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Analysis of EVHC and Rural/Metro Bryce R. Cook Chart 1 AMR 04065 - PowerPoint PPT Presentation

AMR 04064 Analysis of EVHC and Rural/Metro Bryce R. Cook Chart 1 AMR 04065 Bryce Cook Qualifications Director at Navigant Consulting, Inc. B.S. in business management with concentration in finance M.B.A. with concentration in


  1. AMR 04064 Analysis of EVHC and Rural/Metro Bryce R. Cook Chart 1

  2. AMR 04065 Bryce Cook Qualifications  Director at Navigant Consulting, Inc.  B.S. in business management with concentration in finance  M.B.A. with concentration in finance and economics  Certified Management Accountant  Member of the National Association of Certified Valuation Analysts  Member of Licensing Executive Society  27 years of consulting experience Chart 2

  3. AMR 04066 Navigant Assignment 1. Analyze current financial health of EVHC 2. Assess ongoing financial viability of EVHC 3. Compare EVHC and Rural/Metro’s financial health Chart 3

  4. AMR 04067 Assessing Financial Health Performance • Sales growth • Profitability • Cash flow Income Statement Cash Flow Statement Solvency Liquidity • Ability to meet long- • Ability to pay short- term financial term obligations commitments • Cash on hand • Manageable debt load • Cash conversion cycle • Sufficient equity Balance Sheet Balance Sheet Cash Flow Statement Chart 4

  5. AMR 04068 Basics – Ambulance Operations AMR 1 R/M 2 Measure 2.8 million 1.5 million Patient transports 41 21 States Number of contracts 169 90 Emergency 3,600 800 Non-emergency 18,000 10,000 Employees $1.37 billion $ 570 million Revenue 1 Source: EVHC 2013 10-K, pp. 19-24 2 Source: R/M website at “About” and “History,” except for AMB revenue which is the 2014 projection from its Plan of Reorganization. Number of employees includes Fire segment. Chart 5

  6. AMR 04069 Assessing Financial Health Performance • Sales growth • Profitability • Cash flow Income Statement Cash Flow Statement Chart 6

  7. AMR 04070 Performance EVHC Net Revenue (billions) $4.2 $3.7 $3.3 $3.1 2011 2012 2013 2014P 2014 is annualized from six months of operations through June 30, 2014. Chart 7

  8. AMR 04071 Performance EVHC Net Income (millions) $45.7 $41.2 Down due to costs of early $24.6 debt retirement $6.0 2011 2012 2013 2014P 2014 is annualized from six months of operations through June 30, 2014. Chart 8

  9. AMR 04072 Performance EVHC Operating Income Margin 7.8% 7.7% 7.4% 6.7% 2011 2012 2013 June 30, 2014 Chart 9

  10. AMR 04073 Performance EVHC Operating Income (millions) $323 $277 $257 $207 2011 2012 2013 2014P 2014 is annualized from six months of operations through June 30, 2014. Chart 10

  11. AMR 04074 Performance EVHC Operating Cash Flow (millions) $216.4 $187.9 Down due to: $182.8 increased receivables as a result of CMS processing delays; payment of short-term liabilities $54.1 2011 2012 2013 2014P 2014 is annualized from six months of operations through June 30, 2014. Chart 11

  12. AMR 04075 Performance Analysts’ Outlook Chart 12

  13. AMR 04076 Performance Analysts’ Outlook Chart 13

  14. AMR 04077 Performance Analysts’ Outlook Chart 14

  15. AMR 04078 Assessing Financial Health Solvency • Ability to meet long-term financial commitments • Manageable debt load • Sufficient equity Balance Sheet Chart 15

  16. AMR 04079 Solvency EVHC Total Assets (billions) $4.5 $4.3 $4.0 $4.0 2011 2012 2013 June 30, 2014 Chart 16

  17. AMR 04080 Solvency EVHC Capitalization (billions) $1.0 billion from IPO, paid down debt $1.6 $1.6 $0.5 Equity $0.9 $3.5 Debt $3.1 $2.8 $2.7 2011 2012 2013 June 30, 2014 Chart 17

  18. AMR 04081 Solvency EVHC Capitalization % 14% 23% Equity 37% 37% Debt 86% 77% 63% 63% 2011 2012 2013 June 30, 2014 Chart 18

  19. AMR 04082 Solvency EVHC – Credit Rating Upgrades Chart 19

  20. AMR 04083 Assessing Financial Health Liquidity • Ability to pay short-term obligations • Cash on hand • Cash conversion cycle Balance Sheet Cash Flow Statement Chart 20

  21. AMR 04084 Liquidity EVHC Current Ratio 2.40 2.37 1.57 2012 2013 June 30, 2014 Chart 21

  22. AMR 04085 Liquidity EVHC Cash Balance (millions) $205 $163 $134 $58 2011 2012 2013 June 30, 2014 Chart 22

  23. AMR 04086 Navigant Findings and Conclusions  EVHC is financially sound.  EVHC can be reasonably expected to exhibit strong financial performance into the future. Chart 23

  24. AMR 04087 Comparison Analysis Chart 24

  25. AMR 04088 Comparison Analysis Projected Net Revenue (billions) EVHC Rural/Metro $4.9 $4.3 “ 1.9% per year …coupled with a 10% reduction in revenue in CY2015 based $3.7 upon a reduction in transports due to $3.3 lost contracts in markets with near term expiration/renewal dates.” 2 $0.67 $0.65 $0.63 $0.62 Expected growth of 16% in 2014 and 14% in 2015 . Exceeded 2014 expectations with Q2 results. 1 2012 2013 2014P 2015P 2014P 2015P 2016P 2017P 1 Source: Jefferies Equity Research Americas, June 10, 2014 EVHC Company Update 2 Source: Rural Metro financial projections filed in U.S. Bankruptcy Court. Chart 25

  26. AMR 04089 Comparison Analysis Quarterly Operating Income Margin EVHC Rural/Metro 8.6% 8.7% 6.7% 2.0% -0.9% -2.6% Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 26

  27. AMR 04090 Comparison Analysis Quarterly Operating Cash Flow (000s) EVHC Rural/Metro $63,720 $30,220 $29,602 $11,009 $(6,270) $(21,585) Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 27

  28. AMR 04091 Comparison Analysis Quarterly Cash-Flow-to-Capex Ratio EVHC Rural/Metro 2.82 2.80 2.02 1.45 (1.06) (2.28) Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 28

  29. AMR 04092 Comparison Analysis Quarterly Interest-Coverage Ratio EVHC Rural/Metro 3.21 2.27 2.22 0.35 (0.12) (0.45) Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 29

  30. AMR 04093 Comparison Analysis Quarterly Equity Percentage EVHC Rural/Metro 38% 37% 37% 12% 11% 11% Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 30

  31. AMR 04094 Comparison Analysis Quarterly Z”-Score EVHC Rural/Metro Distress Zone < 1.1 2.1 2.0 2.0 1.1 1.0 1.0 Q4 2013 Q1 2014 Q2 2014 Q4 2013 Q1 2014 Q2 2014 Chart 31

  32. AMR 04095 Navigant Findings and Conclusions 1. EVHC is financially sound and can be reasonably expected to exhibit continued strong financial performance into the future. 2. EVHC exhibits stronger financial condition and operating performance than RM as measured by operating profit margins, revenue growth and debt level. 3. EVHC’s ongoing viability is significantly more secure than RM as measured by solvency ratios, liquidity ratios and the Altman Z”-Score indicator. Chart 32

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