IPCM

IPC The Hospitalist Company, Inc. (IPCM)

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IPC The Hospitalist Company (IPCM)

Q2 2008 Earnings Call

August 12, 2008 5:00 pm ET

Executives

Stephanie Carrington - Investor Relation

Adam Singer - Chairman and Chief Executive Officer

Devra Shapiro - Chief Financial Officer

Jeff Taylor - President and Chief Operating Officer

Analysts

Bill Bonello - Wachovia

Ryan Daniels - William Blair

Sudeep Singh - Deutsche Bank

Patrick Schaefer - Chartwell

Art Henderson - Jefferies & Company

Mart Yokosawa - Oberweis Asset Management

Bryan - Jefferies & Company

Presentation

Operator

Please standby we are about to begin, Good day ladies and gentlemen welcome to the IPC The Hospitalist Company’s Second Quarter 2008 Earnings Conference Call. At this time all participant lines are in a listen-only mode. Later, there will be an opportunity for questions with instructions given at that time. And now at this time I would like to turn the call over to your host Ms. Stephanie Carrington, please go ahead.

Stephanie Carrington – Investor Relations

Thank you operator. With us today from management are Adam Singer M.D., Chairman and Chief Executive Officer; Jeff Taylor, President and Chief Operating Officer; and Devra Shapiro, Chief Financial Officer. I hope you have seen the press release announcing the earnings of IPC The Hospitalist Company for the second quarter. If you have not yet received a copy, please call Robert Matthew at 646-536-7023 and he will fax or e-mail you a copy or otherwise a copy may be obtained from IPC’s website at www.hospitalists.com.

Certain statements and information in this conference call 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 regarding projected operating results, revenues, earnings, and IPC’s growth opportunities and strategy. Forward-looking statements are often characterized by terminologies such as may, anticipate, will, expect, estimate, project, positioned, strategy, and other similar expressions.

Although IPC believes that the expectations being reflected in any of its forward-looking statements are reasonable based upon existing trends and information and IPC’s judgments as of today, actual results could differ materially from those projected or assumed based upon a number of factors including those factors set forth in its annual report on Form 10-K under the headings “Risk Factors,” and in IPC’s other filings with the SEC. IPC’s future financial condition and results of operations as well as any forward-looking statements are subjected to inherent known and unknown risks and uncertainties. IPC does not intend and undertakes no obligation to update any of its forward-looking statements to reflect future events or circumstances. With that, I will now turn the call over to Adam Singer, M.D., Chairman and Chief Executive Officer.

Adam Singer – Chairman and Chief Executive Officer

Thank you Stephanie and thank you everyone for joining us today. We reported our second quarter 2008 results today after the close of market. I will start by reviewing our recent highlights and then Devra will review the financials and we can then open the call up to questions.

We are very pleased to again report top line results for the quarter, a very strong top line results. For the second quarter 2008 our hospitals reported over 660,000 patient encounters generating net revenue of approximately 59.2 million, this is up 32% from the same period in the prior year. This was driven largely by 21% same market revenue growth. We are pleased with our ability to continue to grow the top line revenue through both the same market revenue growth and through acquisitions, while at the same time demonstrating significant operating leverage.

Our recent completed follow on public offering was well received which is currently a very challenging equity market. We believe this underscores the attractiveness of our business model and of our growth opportunities. Indeed, we closed two acquisitions during the quarter and a third hospitals in America on August 1st 2008. (Inaudible) give us into the Southeast Florida market for a prudent hospitalist operation which we plan the leveraging use as we build practices in this highly fragmented market area.

In addition we also recently founded our national footprint by entering our 17 and 18 states with hospital contracts in Lebanon Pennsylvania and Toledo Ohio. With that I would like to turn over the call to Devra Shapiro who will review our financial results.

Devra Shapiro – Chief Financial Officer

Thank you Adam and good afternoon everyone. Total patient encounters increased 29% to 650,000 compared to 511,000 in the same period last year. We recorded second quarter 2008 net revenue of $59.2 million, an increase of 32% from the same period last year. Of the $14.3 million revenue increase, $9.3 million or 64% was attributable to same market area growth giving us a 21% revenue increase over the same quarter of the prior year. The increase in the same market revenue is primarily the result of the addition of new hospitalist, either hired or added through market acquisitions and higher physician productivity for existing hospitalists.

Overall revenue per encounter increased 2.2% largely as a result of improvement in our billing and collection. Physician practice salaries, benefits, and other expenses for the second quarter 2008 were $43.2 million or 73.1. % of net revenue compared to $32.3 million or 71.8% of net revenue for the same period last year. The increase in physician cost as a percentage of revenue is primarily attributable to practices underdevelopment.

General and administrative expenses increased $1.5 million or 17% to $10.6 million for the second quarter of 2008 compared to $9.1 million for the same period of last year. However, as a percentage of revenue general and administrative expenses decreased by 18% of revenue in the second quarter of 2008 compared to 20% for the same period last year. This demonstrates a continuing leverage of our cost structure on a larger revenue base even after factoring in the higher costs associated with the publicly traded company.

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