GMR Solutions Q3 2026 Earnings Results & Report

GMR Solutions EPS Results

• Actual EPS: $0.64
• Consensus EPS: $0.47
• Beat/Miss: Beat by +$0.17
• One Year Ago EPS: N/A

GMR Solutions Revenue Results

• Actual Revenue: $1.60 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

GMR Solutions (NYSE:GMRS) is a provider of emergency medical services delivering EMS and other essential out-of-hospital care in rural and urban communities. GMR Solutions Inc. is based in Lewisville, Texas.

GMR Solutions Q3 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q3 revenue rose 5.9% to $1.6 billion, Adjusted EBITDA increased 4.2% to $357 million, and free cash flow grew to approximately $110 million. Management said healthy emergent demand, improved revenue per transport, favorable service mix, and cost discipline supported results, though lower prior-year No Surprises Act estimate adjustments affected comparisons.
• Negative Sentiment: GMR narrowed its 2026 revenue outlook to $5.9 billion–$6.05 billion, citing less favorable flying conditions and minimal hurricane deployment activity, while maintaining Adjusted EBITDA guidance of $1.135 billion–$1.195 billion. Elevated fuel and related supplier costs remain a headwind entering 2027.
• Positive Sentiment: Growth initiatives advanced, with same-market revenue up 6%, Nurse Navigation call volume up 51% year over year, and new agreements totaling more than $50 million in incremental annualized revenue. The company also launched new 911 systems, air bases, and an inter-facility market.
• Positive Sentiment: GMR used $200 million of cash to repay term-loan debt and repriced the facility, expecting approximately $28 million in annual interest savings. Net leverage fell to 3.4x from 4.3x a year earlier.
• Neutral Sentiment: The company reported a September 30 rotorcraft accident off Catalina Island that killed two team members and a patient; another team member and the patient’s attendant survived. GMR said it is cooperating with the FAA and NTSB investigation and reaffirmed its focus on safety.

Presentation

[Operator]

Hello, everyone. Thank you for joining us, and welcome to the GMR Solutions Q3 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.

[Krister Sorensen, VP of Investor Relations at GMR Solutions]

Thank you. Good morning, and welcome to the GMR Solutions Q3 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 of our IPO prospectus. Today's remarks also include certain non-GAAP financial measures, including adjusted EBITDA, adjusted diluted EPS, and free cash flow. 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.

[Krister Sorensen, VP of Investor Relations at GMR Solutions]

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

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Thanks, Krister, and thank you all for joining us today. We are pleased to be reporting continued solid results for the third quarter, with revenue, adjusted EBITDA, and free cash flow all increasing year-over-year. Core emergent demand remained healthy, and disciplined execution helped us manage a more challenging fuel and inflation environment. That said, before we discuss our results, I want to take a moment to remember two of our team members and a patient that tragically lost their lives in a rotor accident off Catalina Island on September 30th, along with one of our team members and the patient's attendant who survived the accident. We are cooperating fully with the FAA and NTSB as they investigate the cause. Our thoughts and prayers remain with the families, our team members, and everyone impacted by this tragedy.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

This is a somber reminder that the work our teams perform every day is mission-critical and, by its nature, carries inherent risk. Safety remains fundamental to how we operate, and we remain committed to identifying, managing, and mitigating those risks. Now, let me turn to our third-quarter results. GMR completed 1.4 million patient encounters during the third quarter. We provided ground medical services to over 1.35 million patients, which included more than 1 million transports, along with 32,000 calls through 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 nearly 38,000 patients. Q3 revenue increased 5.9% to $1.6 billion. Adjusted EBITDA increased 4.2% to $357 million, with an adjusted EBITDA margin of 22.3%.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

As with last quarter, this quarter's prior year results benefited from favorable revenue estimate adjustments associated with No Surprises Act-related collections on claims from earlier dates of service. Despite this comparability impact, the business delivered strong revenue growth and increased adjusted EBITDA. Favorable service mix and disciplined cost management helped mitigate fuel and other inflationary pressures. The quarter also highlighted the benefits of our national platform and integrated services. We operate across air and ground services, diverse geographies, and a broad range of community and health system relationships. This breadth helps us manage variability in any individual service line or market while continuing to deploy our clinical capabilities where they create the greatest value. We remain focused on executing against our four strategic priorities: clinical excellence, growth, differentiation, and sustainable margins.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Recall that we are the largest provider of emergency medical services in the country, serving approximately 5.5 million patients annually in markets representing more than 60% of the U.S. population. With more than 24,000 highly trained clinicians and a fleet of ambulances and aircraft, we have the scale and capabilities to deliver critical care to patients when and where they need it most. On the reimbursement front, we continue to make progress in pursuing in-network and preferred provider agreements with payers willing to engage at appropriate rates and terms. When payers do not engage, we assert our right to be paid appropriately for the out-of-network emergency services we deliver. This includes working with state regulators when we see patterns of health plans inappropriately denying coverage of urgent and medically necessary care, as well as filing claims under the federal No Surprises Act whenever warranted.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

