GMRS

Hello, everyone. Thank you for joining us, and welcome to GMR Solutions' Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Krister Sorensen, Vice President of Investor Relations. Krister, please go ahead.

Joining me today are Nick Loporcaro, our Board Chair and Thank you. Good morning, and welcome to the GMR Solutions Q2 2026 earnings conference call. Joining me today are Nick Loporcaro, our Board Chair and CEO, Ted Van Horne, our President and COO, and Brian Tierney, our Executive Vice President and CFO. Before we begin, note that during this call, we may make forward-looking statements and actual results may differ materially from those statements because of various risks and uncertainties, including those described in our most recent earnings report posted on our investor relations website, and in the Risk Factors section in our IPO prospectus. Today's remarks also include certain non-GAAP financial measures, including adjusted EBITDA. You can find a reconciliation of these measures in our earnings release and earnings presentation that is available on our website at investors.globalmedicalresponse.com.

Unless otherwise noted, references to the quarter will be for the second quarter of 2026. I will now turn the call over to Nick.

Thanks, Krister, and thank you all for joining us today. We are excited to report strong financial and operational results in the second quarter of 2026 that are in line with our expectations. To provide a high-level overview of the quarter, GMR completed nearly 1.4 million patient encounters during the second quarter. We provided ground medical services to over 1.3 million patients, which includes more than 1 million transports along with 29,000 calls to our 911 Nurse Navigation offering, and the remaining approximately 280,000 ground patient encounters consisted of interventions on scene that did not result in a transport. During the quarter, we provided air medical services to over 36,000 patients. Q2 revenue was $1.49 billion, which represents 3.3% year-over-year growth. Adjusted EBITDA of $285 million decreased 11.8% year-over-year with an adjusted EBITDA margin of 19.1%.

As mentioned previously, prior year results benefited from favorable revenue estimate adjustments associated with the No Surprises Act-related collections on claims from earlier dates of service. Aside from this comparability impact, you will see that the business delivered strong underlying revenue and operating performance during the quarter that Brian will expand on later in the call. Our strong performance was driven by continued same-market revenue growth, revenue from cross-selling and new markets, disciplined cost management, continued optimization of our clinical and operational platforms, and an unwavering focus on service to our communities by keeping care at the center of what we do.

Today marks our second earnings call since the successful completion of our IPO three months ago, which was an incredible accomplishment that could not have been possible without the dedication of our frontline and support staff as we refocused our energy on our core competency of emergency care over the past few years. Before Ted and Brian discuss the quarter in more detail, I want to step back and reiterate why we believe GMR is best positioned as the front of the frontline healthcare provider. As the largest provider of emergency medical services, we serve 5.5 million patients annually, covering markets that represent over 60% of the U.S. population with one or more of our solutions. Our more than 24,000 highly trained clinicians and fleet of ambulances and aircraft are rapidly deployed to navigate and provide essential out-of-hospital care for patients when they need us most.

Our model is differentiated because it is integrated. We bring together clinical capabilities through air, ground, technology, and care navigation assets in a way that allows us to serve communities, health systems, payers, federal and state agencies, and patients across a broad range of settings. In addition to emergent care, we provide non-emergent care, medical response, and disaster response. We have also maintained a long-standing role as the prime EMS contractor for FEMA, supporting national emergency and disaster response needs. The opportunity in front of us is built around four ideas. Saving and serving lives through clinical excellence. Second, growth across existing and new markets. Third, differentiation through our integrated platform and innovative solutions. And fourth, maintaining sustainable margins through disciplined operating execution. We operate within a $35 billion total addressable market that includes private providers like us, municipal-run EMS systems, and volunteer programs.

The U.S. population is growing as well as aging, and chronic disease prevalence continues to rise. Many rural healthcare facilities face closure or a reduction in service capabilities. All of this drives an increase in demand for EMS. As the primary provider and connection point to healthcare facilities and the only nationally integrated air and ground ambulance provider across 46 states and Washington, D.C., we believe GMR is best positioned to capture this demand. This positioning gives us a greater access to growth through adjacent markets, cross-selling within existing markets, and through disciplined M&A. And we never stop scrutinizing our existing business to ensure we continue to grow and provide sustainable care to our communities. As the national leader of EMS, this puts us in an exceptional position to be the innovators of the practice and raise the tide for the entire industry.

At GMR, we have several systems and solutions, including 911 Nurse Navigation, our Concierge platform, and our online ordering system, Transport.net, that enhance efficiencies across our organization, resulting in the most appropriate care for patients. Our 911 Nurse Navigation connects lower acuity 911 callers with skilled nurses who can guide them to more appropriate sites of care when an ambulance transport is not clinically necessary. Concierge helps health systems better coordinate discharge and non-emergent transport needs, improve hospital throughput, and create a clearer reimbursement framework. Transport.net reduces the effort in requesting, tracking, and dispatching both air and ground ambulance resources. Together, these solutions strengthen our offering, improve resource utilization, enhance patient outcomes, and create a reinforcing flywheel. Our national scale creates clinical data. That data informs innovation. Our tools support contract wins, and those wins further reinforce our national scale.

Each of these innovations help take the friction out of a traditionally run EMS system and ultimately provide better patient care, more efficient operations, and better hospital throughput while delivering savings to payers in turn. Our scale also enables a large EMS database, currently over 80 million records, that allows us to pair with hospital outcome data to drive system improvements and protocols. This data-driven effort resulted in GMR receiving ESO Solutions' Best Use of EMS Data to Improve Outcomes award at ESO's WAVE Conference in April this year, which is a national gathering for fire, EMS, and hospital professionals. Our performance continues to be driven by the same key ideas. First, saving and serving lives through clinical excellence. Our advanced clinical protocols and rigorous training standards remain the foundation of everything we do, ensuring the highest quality of care in every patient encounter.

Second, on growth, we continue to expand in existing markets, enter adjacent and new markets, cross-sell our solutions, and evaluate discipline M&A opportunities. Third, on differentiation, our integrated air and ground model, supported by innovative technology, allows us to reduce friction in traditional EMS systems and deliver care more efficiently. Fourth, on margins, we continue to scrutinize the market and contracts in which we operate, emphasizing work that is strategically aligned and economically sustainable. On the reimbursement front, we applaud the recent introduction of the Reimbursing Emergency Services for Critical Urgent Encounters, or RESCUE Act of 2026 in the U.S. House of Representatives. This bipartisan legislation provides a necessary solution to modernize the Medicare payment structure so emergency medical services are treated similarly to other healthcare providers with payments based on real cost data.

Under this approach, Medicare's payment rates will be more transparent, financially responsible, and cost-based, helping to close the financial gap between reimbursement and the cost of services for EMS providers. Achieving this milestone is another example of the recognition we are garnering with lawmakers and the payer community with respect to the necessary services we provide. Ted will now provide more detail on how our initiatives are unfolding operationally.

Thanks, Nick. GMR's operational focus remains clear: grow our core emergent services, participate in non-emergent services where they make fiscal and strategic sense, and realize efficiency through innovative offerings such as 911 Nurse Navigation, Concierge, and Transport.net. These capabilities give us ways to pair clinical care with better operational decision-making and stronger partnerships across communities and health systems. These reflect a broader principle behind our model. We coordinate care across modalities and geographies as an integrated service rather than providing services on a standalone basis, given patients rarely fit neatly into a single mode of care. Care coordination allows us to better match resources to acuity, improve visibility for our partners, and support more efficient operations. In weather-constrained air markets, for example, the ability to deploy clinical resources across the ground platform reflects the practical value of integration.

911 Nurse Navigation continues to be one of our most important examples of innovation in the EMS model. The program connects lower acuity 911 callers with skilled nurses who can assess the patient's needs and guide them to appropriate care setting or transport modality. This is better for patients, better for crews, better for hospital systems facing emergency department overcrowding, a lower cost option for payers, and better for communities seeking a more sustainable EMS model. In the second quarter, we navigated nearly 29,000 calls through this program, up 50% year-over-year.

In the quarter, we started servicing three new communities, representing 1.3 million covered lives, bringing our total to 29 communities, representing 19.7 million covered lives, and we plan to implement four more communities over the remainder of the year. We've seen up to 20% of 911 medical calls diverted to nurse navigation with qualitative benefits, including better alignment of resources to acuity, improved resource utilization, client stickiness, and higher satisfaction for both patients and crews. For example, during the Spokane wildfires, GMR's 911 Nurse Navigation program quickly partnered with local emergency response and healthcare teams to connect displaced residents with appropriate care. Within hours, nurse navigators were helping patients access urgent care, telehealth, and community resources, reducing unnecessary emergency department visits while ensuring timely support. This effort demonstrates how 911 Nurse Navigation can rapidly adapt during crisis to improve patient access and support healthcare system capacity.

