GMR Solutions (NYSE:GMRS) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.
This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation.
The full earnings call is available at https://events.q4inc.com/attendee/831059655
Summary
GMR Solutions reported Q2 2026 revenue of $1.49 billion, a 3.3% increase year-over-year, with adjusted EBITDA at $285 million, down 11.8% due to prior-year favorable revenue estimate adjustments.
The company completed 1.4 million patient encounters, with significant growth from same-market revenue, new markets, and disciplined cost management.
GMR Solutions reiterated its full-year guidance, expecting revenue between $5.89 billion and $6.18 billion, and adjusted EBITDA between $1.135 billion and $1.195 billion.
Strategic initiatives include expanding their 911 nurse navigation program, which increased calls by 50% year over year, and opening new air bases and 911 systems.
The company highlighted the impact of the No Surprises Act and ACA exchange subsidy expiration on payer mix and revenue, but maintains a strong liquidity position with $420 million in cash.
Management emphasized the company's positioning in the EMS market and its integrated service model, focusing on growth and operational efficiency through technology and data utilization.
Full Transcript
OPERATOR
Hello everyone. Thank you for joining us and welcome to GMR Solutions Q2 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, Vice President of Investor Relations
Joining me today are Nick Loporcaro, our Board Chair and CEO, Ted Van Horn, 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 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 and earnings presentation that is available on our website at investors.globalmedicalresponse.com. Unless otherwise noted, references to the quarter will be for the second quarter of 2026. I will now turn the call over
Nick Loporcaro, Chief Executive Officer
Thanks, Krister, and thank you all for joining us today. We are excited to report strong financial and operational results in the second quarter of 2026 that are in line with our expectations. To provide a high level overview of the quarter, GMR completed nearly 1.4 million patient encounters during the second quarter. We provided ground medical services to over 1.3 million patients, which includes more than 1 million transports, along with 29,000 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 over 36,000 patients. Q2 revenue was $1.49 billion, which represents 3.3% year-over-year growth. Adjusted EBITDA of 285 million decreased 11.8% year-over-year with an adjusted EBITDA margin of 19.1%. As mentioned previously, prior year results benefited from favorable revenue estimate adjustments associated with the No Surprises Act related collections on claims from earlier dates of service.
Aside from this comparability impact, you will see that the business delivered strong underlying revenue and operating performance during the quarter that Brian will expand on later in the call. 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.
Today marks our second earnings call since the successful completion of our IPO three months ago, which was an incredible accomplishment that could not have been possible without 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. Before Ted and Brian discuss the quarter in more detail, I want to step back and reiterate why we believe GMR is best positioned as a front-of-the-front-line healthcare provider.
As the largest provider of emergency medical services, we serve 5.5 million patients annually, covering markets that represent over 60% of the U.S. population with one or more of our solutions. Our more than 24,000 highly trained clinicians and fleet of ambulances and aircraft are rapidly deployed to navigate and provide essential out-of-hospital care for patients when they need us most. Our model is differentiated because it is integrated. We bring together clinical capabilities through air, ground, technology and care navigation assets in a way that allows us to serve communities, health systems, payers, federal and state agencies, and patients across a broad range of settings. In addition to emergent care, we provide non-emergent care, event medical response, and disaster response. We have also maintained a long-standing role as the prime EMS contractor for FEMA, supporting national emergency and disaster response needs. The opportunity in front of us is built around four ideas: saving and serving lives through clinical excellence; second, growth across existing and new markets; third, differentiation to our integrated platform and innovative solutions; and fourth, maintaining sustainable margins through disciplined operating execution. We operate within a $35 billion total addressable market that includes private providers like us, municipal-run EMS systems, and volunteer programs. The U.S. population is growing as well as aging, and chronic disease prevalence continues to rise. Many rural healthcare facilities face closure or reduction in service capabilities. All of this drives an increase in demand for EMS as the primary provider and connection point to healthcare facilities, and as the only nationally integrated air and ground ambulance provider across 46 states and Washington, D.C., we believe GMR is best positioned to capture this demand. This positioning gives us greater access to growth through adjacent markets, cross-selling within existing markets, and through disciplined M&A. And we never stop scrutinizing our existing business to ensure we continue to grow and provide sustainable care to our communities. As the 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.
At GMR, we have several systems and solutions including 911 nurse navigation, our Concierge platform, and our online ordering system transport.net that enhance efficiencies across our organization, resulting in the most appropriate care for patients. Our 911 nurse navigation connects lower acuity 911 callers with skilled nurses who can guide them to more appropriate sites of care when an ambulance transport is not clinically necessary. Concierge helps health systems better coordinate discharge and non-emergent transport needs, improve hospital throughput, and create a clearer reimbursement framework.
Transport.net reduces the effort in requesting, tracking, and dispatching both air and ground ambulance resources. Together, these solutions strengthen our offering, improve resource utilization, enhance patient outcomes, and create a reinforcing flywheel. Our national scale creates clinical data. That data informs innovation. Our tools support contract wins, and those wins further reinforce our national scale. Each of these innovations helps take the friction out of a traditionally run EMS system and ultimately provide better patient care, more efficient operations, and better hospital throughput while delivering savings to payers.
