GMR Solutions Inc. Q1 FY2026 earnings call

### Overall Financial Performance - Q1 2026 total net revenue was $1.46 billion, a 6.6% year-over-year increase, hitting the top of the guidance range shared in the company's S-1 IPO filing. - Adjusted EBITDA reached $305 million, a 9.7% year-over-year increase, with an adjusted EBITDA margin of 20.9%, up 59 basis points year-over-year. - Net income increased 179.9% year-over-year to $106.3 million. - Total patient encounters reached approximately 1.4 million for the quarter.

### Operational and Strategic Updates - GMR is the largest U.S. emergency medical services (EMS) provider, serving 5.5 million patients annually across markets covering over 60% of the U.S. population, with 24,000 trained clinicians. - The company prioritizes core emergent services, actively reducing low-reimbursement non-emergent and wheelchair encounters, which declined 7.2% and 52.8% year-over-year respectively. - The 911 Nurse Navigation innovation continues to expand: it is currently active in 29 U.S. communities, with 13 additional markets in implementation, bringing total covered lives to over 22 million. Q1 2026 call volume grew 47% year-over-year to 28,000, delivering an average 15% reduction in non-acute dry runs and 2.5% reduction in unreimbursed transports. - Labor metrics improved year-over-year: the crew vacancy rate declined 77 basis points, total crew wages increased 3.0%, and base unit wage inflation was 3.8% per payroll hour, in line with expectations. - New business delivered $20 million in incremental Q1 revenue, with new executed agreements totaling $47 million in annualized incremental revenue. The company is actively pursuing rural health opportunities tied to the $50 billion five-year federal Rural Health Transformation Program, responding to RFPs across multiple states.

### Financial and Capital Structure Updates - Payer mix by net transport revenue was 57% commercial, 25% Medicare, 9% Medicaid, 7% other third-party, and 2% self-pay, with a small positive mix shift toward higher-reimbursement commercial payers year-over-year. - Days Sales Outstanding (DSO) decreased 3 days year-over-year to 76 days. - The company completed its IPO, using proceeds to reduce total debt and redeem preferred equity by more than $1.1 billion, cutting annualized interest expense by $46 million and annualized preferred dividends by $73 million. Net leverage post-IPO is 3.5x. - Credit ratings were upgraded from B/B2 to B+/B1, triggering a 25 basis point interest rate reduction that cuts annualized interest expense by an additional $7.4 million, for a total annualized savings of over $125 million.

GMR Solutions reports two core service segments: ground medical services and air medical services. - **Ground Medical Services**: Generated revenue from over 1.3 million patient encounters during Q1 2026, including more than 1 million transports, 28,000 911 nurse navigation calls, and 270,000 on-scene non-transport interventions. Emergent ground transports grew 0.6% year-over-year, while non-emergent ground transports declined 7.2% year-over-year as the company prioritizes higher-reimbursement core services. This segment represents approximately 97.6% of total patient encounters and the majority of total net revenue. - **Air Medical Services**: Served over 34,000 patients during Q1 2026. Emergent air volumes grew 1.1% year-over-year, and same-market emergent flights increased 1.9% year-over-year. Favorable weather increased the flight capture rate by 87 basis points to 45.1%, adding approximately $11 million in incremental revenue versus the prior year quarter. This segment makes up approximately 2.4% of total patient encounters.

- Full year 2026 net revenue guidance is set at a range of $5.89 billion to $6.18 billion, and adjusted EBITDA guidance is $1.135 billion to $1.195 billion. - Total cash used for CapEx and aircraft financing is projected to be between 5.1% and 5.3% of total 2026 revenue. - The guidance incorporates expected payer mix degradation from the implementation of the One Big Beautiful Bill Act and expiration of Affordable Care Act exchange subsidies, which began to appear in April 2026, with a total expected negative impact of $25 million to $30 million for full year 2026. - Guidance also incorporates higher fuel costs resulting from the Iran conflict, with an incremental expected $25 million to $30 million in annual fuel expense based on a WTI price of $98 per barrel. - Management expects net leverage to fall below 3.3x by the end of 2026, and to reach 3.0x in 2027. - Long-term, GMR expects mid-single-digit top-line annual revenue growth, driven by low single-digit same-market volume growth and low to mid-single-digit rate growth, plus cross-selling and new market expansion. - Long-term, management expects high single-digit adjusted EBITDA growth, with adjusted EBITDA margins around 20%, and annual CapEx and aircraft financing cash usage just above 5% of revenue.

- The recently proposed CMS rule overhauling Medicaid targeted supplemental intergovernmental transfer payments could create financial pressure on municipal-run EMS systems, though GMR's early analysis estimates a negative annual impact of less than $5 million, and the company sees potential for share gain from this pressure. - Fuel prices rose in March 2026 due to the Iran conflict; while fuel commodity exposure only represents ~1% of total revenue, sustained high prices could increase operating expenses. GMR does not currently hedge fuel price exposure, though it is evaluating implementing hedges going forward. - Collections from older No Surprises Act Independent Dispute Resolution (IDR) process dates of service declined significantly year-over-year, with Q1 2026 IDR collections from 2022-2024 transports totaling only $7 million, a $24 million decrease from the prior year. This return to a normal collection cycle is already incorporated into guidance. - Medicare and Medicaid reimbursement rates remain inadequate for EMS services, and regulatory changes could create ongoing headwinds for revenue growth, though GMR is actively lobbying for federal legislation to modernize reimbursement. - The delayed impact of the One Big Beautiful Bill Act and ACA exchange subsidy expiration has only begun to appear in April, so further unexpected shifts in payer mix could negatively impact revenue and margins.

Q: What is the expected impact of ACA exchange subsidy expiration and the One Big Beautiful Bill Act on 2026 results, and was there any impact in Q1? / A: GMR saw almost no impact from these policy changes in Q1 2026. A 1% mix shift out of commercial payers began when closing April 2026 results. The full year 2026 guidance already incorporates a total negative impact of $25 million to $30 million from these changes. Management is still analyzing early trends and will provide more detail after Q2.

Q: What was the Q1 2026 impact of higher fuel prices, how does fuel pricing flow through the P&L, and what is the full year expected impact? / A: Higher fuel prices only impacted March 2026, adding $3 million in incremental Q1 expense versus budget. Full year guidance incorporates $25 million to $30 million in incremental fuel expense based on a WTI price of $98 per barrel. Roughly half of GMR's total fuel expense is tied to commodity prices, and half is fixed distribution and delivery costs; commodity exposure totals ~1% of total revenue.

Q: How should investors think about IDR collection trends for the rest of 2026, and what is the outlook for moving additional out-of-network payers in-network? / A: Q1 2026's $24 million year-over-year decline in IDR collections from older dates of service will grow to 50% to 100% that magnitude in remaining 2026 quarters, as most old outstanding collections were cleared in 2025 and the business has returned to a normal collection cycle. GMR continues to make steady progress moving payers in-network, bringing its largest out-of-network payer in-network in Q1, pushing in-network commercial air transport share to nearly 70%, with a target ceiling around 80%. GMR wins over 90% of IDR disputes, giving it strong leverage in in-network contract negotiations.

Q: Post-IPO leverage is 3.5x net debt; what is GMR's current M&A appetite and pipeline status? / A: GMR has a healthy pipeline of ~12 viable, mostly small tuck-in acquisition targets that align with its core EMS business. No M&A is incorporated into 2026 guidance. Management remains disciplined, will only pursue highly accretive transactions that complement existing geographic footprints or service lines, and is comfortable pursuing opportunities as deleveraging continues on the current projected path.