SecProbe.io

CORRESP
1
filename1.htm

LETTER TO THE S.E.C.

KAYE
SCHOLER LLP

Memorandum

    To:

    Daniel Zimmerman, Esq.

    From:

    Lynn Toby Fisher

    Date:

    November 28, 2005

    Subject:

    Emergency Medical Services Corporation

    Emergency Medical Services L.P.

    Amendment No. 4 to Registration Statement on Form S-1

    (File No. 333-127115)

     As we discussed on Wednesday, November 23, 2005, we attach copies of changed pages that will
be included in Amendment No. 4, in response to the Staff’s comments contained in Mr. Fay’s letter
dated November 23, 2005.

     For your convenience in reviewing these pages, the following sets forth the number of the
Staff’s comments, and the number of the page or pages of the accompanying text that is responsive
to the Staff’s request:

    Comment Number

    Prospectus Page

    1

    not applicable

    2

    see below

    3

    page 1 (“Company Overview”)

    4

    page 4

    5

    pages 9 and 10

    6

    page 121

    7

pages
28, 29 and 30 of IPO prospectus; pages 6, 7 and 8 of
“Exchange prospectus”

    8

pages
5, 29, 30 and pages 120 and 121 of IPO prospectus; pages 6, 7 and 8 of the
“Exchange prospectus”.

    9

    page 29, including footnote 2 to the diagram

    10

pages
28 and 31

    11

    pages 129 through 133, new section captioned “Limited
Partnership Agreement of Emergency Medical Services L.P.”

    12

page 131, under the caption “Distributions”

    13

    page 130, under the caption “Conflicts of Interest and
Fiduciary Duties”

    14

    pages 117 and 119

    15

page 136 (which now includes all of the relevant text of
the agreement)

    16

page
F-74 and F-75

     Our response to comment 2 will follow under separate cover.

SUMMARY

This summary highlights selected information contained
elsewhere in this prospectus and does not contain all of the
information you need to consider in making your investment
decision. This summary is qualified in its entirety by the more
detailed information and the combined and consolidated financial
statements and notes thereto appearing elsewhere in this
prospectus. You should read carefully this entire prospectus and
should consider, among other things, the matters set forth in
the section entitled “Risk Factors” before deciding
whether to invest in our common stock.

Company Overview

Emergency Medical Services Corporation is a leading provider of
emergency medical services in the United States. We operate our
business and market our services under the AMR and EmCare
brands. AMR is the leading provider of ambulance services in the
United States, based on net revenue and number of transports.
EmCare is the leading provider of outsourced emergency
department staffing and related management services in the
United States, based on number of contracts with hospitals and
affiliated physician groups. Approximately 86% of our fiscal
2004 net revenue was generated under exclusive contracts.
For the fiscal year ended August 31, 2004, we generated net
revenue of $1.6 billion, of which AMR and EmCare
represented approximately 66% and 34%, respectively, and net
income of $37.3 million.

AMR. Over its 50 years of operating history, AMR has
developed the largest network of ambulance services in the
United States. AMR has an 8% share of the total ambulance
services market and a 21% share of the private provider
ambulance market, with net revenue approximately twice that of
our only national competitor. During fiscal 2004, AMR treated
and transported approximately 3.7 million patients in
34 states. AMR has approximately 2,855 contracts with
communities, government agencies, healthcare providers and
insurers to provide ambulance transport services. For fiscal
2004, approximately 57% of AMR’s net revenue was generated
from emergency 911 ambulance services, 32% from non-emergency
ambulance services and the balance generated from the provision
of training, dispatch centers and other services to communities
and public safety agencies.

EmCare. Over its 33 years of operating history,
EmCare has become the largest provider of outsourced emergency
department staffing and related management services to
healthcare facilities. EmCare has a 6% share of the total
emergency department services market and a 9% share of the
outsourced emergency department services market, and has 32%
more emergency department staffing contracts than our principal
national competitor. In addition, EmCare has become one of the
leading providers of hospitalist services, the staffing of
physicians that specialize in the care of acutely ill patients
in an inpatient setting. During fiscal 2004, EmCare had
approximately 5.3 million patient visits in 38 states.
We contract with our hospital customers and our healthcare
professionals directly and through our affiliated physician
groups and managed companies. Through its 4,500 affiliated
physicians and 333 exclusive contracts with hospitals and
independent physician groups, EmCare provides emergency
department, hospitalist and radiology staffing, management and
other administrative services.

