Venture investors are cashing in on one of the year's few big winners in health care: IPC-The Hospitalist Co.

The company's principal backers - Scale Venture Partners, Morgenthaler Ventures, Bessemer Venture Partners and CB Health Ventures - sold shares during IPC's January initial public offering, and each plans to sell more of their stake without liquidating their positions entirely, according to a recent regulatory filing.

IPC, a provider of outsourced inpatient care to hospitalized patients, went public at $16 and has traded as high as $24.20. On Wednesday, the company closed at $19.46, down 11.55% from its close of $22 on Tuesday. The decline came after the North Hollywood, Calif., company told investors that its second-quarter earnings wouldn't match analyst projections.

But overall, IPC has performed well. Net revenue rose to $190 million in 2007, from $148 million in 2006 and $110.9 million in 2005. Earnings before interest, taxes, depreciation and amortization increased to $15.2 million in 2007, up from $6.4 million in 2006. For this year, IPC projects revenue to reach $239 million to $245 million.

IPC raised about $40 million in venture capital before it went public. According to regulatory filings, venture firms paid an average of about $4.50 per share.

Profitable companies that help reduce health care costs stand out in difficult markets, said Scale Managing Director Mark Brooks. According to IPC, hospitals using its services see a 13.4% reduction in the cost of inpatient care, on average, and the average length of stay drops by 16.6%.

"Investors in times of uncertainty want to attach themselves to simple growth stories," Brooks said.

Scale, which owns 2.43 million shares and holds a 16.4% stake, intends to offer 1.21 million shares through the offering, and 258,008 more could be sold through an over-allotment option, which in total would reduce its stake to 6%. Similarly, Morgenthaler, holder of 1.97 million shares, for a 13.2% ownership, plans to offer 987,597 shares, and 209,579 more through the over allotment, to cut its stake to 4.87%.

Bessemer will shrink its ownership to 2.79% from 9.17%, and CB Health Ventures will cut its stake to 2.83% from 7.72% through the offering and over-allotment options, according to a recent S-1 filing. Before IPC went public, Scale owned about 31.79%, Morgenthaler 25.46%, Bessemer 17.4% and CB 14.8%, according to regulatory filings.

Though IPC appears to be on track for more growth, its venture backers are at a point where they need to begin distributing gains to limited partners. Selling stock at the IPO and through the upcoming offering also frees up IPC shares to be bought by public-market investors.