PROSPE CTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus and does not contain all of the information you need to consider in making your investment decision. This summary is qualified in its entirety by the more detailed information and consolidated financial statements and notes thereto appearing elsewhere in this prospectus. You should read carefully this entire prospectus and should consider, among other things, the matters set forth in the section entitled “Risk Factors” before deciding whether to invest in our common stock.

In this prospectus, unless otherwise expressly stated or the context otherwise requires, “IPC,” “we,” “us” and “our” refer to IPC The Hospitalist Company, Inc., a Delaware corporation, and its wholly-owned subsidiaries, together with IPC’s affiliated professional corporations and limited liability companies (“affiliated professional organizations”). Our affiliated professional organizations are separate legal entities that provide physician services in certain states and with which we have management agreements. Also, unless otherwise expressly stated or the context otherwise requires, “our affiliated hospitalists” refer to physicians, nurse practitioners and physician assistants employed by either our wholly-owned subsidiaries or our affiliated professional organizations. References to “practice groups” refer to our affiliated professional organizations and the wholly-owned subsidiaries of IPC that provide medical services, unless otherwise expressly stated or the context otherwise requires.

All share and per share information included in this prospectus has been adjusted for the 1-for-6.4 reverse stock split of our common stock which was effective on January 11, 2008.

Company Overview

We are a leading provider of hospitalist services in the United States. Hospitalist medicine is organized around inpatient care, primarily delivered in hospitals, and is focused on providing, managing and coordinating the care of hospitalized patients. We believe we are the largest dedicated hospitalist company in the United States based on revenues, patient encounters and number of affiliated hospitalists. Our over 550 affiliated hospitalists, including physicians, nurse practitioners and physician assistants, provide hospitalist solutions at over 300 hospitals and other inpatient facilities in sixteen states. We have had more than five million patient encounters since the beginning of 2004. Collectively, our affiliated hospitalists work with more than 21,000 referring physicians and 1,000 health plans. Our early entry into the emerging hospitalist industry has permitted us to establish a reputation and leadership position that we believe is closely identified with hospitalist medicine.

Our Company assists hospitals and payors in improving quality of care, increasing operating efficiencies and reducing costs. Our Company, through our affiliated hospitalists, provides, manages and coordinates the care of hospitalized patients and serves as the inpatient partner of primary care physicians and specialists, allowing them to focus their time and resources on their office based practices or their specialties. We also provide our affiliated hospitalists with the infrastructure, information management systems, specialized training programs and administrative support necessary to perform these services. We believe we are an attractive employer to hospitalists, whether practicing as individuals or in groups, because our administrative services help reduce the burden associated with managing a physician practice. Likewise, hospitalists choose to affiliate with us because of our leadership position, financial resources, technology-based infrastructure, commitment to training and development, and our performance-based compensation. We provide a comprehensive solution of clinical and management experience, proprietary technology and high quality of care to healthcare constituents, which we believe provides us with a sustained competitive advantage to capitalize on the rapid growth in demand for hospitalists.

 

Industry Overview

Hospitalist medicine is an emerging specialty. Hospitalists focus on a patient’s care from the time of admission to discharge, working in close consultation with primary care physicians, other referring physicians and medical providers to coordinate the inpatient care delivery system and manage the entire inpatient episode of care. Hospitalists receive medical training generally in primary care, with many having experience in internal medicine, family practice or other medical specialties. Hospitalists differ from primary care physicians and specialists by treating patients only in a non-office based setting. By focusing exclusively on inpatient medicine, a hospitalist develops practiced expertise in both the diagnosis and treatment of common conditions that require hospitalization and the optimization of patient care within a hospital. Hospitalists serve a necessary and critical role in coordinating, managing and communicating with the different healthcare constituents within the inpatient care and post-hospital settings. According to a 2002 study in the Journal of the American Medical Association, hospitalist programs have resulted in an average 13.4% reduction in hospital costs and an average 16.6% reduction in the average length of a patient’s hospital stay.

Hospitalists practice in inpatient facilities, including acute care hospitals, long-term acute care facilities, specialty hospitals, psychiatric facilities, rehabilitation hospitals and skilled nursing facilities. Acute care hospitals represent the largest component of inpatient facilities in which hospitalists practice, with currently over 4,900 hospitals in the United States based on a 2005 survey by the American Hospital Association, or AHA. According to the AHA, in 2005 there were approximately 35 million admissions to inpatient facilities in the United States, and the average length of stay was approximately 5.6 days. In 2005, total U.S. spending on hospital care was $612 billion and is expected to grow at a compound annual growth rate of 7.0% to $1,288 billion in 2016 according to the Centers for Medicare and Medicaid Services.

