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Deutsche Bank Markets Research

Rating

Buy North America

United States

Health Care

Health Care Facilities and Services

Company

Envision Healthcare

Date

7 August 2014

Results

Q2 wrap: reiterate Buy -- growth outlook strong

Reuters Bloomberg Exchange Ticker EVHC.N EVHC US NYS EVHC

Forecasts And Ratios

Year End Dec 31 2013A 2014E 2015E

FY EPS (USD) 0.57 1.18 1.64

P/E (x) 50.3 29.9 21.4

EV/EBITDA 14.7 15.2 11.4

Adjusted EBITDA 446 554 698

Source: Deutsche Bank estimates, company data 1 Includes the impact of FAS123R requiring the expensing of stock options.

2 EPS is pro forma excluding non-cash deal amortization.

Q2 results above preview; 2014 outlook raised

________________________________________________________________________________________________________________

Deutsche Bank Securities Inc.

Deutsche Bank does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. DISCLOSURES AND ANALYST CERTIFICATIONS ARE LOCATED IN APPENDIX 1. MCI (P) 148/04/2014.

Price at 6 Aug 2014 (USD) 35.15

Price Target 41.00

52-week range 37.69 - 25.10

Darren Lehrich

Research Analyst

(+1) 212 250-2629

[email protected]

Dana Nentin, CFA

Research Associate

(+1) 212 250-6587

[email protected]

Joshua Kalenderian

Research Associate

(+1) 212 250-3070

[email protected]

Price/price relative

24

28

32

36

40

8/13 2/14

Envision Healthcare

S&P 500 INDEX (Rebased)

Performance (%) 1m 3m 12m

Absolute -2.6 2.0 –

S&P 500 INDEX -3.3 2.8 13.1

Source: Deutsche Bank

Valuation and risks: Maintain Buy / $41 PT on ~13.5x 2015E EV/EBITDA Our target multiple is at upper end of

peer range (10x-14x) due to its larger mkt

cap vs. most nat’l peers and higher

internal growth profile due to contract-

win opportunities in key end-mkts. Key

risks: PE overhang, margin risks (contract

start-ups, service bundling), M&A

integration, contract retention, PPACA,

and Medicare/Medicaid cuts.

Q2 results were solid, with EBITDA $134.2M (+27% yoy) vs. Street $129.5M / DB $129.9M and above July's preview $129M-$133M. EVHC raised guidance for 2014 adj EBITDA (by 3%) and EPS by (4%), but the outlook seems conservative in that it assumes underlying volume trends and ACA benefits will not continue at the same rate in 2H. We maintain our Buy rating and $41 PT on ~13.5x fwd EV/EBITDA; we are making modest upward revisions to our model and we still see adjusted EPS approaching $2/sh by 2016 (DB 2016 $1.96).

Key take-aways from Q2 and CC (see body of note for detailed Q2 review) *Growth still running at high-gear. EmCare segment revs +21% with the contribution from net new contracts +15% and same-contract +5%. EmCare segment EBITDA +23.4% YoY, showing better operating leverage vs. Q1 as start-up costs were less of a pressure point and ACA/mix benefits kicked in ($2.4M in Q2). AMR segment revs +16.7% with the organic growth contribution +9.6% (+5% net new contract / +4.6% same-contract) and mgmt citing a recovery in IFT vols due to improved service and better overall facility census trends. AMR segment EBITDA +33.1% YoY, with very significant margin gains due to cost efficiencies and ACA benefit ($3.8M in Q2). *ACA comments. In EmCare, mgt noted solid ED volume increases +4.2%, with Medicaid expansion states +5.6% and non-expansion +4.1%. EmCare self-pay uninsured vol mix fell 200+ bps since the end of 2013 and 300 bps YoY to (18% of vols). In AMR, same-mkt vols +3.6%, with Medicaid expansion states +4.4% and non-expansion +1.5%. AMR self-pay uninsured vol mix fell 250 bps since the end of 2013 (19.3% of vols vs. 21.8% prior). EVHC’s guidance assumes ACA benefits will not continue at the same rate in 2H, although mgmt noted this could be a conservative stance given vol/mix trends seen in Q2. EVHC maintained its Medicaid parity guidance $17M-$20M, though it noted potential upside since YTD parity revs ~$15M. *Pipeline. EVHC provided upbeat commentary about its EmCare new contract pipeline, leading us to believe there could be upside risks to our net new assumption for ~9% in 2015 (vs. +14% in 1H’2014). EVHC also noted several new pilots in Evolution Health with hospital and health system clients.

Updated estimates: we assume ACA builds to ~$58M benefit in 2015 2014E EBITDA $554M (from $546M) and 2014E pro forma EPS $1.18 (from $1.14). 2015E adj EBITDA $698M (from $690M) and 2015E pro forma EPS $1.64 (from $1.57). 2016E adj EBITDA $807M (from $799M) and 2016E pro forma EPS $1.96 (from $1.91). Key change was Q2 beat and slightly higher vol.

