Good morning. My name is Fredrick and I will be your conference operator today. At this time, I'd like to welcome everyone to the IntegraMed Second Quarter Investor 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. Norberto Aja, Investor Relations. You may begin your conference.

Thank you, operator. Good morning, everyone, and thank you for participating in IntegraMed's Second Quarter Conference Call. I’m joined today by Mr. Jay Higham, President and CEO; and by Tim Sheehan, Vice President and Interim CFO of IntegraMed. Before we begin, however, I would like to caution that some of comments made on this call, may refer to certain measures such normalized earnings, which are not calculated in accordance with Generally Accepted Accounting Principles or GAAP. Management believes these results are representative of the performance of the ongoing business of the company. For recalculation and reconciliation of normalized earnings to GAAP results in accordance with Regulation G under the Securities and Exchange Act, please see the company’s press release furnished as an exhibit to its current report on Form 8-K filed with the Securities and Exchange Commission today August 4, 2011, which maybe found under the News tab of the company’s website at www.integramed.com. The content of this conference call contains time-sensitive information that is accurate only as of today, August 4, 2011. IntegraMed undertakes no obligation to revise or update any statements to reflect events or circumstances occurring after the date of this conference call. With that, I'd now like to turn the call over to Mr. Jay Higham, President and CEO. Jay.

Thank you, Norberto, and good morning everyone. We appreciate your joining us today and hope you’ve had a chance to review our Q2 release issued earlier this morning. Before I review our Q2 operating results, I do want to explain the background or around the $1.65 million charge. The expense is a pre-tax provision for the settlement of medical malpractice suit brought against one of our partner fertility centers, a physician at the practice, and the company which reduced our reported net income by about $1 million. Absent this charge, IntegraMed would have reported normalized EPS of $0.12 per share for the quarter. And though, we have disclosed this as a legal risk factor in our last two quarterly SEC filings. And malpractice is unfortunate reality of healthcare and healthcare-related business, this is not the outcome we expected. It was only in late May that we gained clarity on where the case is going, and since then, we’ve been actively involved in reaching a satisfactory resolution on the settlement of the terms we reported today. Despite by this setback, we continue to believe our operating structure provides substantial protections against medical malpractice liability, both in terms of how we’re structured and through insurance. We do not believe that this case represents an unfavorable precedent and materially changes our business risk. However, having endured this proceeding and having increased our insurance coverage over the past year by creating an additional entity level of coverage. There maybe other steps we can take, such as requiring each nurse to carry an additional level of individual malpractice insurance, which we are evaluating as well. I want to turn the basic operations, I understand there’s likely to be other questions regarding this case and I’m prepared to address those in detail during the Q&A. With…

Thank you, Jay. Looking at the income statement overall revenue increased by 11.8% to $69.1 million versus Q2 2010. The increase was the result of an 19.8% jump in revenue at our Vein Clinics Division, as recently opened clinics begin to contribute to the top line and a 8.9% increase in our Fertility Division. Total contribution for the second quarter of 2011 was $5.4 million. This number reflects the continued significant investment we are making to grow our vein business, G&A costs for the quarter remained relatively steady on a year-over-year basis. Our tax rate in the second quarter was approximately 44.8% as compared to 43.9% in the same period last year. We expect our income tax rate to approximate 40% over the second half for this year. As we reached a critical number of vein clinics, the impact of new clinical openings on operating income and earnings will diminish as it will become clear that our business is indeed performing at a high level. We expect that we will be able to drive continued revenue growth to the bottom line over this second half of the year. Moving to the balance sheet, our cash position increased to $53.9 million versus $50.2 million at the end of 2010, primarily as a result of the cash generated by the business. We believe the company’s current cash position and its access to capital will allow us to successfully execute on our growth strategy going forward. While accounts payable decreased from $3.6 million at December 2010 to $2.3 million, accrued liabilities increased from $17.3 million to $23.3 million as of the end of the second quarter. Primarily due to accrued payments for physicians and the timing of payroll and certain expenses. Regarding our bank facility, we continue to pay down this term loan…

Thank you. (Operator Instructions). Your first question comes from the line of Nick Halen.

Hey, good morning guys.

Hi Nick.

First question I had is, just in terms of the medical malpractice that $1.6 million that you saw, is that – that's just a one-time thing and none of that will carry into future quarters?

That’s correct.

Okay. All right. And then now, just on the fertility side, I mean obviously it's a market that, you know, like you said the growth has been pretty flat to single-digit and I was just wondering, just what the pipeline looks like now in terms of acquiring new partners and where you are starting to see opportunities and I guess, what are your expectations going forward on that front?

