Edgar Filing: Emergency Medical Services L.P.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended March 31, 2010

	Or

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file numbers:

001-32701

333-127115

EMERGENCY MEDICAL SERVICES CORPORATION

EMERGENCY MEDICAL SERVICES L.P.

(Exact name of Registrants as Specified in their Charters)

		20-3738384
Delaware		20-2076535
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification Numbers)

6200 S. Syracuse Way, Suite 200
Greenwood Village, CO		80111
(Address of principal executive offices)		(Zip Code)

Registrants’ telephone number, including area code: 303-495-1200

Former name, former address and former fiscal year, if changed since last report:

Not applicable

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o		Smaller reporting company o
(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange act). Yes o No x

Shares of class A common stock outstanding at April 29, 2010 — 30,129,904; shares of class B common stock outstanding at April 29, 2010 — 65,052; LP exchangeable units outstanding at April 29, 2010 — 13,724,676.

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EMERGENCY MEDICAL SERVICES CORPORATION

INDEX TO QUARTERLY REPORT

ON FORM 10-Q

FOR THE THREE MONTHS ENDED

MARCH 31, 2010

Part 1. Financial Information			3

	Item 1.	Financial Statements (Unaudited):	3

		Consolidated Statements of Operations and Comprehensive Income	3

		Consolidated Balance Sheets	4

		Consolidated Statements of Cash Flows	5

		Notes to Unaudited Consolidated Financial Statements	6

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17

	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24

	Item 4.	Controls and Procedures	24

Part II. Other Information			25

	Item 1.	Legal Proceedings	25

	Item 1A.	Risk Factors	25

	Item 6.	Exhibits	26

Signatures			27

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EMERGENCY MEDICAL SERVICES CORPORATION

PART I. FINANCIAL INFORMATION

FOR THE THREE MONTHS ENDED

MARCH 31, 2010

ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)

Emergency Medical Services Corporation

Consolidated Statements of Operations and Comprehensive Income

(unaudited; in thousands, except share and per share data)

	Quarter ended March 31,
	Quarter ended March 31,
	2010			2009
Net revenue	$	679,354		$	613,022
Compensation and benefits	480,317			426,534
Operating expenses	86,529			84,672
Insurance expense	22,070			22,504
Selling, general and administrative expenses	16,858			15,036
Depreciation and amortization expense	16,180			16,768
Income from operations	57,400			47,508
Interest income from restricted assets	855			1,266
Interest expense	(8,266		)	(10,190		)
Realized gain on investments	92			639
Interest and other income	265			517
Income before income taxes and equity in earnings of unconsolidated subsidiary	50,346			39,740
Income tax expense	(19,410		)	(15,726		)
Income before equity in earnings of unconsolidated subsidiary	30,936			24,014
Equity in earnings of unconsolidated subsidiary	94			57
Net income	31,030			24,071
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) during the period	442			(1,157		)
Unrealized gains on derivative financial instruments	478			351
Comprehensive income	$	31,950		$	23,265

Basic earnings per common share	$	0.71		$	0.57
Diluted earnings per common share	$	0.70		$	0.56
Weighted average common shares outstanding, basic	43,571,705			41,924,218
Weighted average common shares outstanding, diluted	44,534,858			43,094,597

The accompanying notes are an integral part of these financial statements.

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Emergency Medical Services Corporation

Consolidated Balance Sheets

(in thousands, except share and per share data)

	March 31, 2010		December 31, 2009
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	381,055	$	332,888
Insurance collateral	26,127		24,986
Trade and other accounts receivable, net	456,897		459,088
Parts and supplies inventory	22,467		22,270
Prepaids and other current assets	23,050		19,662
Current deferred tax assets	6,090		6,323
Total current assets	915,686		865,217
Non-current assets:
Property, plant and equipment, net	122,556		125,855
Intangible assets, net	128,448		102,654
Non-current deferred tax assets	13,508		13,468
Insurance collateral	140,821		143,886
Goodwill	351,979		381,951
Other long-term assets	23,044		21,676
Total assets	$	1,696,042	$	1,654,707
Liabilities and Equity
Current liabilities:
Accounts payable	$	68,417	$	70,759
Accrued liabilities	262,289		273,704
Current portion of long-term debt	5,368		4,676
Total current liabilities	336,074		349,139
Long-term debt	448,610		449,254
Insurance reserves and other long-term liabilities	177,234		170,227
Total liabilities	961,918		968,620
Equity:
Preferred stock ($0.01 par value; 20,000,000 shares authorized, 0 issued and outstanding)	—		—
Class A common stock ($0.01 par value; 100,000,000 shares authorized, 30,126,263 and 29,541,411 issued and outstanding in 2010 and 2009, respectively)	301		295
Class B common stock ($0.01 par value; 40,000,000 shares authorized, 65,052 issued and outstanding in 2010 and 2009)	1		1
Class B special voting stock ($0.01 par value; 1 share authorized, issued and outstanding in 2010 and 2009)	—		—
LP exchangeable units (13,724,676 shares issued and outstanding in 2010 and 2009)	90,776		90,776
Additional paid-in capital	291,397		275,316
Retained earnings	350,072		319,042
Accumulated other comprehensive income	1,577		657
Total equity	734,124		686,087
Total liabilities and equity	$	1,696,042	$	1,654,707

The accompanying notes are an integral part of these financial statements.

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Emergency Medical Services Corporation

Consolidated Statements of Cash Flows

(unaudited; in thousands)

	Quarter ended March 31,
	2010			2009
Cash Flows from Operating Activities
Net income	$	31,030		$	24,071
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	16,687			17,080
Loss (gain) on disposal of property, plant and equipment	44			(2		)
Equity-based compensation expense	1,104			650
Excess tax benefits from stock-based compensation	(10,581		)	—
Equity in earnings of unconsolidated subsidiary	(94		)	(57		)
Dividends received	403			713
Deferred income taxes	(133		)	14,595
Changes in operating assets/liabilities, net of acquisitions:
Trade and other accounts receivable	2,191			(2,625		)
Parts and supplies inventory	(162		)	(20		)
Prepaids and other current assets	(3,388		)	(7,840		)
Accounts payable and accrued liabilities	6,006			(8,500		)
Insurance accruals	1,478			3,877
Net cash provided by operating activities	44,585			41,942
Cash Flows from Investing Activities
Purchases of property, plant and equipment	(6,516		)	(7,207		)
Proceeds from sale of property, plant and equipment	42			21
Acquisition of businesses, net of cash received	(3,300		)	—
Net change in insurance collateral	2,366			13,310
Other investing activities	290			(670		)
Net cash (used in) provided by investing activities	(7,118		)	5,454
Cash Flows from Financing Activities
EMSC issuance of class A common stock	4,402			898
Repayments of capital lease obligations and other debt	(1,184		)	(1,159		)
Excess tax benefits from stock-based compensation	10,581			—
Net change in bank overdrafts	(3,099		)	840
Net cash provided by financing activities	10,700			579
Change in cash and cash equivalents	48,167			47,975
Cash and cash equivalents, beginning of period	332,888			146,173
Cash and cash equivalents, end of period	$	381,055		$	194,148

The accompanying notes are an integral part of these financial statements.

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Emergency Medical Services Corporation

Notes to Unaudited Consolidated Financial Statements

(in thousands, except share and per share data)

1. General

Basis of Presentation of Financial Statements

The accompanying interim consolidated financial statements for Emergency Medical Services Corporation (“EMSC” or the “Company”) have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim reporting and accordingly, do not include all of the disclosures required for annual financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included. All such adjustments are of a normal, recurring nature. Operating results for the three months ended March 31, 2010 are not necessarily indicative of the results that may be expected for the full year ending December 31, 2010. For further information, see the Company’s consolidated financial statements, including the accounting policies and notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2009.

The consolidated financial statements of EMSC include those of its direct subsidiary, Emergency Medical Services L.P. (“EMS LP”), a Delaware limited partnership. The Company’s business is conducted primarily through two operating subsidiaries, American Medical Response, Inc. (“AMR”), its healthcare transportation services segment, and EmCare Holdings Inc. (“EmCare”), its facility-based physician services segment.

The Company is party to a management agreement with a wholly-owned subsidiary of Onex Corporation, the Company’s principal equityholder. In exchange for an annual management fee of $1.0 million, the Onex subsidiary provides the Company with corporate finance and strategic planning consulting services. For each of the three months ended March 31, 2010 and 2009, the Company expensed $250 in respect of this fee.

2. Summary of Significant Accounting Policies

Consolidation

The consolidated financial statements include all wholly-owned subsidiaries of EMSC, including AMR and EmCare and their respective subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements requires management to make estimates and assumptions relating to the reporting of results of operations, financial condition and related disclosure of contingent assets and liabilities at the date of the financial statements. Actual results may differ from those estimates under different assumptions or conditions.

Insurance

Insurance collateral is comprised principally of government and investment grade securities and cash deposits with third parties and supports the Company’s insurance program and reserves. Certain of these investments, if sold or otherwise liquidated, would have to be replaced by other suitable financial assurances and are, therefore, considered restricted.

Insurance reserves are established for automobile, workers compensation, general liability and professional liability claims utilizing policies with both fully-insured and self-insured components. This includes the use of an off-shore captive insurance program through a wholly-owned subsidiary for certain professional liability (malpractice) programs for EmCare. In those instances where the Company has obtained third-party insurance coverage, the Company normally retains liability for the first $1 to $2 million of the loss. Insurance reserves cover known claims and incidents within the level of Company retention that may result in the assertion of additional claims, as well as claims from unknown incidents that may be asserted arising from activities through the balance sheet date.

