NORTH HOLLYWOOD, Calif., May 4 /PRNewswire-FirstCall/ -- IPC The Hospitalist Company, Inc. (Nasdaq: IPCM), a leading national hospitalist physician group practice, today announced financial results for the first quarter ended March 31, 2009.
First Quarter 2009 Highlights (comparisons are to first quarter 2008):
Adam D. Singer, M.D., Chief Executive Officer of IPC The Hospitalist Company, stated, "Our record results for the first quarter of 2009 reflect IPC's continued ability to generate strong revenue growth and expand operating margin. The first quarter revenue growth of 26% was driven by increased penetration of same-market areas, as well as the contribution from IPC's entry into its newest market in Southeast Florida. As we grow our revenue base, we have a significant opportunity to leverage our general and administrative costs, as evidenced by the 90 basis point improvement in our operating margin. We also continued to strengthen our balance sheet by increasing our cash flow and reducing our days sales outstanding, which resulted in an increase in our cash balance."
Dr. Singer added, "In line with our growth strategy, we are aggressively continuing to recruit new physicians to add to our existing practices. In the first quarter, we also completed two in-market acquisitions in Phoenix, which strengthened our foothold in one of our largest markets. Our acquisition pipeline remains robust in this highly fragmented industry, and we continue to evaluate opportunities across the hospitalist sector. We remain confident that we can continue to grow and penetrate current and new markets through this combination of organic growth and acquisitions. With less than 5% of our encounters coming from elective in-patient stays and uninsured patients remaining stable at approximately 7% of our encounters, we believe we are very well positioned in this challenging economic environment."
First Quarter 2009
IPC's first quarter 2009 patient encounters rose 18% to 810,000, compared to 684,000 in the same period last year. Net revenue for the first quarter was $76.1 million, an increase of $15.5 million, or 25.6%, from $60.6 million for the prior year quarter. Of this $15.5 million increase, $11.8 million, or 76.1%, was attributable to same-market area growth and $3.7 million was attributable to revenue generated from a new market acquisition, which was completed in the third quarter of 2008. The change in same-market area net revenue was the result of an 11.9% increase in patient encounters, a 5.9% increase in patient revenue per encounter and an increase in hospital contract revenue. The increase in patient revenue per encounter was partially due to an increase in Medicare reimbursement rates for the billing codes applicable to the services performed by the Company's hospitalists, as well as improvements in billing processes and collections.
Physician practice salaries, benefits and other expenses for the three months ended March 31, 2009 were $55.5 million, or 72.9%, of net revenue compared to $43.9 million, or 72.6%, of net revenue for the three months ended March 31, 2008. Physician costs as a percentage of net revenue increased slightly as a result of the costs associated with one hospital contract being operated at breakeven, as it is being staffed with locum tenens and other part-time providers at the hospital's request while IPC recruits employed staff. Excluding this contract, physician costs as a percentage of net revenue for the current quarter were at the same level as the prior year quarter.
General and administrative expenses for the first quarter of 2009 were $12.4 million, compared to $10.7 million for the first quarter of 2008. General and administrative expenses as a percentage of net revenue declined to 16.4% for the first quarter of 2009, compared to 17.7% for the first quarter of 2008, as the Company continues to leverage these costs over a larger revenue base as it grows its existing practices and continues to acquire new practices.
Income from operations for the first quarter of 2009 increased 39.4% to $7.6 million, compared to $5.4 million for the first quarter of 2008. The Company's operating margin rose to 9.9% for the first quarter of 2009, compared to 9.0% for the first quarter of 2008. The increase in operating margin was primarily the result of the reduction in general and administrative expenses as a percentage of net revenue.
The effective tax rate for the three months ended March 31, 2009 was 40.0%, compared to 42.0% for the three months ended March 31, 2008. The decrease in the effective tax rate reflected a new enterprise zone tax credit recorded for the first time in the fourth quarter of 2008. The Company expects its effective tax rate to remain at 40% for the remainder of 2009.
First quarter 2009 net income increased by 50% to $4.5 million, or $0.28 per diluted share, compared to $3.0 million, or $0.21 per pro-forma diluted share, for the first quarter of 2008.