AMR 04027

7 August 2014


Envision Healthcare


Model updated:07 August 2014

Running the numbers

North America

United States


Envision Healthcare Reuters: EVHC.N Bloomberg: EVHC US

Buy Price (6 Aug 14) USD 35.15

Target Price USD 41.00

52 Week range USD 25.10 - 37.69

Market Cap (m) USDm 6,592

EURm 4,935

Company Profile

Envision Healthcare is one of the largest providers of outsourced medical services in the U.S. The company has two main segments: EmCare, which provides outsourced facility-based services including emergency, anesthesiology, hospitalist/inpatient care, radiology, and surgery and AMR which provides outsourced ambulance and emergency-911 services managed transportation and disaster relief.

Price Performance

24

28

32

36

40

Aug 13 Feb 14

Envision HealthcareS&P 500 INDEX (Rebased)

Margin Trends

689

11121415

11 12 13 14E 15E 16E

EBITDA Margin EBIT Margin

Growth & Profitability

0

5

10

15

20

0

5

10

15

20

11 12 13 14E 15E 16E

Sales growth (LHS) ROE (RHS)

Solvency

0

2

4

6

8

10

0

100

200

300

400

500

600

11 12 13 14E 15E 16E

Net debt/equity (LHS) Net interest cover (RHS)

Darren Lehrich

+1 212 250-2629 [email protected]

Fiscal year end 31-Dec 2011 2012 2013 2014E 2015E 2016E

Financial Summary

DB EPS (USD) na na 0.57 1.18 1.64 1.96

Reported EPS (USD) 0.33 0.43 0.07 0.72 1.43 1.76

DPS (USD) 0.00 0.00 0.00 0.00 0.00 0.00

BVPS (USD) 6.98 4.10 10.48 9.28 10.52 12.17

Valuation Metrics Price/Sales (x) nm nm 1.2 1.5 1.3 1.1

P/E (DB) (x) na na 50.3 29.9 21.4 17.9

P/E (Reported) (x) na na 386.1 49.2 24.6 20.0

P/BV (x) 0.0 0.0 3.4 3.8 3.3 2.9

FCF yield (%) na na nm 3.7 6.2 6.2

Dividend yield (%) na na 0.0 0.0 0.0 0.0

EV/Sales nm nm 1.6 1.9 1.6 1.3

EV/EBITDA nm nm 14.7 15.2 11.4 9.5

EV/EBIT nm nm 22.2 20.7 14.6 11.9

Income Statement (USDm)

Sales 3,108 3,300 3,728 4,411 5,179 5,826

EBITDA 313 381 417 548 706 817

EBIT 213 257 277 403 551 649

Pre-tax profit 72 88 10 227 461 570

Net income 44 57 11 134 272 337

Cash Flow (USDm)

Cash flow from operations 181 215 32 313 493 506

Net Capex -65 -53 -65 -66 -78 -87

Free cash flow 117 162 -33 247 415 419

Equity raised/(bought back) -2 0 1,112 -14 0 0

Dividends paid 0 0 0 0 0 0

Net inc/(dec) in borrowings 3,284 296 -805 5 -300 -300

Other investing/financing cash flows -3,554 -536 -149 -279 -120 -72

Net cash flow -155 -78 125 -42 -5 47

Change in working capital 25 -9 -173 -17 66 1

Balance Sheet (USDm)

Cash and cash equivalents 134 58 205 163 149 184

Property, plant & equipment 192 192 195 228 287 319

Goodwill 2,833 2,978 2,949 3,087 3,070 3,029

Other assets 854 809 951 1,063 1,152 1,277

Total assets 4,013 4,037 4,300 4,541 4,658 4,809

Debt 2,372 2,659 1,908 1,919 1,619 1,319

Other liabilities 727 833 783 881 1,036 1,162

Total liabilities 3,100 3,492 2,690 2,800 2,655 2,482

Total shareholders' equity 913 545 1,610 1,741 2,002 2,327

Net debt 2,238 2,602 1,703 1,756 1,471 1,135

Key Company Metrics

Sales growth (%) 8.7 6.2 13.0 18.3 17.4 12.5

DB EPS growth (%) na na na 104.9 39.4 19.7

Payout ratio (%) 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA Margin (%) 10.1 11.5 11.2 12.4 13.6 14.0

