Delaware
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27-2909425
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(State or other jurisdiction
of incorporation)
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(IRS Employer
Identification No.)
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¨
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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¨
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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¨
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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¨
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 2.02.
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Results of Operations and Financial Condition. |
Item 9.01.
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Financial Statements and Exhibits.
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Exhibit No.
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Description
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99.1
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Press Release dated November 5, 2012
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ExamWorks Group, Inc.
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Date: November 5, 2012
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By:
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/s/ J. Miguel Fernandez de Castro | |
J. Miguel Fernandez de Castro
Chief Financial Officer and Senior Executive Vice President
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Exhibit No.
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Description
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99.1
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Press Release dated November 5, 2012
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·
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Revenues for the third quarter of 2012 were $130.1 million, an increase of $20.9 million, or 19.1%, over the year-ago quarter revenues of $109.2 million. Excluding the impact of acquisitions completed in the past 12 months, organic revenue growth was 6.4% over the prior year quarter.
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·
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Pro forma revenues for the third quarter of 2012 were $141.4 million, an increase of $8.5 million, or 6.4%, over the year-ago quarter pro forma revenues of $132.9 million. Excluding the impact of currency, revenues would have grown by 7.1% over the prior year pro forma quarter. Pro forma revenues assume that acquisitions completed in 2011 and 2012 were completed on January 1, 2010 and 2011, respectively.
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·
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Adjusted EBITDA for the third quarter of 2012 was $20.2 million (15.5% of revenues), an increase of $3.1 million, or 18.1%, over the year-ago quarter adjusted EBITDA of $17.1 million. Excluding the impact of acquisitions completed in the third quarter of 2012, adjusted EBITDA was $18.9 million (15.2% of revenues), an increase of $1.8 million, or 10.5%, over the year-ago quarter adjusted EBITDA of $17.1 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.
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·
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On August 31, 2012, we completed the acquisition of MedHealth Holdings Pty Ltd (“MedHealth”), gaining a leadership position in the Australian IME services market, continuing our global expansion into high-growth markets and further diversifying our business. Additionally, on July 12, 2012, we completed the acquisition of Makos Health, a small Ontario based company that was immediately integrated into one of our existing business units, providing us with new customer relationships. During the twelve months ended June 30, 2012, these acquired businesses generated aggregate annual revenues and adjusted EBITDA of $56.5 million and $12.8 million, respectively. In the third quarter of 2012, these two acquisitions contributed revenues and adjusted EBITDA of $5.5 million and $1.3 million, respectively.
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·
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We ended the quarter with $6.4 million of cash on hand, approximately $381.9 million of total debt and total consolidated leverage of approximately 4.28x, pro forma for the effect of the MedHealth acquisition. As of the end of the quarter, we had available liquidity in excess of $45 million, including cash on hand and availability under our senior secured revolving credit facility.
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Pro Forma Revenues
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(In thousands except %)
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Three Months Ended September 30,
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Nine Months Ended September 30,
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2011 | 2012 |
Change (a)
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2011 | 2012 |
Change (b)
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ExamWorks U.S.
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$ | 83,488 | $ | 84,784 | 1.6 | % | $ | 255,283 | $ | 260,441 | 2.0 | % | ||||||||||||
United Kingdom
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27,074 | 33,521 | 23.8 | % | 83,114 | 95,475 | 14.9 | % | ||||||||||||||||
Canada
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8,879 | 6,589 | (25.8 | )% | 29,786 | 21,027 | (29.4 | )% | ||||||||||||||||
Subtotal
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119,441 | 124,894 | 4.6 | % | 368,183 | 376,943 | 2.4 | % | ||||||||||||||||
Australia
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13,455 | 16,466 | 22.4 | % | 36,541 | 44,538 | 21.9 | % | ||||||||||||||||
Total
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$ | 132,896 | $ | 141,360 | 6.4 | % | $ | 404,724 | $ | 421,481 | 4.1 | % |
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(a)
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For the three months ended September 30, 2012 and excluding the impact of currency, our growth in the U.K. would have been 26.3%, the decline in Canada would have been (25.0)%, our growth in Australia would have been 25.1%, and our total growth would have been 7.1%.
