Emergency Medical Widens Reach

Emergency Medical’s (EMS) healthcare transportation services segment, American Medical Response (AMR) has been assigned a contract to serve emergency ambulance services in Manchester, New Hampshire. With this contract, AMR has become the largest provider of pre-hospital emergency medical care in New Hampshire.

Parallel to this contract was the commencement of the acquisition of Blythe Ambulance Service -- a full-service Advanced Life Support (ALS) provider in Blythe, California.

AMR is currently the largest provider of ambulance services in the US based on net revenue and number of vehicles. It holds an estimated 9% share of the total ambulance services market and a 25% share of the private provider ambulance market, operating in approximately 38 states. During the third quarter, this segment generated revenues of $352.2 million, up 4.0% from the year-ago period. The increase appeared with a surge in emergency transport and other revenues, offset partially by lower inter-facility transport.

Earlier, in December 2010, Emergency Medical had acquired Doctor’s Ambulance Service, which provides both emergency and non-emergency ambulance services in Orange Country, California. Emergency Medical has reached its height through both organic and inorganic growth.

The company exited the latest quarter with $345.7 million of cash and cash equivalents, up from $332.9 million at the end of December 2009. Such strong cash balance facilitates the company to get into an acquisitive mood and greatly boosting its top line. Going by Emergency Medical’s statement during the third quarter call, an acquisition in the area of anesthesia was just around the corner.

The ambulance industry is highly fragmented with an estimated 15,000 providers across the US, representing annual revenues of approximately $14 billion. In addition, increased demand for effective use of technology, cost-efficient services, improved patient outcomes, emergency alertness and response should encourage communities and hospitals to outsource ambulance services to private providers.

We are currently Neutral on the stock.

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