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Wednesday May 6, 8:02 am Eastern Time
Company Press Release
SOURCE: Integrated Medical Resources, Inc.
Strong Initial Demand Seen for Pfizer's Viagra Impotence
Pill as Integrated Medical Resources Announces First
Quarter 1998 Results
Nationwide direct marketing underway for Viagra(R) -- fastest-selling
prescription drug in history -- to Company's database of 50,000 diagnosed
impotent men and 110,000 prospective new patients; First quarter revenue
increases 32% for leading national network of impotence treatment clinics
LENEXA, Kan., May 6 /PRNewswire/ -- Integrated Medical Resources, Inc. (Nasdaq: IMRI -
news), manager of the leading national network of providers of treatment for impotence, today
announced revenues increased 32% to $5.3 million for the three months ended March 31, 1998,
compared to $4.1 million in the first quarter of 1997.
The net loss for the first quarter of 1998 also showed significant improvement, decreasing 51% from
the year ago period. The Company's loss before interest, taxes, depreciation and amortization
(EBITDA) decreased 86% to $176,000 for the first quarter of 1998, compared to a loss of $1.3
million in the first quarter of 1997.
Strong initial demand was seen among the Company's established patients for Pfizer's revolutionary
new Viagra(R) impotence pill, which was approved by the FDA at the end of March and has
reportedly become the fastest-selling prescription drug in history.
During the third week of April, Integrated Medical Resources launched an updated version of its
direct-response telemarketing campaign featuring Viagra, targeted primarily toward the country's
estimated 14 million men ages 40 to 70 who suffer from moderate to complete impotence.
The Company also began a direct mail campaign to more than 50,000 current or former patients of
the Diagnostic Centers for Men, which represents the largest proprietary database of diagnosed
impotent men in the U.S., as well as to approximately 110,000 additional men who have inquired
about treatment. The Company expects to report on the progress of these efforts following the end
of the second quarter.
Each of the Company's Centers excluding 5 clinics in Texas and New York has a pharmacy
operation which can immediately fill prescriptions for patients on-site. Since mid-April 1998 when
Viagra first became widely available in pharmacies and through the Diagnostic Centers for Men, the
Centers have reported a significant increase in established patient inquiries for the new drug.
Viagra is Pfizer's trade name for sildenafil citrate, the first FDA-approved oral medication for the
treatment of male erectile dysfunction, commonly known as impotence. In clinical studies, the drug
improved sexual function in about 70% of the men who took it. In those men for whom Viagra is an
appropriate medical option, the drug is viewed by many as preferable to other treatments which
may involve the introduction of medication directly into the penis via injection or urethral
suppository, the use of an external device or a surgical procedure.
For the first quarter of 1998, the Company posted a net loss of $908,000 or ($0.13 per diluted
share) on 6,733,642 weighted average common shares outstanding, compared to a net loss of $1.8
million or ($0.27 per diluted share) on 6,717,517 weighted average common shares outstanding for
the first quarter of 1997.
Dr. E. Stanley Kardatzke, Chairman and Chief Executive Officer, commented: ''Although I do not
like to report losses of any kind, we are pleased to report an improved net loss for the quarter. It is
notable that Center operating and corporate expenses, particularly physician and staff salaries and
advertising, have improved significantly as a percentage of revenue for two quarters in a row. We
believe this reflects the ongoing effectiveness of operational process improvements and continued
efforts to better leverage the Company's infrastructure.''
On a same-clinic basis in the mature Centers which have been open at least 15 months, the
Company attained first quarter 1998 revenue of $4.67 million, versus $4.72 million in the fourth
quarter of 1997. This modest 1% decrease reflects the suspension of the Company's pharmacy
dispensing program during the implementation of operational changes. First quarter 1998 revenue at
the mature Centers grew 42% compared to the same quarter in 1997 on a same-clinic basis.
As of March 31, 1998, the Company managed 28 Centers operating in 18 states, compared to 31
Centers operating at the end of the first quarter of last year. Two of the 28 Centers in operation
were opened since year-end 1997.
Revenues from established patients were 10% of total patient charges during the first quarter of
1998, compared to 11% in the fourth quarter of 1997 and 20% in the year ago first quarter. The
higher revenue from established patients in the first quarter of 1997 reflected the significant response
to the introduction of the urethral suppository MUSE(R) by VIVUS, Inc. (Nasdaq: VVUS - news)
in late 1996.
Kardatzke continued: ''Pfizer's Viagra pill, just as MUSE did one year ago, represents an additional
opportunity for enhanced revenues, albeit a potentially significant one, as it may motivate more men
to seek treatment who would not otherwise be properly diagnosed. While an initial inquiry may be
made because of Viagra, those men who decide to pursue treatment should ultimately receive
whatever treatment is most effective and medically appropriate for them.''
Dr. Troy Burns, President and Chief Medical Officer, observed: ''Integrated Medical Resources is
a key player at a historic point in medical science when innovative new treatments are being
developed for the treatment of impotence, most recently Pfizer's Viagra pill. In the very early going,
we are excited to see about half of the patients for whom we have prescribed Viagra telling us that
they are pleased with the results. The most appropriate and effective treatment, however, depends
on accurate diagnosis of the cause of each patient's impotence based on a complex group of
symptoms which can sometimes indicate more serious, underlying disease. IMR is ideally positioned
to fulfill the needs of this largely untapped market where the total annual revenue has been estimated
at up to $5 billion.''
