TISG: Q1 Updated Stock Research Report

CONTINUED POSITIVE TREND LINE;
ANNUAL RUN RATE REVENUE ABOUT $44M.

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Summary and Recommendation

TIGroup reported its sixth consecutive quarter of increased revenue. A significant portion of the increase was attributable to revenue of $3.0 million from operations of Southern Plains Medical Center in Oklahoma. On February 11, 2009, the company completed another round of financing, raising $1.5 million - $2.0 million.
Along with strategic initiatives undertaken in the last quarter to improve operational and financial capabilities, financing for acquisitions, projects and growth should continue the forward momentum.

The credit crisis has made borrowing significantly more difficult. The investing community’s support of TIGroup speaks volumes about the scalability of its business model and the credibility of management.

The new stimulus bill, enacted on February 17, 2009, included $19 billion for healthcare information technology (IT) and more than $100 billion for healthcare measures. TIGroup stands to gain significantly from this stimulus package. Adversely, the Medicare Advantage program will see a large cut over the next few quarters.

We maintain our Buy rating and reiterate both our price ranges to reflect the positive impact of the stimulus package partially offset by slowing demand and the apparent loss of Medicate Advantage. We expect a near-term price range of $0.56 to $1.01 and a long-term target of $1.20 to $1.61.

Key Points

• Q1 09 revenues increased 128% year-over–year

• Healthcare operations generated EBITDA of $665,000

• Completed bridge financing of $1.5 - $2.0 million through warrant exercise
and note conversion priced at significant premium to current market prices

• Acquired the remaining 49% of RHA, LLC and began doing business
as Southern Plains Medical Group (SPMG).

• Donald Parkerson promoted TIGroup CFO; also serves as CFO of SPMG

• Rod Rivera joined advisory board

• Tom Rice hired as president and COO of SPMG

• Expected to benefit from the new Stimulus Package

Pink Sheets: TISG

Visit TISG's website at http://www.tig3.com.