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Article by DailyStocks_admin    (01-14-09 07:31 AM)

Filed with the SEC from Jan 01 to Jan 07:

IntegraMed America (INMD)
Shareholders including BlueLine Partners reported ownership of 735,734 shares (8.5%), after buying 349,304 from Dec. 17 to Dec. 23, at prices ranging from $6 to $6.36 a share. Blueline partners, which said that the purchase was made for investment purposes, also said that it has had conversations with IntegraMed regarding "shareholder-value issues," and expects discussions with management to continue.

BUSINESS OVERVIEW

Overview -

IntegraMed America is a specialty healthcare services company that was incorporated in Delaware on June 4, 1985 and celebrated its fifteenth year as a publicly traded company in 2007. The Company is the leading operator of fertility centers and vein clinics in the United States and provides treatment financing programs for patients of these facilities whose insurance does not cover the particular procedure. The Company is organized into three operating divisions and a Corporate office that provides shared services.

The Fertility Centers Division is a provider network comprised of nine contracted fertility centers in our Partner program, located in major markets across the United States. These nine contracted centers are among the largest in the United States accounting for approximately 13% of total U.S. IVF procedures performed. We offer products and services to these providers designed to support the fertility center's growth. All fertility Partners also have full access to our Consumer Services offerings (described below). The division also supports a Council of Physicians and Scientists, for fertility providers as well as ARTIC, a captive insurance company which provides malpractice insurance to member physicians.

The Consumer Services Division offers products directly to fertility patients. The division's Shared Risk Refund(R) and financing programs are designed to make the treatment process easier and more affordable for patients. The division maintains a contracted network of 20 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 those serviced by our Fertility Center locations. These 20 contracted fertility centers also represent among the largest centers in the U.S. collectively providing an additional 9% of total U.S. IVF procedures. The division also offers fertility medications directly to patients via a competitively priced mail-order pharmacy.

Our Vein Clinics Division was formed on August 8, 2007, with the purchase of Vein Clinics of America, Inc. The Vein Clinic division provides business and management services to a network of 29(as of March, 2008)clinics located in 11 states which specialize in the treatment of vein disease and disorders.

The Shared Services group within the Corporate office 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 and sales support; internet marketing and website support and integrated information systems.

We also maintain a website at www.integramed.com to provide information to the general public and our shareholders on our products, resources and services, along with general information on IntegraMed and its management, financial results and press releases. Copies of our most recent Annual Report on Form 10-K, our Quarterly Reports on Form 10-Q or our other reports filed with the Securities and Exchange Commission, or SEC, can be obtained, free of charge as soon as reasonably practicable after such material is electronically filed with, or furnished to the SEC, from our Investor Relations Department by calling 914-253-8000, by an e-mail request from our Investor Information web page at www.integramed.com, or through the SEC's website by clicking the direct link from our website at www.integramed.com or directly from the SEC's website at www.sec.gov. Our website and the information contained therein or connected thereto are not intended to be incorporated into this Annual Report on Form 10-K.

Our Industries of Focus --

Reproductive Medicine

Reproductive medicine encompasses the medical discipline that focuses on male and female reproductive systems and processes. There are many reasons why couples have difficulty conceiving, and accurate identification of a specific cause of infertility can be time consuming, expensive and requires access to specialized diagnostic and treatment services. Reproductive endocrinologists are specialized physicians who perform these more sophisticated medical and surgical fertility diagnoses and treatments. Reproductive endocrinologists generally have completed a minimum of four years of residency training in obstetrics and gynecology and have at least two years of additional training in an approved subspecialty fellowship program. The fertility services market is highly fragmented among providers in each major market and nationally.

Conventional fertility services include diagnostic tests performed on both the female and male. Depending on the results of the diagnostic tests performed, treatment options may include, among others, fertility drug therapy, artificial insemination and fertility surgeries to correct anatomical problems. According to recent CDC figures, approximately 10% of women of reproductive age, or more than 6 million women, have an infertility-related medical appointment annually. Procedures that require gametes (sperm and eggs) to be handled in vitro (outside the body) are classified as Assisted Reproductive Technology, or "ART", services. Current types of ART services include in vitro fertilization, or IVF, frozen embryo transfers, donor egg programs as well as other more specialized treatments. IVF represents the most frequently employed form of ART with current techniques used in connection with IVF services including intracytoplasmic sperm injection, or ICSI, assisted hatching, cryopreservation of embryos, pre-implantation genetic diagnosis (PGD), and blastocyst culture and transfer.

According to publications from the Harvard Business School Press, the annual expenditures relating to fertility services are approximately $3 billion.

While various demographic trends have dampened the growth in demand for advanced reproductive medicine and treatment recently, we believe the market will continue to grow in the future for the following reasons:

o The quality of treatment is improving, increasing pregnancy success rates;
o Improvements in embryo culture media and implantation rates are leading to the capability of reducing high order multiple pregnancies - one of the greatest risk factors in this industry;
o With improving pregnancy rates, the cost of treatment is decreasing thereby making these services more affordable;
o Public policy initiatives including legislative mandates for insurance coverage are producing a more favorable reimbursement climate;
o Demand for reproductive medical services is increasing through greater public awareness and acceptance of these treatments.

While the overall market growth has slowed recently, IntegraMed fertility centers have experienced faster growth than their competitors due to economies of scale and the ability to leverage the Company's infrastructure. In addition, numerous market conditions in this industry produce business opportunities for us, including:

o The high level of specialized skills and technology required for comprehensive patient treatment;
o The capital-intensive nature of acquiring and maintaining state-of-the-art medical equipment, laboratory and clinical facilities;
o The need to develop and maintain specialized management information systems to meet the increasing demands of technological advances, patient monitoring and third-party payers;
o The high cost of treatment with inadequate insurance benefits in most markets;
o The need for seven-days-a-week service to respond to patient needs and to optimize the outcomes of patient treatments;
o Increasing competition among medical providers specializing in fertility treatment;
o The high cost of pharmaceutical products requiring patient education and support.

Overview of our Business Strategy for the Fertility Centers Division

(i) We Plan to Enter into Additional Fertility Partner Contracts

The nine fertility centers participating in our Partner program are entitled to our full suite of products and services. Recruitment into our Partner program has traditionally been focused on fertility centers currently participating as Affiliates in our provider network. As Affiliates, practices have become familiar with the offerings we provide and our commitment to customer service; also, we have had a chance to assess a practice's commitment to growth and utilization of our services. Partner practices are also recruited from outside the pool of existing Affiliates; to be considered, non-Affiliate candidates need to meet a stringent set of criteria. As of December 31, 2007, we had Partner contracts with nine leading fertility centers, in eleven major markets, which in turn employ and/or contract with individual physicians.

