GMR Solutions Inc. (GMRS) September 2026 Conference Transcript

All right. Great. Well, good afternoon, everyone. I'm Craig Hettenbach. I cover the providers for Morgan Stanley. Just before we get started, for disclosures, you can go to the Morgan Stanley website, www.morgansanley.com backslash research disclosures. So with that, very pleased to have with us Global Medical Response Solutions, so CEO Nick Lupercaro and CFO Brian Tierney, welcome. Thank you. Thank you. So I thought we'd just start with an overview of the business. I mean, recent IPO, and as people are kind of getting up to speed on the name, just start with kind of key secular growth drivers on the EMS side, and we can build from there if that works.

Well, let me start at sort of the proverbial 40,000-foot level. You know, we refer to us as an integrated EMS provider. And I'll stick with, if you think about a 911 system, You dial 911 when you have a perceived medical emergency, and when you're dialing at that local level, that call gets determined on whether you need police, fire, EMS. Once it's determined you need EMS, a provider like ourselves who has the contract for that community are going to be the responders. That's a traditional 911 model, and if you have that contract, you're an exclusive provider for that community. Where we, GMR, have evolved the model and hope to bring the market there as well is intercepting that call to determine whether you truly need, one, an ambulance dispatch. And is that an advanced life support where you have lights and sirens and we're showing up in nine minutes? Or is that a basic life support unit, still urgent, still needs clinical care, but we can get there in 30 minutes, we don't need the lights and sirens? Or do you need treatment in place? Is there a treatment, no transport? We have highly qualified clinicians that can do that. Should we get you to an urgent care? Should we get you connected to a telemedicine call? And so the level of acuity and distance is what's going to determine whether or not we're doing that with a ground asset, a rotor asset, or a fixed wing asset. That's probably the simplest way to think about EMS. When you think about GMR, we're national. We're of scale and size. We're physically situated in 46 states. service all of the states in the U.S., 34,000 team members, 24,000 of which are clinicians, over 500 air assets, and over 7,500 ground assets. It's a sort of good snapshot of who we are. Now, as to the trends, you know, you look at the demographic trends, but more importantly is think about the state of health care. Where are the real pain points? access, clogged up emergency rooms, people not getting to the right level of care. And we believe when you look at EMS, we're the tip of the spear. There's no one further upstream pre-hospital than we are as a service. And so we can help, and I intentionally don't use the word steer, we can actually help get people to the right sites of care and the right type or modality of care that they require in the communities we serve.

It's a great level setting in terms of the business, so I appreciate that. You mentioned you're the largest provider. It's a very fragmented business as well. So can you maybe touch on that, like what that means in terms of your size and scope in terms of you and your markets versus maybe some regional competitors and kind of different nuances in the market?

So I'll start and invite Brian to give you a little bit more granularity. If you look at us as an integrated national player, we truly are an N of one. When you look at it from that perspective, there are a couple of mid-sized players that are now taking on a little bit more of integrated. These are traditionally medium-sized ground service providers who have either partnered with some air offerings or started investing on their own. So you'll see some of that. If you were to compare us traditional air and ground, which we don't typically like to do, but if you were to do that, we're still the largest on the air. We have a second provider, a close second, with their methods, and then you have PHI and Metro that probably occupy the third spot and then drops precipitously from there on a share perspective. On the ground side, no one on our scale on the ground side, a couple of good mid-sized players, and we have seen some private equity investment in grouping and rolling up a few of the other smaller players. Brian, if you want to offer up some of the stats.

Yeah, let me approach it from a slightly different angle. Of the overall private providers, we're roughly at close to $6 billion of revenue. We're roughly 25, almost 30% of the overall private space. that it covers all of our services. If you include the municipal-run fire systems, again, we're about $5 to $6 billion of revenue of $35 billion total addressable market. So really sizable by just about any measure. If you call 911 in this country, about 9% of the time we're the group that will respond. And at north of 500 aircraft, 7,500 vehicles that Nick mentioned, we're the ninth largest commercial air fleet in the world, American United, Delta, so on. We're down at number nine. So size and scale, in an industry where size and scale really matter, they give us synergies, they give us ability to grow EBITDA faster than revenue, we really have the size.

