CASE STUDY
The Client:
A medical transport company providing emergency and non-emergency ambulance services to healthcare facilities, municipalities, and patients across its service territory, the business operates in the essential healthcare infrastructure sector where reliable emergency response capabilities and fleet capacity determine contract retention and growth opportunities. With established contracts and ongoing demand for medical transportation services, the company needed to continuously expand its ambulance fleet to meet increasing service requirements, pursue new municipal contracts, and maintain the response time standards that healthcare systems and local governments demand. Operating in a capital-intensive industry where each ambulance represents substantial investment in specialized vehicles and medical equipment, the business had traditionally relied on bank financing to fund fleet expansion but recognized the value of diversifying capital sources to support aggressive growth plans spanning multiple years.
The Challenge:
The medical transport company sought alternative financing outside their traditional bank for 10-12 ambulances totaling between $1 million and $1.5 million annually for both 2022 and 2023, recognizing the need for substantial multi-year capital commitments to support fleet growth. However, COVID-19 had a devastating effect on the company’s financial performance as healthcare facilities and patients—their primary revenue sources—struggled with pandemic-related disruptions and payment delays. With clients unable to make timely payments, the medical transport company’s cash flow collapsed and they blew through financial covenants with their existing bank, creating a downward spiral where covenant violations constrained access to additional capital precisely when fleet expansion was essential to maintaining service contracts. Making matters worse, even as First National worked to structure initial financing, the client suddenly informed FNC that they might trip covenants in the proposed facility as well, threatening to derail the transaction before it closed. The company needed ongoing financing for 2023 despite continuing cash flow issues, requiring a lender willing to maintain commitment through operational challenges that would cause most capital sources to retreat.
Solution:
First National Capital recognized that COVID-related financial distress didn’t reflect the underlying viability of an essential medical transport business that would recover as healthcare systems normalized and payment patterns stabilized. FNC initially proposed conservative financing with a fixed charge coverage ratio amenable to the client, establishing baseline terms that balanced risk management with the company’s growth needs. When the client suddenly revealed they might trip FCCR covenants as well, rather than declining the transaction or imposing punitive terms, First National demonstrated the flexibility that distinguishes relationship lenders from transactional capital sources—FNC replaced the FCCR covenants in the term sheet with a tangible net worth covenant that better aligned with the company’s financial profile and increased the rate by only 25 basis points to reflect the adjusted risk. The client was very pleased with the revised covenant structure and had no problem with the modest rate increase, recognizing that First National’s willingness to restructure terms mid-process demonstrated genuine partnership rather than rigid underwriting. For 2023, when the company needed additional debt sources to finance more vehicles despite ongoing cash flow challenges that had exhausted other capital alternatives, First National leveraged the relationship of trust forged during the difficult 2022 period to secure financing meeting their continued fleet expansion needs. This multi-year partnership enabled the medical transport company to maintain fleet growth through unprecedented operational challenges, demonstrate to municipal and healthcare clients that service capacity would not be constrained, and position the business for stronger performance as COVID impacts receded and cash flow normalized.
It All Begins With A Conversation
We listen. We live out-of-the-box. We solve problems. And we get deals done. Let’s do this.