When establishing a Partner contract, we typically acquire the assets of a fertility center, enter into a long-term comprehensive service agreement with the center and assume most administrative and financial functions of the center. In addition, we also typically require that the fertility center enter into long-term employment agreements containing non-compete provisions with all key physicians and that each physician shareholder of the medical practice enter into a personal responsibility agreement with us. Typically, the fertility center contracting with us is a professional corporation in which the key physicians are the shareholders.

Partner contracts provide that all patient medical care is to be provided by the physicians and that we are responsible for providing defined business services to the center. We provide the equipment, facilities and support necessary to operate the center, and employ substantially all non-physician personnel. Under the agreements, we may also advance funds to the fertility center to provide new services, utilize new technologies, fund projects, provide working capital or fund mergers with other physicians or physician groups.

Partner contracts generally obligate us to pay a fixed sum for the exclusive right to service the fertility center. These agreements are typically for terms of 10 to 25 years and may contain early termination clauses coupled with fertility center obligations on termination. Generally, no shareholder of contracted fertility centers may assign his/her interest in the fertility center without IntegraMed's written consent.

Under all nine current Partner agreements, we receive as compensation for our services a three-part fee comprised of: (i) a tiered percentage of net revenues generally between 3% and 6%; (ii) reimbursed costs of services (costs incurred in providing services to a fertility center and any costs paid on behalf of the fertility center); and (iii) either a fixed amount or a percentage of the center's earnings, which currently ranges from 10% to 20%, but may be subject to limits.

(ii) We Plan to Increase Revenues and Profits at Contracted Partners

Given our fee structure as described above, we have a significant incentive to assist in the profitable growth of each Partner. To achieve this objective we:

o Help them formulate and execute longer-term planning activities, such as investment/development via facility build-out and in-market mergers with other practices and planning and budgeting support;
o Put in place products and services that help them attract and retain patients, including the offerings included in our Affiliate relationship - e.g., access to the Shared Risk Refund Program, internet marketing, patient financing, etc., - along with proven field sales programs and direct-to-consumer advertising capabilities and resources;
o Enable them to enhance their ability to provide superior care via usage of our ARTworks Clinical application which provides electronic medical record, workflow management and decision support functionality, along with clinical risk management auditing services;
o Enhance their operating efficiency through the implementation of an infrastructure focused on improved accounts receivables management along with business continuity and other IT support, human resource, legal and procurement support that leverages our economies of scale and deep expertise in these areas.

(iii) We Plan to Grow Current Ancillary Services for the Fertility Centers

In 1996, we established the Council of Physicians and Scientists, or the Council, comprised mostly of representatives from our fertility network, to bring together leaders in reproductive medicine and embryology with the goal of promoting a high quality clinical environment throughout the network. The Council meets regularly and conducts bi-monthly teleconferences on topics related to improving infertility diagnosis and treatment.

We assisted in the organization of, and obtained a minority equity interest in, an offshore captive insurance company designed to moderate the cost of malpractice insurance to members of our network. The majority of the equity of the captive insurance company is owned by various physician practices which are members of our network. On January 1, 2005, this captive insurance company began providing the majority of the malpractice insurance coverage to physicians within our reproductive Partner network.

Overview of our Business Strategy for the Consumer Services Division

(i) We Plan to Expand our Network of Affiliated Fertility Centers

Our strategic plan calls for us to expand our provider network to establish a presence in other major markets across the country. We primarily focus our network development activities on major metropolitan markets with populations in excess of 500,000. Because of the relatively low percentage of the population that seeks fertility treatment, a large population base is required to support a sophisticated fertility center. Our high quality fertility centers are capable of drawing consumers from a large geographic catchment area. Expanding our provider network to the 100 largest metropolitan markets in the United States will allow us to cover a large percentage of the national population, since approximately 90% of fertility services performed in the U.S. occur in these top 100 markets.

The entry point for fertility centers participating in our provider network is usually as an Affiliate center. Included in this level of participation is access to our:

o Shared Risk(R) Refund Program (as described below);
o Patient financing;
o Marketing support activities;
o Pharmaceutical products.

While a primary value proposition for the Affiliate offerings is to help practices improve their ability to attract and retain patients, the offerings can also be used to improve operational efficiency and support the provision of superior care. We provide access to these programs on an exclusive basis in each defined market area to the Affiliated clinic.

(ii) We Plan to Support the Number and Value of Service Packages sold to Participating Affiliate Centers

Once an Affiliate practice has demonstrated a commitment to leveraging our offerings to increase practice profitability, we can offer a wider portfolio of service packages which can improve performance even more and require more up front implementation effort. These service offerings include:

ARTworks(R) Clinical Information System - a proprietary electronic medical record (EMR) system focused exclusively on the unique requirements of providing clinical care to patients seeking fertility treatment. We maintain this application at our data center in New York, with contracted fertility centers gaining access via a dedicated communications link. This structure allows our customers to minimize their investment in information systems and relieves them of software maintenance obligations. The application is also interfaced with commonly used laboratory equipment and our practice management information systems.

ARTworks Financial Practice Management Information System - an integrated software platform which enables contracted fertility centers to have an sophisticated scheduling, billing and accounts receivable system. This system is also hosted out of our data center, which permits contracted fertility centers to gain access to a powerful practice management system at a fraction of the cost of a traditional installation. This system has been customized to the unique requirements of fertility centers, and has helped contracted fertility centers to effectively manage their accounts receivable.

Marketing & Field Sales Support - a package of award-winning marketing and sales programs that have helped contracted fertility centers to grow faster than the average rate for the industry. This service includes access to our extensive proprietary marketing collateral material library of ads, brochures, fliers and announcements. In addition, IntegraMed conducts quarterly sales and marketing training seminars, offers a syndicated media buying service and produces radio ads, television ads and educational videos.

