GMR Solutions Q3 2026 Earnings Call Transcript

GMR Solutions (NYSE:GMRS) reported third-quarter financial results on Tuesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

GMR Solutions reported an 18 million dollar impact from older claims in the third quarter, with efforts ongoing to collect on these outstanding items.

The company is prioritizing deleveraging and operational efficiency, with potential M&A opportunities being considered if they are synergistic.

Fuel costs remain a concern due to volatility, but GMR Solutions is employing futures and purchasing programs to manage expenses.

Weather-related cancellations increased due to El Niño, impacting flight growth forecasts for the fourth quarter.

The company continues to invest in IFR-capable aircraft to mitigate weather disruptions and plans further fleet expansions in 2027.

Revenue per transport is expected to grow in the low to mid-single digits, with an aim for mid-single-digit revenue growth and high-single-digit EBITDA growth in the long term.

GMR Solutions is engaging with states regarding the Rural Health Transformation Fund, though initial rollout challenges have delayed revenue impacts.

Management expressed confidence in the company’s strategy and resilience, highlighting continued growth in core services and innovative solutions.

Full Transcript

Ben (Analyst)

Thoughts about trends and whether you think it’s fair that you’ll run rate, call it the 15 to 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 Scott Tierney (Chief Financial Officer)

Yeah, Ben, this is Brian. Thank you. Yeah. Fuel costs, we 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, all over the place. 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. But 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. 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. So 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 dollar run rate is, I think, the right number. We saw a little bit of it in the first quarter this year of ’26, so there’ll be a little bit of impact there. What we’re watching right now for ’27 is the work requirements for Medicaid. There’s a number of different estimates out there. We’re trying to refine as we think about ’27. So that’s the known headwind that we see from an NRT perspective.

Ben (Analyst)

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 Scott Tierney (Chief Financial Officer)

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 to 24 month range. So this is not change of estimate.

Change of estimate by definition is an older date of service.

Ben (Analyst)

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 (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.

Nicola Loporcaro (Chief Executive Officer)

So 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. You know, 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. You know 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. So 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. 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 know Brian or Ted, if you would add anything to that.

Edward Van Horne (President & COO)

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. But also, it gives us better efficiency, the types of airframes you bring in. It’s very specific to instrument flight rules aircraft that we’re doing, and 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.

So we’re going to continue to reinvest in not only the technology that the new aircraft bring in, but then obviously the ability to grow further.

Brian Scott Tierney (Chief Financial Officer)

And 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 and to do the aircraft purchases when the time comes, and so feel good about our position.

Craig Hettenbach (Analyst at Morgan Stanley)

Helpful context. Thanks. And 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 Scott Tierney (Chief Financial Officer)

Just the inflationary environment continues to be more challenging than I think any of us would like. 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. It initially started with transport-related things like freight and travel, but we’ve seen it really start to pop into all of the other lines as well. And we continue to work. We’ve got a very good purchasing team that manages all of their contracts.

Our frontline staff do a great job making sure we’re using only what we need. But we are seeing that inflation pop through into other lines, and so we’ve incorporated that into our guidance.

Craig Hettenbach (Analyst at Morgan Stanley)

Got it. Thank you.

OPERATOR

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

Andrew Mock (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.

Edward Van Horne (President & COO)

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. And then we had a couple really bad storms, as we know, not only as the hurricane came through. Remember the month or so prior to that hurricane in the Gulf, there was just quite a bit of southeastern storms, long lines.

And 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. So we did see that unusually higher number. 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.

Nicola Loporcaro (Chief Executive Officer)

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. So we continue to look at those patterns and how do we mitigate this. With your question on, you know, 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.

Edward Van Horne (President & COO)

Let me pile onto the IFR comment. 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. And so we continue to invest in those types of aircraft. The order of those aircraft will come in in ’27. So that’s our plan: 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. And so as we continue to change that mix, then hopefully we will eventually decrease a little bit the weather impact.

Andrew Mock (Analyst at Barclays)

Great. And 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.

Edward Van Horne (President & COO)

Yeah, I don’t have the numbers at hand and we’re still working with the suppliers on the delivery timeline. I think we had mentioned on the previous call we had seen some delays from one of the suppliers. We’ve worked through a lot of that. We don’t 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. So as we get into ’27, doing the ’27 guidance, we’ll have a clearer picture and share that at that time.

Nicola Loporcaro (Chief Executive Officer)

And Andrew, I want to come back to a point, says Nick, that we’ve realized. As we’ve messaged out to all of you, we talk about bases, but I think one of the things we’ve not highlighted as well, I’ll 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. So 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’ll continue to improve how we report against that as well.

Andrew Mock (Analyst at Barclays)

Great, thank you.

OPERATOR

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

Joanna Gadget (Analyst at Bank of America)

Hey, good morning. Thanks so much for taking that question. So when I look at the revenue per transport quote, right, and if we normalize for the year-over-year headwind you talk about, the 37 million from the lower NSA adjustment year over year, we come up with, call it, you know, five and a half percent or so of growth. So is that the right math? And also is this the level of RPT goal we should be swimming into next year, because sounds like those adjustments will be close to zero, right?

So if that’s the case, right, if your core pricing or revenue per transport is growing mid-single digits, you know I understand the fuel inflationary cost pressure, but you know, if that’s what’s happening with the pricing at least, you know, is it fair to assume that at this pace of revenue per transport growth you can grow to your EBITDA high single digits next year? Thank you.

Brian Scott Tierney (Chief Financial Officer)

Elizabeth. Thanks for the question. Yeah, on NRT we’ve got a couple of different things that fit into that. One is the underlying just NRTs of the business, some of it within the emergent and non-emergent service lines, and then we have the mix shift that sits on top, offset a little bit by the payer mix. Our expectation for NRT as we go into the fourth quarter, and we’ll provide guidance on ’27 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 road shows and the IPO, in that 2, 3, 4%, and 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.

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 Gadget (Analyst at Bank of America)

Great, thanks for that. And if I may, I guess as it relates to next year, another question around the Rural Health Transformation Fund. 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 you know how many projects you’re involved in, you know when we should expect to see some revenue contribution flowing from that. Any color will be appreciated.

Thank you.

Nicola Loporcaro (Chief Executive Officer)

Joanna, this is Nick. Look, 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 Solutions, can benefit from a few other categories. I know we mentioned nurse nav, we mentioned some other innovations, and that’s the REACT model that we went out. We believe this year we should start being able to see some of the contracts. 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, if you 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. So we remain optimistic about this. We’re still promoting and actually engaged with a few states and a few counties on getting to contracts.

Joanna Gadget (Analyst 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.

Nicola Loporcaro (Chief Executive Officer)

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 Solutions’ strategy. We continue to grow our core services, expand innovative solutions like nurse navigation, maintain discipline across our operations, and strengthen our financial position. We believe our national scale, integrated model, and clinical capabilities position GMR Solutions 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.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.