EBIT Margin (%) 6.9 7.8 7.4 9.1 10.6 11.1

ROE (%) 5.0 7.8 1.1 8.0 14.5 15.6

Net debt/equity (%) 245.0 477.6 105.8 100.9 73.5 48.8

Net interest cover (x) 1.9 1.5 1.5 3.8 6.3 8.7

DuPont Analysis

EBIT margin (%) 6.9 7.8 7.4 9.1 10.6 11.1

x Asset turnover (x) 1.1 0.8 0.9 1.0 1.1 1.2

x Financial cost ratio (x) 0.5 0.3 0.3 0.7 0.8 0.9

x Tax and other effects (x) 0.4 0.7 0.1 0.5 0.6 0.6

= ROA (post tax) (%) 1.5 1.4 0.3 3.0 5.9 7.1

x Financial leverage (x) 3.3 5.5 3.9 2.6 2.5 2.2

= ROE (%) 5.0 7.8 1.1 8.0 14.5 15.6

annual growth (%) -74.7 56.6 -86.3 650.2 81.6 7.0

x NTA/share (avg) (x) 6.7 5.5 7.0 8.9 9.8 11.3

= Reported EPS 0.33 0.43 0.07 0.72 1.43 1.76

annual growth (%) -90.1 27.6 -82.5 855.8 99.8 23.3

Source: Company data, Deutsche Bank estimates

AMR 04028

7 August 2014


Envision Healthcare


Q2’2014 earnings review

Key points

Revenues: Q2 revenues were $1,075M (+19.6% yoy) vs. Street $1,039.8M

/ DBe $1,060.4M. Revenue included $9.7M from Medicaid parity and ACA-

related payor mix changes ($7.3M parity / $2.4M ACA).

o EmCare (incl EvH): Q2 EmCare revenues were $690.0M (21.2%

yoy) vs. DBe $685.7M, of which 20.3% yoy was from organic

growth. YoY growth contribution was decomposed into 0.9%

from M&A, 4.9% from same-contract (S-C), and 15.4% from net

new contracts (DBe +12.5%). On a same-store basis, revenues

were +5.5% (+5.3% volume / +0.2% pricing vs. DBe +2.5%

volume / +3.5% pricing), while same-store revenue from other

service lines was +1.2%. ED volumes were +4.2%, with Medicaid

expansion states +5.6% and non-Medicaid expansion states

+4.1%. ED pricing was +2.9% largely due to payor mix changes

and rate increases, offset by other service lines.

o AMR: Q2 AMR revenues were $385.3M (+16.7% yoy) vs. DBe

$374.6M (+13.5% yoy). Organic growth was 9.6% driven by 4.6%

yoy growth in existing markets and 5.0% new 911 contract wins.

Existing market revenues were driven by a +3.6% yoy increase in

wtd transports (DBe +8.5%) and a +1.0% yoy increase in rev/wtd

transport (DBe +3.5%). Existing market volumes in Medicaid

expansion states increased +4.4%, while non-expansion states

were up +1.5%. Acquisitions also contributed +7.1% to revenue

growth in the quarter.

Adjusted EBITDA: Q2 adjusted EBITDA was $134.2M (+26.6% yoy) vs.

Street $129.5M / DBe $129.9M. EBITDA margin of 12.5% was in-line with

Street 12.5% / DBe 12.3%. Q2 EBITDA was above the previewed $129-

$133 range.

o EmCare (incl EvH): Q2 EmCare adjusted EBTIDA was $87.1M

(+23.4% yoy) vs. DBe $85.2M (+20.7% yoy). EBITDA margin of

12.6% was above DBe 12.4%.

o AMR: Q2 AMR adjusted EBTIDA was $47.1M (+33.1% yoy) vs.

DBe $44.7M (+26.4% yoy). EBITDA margin of 12.2 % was above

DBe 11.9%.

EPS: Q2 pro forma EPS was $0.28 vs. Street $0.25 / DBe $0.27. Pro forma

EPS is adjusted for tax-effected amortization expense and other non-

recurring items.

Cash flow / leverage: Q2 CFFO $63.7M vs. DBe $26.4M. EVHC generated

$43.5M of adjusted free cash flow in Q23 (excl non-recurring items). Net

leverage at the end of Q2 was ~3.9x.

AMR 04029

7 August 2014


Envision Healthcare


Guidance: EVHC raised 2014 adjusted EBITDA guidance to $553M-$558M

($538M-$545M) and 2014 EPS to $1.15-$1.20 ($1.10-$1.15), excluding

~$80M pre-tax (~$0.25) non-cash deal amortization. EVHC’s guidance

continues to include $17M-$20M from Medicaid parity but does not

include any other PPACA benefits.

