Emergency Medical Services Corporation (NYSE:EMS) (EMSC or the
Company) today announces results for the third quarter ended
September 30, 2008. William A. Sanger, Chairman and Chief Executive
Officer, said, �EMSC had an excellent quarter, as evidenced by
strong organic revenue growth, earnings growth and improved cash
flow. While maintaining contractual commitments in the communities
we serve, we responded to the largest EMS deployment in our
nation�s history. We continue to expand our service offerings, and
are encouraged by the early successes in our new anesthesiology
services division and our recent acquisition in the teleradiology
business.� Results of Operations for the Third Quarter 2008 For the
quarter ended September 30, 2008, EMSC generated net revenue of
$679.3�million, an increase of 28.2% (11.1% excluding the change in
FEMA deployment revenue) compared to the same quarter last year.
FEMA deployment revenue was $101.1 million in the quarter, which
included $11.0 million in expense pass-throughs, compared to $10.5
million in the same quarter last year. Adjusted EBITDA was $73.5
million, an increase of 38.6% compared to the same quarter last
year. A reconciliation of non-GAAP to GAAP financial measures is
included in this news release. EMSC generated net income of $28.6
million, or $0.66 per diluted share, for the third quarter of 2008,
compared to net income of $14.7 million, or $0.34 per diluted
share, in the third quarter of last year, an increase of 95.7%. The
increase in earnings is attributable primarily to the FEMA
deployment, the net impact of higher rates and volumes on existing
contracts, increased volume from net new contracts and
acquisitions, partially offset by higher provider compensation,
insurance expense and fuel costs. Free cash flow was $65.5 million
in the third quarter 2008 compared to $24.9 million in the same
quarter last year. Cash provided by operating activities was $75.0
million in the third quarter 2008, compared to $37.7 million for
the same quarter last year. Accounts payable and accrued
liabilities increased $52.3 million in the third quarter 2008
primarily from FEMA deployment related accruals, compared to a $5.2
million increase last year. Accounts receivable increased $40.7
million during the third quarter 2008 due to outstanding FEMA
deployment receivables and overall revenue growth, offset by an
improvement in cash collections, compared to $7.1 million last
year. EMSC�s Days Sales Outstanding (DSO) decreased 4 days
(decreased 7 days including the impact of the FEMA deployment) in
the third quarter of 2008. Net cash used in investing activities
was $17.9 million for the quarter ended September 30, 2008,
compared to $87.9 million for the same period in 2007. Acquisition
related funding was $8.4 million in the third quarter 2008 compared
to $75.2 million in the same period last year. The remaining change
is due to a $5.4 million reduction in net insurance collateral
requirements offset by an increase in net capital spending of $2.6
million. For the quarter ended September 30, 2008, net cash
provided by financing activities was $5.5 million compared to $43.1
million for the same quarter last year. Net debt repayments were
$1.3 million for the three months ended September 30, 2008 compared
to net borrowings of $37.9 million in the prior year for
acquisitions. Results of Operations for the Nine Months Ended
September 30, 2008 EMSC�s net revenue was $1.82 billion for the
nine months ended September 30, 2008, an increase of 15.7% (9.9%
excluding the change in FEMA deployment revenue) compared to the
same period last year. Adjusted EBITDA was $183.4 million, an
increase of 14.9% compared to the same period last year. The nine
month period last year included incremental revenue adjustments of
approximately $13 million, with a positive Adjusted EBITDA impact
of approximately $10 million. EMSC�s net income for the nine months
ended September 30, 2008 was $64.0 million, or $1.49 per diluted
share, compared to net income of $46.4 million or $1.08 per diluted
share, an increase of 38.2% over the same period last year. The
increase in earnings is attributable primarily to organic rate and
volume growth, acquisitions, and FEMA deployment, partially offset
by higher provider compensation, insurance expense and fuel costs.
Free cash flow was $128.4 million for the nine months ended
September 30, 2008, an increase of $106.9 million over the nine
months ended last year. Cash provided by operating activities for
the nine months ended September 30, 2008 was $130.4 million
compared to $56.9 million for the same period in 2007. Accounts
payable and accrued liabilities increased $42.0 million in 2008
primarily from FEMA deployment related accruals, compared to a $5.3
million increase in 2007. Accounts receivable increased $54.5
million during 2008, primarily due to outstanding FEMA deployment
receivables and overall revenue growth, offset by an improvement in
cash collections. Accounts receivable increased $71.0 million in
2007, driven primarily by collection delays at both segments.
