We're maintaining our fair value estimate after reviewing yet another strong quarter from Emergency Medical Services EMS. Net revenue for the third quarter was $665.1 million, down 2.1% from the third quarter of 2008 (or up 15.0% excluding the FEMA hurricane deployment revenue of $101.1 million last year). The operating margin rose 60 basis points as the firm continues to contain expenses and spread costs over a larger revenue base. Ambulance division American Medical Response brought in $338.8 million for the quarter as improved revenue per transport offset lower transport volume, thanks to the firm's exit of underperforming markets. Outsourced emergency room services segment EmCare brought in $326.3 million for the quarter as it continued to win new contracts. Many of these new deals were signed with existing customers for expanded services such as radiology and anesthesiology, illustrating the success of the firm's cross-selling strategy. EmCare's third quarter also got a boost from higher emergency room volume caused by the H1N1 outbreak. Although the virus' increased incidence should provide a tail wind for the top line in the fourth quarter, the outbreak's impact on the firm's bottom line will be less pronounced because flu treatment is tied to lower-acuity patients that generally yield lower margins.

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