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Dutton Associates Featured Company: IntegraMed America Inc (INMD)

IntegraMed America, Inc., a specialty healthcare services company, offers products and services to patients and providers in three main market segments of the health industry in the United States: the fertility segment, the vein care segment, and consumer services. The company was founded in 1985 and is headquartered in Purchase, New York.

The Fertility Centers Division operates a network in twelve major markets, including 50 locations consisting of 86 physicians and scientists. The fertility sector of the health care industry remains a strong market, and the company’s position in the market is attractive. The company is the market leader with a solid infrastructure and growth potential and remains the leading provider of complete fertility services in the US. The division performs approximately 25% of all in vitro fertilization procedures in the United States. The division includes four of the top five fertility practices in the United States.

The Consumer Services Division operates in 46 locations, with 80 physicians and scientists, and offers products directly to fertility patients. It is the fastest-growing division and the least capital-intensive. It provides Shared Risk Refund and financing programs that are designed to help patients finance the expense of fertility procedures.

This division maintained a contracted network of 20 independent fertility clinics under its affiliate program designed to distribute the division’s products and services to patients. It also offers fertility medications directly to patients via a mail-order pharmacy. In addition, this division provides a clinical information system. This information system is an electronic medical record system that provides contracted fertility centers with a scheduling, billing, and accounts receivable system, marketing and sales programs, and malpractice insurance to member physicians.

The Vein Clinics Division provides business and management services to a network of 30 clinics located in 11 Midwestern and Southeastern states that specialize in the treatment of vein disease and disorders. The vein care market is growing, and the Vein Care Division is the market leader. The vein care division focuses exclusively on nonsurgical treatment of vein disease-related conditions, which is a narrow, well defined treatment set. This is a high-volume, replicable practice with significant economies of scale.

The company believes that it is positioned for strong growth in revenues and earnings. It is the industry leader in two growing, highly fragmented medical sectors which offer market share and margin expansion opportunities. The Fertility Care market is a $3 billion market and growing at 3% per year and INMD is the leading fertility clinic in this market, growing at 13% per year.

The Vein Care market is a $2 billion market and is growing at 20% per year. In this market, INMD is the leading clinical network with 30 clinics and each clinic generates a contribution margin of 24% along with low startup costs. Both businesses are scalable and offer excellent growth potential. Finally, the company believes there are no viable competitors in either market.

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