As Congress considers reforms to the No Surprises Act, we are confident that most policymakers understand the need to preserve an arbitration process for emergency services. We are also gratified by the growing consensus that any reforms need to include a strong and meaningful enforcement mechanism to ensure that health plans pay arbitration awards on a timely basis. We will continue to educate federal and state policymakers, policy influencers, and the media to make the case for reforms that protect patients while also ensuring fair payment for emergency services, even when those services are out of network. We are pleased with the underlying demand and execution reflected in the quarter, while recognizing that elevated fuel and other inflationary pressures will remain important considerations as we enter 2027. Our focus remains on disciplined execution, targeted growth, and actions that support sustainable long-term value creation.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

I'll now turn it over to Ted to provide an operational update.

[Ted Van Horne, President and COO at GMR Solutions]

Thanks, Nick. Our operational focus remains straightforward. Grow our core emergent services, participate selectively in non-emergent services where they make strategic and economic sense, and use innovation to deliver care more efficiently. The advantage of our integrated model is our ability to coordinate care across modalities and geographies, rather than operating each service independently. That allows us to better match clinical resources to patient needs, improve efficiency, and provide broader solutions to our community and health system partners. A great example of this is our 911 Nurse Navigation solution. During the quarter, Nurse Navigation supported over 32,000 calls across 30 communities, representing over 19 million covered lives. This represents a 51% increase in call volume over the prior year quarter. We continue to see strong potential to expand 911 Nurse Navigation within existing markets and to use it as a differentiator as we pursue new municipal and health system partnerships.

[Ted Van Horne, President and COO at GMR Solutions]

Turning to growth, we continue to see opportunities across both existing and new markets. Same-market revenue increased $88.7 million, or 6% year-over-year, while new market revenue contributed $28.2 million during the quarter. We launched three new 911 systems, two new air bases, and one new inter-facility market in the quarter. We also executed new agreements totaling over $50 million in incremental annualized revenue. We continue to prioritize opportunities where integrated capabilities provide an advantage and where the economics support sustainable long-term partnerships. Beyond these near-term wins, our scale creates additional opportunities to deploy clinical resources where they are needed, respond quickly to surges in demand, and support customers and communities in line with our core business.

[Ted Van Horne, President and COO at GMR Solutions]

While we did not have a FEMA hurricane deployment this year, our teams remained highly active across a range of events and emergency response needs, demonstrating the breadth of our capabilities beyond any single type of deployment. At the 2026 FIFA World Cup, GMR provided medical services at seven of the 11 U.S. host locations, caring for over 3,100 patients, including 200 who were transported to area hospitals. During the July 4th holiday week, we rapidly expanded capacity in New York City, deploying 50 additional ambulances and responding to over 2,000 911 calls amidst extreme heat and the 250th anniversary celebrations. When three hurricanes impacted Hawaii, our local and regional teams surged additional personnel and support into the state.

[Ted Van Horne, President and COO at GMR Solutions]

We partnered directly with county emergency operations centers and expanded our air and ground ambulance capacity into the 911 systems to handle the demands the storm caused on the island communities. Similarly, subsequent to the quarter, in early October, we were deployed by the Florida Ambulance Association and HCA for Hurricane Isaias, with 105 ambulances and over 250 personnel brought in to relocate patients to facilities out of the storm's path and provide 911 and rescue support through the storm. Total revenue for this deployment was approximately $4 million. These examples demonstrate operational capability, but they are not the foundation of our growth strategy. Our primary focus remains consistent execution in core markets, expansion of emergent services, and development of scalable solutions that address longer-term gaps in access and capacity.

[Ted Van Horne, President and COO at GMR Solutions]

That includes working with states and communities to improve rural healthcare access through our 911 REACT solution and the Rural Health Transformation Program. Our scale, clinical resources, and integrated model position us to help communities address EMS capacity constraints while creating attractive, sustainable growth opportunities. Overall, we're encouraged by demand across the platform and the progress we are making in 911 Nurse Navigation, core emergent services, and new market development. At the same time, we remain disciplined about contract economics, resource deployment, and the pace of expansion. With that, I'll turn it over to Brian to discuss our financial performance in more detail.