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(b)
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For the nine months ended September 30, 2012 and excluding the impact of currency, our growth in the U.K. would have been 17.5%, the decline in Canada would have been (28.0)%, our growth in Australia would have been 23.1%, and our total growth would have been 4.7%.
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● |
Full year reported revenue is expected to range between $520 million and $524 million, excluding the impact of any acquisitions that may be completed in the fourth quarter of 2012. Additionally, this outlook does not include the estimated $5 million to $10 million negative impact that Hurricane Sandy could have on our US operations.
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● |
Full year pro forma revenue is expected to range between $575 million and $579 million, assuming the closing of approximately $15 million of revenue from acquisitions currently in process. Additionally, this outlook does not include the estimated $5 million to $10 million negative impact that Hurricane Sandy could have on our US operations.
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For 2012, we expect adjusted EBITDA margins between 15-16% of reported revenues. The adjusted EBITDA margin range does not include the estimated negative impact that Hurricane Sandy could have on our US operations.
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Fourth quarter 2012 reported revenue is expected to range between $138 million and $142 million, excluding the impact of any acquisitions that may be completed in the fourth quarter of 2012. Additionally, this outlook does not include the estimated $5 million to $10 million negative impact that Hurricane Sandy could have on our US operations.
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Fourth quarter 2012 adjusted EBITDA margin is expected to range between 15-16% of reported revenue. The adjusted EBITDA margin range does not include the estimated negative impact that Hurricane Sandy could have on our US operations. 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 nine months ended September 30, 2012.
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For 2013, we expect organic revenue growth to increase to between 5-7% based upon our expected 2012 pro forma revenue and we expect adjusted EBITDA margins between 16-17% of reported revenues.
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For the three months ended
September 30,
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For the nine months ended
September 30,
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2011
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2012
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2011
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2012
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Revenues | $ | 109,218 | $ | 130,085 | $ | 282,548 | $ | 381,600 | ||||||||
Costs and expenses: | ||||||||||||||||
Costs of revenues | 72,148 | 86,080 | 186,225 | 251,476 | ||||||||||||
Selling, general and administrative expenses | 22,803 | 28,281 | 58,785 | 84,642 | ||||||||||||
Depreciation and amortization | 13,069 | 14,458 | 33,153 | 42,245 | ||||||||||||
Total costs and expenses | 108,020 | 128,819 | 278,163 | 378,363 | ||||||||||||
Income from operations | 1,198 | 1,266 | 4,385 | 3,237 | ||||||||||||
Interest and other expenses, net: | ||||||||||||||||
Interest expense, net | 4,722 | 7,136 | 8,922 | 20,154 | ||||||||||||
Loss on early extinguishment of debt | 621 | — | 621 | — | ||||||||||||
Other income, net | — | (70 | ) | — | (226 | ) | ||||||||||
Gain on interest rate swap | (56 | ) | (54 | ) | (253 | ) | (169 | ) | ||||||||
Realized foreign currency loss | — | 534 | 223 | 534 | ||||||||||||
Total interest and other expenses, net | 5,287 | 7,546 | 9,513 | 20,293 | ||||||||||||
Loss before income taxes | (4,089 | ) | (6,280 | ) | (5,128 | ) | (17,056 | ) | ||||||||
Benefit for income taxes | (1,412 | ) | (1,654 | ) | (1,820 | ) | (4,800 | ) | ||||||||
Net loss | $ | (2,677 | ) | $ | (4,626 | ) | $ | (3,308 | ) | $ | (12,256 | ) | ||||
Per share data: | ||||||||||||||||
Net loss per share: | ||||||||||||||||
Basic and diluted | $ | (0.08 | ) | $ | (0.14 | ) | $ | (0.10 | ) | $ | (0.36 | ) | ||||
Weighted average number of common shares outstanding: | ||||||||||||||||
