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

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Apr 11, 2023 25 likes •349 views

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

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Chart 1

Analysis of EVHC and Rural/Metro

Bryce R. Cook

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Chart 2

 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

Bryce Cook Qualifications

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Chart 3

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

Navigant Assignment

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Assessing Financial Health

Chart 4

Performance

Sales growth
Profitability
Cash flow

Solvency

Ability to meet long-

term financial commitments

Manageable debt load
Sufficient equity

Liquidity

Ability to pay short-

term obligations

Cash on hand
Cash conversion cycle

Income Statement Cash Flow Statement Balance Sheet Balance Sheet Cash Flow Statement

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Basics – Ambulance Operations

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Measure

AMR1 R/M2

Patient transports

2.8 million 1.5 million

States

41 21

Number of contracts Emergency

169 90

Non-emergency

3,600 800

Employees

18,000 10,000

Revenue

$1.37 billion $ 570 million

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. AMR 04068

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Assessing Financial Health

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Performance

Sales growth
Profitability
Cash flow

Income Statement Cash Flow Statement

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Performance

EVHC Net Revenue (billions)

Chart 7

$3.1 $3.3 $3.7 $4.2 2011 2012 2013 2014P

2014 is annualized from six months of operations through June 30, 2014. AMR 04070

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Performance

EVHC Net Income (millions)

Chart 8

$24.6 $41.2 $6.0 $45.7 2011 2012 2013 2014P

Down due to costs of early debt retirement 2014 is annualized from six months of operations through June 30, 2014. AMR 04071

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Performance

EVHC Operating Income Margin

Chart 9

6.7% 7.8% 7.4% 7.7% 2011 2012 2013 June 30, 2014

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Performance

EVHC Operating Income (millions)

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$207 $257 $277 $323 2011 2012 2013 2014P

2014 is annualized from six months of operations through June 30, 2014. AMR 04073

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Performance

EVHC Operating Cash Flow (millions)

Chart 11

$182.8 $216.4 $54.1 $187.9 2011 2012 2013 2014P

Down due to: increased receivables as a result of CMS processing delays; payment of short-term liabilities 2014 is annualized from six months of operations through June 30, 2014. AMR 04074

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Performance

Analysts’ Outlook

Chart 12

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Performance

Analysts’ Outlook

Chart 13

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Performance

Analysts’ Outlook

Chart 14

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Assessing Financial Health

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Solvency

Ability to meet long-term

financial commitments

Manageable debt load
Sufficient equity

Balance Sheet

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Solvency

EVHC Total Assets (billions)

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$4.0 $4.0 $4.3 $4.5 2011 2012 2013 June 30, 2014

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Solvency

EVHC Capitalization (billions)

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$3.1 $3.5 $2.7 $2.8 $0.9 $0.5 $1.6 $1.6

2011 2012 2013 June 30, 2014

$1.0 billion from IPO, paid down debt

Equity Debt

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Chart 18

77% 86% 63% 63% 23% 14% 37% 37%

2011 2012 2013 June 30, 2014

Equity Debt

Solvency

EVHC Capitalization %

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Solvency

EVHC – Credit Rating Upgrades

Chart 19

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Assessing Financial Health

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Liquidity

Ability to pay short-term
bligations
Cash on hand
Cash conversion cycle

Balance Sheet Cash Flow Statement

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Liquidity

EVHC Current Ratio

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1.57 2.40 2.37 2012 2013 June 30, 2014

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Liquidity

EVHC Cash Balance (millions)

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$134 $58 $205 $163 2011 2012 2013 June 30, 2014

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 EVHC is financially sound.  EVHC can be reasonably expected to exhibit strong financial performance into the future.

Navigant Findings and Conclusions

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Comparison Analysis

Chart 24

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Comparison Analysis

Projected Net Revenue (billions)

1 Source: Jefferies Equity Research Americas, June 10, 2014 EVHC Company Update 2 Source: Rural Metro financial projections filed in U.S. Bankruptcy Court.

$3.3 $3.7 $4.3 $4.9

2012 2013 2014P 2015P

EVHC

$0.67 $0.62 $0.63 $0.65 2014P 2015P 2016P 2017P

Rural/Metro

Expected growth of 16% in 2014 and 14% in 2015. Exceeded 2014 expectations with Q2 results.1 “1.9% per year…coupled with a 10% reduction in revenue in CY2015 based upon a reduction in transports due to lost contracts in markets with near term expiration/renewal dates.”2

Chart 25

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Comparison Analysis

Quarterly Operating Income Margin

8.6% 6.7% 8.7%

Q4 2013 Q1 2014 Q2 2014

EVHC

0.9%
2.6%

2.0% Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Chart 26

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Comparison Analysis

Quarterly Operating Cash Flow (000s)

$29,602 $30,220 $63,720

Q4 2013 Q1 2014 Q2 2014

EVHC

$(21,585)

$(6,270) $11,009

Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Chart 27

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Comparison Analysis

Quarterly Cash-Flow-to-Capex Ratio

1.45 2.82 2.80 Q4 2013 Q1 2014 Q2 2014

EVHC

(2.28) (1.06) 2.02 Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Chart 28

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Comparison Analysis

Quarterly Interest-Coverage Ratio

2.22 2.27 3.21

Q4 2013 Q1 2014 Q2 2014

EVHC

(0.12) (0.45) 0.35

Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Chart 29

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Comparison Analysis

Quarterly Equity Percentage

37% 38% 37%

Q4 2013 Q1 2014 Q2 2014

EVHC

12% 11% 11%

Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Chart 30

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Comparison Analysis

Quarterly Z”-Score

2.0 2.1 2.0

Q4 2013 Q1 2014 Q2 2014

EVHC 1.1 1.0 1.0

Q4 2013 Q1 2014 Q2 2014

Rural/Metro

Distress Zone < 1.1

Chart 31

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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.

Navigant Findings and Conclusions

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