March 20, 2008

IPC The Hospitalist Company Reports Fourth Quarter and Full Year 2007 Results

NORTH HOLLYWOOD, Calif., March 20, 2008 /PRNewswire-FirstCall via COMTEX News Network/ -- IPC The Hospitalist Company, Inc. (Nasdaq: IPCM), a leading provider of hospitalist services, today announced financial results for the fourth quarter and full year ended December 31, 2007.

    Fourth Quarter 2007 Highlights:
    -- Net revenue increased 31% year-over-year to $52.6 million, largely
       driven by same-market area revenue growth of 20%
    -- Income from operations rose 207% year-over-year to $4.1 million, as
       operating margin increased to 8%
    -- Net income increased 94% year-over-year to $2.8 million, or $0.24 per
       pro-forma fully diluted share
    -- Ended the year with 546 affiliated hospitalists


Adam D. Singer, M.D., Chief Executive Officer, stated, "We are pleased to report record operating results for the full year and fourth quarter of 2007. The results continue our 10-year track record of year-over-year growth in revenue, patient encounters and our number of affiliated hospitalists. In 2007, we acquired nine hospitalist physician practices, of which two represented new market areas for the Company."

Dr. Singer added, "We became a publicly traded company in January 2008 following our successful initial public offering. As a leader in providing hospitalist services, we are well-positioned to continue to expand our market presence through organic growth initiatives and acquisitions."

Fourth Quarter 2007

IPC's fourth quarter 2007 total patient encounters rose 29% to 594,000, compared to 460,000 in the same period last year. IPC reported fourth quarter 2007 net revenue of $52.6 million, a 31% increase from $40.2 million for the fourth quarter of 2006. Of the increase in net revenue, 62% was attributed to same-market areas. Fourth quarter 2007 same-market area net revenue grew 20% and same-market area patient encounters rose 18%. The increase in same-market net revenue was primarily the result of higher physician productivity for existing hospitalists and the addition of new hospitalists either hired or added from in-market acquisitions, together with an increase in revenue per encounter.

Physician practice salaries and other expenses for the fourth quarter 2007 were $36.9 million, compared to $29.5 million in the fourth quarter of 2006. The physician expenses as a percentage of net revenue declined to 70% in the fourth quarter of 2007 from 73% in the fourth quarter of 2006 due to higher physician productivity and increased revenue per encounter. Also, the fourth quarter included a reduction of $0.8 million in claims and professional liability reserves as the final 2007 year end actuarial loss projection was less than the interim actuarial loss projections for the year due to favorable trends in the ratio of claims to the number of encounters and improvements in the estimates of the ultimate costs per claim.

General and administrative expenses for the fourth quarter of 2007 were $11.3 million, compared to $9.1 million for the fourth quarter of 2006. The increase was attributed to increased salaries, benefits, corporate and regional incentive compensation, technology costs and increased travel to support the continuing growth of the Company's operations and acquisitions. In addition, the Company incurred increased expenses as it prepared to become a public company. However as a percentage of revenue, general and administrative expenses decreased to 21% for the fourth quarter of 2007, compared to 23% for the fourth quarter of 2006.

Income from operations for the fourth quarter of 2007 increased 207% to $4.1 million, compared to $1.3 million for the fourth quarter of 2006, which is net of depreciation and amortization of $0.4 million and $0.3 million, for 2007 and 2006, respectively. Operating margin rose to 8% for the fourth quarter of 2007, compared to 3% for the fourth quarter of 2006. The increase in operating margin was the result of a decrease in physician costs, and general and administrative expenses as a percentage of net revenue.

Fourth quarter 2007 net income was $2.8 million, or $0.24 per pro-forma fully-diluted share, compared to $1.5 million, or $0.13 per pro-forma fully diluted share, for the fourth quarter of 2006.

Full Year 2007

The Company had over 2.1 million patient encounters in 2007, an increase of 23% compared to 2006, and ended the year with 546 hospitalists, providing services in over 300 facilities. IPC reported full year 2007 net revenue of $190.0 million, a 28% increase from $148.1 million for 2006. Of the full year 2007 net revenue growth, 68% was attributable to same-market areas. Full year 2007 same-market area net revenue grew 20% and same-market area patient encounters rose 15% as compared with full year 2006. The increase in same- market net revenue was primarily the result of higher physician productivity for existing hospitalists and the addition of new hospitalists either hired or added from in-market acquisitions, together with increased revenue per encounter primarily from an increase in Medicare reimbursement rates for the billing codes applicable to our services effective January 1, 2007.

