Feb 5, 2010
Operator
Good morning, ladies and gentlemen. My name is Tina, and I will be your conference operator today.
At this time, I would like to welcome everyone to the IntegraMed fourth quarter 2009 earnings conference call. All lines have been placed on mute to prevent any background noise.
After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you.
Mr. Hlywak, you may begin your conference.
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 in this conference call contains time-sensitive information that is accurate only as of today, February 5, 2010.
IntegraMed undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. With that, I will now turn the call over to Jay, President and CEO of IntegraMed.
Jay?
Jay Higham
Thank you, John. And good morning, everyone.
Thank you for joining us today. Let me begin with some general comments on our Q4 and full year 2009 results and the overall health of the company.
And I’ll briefly review our growth strategy and prospects before turning the call over to John to review our results in greater detail. Overall, IntegraMed delivered healthy fourth quarter and full year results.
Despite some business headwinds, they were largely a result of the prolonged economic challenges affecting many consumers. Specifically, our overall business achieved 9% growth in revenue for both the quarter and full year, and 16% and 14% increase in operating income, or what we call contribution, for the quarter and full year respectively.
On the bottom line, IntegraMed achieved 14% and 15% increases in net income for the quarter and full year of 2009, resulting in EPS of $0.14 and $0.51 for the fourth quarter and full year respectively. As John will explain in greater detail, EPS was impacted by approximately $0.02 due to a tax adjustment related to one of our jurisdictions.
Importantly, our Q4 results suggest that the worst may be over as far as the impact of the economic downturn has had on our business performance. Moving on to each of our business segments, our Fertility Center segment continued to perform well despite some lingering economy-driven challenges, generating top-line growth of 5% in both Q4 and full year 2009 and growing contributions by 13% and 14% on a quarterly and annual comparison.
The performance drivers in this business were the following. Sales and marketing execution that continued to drive top-line performance above industry rates; ongoing operating discipline that has led to increased margin expansion; revenue cycle management improvements that led to a decrease in days sales outstanding or DSO; and new business development that led to three new fertility center contract acquisitions in December.
In terms of sales and marketing, we continue to make investments in growing the business. We now have the largest direct sales force in the fertility services marketplace with over 50 people in the field, calling and referring physicians and running ongoing marketing campaigns.
These ongoing investments have traditionally led to our fertility centers growing two to three times faster than non-IntegraMed fertility centers. During Q4 and the full year, same-store patient revenue grew by 3.2% at a time when our research indicated that the market was flat to slightly down.
In terms of operating discipline, we exercised strong control over operations in 2009, as is demonstrated by the fact that contribution margins expanded to 8.2% and 8.0% in Q4 and full year 2009, from 7.6% and 7.4% in 2008. We believe we have the capability for continuing to improve margins and obtain additional leverage from our growing base of fertility center operations across the United States.
Moving to revenue cycle management, we overhauled our procedures in 2009 and instituted better control and greater standardization over this important function. As a result, days sales outstanding, or DSO, was reduced from 32.1 to 24.9 days, a 22% improvement.
As most of you know, one of the most important determinants of success or failure in healthcare services is revenue cycle management. We believe we have world-class performance in this area, and it’s one of the key reasons behind new fertility centers joining with the company to gain access to the benefits of maximizing reimbursement and collecting revenue in a very timely and comprehensive manner.
Finally, business development was a big success for us in Q4. In early December, we closed on the acquisition of Regents Management Company, which manages three fertility centers in the Western US.
While the company has always prided itself on driving performance based on organic growth, we believe the environment we are in today uniquely suited to pressing our advantage and accelerating new fertility center contract acquisitions. In summary, our priority with regard to our Fertility Center segment remains to drive further efficiency and productivity at our centers while we work to expand our base of operations through new contract acquisitions.
