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 EMSC's consolidated financial statements and notes thereto included in our Annual Report on Form 10-K filed with the SEC on February 23, 2009.

Company Overview

We are a leading provider of emergency medical services in the United States. We operate our business and market our services under the AMR and EmCare brands. We believe that AMR, over its more than 50 years of operating history, has become the leading provider of ambulance transport services in the United States. We believe that EmCare, over its more than 35 years of operating history, has become the leading provider of outsourced emergency department staffing and management services in the United States and also provides hospital-based services for hospitalist/inpatient, radiology, and anesthesiology departments.

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 is 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.

The table below summarizes our approximate payor mix as a percentage of both net revenue and total transports and patient visits for the three and nine months ended September 30, 2009 and 2008. In determining the net revenue payor mix, we use cash

collections in the period as an approximation of net revenue recorded. The 2008 FEMA deployment revenue is included in Subsidies and fees.

                          Percentage of Net Revenue              Percentage of Total Volume
                                          Nine months                             Nine months
                      Quarter ended          ended           Quarter ended           ended
                      September 30,      September 30,       September 30,       September 30,
                      2009     2008      2009      2008      2009      2008      2009      2008
Medicare               22.4 %   20.4 %    23.2 %    23.1 %    23.7 %    25.2 %    24.6 %    25.9 %
Medicaid                4.9 %    3.7 %     4.7 %     4.3 %    11.4 %    10.8 %    11.2 %    10.8 %
Commercial
insurance and
managed care           50.2 %   42.6 %    50.5 %    47.0 %    42.9 %    41.9 %    42.7 %    41.9 %
Self-pay                3.8 %    4.0 %     3.9 %     4.3 %    22.0 %    22.2 %    21.5 %    21.4 %
Subsidies & fees       18.7 %   29.3 %    17.7 %    21.3 %       -         -         -         -
Total                 100.0 %  100.0 %   100.0 %   100.0 %   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 nine months ended September 30, 2009 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 weighted in certain analyses) and net revenue per transport.

The change from period to period in the number of transports is influenced by increases 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 exited markets.

The costs we incur in our AMR business segment consist primarily of compensation and benefits for medical 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.

EmCare

Of EmCare's net revenue for the nine months ended September 30, 2009, approximately 85% was derived from our hospital contracts for emergency department staffing and approximately 15% was derived from hospitalist, anesthesiology, radiology and other hospital management services. Approximately 80% of EmCare's net revenue was generated from billings to third party payors and patients for patient encounters and approximately 20% 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 weighted in certain analyses), net revenue per patient encounter, and number of contracts. Due to our expansion in the radiology and anesthesiology markets which typically generate lower net revenue per encounter than emergency room visits, patient encounters are now being weighted to make net revenue per encounter comparable across all of EmCare's markets.

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.

Recent Developments

Effective January 1, 2009, we adopted changes in requirements for how an acquirer in a business combination recognizes and measures the assets acquired, liabilities assumed and any noncontrolling interests. The impact to our consolidated financial statements and related disclosures will depend on the nature and terms of the business combinations entered into subsequent to January 1, 2009.

Factors Affecting Operating Results

Federal Emergency Management Agency Contract

In 2007, the Federal Emergency Management Agency, or FEMA, awarded AMR with a national contract to provide ambulance, para-transit, and rotary and fixed-wing air ambulance transportation services to supplement federal and military responses to disasters, acts of terrorism and other public health emergencies. The contract covered the 21 states along the Gulf and Atlantic coasts and was expanded by FEMA to the full 48 contiguous states on October 1, 2009. FEMA has the option to renew the contract for different zones in the contract at various points during 2010 and 2011. In August 2008, AMR was deployed under this contract to provide patient evacuations and disaster relief efforts in three Gulf Coast states for hurricanes Gustav and Ike and recorded approximately $101 million in net revenue, which included approximately $11 million of expense pass-throughs, during the three months and nine months ended September 30, 2008. There were no FEMA related deployments during the three months ended September 30, 2009.

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. Excluding the impact of the FEMA contract in 2008, fuel expense represented 9.7% and 16.2% of AMR's operating expenses for the three months ended September 30, 2009 and 2008, respectively, and 8.9% and 15.2% for the nine months ended September 30, 2009 and 2008, respectively. Although we have generally been able to offset inflationary and other 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 fuel and inflationary cost increases through similar efficiencies and fee changes.

Critical Accounting Policies

Revenue Recognition

Management regularly analyzes the ultimate collectability 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 and nine month periods ended September 30, 2009 and 2008.

Results of Operations

Three and Nine Months Ended September 30, 2009 Compared to Three and Nine Months Ended September 30, 2008

The following tables present a comparison of financial data from our unaudited consolidated statements of operations for the three and nine months ended September 30, 2009 and for the three and nine months ended September 30, 2008 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.

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

                                      EMSC



                         Quarter ended           Quarter ended         Nine months ended        Nine months ended
                      September 30, 2009      September 30, 2008       September 30, 2009       September 30, 2008
                                  % of net                % of net                 % of net                 % of net
                                  revenue                 revenue                  revenue                  revenue
Net revenue          $  665,056      100.0 % $  679,328      100.0 % $ 1,915,369      100.0 % $ 1,816,193      100.0 %
Compensation and
benefits                467,625       70.3      426,755       62.8     1,332,787       69.6     1,221,607       67.3
Operating expenses       85,510       12.9      135,087       19.9       252,355       13.2       302,014       16.6
Insurance expense        24,845        3.7       25,109        3.7        75,706        4.0        63,640        3.5
Selling, general
and administrative
expenses                 15,871        2.4       20,509        3.0        47,186        2.5        50,621        2.8
Interest income
from restricted
assets                   (1,082 )     (0.2 )     (1,623 )     (0.2 )      (3,468 )     (0.2 )      (5,113 )     (0.3 )
Adjusted EBITDA      $   72,287       10.9 % $   73,491       10.8 % $   210,803       11.0 % $   183,424       10.1 %
Depreciation and
amortization
expenses                (15,733 )     (2.4 )    (16,993 )     (2.5 )     (48,658 )     (2.5 )     (52,156 )     (2.9 )
Interest expense        (10,280 )     (1.5 )    (11,117 )     (1.6 )     (30,749 )     (1.6 )     (31,387 )     (1.7 )
Realized gain on
investments                 544        0.1          768        0.1         2,030        0.1         3,011        0.2
Interest and other
income                      502        0.1          508        0.1         1,442        0.1         1,097        0.1
Income tax expense      (18,533 )     (2.8 )    (18,138 )     (2.7 )     (53,144 )     (2.8 )     (40,170 )     (2.2 )
Equity in earnings
of unconsolidated
subsidiary                   91        0.0           98        0.0           244        0.0           152        0.0
Net income           $   28,878        4.3 % $   28,617        4.2 % $    81,968        4.3 % $    63,971        3.5 %