Hospitalists assume the inpatient care responsibilities that are otherwise provided by the primary care physician or attending physician and are reimbursed by third parties using the same visit-based or procedural billing codes. By practicing each day in the same facility, hospitalists perform consistent functions, interact regularly with the same healthcare professionals and become highly accustomed to specific facility processes, which can result in greater efficiency, less process variability and better patient outcomes. We believe hospitalists are better able to achieve these results because of their exclusive focus on inpatient care without the inherent distraction of balancing both inpatient and outpatient care responsibilities. Likewise, hospitalists generate operating and cost efficiencies by managing the treatment of a large number of patients with similar clinical needs.

According to the Society of Hospitalist Medicine, or SHM, the number of hospitalists has grown from an estimated 800 in the mid-1990s to approximately 20,000 in 2006, making it one of the fastest-growing medical disciplines in the United States. The 2004 Clinical Advisory Board Report indicates that over 40% of all hospitals have formal hospitalist programs and we believe based on our operational experience that a greater number of hospitals have hospitalists practicing within the facility. SHM estimates that the number of hospitalists will reach approximately 30,000 by 2010.

We believe the growing demand for hospitalists is primarily driven by five significant changes in the healthcare delivery system:

 

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The primary care physician’s role in hospital care is decreasing due to the increasingly specialized nature of hospital care, the demands of treating higher acuity patients in the outpatient setting and the desire to reduce on-call obligations;

 

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Hospitals have a greater need for consistent on-site physician availability, due to the need to admit patients from the emergency room, the increasing severity of illness required to justify hospital admissions and external pressures to decrease the length of inpatient stays;

 

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Specialists have an increased desire to limit their practice to their medical specialty;

 

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National residency accreditation organizations have established limitations on the number of hours that resident physicians in training may practice; and

 

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Health plans seek alternative mechanisms to appropriately control the substantial increase in inpatient expenditures.

Our Company and Our Solution

We provide high-quality professional medical care for patients while reducing the cost of care for inpatient facilities and payors. Either through our wholly-owned subsidiaries or our affiliated professional organizations, we employ or affiliate with over 550 hospitalists, including physicians, nurse practitioners and physician assistants, who are organized into traditional medical group practices to provide hospitalist services. To enhance the efficiency of these operations, we offer our affiliated hospitalists specialized training programs, information management systems and the administrative support necessary to effectively manage these nationally integrated practice group organizations. We have entered into long-term management contracts with our affiliated professional organizations in those states where business entities, as opposed to physicians, are prohibited from practicing medicine and include these entities in our consolidated financial statements.

We generate approximately 95% of our revenues through our affiliated hospitalists’ patient encounters at inpatient facilities. Patients are referred to our affiliated hospitalists through their community medical providers, emergency departments, payors and hospitals. Third party payors and patients pay for our services in the same manner as they would pay the primary care physicians and other medical professionals who otherwise would be furnishing this direct patient care. The remainder of our revenues are substantially comprised of contracts with the hospitals and other inpatient facilities to provide hospitalist services.

Each major constituent of the healthcare delivery system, including patients, primary care physicians, specialists, acute care hospitals, alternative sites of inpatient care, and health plans, can benefit from better coordinated inpatient care. We are positioned to assist each of these constituents in finding solutions to many of the challenges associated with patient care at inpatient facilities.

Patients

Patients frequently experience medical conditions at unpredictable times and may require admission to a hospital when their primary care physician is unavailable or patients may not have a primary care physician. The quality, or the perception, of the care received by the patient may suffer as a result of the limited availability of dedicated physicians in the inpatient setting to answer patient questions and provide continuity throughout the inpatient experience. Uncoordinated communication between healthcare providers, patients and family members often negatively affects the inpatient experience and may also impact patient outcomes.

In addition to providing medical services, our affiliated hospitalists are trained to serve as team leaders in coordinating inpatient care and providing a consistent, single point of contact for patients, family members and medical professionals. Our affiliated hospitalists facilitate the communication of patient information in the inpatient setting and, after the patient is discharged, often assist with the transition to outpatient or other post-hospital care by communicating with the outpatient physician provider. In the event a patient does not have a primary care physician, our affiliated hospitalists refer the patient to physicians or clinics in the area.