We expect to continue expanding 911 Nurse Navigation in existing 911 markets and using the system as a differentiator in new municipal and health system partnerships. Concierge supports the non-emergent side of the model by partnering with health systems to coordinate appropriate transports under a clear reimbursement structure. This creates a more predictable framework for service that could otherwise be low reimbursing or operationally inefficient. It also supports hospital throughput by helping discharge processes move more efficiently and by reducing friction in scheduled transport workflows. Transport.net reduces friction in the process of requesting, tracking, and dispatching air and ground ambulance resources. By increasing visibility and simplifying handoffs among access points, health systems, and dispatch teams, the platform enhances the value of our integrated network. We are installed in nearly 3,000 Public Safety Answering Points, or PSAPs, across the country, representing over 65% of all PSAPs nationwide.

This software reduces dispatch friction, improves visibility, and strengthens partner relationships. For example, in Fredericksburg, Texas, Gillespie County Communications Center serves both the police department and sheriff's office. This is a very busy system. They were an early adopter of the Transport.net ordering technology and now process 100% of their air transport requests through the platform. Thanks to its ease of use, reliability, and aircraft tracking capabilities, they save valuable minutes on every request, allowing them to focus on other emergencies instead of spending significant time on the phone. Turning to growth, we remain positive about our ability to win new business opportunities in core emergent services and expanded municipal ambulance contracting through 911 Nurse Navigation. Our growth strategy is multi-pronged, grow same market revenue, expand in existing markets, and enter new markets, cross-sell our integrated offering, and evaluate disciplined acquisitions where they are financially accretive and strategically aligned.

Same market revenue increased $53.1 million, or 3.8% year-over-year. New market revenue in the quarter was $21.3 million. For new market starts in the quarter, we opened two new 911 systems in markets where we already had air operations, advancing our integrated market strategy. We also opened three new air bases, two adjacent to existing operations, expanding our footprint, and one in a new region with future growth potential. Also in the quarter, we executed new agreements totaling over $43 million in incremental annualized revenue. We continue engaging with states and other stakeholders on rural healthcare access and EMS models, including opportunities tied to state-led rural health transformation initiatives under the Rural Health Transformation Program with our 911 REACT platform. 911 REACT provides rural areas with the connection point to care that is desperately needed in these healthcare deserts.

While we believe we are the best positioned to help solve rural health issues, we also believe we are the best to provide urban system rescue. Over the 4th of July weekend, as part of our response capabilities, the State of New York requested 50 ambulances and 110 personnel for the City of New York to supplement the FDNY during what is typically the busiest weekend of the year for local EMS. GMR teams responded to over 2,200 emergency calls throughout all five boroughs. This short deployment is just another example of GMR's ability to be the safety net for EMS across the country. Under our event medical operations, we covered seven of the 11 stadiums hosting FIFA World Cup games, as well as provided coverage for several of the teams' practice facilities.

We treated over 3,000 patients across the U.S., including about 300 transports and one full cardiac arrest resuscitation. I will now turn it over to Brian, who will provide more detail on the financials.

Thanks, Ted. In the second quarter of 2026, GMR reported net revenue of $1.49 billion, a 3.3% increase year-over-year. Compared to the same quarter in 2025, Q2 air volumes were up 6.9% due to strong request demand coupled with improved capture rate. Emergent ground transports increased 2.4%, driven by strong same-store demand, while non-emergent ground transports decreased 3.0%, reflecting our deliberate strategy of redirecting our resources towards higher acuity responses. As a result, during the quarter, total patient encounters associated with our focus areas of emergent transports and Nurse Navigation grew 3.7%, while lower reimbursement patient encounters associated with non-emergent wheelchair and non-transports decreased. On margin, our operating discipline remains centered on contract profitability, labor productivity, resource utilization, rate adequacy, and operational efficiency.

Following the strategic review process that began in 2022, we have continued to focus the portfolio on core operations and better performing services, including reviewing, renegotiating, and, where appropriate, exiting contracts that did not meet the return thresholds or strategic requirements. We also continue to benefit from efficiency initiatives in billing, collections, staffing, fleet utilization, and shared services. Long term, we believe margin sustainability will be supported by integrated operations, payer relationships, disciplined contract structures, and continued refinement of the independent dispute resolution and other reimbursement processes. Net transport revenue per ambulance transport, or NRT, increased 1.4% compared to the prior year quarter. Revenue performance was driven by a positive mix shift from non-emergent to emergent transports and strong underlying NRT improvement on a like-for-like basis.

This was partially offset by an approximate $16 million payer mix shift impact from the expiration of the Affordable Care Act exchange subsidies as patients shifted out of commercial insurance and into self-pay, which was in line with our expectations and was included in our prior guidance. Additionally, the current quarter did not benefit from the same level of favorable changes in revenue estimates recognized in the prior year period, which were largely associated with collections on No Surprises Act claims from earlier dates of service. During the second quarter, changes in estimates predominantly related to No Surprises Act claims were approximately $74 million lower than the prior year period. This creates a meaningful variance in the year-over-year comparison in net revenue per transport, total revenue, and adjusted EBITDA, which was $284.5 million, down 11.8% from the prior year.

Aside from this comparability impact, the business continued to demonstrate strong underlying revenue and operating performance during the quarter. Turning to expenses, total operating expense increased 19.4% to $1.43 billion in the quarter, compared to $1.20 billion for the same period in 2025. Employee wages, benefits, and taxes increased by 24.5% to $925 million. The increase year-over-year was primarily driven by increased stock compensation expense of $129.6 million related to the vesting of stock units associated with the execution of the IPO. The remaining increase was primarily driven by improved staffing and normal wage adjustments to attract and retain talent. The average base unit wage increase during the quarter was 3.3%. Maintenance, fuel, and other direct expenses increased by 21.1% to $136.4 million. The increase was primarily driven by fuel unit costs associated with the Iran conflict and the timing of aircraft maintenance events.

We also saw higher than normal inflationary costs impact lines that have a direct correlation with the suppliers' underlying fuel costs, including travel and shipping costs. Other operating expenses were generally in line with expectations. As reported, we recognized a net loss of $28.3 million in the quarter compared to net income of $80.8 million in the prior year period. The year-over-year change was primarily driven by $142.3 million of expenses associated with our IPO, as well as the lower changes in estimates already mentioned related to No Surprises Act claims on older dates of service. Shifting to CapEx, cash flows, and liquidity. Cash used for CapEx and aircraft financing was 6.3% of revenue for the second quarter of 2026, compared to 4.5% of revenue for the second quarter of 2025.

The increase was primarily due to the timing of CapEx purchases in both years, as well as our decision to pull forward certain purchases that were planned for later in the year to capture available price discounts. GMR finished the second quarter with $420.0 million in cash and cash equivalents and undrawn ABL with $696 million of cash borrowing capacity after letters of credit. Our free cash flow was approximately $15 million. Net leverage finished the quarter at 3.5 times, down from 4.3 times at the end of 2Q last year. We expect strong cash flows to drive this below 3.3 times by year end and have line of sight to 3.0 times before the end of 2027.

Shortly after the IPO, Moody's and S&P upgraded our credit ratings from B2/B to B1/B+, respectively, triggering a 25 basis point interest rate step down on our term loan facility. Moving on to guidance. We are reiterating our full year earnings guidance. We continue to expect revenue in the range of $5.89 billion-$6.18 billion, our adjusted EBITDA in the range of $1.135 billion-$1.195 billion and total cash used for CapEx and aircraft financing between 5.1% and 5.3% of total revenue. Our guidance assumes continued momentum in transport rates and volumes, a stable payer mix that already reflects the elimination of the ACA exchange subsidies, and the ongoing impact of the prolonged Iran conflict. In summary, it was a strong quarter. We had strong demand for and grew our core emergent services. We collected more for those services. Base unit wage costs were moderate.

We have ample liquidity enabling further de-leveraging. Now I will turn it over to the operator to open for any questions. Thank you.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Scott Fidel with Goldman Sachs. Your line is open. Please go ahead.

