Emergency Medical Services CorporationEMS

Morningstar Rating

Stock Research and Analysis

by Lauren Migliore

Since its separation from transportation colossus Laidlaw, new management has revitalized Emergency Medical Services through new contract wins and operational improvements. Despite operating in a highly fragmented market, we expect EMS will continue to benefit from favorable industry dynamics and scale advantages. Read more

Bulls Say

As patient visits far outpace emergency room availability, increased use of emergency room outsourcing should be favorable for EMS.

With ambulance and emergency services in 40 and 41 states, respectively, EMS' vast geographic footprint encourages large, comprehensive contracts with managed-care and private insurance companies.

As one of few national providers in emergency services, economies of scale allow EMS to spread out its overhead costs, and this scalability should help keep smaller competitors at bay.

Under its FEMA contract this year, AMR had a chance to prove its mettle by executing the largest ambulance deployment in history in response to Hurricanes Gustav and Ike, raking in $90 million in additional revenue. Read more

Bears Say

Although EMS is the market leader in both the ambulance transport and outsourced emergency room services arenas, it only claims single-digit market share. Highly fragmented markets of this nature generally encourage fierce, profitability-impairing competition.

With roughly a third of revenue coming from beneficiaries of Medicare or Medicaid, EMS' top line is highly vulnerable to reimbursement and regulatory changes over time.

EMS has a substantial amount of debt on its books. If the company does not continue to generate robust growth, it will likely have difficulty servicing its debt.

Onex's essential monopoly on EMS' voting power significantly hinders outside shareholders from having any influence in the company's affairs. Read more

Strategy

To continually improve sales and profitability, EMS strives to achieve growth organically by increasing its number of patients/transports, as well as improving revenue per patient/transport. In addition, the firm has had success supplementing organic growth with strategic acquisitions to bolster its geographic footprint or add to its EmCare service offerings. Read more

Management

We award EMS a poor Stewardship Grade because of significant barriers to change and a number of related-party transactions. The extent of Onex Partners' ownership in the company seriously inhibits change from outside shareholders, as the private-equity firm controls over 90% of the voting power. Read more

Profile

Emergency Medical Services, through its American Medical Response (AMR) and EmCare units, is a national provider of emergency services. AMR, the industry leader for ambulance services in the U. Read more

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