Figure 1: 2Q14 Earnings Variance Chart ($ in millions, except per share data)

2Q14 Income Statement DB Estimate Consensus Actual Variance (1)

Total net revenue $1,060.4 $1,039.8 $1,075.3 3.4%

YoY % growth 17.9% 15.6% 19.6% 395 bps

AMR net revenue $374.6 NA $385.3 2.8%

YoY % growth 13.5% NA 16.7% 323 bps

EmCare net revenue $685.7 NA $690.0 0.6%


Total adjusted EBITDA $129.9 $129.5 $134.2 3.6%

YoY % growth 22.6% 22.2% 26.6% 440 bps

AMR adjusted EBITDA $44.7 NA $47.1 5.3%


EmCare adjusted EBITDA $85.2 NA $87.1 2.2%


Adjusted EPS, excl. one-time charges $0.05 $0.25 ($0.01) -104.4%

2Q14 Margin Analysis DB Estimate Consensus Actual Variance

Adjusted EBITDA margin 12.3% 12.5% 12.5% 2 bps

AMR adjusted EBTIDA margin 11.9% NA 12.2% 28 bps

EmCare adjusted EBITDA margin 12.4% NA 12.6% 20 bps

2Q14 Revenue Metrics DB Estimate Consensus Actual Variance

AMR revenue metrics

AMR weighted transports 8.5% NA 12.4% 389 bps

Net revenue per weighted transport 3.5% NA 3.8% 35 bps

EmCare revenue metrics

Weighted patient encounters 15.3% NA 22.8% 756 bps

SS revenue per encounter 2.5% NA 0.2% -230 bps Source: Deutsche Bank, company reports, Thomson Reuters

AMR 04030

7 August 2014


Envision Healthcare


Charts and data review

Figure 2: EmCare segments same-contract trends

2.3%

-0.9%

3.3% 3.6%

1.9%

6.0%

3.9%

-0.2%

1.9%

0.5%

-1.4%

5.3%

2.2%

7.7%

4.6%

2.6%

1.2%

2.0%

-0.3%

3.6%

1.9% 2.1%

3.9%

0.2%

4.5%

6.8%

7.9%

6.2%

3.1%

8.0%

3.6%3.4%

3.8%

2.6% 2.5%

5.5%

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14

Same-contract volumes Same-contract pricing Same-contract revenue

Source: Deutsche Bank, company reports

Figure 3: Adjusted EBITDA and margin trends

2011 2012 1Q13 2Q13 3Q13 4Q13 2013 1Q14 2Q14

EmCare Adj. EBITDA $219.1 $260.7 $66.2 $70.6 $82.0 $75.2 $294.0 $71.4 $87.1

YoY % Growth 15.9% 19.0% 16.7% 10.7% 19.3% 5.3% 12.8% 7.9% 23.4%

% Margin 13.1% 13.6% 11.9% 12.4% 13.6% 11.9% 12.5% 11.1% 12.6%

yoy growth in bps 35 47 (71) (120) (59) (203) (115) (85) 22

AMR Adj. EBITDA $126.3 $144.0 $34.8 $35.4 $39.6 $41.9 $151.7 $38.6 $47.1

YoY % Growth 0.7% 14.0% 0.0% 8.6% 14.2% 0.0% 5.4% 10.9% 33.1%

% Margin 8.8% 10.4% 10.4% 10.7% 11.3% 11.8% 11.1% 10.5% 12.2%

yoy growth in bps (31) 163 70 92 94 17 68 0 150

Total Adjusted EBITDA $345.4 $404.7 $101.0 $106.0 $121.7 $117.1 $445.7 $110.0 $134.2

YoY % Growth 8.8% 17.2% 10.3% 10.0% 17.6% 3.3% 10.2% 8.9% 26.6%

% Margin 11.1% 12.3% 11.4% 11.8% 12.7% 11.9% 12.0% 10.8% 12.5%

yoy growth in bps 1 115 1 (24) 12 (111) (31) (52) 70 Source: Deutsche Bank, company reports

AMR 04031

7 August 2014


Envision Healthcare


Figure 4: Model Summary

Envision Healthcare Holdings, Inc.

Model Summary

Fiscal Year Ends December 31

($ in MMs, except per share data)