Hi. Thanks, and good morning. First question, just was hoping to get maybe a little bit more context to the extent you can provide it, just around the IDR dynamics and appreciate the flagging the year-over-year change. Maybe if you could just sort of put that maybe in the context of more of year to date and the first quarter. Did you have, I don't recall, similar dynamics, but it seems like that was more of a meaningful number in the second quarter of last year. I think you mentioned having maybe some sort of prior year sweeps and collecting some of those funds. Just maybe more broadly, just talk about the trends with IDR in terms of how basically the revenues that you're generating from that, to the extent you can, have been on trend year to date.

Hey, Scott. Thank you. This is Brian. Last year in the second quarter, we had about $79 million worth of change in estimate related to the No Surprises Act stuff. This year was about $5 million. So that drives that $74 million delta. What that really says is we've been able to really dial in the estimates. This is all related, the stuff in 2025 is really related to stuff much earlier. So feel really good about our ability to predict the revenue here. There's still some older stuff hanging out there. We will continue to try to go get that really old stuff, but feel that we're going to be more in this 0+ or -5 range here as we go forward.

Okay. Got it. For my follow-up question, maybe if you could walk us through just the payer mix dynamics in terms of fully bridging to the year-over-year changes. Certainly, heard the call out around the impact on the exchanges and would imagine that that certainly had a meaningful amount of it. Should we think about the lower commercial payer mix year-over-year being largely a function of both the impact from the lower exchange revenues and then combined with the lower IDR revenues that you already recognized? Would that largely comprise it, or just curious if there's anything else that we should be aware of. How you're thinking about payer mix trends within your guidance into the back half of the year. Thanks.

Hey, Scott, it's Nick. Let me tackle a higher level, and then Brian can get in a little more granular. When we had our last call, we had said we saw little, if any, impact first quarter. We started seeing some impact in the second quarter in the ACA, and I recall mentioning we'd seen that in our own benefits. We had more employees taking on our employer benefit plan. We suspect that these were folks that were on the exchanges looking for other alternatives. I also mentioned whether you're on the gold plan or the bronze plan doesn't make a difference for our types of interventions. We get paid. We did see some impact in second quarter that Brian can expand on and mentioned, obviously, in our call here. Thinking we still need to better understand it. Where are these folks?

Are they all going to self-pay? Are they all going to different commercial, and we're seeing evidence of that? The other key thing we're learning, and I think it showed up, at least in what I've read on some of the hospital readouts recently, geographically, it's different as well. We have parts of the country where, yes, we'll see more go to self-pay, other parts of the country that we're finding them now in commercial plans, which is actually an upside for us. Still, thinking about all of this, studying it, learning more, and anticipate we'll learn more even this quarter. I'll hand it over to Brian to get a little more granular to tackle some of the numbers around your question.

Yep. The short answer to your question is yes, it's the exchange impact and the No Surprises Act year-over-year comp that really drive the payer mix shift. To expand a little bit more on what Nick said, yeah, we're seeing it exactly where we thought we would see it. It's the big exchange providers, the Molinas, the Centenes, a few of the bigger blues that are in the exchange programs. We've seen the decrease in their volumes in the states that they were heavy in. Really since April, we've seen a very consistent mix shift relative to what we had expected, and so that we've got that in our guidance as we go forward. We had it in our guidance before. It's still in our guidance. We'll keep watching this, as Nick said. Got to make sure we understand where everybody ultimately lands.

It's been really consistent here across the quarter.

Closing comment I'd make here, Ted and his teams, as we figure out those geographies, remember, we do have some levers to pull. We can go back to the counties. We do have subsidy programs. We can reopen up some of those contracts on pricing. So there are some levers. We haven't flipped them yet because we want to better understand where the impact is.

Okay, helpful details. Thank you.

Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.

Hi, guys. Thanks so much for the question. I have lots of conceptual questions and maybe one numbers cleanup question. You talked about the improved capture rate as one of the nice improvements in the quarter. Can you talk a little bit more about that? I know obviously the weather is better in the second quarter than the first quarter, but is that sort of what you're referring to? Or is there something more underlying than that that also helped improve the capture rate? Thank you very much.

Elizabeth, I will have Ted expand on this. This is Nick. There is a lot of levers here that we are looking at. Some of it is technology, some of it is recruiting of pilots and medical staff, making sure we have people in the right places, studying trends. You heard Ted mention Transport.net and how that drives, one, making sure we understand the demand, where it is, and that we are readily available to capture it. Obviously, weather, and even with weather, we have talked about further investments in IFR, which mitigates some of the weather impacts. I will ask Ted to maybe provide a little bit more color around this and the initiatives we are having on the air side.

Yeah, and that quarter specific, in Q2, the way the weather was impacting different parts of geographies for us, too. So we see higher capture rates in certain parts of America generally, and that is where we have seen a lot of the weather improvements, and we saw the capture rates improve with that also. So that was a big chunk of the reason why. We are going to continue to make all the improvements and investments as IFR, different types of aircraft. We have been bringing them in from one of the vendors specifically at a pretty good clip right now. So we are excited about that. We do see the results every time we bring in the IFR aircraft.

Great. My numbers cleanup question, just to make sure that we are modeling your go forward correctly. One, I heard you say sort of a continuation of high oil pricing expectations. Is it currently sort of that current rates continue for the rest of the year? So that is the first part of it. Then secondly, obviously the FIFA World Cup doesn't happen every year. So is it possible to parse out the specific FIFA World Cup part of the revenue just to make sure that we are not comping you off of it for next year?

Yeah. I will take the second part first. The FIFA World Cup was a couple million dollars, a very low revenue piece.

Right.

Not all of that flows through to earnings. It is a very small piece. The oil prices on a go forward basis, we use the forward curve. The average for the rest of the year is about $80 bbl, a little bit higher in August and September, a little bit lower in November. I think the market is assuming, at least for the rest of the year, there is continued Iran conflict with potential for a little bit of relief at the end. We have baked that in going forward. That is $10+ million a quarter of incremental fuel relative to what we had initially, we would have done if we were setting a budget or something before the year began. All of that is baked in.

Got it. Super helpful. Thank you very much.

Your next question comes from the line of Benjamin Rossi with JPMorgan. Your line is open. Please go ahead.

Good morning, and thanks for taking my questions here. Just as a follow-up on the IDR comments, by my maths, during the first half of the year, you have lapped about $110 million in out-of-period benefits from IDR last year. When we think about the back half of the year, if you were to receive no IDR benefits during 3Q and 4Q, what would this out-of-period comp dynamic look like? Is it fair to think of the step-down during the second and a half of the year being similar in magnitude as the first half? Just curious on what that contribution looked like last year during the second half compared to the first half.

Yeah. Thanks, Ben. The number's about the same. It's just under $100 million was in that second half of the year last year.

Got it. Okay. As a follow-up question, the press release, you mentioned some new business wins. Can you just elaborate on those opportunities and how you're thinking about potential contributions from these wins in the back half of the year? Thanks.

We don't get into specifics per contract, but overall, there are 911 wins both on the ground and air. Air were adjacent markets, I think, as I mentioned, where we had opportunities in airbases and expanding footprint for us. When we can operationalize the next town over, the next county over, we get such great operational synergies with it. When we link in our Transport.net, we're actually building in more aircraft into that web for the 911 centers as they're using it. That's been a big piece of the Q2 on the air side. The ground side was two new 911 wins in new communities that we already had the air. It was great that we were able to bring in the ground operations, create that integrated market.

Those were in the Southeast, and they're excited because we see a lot of that opportunity continue for the rest of the year, these small, midsize communities across the U.S.

Great. Thanks for the additional details.

Your next question comes from the line of A.J. Rice with UBS. Your line is open. Please go ahead.

Your line is open.

Hi, everybody. First, maybe just to pursue a little more on your rollout of your 911 Nurse Navigation. How much of your footprint does that address today? Is there an ultimate target of how much of your footprint you can get to and what the pacing or limiting factor on rolling that out is?

A.J., it's Nick. Again, I'll start at a high level and ask Ted to offer up some more details if I miss anything here. We're probably 29 communities today of coverage, representing just shy of 20 million covered lives. I think you'll recall, and we've talked about in our presentations, we have approximately 200 million lives in the geographies that we serve. That's the potential. Do I think, as the CEO and pushing the team, as you look at our five-year plan, could we potentially get to 100 million covered lives? I think that's realistic. I think we have plans in place. What does that mean for the impact of the business? You've all challenged us before on what is 911 Nurse Navigation in itself worth. It allows us to run our business better. It allows us to win more business because of the value.

