Atlanta, GA – ExamWorks Group, Inc. (NYSE: EXAM), a leading provider of independent medical examinations (“IMEs”), peer reviews, bill reviews and related services, recently reported financial results for the second quarter of 2013.
Second Quarter 2013 Highlights
- Revenues for the second quarter of 2013 were $156.1 million, an increase of $28.3 million, or 22.1%, over the year-ago quarter revenues of $127.8 million.
- On a pro forma basis, revenues of $156.1 million for the second quarter of 2013 represent an increase of $10.4 million, or 7.2%, over the year-ago quarter pro forma revenues of $145.7 million. Excluding the impact of currency, revenues would have grown by 8.2% over the prior year pro forma quarter. Pro forma revenues assume that acquisitions completed in 2012 were completed on January 1, 2011. We did not complete any acquisitions in the first half of 2013, thus pro forma revenues equal actual revenues.
- Adjusted EBITDA for the second quarter of 2013 was $25.0 million (16.0% of revenues), an increase of $4.6 million, or 22.5%, over the year-ago quarter adjusted EBITDA of $20.4 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.
- Generated $18.7 million of cash flow from operations in the second quarter and repaid $23.7 million of debt.
- Increasing our full year 2013 guidance, revenues, on a constant currency basis, are now expected to increase organically between 5.5% and 7.5% from our 2012 pro forma revenues of approximately $574 million. Adjusted EBITDA margins are expected to continue to range between 15.5% and 16.5% of reported revenues.
- We were awarded another national account in the U.S., which we expect will begin to contribute to our growth early in 2014.
Commentary
Commenting on the earnings announcement, James K. Price, Chief Executive Officer of ExamWorks, said: “Our latest national account win once again demonstrates that the industry has embraced our model and the value we deliver to our customers. We continue to work hard to meet and redefine customer expectations, made possible by our dedicated employees worldwide. We are excited about our momentum and look forward to the remainder of 2013.”
Richard E. Perlman, Executive Chairman of ExamWorks, said: “The combination of our vision and strategy for our industry and business, together with excellent execution have led to the results we announce today. As reflected by our new revenue guidance, we expect our growth to continue, further solidifying our position and reputation as the leader in the IME industry.”
Financial Review
Revenues – For the three months ended June 30, 2013, revenues were $156.1 million, an increase of 22.1% over the $127.8 million in revenues in the second quarter of 2012. The increase in revenues was primarily due to acquisitions completed in 2012 and, to a lesser extent, growth across all of our existing businesses. The company did not complete any acquisitions in the three months ended June 30, 2013.
On a pro forma basis, for the three months ended June 30, 2013, revenues were $156.1 million, an increase of 7.2% over the $145.7 million in pro forma revenues in the second quarter of 2012. The increase in pro forma revenues was driven by growth across all of our geographies.
Costs of revenues – For the three months ended June 30, 2013, costs of revenues were $102.1 million, an increase of 21.2% over the $84.2 million in costs of revenues in the second quarter of 2012. The change was primarily due to the acquired costs of revenues for acquisitions completed in 2012. Costs of revenues as a percentage of revenues for the second quarter of 2013 improved to 65.4% from 65.9% in the second quarter of 2012 due to a change in sales mix and positive operating leverage resulting from increased revenues. Included in costs of revenues in the second quarter of 2012 and 2013 are $750,000 and $719,000 of share-based compensation expenses, respectively.
Selling, general and administrative expenses (“SGA”) – For the three months ended June 30, 2013, SGA expenses were $34.1 million, an increase of 23.1% over the $27.7 million in SGA expenses in the second quarter of 2012. The increase was primarily due to the acquired SGA expenses for acquisitions completed in 2012. Included in SGA expenses in the second quarter of 2013 are $3.6 million in share-based compensation expenses and $769,000 in acquisition-related transaction costs and other non-recurring costs. Included in SGA expenses in the second quarter of 2012 were $4.1 million in share-based compensation expenses and $(228,000) in acquisition-related transaction costs and other non-recurring costs.
Depreciation and amortization expenses (“D&A”) – For the three months ended June 30, 2013, D&A expenses were $15.8 million, an increase of 14.5% over the $13.8 million in D&A expenses in the second quarter of 2012. The increase was primarily due to acquisitions completed in 2012. For the three months ended June 30, 2013, depreciation expense was $1.3 million and amortization expense was $14.5 million.
Interest and other expenses, net – For the three months ended June 30, 2013, interest and other expenses, net were $7.7 million, an increase of 24.2% over the $6.2 million in interest and other expenses, net in the second quarter of 2012. The increase was primarily due to higher average debt balances this quarter compared to the prior year quarter resulting from the acquisition of Australia based MedHealth completed in August 2012.
Adjusted EBITDA – For the three months ended June 30, 2013, adjusted EBITDA was $25.0 million, an increase of 22.5% over the $20.4 million in adjusted EBITDA in the second quarter of 2012.
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 $18.7 million of cash flow from operations in the second quarter of 2013 and $17.6 million of cash flow from operations in the first six months of 2013, after the $11.0 million bond interest payment made in January 2013. We ended the quarter with $9.2 million of cash on hand, $357.9 million of total debt and total leverage as calculated under our credit facility of approximately 3.86x. Our total debt consisted of $250.0 million of senior unsecured notes due July 2019, $78.0 million outstanding under the senior secured revolving credit facility, $29.3 million outstanding under the working capital facilities in the U.K., and approximately $600,000 in seller subordinated notes. As of the end of the quarter, our committed availability under our credit facilities was approximately $200 million, of which approximately $82 million was immediately available and the balance of approximately $118 million was available to fund future acquisitions.
Business Outlook
ExamWorks is providing the following business outlook for the full year and the third quarter of 2013:
Increasing our prior guidance, our full year 2013 revenues are expected to increase organically between 5.5% and 7.5% from our 2012 pro forma revenues of approximately $574 million, excluding the effects of currency.
We continue to expect our full year 2013 adjusted EBITDA margins to range between 15.5% and 16.5% of reported revenues. On a quarterly basis, adjusted EBITDA margins as a percentage of revenue may fluctuate between 15.5% and 17.0%.
Third quarter 2013 reported revenues are expected to range between $150 million and $154 million, which include approximately $2 million – $3 million unfavorable impact due to currency as compared to prior year reported revenues.
Third quarter 2013 reported adjusted EBITDA margins are expected to range between 15.5% and 16.0% of reported revenues.
The complete earnings release is available here: ExamWorks Second Quarter 2013 Results
Source: ExamWorks