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Envision Healthcare Reports 2014 Adjusted EPS Growth of 76.5% to $1.20, Adjusted EBITDA Growth of 24.8% to $556.2 Million, on 18.0% Revenue GrowthEnvision Healthcare Holdings, Inc. (NYSE: EVHC) (Envision or Company) reported results from operations for the three months and 12 months ended December 31, 2014. All comparisons included in this release are for fourth quarter or calendar year 2014 to the comparable 2013 period, unless otherwise noted. Fourth Quarter and 2014 Highlights:
"2014 was another solid year of revenue and EBITDA growth, one that continues to be driven by a combination of new contract wins, expanded service offerings and contributions from acquisitions," said William A. Sanger, chairman, president and chief executive officer. "Our consolidated revenue growth for the quarter of 18% included 13% organic revenue from net new contract wins and same store growth. Our Adjusted EBITDA growth for the quarter of 34% was the result of revenue growth, coupled with a sustained focus on improving operating efficiencies. For 2015, we anticipate our year over year net revenue growth rate to accelerate due to recently announced transactions and our robust organic and acquisition pipeline. We are confident our performance will remain strong as we develop and deliver innovative offerings to improve care delivery for patients, hospitals, health plans and communities while attracting more providers to our organization." Results of Operations for the Fourth Quarter 2014 For the fourth quarter of 2014, Envision generated net revenue of $1.16 billion, an increase of 17.6%. Adjusted EBITDA was $156.6 million, an increase of 33.6%. This was primarily attributable to the impact of net new contract wins, improved volumes, a favorable shift in payor mix, effective expense control and acquisitions completed over the previous 12 months. Adjusted EBITDA now excludes transaction costs related to acquisition activities. During the fourth quarter of 2014, the Company incurred $1.8 million of transaction costs, compared to $0.3 million in the 2013 period. Income from operations was $113.1 million, an increase of 33.6%. Envision generated net income of $49.9 million, compared to net income of $7.9 million. The increase in net income was primarily attributable to an increase in income from operations and the net impact of debt structure changes in 2013 and 2014. Segment Results for the Fourth Quarter 2014 Envision operates two business segments: EmCare Holdings, Inc. (EmCare), the Company's facility-based and post-acute care physician services segment and American Medical Response, Inc. (AMR), the Company's healthcare transportation services segment. EmCare EmCare generated net revenue of $759.8 million, an increase of 20.7%. Organic revenue growth was 15.5%, driven by an increase of 10.2% from net new contracts and an increase of 5.3% from same store contracts. Acquisition revenue growth was 5.2%. On a same store basis, net revenue grew 5.9% from higher volume. While the net rate was unchanged quarter over quarter, combined rates for emergency department and hospitalist service lines increased 2.9%, offset by lower rates in other service lines. Adjusted EBITDA was $102.5 million, an increase of 36.1%. The increase in Adjusted EBITDA was primarily driven by revenue increases from net new contracts, same store revenue growth, acquisitions, favorable compensation and benefits and insurance as a percentage of revenue. American Medical Response AMR generated net revenue of $398.0 million, an increase of 12.0%. Organic revenue growth increased 8.3%, driven by 1.7% from net new contract wins and 6.6% in existing markets. Acquisition revenue growth was 3.7%. On an existing market basis, net revenue grew 7.3%, including a 6.5% volume increase, primarily due to additional volumes in both Medicaid expansion and non-expansion states and a 0.8% revenue increase per weighted transport. Adjusted EBITDA was $54.1 million, an increase of 29.2%. The increase was attributable to revenue increases and the actualization of cost improvements, primarily driven by deployment, staffing and operating efficiencies as well as lower fuel costs. Cash Flows for the Fourth Quarter 2014 Cash provided by operating activities was $80.0 million, compared to $28.5 million. This improvement was driven by an increase in net income, improved cash collections and a decrease in cash interest payments in 2014. Net cash used in investing activities was $12.2 million, compared to $28.6 million. Net cash provided by financing activities was $3.9 million, compared to cash used in financing activities of $371.0 million. This was primarily due to the 2013 net impact to redeem a portion of outstanding debt. At December 31, 2014, there were no amounts outstanding under the ABL Facility. Adjusted Free Cash Flow was $56.2 million, compared to $4.6 million. Results of Operations for the Full Year 2014 Envision net revenue was $4.40 billion, an increase of 18.0%. Adjusted EBITDA was $556.2 million, an increase of 24.8%. This increase was primarily attributable to the impact of increased revenue from net new contracts and existing contracts, effective expense controls, healthcare reform and acquisitions completed over the past 12 months. During the year, the Company incurred $5.0 million of transaction costs, compared to $1.4 million in 2013. Income from operations was $388.5 million, an increase of 40.4%. Envision generated net income of $125.5 million, compared to net income of $6.0 million. The increase in net income was primarily attributable to an increase in income from operations and the net impact of debt retirements in 2013 and refinancing in 2014. Segment Results for the Full Year 2014 EmCare's net revenue was $2.84 billion, an increase of 20.5%. Adjusted EBITDA was $363.3 million, an increase of 23.6%. AMR's net revenue was $1.56 billion, an increase of 13.6%. Adjusted EBITDA was $192.9 million, an increase of 27.1%. Cash Flows for the Full Year 2014 Cash provided by operating activities was $274.0 million, compared to $54.1 million. The change was primarily driven by improvements in net income, improved cash collections, lower interest payments in 2014 and non-recurring outflows in 2013. Net cash used in investing activities was $276.8 million, compared to $98.6 million. The increase in cash used for investing was primarily driven by acquisitions which were $181.6 million, compared to $35.1 million. Net cash provided by financing activities was $117.0 million, compared to $191.4 million. This was primarily due to the 2013 net impact of our initial public offering and bond refinancing. Adjusted Free Cash Flow was $223.4 million compared to $48.9 million. 