Just real interesting, actually, in a session we had yesterday, we have evidence of where we put in 911 Nurse Navigation, and Brian can speak to the numbers here, on 150 basis points lift on just margin improvement in the markets we put it in. What's even more interesting, what we're learning, when we have nurse navigation combined with a treat no transport, we're actually making better reimbursement on that versus a basic life support transport. That's the dynamic that's important and the reason you'll see us continue to talk about 911 Nurse Navigation, the push of it, and the proliferation, and how it positions us in the markets where we're deploying. Ted, I don't know if you'd offer up any other detail on that.

Yeah. For us, the 911 Nurse Navigation really is three distinct growth channels. One is our existing footprint, which you mentioned, and we can continue to spread that out in multiple over the course of each year. We're going to keep growing those out. The second channel is the Rural Health Transformation Program and the new bids there as we're proposing that across the U.S. And the third channel is the big metro models, right? Where we're working the nurse navigation in with the very large municipal city bids. Those take a little bit longer on the sales cycle, obviously, because they're very big municipalities. But we have a great sales team that's working very closely with each one of those cities as they walk through those proposals. That's how we see those three distinct cycles.

Each one has got a lot of room in it, and we're excited because we've just opened up the second center in Phoenix. We've got a lot of capacity and room to grow. We've thought both Phoenix and here in the Dallas area, being able to get the nurses, and so we continue to grow that, the actual nurses taking the call. We're ready for it on the technology side, space side, and continue to grow it.

Okay. Thanks. Maybe the follow-up, you mentioned on the prepared remarks, you would be at 3.3 times leverage by the end of the year, 3 times by the end of next year. Is 3 times a steady state that you are comfortable with? If it is, it sounds like there are some potential deals out there. Can you categorize what you are seeing? What kind of things you might be interested in doing, and what kind of valuations are they going to be potentially immediately accretive to you if you can do some things?

AJ, I am going to start backwards with your question. We had hoped and anticipated post the IPO we would have some arbitrage opportunities. Admittedly, with where we are trading and where the market is evaluating things, I think that has created a bit of conservatism around the pipeline. We do have a healthy pipeline. We have probably got about 15 targets from some small, mid-size to some largers. Ultimately, I lean on Brian and the team here on how do we best leverage our capital? To go now to the front end of your question, are we better focusing on de-levering for the time being? We are going to scrutinize the M&A opportunities. There is a couple of opportunities in adjacent markets where we have to ask ourselves the question, can we just win the business? Is it quicker to buy it?

We have mentioned to you guys in the past, we are going to look at a market that has strong ground presence. Do we buy an air asset there? That is how we are looking at it. I think, as you said in the prepared remarks, this is a conversation Brian and I and the teams have often is, where are the opportunities now? We constantly look at our current rates. Is de-levering combined with some of that in our best interest? There will be more news coming along those lines, probably in pretty short order.

Okay, thanks.

Your next question comes from the line of Joanna Gajuk with Bank of America. Your line is open. Please go ahead.

Hi. Good morning. Thanks so much for taking the question. Actually, I have a two-part question on the IDR process. First, about the final regulation that came out, a cost for lower fee per claim going to an arbitration, but there's some other changes in there. Just curious, how do you expect this reg, if at all, to impact your IDR process and your experience there? The second part, we heard from the health plan industry lobby groups. They've been very vocal. They call for some changes to the IDR process altogether. They complain about the number of claims, the rates the providers get awarded. What are your thoughts about potential changes to the IDR process? Thank you.

Joanna, let me hit the second part of your question. I'm going to hand it over to Brian. On the second part, we understand the health plans are pushing back on the volume. Our belief is a lot of that has less to do with us on the EMS side of the business, and more on what they're getting from other provider groups. That's our assessment of a lot of that. As Brian has mentioned in the past, and he can provide an update, we continue to bring some of the larger plans in-network. We have great collaboration with them, and we see that continuing. Now, honestly, we have our own concerns on how the plans behave on some of them, and some pushback, and have been winning some of those arguments as well. I'll hand it over to Brian to tackle the first part of your question.

Yeah. Let me just hit quickly on the second part as well. We continue to have really good conversations with a number of large payers, to get them in-network. You've also got some large payers that really have no interest in getting to a reasonable rate and term environment, and so that group we will continue to have to beat them in IDR. I'd rather have them all in-network. But, it takes two to get to there. On the first part, no, I think we appreciated the ruling or the new rules from the government on how the IDR process will work. I think it really cleaned up a little bit. Didn't have really much impact to us from an overall perspective. We do appreciate the lower fees. That's a slight tailwind for us, in the very low millions of dollars range of $1 million-$2 million on an annual basis.

Nothing material. But we think the administration coming out and reaffirming the current process was very helpful. It would take Congress to reopen the process to do something different. Until that happens, if that happens, we will just continue to work to get everybody in-network, and if not, we will continue to work to beat them in IDR.

Thank you. If I may, just to follow up on the commentary around the subsidy expiration impact in the quarter. Should we assume a similar amount per quarter going forward? So, $16 million? Just to clarify, that was the EBITDA type headwind you referred to?

Yes, it is both revenue and EBITDA. Yes, that is what is in our guidance going forward, is about that $15 million, $16 million a quarter.

All right. Thank you.

Your next question comes from the line of Andrew Mok with Barclays. Your line is open. Please go ahead.

Hi, good morning. I think air bases increased pretty meaningfully in the quarter. I think it is up 10 or so. Do I have that right? What drove that level of accelerated expansion, and was that all planned or is that a result of new or unexpected wins? Just how should we think about the pace of air base expansion for the balance of the year?

Yeah. No, I think we were up three or four bases in the quarter, not 10. As we go forward, we do have a large number of aircraft coming really over the next couple of years. We have a number of them. I do not know the exact count. It is in the high single digits for the remainder of the year. It is actually down a little bit from what we would have projected at the beginning of the year. We have one of our aircraft suppliers is just a little bit late with some of their deliveries. We are seeing a few aircraft push out of 2026 and into 2027, by a couple of months. Not material or meaningful, and it will all catch up in the long term. We are not at 10, but we do have good air volume growth or air base growth going forward.

Yeah. To your question about plan, these aircraft that Brian Tierney is mentioning are all tied to contracts as well. They are planned. As they come in, they will be deployed.

Got it. Okay. Just a follow-up on the IDR side. Can you share where your in-network rates stand today and just the progress you've been able to make with this IDR backdrop developing more negatively against the insurers? Thanks.

Yeah. Yes, we get higher rates through the IDR process than we are willing to take in-network. I'd rather have them in-network, and we'll take a discount, because the whole process is easier. The cash is faster. With the right partners, you can get better terms. So you got your claims flow through the process a lot easier. Again, I'd rather have them in-network at a little bit of a discount, relative to what we're winning in IDR. The contracts that we're signing, they are just below our IDR rates. So, we continue to make progress with those groups.

Andrew, the other thing to add, there's two reasons. The obvious on why we don't want to mention the rate is for competitive reasons. The other thing is, I think we've walked through this before as well. What we find is when we're bringing folks in-network, we see a drop in medical necessity denials. We see a drop in the DSO. So there's a lot of other aspects, so.

The rate difference, I think we more than make up for as we bring them in-network. So we hesitate on putting that out there because honestly, I think it's a much better deal to bring them in-network, even though the sticker price looks a little different, we more than make up for it.

Right. Maybe I should phrase it better. I wasn't looking for the rates themselves, just what percentage of your contracts are in-network today? What progress have you made, and where do you see that going?

Hovering around the 70%. I think if we drill down, we're like at 69%, but

Yep.

I keep waiting for Brian Tierney to tell me the next big one that's just about to be signed.

We've got that number in the hopper. Remember, this is just an air conversation, right? All of the ground in-network, out-of-network is not the same concept. So that 69% is where we landed the second quarter for in-network and known reimbursement.

Got it. Thank you.

Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is unmuting. Please go ahead.

Great. Thank you. For the implied second half guidance, can you just touch on volume expectations, ground and air, any noticeable changes in the market that you are seeing relative to first half?

For us, how we are expecting to roll out our new base growth for second half is what we are still projecting and what you see in the guidance. We have worked through that. We have got not only air new bases, but then any of the starts. That is all projected. We do still see and always managing what weather impacts are happening. Some of the fire activity that happens across the U.S., obviously from an air standpoint, sometimes cause some the weather behavior, believe it or not, and ability to fly out west. We are watching all that through the course of the year, but what you see on the forecast and how we plan that out is on the base expectations of aircraft coming in and the base starts that we have got working in.