All right. I think that's a good buildup to kind of just how you think about your long-term targets of, like, mid-single-digit revenue growth, high-single-digit adjusted EBITDA growth. Maybe talk about just some of the building blocks that kind of underpin that target.

As will usually be the case, let me start at a high level, and Brian can provide a bit more of the details. So the reason we're pretty adamant about talking about being an integrated EMS provider and we operate and manage the business geographically, years ago we introduced a system called Nurse Navigation. to other innovations, Transport.net, Concierge. And these are not separate businesses. These are all integrated into our offering. So NurseNav is going to intercept some of those calls that may not require that ALS call. Why is that important? That's important internally for our own operations. We see a pickup of 1% to 2% margin improvement by just adopting those types of innovations. From the perspective of the payer, what we've been able to do in some of the communities we're in As we put NurseNav in, we're actually able to negotiate better rates and reimbursement for things like treatment no transport in the communities that we're serving. So you see an uplift. So why the demarcation or that almost two-to-one growth of EBITDA over some of its scale? We see that. But some of it's as well the efficiencies by cross-selling, introducing these new services in the markets we're in. So if we have a market where we primarily have a strong ground presence, We have opportunities through the likes of NurseNavTransport.net, our concierge offering with health systems to then get their air business, to go get the local EMS contract when it comes up for renewal because we're already in that community. And that's sort of the flyover we keep looking for is cross-selling is big. Looking at adjacent communities, are we better off just winning the business through a competitive RFP or potentially acquiring a smaller player and then using that? It's a whole lot easier, you know, proverbial tuck-in when we have an adjacent market.

I think Nick's just hit on a lot of the growth algorithms for expanding in our land and expand strategy. Let me hit on some of the same-store basis as well. We've got some really natural demographic tailwinds that really support the business growth. Population growth is the first one. It drives increased patient encounters. Rural hospitals continue to close. They're under a significant amount of financial pressure that drives volume into the EMS system as folks use 911 as their health care provider. From a rate perspective, we have CPI plus in just about all of our contracts. And so as we leverage those, that gets you low single-digit volume growth. It gets you low to mid single-digit rate growth, and that gets you mid single-digit plus. right before what Nick just talked about, which is all of the different mechanisms that we use are better offering to get additional volume.

And what's still a fragmented, even though you're the largest player, still a fragmented industry, and you've used acquisitions to kind of scale up and grow capabilities. What are you seeing in kind of the M&A landscape today? You know, how do multiples look? How are you kind of approaching M&A versus deleveraging the balance sheet versus organic growth?

So three, I'd put it in three stages. During COVID, you know, M&A was frozen. I'm borrowing from a term Brian has used in the past. We started seeing a bit of a thaw, and we were the leaders in expressing some interest and looking at, you know, some M&A. We probably had a pipeline of about 15 or so targets. And as we were lining up with the IPO, had hoped to get some arbitrage value between, you know, what we had anticipated our multiple to trade at and what expectations are. Suffice it to say, we're, you know, trading at a multiple that's made that a little more difficult currently. That said, Brian and I have entertained a couple of potential targets that our operations, you know, and BD teams have brought to us. So we do think there are some opportunities, but really do believe, you know, We need to bring that valuation or a multiple up in order to get to be a little more competitive on the M&A perspective. On the balancing, no pun intended, of the balance sheet, I'll leave it to Brian. We just announced recently as well, but trying to make sure we're not losing sight of some good deals while also working on deleveraging.

The M&A targets will fit in our core EMS space, as Nick mentioned earlier. In regions where we have a service, it's sometimes easier just to go by somebody who's adjacent as opposed to trying to compete or wait for an RFP that may be several years down the line. From a use-of-cash perspective, we'll continue to use the cash to grow the business. We've got a pretty clear line of sight on the capital needs. We are going to delever, and we just did reprice the term loan. Last week we announced commitments on Friday where we are using $200 million to buy down a little bit of the debt as part of our deleveraging strategy. And then M&A that makes sense will fit in there as well. And so we've got, as Nick mentioned, we've got a number of things in the pipeline, making sure that they all make sense as we go forward. But that's really the deployment of capital.