Primary Care Physicians

Primary care physicians are typically focused on treating patients in an office-based setting as opposed to an inpatient facility. The time spent making hospital rounds may reduce the time available for primary care

 

physicians to treat patients in their offices, which can result in lower earnings for the physician. In addition, an inpatient’s medical needs may be unpredictable and require the primary physician to provide off-hour attention and unscheduled care. The burden on primary care physicians is increasing because of the continuing reduction in the average length of inpatient stays and the corresponding increase in the acuity of patients treated in an outpatient setting.

We train and support our affiliated hospitalists to manage the care of hospitalized patients, enabling them to assume the inpatient care responsibilities that were previously provided by the primary care physician. As a result of our services, primary care physicians have the opportunity to spend more time treating office-based patients, which may increase their earnings. Our hospitalist programs result in reduced on-call time for primary care physicians and relieve practice demands during evenings and weekends. Our affiliated hospitalists also coordinate the discharge and transition of inpatients to outpatient care by communicating with patients’ primary care physicians after discharge from an inpatient facility.

Specialists

Specialist physicians are trained to focus on specific procedures or medical conditions. As a result, specialists often desire to limit their practice to their medical specialty. Hospitalized patients, however, frequently experience multiple medical issues that require consideration and coordination among several specialists and other care providers.

Our affiliated hospitalists focus on the needs of hospitalized patients, relieving specialists of their primary responsibility for certain unrelated clinical issues in the inpatient setting and providing these specialists with an opportunity to focus on their specialty. Our affiliated hospitalists also serve as a liaison between specialists and patients, primary care physicians, other care providers, and family members.

Acute Care Hospitals

Acute care hospitals must provide consistent and reliable care despite potentially having hundreds of admitting physicians who each have their own methods of care, preferences for medications and differing utilization and review processes. The resulting process variability can lead to an increased number of clinical errors, higher medical costs and deficiencies in medical record documentation which can lead to reimbursement and regulatory issues. Acute care hospitals may experience difficulty finding available physicians as a result of the reluctance of some medical staff members to assume the care of unassigned patients. This is further complicated by the statutory and organizational limitations on intern and resident duty hours. Acute care hospitals also face the challenge of providing medical care to indigent patients. Acute care hospitals may experience emergency department overcrowding caused by an often large number of unassigned patients seeking admission to the hospital through the emergency department.

Our hospitalist programs are structured to provide acute care hospitals with a consistent on-site physician presence that typically results in fewer admitting physicians overseeing patients in the hospital, thereby reducing process variability and enhancing the ability to implement standardized practices. Our affiliated hospitalists’ consistent presence in the facilities leads to more efficient processes within the acute care hospitals, which can improve clinical outcomes, decrease average length of inpatient stay and lower costs per day. By concentrating the care of more patients with relatively fewer physicians, hospitals can more easily implement new initiatives and enhance compliance with protocols. Our hospitalist training programs lead to improved medical record documentation, which can improve hospital reimbursement and result in better regulatory compliance. Overall, through our hospitalist programs, we provide acute care hospitals with increased patient coverage, rapid response times, efficient management of care for insured and indigent patients and increased emergency department throughput.

 

Alternative Sites of Inpatient Care

Alternative sites of inpatient care, such as long-term acute care facilities, specialty hospitals, psychiatric facilities, rehabilitation hospitals and skilled nursing facilities, face many of the same challenges as acute care hospitals. Alternative sites of inpatient care may face additional challenges related to the narrow breadth of physician coverage that is typically available at such sites.

Our affiliated hospitalists provide alternative sites of inpatient care with consistent on-site physician availability and experience, which benefits the alternative site of inpatient care facility by providing a single point of contact and enhancing regular communication with other healthcare constituents outside the site of care. By coordinating inpatient care at such facilities, our affiliated hospitalists manage the appropriate utilization of patient care to the benefit of both the facility and the patient.

Health Plans

Health plans face significant increases in costs caused by inconsistent healthcare practices, redundant diagnostic tests, inefficient discharge coordination between hospitals and outpatient physician providers, and process variability. In addition, health plans can incur additional costs when their members are admitted to hospitals by physicians who are not credentialed by their plan.

Health plans contract with our credentialed affiliated hospitalists to provide in-network coverage for hospitalized members. Our affiliated hospitalists provide consistent healthcare practices, coordinate ordering of diagnostic tests with outpatient physician providers and reduce process variability, resulting in reduced medical costs for health plans while promoting quality of care.