Got it. Then just a follow-up for Brian Tierney. You talked about just some operating efficiencies. Can you just touch on some of the key drivers there and maybe expand on ways you are using technology to help expand margins over time?

Yeah. Well, I think from an operations efficiencies, we continue to match our labor to our volume. In markets where we've got stronger volume, it's not always a one-for-one that you've got to add incremental labor costs. We can do that. Then also if we've got a market where maybe the volume's down a little bit, the operations do a really good job of trying to manage the staff to that level. We're always looking for efficiencies across the back office. I think we've got 40 or 50 different AI-related initiatives, some of them bigger, some of them smaller, that just help drive the efficiencies that we should get out of our system. We should be better today than we were yesterday and a little better tomorrow than we are today. A little bit of incremental improvement all the time ultimately adds up.

We've got folks that are always focused on making sure we're spending the right amounts out of our procurement teams and so on. So it's a culture and a focus for us just to make sure that we're being as efficient as we can.

Yeah, I would add two things. One, we often talk about our scale and our size. One of the things that we've gotten really good at, and still more room to get better at, is how do we get better alignment across the whole organization? I often quote my friend Pareto. The 80% that's similar across our platform, we're getting really good at leveraging best practices, better alignment, standardization across the platform with leaving that 20% of the local flavor and intervention that we need to. So we're seeing a lot of that on the operations side. Just to lean on the AI implementations. One, we have an AI governance committee we're very sensitive to. We are in healthcare.

But, not to sound too cliché, our North Star remains and our effort remains patient care and how do we continue to optimize the time that our providers spend with hands-on patient. That's always our focus going into any deployment of technology innovation. We really believe if we do that right, we'll see the efficiencies as well in the system as we're providing better care.

Okay. Thank you.

Your next question comes from the line of Daniel Grosslight with Citigroup. Your line is open. Please go ahead.

Hey, this is Luis in for Daniel. Guidance does contemplate a step down in EBITDA margins in the back half of the year relative to 2Q, and I know that you're rolling out some ground 911 contracts, which should benefit NRT. My question is, what is driving the margin compression in the back half? Thanks.

Thanks, Daniel. I think a little bit, if you're comparing first half to second half, I think as we mentioned in the first quarter, we really didn't see the exchange impact that we saw really start in the second quarter that will continue through the rest of the year. Probably another driver of that is really just the whole Iran conflict related costs. Fuels really didn't spike up until the latter part of March. We've really seen that $10 million plus a quarter really run through the P&L. Then we've seen, call it Iran conflict-related costs pop up across the P&L in small ways. Our airfare for moving crews around is up. Shipping costs, fuel costs. All of those just add a little bit more to the back half of the year. I know we had a new one yesterday, fuel surcharges on office supply delivery.

Making sure that we're minimizing the deliveries. It's that kind of thing that I think will impact the back half of the year. But feel good about our guidance and the range that we've got out there.

Got it. Thank you.

We have reached the end of the Q&A session. I would now like to turn the call back to Nick Loporcaro for closing remarks. Please go ahead.

Thank you again for joining our call today. The second quarter reinforces our confidence in GMR strategy and execution. Underlying performance was strong. Our mix continues to shift toward higher yielding services. Nurse Navigation is scaling, and our liquidity position remains strong. We are proud of the role GMR plays across the EMS system, from major events to disaster response, to everyday care in the communities we serve. None of this would be possible without our exceptional frontline clinicians, pilots, mechanics, dispatchers, support personnel, and regional leaders. They keep care at the center every day, and I want to thank them for their commitment to patients, partners, and communities. Thank you for your continued support, and have a wonderful day.

This concludes today's call. Thank you for attending. You may now disconnect

Hello everyone. Thank you for joining us and welcome to GMR Solutions' Q1 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Krister Sorensen, Vice President of Investor Relations. Krister, please go ahead.

Thank you. Good morning and welcome to the GMR Solutions Q1 2026 earnings conference call. Joining me today are Nick Loporcaro, our Board Chair and CEO, Ted Van Horne, our President and COO, and Brian Tierney, our Executive Vice President and CFO. Before we begin, note that during this call, we may make forward-looking statements and that actual results may differ materially from those statements because of various risks and uncertainties, including those described in our most recent earnings report posted on our investor relations website and in the risk factors section in our IPO prospectus. Today's remarks also include certain non-GAAP financial measures, including adjusted EBITDA. You can find a reconciliation of these measures in our earnings release that is available on our website, investors.globalmedicalresponse.com. Unless otherwise noted, references to the quarter will be for the first quarter of 2026. I will now turn the call over to Nick.

Thanks, Krister, and thank you all for joining us today. This is our first earnings call since the successful completion of our IPO a few weeks ago. An incredible accomplishment that could not have been possible but for the dedication of our frontline and support staff as we refocused our energy on our core competency of emergency care over the past few years. With this, we saw profitability grow and our financial profile strengthen, which led us to the IPO. Now we can more publicly, no pun intended, demonstrate and educate the masses on what EMS actually delivers, and that is that we deliver healthcare. We are the front line of the front line. We are the tip of the spear. There's no one further upstream than we are in an emergency situation.

GMR is the largest provider of emergency medical services, serving 5.5 million patients annually, covering markets that represent over 60% of the U.S. population with one or more of our solutions. Our 24,000 highly trained clinicians and fleet of ambulances and aircraft are rapidly deployed to navigate and provide essential alternate site out-of-hospital care for patients when they need us most. As a national leader of EMS, this puts us in an exceptional position to be the innovators of the practice and raise the tide for the entire industry. We accomplish this through our 911 Nurse Navigation offering, our Concierge platform, and our online ordering system, Transport.Net. Each of these innovations help take the friction out of the traditional run EMS systems and ultimately provide better patient care, more efficient operations, and better hospital throughput while delivering savings to the payers in turn.

With that, we are pleased to report strong financial and operational results in the first quarter of 2026. Q1 revenues were $1.46 billion, which represents 6.6% year-over-year growth and continues to highlight the strong demand for the mission-critical services that GMR provides and our strong competitive position. Q1 adjusted EBITDA was $305 million, a year-over-year improvement of 9.7% and EBITDA margin increase of 59 basis points versus the prior year quarter to 20.9%. These results reflect the continued emphasis on improving the efficiency of our integrated operating model and shared services infrastructure designed to effectively support our operators in the markets we serve. I'll note that both revenue and adjusted EBITDA came into the top of the range we provided in the flash of the quarter in the S1. Q1 cash CapEx and cash used in aircraft financing combined was 5.4% of total revenue, compared to 4.7% in Q1 2025.

GMR completed approximately 1.4 million patient encounters during the quarter. We provided ground medical services to over 1.3 million patients, which includes more than 1 million transports, along with over 28,000 calls through our 911 Nurse Navigation office. The remaining approximately 270,000 ground patient encounters consists of interventions on scene that did not result in a transport. During the quarter, we provided air medical services to over 34,000 patients. Our strong performance was driven by continued same-market revenue growth, revenue from cross-selling and new markets, disciplined cost management, continued optimization of our clinical and operational platforms, and an unwavering focus on service to our communities by keeping care at the center of what we do. Ted and Brian will elaborate further on the detailed drivers of the performance later in the call. I now want to provide an overview on regulatory matters.

We've engaged with Congress to request that it enact new legislation requiring CMS to modernize air and ground ambulance reimbursement based on cost data that CMS is authorized to collect. GMR has highlighted to Congress and the administration the inadequate reimbursement we receive from Medicare. I also raised this issue when I met with the CMS Administrator, Dr. Mehmet Oz, in February. As a leader in EMS, we feel an obligation to raise our hand and move the whole industry forward. We are optimistic that bipartisan legislation will be introduced in the House soon. Last week, CMS released a proposed rule that would substantially overhaul the use of state-directed payments and supplemental payments, including intergovernmental transfers, or IGT, with respect to Medicaid funding.

Under the proposed rule, a state's fee-for-service Medicaid payments would be limited to between 100% and 110% of Medicare rates if the state's total payment is targeted to a subset of providers within a broader provider group. The proposed rule includes ground and air medical groups, both private and municipally run. Notably, if the payment is not targeted to a subset of providers, a type of parity analysis within a broader provider group, then the Medicare rate cap does not apply. State plans that are impacted by the proposed rule will have a transition period until 2029. Albeit not common that ground or air Medicaid payments exceed Medicare rates, we are evaluating the potential impacts of the proposed rule from all perspectives. Early analysis suggests a less than $5 million negative annual impact to GMR from the proposed rule.