The Company establishes reserves for claims based upon an assessment of actual claims and claims incurred but not reported. The reserves are established based on quarterly consultation with third-party independent actuaries using actuarial principles and assumptions that consider a number of factors, including historical claim payment patterns (including legal costs) and changes in case reserves and the assumed rate of inflation in healthcare costs and property damage repairs.

The Company’s most recent actuarial valuation was completed in March 2010. As a result of this and previous actuarial valuations, the Company recorded a decrease in its provisions for insurance liabilities of approximately $2.8 million in the three months ended March 31, 2010 compared to an increase of $0.7 million during the same period in 2009 related to

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reserves for losses in prior years.

The long-term portion of insurance reserves was $150.2 million and $143.6 million as of March 31, 2010 and December 31, 2009, respectively.

Trade and Other Accounts Receivable, net

The Company determines its allowances based on payor reimbursement schedules, historical write-off experience and other economic data. The allowances for contractual discounts and uncompensated care are reviewed monthly. Account balances are charged off against the uncompensated care allowance when it is probable the receivable will not be recovered. Write-offs to the contractual allowance occur when payment is received. The allowance for uncompensated care is related principally to receivables recorded for self-pay patients. The Company’s accounts receivable and allowances are as follows:

	March 31, 2010		December 31, 2009
Gross trade accounts receivable	$	1,973,460	$	1,955,152
Allowance for contractual discounts	1,026,073		1,001,285
Allowance for uncompensated care	569,385		572,015
Net trade accounts receivable	378,002		381,852
Other receivables, net	78,895		77,236
Net accounts receivable	$	456,897	$	459,088

Other receivables represent EmCare hospital subsidies and fees and AMR fees for stand-by and special events and subsidies from community organizations.

AMR contractual allowances are determined primarily on payor reimbursement schedules that are included and regularly updated in the billing systems, and by historical collection experience. The billing systems calculate the difference between payor specific gross billings and contractually agreed to, or governmentally driven, reimbursement rates. The allowance for uncompensated care at AMR is related principally to receivables recorded for self-pay patients. AMR’s allowances on self-pay accounts receivable are estimated on claim level, historical write-off experience.

Accounts receivable allowances at EmCare are estimated based on cash collection and write-off experience at a facility level contract and facility specific payor mix. These allowances are reviewed and adjusted monthly through revenue provisions. In addition, a look-back analysis is done, typically after 15 months, to compare actual cash collected on a date of service basis to the revenue recorded for that period. Any adjustment necessary for an overage or deficit in these allowances based on actual collections is recorded through a revenue adjustment in the current period.

Revenue Recognition

Revenue is recognized at the time of service and is recorded net of provisions for contractual discounts and estimated uncompensated care. Provisions for contractual discounts and estimated uncompensated care as a percentage of gross revenue and as a percentage of gross revenue less provision for contractual discounts are as follows:

	Quarter ended March 31,
	2010		2009
Gross revenue	100.0	%	100.0	%
Provision for contractual discounts	52.1	%	47.9	%
Revenue net of contractual discounts	47.9	%	52.1	%
Provision for uncompensated care as a percentage of gross revenue	18.8	%	19.6	%
Provision for uncompensated care as a percentage of gross revenue less contractual discounts	39.2	%	37.7	%

Healthcare reimbursement is complex and may involve lengthy delays. Third-party payors are continuing their efforts to control expenditures for healthcare, including proposals to revise reimbursement policies. The Company has from time to time experienced delays in reimbursement from third-party payors. In addition, third-party payors may disallow, in whole or in part, claims for reimbursement based on determinations that certain amounts are not reimbursable under plan coverage, on determinations of medical necessity, or the need for additional information. Laws and regulations governing the Medicare and Medicaid programs are very complex and subject to interpretation. Revenue is recognized on an estimated basis in the period in which related services are rendered. As a result, there is a reasonable possibility that recorded estimates will

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change materially in the short-term. Such amounts, including adjustments between provisions for contractual discounts and uncompensated care, are adjusted in future periods, as adjustments become known. These adjustments were less than 1% of net revenue for the three month periods ended March 31, 2010 and 2009.

The Company also provides services to patients who have no insurance or other third-party payor coverage. In certain circumstances, federal law requires providers to render services to any patient who requires emergency care regardless of their ability to pay.

Equity Structure

On December 21, 2005, the Company effected a reorganization and issued 8.1 million shares of class A common stock in an initial public offering. Pursuant to the reorganization, EMS LP, the former top-tier holding company of AMR and EmCare, became the consolidated subsidiary of EMSC, a newly formed corporation. To effect the reorganization, the holders of the capital stock of the sole general partner of EMS LP contributed that capital stock to the Company in exchange for class B common stock; the general partner was merged into the Company and the Company became the sole general partner of EMS LP. Concurrently, the holders of class B units of EMS LP contributed their units to the Company in exchange for shares of the Company’s class A common stock, and the holders of certain class A units of EMS LP contributed their units to the Company in exchange for shares of the Company’s class B common stock.

As of March 31, 2010, the Company holds 68.7% of the equity interests in EMS LP. LP exchangeable units, held by persons affiliated with the Company’s principal equity holder, represent the balance of the EMS LP equity. The LP exchangeable units are exchangeable at any time, at the option of the holder, for shares of the Company’s class B common stock on a one-for-one basis. The holders of the LP exchangeable units have the right to vote, through the trustee holder of the Company’s class B special voting stock, at all stockholder meetings at which holders of the Company’s class B common stock or class B special voting stock are entitled to vote.

In the EMS LP partnership agreement, the Company has agreed to maintain the economic equivalency of the LP exchangeable units and the class B common stock, and the holders of the LP exchangeable units have no general voting rights. The LP exchangeable units, when considered with the class B special voting stock, have the same rights, privileges and characteristics of the Company’s class B common stock. The LP exchangeable units are intended to be economically equivalent to the class B common stock of the Company in that the LP exchangeable units carry the right to vote (by virtue of the class B special voting stock) with the holders of class B common stock as one class, and entitle holders to receive distributions only if the equivalent dividends are declared on the Company’s class B common stock. Accordingly, the Company accounts for the LP exchangeable units as if the LP exchangeable units were shares of its common stock, including reporting the LP exchangeable units in the equity section of the Company’s balance sheet and including the number of outstanding LP exchangeable units in both its basic and diluted earnings per share calculations.

Fair Value Measurement

The Company classifies its financial instruments that are reported at fair value based on a hierarchal framework which ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is impacted by a number of factors, including the type of instrument and the characteristics specific to the instrument. Instruments with readily available active quoted prices or for which fair value can be measured from actively quoted prices generally will have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value.

Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories:

Level 1—Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. The Company does not adjust the quoted price for these assets or liabilities.

Level 2—Pricing inputs are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date, and fair value is determined through the use of models or other valuation methodologies.

Level 3—Pricing inputs are unobservable as of the reporting date and reflect the Company’s own assumptions about the fair value of the asset or liability.

The following table summarizes the valuation of EMSC’s financial instruments as of March 31, 2010 by the above fair value hierarchy levels:

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Description	Total		Level 1		Level 2		Level 3
Assets:
Securities	$	83,548	$	69,151	$	14,397	$	—
Derivatives	$	520	$	—	$	520	$	—

The Company also estimates the fair value of its fixed rate, senior subordinated notes based on quoted market prices. The estimated fair value of the senior subordinated notes at March 31, 2010 was approximately $263 million with a carrying value of $250 million.

3. Acquisitions

During the three months ended March 31, 2010, the Company made a purchase price allocation adjustment related to the acquisition of the management services entity of Pinnacle Anesthesia Consultants, P.A. and Pinnacle Consultants Mid-Atlantic, L.L.C. (together, the “Pinnacle Acquisition”) which closed in December 2009. Based on an independent valuation analysis performed, $31.1 million was reclassified from goodwill to intangible assets, and, as a result, an adjustment was also made to amortization expense.

4. Accrued Liabilities

Accrued liabilities were as follows at March 31, 2010 and December 31, 2009:

	March 31, 2010		December 31, 2009
Accrued wages and benefits	$	106,977	$	92,721
Accrued paid time-off	26,473		24,290
Current portion of self-insurance reserves	57,717		62,832
Accrued restructuring	175		181
Current portion of compliance and legal	3,432		2,814
Accrued billing and collection fees	3,674		4,093
Accrued profit sharing	14,714		34,000
Accrued interest	3,510		9,773
Accrued income taxes payable	7,402		5,454
Other	38,215		37,546
Total accrued liabilities	$	262,289	$	273,704

5. Long-Term Debt

Long-term debt consisted of the following at March 31, 2010 and December 31, 2009:

	March 31, 2010			December 31, 2009
Senior subordinated notes due 2015	$	250,000		$	250,000
Senior secured term loan due 2012 (2.23% at March 31, 2010)	199,240			199,765
Notes due at various dates from 2010 to 2022 with interest rates from 6% to 8%	2,256			1,249
Capital lease obligations due at various dates from 2010 to 2018 (see note 7)	2,482			2,916
	453,978			453,930
Less current portion	(5,368		)	(4,676		)
Total long-term debt	$	448,610		$	449,254

6. Derivative Instruments and Hedging Activities

The Company manages its exposure to changes in market interest rates and fuel prices and from time to time uses highly effective derivative instruments to manage well-defined risk exposures. The Company monitors its positions and the credit ratings of its counterparties and does not anticipate non-performance by the counterparties. The Company does not use derivative instruments for speculative purposes.