[Brian Tierney, EVP and CFO at GMR Solutions]

Thanks, Ted. In the third quarter of 2026, GMR delivered solid financial performance in a challenging operating environment. Net revenue increased 5.9% to $1.6 billion, supported by healthy demand in our core emergent services, continued improvement in net revenue per transport, and contributions from new markets. Compared to the same quarter in 2025, emergent ground transports increased 3.4%, driven by strong same-store demand, while non-emergent ground transports decreased 1.0%, reflecting our deliberate strategy of redirecting our resources towards higher acuity responses. Air demand increased 2.8%. However, transports were essentially flat, driven by decreased capture rate, primarily from worse weather compared to the prior year quarter. As a result, during the quarter, total patient encounters associated with our focus areas of emergent transports and 911 Nurse Navigation grew 4.4%, while lower reimbursement patient encounters associated with non-emergent wheelchair and non-transports decreased 4.2%.

[Brian Tierney, EVP and CFO at GMR Solutions]

Net transport revenue per ambulance transport, or NRT, increased 3.0% 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 improvements 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. The year-over-year comparison also reflects a significant difference in favorable revenue estimate changes. In the third quarter, changes in estimates predominantly related to No Surprises Act claims were $18 million, approximately $37 million lower than in the prior year period.

[Brian Tierney, EVP and CFO at GMR Solutions]

This comparison affects reported growth in NRT, total revenue, and adjusted EBITDA, but does not change our view of the underlying operating momentum in the business. Turning to expenses, total operating expense increased 3.4% to $1.33 billion in the quarter compared to $1.29 billion for the same period in 2025. Employee wages, benefits, and taxes increased by 3.6% to $802 million. The increase year-over-year was primarily driven by improved staffing and normal wage adjustments to attract and retain talent. Average base unit wages increased 3.1% during the quarter, remaining consistent with our disciplined approach to labor cost management. Maintenance, fuel, and other direct expenses increased by 25.1% to $150 million. The increase was primarily driven by the timing of aircraft maintenance events and approximately $11 million of higher fuel unit costs associated with the Iran conflict.

[Brian Tierney, EVP and CFO at GMR Solutions]

Elevated fuel prices also affected supplier costs that are correlated with fuel, including travel and shipping. Other operating expenses were generally in line with expectations. We expect fuel and fuel-related supplier costs to remain elevated as we enter 2027. We will benefit from CPI-related rate increases inherent in most of our contracts in 2027. We are also actively managing these pressures through procurement initiatives, operating efficiencies, disciplined resource deployment, and our continued focus on service mix. While these actions may not fully offset the near-term impact, they are important components of our plan to protect margins and sustain profitable growth. Despite these pressures and the less favorable prior year comparison, adjusted EBITDA increased 4.2% to $357 million, with an adjusted EBITDA margin of 22.3%. This performance reflects continued revenue growth, favorable service mix, and disciplined cost management across the organization.

[Brian Tierney, EVP and CFO at GMR Solutions]

As reported, we recognized a net income of $135.6 million in the quarter, compared to a net income of $74.6 million in the prior year period. Beginning this quarter, our earnings presentation includes adjusted diluted earnings per share as an additional non-GAAP measure. We believe this per-share measure complements our existing financial metrics, provides investors with another way to evaluate underlying earnings trends and performance across periods. Adjusted diluted EPS was $0.64 on a diluted weighted average common shares outstanding of approximately 242.4 million shares. Turning to CapEx, cash flows, and liquidity. Cash used for CapEx and aircraft financing was 5.2% of revenue for the third quarter of 2026, compared to 5.5% of revenue for the third quarter of 2025. We generated approximately $110 million of free cash flow, up from approximately $79 million in the prior year quarter.

[Brian Tierney, EVP and CFO at GMR Solutions]

GMR finished the third quarter with $298 million in cash and cash equivalents and an undrawn ABL with $701 million of cash borrowing capacity after letters of credit. In September, we used approximately $200 million of cash on hand to repay outstanding term loan borrowings, reducing the outstanding principal amount of the facility to approximately $2.7 billion. We also repriced the facility by 50 basis points with no additional indebtedness and expect the combined actions to generate approximately $28 million of annual cash interest expense savings. In addition, GMR used approximately $32 million of cash on hand to satisfy required payroll tax obligations arising in connection with the settlement of certain previously granted equity awards.