EMSC�s DSO improved 7 days (improved 10 days including the FEMA
impact) in the nine months ended September 30, 2008. Net cash used
in investing activities was $30.4 million for the nine months ended
September 30, 2008 compared to $111.1 million for the same period
in 2007. Acquisition related funding was $28.3 million in 2008
compared to $75.6 million in the same period in 2007. The remaining
change was affected by reduced insurance collateral requirements of
$23.3 million and lower capital expenditures of $9.9 million. For
the nine months ended September 30, 2008, net cash provided by
financing activities was $6.7 million compared to $37.3 million for
the nine months ended September 30, 2007. Net debt repayments were
$4.0 million for the nine months ended September 30, 2008 compared
to net borrowings of $34.5 million in the prior year for
acquisitions. 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 September 30, 2008, AMR generated net revenue of
$425.3 million, an increase of 36.8% (7.6% excluding the change in
FEMA deployment revenue) compared to the same quarter last year.
The 7.6% increase in net revenue was from an improvement in revenue
per transport in existing markets offset by lower than anticipated
non-emergency transports. Adjusted EBITDA was $47.2 million, an
increase of 81.4% compared to the same quarter last year. The
increase in Adjusted EBITDA is attributable primarily to the net
impact of higher revenue, including the FEMA deployment, partially
offset by higher compensation, insurance expense and fuel costs.
Compared to the same quarter last year, insurance expense increased
primarily due to a reduction of $3.0 million in favorable prior
period insurance adjustments. For the nine months ended September
30, 2008, AMR�s net revenue was $1.08 billion, an increase of 17.6%
(7.7% excluding the change in FEMA deployment revenue) compared to
the same period last year. Adjusted EBITDA was $101.6 million, an
increase of 36.7% compared to the same period last year. Insurance
expense for the nine months ended September 30, 2008 was higher
than the same period last year primarily due to a reduction of $6.6
million in favorable prior period insurance adjustments. EmCare For
the quarter ended September 30, 2008, EmCare generated net revenue
of $254.0 million, an increase of 16.1% compared to the same
quarter last year. The increase in revenue is primarily driven by
volume increases at existing contracts and 74 net new contracts
added since June 30, 2007. Of the 74 net new contracts added, 45
were from the acquisition of Clinical Partners in August 2008 with
related management fee revenue of $1.1 million during the quarter.
Adjusted EBITDA was $26.3 million compared to $27.0 million last
year, a decrease of 2.6%. The reduction in Adjusted EBITDA is
primarily attributable to an unfavorable prior period insurance
adjustment of $3.9 million in the quarter ended September 30, 2008
compared to a favorable prior period adjustment of $3.1 million in
the same period last year. Prior period insurance development in
the third quarter of 2008 was not consistent with EmCare�s
historical experience and the Company does not believe this level
of adjustment is indicative of an ongoing trend. Compensation
increased as a percent of net revenue due to increased provider
costs in both new contract starts and existing contracts, offset by
lower operating costs. For the nine months ended September 30,
2008, EmCare�s net revenue was $740.9 million, an increase of 13.0%
compared to the same period last year. Adjusted EBITDA was $81.9
million compared to $85.4 million last year. The nine month period
last year included incremental positive revenue adjustments of
approximately $13 million, with an Adjusted EBITDA impact of
approximately $10 million. Insurance expense in the nine months
ended September 30, 2008 included an unfavorable prior period
adjustment of $1.3 million compared to a favorable prior period
adjustment of $9.7 million in the same period last year. Guidance
EPS guidance is updated to an expected range of $1.90 - $2.00 per
diluted share from previously announced guidance of $1.70 - $1.75
per diluted share, and Adjusted EBITDA guidance is updated to an
expected range of $240 million to $245 million from previously
announced guidance of $227 million to $232 million. Conference Call
EMSC management will host a conference call and live audio webcast
on Friday, October 31, 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. It also includes presentations of free cash flow,
which is defined as cash flow from operations less cash used in
non-acquisition related investment activities. Adjusted EBITDA and
free cash flow are commonly used by management and investors as
performance measures and liquidity indicators. Adjusted EBITDA and
free cash flow are not considered measures of financial performance
under U.S. generally accepted accounting principles (GAAP), and the
items excluded therefrom are significant components in
understanding and assessing our financial performance. Adjusted
EBITDA and free cash flow 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 and free cash flow are
not measures determined in accordance with GAAP and are susceptible
to varying calculations, these measures, as presented, may not be
comparable to other similarly titled measures of other companies.