And Brian, from a leverage perspective, is there kind of a longer-term target or a band that you kind of want to run the business within?

We came out of the IPO at three and a half times and said that we will look to get to three times by the end of 2027. And this last week's and this week's activity, when we do pay down the term loan, is just the next step in that. So the business continues to generate cash. It's growing EBITDA at a top line, and those will help get us into that three range in 27. Got it.

And then, Nick, I know the company had a strategic review in 2022, and you've been really thorough in terms of looking at contracts and what makes most sense to you. Also, what are, you know, from an urgent care perspective or not. Can you maybe just go into that in terms of the genesis of that review, kind of how it's performed and what that really means to the business?

Look, I think post-COVID, as people started getting their bearings and revenue started to decline and costs went up, never a good formula, started scrutinizing all of our bases. And what we noticed, not 100% of the time, but the vast majority of times, a lot of the more non-urgent, so high volume, lower margin, and candidly, not what we're built for. I mean, we're built for emergency and what I call the right non-emergent, which is still urgent and needs clinical interventions. So the team did a lot of great work, and obviously not easy, you know, shuttering some bases and getting focused on the urgent. The other were three significant business divestitures. I often say these weren't good or bad businesses. They just weren't the right businesses for us. So we had a fire business with, you know, fire engines and the like. We knew we weren't going to invest in that space. We ultimately found a better home. We found a group that actually was interested in getting into specialty fire. We had an organ transfer business, at least on the surface was organ transfer. Ended up being more of a commercial jet business. We offloaded, we had wheels up at the time, needed that type of aircraft, divested to them. And then the third one was more of when you think about sort of wheelchair transfers, very high volume, spun that business off to MTM. We've kept relationships with all three of those, wound down a small international business and an investment we had in the hospital-at-home space. That did a couple of things. One, and I don't like using the term distraction, but sort of, you know, took away a distraction so we could focus on the core. And what we saw, which was a little counterintuitive from a traditional metrics perspective, a drop in traditional volume being transports, but more margin and EBITDA growth because we're now focused on our core competency. Plus, one of the other real benefits of that, our employee engagement from the field side has continued to grow year over year with that focus. That's what these folks are trained for. It's what they sign up for, and it's what we're built for.

Nick mentioned that this is key. We're going to run the business by earnings growth. not by maintaining particular volume. And so as we continue to look at all of the contracts we have, if there's a contract that turns south and we can't get the appropriate reimbursement for the cost structure that it would take to service that contract, well, first we're going to try to renegotiate it. And if we can't get it there, then we will exit the contract. So most of that is in the non-emergent ground space that Nick just mentioned. Again, that's a lower acuity business by definition. It's going to be lower reimbursing, and we're going to find the right contracts for us. Our focus is on emergent. That's what we're built for, and that's where we'll continue to see the growth.

Great. I want to touch on just the air business in the context of what you said before on the growth algorithm of just you had really solid growth year-over-year in Q2. How did that kind of frame that versus, like, the long-term, how do you think about air base openings and just the longer-term outlook on the air side of things?

So, yes, we've got a second quarter was good. We did benefit from a little bit better weather year over year, which has a variability in the air business at times. But really, the second quarter this year was pretty normal, and so a good base to grow off of. We have a large number of aircraft coming in the next couple of years, around 50, and that will help fund the growth. We've got good visibility on where those are going to go, very good partnerships with the hospital systems, and so feel good about how that looks going forward. Those air bases we should get in the high single-digit, low-double-digit air base growth year over year. That's what those air bases, those aircraft will fund. And, again, feel good about the visibility.

All right, I want to switch gears to just technology and the buzzword of AI. I know you guys have like 40 or 50 different projects undergoing. You run a very complex business, so I don't think it's going to be obsoleted by AI. So how are you putting kind of technology to work for the company in terms of efficiencies? What are some of the use cases?