Income from operations for the full year 2007 increased 248% to $13.8 million, compared to $4.0 million for 2006, which is net of depreciation and amortization of $1.4 million and $1.1 million, for 2007 and 2006, respectively. Operating margin rose to 7% for full year 2007, compared to 3% for 2006.

The 2007 net loss was $0.9 million, or $0.08 per pro-forma fully diluted share, compared to net income of $1.8 million, or $0.16 per pro-forma fully diluted share, for 2006. Full year 2007 and 2006 results included the loss on fair value of preferred stock warrant liabilities of $8.8 million and $0.7 million, respectively. We do not expect to incur further losses with respect to our remaining outstanding warrants.

During 2007, IPC generated cash flow from operations of $1.4 million. The Company used $15 million to acquire nine hospitalist physician practices and make earn-out payments attributable to practices acquired in 2006.

Recent Corporate Developments

On January 30, 2008, IPC completed its initial public offering for the sale of 5,905,000 shares of its common stock at $16.00 per share for net proceeds of $84.9 million after deducting underwriting discounts and commissions and other offering expenses. Excluding shares offered by selling stockholders, net proceeds to the Company were approximately $46.1 million.

On January 7, 2008, IPC acquired Innovative Physician Services, LLC (IPS), a New England based practice group with 38 hospitalists.

Guidance

The Company expects full year 2008 revenue to be in the range of $239 million to $245 million. The Company anticipates full year 2008 earnings per pro-forma diluted share to be in the range of $0.87 to $0.94. The Company has provided this outlook based on the following assumptions: (i) no change in physician reimbursement rates for services provided to Medicare patients; (ii) no additional new market acquisitions; (iii) continued growth in same-market areas whether from new hires or in-market acquisitions; (iv) increased public company costs impacting general and administrative expenses; (v) conservative investment of IPO proceeds; and (vi) 14.9 million weighted average pro-forma fully diluted shares outstanding for the year and conversion of all preferred stock to common as of the date of the IPO.

Conference Call

IPC The Hospitalist Company will host an investor conference call to discuss the quarterly results at 9 a.m. (EDT) today. To participate in the conference call, please dial 877-397-0235 (USA) or 719-325-4922 (International). The conference call Webcast may be accessed from the Company's Website, www.hospitalist.com. A telephone replay of the conference call will be available from 12:00 p.m. (EDT) today through April 3, 2008, by dialing 888-203-1112, access code 2179947. The replay will also be available at www.hospitalist.com.

About IPC The Hospitalist Company

IPC The Hospitalist Company, Inc. (Nasdaq: IPCM) is a leading physician group practice company focused on the delivery of hospitalist medicine services. IPC's physicians and affiliated providers manage the care of hospitalized patients in coordination with primary care physicians and specialists. The Company provides its hospitalists with the comprehensive training, information technology, and management support systems necessary to improve the quality and reduce the cost of inpatient care in the facilities it serves. For more information, visit the IPC website at www.hospitalist.com .

Safe Harbor Statement

Certain statements and information in this press release may be deemed to be "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, but are not limited to, those statements set forth under the section entitled "Guidance" regarding projected operating results, revenues, earnings, margins, reimbursement rates, and IPC's growth opportunities and strategy. Forward-looking statements are often characterized by terminology such as "believe", "hope", "may", "anticipate", "should", "intend", "plan", "will", "expect", "estimate", "project", "positioned", "strategy" and similar expressions. Any forward-looking statements are not guarantees of our future performance and are subject to risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by any forward-looking statements. IPC's projections, while presented with numerical specificity, are necessarily based on a variety of estimates and assumptions which, though considered reasonable by the Company, may not be realized and are inherently subject to significant business, economic, competitive, industry, regulatory, market and financial uncertainties and contingencies, many of which are and will be beyond IPC's control. IPC cautions that no representations can be made or are made as to the accuracy of the projections or to IPC's ability to achieve the projected results. The following risks and uncertainties, among others, may have such an impact:

    -- potential penalties or changes to our operations if we fail to comply
       with complex and intensive government regulation of our industry;
    -- the failure of our affiliated hospitalists to appropriately document
       services they provide;
    -- the adequacy of our insurance coverage and insurance reserves;
    -- our ability to recruit and retain qualified physicians and other
       healthcare professionals, and enforce the non-compete agreements with
       our affiliated hospitalists;
    -- our ability to successfully integrate new acquisitions;
    -- the effect of changes in rates or methods of third-party reimbursement;
    -- our ability to successfully restructure our operations to comply with
       future changes in government regulation of our industry;
    -- the high level of competition in our industry;
    -- our ability to maintain our complex information management systems;
    -- the limited experience of our management team in public company
       matters;
    -- the loss of services of one or more members of our senior management
       team; and
    -- those other risks and uncertainties contained in the Company's
       Registration Statement filed with the Securities and Exchange
       Commission on Form S-1 under the heading "Risk Factors."


IPC undertakes no obligation following the date of this presentation to update or revise its forward-looking statements or to update the reasons actual results could differ materially from those anticipated in forward- looking statements. We caution you not to place undue reliance upon any such forward-looking statements, which speak only as of today's date.


    Contacts:                            Stephanie Carrington/Jared Hoffman
    Devra Shapiro                        The Ruth Group
    IPC The Hospitalist Company, Inc.    (646) 536-7017/7013
    (818) 766-3502                       scarrington@theruthgroup.com
                                         jhoffman@theruthgroup.com



                       IPC The Hospitalist Company, Inc.
                          Consolidated Balance Sheets
               (dollars in thousands, except for per share data)

                                                          December 31
                                                     2007              2006
                                                 (Unaudited)

    Assets
    Current assets:
    Cash and cash equivalents                       $6,976            $5,946
    Accounts receivable, net                        39,494            31,518
    Prepaid expenses and other current assets       10,203             7,029
    Deferred tax assets, net                           -               1,308
    Total current assets                            56,673            45,801

    Restricted cash                                    -               2,500
    Furniture and equipment, net                     2,189             2,307
    Goodwill                                        34,754            21,970
    Other intangible assets, net                       808               516
    Deferred tax assets, net                         2,952             2,935
    Total assets                                   $97,376           $76,029

    Liabilities
    Current liabilities:
    Accounts payable                                $4,959            $7,176
    Accrued compensation                            12,382             8,223
    Medical malpractice and self-insurance
     reserves                                          951               653
    Accrued litigation loss and other claims           -               3,598
    Deferred tax liability                              45               -
    Short-term debt and current portion
     of capital leases                               7,029             4,410
    Total current liabilities                       25,366            24,060
    Long-term debt and capital leases,
     less current portion                           19,793            10,041
    Medical malpractice and self-insurance
     reserves                                        8,900             7,352
    Other long-term liabilities                        300               -
    Preferred stock warrant liabilities                -               2,588
    Total liabilities                               54,359            44,041

    Redeemable convertible preferred stock             -              43,002

    Stockholders' equity (deficit):
    Convertible preferred stock, Series
     A, B, C and D, $.001 par value, 64,905,826
     shares authorized, 57,761,235 shares
     issued and outstanding in 2007; liquidation
     preference of $43,230,532 in 2007                  57               -
    Preferred stock, $.001 par value,
     294,174 shares authorized, none issued            -                 -
    Common stock, $.001 par value,
     87,300,000 shares authorized, 1,244,257
     and 1,878,382 shares issued and outstanding
     in 2006 and 2007, respectively                      2                 1
    Additional paid-in capital                      55,605                27
    Accumulated deficit                            (12,647)          (11,042)
    Total stockholders' equity (deficit)            43,017           (11,014)

    Total liabilities, redeemable
     preferred stock and stockholders'
     equity (deficit)                             $97,376           $76,029



                        IPC The Hospitalist Company, Inc.
                      Consolidated Statements of Operations
                (dollars in thousands, except for per share data)

                                          Quarters Ended      Years Ended
                                           December 31,       December 31,
                                          2007     2006      2007      2006
                                           (Unaudited)    (Unaudited)

