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Company Update May 2015.

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Presentation on theme: "Company Update May 2015."— Presentation transcript:

1 Company Update May 2015

2 FORWARD-LOOKING STATEMENTS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INFORMATION Certain statements and information in this presentation may be deemed to be “forward-looking statements” within the meaning of the Federal Private Securities Litigation Reform Act of Forward-looking statements may include, but are not limited to, statements relating to our Adjusted EBITDA and Adjusted EPS guidance, 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, including EVHC’s ability to successfully complete any pending acquisitions, annualized revenue contribution from recent acquisitions and annual estimated patient encounters from recent acquisitions. Any forward-looking statements herein are made as of the date of this presentation, and we undertake 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 our filings with the Securities and Exchange Commission from time to time, including in the section entitled “Risk Factors” in our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q . Among the factors that could cause future results to differ materially from those provided in this presentation are: decreases in our revenue and profit margin under our fee-for-service contracts due to changes in volume, payor mix and third party reimbursement rates, including from political discord in the federal budgeting process; the loss of existing contracts; failure to accurately assess costs under new contracts; difficulties in our ability to recruit and retain qualified physicians and other healthcare professionals, and enforce our non-compete agreements with our physicians; failure to implement some or all of our business strategies, including our efforts to grow our Evolution Health business and cross-sell our services; lawsuits for which we are not fully reserved; the adequacy of our insurance coverage and insurance reserves; our ability to successfully integrate strategic acquisitions; the high level of competition in the markets we serve; the cost of capital expenditures to maintain and upgrade our vehicle fleet and medical equipment; the loss of one or more members of our senior management team; our ability to maintain or implement complex information systems; disruptions in disaster recovery systems , management continuity planning, or information systems; our ability to adequately protect our intellectual property and other proprietary rights or to defend against intellectual property infringement claims; challenges by tax authorities on our treatment of certain physicians as independent contractors; the impact of labor union representation; the impact of fluctuations in results due to our national contract with FEMA; potential penalties or changes to our operations, including our ability to collect accounts receivable, if we fail to comply with extensive and complex government regulation of our industry; the impact of changes in the healthcare industry, including changes due to healthcare reform; our ability to timely enroll our providers in the Medicare program; our ability to restructure our operations to comply with future changes in government regulation; the outcome of government investigations of certain of our business practices; our ability to comply with the terms of our settlement agreements with the government; our ability to generate cash flow to service our substantial debt obligations; and other factors discussed in our filings with the Securities and Exchange Commission.

3 NON-GAAP FINANCIAL MEASURES
In this presentation, we refer to Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EPS, which are not financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America (GAAP). Adjusted EBITDA is defined as net income (loss) before equity in earnings of unconsolidated subsidiary, income tax benefit (expense), loss on early debt extinguishment, other income (expense), net, realized gains (losses) on investments, interest expense, net, equity-based compensation expense, transaction costs related to acquisition activities, related party management fees, restructuring charges, severance and related costs, adjustment to net loss (income) attributable to non-controlling interest due to deferred taxes, and depreciation and amortization expense. Adjusted EBITDA Margin represents Adjusted EBITDA divided by net revenue. Adjusted EPS is defined as diluted earnings per share adjusted for expenses related to EVHC’s secondary offerings, amortization expense, equity-based compensation expense, restructuring charges and loss on early debt extinguishment, net of an estimated tax benefit. Adjusted EBITDA for the quarter ended March 31, 2014, has been presented to conform to the current-period presentation by including transaction costs related to acquisition activity in the definition of Adjusted EBITDA. These non-GAAP financial measures are commonly used by management and investors as performance measures and liquidity indicators. However, the items excluded from these non-GAAP financial measures are significant components in understanding and assessing the Company’s financial performance, and as a result, these measures should not be considered in isolation or as an alternative to GAAP measures such as net income, cash flows provided by or used in operating, investing or financing activities or other financial statement data presented in the Company’s consolidated financial statements as an indicator of financial performance or liquidity. Since these non-GAAP financial measures are not measures determined in accordance with GAAP and are susceptible to varying calculations, these measures, as presented, may not be comparable to other similarly titled measures of other companies. Reconciliations of Adjusted EBITDA to net income for the periods presented are included in “Supplemental Materials” presented herein.  Reconciliations for the forward-looking full-year 2015 Adjusted EBITDA and Adjusted EPS projections presented in this presentation are not being provided due to the number of variables in the projected full-year 2015 Adjusted EBITDA and Adjusted EPS ranges and thus EVHC does not currently have sufficient data to accurately estimate the individual adjustments for such reconciliations. All comparisons included in this presentation are for the first quarter of 2015 to the comparable 2014 period, unless otherwise noted.