So, you know, the North Star for us, and we live by this, is making sure we put care at the center. It's part of our core behaviors. So our first goal with any technology, whether it's AI or any other innovation, is to free up our caregivers' time so that they have more time with hands-on patients. Like, that's the mantra. Whatever we can do to make sure that our providers have time with their patients and less time needing to chart or code or get bogged down with asking for insurance information, that's the key driver. Now, we do have an AI governance committee to make sure we've got the guardrails around what we're doing. But it goes from the sublime to what you would think is rudimentary things that we're doing, all of it driving value. Revenue cycle, we've seen incredible increase in yield with our ground vendor partner. And what's been really interesting, it came up in one of our conversations earlier today, there hasn't been a lot of reduction in force. We've turned coders into auditors. But what we have seen is a 20% to 25% increase in yield. And so what we're doing is getting better quality to these folks so that when we're going out to collect, we're collecting the right amounts from the right payers for the right reasons. We're able to counter any medical necessity denials based on what we're capturing. Brian and team are looking at an effort on the air side as well. How do we start incorporating these things? And it's, again, across the board. So what we ultimately want to do is use AI to bring better information to our providers and looking at things. We haven't put in ambient listening. We've started talking about that opportunity. And aside from HIPAA rules, we actually have, you know, some concerns around are our teams comfortable with it. But the more they see that we've been using it to improve quality and thus drive better value for the organization, the more we see people embracing it. It really hasn't been this mantra of we're going to put AI so we can cut costs. It is really about improving yield, improving better care. One of our first tests with AI was going through our clinical protocols. We were able to take, we have over 200 medical directors, an analysis that demonstrated to them 90% of their clinical protocols were the same, which drove better alignment. So when you think about our clinical outcomes data and the efforts around that, AI has been great. We iterate on that data. We get to continue to show outcomes, impact, which has then allowed us to get better recognition from the payers, translating to better reimbursement. So that's how we see ourselves continue to leverage AI.

Great. And then maybe, Brian, in the CFO seat, when you think about kind of some of the cost to invest in technology versus return, how are you approaching that, and how are you seeing things kind of play out?

Yeah, I think carefully is the right word. Proof of concept, making sure we have good ways of measuring the projects to make sure that we're going to get the return that we expect. As Nick mentioned, a lot of this is on yield improvement. There's safety elements to this as well. We put AI-embedded drive cams in our ambulances that actually look at the eyes of the driver, make sure they're paying attention, kind of mother-like. It yells at you if you're not watching the road. It's those types of things where we can see a real return that we're investing in, but being super careful on not signing up for, again, this is not a cosplay for us. This is about how do we provide better care and get the better return.

And I think you guys have described kind of an 80-20 rule in terms of what you can kind of standardize versus maybe there's some nuance in that 20%. How far along are you in that 80% in terms of kind of standardizing workflows and things in the business?

You know, three years ago, had you asked me that question, I'd probably wipe my brow and go long road ahead. A year later, we started seeing some progress. Two weeks ago, we had 300 of our operators, you know, our regional directors and ops teams in for our annual conference. And I can tell you today, I don't know if I'm at the 80%, but it's resonating. What we've been able to demonstrate with the teams and, you know, one of what I call sort of the running jokes was everybody will say, well, we're different. And so my challenge is, so are you telling me the human anatomy in New York is different than in Utah? And that's where you get the pause and people go, okay, we still have to respect the 20%. The local nuances are important, but that has more to do with customer relationships, the county, the fire department, the health systems. The 80% is pretty much standard. Brian can tell you about some of the systems internally where we've standardized across the organization, that clinical protocols. On the surface, it doesn't seem like a big thing, but when you've got all of your medical directors now aligned around 90%, and I don't even call it standardization, alignment the power of that and be able to prove outcomes defend your clinical procedures is very powerful and people are seeing the benefits how we run the business today you know we happen to have over 500 aircraft available to everyone in the country we have 7500 ground assets available to everyone this is no longer you know i've got 10 ambulances in in my business unit and so that's really helped us, and people have seen the power of it.

