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, 2009.

William A. Sanger, Chairman and Chief Executive Officer, said, “EMSC had another banner year in 2009. In more than 13 million patient encounters, our clinicians provided care with an emphasis on quality, safety, compassion and dignity. We produced strong organic growth, won a significant number of new contracts, and enhanced our market position with targeted acquisitions. We believe the actions taken in 2009 position us well for the opportunities in 2010 and beyond.”

Results of Operations for the Fourth Quarter 2009

For the quarter ended December 31, 2009, EMSC generated net revenue of $654.3 million, an increase of 10.2% compared to the same period last year.

EMSC generated net income of $33.3 million, or $0.75 per diluted share, for the fourth quarter of 2009, compared to net income of $20.9 million, or $0.48 per diluted share, in the fourth quarter of 2008. Adjusted EBITDA was $71.2 million, an increase of 18.3% compared to the same quarter last year. This increase is attributable primarily to the impact of increased volume from net new contracts, increased revenue from existing contracts, a decrease in selling, general and administrative expenses as a percentage of net revenue and lower fuel costs offset by increased compensation and insurance expense. Net income and diluted earnings per share were also positively impacted by a reduction in tax expense of approximately $3.5 million, or $0.08 per diluted share, primarily related to the release of accruals for previous tax positions. A description of the non-GAAP measures, Adjusted EBITDA and Free Cash Flow, and a reconciliation of non-GAAP to GAAP financial measures are included in this news release.

Cash provided by operating activities was $62.8 million in the fourth quarter of 2009, compared to $81.0 million for the same quarter last year. Working capital changes in the fourth quarter of 2008 were significantly impacted by the FEMA hurricane deployment. During the fourth quarter of 2009, accounts receivable decreased $10.3 million and changes in other assets and liabilities increased cash by $26.7 million related to the timing of insurance and tax payments.

Free cash flow was $52.0 million in the fourth quarter of 2009. This figure does not include a $17.4 million cash flow benefit related to tax deductions for stock-based compensation. Free cash flow of $63.9 million in the fourth quarter of 2008 included significant net collections associated with our FEMA deployment.

Net cash used in investing activities was $85.0 million for the quarter ended December 31, 2009, compared to $44.6 million for the same period in 2008. Acquisition related funding was $74.2 million in the fourth quarter 2009 compared to $27.5 million in the same period last year.

For the quarter ended December 31, 2009, net cash provided by financing activities was $24.0 million and includes the exercise of stock options and the cash flow benefit related to tax deductions for stock-based compensation. Net cash used in financing activities of $26.0 million for the fourth quarter of 2008 included unscheduled payments of approximately $20.0 million on our senior secured credit facility. At December 31, 2009, there were no amounts outstanding under our revolving credit facility.

Results of Operations for the Year Ended December 31, 2009

EMSC’s net revenue was $2.57 billion for the year ended December 31, 2009, an increase of 6.6% compared to last year, or an 11.6% increase excluding the 2008 impact of the FEMA hurricane deployment.

EMSC’s net income for the year ended December 31, 2009 was $115.2 million, or $2.64 per diluted share, compared to net income of $84.8 million, or $1.97 per diluted share, an increase of 34.3% over last year. Adjusted EBITDA was $282.0 million, an increase of 15.8% compared to last year. The increase in earnings is attributable primarily to the net impact of increased volume from net new contracts, increased revenue on existing contracts, a decrease in compensation and benefits expenses as a percentage of net revenue and lower fuel costs, partially offset by higher insurance expense in 2009 and the favorable impact of the FEMA hurricane deployment in 2008.

Cash provided by operating activities for the year ended December 31, 2009 was $272.6 million compared to $211.5 million in 2008. The increase in operating cash flow relates primarily to an increase in net income, further reductions in DSO, and changes in other assets and liabilities. Accounts receivable decreased $18.7 million for the year ended December 31, 2009, primarily due to a decrease in DSO of 10 days during the year. Changes in other assets and liabilities increased cash by $42.7 million during the year ended December 31, 2009, primarily attributable to the timing of compensation related payments and deferred income taxes. Working capital changes for the year ended December 31, 2008 were significantly impacted by the FEMA hurricane deployment. Free cash flow was $231.5 million for the year ended December 31, 2009, an increase of $39.2 million over the year ended December 31, 2008.

Net cash used in investing activities was $116.6 million for the year ended December 31, 2009 compared to $74.9 million in 2008. The increase relates primarily to an increase in acquisition and net capital expenditures. Acquisitions totaled $75.6 million during the year ended December 31, 2009 compared to $55.8 million during 2008. Net capital expenditures were $44.6 million for the year ended December 31, 2009 compared to $31.7 million for the same period in 2008.