Assisted Reproductive Technology Insurance Company, or "ARTIC", and Risk Management - ARTIC is a captive malpractice insurance company formed in conjunction with practices in IntegraMed's network which has the following features: Comprehensive malpractice coverage - which meets the requirements of all hospitals and state regulatory bodies; assured availability for member practices; the goal of lower malpractice insurance costs - Shareholder practices participate in underwriting, claims and investment decisions; and the goal of lower cost increases for malpractice insurance over time - given an expected strong claims history and industry factors based on reproductive endocrinologists, not a broader obstetric and gynecological population. Risk management comprises services associated with minimizing practice risk via: an audit of a practice's existing risk management policies, procedures and processes; specific recommendations and tools to introduce improved risk management to practice operations; and ongoing auditing and review management.

(iii) We Plan to Increase Penetration of our Shared Risk Refund Program

Currently, many health plan sponsors provide limited of coverage for the diagnosis and treatment of infertility. Because patients seeking fertility treatment often have other gynecological symptoms, health plans may cover diagnostic expenses even when infertility treatment itself is not a covered benefit. As we continuously seek to increase the number of patients being treated by our provider clinics, our Shared Risk Refund program, which is sold directly to consumers, has been designed to offer attractive financial options to prospective patients. The Shared Risk Refund program consists of a package that includes up to three attempts of in vitro fertilization with fresh embryos and three additional attempts with frozen embryos for one fixed price, with up to a 100 percent refund if the patient does not take home a baby. Under this innovative financial program, we receive payments directly from consumers who qualify for the program and pay contracted fertility centers a defined reimbursement for each treatment performed. The benefit to providers is increased patient volume and patient retention, and the benefit to consumers is the opportunity for multiple treatment cycles with a significant financial refund should the treatments be unsuccessful.

Due to the characteristics of the program, we assume risk for unsuccessful treatments. In order to moderate and manage this risk, we have developed a sophisticated statistical model and case management program in which Shared Risk patients are medically pre-approved prior to enrollment in the program. We also continuously review their clinical criteria as they undergo treatment. If, while undergoing treatment, a patient's clinical response falls outside our criteria for participation in the Shared Risk Refund program, we have the right to remove that individual from the program, with an applicable refund to the patient. To date, our case management process has been effective in managing the risks associated with our Shared Risk Refund program within expected limits.

Vein Disease

Phlebology is the medical specialty concerned with the treatment of vein diseases. Common venous diseases and their symptoms can take many forms including;

o Varicose veins - which are caused when small valves designed to allow blood to flow in one direction only fail or leak. This causes blood to flow backwards under the force of gravity and pool inside the vein;

o Spider veins - which are very small varicose veins. They are thin, threadlike veins that lie close to the skin's surface and are commonly red or purple in appearance. Spider veins can be hormonally induced and are often associated with pregnancy and menstruation;

o Venous Leg Ulcer - non-healing open wounds that are caused by venous pump failure. It usually occurs near the inside of the ankle, but can be found anywhere below the knee. It can occur with or without visible varicose veins;

o Klippel-Trenaunay Syndrome (KT) - which is a rare, congenital disorder in which patients usually have one hypertrophied leg, a port wine stain, and large varicose veins on the lateral aspect of the leg;

o Restless Leg Syndrome (RLS) - which may occur when valves fail, causing blood to reflux, or flow backwards, causing it to pool and stagnate in the veins, leading to aching, throbbing, cramping and fatigue in the legs.

Although there are both surgical as well as non-surgical treatment protocols for vein disease, we specialize in non-surgical care. Conventional vein care treatment under both protocols usually begins with an ultrasound assisted mapping to determine the extent of the disease, generally followed by a surgical or non-surgical treatment protocol. The most common surgical treatment is a procedure referred to as vein stripping, which is the surgical removal of surface veins, generally done as an outpatient procedure performed while the patient is under general anesthesia. Common non-surgical treatments include Endovenous Laser Treatment (ELT) and Sclerotherapy. ELT is a quick, minimally invasive laser treatment which involves no hospitalization or complicated surgery. With ELT, a small optical fiber is inserted through a needle into the varicose vein under ultrasound guidance. The laser is activated and, as the optic fiber is removed from the vein, it heats and closes the vein. Once the vein is closed, the blood that was circulating through the vein is naturally rerouted to other healthy veins. Over time, the varicose vein is absorbed by the body. Sclerotherapy (from the Greek "skleros" meaning hard) involves injecting abnormal veins with a solution called a sclerosant. This seals the vein off from the rest of the vein network in the leg, allowing the body to naturally redirect the blood flow to healthy veins. A typical sclerotherapy treatment may last for 15 to 20 minutes and will consist of multiple microinjections.

Various demographic trends are contributing to the growth in demand for vein care, and we believe the market will continue to grow in the future as awareness of non-surgical treatment protocols grows among people with vein disease and additional third party payers recognize the medical necessity of treating vein disease. Our vein clinics specialize in the non-surgical treatment of vein diseases and are the largest single network of vein care providers in the country, allowing operational efficiencies by leveraging resources, knowledge and infrastructure and providing a strong base for new clinic expansion.

Numerous market conditions in this industry produce business opportunities for us, including:

o The level of specialized skills required for comprehensive patient treatment;
o Favorable demographic trends and aging population;
o The need to develop and maintain specialized management information systems to meet the increasing demands of patient billing and third-party payers;
o The current fragmented nature of the market, which is comprised of numerous smaller, independent providers, allowing the opportunity for market consolidation;
o New technology

An Overview of Our Business Strategy for the Vein Clinics Division

Our business strategy is to develop a national network of high quality managed vein clinics. Currently, our vein clinics division is the largest managed network of vein disease treatment centers in the United States. The primary elements of our business strategy for this division include:

o Integrating the Vein Clinics of America acquisition into the company;
o Developing an infrastructure that supports sustained higher growth;
o Opening new vein clinics in targeted markets;
o Attracting and retaining consumers in needof vein treatment;
o Increase revenues and profitability at existing clinics.

(i) Integrate the Vein Clinics of America Acquisition into the Company

We expect to fully integrate Vein Clinics of America into the Corporate Shared Services infrastructure of the company in the follow areas:

o Legal Services - our legal department will assume responsibility for legal matters that arise in the Vein Clinics Division including lease negotiations, physician contracts, managed care agreements, employment matters and general business matters.
o Human Resources - our human resource department will assume responsibility for supporting the personnel needs for the Vein Clinics Division by providing policies and standard procedures, payroll services, benefits evaluation and a fully automated human resource information system.
o Finance - our finance department will support the Vein Clinics Division by transitioning the division over to our banking relationships, our general ledger and accounting systems, our accounts payable system, our patient billing and collections systems and procedures, and our general finance policies and procedures.
o Information Systems - our information systems department will support the Vein Clinics Division by hosting Vein Clinics of America information systems in our national data center and providing help desk back up to users of those systems.
o Marketing and Sales - our marketing and sales department will support the Vein Clinics Division by centralizing aspects of marketing program development and by leveraging the Company's sales force already in the market to gain access to more physician referral relationships that help drive increased referrals to vein clinics locations where we have market overlap.

