $ 4,285 $ - $ - $ 34,012 Cost of Services................... 27,246 3,038 - - 30,284 -------- -------- -------- -------- -------- Contribution....................... 2,481 1,247 - - 3,728 Operating margin................... 8.3% 29.1% 0.0% 0.0% 11.0% General and Administrative......... - - - 2,690 2,690 Interest, net...................... (53) - - (148) (201) -------- -------- -------- -------- -------- Income before income taxes......... $ 2,534 $ 1,247 $ - $ (2,542) $ 1,239 ======== ======== ======== ======== ======== Depreciation expense included above $ 973 $ - $ - $ 217 $ 1,190 Capital Expenditures............... $ 797 $ - $ - $ 147 $ 944 Total Assets....................... $ 40,724 $ 789 $ - $ 36,049 $ 77,562 For the six-months ended June 30, 2007 Revenues........................... $ 58,819 $ 7,577 $ - $ - $ 66,396 Cost of Services................... 54,068 5,505 - - 59,573 -------- -------- -------- -------- -------- Contribution....................... 4,751 2,072 - - 6,823 Operating margin................... 8.1% 27.3% 0.0% 0.0% 10.3% General and Administrative......... - - - 5,086 5,086 Interest, net...................... (116) - - (301) (417) -------- -------- -------- -------- -------- Income before income taxes.............. $ 4,867 $ 2,072 $ - $ (4,785) $ 2,154 ======== ======== ======== ======== ======== Depreciation expense included above $ 1,904 $ 1 $ - $ 419 $ 2,324 Capital Expenditures............... $ 1,765 $ - $ - $ 329 $ 2,094 Total Assets....................... $ 40,724 $ 789 $ - $ 36,049 $ 77,562
NOTE 6- INTANGIBLE ASSETS: Business Service Rights consist of fees and expenses paid in conjunction with service contracts associated with our Fertility Centers Partner program. These service contracts typically have ten to twenty five year initial lives with the associated service fees on some contracts refundable upon contract termination. We amortize our non-refundable Business Service Rights over the life of their applicable contract. Refundable Service Rights, which totaled approximately $6.1 million as of June 30, 2008, are not amortized because these funds will be returned to us upon contract termination. Goodwill consists of amounts paid related to the acquisition of VCA in excess of the fair value of net assets and liabilities acquired. Contingent consideration payments, if any, related to earn out provisions of this acquisition are not included in the value presented as they are not estimable at this time. Such payments, if any, will be paid 50% in cash and 50% in stock and will result in an adjustment to goodwill. Currently, no contingent earn out provisions have been met and no payments are due. Trademarks are comprised of valuations assigned to assets associated with the VCA acquisition as well as costs associated with our trademark and service mark rights. 10 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) We test all our individual intangible assets for impairment on a regular basis. To date no impairment has been incurred and therefore no impairment charges have been recognized in our financial statements. NOTE 7 - DUE TO MEDICAL PRACTICES: Due to Fertility Medical Practices is comprised of the net amounts owed by us to medical practices contracted as Fertility Centers. We do not consolidate the results of the Fertility Centers into our accounts. This balance is comprised of amounts due to us by the medical practices for funds, which we advanced with full recourse for use in financing their accounts receivable, less balances owed to the medical practices by us for undistributed physician earnings and patient deposits we hold on behalf of the medical practices. As of June 30, 2008 and December 31, 2007, Due to Medical Practices was comprised of the following balances (000's omitted): June 30, 2008 December 31, 2007 ------------- ----------------- (unaudited) Advances to Practice....................... $(18,560) $(15,585) Undistributed Physician Earnings........... 3,211 6,338 Physician Practice Patient Deposits........ 22,674 18,290 -------- --------- Due to Medical Practices, net..............$ 7,325 $ 9,043 ========= ========= NOTE 8 - STOCK-BASED EMPLOYEE COMPENSATION: We currently have three stock option plans which have been previously approved by the stockholders. All three plans are described more fully in Note 16 of the financial statements in our most recent Annual Report on Form 10-K. Under the 1992 Incentive and Non-Incentive Stock Option Plan (the "1992 Plan"), the 2000 Long-term Compensation Plan (the "2000 Plan") and the 2007 Long-term Compensation Plan (the "2007 Plan"), 500,000, 700,000 and 500,000 shares ,subject to adjustment, of common stock, respectively, were reserved for issuance of incentive and non-incentive stock options and stock grants. The 1992 Plan expired in May 2002, and although some options are still outstanding, no further awards may be made under that plan. Under the 2000 and 2007 Plans, stock options and stock grants may be awarded to employees, directors and such other persons as the Board of Directors determines will contribute to our success. Vesting periods are set by the Board of Directors and stock options are generally exercisable during a ten-year period following the date of award, with stock grants generally vesting in three to five years. The Board of Directors has the authority to accelerate the maturity of any stock option or grant at its discretion, and all stock options and grants have anti-dilution provisions. Under all of our plans, options expire three months from the date of the holder's termination of employment or twelve months in the event of disability or death. As of June 30, 2008, there were 356,784 shares available for granting under these plans. We recognize compensation cost for stock option plans over the vesting period based on the fair value of the option as of the date of the grant. The following table sets forth information about the weighted-average fair value of options granted during the periods below, and the assumptions used for each grant: 11 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)
For the For the three months six months ended June 30, ended June 30, --------------- ---------------- 2008 2007 2008 2007 ---- ---- ---- ---- Fair Value of Options................... $8.06 N/A $8.45 N/A Dividend yield.......................... 0.0% N/A 0.0% N/A Expected volatility..................... 51.7% N/A 51.8% N/A Risk free interest rate................. 4.0% N/A 4.0% N/A Expected term in years.................. 6.31 N/A 6.30 N/A
Stock option activity under these plans is summarized below: Number of Shares of Common Stock Underlying Weighted Average Options Exercise Price ---------- ---------------- Options outstanding as of December 31, 2007.... 102,219 $ 2.33 Stock awards (granted)......................... 127,844 $ 8.45 Awards exercised............................... 133 $46.52 Awards cancelled............................... - --------- Options outstanding as of June 30, 2008........ 229,930 $ 5.71 ======= Options exercisable at: December 31, 2007......................... 102,219 $ 2.33 June 30, 2008............................. 102,085 $ 2.27 The intrinsic value (difference between exercise price and current value of our common stock) of exercisable options at December 31, 2007 and June 30, 2008 was $973,000 and $721,000, respectively. For the three and six month periods ended June 30, 2008, we recorded a charge to earnings to recognize compensation expense of $4,000 and $6,000, respectively, related to the value of outstanding stock options. There was no compensation expense related to stock options in the comparable periods of 2007. As of June 30, 2008, we had approximately $731,000 of unrecognized compensation costs related to stock options which will be recognized over their vesting period. We also issue restricted stock grants to officers and members of the Board of Directors. Stock granted to Board members vests immediately and stock granted to officers generally vests over a period of three to five years. Our General and Administrative expense includes compensation costs recognized in connection with these restricted stock grants of $216,000 and $367,000 for the three and six month periods ended June 30, 2008, respectively, and $115,000 and $225,000 for the three and six month periods ended June 30, 2007. As of June 30, 2008, we had approximately $1.7 million of unrecognized compensation costs related to stock grants which will be recognized over their vesting period. NOTE 9 -- INTEREST RATE HEDGING TRANSACTION: In the normal course of business we are exposed to the risk that our earnings and cash flows could be adversely impacted by market driven fluctuations in the level of interest rates. It is our policy to manage these risks by using a mix of fixed and floating rate debt and derivative instruments. 12 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) In conjunction with our term loan agreement, executed during the third quarter of 2007, we entered into an interest rate swap agreement on a portion of that loan. This swap agreement is designed to hedge risks associated with a portion of our principle floating rate debt. As a result of this agreement, our net income for the three and six-months ended June 30, 2008, included additional financing costs of approximately $71,000 and $115,000, respectively, and we expect to record additional financing costs of approximately $250,000 related to the swap agreement over the next twelve months, given current interest rate forecasts (these financing costs are expected to be offset by lower interest rates on that portion of the underlying term loan not participating in the swap). In addition to the costs included in our reported net income, this hedge also generated a non-recognized income of approximately $54,000 for the second quarter of 2008, and a non-recognized loss of $221,000 as of June 30, 2008 which is reported as part of our accumulated other comprehensive income (loss). The interest rate swap agreement is designed to hedge approximately 50% of our outstanding term loan. We deem this hedge to be highly effective as it shares the same termination date and amortization schedule as the underlying debt subject to the hedge and the change in fair value inversely mimics the appropriate portion of the hedged item. As of June 30, 2008, we had no other hedge or derivative transactions. The following table summarizes total comprehensive income (loss) for the applicable periods (000's omitted):
For the For the three-month period six-month period ended June 30, ended June 30, ------------------ ----------------- 2008 2007 2008 2007 -------- -------- ------- ------- Net income as reported ..................... $ 971 $ 817 $ 1626 $ 1,432 Net income/(loss) on derivative transactions 54 5 (139) (6) ------- ------- ------- ------- Total comprehensive income ................. $ 1,025 $ 822 $ 1,487 $ 1,426 ======= ======= ======= =======