Basic and diluted | 34,732,028 | 34,116,062 | 33,889,584 | 34,092,093 | ||||||||||||
Adjusted EBITDA | $ | 17,128 | $ | 20,182 | $ | 46,494 | $ | 59,457 |
Assets
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December 31,
2011 |
September 30,
2012 |
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Current assets:
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Cash and cash equivalents | $ | 8,416 | $ | 6,406 | ||||
Accounts receivable, net | 144,041 | 171,097 | ||||||
Other receivables | 40 | 62 | ||||||
Prepaid expenses | 4,487 | 5,012 | ||||||
Deferred tax assets | 1,640 | — | ||||||
Other current assets | 1,173 | 1,226 | ||||||
Total current assets | 159,797 | 183,803 | ||||||
Property, equipment and leasehold improvements, net
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8,918 | 10,549 | ||||||
Goodwill
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300,260 | 352,026 | ||||||
Intangible assets, net
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146,168 | 160,505 | ||||||
Deferred tax assets, noncurrent
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— | 11,607 | ||||||
Deferred financing costs, net
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11,458 | 10,771 | ||||||
Other assets
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438 | 1,102 | ||||||
Total assets | $ | 627,039 | $ | 730,363 | ||||
Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable | $ | 42,642 | $ | 45,295 | ||||
Accrued expenses | 28,410 | 46,187 | ||||||
Accrued interest expense | 10,247 | 5,133 | ||||||
Deferred revenue | 1,332 | 3,369 | ||||||
Current portion of subordinated unsecured notes payable | 1,932 | 1,251 | ||||||
Deferred tax liability | — | 358 | ||||||
Current portion of contingent earnout obligation | 91 | 83 | ||||||
Current portion of working capital facilities | — | 6,292 | ||||||
Other current liabilities | 5,459 | 6,005 | ||||||
Total current liabilities | 90,113 | 113,973 | ||||||
Senior unsecured notes payable
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250,000 | 250,000 | ||||||
Senior secured revolving credit facility and working capital facilities, less current portion
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44,063 | 123,825 | ||||||
Long-term subordinated unsecured notes payable, less current portion
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717 | 528 | ||||||
Long-term contingent earnout obligation, less current portion
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86 | — | ||||||
Deferred tax liability, noncurrent
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2,159 | — | ||||||
Other long-term liabilities
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1,977 | 1,810 | ||||||
Total liabilities | 389,115 | 490,136 | ||||||
Commitments and contingencies
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Stockholders’ equity:
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Preferred stock, $0.0001 par value; Authorized 50,000,000 shares; no shares issued and outstanding at December 31, 2011 and September 30, 2012
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— | — | ||||||
Common stock, $0.0001 par value; Authorized 250,000,000 shares; issued and outstanding 34,090,618 and 34,193,304 shares at December 31, 2011 and September 30, 2012, respectively
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3 | 3 | ||||||
Additional paid-in capital | 268,162 | 278,819 | ||||||
Accumulated other comprehensive income ( loss) | (1,429 | ) | 3,698 | |||||
Accumulated deficit | (21,549 | ) | (33,805 | ) | ||||
Treasury stock, at cost; 805,613 and 905,349 shares at December 31, 2011 and September 30, 2012, respectively | (7,263 | ) | (8,488 | ) | ||||
Total stockholders’ equity | 237,924 | 240,227 | ||||||
Total liabilities and stockholders' equity | $ | 627,039 | $ | 730,363 |
For the nine months ended September 30,
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2011
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2012
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Operating activities:
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Net loss | $ | (3,308 | ) | $ | (12,256 | ) | ||
Adjustments to reconcile net loss to net cash provided by operating activities: | ||||||||
Gain on interest rate swap | (253 | ) | (169 | ) | ||||
Depreciation and amortization | 33,153 | 42,245 | ||||||