For the year ended December 31, 2009, net cash provided by financing activities was $30.8 million and includes the exercise of stock options and the cash flow benefit related to tax deductions for stock-based compensation. Net cash used in financing activities of $19.3 million for the year ended December 31, 2008 included unscheduled payments of approximately $20.0 million on our senior secured credit facility.

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 facility-based physician services segment.

American Medical Response (AMR)

Comparisons of AMR’s results for the quarter and year ended December 31, 2009 to the same periods last year are significantly impacted by our FEMA hurricane deployment during 2008. Notwithstanding the difficulty in comparing the 2009 to the 2008 periods, performance in our core business improved in 2009.

For the quarter ended December 31, 2009, AMR generated net revenue of $331.1 million, an increase of 2.0% compared to the fourth quarter last year, or a 4.0% increase excluding the fourth quarter 2008 impact of the FEMA hurricane deployment. The increase in net revenue was from an improvement in revenue per transport and growth in our managed transportation business, offset by lower transports primarily from our exit of underperforming markets.

Adjusted EBITDA was $26.6 million, a decrease of 6.4% compared to the same quarter last year. The decrease in Adjusted EBITDA is attributable primarily to the favorable impact of the FEMA hurricane deployment in the fourth quarter of 2008. Adjusted EBITDA in 2009 was positively impacted by revenue growth coupled with improvements in our resource utilization and lower fuel costs. Insurance costs were higher in the quarter by $3.5 million primarily due to a benefit recorded in the fourth quarter of 2008 for current year reserves. Income from operations was $14.0 million, a decrease of 0.3% compared to the same quarter in 2008.

For the year ended December 31, 2009, AMR’s net revenue was $1.34 billion, a decrease of 4.1% compared to last year, or a 3.8% increase excluding the 2008 FEMA hurricane deployment revenue. Adjusted EBITDA was $124.7 million, a decrease of 4.0% compared to last year, which was positively affected by the 2008 FEMA hurricane deployment. Insurance expense for the year ended December 31, 2009 included an unfavorable prior period adjustment of $1.1 million compared to a favorable prior period adjustment of $4.4 million in 2008. Income from operations was $73.5 million, an increase of 1.8% compared to 2008.

EmCare

For the quarter ended December 31, 2009, EmCare generated net revenue of $321.2 million, an increase of 20.2% compared to the same quarter last year. The increase in revenue is attributable primarily to the addition of 74 net new contracts since September 30, 2008 (of which 23 were a part of our Pinnacle transaction in December 2009) and revenue increases at existing contracts.

Adjusted EBITDA was $44.6 million for the quarter compared to $31.8 million last year, an increase of 40.3%. The increase in Adjusted EBITDA was driven primarily by the net impact of revenue and volume increases in addition to a decrease in operating, insurance and selling general and administrative expenses as a percentage of net revenue. Income from operations was $40.4 million, an increase of 47.9% over the same period in 2008.

For the year ended December 31, 2009, EmCare’s net revenue was $1.23 billion, an increase of 21.6% compared to last year. Adjusted EBITDA was $157.3 million compared to $113.7 million, an increase of 38.4% compared to last year. Insurance expense in the year ended December 31, 2009 included unfavorable prior period adjustments of $3.4 million compared to unfavorable prior period adjustments of $0.3 million last year. Income from operations was $139.6 million, an increase of 45.5% over 2008.

Guidance

The Company announces guidance for the fiscal year ending December 31, 2010. The Company expects diluted earnings per share to be between $3.00 and $3.10, and Adjusted EBITDA to be between $313.0 million and $320.0 million for the year. Guidance for 2010 includes expected stock compensation expense of $7.0 million, but does not include future acquisitions or any expected impact from debt refinancing options the Company is considering.

Conference Call

EMSC management will host a conference call and live audio webcast on Thursday, February 11, 2010, 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 facility-based physician services segment. AMR is the leading provider of ambulance services in the United States. EmCare is a leading provider of outsourced physician services to healthcare facilities. In 2009, EMSC provided services in 13.0 million patient encounters in more than 2,200 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; the impact of potential changes in the healthcare industry generally resulting from legislation currently under consideration; our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; our ability to generate cash flow to service our debt obligations; the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment; 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 successfully restructure our operations to comply with future changes in government regulation; the loss of existing contracts and the accuracy of our assessment of costs under new contracts; the high level of competition in our industry; our ability to maintain or implement complex information systems; our ability to implement our business strategy; our ability to successfully integrate strategic acquisitions; and our ability to comply with the terms of our settlement agreements with the government.