NOTE 10-- LITIGATION: From time to time, we are party to legal proceedings in the ordinary course of business. As of June 30, 2008, none of these proceedings is expected to have a material adverse effect on our financial position, results of operations or cash flows. NOTE 11 -- RECENT ACCOUNTING STANDARDS: SFAS No. 141R, Business Combinations In December 2007, the Financial Accounting Standards Board ("FASB") issued Statement 141 (Revised 2007), Business Combinations ("SFAS No. 141R"). The objective of SFAS 141R is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects. To accomplish that, SFAS 141R establishes principles and requirements for how the acquirer: a. Recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, and any non-controlling interest in the acquiree b. Recognizes and measures the goodwill acquired in the business combination or a gain from a bargain purchase c. Determines what information to disclose to enable users of the financial statements to evaluate the nature and financial effects of the business combination. 13 INTEGRAMED AMERICA, INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited) This statement is effective for fiscal years beginning on or after December 15, 2008. We are currently evaluating the impact that SFAS No. 141R could have on our consolidated financial statements. SFAS No. 160, Non-controlling Interests in Consolidated Financial Statements - ---------------------------------------------------------------------------- In December 2007, the FASB issued Statement No. 160, Non-controlling Interests in Consolidated Financial Statements -- an amendment of ARB No. 51 ("SFAS No. 160"). SFAS No. 160 requires a company to clearly identify and present ownership interests in subsidiaries held by parties other than the company in the consolidated financial statements within the equity section but separate from the company's equity. It also requires the amount of consolidated net income attributable to the parent and to the non-controlling interest be clearly identified and presented on the face of the consolidated statement of income; changes in ownership interest be accounted for similarly, as equity transactions; and when a subsidiary is deconsolidated, any retained non-controlling equity investment in the former subsidiary and the gain or loss on the deconsolidation of the subsidiary be measured at fair value. This statement is effective for fiscal years after December 15, 2008. We are currently evaluating the impact that SFAS No. 160 and believe it will have no material impact on our consolidated financial statements. SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities - ----------------------------------------------------------------------------- In March 2008, the FASB issued Statement No. 161, Disclosures about Derivative Instruments and Hedging Activities--an amendment of FASB Statement No. 133 ("SFAS 161"). SFAS No. 161 changes the disclosure requirements for derivative instruments and hedging activities. Entities are required to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedge items affect an entity's financial position, financial performance, and cash flows. This statement is effective for fiscal years after November 15, 2008. We are currently evaluating the impact that SFAS No. 161 and believe it will have no material impact on our consolidated financial statements. 14 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis should be read in conjunction with the condensed consolidated financial statements and notes thereto included in this report and with IntegraMed America Inc.'s Annual Report on Form 10-K for the year ended December 31, 2007. Forward Looking Statements This Form 10-Q and discussions and/or announcements made by or on behalf of us, 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 involves 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. Our actual results may differ materially from those described in these forward-looking statements due to the following factors: our ability to acquire additional fertility Partner agreements or open additional vein clinics, our ability to raise additional debt and/or equity capital to finance future growth, the loss of significant Partner agreement(s), the profitability or lack thereof at fertility centers or vein clinics serviced by us, increases in overhead due to expansion, the exclusion of fertility services or vein care from insurance coverage, government laws and regulation regarding health care, changes in managed care contracting, and the timely development of and acceptance of new fertility or vein treatment technologies and techniques. We are under no obligation (and expressly disclaim any such obligation) to update or alter any forward-looking statements whether as a result of new information, future events or otherwise. Business Overview IntegraMed America is a leading provider of specialty healthcare services in emerging, technology-focused segments. The company currently operates in two healthcare sectors - the fertility care and varicose vein treatment segments. The company supports its operations with an established infrastructure of clinical and business information systems, marketing, facilities and operations management, finance and accounting, human resources, legal support, risk management and quality assurance. The company is organized into three operating divisions. Our Fertility Centers Division is comprised of ten contracted fertility centers, located in major markets across the United States. Each contracted center is comprised of multiple physicians and locations and are typically the number one or two provider group in the markets served. The strategy of the Fertility Centers Division is to support long term growth, attract and retain new patients, enable provision of superior care, and increase efficiency of contracted fertility centers. The Fertility Center division is contracted with fertility centers comprised of 82 physicians and PhD scientists performing 13% of total US IVF volume. Our Consumer Services Division offers treatment financing programs directly to fertility patients. The division's Shared Risk Refund and traditional credit financing programs are designed to make the treatment process easier and more affordable for patients. The division maintains provider contracts with the Fertility Centers division as well as a network of 22 independent fertility clinics under its Affiliate program. The division also offers fertility medications directly to patients through a competitively priced mail-order pharmacy. The strategy of the Consumer Services division is to increase the size of the Affiliate provider network, increase the number of Shared Risk Refund contracts sold to patients, maintain excellent pregnancy success rates for patients enrolled in the program, expand the offerings of the Shared Risk Refund program to additional patients who currently do not qualify for the current program, and build new products and services that can be sold directly to consumers of specialty health care services. Our Vein Clinics Division was formed on August 8, 2007, with the purchase of Vein Clinics of America, Inc. The Vein Clinics Division provides business and management services to a network of 31 clinics located in 11 states which specialize in the treatment of vein disease and disorders. The strategy of the Vein Clinics division is to provide technologically advanced care for varicose vein disease to underserved populations across the US, increase the volume, productivity and profits of existing vein clinics, open new 15 vein clinics in markets currently being served by the company, open new vein clinics in markets currently not served by the company, and support anticipated growth with a solid business management infrastructure. The Company seeks to support its operating divisions with Shared Services that can be leveraged across the operations. Included in the Shared Services infrastructure are information systems, finance and administration, human resources, legal services and investor relations. Major Events Impacting Financial Condition and Results of Operations 2008 - ---- On June 23, 2008, we announced that we entered into a new Affiliate services contract with the University of North Carolina ("UNC") School of Medicine's Department of Obstetrics and Gynecology in Chapel Hill, North Carolina. As an Affiliate, UNC School of Medicine's Department of Obstetrics and Gynecology receives distribution rights to IntegraMed's consumer products and services. In addition, UNC School of Medicine's Department of Obstetrics and Gynecology has the right to receive other products and services uniquely designed to support the business needs of successful, high-growth fertility centers. On June 5, 2008, we announced the opening of a new Vein Clinic location in Marietta, Georgia. This clinic is IntegraMed's fourth vein clinic in Georgia and this newly completed, state-of-the-art clinic, outfitted with the latest in laser and other vein treatment technologies is uniquely positioned to deliver the highest level of patient care available in the area. On April 29, 2008, we announced the opening of a new Vein Clinic treatment center in Alexandria, Virginia. This addition to our Vein Clinics Division will provide focused vein care treatment solutions to the Washington, D.C. metropolitan area. On April 24, 2008, we entered into a Business Services Agreement to supply a complete range of business, marketing and facility services to the Southeastern Fertility Centers, P.A., located near Charleston, South Carolina. Under the terms of this 25-year agreement, our service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of the practice's earnings. We also committed up to $0.6 million to fund any necessary capital needs of the practice. On April 1, 2008, we entered into an Affiliate services contract with OU Physicians Reproductive Health in Oklahoma City, Oklahoma. As a result of this agreement, OU Physicians Reproductive Health provides another opportunity for our Consumer Services Division to distribute their product offerings in support of this successful fertility center. Subsequent Events - ----------------- On July 9, 2008 we entered into a Business Services Agreement to provide business, marketing and facility services to Arizona Reproductive Medicine Specialists in Phoenix, Arizona. Under the terms of this 25 year agreement, IntegraMed will phase in full implementation of its services over time. 2007 - ---- On August 29, 2007, we entered in to a Business Services Agreement to supply a complete range of business, marketing and facility services to the Center for Reproductive Medicine in Orlando, Florida. The Center for Reproductive Medicine is a fertility practice comprised of four physicians. Under the terms of this 25-year agreement, our service fees are comprised of reimbursed costs of services, a tiered percentage of revenues, and an additional fixed percentage of the Center for Reproductive Medicine's earnings. We also committed up to $1.0 million to fund any necessary capital needs of the practice. On August 8, 2007, we acquired all of the outstanding stock of Vein Clinics of America, Inc.(VCA) for a total cost of approximately $29 million in cash and common stock. The results of VCA are included in our financial statements from the date of the acquisition. Also on August 8, 2007 we entered into an amended loan agreement with Bank of America. The new term loan is in the amount of $25 million (the proceeds of which were applied to repay our original term loan and finance in part the VCA transaction). Interest on the new term loan is at our option, at the prime rate or at LIBOR plus 2% to 2.75% depending upon the level of the ratio of 16 consolidated debt to earnings before interest, taxes depreciation and amortization ("EBITDA"). The loan agreement also contains provisions for a revolving line of credit in the amount of $10 million. Interest on the revolver is at LIBOR plus 1.5% to 2.5% depending on the level of the ratio of consolidated debt to EBITDA. As of June 30, 2008, no amounts were drawn on the revolver. Effective July 1, 2007, we expanded the Shady Grove Fertility Center Partner Service arrangement with the addition of the Fertility Center of the Greater Baltimore Medical Center ("Center") in Baltimore, Maryland where we will provide a full range of business, marketing and facility services. Under the terms of this agreement, we purchased the assets of the Center from Greater Baltimore Medical Center and have committed additional resources to support further growth and development of the Center. Under the terms of this agreement, we will be paid service fees comprised of reimbursed costs of services and a fixed percentage of revenues, plus an additional fixed amount of the Center's earnings. On March 19, 2007, we declared a 25% stock split effected in the form of a stock dividend for all holders of record as of April 13, 2007. As a result of this dividend, 1,628,907 new shares of common stock were issued on the payment date of May 4, 2007. No fractional shares were issued as all fractional amounts were rounded up to the next whole share. All weighted average shares outstanding and earnings per share calculations in this filing have been restated to reflect this stock split. Results of Operations The following table shows the percentage of net revenue represented by various expenses and other income items reflected in our statements of operations for the three and six month periods ended June 30, 2008 and 2007:
For the For the three-month period six-month period ended June 30, ended June 30, ------------------ ----------------- 2008 2007 2008 2007 -------- -------- ---- ------ (unaudited) (unaudited) Revenues, net Fertility Centers .................... 70.4% 87.4% 71.0% 88.6% Consumer Services .................... 9.4% 12.6% 9.2% 11.4% Vein Care Services ................... 20.2% 0.0% 19.8% 0.0% Total Revenues .................. 100.0% 100.0% 100.0% 100.0% Cost of services and sales Fertility Centers .................... 65.2% 80.1% 65.9% 81.4% Consumer Services .................... 6.7% 8.9% 6.6% 8.3% Vein Care Services ................... 18.3% 0.0% 18.7% 0.0% Total Costs of services and sales 90.7% 89.0% 91.2% 89.7% Contribution Fertility Centers .................... 5.2% 7.3% 5.1% 7.2% Consumer Services .................... 2.7% 3.7% 2.6% 3.1% Vein Care Services ................... 1.4% 0.0% 1.1% 0.0% Total Contribution .............. 9.3% 11.0% 8.8% 10.3% General and administrative expenses ...... 5.5% 7.9% 5.3% 7.7% Interest income .......................... (0.1)% (1.0)% (0.2)% (1.0)% Interest expense ......................... 0.7% 0.5% 0.8% 0.4% Total other expenses ............ 6.1% 7.4% 5.9% 7.1% Income before income taxes ............... 3.2% 3.6% 2.9% 3.2% Income tax provision ..................... 1.3% 1.2% 1.1% 1.0% Net income ............................... 1.9% 2.4% 1.8% 2.2%
17 Three and Six Months Ended June 30, 2008 Compared to the Three and Six Months Ended June 30, 2007 - ------------------------------------------------------------------------------ Revenues - -------- For the three months ended June 30, 2008, total revenues of $49.8 million increased approximately $15.8 million, or 47%, from the same period in 2007. Approximately $10.0 million of this increase came from our Vein Clinics Division, which was acquired in the third quarter of 2007, with the remaining increase attributable to our existing Fertility Centers and Consumer Services Divisions. Our Fertility Centers revenue increased approximately $5.3 million, or 17.9%, as a result of growth within legacy medical practices, the addition of two new Partner arrangements and the expansion of the Shady Grove contract in mid-2007. Our Consumer Services segment experienced increased revenues of $0.4 million, or 9.8%, primarily driven by growth in its Shared Risk Refund program. For the six months ended June 30, 2008, total revenues $95.5 million increased approximately $29.1 million, or 44%, from the same period in 2007. Approximately $18.9 million of this increase was derived from our Vein Clinics Division, with the remaining increase attributable to our existing Fertility Centers and Consumer Services operations. Our Fertility Centers revenue increased approximately $9.0 million, or 15.3%, as a result of growth within the underlying medical practices and the addition of three new Partner agreements. Our Consumer Services segment experienced increased revenues of $1.2 million, or 15.8%, through the continued expansion of its Shared Risk Refund program. A segment-by-segment discussion is presented below. Fertility Centers Segment In providing clinical care to patients, each of our fertility centers generates patient revenue which we do not report in our financial statements. Although we do not consolidate the physician fertility practice financials with our own, these financials do directly affect our revenues. The components of our revenue from each of the fertility centers are: o A Base Service fee calculated as a percentage of patient revenue as reported by the center (this percentage varies from 6% down to 3% depending on the level of patient revenues); o Cost of Services equal to reimbursement for the expenses which we advanced to the center during the month (representing substantially all of the expenses incurred by the practice) and; o Our Additional fees which represent our share of the net income of the center (which varies from 10% to 20% or a fixed amount depending on the underlying center). In addition to these revenues generated from our Fertility Centers, we often receive miscellaneous other revenues related to providing services to medical practices. From the total of our revenues, we subtract the annual amortization of our Business Service Rights, which are the rights to provide Business Services to each of the centers. During the second quarter of 2008, Fertility Center revenues increased by $5.3 million or 17.9% from the same period in 2007. Our two newest stand-alone fertility center contracts, one acquired in the third quarter of 2007, the other during the second quarter of 2008, were responsible for $2.3 million of the increase. The remaining growth among our existing centers is mainly attributed to an increased number of patient visits and patient treatment cycles. Fertility center revenue for the six months ended June 30, 2008 versus the six months ended June 30, 2007 increased approximately $9.0 million, or 15.3%. Approximately $3.6 million of this increase was derived from the two new stand-alone contracts with the remainder $5.4 million generated based on organic patient growth at our legacy centers. The table below illustrates the components of Fertility Centers revenue in relation to the physician practice financials for the first three and six months of 2008 compared to 2007: 18
For the For the three month period six-month period ended June 30, ended June 30, ------------------ ------------------- 2008 2007 2008 2007 ------ ------ ------ ------ (unaudited) (unaudited) Providers Providers Providers Providers Physician Financials (a) Patient revenue ............................... $ 48,515 $ 41,666 $ 92,264 $ 80,528 (b) Cost of services .............................. 31,740 26,782 61,504 53,167 (c) Base service fee .............................. 2,201 1,924 4,237 3,753 -------- -------- -------- -------- (d) Practice contribution (a-b-c) ................. 14,574 12,960 26,523 23,608 (e) Physician compensation ........................ 13,201 11,677 23,898 21,149 (f) IntegraMed additional fee ..................... 1,374 1,306 2,625 2,482 IntegraMed Financials (g) IntegraMed gross revenue (b+c+f) .............. 35,315 30,012 68,366 59,402 (h) Amortization of business service rights ....... (324) (321) (648) (693) (i) Other revenue ................................. 60 36 79 110 -------- -------- -------- -------- (k) IntegraMed fertility services revenue (g+h+i+j) $ 35,051 $ 29,727 $ 67,797 $ 58,819 ======== ======== ======== ========
Consumer Services Segment Revenues from our Shared Risk Refund program accounted for approximately 93% of our Consumer Services segment revenues during the second quarter and first six months of 2008, up from 91% and 90% for the same periods in 2007, respectively. Patients enrolled in the Shared Risk Refund program generally pay us an upfront fee (deposit) in return for up to six treatment cycles. The non-refundable portion of the fee is recognized as revenue at the completion of the first treatment. The remainder is recognized at the time of a treatment outcome (clinical pregnancy) or issued as a refund if all treatment options fail. The two main factors that impact Shared Risk revenue (and contribution) are: o The number of patients enrolled and receiving treatment o Pregnancy success rates On both a quarterly and year to date basis the Shared Risk Refund program continued to experience significant growth. Revenue of $4.3 million in the second quarter of 2008 was up $0.5 million, or 12% from the same period in the prior year. For the six months ended June 30, 2008, revenue from the Shared Risk Refund program increased $1.3 million, or 19%, from the same period in 2007. Applications by prospective patients to join the program grew by 23% and 17% for the three and six months ended June 30, 2008, respectively, versus the same periods in the prior year. Our Affiliate program generated revenues of $304,000 during the second quarter of 2008, versus $321,000 in the same period in the prior year. Our Affiliate program generated revenues of $587,000 during the first six months of 2008 as compared to $638,000 for the first six months of 2007. Our two newest fertility practices, located in Orlando, Florida and Mount Pleasant, South Carolina, transitioned from the Affiliate program into full fertility clinic contracts the third quarter of 2007 and second quarter of 2008, respectively. With their conversion from Affiliate to fertility clinic, earnings from these practices are now reflected in the Fertility Centers segment of our business. As of June 30, 2008, our Affiliate network was comprised of 22 independent fertility clinics compared to 21 clinics on June 30, 2007. We have an on-going program designed to attract independent unaffiliated fertility centers to join our Affiliate network. Pharmaceutical revenue was $34,000 and $68,000 for the three and six months ended June 30, 2008, compared to $68,000 and $105,000 during the same periods in the prior year. This segment of our Consumer offerings continues to experience decreasing margins due to pharmaceutical cost increases which are not able to be passed on to the consumer. Vein Clinics Segment Revenues for the three and six months ended June 30, 2008 were $10.1 million and $18.9 million, respectively. This compares to revenues of $9.2 million and $16.6 million generated in the second quarter and first six months of 2007 by VCA on a 19 stand alone basis, prior to our acquisition of this business segment. Revenues in this segment are generally from billings to patients or their insurer for vein disease treatment services with this patient revenue consolidated directly into our financials. Contribution - ------------ Our 2008 second quarter contribution of $4.6 million increased 25% from the same period in 2007. Contribution increased from $6.8 million in the first six months of 2007 to $8.4 million for the first six months of 2008, or an increase of 23%. A segment-by-segment discussion is presented below. Fertility Centers Segment Comparing the second quarters and first six months of 2008 to 2007, Fertility Center contribution grew 3.5% from $2.5 million to $2.6 million. Second quarter margins in 2008 of 7.3% were down from 8.3% in 2007. For the first six months of 2008, Fertility Center contribution was $4.9 million as compared to $4.8 million during the same period in 2007, an increase of 2.6%. Although revenue increased for