We feel this combination of organic and acquisition-based growth will yield greatest benefits for our patients and shareholders. Looking at our Consumer Services segment, which is principally comprised of our suite of fertility treatment financing programs under the Attain IVF brand, we experienced a slowdown in growth rate in 2009, mainly as a result of the economic downturn, but we also saw the beginning of a rebound in performance around the fourth quarter following a trough midyear.
Revenue in this segment increased by 3% and 5% on a quarterly and full year basis. While this is below our traditional growth rate in the business, the fact that we are able to produce growth at a time when consumer credit collapsed and the average price point for our service is $25,000 makes our performance all the more meaningful and gives me great reassurance that the business is fundamentally sound and continues to hold great potential.
Operating income also rebounded nicely in Q4 2009 from declines earlier in the year and reflected the strong gains we achieved in both applications and enrollments. These gains reflect the recently implemented marketing initiatives and new product additions put in place during 2009 to make our Attain IVF suite of programs available to a broader audience of patients.
As an example, we launched Attain Multi-Cycle in the second half of the year as a way to provide an additional option for all patients with a lower-priced entry point into our treatment regimens. So far it’s proven to be a popular offering, especially with more cost-conscious consumers.
Compounding the economic pressures during 2009 was the impact on our business from a change in third-party lenders who provided funding to consumers seeking to enter our Attain IVF program. Historically, around 30% of patients who relied on third-party funding to enroll in Attain programs, making the withdrawal of our longstanding partner, CapitalOne, from this line of lending a meaningful impact on the business.
In fact, only 6% of second and third quarter patient enrollments were able to utilize third-party financing support. At the beginning of Q4, we brought on board Springstone Patient Financing.
Springstone has an experienced team of lenders, with whom we have worked in the past. They are very knowledgeable about fertility treatment lending and have been able to deliver a product that reflects the strong credit performance they achieved in the past fertility lending programs.
We reflect a strong credit performance they achieved in the past. We view this as a win-win for IntegraMed, as we can shelter our company from all credit risk in the program while continuing to provide an attractive financing vehicle to those who needed.
As a result, in Q4, approximately 20% of patients were able to finance their Attain IVF program fee. So we are seeing this issue become less of an impediment, as we are continuing to grow.
The combination of new product development, new financing options, and a stronger investment in sales and marketing has resulted in an increase of 12% for the quarter and 5% for the year for patient applications. We believe this is proof we are on track in rebuilding the momentum of this important segment of our overall business.
A discussion of Consumer Services would not be complete, however, without commenting on pregnancy rates and their impact on revenue and profitability. During Q4 and 2009, we saw pregnancy rates modestly lower compared to the year-ago rates.
As pregnancy is an important driver in revenue recognition and ultimate profitability of our Attain program, these success rates will continue to cause variances in year-over-year and sequential operating performance. Moving on to the third business segment, Vein Clinics, we are very pleased with the continued progress and growth in this segment.
Revenues grew by 25% in Q4 ’09 versus Q4 ’08 and by 27% in all of 2009 versus 2008. Our Vein Clinics segment is becoming an increasingly important contributor, both at the top-line as well as at the operating income level, where contribution grew by 48% and 55% on a quarter and full year basis respectively.
These improvements reflect both internal same-store gains as well as the benefit of new clinic additions throughout the year. They also reflect the benefit from our increased marketing efforts.
In fact, marketing has been the key driver behind improvements in demand for treatment. Our Vein Clinic business is highly promotionally responsive, and we have made heavy investments in direct response advertising to take advantage of that fact.
By retooling and refining our marketing in this business, we have experienced dramatic improvement in patient volume, with a 55% increase in new patient inquiries and a 32% growth in new patients versus the prior year. About 20% of this increase was on a same-store basis and 12% in new clinics.
So we continue to do a good job of improving performance at existing clinics without having to rely exclusively on new clinics to drive performance improvements. As successful as we are at recruiting new patients, we also have to do a good job of treating and processing patients through the system.