[Brian Tierney, EVP and CFO at GMR Solutions]

Net leverage finished the quarter at 3.4x, down from 4.3x at the end of 3Q last year, and we have line of sight to approximately 3.0x before the end of the year in 2027. Moving on to guidance, we are narrowing our revenue outlook for the year and now expect 2026 revenue to be in the range of $5.9 billion-$6.05 billion, lowering the top end and bringing the midpoint down to $5.975 billion. This revised outlook reflects less favorable flying conditions in the third quarter and quarter to date and minimal hurricane deployment activity.

[Brian Tierney, EVP and CFO at GMR Solutions]

We are maintaining our full year outlook for adjusted EBITDA in the range of $1.135 billion-$1.195 billion, which incorporates our revised revenue outlook and higher fuel and other inflationary costs, offset by margin expansion driven by mix shift to emergency transports and our ongoing focus on margin management. Total cash used for CapEx and aircraft financing is expected to be between 5.2% and 5.4% of total revenue. In summary, the quarter demonstrated healthy underlying demand, continued progress in our core emergent services, improved revenue per transport, strong free cash flow, and further deleveraging. We are managing a more challenging cost environment and several known revenue headwinds with discipline, while continuing to invest in the capabilities and growth opportunities that support long-term value creation. I will turn it over to the operator to open for any questions. Thank you.

[Operator]

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 now while we compile the Q&A roster. Your first question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.

[Elizabeth Anderson, Senior Managing Director at Evercore ISI]

Hi, guys. Good morning, and thanks so much for the question. I wanted to ask a follow-up question about the implied 4Q guide. With the updated revenue range, it seems like if you have continued growth in the ground transport similar to what we've seen in the third quarter, it's almost like the low end of the revenue guidance is pricing in maybe negative net transport revenue per transport growth. It's definitely been positive and trending, so I just want to understand maybe what gets you to the low end of that versus the high end, and should we be expecting positive net transport revenue per transport growth? Thank you.

[Brian Tierney, EVP and CFO at GMR Solutions]

Thanks, Elizabeth. We are expecting the continued momentum out of NRTs. Again, we have seen good collection activity. We have the payer mix shift that we have talked about all year associated with the exchanges. We did have the benefit of the change in estimate, the air change in estimate that we talked about in the call, which that volume is decreasing quarter-over-quarter as we go into the fourth quarter. No real change in our broader thinking long term. Fourth quarter is always a little bit weaker from a seasonality perspective because there is just a mix between commercial and some of the other payers during the fourth quarter, fourth and first quarter. No real change from our underlying trends.

[Elizabeth Anderson, Senior Managing Director at Evercore ISI]

Okay, great. That is good to hear. Then I think a couple of times you talked about, obviously with the increase in fuel costs and things like that, some of these efficiency gains that you have been seeking out. Can you talk to us a little bit more about operationally what those are and sort of how you have been evaluating that as unfortunately the oil cost trend seems to be less transitory than we had hoped?

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Elizabeth, this is Nick. Look, one of the things I think we have stated a few times is we have got a lot of dials we can turn and tighten up. We have used a measure internally, which is UHU on utilization, really tight on how we are deploying, how we are stationing folks. Operationally, we kind of turn those dials where we need them and tighten up. It just goes back to our ability to manage fleet and demand. Also, as you know, we have said with some of the weather, you have seen some of our capture down. The pluses and minuses have allowed us, at least from operational perspective, to smooth out some of those.

[Elizabeth Anderson, Senior Managing Director at Evercore ISI]

Okay. It sounds like what you are saying is sort of just continued strong operational thing, but not necessarily like a shift versus things you were doing earlier in the year.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

No.

[Elizabeth Anderson, Senior Managing Director at Evercore ISI]

Is that fair?

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Yes.

[Elizabeth Anderson, Senior Managing Director at Evercore ISI]

Yeah. Okay, perfect. Thank you very much.

[Operator]

Your next question comes from the line of Scott Fidel with Goldman Sachs. Your line is open. Please go ahead.

