December 15, 2017

ExamWorks Reports Fourth Quarter 2011 Financial Results

ATLANTA, GA (MARKETWIRE via COMTEX) — ExamWorks Group, Inc. (NYSE: EXAM), a leading provider of independent medical examinations (“IMEs”), peer reviews, bill reviews and related services, today reported financial results for the fourth quarter of 2011 and announced that it has been awarded three new national accounts.

Fourth Quarter and Fiscal Year End 2011 Results

  • Revenues for the fourth quarter of 2011 were $115.3 million, anincrease of $61.0 million, or 112%, over the year-ago quarter revenue of $54.3 million.
  • Adjusted EBITDA for the fourth quarter of 2011 was $16.8 million, anincrease of $6.7 million, or 66%, over the year-ago quarter adjustedEBITDA of $10.1 million. Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent.
  • As previously announced, in September 2011 and October 2011 we completed six acquisitions (collectively the “Q4 2011 Acquisitions”).These acquisitions contributed $8.3 million in revenue and $1.5 million in adjusted EBITDA, respectively, in the fourth quarter of 2011.
  • In the fourth quarter of 2011, the Company repurchased approximately692,000 shares at an average price of $8.49 per share. Since inception of the repurchase plan, the Company has repurchased approximately 1.0 million shares at an average price of $9.34 per share. As of December 31, 2011, the Company has $10.6 million remaining under its current authorization. The Company reissued approximately 203,000 shares out of treasury in connection with the Q4 2011 Acquisitions.
  • We ended fiscal year 2011 with pro forma revenues of $483.2 million and pro forma adjusted EBITDA of $80.7 million. On an as reported basis, we ended 2011 with revenues of $397.9 million and adjusted EBITDA of $63.3 million.
  • We generated $12.7 million of cash flow from operations in the fourth quarter of 2011 and $39.5 million in the full year 2011. We ended the year with available liquidity in excess of $94 million, including cash on hand and availability under our senior revolving credit facility. As of the end of the year, our consolidated leverage was 3.64x.

Commentary
Commenting on today’s earnings announcement, Richard E. Perlman, Executive Chairman of ExamWorks, said: “2011 was a year of significant transformative growth for ExamWorks, driven primarily by the acquisitions of MES and Premex. ExamWorks has now established itself as the global leader in the IME marketplace. This transformation did not come without its operational challenges, significant volatility for our shareholders and the disappointing performance of our share price. As significant shareholders ourselves, we empathize and are fully committed to demonstrating substantial progress during 2012 and making every effort to achieve our operational and financial objectives.”

“At the IPO, we emphasized that one of our strategic objectives was to develop national accounts. We are pleased to report that six months after having established the national accounts program that two customers in the US and one in the UK have chosen to become national account customers. During 2011, these customers conducted exhaustive due diligence on our technological capabilities and services validating the integrity of our exceptional IT platform and consolidating IME vendor relationships. We expect to build on the success and momentum of this milestone in 2012 and beyond.”

James K. Price, Chief Executive Officer of ExamWorks, said: “ExamWorks has made a substantial investment in the Company’s infrastructure, operations and technology platform over the last three years and will continue to do so. Our value proposition is increasingly evident among industry stakeholders. We believe that the organizational and operational improvements, especially the initiatives implemented during 2011, are the driving momentum behind ExamWorks’ recent successes and a solid platform for future growth.”

Business Highlights

  • We have approximately 1,900 full-time employees operating out of 45 service centers in North America and the UK. Today we process approximately 900,000 IME and related services annually and our medical panel consist of over 29,000 doctors and medical providers.
  • We have more than doubled our revenues since our IPO in October 2010 and we now operate under several leading brands including ExamWorks, MES and Premex.
  • We were awarded three national accounts, two in the US and one in the UK. This is in addition to the three existing accounts under the ExamWorks brand and 15 under the MES brand.
  • In Q4 2011, we experienced the beginning of the anticipated improvement in the ExamWorks brand organic revenue metric and expect continued improvement over the course of 2012.
  • We have successfully validated our robust technology infrastructure and processes by completing an SSAE 16, SOC 1, Type 2 audit (formerly known as SAS 70) for all of the ExamWorks companies in the United States and Canada.

Financial Review
Revenues – For the three months ended December 31, 2011, revenues were $115.3 million, an increase of 112% over the $54.3 million in revenues in the fourth quarter of 2010. In the three months ended December 31, 2011, MES, Premex and the Q4 2011 Acquisitions contributed revenues of $34.3 million, $23.3 million and $8.3 million, respectively. The balance of $49.4 million of revenue was derived by the remaining ExamWorks’ businesses, which we collectively refer to as the ExamWorks brand.

For the three months ended December 31, 2011, pro forma revenues were $115.9 million compared to $121.3 million of pro forma revenues in the fourth quarter of 2010, representing a pro forma decline of approximately 4.4%.

