ExamWorks Group (NYSE:EXAM)

TMFMattyA (99.67) Submitted: 12/10/2012 2:59:48 PM : Start Price: $12.53 EXAM Score: +47.80

• ExamWorks is a leading provider of independent medical examinations (IME) to insurance companies, law offices, hospitals, and government agencies.

• Basically, they help these companies determine the validity of claims made by patients or other entities. One of the missions of the company is to help root out cases of fraud in the healthcare industry – something they estimate costs hospitals and insurance companies upwards of $70 billion per year.

• Okay, maybe not a terribly exciting business

• But what is exciting is the fact that EXAM has made 37 IME acquisitions since 2008 – consolidating a highly fragmented industry and trying to build the largest, most scalable IME business in the country

• They now deliver their services in all 50 states, as well as Canada and the UK

• They’ve taken on considerable debt over the past years to finance the acquisitions, but this is a cash flow strong business and have developed strong, long-term relationships with their customer base

• Revenue has soared from under $50 million in 2009 to nearly $300 million in 2011. Better still, free cash flow (not adjusted for acquisitions) has gone up 10x from less than $3 million to more than $30 million

• Management believes the ultimate market opportunity for the IME business in the U.S. exceeds $4 billion in the U.S. (and set to grow thanks to strong trends in the overall healthcare industry)

• CEO James Price just purchased $200,000 a few weeks ago on the open market (strong sign, especially since he bought AFTER the stock’s nearly 100% climb over the last 12 months)

• Mr. Price (4.5%) and the company’s founder and Chairman Richard Perlman (4.3%) own almost 9% of the outstanding shares