We expect over time to achieve cost savings through these integration efforts.

(ii) Develop an Infrastructure that Supports Sustained Higher Growth

At the time of the acquisition of the Vein Clinics of America business, VCA had a very limited infrastructure to support scaled growth. Since the acquisition we have made significant investments in the VCA infrastructure to support sustained higher growth in the business in the future. These investments include:

o Physician Recruiting and Training - the business model for VCA depends on being able to identify, recruit and train new physicians to staff new clinics. We needed to invest in additional personnel and recruiting and training assets to support scaled growth in the future. As we continue to scale the number of clinics, these investments will continue.

o Regional Management - we needed to put a regional management infrastructure in place to manage the day to day operations of the expanding VCA clinic network. We anticipate continued investment in regional management talent.

o Revenue Cycle Management - The vein treatment market is at the tail end of a shift from an environment where patients had to pay for treatment out of pocket to an environment where most treatment is covered by insurance. This shift has caused us to have to make heavy investments in physician credentialing, improved billing and collections personnel, systems and procedures. These investments will continue as the business grows.

o New Clinic Development - In anticipation of more rapidly scaling the opening of new clinics, we are making investments in personnel and procedures for identifying and opening new clinics in existing and new markets.

o Marketing and Sales - historically, due to the overwhelming self pay requirement for patients, most marketing was based on a consumer advertising model. With the shift to third party reimbursement and the maturation of new treatment modalities, we believe the business will need to shift its marketing focus to rely more heavily on physician referral relationships. That shift will require investments in physician marketing assets and personnel.

o Quality Assurance and Risk Management - As the vein clinics network grows in size, we anticipate a need to invest in a more standardized approach to quality assurance and risk management.

(iii) Open New Vein Clinics in Targeted Markets

We expect to make use of the enhanced infrastructure by opening new clinics at a more rapid and sustained pace. Demographic analysis and past experience suggests that the vein clinics business can support one clinic per million population in major metropolitan markets. The new clinic development plan includes:

o Develop new clinics in markets where we already have existing clinics that have not been fully penetrated to take advantage of existing investments in regional management, managed care contracts, personnel and marketing capabilities.

o Identify attractive new markets in states that already have a VCA clinic location to take advantage of regional management, personnel and other infrastructure assets.

o Identify attractive markets in new states contiguous to existing markets to leverage off existing regional management.

(iv) Attract and retain consumers in need of vein treatment

Non-surgical varicose vein treatment, which VCA pioneered, is still a relatively new approach to treatment. As such, success in this business requires us to be able to attract and retain patients to existing and new vein clinic locations. We continue to invest in consumer advertising, internet advertising and physician referral development.

(v) Increase Revenues and Profitability at Existing Clinics

The Vein Clinics Division long term success will be dependent on ensuring that established clinics increase revenues and profitability. The regional management team is focused on this goal through scheduling efficiencies, yield management and productivity improvements.

As noted in our near-term strategy outlined above, significant cost increases and investments are expected to be made in 2008. As a result, we do not expect this division to be accretive to earnings until 2009.

Shared Services

We provide the following support for our operating divisions-

(i) Administrative Services

Our administrative services include: (i) accounting and financial services, such as billing and collections, accounts payable, payroll, and financial reporting and planning; (ii) recruiting, hiring, training and supervising all non-medical personnel; and (iii) purchasing of supplies, pharmaceuticals, equipment, services and insurance.

(ii) Access to Capital

We provide our fertility Partners and vein clinics with a significant competitive advantage through immediate access to capital for funding accounts receivable, expansion and growth. We are also able to offer physician providers in our network rapid access to the latest technologies and facilities in order for them to provide a full spectrum of services and compete effectively for patients in the marketplace. For example, we have built new clinical facilities housing state of the art fertility laboratories for several Partners, which enable them to expand their offerings to include a number of services, which they had previously outsourced.

(iii) Traditional Marketing and Sales

Our marketing department specializes in the development of sophisticated marketing and sales programs that give contracted clinics access to business-building techniques designed to facilitate growth and development. In today's highly competitive health care environment, marketing and sales are essential for growth and success. While these marketing and sales efforts are often too expensive for many individual physician practice groups, affiliation with us provides access to significantly greater marketing and sales capabilities than would otherwise be available. Our marketing services focus on revenue and referral enhancement, relationships with local physicians, media and public relations.

(iv) Internet Marketing and Website support

We operate industry leading web portals which (i) allow visitors access to educational material concerning infertility and vein care issues; (ii) provide links to our fertility Partner and Affiliate practices; (iii) allows prospective fertility patients to request appointments and follow-up contact, request information on our Shared Risk Refund program and apply for treatment financing.

(v) Integrated Information System

Using our established base of treatment providers, we are continuously developing nationwide, integrated information systems to collect and analyze clinical, patient, financial and marketing data. Our goal is to use this data to control treatment expenses, measure patient outcomes, improve patient care, develop and manage utilization rates and maximize reimbursements.


CEO BACKGROUND

KUSH K. AGARWAL (60) became a director of the Company effective August 8, 2007. He has served as President of Vein Clinics of America, Inc., which was acquired by the Company on August 8, 2007, since joining Vein Clinics of America in August 1987. Mr. Agarwal has a Master of Science in Industrial Administration from Carnegie-Mellon University, a Master of Science in Applied Analysis and Operations Research from the State University of New York and a Bachelor of Technology in Mechanical Engineering from Indian Institute of Technology.

GERARDO CANET (62) served as Chief Executive Officer of the Company from February 14, 1994 to December 31, 2005 and has been a director of the Company since February 14, 1994. Mr. Canet resigned as Chief Executive Officer effective December 31, 2005, but continues to serve as Chairman of the Board and a consultant to the Company. Mr. Canet has been a director of Dendreon Corporation since December 1996. He earned a B.A. in Economics from Tufts University and an M.B.A. from Suffolk University.