EMERGENCY MEDICAL SERVICES CORPORATION Consolidated Statements of
Operations and Other Information Including a Reconciliation of
Income from Operations to Adjusted EBITDA (1) (unaudited; in
thousands, except shares, per share data and other information) � �
� Quarter ended September 30, Nine months ended September 30, 2008
2007 2008 2007 � Net revenue $ 679,328 � $ 529,752 � $ 1,816,193 �
$ 1,569,783 � Compensation and benefits 426,755 366,835 1,221,607
1,079,076 Operating expenses 135,087 82,473 302,014 238,731
Insurance expense 25,109 13,465 63,640 51,242 Selling, general and
administrative expenses 20,509 15,876 50,621 44,082 Depreciation
and amortization expense 16,993 17,809 52,156 52,165 Restructuring
charges � - � � - � � - � � 2,242 � Income from operations 54,875
33,294 126,155 102,245 Interest income from restricted assets 1,623
1,919 5,113 5,294 Interest expense (11,117 ) (12,652 ) (31,387 )
(35,281 ) Realized gain on investments 768 9 3,011 68 Interest and
other income � 508 � � 602 � � 1,097 � � 1,791 � Income before
income taxes and equity in earnings of unconsolidated subsidiary
46,657 23,172 103,989 74,117 Income tax expense (18,138 ) (8,672 )
(40,170 ) (28,146 ) Equity in earnings of unconsolidated subsidiary
� 98 � � 170 � � 152 � � 425 � Net income $ 28,617 � $ 14,670 � $
63,971 � $ 46,396 � � � Basic earnings per common share $ 0.69 $
0.35 $ 1.54 $ 1.12 Diluted earnings per common share $ 0.66 $ 0.34
$ 1.49 $ 1.08 Weighted average common shares outstanding, basic
41,637,765 41,567,657 41,594,270 41,544,741 Weighted average common
shares outstanding, diluted 43,062,364 43,190,779 43,058,904
43,143,997 � Other Information EmCare patient encounters 1,999,161
1,800,340 5,983,821 5,365,668 AMR ambulance transports (2) 732,005
733,756 2,220,845 2,163,784 AMR weighted transports (2) 742,574
746,684 2,254,694 2,203,816 � � Reconciliation of income from
operations to Adjusted EBITDA Income from operations $ 54,875 $
33,294 $ 126,155 $ 102,245 Depreciation and amortization expense
16,993 17,809 52,156 52,165 Interest income from restricted assets
� 1,623 � � 1,919 � � 5,113 � � 5,294 � Adjusted EBITDA $ 73,491 �
$ 53,022 � $ 183,424 � $ 159,704 � � � (1) These statements provide
a reconciliation of Adjusted EBITDA to income from operations, and
a reconciliation of income from operations to net income. (2)
Transports are not reported for FEMA deployment. EMERGENCY MEDICAL
SERVICES CORPORATION Reconciliation of Adjusted EBITDA to Cash
Flows Provided by Operating Activities (unaudited; in thousands) �
� � � Quarter ended September 30, Nine months ended September 30,
2008 2007 2008 2007 � Adjusted EBITDA $ 73,491 $ 53,022 $ 183,424 $
159,704 Interest paid (10,644 ) (12,125 ) (29,808 ) (33,734 )
Change in accounts receivable (40,747 ) (7,073 ) (54,499 ) (71,007
) Change in other operating assets/liabilities 51,307 5,007 29,226
1,289 Equity based compensation 717 493 1,841 1,293 Other � 923 � �
(1,658 ) � 242 � � (599 ) Net cash provided by operating activities
$ 75,047 � $ 37,666 � $ 130,426 � $ 56,946 � EMERGENCY MEDICAL
SERVICES CORPORATION Reconciliation of Segment Income from
Operations to Adjusted EBITDA (unaudited; in thousands) � � � �
Quarter ended September 30, Nine months ended September 30, 2008
2007 2008 2007 AMR Income from operations $ 33,032 $ 11,041 $
57,538 $ 30,449 Depreciation and amortization expense 13,447 14,246
41,951 41,707 Interest income from restricted assets � 705 � 720 �
2,069 � 2,160 Adjusted EBITDA (1) � 47,184 � 26,007 � 101,558 �
74,316 � EmCare Income from operations 21,843 22,253 68,617 71,796
Depreciation and amortization expense 3,546 3,563 10,205 10,458
Interest income from restricted assets � 918 � 1,199 � 3,044 �
3,134 Adjusted EBITDA (2) � 26,307 � 27,015 � 81,866 � 85,388 �
Total Income from operations 54,875 33,294 126,155 102,245
Depreciation and amortization expense 16,993 17,809 52,156 52,165
Interest income from restricted assets � 1,623 � 1,919 � 5,113 �
5,294 Adjusted EBITDA $ 73,491 $ 53,022 $ 183,424 $ 159,704 � � (1)
AMR Adjusted EBITDA includes $2.2 million of restructuring charges
for the nine months ended September 30, 2007. (2) EmCare Adjusted
EBITDA includes the net impact of approximately $10 million of
positive revenue adjustments for the first two quarters of 2007.
