Emergency Medical Services Corporation (NYSE:EMS) (EMSC or the
Company) today announces results for the fourth quarter and year
ended December 31, 2008.
William A. Sanger, Chairman and Chief Executive Officer, said,
�2008 was a very successful year. We expanded our core businesses,
entered new markets and service lines, and delivered strong revenue
and earnings growth. We experienced the best year of contract
growth and free cash flow in EMSC history. We believe we are well
positioned to build on these successes and respond to opportunities
that arise during these challenging economic times.�
Results of Operations for the Fourth Quarter 2008
For the quarter ended December 31, 2008, EMSC generated net
revenue of $593.7�million, an increase of 10.5% compared to the
same quarter last year. Adjusted EBITDA was $60.2 million, an
increase of 19.2% compared to the same period in 2007. A
reconciliation of non-GAAP financial measures, including free cash
flow and Adjusted EBITDA, to GAAP financial measures is included in
this news release.
EMSC generated net income of $20.9 million, or $0.48 per diluted
share, for the fourth quarter of 2008, compared to net income of
$13.4 million, or $0.31 per diluted share, in the fourth quarter of
last year, an increase of 54.9%. The increase in earnings is
attributable primarily to the net impact of higher revenue on
existing contracts, increased volume from net new contracts and
acquisitions, and a decline in total expenses as a percentage of
net revenue.
Free cash flow was $63.9 million in the fourth quarter 2008
compared to $51.8 million in the same quarter last year. Cash
provided by operating activities was $81.0 million in the fourth
quarter 2008, compared to $40.9 million for the same quarter last
year. Accounts receivable decreased $82.1 million during the fourth
quarter 2008 due to the collection of Federal Emergency Management
Agency (FEMA) deployment receivables and a reduction in Days Sales
Outstanding (DSO) from improved cash collections. EMSC�s DSO
decreased 4 days (excluding the FEMA impact) in the fourth quarter
of 2008. Accounts payable and accrued liabilities decreased $43.5
million in the fourth quarter 2008 primarily from payment of FEMA
deployment accruals.
Net cash used in investing activities was $44.6 million for the
quarter ended December 31, 2008, compared to cash provided by
investing activities of $10.9 million for the same period in 2007.
Acquisition related funding was $27.5 million in the fourth quarter
2008. Net insurance collateral funding was $6.5 million in the
fourth quarter 2008 compared to a net $18.2 million reduction in
insurance collateral in the fourth quarter 2007.
For the quarter ended December 31, 2008, net cash used in
financing activities was $26.0 million compared to $45.3 million
for the same quarter last year. Net debt repayments were $21.2
million for the three months ended December 31, 2008, including a
discretionary payment of $20.0 million on the Company�s senior
secured term loan, compared to $40.2 million in the same quarter
last year related primarily to payments on the Company�s revolving
credit facility.
Results of Operations for the Year Ended December 31,
2008
EMSC�s net revenue was $2.4 billion for the year ended December
31, 2008, an increase of 14.4% compared to last year. Adjusted
EBITDA was $243.6 million, an increase of 15.9% compared to last
year.
EMSC�s net income for the year ended December 31, 2008 was $84.8
million, or $1.97 per diluted share, compared to net income of
$59.8 million or $1.39 per diluted share, an increase of 41.9% over
last year. The increase in earnings is attributable primarily to
organic rate and volume growth from existing contracts, including
FEMA, and acquisitions, partially offset by higher provider
compensation, insurance expense and fuel costs.
Free cash flow was $192.3 million for the year ended December
31, 2008, an increase of $119.1 million, or 162.6% over the prior
year. Cash provided by operating activities for the year ended
December 31, 2008 was $211.5 million compared to $97.8 million in
2007. The change was primarily the result of reductions in accounts
receivable of $27.6 million during 2008 from improved cash
collections, compared to an increase of $75.0 million in 2007.
EMSC�s DSO decreased 11 days (excluding the FEMA impact) during the
year ended December 31, 2008.
Net cash used in investing activities was $74.9 million for the
year ended December 31, 2008, compared to $100.2 million in 2007.