Cash flow from operations for the first quarter of 2009 was $10.7 million, compared to $2.6 million for the same quarter of 2008. Days sales outstanding (DSO) decreased to 55 DSO at the end of the quarter, compared to 60 DSO as of December 31, 2008, as the Company continued to improve its billing processes and collections. During the quarter, the Company expended $4.8 million for physician practice acquisitions and earn-out payments attributable to practices acquired in 2007 and 2008.
For the full year 2009, the Company continues to expect revenue to be in the range of $300 million to $305 million and earnings per diluted share to be in the range of $1.01 to $1.11. The Company has provided this outlook based on the following assumptions: (i) an estimated 4.6% increase in the weighted average reimbursement rates for services provided to Medicare patients; (ii) continued growth in same-market areas whether from new hires or in-market acquisitions; (iii) a 40% effective tax rate; and (iv) 16.3 million weighted average diluted shares outstanding for the year. Not included in the assumptions are (i) new market acquisitions; (ii) increased general and administrative expenses as a result of the requirement of FAS Statement 141(R) to expense external costs associated with acquisitions that close subsequent to December 31, 2008; and (iii) gains or losses related to changes in estimates of earn-outs related to acquisitions that close subsequent to December 31, 2008 as required by FAS Statement 141(R).
Conference Call Information
IPC The Hospitalist Company will host an investor conference call to review the quarterly results at 5:00 p.m. ET (2:00 p.m. PT) today. To participate in the conference call, please dial 877-879-6184 (USA) or 719-325-4789 (International). In addition, a dial-up replay of the conference call will be available beginning May 4, 2009 at 8:00 p.m. ET (5:00 p.m. PT) and ending on May 18, 2009. The replay telephone number is 888-203-1112 (USA) or 719-457-0820 (International) Replay Passcode: 9468818. A live webcast of the call will also be available from the Investor Relations section on the corporate website at http://www.hospitalist.com. A webcast replay can be accessed on the corporate website beginning May 4, 2009 at approximately 8:00 p.m. ET (5:00 p.m. PT) and will remain available until May 18, 2009 at 11:59 p.m.
About IPC The Hospitalist Company
IPC The Hospitalist Company, Inc. (Nasdaq: IPCM) is a leading national hospitalist physician group practice 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 may include, but are not limited to, those statements set forth under the section titled "Guidance" regarding projected operating results, revenues, earnings, 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 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. Important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by any forward-looking statements are described in IPC's most recent Annual Report on Form 10-K, including the section titled "Risk Factors" and actual results could differ materially from those anticipated in forward-looking statements.
In particular the following risks and uncertainties may have such an impact:
IPC undertakes no obligation following the date of this press release to update or revise any such statements or projections whether as a result of new information, future events, or otherwise.
IPC The Hospitalist Company, Inc. Consolidated Balance Sheets (in thousands, except for share data) March 31, 2009 December (unaudited) 31, 2008 Assets Current assets: Cash and cash equivalents $42,379 $37,394 Accounts receivable, net 46,035 44,474 Prepaid expenses and other current assets 5,117 8,081 ----- ----- Total current assets 93,531 89,949 Furniture and equipment, net 2,412 2,452 Goodwill 70,752 63,893 Other intangible assets, net 2,758 2,905 Deferred tax assets, net 3,492 3,492 ----- ----- Total assets $172,945 $162,691 ======== ======== Liabilities and Stockholders' Equity Current liabilities: Accounts payable and accrued liabilities $5,179 $4,664 Accrued compensation 14,317 11,232 Payables for practice acquisitions 4,616 2,476 Medical malpractice and self- insurance reserves, current portion 351 539 Deferred tax liabilities 481 481 Short-term debt and current portion of capital leases 