[Scott Fidel, Managing Director and Senior Research Analyst at Goldman Sachs]

Hi, thanks. Good morning. Was hoping maybe you could just give us an update on just the IDR revenue collections and how those are trending. Did see the disclosures you provided in the 10-Q and appreciate that. But maybe just against the backdrop too of obviously this has become a very visible issue in the healthcare system as well. So just maybe walk us through the revenue collections there and then how you see that against the backdrop of the current environment around the payers in particular contesting the structure of the IDR process.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Hey, Scott. This is Nick. Thanks for the question. I'll start in reverse with the overview of how we're tackling some of the noise that you're all seeing and hearing in IDR, and then I'll ask Brian to get to some of the more granular points at the beginning of your question. Look, we feel confident. I think we said it, and we put it down in writing. With respect to emergency health, the EMS environment, and I think there was a Paragon report as well that went out probably a month or two ago that stated almost exactly what I had spoken to Dr. Mehmet Oz about several months ago, where you've got to treat EMS, especially 911 response, very differently. Emergency versus elective, which is where I think most of the noise is.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

When I spend my time on the Capitol Hill, which I spend a lot of time on the Capitol Hill with legislators, the lawmakers get it, the administration gets it. We remain highly confident that we have a lot of support there with the differentiation. Even from a scale perspective, and Brian can get into some of the numbers, you'll recall this is a very small portion, one of our overall interventions, and even from an air perspective, we continue to grow our in-network partnerships with payers. So, look, we get it. We see the noise. We fight it. Just recently, I've engaged with state lawmakers as well, and even AGs on getting their attention with some of the behavior we're seeing out of the payers. So, our bias is we're being thrown into a mix unfairly.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

We believe that what we've gone into the process with, one and all, not only eligible, but justifiable, and we'll continue to win at the rates we do and continue to demand and get justification for payment on all of these. I don't know, Brian, if you want to add a little bit more to Scott's question.

[Brian Tierney, EVP and CFO at GMR Solutions]

Yeah. This is not a new topic. It's getting a little bit more volume, but we've had payers that have not paid per the No Surprises Act timelines, really since the inception. We work with the industry, as Nick mentioned, and lawmakers and other stuff to try to advance this. I'd rather have everybody in-network. We renewed a couple of contracts with some very large multi-state payers during the quarter. It shows that, again, we can get in-network and stay in-network with folks that are interested in being in-network. Yeah, this is not a new topic, and we'll continue to fight.

[Scott Fidel, Managing Director and Senior Research Analyst at Goldman Sachs]

Okay, great. Then just as my follow-up question, could you maybe just unpack the labor costs seem to be, the expense management around that seemed to be quite strong in the quarter. Did see some of the commentary in the 10-Q about some lower stock comp expense year-over-year. But even despite that, excluding that, the overall employee wages and benefits and just sort of cost control were better than we expected. Could you maybe just talk about that in terms of your underlying labor cost trends and then how you see that sort of progressing into the fourth quarter. Thanks.

[Ted Van Horne, President and COO at GMR Solutions]

Yeah, thanks. This is Ted Van Horne. The teams continue, and it is kind of core to our culture and teams and how we operationalize every single business unit and how the local leaders actually manage their teams. So it is a market by market, and it is a very broad program that we have on the utilization of the assets, and we use the right employees for the right types of calls and the labor rates. We have also seen quite a bit with 911 Nurse Navigation improving our operational efficiency in some of these really large markets. You see the growth we have had with 911 Nurse Navigation, and that makes the systems overall more efficient. The right ambulances going to the right calls in the emergency side. So, it provides for quite a bit of efficiency throughout the operations where we have it rolled out.

[Ted Van Horne, President and COO at GMR Solutions]

And just fundamentally in how we operate in the air and ground side, that is a core piece to what we do is utilization management of our teams.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Yeah, and Scott, this is Nick Loporcaro. Just to add to that and probably segue from the question Elizabeth Anderson asked earlier in my alluding to the proverbial dials we talk about. One of the things we continue to see as we deploy 911 Nurse Navigation in our own markets is that efficiency that we have referred to in the past. So that helps us avoid some of the dry runs and dispatching the wrong teams. And so you continue to see that improvement inherent in the numbers that we are presenting.

[Scott Fidel, Managing Director and Senior Research Analyst at Goldman Sachs]

Okay. Thank you.

[Operator]

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

[Benjamin Rossi, VP of Healthcare Services Equity Research at JPMorgan]

Good morning. Thanks for taking my questions here. I know you aren't providing formal guidance for 2027, but in setting up puts and takes, can you remind us what's being incorporated into your revised guidance for fuel costs, IDR rollover from last year's trend, and some of the payer mix impact related to the ACA exchanges? For next year's ACA exchange impact, any initial thoughts about trends and whether you think it's fair that you'll run rate, call it the $15 million-$16 million impact into the first quarter of 2027, given some of the more minimal impact felt in the first quarter of this year?