2015 Guidance The Company reaffirms its recently issued guidance for 2015 of Adjusted EBITDA of $653 million to $665 million, which would be approximately 17% to 20% higher than results for 2014, and Adjusted EPS of $1.42 to $1.50 for 2015. Conference Call Envision management will host a conference call today, Thursday, February 26, 2015, at 5 p.m. Eastern Time, to discuss the Company's financial results. Interested participants may listen to the call by dialing 800-857-6466, or 517-623-4761 for international callers, and referencing participant code 60012 approximately 15 minutes prior to the call. For those unable to participate in the live call, a replay will be available one hour after the call ends through March 25, 2015. The numbers for the replay have been revised since our initial announcement. To access the replay, dial 800-759-4057, or 402-998-0479 for international callers, and enter access code 6802. An audio file will also be archived for 30 days on the investor relations section of the Company's website: investor.evhc.net. About Envision Healthcare Holdings, Inc. Envision Healthcare Holdings, Inc., and our more than 34,000 employees and affiliated clinicians, offers an array of healthcare related services to consumers, hospitals, healthcare systems, health plans and local, state and national government entities. Through Envision Healthcare Corporation, we operate American Medical Response, Inc. (AMR), EmCare Holdings, Inc. (EmCare) and Evolution Health, LLC (Evolution Health). AMR is a provider and manager of community-based medical transportation services, including emergency ('911'), non-emergency, managed transportation, fixed-wing air ambulance and disaster response. EmCare is a provider of integrated facility-based physician services, including emergency, anesthesiology, hospitalist/inpatient care, radiology, tele-radiology and surgery. Evolution Health provides comprehensive care to patients across various settings, many of whom suffer from advanced illnesses and chronic diseases. We are headquartered in Greenwood Village, Colorado. For additional information, visit www.evhc.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 2015 Adjusted EBITDA and Adjusted EPS guidance, 2015 performance, 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 Envision 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 Envision's filings with the U.S. Securities and Exchange Commission from time to time, including in the section entitled "Risk Factors" in the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, the Company's Annual Report on Form 10-K for the year ended December 31, 2014 to be filed hereafter, and subsequent periodic reports. Among the factors that could cause future results to differ materially from those provided in this press release are: decreases in our revenue and profit margin under our fee-for-service contracts due to changes in volume, payor mix and third party reimbursement rates, including from political discord in the federal budgeting process; the loss of existing contracts; failure to accurately assess costs under new contracts; difficulties in our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; failure to implement some or all of our business strategies, including our efforts to grow our Evolution Health business and cross-sell our services; lawsuits for which we are not fully reserved; the adequacy of our insurance coverage and insurance reserves; our ability to successfully integrate strategic acquisitions; the high level of competition in the markets we serve; 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; our ability to maintain or implement complex information systems; disruptions in disaster recovery systems, management continuity planning, or information systems; our ability to adequately protect our intellectual property and other proprietary rights or to defend against intellectual property infringement claims; challenges by tax authorities on our treatment of certain physicians as independent contractors; the impact of labor union representation; the impact of fluctuations in results due to our national contract with FEMA; potential penalties or changes to our operations, including our ability to collect accounts receivable if we fail to comply with extensive and complex government regulation of our industry; the impact of changes in the healthcare industry, including changes due to healthcare reform; our ability to timely enroll our providers in the Medicare program; our ability to restructure our operations to comply with future changes in government regulation; the outcome of government investigations of certain of our business practices; our ability to comply with the terms of our settlement agreements with the government; our ability to generate cash flow to service our substantial debt obligations; the significant influence of investment funds sponsored by, or affiliated with, Clayton, Dubilier & Rice, LLC over us. Non-GAAP Financial Measures Description and Reconciliation This press release includes presentations of Adjusted EBITDA, Adjusted Free Cash Flow and Adjusted EPS, which are not financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP). Adjusted EBITDA is defined as net income (loss) before equity in earnings of unconsolidated subsidiary, income tax benefit (expense), loss on early debt extinguishment, other income (expense), net, realized gains (losses) on investments, interest expense, net, equity-based compensation expense, transaction costs related to acquisition activities, related party management fees, restructuring charges, adjustment to net loss (income) attributable to non-controlling interest due to deferred taxes, and depreciation and amortization expense. Adjusted Free Cash Flow is defined as cash flow from operations adjusted for cash used in non-acquisition related investing activities and certain out-of-period or non-recurring cash payments. Adjusted EPS is defined as diluted earnings per share adjusted for expenses related to the Company's secondary offerings, amortization expense, equity-based compensation expense, restructuring charges and loss on early debt extinguishment, net of an estimated tax benefit. These non-GAAP financial measures are commonly used by management and investors as performance measures or liquidity indicators. However, the items excluded from these non-GAAP financial measures are significant components in understanding and assessing the Company's financial performance, and as a result, these measures 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 the Company's consolidated financial statements as an indicator of financial performance or liquidity. Since these non-GAAP financial measures 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. Reconciliations of non-GAAP financial measures are provided in this press release. Reconciliation for the forward-looking full-year 2015 Adjusted EBITDA and Adjusted EPS projections presented herein is not being provided due to the number of variables in the projected full-year 2015 Adjusted EBITDA and Adjusted EPS ranges and thus the Company does not currently have sufficient data to accurately estimate the individual adjustments for such reconciliation.
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