In turn, our scale also enables a large EMS database—currently over 80 million records—that allows us to pair with hospital outcome data to drive system improvements and protocols. This data-driven effort resulted in GMR receiving ESO Solutions' Best Use of EMS Data to Improve Outcomes award at ESO's WAVE conference in April this year, which is a national gathering for fire, EMS, and hospital professionals. Our performance continues to be driven by the same key ideas.
First, saving and serving lives through clinical excellence. Our advanced clinical protocols and rigorous training standards remain the foundation of everything we do, ensuring the highest quality of care in every patient encounter. Second, on growth, we continue to expand in existing markets, enter adjacent and new markets, cross-sell our solutions, and evaluate disciplined M&A opportunities. Third, on differentiation, our integrated air and ground model, supported by innovative technology, allows us to reduce friction in traditional EMS systems and deliver care more efficiently.
Fourth, on margins, we continue to scrutinize the markets and contracts in which we operate, emphasizing work that is strategically aligned and economically sustainable. On the reimbursement front, we applaud the recent introduction of the Reimbursing Emergency Services for Critical Urgent Events, or RESCUE, Act of 2026 in the U.S. House of Representatives. This bipartisan legislation provides a necessary solution to modernize the Medicare payment structure so emergency medical services are treated similarly to other healthcare providers with payments based on real cost data.
Under this approach, Medicare's payment rates will be more transparent, financially responsible, and cost-based, helping to close the financial gap between reimbursement and the cost of services for EMS providers. Achieving this milestone is another example of the recognition we are garnering with lawmakers and the payer community with respect to the necessary services we provide. Ted will now provide more detail on how our initiatives are unfolding operationally.
Ted Van Horn (President and Chief Operating Officer)
Thanks, Nick. GMR Solutions' operational focus remains clear. Grow our core emergent services, participate in non-emergent services where they make fiscal and strategic sense, and realize efficiency through innovative offerings such as 911 nurse navigation, concierge, and Transport Net. These capabilities give us ways to pair clinical care with better operational decision making and stronger partnerships across communities and health systems. These reflect a broader principle behind our model.
We coordinate care across modalities and geographies as an integrated service rather than providing services on a standalone basis. Given patients rarely fit neatly into a single mode of care, care coordination allows us to better match resources to acuity, improve visibility for our partners, and support more efficient operations in weather-constrained air markets, for example. The ability to deploy clinical resources across the ground platform reflects the practical value of integration. 911 nurse navigation continues to be one of our most important examples of innovation in the EMS model. The program connects lower acuity 911 callers with skilled nurses who can assess the patient's needs and guide them to appropriate care setting or transport modality. This is better for patients, better for crews, better for hospital systems facing emergency department overcrowding, a lower cost option for payers, and better for communities seeking a more sustainable EMS model.
In the second quarter, we navigated nearly 29,000 calls through this program, up 50% year over year. In the quarter we started servicing three new communities representing 1.3 million covered lives and bringing our total to 29 communities representing 19.7 million covered lives. We plan to implement four more communities over the remainder of the year. We've seen up to 20% of 911 medical calls diverted to nurse navigation with qualitative benefits including better alignment of resources to acuity, improved resource utilization, client stickiness, and higher satisfaction for both patients and crews.
For example, during the Spokane wildfires, GMR Solutions' 911 nurse navigation program quickly partnered with local emergency response and healthcare teams to connect displaced residents with appropriate care. Within hours, nurse navigators were helping patients access urgent care, telehealth, and community resources, reducing unnecessary emergency department visits while ensuring timely support. This effort demonstrates how 911 nurse navigation can rapidly adapt during crisis to improve patient access and support healthcare system capacity.
We expect to continue expanding 911 nurse navigation in existing 911 markets and using the system as a differentiator in new municipal and health system partnerships. Concierge supports the non-emergent side of the model by partnering with health systems to coordinate appropriate transports under a clear reimbursement structure. This creates a more predictable framework for service that can otherwise be low reimbursing or operationally inefficient.
It also supports hospital throughput by helping discharge processes move more efficiently and by reducing friction in scheduled transport workflows. Transport Net reduces friction in the process of requesting, tracking, and dispatching air and ground ambulance resources. By increasing visibility and simplifying handoffs among access points, health systems, and dispatch teams, the platform enhances the value of our integrated network. We are installed in nearly 3,000 Public Safety Answering Points, or PSAPs, across the country, representing over 65% of all PSAPs nationwide.
This software reduces dispatch friction, improves visibility, and strengthens partner relationships. For example, in Fredericksburg, Texas, Gillespie County Dispatch serves both the police department and sheriff's office. This is a very busy system. They were an early adopter of the Transport Net ordering technology and now process 100% of their air transport requests through the platform. Thanks to its ease of use, reliability, and aircraft tracking capabilities, they save valuable minutes on every request, allowing them to focus on other emergencies instead of spending significant time on the phone.