[Brian Tierney, EVP and CFO at GMR Solutions]

Yeah. Ben, this is Brian. Thank you. Fuel costs, we're going to continue to use the fuel futures. I'm not going to guess what fuel prices are, so we just take the benefit of everybody else's knowledge. They've moved, as you can imagine, they move all over the place. But so we're using the fuel futures really from the end of last week, so they have the benefit of the post-midterm election change. But that's still higher than we'd like to see, and we'll continue to try to drive efficiencies, make sure we've got all of our fuel card program, bulk purchasing programs, other stuff to minimize the fuel costs as much as we can. Related to IDR, again, the change of estimates, we continue to believe that these will drive closer to zero. There's some very old stuff that's still out there.

[Brian Tierney, EVP and CFO at GMR Solutions]

We'll continue to try to chase it. It's not on the books, which is why it's a change of estimate when we do collect it. Second quarter, I think, was about $5 million. Third quarter was in the $18 million range. It's going to be low, and we're going to continue to try to collect on that really old stuff. Related to the exchanges, $16 million run rate is, I think, the right number. We saw a little bit of it in the first quarter this year of 2026, so there'll be a little bit of impact there. What we're watching right now for 2027 is the work requirements for Medicaid. There's a number of different estimates out there we're trying to refine as we think about 2027. So that's the known headwind that we see from an NRT perspective.

[Benjamin Rossi, VP of Healthcare Services Equity Research at JPMorgan]

Great. Thanks for the details there. As a follow-up on IDR, for the $18 million in IDR claims received this quarter, can you just remind us what the breakdown is between claims that occurred during 3Q versus claims that came through from prior periods?

[Brian Tierney, EVP and CFO at GMR Solutions]

Yeah. This is all related to claims for much older dates of service. Our revenue recognition process for both air and ground, although they have slightly different timing, is to make an estimate at the time that we provide the service and then wait six months for the air, 12 months for the ground to update those. And then, so these changes are older than six months on the air side. And frankly, most of them are in the 18-24 month range from a perspective. So this is not change of estimate. Change of estimate by definition is an older date of service.

[Benjamin Rossi, VP of Healthcare Services Equity Research at JPMorgan]

Great. Thanks for the details.

[Operator]

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

[Craig Hettenbach, Executive Director and Senior Equity Research Analyst at Morgan Stanley]

Yes, thank you. Can you just touch on capital allocation priorities and really the extent to which maybe it's used towards balance sheet deleveraging near term versus potential M&A opportunities that may arise on a longer-term basis?

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Craig, this is Nick. Again, as usual, I'll give you a bit of high level, and then Brian and Ted can chime in with a little bit more color. Delevering, I'll say, is priority one on the list. Then there's operating the business. If we can get some opportunities to bring some assets in to help us launch contracts sooner, I would tell you that's priority two. M&A, as we've discussed, obviously, we do have some targets. The multiples expected out in the market are at times a little prohibitive. That said, we are engaged on a few smaller ones in adjacent markets that we think are very synergistic. We can make the case and have a high degree of conviction around the M&A and the ROI around it, we're going to move forward on it.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

But those three buckets we will manage with a lot of scrutiny and a high level of discretion on which one makes more sense when on how we deploy our capital. I don't know, Brian or Ted, if you would add anything to that.

[Ted Van Horne, President and COO at GMR Solutions]

We just recently saw the announcement on adding more Bell aircraft into the fleet on purpose in the last couple weeks here, those are ongoing over the course of the next year as they come in. It's also, it gives us better efficiency, the types of airframes we bring in. It's very specific to instrument flight, the IFR aircraft that we're doing. We have quite a few other aircraft coming in over the course of this year and next year to continue to meet the growth and the needs that our customers have. We're going to continue to reinvest in there on not only the technology that the new aircraft bring in, but obviously the ability to grow further.

[Brian Tierney, EVP and CFO at GMR Solutions]

As the business continues to generate cash, we're going to use some of that to delever like we did during the third quarter. We did reprice the term loan, bought down about $200 million worth of the term loan as well. We thought that was the right time. We're generating plenty of cash to continue to operate and do the M&A when the time comes, to do the aircraft purchases when the time comes. Feel good about our position.

[Craig Hettenbach, Executive Director and Senior Equity Research Analyst at Morgan Stanley]

Helpful context. Thanks. Brian, just a follow-up for you on the back of solid EBITDA beats in Q2 and Q3. You guys talked about kind of the revenue range for Q4. Anything you're considering in terms of implied guide for Q4 in terms of any headwinds or tailwinds that you would call out specifically?

