Emergency Medical Services Corporation (NYSE: EMS) (EMSC or the
Company) today announces results for the second quarter ended June
30, 2008. William A. Sanger, Chairman and Chief Executive Officer,
said, �EMSC continues to produce strong revenue and earnings
growth, both sequentially and year over year. We had excellent cash
flow in the quarter driven by improvements in our DSO and
reductions in insurance collateral requirements. We again
demonstrated our ability to leverage our unique market position by
signing another national agreement offering both medical
transportation and hospital-based physician services. We continue
to expand our scope of services, as evidenced by yesterday�s
announcement of our entry into the outsourced anesthesiology
services market.� Results of Operations for the Second Quarter 2008
For the quarter ended June 30, 2008, EMSC generated net revenue of
$571.1�million, an increase of 10.5% compared to the same quarter
last year. Adjusted EBITDA was $55.5 million, an increase quarter
over quarter of 5.9%. The three months ended June 30, 2007 included
incremental revenue adjustments of approximately $4 million, with a
positive Adjusted EBITDA impact of approximately $1.9 million. A
reconciliation of non-GAAP to GAAP financial measures is included
in this news release. EMSC generated net income of $18.3 million,
or $0.43 per diluted share, for the second quarter of 2008,
compared to net income of $15.1 million, or $0.35 per diluted
share, in the second quarter of last year, an increase of 22.0%.
The increase in earnings is attributable primarily to the net
impact of higher rates and volumes on existing contracts, increased
volume from net new contracts and acquisitions, gains on insurance
collateral investments and lower interest expense, partially offset
by higher provider compensation, fuel costs and income tax expense.
Free cash flow was $65.4 million in the second quarter 2008
compared to $6.4 million in the same quarter last year. Cash
provided by operating activities was $58.2 million in the second
quarter 2008, compared to $23.1 million for the same quarter last
year, primarily from an improvement in accounts receivable. Cash
provided by operating activities in the second quarter 2008 was
positively impacted by improved collections in both segments.
EMSC�s DSO decreased 2 days in the second quarter of 2008. Net cash
provided by investing activities was $0.5 million for the quarter
ended June 30, 2008, compared to cash used in investing activities
of $17.2 million for the same period in 2007. The change is due to
a $14.9 million reduction in net insurance collateral requirements
and reduced net capital spending of $6.8 million compared to the
same period last year, offset by an acquisition of $6.7 million
during the second quarter 2008. For the quarter ended June 30,
2008, net cash used in financing activities was $1.8 million
compared to $6.3 million for the same quarter last year primarily
due to changes in the amount of outstanding checks. Results of
Operations for the Six Months Ended June 30, 2008 EMSC�s net
revenue was $1.14 billion for the six months ended June 30, 2008,
an increase of 9.3% compared to the same period last year. Adjusted
EBITDA was $109.9 million, an increase of 3.0% from the same period
last year. The six months ended June 30, 2007 included incremental
revenue adjustments of approximately $13 million, with a positive
Adjusted EBITDA impact of approximately $10 million. EMSC�s net
income for the six months ended June 30, 2008 was $35.4 million, or
$0.82 per diluted share, compared to net income of $31.7 million or
$0.74 per diluted share, an increase of 11.6% over the same period
last year. The increase in earnings is attributable primarily to
the net impact of higher rates and volumes on existing contracts,
increased volume from net new contracts and acquisitions, gains on
insurance collateral investments and lower interest expense,
partially offset by higher provider compensation, fuel costs and
income tax expense. Free cash flow was $62.9 million for the six
months ended June 30, 2008, an increase of $66.4 million over the
six months ended last year. Cash provided by operating activities
for the six months ended June 30, 2008 was $55.4 million, compared
to $19.3 million for the same period last year, driven primarily
from improvements in collections and reduced insurance collateral.
EMSC�s DSO improved 3 days in the six months ended June 30, 2008.