4 Net Revenue ($ in billions) Adjusted EBITDA ($ in millions)
KEY HIGHLIGHTS Net Revenue ($ in billions) Highlights Strong Growth: Q revenue up 23%; Adjusted EBITDA up 16% Organic growth, including increased level of contract starts, driven by customer demand for differentiated services Improved capital structure with sufficient liquidity to pursue strategic acquisitions Completed acquisitions of Scottsdale Emergency Associates, VISTA Staffing and Emergency Medical Associates in Q1 15 Continued strong growth; Q revenue up 28.0% Organic growth continues to be predominantly driven by net new contracts Robust contract pipeline with strong visibility Q revenue up 13.5% Continued execution on cost and productivity initiatives driving margin improvements Entered a definitive agreement to acquire ambulance operations in northeastern U.S. with expected annual revenues of $25M Q launched joint venture with Ascension Health 2014 completed agreements with Memorial Hermann Health System, Universal Health Services and Aetna for transitional services and a risk-based contract with Healthspring in Dallas area Envision 33% Growth EmCare Adjusted EBITDA ($ in millions) AMR 38% Growth (a) Evolution Health Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials. (a) $9.7M of insurance reserve adjustments for two significantly higher than expected malpractice cases from 2009 and 2011

5 PROVEN TRACK RECORD OF EVOLVING THE BUSINESS TO MEET CUSTOMER AND MARKET NEEDS
2005 – 2010 2010 – 2014 2015 – Future 2005 Adj. EBITDA: $46M 2014 Adj. EBITDA: $363M 2005 Adj. EBITDA: $106M 2014 Adj. EBITDA: $193M 2005 EBITDA: $152M 2014 EBITDA: $556M Leading player focused on episodic care Track record of strong organic growth Outsized returns delivered to shareholders through public markets Accelerated EmCare growth via service line expansion and integration of services Re-aligned AMR to drive new revenue opportunities and improved margins Expanded service solutions to improve quality and lower costs Extended clinical capabilities outside the hospital through Evolution Health Positioned for population health management in the evolving healthcare landscape History of Successfully Evolving the Business Model Within a Dynamic Healthcare Environment Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials.

6 Changing Market Dynamics
POSITIONED AT THE NEXUS OF THE EVOLVING LANDSCAPE Envision Customers Changing Market Dynamics Communities Payors Healthcare Facilities Healthcare reform driving new models of delivery and reimbursement Population health driving changes in managing care across the patient continuum Value-based Integrated care models improve outcomes, reduce cost Movement toward market centricity (space and scale) Key Customer Challenges Addressed by Envision Service, quality and patient outcomes Operational expertise / innovation Recruitment and retention Care coordination at lower costs Accountability and value based care Envision is Well-Positioned to Meet the Changing Market Environment and Deliver a Differentiated Solution for Improving Quality and Lowering the Cost of Care

7 MULTIPLE LEVERS TO DRIVE STRONG AND CONSISTENT GROWTH
Organic Growth Acquisitions and New Services Same Store Net New Contracts Existing Services New Services Consistent underlying market volume trends Stable pricing and reimbursement dynamics Long-term customer relationships Integrated services / cross- selling Proven track record improving quality and operating efficiency In 2014, 63% of EmCare new contracts were with new facilities; 37% were new services with existing facilities AMR experiencing highest contract win rate in years Highly fragmented markets with only a few national providers Geographic platform extensions to enhance organic growth Expansion of existing markets with synergy opportunities Continued development of additional services that enhance the patient continuum Either de novo or through acquisitions Majority of Historical Revenue Growth Driven by Organic Activity Acquisition Activity Has Significantly Expanded Service Offerings Proven Track Record of Delivering Strong Growth Through a Combination of New Contracts, Same-Contract Revenue Growth and Disciplined Value-Enhancing Acquisitions