Our Vein Clinics business has a highly standardized training program for new physicians and staff and highly standardized operational systems. This ensures that we have a consistently high quality service that keeps patients in treatment and maximizes clinical value as well as operating results.
As a result of the benefit of this system, we continue to have good performance in what we call yield management, which is the percentage of patients who have a first leg treatment that go on to a second leg treatment. This measure, already at a very high level for us, increased from 70% in 2008 up to 71% in 2009.
Finally, as with Fertility Centers, revenue cycle management is increasingly important to the overall success of Vein Clinics. In 2009, our retooled revenue cycle management system resulted in a drop in DSO from 54.9 days to 49.3 days, a 10% reduction.
As always, it’s important to note that opening new clinics leads to startup costs that create a drag on operating performance for the first nine months of operations. During 2009, we did open two new clinics, but this was not a significant issue for us.
However, this will be something to keep in mind as we move further on into 2010 and roll out a more aggressive growth strategy to open eight new clinics. Two new announcements we have made so far this year regarding new clinic openings are evidence that we are on track to increase the pace of new clinic openings in 2010.
In summary, despite the challenges posed by the economy, IntegraMed continues to deliver healthy financial results and we continue to both perfect and expand our business model. We are excited about the future and the opportunities that lie ahead to expand our new fertility contracts, our new consumer service offerings and affiliates, and further build out new vein clinics.
With that, let me now turn the call back to John Hlywak, the Chief Financial Officer, to discuss the fourth quarter results in greater detail. John?
John Hlywak
Thank you, Jay. As Jay mentioned, facing a weakened consumer, the overall strength and diversity of our business model enabled us to weather the challenging economy and deliver modest top-line growth and stronger bottom line growth.
Overall, compared to the fourth quarter of 2008, total revenues grew 9% to $54.7 million, while operating income grew 16% to $5.4 million and EPS grew 17% to $0.14 per share. Comparing the full year 2009 to 2008, total revenues grew by 9% to $216.8 million, operating income grew 14% to $20.9 million, and EPS grew 13% to $0.51 per share.
It is important to note that the fourth quarter’s tax rate and EPS was negatively impacted by a catch-up adjustment for taxes in one state, which amounted to an approximately $0.02 per share negative impact on EPS and brought our tax rate up to 48%. Going forward, we expect taxes in this jurisdiction when we have a nominal impact on our tax rate and that tax rate should settle back to just under 42%.
Gross margin improved by 50 basis points to 9.9% for the quarter and 40 basis points to 9.6% for the full year. Net income also improved by 14% for the quarter to $1.2 million and by 15% to $4.5 million for the full year.
Drilling down to divisional performance, beginning with our Fertility Centers segment, revenue increased by 5% to $35.8 million in Q4 and by 5% to $145.3 million for the full year, both healthy gains in light of the economic slowdown and a deterioration of consumer demand, as well as a loss of the third-party contract mentioned earlier in the year. Contribution in operating income increased by 13% for the quarter to $2.9 million and by 14% on a full year basis to $11.6 million.
The gross margin was flat Q4-versus-Q4 at 8.1%, but it did improve about 60 basis points to 8% for the full year. With regard to key metrics for this segment, both inquiries as well as new patient visits increased on a quarterly and full year basis.
In terms of the number of IVF cycles, we were about level with Q4 ’09 with Q4 ’08, however, when we consider our December acquisitions. And then we saw an increase of about 2% on a full year basis.
While this appears to be modest growth, when you keep in mind that the loss -- we had a loss of several hundred IVF cycles from that payer contract termination. Moving on to Consumer Services, this segment saw revenues increase by 3% in Q4 ’09 to $5.6 million compared to the year-ago period and an increase by 5% to $20.8 million on a full year basis.
In terms of contribution, operating income rose by 4% to $1.4 million in Q4 ’09, and it however decreased by about 4% on a full year basis to $5.2 million. We can confirm that demand remains healthy in the sectors, but patient applications along with enrollments increased by 12% and 13% respectively compared to Q4 ’08 and by 5% and 1% respectively when you look at the full year of 2008.