Net cash used in investing activities was $12.4 million for the six
months ended June 30, 2008 compared to $23.2 million for the same
period in 2007. The change in investing cash flows was affected by
reduced insurance collateral requirements of $17.9 million, reduced
capital expenditures of $12.5 million, offset by additional
acquisition costs of $19.5 million. For the six months ended June
30, 2008, net cash provided by financing activities was $1.2
million compared to cash used in financing activities of $5.9
million for the six months ended June 30, 2007 primarily from
changes in the amount of outstanding checks. Segment Results EMSC
operates two business segments: American Medical Response, Inc.
(AMR), the Company�s healthcare transportation services segment,
and EmCare Holdings Inc. (EmCare), the Company�s outsourced
emergency department and hospital-based physician services segment.
American Medical Response (AMR) For the quarter ended June 30,
2008, AMR generated net revenue of $323.7 million, an increase of
9.6% compared to the same quarter last year. Adjusted EBITDA was
$26.0 million, an increase of 11.2% compared to the same quarter
last year. The increase in Adjusted EBITDA is attributable
primarily to the net impact of higher revenue in existing markets
and acquisitions partially offset by higher fuel costs of $4.3
million and a reduction in favorable prior period insurance
adjustments of $2.4 million compared to the same quarter last year.
For the six months ended June 30, 2008, AMR�s net revenue totaled
$650.0 million, an increase of 7.7% compared to the same period
last year. Adjusted EBITDA was $54.4 million, an increase of 12.6%
compared to the same period last year, or 7.6% excluding
restructuring charges of $2.2 million recorded during the same
period in 2007. EmCare For the quarter ended June 30, 2008, EmCare
generated net revenue of $247.4 million, an increase of 11.7%
compared to the same quarter last year. The increase in revenue is
primarily driven by volume increases at existing contracts and 37
net new contracts added since March 31, 2007. Adjusted EBITDA was
$29.5 million compared to $29.1 million last year, an increase of
1.7%. The three months ended June 30, 2007 included incremental
positive revenue adjustments of approximately $4 million, with an
Adjusted EBITDA impact of approximately $1.9 million. Insurance
expense in the second quarter 2008 included a reduction in
favorable prior period adjustments of $2.9 million compared to the
same period last year. Compensation increased as a percent of net
revenue due to increased provider costs in both new and existing
contracts offset by lower operating costs. For the six months ended
June 30, 2008, EmCare�s net revenue was $486.9 million, an increase
of 11.5% compared to the same period last year. Adjusted EBITDA was
$55.6 million compared to $58.4 million last year. The six months
ended June 30, 2007 included incremental positive revenue
adjustments of approximately $13 million, with an Adjusted EBITDA
impact of approximately $10 million. Guidance EPS guidance is
updated to an expected range of $1.70 to $1.75 per diluted share
from previously announced guidance of $1.57 to $1.63 per diluted
share, and Adjusted EBITDA guidance is updated to an expected range
of $227 million to $232 million from previously announced guidance
of $225 million to $230 million. Conference Call EMSC management
will host a conference call and live audio webcast on Tuesday,
August 5, 2008, at 11:00 a.m. EDT, to discuss the Company�s
financial results. A 30-day online replay will be available
approximately one hour following the conclusion of the live
broadcast. A link to the live broadcast and online replay is
available on the Investor Relations section of the Company�s
website at www.emsc.net. About Emergency Medical Services
Corporation Emergency Medical Services Corporation (EMSC) is a
leading provider of emergency medical services in the United