JAY HIGHAM (49) became President and Chief Executive Officer, effective January 1, 2006 and was President and Chief Operating Officer of the Company since June 2004. He was appointed a director of the Company, effective January 24, 2006. In October 1994 Mr. Higham joined the Company as Vice President of Marketing and Development and in January 1999, was promoted to Senior Vice President of Marketing and Development. He earned a B.S. in Psychology from the University of Rochester and a M.H.S.A. from George Washington University.

SARASON D. LIEBLER (71) became a director of the Company in August 1994. Mr. Liebler is President of SDL Consultants, a privately-owned consulting firm engaged in rendering general business advice. During the past 30 years, Mr. Liebler was a director and/or officer of a number of companies in the fields of home health care, clinical diagnostics, high density optical storage and sporting goods. Mr. Liebler is a graduate of the United States Naval Academy with a B.S.

WAYNE R. MOON (68) became a director of the Company in May 2001. Mr. Moon joined Kaiser Foundation Health Plan, Inc. in 1970 and was subsequently elected President, Chief Operating Officer and Director. In September 1993, Mr. Moon was appointed President and Chief Executive Officer of Blue Shield of California and a member of its Board of Directors and, later, Chairman. Mr. Moon retired from Blue Shield in January 2000. Until recently, he served as Chairman of the Board of RelayHealth, Inc. He serves on various corporate and civic boards, including Varian, Inc. and the California State Automobile Association. Mr. Moon earned a B.B.A. and a Masters in Hospital Administration from the University of Michigan.

LAWRENCE J. STUESSER (66) became a director of the Company in April 1994. Since June 1999, Mr. Stuesser has been a private investor. From June 1996 to May 1999, Mr. Stuesser was the President and Chief Executive Officer and a director of Computer People Inc., the U.S. subsidiary of London-based Delphi Group plc., of which he was also a director. Mr. Stuesser was a director of American Retirement Corporation from May 1997 to July 2006. Early in his career, Mr. Stuesser qualified as a certified public accountant and served as an audit manager with Alexander Grant & Company, an accounting firm. Mr. Stuesser holds a B.B.A. in accounting from St. Mary's University.

ELIZABETH E. TALLETT (59) became a director of the Company in June 1998. Since July 2002, Ms. Tallett has been a Principal of Hunter Partners, LLC, which provides management services to developing life sciences companies. Ms. Tallett held the position of President and Chief Executive Officer of Dioscor, Inc., a biopharmaceutical company, from 1996 until July 2003. Ms. Tallett is a director of The Principal Financial Group, Inc., Varian, Inc., Coventry Health Care, Inc. and Immunicon, Inc. She is a founding board member of the BioNJ and a board member of the Museum of Contemporary Science in New Jersey. Ms. Tallett graduated from Nottingham University with degrees in mathematics and economics.

YVONNE S. THORNTON, M.D., M.P.H. (60) became a director of the Company in January 2006. Dr. Thornton is a double board-certified specialist in obstetrics, gynecology and maternal-fetal medicine. Dr. Thornton is a former Professor of Clinical Obstetrics and Gynecology at Cornell (Weill) Medical College and Vice-Chair of the Department of OB/GYN and Director of Maternal-Fetal Medicine at Jamaica Hospital Medical Center in New York City where she served from 2002-2005. From 2000-2002, Dr. Thornton was a member of the Department of Obstetrics and Gynecology, Division of Maternal-Fetal Medicine at St. Luke's-Roosevelt Hospital in New York City. Currently, Dr. Thornton is a perinatal consultant at Westchester Medical Center in New York. Dr. Thornton is a Diplomate of the American Board of Obstetrics and Gynecology, a Fellow of the American College of Surgeons and an Oral Examiner for the American Board of Obstetrics and Gynecology. She is the author of the Pulitzer prize-nominated book entitled, "The Ditchdigger's Daughters." After graduating with honors from Monmouth College in New Jersey, she received her M.D. degree with honors from Columbia University College of Physicians and Surgeons. Dr. Thornton also received her Executive Masters (M.P.H.) degree in Health Policy and Management from Columbia University.


MANAGEMENT DISCUSSION FROM LATEST 10K

Forward Looking Statements

This Form 10-K 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, 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 specialty healthcare services company offering products and services to patients and providers in the fertility and vein segments of the healthcare industry. We deliver these products and services through three main operating divisions.

Our Fertility Centers division is a provider network comprised of nine contracted fertility centers , located in major markets across the United States. IntegraMed offers products and services to these providers designed to support the fertility center's growth. All fertility Partners also have full access to our Consumer Services offerings (described below). The division also supports a Council of Physicians and Scientists, for fertility providers as well as ARTIC, a captive insurance company which provides malpractice insurance to member physicians.

The Consumer Services division offers products directly to fertility patients. The division's Shared Risk Refund and financing programs are designed to make the treatment process easier and more affordable for patients. The division maintains a contracted network of 20 independent fertility clinics under its Affiliated program which are designed to distribute the division's products and services to a wider group of patients than those serviced by our Fertility Center locations. The division also offers fertility medications directly to patients through a competitively priced mail-order pharmacy.

Our Vein Clinics division began operations on August 8, 2007, with the purchase of Vein Clinics of America, Inc. The Vein Clinics division currently operates a network of 28 clinics located in 11 states, which specialize in the treatment of vein disease and disorders.

The primary elements of our business strategy include:

o Expanding our network of fertility and vein clinics into new major markets;
o Increasing the number and value of Consumer Service packages purchased by Affiliates in our network;
o Entering into additional Partner contracts with Affiliated and non-Affiliated fertility centers;
o Opening new vein treatment clinics;
o Increasing revenues and profits at contracted fertility centers and consolidated vein clinics;
o Increasing sales of Shared Risk Refund, pharmaceutical and treatment financing products to fertility patients; and
o Leveraging corporate general and administrative costs over a larger base of operations.

The business strategy of our Fertility Centers segment is to leverage our deep expertise and commitment to improved fertility center performance by providing the best value-specific offerings designed to manage and grow the center within the context of a long-term relationship. The business strategy of our Consumer Segment is to provide products and services that make obtaining high quality fertility treatment easier and more affordable for patients. The business strategy of the Vein Clinic segment is provide technologically advanced care for varicose vein disease to an underserved population through the opening of additional clinics, growing each of the clinics and achieving higher productivity and profitability at each clinic.