Turning to growth, we remain positive about our ability to win new business opportunities in core emergency medical services and expanded municipal ambulance contracting through 911 nurse navigation. Our growth strategy is multi-pronged. Grow same market revenue, expand in existing markets and enter new markets, cross-sell our integrated offering, and evaluate disciplined acquisitions where they are financially accretive and strategically aligned.
Same market revenue increased $53.1 million, or 3.8% year over year. New market revenue in the quarter was $21.3 million for new market starts. In the quarter we opened two new 911 systems in markets where we already had air operations, advancing our integrated market strategy. We also opened three new air bases, two adjacent to existing operations, expanding our footprint, and one in a new region with future growth potential. Also in the quarter we executed new agreements totaling over $43 million in incremental annualized revenue.
We continue engaging with states and other stakeholders on rural healthcare access and EMS models, including opportunities tied to state-led rural health transformation initiatives under the Rural Healthcare Transformation Fund with our 911 React platform. 911 React provides rural areas with the connection point to care that is desperately needed in these healthcare deserts. While we believe we are the best positioned to help solve rural health issues, we also believe we are the best to provide urban system rescue.
Over the 4th of July weekend, as part of our response capabilities, the State of New York requested 50 ambulances and 110 personnel for the City of New York to supplement the FDNY during what is typically the busiest weekend of the year for local EMS, GMR Solutions teams responded to over 2,200 emergency calls throughout all five boroughs. This short deployment is just another example of GMR Solutions' ability to be the safety net for EMS across the country.
Under our event medical operations, we covered seven of the 11 stadiums hosting FIFA World Cup games as well as provided coverage for several of the teams' practice facilities. We treated over 3,000 patients across the U.S., including about 300 transports and one full cardiac arrest resuscitation. I will now turn it over to Brian who will provide more detail on the financials.
Brian Tierney, Executive Vice President and Chief Financial Officer
Thanks, Ted. In the second quarter of 2026, GMR Solutions reported net revenue of $1.49 billion, a 3.3% increase year over year compared to the same quarter in 2025. Q2 air volumes were up 6.9% due to strong request demand coupled with improved capture rate. Emergent ground transports increased 2.4% driven by strong same-store demand, while non-emergent ground transports decreased 3.0%, reflecting our deliberate strategy of redirecting our resources towards higher acuity responses.
As a result, during the quarter, total patient encounters associated with our focus areas of emergent transports and nurse navigation grew 3.7% while lower-reimbursement patient encounters associated with non-emergent wheelchair and non-transports decreased on margin. Our operating discipline remains centered on contract profitability, labor productivity, resource utilization rate, adequacy, and operational efficiency. Following the strategic review process that began in 2022, we have continued to focus the portfolio on core operations and better performing services including reviewing, renegotiating and, where appropriate, exiting contracts that did not meet the return thresholds or strategic requirements. We also continue to benefit from efficiency initiatives in billing, collections, sales, staffing, fleet utilization, and shared services. Long term, we believe margin sustainability will be supported by integrated operations, payer relationships, disciplined contract structures, and continued refinement of the Independent Dispute Resolution and other reimbursement processes. Net transport revenue per ambulance transport, or NRT, increased 1.4% 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 improvement 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.
Additionally, the current quarter did not benefit from the same level of favorable changes in revenue estimates recognized in the prior-year period, which were largely associated with collections on No Surprises Act claims from earlier dates of service. During the second quarter, changes in estimates—predominantly related to No Surprises Act claims—were approximately $74 million lower than the prior-year period. This creates a meaningful variance in the year-over-year comparison in net revenue per transport, total revenue, and adjusted EBITDA, which was $284.5 million, down 11.8% from the prior year.
Aside from this comparability impact, the business continued to demonstrate strong underlying revenue and operating performance during the quarter. Turning to expenses, total operating expense increased 19.4% to $1.43 billion in the quarter compared to $1.20 billion for the same period in 2025. Employee wages, benefits, and taxes increased by 24.5% to $925 million. The increase year over year was primarily driven by increased stock compensation expense of $129.6 million related to the vesting of stock units associated with the execution of the IPO.
The remaining increase was primarily driven by improved staffing and normal wage adjustments to attract and retain talent. The average base unit wage increase during the quarter was 3.3%. Maintenance, fuel, and other direct expenses increased by 21.1% to $136.4 million. The increase was primarily driven by fuel unit costs associated with the Iran conflict and the timing of aircraft maintenance events. We also saw higher-than-normal inflationary costs impact lines that have a direct correlation with the supplier's underlying fuel costs, including travel and shipping costs.
Other operating expenses were generally in line with expectations. As reported, we recognized a net loss of $28.3 million in the quarter compared to net income of $80.8 million in the prior-year period. The year-over-year change was primarily driven by $142.3 million of expenses associated with our IPO, as well as the lower changes in estimates already mentioned related to No Surprises Act claims on older dates of service. Shifting to CapEx, cash flows, and liquidity, cash used for CapEx and aircraft financing was 6.3% of revenue for the second quarter of 2026 compared to 4.5% of revenue for the second quarter of 2025.