States. EMSC operates two business segments: American Medical
Response, Inc. (AMR), the Company�s healthcare transportation
services segment, and EmCare Holdings Inc. (EmCare), the Company�s
outsourced emergency department and hospital-based physician
services segment. AMR is the leading provider of ambulance services
in the United States. EmCare is the nation�s leading provider of
outsourced emergency department and hospital-based physician
services. In 2007, EMSC provided services to 10.6 million patients
in more than 2,000 communities nationwide. EMSC is headquartered in
Greenwood Village, Colorado. For additional information visit
www.emsc.net. Forward-Looking Statements Certain statements and
information herein may be deemed to be "forward-looking statements"
within the meaning of the Federal Private Securities Litigation
Reform Act of 1995. Forward-looking statements may include, but are
not limited to, statements relating to our objectives, plans and
strategies, and all statements (other than statements of historical
facts) that address activities, events or developments that we
intend, expect, project, believe or anticipate will or may occur in
the future. Any forward-looking statements herein are made as of
the date of this press release, and EMSC undertakes no duty to
update or revise any such statements. Forward-looking statements
are not guarantees of future performance and are subject to risks
and uncertainties. Important factors that could cause actual
results, developments and business decisions to differ materially
from forward-looking statements are described in EMSC's filings
with the SEC from time to time, including in the section entitled
�Risk Factors� in the Company�s most recent Annual Report on Form
10-K and subsequent periodic reports. Among the factors that could
cause future results to differ materially from those provided in
this press release are: the impact on our revenue of changes in
transport volume, mix of insured and uninsured patients, and third
party reimbursement rates and methods; the adequacy of our
insurance coverage and insurance reserves; potential penalties or
changes to our operations if we fail to comply with extensive and
complex government regulation of our industry, both as it exists
now and as it may change in the future; our ability to recruit and
retain qualified physicians and other healthcare professionals, and
enforce our non-compete agreements with our physicians; the loss of
one or more members of our senior management team; the outcome of
government investigations of certain of our business practices; our
ability to generate cash flow to service our debt obligations and
fund the cost of capital expenditures to maintain and upgrade our
vehicle fleet and medical equipment; and the loss of existing
contracts and the accuracy of our assessment of costs under new
contracts. Non-GAAP Financial Measures Reconciliation This press
release includes presentations of Adjusted EBITDA, which is defined
as net income before equity in earnings of unconsolidated
subsidiary, income tax expense, interest and other income, realized
gain on investments, interest expense, and depreciation and
amortization. Adjusted EBITDA is commonly used by management and
investors as a performance measure and a liquidity indicator.
Adjusted EBITDA is not considered a measure of financial
performance under U.S. generally accepted accounting principles
(GAAP), and the items excluded from Adjusted EBITDA are significant
components in understanding and assessing our financial
performance. Adjusted EBITDA should not be considered in isolation
or as an alternative to GAAP measures such as net income, cash
flows provided by or used in operating, investing or financing
activities or other financial statement data presented in our
consolidated financial statements as an indicator of financial
performance or liquidity. Reconciliations of non-GAAP financial
measures are provided in this news release. Reconciliation for the