The fourth quarter 2011 decline at ExamWorks of (12.4)% compared to the third quarter 2011 decline of (14.1)% and was in part due to (1) restrictions associated with performing examinations in the state of Washington and (2) legislative impacts in the province of Ontario. The restrictions in the state of Washington were lifted in late October with meaningful revenue recognition resuming in Q1 2012. The legislative impact in the province of Ontario we expect will continue through the first half of 2012 and improve thereafter.

Excluding the impact of foreign currency, Premex grew at 8.1% and 4.4% in the fourth quarter 2011 and full year 2011 as compared to the same periods in 2010, respectively.

The fourth quarter 2011 decline in the Q4 2011 Acquisitions of (14.9)% compared to the fourth quarter 2010 was primarily due to a 28% decline in Q4 2011 revenue from the three acquisitions based in Ontario due to the previously mentioned legislative impacts. This decline was anticipated by us prior to the acquisition and reflected in the purchase price we paid.

Costs of revenues – For the three months ended December 31, 2011, costs of revenues were $76.0 million, an increase of 118% over the $34.9 million in costs of revenues in the fourth quarter of 2010. The change was primarily due to the acquired costs of revenues for acquisitions completed in 2010 and 2011. Costs of revenues as a percentage of revenues for the fourth quarter of 2011 were 66% compared to 66% in the third quarter of 2011 and 64% in the fourth quarter of 2010. Included in costs of revenues in the fourth quarter of 2011 are $650,000 of share-based compensation expenses.

Selling, general and administrative expenses (“SGA”) – For the three months ended December 31, 2011, SGA expenses were $25.3 million, an increase of 85% over the $13.7 million in SGA expenses in the fourth quarter of 2010. The change was primarily due to the acquired SGA for acquisitions completed in 2010 and 2011. Included in SGA expenses in the fourth quarter of 2011 are $1.8 million in share-based compensation expenses and $413,000 in acquisition-related transaction and other non-recurring costs. Included in SGA expenses in the fourth quarter of 2010 are $1.3 million in share-based compensation expenses, $3.0 million in acquisition-related transaction costs and $188,000 in other non-recurring costs.

Depreciation and amortization expenses (“D&A”) – For the three months ended December 31, 2011, D&A expenses were $14.3 million, an increase of 101% over the $7.1 million in D&A expenses in the fourth quarter of 2010. The change was primarily due to acquisitions completed in 2010 and 2011. For the three months ended December 31, 2011, depreciation expense was $1.3 million and amortization expense was $13.0 million.

Interest and other expenses, net – For the three months ended December 31, 2011, interest and other expenses, net were $6.9 million, an increase of 17% over the $5.9 million in interest and other expenses, net in the fourth quarter of 2010. Included in interest and other expenses, net in the fourth quarter of 2011 are $6.6 million of interest expenses and deferred loan cost amortization.

Adjusted EBITDA – For the three months ended December 31, 2011, adjusted EBITDA was $16.8 million, an increase of 66% over the $10.1 million in adjusted EBITDA in the fourth quarter of 2010. Adjusted EBITDA is a non-GAAP measure that is described and reconciled to net loss below and is not a substitute for the GAAP equivalent.

Other financial data – We generated $12.7 million of cash flow from operations in the fourth quarter of 2011 and $39.5 million of cash flow from operations in the full year 2011. We ended the year with $8.4 million of cash on hand and approximately $296.7 million of total debt, consisting of $250.0 million of senior unsecured notes due July 2019, $39.1 million outstanding under the working capital facility in the UK, $5.0 million outstanding under our senior secured revolving credit facility, and $2.6 million in seller subordinated notes. As of the end of the quarter, we had available liquidity in excess of $94 million, including cash on hand and availability under our senior secured revolving credit facility. As of December 31, 2011, our consolidated total leverage was 3.64x.

Business Outlook
ExamWorks is providing the following business outlook for the first quarter of 2012 and full year 2012:

  • First quarter 2012 reported revenue is expected to range between $116.0 million to $120.0 million. We expect these results to show continued growth at MES and Premex and continued improvement in the ExamWorks brand revenue metric.
  • Consistent with Q4 2011, adjusted EBITDA for the first quarter of 2012 is expected to be approximately 14.5% of reported revenues. Adjusted EBITDA is a non-GAAP measure, the use of which by ExamWorks is described below. The reconciliation to GAAP measures of reported 2012 Adjusted EBITDA is expected to be calculated and presented in a manner consistent with the reconciliation set forth below with respect to the three and twelve months ended December 31, 2011.
  • For 2012, we expect organic revenue growth between 4-6% based upon our 2011 pro forma revenue of approximately $483 million. Additionally, we expect to complete acquisitions in the second half of 2012 with annual revenues of approximately $75 million.
  • For 2012 and consistent with 2011, we expect adjusted EBITDA margins between 15-17% of reported revenues. We expect a gradual increase in EBITDA margins over the course of 2012 as we begin to realize revenue growth and leverage our current infrastructure.
  • The complete earnings release is available here: ExamWorks Q4 2011 Financial Results

Source: ExamWorks

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