Conversion of callers improved to 26.6% in the first quarter from 22.6% in the preceding fourth
quarter, with the number of new patients seen increasing 8%, totaling 5,994 during the first quarter
compared with 5,548 in the fourth quarter. This increase occurred despite the operation of 4 fewer
Centers during the first quarter of 1998 as compared with the fourth quarter of 1997. The
Company's patient base (patients treated on an ongoing basis) expanded 11% to 58,796 at the end
of the first quarter compared to 52,802 at the end of the fourth quarter.
Kardatzke added: ''The continued growth in new patient volume and related impotence treatment
revenues is particularly encouraging. In the last four quarters, new patient volume has grown by over
23,000 or about 19%, a trend which we expect to continue with added momentum provided by
strong patient demand for the Viagra pill. More recently, we have seen an improvement in internally
generated cash flows at the same time that more of the delayed Medicare reimbursements to several
of our managed clinics have been resolved. All these developments, together with the previously
announced additional financing arrangements and the aggressive series of cost reduction measures
implemented in the fourth quarter, should allow us to meet our working capital needs going forward
while we focus on further improving our receivables collections.''
Additional Financing
On May 5, 1998, Kardatzke Management, Inc. and certain other significant Company shareholders
agreed to provide additional funding of up to $2.1 million during May 1998. In consideration of
unsecured notes, the Company agreed to revise the exercise price of certain previously granted
options from $3.15 per share to $2.15 per share if exercised prior to May 31, 1998.
About the Company
Integrated Medical Resources, Inc. provides complete management services to physicians who
offer comprehensive diagnostic, educational and treatment services designed to address the medical
and emotional needs of its patients and their partners through the largest network of medical clinics
in the U.S. dedicated to the diagnosis and treatment of impotence. The Company believes that this
market is largely underserved due to misconceptions about the causes of impotence, a general lack
of specialized knowledge by primary care physicians regarding treatment alternatives, and the
limited focus on impotence by medical specialists.
The number of impotent men in the U.S. is estimated to exceed 24 million, and this total is projected
to increase by approximately 400,000 new cases each year as the baby boomer generation ages.
Although patients suffering from impotence can range in age from 18 to over 90, the Company's
target marketing focus is the estimated 14 million men ages 40 to 70 who suffer from moderate to
complete impotence.
Cautionary Statement
This press release contains forward-looking statements of management expectations and initiatives
(within the meaning of the Private Securities Litigation Reform Act of 1995) which should be viewed
in the context of various factors that could affect actual results. Forward-looking statements are
subject to certain risks and uncertainties which could cause actual results to differ materially from
those anticipated in the forward-looking statements. You should review the Company's annual
report on Form 10-K for the year ended December 31, 1997 and Forms 8-K dated March 5,
1998; April 14, 1998; and April 28, 1998 filed with the Securities and Exchange Commission for
important factors that might cause such a difference.
Viagra(R) is a trademark of Pfizer, Inc. (NYSE: PFE - news).
MUSE(R) is a trademark of VIVUS, Inc.
INTEGRATED MEDICAL RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
Three months ended
March 31,
1998 1997
(Unaudited) (Unaudited)
Net center revenues $5,334 $4,056
Center operating expenses
Physician salaries 862 896
Cost of services 1,265 947
Center staff salaries 519 547
Center facilities rent 295 324
Total Center operating expenses 2,941 2,714
Center contribution 2,393 1,342
Corporate expenses:
Advertising 1,005 1,362
Selling, general and
administrative 1,564 1,253
Depreciation and amortization 489 558
Total corporate expenses 3,058 3,173
Operating loss (665) (1,831)
Other income (expense):
Interest income 3 61
Interest expense (246) (78)
Other 0 7
(243) (10)
Net loss $(908) $(1,841)
Basic weighted average common
shares outstanding 6,734 6,718
Net loss per common share --
basic and diluted $(0.13) $(0.27)
INTEGRATED MEDICAL RESOURCES, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
1998 1997
(Unaudited)
Assets
Current assets:
Cash $577 $765
Accounts receivable 8,828 8,411
Supplies 381 407
Prepaid expenses 150 102
Total current assets 9,936 9,685
Property and equipment
Office equipment and
software 1,896 1,921
Furniture, fixtures and
equipment 6,382 6,431
Leasehold improvements 159 152
8,437 8,504
Accumulated depreciation 3,160 2,801
5,277 5,703
Intangible assets 157 183
Other assets 294 239
Total assets $15,664 $15,810
Liabilities and
stockholders' equity
Current liabilities:
Accounts payable $2,784 $3,793
Accrued expenses 2,485 2,238
Working capital line
of credit 2,587 3,086
Current portion of
long-term debt 2,902 2,685
Current portion of capital
lease obligations 205 246
Total current liabilities 11,233 12,048
Long-term debt, less
current portion 2,632 1,521
Capital lease obligations,
less current portion 106 140
Stockholders' equity:
Preferred stock 0 0
Common stock 9 7
Treasury stock (11) (11)
Additional paid-in capital 18,717 18,220
Accumulated deficit (17,022) (16,115)
Total stockholders' equity 1,693 2,101
Total liabilities and
stockholders' equity $15,664 $15,810
SOURCE: Integrated Medical Resources, Inc.
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