The increase was primarily due to the timing of CapEx purchases in both years, as well as our decision to pull forward certain purchases that were planned for later in the year to capture available price discounts. GMR Solutions finished the second quarter with $420.0 million in cash and cash equivalents and undrawn ABL with $696 million of cash borrowing capacity. After letters of credit, our free cash flow was approximately $15 million. Net leverage finished the quarter at 3.5 times, down from 4.3 times at the end of 2Q last year.
We expect strong cash flows to drive this below 3.3 times by year end and have line of sight to 3.0 times before the end of the year. In 2027, shortly after the IPO, Moody's and S&P upgraded our credit ratings from B2 to B1 and from B to B+, respectively, triggering a 25 basis point interest rate step-down on our term loan facility. Moving on to guidance, we are reiterating our full-year earnings guidance. We continue to expect revenue in the range of $5.89 billion to $6.18 billion, adjusted EBITDA in the range of $1.135 billion to $1.195 billion, and total cash used for CapEx and aircraft financing between 5.1% and 5.3% of total revenue.
Our guidance assumes continued momentum in transport rates and volumes, a stable payer mix that already reflects the elimination of the ACA exchange subsidies, and the ongoing impact of the prolonged Iran conflict. In summary, it was a strong quarter. We had strong demand for and grew our core emergent services. We collected more for those services. Base unit wage costs were moderate. We have ample liquidity enabling further deleveraging. And 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, and 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 Scott Fadal with Goldman Sachs.
Your line is open. Please go ahead.
Scott Fadal, Analyst at Goldman Sachs
Hi, thanks, and good morning. First question, just was hoping to get maybe a little bit more context, to the extent you can provide it, just around the IDR dynamics, and appreciate the flagging of the year-over-year change. Maybe if you could just sort of put that in the context of more of year to date. And in the first quarter did you have— I don't recall similar dynamics, but it seems like that was more of a meaningful number in the second quarter of last year.
And I think you mentioned having maybe some prior-year sweeps and collecting some of those funds. And just maybe more broadly, talk about the trends with IDR in terms of how basically the revenues that you're generating from that, to the extent you can, have been trending year to date.
Brian Tierney, Executive Vice President and Chief Financial Officer
Thanks, Scott. Thank you. This is Brian. Yeah, last year in the second quarter we had about $79 million worth of change in estimate related to the No Surprises Act stuff. This year was about 5. So that drives that $74 million delta. What that really says is, you know, we've been able to really dial in the estimates. This is all related— you know, the stuff in '25 is really related to stuff much earlier, and so feel really good about our ability to predict the revenue here.
Now, there's still some older stuff hanging out there. We will continue to try to go get that really old stuff, but feel that we're going to be more in this 0 or -5 range here as we go.
Scott Fadal, Analyst at Goldman Sachs
Okay, got it. And then just for my follow-up question, maybe if you could walk us through the payer mix dynamics in terms of fully bridging to the year-over-year changes, and certainly heard the callout around the impact on the exchanges and would imagine that that certainly had a meaningful amount of it. So should we think about the lower commercial payer mix year over year being largely a function of both the impact from the lower exchange revenues and then combined with the lower IDR revenues that you already recognized— would that largely comprise it, or just curious if there's anything else that we should be aware of, and then how you're thinking about payer mix trends within your guidance into the back half of the year? Thanks.
Nick Loporcaro, Chief Executive Officer
Hey Scott, it's Nick. Let me tackle at a higher level and then Brian can get in a little more granular. So, you know, when we had our last call we had said we saw little, if any, impact first quarter. We started seeing some impact in the second quarter in the ACA, and I recall mentioning we'd seen that in our own benefits— we had more employees taking on our employer benefit plan. We suspected there that these were folks that were on the exchanges looking for other alternatives.
I also mentioned, you know, whether you're on the gold plan or the bronze plan doesn't make a difference for our types of interventions. We get paid. So we did see some impact in second quarter that Brian can expand on and mentioned obviously in our call here. So, you know, thinking we still need to better understand it. Where are these folks? Are they all going to self-pay? Are they all going to different commercial. And we're seeing evidence of that.
The other key thing we're learning— and I think it showed up at least in what I've read on some of the hospital readouts recently— geographically it's different as well. We have parts of the country where, yes, we'll see more go to self-pay, other parts of the country that we're finding them now in commercial plans, which is actually an upside for us. So still thinking about all of this, studying it, learning more, and anticipate we'll learn more even this quarter.
I'll hand it over to Brian to get a little more granular and tackle some of the numbers around your question.
Brian Tierney, Executive Vice President and Chief Financial Officer
Yeah, the short answer to your question is yes, it's the exchange impact and the No Surprises Act year-over-year comp that really drive the payer mix shift. To expand a little bit more on what Nick said, we're seeing it exactly where we thought we would see it. It's the big exchange providers— the Molinas, the Centenes, a few of the bigger Blues that are in the exchange programs. We've seen the decrease in their volumes in the states that they were heavy in.
