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 Q3'08 Revenue $8.4 million. Annual Revenue Run Rate to Exceed $35 Million. Releases Mid-Year Update to Shareholders.
The Los Angeles-based company is building a diversified portfolio of interests in healthcare services operations, including ambulatory surgical centers (ASCs), rural hospitals, surgical hospitals and other healthcare delivery platforms operating in partnership with physicians. TIGroup was formed in mid-2005 via the acquisition of a clean public shell traded over-the-counter by a group of individual investors with complementary talents across a broad range of disciplines. TIGroup currently operates numerous facilities employing over 270 personnel in California and Oklahoma. Currently, TIGroup is focused on two particular segments of the healthcare industry, rural hospitals and ASCs. In November of 2006, TIGroup completed the acquisition of majority interests in two ASCs in Southern California, the Del Mar and Point Loma Surgical Centers. In November of 2007, TIGroup completed the acquisition of a majority interest in Rural Healthcare Acquisition LLC (RHA). Based in Oklahoma City, RHA owns and operates three critical access hospitals and provides ancillary healthcare services. In April 2008, TIGroup announced its plans to acquire Southern Plains Medical Group. Southern Plains, based in Oklahoma, is one of the nation's longest established medical groups, having provided care since 1915.
Upon close of the Southern Plains deal, TIGroup estimates annualized consolidated revenues will exceed $35 million.
Company Overview 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 to generate attractive operating margins.
TIGroup currently has several innovative approaches to assist the physician-owners of ASCs in monetizing the equity in the businesses they have created. The “ASC Re-cap,” enables physician-owners the opportunity to realize cash without surrendering operational control of an ASC facility.
TIGroup’s strategy is to provide flexible financial solutions to businesses delivering quality healthcare services outside of traditional hospital settings and in support of new treatment solutions where TIGroup’s interests are aligned with those of physician-partners. 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 riskadjusted 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. The company’s goal is to capture and offer attractive solutions for its physician partners including insurance, IT and billing systems.
Differentiators
CRITICAL ACCESS and RURAL HOSPITALS
Rural hospitals currently 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. 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.In the past decade, surgical procedures carried out at ASCs have grown to approximately 8.3 million per year. Payors, physicians and patients have increasingly preferred procedures performed on an outpatient basis in clinics, surgery centers and physician’s offices, spurring significant growth in the industry.
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 physician-owners, with an estimated 75% of centers unaffiliated with corporate buyers or hospitals.
TIGroup believes the key driver of growth in ASC opportunities remains the desire of physician-owners to achieve liquidity, which should increase as the group ages and newcomers enter the market. TIGroup’s innovative financial strategies enable physician-owners to unlock the value they have created without having to cede control.
TIGroup estimates there are more than 5,000 ASCs across the country, each possessing average EBITDA of $1.5 million and modest maintenance capital expenditures, meaning the cash-generating abilities of a well-run center are stable, predictable and attractive. In the aggregate, the company estimates the industry produces free cash flow of approximately $7.5 billion per year. The industry is also highly fragmented, since by definition most surgical center business is local.
Recent News
TIGroup Third Quarter Revenue Up to $8.4 Million
TIGroup to Present at the Noble Financial Equity Conference
TIGroup Mid-Year Update to Shareholders
TIGroup Announces Agreement with ESSENCE Healthcare to Provide Unique Health Plans for Medicare Patients
TIGroup Brings Advanced Diagnostic Technology to Rural Oklahoma Patients
- Dependence on relationships with physicians
- Dependence on payments from third parties
- Market for common stock may be illiquid
The Outlook TIGroup finds mature, cash-generating healthcare-related businesses in which to invest the capital it raises. TIGroup’s growth comes from four main areas: the recruitment of physicians to TIGroup’s facilities; expansion to new locations; incorporating additional services to existing locations; and lowering operating costs through better technology.
TIGroup reported Q1 FY ’08 revenue of $4.7 million, an increase of approximately $4.0 million from the comparable quarter ended January 31, 2007. Results for the first quarter reflect revenues from Rural Hospital Acquisition LLC (RHA), acquired by TIGroup at the end of the first month of the quarter, and increased revenues from ambulatory surgical center (ASC) operations in San Diego.
In February the company also increased its annual run rate guidance to greater than $20 million. Upon announcing the acquisition of Southern Plains Medical Group in April, TIGroup further increased its annual revenue guidance to over $35 million.
As of December 31, 2007, the company had cash and equivalents on hand of $1.2 million, an increase of 70% compared to the $0.7 million outstanding at September 30, 2007. Accounts receivables at the end of the first fiscal quarter totaled $6.0 million, an increase of $4.6 million from September 30, 2007, largely due to the RHA acquisition.
In the second fiscal quarter ending March 31, 2008, TIGroup raised a total of $8.2 million from private accredited investors through two placements of preferred stock and warrants. Both offerings included participants that had previously invested in the $1.6 million convertible bridge notes the company issued in its first fiscal quarter in October 2007. Once exercised, warrants issued in these financings will bring in another $5.7 million in cash to the company.
On July 1, 2008, in its mid-year update to shareholders, TIGroup announced its intention to apply to list on either the American Stock Exchange (AMEX) or NASDAQ by the end of calendar year 2008. The company also indicated it had applied to become a Medicare Advantage plan provider, and should receive a determination by the fourth calendar quarter of 2008.
Management
Chairman and CEO-
David
Hirschhorn
CFO-
Dennis
M.
Smith