At March 31, 2010, the Company was party to a series of fuel hedge transactions with a major financial institution under one master agreement. Each of the transactions effectively fixes the cost of diesel fuel at prices ranging from $2.88 to $3.15 per gallon. The Company purchases the diesel fuel at the market rate and periodically settles with its counterparty for the

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difference between the national average price for the period published by the Department of Energy and the agreed upon fixed price. The transactions fix the price for a total of 4.4 million gallons, which represents approximately 33% of the Company’s total estimated usage over the hedge period, and are spread over periods from April 2010 through June 2011. As of March 31, 2010, the Company recorded, as a component of other comprehensive income before applicable tax impacts, an asset associated with the fair value of the fuel hedge in the amount of $0.5 million, compared to $0.2 million as of December 31, 2009. The net additional payments made or received under these hedge agreements resulted in an increase in operating expenses of less than $0.1 million during the three months ended March 31, 2010.

7. Commitments and Contingencies

Lease Commitments

The Company leases various facilities and equipment under operating lease agreements.

The Company also leases certain vehicles and leasehold improvements under capital leases. Assets under capital leases are capitalized using inherent interest rates at the inception of each lease. Capital leases are collateralized by the underlying assets.

Forward Purchase Commitment

Beginning in March 2009, AMR entered into a series of forward purchase contracts which fix the price for a portion of its total monthly diesel fuel usage from April 1, 2009 through June 30, 2010. For the three months ending June 30, 2010, the Company is under contract to purchase 50,000 gallons of diesel fuel per month at $2.99 per gallon. These forward purchase contracts represent approximately 6% of the Company’s total monthly diesel fuel usage. Based on the terms of the contracts, the Company has concluded they do not qualify as derivatives. There was no material impact to operating expenses related to these contracts during the three months ended March 31, 2010.

Services

The Company is subject to the Medicare and Medicaid fraud and abuse laws which prohibit, among other things, any false claims, or any bribe, kickback or rebate in return for the referral of Medicare and Medicaid patients. Violation of these prohibitions may result in civil and criminal penalties and exclusion from participation in the Medicare and Medicaid programs. Management has implemented policies and procedures that management believes will assure that the Company is in substantial compliance with these laws and regulations but there can be no assurance the Company will not be found to have violated certain of these laws and regulations. From time to time, the Company receives requests for information from government agencies pursuant to their regulatory or investigational authority. Such requests can include subpoenas or demand letters for documents to assist the government in audits or investigations. The Company is cooperating with the government agencies conducting these investigations and is providing requested information to the government agencies. Other than the proceedings described below, management believes that the outcome of any of these investigations would not have a material adverse effect on the Company.

Other Legal Matters

On December 13, 2005, a lawsuit purporting to be a class action was commenced against AMR in Spokane, Washington in Washington State Court, Spokane County. The complaint alleges that AMR billed patients and third party payors for transports it conducted between 1998 and 2005 at higher rates than contractually permitted. The court has certified a class in this case, but the size and membership of the class has not been determined. At this time, AMR does not believe that any incorrect billings are material in amount.

In December 2006, AMR received a subpoena from the Department of Justice. The subpoena requested copies of documents for the period from January 2000 through the present. The subpoena required AMR to produce a broad range of documents relating to the operations of certain AMR affiliates in New York. The Company produced documents responsive to the subpoena. The government has identified claims for reimbursement that the government believes lack support for the level billed, and invited the Company to respond to the identified areas of concern. The Company reviewed the information provided by the government and provided its response. The Company does not believe the identified claims will result in a material adverse effect on the financial condition or results of operations of EMSC.

Four different lawsuits purporting to be class actions have been filed against AMR and certain subsidiaries in California alleging violations of California wage and hour laws. On April 16, 2008, Lori Bartoni commenced a suit in the Superior Court for the State of California, County of Alameda; on July 8, 2008, Vaughn Banta filed suit in the Superior Court of the State of California, County of Los Angeles; on January 22, 2009, Laura Karapetian filed suit in the Superior Court of the State of California, County of Los Angeles; and on March 11, 2010, Melanie Aguilar filed suit in Superior Court of the State of California,

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County of Los Angeles. The Banta and Karapetian cases have been coordinated with the Bartoni case in the Superior Court for the State of California, County of Alameda. At the present time, the courts have not certified classes in any of these cases. Plaintiffs allege principally that the AMR entities failed to pay overtime charges pursuant to California law, and failed to provide required meal breaks or pay premium compensation for missed meal breaks. Plaintiffs are seeking to certify the classes and are seeking lost wages, punitive damages, attorneys’ fees and other sanctions permitted under California law for violations of wage hour laws. The Company is unable at this time to estimate the amount of potential damages, if any.

The Company is involved in other litigation arising in the ordinary course of business. Management believes the outcome of these legal proceedings will not have a material adverse effect on its financial condition, results of operations or liquidity.

8. Equity Based Compensation

The Company’s stock options are valued using the Black-Scholes valuation method on the date of grant. Equity based compensation has been issued under the plans described below.

Equity Option Plan

Under the Company’s Equity Option Plan, key employees were granted options that permit the individuals to purchase class A common shares and vest ratably generally over a period of four years. In addition, certain performance measures must be met for 50% of the options to become exercisable; these performance measures were satisfied during the first quarter of 2009 with respect to the options granted in first quarter of 2005, and in the first quarter of 2010 for the balance of the options under the Equity Option Plan. As the vesting period for these shares was completed during the first quarter of 2009, the Company did not record a compensation charge for the three months ended March 31, 2010. A compensation charge of $97 was recorded for the three months ended March 31, 2009. Options are no longer granted under the Equity Option Plan, but rather under the Company’s Amended and Restated 2007 Long-Term Incentive Plan described below.

Long-Term Incentive Plan

The Company’s original 2007 Long-Term Incentive Plan was approved by stockholders in May 2007 and an Amended and Restated 2007 Long-Term Incentive Plan (the “Plan”) was approved by stockholders in May 2008. The Plan provides for the grant of long-term incentives, including various equity-based incentives, to those persons with responsibility for the success and growth of the Company and its subsidiaries. Options granted under the Plan vest and become exercisable ratably over a period of four years from the date of grant and have a maximum term of ten years. In addition, for options granted under the plan prior to January 1, 2009, certain performance measures were required to be met for 50% of certain of these options to become exercisable; these performance measures were satisfied during the first quarter of 2010.

The Company granted options under the Plan to key employees during the three months ended March 31, 2010. The options permit employees to purchase an aggregate of 75,000 shares of class A common stock at a weighted average exercise price of $52.06 per share, vest ratably over a period of 4 years from the date of grant and have a maximum term of ten years.

The Company recorded a compensation charge of $979 and $428 during the three months ended March 31, 2010 and 2009, respectively, in connection with the Plan.

Non-Employee Director Compensation Plan

The Non-Employee Director Compensation Plan, approved in May 2007, is available to non-employee directors of the Company, other than the Chair of the Compliance Committee. Under this plan, eligible directors are granted Restricted Stock Units (“RSUs”) following each annual stockholder meeting with each RSU representing one share of the Company’s class A common stock. Eligible directors receive a grant of RSUs having a fair market value of $100 on the date of grant based on the closing price of the Company’s class A common stock on the business day immediately preceding the grant date. The Non-Employee Director Compensation Plan allows directors to defer income from the grant of RSUs, which vest immediately prior to the election of directors at the next annual stockholder meeting. In connection with this plan, the Company granted 3,018 RSUs per director in 2009. As described above, RSU grants in 2010 pursuant to this plan will be made following the annual stockholder meeting to be held in the second quarter of 2010. The Company expensed $125 for the three months ended March 31, 2010 and 2009.

9. Segment Information

The Company is organized around two separately managed business units: healthcare transportation services and facility-based physician services, which have been identified as operating segments. The healthcare transportation services reportable segment focuses on providing a full range of medical transportation services from basic patient transit to the most advanced

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emergency care and pre-hospital assistance. The facility-based physician services reportable segment provides physician services to hospitals primarily for emergency departments and urgent care centers, as well as for hospitalist/inpatient, radiology, teleradiology and anesthesiology services. The Chief Executive Officer has been identified as the chief operating decision maker (“CODM”) as he assesses the performance of the business units and decides how to allocate resources to the business units.

Net income before equity in earnings of unconsolidated subsidiary, income tax expense, interest and other income, realized gain on investments, interest expense, and depreciation and amortization (“Adjusted EBITDA”) is the measure of profit and loss that the CODM uses to assess performance, measure liquidity and make decisions. The accounting policies for reported segments are the same as for the Company as a whole.

