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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934


FOR THE QUARTERLY PERIOD ENDED: MARCH 31, 2005

COMMISSION FILE NUMBER: 0-26625


NOVAMED, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
36-4116193
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer Identification No.)
 
980 North Michigan Avenue, Suite 1620, Chicago, Illinois 60611
(Address of principal executive offices)

Registrant's telephone, including area code: (312) 664-4100
___________________

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
Yes  No x

As of May 6, 2005, there were outstanding 21,493,527 shares of the registrant's common stock, par value $.01 per share.
 

NOVAMED, INC.
FORM 10-Q FOR QUARTERLY PERIOD ENDED MARCH 31, 2005
INDEX


 
PART OR ITEM
PAGE
Part I.
FINANCIAL STATEMENTS
3
Item 1.
Interim Condensed Consolidated Financial Statements (unaudited)
  
 
Condensed Consolidated Balance Sheets -March 31, 2005 and December 31, 2004
3
 
Condensed Consolidated Statements of Operations - Three months ended March 31, 2005 and 2004
4
 
Condensed Consolidated Statements of Cash Flows - Three months ended March 31, 2005 and 2004
5
 
Notes to the Interim Condensed Consolidated Financial Statements
6
   
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
11
     
Item 4.
Disclosure Controls and Procedures
16
     
Part II.
OTHER INFORMATION
17
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
17
Item 6.
Exhibits
17
 
Signatures
18
 
2

Part I
Item 1.
NOVAMED, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share data)
 
     
March 31,
    
December 31,
  
ASSETS    
2005
    
2004
  
Current assets:    
(unaudited)
        
Cash and cash equivalents 
  
$
1,255
  
$
500
  
Accounts receivable, net of allowances of $10,803 and $10,083, respectively
    
11,542
    
10,237
  
Notes and amounts due from related parties 
    
570
    
719
  
Inventory 
    
1,691
    
1,518
  
Other current assets 
    
990
    
1,182
  
Total current assets 
    
16,048
    
14,156
  
Property and equipment, net 
    
9,184
    
8,110
  
Intangible assets, net 
    
58,402
    
51,421
  
Noncurrent deferred tax assets, net
    
1,657
    
2,248
  
Other assets, net 
    
1,092
    
1,052
  
Total assets 
  
$
86,383
  
$
76,987
  
               
LIABILITIES AND STOCKHOLDERS’ EQUITY
              
Current liabilities:
              
Accounts payable
  
$
6,279
  
$
4,848
  
Accrued expenses and income taxes payable 
    
2,708
    
3,168
  
Current maturities of long-term debt
    
310
    
274
  
Current liabilities of discontinued operations
    
215
    
246
  
Total current liabilities
    
9,512
    
8,536
  
Long-term debt, net of current maturities
    
12,184
    
5,314
  
Minority interests
    
8,696
    
8,516
  
Commitments and contingencies
              
Stockholders’ equity:
              
Series E Junior Participating Preferred Stock, $0.01 par value, 1,912,000 shares authorized, none outstanding at March 31, 2005 and December 31, 2004, respectively
    
—
    
—
  
Common stock, $0.01 par value, 81,761,465 shares authorized, 25,749,671 and 25,649,921 shares issued at March 31, 2005 and December 31, 2004, respectively
    
258
    
256
  
Additional paid-in-capital
    
80,025
    
79,710
  
Accumulated deficit
    
(17,828
)
  
(19,182
)
Treasury stock, at cost, 4,257,461 and 4,208,743 shares at March 31, 2005 and December 31, 2004, respectively
    
(6,464
)
  
(6,163
)
Total stockholders’ equity
    
55,991
    
54,621
  
Total liabilities and stockholders’ equity
  
$
86,383
  
$
76,987
  

The notes to the interim condensed consolidated financial statements
are an integral part of these statements.

3


NOVAMED, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data; unaudited)
 
   
Three months ended
March 31,
  
   
2005
  
2004
  
Net revenue:
            
Surgical facilities
  
$
13,638
  
$
9,349
  
Product sales and other
    
4,863
    
4,876
  
Total net revenue
    
18,501
    
14,225
  
               
Operating expenses:
              
Salaries, wages and benefits
    
6,052
    
5,078
  
Cost of sales and medical supplies
    
4,478
    
3,518
  
Selling, general and administrative
    
3,878
    
3,154
  
Depreciation and amortization
    
583
    
676
  
Total operating expenses
    
14,991
    
12,426
  
               
Operating income
    
3,510
    
1,799
  
               
Minority interests in earnings of consolidated entities
    
1,532
    
753
  
Earnings of non-consolidated affiliate
    
(61
)
  
—
  
Other (income) expense, net
    
(15
)
  
(200
)
Income before income taxes
    
2,054
    
1,246
  
Income tax provision
    
822
    
499
  
Net income from continuing operations
    
1,232
    
747
  
Net income from discontinued operations
    
122
    
594
  
Net income
 
$
1,354
  
$
1,341
  
               
Basic earnings per common share:
              
Income from continuing operations
  
$
0.05
  
$
0.03
  
Income from discontinued operations
    
0.01
    
0.03
  
Net income
 
$
0.06
  
$
0.06
  
               
Diluted earnings per common share:
              
Income from continuing operations
  
$
0.05
  
$
0.03
  
Income from discontinued operations
    
0.01
    
0.03
  
Net income
 
$
0.06
  
$
0.06
  
               
Weighted average common shares outstanding