We are also evaluating the proposed rule's impact on select municipal-run systems and the sustainability of their model versus our private provider model. Overall, we remain encouraged by the progress made in both the federal and state issues, and we'll keep you updated as we learn more. I'll now turn it over to Ted to dive deeper into our performance within the quarter.

Thanks, Nick. GMR's focus remains growing our core emergent services, completing non-emergent services where they make fiscal sense, and realizing efficiency through the use of innovative offerings like 911 Nurse Navigation. During the quarter, patient encounters related to emergent transports and nurse navigation increased 1.7%, while low to no reimbursing patient encounters related to non-emergent and wheelchair transports and those encounters that did not result in a transport decreased 5.2%. More specifically, total emergent transports increased 0.7% during the quarter. Same market emergent ground increased 0.5%, despite a less severe, shorter than average, and much shorter than prior year flu season. Same market emergent flights increased 1.9%. Our weather cancellation rate in the quarter was 17.1%, 81 basis points lower than the prior year quarter and 220 basis points lower than the previous three-year average for the quarter.

Our 911 Nurse Navigation solution continues to expand, currently serving 29 communities across the U.S. We have additional 13 markets currently in the implementation phase, which will bring our total covered lives to over 22 million. In the quarter, our nurses navigated over 28,000 911 calls, which was nearly a 47% increase over the prior year quarter. In the 911 markets we have historically served where we implement nurse navigation, we have seen on average a 15% reduction in dry runs, effectively reserving ALS resources for the highest acuity patients. We've also seen a 2.5% reduction in total transports. These are transports that we would likely receive little to no reimbursement for. Our nurses navigate these calls to care options and other transport modalities that are better for the patient, better for our crews, and better for the hospital systems that are plagued with overcrowded emergency departments.

Together with these stakeholders, 911 Nurse Navigation allows us to find a better way to improve patient outcomes. Patient encounters that did not result in a transport decreased 0.8%. Lower reimbursing non-emergent and wheelchair patient encounters decreased 7.2% and 52.8% respectively when compared to the prior year quarter. This is consistent with remaining focused on our core emergent services and maintaining contracts that provide appropriate reimbursement. Solutions like Concierge, which create guaranteed reimbursement from partner hospital systems for non-emergent transports, are part of this strategy. With respect to labor, our crew staffing metrics continue to show trends in line with expectations. Total crew wages in the first quarter increased 3.0% year-over-year, predominantly tied to wage increases and filling open positions. Base unit cost, which reflects the year-over-year inflation in our base wages, was up 3.8% per payroll hour as expected.

Our crew vacancy rate declined by 77 basis points as positive hiring continued in the quarter. We will continue to invest in our crews to ensure we can hire and retain our pilots, mechanics, and clinical staff, critical to the sustainability of our operations. As for new business growth, we remain bullish about our ability to win new business opportunities in our core areas of emergency medical services, growth of 911 Nurse Navigation, and expanded municipal ambulance contracting. During the quarter, our revenue included approximately $20 million in new market growth. Also in the quarter, we executed new agreements totaling nearly $47 million in incremental annualized revenue. Last year's federal budget reconciliation law created a Rural Health Transformation program that will direct $50 billion over the next five years toward state-led efforts to transform how they deliver and finance healthcare in rural areas.

Since passage of the law, we've engaged with officials from nearly every state to share ideas about how GMR and the EMS community can play an even bigger role in ensuring access to quality healthcare in rural and frontier areas. We are responding to active RFPs from several states and engaging directly in contracting discussions with others. With rural healthcare under pressure as a result of hospital closures, EMS providers can and should be part of the solution to these challenges across the country. We stand ready to help states solve these challenges as part of our national growth strategy. I will now turn it over to Brian, who will provide more detail on the financials.

Thanks, Ted. As Nick mentioned, we had strong performance in the first quarter. In the first quarter of 2026, GMR reported net revenue of $1.46 billion, which is a 6.6% increase year-over-year. Compared to the same quarter in 2025, Q1 emergent air volumes were up 1.1%, emergent ground transports increased 0.6%, while non-emergent ground transports were down 7.2%. Overall emergent air requests decreased 0.8%. Flights were impacted by favorable weather, resulting in a capture rate increase of approximately 87 basis points to 45.1%. We estimate that the favorable weather impacted revenue by approximately $11 million compared to the prior year quarter. Net revenue per transport increased 7.9% compared to the prior year quarter.

Revenue performance was driven by a positive mix shift from non-emergent to emergent transports and strong underlying air and ground NRT improvements on a like-for-like basis, driven by strong collections performance in our normal collection cycle. As expected, we saw a decrease in collections from older dates of service associated with the initial implementation of the No Surprises Act independent dispute resolution process, or IDR. During the quarter, we collected about $7 million from IDR-related transports performed in 2022 through 2024, a decrease of nearly $24 million from similarly mature dates of service during the prior year. Separately, during the quarter, we did benefit from roughly $16 million in collections from 2024 dates of service related to the implementation of California's state surprise medical billing legislation.

Recall that the federal IDR process applies to air transports, while state balanced billing laws generally require payers or fully insured state plans to pay either the locally set ground ambulance rate or a multiple of Medicare. Following the implementation of the California bill on January 1, 2024, select payers underpaid the required local rates. While it took us time, we were successful in collecting on the correct rates in the first quarter of 2026. In the first quarter, we did not see the expected negative impact on payer mix as a percentage of transports from the implementation of the One Big Beautiful Bill Act, which was expected to decrease Medicaid mix, or the expiration of the Affordable Care Act exchange subsidies, which were expected to decrease commercial mix.

When closing April, we did start to see some of these impacts appear, perhaps as a result of the timing of recognition by the payers of member exchange premiums. We will continue to closely monitor payer mix and have included some degradation in our guidance going forward. Our DSO for the quarter decreased three days to 76 days from 79 days in the same quarter last year. We continue to monitor our DSO metric to ensure the reasonableness of our estimates of revenue and AR. Regarding payer mix, payer mix by net transport revenue for the quarter was 57% commercial, 25% Medicare, 9% Medicaid, 7% from other third-party payers, and 2% self-pay. Payer mix by net transport revenue for Q1 2025 was 56% commercial, 26% Medicare, 9% Medicaid, 7% from other third-party payers, and 2% self-pay.

Contributing to the mid-shift are the higher rates that we are able to drive for both out-of-network and in-network payers as a result of the No Surprises Act. We are winning IDR disputes at a rate over 90%, and we utilize the amounts we are winning through the No Surprises Act adjudication process as reference points when renegotiating expiring air contracts with lower reimbursing in-network payers or when bringing new payers in-network. During the quarter, effective February 1, we signed an agreement that brought our largest out-of-network payer in-network at reasonable rates and terms, which is expected to reduce our IDR adjudications by roughly 12%. This helps bring the percentage of our commercial air transports that are in-network to nearly 70%. Complementary revenue decreased 1.2%, or roughly $0.5 million, primarily driven by a small FEMA deployment last year for floods in Kentucky. Excluding this, our complementary revenue grew 4.7%.

Now, turning to expenses. Total operating expense increased 4.1% to $1.24 billion in the quarter compared to $1.19 billion for the same period in 2025. Employee wages, benefits, and taxes increased by 4.8% to $770 million. Crew wages increased 3.0%, driven primarily by expected wage increases. Maintenance, fuel, and other direct expenses increased by 6.1% to $119 million. The increase was primarily driven by fuel and the timing of medical supplies purchases. Fuel costs began to rise in early March due to the Iran conflict. Historically, our fuel expense is about 2% of total revenue and only about 1% is tied to the commodity price. With fuel being a small portion of our total expense and managed through bulk purchase and fuel card discount programs, we have historically not hedged our commodity exposure.

On a go-forward basis, we may consider paying for the certainty that fuel hedging provides as a potential option to further limit our exposure, and we will keep you informed of our progress in this area. Insurance expense, which increased by $9.3 million, or 27.6% to $43 million, driven primarily by increased professional liability-related claims and third-party premium expenses. Other operating expenses, which include outside services and general and administrative expenses, increased 5.7% to $228.1 million. Outside services increased $1.3 million or 3.1%. General and administrative expenses increased $11.0 million or 6.3%, primarily driven by increased system integration and enhancement expenses, software licensing and development, and freight expense. Depreciation and amortization expense was relatively flat versus prior year, and acquisition integrations and other charges decreased to $3.6 million compared to $4.3 million for the same prior year period due to reduced fees associated with previously divested business units.