And so really since April we've seen a very consistent mix shift relative to what we had expected. And we've got that in our guidance as we go forward. We had it in our guidance before; it's still in our guidance. We'll keep watching this. As Nick said, we're going to make sure we understand where everybody ultimately lands. But it's been really consistent here across the quarter.
Nick Loporcaro, Chief Executive Officer
Yeah, and closing comment I'd make here— Ted and his teams, as we figure out those geographies, remember we do have some levers to pull. We can go back to the counties. We do have subsidy programs. We can reopen some of those contracts on pricing. So there are some levers. We haven't flipped them yet because we want to better understand where the impact is.
OPERATOR
Your next question comes from the line of Elizabeth Anderson with Evercore ISI. Your line is open. Please go ahead.
Elizabeth Anderson, Analyst at Evercore ISI
Hi guys. Thanks so much for the question. I have one sort of conceptual question and maybe one numbers cleanup question. If you talk about, you talked about the improved capture rate as one of the nice improvements in the quarter. Can you talk a little bit more about that? I know obviously the weather is better in the second quarter than the first quarter, but is it, is that sort of what you're referring to or is there something more underlying than that that also helped improve the capture rate?
Nick Loporcaro, Chief Executive Officer
Thank you very much, Elizabeth. And I'll have Ted expand on this. This is Nick. You know, there's a lot of levers here that we're looking at. Some of it's technology, some of it's recruiting of pilots and medical staff, making sure we have people in the right places, studying trends. You heard Ted mention Transport.net and how that drives, one, making sure we understand the demand, where it is, and that we're readily available to capture it. Obviously weather. And even with weather, we've talked about further investments in IFR which mitigates some of the weather impacts.
But I'll ask Ted to maybe provide a little bit more color around this and the initiatives we're having on the air side.
Ted Van Horn (President and Chief Operating Officer)
Yeah. And that quarter-specific in Q2, the way the weather was impacting the good parts of geographies for us too. So when we see higher capture rates in certain parts of America generally, and that's where we're seeing a lot of the weather improvements, we saw the capture rates improve with that also. So, you know, that was a big chunk of the reason why. And we are going to continue to make all the improvements and investments. This IFR, different types of aircraft, we've been bringing them in from one of the vendors specifically at a pretty good clip right now.
So we're excited about that. We do see the results every time we bring in the IFR aircraft.
Elizabeth Anderson, Analyst at Evercore ISI
Great. And my numbers cleanup question just to make sure that we're modeling your go-forward correctly. One, I heard you say sort of a continuation of high oil price expectations. Is it currently sort of that current rates continue for the rest of the year? So that's the first part of it. And then secondly, obviously the World Cup doesn't happen every year, so is it possible to parse out the specific World Cup part of the revenue just to make sure that we're not, you know, comping you off of it for next year.
Brian Tierney, Executive Vice President and Chief Financial Officer
Yep. I'll take the second part first. The World Cup was a couple million dollars, a very low revenue piece, and not all of that flows through to earnings. So it's a very, very small piece. The oil prices on a go-forward basis, we use the forward curve. The average for the rest of the year is about $80 a barrel, a little bit higher in August and September, a little bit lower in November. I think the market is assuming, at least for the rest of the year, there's continued Iran conflict with potential for a little bit of relief at the end.
We've baked that in going forward. That's ten-plus million dollars a quarter of incremental fuel relative to what we had initially—we would have done if we were setting a budget or something before the year began. All of that's baked in.
Elizabeth Anderson, Analyst at Evercore ISI
Got it. Super helpful, thank you very much.
OPERATOR
Your next question comes from the line of Benjamin Rossi with J.P. Morgan. Your line is open. Please go ahead.
Benjamin Rossi, Analyst at J.P. Morgan
Good morning. Thanks for taking my questions here. Just as a follow-up on the IDR comments, by my math, during the first half of the year you've lapped about 110 million in out-of-period benefits from IDR last year. When we think about the back half of the year, if you were to receive no IDR benefits during 3Q and 4Q, what would this out-of-period comp dynamic look like? Is it fair to think of the step down during the second half of the year being similar in magnitude as the first half?
Just curious on what that contribution looked like last year during the second half compared to the first half.
Brian Tierney, Executive Vice President and Chief Financial Officer
Yeah, thanks, Ben. Yeah, the number is about the same. It's just under $100 million was in that second half of the year last year.
Benjamin Rossi, Analyst at J.P. Morgan
Got it. Okay. I guess just as a follow-up question, the press release you mentioned some new business wins. Can you just elaborate on those opportunities and how you think about potential contributions from these wins in the back half of the year?
Ted Van Horn (President and Chief Operating Officer)
We don't get into specifics per contract, but overall there are 901 wins both on the ground and air. Air were adjacent markets, I think, as I mentioned, where we had opportunities and air bases and expanding footprint for us. When we can operationalize the next town over, the next county over, we get such great operational synergies with it. And then when we link in our Transport.net, we're actually building in more aircraft into that web for the 911 centers as they're using it.