3,360 3,471 ----- ----- Total current liabilities 28,304 22,863 Long-term debt and capital leases, less current portion 4,570 5,368 Medical malpractice and self-insurance reserves, less current portion 11,580 11,220 Other long-term liabilities 293 293 --- --- Total liabilities 44,747 39,744 Stockholders' equity: Preferred stock, $0.001 par value, 15,000,000 shares authorized, none issued - - Common stock, $0.001 par value, 50,000,000 shares authorized, 16,091,345 and 16,068,835 shares issued and outstanding at March 31, 2009 and December 31, 2008, respectively 16 16 Additional paid-in capital 122,759 122,024 Retained earnings 5,423 907 ----- --- Total stockholders' equity 128,198 122,947 ------- ------- Total liabilities and stockholders' equity $172,945 $162,691 ======== ======== IPC The Hospitalist Company, Inc. Consolidated Statements of Income (dollars in thousands, except for per share data) (unaudited) Three Months Ended March 31, ---------------- 2009 2008 ---- ---- Net revenue $76,057 $60,559 Operating expenses: Cost of services-physician practice salaries, benefits and other 55,461 43,943 General and administrative 12,441 10,732 Depreciation and amortization 588 457 --- --- Total operating expenses 68,490 55,132 ------ ------ Income from operations 7,567 5,427 Investment income 41 164 Interest expense (79) (385) --- ---- Income before income taxes 7,529 5,206 Income tax provision 3,012 2,186 ----- ----- Net income 4,517 3,020 Income allocable to preferred stockholders - (696) --- ---- Net income attributable to common stockholders $4,517 $2,324 ====== ====== Per share data: Net income per share attributable to common stockholders-historical: Price per share: Basic $0.28 $0.20 ===== ===== Diluted $0.28 $0.20 ===== ===== Weighted average shares: Basic 16,089,357 11,434,588 ========== ========== Diluted 16,258,950 11,831,936 ========== ========== Net income per share attributable to common stockholders-pro forma (1): Basic N/A $0.22 ===== ===== Diluted N/A $0.21 ===== ===== Weighted average shares Basic N/A 13,975,526 ===== ========== Diluted N/A 14,212,207 ===== ========== (1) Pro forma per share information assumes conversion of our convertible preferred stock and associated warrants at the beginning of 2008 based on the terms of the warrants and convertible preferred stock. IPC The Hospitalist Company, Inc. Consolidated Statements of Cash Flows (dollars in thousands) (unaudited) Three Months Ended March 31, ---------------- 2009 2008 Operating activities Net income $4,517 $3,020 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 588 457 Stock-based compensation expense 448 107 Changes in assets and liabilities: Accounts receivable (1,561) (3,327) Prepaid expenses and other current assets 2,964 4,744 Accounts payable 513 (1,097) Accrued compensation 3,085 (1,984) Medical malpractice and self- insurance reserves 172 729 --- --- Net cash provided by operating activities 10,726 2,649 ------ ----- Investing activities Acquisitions of physician practices (4,792) (3,452) Purchase of furniture and equipment (327) (495) ---- ---- Net cash used in investing activities (5,119) (3,947) ------ ------ Financing activities Repayments of long-term debt and capital leases, net (909) (12,382) Net proceeds from issuance of common and preferred stock 270 46,131 Excess tax benefits from stock-based compensation 17 74 -- -- Net cash (used in) provided by financing activities (622) 33,823 ---- ------ Net increase in cash and cash equivalents 4,985 32,525 Cash and cash equivalents, beginning of period 37,394 6,976 ------ ----- Cash and cash equivalents, end of period $42,379 $39,501 ======= ======= IPC The Hospitalist Company, Inc. Operating Data Number of Patient Encounter Data (unaudited): The following is a summary of the quarterly patient encounters for the five quarters ended March 31, 2009: Quarter Ended: --------------- Mar 31, Jun 30, Sep 30, Dec 31, Mar 31, 2008 2008 2008 2008 2009 ---- ---- ---- ---- ---- Patient encounters 684,000 660,000 692,000 754,000 810,000 ======= ======= ======= ======= =======
Contacts: Amy Glynn/Nick Laudico Devra Shapiro The Ruth Group IPC The Hospitalist Company, Inc. (646) 536-7023/7030 (818) 766-3502 firstname.lastname@example.org email@example.com
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