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 second quarter of 2011.
Second Quarter 2011 Highlights
- Revenues for the second quarter of 2011 were $106.7 million, an increase of $71.4 million, or 202%, over the year-ago quarter revenue of $35.3 million.
- Adjusted EBITDA for the second quarter of 2011 was $18.5 million, an increase of $12.3 million, or 198%, over the year-ago quarter adjusted EBITDA of $6.2 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 May 10, 2011, we completed the acquisition of Premex Group Limited (Premex) for $108.4 million. Premex contributed $13.6 million in revenues in the second quarter of 2011.
Financial Review
Revenues — For the three months ended June 30, 2011, revenues were $106.7 million, an increase of 202% over the $35.3 million in revenues in the second quarter of 2011. For the three months ended June 30, 2011, pro forma revenues were $115.7 million compared to $113.9 million of pro forma revenues in the second quarter of 2010. Pro forma revenues for the three months ended June 30, 2011 and June 30, 2010 assumes that the 2010 and 2011 acquisitions were completed on January 1, 2010.
Costs of revenues — For the three months ended June 30, 2011, costs of revenues were $70.5 million, an increase of 219% over the $22.1 million in costs of revenues in the second quarter of 2010. Costs of revenues as a percentage of revenues for the second quarter of 2011 was 66% compared to 63% in the second quarter of 2010. The change was due primarily to higher cost of revenues as a percentage of revenues for the MES acquisition, offset in part by lower cost of revenues as a percentage of revenues for the Premex acquisition.
Selling, general and administrative expenses (“SGA”) — For the three months ended June 30, 2011, SGA expenses were $21.7 million, an increase of 158% over the $8.4 million in SGA expenses in the second 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 second quarter of 2011 are $1.4 million in share-based compensation expenses, $1.5 million in acquisition-related transaction costs, and $380,000 in other non-recurring costs. Included in SGA expenses in the second quarter of 2010 are $184,000 in share-based compensation expenses and $1.2 million in acquisition-related transaction costs.
Depreciation and amortization expenses — For the three months ended June 30, 2011, D&A expenses were $11.5 million, an increase of 219% over the $3.6 million in D&A expenses in the second quarter of 2010. The change was primarily due to acquisitions completed in 2010 and 2011. For the three months ended June 30, 2011, depreciation expense was $954,000 and amortization expense was $10.5 million.
Interest and other expenses, net — For the three months ended June 30, 2011, interest and other expenses, net were $3.2 million, an increase of 146% over the $1.3 million in interest and other expenses, net in the second quarter of 2010. Included in interest and other expenses, net in the second quarter of 2011 are $3.0 million of interest expenses and deferred loan cost amortization.
Adjusted EBITDA — For the three months ended June 30, 2011, adjusted EBITDA was $18.5 million, an increase of 198% over the $6.2 million in adjusted EBITDA in the second 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.
Senior Unsecured Notes
On July 19, 2011, the Company closed on a private offering of $250.0 million in aggregate principal amount of 9.0% senior notes due 2019 (the “Notes”). The Notes were issued at a price of 100% of their principal amount. The Notes are senior unsecured obligations of ExamWorks and are guaranteed by ExamWorks’ existing and future U.S. subsidiaries.
The gross proceeds of $250.0 million were used to repay borrowings outstanding under our senior credit facility, pay related fees and expenses, and for general corporate purposes, including acquisitions.
Commentary
Commenting on today’s earnings announcement, Richard E. Perlman, Executive Chairman of ExamWorks, said: “We are pleased to share the results of our strong financial performance this quarter which continues to validate the strength and momentum of our business model. ExamWorks revenues have doubled since the IPO; and EBITDA has grown even faster. We believe that ExamWorks is ideally positioned to sustain this high-growth rate given our track record of successful execution. Moreover, having just closed our recent bond offering of $250.0 million in notes, we have the financial resources to fund our acquisition strategy and continue to create exceptional shareholder value with minimal dilution to our current shareholders.
James K. Price, Chief Executive Officer of ExamWorks, said: “Our financial performance is a clear indication that we are successfully executing our strategy. The underlying ideas of economies of scale; world class infrastructure; and disciplined operating standards are, without doubt, delivering results while constituting a solid platform for the future.”
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 and six months ended June 30, 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 assume that all 2011 acquisitions were completed on January 1, 2011. The potential transaction disclosed on July 8, 2011 is still under evaluation and negotiation but may not occur. Our acquisition guidance for the remainder of this year is irrespective of this transaction. We have not and have no intention of announcing the signing or termination of letters of intent in the future.
The complete earnings release can be found here.
Source: ExamWorks, Inc.