2011 2012 2013 2014E 2015E 2016E

Income statement summary

EmCare segment revenue $1,667 $1,910 $2,243 $2,703 $3,242 $3,697

YoY% Growth 12.8% 14.6% 17.4% 20.5% 19.9% 14.0%

AMR segment revenue $1,441 $1,385 $1,370 $1,555 $1,735 $1,863

YoY% Growth 4.3% -3.9% -1.1% 13.5% 11.6% 7.4%

Evolution Health NA $5 $116 $153 $201 $266

YoY% Growth NA NA NA 32.0% 32.0% 32.0%

Revenue $3,108 $3,300 $3,728 $4,411 $5,179 $5,826

YoY% Growth 8.7% 6.2% 13.0% 18.3% 17.4% 12.5%

Income From Operations 213.4 255.5 293.6 403.1 550.9 648.5

YoY % Growth -13.2% 19.7% 14.9% 37.3% 36.7% 17.7%

% Margin 6.9% 7.7% 7.9% 9.1% 10.6% 11.1%

EmCare Adj. EBITDA $219 $262 $277 $341 $436 $511

YoY % Growth 15.9% 19.0% 12.8% 23.5% 28.2% 18.2%

% Margin 13.1% 13.6% 12.5% 12.7% 13.5% 13.9%

AMR Adj. EBITDA $126 $144 $152 $191 $233 $257

YoY % Growth 0.7% 14.0% 5.4% 25.7% 22.0% 10.4%

% Margin 8.8% 10.4% 11.1% 12.3% 13.4% 13.8%

Evolution Health Adj. EBITDA NA NA $17 $22 $30 $39

YoY % Growth NA NA NA 133% 133% 132%

% Margin NA NA 14.6% 14.7% 14.8% 14.8%

Total Adjusted EBITDA 345.4 404.7 445.7 553.7 698.1 807.2

YoY % Growth 8.8% 17.2% 10.2% 24.2% 26.1% 15.6%

% Margin 11.1% 12.3% 12.0% 12.6% 13.5% 13.9%

Net income from continuing ops excluding unusual items 43.8 56.8 6.0 133.6 261.7 324.9

YoY % Growth -71.0% 29.7% -89.4% 2128.5% 95.9% 24.1%

% Margin 1.4% 1.7% 0.2% 3.0% 5.1% 5.6%

Pro forma EPS (excluding acquisition amortization) N/A N/A $0.57 $1.18 $1.64 $1.96

YoY % Growth N/A N/A N/A 104.9% 39.4% 19.7%

Diluted GAAP EPS $0.26 $0.36 $0.03 $0.69 $1.37 $1.70

YoY % Growth -91.3% 41.5% -92.3% 2371.9% 98.8% 23.6%

Segment summary

EmCare

Weighted patient encounters 9,512,180 10,517,412 12,137,519 14,337,597 16,697,616 18,617,842

YoY % Growth -1.8% 10.6% 15.4% 18.1% 16.5% 11.5%

Net revenue per weighted encounter $175 $182 $185 $188 $193 $196

YoY % Growth 14.8% 3.9% 1.5% 1.7% 2.5% 2.0%

Same-contract revenue growth 5.1% 6.3% 3.0% 3.9% 5.0% 4.5%

AMR

AMR weighted transports 2,949,241 2,847,752 2,811,213 3,082,445 3,344,453 3,511,676

YoY % Growth 1.5% -3.4% -1.3% 9.6% 8.5% 5.0%

Net revenue per weighted transport 488 486 487 502 509 517

YoY % Growth 2.8% -0.4% 0.2% 3.0% 1.5% 1.5%

Balance sheet summary

Cash and equivalents $134 $58 $205 $163 $149 $184

Total debt $2,358 $2,647 $1,895 $1,907 $1,607 $1,307

Total debt to adjusted EBITDA 6.8x 6.5x 4.3x 3.4x 2.3x 1.6x

Net debt $2,238 $2,602 $1,703 $1,756 $1,471 $1,135

Net debt to adjusted EBITDA 6.5x 6.4x 3.8x 3.2x 2.1x 1.4x

Accounts receivable, net $526 $625 $801 $876 $935 $1,034

DSOs 61.7 69.1 78.4 72.5 65.9 64.8

Working capital $385 $275 $631 $613 $584 $659

Cash flow summary

Cash flow from operations $183 $216 $54 $314 $482 $494

Capital expenditures ($65) ($60) ($66) ($68) ($78) ($87)

Capex as % of revenue -2.1% -1.8% -1.8% -1.5% -1.5% -1.5%

Free cash flow (CFFO - capex) $118 $156 ($12) $246 $405 $407

Free cash flow margin 3.8% 4.7% -0.3% 5.6% 7.8% 7.0%

Source: Deutsche Bank, Company reports

AMR 04032

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Figure 5: Income Statement

Envision Healthcare Holdings, Inc.

Consolidated Income Statement

Fiscal Year Ends December 31

($ in MMs, except per share data)

2010 2011 2012 1Q13 2Q13 3Q13 4Q13 2013 1Q14 2Q14 3Q14E 4Q14E 2014E 1Q15E 2Q15E 3Q15E 4Q15E 2015E 2016E

Total net revenue $2,859.3 $3,107.6 $3,300.1 $888.3 $899.3 $955.9 $984.8 $3,728.3 $1,014.2 $1,075.3 $1,144.7 $1,174.1 $4,410.7 $1,202.1 $1,274.1 $1,333.7 $1,369.0 $5,178.9 $5,826.0

Compensation and benefits 2,023.5 2,185.7 2,307.6 641.8 644.0 677.8 703.9 2,667.4 743.7 767.0 814.2 835.2 3,160.1 868.4 910.4 944.9 970.3 3,694.0 4,163.4