[Brian Tierney, EVP and CFO at GMR Solutions]

Just the inflationary environment continues to be more challenging than I think any of us would like. We've seen You've got the variability of fuel prices, but they're much higher than even earlier in the year. We've seen that continue to trickle through other lines in the P&L. Initially started with transport-related things like freight and travel. We've seen it really start to pop into all of the other lines as well, we continue to work. We've got a very good purchasing team that manages all of our contracts. Our frontline staff do a great job making sure we're using only what we need. We are seeing that inflation pop through into other lines, so we've incorporated that into our guidance.

[Craig Hettenbach, Executive Director and Senior Equity Research Analyst at Morgan Stanley]

Got it. Thank you.

[Operator]

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

[Andrew Mok, Director and U.S. Health Care Equity Analyst at Barclays]

Hi. Good morning. Weather cancellations were up 100 basis points year-over-year and the highest 3Q cancellation rate we've seen in recent years. I know you were expecting moderating weather to be a tailwind this year, so can you help us understand what drove that increase in cancellations, including any impact of El Niño and how that impacts your view of flight growth for 4Q? Thanks.

[Ted Van Horne, President and COO at GMR Solutions]

Yeah, I think you said the words there, El Niño, and what we saw obviously was certain pockets of the U.S. had very unseasonal weather issues in the summer months, heavily also in the West, Colorado. So those western states got hit unusually hard this year. Then we had a couple really bad storms, as we know, not only as the kind of hurricane came through, but if you remember the month or so prior to that hurricane in the Gulf, there was just quite a bit of southeastern storms along the lines. When those types of weather fronts come through, it does increase the weather cancellation rates. Even if we had the IFR aircraft, we're not flying in those kind of conditions.

[Ted Van Horne, President and COO at GMR Solutions]

We did see that unusually higher number that we. In the summer months, it usually isn't that way, so that's what we saw the year-over-year increase in the cancellation rates because of the weather.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Yeah, and Andrew, Nick here. Look, as we continue to learn and look at the business, we also know we have opportunities at times as weather patterns are coming in. We've often stated our assets are mobile. We can move some of those rotor assets to other markets that are not having some of the weather issues, maybe to pick up some volume as well. We continue to look at those patterns and how do we mitigate this. With your question on what does El Niño do next year, I can't tell you what those patterns are going to be, but we continue to look inward. Ted mentioned earlier continued investment in IFR, technologies, training on how we can mitigate some of these weather patterns as they move through the system.

[Brian Tierney, EVP and CFO at GMR Solutions]

Yeah. Let me pile onto the IFR comment. Yeah, the aircraft, the Bell aircraft that we ordered during the quarter are instrument flight rules, IFR, which means that you can use GPS and other things to fly in conditions that you can't do if you're flying visual flight rules or VFR. We continue to invest in those types of aircraft. The order of those aircraft will come in in 2027. That's our plan, is all aircraft as we go forward from Bell that will come in, will come in with the IFR aircraft. All the twin engines will come in with IFR. As we continue to change that mix, then hopefully we will eventually decrease a little bit the weather impacts.

[Andrew Mok, Director and U.S. Health Care Equity Analyst at Barclays]

Great. Can you talk a little bit more about the pace of air bases we can expect over the next five quarters or so? Just remind us what the targets are and cadence. Thanks.

[Brian Tierney, EVP and CFO at GMR Solutions]

Yeah, I do not have the numbers at hand, and we are still working with the suppliers on the delivery timeline. I think we had mentioned, we had, on the previous call, we had seen some delays from one of the suppliers. We have worked through a lot of that. We do not have complete line of sight yet, but we do have a lot of aircraft coming. A couple at the very end of this year that will fund bases to start early next year, and then a number throughout 2027. As we get into doing the 2027 guidance, we will have a clearer picture and share that at that time.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Andrew, I want to come back to a point, this is Nick, that we have realized as we have messaged out to all of you, we talk about bases, but I think one of the things we have not highlighted as well, I will go back to a point I raised earlier, is as we look at demand around our current bases, we have the ability, again, to move some of those assets in higher demand areas and pick up more volume. We can still get the ultimate impact of increased volume without necessarily opening up new bases. I just want to highlight that point, and we will continue to improve how we report against that as well.

[Andrew Mok, Director and U.S. Health Care Equity Analyst at Barclays]

Great. Thank you.