Major events impacting financial condition and results of operations

2007

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.

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 the 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 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 a Second Amended and Restated 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 Vein Clinics of America, Inc. transaction). Interest on the new term loan is at LIBOR plus 2% to 2.75% depending upon the level of the ratio of consolidated debt to 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 December 31, 2007, no amounts were drawn on the revolver.

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 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 CRM's earnings. We also committed up to $1.0 million to fund any necessary capital needs of the practice.

2006

On May 22, 2006, we declared a 25% stock split effected in the form of a stock dividend for all holders of record as of June 7, 2006. As a result of this dividend, 1,291,368 new shares of common stock were issued on the payment date of June 21, 2006. 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.

During October 2006, we provided notification that our financial statements for 2005 and the first two quarters of 2006 could not be relied on, and were restated due to an accounting error. The restatements consisted of non-cash adjustments to deferred tax and intangible balances and did not result in any changes to net income or earnings per share for any period. All periods affected by this error have been restated throughout this document.

In December 2006, we determined that we no longer needed a valuation allowance related to deferred tax assets generated by net operating loss carry-forwards of prior years. As a result, we recorded a tax benefit of $821,000 which reduced our overall tax provision and increased net income by the same amount while adding $0.10 to earnings per share.

2005

Effective January 1, we signed a Partner agreement to supply a complete range of business, marketing and facility services to the Reproductive Partners Medical Group, Inc., or RPMG, a fertility practice comprised of six physicians in the Southern California market. 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 RPMG's earnings. We also committed up to $0.5 million to fund any necessary capital needs of the practice.

Effective January 1, 2005, the Company became a minority equity investor in the Assisted Reproductive Technology Insurance Company, LTD, ("ARTIC"). ARTIC is incorporated as an off-shore captive insurance company designed to offer malpractice insurance to physicians and related facilities within the IntegraMed network. IntegraMed's equity investment of $50,000 represents a 10% ownership stake, which is accounted for on the cost basis. ARTIC is owned and controlled by participating physician groups, who own the remaining equity interest. To date, earnings on our equity investment have been immaterial, however IntegraMed is paid a predetermined fee to provide certain administrative and risk management related services to ARTIC.

On May23, 2005, we declared a 30% stock split effected in the form of a stock dividend for all holders of record as of June 8, 2005. As a result of this dividend, 1,129,541 new shares of common stock were issued on the payment date of June 22, 2005. 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.

Through September 30, 2005, we marketed pharmaceutical products directly to patients throughout our network and we had contracted with a third-party pharmacy to provide certain business services related to the distribution of and accounting for these sales. Effective October 1, 2005, this agreement was terminated and replaced by a new agreement between us and the pharmacy. Under the terms of the new agreement, we were no longer a direct distributor of pharmaceutical products to patients as this function is being performed directly by the pharmacy. Our responsibilities are currently limited to marketing the products for which we receive marketing fees. This compensation approximates our previous contribution from those pharmaceutical sales and services, and will be shown on a "net" rather than "gross" basis. As a result, as of October 1, 2005, we no longer record pharmaceutical sales, the related cost of sales and other costs related to pharmaceutical distribution. As anticipated, this change has resulted in a significant decrease in pharmaceutical revenues and cost of sales; however (assuming the same volume of pharmaceutical products is distributed) contribution from operations and income before income taxes, as well as net income, has been virtually unaffected by this contract change.

Significant Accounting Policies

Our accounting policies are described in Note 2 of the consolidated financial statements.

Revenues

For the year ended December 31, 2007, total revenues of $152.0 million increased approximately $25.6 million, or 20.2% from the same period in 2006. We experienced revenue increases in both of our legacy operating segments. Our Fertility Centers revenue increased as a result of growth within the underlying medical practices, and the addition of one new Partner arrangement and the expansion of the Shady Grove contract in 2007. Expansion continued in our Consumer Services segment, driven primarily by the growth of its Shared Risk Refund program. In addition to organic and acquisition growth in these two segments, on August 8, 2007, we acquired Vein Clinics of America, Inc. This leading provider of vein disease treatment became our third operating segment and contributed $14.3 million to our 2007 revenues since its acquisition.

For the year ended December 31, 2006, the total revenues of $126.4 million were lower by $2.4 million, or 1.8% from the same period in 2005. 2006 saw continued expansion of our Fertility Center operations with revenues up $7.5 million or 7.1% from 2005 levels, and the Shared Risk Refund revenue was up $3.6 million or 43.5% from the prior year. Increases in both operations are generally attributable to higher patient flow as a result of increased marketing efforts. These increases were offset by a $13.4 million reduction of revenues in the Pharmaceutical operations due to a contractual change with the third-party pharmacy we use to process and fulfill orders. As previously disclosed, effective October 1, 2005, we relieved ourselves of the responsibility for being a direct distributor of pharmaceutical products to patients by transferring this obligation directly to the pharmacy and no longer record the sales revenues or related costs. While our new fee structure resulted in a significant decrease in pharmaceutical revenues and cost of sales; our net income as a result of this contract change, has been virtually unaffected by this contract change.

A segment-by-segment discussion is presented below.

Fertility Centers Segment

In providing clinical care to patients, each of our Partner practices 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 Partner practices are:

o A Base Service fee calculated as a percentage of patient revenue as reported by the Partner practice (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 Partner practice during the month (representing substantially all of the expenses incurred by the practice);
o Our Additional fees which represent our share of the net income of the Partner practice (which varies from 10% to 20% or a fixed amount depending on the Partner practice).

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 Partner practices.

Fertility Center revenues in the year ended December 31, 2007, increased by $8.3 million or 7.4% from the same period in 2006. This compares to an increase of $7.5 million, or 7.1% for the year ended December 31, 2006 over 2005. During both years, growth was largely attributable to organic year-over-year growth in our network of underlying medical practices. Influencing this growth is our focus on increasing patient revenues through effective marketing programs, and focus on expense management which drives operational efficiency and higher contribution margins. Revenues for the year ended December 31, 2007, also benefited from the addition of our newest fertility Partner in Orlando, Florida and the expansion of Shady Grove to the Baltimore, Maryland market. These new arrangements became effective on July 1 and September 1, 2007 and generated more than $2 million in revenues for us in 2007.