So that's been a big piece of the Q2 on the air side. The ground side was two new 911 wins in new communities that we already had the air. So it was great that we were able to bring in the ground operations, create that integrated market. So those were in the Southeast and we're excited because we see a lot of that opportunity continue for the rest of the year—these small, mid-sized communities across the U.S.
Benjamin Rossi, Analyst at J.P. Morgan
Great, thanks for the additional details.
OPERATOR
Your next question comes from the line of AJ Rice with UBS. Your line is open. Please go ahead.
AJ Rice, Analyst at UBS
Hi everybody. First, maybe just to pursue a little more on your rollout of your 911 nurse navigation, how much of your footprint does that address today and is there an ultimate target of how much of your footprint you can get to, and what the pacing or limiting factor on rolling that out is?
Nick Loporcaro, Chief Executive Officer
AJ, it's Nick again. I'll start at a high level and ask Ted to offer up some more details if I miss anything here. So, you know, we're probably 29 communities today of coverage, representing just shy of 20 million covered lives. And I think you'll recall, and you know, we've talked about in our presentations, we have approximately 200 million lives in the geographies that we serve. So that's the potential. Do I think, as the CEO and pushing the team, as you look at our sort of a five-year plan, could we potentially get to 100 million covered lives?
I think that's realistic. I think we have plans in place. Now, what does that mean for the impact of the business? You know, you've all challenged us before on what is Nurse Nav and its worth. It allows us to run our business better. It allows us to win more business because of the value. And just really interesting—in a session we had yesterday, we have evidence of where we put in Nurse Nav, and Brian can speak to the numbers here, on, you know, 150 basis points lift on just margin improvement in the markets we put it in.
But what's even more interesting, what we're learning, when we have nurse navigation combined with, like, a treat-no-transport, we're actually making better reimbursement on that versus a basic life support transport. And that's the dynamic that's important and the reason you'll see us continue to talk about Nurse Nav, the push of it, and the proliferation and how it positions us in the markets where we're deploying. Ted, I don't know if you'd offer up any other detail on that for us.
Ted Van Horn (President and Chief Operating Officer)
The nurse nav—really, it's three distinct growth channels. One is our existing footprint, which you mentioned, and we can continue to spread that out over the course of each year. We're going to keep growing those out. The second channel is the Rural Health Transformation Fund and the new bids there as we're proposing that across the U.S. And the third channel is the big metro models. We're working the nurse navigation in with the very large municipal city bids.
Those take a little bit longer on the sales cycle, obviously, because they're very big municipalities. But we have a great sales team that's working very closely with each one of those cities as they walk through those proposals. So, you know, that's how we see those three distinct cycles. Each one has got a lot of room in it, and we're excited because we've just opened up the second center in Phoenix. So we've got a lot of capacity and room to grow.
We thought Phoenix—both Phoenix and here in the Dallas area—being able to get the nurses, and so we continue to grow the actual nurses taking the call. So we're ready for it on the technology side, space side, and continue to grow it.
AJ Rice, Analyst at UBS
Okay, thanks. Maybe the follow-up: you mentioned on the prepared remarks, you'd be at 3.3 times leverage by the end of the year, 3 times by the end of next year. Is sort of 3 times a steady state that you're comfortable with? And then if it is, it sounds like there are some potential deals out there. Can you categorize what you're seeing, what kind of things you might be interested in doing, and what kind of valuations? Are they going to be potentially immediately accretive to you if you can do some things?
Nick Loporcaro, Chief Executive Officer
So, A.J., I'm going to start backwards with your question. We had hoped and anticipated post the IPO we would have some arbitrage opportunities. Admittedly, with where we're trading and where the market is evaluating things, I think that's created a bit of conservatism around the pipeline. We do have a healthy pipeline. We've probably got about 15 targets from some small, mid-size to some larger ones, and ultimately—and I lean on Brian and the team here—on how do we best leverage our capital.
To go now to the front end of your question, are we better focusing on delevering for the time being? We're going to scrutinize the M&A opportunities. There's a couple of opportunities in adjacent markets where we have to ask ourselves the question, can we just win the business? Is it quicker to buy it? You know, we've mentioned to you guys in the past we're going to look at a market that has strong ground presence—do we buy an air asset there? So that's how we're looking at it. I think, as you said in the prepared remarks, this is a conversation Brian and I and the teams have often—where are the opportunities now? We constantly look at our current rates. Is delevering combined with some of that in our best interest? So there'll be more news coming along those lines probably in pretty short order.
AJ Rice, Analyst at UBS
Okay, thanks.
OPERATOR
Your next question comes from the line of Joanna Gajik with Bank of America. Your line is open. Please go ahead.
Joanna Gajik, Analyst at Bank of America
Hi, good morning. Thanks so much for taking the question. So I actually have a two-part question on the IDR process. So first, about the final regulation that came out: it calls for lower fee per claim going to an arbitration, but there's some other changes in there. So just curious, how do you expect this, if at all, to impact your IDR process and your experience there? And the second part, we heard from the health plan industry lobby groups—they've been very vocal.
They call for some changes to the IDR process altogether. They complain about the number of claims, the rates the providers get awarded. So what are your thoughts about potential changes to the IDR process?