The variance is primarily the result of acquisition related funding
of $55.8 million in 2008 compared to $75.6 million in 2007 and
reduced net capital expenditures during 2008.
For the year ended December 31, 2008, net cash used in financing
activities was $19.3 million compared to $8.0 million for the year
ended December 31, 2007. Net debt repayments were $25.2 million for
the year ended December 31, 2008 compared to $5.7 million in the
prior year.
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 hospital-based physician services segment.
American Medical Response (AMR)
For the quarter ended December 31, 2008, AMR generated net
revenue of $326.5 million, an increase of 7.1% compared to the same
quarter last year. The increase was from an improvement in revenue
per transport in existing markets offset by lower ambulance
transports primarily from the exit of certain underperforming
markets. Adjusted EBITDA was $28.4 million, an increase of 54.1%
compared to the same quarter last year. The increase in Adjusted
EBITDA is attributable primarily to the net impact of higher
revenue and reduction in compensation and benefits, fuel cost, and
insurance cost as a percent of net revenue.
For the year ended December 31, 2008, AMR�s net revenue was $1.4
billion, an increase of 15.0% compared to last year. Adjusted
EBITDA was $129.9 million, an increase of 40.1% compared to last
year. Insurance expense for the year ended December 31, 2008 was
higher than last year primarily due to a reduction in favorable
prior period insurance adjustments. The favorable prior period
adjustments were $4.4 million in 2008 compared to $11.3 million in
2007.
EmCare
For the quarter ended December 31, 2008, EmCare generated net
revenue of $267.2 million, an increase of 15.0% compared to the
same quarter last year. The increase in revenue is driven primarily
by 91 net new contracts added since September 30, 2007 for
emergency department and other hospital based provider services and
volume increases at existing contracts. Adjusted EBITDA was $31.8
million compared to $32.1 million for the same quarter last year.
The fourth quarter of 2007 included a $4 million benefit from a
timing difference in recording current period insurance costs.
Prior year favorable developments of $1.0 million were recorded in
the fourth quarter 2008 compared to $0.6 million in the fourth
quarter 2007.
For the year ended December 31, 2008, EmCare�s net revenue was
$1.0 billion, an increase of 13.5% compared to last year. Adjusted
EBITDA was $113.7 million, compared to $117.5 million last year.
Adjusted EBITDA in 2007 was positively impacted by $20.2 million
from incremental revenue adjustments and favorable prior period
insurance adjustments. These incremental revenue adjustments in
2007, which had an Adjusted EBITDA impact of approximately $10
million, were not replicated in 2008. Favorable prior period
insurance adjustments were $10.2 million in 2007, compared to
unfavorable prior period adjustments of $0.3 million in 2008.
Guidance
The Company announces earnings guidance for the fiscal year
ending December 31, 2009. The Company expects diluted earnings per
share to be between $2.05 and $2.15, and Adjusted EBITDA to be
between $248.0 million and $255.0 million for the year. This
guidance includes an expected increase in stock compensation
expense of approximately $3.0 million, but does not include the
impact of future acquisitions nor does it include any extraordinary
FEMA deployment.
Conference Call
EMSC management will host a conference call and live audio
webcast on Thursday, February 12, 2009, at 11:00 a.m. EST, 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
hospital-based physician services segment. AMR is the leading
provider of ambulance services in the United States. EmCare is a
leading provider of outsourced hospital-based physician services.