Competitive Strengths

We believe the following competitive strengths position us to capitalize on the rapid growth in demand for hospitalists within the healthcare industry.

Leading, Established Provider of Hospitalist Services. We believe we are the largest dedicated hospitalist company in the United States based on revenues, patient encounters and number of full time affiliated hospitalists. Our early entry into the emerging hospitalist industry has permitted us to establish a reputation and leadership position that we believe has become closely identified with hospitalist medicine. Since the beginning of 2004, we have had more than five million patient encounters in over 300 hospitals and medical facilities across sixteen states. We believe that our scale, financial resources and established infrastructure provide operating efficiencies and allow us to consistently implement best practices in a manner that our competitors may not be able to provide.

Significant Investment in a Technology-Based Management System. We have developed a fully-integrated, proprietary technology-based management system called IPC-Link^® which enables us to manage virtually all aspects of our business. Our system is designed to accommodate significant future growth in our business, and we believe this sophisticated system differentiates us from other hospitalist companies. Through IPC-Link^®, we are able to provide our affiliated hospitalists with a web-based Virtual Office portal, which enables us to:

 

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Transmit vital clinical information from our affiliated hospitalists to referring physicians;

 

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Capture near real-time information to manage our operations and monitor our financial and clinical performance;

 

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Provide electronic charge capture and billing information; and

 

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Immediately integrate new affiliated hospitalists and newly-acquired affiliated hospitalist practice groups onto one information management system.

Comprehensive Repository of Outcomes Data. Through our use of IPC-Link^® to aggregate data from our patient encounters, we have established an extensive database of hospitalist patient information. Our database allows us to track metrics which we can use to monitor the productivity and quality of care of our affiliated hospitalists. Additionally, our database provides our affiliated hospitalists with insights into common patient problems that enables our affiliated hospitalists to improve outcomes. Focused outcomes studies using aggregated patient data from our database have been published in several peer reviewed journals and trade publications which enhances our reputation and strengthens our ability to recruit hospitalists.

Leader in Transition Management Services. We use IPC-Link^® to create customized surveys for patients once discharged to home from an inpatient facility. Our IPC-Link^® system provides our call center with patient information and follow-up instructions to assist in monitoring and documenting the patient’s discharge and transition to outpatient care. We believe our system enables us to identify a patient’s medical issues on a near real-time basis, coordinate care with the appropriate care provider, improve outcomes through evidence-based medicine, lower the re-admission rate into inpatient facilities, and decrease our medical malpractice risk.

Strong and Diverse Referral Relationships. We provide hospitalist solutions at over 300 hospitals and medical facilities in sixteen states. We believe that through the provision of high-quality care, our affiliated hospitalists have established and continue to develop strong relationships with primary care physicians, specialists and other medical personnel at the inpatient facilities in which they operate, and that these relationships generate consistent patient referrals. We have successfully expanded our referral sources from approximately 13,000 physicians in 2004 to 21,000 in 2006.

Leader in Recruiting, Training and Retaining High-Quality Hospitalists. We are able to recruit and retain high-quality hospitalists due to our industry leading reputation, training and development programs, and attractive compensation programs. From the beginning of 2004 to November 30, 2007, we have grown the number of our affiliated hospitalists from 268 to approximately 551. We have developed a comprehensive training program comprised of new-hire training, which all of our affiliated hospitalists complete prior to treating patients, and continuing education for all our affiliated hospitalists. We also provide our affiliated hospitalists with performance-based compensation packages, which we believe enhances our ability to retain current affiliated hospitalists and attract new hospitalists.

Strong Management Team with Extensive Industry Experience. We are led by an experienced senior management team with an average of over 20 years of experience in the hospitalist and related healthcare industries. Our Chief Executive Officer, Adam D. Singer, M.D., founded the company in 1995 and was a pioneer in the creation of the hospitalist industry. Furthermore, Dr. Singer continues to be an industry leader today by creating greater awareness of the advantages of hospitalist medicine. In addition, our senior management team has experience in developing and executing organic and acquisition-based growth strategies, having increased our net revenues from $39 million in 2001 to $148 million in 2006.

