ATLANTA, GA. – 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 first quarter of 2011.
ExamWorks today also announced the acquisition of Premex Group, Limited (“Premex”), a leading provider of IMEs in the United Kingdom.
First Quarter 2011 Highlights
- Revenues for the first quarter of 2011 were $66.6 million, an increase of $41.2 million, or 162%, over the year-ago quarter revenue of $25.4 million.
- Adjusted EBITDA for the first quarter of 2011 was $10.9 million, an increase of $6.7 million, or 162%, over the year-ago quarter adjusted EBITDA of $4.2 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.
- On February 28, 2011, we completed the acquisition of MES Group, Inc. (MES) for $215.0 million. MES contributed $13.2 million in revenues in the first quarter of 2011. Additionally, in the first quarter of 2011, we completed the acquisition of National IME Centres, Inc. (National IME). National IME contributed $220,000 in revenues in the first quarter of 2011.
Financial Review
Revenues – For the three months ended March 31, 2011, revenues were $66.6 million, an increase of 162% over the $25.4 million in revenues in the first quarter of 2010. For the three months ended March 31, 2011, pro forma revenues were $87.8 million compared to $87.4 million of pro forma revenues in the first quarter of 2010. Pro forma revenues for the three months ended March 31, 2011 assumes that the 2011 acquisitions were completed on January 1, 2011. Pro forma revenues for the three months ended March 31, 2010 assumes that the 2010 and 2011 acquisitions were completed on January 1, 2010.
Costs of revenues – For the three months ended March 31, 2011, costs of revenues were $43.6 million, an increase of 170% over the $16.1 million in costs of revenues in the first quarter of 2010. Costs of revenues as a percentage of revenues for the first quarter of 2011 was 65% compared to 64% in the first quarter of 2010.
Selling, general and administrative expenses – For the three months ended March 31, 2011, SGA expenses were $14.3 million, an increase of 138% over the $6.0 million in SGA expenses in the first 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 first quarter of 2011 are $977,000 in share based compensation expenses, $767,000 in acquisition-related transaction costs, and $467,000 in other non-recurring costs. Included in SGA expenses in the first quarter of 2010 are $114,000 in share based compensation expenses and $795,000 in acquisition-related transaction costs.
Depreciation and amortization expenses – For the three months ended March 31, 2011, D&A expenses were $8.6 million, an increase of 189% over the $3.0 million in D&A expenses in the first quarter of 2010. The change was primarily due to acquisitions completed in 2010 and 2011. For the three months ended March 31, 2011, depreciation expense was $736,000 and amortization expense was $7.9 million.
Interest and other expenses, net – For the three months ended March 31, 2011, interest and other expenses, net were $1.0 million, a decrease of 31% over the $1.5 million in interest and other expenses, net in the first quarter of 2010. Included in interest and other expenses, net in the first quarter of 2011 are $1.4 million of interest expense and deferred loan cost amortization, offset by adjustments on an interest rate swap and reductions in other expenses.
Adjusted EBITDA – For the three months ended March 31, 2011, adjusted EBITDA was $10.9 million, an increase of 162% over the $4.2 million in adjusted EBITDA in the first 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.
Premex Acquisition
On May 10, 2011, we acquired 100% of the share capital of Premex Group, Inc. (Premex) and its subsidiaries. Premex, based in Bolton, England, provides independent medical examinations, rehabilitation and diagnostic offerings and ancillary services. Premex was founded in 1996 and has grown through a combination of organic and acquisition growth. Revenues and adjusted EBITDA for the trailing twelve month period ended March 31, 2011 were approximately £55.8 million and £8.7 million, respectively, or apprximately $91.0 million and $14.2 million using a conversion rate of 1.63.
ExamWorks completed its acquisition of Premex for a purchase price consisting of £40.6 million (or $66.2 million) in cash, 661,610 shares of Company common stock with a contractual value of approximately £8.9 million (or $14.5 million), and £16.4 million (or $26.7 million) of assumed indebtedness under Premex’s receivables facility, which was paid off at closing. ExamWorks financed the cash portion of the transaction with proceeds from the senior revolving credit facility.
“We are thrilled to welcome Premex to the ExamWorks family of companies,” said James K. Price, Chief Executive Officer of ExamWorks. The talented professionals of our operating companies, Premex and UK Independent Medical (UKIM) have exceptional industry veterans who will lead us to the next phase of our growth in the United Kingdom. Each group brings unique personnel, information technology and operational assets, continually enhancing IME workflow and client experience.”
Senior Revolving Credit Facility
On May 6, 2011, we increased and fully exercised the accordion feature of our senior secured revolving credit facility. The increase and exercise of the accordion feature increased the committed capacity of the credit facility by $55 million, from a total of $245 million to $300 million.
Richard E. Perlman, Executive Chairman of ExamWorks, said: “We are pleased to share our progress and positive start to 2011. The market continues to validate our vision for the IME industry, including our lender group that is facilitating this round of expansion and providing additional liquidity for the future to continue the successful execution of our strategy.”
Business Outlook
ExamWorks is providing the following updated business outlook for fiscal year 2011:
Fiscal year 2011 reported revenue is expected to be $405 million to $415 million, including the expected results of MES, National IME and Premex from the date of acquisition, but excluding the effect of expected future acquisitions during 2011.
Fiscal year 2011 reported Adjusted EBITDA is expected to be $74 million to $80 million, including the expected results of MES, National IME and Premex from the date of acquisition, but excluding the effect of expected future acquisitions during 2011. Adjusted EBITDA is a non-GAAP measure, the use of which by ExamWorks is described below. The reconciliation to GAAP measures of reported 2011 Adjusted EBITDA is expected to be calculated and presented in a manner consistent with the reconciliation set forth below with respect to the three months ended March 31, 2011.
The Company expects to acquire a minimum of $40 million of annual revenue during the balance of 2011. This will result in acquired revenues of at least $265 million since the IPO, reaching the Company’s stated goal of $250 million of acquired revenues in 2011, 2012 and 2013 well ahead of the original timeline. Including the $40 million of additional acquired revenue, we expect to end 2011 with pro forma revenues in excess of $500 million. Pro forma revenues assumes that all 2011 acquisitions were completed on January 1, 2011.
The complete earnings release is available here.
Source: ExamWorks Group, Inc.