NovaMed Reports 50% Increase in Income from Continuing Operations; Announces Stock...

NovaMed Reports 50% Increase in Income from Continuing Operations; Announces Stock Repurchase Program

CHICAGO--(Business Wire)--
Thomas S. Hall, Chairman, President and Chief Executive Officer of
NovaMed, Inc. (Nasdaq: NOVA), today announced results for the second
quarter ended June 30, 2008. Total net revenue grew to $35,180,000, up
10% from $31,952,000 in the prior year second quarter, with net
revenue from surgical facilities growing to $29,072,000, up 10% from
$26,364,000 in the prior year second quarter. Income from continuing
operations in the second quarter of 2008 was $2,387,000, or $0.09 per
diluted share, compared to $1,592,000, or $0.06 per diluted share, in
the prior year second quarter, an increase of 50%. Same-facility net
revenue growth was 3% for the quarter. Net cash provided by operations
was $6,782,000 in the second quarter of 2008, up 28% from $5,311,000
in the prior year second quarter.

Mr. Hall commented, "Our second quarter results were in line with
our expectations. We are pleased with NovaMed's solid growth in
earnings and cash flow as well as margin improvement in the second
quarter of 2008."

Highlights of second quarter continuing operations include:

-- Income from continuing operations increased 50% to $2,387,000

-- Cash flow from operations of $6,782,000

-- Operating income increased 16% to $9,187,000

-- Total net revenue increased 10% to $35,180,000

For the six months ended June 30, 2008, total net revenue grew to
$68,993,000, up 10% from $62,520,000 for the first six months last
year, with net revenue from surgical facilities growing to
$56,487,000, up 12% from $50,641,000 in the first six months of 2007.
Income from continuing operations in the first six months of 2008 was
$4,523,000, or $0.18 per diluted share, compared to $3,125,000, or
$0.12 per diluted share, in the first six months of 2007, an increase
of 45%. Same-facility net revenue growth was 3% for the first six
months of 2008. Net cash provided by operations was $10,802,000 in the
first six months of 2008, up 91% from $5,648,000 in the first six
months of 2007.

NovaMed also announced today that its Board of Directors has
adopted a program to repurchase from time to time at management's
discretion up to $8 million of NovaMed's common stock in the open
market or in private transactions during the 12-month period ending
July 31, 2009 at prevailing market prices. As of June 30, 2008,
NovaMed had 24,819,573 shares of common stock outstanding.

"With solid cash flow from operations of almost $11 million in the
first six months of 2008, and approximately $100 million available
under our credit facility, we remain well positioned to continue to
acquire surgery centers and execute our growth strategy while at the
same time repurchase our common stock on an opportunistic basis,"
added Mr. Hall. "We believe the stock repurchase program reflects our
confidence in our business and our ongoing commitment to increasing
shareholder value."

NovaMed acquires, develops and operates ambulatory surgery centers
in partnership with physicians. NovaMed has majority ownership
interests in 35 surgery centers located in 18 states. NovaMed's
executive offices are located in Chicago, Illinois.

As previously announced, NovaMed will hold a conference call to
discuss this release at 10:00 a.m. Central Time on Thursday, July 31,
2008. Investors can listen to the call over the Internet by visiting
www.earnings.com or NovaMed's website at www.novamed.com. For those
who cannot listen to the live broadcast, a replay will be available at
these sites through August 31, 2008.