	Quarter ended March 31,
	2010			2009
Healthcare Transportation Services
Net revenue	$	336,962		$	336,446
Segment Adjusted EBITDA	32,402			33,888
Facility-Based Physician Services
Net revenue	342,392			276,576
Segment Adjusted EBITDA	42,033			31,654
Total
Total net revenue	679,354			613,022
Total Adjusted EBITDA	74,435			65,542
Reconciliation of Adjusted EBITDA to Net Income
Adjusted EBITDA	$	74,435		$	65,542
Depreciation and amortization expense	(16,180		)	(16,768		)
Interest expense	(8,266		)	(10,190		)
Realized gain on investments	92			639
Interest and other income	265			517
Income tax expense	(19,410		)	(15,726		)
Equity in earnings of unconsolidated subsidiary	94			57
Net income	$	31,030		$	24,071

A reconciliation of Adjusted EBITDA to cash flows provided by operating activities is as follows:

	Quarter ended March 31,
	2010			2009
Adjusted EBITDA	$	74,435		$	65,542
Interest paid	(7,759		)	(9,877		)
Change in accounts receivable	2,191			(2,625		)
Change in other operating assets/liabilities	3,934			(12,483		)
Equity based compensation	1,104			650
Excess tax benefits from stock-based compensation	(10,581		)	—
Income tax expense, net of change in deferred taxes	(19,543		)	(1,131		)
Other	804			1,866
Cash flows provided by operating activities	$	44,585		$	41,942

10. Guarantors of Debt

EMS LP financed the acquisition of AMR and EmCare in part by issuing $250.0 million principal amount of senior subordinated notes and borrowing $370.2 million under its senior secured credit facility. Its wholly-owned subsidiaries, AMR HoldCo, Inc. and EmCare HoldCo, Inc., are the issuers of the senior subordinated notes and the borrowers under the senior secured credit facility. As part of the transaction, AMR and its subsidiaries became wholly-owned subsidiaries of AMR HoldCo, Inc. and EmCare and its subsidiaries became wholly-owned subsidiaries of EmCare HoldCo, Inc. The senior subordinated notes and the senior secured credit facility include a full, unconditional and joint and several guarantee by EMSC, EMS LP and EMSC’s domestic subsidiaries. The senior subordinated notes and senior secured credit facility do not include a guarantee by the Company’s captive insurance subsidiary. All of the operating income and cash flow of EMSC, EMS LP, AMR HoldCo, Inc. and EmCare HoldCo, Inc. is generated by AMR, EmCare and their subsidiaries. As a result, funds necessary to meet the debt service obligations under the senior secured notes and senior secured credit facility described

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above are provided by the distributions or advances from the subsidiary companies, AMR and EmCare. Investments in subsidiary operating companies are accounted for on the equity method. Accordingly, entries necessary to consolidate EMSC, EMS LP, AMR HoldCo, Inc., EmCare HoldCo, Inc. and all of their subsidiaries are reflected in the Eliminations/Adjustments column. Separate complete financial statements of the issuers, EMS LP and subsidiary guarantors would not provide additional material information that would be useful in assessing the financial composition of the issuers, EMS LP or the subsidiary guarantors. The condensed consolidating financial statements for EMSC, EMS LP, the issuers, the guarantors and the non-guarantor are as follows:

Consolidating Statement of Operations

For the quarter ended March 31, 2010

					Issuer		Issuer
					AMR		EmCare		Subsidiary			Subsidiary			Eliminations/
	EMSC		EMS LP		HoldCo, Inc.		HoldCo, Inc.		Guarantors			Non-Guarantor			Adjustments			Total
Net revenue	$	—	$	—	$	—	$	—	$	679,354		$	7,238		$	(7,238	)	$	679,354
Compensation and benefits	—		—		—		—		480,317			—			—			480,317
Operating expenses	—		—		—		—		86,529			—			—			86,529
Insurance expense	—		—		—		—		21,467			7,841			(7,238		)	22,070
Selling, general and administrative expenses	—		—		—		—		16,858			—			—			16,858
Depreciation and amortization expense	—		—		—		—		16,180			—			—			16,180
Income (loss) from operations	—		—		—		—		58,003			(603		)	—			57,400
Interest income from restricted assets	—		—		—		—		344			511			—			855
Interest expense	—		—		—		—		(8,266		)	—			—			(8,266		)
Realized gain on investments	—		—		—		—		—			92			—			92
Interest and other income	—		—		—		—		265			—			—			265
Income before income taxes	—		—		—		—		50,346			—			—			50,346
Income tax expense	—		—		—		—		(19,410		)	—			—			(19,410		)
Income before equity in earnings of unconsolidated subsidiaries	—		—		—		—		30,936			—			—			30,936
Equity in earnings of unconsolidated subsidiaries	31,030		31,030		10,285		20,744		94			—			(93,089		)	94
Net income	$	31,030	$	31,030	$	10,285	$	20,744	$	31,030		$	—		$	(93,089	)	$	31,030

Consolidating Statement of Operations

For the quarter ended March 31, 2009

					Issuer		Issuer
					AMR		EmCare		Subsidiary			Subsidiary			Eliminations/
	EMSC		EMS LP		HoldCo, Inc.		HoldCo, Inc.		Guarantors			Non-Guarantor			Adjustments			Total
Net revenue	$	—	$	—	$	—	$	—	$	613,022		$	6,883		$	(6,883	)	$	613,022
Compensation and benefits	—		—		—		—		426,534			—			—			426,534
Operating expenses	—		—		—		—		84,672			—			—			84,672
Insurance expense	—		—		—		—		21,154			8,233			(6,883		)	22,504
Selling, general and administrative expenses	—		—		—		—		15,036			—			—			15,036
Depreciation and amortization expense	—		—		—		—		16,768			—			—			16,768
Income (loss) from operations	—		—		—		—		48,858			(1,350		)	—			47,508
Interest income from restricted assets	—		—		—		—		555			711			—			1,266
Interest expense	—		—		—		—		(10,190		)	—			—			(10,190		)
Realized gain on investments	—		—		—		—		—			639			—			639
Interest and other income	—		—		—		—		517			—			—			517
Income before income taxes	—		—		—		—		39,740			—			—			39,740
Income tax expense	—		—		—		—		(15,726		)	—			—			(15,726		)
Income before equity in earnings of unconsolidated subsidiaries	—		—		—		—		24,014			—			—			24,014
Equity in earnings of unconsolidated subsidiaries	24,071		24,071		9,344		14,728		57			—			(72,214		)	57
Net income	$	24,071	$	24,071	$	9,344	$	14,728	$	24,071		$	—		$	(72,214	)	$	24,071

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Consolidating Balance Sheet

As of March 31, 2010

					Issuer		Issuer
					AMR		EmCare		Subsidiary		Subsidiary			Eliminations/
	EMSC		EMS LP		HoldCo, Inc.		HoldCo, Inc.		Guarantors		Non-Guarantor			Adjustments			Total
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	365,695	$	15,360		$	—		$	381,055
Insurance collateral	—		—		—		—		10,367		20,841			(5,081		)	26,127
Trade and other accounts receivable, net	—		—		—		—		456,256		641			—			456,897
Parts and supplies inventory	—		—		—		—		22,467		—			—			22,467
Prepaids and other current assets	—		—		—		—		21,156		1,894			—			23,050
Current deferred tax assets	—		—		—		—		2,256		3,834			—			6,090
Current assets	—		—		—		—		878,197		42,570			(5,081		)	915,686
Non-current assets:
Property, plant, and equipment, net	—		—		—		—		122,556		—			—			122,556
Intercompany receivable	—		—		264,803		181,915		—		—			(446,718		)	—
Intangible assets, net	—		—		—		—		128,448		—			—			128,448
Non-current deferred tax assets	—		—		—		—		19,628		(6,120		)	—			13,508
Insurance collateral	—		—		—		—		57,227		81,039			2,555			140,821
Goodwill	—		—		—		—		351,521		458			—			351,979
Other long-term assets	—		—		4,114		1,932		16,998		—			—			23,044
Investment and advances in subsidiaries	734,124		734,124		413,281		320,829		33,227		—			(2,235,585		)	—
Assets	$	734,124	$	734,124	$	682,198	$	504,676	$	1,607,802	$	117,947		$	(2,684,829	)	$	1,696,042
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	—	$	—	$	—	$	68,325	$	92		$	—		$	68,417
Accrued liabilities	—		—		1,895		1,615		231,860		28,170			(1,251		)	262,289
Current portion of long-term debt	—		—		1,447		650		3,271		—			—			5,368
Current liabilities	—		—		3,342		2,265		303,456		28,262			(1,251		)	336,074
Long-term debt	—		—		264,529		182,614		1,467		—			—			448,610
Insurance reserves and other long-term liabilities	—		—		—		—		130,875		47,634			(1,275		)	177,234
Intercompany payable	—		—		—		—		437,894		8,824			(446,718		)	—
Liabilities	—		—		267,871		184,879		873,692		84,720			(449,244		)	961,918
Equity:
Class A common stock	301		—		—		—		—		30			(30		)	301
Class B common stock	1		—		—		—		—		—			—			1
Partnership equity	90,776		382,475		315,491		66,984		382,475		—			(1,147,425		)	90,776
Additional paid-in capital	291,397		—		—		—		—		4,316			(4,316		)	291,397
Retained earnings	350,072		350,072		98,544		251,528		350,058		26,522			(1,076,724		)	350,072
Comprehensive income	1,577		1,577		292		1,285		1,577		2,359			(7,090		)	1,577
Equity	734,124		734,124		414,327		319,797		734,110		33,227			(2,235,585		)	734,124
Liabilities and Equity	$	734,124	$	734,124	$	682,198	$	504,676	$	1,607,802	$	117,947		$	(2,684,829	)	$	1,696,042