Consumer Services Segment

For the year ended December 31, 2007, revenues of $15.3 million from our Shared Risk Refund program represented over 91% of our Consumer Services Segment revenues. This compares to revenues of $12.0 million, or 88% of Consumer Services revenues in 2006. Revenue growth of $3.2 million or 26.7% is a result of enrolling more patients into the program and maintaining high pregnancy success rates.

Revenues from our Affiliate program were $1.2 million for the year 2007, which is unchanged from the prior year. Although our Affiliate program produces significant revenues on a stand alone basis, it also serves as a distribution channel for our Shared Risk Refund program and often serves as an introduction to our services for medical practices which move on to become full fertility Partners. As a result of these financial and strategic opportunities, we are dedicating resources and targeting this program for expansion in coming years.

Pharmaceutical revenue of $0.1 million for the year ended December 31, 2007, was down approximately $0.3 million from the prior period. This decline is a result of decreasing margins due to pharmaceutical cost increases which are not able to be passed on to the consumer as a result of competitive pressures. We view these cost and pricing developments as longer- term market developments and do not expect significant improvement during 2008.

For the year ended December 31, 2006, the revenues of the Shared Risk Refund program grew $3.6 million or 42.9% over 2005. The growth came from increased patient enrollments, higher pregnancy rates and the expansion of the program to additional Affiliated clinics.

The 2006 revenues from our Affiliate program of $1.2 million were $0.2 million higher than 2005 due to the net addition of three clinics.

The 2006 Pharmaceutical Revenue was $0.4 million while the 2005 revenue was $14.2 million. As previously discussed, the reduction is a result of contract changes made in 2005.

MANAGEMENT DISCUSSION FOR LATEST QUARTER

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 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 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.

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.

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 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.

CONF CALL

John Hlywak

Thank you. Good morning. This is John Hlywak, Executive Vice President and CFO of IntegraMed. Thank you for participating in today's call. Joining me today is Jay Higham, President and Chief Executive Officer.

Before we begin, I'd like to caution that comments made during this conference call by management may contain forward-looking statements that involve risks and uncertainties regarding the operations and future results of IntegraMed. I encourage you to review the company's filings with the Securities and Exchange Commission, including without limitation, the company's Form 10-K and Form 10-Qs, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. The content of this conference call contains time-sensitive information that is accurate only as of today, October 27, 2008. The company undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

I will now turn the call over to Jay. Jay?

Jay Higham

Thank you, John. Good morning, everyone. And thank you for joining us today. Our results demonstrate ongoing growth and increased contribution across all three of our business units – fertility centers, consumer services, and vein clinics. Both on the top line and bottom line, we achieved record quarterly operating results in Q3 2008, despite an increasingly uncertain economy. While no business can be completely immune from the impact of economic forces, we believe our results point to the strength and value of our service model, as well as the resiliency of the segments of healthcare we occupy. We remain vigilant in monitoring the business in order to quickly identify if the larger macroeconomic forces do spill over into our chosen service markets.

Total revenues for the three and nine-month periods ending September 30 grew 30% and 38% over their respective prior-year periods to $52.3 million and $147.8 million. Q3 and year-to-date EPS rose 18% and 10% respectively, to $0.13 and $0.32 in 2008 versus $0.11 and $0.29 for the prior-year periods. Please note that our acquisition of the Vein Clinic business did not take place until early August of last year. So the prior-year periods contain less than two months of contribution from this business. And the comparative results should be viewed in that context.

Let me now make a few brief comments highlighting the performance of each of our business units, starting with our Fertility Centers business. IntegraMed achieved strong growth in new patient visits and same center revenue during the third quarter, reflecting continued strong patient demand and good execution. Importantly, this demand underscores our experience historically that the decision to start or expand a family remains a top priority for couples, even in challenging economic times.

Overall revenues for our fertility centers business increased by 18% in the quarter and 16% year-to-date compared to the prior year, while contribution only increased 1%. This disparity is explained by investments in division-level G&A expenses, which were part of our strategic investment program necessary to build out an infrastructure to support our planned growth. We're largely done with those investments and look to improve leverage in this business in the future. IntegraMed has also achieved its annual forecast of completing one to two new fertility center acquisitions this year. We continue to see a strong flow of interest in our services, as fertility centers are seeking ways to increase their patient volumes, improve patient outcomes, and enhance overall center profitability. Certainly, the imperative for independent clinics to address such issues becomes a high priority in uncertain economic times. And we believe that dynamic contributes to the increase in interest we have been seeing. Possessing a strong balance sheet and an excellent track record affords us an opportunity to be opportunistic in building our fertility network. We have the capital and human resources to support that growth and look forward to reporting on developments as they materialize.

Moving onto consumer services, demand for the shared risk refund program was robust in the third quarter, s applications and enrollments climbed significantly. An improvement in pregnancy rates over the prior-year’s period, while still within normal ranges, helped to offset the impact of investments to support long-term growth; and yielded a comparable contribution margin versus the prior year. The shared-risk refund program was developed to mitigate the financial and success risks of embarking on IVF treatments, factors that we believe may prove even more relevant to patients being squeezed in the current economy.

The success of the program has been undeniable. And to make it applicable for a broader spectrum of IVF treatments, in the second quarter of this year, we moved to expand the scope of the service available for donor egg recipients. Patient demand for this expanded option has been strong and has enabled us to increase the average fee per enrollment by approximately 5% versus last year. As we referenced in today's news announcement, the addition of Reproductive Associates of Delaware in September, we have already achieved our 2008 full-year goal of adding four affiliates to our fertility provider network. In order to continue to grow this network, we are engaging in active dialogue with several potential affiliate centers. And based on the strong patient and clinic interest in our shared-risk refund program, we are confident in the potential to add an additional four affiliates by the end of next year.

Regarding our third business, Vein Clinics, let me say that the integration and development of our Vein Clinics business unit is progressing as planned, and will soon be nearing completion a little more than a year after we consummated the acquisition in August 2007 and within the 18-month timeline we discussed from the date of acquisition. We have been working on two major initiatives over this time. First, to raise the management and operational infrastructure of this business, which had operated as a very lean subchapter S corporation, to a level that can support well-managed long-term growth and the requisite financial reporting. And second, to accelerate the growth and development of the organization with a more aggressive new clinic development program. Historically, the company had opened one to two new clinics per year. In the first year after the acquisition, we have doubled that with four new clinics.