8 EMCARE: ROBUST GROWTH PLATFORM WITH SIGNIFICANT MOMENTUM
EmCare Revenue Growth Breakdown1 EmCare Key Growth Drivers Integrated Services and Cross-Selling 17/4/20 14時30分 EMCARE: ROBUST GROWTH PLATFORM WITH SIGNIFICANT MOMENTUM Expansion of Multiple Service Lines Creative Healthcare System Partnership Models Share Gains from Local and Regional Groups Organic Continued Healthcare Facility Outsourcing Robust Contract Pipeline with Strong Visibility Again, we are the leading provider of ambulance services in the US with 8% market share We believe there are several key differentiating elements that make AMR unique Hit the bold bullets Organic Growth 13.0% 15.5% 17.3% 14.7% Long-Term History of Highly Visible, Recurring Revenue with Recent Acceleration in Growth 1. EmCare net new contract growth in 2012 of 9.9% includes acquisition growth contribution of 1.9%. Same store contracts growth shown above is calculated using total contracts as the denominator. When calculating net revenue growth contribution from same-store contracts using only contracts in existence for the entirety of both year-over-year periods in the denominator, 2012 same store contract growth was 6.3%, 2013 was 2.4%, 2014 was 5.5% and 1Q 2015 was 5.0%. ECHO2007\Management Presentation\Echo Management Presentation\FINALv2_Echo Management Presentation.ppt 8

9 AMR Competitive Advantages AMR Market Size and Positioning1
17/4/20 14時30分 AMR: LEADING OUTSOURCED PROVIDER OF COMMUNITY-BASED MEDICAL TRANSPORTATION SERVICES AMR Market Size and Positioning1 Ambulance Managed Transportation Fixed-Wing Air Transport2 $18bn $2bn $3bn 7% ≤ 4% Substantial scale advantages in ambulance services (more than 2x nearest competitor) “AMR Medicine” drives best of class clinical outcomes and improved patient experience Strong brand recognition and national contracting capabilities Managed transportation service offering Technology investments Again, we are the leading provider of ambulance services in the US with 8% market share We believe there are several key differentiating elements that make AMR unique Hit the bold bullets Clear Leader in Ambulance Market with Growing Positions in Complementary Service Lines 2. Envision outsourced market share represents fixed-wing market only (total market size represents all air medical transportation services). ECHO2007\Management Presentation\Echo Management Presentation\FINALv2_Echo Management Presentation.ppt 9

10 Positioned for Accelerated Revenue Growth
Cost and Productivity Initiatives Strengthened AMR Management Team 17/4/20 14時30分 Proven Superior Clinical Outcomes (AMR Medicine) AMR: BUSINESS REALIGNMENT ACCELERATED GROWTH, LED TO MARGIN IMPROVEMENTS Increasing New Contract Win Rates AMR Adjusted EBITDA Margin Improvement Since 2010 Expanding Complementary Service Offerings Implemented Platform for Sustainable Growth (“PSG”) in ; key initiatives to date include: Rationalization of underperforming contracts Organizational and infrastructure realignment Support function efficiencies Strong Financial Position vs. Competitors Emerging Product Lines Across Patient Continuum Achieved Q Revenue Growth of 13.5% over Q1 2014 Future AMR Margin Improvements Primarily Driven by Technology Investments Again, we are the leading provider of ambulance services in the US with 8% market share We believe there are several key differentiating elements that make AMR unique Hit the bold bullets Well-Positioned for Accelerated Revenue Growth and Continued Margin Improvements Note: Adjusted EBITDA as defined in Non-GAAP Financial Measures. See reconciliation in supplemental materials. ECHO2007\Management Presentation\Echo Management Presentation\FINALv2_Echo Management Presentation.ppt 10

11 High ROI Service Offerings
Physician-Led Care Management - Solutions for High Risk Populations 17/4/20 14時30分 High ROI Service Offerings EVOLUTION HEALTH: INNOVATIVE SOLUTIONS PROVIDER FOR HEALTHCARE’S MOST CHALLENGING PATIENT POPULATIONS Comprehensive Population Assessment HRA, Mobile Diagnostics Transitional Care In-Home Care, Facility Care, Virtual Support Specializes in physician-led, population management services in the post-acute, home, mobile environment Focus on high risk, high cost and vulnerable populations with advanced illness and multiple chronic conditions Over 2,200 dedicated caregivers, and rapidly growing Leverages EmCare and AMR competencies and workforce Novel and clinically sophisticated Medical Command Center providing healthcare logistics, care coordination, telemedicine, telemonitoring and remote care Strong value proposition delivering on improving clinical outcomes and member/patient experience while reducing the cost to risk-bearing entities Key customer segments: health plans, health systems and at- risk providers Longitudinal High Risk Management Home Based Primary Care, Co-Management Advanced Illness Management Palliative Care, Hospice, Comfort Care 24/7 Unplanned Care In-Home, Virtual and Mobile Clinic Medical Command Center Services Telemedicine, Telemonitoring, Telehealth Again, we are the leading provider of ambulance services in the US with 8% market share We believe there are several key differentiating elements that make AMR unique Hit the bold bullets ECHO2007\Management Presentation\Echo Management Presentation\FINALv2_Echo Management Presentation.ppt 11