Yeah, I think from a pure operating finance perspective, single payroll system, single IT systems, single systems that really run pretty much everything, and it's just minor nuances for local operations that we need to maintain, and so it's trying to find that right balance, but feel very good about the foundation from which we launch any new business from. great i want to build on the nurse navigation comments before when i think about just technology and innovation i think on the last call you guys talked about you're just shy of 20 million lives you can get to 100 million i think there's been some margin benefits to that so how do you think about that on the path from 20 to 100 and what it means to kind of the performance of the business

and then p&l as well so i'll speak to the drive towards 100 that's sort of one of those nick said in the organization, we put out the stat that 60% of the U.S. population resides in a community that we serve in one shape or form, not all of our services. And if you think of it that way, that's 200 million Americans that live in that encatchment I believe, and we've put it out as an objective for ourselves, that in this five-year window, we should be able to go get about half of that population, right, if you think about our footprint. So two weeks ago with all of our ops managers, and this is in line with your question as well around alignment, we've told all of them, you need to be looking at NurseNav even just for your own benefit. There's a 1% to 2% margin pickup by just putting it in by avoiding the dry runs, running the business better. So they have an incentive to do it. How you introduce that to your partners in those communities where at times we can get subsidized by the counties. We know we get better rates from the payers. We get less denials from them as well. They reimburse us for things like treat no transport. So all of those get to the financial benefit of where we see the upside here. But just internally, we know this is a better system. It really resonates with our teams. Thus, putting out that objective of that's what we should drive towards over the next five years.

Got it. And then you also have the federal health fund out there, kind of $50 billion program. You mentioned before, I mean, one of the issues of health care broadly is just lack of access, right? And so any context there in terms of what that could mean in terms of opportunity set or things in your market?

Early innings, we don't have a number yet, but I think we had mentioned we helped all 50 states submit a white paper around these innovative models, a model we call REACT. And so as we put that out there, we now have, I'm not sure if it's four or five states that have come back to us with RFPs, one we're engaged with, to look at a couple of the communities that they're in. And that model at a high level is a combination of ground, air, and NurseNav for rural communities. Recall that NurseNav was built around an urban model, but we've looked at adapting it for rural. So it's resonating, you know, how much of that $50 billion fund over the next 10 years is one going to come to EMS. Whatever that is, we believe we can earn an outside share of that as these programs start to get some legs.

Great. I do want to maybe shift gears a bit to the Rescue Act, and if I think about on the Medicare side of just rates that are decades old, I know there's plenty of stuff going on in Washington right now, right? But if you think about just bipartisanship, like how things could come about for this, and your best gauge in terms of timeline and things for us as analysts and investors to kind of watch for on this important topic?

So listen, super, super news with the Rescue Act, the bill being introduced. That was a 12-month-plus effort. You know, we had put together an alliance of different industry players, both on air and ground. So we got bipartisan support in the House to introduce the bill. We're looking for more co-sponsors, hoping to get it through the Senate. and not unlike three years ago when we got support on the VA. We got bipartisan, bicameral support around this. I'm actually heading to D.C. tomorrow. I'm back in two more weeks. This really resonates with lawmakers, and you mentioned it. We're living with what I'm going to call a fee schedule that dates back to 2002 based on 1998 data. So what the Rescue Act does on the basis is forces CMS to look at our cost data, But more importantly, it continues to open doors for us, both at the administration and congressional levels, where we get to talk about what it is we really do. I think the ultimate goal is, how do we start getting reimbursed out of Part B dollars versus transport benefit? That's the real one, Greg. It's like that, and I had the opportunity to spend 30 minutes with Dr. Oz a couple of months back, and this was one of the few points we talked about, was how do we continue to leverage EMS in providing better health care and getting people to the right sites of care and the right modalities of care? And I can tell you it's resonating. We're getting a lot of support. We've had no issues in getting bipartisan support on these efforts.

Got it.

Now, as the timeline, sort of what I call the positive tension between Brian and I, I say end of 27, he thinks 28, but I'm going to push for 27.

What's the difference? We'll get a midpoint of... All right. Well, hopefully things can move forward to that point. I do want to touch on just the IDR. I think for you guys it's kind of been relatively stable. I know some of the payers have made some noise about the process more broadly, but just kind of where things stand today and any variability you expect to IDR going forward.