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Consolidating Balance Sheet

As of December 31, 2009

					Issuer		Issuer
					AMR		EmCare		Subsidiary		Subsidiary			Eliminations/
	EMSC		EMS LP		HoldCo, Inc.		HoldCo, Inc.		Guarantors		Non-Guarantor			Adjustments			Total
Assets
Current assets:
Cash and cash equivalents	$	—	$	—	$	—	$	—	$	317,538	$	15,350		$	—		$	332,888
Insurance collateral	—		—		—		—		10,792		19,450			(5,256		)	24,986
Trade and other accounts receivable, net	—		—		—		—		458,558		530			—			459,088
Parts and supplies inventory	—		—		—		—		22,270		—			—			22,270
Prepaids and other current assets	—		—		—		—		19,650		12			—			19,662
Current deferred tax assets	—		—		—		—		2,489		3,834			—			6,323
Current assets	—		—		—		—		831,297		39,176			(5,256		)	865,217
Non-current assets:
Property, plant, and equipment, net	—		—		—		—		125,855		—			—			125,855
Intercompany receivable	—		—		268,220		185,153		—		—			(453,373		)	—
Intangible assets, net	—		—		—		—		102,654		—			—			102,654
Non-current deferred tax assets	—		—		—		—		19,588		(6,120		)	—			13,468
Insurance collateral	—		—		—		—		56,166		85,165			2,555			143,886
Goodwill	—		—		—		—		381,493		458			—			381,951
Other long-term assets	—		—		4,281		1,898		15,497		—			—			21,676
Investment and advances in subsidiaries	686,087		686,087		394,715		291,358		34,343		—			(2,092,590		)	—
Assets	$	686,087	$	686,087	$	667,216	$	478,409	$	1,566,893	$	118,679		$	(2,548,664	)	$	1,654,707
Liabilities and Equity
Current liabilities:
Accounts payable	$	—	$	—	$	—	$	—	$	70,696	$	63		$	—		$	70,759
Accrued liabilities	—		—		5,117		4,656		231,855		32,077			(1		)	273,704
Current portion of long-term debt	—		—		1,447		650		2,579		—			—			4,676
Current liabilities	—		—		6,564		5,306		305,130		32,140			(1		)	349,139
Long-term debt	—		—		264,891		182,777		1,586		—			—			449,254
Insurance reserves and other long-term liabilities	—		—		—		—		129,555		43,372			(2,700		)	170,227
Intercompany payable	—		—		—		—		444,549		8,824			(453,373		)	—
Liabilities	—		—		271,455		188,083		880,820		84,336			(456,074		)	968,620
Equity:
Class A common stock	295		—		—		—		—		30			(30		)	295
Class B common stock	1		—		—		—		—		—			—			1
Partnership equity	90,776		366,388		307,447		58,941		366,388		—			(1,099,164		)	90,776
Additional paid-in capital	275,316		—		—		—		—		4,316			(4,316		)	275,316
Retained earnings	319,042		319,042		88,261		230,781		319,028		28,080			(985,192		)	319,042
Comprehensive income	657		657		53		604		657		1,917			(3,888		)	657
Equity	686,087		686,087		395,761		290,326		686,073		34,343			(2,092,590		)	686,087
Liabilities and Equity	$	686,087	$	686,087	$	667,216	$	478,409	$	1,566,893	$	118,679		$	(2,548,664	)	$	1,654,707

Condensed Consolidating Statement of Cash Flows

For the three months ended March 31, 2010

						Issuer		Issuer
						AMR		EmCare		Subsidiary			Subsidiary
	EMSC			EMS LP		HoldCo Inc.		HoldCo Inc.		Guarantors			Non-guarantors			Total
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	—		$	—	$	—	$	—	$	47,576		$	(2,991	)	$	44,585
Cash Flows from Investing Activities
Purchase of property, plant and equipment	—			—		—		—		(6,516		)	—			(6,516		)
Proceeds from sale of property, plant and equipment	—			—		—		—		42			—			42
Acquisition of businesses, net of cash received	—			—		—		—		(3,300		)	—			(3,300		)
Net change in insurance collateral	—			—		—		—		(635		)	3,001			2,366
Net change in deposits and other assets	—			—		—		—		290			—			290
Net cash (used in) provided by investing activities	—			—		—		—		(10,119		)	3,001			(7,118		)
Cash Flows from Financing Activities
EMSC issuance of class A common stock	4,402			—		—		—		—			—			4,402
Repayments of capital lease obligations and other debt	—			—		—		—		(1,184		)	—			(1,184		)
Excess tax benefits from share-based compensation	—			—		—		—		10,581			—			10,581
Increase in bank overdrafts	—			—		—		—		(3,099		)	—			(3,099		)
Net intercompany borrowings (payments)	(4,402		)	—		—		—		4,402			—			—
Net cash provided by financing activities	—			—		—		—		10,700			—			10,700
Change in cash and cash equivalents	—			—		—		—		48,157			10			48,167
Cash and cash equivalents, beginning of period	—			—		—		—		317,538			15,350			332,888
Cash and cash equivalents, end of period	$	—		$	—	$	—	$	—	$	365,695		$	15,360		$	381,055

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Condensed Consolidating Statement of Cash Flows

For the three months ended March 31, 2009

						Issuer		Issuer
						AMR		EmCare		Subsidiary			Subsidiary
	EMSC			EMS LP		HoldCo Inc.		HoldCo Inc.		Guarantors			Non-guarantors			Total
Cash Flows from Operating Activities
Net cash provided by (used in) operating activities	$	—		$	—	$	—	$	—	$	42,976		$	(1,034	)	$	41,942
Cash Flows from Investing Activities
Purchase of property, plant and equipment	—			—		—		—		(7,207		)	—			(7,207		)
Proceeds from sale of property, plant and equipment	—			—		—		—		21			—			21
Net change in insurance collateral	—			—		—		—		1,365			11,945			13,310
Net change in deposits and other assets	—			—		—		—		(670		)	—			(670		)
Net cash provided by (used in) investing activities	—			—		—		—		(6,491		)	11,945			5,454
Cash Flows from Financing Activities
EMSC issuance of class A common stock	898			—		—		—		—			—			898
Repayments of capital lease obligations and other debt	—			—		—		—		(1,159		)	—			(1,159		)
Net change in bank overdrafts	—			—		—		—		840			—			840
Net intercompany borrowings (payments)	(898		)	—		—		—		898			—			—
Net cash provided by financing activities	—			—		—		—		579			—			579
Change in cash and cash equivalents	—			—		—		—		37,064			10,911			47,975
Cash and cash equivalents, beginning of period	—			—		—		—		140,452			5,721			146,173
Cash and cash equivalents, end of period	$	—		$	—	$	—	$	—	$	177,516		$	16,632		$	194,148

11. Subsequent Events

The Company’s management has evaluated events subsequent to March 31, 2010 through the issue date of this report to identify any necessary changes to the consolidated financial statements or related disclosures. Below is a description of events for which disclosure was deemed necessary.

On April 8, 2010, the Company completed the financing of new senior secured credit facilities consisting of a $425 million term loan and a $150 million revolving credit facility. The term loan bears interest at LIBOR, plus a margin of 3.00%, and requires quarterly principal repayments until maturity in 2015. The revolving facility bears interest at LIBOR, plus a margin of 3.00%, and is repayable at maturity in 2015. The senior secured credit facilities can be expanded and the interest rate margins stepped down to 2.75% upon achieving certain leverage ratios. Substantially all of EMS LP’s assets are pledged as collateral under the new senior secured credit facilities.

On April 28, 2010, the Company entered into an agreement for the acquisition of V.I.P. Professional Services, Inc., the parent of Gold Coast Ambulance Service, which provides emergency and non-emergency ambulance services in southwest Ventura County, California. Also on April 28, 2010, an affiliate of the Company entered into an agreement for the acquisition of professional corporations which provide anesthesiology services and are related to Clinical Partners Management Company, an existing subsidiary of the Company. These transactions are subject to customary closing conditions.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Forward-Looking Statements and Factors That May Affect Results

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 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 this Quarterly Report on Form 10-Q is filed with the Securities and Exchange Commission, and EMSC 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 EMSC’s filings with the SEC from time to time, including in the section entitled “Risk Factors” in EMSC’s most recent Annual Report on Form 10-K and in subsequent Quarterly Reports on Form 10-Q. Among the factors that could cause future results to differ materially from those provided in this Quarterly Report on Form 10-Q are: the impact on our revenue of changes in transport volume, mix of insured and uninsured patients, and third party reimbursement rates and methods; the adequacy of our insurance coverage and insurance reserves; potential penalties or changes to our operations if we fail to comply with extensive and complex government regulation of our industry, both as it exists now and as it may change in the future; our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; the loss of one or more members of our senior management team; the outcome of government investigations of certain of our business practices; our ability to generate cash flow to service our debt obligations and fund the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment; and the loss of existing contracts and the accuracy of our assessment of costs under new contracts.

All references to “we”, “our”, “us” or “EMSC” refer to Emergency Medical Services Corporation and its subsidiaries, including Emergency Medical Services L.P., or EMS LP. Our business is conducted primarily through two operating subsidiaries, American Medical Response, Inc., or AMR, and EmCare Holdings Inc., or EmCare.

This Report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 19, 2010.

Company Overview

We are a leading provider of emergency medical services and facility-based physician services in the United States. We operate our business and market our services under the AMR and EmCare brands. AMR, over its more than 50 years of operating history, is a leading provider of ground and fixed-wing ambulance services in the United States based on net revenue and number of transports. EmCare, over its more than 35 years of operating history, is a leading provider of physician services in the United States based on number of contracts with hospitals and affiliated physician groups. Through EmCare, we provide facility-based physician services for emergency departments and hospitalist/inpatient, anesthesiology, radiology, and teleradiology programs.