12 EVOLUTION HEALTH: INTEGRATION DRIVEN
Robust Clinical Care Model Strategic Deployment for Market Centricity Integrated and Cross Selling with EmCare & AMR 17/4/20 14時30分 EVOLUTION HEALTH: INTEGRATION DRIVEN GROWTH WITH DEMONSTRATED MARKET TRACTION Modular and Customizable Service Offerings Innovative Partnership and JV Models Risk Arrangements, Gain Sharing, Bundled Payments, Capitation Turnkey Outsourcing for Population Health Management Diverse and rapidly growing customer base Again, we are the leading provider of ambulance services in the US with 8% market share We believe there are several key differentiating elements that make AMR unique Hit the bold bullets 10% of Patients Account for More Than 60% of Health Costs Strategic Innovation with Strong Market Traction and Recent Acceleration in Growth ECHO2007\Management Presentation\Echo Management Presentation\FINALv2_Echo Management Presentation.ppt 12

13 RECENT EVENTS Envision’s 2015 Guidance:
Adjusted EBITDA of $653M-$665M and Adjusted EPS of $ $1.50 17 to 20 percent implied Adjusted EBITDA growth includes lost Medicaid parity revenue at ~80% Adjusted EBITDA margin, to be fully offset by recent acquisitions at EmCare’s traditional margins EmCare acquisition of Emergency Medical Associates, Scottsdale Emergency Associates and VISTA Staffing Solutions completed in Q1 2015 Expected combined annual net revenues of approximately $435 million and 1.7 million annual patient encounters Envision’s net leverage ratio 3.8x TTM Adjusted EBITDA at March 31, 2015 AMR entered a definitive agreement to acquire ambulance operations located in northeastern U.S. with expected annual revenue of approximately $25M Evolution Health joint venture with Ascension Health to complete phase-one roll out in five markets by Spring Additional phases adding up to 18 more markets to be completed over the next two years Initial participation in Bundled Payment for Care Improvement (BPCI) initiative effective July 1, 2015 Note: Adjusted EBITDA and Adjusted EPS are defined in Non-GAAP Financial Measures.

14 Financial Review

15 Long History of Consistent, Strong Revenue and Adjusted EBITDA Growth
STRONG HISTORICAL REVENUE AND EBITDA GROWTH Net Revenue Adjusted EBITDA ’05-’14 CAGR: 3.4% ’05-’14 CAGR: 6.9% ’05-’14 CAGR: 17.9% ’05-’14 CAGR: 25.8% ’05-’14 CAGR: 10.4% ’05-’14 CAGR: 15.5% Long History of Consistent, Strong Revenue and Adjusted EBITDA Growth Note: $ in millions. Adjusted EBITDA as defined in Non-GAAP Financial Measures. Prior periods have been adjusted accordingly for comparability purposes. See reconciliation in supplemental materials – 2014 net revenue CAGR is 10.6% and 2008 – 2014 Adjusted EBITDA CAGR is 14.5%.

16 Continued Strong Performance in 2015
CONTINUED REVENUE AND EBITDA GROWTH IN 2015 Q Financial Results Envision Q1 2015: Revenue up 22.7% Adjusted EBITDA up 16.3% EmCare Revenue growth driven by: 6.3% higher same-store volume, including 7.5% higher ED volume Net new contract wins Acquisitions Margin impacted by: Lower anesthesia collection rate Medicaid parity discontinued AMR 7.8% higher same-market volume Margin expansion related to: Improved deployment Lower fuel costs Net Revenue Adjusted EBITDA % Growth EmCare % AMR % Envision % % Margin EmCare % % AMR % % Envision % % Continued Strong Performance in 2015 Note: $ in millions. Adjusted EBITDA as defined in Non-GAAP Financial Measures.

17 INVESTMENT HIGHLIGHTS
Leading Player in Large and Growing Outsourced Healthcare Services Markets Positioned at the Nexus of Rapidly Evolving Healthcare Landscape Differentiated, Integrated Service Model Across the Patient Continuum History of Strong Revenue and EBITDA Growth with Stable Cash Flows Consistent Revenue and EBITDA Growth From Diversified Sources Beneficiary of Healthcare Reform Experienced Management Team with History of Success

18 Supplemental Materials

19 ADJUSTED EBITDA RECONCILIATION
related party management fees represent both Laidlaw and Onex management fees and 2013 includes $20M to terminate the CD&R consulting agreement


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