Article for Medill: NovaMed’s modest profits

NovaMed Eyecare Inc., an owner and developer of outpatient surgery centers, posted modest earnings for the fourth quarter, an improvement from a year-earlier loss that was due in part to the introduction of new cosmetic and pain-management surgical procedures.

NovaMed earned $1.34 million, or 6 cents per diluted share, for the quarter ended Dec. 31. For the same period a year earlier, the company reported a loss of $1.24 million, or 5 cents per diluted share, with most of the loss attributable to the continuing divestiture of its physician management business. Revenues were $13.61 million for the quarter, compared with revenues of $13.69 million for the same period a year ago.

In 2003, NovaMed earned $3.49 million, or 16 cents per diluted share, compared with $0.21 million, or 1 cent per diluted share, in 2002. Revenues rose slightly to $55.51 million from $53.77 million.

The new surgical procedures at NovaMed’s centers — including minor plastic surgery and specialized pain-relieving shots — helped push sales of all non-cataract related procedures up 43 percent in 2003, but drops in demand for laser vision correction procedures somewhat offset those gains.

The company intends to add more new procedures and grow significantly due to continuing advancements in surgical technology and techniques, said Stephen Winjum, chairman, president and chief executive officer of NovaMed, during a conference call with investors. Growth should also be spurred by the increased demand in eye care from aging baby boomers, he added.

New surgical procedures in the fields of podiatry and orthopedics are being considered to help boost growth, said Scott Macomber, chief financial officer.

“We view our surgical facilities as our core business and that’s what our growth strategy is built around,” Macomber said. In December, NovaMed completed the divestiture of its physician management business.

“It was very management intensive, and was not a business we saw much growth potential with,” he said.

Winjum said the poorly performing national economy contributed to the drop in the number of laser vision correction procedures — commonly known as LASIK — performed. He expects any improvement in the economy to boost sales of NovaMed’s LASIK procedures.

Besides outpatient surgery centers, NovaMed runs optical products and services businesses. No analysts cover the company.

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