Operating expenses 359.3 416.4 421.4 100.5 102.3 110.4 111.7 424.9 114.6 120.7 121.4 123.3 480.0 129.4 131.9 133.6 135.8 530.6 570.3

Insurance expenses 97.3 112.3 98.0 25.8 25.8 27.0 27.6 106.3 31.0 31.6 30.7 31.3 124.5 30.8 33.6 35.2 35.9 135.4 149.5

Selling, general and administrative expenses 67.9 73.6 78.3 22.0 23.8 40.7 20.1 106.7 19.4 23.6 24.9 25.7 93.6 26.4 28.0 28.7 29.7 112.9 126.0

Restructuring charges 0.0 6.5 14.1 0.6 3.0 1.3 0.7 5.7 0.8 3.7 0.0 0.0 4.5 0.0 0.0 0.0 0.0 0.0 0.0

EBITDA 314.4 338.9 390.6 100.3 102.9 108.6 122.0 433.8 105.9 130.4 155.3 160.3 554.3 148.8 172.0 193.0 199.0 712.9 823.6

Adjusted EBITDA 317.5 345.4 404.7 101.0 106.0 121.7 117.1 445.7 110.0 134.2 152.3 157.2 553.7 145.3 168.4 189.2 195.1 698.1 807.2

Depreciation and amortization expense 65.3 99.8 123.8 34.8 34.6 35.2 36.1 140.6 36.4 35.6 35.8 37.1 144.8 36.8 38.2 39.6 40.5 155.1 168.2

EBIT 246.0 213.4 256.9 62.9 65.7 63.5 84.7 276.8 68.3 93.1 117.8 121.5 403.1 110.2 132.1 151.7 156.8 550.9 648.5

Net interest expense (income) 19.8 109.5 170.5 51.4 49.7 46.8 38.0 186.0 29.4 28.2 24.1 23.6 105.3 22.8 22.1 21.4 20.6 87.0 75.0

Other net expenses (income) (3.4) 32.0 (1.8) 12.8 0.1 29.4 38.3 80.6 0.8 68.4 0.8 0.8 70.8 0.8 0.8 0.8 0.8 3.2 3.2

Pre-tax income 229.6 71.9 88.2 (1.4) 15.8 (12.7) 8.4 10.2 38.2 (3.5) 92.9 97.0 227.0 86.6 109.2 129.5 135.4 460.7 570.3

Provision for (benefit from) income taxes 79.1 28.6 31.9 2.6 6.3 (4.9) (4.9) (1.0) 16.7 (1.4) 38.1 39.8 93.1 35.5 44.8 53.1 55.5 188.9 233.8

Equity in earnings of unconsolidated subsidiary 0.3 0.4 0.4 0.1 0.1 0.1 0.1 0.3 0.0 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.1 0.3 0.3

Noncontrolling interest (5.5) (5.5) 3.3 0.0 (1.9) (1.9) (0.5) (2.4) (2.5) (2.7) (2.8) (10.3) (11.9)

Net income from continuing ops excluding unusual items $150.8 $43.8 $56.8 ($3.8) $9.6 ($7.7) $7.9 $6.0 $24.8 ($2.0) $53.0 $55.4 $133.6 $48.8 $61.9 $73.8 $77.2 $261.7 $324.9

Extraordinary charges ($19.1) ($10.1) ($8.3) ($0.7) $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0

Net income $131.7 $33.7 $48.5 ($4.6) $9.6 ($7.7) $7.9 $6.0 $24.8 ($2.0) $53.0 $55.4 $133.6 $48.8 $61.9 $73.8 $77.2 $261.7 $324.9

Fully diluted EPS from continuing ops excluding unusual items $3.25 $0.33 $0.43 ($0.03) $0.07 $0.13 $0.15 $0.32 $0.13 ($0.01) $0.28 $0.29 $0.69 $0.26 $0.33 $0.39 $0.40 $1.37 $1.70

Pro forma EPS (excluding acquisition-related amortization) N/A N/A N/A $0.04 $0.14 $0.20 $0.20 $0.57 $0.20 $0.28 $0.34 $0.35 $1.18 $0.32 $0.39 $0.45 $0.47 $1.64 $1.96

Diluted GAAP EPS $2.95 $0.26 $0.36 ($0.04) $0.07 ($0.05) $0.04 $0.03 $0.13 ($0.01) $0.28 $0.29 $0.69 $0.26 $0.33 $0.39 $0.40 $1.37 $1.70

Diluted shares outstanding 44.7 130.8 132.9 130.7 137.3 157.3 189.3 153.6 189.4 181.1 189.7 189.9 187.5 190.1 190.3 190.5 190.7 190.4 191.2