the second quarter and first six months of 2008 by $5.3 million and $9.0 million, respectively, and our fertility center locations experienced a 13.5% increase in new patient volume during this period, margin growth has been tempered by additional division level infrastructure investments which were previously disclosed and are designed to support continuing growth and new acquisitions. The bulk of these investments have already been absorbed into the division support structure and we expect increased contribution and margins in future quarters as a result. Consumer Services Segment Contribution from our Consumer Services segment grew by $117,000 or 9.4% in the second quarter of 2008, compared to the same period in the prior year. This growth was driven by our Shared Risk Refund program in which applications for enrollment increased by 23.0% from the same period in the prior year and pregnancy success rates rose by 15.9% versus the second quarter of 2007. On a six month basis, contribution is up 20%, or $413,000, based on higher patient activity and success rates of 47% versus 41% during the same period in 2007. Current success rates of 47% represent the high end of the expected success range while the prior year success rates were at the lower end of the range. During the second quarter of 2008 we also contracted with one new fertility center to be a participating provider in our Affiliate program which should translate into increased Shared Risk volume in the coming months. Vein Clinics Segment For the second quarter of 2008, contribution from our Vein Clinics Division was $713,000, or 7.1% of Vein Clinic revenues. This compares to contribution of $1.2 million, or 12.7% of revenues in the same period in the prior year. For the first six months of 2008, Vein Clinic contribution of $1.0 million or 5.5% of revenue compares to $1.4 million or 8.6% of revenue in the first six months of 2007. The first quarter is traditionally the slowest quarter for this business segment. The historic core of this segment's operations are in the Upper Mid-West, which experienced an unusually severe winter season this year versus last year hampering our six month comparison. In addition to seasonality factors, 2008 contribution was also impacted by infrastructure additions designed to support our accelerated new clinic opening plans. This segment opened three clinics in all of 2007, and has opened three new clinics in 2008 to date, with plans to open one more clinic before the end of the current year. As with the Fertility Centers Division, most of the investments in division level resources for the Vein Clinics have already been absorbed into their cost structure and will enable us to accelerate new clinic openings in a controlled and predictable manner with five or six new clinics planned for 2009. We have also begun to extract benefits from the integration of VCA's administrative functions with our Corporate Shared Services group. Efficiencies in the areas of legal, finance, information technology and human resources are expected to generate additional cost savings as 2008 progresses, with additional synergistic opportunities continuing to be evaluated. 20 General and Administrative Expenses - ----------------------------------- General and Administrative ("G&A") expenses are comprised of salaries and benefits, administrative, regulatory compliance, and operational support costs defined as our Shared Services group, which are not specifically related to individual clinical operations or other product offerings. These costs totaled $2.7 million in the second quarter of 2008, and $5.1 million for the first six months of 2008, approximately even with the same periods in 2007. G&A expenses were 58.9% of contribution for the second quarter of 2008, down substantially from 72.2% during the same period in 2007. For the first six months of 2008, G&A expenses were 60.7% of contribution, as compared to 74.5% during the same period in 2007. We continue to actively manage G&A expenses in an effort to leverage our Support Services group and extract economies of scale from within the organization. Interest - -------- Net interest expense in the second quarter of 2008 totaled $297,000, compared to net interest income of $201,000, during the same period in the prior year. Net interest expense was $576,000 for the first six months of 2008 as compared to net interest income of $417,000 in the first six months of 2007. The change in net interest income/expense is primarily the planned result of utilizing cash on hand and additional borrowings as the principal means of financing our acquisition of VCA. As expected, if one compares the increased financing costs to the contribution by our Vein Clinics Division over the first six months of 2008, the acquisition was slightly dilutive after taking into account the shares issued during the transaction. We expect subsequent quarters to show accretion in this business segment but still maintain that our Vein Clinics acquisition will be neutral to slightly accretive over the next six to nine months. In addition to the impact of financing the VCA transaction, lower market interest rates, versus a year ago, have reduced the return on our current cash balances. Income Tax Provision - -------------------- Our provision for income tax was approximately $1.1 million for the six months ended June 30, 2008, or 40.2% of pre-tax income. This is compared to approximately $0.7 million, or 33.5%, of pre-tax income during the same period in the prior year. For the second quarter of 2008, the income tax provision was approximately $0.6 million, or 39.9% of pre-tax income, compared to $0.4 million, or 34.0% of pre-tax income in the second quarter of 2007. Our effective tax rates for 2008 and 2007 reflect provisions for both current and deferred federal and state income taxes. The higher effective tax rates for the periods ended June 30, 2008 are mainly due to a decrease in tax-exempt interest income projected for 2008 compared with 2007. The effective income tax rate for the six months ended June 30, 2008 also includes additional interest for tax exposure items of approximately $11,000, which is treated as a discrete item. Effective January 1, 2007, we adopted Financial Accounting Standards Board (FASB) Interpretation No. 48 (FIN No. 48), "Accounting for Uncertainty in Income Taxes," which clarifies the accounting and disclosure for uncertainty in income taxes. The adoption of this interpretation did not have a material impact on our financial statements. As of June 30, 2008, the total gross unrecognized tax benefits were approximately $246,000, and the total unrecognized tax benefits (net of federal effect) were approximately $179,000, all of which would impact our effective tax rate if recognized. Interest on unrecognized tax benefits as of June 30, 2008 was approximately $26,000. We anticipate that approximately $30,000 of our net unrecognized tax benefits will become recognized over the next year due to expirations in the statute of limitations. We file income tax returns in the U.S. federal jurisdiction and various states. For federal income tax purposes, our 2004 through 2007 tax years remain open for examination by the tax authorities under the normal three year statute of limitations. For state tax purposes, our 2003 through 2007 tax years remain open for examination by the tax authorities under a four year statute of limitations. Off-balance Sheet Arrangements FASB Interpretation No. 46 (Revised) "Consolidation of Variable Interest Entities" (FIN 46R) addresses how a business enterprise should evaluate whether it has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the entity. As of June 30, 2008, as a result of the acquisition of the VCA we have interests in the individual vein clinics, where we are the primary beneficiary, therefore the adoption of FIN 46R has required us to consolidate such vein clinic operations in our financial statements. Since we do not have any interest in the individual 21 fertility clinics and we are not the primary beneficiary, we do not consolidate the results of the fertility clinics in our accounts. Also, since we do not have any significant interest in the captive insurance provider and we are not the primary beneficiary, we do not consolidate the results of the captive insurance company in our accounts. Liquidity and Capital Resources As of June 30, 2008, we had approximately $22.3 million in cash and cash equivalents on hand as compared to $23.7 million at December 31, 2007. Additionally, we had a working capital deficit of approximately $3.6 million, at June 30, 2008, an increase of $1.0 million in the working capital deficit of $2.6 million as of December 31, 2007. Cash balances decreased from December 31, 2007 levels primarily due to investments in fixed assets and leasehold improvements, the purchase of additional business service rights and scheduled debt repayments. We expect to build cash balances over the remainder of the current year due to better timing of payments to vendors and a reduction in the pace of capital expenditures. Shared Risk Refund patient deposits, which are reflected as a current liability, represent funds received from patients in advance of treatment cycles and are an indication of future Shared Risk revenues. These deposits totaled approximately $10.6 million and $9.7 million as of June 30, 2008 and December 31, 2007, respectively. These deposits are a significant source of cash flow and represent interest-free financing for us. As of June 30, 2008, we did not have any significant contractual commitments for the acquisition of fixed assets or construction of leasehold improvements. However, we anticipate upcoming capital expenditures of approximately $2.6 million for the remainder of 2008. These expenditures are primarily related to medical equipment, information system infrastructure and leasehold improvements. We believe that working capital, specifically cash and cash equivalents, remain at adequate levels to fund our operations and our commitments for fixed asset acquisitions. We also believe that the cash flows from our operations plus our available credit facility will be sufficient to provide for our future liquidity needs over the next twelve months. In August, 2007, as part of our acquisition of VCA, we secured a new $25 million five-year term loan. Our previous term loan of $7.7 million was paid off in its entirety as part of this agreement. After deducting the previous loan amount, interest and fees, our net funding from Bank of America was $17.0 million. Other features of this credit facility include a $10 million five-year revolving line of credit. Each component of our amended credit facility bears interest by reference to Bank of America's prime rate or LIBOR, at our option, plus a margin, which is dependent upon a leverage test, ranging from 2.00% to 2.75% in the case of LIBOR-based loans. Prime-based loans are made at Bank of America's prime rate and do not contain an additional margin. Interest on the prime-based loans became payable quarterly beginning November 8, 2007 and interest on LIBOR-based loans is payable on the last day of each applicable interest period. As of June 30, 2008, interest on the term loan was payable at a rate of 5.42%. 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 agreement. As of June 30, 2008 under the revolving line of credit the full amount of $10.0 million was available, of which none was outstanding. In order to mitigate the interest rate risk associated with our new term loan, we entered into an interest rate swap agreement with Bank of America in August 2007 for 50% of the loan amount. The effect of this swap transaction was to effectively fix the interest rate on our term loan at 5.39% plus the applicable margin for the life of the loan. Our Bank of America credit facility is collateralized by substantially all of our assets. As of June 30, 2008, we were in full compliance with all applicable debt covenants. We also continuously review our 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 our contractual obligations and other commercial commitments at June 30, 2008, and the effect such obligations are expected to have on our liquidity and cash flows in future periods. 22 Payments Due by Period (000's omitted)