Yeah, I think the IDR for the air ambulance, space has been, well, it's been a tailwind for us as it helped get appropriate reimbursement out of some previously low reimbursing payers that were unwilling to come in network at appropriate rates and terms. So we've seen that step up over the last few years. I think the government coming in earlier this year and kind of solidifying the process just says, hey, yes, this is going to continue going forward. You know, for us, it's been really pretty stable. We've been winning at about the same rates that we've seen in the past. We continue to endeavor to get the payers in network at appropriate rates and terms. We brought our largest payer in network earlier this year. We continue to make progress with others. These conversations unfortunately take a long time. Air ambulance spend is a very small percentage of the overall spend for most payers. So getting their attention on this, even when they're losing an IDR, It does take some effort. I'd rather have them all in network. It creates an opportunity for partnership. We're willing to take a little bit less to go in network than what we're winning in IDR. The IDR process, frankly, is very long. It's a lot of effort. It's a lot of energy. And so from just a pure DSO game, time value of money, cost, I'd rather have them in network, and then we can have a real good partnership discussion.

And do you think, how are the prospects of getting some more in network? I'm sure there will always be some that just doesn't happen, but how are you thinking about getting some maybe over the line in the network?

Yeah, so we've got a lot of really good conversations going now. Again, it's a combination of rates and terms with the payers, so it's not just a headline rate. So we need to get all of those pieces. We're getting closer with some. So we've got a team that's just dedicated to in-network contracting. So we'll look to drive. We're currently, of the commercial air volume that is eligible, we're about 69% in-network. We look to drive that up. I think we probably tap out about 80%. We have over 700 payers. There are a lot of really, really small payers that, frankly, just spending the time on either side to figure out in-network just doesn't really make sense. And we solve a lot of those with what we call a single case agreement before it goes into the IDR process anyway. So again, there's a couple of large ones that we're working to get across the finish line. They have to want to get across the finish line. It does take two to get here. But lots of effort on our side and we expect positive returns here in the future.

And then if I look at your first two quarters as a public company, you've put up good results, and at the spite, you do have some headwinds, but be it the ACA, be it fuel costs. And so just thoughts on kind of managing through some of those things and any variability of stuff to be kind of mindful of.

Yeah, you've hit on a couple of items. We've baked into our guidance, right? The ACA started, you know, we started to really see things towards the end of the first quarter. It's really been pretty stable since that time, and so we've baked that into our guidance. Fuel overall from what's going on in Iran and the Middle East is a relatively small percentage of our overall spend. It's less than 2% of revenue. Less than 1% is actually tied to the commodity price, and so while there's still turmoil in the Middle East, I think we'll still see a little bit of variability in there. But it's something that our P&L can absorb. We've baked that, those expected go-forward costs into our guidance as well.

Great. As we come up on time here in the last minute or so, Nick, just kind of bringing all this together, we'd love to get your take on just kind of key strategic priorities, what you're most focused on delivering over the next 12 months or so.

We've hit on some of them, right? I'll start in reverse. When you think about React for new markets in the urban communities feeling really good about, you know, what we've put out there, like anything, it'll take time for some of those things to materialize. That might open up some doors to some potential M&A as well, where if we look at some interesting providers coupled up, we can service those markets. The rescue bill, you know, I mean, all kidding aside, whether it's end of 27 or 28, we know there's only upside here. When they look at that cost data, we know there's going to be some increases. But getting to the strategy, it's sort of continuing with this focus of almost like think about this 911 care network where we're going into communities and we're taking care of their needs. As these calls come in, we're making sure people are getting the right care at the right site, right time, like all of those, getting that recognition from payers and getting it from lawmakers so that we're being compensated for the value that we're delivering. And so I think as we stay on that, we remain steadfast on that, we see those flywheels. And my closing comment will be, as much as there's very positive demographic shifts, think about the problems EMS solves in the current healthcare, you know, sort of ecosystem. Access problems, overcrowded ERs, and people just not getting the right care.

We're at the tip of that spear.

There's no one further upstream than us, and we can play an active part in making sure that those folks are taken care of.

All right. I think we'll end on that note. So, Nick and Brian, thanks so much for your time today.

Thank you.