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First Quarter 2010 Highlights (comparisons are to first quarter 2009):
Adam D. Singer, M.D., Chief Executive Officer of IPC The Hospitalist Company, stated, "Our record first quarter results, including a 15% increase in net revenue, reflect our continued ability to grow our top line from both existing markets and new market acquisitions. As we grew our top-line, we were able to leverage our corporate overhead, which contributed to an 80 basis point improvement in our operating margin for the quarter."
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Dr. Singer added, "We completed one acquisition to date in 2010. With a clean balance sheet and strong free cash flow, we are well-positioned to capitalize on the numerous acquisition opportunities in this highly fragmented industry. We are confident that we will continue to execute our organic and acquisitive growth strategy in 2010 and beyond."
First Quarter 2010
Patient encounters for the three months ended March 31, 2010 increased 14.4% to 927,000, compared to 810,000 for the same period last year. Net revenue for the three months ended March 31, 2010 was $87.7 million, an increase of $11.6 million, or 15.3%, from $76.1 million for the three months ended March 31, 2009. Of this $11.6 million increase, $7.8 million or 67.2% was attributable to same-market area growth and $3.8 million, or 32.8% was attributable to revenue generated from two new markets which were entered through acquisitions in 2009. The change in same-market area net revenue was the result of a 9.9% increase in patient encounters and a 1.6% increase in patient revenue per encounter.
Physician practice salaries, benefits and other expenses for the three months ended March 31, 2010 were $63.7 million, or 72.6% of net revenue, compared to $55.5 million, or 72.9% of net revenue, for the three months ended March 31, 2009.
General and administrative expenses increased $1.6 million, or 12.5%, to $14.0 million, or 16.0% of net revenue, for the three months ended March 31, 2010, as compared to $12.4 million, or 16.4% of net revenue, for the three months ended March 31, 2009.
Income from operations increased $1.8 million, or 24.6%, to $9.4 million, as compared to $7.6 million for the same period in the prior year. The operating margin increased to 10.7% for the three months ended March 31, 2010, up 80 basis points from an operating margin of 9.9% for the three months ended March 31, 2009.
The effective tax rate for the three months ended March 31, 2010 was 39.0% compared to 40.0% for the three months ended March 31, 2009. The decrease in the effective tax rate reflects a change in our effective state tax rate.
Net income increased to $5.7 million for the three months ended March 31, 2010, as compared to $4.5 million for the three months ended March 31, 2009, and net income margin increased to 6.5% from 5.9% for the same period in the prior year. Earnings per diluted share for the first quarter of 2010 was $0.35, compared to earnings per diluted share of $0.28 for the first quarter of 2009, an increase of 24.5%.
Liquidity and Capital Resources
Net cash provided by operating activities for the three months ended March 31, 2010 increased to $11.4 million, compared to $10.7 million for the same period of 2009. Days sales outstanding (DSO) decreased to 52 DSO as of March 31, 2010, compared to 54 DSO as of December 31, 2009. During the first quarter of 2010, $2.6 million was used for the acquisition of one physician practice and for earn-out payments on prior acquisitions, compared to $4.8 million in the same period of the prior year.
2010 Guidance
The Company reaffirms its guidance for the full year 2010 and expects revenue to be in the range of $352 million to $361 million and earnings per diluted share to be in the range of $1.34 to $1.43. The Company has provided this outlook based on the following assumptions: (i) weighted average shares outstanding of 16.6 million for the year; (ii) a 39.0% effective tax rate, and (iii) Congress passes legislation to prevent the scheduled June 1, 2010 reduction in the Medicare Physician Fee Schedule. Not included in the assumptions are (i) practice acquisitions completed after today's date, or (ii) gains or losses related to changes in estimates of earn-outs attributable to practice acquisitions that closed subsequent to December 31, 2008.
Conference Call Information
IPC The Hospitalist Company (IPC) will host an investor conference call to review the quarterly results at 5:00 p.m. ET (2:00 p.m. PT) today. To participate in the conference call, please dial 877-225-7695 (USA) or 720-545-0027 (International). In addition, a dial-up replay of the conference call will be available beginning April 26, 2010 at 8:00 p.m. ET (5:00 p.m. PT) and ending on May 10, 2010 at 11:59 p.m. The replay telephone number is 800-642-1687 (USA) or 706-645-9291 (International). A live webcast of the call will also be available from the Investor Relations section on the corporate web site at www.hospitalist.com. A webcast replay can be accessed on the corporate web site beginning April 26, 2010 at approximately 8:00 p.m. ET (5:00 p.m. PT) and will remain available until May 10, 2010 at 11:59 p.m.
About IPC The Hospitalist Company
IPC The Hospitalist Company, Inc. (Nasdaq: IPCM) is a leading national hospitalist physician group practice focused on the delivery of hospitalist medicine services. IPC's physicians and affiliated providers manage the care of hospitalized patients in coordination with primary care physicians and specialists. The Company provides its hospitalists with the comprehensive training, information technology, and management support systems necessary to improve the quality and reduce the cost of inpatient care in the facilities it serves. For more information, visit the IPC website at www.hospitalist.com.
Safe Harbor Statement
Certain statements and information in this press release may be deemed to be "forward-looking statements" within the meaning of the Federal Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release may include, but are not limited to, those statements set forth under the section titled "Guidance" regarding projected operating results, revenues, earnings, and IPC's growth opportunities and strategy. Forward-looking statements are often characterized by terminology such as "believe", "hope", "may", "anticipate", "should", "intend", "plan", "will", "expect", "estimate", "project", "positioned", "strategy" and similar expressions. Any forward-looking statements are necessarily based on a variety of estimates and assumptions which, though considered reasonable by the Company, may not be realized and are inherently subject to significant business, economic, competitive, industry, regulatory, market and financial uncertainties and contingencies, many of which are and will be beyond IPC's control. Important risks and uncertainties that could cause actual results, developments and business decisions to differ materially from those contemplated by any forward-looking statements are described in IPC's most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2010, including the section titled "Risk Factors", and actual results could differ materially from those anticipated in forward-looking statements.
In particular the following risks and uncertainties may have such an impact:
IPC undertakes no obligation following the date of this press release to update or revise any such statements or projections whether as a result of new information, future events, or otherwise.
-- Net revenue increased 15% to $87.7 million, with same-market area net revenue growth of 10% -- Patient encounters increased 14% to 927,000 -- Income from operations rose 25% to $9.4 million -- Operating margin improved 80 basis points to 10.7% -- Net income increased 27% to $5.7 million, or $0.35 per diluted share
SOURCE IPC The Hospitalist Company, Inc.