Total Less than 1 Year 1-3 Years 4-5 Years After 5 Years ----- ---------------- --------- --------- ------------- Notes payable......................... $23,816 $3,888 $10,904 $ 9,024 $ - Interest on notes payable............. 1,274 198 589 487 - Capital lease obligations............. 347 80 185 82 - Operating leases...................... 63,026 10,709 16,874 14,314 21,015 ------- ------ ------- ------- ------- Total contractual cash obligations...................... $88,463 $14,875 $28,552 $24,021 $21,015 ======= ======= ======= ======= ======= Total Less than 1 year 1-3 Years 4-5 Years After 5 Years ----- ---------------- --------- --------- ------------- Unused lines of credit................ $10,000 $10,000 $ - $ - $ -
We also have commitments to provide working capital financing to member clinics in our Fertility Centers Division. A significant portion of these commitments relate to our transactions with the medical practices themselves. Our responsibilities to the these medical practices are to provide financing for their accounts receivable and to hold patient deposits as well as undistributed physician earnings on their behalf. Disbursements to the medical practices generally occur monthly. The medical practice's repayment hierarchy consists of the following: o We provide a cash credit to the practice for billings to patients and insurance companies; o We reduce the cash credit for clinic expenses that we have incurred on behalf of the practice; o We reduce the cash credit for the base portion of our Service Fee which relates to the Partner revenues; o We reduce the cash credit for the variable portion of our Service Fee which relates to the Partner earnings; and o We disburse to the medical practice the remaining cash amount which represents the physician's undistributed earnings. We are also responsible for the collection of the fertility center accounts receivables, which we finance with full recourse. We continuously fund these needs from our cash flow from operations, the collection of prior months' receivables and deposits from patients in advance of treatment. If delays in repayment are incurred, which have not as yet been encountered, we could draw on our existing working capital line of credit. We also make payments on behalf of the Partner for which we are reimbursed in the short-term. Other than these payments, as a general course, we do not make other advances to the medical practice. We have no other funding commitments to the Partner. New Significant Accounting Policies There have been no changes to any of our accounting policies disclosed in our most recent Annual Report on Form 10-K. New Accounting Pronouncements Please see Note 11 of the consolidated financial statements contained in this quarterly report on Form 10Q for a discussion on recently issued accounting pronouncements. Item 3. Quantitative and Qualitative Disclosures About Market Risk In the normal course of business, our interest income and expense items are sensitive to changes in the general level of interest rates. During the third quarter of 2007 we entered into a derivative transaction designed to hedge 50% 23 of our variable rate term loan. As a result of this derivative transaction we have successfully shielded ourselves from a portion of the interest rate risks associated with our term loan. We are currently subject to interest rate risks associated with our short term investments and certain advances to our fertility clinics, both of which are tied to either short term interest rates or the prime rate. As of June 30, 2008, a one percent change in interest rates would impact our pre-tax income by approximately $100,000 annually. Item 4. Controls and Procedures (a) 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 under the Exchange Act) as of June 30, 2008 (the "Evaluation Date"). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective. As permitted by Section 404 of the Sarbanes-Oxley Act, we have elected to defer until the end of fiscal year 2008 the assessment of the effectiveness of internal control over financial reporting for the newly acquired VCA subsidiary. We are in the process of reviewing the internal control system in place, documenting controls and making enhancements where needed. (b) 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 have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. 24 Part II - OTHER INFORMATION Item 1. Legal Proceedings. From time to time, we are party to legal proceedings in the ordinary course of business. As of June 30, 2008, none of these proceedings is expected to have a material adverse effect on our financial position, results of operations or cash flow. Item 1A. Risk Factors There have been no material changes from the risk factors previously disclosed in our Form 10-K for the year ended December 31, 2007. Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. None. Item 3. Defaults Upon Senior Securities. None. Item 4. Submission of Matters to Vote of Security Holders. At an Annual Stockholders Meeting held on May 13, 2008, the following matters were acted upon by the stockholders with the indicated votes thereon: Proposal 1 -- Election of Directors ----------------------------------- Director Votes For Votes Withheld -------- --------- -------------- Kush K. Agarwal 5,321,310 1,322,554 Gerardo Canet 5,348,928 1,294,936 Jay Higham 5,358,817 1,285,047 Sarason D. Liebler 5,556,177 1,087,687 Wayne R. Moon 6,510,105 133,759 Lawrence J. Stuesser 6,510,105 133,759 Elizabeth E. Tallett 6,508,556 135,308 Yvonne Thornton, M.D. 6,549,009 94,855 Item 5. Other Information. None. Item 6. Exhibits. See Index to Exhibits on Page 27. 25 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. INTEGRAMED AMERICA, INC. (Registrant) Date: August 6, 2008 By:/s/: John W. Hlywak, Jr. ------------------- John W. Hlywak, Jr. Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) 26 INDEX TO EXHIBITS Exhibit Number Exhibit 3.2 (G) -- Copy of By-laws of Registrant (as Amended on June 6, 2008) 31.1 -- CEO Certification Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated August 6, 2008. 31.2 -- CFO Certification Pursuant to Rule 13a-14(a) as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 dated August 6, 2008. 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 6, 2008. 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 6, 2008. 27 EX-3.2G 3 exhibit3g.txt INTEGRAMED AMERICA, INC. BY-LAWS INTEGRAMED AMERICA, INC. (As Amended June 6, 2008) ARTICLE I OFFICES Section 1. Registered Office. The registered office shall be in the City of Wilmington, County of New Castle, State of Delaware. Section 2. Other Offices. The corporation may also have offices at such other places both within and without the State of Delaware as the board of directors may from time to time determine or the business of the corporation may require. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. All meetings of the stockholders for the election of directors shall be held at such place, within or without the State of Delaware, as shall be designated from time to time by the board of directors and stated in the notice of the meeting or in a duly executed waiver thereof. Meetings of the stockholders for any other purpose may be held at such place, within or without the State of Delaware, as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Date and Time of Annual Meeting. Annual meetings of the stockholders shall be held at such date and time as shall be designated from time to time by the board of directors and stated in the notice of the meeting. At each such annual meeting, the board of directors shall be elected by the plurality vote of the holders of the authorized and outstanding shares of the corporation's capital stock entitled to vote thereon. Section 3. Notice of Annual Meeting. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. Section 4. Voting List; Inspection. The officer or agent who has charge of the stock transfer books of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting or at any adjournment thereof, arranged in alphabetical order within each class, series or group of stockholders, and showing the address of each stockholder and the number of shares registered in the name of each Stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present. Section 5. Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the certificate of incorporation, may be called by resolution of the board of directors or by the chairman of the board or the president. Section 6. Notice; Date and Time of Special Meetings. Written notice of a special meeting, stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder of record entitled to vote at such meeting. Section 7. Notice of Stockholder Business and Nominations. --------- ----------------------------------------------- (a) At an annual meeting of the stockholders, only such business, including the nominations of persons for election to the Board of Directors, shall be conducted as shall have been brought before the meeting (i) pursuant to the corporation's notice of meeting, (ii) by or at the direction of the board of directors or (iii) by any stockholder of the corporation who is a stockholder of record at the time of giving of the notice provided for in this by-law, who shall be entitled to vote at such meeting and who complies with the notice procedures set forth in this by-law; clause (iii) shall be the exclusive means for a stockholder to make nominations or submit other business (other than matters properly brought under Rule 14a-8 of the Securities Exchange Act of 1934 and included in the corporation's notice of meeting) before an annual meeting of stockholders. (b) For director nominations or any other business to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of paragraph (a) of this by-law, the stockholder must have given timely notice thereof in writing to the secretary of the corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the corporation not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the meeting is changed by more than 30 days from such anniversary date, notice by the stockholder to be timely must be received no later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. A stockholder's notice to the secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, including a statement of qualifications for nomination candidates and a disclosure of any material relationships between the nominee and the stockholder, (ii) the name and address, as they appear on the corporation's books, of the stockholder proposing such business, and the name and address of the beneficial owner, if any, on whose behalf the proposal is made, (iii) the class and number of shares of the corporation which are owned beneficially and of record by such stockholder of record and by the beneficial owner, if any, on whose behalf the proposal is made and (iv) any material interest of such stockholder of record and the beneficial owner, if any, on whose behalf the proposal is made in such business, including any derivatives, hedged positions, and any other economic and voting interests. (c) Notwithstanding anything in these by-laws to the contrary, no business shall be conducted at an annual meeting except in accordance with the procedures set forth in this by-law. The Chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting and in accordance with the procedures prescribed by these by-laws, and if he should so determine, he shall so declare -2- to the meeting and any such business not properly brought before the meeting shall not be transacted. Notwithstanding the foregoing provisions of this by-law, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this by-law. Section 8. Business Transacted at Special Meetings. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice. Section 9. Quorum; Adjournment. The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the certificate of incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place to which the meeting is adjourned, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the original meeting. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 10. Votes Required. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision in the statutes or of the certificate of incorporation, a different vote is required, in which case such express provision shall govern the vote required to decide such question. Section 11. Voting of Shares. Unless otherwise provided in the certificate of incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy (which may be evidenced by original or facsimile signature in accordance with the Delaware General Corporation Law) for each share of the capital stock having voting power held by such stockholder, but no proxy shall be valid and voted on after three years from its date, unless the proxy provides for a longer period. Section 12. Voting Procedures and Inspectors of Elections. ---------- --------------------------------------------- (a) The corporation shall, in advance of any meeting of stockholders, appoint one or more inspectors (and may appoint one or more alternates) to act at the meeting and make a written report thereof. If no inspector or alternate is able to act at a meeting of stockholders, the person presiding at the meeting shall appoint one or more inspectors to act at the meeting. Each inspector, before entering upon the discharge of duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of such inspector's ability. (b) The inspectors shall ascertain the number of shares outstanding and the voting power of each, determine the shares represented at a meeting and the validity of proxies and ballots, count all votes and ballots, determine and retain for a reasonable period a record of the disposition of any challenges made to any determination by the inspectors, and certify their determination of -3- the number of shares represented at the meeting, and their count of all votes and ballots. The inspectors may appoint or retain other persons or entities to assist in the performance of the duties of the inspectors. (c) The date and time of the opening and the closing of the polls for each matter upon which the stockholders will vote at a meeting shall be announced at the meeting. No ballot, proxies or votes, nor any revocations thereof or changes thereto, shall be accepted by the inspectors after the closing of the polls unless the Court of Chancery upon application by a stockholder shall determine otherwise. (d) In determining the validity and counting of proxies and ballots, the inspectors shall be limited to an examination of the proxies, any envelopes submitted with those proxies, any information provided in accordance with ss. 212(c)(2) of the Delaware General Corporation Law, ballots and the regular books and records of the corporation, except that the inspectors may consider other reliable information for the limited purpose of reconciling proxies and ballots submitted by or on behalf of banks, brokers, their nominees or similar persons which represent more votes than the holder of a proxy is authorized by the record owner to cast or more votes than the stockholder holds of record. If the inspectors consider other reliable information for the limited purpose permitted herein, the inspectors at the time they make their certification pursuant to subsection (b) of this section shall specify the precise information considered by them including the person or persons from whom they obtained the information, when the information was obtained, the means by which the information was obtained and the basis for the inspectors' belief that such information is accurate and reliable. ARTICLE III DIRECTORS Section l. General. The business of the corporation shall be managed by or under the direction of its board of directors (sometimes hereinafter referred to as the "board") which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the certificate of incorporation or by these by-laws directed or required to be exercised or done by the stockholders. Section 2. Number and Term. The board of directors or the corporation shall consist of seven (7) persons.. Each director shall hold office until his successor is elected and qualified or until his earlier resignation or removal. Section 3. Vacancies. Unless otherwise provided in the certificate of incorporation or these bylaws, vacancies and newly created directorships resulting from any increase in the authorized number of directors may be filled by a majority of the directors then in office even if such directors do not constitute a quorum, or by a sole remaining director, and the directors so chosen shall hold office until the next annual meeting of the stockholders and until their successors are duly elected and shall qualify, unless sooner displaced. If there are no directors in office, then such vacancies or new directorships shall be filled by a majority of the stockholders entitled to vote for the election of directors. -4- Section 4. Nominations of Directors. --------- ------------------------ (a) Only persons who are nominated in accordance with the procedures set forth in these by-laws shall be eligible to serve as directors. Nominations of persons for election to the board of directors of the corporation may be made at a meeting of stockholders (i) by or at the direction of the board of directors or (ii) by any stockholder of the corporation who is a stockholder of record at the time of giving of notice provided for in this by-law, who shall be entitled to vote for the election of directors at the meeting and who complies with the notice procedures set forth in this by-law. (b) Nominations by stockholders shall be made pursuant to timely notice in writing to the secretary of the corporation. To be timely, a stockholder's notice shall be delivered to or mailed and received at the principal executive offices of the corporation (i) in the case of an annual meeting, not less than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting; provided, however, that in the event that the date of the annual meeting is changed by more than 30 days from such anniversary date, notice by the stockholder to be timely must be so received not later than the close of business on the l0th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made, and (ii) in the case of a special meeting at which directors are to be elected, not later than the close of business on the 10th day following the earlier of the day on which notice of the date of the meeting was mailed or public disclosure was made. Such stockholder's notice shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors, or is otherwise required, in each case pursuant to Regulation 14A under the Securities Exchange Act of 1934, as amended (including such person's written consent to being named in the proxy statement as a nominee and to serving as a director if elected); (ii) as to the stockholder giving the notice (A) the name and address, as they appear on the corporation's books, of such stockholder and (B) the class and number of shares of the corporation which are beneficially owned by such stockholder and also which are owned of record by such stockholder; and (iii) as to the beneficial owner, if any, on whose behalf the nomination is made, (A) the name and address of such person and (B) the class and number or shares or the corporation which are beneficially owned by such person. At the request of the board of directors, any person nominated by the board of directors for election as a director shall furnish to the secretary of the corporation that information required to be set; forth in a stockholder's notice of nomination which pertains to the nominee. (c) No person shall be eligible to serve as a director of the corporation unless nominated in accordance with the procedures set forth in this by-law. The chairman of the meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the procedures prescribed by these by-laws, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded. Notwithstanding the foregoing provisions of this by-law, a stockholder shall also comply with all applicable requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder with respect to the matters set forth in this by-law. Section 5. The Chairman of the Board. --------- ------------------------- (a) The chairman of the board shall be a member of the board. The chairman shall preside at all meetings of the board of directors and the stockholders. -5- (b) The chairman of the board shall provide leadership and support to the board in fulfilling its corporate governance functions; schedule meetings of the board; and develop, with the board and management, agendas for board meetings. (c) The chairman of the board shall serve as an ex officio member (non-voting) of the Governance and Nominating Committee of the board. (d) The chairman shall carry out such other duties and responsibilities as may be assigned by the board. Section 6. The Vice Chairman. The vice chairman of the board, if there be one, shall be a member of the board and shall perform the duties of the chairman of the board in the latter's absence or disability and such other duties as shall be prescribed by the chairman or the board. MEETINGS OF THE BOARD OF DIRECTORS Section 4. Place of Meetings. The board of directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware. Section 5. Annual Meeting. The first meeting of each newly elected board of directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting to the newly elected directors shall be necessary in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time and place of such first meeting of the newly elected board of directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the board of directors, or as shall be specified in a written waiver signed by all of the directors. Section 6. Regular Meetings. Regular meetings of the board of directors may be held without notice at such time and at such place as shall from time to time be determined by the board. Section 7. Special Meetings. Special meetings of the board may be called by the chairman of the board or the president on one day' s notice to each director, either personally or by telephone, telecopy, telegram or recognized overnight courier; and special meetings shall be called by the president or secretary in like manner and on like notice on the written request of Any two or more directors, unless the board consists of only one director in which case a special meeting may be called and held by such director. Section 8. Quorum; Action of the Board. At all meetings of the board, a majority of the directors shall constitute a quorum