9663 Santa Monica Blvd. #959
• Beverly Hills
• CA
• 90210
• USA
• www.tig3.com
Investor Contact: Frank N. Hawkins, Jr. or Julie Marshall · Hawk Associates Inc. · (305) 451-1888 · www.hawkassociates.com
Investor Contact: Frank N. Hawkins, Jr. or Julie Marshall · Hawk Associates Inc. · (305) 451-1888 · www.hawkassociates.com
TIGroup Second Quarter Revenue Up 57% to $10.2M; Company Announces New Agreements and Financings
The company is building a portfolio of interests in healthcare services operations outside the traditional urban hospital setting. TIGroup promotes quality medical care by offering improved access and breadth of services. It unlocks the value of its investments by developing strong, long-term and mutually beneficial relationships with their physicians and the communities they serve. The company operates six medical facilities and employs approximately 410 people in Oklahoma and California.
The Los Angeles-based company's portfolio of interests includes ambulatory surgical centers (ASCs), rural hospitals, surgical hospitals and other healthcare delivery platforms operating in partnership with physicians. TIGroup was formed in mid-2005 by a group of individual investors with complementary talents across a broad range of disciplines with the acquisition of a clean public shell.
Currently, TIGroup is focused on two specific healthcare segments, rural hospitals and ASCs. In November 2006, TIGroup acquired majority interests in the Del Mar and Point Loma Surgical Centers in Southern California and subsequently consolidated both centers into a single operation. In November 2007, TIGroup acquired 51% of Rural Healthcare Acquisition LLC (RHA) in Oklahoma, which owned and operated three critical access hospitals and provided ancillary healthcare services. In May 2008, TIGroup acquired Southern Plains Medical Group, adding two additional facilities in Oklahoma. Southern Plains is one of the nation's longest established medical groups and most respected provider in the region, having provided care since 1915. In December 2008, TIGroup purchased the remaining 49% of RHA consolidating all operations under the Southern Plains Medical Group brand.
Differentiators
CRITICAL ACCESS and RURAL HOSPITALS
Rural hospitals provide essential care services to nearly 54 million people, including nine million Medicare beneficiaries. These facilities suffer from the same workforce shortages and rising liability premiums as their urban counterparts, but with a distinct difference.Rural hospitals have historically had much more restricted access to capital. In addition to declining reimbursement payments, many of these facilities are approaching 50 years of age, further compounding the seriousness of this problem.
Approximately 1,300 rural hospitals in the U.S., including the facilities in the Southern Plains Group, are designated as “critical access hospitals.” These facilities are typically located more than 35 miles from other hospitals, offer 24-hour emergency care, maintain fewer than 15 inpatient beds and do not keep inpatients longer than 96 hours. That these critical care facilities exist underscores their importance in delivering healthcare to many communities. That they have been chronically under-funded provides a significant opportunity for TIGroup.
AMBULATORY SURGICAL CENTERS (ASCs)
ASCs are independent, stand-alone centers where surgeries are performed on an out-patient basis. Procedures performed at ASCs typically include orthopedic surgeries, non-invasive laser surgeries, podiatry, and obstetrics-gynecology surgeries.The Southern California ASC market, where TIGroup operates, is believed to be the largest in the country, with approximately 700 ASCs in operation. The ASC industry remains highly fragmented and dominated by practicing physicianowners, with an estimated 75% of centers unaffiliated with corporate buyers or hospitals.
Medicare Advantage Program (MA)
In reviewing its prospects for introducing the Medicare Advantage program, TIGroup has taken a wait and see position in terms of the viablitity of the program with the new administration in Washington.
Economics and Strategy
Due to the relatively high fixed cost structure of healthcare facilities, the economics of TIGroup’s business are primarily determined by capacity and volume. TIGroup estimates well-managed centers will generate attractive operating margins.The company believes this approach provides the basis for interdependent relationships tied to sound operating partnerships that deliver solid risk-adjusted returns. TIGroup also desires to continue to build its real estate portfolio of healthcare facilities.
TIGroup believes that its funding strategy provides above-average returns to its preferred shareholders. Physician-owners receive an attractive proposition as equity interests are acquired at multiples traditionally paid for a controlling stake. TIGroup’s preferred shareholders benefit from a portfolio of equity positions that do not require additional outlays of cash for operations and growth.
Through its First Physicians Business Solutions, TIGroup’s strategy is to provide flexible financial solutions to businesses delivering quality healthcare services outside of traditional hospital settings where TIGroup’s interests are aligned with those of physician-partners. Its goals are to capture and offer attractive solutions for its physician partners including insurance, IT and billing systems. For the centers that TIGroup operates, the company plans to upgrade technology and improve operational efficiencies to increase their value. Recent News
TIGroup Second Quarter Revenue Up 57% To $10.2M; Company Announces New Agreements and Financings
TIGroup Approved for Quotation on OTC Bulletin Board
AMI Research Issues Q1 FY '09 Stock Research Report Update for TIGroup
TIGroup First Quarter Revenue Up 128% to $10.8M. Annual Run Rate Approaches $44M.
TIGroup Announces Appointment of Donald Parkerson as CFO; Rod Rivera Joins Advisory Board
- Dependence on relationships with physicians
- Dependence on payments from third parties
- Illiquidity of its common stock
The Outlook For the second fiscal quarter ended March 31, 2009, TIGroup reported revenue of $10.2 million. This represented a 57% YOY increase from $6.5 million in FQ2 '08. Revenue totaled $21 million for the first half of the fiscal year, an increase of 86% from $11.3 million for the comparable period ended March 31, 2008.
Healthcare operations, which included earnings from surgery centers, critical access hospitals and medical clinics generated adjusted EBITDA of $453,000 for the quarter and $1.28M for the first six month.
The company reported a ($585,000) operating loss before non-cash charges for FQ2. Adjusted company-wide EBITDA was a negative ($948,000) reflecting the add-back of non-cash stock-based compensation, depreciation/amortization and interest to the overall net loss of ($1.87 million).
As of March 31, 2009, TISG retained a strong cash position with close to $4 million in available and restricted cash. In April, 2009, TIGroup moved to the OTCBB from the Pink Sheets.
Through April 2009, the company completed financings totaling $2.4 million in convertible notes. The company said its focus for 2009 is on profitability and growth. The company is actively seeking other ways to leverage the many facets of its business including its real estate holdings and trusted advisory relationships with its physician partners.
The company has agreed to a definitive transaction with Chander Medical Group, which is located near TIGroup's Stroud Medical Center in Oklahoma. The two entities began working together on May 1 with TIGroup providing billing services for Chandler.
TIGroup has an agreement in principle to significantly expand its presence in San Diego with a leading medical provider group through the company's Del Mar Outpatient Surgery Center. The agreement is subject to completion and final documentation, which is expected to to completed by the end of the third quarter.
TIGroup has a written commitment for $6M toward the recapitalization of the Southern Plains Medical Center property and building. The transaction is expected to include the refinancing of an existing $4.5M bank note due in October and will free up $1.5M in restricted cash. Management
CEO and Chairman-
David
Hirschhorn
CEO, Southern Plains Medical Group, a division of TIG Healthcare Services-
Thomas
Rice
CFO, Southern Plains Medical Group, a division of TIG Healthcare Services-
Donald
C.
Parkerson
Senior VP of Operations, Southern Plains Medical Group, a division of TIG Healthcare Services-
Roland
D.
Gee
Vice President, Finance and Controller, Southern Plains Medical Group, a division of TIG Healthcare Services-
Richard
E.
Rentsch
Senior Marketing Consultant, TIGroup, Inc.-
Elizabeth
Winterhalter