Nick Loporcaro, Chief Executive Officer
Thank you, Joanna. Let me hit the second part of your question. I'm going to hand it over to Brian on the second part. We understand the health plans are pushing back on the volume. Our belief is a lot of that has less to do with us on the EMS side of the business and more on what they're getting from other provider groups. That's our assessment of a lot of that, as Brian has mentioned in the past and he can provide an update. We continue to bring some of the larger plans in network.
We have great collaboration with them and we see that continuing now. Honestly, we have our own concerns on how the plans behave on some of them and some pushback and have been winning some of those arguments as well. But I'll hand it over to Brian to tackle the first part of your question.
Brian Tierney, Executive Vice President and Chief Financial Officer
Yeah, let me just hit quickly on the second part as well. We continue to have really good conversations with a number of large payers to get them in network. You've also got some large payers that really have no interest in getting to a reasonable rate in termination environment. And so that group, we will continue to have to beat them in IDR. I'd rather have them all in network, but it takes two to get there. On the first part, no, I think we appreciated the ruling or the new rules from the government on how the IDR process will work and I think it really cleaned up a little bit.
Didn't have really much impact to us from an overall perspective. We do appreciate the lower fees. It's a slight tailwind for us in the very, very low millions of dollars range. One, two million dollars on an annual basis. So nothing material, but we think the administration coming out and reaffirming the current process was very helpful. It would take Congress to reopen the process to do something different. So until that happens, if that happens, we'll just continue to work to get everybody in network and if not, we will continue to work to beat them in IDR.
Joanna Gajik, Analyst at Bank of America
Thank you. And if I may just follow up on the comment there around the subsidy expiration impact. So should we assume a similar amount, per quarter going forward? So sort of, you know, $60 million? And just to clarify, that was the EBITDA-type headwind you referred to?
Brian Tierney, Executive Vice President and Chief Financial Officer
Yes, it's both revenue and EBITDA. And yes, that's what's in our guidance going forward is about that $15, $16 million a quarter.
Joanna Gajik, Analyst at Bank of America
All right, 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. I think air bases increased pretty meaningfully in the quarter. I think it's 10 or so. Do I have that right? So what drove that level of accelerated expansion and was that all planned or is that a result of newer unexpected wins? And just how should we think about the pace of air base expansion for the balance of the year?
Brian Tierney, Executive Vice President and Chief Financial Officer
Yeah, no. I think we were up three or four bases in the quarter and that would not be 10. And as we go forward, we do have a large number of aircraft coming, really over the next couple of years. We've got a number of them—I don't know the exact count—it's in the high single digits for the remainder of the year. It's actually down a little bit from what we would have projected at the beginning of the year. We've got one of our aircraft suppliers just a little bit late with some of their deliveries, so we're seeing a few aircraft push out of ’26 and into ’27 by a couple of months.
It's not material or meaningful and they'll catch up in the long term, but yeah, we're not at 10. But we do have good air volume growth, air base growth.
Nick Loporcaro, Chief Executive Officer
Going forward to your question about plan, these aircraft that Brian's mentioning are all tied to contracts as well. So they are planned. As they come in, they'll be deployed.
Andrew Mock, Analyst at Barclays
Got it. Okay. And then just a follow-up on the IDR side. Can you share where your in-network rates stand today and just the progress you've been able to make with this IDR backdrop developing more negatively against the insurers? Thanks.
Brian Tierney, Executive Vice President and Chief Financial Officer
So, yes, we get higher rates through the IDR process than we are willing to take in network. I'd rather have them in network and we'll take a discount because the whole process is easier. The cash is faster. With the right partners, you can get better terms, so your claims flow through the process a lot easier. Again, I'd rather have them in network at a little bit of a discount relative to what we're winning in IDR. And the contracts that we're signing are just below our IDR rates.
So we continue to make progress with those groups.
Nick Loporcaro, Chief Executive Officer
Andrew, the other thing—there are two reasons, the obvious, on why we don't want to mention the rate is for competitive reasons. The other thing is, I think we've walked through this before as well: when we're bringing folks in network, we see a drop in medical necessity denials, we see a drop in the DSO. So there's a lot of other aspects. So the rate difference I think we more than make up for as we bring them in network. So we kind of hesitate on putting that out there because honestly I think it's a much better deal to bring them in network.
Even though the sticker price looks a little different, we more than make up for it.
Andrew Mock, Analyst at Barclays
Right. And maybe I should phrase it better. I was looking for the rates themselves—just kind of what percentage of your contracts are in network today, what progress have you made, and where do you see that going?
Nick Loporcaro, Chief Executive Officer
Yeah, hovering around the 70%. I think if we drill down, we're like at 69. But I keep waiting for Brian to tell me the next big one that's just about to be signed.
Brian Tierney, Executive Vice President and Chief Financial Officer
Better number in the hopper. And remember, this is just an air conversation. All of the ground in-network/out-of-network—it's not the same concept. So that 69% is where we landed the second quarter for in network and known reimbursement.
Andrew Mock, Analyst at Barclays
Thank you.
