GMR Solutions Q1 2026 Earnings Report

GMR Solutions EPS Results

• Actual EPS: $999.00
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

GMR Solutions Revenue Results

• Actual Revenue: $1.46 billion
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

GMR Solutions Announcement Details

• Quarter: Q1 2026
• Date: 6/1/2026
• Time: After Market Closes
• Conference Call Date: Tuesday, June 2, 2026
• Conference Call Time: 10:00AM ET

GMR Solutions Q1 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Q1 results were strong, with revenue up 6.6% year over year to $1.46 billion and adjusted EBITDA up 9.7% to $305 million, while EBITDA margin expanded to 20.9%.
• Positive Sentiment: Operational mix improved as the company reduced lower-reimbursing non-emergent and wheelchair transports and grew emergent services, helping boost net revenue per transport by 7.9%.
• Positive Sentiment: 911 Nurse Navigation is scaling quickly, now serving 29 communities with 13 more in implementation, and call volumes nearly rose 47% year over year in the quarter.
• Neutral Sentiment: Guidance factors in several offsets, including normalized IDR collections, some payer-mix degradation from ACA subsidy changes and the One Big Beautiful Bill Act, and higher fuel costs tied to the Iran conflict.
• Positive Sentiment: Balance sheet and financing costs improved materially after the IPO, with more than $1.15 billion of debt and preferred equity reduction, net leverage around 3.5x, and over $125 million in annualized financing cost savings.

Presentation

[Operator]

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

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

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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%.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[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 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.

[Benjamin Rossi, Analyst at JPMorgan]

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.

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

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

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

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.

[Benjamin Rossi, Analyst at JPMorgan]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Operator]

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

[Elizabeth Anderson, Analyst at Evercore ISI]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Elizabeth Anderson, Analyst at Evercore ISI]

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?

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

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

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.

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

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.

[Elizabeth Anderson, Analyst at Evercore ISI]

Great. Thank you very much.

[Operator]

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

[Andrew Mok, Analyst at Barclays]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Andrew Mok, Analyst at Barclays]

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.

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

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

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

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

[Brian Tierney, EVP and CFO at GMR Solutions]

That's on the Medicaid side. Yep.

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

Yeah.

[Andrew Mok, Analyst at Barclays]

Great. Thank you.

[Operator]

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

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

That was Craig.

[Craig Hettenbach, Analyst at Morgan Stanley]

Great. Thank you.

[Craig Hettenbach, Analyst at Morgan Stanley]

Could you-

[Brian Tierney, EVP and CFO at GMR Solutions]

That was Daniel.

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

Oh, Daniel, sorry.

[Craig Hettenbach, Analyst at Morgan Stanley]

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?

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

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.

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

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.

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

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?

[Craig Hettenbach, Analyst at Morgan Stanley]

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?

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Craig Hettenbach, Analyst at Morgan Stanley]

Helpful. Thank you.

[Operator]

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

[Daniel Grosslight, Analyst at Citi]

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.

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

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.

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

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Daniel Grosslight, Analyst at Citi]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Brian Tierney, EVP and CFO at GMR Solutions]

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.

[Daniel Grosslight, Analyst at Citi]

Got it. Thank you.

[Operator]

We have 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, 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.

[Operator]

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

Participants

Executives

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

Analysts

• Andrew Mok, Analyst at Barclays
• Benjamin Rossi, Analyst at JPMorgan
• Craig Hettenbach, Analyst at Morgan Stanley
• Daniel Grosslight, Analyst at Citi
• Elizabeth Anderson, Analyst at Evercore ISI