Key Factors and Measures We Use to Evaluate Our Business

The key factors and measures we use to evaluate our business focus on the number of patients we treat and transport and the costs we incur to provide the necessary care and transportation for each of our patients.

We evaluate our revenue net of provisions for contractual payor discounts and provisions for uncompensated care. Medicaid, Medicare and certain other payors receive discounts from our standard charges, which we refer to as contractual discounts. In addition, individuals we treat and transport may be personally responsible for a deductible or co-pay under their third party payor coverage, and most of our contracts require us to treat and transport patients who have no insurance or other third party payor coverage. Due to the uncertainty regarding collectability of charges associated with services we provide to these patients, which we refer to as uncompensated care, our net revenue recognition is based on expected cash collections. Our net revenue represents gross billings after provisions for contractual discounts and estimated uncompensated care. Provisions for contractual discounts and uncompensated care have increased historically primarily as a result of increases in gross billing rates without corresponding increases in payor reimbursement.

The table below summarizes our approximate payor mix as a percentage of both net revenue and total transports and patient encounters for the quarters ended March 31, 2010 and 2009. In determining the net revenue payor mix, we use cash collections in the period as an approximation of net revenue recorded.

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	Percentage of Net Revenue				Percentage of Total Volume
	Q1 2010		Q1 2009		Q1 2010		Q1 2009
Medicare	22.1	%	23.8	%	25.0	%	25.9	%
Medicaid	5.0	%	4.5	%	12.2	%	10.8	%
Commercial insurance and managed care	49.6	%	49.8	%	42.8	%	42.2	%
Self-pay	4.2	%	4.1	%	20.0	%	21.1	%
Fees and subsidies	19.1	%	17.8	%	—		—
Total	100.0	%	100.0	%	100.0	%	100.0	%

In addition to continually monitoring our payor mix, we also analyze certain measures in each of our business segments.

AMR

Approximately 88% of AMR’s net revenue for the three months ended March 31, 2010 was transport revenue derived from the treatment and transportation of patients, including fixed wing medical transportation services, based on billings to third party payors, healthcare facilities and patients. The balance of AMR’s net revenue is derived from direct billings to communities and government agencies for the provision of training, dispatch center and other services. AMR’s measures for net revenue include transports (segregated into ambulance and wheelchair transports and that we weight in certain analyses) and net revenue per transport.

The change from period to period in the number of transports is influenced by changes in transports in existing markets from both new and existing facilities we serve for non-emergency transports, the effects of general community conditions for emergency transports and the impact of newly acquired businesses and markets AMR has exited.

The costs we incur in our AMR business segment consist primarily of compensation and benefits for ambulance crews and support personnel, direct and indirect operating costs to provide transportation services, and costs related to accident and insurance claims. AMR’s key cost measures include unit hours and cost per unit hour (to measure compensation-related costs and the efficiency of our ambulance deployment), operating costs per transport, and accident and insurance claims.

We have focused our risk mitigation efforts on employee training for proper patient handling techniques, development of clinical and medical equipment protocols, driving safety, implementation of technology to reduce auto incidents and other risk mitigation processes which we believe have resulted in a reduction in the frequency, severity and development of claims.

Our AMR business segment requires various investments in long-term assets and depreciation expense relates primarily to charges for usage of these assets, including vehicles, computer hardware and software, equipment, and other technologies. Amortization expense relates primarily to intangibles recorded for customer relationships.

EmCare

Of EmCare’s net revenue for the three months ended March 31, 2010, approximately 81% was derived from our hospital contracts for emergency department staffing and approximately 19% was derived from hospitalist, anesthesiology, radiology, teleradiology and other hospital management services. Approximately 77% of EmCare’s net revenue was generated from billings to third party payors and patients for patient encounters and approximately 23% was generated from billings to hospitals and affiliated physician groups for professional services. EmCare’s key net revenue measures are patient encounters (segregated into emergency department visits, radiology reads, and anesthesiology and hospitalist encounters and that we weight in certain analyses), net revenue per patient encounter, and number of contracts.

The change from period to period in the number of patient encounters under our “same store” contracts is influenced by general community conditions as well as hospital-specific elements, many of which are beyond our direct control.

The costs incurred in our EmCare business segment consist primarily of compensation and benefits for physicians and other professional providers, professional liability costs, and contract and other support costs. EmCare’s key cost measures include provider compensation per patient encounter and professional liability costs.

We have developed extensive professional liability risk mitigation processes, including risk assessments on medical professionals and hospitals, extensive incident reporting and tracking processes, clinical fail-safe programs, training and education and other risk mitigation programs which we believe have resulted in a continued reduction in the frequency, severity and development of claims.

Our EmCare business segment is less capital intensive than AMR, and EmCare’s depreciation expense relates primarily to

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charges for usage of computer hardware and software, and other technologies. Amortization expense relates primarily to intangibles recorded for customer relationships.

Factors Affecting Operating Results

Changes in Net New Contracts

Our operating results are affected directly by the number of net new contracts and related volumes we have in a period, reflecting the effects of both new contracts and contract expirations. We regularly bid for new contracts, frequently in a formal competitive bidding process that often requires written responses to a Request for Proposal, or RFP, and, in any fiscal period, certain of our contracts will expire. We may elect not to seek extension or renewal of a contract, or may reduce certain services, if we determine that we cannot continue to provide such services on favorable terms. With respect to expiring contracts we would like to renew, we may be required to seek renewal through an RFP, and we may not be successful in retaining any such contracts, or retaining them on terms that are as favorable as present terms.

Inflation

Certain of our expenses, such as wages and benefits, insurance, fuel and equipment repair and maintenance costs, are subject to normal inflationary pressures. Fuel expense represented 9.6% and 8.0% of AMR’s operating expenses for the three months ended March 31, 2010 and 2009, respectively. Although we have generally been able to offset inflationary cost increases through increased operating efficiencies and successful negotiation of fees and subsidies, we can provide no assurance that we will be able to offset any future inflationary cost increases through similar efficiencies and fee changes.

Critical Accounting Policies

Revenue Recognition

Management regularly analyzes the ultimate collectibility of accounts receivable after certain stages of the collection cycle using a look-back analysis to determine the amount of receivables subsequently collected. Adjustments related to this analysis were less than 1% of net revenue for the three month periods ended March 31, 2010 and 2009.

Results of Operations

Quarter Ended March 31, 2010 Compared to the Quarter Ended March 31, 2009

The following tables present a comparison of financial data from our unaudited consolidated statements of operations for the three months ended March 31, 2010 and 2009 for EMSC and our two operating segments.

Non-GAAP Measures

Adjusted EBITDA. Adjusted EBITDA is defined as net income before equity in earnings of unconsolidated subsidiary, income tax expense, interest and other income, realized gain on investments, interest expense and depreciation and amortization. Adjusted EBITDA is commonly used by management and investors as a performance measure and liquidity indicator. Adjusted EBITDA is not considered a measure of financial performance under U.S. generally accepted accounting principles, or GAAP, and the items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to such GAAP measures as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in our financial statements as an indicator of financial performance or liquidity. Since Adjusted EBITDA is not a measure determined in accordance with GAAP and is susceptible to varying calculations, Adjusted EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. The tables set forth a reconciliation of Adjusted EBITDA to net income and cash flows provided by operating activities.

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Unaudited Consolidated Results of Operations and as a Percentage of Net Revenue

(dollars in thousands)

EMSC

	Quarter ended March 31, 2010					Quarter ended March 31, 2009
				% of net					% of net
				revenue					revenue
Net revenue	$	679,354		100.0	%	$	613,022		100.0	%
Compensation and benefits	480,317			70.7		426,534			69.6
Operating expenses	86,529			12.7		84,672			13.8
Insurance expense	22,070			3.2		22,504			3.7
Selling, general and administrative expenses	16,858			2.5		15,036			2.5
Interest income from restricted assets	(855		)	(0.1	)	(1,266		)	(0.2	)
Adjusted EBITDA	74,435			11.0		65,542			10.7
Depreciation and amortization expenses	(16,180		)	(2.4	)	(16,768		)	(2.7	)
Interest expense	(8,266		)	(1.2	)	(10,190		)	(1.7	)
Realized gain on investments	92			0.0		639			0.1
Interest and other income	265			0.0		517			0.1
Income tax expense	(19,410		)	(2.9	)	(15,726		)	(2.6	)
Equity in earnings of unconsolidated subsidiary	94			0.0		57			0.0
Net income	$	31,030		4.6	%	$	24,071		3.9	%

Unaudited Reconciliation of Adjusted EBITDA to Cash Flows Provided by Operating Activities

(dollars in thousands)

	Quarter ended March 31,
	2010			2009
Adjusted EBITDA	$	74,435		$	65,542
Interest paid	(7,759		)	(9,877		)
Change in accounts receivable	2,191			(2,625		)
Change in other operating assets/liabilities	3,934			(12,483		)
Equity based compensation	1,104			650
Excess tax benefits from stock-based compensation	(10,581		)	—
Income tax expense, net of change in deferred taxes	(19,543		)	(1,131		)
Other	804			1,866
Cash flows provided by operating activities	$	44,585		$	41,942

Unaudited Segment Results of Operations and as a Percentage of Net Revenue

(dollars in thousands)

