NovaMed, Inc. (NOVA)

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NovaMed, Inc. is a healthcare services company that operates Ambulatory Surgery Centers (ASC), where surgeons can provide services like surgery, pain management, certain diagnostic (e.g., colonoscopy) and laser vision correction surgery in an outpatient (non hospital) setting.

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Company Analysis

Founded in 1995, Chicago based Novamed, Inc. primarily acquires, develops and operates ambulatory surgery centers (ASCs) in partnership with physicians. As of April 1, 2007, NovaMed had ownership interests in 37 surgery centers located in 18 states. ^[1]

The company has two reportable business segments: ^[2]

Surgical Facilities

The company partners with physicians in the ownership of surgical facilities and provides professional, experienced management to these facilities. NovaMed also provides development expertise for building new surgical facilities in partnership with physicians and expertise in identifying and attracting new physicians to perform surgical procedures at existing surgical facilities. As of April 1, 2007, NovaMed had ownership interests in 37 ASCs, each of which is state licensed and Medicare certified. Physicians perform a variety of surgical procedures in NovamMed's ASCs, including ophthalmology, orthopedics (including podiatry), urology, gastroenterology, pain management, plastic surgery and gynecology. 71% of the surgical procedures performed in the companies' facilities in 2006 were ophthalmic procedures, with orthopedics, pain management and gastroenterology comprising 8%, 7% and 7%, respectively.

The company generally owns and operates its surgical facilities through joint ownership arrangements in which it owns a majority interest in the facility and the minority equity interests are held by physicians that perform surgeries in the ASC and live in the ASC’s local community.

NovaMed is also parties to laser services agreements pursuant to which the compnay provide excimer lasers and various services to ophthalmologists for their use in performing laser vision correction surgery. The company's excimer lasers are either located in its ASCs or provided to physicians for use in their medical practices through these laser services agreements.

In year ended in December 31, 2006, procedures performed in same facility rose by 2,880 procedures (4.4%) to 68,287 procedures compared to the same period in 2005. Same-facilities net revenue rose 9.03% to $57.57 million in fiscal year ended in December 31, 2006 compared to same period in 2005.

Product Sales

The company sells a variety of optical products to eye care professionals and consumers through our purchasing organization, wholesale laboratories and optical retail store. NovaMed also provides marketing products and services to eye care professionals and vendors.

Revenue in this segment comes from the following sub-segments:

• The company owns and operates an optical laboratory business that specializes in surfacing, finishing and distributing corrective lenses and eyeglass lenses, with in excess of 250 active customers, including ophthalmologists, optometrists, opticians and optical retail chains.
• NovaMed's optical products purchasing organization allows eye care professionals to purchase optical products through the company from more than 200 suppliers. NovaMed process

consolidated monthly billing for over 1,500 customers that utilize our purchasing organization. Customers of these businesses include our former affiliated doctors who are parties to multi-year optical supply agreements with us pursuant to which our group purchasing organization and optical laboratories are the primary providers of optical products and supplies to these doctors. The product sales revenue generated from these customers in 2006 constituted less than five percent of NovaMed's total product sales revenue.

• The company's marketing products and services business provides eye care professionals and vendors with a range of products and services including brochures, videos, advertising and website design, education and training programs, and consulting services.
• NovaMed also has a long-term service agreement with an optometric practice located in Illinois. The optometric practice also has a retail optical outlet that sells eyeglasses and other products to patients. NovaMed provides all of the services, facilities and equipment necessary to operate this optometric practice under a 25-year service agreement. The services include:

• billing, collection and cash management services

• procuring and maintaining all office space, equipment and supplies

• subject to federal and state law, recruiting, employing, supervising and training all non-professional personnel

• assisting in recruiting additional doctors

• all administrative and support services

• information technology services

Leadership

Oficers and Directors list from Reuters

News Feed

Risks

• NovaMed's revenue depends a lot on Medicare and other third part payors' reimbursement practices. Changes in regulations and cost containment effort from these third party payors may result in pricing pressure and reduced margin for NovaMed.
• NovaMed relies heavily on its relationships with local physicians that perform procedures in the company's ASC.
• Novamed could be exposed to potential claims and material liabilities relating to the ASC business and procedures performed in its ASC's

Research Links

NovaMed, Inc. Snapshot

• Profile at Yahoo Finance
• Profile at MoneyCentral.com
• Company Events
• Earnings Estimates
• Competitors at Yahoo Finance

NovaMed, Inc. Leadership

• Officers and Directors at Reuters
• Salaries and Compensation at Reuters
• Insider Trades at Money Central
• Insider Trades at TheStreet.com
• Institutional Ownership at Money Central

NovaMed, Inc. Fundamentals

• Key Statistics Yahoo Finance
• Key Ratios at Reuters
• Dividends and Returns at Morningstar
• SEC Filings at Edgar Online
• Financial Statements Quickview at Morningstar
• Historical Prices at Yahoo Finance
• Analyst Estimates
• All Press Articles

NovaMed, Inc. Technical Analysis

• TA at DeepMarket
• Advanced Charts at BigCharts.com
• TA at Yahoo Finance

NovaMed, Inc. Message Boards

• Yahoo Finance
• Raging Bull
• ValueWiki Message Board
• ValueWiki Chat

Notes

1. ↑ Novamed corporate website. Accessed on May 16, 2007.
2. ↑ Annual report for the year ended in Dec. 31, 2006. Accessed on May 16, 2007.