Yeah, Nick, it’s a great question and obviously we raise money in order to be able to put the money to work and make acquisitions. I do think that where the market is right now which is flat to very small increase. In some market, it’s different in different markets around the country. Some markets are actually down. We feel that this is a target-rich environment, we feel that this is a hostile environment for a lot of these centers. It's a high fixed cost business used to be relatively easy to grow the top line, not the case from most providers now. And we are entering a phase of the evolution of this field where we feel there's going to be a lot more consolidation in order to drive efficiencies and that’s what going to be – enable people to show improved performance in this type of environment. There is nobody else out there who has the capital or the operational capability of driving those operational performances – that type of consolidation efficiency improvement of IntegraMed and we feel it's just a matter of time. They are willing physicians and fertility centers out there, the question comes down to price. And we need to maintain discipline around price and not overpay. So we’re willing to pay a fair amount, but we are not willing to overpay and that’s really what’s going to drive the pace of consolidation here.

Okay. Thanks for that. And just one more question, is there any chance that you guys would end up lessening the requirement to be accepted into the Attain IVF refund and then multi-cycle programs, if say the economy turns south and you guys start seeing less volumes?

No, there is no – there's no, I can’t see any benefit for us doing that. I mean this is a program that has a lot of consumer appeal. This is the program that we were able to continue growing, although at a very slow rate through the teeth of the last recession in 2008, 2009. So we’re confident that this is a very substantial value proposition for consumers. I mean, I think the bigger issue for patients enrollingness during the last recession was availability of credit. This is the one that does require. It has a price point of sort of mid $20,000 range and does – for most people it requires, even though we’re dealing with the more affluent population by definition, most people do want to finance this and consumer credit was scarce during the last recession. We never wanted to use our balance sheet to provide credit. That’s not our business and we – I think we did a solid jobs through the last recession, if another recession comes along we'll honker down and continue to perform and eke out improvements where we can. So I’m not too concerned about that.

Okay. Great. Thanks.

Your next question comes from the line of Brooks O'Neil.

Good morning. I have a couple of questions. First, I guess, obviously, you spoke a little bit about the legal situation and it sure sounds in general like the one-off situation, but if you could provide any additional color regarding the specifics there and why you believe it’s more of a one-off situation? That would be very helpful, Jay.

Thanks for the question, Brooks. And I’m very happy to do that. I’m glad you raised the question. Okay. So first, I think the first thing to understand is that IntegraMed, we have a management contract with each of the fertility center of PCs, professional corporations which is embedded physicians. We do not employ physicians. We provide contract management services to physicians. It's a very standard structure that all companies that kind of look like us use. And it's really required throughout United States by regulatory, through the country's regulatory requirements which prohibits companies like ours from practicing medicine, it's called the corporate prohibition against corporate practice medicine. So, even if we wanted to which we don’t – we don’t practice medicine. We don’t employee doctors and we don’t practice medicine by definition. We are, however, affiliated with the physicians and we do employee all the non-physician clinicians. So, the nurses is an example and the embryologists. And we do get, from time-to-time we do get named in malpractice cases because we do employee people who are involved in the treatment of patients and not the primary provider of care obviously and they are not physician, but they are involved in taking histories and assisting the physician in the provision of healthcare. In every other case that we've been involved in here IntegraMed – malpractice does rise from time-to-time, the company has been successful in getting itself removed, dismissed from this cases just because of our structure and the fact that we don’t practice medicine. We do have and we have had historically entity level coverage which covers us in the event that the nurse does get dragged into a case and since I said this, this does happen from time-to-time but in all other cases we have been successful…

Sure.

So, again, sort of a black swan type situation. All the facts lined up against the physician. I want to emphasize these are good physicians. We’re very happy to be affiliated with this group, it's just a really unfortunate circumstance for principally for the young woman obviously.

Sure. Well, all that color is very helpful and it certainly makes a lot of sense to me. Let me just shift gears and ask you, if I understand your release in what you’ve said so far correctly, it seems to me like the vein centers that you’ve opened over the last 12 to 18 months are ramping generally consistent with your expectations. But if you could provide any color on sort of the nature of the ramp and what you're seeing particularly in light of the current economic environment that would be helpful?