It is important to note that the Consumer Services group was not able to leverage the increased Attain IVF program offerings that they brought to market until later in the year with those new offerings beginning to contribute in the fourth quarter. Looking at our third business segment, the Vein Clinics division experienced strong top-line trends in Q4 and on a full year basis.
Revenue grew 25% to $13.3 million in the fourth quarter and 27% to $50.6 million for the full year of 2009. This revenue growth shows the benefit of our new patient recruitment and marketing programs in creating additional patient demand.
Importantly, the leading indicator for this business, new consultations, achieved 42% increase in both Q4 and for the full year. Contribution for this segment increased significantly with Q4 operating income growing 48% and it also grew 55% on a full year basis.
Commenting on the business as a whole, G&A expenses increased 4% in Q4 ’09 versus Q4 ’08 and by 14% on a full year basis. This was mainly due to judicious headcount additions and related compensation recruiting costs.
While we had an increase in absolute G&A dollars, G&A dollars remained level as a percentage of operating income. Net interest expense declined 23% in Q4 ’09 and for the full year as well.
This was principally due to lower average interest rates and reduced outstanding balances. Income before income taxes, what I think is the most important measure of non-interest performance, was up 40% for the quarter and 21% for the year.
Moving to the bottom line, Q4 net income grew 14% to $1.2 million compared to 2008 and by 15% to $4.5 million for all of 2009. That was a 17% -- that resulted in a 17% increase in earnings per share for the quarter and a 13% increase to $0.15 per share on a full year basis.
Days sales outstanding for the consolidated company improved to 32.1 days in the fourth quarter from 40.5 in the fourth quarter of last year, reflecting our continued effort in this area. This discipline is particularly significant given a marked shift in some areas of our business on cash-based procedures to insurance-based ones.
Finally, turning to the balance sheet, IntegraMed continues to enjoy a healthy and solid financial position. Our cash position increased slightly to $28.9 million compared to the year-ago period.
This modest increase reflects improved cash flow from operations and cash outflows related to acquisitions and fixed asset acquisitions. As we mentioned in the press release, we will use cash in the fourth quarter of 2010 for the payment of accrued physician compensation, upfront payments for marketing, advertising and media buys, as well as insurance.
I think these payments may consume as much as $6 million of cash in the first quarter. Our debt decreased slightly from $29.2 million at year-end 2008 to $26.4 million in 2009 as a result of our normal debt payments.
This debt is less than two turns of EBITDA. In closing, we are pleased with the results for our fourth quarter and full year 2009, including our revenue, net income, and EPS growth.
We remain focused on delivering clear and tangible value to our partners, affiliates, and more importantly, our patients. Before we open the call to questions, let me remind you that the law severely restricts comments that we can’t make on any capital raising efforts.
You will find important disclosures on our Form S-1 that was filed earlier this week with the SEC. Therefore we appreciate at the Q&A session of this conference call that you focus on our results and the outlook for IntegraMed.
With that said, I’ll now turn the call over to the operator and open the floor to questions.
Operator
(Operator instructions) Our first question will come from the line of Greg Williams with Sidoti & Company.
Greg Williams
I had a couple questions on the fertility centers. You guys had nice margins around 8%.
And I’m just wondering with the ramp-up of the three new partnerships, is it safe to assume that that 8% might get flipped a little bit or do you think that’s sustainable?
Jay Higham
No, I think that -- look, one of the things we’ve talked about, first of all, is that the newer -- the historic margins in this business are going to be improving. We have better deal terms that we are able to get now because we do command a pretty substantial position in this marketplace.
So we are going to continue to see margin expansion is my expectation.
Greg Williams
Nice. And if you look at sequentially in the fertilities, it sounds like you guys are down in visits about 9%.