Growth Strategy

We plan to grow our business by (1) increasing our market share in facilities where our affiliated hospitalists already provide care, (2) entering new facilities in existing markets, and (3) expanding into new markets. We intend to achieve this growth by pursuing one or more of the following strategies in each area:

Improve Hospitalist Productivity. We intend to improve hospitalist efficiency and productivity by leveraging our technology-based infrastructure, extensive hospitalist training programs and diverse referral

 

relationships. We provide our affiliated hospitalists with administrative and professional services to support their practice of medicine and improve their operating efficiencies. We intend to continue to improve the productivity of our existing affiliated hospitalists by enabling them to focus on efficiently providing high-quality care to a greater number of patients. We also believe our performance-based compensation plan will continue to motivate our affiliated hospitalists in an appropriate manner.

Recruiting Additional Hospitalists. A significant portion of our growth has been, and will continue to be, the recruitment of new high-quality hospitalists. We intend to recruit and train additional hospitalists who will obtain admitting privileges and begin practicing at one of our existing facilities or a new facility in a given market. We believe our reputation for delivering high-quality hospitalist service creates opportunities for our affiliated hospitalists to establish new practices. We also believe that the breadth of our affiliated hospitalists’ referral relationships in existing markets is attractive to new hospitalists because it allows them to join existing practices and quickly build their patient volume.

Establishing Contracts with Both New and Existing Facilities. Entering into a contract with hospitals or other facilities where we have existing practices provides us with steady access to the unassigned patients and strengthens our relationships with both the facilities and their medical staffs. Obtaining a contract with a new inpatient facility for the delivery of hospitalist services often serves as our initial entry into the facility and enables us to establish a diversified hospitalist practice at that facility.

Acquisitions. We have substantial experience in identifying, acquiring and integrating other hospitalist practice groups. We have completed a number of acquisitions of hospitalist practice groups and successfully integrated them into IPC and onto IPC-Link^®. These acquisitions have enabled us to both establish a presence in new markets and to strengthen our position in existing markets. Many markets are still highly fragmented, providing us with additional opportunities to identify and capitalize on complementary acquisitions in the future.

Challenges We Face

Our ability to execute our strategy and capitalize on our advantages is subject to a number of risks more fully discussed in the “Risk Factors” section immediately following this summary. Before you invest in our shares, you should carefully consider all of the information in this prospectus, including matters set forth under the heading “Risk Factors,” such as:

 

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Highly regulated industry. The healthcare services industry is complex and subject to a wide variety of federal, state and local laws and regulations. We cannot predict whether a federal, state or local government will determine that we are not operating in accordance with these laws, or whether these laws will change in the future and impact our business. Any of these actions could have a material adverse effect on our business, financial condition and results of operations.

 

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Reliance on referrals from third parties. Our business is completely reliant on referrals from third parties. As a result, if we are unable to maintain our referral base or our preferred provider status with significant third party payors in the communities where we operate, it may negatively impact our revenues and our financial performance.

 

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Concentration of our operations. Approximately 65% of our net revenue in 2006 was generated by our operations in Texas, Arizona, Michigan and Missouri. Unfavorable changes or conditions occurring in these states, such as healthcare reforms, changes in laws and regulations, reduced Medicaid reimbursements and government investigations, may have a material adverse effect on our business, financial condition and results of operations.

 

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Competition for hospitalists. Our business is dependent on our affiliated hospitalists to provide services and generate revenues. We compete with many types of healthcare providers for the services of a

 

limited number of clinicians. This competition makes it challenging for us to meet our hiring needs and may require us to increase hospitalist compensation in a manner that decreases our profit margins.

 

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Internal controls over financial reporting for non-routine transactions. Our independent auditors have identified a material weakness in our internal controls over financial reporting relating to accounting for our warrants for redeemable preferred stock. Our audit committee and management have been advised that we need to enhance our financial reporting processes to identify and properly account for such significant non-routine transactions. The accounting for certain non-routine transactions may not be obvious and may require significant evaluation and consultation to determine the proper accounting treatment. Any failure to maintain effective internal controls over our financial reporting could affect our ability to ensure timely and reliable financial reports.

Recent Developments

On January 7, 2008, we completed the acquisition of a hospitalist group comprised of over 30 hospitalists practicing in 26 medical facilities located in Massachusetts and New Hampshire. Giving effect to the completion of this acquisition, we provide hospitalist solutions in eighteen states. In this prospectus, the stated numbers relating to our affiliated hospitalists, medical facilities and states in which we practice do not give effect to this acquisition.