forward-looking Adjusted EBITDA projections presented herein is not
being provided due to the number of variables in the projected
Adjusted EBITDA range. Since Adjusted EBITDA is not a measure
determined in accordance with GAAP and is susceptible to varying
calculations, Adjusted EBITDA, as presented, may not be comparable
to other similarly titled measures of other companies. EMERGENCY
MEDICAL SERVICES CORPORATIONConsolidated Statements of Operations
and Other InformationIncluding a Reconciliation of Income from
Operations to Adjusted EBITDA1(unaudited; in thousands, except
shares, per share data and other information) � Quarter ended June
30, � Six months ended June 30, � 2008 � � � 2007 � � 2008 � � �
2007 � � Net revenue $ 571,079 � $ 516,712 � $ 1,136,865 � $
1,040,031 � Compensation and benefits 400,501 357,309 794,852
712,241 Operating expenses 83,704 76,262 166,927 156,258 Insurance
expense 17,568 17,476 38,531 37,777 Selling, general and
administrative expenses 15,520 14,901 30,112 28,206 Depreciation
and amortization expense 17,446 17,577 35,163 34,356 Restructuring
charges � - � � - � � - � � 2,242 � Income from operations 36,340
33,187 71,280 68,951 Interest income from restricted assets 1,735
1,660 3,490 3,375 Interest expense (10,354 ) (11,395 ) (20,270 )
(22,629 ) Realized gain on investments 1,571 22 2,243 59 Interest
and other income � 287 � � 532 � � 589 � � 1,189 � Income before
income taxes and equity in earnings of unconsolidated subsidiary
29,579 24,006 57,332 50,945 Income tax expense (11,348 ) (9,012 )
(22,032 ) (19,474 ) Equity in earnings of unconsolidated subsidiary
� 104 � � 101 � � 54 � � 255 � Net income $ 18,335 � $ 15,095 � $
35,354 � $ 31,726 � � � Basic earnings per common share $ 0.44 $
0.36 $ 0.85 $ 0.76 Diluted earnings per common share $ 0.43 $ 0.35
$ 0.82 $ 0.74 Weighted average common shares outstanding, basic
41,573,893 41,544,901 41,572,162 41,533,093 Weighted average common
shares outstanding, diluted 43,022,034 43,211,661 43,052,668
43,120,416 � Other Information EmCare patient encounters 2,019,145
1,821,307 3,984,660 3,565,328 AMR ambulance transports 737,200
702,621 1,488,840 1,430,028 AMR weighted transports 748,606 715,462
1,512,120 1,457,132 � � Reconciliation of income from operations to
Adjusted EBITDA Income from operations $ 36,340 $ 33,187 $ 71,280 $
68,951 Depreciation and amortization expense 17,446 17,577 35,163
34,356 Interest income from restricted assets � 1,735 � � 1,660 � �
3,490 � � 3,375 � Adjusted EBITDA $ 55,521 � $ 52,424 � $ 109,933 �
$ 106,682 � � (1) These statements provide a reconciliation of
Adjusted EBITDA to income from operations; and a reconciliation of
income from operations to net income. EMERGENCY MEDICAL SERVICES
CORPORATIONReconciliation of Adjusted EBITDA to Cash Flows Provided
by Operating Activities(unaudited; in thousands) � Quarter ended
June 30, � Six months ended June 30, � 2008 � � � 2007 � � 2008 � �
� 2007 � � Adjusted EBITDA $ 55,521 $ 52,424 $ 109,933 $ 106,682
Interest paid (9,827 ) (10,864 ) (19,164 ) (21,609 ) Change in
accounts receivable 12,556 (35,783 ) (13,752 ) (63,934 ) Change in
other operating assets/liabilities 659 17,164 (22,081 ) (3,718 )
Equity based compensation 562 400 1,124 800 Other � (1,314 ) � (215
) � (681 ) � 1,059 � Net cash provided by operating activities $
58,157 � $ 23,126 � $ 55,379 � $ 19,280 � EMERGENCY MEDICAL
SERVICES CORPORATIONReconciliation of Segment Income from
Operations to Adjusted EBITDA (unaudited; in thousands) � Quarter
ended June 30, � Six months ended June 30, 2008 � 2007 2008 � 2007
AMR Income from operations $ 11,176 $ 8,934 $ 24,506 $ 19,408
Depreciation and amortization expense 14,118 13,711 28,504 27,461
Interest income from restricted assets 682 719 1,364 1,440 Adjusted
EBITDA (1) 25,976 23,364 54,374 48,309 � EmCare Income from
operations 25,164 24,253 46,774 49,543 Depreciation and
amortization expense 3,328 3,866 6,659 6,895 Interest income from
restricted assets 1,053 941 2,126 1,935 Adjusted EBITDA (2) 29,545
