Private Equity Eats Another Ambulance Company; Will They Look at Air Medical Services Next?

March 28, 2011 9:06 AM EDT
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Private equity firms clearly see a big opportunity in the ambulance transport service sector, announcing two large deals in the past couple of months.

Today Rural/Metro Corp. (Nasdaq: RURL) was acquired by Warburg Pincus in an all-cash transaction valued at $17.25 per share, a 37 percent premium to Friday's close.

The deal follows the acquisition of Emergency Medical (NYSE: EMS) in February by Clayton Dubilier for $3.2 billion.

These two companies were the only two national publicly-traded traditional ambulance transport service providers, so investors will have to look elsewhere to find opportunity.

According to Joe Kunkle, the founder of OptionsHawk.com, the activity in the sector started with private equity firm Bain Capital buying emergency air medical provider Air Medical late last year. This sub-sector may now be where opportunity still exists, he said.

On such company is Air Methods Corp. (Nasdaq: AIRM), the largest provider of air medical emergency transport services and systems throughout the US. The company provides air medical emergency transport services under two service delivery models: Community-Based Services and Hospital-Based Services.

As of December 31, 2010, Air Methods had 2,753 full-time and 207 part-time employees, comprised of 956 pilots; 531 aviation machinists, airframe and power plant (A&P) engineers, and other manufacturing/maintenance positions; 730 flight nurses and paramedics; and 743 business, dispatch, billing, and administrative personnel. The company's aircraft fleet consists of 90 Company-owned aircraft and 177 aircraft leased under operating leases. In addition, 56 aircraft are owned by customers and operated by Air Methods under contracts.

Air Methods reported revenue of $562 million in 2010, up from $514.3 million in 2099. Diluted EPS in 2010 was $3.50, up from $2.33 in 2009.

Another air medical emergency transport service providers is PHI Inc. (Nasdaq: PHII) (OTC: PHIIK), although the company also provides services to oil & gas companies.

In air medical, PHI provides air medical transportation services for hospitals and emergency service agencies in 18 states using approximately 89 aircraft at 64 separate locations.


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