In 2008, EMSC provided services to 11.4 million patients in nearly
2,100 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, loss on early debt
extinguishment, 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
EBITDA1 (unaudited; in thousands, except shares, per
share data and other information) � � � � �
Quarter ended
December 31, Year ended December 31, �
2008 � �
2007 � �
2008 � �
2007 � � Net revenue $
593,671 � $ 537,210 � $ 2,409,864 � $ 2,106,993 � Compensation and
benefits 415,818 376,894 1,637,425 1,455,970 Operating expenses
81,345 78,787 383,359 317,518 Insurance expense 18,581 15,066
82,221 66,308 Selling, general and administrative expenses 19,037
17,811 69,658 61,893 Depreciation and amortization expense 16,824
18,318 68,980 70,483 Restructuring charges � - � � - � � - � �
2,242 � Income from operations 42,066 30,334 168,221 132,579
Interest income from restricted assets 1,294 1,849 6,407 7,143
Interest expense (10,700 ) (11,667 ) (42,087 ) (46,948 ) Realized
gain (loss) on investments (289 ) 177 2,722 245 Interest and other
income 958 264 2,055 2,055 Loss on early debt extinguishment � (241
) � - � � (241 ) � - �
Income before income taxes and
equity in earnings of unconsolidated subsidiary
33,088 20,957 137,077 95,074 Income tax expense (12,360 ) (7,958 )
(52,530 ) (36,104 ) Equity in earnings of unconsolidated subsidiary
� 148 � � 423 � � 300 � � 848 � Net income $ 20,876 � $ 13,422 � $
84,847 � $ 59,818 � � � Basic earnings per common share $ 0.50 $
0.32 $ 2.04 $ 1.44 Diluted earnings per common share $ 0.48 $ 0.31
$ 1.97 $ 1.39 Weighted average common shares outstanding, basic
41,826,415 41,570,392 41,652,783 41,551,207 Weighted average common
shares outstanding, diluted 43,344,507 43,155,322 43,130,782
43,146,881 �
Other Information EmCare patient encounters
2,078,030 1,841,841 8,061,851 7,182,099 AMR ambulance transports
(2) 717,969 729,574 2,938,814 2,893,358 AMR weighted transports (2)
727,460 741,909 2,982,153 2,945,725 � �
Reconciliation of income
from operations to Adjusted EBITDA Income from operations $
42,066 $ 30,334 $ 168,221 $ 132,579 Depreciation and amortization
expense 16,824 18,318 68,980 70,483 Interest income from restricted
assets � 1,294 � � 1,849 � � 6,407 � � 7,143 � Adjusted EBITDA $
60,184 � $ 50,501 � $ 243,608 � $ 210,205 � � � (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 not reported for FEMA deployment.
EMERGENCY MEDICAL SERVICES CORPORATION Reconciliation of
Adjusted EBITDA to Net Cash Flows Provided by Operating
Activities (unaudited; in thousands) � � � � �
Quarter ended December 31, Year ended December 31, �
2008 � �
2007 � �
2008 � �
2007 � �
Adjusted EBITDA $ 60,184 $ 50,501 $ 243,608 $ 210,205 Interest paid
(10,175 ) (11,140 ) (39,983 ) (44,874 ) Change in accounts
receivable 82,117 (3,984 ) 27,618 (74,991 ) Change in other
operating assets/liabilities (44,579 ) 4,579 (15,353 ) 5,868 Equity
based compensation 635 434 2,476 1,727 Other � (7,151 ) � 482 � �
(6,909 ) � (117 ) Net cash provided by operating activities $
81,031 � $ 40,872 � $ 211,457 � $ 97,818 �
EMERGENCY MEDICAL
SERVICES CORPORATION Reconciliation of Segment Income from
Operations to Adjusted EBITDA (unaudited; in thousands)
� � � � � �
Quarter ended December 31, Year ended
December 31, �
2008 �
2007 �
2008 �
2007 AMR Income from operations $ 14,723 $ 2,835 $
72,261 $ 33,284 Depreciation and amortization expense 13,131 14,853
55,082 56,560 Interest income from restricted assets � 521 � 721 �
2,590 � 2,881 Adjusted EBITDA (1) � 28,375 � 18,409 � 129,933 �
92,725 �
EmCare Income from operations 27,343 27,499 95,960
99,295 Depreciation and amortization expense 3,693 3,465 13,898
13,923 Interest income from restricted assets � 773 � 1,128 � 3,817