29,060 55,559 58,373 � Total Income from operations 36,340 33,187
71,280 68,951 Depreciation and amortization expense 17,446 17,577
35,163 34,356 Interest income from restricted assets 1,735 1,660
3,490 3,375 Adjusted EBITDA $ 55,521 $ 52,424 $ 109,933 $ 106,682 �
(1) AMR Adjusted EBITDA includes $2.2 million of restructuring
charges for the six months ended June 30, 2007. (2) EmCare Adjusted
EBITDA includes the net impact of approximately $1.9 million of
positive revenue adjustments for the quarter ended June 30, 2007
and approximately $10 million of positive revenue adjustments for
the six months ended June 30, 2007. EMERGENCY MEDICAL SERVICES
CORPORATIONCondensed Consolidated Balance Sheets(in thousands) �
June 30,2008 � December 31,2007 (Unaudited) (Audited) Assets
Current assets: Cash and cash equivalents $ 73,019 $ 28,914 Trade
and other accounts receivable, net 512,027 495,348 Other current
assets � 156,314 � 146,498 Total current assets 741,360 670,760
Non-current assets: Property, plant and equipment, net 127,745
143,342 Goodwill and other intangible assets, net 405,412 394,841
Other long-term assets � 227,667 � 270,620 Total assets $ 1,502,184
$ 1,479,563 � Liabilities and Equity Current liabilities $ 301,490
$ 306,891 Long-term debt 476,186 478,166 Insurance reserves and
other long-term liabilities � 240,945 � 245,010 Total liabilities
1,018,621 1,030,067 Total equity � 483,563 � 449,496 Total
liabilities and equity $ 1,502,184 $ 1,479,563 EMERGENCY MEDICAL
SERVICES CORPORATIONCondensed Consolidated Statements of Cash
Flows(unaudited; in thousands) � Quarter ended June 30, � Six
months ended June 30, � 2008 � � � 2007 � � 2008 � � � 2007 � Cash
Flows from Operating Activities Net income $ 18,335 $ 15,095 $
35,354 $ 31,726 Adjustments to reconcile net income to net cash
provided by operating activities: Depreciation, amortization,
deferred taxes and other 26,607 26,650 55,858 55,206 Changes in
operating assets/liabilities, net of acquisitions: Trade and other
accounts receivable 12,556 (35,783 ) (13,752 ) (63,934 ) Insurance
accruals (3,741 ) (5,020 ) (7,140 ) 4 Other assets and liabilities
� 4,400 � � 22,184 � � (14,941 ) � (3,722 ) Net cash provided by
operating activities � 58,157 � � 23,126 � � 55,379 � � 19,280 � �
Cash Flows from Investing Activities Purchases of property, plant
and equipment, net (7,496 ) (14,256 ) (9,960 ) (22,452 )
Acquisition of businesses, net of cash received (6,679 ) (477 )
(19,957 ) (477 ) Net change in insurance collateral 12,731 (2,123 )
14,856 (3,033 ) Other investing activities � 1,975 � � (306 ) �
2,628 � � 2,715 � Net cash provided by (used in) investing
activities � 531 � � (17,162 ) � (12,433 ) � (23,247 ) � Cash Flows
from Financing Activities EMSC issuance of class A common stock 33
76 45 249 Borrowings under revolving credit facility - - 14,000 -
Repayments of capital lease obligations and other debt (1,570 )
(1,058 ) (16,721 ) (3,391 ) Increase (decrease) in bank overdrafts
� (287 ) � (5,330 ) � 3,835 � � (2,743 ) Net cash provided by (used
in) financing activities � (1,824 ) � (6,312 ) � 1,159 � � (5,885 )
� Change in cash and cash equivalents 56,864 (348 ) 44,105 (9,852 )
Cash and cash equivalents, beginning of period � 16,155 � � 29,832
� � 28,914 � � 39,336 � Cash and cash equivalents, end of period $
73,019 � $ 29,484 � $ 73,019 � $ 29,484 � � Non-cash Activities
Capital lease obligations incurred $ 682 � $ - � $ 682 � $ 8,038 �
� Free Cash Flow $ 65,367 $ 6,441 $ 62,903 $ (3,490 ) � �
Reconciliation of free cash flow to net cash provided by operating
activities Free cash flow $ 65,367 $ 6,441 $ 62,903 $ (3,490 )
Purchase of property, plant and equipment, net 7,496 14,256 9,960
22,452 Net change in insurance collateral (12,731 ) 2,123 (14,856 )
3,033 Other investing activities � (1,975 ) � 306 � � (2,628 ) �
(2,715 ) Net cash provided by operating activities $ 58,157 � $
23,126 � $ 55,379 � $ 19,280 �
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