I was wondering you can comment on that.
Jay Higham
Yes. You are talking about from the third quarter to the fourth quarter, Greg?
Greg Williams
Yes.
Jay Higham
Yes. The fourth quarter is a tricky -- it's a tricky period.
It’s a period when we tend to see a lot more volatility in the business, and I think in other quarters, our labs for the most part close down for much of the month of December. Patients don’t typically like to initiate treatment when the holidays are approaching.
So when you take a look at some of those things, like new patient visits or even IVF treatments, those tend to be more volatile. And I’m not sure I would put too much faith in that as an indicator of the health of the business in the fourth quarter.
It’s kind of a volatile period.
Greg Williams
Okay. And then revenue seemed actually relatively flat sequentially though.
So is there a pricing increase going on or something?
Jay Higham
No, not really. It’s -- again, we did get the benefit of our -- in December of the new three new additions.
So you don’t really see much pricing power in healthcare services these days.
Greg Williams
All right. Sure.
And just moving on to consumer, is the Multi-Cycle Attain IVF offer, is there any risk that you think of cannibalization or maybe patients opting downstream to that lower-priced offer?
Jay Higham
That’s a great question, Greg. Very perceptive.
It was definitely one of the things that was foremost in our mind and we rolled this out very carefully. We tested it at several leading centers before we made it more widely available to see what type of consumer response we were going to get from it.
And there has been very little cannibalization, if any. It’s -- the biggest impact from this program is by making a wider patient population have availability to the benefits of this type of program.
So with the regular refund program, not everybody will qualify for that. So there is a big segment of the population who can’t get access historically to the benefit of these types of programs.
With the Multi-Cycle, it’s effectively making it accessible to everybody who requires IVF treatment. And so what we are seeing is -- and we do track this.
Very little -- very few people who would qualify for the refund or actually opting for the Multi-Cycle, it tends to be more the case of people who didn’t have -- who didn’t qualify for the refund at all are the ones who are enrolling.
Greg Williams
Okay. So do you think that’s money you would have -- that would have fell off the table offset any cannibalization there?
Jay Higham
Absolutely. In fact, well more than offset at this point.
Greg Williams
Okay. Good to know.
And moving to the vein care segment, you supplied same-center sales -- or margins, rather, in fertility clinics, and you mentioned that margins will be maybe depressed as you expand and accelerate your clinics. Do you have maybe a contribution margin for Vein Clinics that have been around for a year-plus or a range?
Jay Higham
The contribution -- the average contribution margin for, what we’ll call the mature clinics, the ones who have been around for more than one year is 25%.
Greg Williams
25%.
Jay Higham
Yes. And so we lose a few percentage points when you include all clinics, new as well as the ones that have been here for more than a year.
So we lose maybe between 4% and 5% on those when you lump it all together. But the mature clinics generate on average 25% contribution margin.
Greg Williams
Okay. And John, I just had a question with the -- in lieu of the two set of taxes, what can we look at?
Is 40% a good tax rate going forward?
John Hlywak
Greg, I think it’s more closer to 42% going forward.
Greg Williams
42%. Okay.
And I did have some follow-on offering [ph] questions, but it sounds like I have to wait and see. Okay.
Thanks, guys.
John Hlywak
Thank you.
Operator
Our next question will come from the line of Brooks O'Neil with Dougherty & Company.
Brooks O'Neil
Couple of questions. First, Jay, you mentioned that it’s likely that your pace of acquisitions in the Fertility Clinic business might accelerate.
And you also mentioned in response to Greg’s question that you are seeing somewhat better pricing in that arena, which is great. Have there been any other changes in the acquisition environment or in the types of practices you might be able to look at in the last year or so?
Jay Higham
Another great question, Brooks. Thanks for that.