AMR

	Quarter ended March 31, 2010					Quarter ended March 31, 2009
				% of net					% of net
				Revenue					revenue
Net revenue	$	336,962		100.0	%	$	336,446		100.0	%
Compensation and benefits	208,351			61.8		208,274			61.9
Operating expenses	75,639			22.4		74,535			22.2
Insurance expense	11,185			3.3		11,088			3.3
Selling, general and administrative expenses	9,729			2.9		9,216			2.7
Interest income from restricted assets	(344		)	(0.1	)	(555		)	(0.2	)
Adjusted EBITDA	32,402			9.6		33,888			10.1
Reconciliation of Adjusted EBITDA to income from operations
Adjusted EBITDA	32,402			9.6		33,888			10.1
Depreciation and amortization expenses	(11,234		)	(3.3	)	(12,706		)	(3.8	)
Interest income from restricted assets	(344		)	(0.1	)	(555		)	(0.2	)
Income from operations	$	20,824		6.2	%	$	20,627		6.1	%

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EmCare

	Quarter ended March 31, 2010					Quarter ended March 31, 2009
				% of net					% of net
				revenue					revenue
Net revenue	$	342,392		100.0	%	$	276,576		100.0	%
Compensation and benefits	271,966			79.4		218,260			78.9
Operating expenses	10,890			3.2		10,137			3.7
Insurance expense	10,885			3.2		11,416			4.1
Selling, general and administrative expenses	7,129			2.1		5,820			2.1
Interest income from restricted assets	(511		)	(0.1	)	(711		)	(0.3	)
Adjusted EBITDA	42,033			12.3		31,654			11.4
Reconciliation of Adjusted EBITDA to income from operations
Adjusted EBITDA	42,033			12.3		31,654			11.4
Depreciation and amortization expenses	(4,946		)	(1.4	)	(4,062		)	(1.5	)
Interest income from restricted assets	(511		)	(0.1	)	(711		)	(0.3	)
Income from operations	$	36,576		10.7	%	$	26,881		9.7	%

Quarter ended March 31, 2010 compared to the quarter ended March 31, 2009

Consolidated

Our results for the three months ended March 31, 2010 reflect an increase in net revenue of $66.3 million and an increase in net income of $7.0 million compared to the three months ended March 31, 2009. The increase in net income was attributable primarily to an increase in Adjusted EBITDA of $8.9 million and a decrease in interest expense of $1.9 million, partially offset by an increase in income tax expense of $3.7 million. Basic and diluted earnings per share were $0.71 and $0.70, respectively, for the three months ended March 31, 2010. Basic and diluted earnings per share were $0.57 and $0.56, respectively, for the three months ended March 31, 2009.

Net revenue. For the three months ended March 31, 2010, we generated net revenue of $679.4 million compared to net revenue of $613.0 million for the three months ended March 31, 2009, representing an increase of 10.8%. The increase was attributable primarily to increases in rates and volumes on existing contracts combined with increased volume from net new contracts and acquisitions.

Adjusted EBITDA. Adjusted EBITDA was $74.4 million, or 11.0% of net revenue, for the three months ended March 31, 2010 compared to $65.5 million, or 10.7% of net revenue for the three months ended March 31, 2009.

Interest expense. Interest expense for the three months ended March 31, 2010 was $8.3 million compared to $10.2 million for the three months ended March 31, 2009. The decrease was due to reduced interest rates on our variable rate debt caused by the expiration of our interest rate swap agreement in December 2009. The agreement converted $200 million of our variable rate debt to fixed rate debt.

Income tax expense. Income tax expense increased by $3.7 million for the three months ended March 31, 2010 compared to the same period in 2009. Our effective tax rate for the three months ended March 31, 2010 was 38.6% and was 39.5% for the same period in 2009.

AMR

Net revenue. Net revenue for the three months ended March 31, 2010 was $337.0 million, an increase of $0.5 million, or 0.2%, from $336.4 million for the same period in 2009. The increase in net revenue was due primarily to an increase in net revenue per weighted transport of 2.6%, or $8.7 million, partially offset by a decrease of 2.4%, or $8.2 million, in weighted transport volume. Net revenue per transport increased 1.9% from rate increases and 0.7% from growth in our managed transportation business. Weighted transports decreased 17,800 from the same quarter last year. The change was due to a decrease in weighted transport volume in existing markets of 2.1% resulting from a mild flu season in the first quarter of 2010 and a decrease of 6,300 weighted transports from the exit of certain markets, partially offset by 4,000 weighted transports from our entry into new markets.

Compensation and benefits. Compensation and benefit costs for the three months ended March 31, 2010 were $208.4 million, or 61.8% of net revenue, compared to $208.3 million, or 61.9% of net revenue, for the same period last year. Ambulance crew wages per ambulance unit hour increased by approximately 4.5%, or $5.0 million attributable primarily to annual wage rate increases. Ambulance unit hours decreased period over period by 3.7%, or $4.3 million, due primarily to the reduction in volume in existing markets and increased efficiency in our ambulance unit hour deployment.

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Operating expenses. Operating expenses for the three months ended March 31, 2010 were $75.6 million, or 22.4% of net revenue, compared to $74.5 million, or 22.2% of net revenue, for the three months ended March 31, 2009. The change was due primarily to an increase in fuel costs of $1.3 million.

Insurance expense. Insurance expense for the three months ended March 31, 2010 was $11.2 million, or 3.3% of net revenue, compared to $11.1 million, or 3.3% of net revenue, for the same period in 2009. We recorded a decrease of prior year insurance provisions of $0.9 million during the three months ended March 31, 2010 compared to an increase of $0.6 million during the three months ended March 31, 2009.

Selling, general and administrative. Selling, general and administrative expense for the three months ended March 31, 2010 was $9.7 million, or 2.9% of net revenue, compared to $9.2 million, or 2.7% of net revenue, for the three months ended March 31, 2009.

Depreciation and amortization. Depreciation and amortization expense for the three months ended March 31, 2010 was $11.2 million, or 3.3% of net revenue, compared to $12.7 million, or 3.8% of net revenue, for the same period in 2009. The decrease was due primarily to AMR’s ability to utilize fewer ambulances to service its existing contracts and the timing of replacing fully depreciated assets.

EmCare

Net revenue. Net revenue for the three months ended March 31, 2010 was $342.4 million, an increase of $65.8 million, or 23.8%, from $276.6 million for the three months ended March 31, 2009. The increase was due primarily to an increase in patient encounters from net new hospital contracts and net revenue increases in existing contracts. Following December 31, 2008, we added 51 net new contracts which accounted for a net revenue increase of $45.4 million for the three months ended March 31, 2010. Of the 51 net new contracts added since December 31, 2008, 53 were added in 2009 resulting in an incremental increase in 2010 net revenue of $41.7 million. Of the 53 net new contracts added in 2009, 23 were from our acquisition of the management services entity of Pinnacle Anesthesia Consultants, P.A. and Pinnacle Consultants Mid-Atlantic L.L.C., or the Pinnacle Acquisition, which was effective December 19, 2009. During the three months ended March 31, 2010, EmCare added 13 new contracts and terminated 15 contracts. These contract changes resulted in an increase in net revenue of $3.7 million during the quarter. Net revenue under our “same store” contracts (contracts in existence for the entirety of both periods) increased $20.7 million, or 8.9%, for the three months ended March 31, 2010. The change was due primarily to a 6.6% increase in revenue per weighted patient encounter primarily as a result of rate increases from our third-party payors, improvement in our payor mix and an increase in acuity. The number of current period same store weighted patient encounters increased 2.3% over the prior period primarily from our new service lines offset by a mild flu season in the first quarter of 2010.

Compensation and benefits. Compensation and benefits costs for the three months ended March 31, 2010 were $272.0 million, or 79.4% of net revenue, compared to $218.3 million, or 78.9% of net revenue for the same period in 2009. Provider compensation costs increased $36.7 million from net new contract additions. Same store provider compensation costs were $12.1 million higher than the prior period due primarily to a 5.2% increase in provider compensation per weighted patient encounter. Non-provider compensation and total benefits costs increased by $6.3 million due primarily to our recent acquisitions and organic growth, partially offset by reductions to incentive related accruals.

Operating expenses. Operating expenses for the three months ended March 31, 2010 were $10.9 million, or 3.2% of net revenue, compared to $10.1 million, or 3.7% of net revenue, for the same period in 2009. Operating expenses increased $0.8 million due primarily to higher collection agency and billing fees incurred in connection with the expansion of our anesthesiology and radiology businesses.

Insurance expense. Professional liability insurance expense for the three months ended March 31, 2010 was $10.9 million, or 3.2% of net revenue, compared to $11.4 million, or 4.1% of net revenue, for the three months ended March 31, 2009. We recorded a decrease of prior year insurance provisions of $1.9 million during the three months ended March 31, 2010 compared to an increase of $0.1 million during the three months ended March 31, 2009.

Selling, general and administrative. Selling, general and administrative expense for the three months ended March 31, 2010 was $7.1 million, or 2.1% of net revenue, compared to $5.8 million, or 2.1% of net revenue, for the three months ended March 31, 2009. The $1.3 million increase was due primarily to growth in the number of contracts since December 31, 2008.

Depreciation and amortization. Depreciation and amortization expense for the three months ended March 31, 2010 was $4.9 million, or 1.4% of net revenue, compared to $4.1 million, or 1.5% of net revenue, for the three months ended March 31, 2009. The $0.8 million increase was due primarily to additional amortization expense associated with a contract intangible asset recorded on acquisitions completed in 2009.