� 4,262 Adjusted EBITDA (2) � 31,809 � 32,092 � 113,675 � 117,480 �
Total Income from operations 42,066 30,334 168,221 132,579
Depreciation and amortization expense 16,824 18,318 68,980 70,483
Interest income from restricted assets � 1,294 � 1,849 � 6,407 �
7,143 Adjusted EBITDA $ 60,184 $ 50,501 $ 243,608 $ 210,205 � � (1)
AMR Adjusted EBITDA includes $2.2 million of restructuring charges
for the year ended December 31, 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) � � � �
December 31, December 31, 2008 2007
(Unaudited) (Audited) Assets Current assets:
Cash and cash equivalents $ 146,173 $ 28,914 Trade and other
accounts receivable, net 472,501 495,348 Other current assets �
196,500 � 146,498 Total current assets 815,174 670,760 Non-current
assets: Property, plant and equipment, net 124,869 143,342 Goodwill
and other intangible assets, net 422,154 394,841 Other long-term
assets � 179,022 � 270,620 Total assets $ 1,541,219 $ 1,479,563 �
Liabilities and Equity Current liabilities $ 320,141 $
306,891 Long-term debt 453,600 478,166 Insurance reserves and other
long-term liabilities � 228,439 � 245,010 Total liabilities
1,002,180 1,030,067 Total equity � 539,039 � 449,496 Total
liabilities and equity $ 1,541,219 $ 1,479,563
EMERGENCY MEDICAL
SERVICES CORPORATION Condensed Consolidated Statements of
Cash Flows (unaudited; in thousands) � � � �
Quarter
ended December 31, Year ended December 31, �
2008
� �
2007 � �
2008 � �
2007 �
Cash Flows
from Operating Activities Net income $ 20,876 $ 13,422 $ 84,847
$ 59,818 Adjustments to reconcile net income to net cash provided
by operating activities: Depreciation, amortization, deferred taxes
and other 22,617 26,855 114,345 107,123 Changes in operating
assets/liabilities, net of acquisitions: Trade and other accounts
receivable 82,117 (3,984 ) 27,618 (74,991 ) Insurance accruals 855
(3,021 ) (4,478 ) (3,006 ) Other assets and liabilities � (45,434 )
� 7,600 � � (10,875 ) � 8,874 � Net cash provided by operating
activities � 81,031 � � 40,872 � � 211,457 � � 97,818 � �
Cash
Flows from Investing Activities Purchases of property, plant
and equipment, net (10,273 ) (6,706 ) (31,680 ) (37,976 )
Acquisition of businesses, net of cash received (27,500 ) - (55,825
) (75,648 ) Net change in insurance collateral (6,539 ) 18,172
9,444 10,872 Other investing activities � (276 ) � (550 ) � 3,116 �
� 2,526 � Net cash (used in) provided by investing activities �
(44,588 ) � 10,916 � � (74,945 ) � (100,226 ) �
Cash Flows from
Financing Activities EMSC issuance of class A common stock 503
1 2,423 383 Borrowings under revolving credit facility - - 14,000
70,300 Repayments of capital lease obligations and other debt
(21,224 ) (40,218 ) (39,230 ) (76,033 ) Increase in bank overdrafts
� (5,231 ) � (5,051 ) � 3,554 � � (2,664 ) Net cash provided by
financing activities � (25,952 ) � (45,268 ) � (19,253 ) � (8,014 )
� Change in cash and cash equivalents 10,491 6,520 117,259 (10,422
) Cash and cash equivalents, beginning of period � 135,682 � �
22,394 � � 28,914 � � 39,336 � Cash and cash equivalents, end of
period $ 146,173 � $ 28,914 � $ 146,173 � $ 28,914 � �
Non-cash
Activities Capital lease obligations incurred $ - � $ - � $ 682
� $ 8,038 � � Free Cash Flow $ 63,943 $ 51,788 $ 192,337 $ 73,240 �
�
Reconciliation of free cash flow to net cash provided by
operating activities Free cash flow $ 63,943 $ 51,788 $ 192,337
$ 73,240 Purchase of property, plant and equipment, net 10,273
6,706 31,680 37,976 Net change in insurance collateral 6,539
(18,172 ) (9,444 ) (10,872 ) Other investing activities � 276 � �
550 � � (3,116 ) � (2,526 ) Net cash provided by operating
activities $ 81,031 � $ 40,872 � $ 211,457 � $ 97,818 �
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