Great, well we’re ramping, I think in the pattern, that exactly the pattern that we had communicated last year and reaffirmed earlier this year. We expected to sort of flip over into a sort of break even position in the second quarter. We did that actually in the month of June before the – call it the – well, call the 2010 class of clinics that were opened. Among those clinics we have some that are superstar clinics and some that are lagging in performance. But overall, as a class, these are – this is exactly the performance that we had expected and anticipated. I could go to individual ones and say, yeah, that one is actually way exceeding our expectations and others that are underperforming our expectations. But as a group, this is exactly what we have anticipated. So, we are very encouraged. We do anticipate – we have $400,000 in startup losses for that group for the second quarter, all of which were incurred in the first-two months, because the third month of the quarter was break even for us. We do anticipate that we will have similar type of startup losses for fourth quarter and frankly really for the – here and out, I mean, we’re going to have – my expectation is we are going to startup losses every single quarter into the future. Because we are into a program here of a consistent program of opening new vein clinics. And so we want and we expect to accelerate that over time. We were not planning on accelerating it next year, so we anticipate having a similar level of startup losses next year, but we are going to have a bigger group to – of mature clinics by that point in time to begin to offset those startup losses. So, over time these startup losses will although they'll always be there will become a smaller and smaller percentage of our performance. Brooks O’Neil: Sure. All that makes sense. That’s helpful. And then just one last question. Obviously, in the recent weeks there's been a lot of concern among healthcare investors about potential for cuts and reimbursement under government programs, particularly Medicare and Medicaid. Obviously, a meaningful portion of reimbursement in vein centers is for Medicare. Do you have any sense at this point of potential changes in reimbursement under the Medicare program for veins right now?

Wow, Brooks, you are a continent healthcare analyst. Great question. We have taken pains to minimize our exposure to Medicare. Company-wide, we have above 3% of our revenue that comes from Medicare through vein clinics business, it’s about 13%. We can do Medicare all day long if we wanted to, but we take – we make an effort to limit the amount of Medicare that we get that we have in these clinics. I'm very respectful of reimbursement risk and in healthcare services I’ve done this long enough to understand that healthcare services, you don’t generally see increases in reimbursement. It's usually sort of a gradual deterioration over time. I think the good news associated with that type of environment is that our business model where we have aggregated a large number of providers in these two segments, really do drive economies of scale and improved performance and we get better performance on revenue cycle management, in the overall cost structure of the business because we are aggregating such a large number of providers. We think this type of business model, whether it’s, you know, in a single specialty across multiple markets or among more driven by large regional hospital providers. This type of larger, more organized provider entity is really what healthcare reform is going to encourage. So we feel like we are ahead of the curve there. We are well positioned to take advantage of those market forces which are going to drive providers into larger organizations like this one. I don’t expect reimbursement to improve, if anything it will probably deteriorate. We haven’t experienced any deterioration over in the four years that we’ve owned our vein clinic business. We enter markets that have better reimbursement. We enter markets that have worst reimbursement, it’s why we are exiting Florida, because the reimbursement there is so bad. And we just don’t, you know, there is really no way to overcome bad reimbursements. So that’s why we are exiting Florida. We take into consideration new markets that we enter and we try to be very smart about where we are positioning the business to try and minimize the effect of these types of changes.

You have a question from the line of Kevin Ellich.

Good morning. Thanks for taking my questions. Just following up on that last question, could you provide us the, just overall payer mix for the business?

Well, we ought to break that down by segment. So our fertility business is about 50% self-pay and the balance is commercial insurance of various kinds, HMOs, PPOs, no government reimbursement in that business. Our vein clinic business is 98% insurance, 2% self-pay. Again, there is a self-pay segment to that business, which tends to be more cosmetic. So spider veins and more cosmetic issues, we have positioned the business over time until to that more to a medical – the medical segment of that business because there is good reimbursement right now. And we are wanting to make access to that reimbursement, so we have filtered it in that direction, but 98% of it is insurance, and of that, you know, of a 100% of our revenue in that business is 2% self-pay, and like I said earlier about 13% is Medicare, we don’t have any Medicaid exposure.

So, then the rest would be commercial or managed care, right?

That’s correct.

Okay.

Mostly, you know, really mostly managed care these days, you don’t have any, there’ very little true commercial insurance anymore.

Understood, understood. Not to beat the dead horse here, but just going back to the medical malpractice suit. You mentioned in the press release that you had a layer of insurance, just wondering if, you know, maybe you can quantify what type of cost impact we should expect going forward?