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Critical Accounting Policies

For a discussion of accounting policies that we consider critical to our business operations and the understanding of our results of operations that affect the more significant judgments and estimates used in the preparation of our unaudited condensed consolidated financial statements, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Critical Accounting Policies” contained in our annual report on Form 10-K for the year ended December 31, 2009 and incorporated by reference herein. As of March 31, 2010, there were no significant changes in our critical accounting policies or estimation procedures.

Liquidity and Capital Resources

Our primary source of liquidity is cash flows provided by our operating activities. We can also use our revolving senior secured credit facility, described below, to supplement cash flows provided by our operating activities if we decide to do so for strategic or operating reasons. Our liquidity needs are primarily to service long-term debt and to fund working capital requirements, capital expenditures related to the acquisition of vehicles and medical equipment, technology-related assets and insurance-related deposits.

We believe our cash and cash equivalents, net cash from our operating activities, and amounts available under our senior secured credit facility will meet the liquidity requirements of our business through at least the next 12 months. As of March 31, 2010, we had available to us, upon compliance with customary conditions, $100.0 million under the revolving credit facility, less outstanding letters of credit of $43.8 million. Further, we had a conditional right under our senior secured credit facility to request new or existing lenders to provide up to an additional $100.0 million of term debt (in $20.0 million increments).

On April 8, 2010, we completed the financing of new senior secured credit facilities consisting of a $425.0 million term loan and a $150.0 million revolving credit facility.

Cash Flow

The table below summarizes cash flow information derived from our statements of cash flows for the periods indicated, amounts in thousands.

	Quarter ended March 31,
	2010			2009
Net cash provided by (used in):
Operating activities	$	44,585		$	41,942
Investing activities	(7,118		)	5,454
Financing activities	10,700			579

Operating activities. Net cash provided by operating activities was $44.6 million for the three months ended March 31, 2010 compared to $41.9 million for the same period in 2009. The change in operating cash flows was affected primarily by an increase in net income combined with changes in operating assets and liabilities and the cash flow benefit related to tax deductions from stock-based compensation. Accounts payable and accrued liabilities increased cash flows from operations $6.0 million during the three months ended March 31, 2010 compared to a reduction of $8.5 million during the three months ended March 31, 2009. The change was due primarily to the timing of compensation related payments. Accounts receivable decreased $2.2 million and days sales outstanding, or DSO, decreased 3 days during the three months ended March 31, 2010.

We regularly analyze DSO which is calculated by dividing our net revenue for the quarter by the number of days in the quarter. The result is divided into net accounts receivable at the end of the period. DSO provides us with a gauge to measure receivables, revenue and collection activities. The reductions since December 31, 2008 shown below are due to additional collections on accounts receivable as a result of continued billing and collection enhancements at both AMR and EmCare. The following table outlines our DSO by segment and in total excluding the impact of AMR’s 2008 deployments under its contract with the Federal Emergency Management Agency and Q4 2009 excludes EmCare’s acquisition of Pinnacle in December 2009:

	Q1 2010	Q4 2009	Q3 2009	Q2 2009	Q1 2009	Q4 2008
AMR	66	68	70	73	74	79
EmCare	56	60	58	61	65	68
EMSC	61	64	64	67	70	74

Investing activities. Net cash used in investing activities was $7.1 million for the three months ended March 31, 2010

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compared to cash provided by investing activities of $5.5 million for the same period in 2009. The decrease relates to changes in cash provided by insurance collateral, which amounted to $2.4 million during the three months ended March 31, 2010 compared to $13.3 million during the same period in 2009. Additionally, cash used for the acquisition of businesses totaled $3.3 million during the three months ended March 31, 2010.

Financing activities. For the three months ended March 31, 2010, net cash provided by financing activities was $10.7 million compared to $0.6 million for the same period in 2009. The variance relates primarily to increased cash flows from the exercise of stock options and the cash flow benefit related to tax deductions for stock-based compensation during the three months ended March 31, 2010 compared to the same period in 2009. At March 31, 2010, there were no amounts outstanding under our revolving credit facility.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our primary exposure to market risk consists of changes in interest rates on certain of our borrowings and changes in fuel prices. While we have from time to time entered into transactions to mitigate our exposure to both changes in interest rates and fuel prices, we do not use these instruments for speculative or trading purposes.

We manage our exposure to changes in market interest rates and fuel prices and, as appropriate, use highly effective derivative instruments to manage well-defined risk exposures. As of March 31, 2010, we were party to a series of fuel hedge transactions with a major financial institution under one master agreement. Each of the transactions effectively fixes the cost of diesel fuel at prices ranging from $2.88 to $3.15 per gallon. We purchase the diesel fuel at the market rate and periodically settle with our counterparty for the difference between the national average price for the period published by the Department of Energy and the agreed upon fixed price. The transactions fix the price for a total of 4.4 million gallons, which represents approximately 33% of our total estimated usage over the hedge period, and are spread over periods from April 2010 through June 2011.

For the three months ending June 30, 2010, we are also under contract to purchase 50,000 gallons of diesel fuel per month at $2.99 per gallon. This forward purchase contract represents approximately 6% of our total monthly diesel fuel usage.

As of March 31, 2010, we had $451.5 million of debt excluding capital leases, of which $199.2 million was variable rate debt under our senior secured credit facility and the balance was fixed rate debt, including $250.0 million aggregate principal amount of our senior subordinated notes. An increase or decrease in interest rates of 0.125% will impact our interest costs by $0.2 million.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain a system of disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in the reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or furnishes under the Exchange Act is accumulated and communicated to the issuer’s management, including its principal executive officer or officers and principal financial officer or officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Based on their evaluation of our disclosure controls and procedures conducted within 90 days of the date of filing this Report on Form 10-Q, our principal executive officer and our principal financial officer have concluded that, as of the date of their evaluation, our disclosure controls and procedures (as defined in Rules 13a -15(e) and 15d -15(e) promulgated under the Exchange Act) are effective.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during our fiscal quarter ended March 31, 2010 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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EMERGENCY MEDICAL SERVICES CORPORATION

PART II. OTHER INFORMATION

FOR THE THREE MONTHS ENDED

MARCH 31, 2010

ITEM 1. LEGAL PROCEEDINGS

As referenced in our Annual Report on Form 10-K for the year ended December 31, 2009, three different lawsuits purporting to be class actions have been filed against AMR and certain subsidiaries in California alleging violations of California wage and hour laws. During the three months ended March 31, 2010, Melanie Aguilar filed suit in the Superior Court of the State of California on substantially identical claims.

For additional information regarding legal proceedings, please refer to note 7, under the caption “Commitments and Contingencies” of the notes accompanying the consolidated financial statements included herein, and to our Annual Report on Form 10-K filed with the SEC on February 19, 2010.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2009.

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ITEM 6. EXHIBITS

	10.4.3	Amendment to Employment Agreement, dated April 1, 2010, between Todd G. Zimmerman and Emergency Medical Services Corporation.*

	10.10	Credit Agreement, dated as of April 8, 2010, among AMR HoldCo, Inc., EmCare HoldCo, Inc., Emergency Medical Services, L.P., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on April 14, 2010).

	31.1	Certification of the Chief Executive Officer of Emergency Medical Services Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

	31.2	Certification of the Chief Executive Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

	31.3	Certification of the Chief Financial Officer of Emergency Medical Services Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

	31.4	Certification of the Chief Financial Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

	32.1	Certification of the Chief Executive Officer and the Chief Financial Officer of Emergency Medical Services Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

	32.2	Certification of the Chief Executive Officer and the Chief Financial Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P. pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed with this Report

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrants have duly caused this report to be signed on their behalf by the undersigned, thereunto duly authorized.

	EMERGENCY MEDICAL SERVICES CORPORATION

	(registrant)

May 4, 2010	By:	/s/ William A. Sanger
Date		William A. Sanger
		Chairman and Chief Executive Officer

	By:	/s/ Randel G. Owen
		Randel G. Owen
		Chief Financial Officer and Executive Vice President

	EMERGENCY MEDICAL SERVICES L.P.
	(registrant)

	By:	Emergency Medical Services Corporation, its General Partner

May 4, 2010	By:	/s/ William A. Sanger
Date		William A. Sanger
		Chairman and Chief Executive Officer

	By:	/s/ Randel G. Owen
		Randel G. Owen
		Chief Financial Officer and Executive Vice President

Table of Contents

EXHIBIT INDEX

10.4.3	Amendment to Employment Agreement, dated April 1, 2010, between Todd G. Zimmerman and Emergency Medical Services Corporation.*

10.10	Credit Agreement, dated as of April 8, 2010, among AMR HoldCo, Inc., EmCare HoldCo, Inc., Emergency Medical Services L.P., Bank of America, N.A. and the other lenders party thereto (incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on April 14, 2010).

31.1	Certification of the Chief Executive Officer of Emergency Medical Services Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.2	Certification of the Chief Executive Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.3	Certification of the Chief Financial Officer of Emergency Medical Services Corporation pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

31.4	Certification of the Chief Financial Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P., pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*

32.1	Certification of the Chief Executive Officer and the Chief Financial Officer of Emergency Medical Services Corporation pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

32.2	Certification of the Chief Executive Officer and the Chief Financial Officer of Emergency Medical Services Corporation, as general partner of Emergency Medical Services L.P. pursuant to 18 U.S.C. Section 1350, as adopted, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

* Filed with this Report