NovaMed measures same-facility results using only those facilities
that it has owned and operated for the entire current and prior year
periods reported. This press release contains forward-looking
statements that relate to possible future events. These statements are
based on management's current expectations and are subject to risks
and uncertainties, which could cause our actual results to differ
materially from those expressed or implied in this press release.
These risks and uncertainties relate to our business, our industry and
our common stock and include: reduced prices and reimbursement rates
for surgical procedures; our ability to acquire, develop or manage a
sufficient number of profitable surgical facilities; our ability to
manage our increasing borrowing costs as we incur additional
indebtedness to fund the acquisition and development of surgical
facilities; our ability to access capital on a cost-effective basis to
continue to successfully implement our growth strategy; our ability to
maintain successful relationships with the physicians who use our
surgical facilities; our ability to grow and manage effectively our
increasing number of surgical facilities; competition from other
companies in the acquisition, development and operation of surgical
facilities; and the application of existing or proposed government
regulations, or the adoption of new laws and regulations, that could
limit our business operations, require us to incur significant
expenditures or limit our ability to relocate our facilities if
necessary. Readers are encouraged to review a more complete discussion
of the factors affecting NovaMed's business and prospects in its
filings with the Securities and Exchange Commission, including the
company's 2007 Form 10-K filed on March 17, 2008. Readers should not
place undue reliance on any forward-looking statements. Except as
required by the federal securities laws, NovaMed undertakes no
obligation to publicly update or revise any forward-looking
statements, whether as a result of new information, future events,
changing circumstances or any other reason after the date of this
press release.

-0-
*T
NovaMed, Inc.
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share data, ASCs operated and procedures
performed)

Three months ended Six months ended
June 30, June 30,
------------------ ------------------
2008 2007 2008 2007
-------- --------- -------- ---------
Net revenue:
Surgical facilities $29,072 $26,364 $56,487 $50,641
Product sales and other 6,108 5,588 12,506 11,879
-------- --------- -------- ---------
Total net revenue 35,180 31,952 68,993 62,520
-------- --------- -------- ---------

Operating expenses:
Salaries, wages and benefits 10,734 9,785 20,965 19,585
Cost of sales and medical
supplies 8,197 7,576 16,182 14,525
Selling, general and
administrative 6,036 5,787 12,324 11,477
Depreciation and amortization 1,026 884 2,047 1,716
-------- --------- -------- ---------
Total operating expenses 25,993 24,032 51,518 47,303
-------- --------- -------- ---------

Operating income 9,187 7,920 17,475 15,217

Interest (income) expense, net 1,043 1,453 2,066 2,777
Minority interest 4,237 3,873 7,980 7,442
Loss of nonconsolidated
affiliate - 18 - 34
Gain on sale of minority
interests - - - (79)
Other (income) expense, net (5) (34) 15 (80)
-------- --------- -------- ---------
Income before income taxes 3,912 2,610 7,414 5,123
Income tax provision 1,525 1,018 2,891 1,998
-------- --------- -------- ---------

Income from continuing
operations 2,387 1,592 4,523 3,125
Loss from discontinued
operations (37) (119) (89) (161)
Gain on disposal of discontinued
operations - - 95 -
-------- --------- -------- ---------

Net income $2,350 $1,473 $4,529 $2,964
======== ========= ======== =========

Earnings per common share -
diluted:
Earnings from continuing
operations $0.09 $0.06 $0.18 $0.12
(Loss) earnings from
discontinued operations - - - -
-------- --------- -------- ---------
Net earnings per diluted share $0.09 $0.06 $0.18 $0.12
======== ========= ======== =========

Shares used in computing diluted
earnings per share 25,191 25,231 25,127 25,203
======== ========= ======== =========

Selected Operating Data:
--------------------------------

ASCs operated at end of period 34 34 34 34
Procedures performed during the
period 34,200 32,344 67,035 62,453
Cash flow provided by operating
activities $6,782 $5,311 $10,802 $5,648
Cash flow used in investing
activities $(1,876) $(25,261) $(3,814) $(34,085)
Cash flow provided by financing
activities $1,219 $19,951 $1,535 $28,357

-----------------------------------------------------------
June 30, December 31,
Balance Sheet Data: 2008 2007
-------------------------------- -------- ------------

Cash and cash equivalents $14,905 $6,382
Accounts receivable, net 21,945 19,298
Working capital 25,942 18,438
Total assets 208,115 195,704
Long-term debt 102,697 101,176
Minority interest 14,949 15,024
Stockholders' equity 71,588 65,173
*T

NovaMed, Inc.
Scott T. Macomber
Executive Vice President, and Chief Financial Officer
(312) 664-4100
smacomber@novamed.com

Copyright Business Wire 2008