Interest expense decreased 26.8% to $83.2 million as a result of the refinancing completed in September 2025. The net result is that net income increased 179.9% to $106.3 million compared to $38 million, and adjusted EBITDA increased 9.7% to $305 million compared to $278 million for the same prior year period. Adjusted EBITDA margin finished the quarter at 20.9%. Shifting to CapEx, cash flows, and liquidity. Cash used for CapEx and aircraft financings was 5.4% of revenue for the first quarter of 2026, compared to 4.7% of revenue for the first quarter of 2025. The increase was primarily driven by the timing of CapEx purchases in the prior year. GMR finished the first quarter with $426.1 million in cash and cash equivalents and undrawn ABL with $692 million of cash borrowing capacity after letters of credit. On March 6th, we reduced the preferred equity holdings by $250 million using cash.

Through the proceeds of our IPO and cash on hand, we improved our leverage position by more than $1.15 billion in total debt reduction and preferred equity redemption, resulting in an approximately $46 million reduction in annualized term loan interest expense and a $73 million reduction in annualized preferred equity dividend accrual. Following the IPO, Moody's and S&P upgraded our credit ratings from B, B2 to B-plus, B1, respectively. The upgrade by Moody's triggered a 25-basis-point interest rate step-down on GMR's existing term loan facility. This results in a $7.4 million reduction in annualized interest expense after considering the debt reductions I just mentioned. All credit enhancements combined resulted in more than $125 million reduction in annualized financing costs. Net leverage after the IPO was approximately 3.5x.

We expect strong cash flows to drive this below 3.3x by year-end and have line of sight to 3.0x in 2027. Moving on to our full year 2026 guidance, which includes actual results through Q1. We have set our revenue target at a range of $5.89 billion-$6.18 billion. Our adjusted EBITDA target at a range of $1.135 billion-$1.195 billion, and the target for our total cash used for CapEx and aircraft financing between 5.1% and 5.3% of total revenue. This 2026 guidance reflects a return to more normal collection timing following the IDR-related collections on older dates of service in 2025. It also includes expectations of a degraded payer mix by volume from the implementation of the One Big Beautiful Bill Act and elimination of the ACA exchange subsidies that we saw start to appear in April.

We've also incorporated higher fuel costs as a result of the Iran conflict and lower interest expense resulting from the new capital structure and lower upgraded rate. Adjusting for these items, and in the long term, we expect GMR to grow top-line revenue at mid-single-digit plus, resulting from same market, low single-digit volume, and low to mid-single-digit rate growth, our ability to cross-sell in existing markets, and opportunities to expand in new markets. We anticipate high single-digit plus adjusted EBITDA growth, adjusted EBITDA margins around 20%, and cash for CapEx and aircraft financing to be just above 5% of revenue. Now I will turn it over to the operator to open for any questions. Thank you.

We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Benjamin Rossi with JPMorgan. Benjamin, your line is now open.

Hi. Good morning. Thanks for taking my questions here. Can you just unpack the ACA attrition impact that you experienced during Q1, and then give us some of the details on some of the benefits that you got from ACA-related volumes during 2025? As you think about that expected embedded growth within your initial guidance, what are you factoring for ACA volumes for 2026? Thanks.

Hey, Benjamin. It's Nick. Thanks for the question. I'll hand it over to Brian in a second. In Q1, we actually saw little, if no impact, on ACA and the One Big Beautiful Bill Act, even on the Medicaid. I think what Brian's alluding to is we factored in some, but I'll let him expand on that as well.

Thanks, Ben. We saw about a 1% mix shift out of commercial into other payers as we closed April. Now one month is not a trend make, but we had expected to see some of this really in the first quarter. We've baked that into our guidance as we go forward. Total exchange, and One Big Beautiful Bill Act impact that's in our guidance for the year, really for the last nine months, is in that $25 million-$30 million total range. That's what we had expected. As we think about 2025 and before, again, we had not really seen any movement, even as in the run-up across the end of 2025 as folks were trying to figure out where they were going to get their health insurance.

Yeah. Benjamin, we're still digging into this, but there's two indicators that we've noticed. One is that we had a significant increase of our employee base join our own benefits plan, which we suspect may have been on ACA exchange-type plans. The other is, we experienced this in the past as well, where if you're on a gold plan on an exchange plan and you go down to a bronze plan, that doesn't impact our reimbursement or our billing. Again, more to dig in there as we get through to Q2, and probably more to provide once we get to our Q2 report out.

Great. I appreciate the added details there. I guess, just flipping topics to fuel impact during Q1. When thinking about the macro impact of oil prices and jet fuel, can you quantify the dollar impact in Q1 from higher prices versus your initial budgeted expectations coming into the year, maybe explain how fuel procurement mechanics flow through your P&L? Thanks.

Sure. For January, February, we were actually slightly better on a rate perspective. Really wasn't until March that we saw the increased fuel prices. I guess they started things in Iran right at the very end of February. It was about $3 million total for March, based on what flowed through the P&L. As we look forward within our guidance, we've used the latest, well, we used at the time was about, WTI was about $98. I think WTI this morning's about $92. When we built our forecast at $98, it added about $25 or $30 million to the P&L from an expense perspective as well. From how it flows through our P&L, just normally, you can think of fuel in two parts.

There's the commodity exposure, which is what we've talked about, and then there's the cost to get it from the refinery through a distribution network to our vehicles in some way, shape, or form. Roughly half of our expense is associated with commodity price, and roughly half is associated with what we call into plane, getting it from the refinery to the vehicles. As we think we've put in our S1, as well as I think I mentioned on this call, it's roughly 1% of revenue is associated with the commodity price.

Our next question comes from the line of Elizabeth Anderson with Evercore. Elizabeth, your line is now open.

Hi, guys. Good morning, and thank you so much for the question. I was curious about your IDR commentary. I think you said $7 million impact and maybe $24 million difference versus last year. For those that were trying to sort of understand how that flows through the rest of the year, would you say that that magnitude is sort of similar in terms of how you would estimate we should think about the future quarters in 2026? Thank you.

Thanks, Elizabeth. We saw a little bit more the collections from the early dates of service related to IDR really hit across second, third, and fourth quarter. It'll be probably an order of magnitude, maybe 50%-100% higher than what we saw in the first quarter from a delta perspective. We've really not seen those collections from those really old dates of service flow through here in 2026. Most of it got cleared out in 2025. We're really back to more our normal IDR collection cycle.

Got it. That's very helpful. Can you tell us, at that point, can you clarify if that impetus means that you would expect additional commercial payers to come in-network as a result of that should smooth out going forward? Are you still seeing continued interest from those payers going in-network, given your high win rates in the IDR process? Do you think that we should just view that as roughly stable going forward?

We've got two different things here. The previous comments were really on cash collections from those really old dates of service. From an in-network perspective, we continue to have really good conversations with a lot of payers. We did bring our largest out-of-network payer in-network during the first quarter. We have signed a number of agreements, both with some very small out-of-network payers, but then re-upped with some other payers as well in the quarter. I think it really comes down to the approach of the payers. We'd love to get them all in-network at appropriate rates and terms. Many we have great conversations with. Some are more challenged, and those are probably the same payers that are challenged with others as well. I think we're going to continue to drive the payers in-network as much as we possibly can.

Again, in-network, out-of-network is really only an emergent air ambulance rate component, and we're just under 70% in-network on the commercial air ambulance flights. We look forward to driving that further up.

Yeah, Elizabeth, this is Nick. Just a couple of things to maybe provide more clarity around IDR. As Brian said, we're hovering right now on that 70% in-network. We think if you look at the current commercial payer mix, we have over 600 payers. There's a long tail of smaller ones there. We probably top out at 80%, when we'll be successful bringing on a couple of larger ones in-network. One of the mysteries or one of the things I'll demystify is just because you're out-of-network doesn't mean you automatically go to IDR. We settle with a lot of the smaller ones that may only have four claims a year with us on air intervention. One, we continue to bring down the IDR volume, the IDR amount that we need to settle. The other is there's a lot of scrutiny around NSA.

We believe when we look at our business, and this is one of the items I spoke to Dr. Oz about, there's a reason we win north of 90% consistently. It's pretty clear-cut when it comes to medical necessity. I anticipate we'll get further positive momentum around this item.

Great. Thank you very much.

Your next question comes from the line of Andrew Mok with Barclays. Andrew, your line is now open.