We are issuing our class A common stock in this offering.
After completion of this offering, we will have no material
assets other than direct ownership of approximately 22.1% of the
equity interest in Emergency Medical Services L.P., or
EMS L.P., the Delaware limited partnership that holds all
of the capital stock of AMR and EmCare. Onex Corporation and its
affiliates will hold the remaining 77.9% of our equity through
their ownership of LP exchangeable units in EMS L.P. The
Onex entities will control 97.7% of our voting power through our
class B special voting stock. Our only source of cash flow
is distributions from EMS L.P. pursuant to the partnership
agreement.

Emergency Medical Services Industry

We operate in the ambulance and emergency department services
markets, two large and growing segments of the emergency medical
services market. Most communities are required by law to provide
emergency ambulance services and most hospitals are required to
provide emergency department services. Approximately 43% of all
hospital admissions originated from the emergency department in
2003, and a substantial portion of patients enter the hospital
by way of ambulance transport. We believe that growth in our
emergency medical services markets will continue due to
increased outsourcing for these services driven by increased
outpatient services and emergency department visits, coupled
with the need for enhanced

1

In exchange for an annual management fee of $1.0 million,
an affiliate of Onex Corporation provides us with corporate
finance and strategic planning consulting services. Our
management agreement has an initial term ending
February 10, 2010, subject to automatic one-year renewals
unless terminated by either party by notice given at least
90 days prior to the scheduled expiration date. The annual
fee may be increased to up to $2.0 million upon approval of
majority of the members of each of AMR’s and EmCare’s
board of directors who are not affiliated with Onex. We have no
other arrangements by which Onex affiliates will receive
payments or compensation from us other than on an equivalent
basis to class A stockholders. See “Certain
Relationships and Related Party Transactions —
Management Fee Agreement with Onex Partners Manager LP”.

Risk Factors

Investing in our class A common stock involves risks. You
should refer to the section entitled “Risk Factors”
for a discussion of certain risks you should consider before
deciding whether to invest in our class A common stock.

Executive Offices

Our principal executive offices are located at
6200 S. Syracuse Way, Suite 200, Greenwood
Village, Colorado 80111 and our telephone number at that address
is (303) 495-1200. Our website address is
www.emsc.net. The website addresses for our business
segments are www.amr.net and www.emcare.com.
Information contained on these websites is not part of this
prospectus and is not incorporated in this prospectus by
reference.

4

The Offering

    Class A common stock offered by us

    7,800,000 shares

    Over-allotment shares of class A common stock offered by
    the selling stockholders

    1,170,000 shares

    Class A common stock outstanding after this offering

    8,948,325 shares

    Use of proceeds

    We intend to use $100.0 million of the net proceeds from
    this offering to repay debt outstanding under our senior secured
    credit facility, and the balance for general corporate purposes.
    See “Use of Proceeds.” Certain of the underwriters of
    this offering or their affiliates are lenders under our senior
    secured credit facility and, in that capacity, will receive a
    portion of the net proceeds of this offering.

    Proposed NYSE symbol

    “EMS”

    The number of shares of class A common stock being offered
    in this offering represents 18.9% of our common stock
    outstanding and 2.3% of our combined voting power. The number of
    shares of our common stock to be outstanding after this offering
    excludes the 32,107,500 shares of class B common stock
    issuable on exchange of the LP exchangeable units and the
    3,509,219 shares of class A common stock issuable upon
    the exercise of options.

    Following this offering, we will have the following securities
    outstanding:

    •

    8,948,325 shares of class A common stock,

    •

    142,545 shares of class B common stock,

    •

    one share of class B special voting stock, and

    •

    32,107,500 LP exchangeable units of EMS L.P.

    At any time at the option of the holder:

    •

    each LP exchangeable unit is exchangeable into one share of
    class B common stock, and

    •

    each share of class B common stock is convertible into one
    share of class A common stock.

    Our securities are entitled to vote on all matters subject to a
    vote of holders of common stock as follows:

    •

    class A common stock is entitled to one vote per share,

    •

    class B common stock is entitled to ten votes per share
    (reducing to one vote per share under certain limited
    circumstances), and

    •

    one share of class B special voting stock, held for the
    benefit of the holders of LP exchangeable units, is entitled to
    a number of votes equal to the number of votes that could be
    cast if all the then outstanding LP exchangeable units were
    exchanged for class B common stock.