Okay. So, we have historically had pretty traditional medical malpractice insurance for the physicians. It’s $1 million, $3 million, $1 million per incidence, $3 million in the aggregate. So, that if multiple providers are named in a particular incident, there’s a $3 million in coverage. This is really standard level of medical malpractice coverage across the country. You do see variations in some markets because of the state regulations or other strategies that physicians have taken, but $1 million, $3 million is very standard level of coverage. We have piggy back, IntegraMed is piggy backed on that coverage for the entity. So the entity, meaning the nurses and the facility itself has been covered under that $1 million and $3 million on the policy. In the case of this particular law suit, so we had million dollars in coverage between the physicians and the entity and it was the same, the same level. So, what we have done is, we have increased that to an additional one separate additional $1 million in coverage for the entity. So then in the future if a situation like this comes along we’ll have an aggregate of $2 million in coverage. That still wouldn’t been sufficient to cover this particular case. And in consulting with the experts and malpractice insurance, the strong vice that we get is, you never can – you don’t really want to have insurance to cover the one in 20-year situation that comes up, the black swan event because what that does, if you do – if we had $5 million in coverage, let's say, which would have covered us in this particular case.

Yeah.

What will happen over time is, obviously the premiums are very high, but what will happen overtime is, it just creates a vicious circle because plaintiffs attorneys will demand settlement up to policy limits. And in most cases – so you want to try and find that sweet spot where you’re covered in most cases, but not over covered, you know, not creating a situation, we have too much coverage, which will, you know, create higher settlements, which will then subsequently drive up premiums. Our performance actually over the last five years has been very solid, to the point where we were able to get, you know, leaving this case, putting this case aside for a moment. If you look at us, if you look at our provider group from an overall standpoint terms of the number of cases and the settlements and the expenses that are going out. Over the last five years it’s been very strong, and our premiums have actually come down over that period of time to the point where we actually were able to get as an additional $1 million in coverage for no additional cost.

Okay. So, bottom line here, I mean, should we expect G&A expense to pick up a little bit because – is that were the premiums?

There’s no additional premium, that's what I’m saying. The premium – the additional level of coverage that we have here is coming at no additional cost.

Got it.

Because of our historic performance. Notwithstanding this one situation, you’re getting half situations where you have a large payout, but we have, you know, you’ve got to look at this over the long haul and the actuaries tell us that our performance is solid and that’s why we are able to get the additional level of coverage and at no cost.

Your final question is coming from the line of Frank DiLorenzo.

Good morning. Thanks for taking my call. Just two quick questions. One regarding the malpractice law suit, with better clinical documentation have helped to shield you in that particular case, just wondering?

Yeah, I mean, if we had really great documentation, it would have probably shielded us a little bit better. We do have an electronic medical record that does provide the tool and capability for that documentation to take place. In this particular case, the allegation that drug that drew the nurses into this case was a lack of documentation, and the tools are there, if they’re not use then I don’t care what the tool is.

Is there anything you got to do, any steps to maybe try to make sure you are recording the patient accounts a little better, where you have fits all of us.

Yeah, it's standard nursing practice. This was a case where malpractice – malpractice cases are rise because of the deviation in the standard practice, not necessarily because there is a bad outcome. A bad outcome – nobody can warrant that the patient has a good outcome. So malpractice generally arises when there is a deviation from the standard. And the standard is to provide good documentation and that’s what nurses are trained to do. And if the nurses aren’t performing that then they get discharged. We can provide the tools, we can reinforce the training, but we do need people and expect people adhere to the standards of nursing practice. And in the case of the physicians it's standards of medical practice.

Okay. Also just, with regards to the fertility centers and also the vein clinics, last quarter it looked like, on the fertility center side, the applications and the enrollments they looked good and there was weakness here in the second quarter going forward. But then, on the vein clinic side, your mature clinics initially grow this quarter and if you go back to the first quarter, the enquiries for the consultations in the first leg starts they were pretty weak, but they’ve shown an big rebound here in the second quarter. I know you had mentioned it earlier, but can you give us a little more color on what the reasoning is for that? Is there anything you’re doing out there from the standpoint of marketing and targeting and trying to find, sort of areas that maybe a little less – a little more insulated from the kind of economic problems we're having out there.