Amortization of deferred rent | (386 | ) | (99 | ) | ||||
Share-based compensation | 5,385 | 12,562 | ||||||
Excess tax benefit related to share-based compensation | (3,112 | ) | — | |||||
Provision for doubtful accounts | 1,381 | 2,555 | ||||||
Amortization of deferred financing costs | 1,433 | 1,612 | ||||||
Deferred income taxes | (6,299 | ) | (15,346 | ) | ||||
Loss on early extinguishment of debt | 621 | — | ||||||
Other | 223 | (31 | ) | |||||
Changes in operating assets and liabilities, net of effects of acquisitions: | ||||||||
Accounts receivable | (3,469 | ) | (20,850 | ) | ||||
Prepaid expenses and other current assets | (786 | ) | 103 | |||||
Accounts payable and accrued expenses | 1,337 | 8,339 | ||||||
Accrued interest expense | 4,562 | (5,114 | ) | |||||
Deferred revenue and customer deposits | (458 | ) | 1,938 | |||||
Other liabilities | (3,218 | ) | (402 | ) | ||||
Net cash provided by operating activities | 26,806 | 15,087 | ||||||
Investing activities:
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Cash paid for acquisitions, net | (300,233 | ) | (95,801 | ) | ||||
Purchases of equipment and leasehold improvements, net | (4,121 | ) | (4,857 | ) | ||||
Working capital and other settlements for acquisitions | (1,884 | ) | 547 | |||||
Net cash used in investing activities | (306,238 | ) | (100,111 | ) | ||||
Financing activities:
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Borrowings under senior secured revolving credit facility | 268,000 | 160,640 | ||||||
Borrowings under senior unsecured notes payable | 250,000 | — | ||||||
Proceeds from the exercise of options and warrants | 2,215 | 1,254 | ||||||
Excess tax benefit related to share-based compensation | 3,112 | — | ||||||
Purchases of stock for treasury | (3,548 | ) | (387 | ) | ||||
Payment of deferred financing costs | (9,746 | ) | (1,034 | ) | ||||
Repayments of subordinated unsecured notes payable | (2,101 | ) | (975 | ) | ||||
Net borrowings (repayments) under working capital facilities | 36,098 | (5,517 | ) | |||||
Repayments under senior secured revolving credit facility | (268,000 | ) | (71,000 | ) | ||||
Other | (358 | ) | (95 | ) | ||||
Net cash provided by financing activities | 275,672 | 82,886 | ||||||
Exchange rate impact on cash and cash equivalents
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5 | 128 | ||||||
Net decrease in cash and cash equivalents | (3,755 | ) | (2,010 | ) | ||||
Cash and cash equivalents, beginning of period
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33,624 | 8,416 | ||||||
Cash and cash equivalents, end of period
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$ | 29,869 | $ | 6,406 |
For the three months ended
September 30,
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For the nine months ended
September 30,
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2011
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2012
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2011
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2012
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Net loss
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$ | (2,677 | ) | $ | (4,626 | ) | $ | (3,308 | ) | $ | (12,256 | ) | ||||
Share-based compensation expense (1) | 2,363 | 3,017 | 5,385 | 12,562 | ||||||||||||
Depreciation and amortization | 13,069 | 14,458 | 33,153 | 42,245 | ||||||||||||
Acquisition related transaction costs | 477 | 1,379 | 2,704 | 1,270 | ||||||||||||
Other non-recurring costs | 21 | 62 | 867 | 143 | ||||||||||||
Interest and other expenses, net | 5,287 | 7,546 | 9,513 | 20,293 | ||||||||||||
Benefit for income taxes | (1,412 | ) | (1,654 | ) | (1,820 | ) | (4,800 | ) | ||||||||
Adjusted EBITDA
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$ | 17,128 | $ | 20,182 | $ | 46,494 | $ | 59,457 |
(1)
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Share-based compensation expense of $748,000 and $2.2 million is included in costs of revenues for the three and nine months ended September 30, 2012, respectively, and the remainder is included in SGA expenses. Share-based compensation expense of $650,000 and $1.3 million is included in costs of revenues for the three and nine months ended September 30, 2011, respectively, and the remainder is included in SGA expenses.
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