Nelly Shishkova

A.D.A.M., Inc. (NASDAQ:ADAM) Hits The Huge Gain

by Nelly Shishkova August 31, 2010
A.D.A.M., Inc. (NASDAQ:ADAM) climbs up extremely fast on the market. The week started with a 72.24% positive price change image195.pngfor the stock and a traded volume of over 2 million shares. ADAM started to climb last Friday, but the huge gain happened yesterday and it provoked traders' attention.

The price jump came up along with the investigation news on the ADAM's Board of Directors in connection with the sale of the company to Ebix Inc. According to the announcement, shareholders will receive 0.3122 shares of Ebix stock for each share of ADAM common stock and they will own about 7% of the combined company upon the transaction.

Ebix Inc. agreed to buy ADAM's stock for $66 million and the deal should add 15 cents to the earnings per share in the first year. As soon as the news was released, investors got excited and ADAM started the climb, although the transaction is not closed yet.

ADAM_logo.jpgA.D.A.M., Inc. provides online information and technology solutions for employers, benefits brokers, healthcare organizations and online media companies. Since the beginning of this year, the company has traded lower, though currently its trading range is between $5.42 - $5.75 per share.

The financial results of ADAM seem to be contradictory. Its revenue and gross profit has not increased much and the company had a net loss. ADAM has registered more assets than liabilities, though its stockholders' equity has got higher.

This January, ADAM awarded a total of 14,284 shares of restricted stock to its Board of Directors with a grant date fair value of $4.20 per share. These shares had a fair value of $60 thousand and will be expended by the end of December, 2010. In June, the total unrecognized compensation expense related to restricted stock was $30 thousand, while the negative working capital totaled approximately $5 million.

ADAM claims that its cash resources  will be sufficient to meet its working capital needs for the next twelve months, however, the company may still need additional funds for developing its new products and services.

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