Yes, we are certainly -- if you go back over, say, a ten-year period of time for the company, we’ve been very disciplined in our approach to acquisition. We tend -- historically we’ve tend to do maybe one a year and put overwhelming focus on making sure that we are doing a really good job of integrating those acquisitions and then growing that business.
So for a company that’s been in business for 25 years, we have 14 full service partners under this program that has come through acquisitions. So our pace of acquisition historically over that period of time, it’s not what I would call a rollout strategy.
Okay? We do see, however, an opportunity to accelerate that pace for a couple of reasons.
Reason number one is that we are a bigger company. We have more infrastructure and we have more capacity.
That’s number one. Reason number two is that we have developed over that 25-year period of time a really solid reputation in this field of being able to deliver on what we promise.
And so physicians have a lot of visibility into what IntegraMed is all about and what they are likely to get from an affiliation with us. And then reason number three is that the market environment that we are entering right now is one that I think is uniquely suited to what we call the benefit of the IntegraMed effect, which is physicians are really going to not only benefit from the historic two to three times growth in revenue that they can get on their own, but an increasing focus of ours, which we, I think, demonstrated very nicely this year of margin expansion.
So we are really excited about the opportunity to -- and again, in a disciplined way, begin to expand the phase of acquisitions. And we saw that in December where we were able to land these three transactions.
So it’s not the case that you are going to see us go from two to ten in a year, we are going to do two to three to four in a year. And then the last point I would make on that is historically our sweet spot has been what we call modest-sized fertility centers, the $5 million in patient billings and then to grow those over a period of time to two, three, four, 5X in size.
We are seeing an opportunity to upsize the transactions to get into the larger centers. And these are centers that are not -- that are doing $15 million, $20 million, $25 million in patient billings.
So, not only do we think we can increase the number, but I think we also feel that we can increase the size of these transactions.
Brooks O'Neil
Yes. And just as a follow-on, and I know you haven’t done it yet, so I’m asking you maybe to speculate a little bit.
I understand it’s an uncomfortable environment to do that. But do you think you have opportunities or you would have opportunities to grow those larger centers, maybe not two, three, four times, but at some respectable rate post-transaction?
Jay Higham
Yes, absolutely. I mean, this is still a highly fragmented field.
Our historic growth has been a function of bringing new physicians into these centers out of residency or fellowship training who will benefit from infrastructure, sales and marketing, and the operational support that we have. But it’s also a function -- this doesn’t get quite as much visibility, but it’s also a function of taking physicians out of competing centers who already have a base of business and bringing them over to ours, and in some cases, even doing some end market mergers.
And we’ve had a consistent track record of doing that as well. So -- there is plenty of opportunity for us to take these big centers and continue to grow and develop those centers.
After all, we have four of the top five centers in the United States today by volume. And those are growing just like the smaller ones.
Brooks O'Neil
That’s great. Okay.
I want to shift gears to the vein business. And I just want to ask you -- clearly it’s performing well.
Has it performed to your expectations since the acquisition? And it sounds like you are prepared to perhaps ramp up the growth rate in 2010.
Maybe if you could just talk a little bit more about how you see that and how that will impact the company this year.
Jay Higham
Okay. I couldn’t be more pleased with what’s transpired with the Vein Clinic acquisition.
It met every one of our expectations and even exceeded some. We have -- I think we delivered exactly what we said we were going to deliver.
And we’ve got a really great team of people in place out there. We did have to do some retooling on the business.
We knew that going in. We made the investments we needed to make.
And we are benefiting from that right now. If I could find two or three more Vein Clinic type opportunities, that would be a great boon to the business.
We are 100% focused on continuing to drive growth and development in that segment as well as the others of our business. We are optimistic that we are going to be able to accelerate the new clinic.
I mean, I can’t conceive of accelerating the new patient volume any faster than what we have this year. I mean, this was an absolute home run for us as far as really retooling the marketing.
So from a marketing point of view, I think we are hitting on all cylinders. It’s unlikely that that’s going to increase at a faster pace.
