CHICAGO—NovaMed (Nasdaq: NOVA), based here, reported a 17 percent increase in profits for the fourth quarter ended Dec. 31, 2007, and a 23 percent increase in profits for 2007.

The company’s total net revenue in the fourth quarter was $33.3 million, up from $28.6 million in the prior year fourth quarter. Net revenue from surgical facilities was $28.1 million, up 23 percent from $22.9 million in the prior year fourth quarter. This revenue increase was primarily due to an 22 percent increase in total surgical procedures performed in the fourth quarter of 2007 as compared to the same period in the prior year, according to NovaMed.

On a same-facility basis, surgical facilities net revenue increased 9 percent over the prior year fourth quarter. Product sales and other revenue was $5.2 million in the fourth quarter of 2007, compared to $5.6 million in the prior year fourth quarter. NovaMed attributed the decrease to the fact that its marketing products business had a strong fourth quarter 2006.

Operating income in the fourth quarter of 2007 increased 30 percent to $8.3 million, or 25 percent of net revenue, from $6.4 million, or 22 percent of net revenue, in the same period last year. Net income from continuing operations was $.85 million, compared to $1.2 million in the prior year fourth quarter.

NovaMed’s total net revenue for 2007 was $128.6 million, up 23 percent from $104.3 million for 2006. Net revenue from surgical facilities was $105.8 million, up 30 percent from $81.1 million for 2006. According to NovaMed, the revenue increase was primarily due to a 35 percent increase in total surgical procedures performed in 2007 as compared to 2006. On a same-facility basis, surgical facilities net revenue increased 7 percent over 2006. Product sales and other revenue was $22.9 million for 2007 compared to $23.2 million for 2006.

Operating income for 2007 increased 37 percent to $31.5 million from $23 million, or 22 percent of net revenue, in 2006. Net income from continuing operations for 2007 was $5.9 million compared to $5.5 million in 2006.

Commenting on the fourth quarter and 2007 results, Thomas S. Hall, chairman, president and CEO of NovaMed, said, “We are pleased with our total revenue growth and our strong same-facility revenue growth of 9 percent for the fourth quarter and 7 percent for the year. We are also pleased with the continuing improvement in our operating income margin and our strong growth in cash flow.”

“Although our decision to divest four surgery centers had a negative impact on our reported results, we believe this is the right decision for NovaMed as it allows us to reallocate resources to more productive opportunities,” added Hall. “With annual cash flow from operations of over $18 million and approximately $100 million available under our credit facility, we are very well positioned to continue to execute our growth strategy in 2008 and beyond.”