The benefits of our investments have already begun to yield improvement in top line performance as vein clinics revenues increased by 18% to $29.3 million for the first nine months of 2008, compared to $24.8 million in the same period of the prior year. For the same periods, income from operations increased 36% to $1.9 million from $1.4 million, demonstrating the leverage available in this business. Our Vein Clinic business continues to grow at a healthy pace, as this specialty remains an underserved market with growing demand from an aging population, supported by the vast majority of our patients, whose treatment are covered by third-party insurance. To drive further growth from this substantial opportunity, we plan to expand our base of vein clinics through the balance of 2008 and into 2009. Towards that end, we will be adding two more clinics in Q4 2008 and plan five clinics in 2009, ending 2009 with a total of 38 clinics.

In summary, our third quarter performance confirms the inherent strength of demand for our services, the value of our diversified business model, and our relentless attention to operational and customer excellence. These foundational pillars, along with disciplined decision making, should serve us well as we seek to drive growth across our businesses, both through higher same-center patient volumes and by opportunistically growing the scope of our provider networks.

I'll now turn the call back over to John, who can provide a more thorough financial review for the third quarter performance. John?

John Hlywak

Thank you, Jay. Third quarter revenues increased across all three business units on both a three and nine-month basis. Total revenues for Q3 2008 grew 30% to $52.3 million. And total revenues for the first nine months of 2008 grew 38% to $147.8 million versus last year. If we assume that we had acquired the VCA operations as of January 1, 2007, our pro forma Q3 revenue growth would have been 19% and pro forma revenue for the first nine months would have grown 18% in 2008 compared to 2007. While our segment revenues are reflected in today's news announcements, I will provide some same-center data to help you evaluate organic versus inorganic growth in our business segments. Same-center revenues from fertility centers under contract for greater than one year grew 11% and 9.7% for the three and nine-month periods to $33.7 million and $97.8 million respectively. Same-center consumer services revenue increased 18.4% and 16.8% for the three and nine-month periods to $5.4 million and $14.2 million respectively.

And on a pro forma basis, if we look at our vein clinic comparisons, assuming we had purchased the business as of January 1, 2007, same-center vein clinics revenues grew by 11.8% and 8.4% in the three and nine-month periods of 2008. Third quarter and year-to-date revenues are based on 25 clinics.

Moving onto contribution, a measure we use to illustrate the economic benefit we derive from each business unit, total contribution rose 14% to $5.1 million in Q3 2008 and reflects the addition of additional personnel and infrastructure investments we have made in these businesses to better support their long-term growth. While some of these investments have been nonrecurring in nature, much of it involves additional personnel, including key senior management and recurring cost that will continue to impact operating performance going forward. We are confident that these investments will support the growth and better management of our business metrics going forward. Importantly, contribution growth in consumer services was in line with the top line growth in this business unit.

We are very pleased that we have been able to drive operating leverage by closely managing G&A expenses. In Q3 2008, we held G&A expenses flat with the year-ago levels. And as a percentage of revenue, Q3 2008 G&A expense declined to 5.5% from 7.1% in Q3 2007. On a nine-month basis, G&A expense represented 5.4% of year-to-date total revenue in 2008, versus 7.5% of total revenues for the nine months of 2007. Looking at G&A expense as a percentage of total contribution; that also declined to 56% in Q3 2008 versus 64% in the year-ago period, and 59% in Q2 2008.

IntegraMed's improved Q3 2008 bottom line results were achieved despite a significant increase in interest expense and a modestly higher tax rate. The higher interest expense is due primarily to higher borrowings associated with the vein clinics acquisition. And the higher tax rate reflects the absence of any significant tax-exempt earnings in 2008 as attractive tax-exempt income investments have become nonexistent.

Net income for the quarter increased 20% to $1.2 million in Q3 2008. And EPS rose 18%, reflecting a modest increase in diluted shares outstanding. Our cash flow from operations was $1.2 million, compared to $6.7 million in the prior-year's quarter. The decrease in cash flow from operations reflect the investments we have made in working capital areas to support growth of our business. Approximately $3 million of this swing is related to investing working capital in the form of training compensation advances to new VCA physicians and stocking of the new clinics, as well as growth in patient receivables resulting from VCA's significant growth in revenue.

In light of infrastructure improvements, VCA's DSO has declined by five days. We have also seen a $2 million growth of working capital in the fertility division, as physicians have steadily drawn most of their undistributed earnings on a current basis rather than wait until the following year, as was their previous practice. Compounding that outflow, we have also experienced growth in the amounts related to patient receivables, even as DSO for the division has declined three days. DSO for the consolidated company has further improved to 39 days. Partially offsetting the outflow for working capital is the continued growth in advance deposits by patients of more than $5 million, reflecting continued future demand for patient services. Of course, we view these near-term deployments of cash as being in the best long-term interest of the company and our shareholders.

IntegraMed remains in a strong financial position, with a current cash position of $22.4 million or $2.60 per share. That is up modestly from Q2 2008. We also have a $10 million unused line of credit and our relationship with Bank of America, our primary lender, is excellent.

I will now turn the call back to Jay for some closing remarks. Jay?

Jay Higham

Thanks, John. Let me close by addressing a question being asked of all healthcare service companies, namely how well will your business hold up in a protracted recession. The simple answer is that we just don't know, as we are all in uncharted waters as far as the economy goes, and it would be foolish to think that we are somehow totally immune. Having said that, a key metric to look at is utilization or procedure volumes. Volume in our fertility center business increased 16% in the third quarter, volume in our consumer services or shared-risk refund program increased by 24% in the period, and volume in our vein clinics business increased 18%. And so far in October, we have continued to experience positive demand trends across all our businesses.

While we have a few weaker regions, such as Florida, the overall demand has remained strong so far in Q4. While this is encouraging, and our teams are working very hard to achieve the strongest possible performance, we do caution that it is by no means a trend or an indicator of future performance, and we are watching our operations very closely. I also want to reemphasize that we continue to manage the company in a prudent, fiscally-disciplined manner to maximize revenue, profitability, and cash flow and seek to strengthen our already strong balance sheet. As always, we will make all necessary adjustments to our business model to reflect current market conditions to be certain that we maintain our company in a strong financial and market position.

In closing, we remain confident in our business model and in the areas of medical specialty we have chosen. We believe we are well positioned from a capital and management standpoint to execute our business and we continue to explore opportunities to expand our footprint and better leverage our suite of services.

That concludes my comments this morning. So let us now turn the call over to the operator to open the floor for questions. Operator, we are now ready to take those questions.

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