Hi, good morning. Can you walk us through the underlying assumptions on air transport volumes embedded in guidance, including same base growth as well as the pace and contribution from new air business? Thanks.

Yeah. Thanks, Andrew. From a same base volume perspective, I think as we've mentioned, we expect in the long term to be that low single digit, 1%-2% range both across all of our transport volumes, specifically for air as we thought about 2026. We're towards the top end of that range from just a normal core growth in the business. On top of that, we also do have weather normalization for the year. If you recall, we had really poor weather across certainly the back half of 2025. Have really expected to see and have seen thus far more normal weather. That drives that percentage up a little bit higher. From a rate perspective, again, across all of GMR, we expect that low to mid-single digit 2%, 3%, 4% rate growth to continue. We've seen that for a while. We continue to see that.

We actually outpaced that in the first quarter, so we will expect to see some mix shift. That includes air and ground. As we just talked about, we do have that little bit of headwind from the OBBA and exchanges. Feel really good sitting in that low to mid-single digit rate growth overall.

Great. On the regulatory front, there's been a few developments in recent weeks. First, CMS expanded Medicaid supplemental payment reform to include emergency transport and air ambulance. Second, CMS finalized some operational changes to the IDR process. Can you walk us through your preliminary thinking on both and help size any impact to the business? Thanks.

Yeah, [Craig], it's Nick. I'll let Brian again add some extra color. I think what we've mentioned in the script here, right now we're looking at less than $5 million impact on the states where this is applicable. The flip side of that, we've nuanced it a little bit, is we actually think there's potential for share gains for us. When you look at the public provider model versus our model, we believe there's going to be significant pressure placed on them. We think there's some share opportunities for us.

Thanks, Nick. Yeah, that's on the Medicaid-capped Medicare rate. From the IDR stuff that just came out, we actually think this is going to be very positive for us from a processing perspective. We don't know that it's going to have a material impact on the financials, but the processing will certainly be easier. It also does require the payers to go through a few more steps as they go through the process to make sure they hit those on time. The administrative fee does go from $150 to $15, and so that will have a small impact on us overall. Feel very good about the structural direction that they're taking this.

It is only a proposed rule right now, just for clarity. I think it'll be open to further debate.

That's on the Medicaid side. Yep.

Yeah.

Great. Thank you.

Our next question comes from the line of Craig Hettenbach with Morgan Stanley. Craig, your line is now open.

That was Craig.

Great. Thank you.

Could you-

That was Daniel.

Oh, Daniel, sorry.

Hi. Good morning. Nick, just given your operating experience across several leading healthcare service organizations, what are some of the key attributes that distinguish Global Medical Response Solutions and where the company's positioned in the market to provide care?

Thanks, [Daniel]. A couple of things. If you think about some of the data points we put out here, we currently offer a service in communities that represent over 60% of the U.S. population. Think about that. That's approximately 200 million Americans that all dial 911 when they have a perceived medical emergency. More often than not, we're at the other end of that call or the ability to catch that call and navigate those individuals not only to the right site of care, but the right type of care, and a lot of times we can administer that care. That in and of itself, in a prior life when I led a value-based care company, one of the limitations of those models is you have to get a payer contract, get lives attributed to you, and then build volume.

In this case, we already have 200 million Americans residing in those communities that we serve. Two, the underpinnings of this is we're an essential service. People don't only want what we do, they need it. Our positioning and what we've been able to do, GMR in representing EMS, is be able to demonstrate that when you look at the clinical strength and the individuals we have in delivering that care, what we've embarked on over the last several years is tying what we do from a clinical protocols perspective to the clinical outcomes. This information loop that's tied to the health systems we work with, how we translate that back to the payer community. Today, I would tell you, we get a modest reimbursement for payers with some of these innovative models.

There's a lot more benefit that I think we can capture in sharing where the overall value of that is. I think that's a significant differentiator on how we're positioned. We talk about our size and our scale, how we can continue to innovate, which comes with the ability to invest there. I've mentioned in the past we have a full-time government affairs team on the Hill from a state perspective. We can continue to educate lawmakers and payers, one, as we continue to iterate on what it is we're delivering. Does that help with your question, Daniel?

It does. Thank you. Then just a follow-up question for Brian. You kind of walked through some puts and takes around weather and different impacts to the business. Just more broadly, where you sit today in the year, how you think the year is shaping up relative to prior years in terms of just confidence level of your full-year targets?

Feel good. From a volume perspective, we're right where we expected. Flu was a little bit softer in the first quarter than historical, but if you adjust for that, everything else is pretty good. We continue to see a little bit of shift away from non-emergent, where if the contract doesn't make sense, then we will not continue to do that. That's a pretty minor shift. The emergent ground business continues to do well. The air business did very well, up 1.9%, same base growth in the first quarter. A little bit of that was weather. We had mentioned weather, expected to just more normalize for the year. All expenses are pretty much where we had expected them to be or slightly better, outside of the fuel. Fuel-related things like our freight charges, I think we mentioned in the first quarter, were up.

That's where we move aircraft parts around. Those were up. Again, it's related to fuel. Feel good about where we sit today relative to our expectations and then relative to our guidance.

Helpful. Thank you.

Our last question comes from the line of Daniel Grosslight with Citi. Daniel, your line is now open.

Hi, guys. Thanks for taking the question. Post your IPO, you're now levered at around 3.5x. I'm curious how this changes your capacity and appetite for acquisitions. I think you ranked it as number three in terms of priorities behind debt repayment. I guess the question is, when do you get more comfortable making acquisitions, and how does your M&A pipeline currently look? Thanks.

From a high level, a healthy pipeline, we've probably got what I would call 12 or so viable targets. One of the commitments we've made to ourselves and to the investor community is if we are to pursue any M&A, one, it'll be very focused, disciplined around our core offering, would need to be highly accretive, and we're looking for some arbitrage value there as well. Still testing the market. Examples would be where it either complements a ground services area, where there's a good air operator and we could scale up and integrate quickly or vice versa. Some adjacent markets where we could use the current established team to expand in geographies in close proximity. We've got a couple of those targets. I'll let Brian expand on our comfort level.

As we mentioned, feeling really good about where we are and our ability to continue to deleverage and, if the right opportunities pop up, take advantage of that M&A as well.

In our guidance, there is no M&A. Although we do have a really good pipeline, really good conversations. In our history, both legacy air and legacy ground business had done a ton of M&A. That's really how we grew back pre-merger in 2018. Feel very comfortable doing it. As Nick just mentioned, we're going to do the right stuff, the stuff that's accretive. We'll see as we work through these 10 or 12 targets that we have. I think the other piece is, as we've signaled to the market, we're interested in doing this.

This market's kind of been frozen really since COVID, but it's now started to thaw, in part because I think we've said that, "Hey, we're open to this at this point in time." We've got strong free cash flow, feel very good about our ability to use that cash to delever. In the right opportunity, a lot of these are going to be small tuck-in opportunities. We'll see how that makes sense but feel good about it.

Yep, makes sense. Brian, on the $16 million from the California state legislation catch-up, I'm curious if you can help us think through how much of that is air versus ground catch-up. As we look forward for the rest of the year, how should we think about potential additional catch-up payments and what's baked into your guidance for that? Thanks.

Yep. That is 100% ground. The federal has the air for the surprise medical billing IDR process. The states have gone in and put in, that's their part, they're filling in with ground. We like these state bills because they require the payers to pay the locally published rates. This California bill started in January of 2024, and the state of California was supposed to publish all of the local rates at that time, and to this date, they have yet to do that. The payers picked, I guess, a rate that they liked or a lower rate. It took us a while to get them to pay the right rates. We've got that process down. Really, the first quarter was this big catch-up of about $16 million from those older periods.

That's baked into our go forward NRTs, but that's just a minor or a small increase overall. You're really not going to see this big lump like you saw in the first quarter.

Got it. Thank you.

We have reached the end of the Q&A session. I will now turn the call back to Nick for closing remarks.

Thank you, Christine. Thank you again for joining our inaugural public company earnings call today. We really appreciate it. As you can see, we remain excited to see how our continued focus, operational discipline, and execution over the past several quarters have positioned us to continue to be the innovators of EMS, which will drive our future growth and success. We remain highly confident in our path forward. Our ability to achieve this would not be possible without our exceptional frontline staff, support personnel, and regional leaders. I'd like to thank you all for your continued support and wish you a wonderful day.

This concludes today's call. Thank you for attending. You may now disconnect.