The holders of the LP exchangeable units may therefore exercise
voting rights with respect to Emergency Medical Services as
though they held the same number of shares of our class B
common stock.

    Except as otherwise indicated, all of the information presented
    in this prospectus assumes the following:

    •

    our formation as a holding company named Emergency Medical
    Services Corporation, as described under “Formation of
    Holding Company”,

    •

    the anticipated 1.5-for-1 stock split based upon an assumed
    initial public offering price of $16.00 per share, which is
    the mid-point of the range set forth in the cover page of this
    prospectus, and

    •

    no exercise of the underwriters’ over-allotment option.

5

RISK FACTORS

An investment in our class A common stock involves a high
degree of risk. You should carefully consider the factors
described below in addition to the other information set forth
in this prospectus before deciding whether to make an investment
in our class A common stock. Additional risks and
uncertainties not presently known to us or that we currently
believe to be immaterial may also materially and adversely
affect our business operations. Any of the following risks could
materially adversely affect our business, financial condition or
results of operations. In such case, you may lose all or part of
your original investment.

Risk Factors Related to our Capital Structure

The interests of our controlling stockholders may conflict
with your interests.

Following this offering, Onex Partners LP and other entities
affiliated with Onex Corporation, which we refer to together as
the Onex entities, will own all of our outstanding LP
exchangeable units, which are exchangeable at any time, at the
option of the holder, for our class B common stock. Our
class A common stock has one vote per share, while our
class B common stock has ten votes per share (reducing to
one vote per share under certain limited circumstances), on all
matters to be voted on by our stockholders. Prior to the
exchange for class B common stock, the holders of the LP
exchangeable units will be able to exercise the same voting
rights with respect to Emergency Medical Services as they would
have after the exchange through a share of class B special
voting stock. As a result, after this offering, the Onex
entities will control 96.7% of our combined voting power.
Accordingly, the Onex entities will exercise a controlling
influence over our business and affairs and will have the power
to determine all matters submitted to a vote of our
stockholders, including the election of directors, the removal
of directors and approval of significant corporate transactions
such as amendments to our certificate of incorporation, mergers
and the sale of all or substantially all of our assets. The Onex
entities could cause corporate actions to be taken even if the
interests of these entities conflict with the interests of our
other stockholders. This concentration of voting power could
have the effect of deterring or preventing a change in control
of Emergency Medical Services that might otherwise be beneficial
to our stockholders. Gerald W. Schwartz, the Chairman, President
and Chief Executive Officer of Onex Corporation, owns shares
representing a majority of the voting rights of the shares of
Onex Corporation. See “Principal and Selling
Stockholders”, “Description of Capital Stock” and
“Limited Partnership Agreement of Emergency Medical
Services L.P.”

Onex has the voting power to elect our entire board of
directors and to remove any director or our entire board without
cause.

Although our current board includes “independent
directors”, so long as the Onex entities control more than
50% of our combined voting power we are exempt from the NYSE
rule that requires that a board be comprised of a majority of
“independent directors”. Onex may have a controlling
influence over our board, as Onex has sufficient voting power to
elect the entire board, and our certificate of incorporation
permits stockholders to remove directors at any time with or
without cause.

As a holding company, our only material asset is our
equity interest in EMS L.P. and our only source of revenue is
distributions from EMS L.P. Because the Onex entities have the
voting power to control our board of directors, they could
influence us, as the general partner of EMS L.P., to take action
at the level of EMS L.P. that would benefit the Onex entities
and conflict with the interests of our class A
stockholders.

We are a holding company, and we will have no material assets
other than our direct ownership of an approximately 22% equity
interest in EMS L.P. EMS L.P. will also be our only source of
cash flow from operations. The Onex entities hold their equity
interest in us through LP exchangeable units of EMS L.P. As our
controlling stockholder, Onex could limit distributions to us
from EMS L.P., and could cause us to amend the EMS L.P.
partnership agreement in a manner that would be beneficial to
the Onex entities, as limited partners of EMS L.P., and
detrimental to our class A stockholders.

Any decrease in our distributions from EMS L.P. would have a
negative effect on our cash flow. In order to minimize this
conflict, the EMS L.P. partnership agreement requires that the
partnership reimburse

9

us for all of our expenses, including all employee costs and the
expenses we incur as a public company, and provides further t