EMERGENCY MEDICAL SERVICES CORPORATION Condensed Consolidated
Balance Sheets (in thousands) � � � September 30, December 31, 2008
2007 (Unaudited) (Audited) Assets Current assets: Cash and cash
equivalents $ 135,682 $ 28,914 Trade and other accounts receivable,
net 552,795 495,348 Other current assets � 168,167 � 146,498 Total
current assets 856,644 670,760 Non-current assets: Property, plant
and equipment, net 126,732 143,342 Goodwill and other intangible
assets, net 412,160 394,841 Other long-term assets � 197,643 �
270,620 Total assets $ 1,593,179 $ 1,479,563 � Liabilities and
Equity Current liabilities $ 360,050 $ 306,891 Long-term debt
474,885 478,166 Insurance reserves and other long-term liabilities
� 242,547 � 245,010 Total liabilities 1,077,482 1,030,067 Total
equity � 515,697 � 449,496 Total liabilities and equity $ 1,593,179
$ 1,479,563 EMERGENCY MEDICAL SERVICES CORPORATION Condensed
Consolidated Statements of Cash Flows (unaudited; in thousands) � �
� Quarter ended September 30, Nine months ended September 30, 2008
2007 2008 2007 Cash Flows from Operating Activities Net income $
28,617 $ 14,670 $ 63,971 $ 46,396 Adjustments to reconcile net
income to net cash provided by operating activities: Depreciation,
amortization, deferred taxes and other 35,870 25,062 91,728 80,268
Changes in operating assets/liabilities, net of acquisitions: Trade
and other accounts receivable (40,747 ) (7,073 ) (54,499 ) (71,007
) Insurance accruals 1,807 11 (5,333 ) 15 Other assets and
liabilities � 49,500 � � 4,996 � � 34,559 � � 1,274 � Net cash
provided by operating activities � 75,047 � � 37,666 � � 130,426 �
� 56,946 � � Cash Flows from Investing Activities Purchases of
property, plant and equipment, net (11,447 ) (8,818 ) (21,407 )
(31,270 ) Acquisition of businesses, net of cash received (8,368 )
(75,171 ) (28,325 ) (75,648 ) Net change in insurance collateral
1,127 (4,267 ) 15,983 (7,300 ) Other investing activities � 764 � �
361 � � 3,392 � � 3,076 � Net cash used in investing activities �
(17,924 ) � (87,895 ) � (30,357 ) � (111,142 ) � Cash Flows from
Financing Activities EMSC issuance of class A common stock 1,875
133 1,920 382 Borrowings under revolving credit facility - 70,300
14,000 70,300 Repayments of capital lease obligations and other
debt (1,285 ) (32,424 ) (18,006 ) (35,815 ) Increase in bank
overdrafts � 4,950 � � 5,130 � � 8,785 � � 2,387 � Net cash
provided by financing activities � 5,540 � � 43,139 � � 6,699 � �
37,254 � � Change in cash and cash equivalents 62,663 (7,090 )
106,768 (16,942 ) Cash and cash equivalents, beginning of period �
73,019 � � 29,832 � � 28,914 � � 39,336 � Cash and cash
equivalents, end of period $ 135,682 � $ 22,742 � $ 135,682 � $
22,394 � � Non-cash Activities Capital lease obligations incurred $
- � $ - � $ 682 � $ 8,038 � � Free Cash Flow $ 65,491 $ 24,942 $
128,394 $ 21,452 � � Reconciliation of free cash flow to net cash
provided by operating activities Free cash flow $ 65,491 $ 24,942 $
128,394 $ 21,452 Purchase of property, plant and equipment, net
11,447 8,818 21,407 31,270 Net change in insurance collateral
(1,127 ) 4,267 (15,983 ) 7,300 Other investing activities � (764 )
� (361 ) � (3,392 ) � (3,076 ) Net cash provided by operating
activities $ 75,047 � $ 37,666 � $ 130,426 � $ 56,946 �
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