OPERATOR
Your next question comes from the line of Craig Hettenbach with Morgan Stanley. Your line is unmuted. Please go ahead.
Craig Hettenbach, Analyst at Morgan Stanley
Great, thank you. For the implied second-half guidance, can you just touch on kind of volume expectations, ground and air—like any noticeable changes in the market that you're seeing relative to first half?
Nick Loporcaro, Chief Executive Officer
Yeah, I mean for us, how we are expecting to roll out our new base growth for second half is what we're still projecting, what you kind of see in the guidance. So we've worked through that. So we've got not only air new bases, but then any of the starts. So that's all projected. We do still see—and are always managing—what weather impacts are happening, some of the fire activity that happens across the U.S. Obviously from an air standpoint, sometimes causes some weather behavior, believe it or not, and ability to fly out west.
So we're watching all that through the course of the year. But what you see on the forecast and how we plan that out is on the base expectations of aircraft coming in and the base starts that we've got working in.
Craig Hettenbach, Analyst at Morgan Stanley
Got it. And then just a follow-up for Brian—you talked about just some operating efficiencies. Can you just touch on some of the key drivers there and maybe expand on ways you're using technology to help expand margins over time?
Brian Tierney, Executive Vice President and Chief Financial Officer
Yeah, well, I think from an operating efficiencies standpoint, we continue to match our labor to our volume. And so in markets where we've got stronger volume, it's not always a one-for-one that you’ve got to add incremental labor costs. We can do that, but then also if we've got a market where maybe the volume is down a little bit, the operations do a really good job of trying to manage the staff to that level. We're always looking for efficiencies across the back office.
We've got 40 or 50 different AI-related initiatives, some of them bigger, some of them smaller, that just help drive the efficiencies that we should get out of our system. We should be better today than we were yesterday and a little better tomorrow than we are today. And a little bit of incremental improvement all the time ultimately adds up. We've got folks that are always focused on making sure we're spending the right amounts out of our procurement teams and so on.
So it's really a culture and a focus for us just to make sure that we're being as efficient as we can.
Nick Loporcaro, Chief Executive Officer
Yeah, and I would add two things. One, we often talk about our scale and our size, and one of the things that we've gotten really good at—and still more room to get better at—is how do we get better alignment across the whole organization. I often quote my friend Pareto: the 80% that's similar across our platform. We're getting really good at leveraging best practices, better alignment, standardization across the platform, while leaving that 20% of the local flavor and intervention that we need to.
So we're seeing a lot of that on the operations side. Just to lean on the AI implementations, one, we have an AI governance committee we're very sensitive to—we are in healthcare. But not to sound too cliche, our north star remains, and our effort remains, patient care and how do we continue to optimize the time that our providers spend with hands-on patient. That's always our focus going into any deployment of technology innovation and we really believe if we do that right we'll see the efficiencies as well in the system as we're providing better care.
Craig Hettenbach, Analyst at Morgan Stanley
Thank you.
OPERATOR
Your next question comes from the line of Daniel Grosslight with Citi. Your line is open. Please go ahead.
Luis (on for Daniel Grosslight), Analyst at Citi
Hey, this is Luis on for Daniel. Guidance does contemplate a step down of EBITDA margins in the back half of the year relative to 2Q, and I know that you're rolling out some ground 911 contracts which should benefit NRT. So my question is what is driving the margin compression in the back half? Thanks.
Brian Tierney, Executive Vice President and Chief Financial Officer
Thanks, Daniel. I think a little bit, if you're comparing first half to second half. I think as we mentioned in the first quarter, we really didn't see the exchange impact that we saw really start in the second quarter that will continue through the rest of the year. Probably another driver of that is really just the whole Iran conflict-related costs. Fuel really didn't spike up until the latter part of March and we've really seen that, you know, $10 million plus a quarter really run through the P&L. And then we've seen call it Iran conflict-related costs pop up across the P&L in small ways. You know, our airfare for moving crews around is up. Shipping costs, fuel costs, all of those just add a little bit more to the back half of the year. I got a new one yesterday: fuel surcharges on office supply delivery. So making sure that we're minimizing the deliveries. It's that kind of thing that I think will impact the back half of the year. But feel good about our guidance and the range that we've got out there.
Luis (on for Daniel Grosslight), Analyst at Citi
Got it. Thank you.
OPERATOR
We have reached the end of the Q&A session. I would now like to turn the call back to Nick Loporcaro for closing remarks. Please go ahead.
Nick Loporcaro, Chief Executive Officer
Thank you again for joining our call today. The second quarter reinforces our confidence in GMR Solutions' strategy and execution. Underlying performance was strong, our mix continues to shift toward higher-yielding services, Nurse Navigation is scaling, and our liquidity position remains strong. We are proud of the role GMR Solutions plays across the EMS system from major events to disaster response to everyday care in the communities we serve. None of this would be possible without our exceptional frontline clinicians, pilots, mechanics, dispatchers, support personnel, and regional leaders.
They keep care at the center every day and I want to thank them for their commitment to 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.
Login to comment