for the transaction of business and the act of a majority of those directors present at any meeting at which there is a quorum shall be the act of the board of directors, except as may be otherwise specifically provided by statute, the certificate of incorporation, or these by-laws. If a quorum shall not be present at any meeting of the board of directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting of the time and place of the adjourned meeting if the period of any adjournment does not exceed ten days, until a quorum shall be present. -6- Section 9. Action of Directors Without a Meeting. Unless otherwise restricted by the certificate of incorporation or these by-laws, any action required or permitted to be taken at any meeting of the board of directors or of any committee thereof may be taken without a meeting, if all members of the board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the board or committee. Section 10. Telephone Conference Call. Unless otherwise restricted by the certificate of incorporation or these by-laws, members of the board of directors, or any committee designated by the board of directors, may participate in a meeting of the board of directors, or any committee, by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and such participation in a meeting shall constitute presence in person at the meeting. COMMITTEES OF THE DIRECTORS Section 11. Authorization. The board of directors may, by resolution passed by a majority of the whole board, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee; provided, however, that any such alternate member shall possess the qualifications required for service on such committee. Section 12. Powers. Any such committee, to the extent provided in the resolution of the board of directors or in these by-laws, shall have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have such power or authority in reference to amending the certificate of incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, electing any director, removing any officer or director, submitting to the stockholders any action that requires the stockholders approval, amending or repealing any resolution theretofore adopted by the board which by its terms is amendable or repealable only by the board, amending, altering or repealing any by-law of the corporation; and, unless the resolution or the certificate of incorporation expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the board of directors or as set forth in these by-laws. Section 13. Minutes of Meetings and Reports to the Board. Board. Each committee shall keep regular minutes of its meetings and report the same to the board of directors when required. COMPENSATION Section 14. Compensation of Directors. Unless otherwise restricted by the certificate of incorporation or these by-laws, the board of directors shall have the authority to fix the compensation of directors. The directors may be -7- paid their expenses, if any, of attendance at each meeting of the board of directors and may be compensated for attendance at such meeting of the board of directors or a stated salary as a director, as determined by the board, payable in cash or securities on other obligations of the corporation. Members of special or standing committees may be allowed like compensation for attending committee meetings. Directors who are full-time employees of the corporation and are compensated as such shall receive no additional compensation for serving as directors. REMOVAL Section 15. Removal of Director. Unless otherwise restricted by the certificate of incorporation or these by-laws, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of shares entitled to vote for the election of directors. ARTICLE III-A ADVISORY DIRECTORS Section 1. Advisory Directors. The Board of Directors may appoint, to serve at the pleasure of the Board, up to three (3) Advisory Directors, who, after their initial appointment, shall, except in the case of such Advisory Director's earlier death, resignation, retirement, disqualification or removal, be subject to re-appointment at the organizational meeting of the Board of Directors immediately following the Annual Stockholders' meeting. Vacancies may, but need not be filled by the Board of Directors between organizational meetings following the Annual Stockholders' meeting. Section 2. Duties. It shall be the duty of an Advisory Director to advise and provide counsel to the Board of Directors with respect to Business Services provided by the Company to the Company's network of medical practices at such times and places and in such groups and committees as may be determined from time to time by the Board of Directors, but such individuals shall not have any responsibility or be subject to any liability imposed upon a director or in any manner be deemed a director in accordance with applicable law. Section 3. Meetings. The Advisory Board of Directors shall meet as necessary; however, not less than twice a year the Advisory Directors shall meet in joint session with the Board of Directors, with the privilege of participating in all discussions but without the right to vote and shall not be counted for determining a quorum of the Board of Directors; and at least once a year, the Advisory Board of Directors are expected to hold a meeting in conjunction with their attendance at either the American Society of Reproductive Medicine Annual Meeting or a meeting of the IntegraMed Council of Physicians and Scientists. Section 4. Compensation. Advisory Directors shall not be compensated for services rendered to the Board of Directors, but shall be entitled to be paid Board Attendance Fees equivalent to the amount paid to members of the Board of Directors, plus reimbursement for reasonable out-of-pockets expenses, including, but not limited to travel expenses for attending meetings. -8- ARTICLE IV NOTICES Section 1. Form of Notice. Whenever, under the provisions of applicable statutes or of the certificate of incorporation or of these by-laws notice is required to be given to any director or stockholder, such notice shall not be construed to mean personal notice, and may be given in writing, by mail, addressed to such director or stockholder, at his address as it appears on the records of the corporation. with postage thereon prepaid, and such notice by mail shall be deemed to be given at the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telephone, telecopy, telegram or recognized overnight courier. Section 2. Waiver of Notice. Whenever any notice is required to be given under the provisions of applicable statutes or of the certificate of incorporation or of these by-laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. The attendance in person or by proxy of any stockholder at a meeting, and the attendance of any director at a meeting, shall constitute a waiver of notice by such stockholder or, as the case may be, director, unless such stockholder or director attends the meeting for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. ARTICLE V OFFICERS Section 1. Designation of Officers. The officers of the corporation shall be elected by the board of directors and shall be a president and chief executive officer, a Senior Vice President and Chief Financial Officer, vice president, secretary and treasurer. The board of directors may also elect senior vice presidents, additional vice presidents, and one or more assistant secretaries and assistant treasurers. Any number of offices may be held by the same person, unless the certificate of incorporation or these by-laws otherwise provide. Section 2. Election of Officers. The board of directors at its first meeting after each annual meeting of the stockholders shall elect or re-appoint a president, one or more senior vice presidents, one or more vice-presidents, a secretary and a treasurer. Section 3. Other Officers. The board of directors may elect such other officers and appoint such agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the board. Section 4. Salaries. The salaries of all officers and agents of the corporation shall be fixed by the board of directors or a committee of the board of directors. -9- Section 5. Term of Office. Each officer of the corporation shall hold office until such officer's successor is chosen and qualifies or until such officer's earlier resignation or removal. Any officer elected by the board of directors may be removed at any time by affirmative vote of a majority of the board of directors. Any vacancy occurring in any office of the corporation shall be filled by the board of directors. Section 6. The President and Chief Executive Officer. --------- ------------------------------------------ (a) The President shall be a member of the board and shall be the chief executive officer of the corporation. (b) .The President shall have general and active management of the business of the corporation, shall see that all orders and resolutions of the board of directors are carried into effect and shall, in the absence or disability of the chairman of the board and the vice chairman of the board, if one is designated, preside at all meetings of the stockholders and the board of directors. (c) The President shall execute bonds, mortgages and other contracts requiring a seal, under the seal of the corporation, except where required of permitted by law to be otherwise signed and executed and except where the signing and execution thereof shall be expressly delegated by the board of directors to some other officer or agent of the corporation. Section 7. Executive Vice President and Chief Financial Officer. (a) The Executive Vice President and Chief Financial Officer shall develop and implement long-term strategies and tactics that protect and enhance the corporation's assets, profits and shareholder value. (b) The Executive Vice President and Chief Financial Officer shall ensure the integrity of the Corporation's financial and information systems, treasury operations, and be a primary spokesperson for the Corporation on financial and investor relations matters. Section 8. The Vice Presidents. In the absence of the president or in the event of his inability or refusal to act, the vice president (or in the event there be more than one vice president, the vice presidents in the order designated by the directors, or in the absence of any designation, then in the order of their election) shall perform the duties of the president, and when so acting, shall have all the powers of and be subject to all the restrictions upon the president. The vice presidents shall perform such other duties and have such other powers as the board of directors or the president may from time to time prescribe. Section 9. The Secretary. The Secretary shall attend all meetings of the board of directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the board of directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors, and shall perform such other duties as may be prescribed by the board of directors, the chairman of the board or president, under whose supervision he shall be. The secretary shall have custody of the corporate seal of the corporation and the secretary, or an assistant secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such assistant -10- secretary. The board of directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature. Section 10. The Assistant Secretary. The assistant secretary, if there be one, shall, in the absence of the secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the secretary and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. Section 11. The Treasurer. The treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors. The treasurer shall disburse the funds of the corporation as may be ordered by the board of directors, taking proper vouchers for such disbursements, and shall render to the chairman of the board and the president and the board of directors, at its regular meetings, or when the board of directors so requires, an account of all his transactions as treasurer and of the financial condition of the corporation. Section 12. The Assistant Treasurer. The assistant treasurer, if there be one, shall, in the absence of the treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the treasurer and shall perform such other duties and have such other powers as the board of directors may from time to time prescribe. ARTICLE VI CERTIFICATES OF STOCK Section 1. Signatures; Payment of Consideration; Classes and Series of Stock. (a) The shares of stock of the corporation shall be represented by a certificate, unless and until the Board of Directors of the corporation adopts a resolution permitting shares to be uncertificated. Notwithstanding the adoption of any such resolution providing for uncertificated shares, every holder of stock in the corporation shall be entitled to have a certificate signed by, or in the name of the corporation by, the chairman or vice chairman of the board of directors, or the president or a vice president and the treasurer or an assistant treasurer or the secretary or an assistant secretary of the corporation, certifying the number of shares owned by him in the corporation. (b) Except as may otherwise be permitted by statute, no certificate shall be issued for any share until such share is fully paid. (c) If the corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences, relative rights and limitations of each class or series authorized to be issued, and of the authority of the board to divide the shares into classes or series and to determine and change the relative rights, preferences and liquidations of any class or series, shall be set forth in full on the face or back of the certificate which the corporation shall issue to represent such class or series of stock; provided that, except as otherwise provided by Section 202 of the -11- Delaware General Corporation Law, in lieu of the foregoing requirements, there may be set forth on the face or back of the certificate which the corporation shall issue to represent such class or series of stock, a statement that the corporation will furnish without charge to each stockholder who so requests a full statement of such designations, preferences, and relative rights and limitations. Section 2. Facsimile Signatures. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 3. Contents. Each certificate shall state on its face that the corporation is organized under the laws of the State of Delaware, the name of the person to whom issued and the number and class, and the designation of the series, if any, of the shares which such certificate represents. Section 4. Lost Certificates. The board of directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate or certificates, the board of directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 5. Transfer of Stock. In the case of certificated shares of stock, upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignation or authority to transfer, it shall be the duty of the corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books. In the case of uncertificated shares of stock, upon receipt of proper transfer instructions from the registered holder of the shares, it shall be the duty of the corporation to record such transfer upon its books. Section 6. Fixing Record Date. In order that the corporation may determine the stockholders (i) entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, or (ii) entitled to consent to corporate action in writing without a meeting, the board of directors may fix, in advance, a record date, which, with respect to the actions described in clause (i) above, shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action described therein, and with respect to the actions described in clause (ii) above, shall not be more than ten days after the date upon which the board of directors fixes the record date. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders and a new record date for the adjourned meeting shall apply to any adjournment of the meeting; provided, however, that the board of directors may fix. -12- Section 7. Registered Stockholders. The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State of Delaware. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. Subject to the provisions, if any, of the certificate of incorporation, dividends upon any class or series of the capital stock of the corporation may be declared by the board of directors at any regular or special meeting, pursuant to law. To the extent permitted by law, and subject to the provisions of the certificate of incorporation, if any, dividends may be paid in cash, in property, or in shares of capital stock. Section 2. Checks. All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the board of directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the corporation shall be December 3lst of each year unless otherwise fixed by resolution of the board of directors. Section 4. Seal. The corporate seal shall have inscribed thereon the name of the corporation, the year of its organization and the words "Corporate Seal, Delaware." The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. Section 5. Indemnification. (a) The corporation shall, to the fullest extent permitted by Section 145 of the General Corporation Law of Delaware, as that Section may be amended and supplemented from time to time, indemnify and advance expenses to any director, officer or trustee which it shall have power to indemnify under that Section against any expenses, liabilities or other matters referred to in or covered by that Section. The indemnification and advancement of expenses provided for in this Section (i) shall not be deemed exclusive of any other rights to which those indemnified may be entitled under the certificate of incorporation or any by-law, agreement or vote of stockholders or disinterested directors or otherwise, both as to action in their official capacities and as to action in another capacity while holding such office, (ii) shall continue as to a person who has ceased to be a director, officer or trustee and (iii) shall inure to the benefit of the heirs, executors and administrators of such a person. The corporation's obligation to provide indemnification and advancement of expenses under this Section shall be offset to the extent of any other source of indemnification or any otherwise applicable insurance coverage under a policy maintained by the corporation or any other person. (b) To assure indemnification under this Section of all such persons who are determined by the corporation or otherwise to be or to have been "fiduciaries" of any employee benefit plan of the corporation which may exist -13- from time to time, such Section 145 shall, for the purposes of this Section, be interpreted as follows: an "other enterprise" shall be deemed to include such an employee benefit plan, including, without limitation, any plan of the corporation which is governed by the Act of Congress entitled "Employee Retirement Income Security Act of 1974," as amended from time to time; the corporation shall be deemed to have requested a person to serve an employee benefit plan where the performance by such person of his duties to the corporation also imposes duties on, or otherwise involves services by, such person to the plan or participants or beneficiaries of the plan; excise taxes assessed on a person with respect to an employee benefit plan pursuant to such Act of Congress shall be deemed "fines"; and action taken or omitted by a person with respect to an employee benefit plan in the performance of such persons duties for a purpose reasonably believed by such person to be in the interest of the participants and beneficiaries of the plan shall be deemed to be for a purpose which is not opposed to the best interests of the corporation. ARTICLE VIII AMENDMENTS Section 1. Amendments. These by-laws may be altered, amended or repealed or new by-laws may be adopted by the stockholders or by the board of directors at any regular meeting of the stockholders or of the board of directors or at any special meeting of the stockholders or of the board of directors if notice of such alteration, amendment, repeal or adoption of new by-laws be contained in the notice of such meeting; provided that no amendment of these by-laws may be adopted which contravenes a provision of the certificate of incorporation of the corporation. -14- EX-31.1 4 exhibit311.txt INTEGRAMED AMERICA, INC. Exhibit 31.1 Certification Pursuant To Rule 13a-14(a), As Adopted Pursuant To Section 302 of the Sarbanes-Oxley Act of 2002 I, Jay Higham, certify that: 1. I have reviewed this quarterly 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)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) Designed such internal control over financial reporting, or caused such internal controla over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the liability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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; (d) 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. Date: August 6, 2008 /s/ Jay Higham ------------------------------------ Jay Higham President and Chief Executive Officer (Principal Executive Officer) EX-31.2 5 exhibit312.txt INTEGRAMED AMERICA, INC. Exhibit 31.2 Certification Pursuant To Rule 13a-14(a), 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 quarterly 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)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) Designed such internal control over financial reporting, or caused such internal controla over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the liability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) 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; (d) 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. Date: August 6, 2008 /s/ John W. Hlywak, Jr ---------------------------------------------------- John W. Hlywak, Jr Executive Vice President and Chief Financial Officer (Principal Financial Officer and Chief Accounting Officer) EX-32.1 6 exhibit321.txt INTEGRAMED AMERICA, INC. EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of IntegraMed America, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2008 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jay Higham, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 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 material respects, the financial condition and results of operations of the Company. /s/Jay Higham ----------------------------- Jay Higham Chief Executive Officer August 6, 2008 EX-32.2 7 exhibit322.txt INTEGRAMED AMERICA, INC. EXHIBIT 32.2 CERTIFICATION PURSUANT TO 18 U.S.C. ss. 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In connection with the Quarterly Report of IntegraMed America, Inc. (the "Company") on Form 10-Q for the period ended June 30, 2008 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. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge: 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 material respects, the financial condition and results of operations of the Company. /s/John W. Hlywak, Jr. ----------------------------------- John W. Hlywak, Jr. Chief Financial Officer August 6, 2008 -----END PRIVACY-ENHANCED MESSAGE-----