Non-GAAP Financial Measures Description and 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 adjusted for 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 (unaudited; in thousands, except shares, per share data and other information)   Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008   Net revenue $ 654,316   $ 593,671   $ 2,569,685   $ 2,409,864   Compensation and benefits 463,992 415,818 1,796,779 1,637,425 Operating expenses 81,973 81,345 334,328 383,359 Insurance expense 21,904 18,581 97,610 82,221 Selling, general and administrative expenses 16,295 19,037 63,481 69,658 Depreciation and amortization expense   15,693     16,824     64,351     68,980   Income from operations 54,459 42,066 213,136 168,221 Interest income from restricted assets 1,048 1,294 4,516 6,407 Interest expense (10,247 ) (10,700 ) (40,996 ) (42,087 ) Realized gain (loss) on investments 75 (289 ) 2,105 2,722 Interest and other income 374 958 1,816 2,055 Loss on early debt extinguishment   -     (241 )   -     (241 )

Income before income taxes and equity in earnings of unconsolidated subsidiary

45,709 33,088 180,577 137,077 Income tax expense (12,541 ) (12,360 ) (65,685 ) (52,530 ) Equity in earnings of unconsolidated subsidiary   103     148     347     300   Net income $ 33,271   $ 20,876   $ 115,239   $ 84,847       Basic earnings per common share $ 0.77 $ 0.50 $ 2.71 $ 2.04 Diluted earnings per common share $ 0.75 $ 0.48 $ 2.64 $ 1.97 Weighted average common shares outstanding, basic 43,106,582 41,826,415 42,552,716 41,652,783 Weighted average common shares outstanding, diluted 44,280,705 43,344,507 43,623,800 43,130,782   Other Information EmCare patient encounters 2,626,560 2,078,030 9,753,211 8,061,851 EmCare weighted patient encounters (1) 2,300,799 1,849,415 8,607,527 7,306,249 AMR ambulance transports 699,735 717,969 2,876,976 2,938,814 AMR weighted transports (2) 706,760 727,460 2,906,899 2,982,153  

(1) EmCare weighted encounters include a weighting of Radiology and Anesthesia encounters due to the differences in reimbursement for these services.

(2) AMR weighted transports include a weighting of wheelchair transports due to the differences in reimbursement for these services.                         EMERGENCY MEDICAL SERVICES CORPORATION Reconciliation of Adjusted EBITDA to Net Income (unaudited; in thousands)   Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008   Adjusted EBITDA $ 71,200 $ 60,184 $ 282,003 $ 243,608 Depreciation and amortization expense (15,693 ) (16,824 ) (64,351 ) (68,980 ) Interest income from restricted assets   (1,048 )   (1,294 )   (4,516 )   (6,407 ) Income from operations 54,459 42,066 213,136 168,221 Interest income from restricted assets 1,048 1,294 4,516 6,407 Interest expense (10,247 ) (10,700 ) (40,996 ) (42,087 ) Realized gain (loss) on investments 75 (289 ) 2,105 2,722 Interest and other income 374 958 1,816 2,055 Loss on early debt extinguishment   -     (241 )   -     (241 )