Company Information

Founded in 1995 by Chairman and Chief Executive Officer, Adam D. Singer, M.D., we were incorporated in Delaware in January 1998. Our principal executive offices are located at 4605 Lankershim Boulevard, Suite 617, North Hollywood, California 91602. Our telephone number is (888) 4IPC-DOC (888-447-2362). We maintain a website at www.thehospitalistcompany.com. Information contained on our website is not a part of, and is not incorporated by reference into, this prospectus.

 

THE OFFERING

 

Common stock offered by us

2,800,000 shares

 

Common stock offered by the selling stockholders

1,900,000 shares

 

Common stock to be outstanding immediately after this offering

14,311,809 shares, assuming no exercise of the underwriters’ over-allotment option, the conversion of all outstanding shares of our redeemable convertible preferred stock and a cashless exercise of warrants held by our preferred stockholders.

 

Over-allotment option offered by the selling stockholders

705,000 shares

 

Use of proceeds

We intend to use the net proceeds to us from this offering to repay certain indebtedness and for general corporate purposes, including to fund the acquisition of physician practices and working capital. We will not receive any proceeds from the sale of shares by the selling stockholders. See “Use of Proceeds.”

 

Risk factors

You should read the “Risk Factors” section of this prospectus for a discussion of some of the factors that you should consider carefully before deciding to invest in shares of our common stock.

 

Proposed Nasdaq Global Market symbol

“IPCM”

Except as otherwise indicated, all information in this prospectus assumes:

 

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that our common stock will be sold at $16.00 per share, which is the midpoint of the estimated offering price range shown on the front cover page of this prospectus;

 

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that the underwriters will not exercise their over-allotment option;

 

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that options to purchase 447,155 shares of common stock at a weighted average exercise price of $3.06 per share, options to purchase 23,438 shares of common stock at the offering price, and warrants to purchase 86,458 shares of common stock at a weighted average exercise price of $4.79 per share have not been exercised;

 

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the conversion of each outstanding share of our series A convertible preferred stock, series B convertible preferred stock, series C convertible preferred stock and series D convertible preferred stock into one share of our common stock;

 

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the effect of a 1-for-6.4 reverse stock split of our common stock, which occurred on January 11, 2008;

 

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the effectiveness of our amended and restated certificate of incorporation prior to the completion of this offering.

 

SUMMARY CONSOLIDATED FINANCIAL AND OPERATING DATA

The following table presents summary consolidated financial and operating data as of the dates and for the periods indicated. The summary consolidated financial and operations data for the years ended December 31, 2004, 2005 and 2006 have been derived from the audited consolidated financial statements included elsewhere in this prospectus. The summary consolidated financial and operations data for the nine months ended September 30, 2006 and 2007, and the balance sheet data as of September 30, 2007, have been derived from our unaudited condensed consolidated financial statements included elsewhere in this prospectus. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments, consisting of normal and recurring adjustments, necessary to state fairly our results of operations as of and for the periods presented. You should read the information contained in this table in conjunction with the “Selected Consolidated Financial and Operating Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and accompanying notes included elsewhere in this prospectus. Historical results of operations and financial position are not necessarily indicative of the results that may be expected for future periods.

 

		Year Ended December 31,												Nine Months Ended September 30,
		2004				2005				2006				2006				2007
		(dollars in thousands, except for per share data)
Consolidated Statements of Income Data:
Net revenue		$	91,668			$	110,883			$	148,098			$	107,929			$	137,425
Operating expenses:
Cost of services—physician practice salaries, benefits and other			62,660				78,966				109,332				79,831				100,090
General and administrative			24,351				27,587				32,330				23,245				26,678
Litigation loss and other claims (1), (2)			—				3,025				1,377				1,383				—
Depreciation and amortization			781				671				1,098				828				1,003
Total operating expenses			87,792				110,249				144,137				105,287				127,771
Income from operations			3,876				634				3,961				2,642				9,654
Net interest income (expense)			46				33				(1,080	)			(750	)			(913	)
Loss on fair value of preferred stock warrant liabilities (3)			—				(90	)			(690	)			(659	)			(8,781	)
Income (loss) before income taxes and cumulative effect of change in accounting principle			3,922				577				2,191				1,233				(40	)
Income tax provision (benefit) (4)			283				(4,009	)			413				908				3,705
Net income (loss) before cumulative effect of change in accounting principle			3,639				4,586				1,778				325				(3,745	)
Cumulative effect of change in accounting principle			—				(941	)			—				—				—
Net income (loss)			3,639				3,645				1,778				325				(3,745	)
Accretion of redeemable convertible preferred stock (3)			—				(248	)			(271	)			(203	)