Income statement relationships (% of revenue)

Compensation and benefits 70.8% 70.3% 69.9% 72.2% 71.6% 70.9% 71.5% 71.5% 73.3% 71.3% 71.1% 71.1% 71.6% 72.2% 71.5% 70.8% 70.9% 71.3% 71.5%

Operating expenses 12.6% 13.4% 12.8% 11.3% 11.4% 11.5% 11.3% 11.4% 11.3% 11.2% 10.6% 10.5% 10.9% 10.8% 10.4% 10.0% 9.9% 10.2% 9.8%

Insurance expenses 3.4% 3.6% 3.0% 2.9% 2.9% 2.8% 2.8% 2.9% 3.1% 2.9% 2.7% 2.7% 2.8% 2.6% 2.6% 2.6% 2.6% 2.6% 2.6%

Selling, general and administrative expenses 2.4% 2.4% 2.4% 2.5% 2.6% 4.3% 2.0% 2.9% 1.9% 2.2% 2.2% 2.2% 2.1% 2.2% 2.2% 2.2% 2.2% 2.2% 2.2%

Restructuring charges 0.0% 0.2% 0.4% 0.1% 0.3% 0.1% 0.1% 0.2% 0.1% 0.3% 0.0% 0.0% 0.1% 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%

Depreciation and amortization 2.3% 3.2% 3.7% 3.9% 3.9% 3.7% 3.7% 3.8% 3.6% 3.3% 3.1% 3.2% 3.3% 3.1% 3.0% 3.0% 3.0% 3.0% 2.9%

Other net expenses -0.1% 1.0% -0.1% 1.4% 0.0% 3.1% 3.9% 2.2% 0.1% 6.4% 0.1% 0.1% 1.6% 0.1% 0.1% 0.1% 0.1% 0.1% 0.1%

Tax rate (as a % of pre-tax income) 34.5% 39.7% 36.1% -189.7% 39.9% 39.0% -58.7% -9.8% 43.7% 40.7% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0% 41.0%

Margin analysis

EBITDA 11.0% 10.9% 11.8% 11.3% 11.4% 11.4% 12.4% 11.6% 10.4% 12.1% 13.6% 13.7% 12.6% 12.4% 13.5% 14.5% 14.5% 13.8% 14.1%

Adjusted EBITDA 11.1% 11.1% 12.3% 11.4% 11.8% 12.7% 11.9% 12.0% 10.8% 12.5% 13.3% 13.4% 12.6% 12.1% 13.2% 14.2% 14.3% 13.5% 13.9%

EBIT 8.6% 6.9% 7.8% 7.1% 7.3% 6.6% 8.6% 7.4% 6.7% 8.7% 10.3% 10.3% 9.1% 9.2% 10.4% 11.4% 11.5% 10.6% 11.1%

Pre-tax 8.0% 2.3% 2.7% -0.2% 1.8% -1.3% 0.9% 0.3% 3.8% -0.3% 8.1% 8.3% 5.1% 7.2% 8.6% 9.7% 9.9% 8.9% 9.8%

Net 5.3% 1.4% 1.7% -0.4% 1.1% -0.8% 0.8% 0.2% 2.4% -0.2% 4.6% 4.7% 3.0% 4.1% 4.9% 5.5% 5.6% 5.1% 5.6%

Revenue by business segment (as % of total revenue)

AMR 48.3% 46.4% 42.0% 37.5% 36.7% 36.7% 36.1% 36.7% 36.4% 35.8% 34.7% 34.3% 35.3% 34.5% 33.9% 33.1% 32.6% 33.5% 32.0%

EmCare 51.7% 53.6% 57.5% 59.5% 60.2% 60.4% 60.5% 60.2% 60.1% 60.8% 62.1% 62.0% 61.3% 61.6% 62.3% 63.3% 63.1% 62.6% 63.5%

Evolution Health 0.0% 0.0% 0.5% 3.0% 3.1% 2.9% 3.4% 3.1% 3.5% 3.4% 3.2% 3.8% 3.5% 3.9% 3.8% 3.6% 4.3% 3.9% 4.6%

Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

Growth rates - YoY % change

Revenue 11.3% 8.7% 6.2% 10.2% 12.3% 16.5% 13.0% 13.0% 14.2% 19.6% 19.8% 19.2% 18.3% 18.5% 18.5% 16.5% 16.6% 17.4% 12.5%

EBITDA 11.9% 7.8% 15.2% 17.2% 10.0% 7.1% 10.9% 11.1% 5.6% 26.8% 43.0% 31.4% 27.8% 40.5% 31.9% 24.3% 24.2% 28.6% 15.5%

Adjusted EBITDA 12.6% 8.8% 17.2% 10.3% 10.0% 17.6% 3.3% 10.2% 8.9% 26.6% 25.2% 34.2% 24.2% 32.1% 25.5% 24.2% 24.1% 26.1% 15.6%