Income before income taxes and equity in earnings of unconsolidated subsidiary

45,709 33,088 180,577 137,077 Income tax expense (12,541 ) (12,360 ) (65,685 ) (52,530 ) Equity in earnings of unconsolidated subsidiary   103     148     347     300   Net income $ 33,271   $ 20,876   $ 115,239   $ 84,847                           EMERGENCY MEDICAL SERVICES CORPORATION Reconciliation of Adjusted EBITDA to Net Cash Provided by Operating Activities (unaudited; in thousands)   Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008   Adjusted EBITDA $ 71,200 $ 60,184 $ 282,003 $ 243,608 Interest paid (9,741 ) (10,175 ) (39,165 ) (39,983 ) Change in accounts receivable 10,294 82,117 18,742 27,618 Change in other operating assets/liabilities 26,675 (44,579 ) 42,675 (15,353 ) Equity based compensation 1,104 635 3,979 2,476 Excess tax benefits from stock-based compensation (17,448 ) - (17,448 ) - Other   (19,332 )   (7,151 )   (18,233 )   (6,909 ) Net cash provided by operating activities $ 62,752   $ 81,031   $ 272,553   $ 211,457                           EMERGENCY MEDICAL SERVICES CORPORATION Reconciliation of Segment Adjusted EBITDA to Income from Operations (unaudited; in thousands)   Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008 AMR Adjusted EBITDA $ 26,558 $ 28,375 $ 124,709 $ 129,933 Depreciation and amortization expense (12,043 ) (13,131 ) (49,190 ) (55,082 ) Interest income from restricted assets   (495 )   (521 )   (1,980 )   (2,590 ) Income from operations   14,020     14,723     73,539     72,261     EmCare Adjusted EBITDA 44,642 31,809 157,294 113,675 Depreciation and amortization expense (3,650 ) (3,693 ) (15,161 ) (13,898 ) Interest income from restricted assets   (553 )   (773 )   (2,536 )   (3,817 ) Income from operations   40,439     27,343     139,597     95,960     Total Adjusted EBITDA 71,200 60,184 282,003 243,608 Depreciation and amortization expense (15,693 ) (16,824 ) (64,351 ) (68,980 ) Interest income from restricted assets   (1,048 )   (1,294 )   (4,516 )   (6,407 ) Income from operations $ 54,459   $ 42,066   $ 213,136   $ 168,221                             EMERGENCY MEDICAL SERVICES CORPORATION Condensed Consolidated Balance Sheets (in thousands)   December 31, 2009 2008 (Unaudited) (Audited) Assets Current assets: Cash and cash equivalents $ 332,888 $ 146,173 Trade and other accounts receivable, net 459,088 472,501 Other current assets   73,241   196,500

Total current assets

865,217 815,174 Non-current assets: Property, plant and equipment, net 125,855 124,869 Goodwill and other intangible assets, net 484,605 422,154 Other long-term assets   179,030   179,022 Total assets $ 1,654,707 $ 1,541,219   Liabilities and Equity Current liabilities $ 349,139 $ 320,141 Long-term debt 449,254 453,600 Insurance reserves and other long-term liabilities   170,227   228,439 Total liabilities 968,620 1,002,180 Total equity   686,087   539,039 Total liabilities and equity $ 1,654,707 $ 1,541,219                         EMERGENCY MEDICAL SERVICES CORPORATION Condensed Consolidated Statements of Cash Flows (unaudited; in thousands)   Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008 Cash Flows from Operating Activities Net income $ 33,271 $ 20,876 $ 115,239 $ 84,847 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization, deferred taxes and other (7,488 ) 22,617 95,897 114,345 Changes in operating assets/liabilities, net of acquisitions: Trade and other accounts receivable 10,294 82,117 18,742 27,618 Insurance accruals (671 ) 855 6,362 (4,478 ) Other assets and liabilities   27,346     (45,434 )   36,313     (10,875 ) Net cash provided (used in) by operating activities   62,752     81,031     272,553     211,457     Cash Flows from Investing Activities Purchases of property, plant and equipment, net (11,048 ) (10,273 ) (44,608 ) (31,680 ) Acquisition of businesses, net of cash received (74,238 ) (27,500 ) (75,612 ) (55,825 ) Net change in insurance collateral 342 (6,539 ) 4,411 9,444 Other investing activities   (11 )   (276 )   (820 )   3,116   Net cash used in investing activities   (84,955 )   (44,588 )   (116,629 )   (74,945 )   Cash Flows from Financing Activities EMSC issuance of class A common stock 3,355 503 10,515 2,423 Excess tax benefits from stock-based compensation 17,448 - 17,448 - Borrowings under revolving credit facility - - - 14,000 Repayments of capital lease obligations and other debt (1,283 ) (21,224 ) (5,109 ) (39,230 ) Increase in bank overdrafts   4,466     (5,231 )   7,937     3,554   Net cash provided by (used in) financing activities   23,986     (25,952 )   30,791     (19,253 )   Change in cash and cash equivalents 1,783 10,491 186,715 117,259 Cash and cash equivalents, beginning of period   331,105     135,682     146,173     28,914   Cash and cash equivalents, end of period $ 332,888   $ 146,173   $ 332,888   $ 146,173     Free cash flow $ 52,035 $ 63,943 $ 231,536 $ 192,337                   EMERGENCY MEDICAL SERVICES CORPORATION Reconciliation of Free Cash Flow to Net Cash Provided by Operating Activities (unaudited; in thousands)       Quarter ended December 31, Year ended December 31, 2009 2008 2009 2008   Free cash flow $ 52,035 $ 63,943 $ 231,536 $ 192,337 Purchase of property, plant and equipment, net 11,048 10,273 44,608 31,680 Net change in insurance collateral (342 ) 6,539 (4,411 ) (9,444 ) Other investing activities   11     276   820     (3,116 ) Net cash provided by operating activities $ 62,752   $ 81,031 $ 272,553   $ 211,457