[Operator]

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

[Joanna Gajuk, Managing Director and Director in US Equity Research at Bank of America]

Hi, good morning. Thanks so much for taking the question. When I look at the revenue per transport growth, if we normalize for the year-over-year headwind, you talk about the $37 million from the lower NSA adjustment year-over-year, where we come up with, call it, 5.5% or so of growth. Is that the right math? Also, is this the level of RPT growth we should be assuming into next year? Because sounds like those adjustments will be close to zero. If that's the case, if your core pricing or revenue per transport is growing mid-single digits, I understand the fuel and other inflationary cost pressure. But if that's what's happening with the pricing at least, is it fair to assume that at this pace of revenue per transport growth, you can grow your EBITDA high single digits next year? Thank you.

[Brian Tierney, EVP and CFO at GMR Solutions]

Joanna, thanks for the question. Yes, on NRT, we've got a couple of different things that fit into that. One is the underlying, just the NRTs of the business, some of it within the emergent and non-emergent service lines. Then we have the mix shift that sits on top, offset a little bit by the payer mix. Our expectation for NRTs as we go into the fourth quarter, and we'll provide guidance on 2027, when we do our call at that time, is still to be in that low to mid-single digits, just like we talked about ahead of the roadshows and the IPO, in that 2%, 3%, 4%. Then we'll benefit from a little bit of mix shift as we continue to focus on the emergent business and then the non-emergent business that makes economic sense.

[Brian Tierney, EVP and CFO at GMR Solutions]

Our goal in the long term, and we always view this from a long-term perspective, is mid-single digit plus revenue growth, high single-digit EBITDA growth, leveraging the size and scale of the business. That hasn't changed.

[Joanna Gajuk, Managing Director and Director in US Equity Research at Bank of America]

Great. Thanks for that. If I may, I guess as it relates to next year, another question around the Rural Health Transformation Program. So I guess by now, all the states have received some approvals for funding. So can you help us understand how material, if at all, could this be for the company? Maybe, how many projects you involved in, when we should expect to see some revenue contribution flowing from that? Any color will be appreciated. Thank you.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Yeah, Joanna, this is Nick. I will be candid. This first year rollout, we saw a lot of confusion, and a lot of the dollars just ultimately went back to the hospitals, where we had understood was not the intention. We've worked hard with all of the states to come up with these innovative models. I think it's a little premature to give you an assessment of what the potential is. We know that they are looking at targeting and earmarking dollars for EMS. We also believe that we, GMR, can benefit from a few other categories. I know we mentioned 911 Nurse Navigation, we mentioned some of other innovations. That's the 911 REACT model that we went out. We believe this year we should start being able to see some of the contracts.

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

We're engaged with some states and respective counties in those states to look at getting some traction with our models and benefiting from some of those dollars. Still a little bit of noise in how the government is allocating those funds and what they're awarding on the true innovative models. Aside from your recall, the first half of dollars were just prorated out to every state. Now they're getting a little more prescriptive around what programs and what innovative models will be awarded the dollars. We remain optimistic about this. We're still promoting and actually engaged with a few states and a few counties on getting the contracts.

[Joanna Gajuk, Managing Director and Director in US Equity Research at Bank of America]

Great. Thank you.

[Operator]

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

[Nick Loporcaro, Board Chair and CEO at GMR Solutions]

Thank you, Tracy. Thank you all again for joining us today. As you see, the third quarter demonstrated continued momentum and resiliency across our business and continues to reinforce our confidence in GMR's strategy. We continue to grow our core services, expand innovative solutions like 911 Nurse Navigation, maintain discipline across our operations, and strengthen our financial position. We believe our national scale, integrated model, and clinical capabilities position GMR well to capture the opportunities ahead and create sustainable long-term value. Our exceptional clinicians, pilots, mechanics, dispatchers, support personnel, and regional leaders are what makes this possible, and I want to thank them for their unwavering commitment to our patients, partners, and communities. Thank you for your continued support, and have a wonderful day.

[Operator]

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

Participants

Executives

• Krister Sorensen, VP of Investor Relations
• Nick Loporcaro, Board Chair and CEO
• Ted Van Horne, President and COO
• Brian Tierney, EVP and CFO

Analysts

• Elizabeth Anderson, Senior Managing Director at Evercore ISI
• Scott Fidel, Managing Director and Senior Research Analyst at Goldman Sachs
• Benjamin Rossi, VP of Healthcare Services Equity Research at JPMorgan
• Craig Hettenbach, Executive Director and Senior Equity Research Analyst at Morgan Stanley
• Andrew Mok, Director and U.S. Health Care Equity Analyst at Barclays
• Joanna Gajuk, Managing Director and Director in US Equity Research at Bank of America