    Net revenue                          $52,577  $40,169  $190,002  $148,098

    Operating expenses:
    Cost of services-physician practice
     salaries, benefits and other         36,870   29,500   136,960   109,332
    General and administrative            11,262    9,084    37,874    32,330
    Litigation loss and other claims         -         (5)      -       1,377
    Depreciation and amortization            393      271     1,396     1,098
    Total operating expenses              48,525   38,850   176,230   144,137

    Income from operations                 4,052    1,319    13,772     3,961
    Net interest expense                    (382)    (331)   (1,294)   (1,080)
    Loss on fair value of preferred
     stock warrant liabilities               -        (31)   (8,781)     (690)
    Income before income taxes             3,670      957     3,697     2,191
    Income tax provision (benefit)           859     (495)    4,564       413
    Net income (loss)                      2,811    1,452      (867)    1,778
    Accretion of redeemable convertible
     preferred stock                         (23)     (68)     (229)     (271)
    Income allocable to preferred
     stockholders                         (2,457)  (1,321)             (1,507)
    Net income (loss) attributable to
     common stockholders                    $331      $63   $(1,096)  $   -

    Per share data:
    Net income per share attributable to
     common stockholders-historical:
    Basic                                  $0.18    $0.05    $(0.64)    $0.00

    Diluted                                $0.12    $0.03    $(0.64)    $0.00

    Net income per share attributable to
     common stockholders-pro forma: (1)
    Basic                                  $0.24    $0.14    $(0.08)    $0.17

    Diluted                                $0.24    $0.13    $(0.08)    $0.16

    (1) Pro forma per share information assumes conversion of our convertible
        preferred stock and associated warrants at the beginning of each
        respective period based on the terms of the warrants and convertible
        preferred stock.



                       IPC The Hospitalist Company, Inc.
                     Consolidated Statements of Cash Flows
                             (dollars in thousands)

                                                    Years Ended December 31
                                                     2007              2006
                                                 (Unaudited)

    Operating activities
    Net income (loss)                                $(867)           $1,778
    Adjustments to reconcile net income
     (loss) to net cash provided by (used
     in) operating activities:
    Depreciation and amortization                    1,396             1,098
    Stock-based compensation expense                    91                26
    Revaluation of preferred stock
     warrant liabilities                             8,781               690
    Deferred taxes                                   1,336                33
    Changes in assets and liabilities:
    Accounts receivable                             (7,976)          (10,667)
    Prepaid expenses and other current assets       (3,382)           (3,243)
    Accounts payable                                  (344)            1,211
    Accrued compensation                             4,159               912
    Medical malpractice and self-
     insurance reserves                              1,846             2,821
    Accrued litigation loss and other claims        (3,598)              573
    Net cash provided by (used in)
     operating activities                            1,442            (4,768)

    Investing activities
    Acquisitions of physician practices            (15,303)           (3,257)
    Sale of short-term investments, net                -               5,251
    Purchase of furniture and equipment               (926)           (1,240)
    Cash restriction by lender                       2,500               -
    Net cash provided by (used in)
     investing activities                          (13,729)              754

    Financing activities
    Proceeds from long-term debt and
     capital leases, net                            12,371             2,992
    Net proceeds from issuance of common
     and preferred stock                               491                51
    Excess tax benefits from stock-based
     compensation                                      455               196
    Net cash provided by financing activities       13,317             3,239

    Net increase (decrease) in cash and
     cash equivalents                                1,030              (775)
    Cash and cash equivalents, beginning of year     5,946             6,721
    Cash and cash equivalents, end of year          $6,976            $5,946



                      IPC The Hospitalist Company, Inc.
                                Operating Data

                Number of Patient Encounter Data (unaudited):

    The following is a summary of the quarterly and annual number of patient
    encounters for the years ended December 31, 2007 and 2006:

                                     Quarter Ended:             Year Ended
                         Mar 31,   Jun 30,   Sep 30,   Dec 31,    Dec 31,
                          2007      2007      2007      2007       2007

    Patient encounters   504,000   511,000   544,000   594,000   2,153,000


                                     Quarter Ended:             Year Ended
                         Mar 31,   Jun 30,   Sep 30,   Dec 31,    Dec 31,
                          2006      2006      2006      2006       2006

    Patient encounters   437,000   422,000   428,000   460,000   1,747,000


SOURCE IPC The Hospitalist Company, Inc.

http://www.hospitalist.com

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