EMS Emergency Medical Services Corp

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 