The vein clinic business is really not – we’re not experiencing exposure to general economic weakness at our vein clinic business. This is a – what’s great about this business and the reason we’re so excited about it, the reason we got into it in the first place is a good example of new technology, emerging technology and reimbursement around that technology that’s creating a market opportunity. And what we’re seeing is a really strong growth and we are trying to get, a lot of vein clinics out there to take access, to make access or gain access to this market opportunity as rapidly as possible. If there was mature market, then I think that we would likely see some exposure to the general economy. Hospitals for instance are seeing weakness in surgical volume because of the economy. Patients are not coming in for procedures as readily as they used to. We’re not experiencing that in our vein clinic business because it’s a new technology, still relatively new technology with the laser and undertreated condition. So even if on the margins some people aren’t, you know, have loss their insurance or aren't making as ready access to their insurance because of higher co-pays and so forth. Even if that’s happening on the margin, there's such a big market opportunity out there for us that we’re not perceiving that in our business. The marketing program is working really well. The second quarter is generally our strongest quarter. We have ton of enquiries. As I've said, the drop in the mature clinics was not a function or a lack of patient demand, it was a function of a lack of capacity to handle the patient demand. And our judgment that it was better to take the foot off the accelerator slightly in that business, in order to be able to preserve the business, and not have the turnover that we’re starting to experience. We want to take a long-term perspective on this and make sure that we adequately staffed to be able to handle the business so that, you know, people aren’t making mistakes. We don’t get expose to incidents and malpractice situation, that good quality care has been provided. I mean that’s really what’s important in the long-term is that we have a great quality of service, it’s being performed and we would rather, you know, take the pressure off a little bit right now, even despite the fact that we have really strong demands from patients for services that we can – that we're offering.

We have a follow-up question from the line of Kevin Ellich.

You said that the vein clinic business is not exposed or it doesn’t have exposure to the economy?

Well no, what I’m saying is it’s a well reimbursed program. In another words, varicose vein disease does get – especially if you tilt it to the medical component of varicose vein disease which we have then insurance companies do cover that because it’s a medical condition. For decades people who've had varicose veins since there have been people walking the earth and…

Oh yeah.

It’s not a new condition. What’s the different here is that about 5 years ago lasers were approved by the FDA for treating large varicose veins because it's a medical condition that gets progressively worst if left untreated. The historic – the treatment that was offered up until that point in time was – was vein stripping, a surgical procedure that people didn’t like. So that reimbursement for vein stripping has always been there, but wasn’t patient-friendly or comfortable or patients sort endured the discomfort and the progressive nature of that disease until they simply couldn’t wait and had to have it treated. What's happened with lasers is that it’s comfortable and effective and also well reimbursed. So that’s was causing the big market opportunity for us is that there is so much vein disease that have been untreated for so many years. So my point is that even if the margin, there is some exposure to the economy, this is such a big opportunity there's sufficient number of people who are – who we can identify, who are willing to move forward with treatment right now that we don’t steal the exposure that the economy has generally in the healthcare right now.

Right. But I mean, given what's going on in – with utilization trends and unemployment, I mean that’s obviously does still have an impact on that business, right?

Well, it has an impact – it has an impact on the healthcare segment generally in the economy, there is no escaping that situation. But we are in high-growth, really underserved component of healthcare right here, and so we can find, we’ve been very successful to find the patients who don’t have the economic limitations.

Understood. And then just speaking about the press release, the comment about the fertility drug financing program, could you provide a little bit more detail on that? How it'll work and I guess what type of revenue expectations should we see going forward?

I don’t want people to build into their model that there's going to be dramatic increase in our Attain IVF program associated with this drug rider. I've raised the issue as an example of how we are constantly innovating and providing new functionality to what we do here at IntegraMed. We do think that it's going to help people to be interested in enrolling in the program? At what pace and how much of impact? That’s still to be determined as we roll this program out. It’s a complex situation, because as I mentioned in my comment, although patient who need IVF treatment look homogenous, on the outside there is a lot of variation and exactly the medication protocol that's used to treat a particular type of patient, these medications are very expensive. So how much, over what period of time is going to have big impact on the price of the program and we are having workout the details. And so, I expect over the near term, that this is not going to be a meaningful impact until we can really workout how the program works. I'm expecting a second half of 2011 for us to beta test what we've been able to workout through the actuarial model and launch this program in a very controlled way. It's potentially, could have a big impact on the performance and we don’t want to expose ourselves to unintended consequences here. So we're going to roll it out very carefully and make sure we beta test it and understand how all the various variables are working before we make it more general available.

There no further question at this time.

Thank you, operator. We continue to see substantial growth potential for IntegraMed in the years to come within our two specialties. We are focused on a long term growth plans supported by a robust balance sheet and healthy cash flow. And more importantly, our success is supported by a highly talented and dedicated group of employee and physicians who are commitment to the highest in patient care and to pursuing disciplined growth. We remain active in the Investor Relations front and hope to see you at Wall Street conferences or on investor marketing trips over the remainder of the year. Please contact Norberto Aja with our Investor Relations firm Jaffoni & Collins, at 212-835-8500. Should you have any questions or wish to schedule some time with management. Thank you for your continued interest in IntegraMed and your participation today. That’s concludes our remarks.

This concludes today's conference call. You may now disconnect.