Adjusted EBITDA (bps) 13 1 115 1 (24) 12 (111) (31) (52) 70 58 150 60 124 74 88 86 92 38

Adjusted EPS 26.9% -89.7% 27.6% N/A N/A N/A N/A N/A 412.4% 99.9% 72.4% 79.9% 104.9% 60.6% 41.4% 32.3% 32.7% 39.4% 19.7% Source: Deutsche Bank, Company reports

AMR 04033

7 August 2014


Envision Healthcare


Appendix 1

Important Disclosures

Additional information available upon request

Disclosure checklist

Company Ticker Recent price* Disclosure

Envision Healthcare EVHC.N 35.15 (USD) 6 Aug 14 1,7,8 *Prices are sourced from local exchanges via Reuters, Bloomberg and other vendors. Data is sourced from Deutsche Bank and subject companies

Important Disclosures Required by U.S. Regulators

Disclosures marked with an asterisk may also be required by at least one jurisdiction in addition to the United States. See Important Disclosures Required by Non-US Regulators and Explanatory Notes.

1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees.

7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.

8. Deutsche Bank and/or its affiliate(s) expects to receive, or intends to seek, compensation for investment banking services from this company in the next three months.

Important Disclosures Required by Non-U.S. Regulators

Please also refer to disclosures in the Important Disclosures Required by US Regulators and the Explanatory Notes.

1. Within the past year, Deutsche Bank and/or its affiliate(s) has managed or co-managed a public or private offering for this company, for which it received fees.

7. Deutsche Bank and/or its affiliate(s) has received compensation from this company for the provision of investment banking or financial advisory services within the past year.

For disclosures pertaining to recommendations or estimates made on securities other than the primary subject of this research, please see the most recently published company report or visit our global disclosure look-up page on our website at http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=EVHC.N

Analyst Certification

The views expressed in this report accurately reflect the personal views of the undersigned lead analyst(s) about the subject issuer and the securities of the issuer. In addition, the undersigned lead analyst(s) has not and will not receive any compensation for providing a specific recommendation or view in this report. Darren Lehrich

AMR 04034

http://gm.db.com/ger/disclosure/Disclosure.eqsr?ricCode=EVHC.N

7 August 2014


Envision Healthcare


Historical recommendations and target price: Envision Healthcare (EVHC.N) (as of 8/6/2014)

12

3

45 6

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

Aug 13 Nov 13 Feb 14 May 14

Secu

rity

Pri

ce

Date

Previous Recommendations

Strong Buy Buy Market Perform Underperform Not Rated Suspended Rating

Current Recommendations

Buy Hold Sell Not Rated Suspended Rating

*New Recommendation Structure as of September 9,2002

1. 09/23/2013: Upgrade to Buy, Target Price Change USD31.00 4. 03/06/2014: Buy, Target Price Change USD35.00

2. 10/09/2013: Buy, Target Price Change USD32.00 5. 06/09/2014: Buy, Target Price Change USD37.00

3. 11/14/2013: Buy, Target Price Change USD32.50 6. 07/22/2014: Buy, Target Price Change USD41.00

Equity rating key Equity rating dispersion and banking relationships

Buy: Based on a current 12- month view of total share-holder return (TSR = percentage change in share price from current price to projected target price plus pro-jected dividend yield ) , we recommend that investors buy the stock. Sell: Based on a current 12-month view of total share-holder return, we recommend that investors sell the stock Hold: We take a neutral view on the stock 12-months out and, based on this time horizon, do not recommend either a Buy or Sell. Notes:

1. Newly issued research recommendations and target prices always supersede previously published research. 2. Ratings definitions prior to 27 January, 2007 were:

Buy: Expected total return (including dividends) of 10% or more over a 12-month period Hold: Expected total return (including dividends) between -10% and 10% over a 12-month period Sell: Expected total return (including dividends) of -10% or worse over a 12-month period

50 % 48 %

2 %

54 %

39 %

25 %0

50100150200250300350400450500

Buy Hold Sell

North American Universe

Companies Covered Cos. w/ Banking Relationship

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7 August 2014


Envision Healthcare


Regulatory Disclosures

1. Important Additional Conflict Disclosures Aside from within this report, important conflict disclosures can also be found at https://gm.db.com/equities under the

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consistent or inconsistent with Deutsche Bank's existing longer term ratings. These trade ideas can be found at the

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AMR 04036

http://gm.db.com/

http://www.globalmarkets.db.com/riskdisclosures

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Member of the Group Executive Committee

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Research

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FICC Research & Global Macro Economics

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Deutsche Bank Research, Germany

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Equity Research, Germany

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Americas Research

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AMR 04037

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