I mean, let’s be honest about that. So we do need to shift our focus and get better results in terms of new clinics.
And what that boils down to for us is being good at recruiting new doctors. The business model that we have in place for the Vein Clinics is a startup model.
It requires us to find physicians, recruit physicians from where they are currently -- what they are currently doing into, in effect, a new career. We take primary care doctors, family practice, internal medicine, ER physicians.
Also now we’ve recruited our first interventional radiologist. And for the primary care and ER physicians, we put them through a rigorous training program in an effect to teach them a new career in medicine, one that they are not -- they don’t come to us equipped to do this.
They need the training. And I think what happened in -- our sense about what happened in 2009 is that we had a lot of physicians who were interested.
But they -- with the level of uncertainty around the economy and the level of uncertainty around health reform, our feeling was it sort of hit the pause button before making a leap into a new career, which does imply some risk, some personal risk to these people. Now that the things have seemed to settle down and frankly because they can look at the type of performance that we deliver through this rocky period of time and there is little more visibility around some of the regulatory issues, we are seeing the pipeline begin to firm up and physicians really in the mood to start pulling the trigger on some of these things, and we have been able to announce two new clinics this year so far.
So we are optimistic that we are going to be able to accelerate the pace.
Brooks O'Neil
Great. And then I have just one last question.
I think a lot of people view your business as maybe driven by private-pay. And I’m just curious if you see it that way, and if not, maybe you could describe how you see it.
Jay Higham
Another excellent question. So -- yes, I think entering sort of around this point last year, the casual observer took a look at IntegraMed and said, okay, this is a company that is obviously in the fertility market, that’s a heavy self-pay, high-ticket item situation.
That’s going to get crushed. And they looked at the Vein Clinic and not really knowing too much about it, but they thought it was cosmetic in nature.
And I think that we’ve kind of put those issues to rest during this last year in terms of the performance. Yes, fertility does have a healthy self-pay component in fact.
If you look at our Fertility Centers business, 50% of the revenue in that business is self-pay and 50% of it is covered by insurance. So there is a very healthy self-pay piece to it.
But I think what people don’t appreciate, we haven’t been through this, is that there is a very significant emotional component. And patients, if at all possible, are going to figure out how to overcome the economic challenges.
So yes, there was a bit of a slowdown and there was a bit of a shift from some of the self-pay piece to more insurance-based, but nowhere near the type of impact that the economy -- that one would have expected based on the sort of self-pay exposure here. So I guess the way to describe it is, from a patient point of view, this is anything but discretionary.
This is not viewed as a discretionary situation for patients. When they have infertility and they want to start a family, this is not a discretionary situation.
They will put off doing almost anything else. And then I guess if you move on to the Vein Clinic piece, that one is also a very big misperception.
This is not cosmetic. If you look at -- it's medical.
If you look at the revenue, we get -- 95% of our revenue in that business is insurance reimbursement. So insurance is definitely not reimbursing for a cosmetic situation.
There are cosmetic procedures that we will do and can do. That’s become a very minor part of the business that people want it.
We are certainly willing and capable of doing it. But overwhelmingly, this is a medical condition that gets good reimbursement from insurance companies.
And then just to round it out, obviously the Consumer Service piece is completely self-pay. It’s a very expensive, high-ticket.
It’s the price of an automobile, you know, $25,000. But there again, just to show the resiliency and the emotional component behind this and the value that we provide for that fee, patients who really stepped up and are continuing to buy this, and even though I would say everybody would concede that we are not completely out of the recession, that business has really came on strong in the fourth quarter and we are back on track.
Brooks O'Neil
That’s great. Thank you very much.
Jay Higham
Thank you.
Operator
(Operator instructions) Our next question will come from the line of Dennis Van Zelfden [ph] with Brazos Research [ph].
Dennis Van Zelfden
Gentlemen, I do not have the S-1 filing in front of me, but can you tell me what the use of proceeds are for the recent offering -- recent filing?
Jay Higham
The use of proceeds is in the filing. And I would encourage you it’s readily available on file and easily accessible for you.
And again, my -- the attorneys are about ready to jump at me right now if I say anything more about that.
Dennis Van Zelfden
But that’s just -- it’s just a fact. I mean, it’s public knowledge what to use.
I just -- my computer is acting up and I just can’t pull it up and I couldn’t last night either.
Jay Higham
Okay. Then I can summarize just by saying that the use of proceeds is for pursuing what we were discussing earlier in this release, which is to more fertility center acquisitions and vein clinic openings.
Dennis Van Zelfden
Okay. I suspected that was the case.
I guess given that, is your balance sheet, which I think you even described as fairly strong, and/or your unused credit lines not large enough to make an acquisition first?
Jay Higham
We have been making -- continuing to run the business. We made some acquisitions in December, as I mentioned.
Unless you get in and really understand the company in great detail, it does appear that we have a lot of cash that should be able to be sufficient for the type of transactions that we’ve been talking about. There is really not as much available cash as what it appears.
We have a fair chunk of that that’s due to the physicians for their compensation that we really can’t tap. There is another very significant component there that is being held for as patient deposits for this Attain IVF program and really need to be made available for paying -- again, paying physicians for treatment, paying our centers for treatment.
So it’s -- once you start drilling down into what our available cash is, it’s much less than what you see there on the balance sheet.
Dennis Van Zelfden
Okay. What kind of multiple of EBITDA do you typically pay for acquisitions?
Can you tell me that?
Jay Higham
We are typically -- we don’t do it on a multiple of EBITDA basis, but we are paying typically around five times what we call pre-distribution earnings, which are earnings available for distribution among shareholders.
Dennis Van Zelfden
Okay. I am new to your company.
I have been a sell-side analyst for 25 years, but I’m new to your company. So forgive me for if I just don’t know the complete history.
But just a general comment, by my calculations, your current enterprise value to EBITDA for your company is approximately four times, give or take. And it just seems that that is an incredibly low valuation to be selling stock, particularly 2.5 million shares on, say, 8.8 million outstanding.
Can the current business, as you have it right now, not grow EBITDA fairly substantially -- or decently, or whatever number -- whatever word you want to use, over the next year such that the stock price hopefully will rise and you can sell at a lot higher and not have to sell it so cheaply?
Jay Higham
Well, it’s hard to speculate as to what’s going to happen in the future, Dennis. I mean, we’ve been -- you know, I’ve been here for 15 years.
We’ve certainly been pursuing I think a very disciplined approach to growth. And at times the stock has been valued at a higher level; at times it’s been valued at a lower level.
It’s hard to know what’s going to happen over the short-term.
Dennis Van Zelfden
I just hate to see any company -- and again, I have no history with you, but I just hate to see any company sell stock at four times price value to EBITDA. Thank you, gentlemen, for your comments.
Jay Higham
Thank you.
Operator
And we have no further questions at this time. Are there any closing remarks?
Jay Higham
Okay. Thanks, operator.
I guess I can conclude by saying -- by thanking everybody for participating in today’s call. I’d also like to take the opportunity to acknowledge the dedication of all the members of the IntegraMed team for their hard work as well as the physicians and patients who choose to work with us.
As we begin 2010, our business is focused, energized, and well positioned to take on leadership and growth opportunities before us. We built the foundation for a promising future for our partners, our employees, and our investors.
And we are incredibly excited about the future. We look forward to speaking with all of you in the future and reporting on our progress, as we progress through 2010 and close out another quarter.
In the interim, if you have questions or wish to schedule a meeting or call with management, please contact Norberto Aja with our Investor Relations firm Jaffoni & Collins at 212-835-8500. Thank you very much.
Operator
Ladies and gentlemen, this does conclude today’s teleconference. You may all disconnect.