• Revenues increased 13% to $18.2 million
• Diluted earnings per share were $0.02 excluding a non-recurring restructuring charge of $223 thousand
• Adjusted EBITDA was $0.9 million
• Processed claims up 34% to 117,000

American CareSource Holdings Inc. (NASDAQ: ANCI) today announced third quarter net income of $147 thousand, or $0.01 per diluted share, compared to net income of $1.0 million, or $0.06 per diluted share reported during the third quarter of 2008. Third quarter 2009 results include a pre-tax, non-recurring, restructuring charge of $223 thousand, or $0.01 per diluted share. Excluding this charge, diluted earnings per share were $0.02.

“Despite a challenging economic environment, our business continues to demonstrate resilience by delivering continued top-line growth and solid operating performance,” said David Boone, Chief Executive Officer of American CareSource. “Our focus on improving the cost of Ancillary healthcare remains a compelling value proposition for our clients. We have an extensive service provider network that gives us a breadth of services that remain unmatched in the industry. This is why I remain confident in the sustained growth of the Company.”

Client and Provider Additions Improve Revenues

Revenues for the third quarter of 2009 increased 13% to $18.2 million compared to $16.1 million reported the same period last year. The higher revenues were attributed to increased revenues from new and existing clients. In particular, the business realized strong revenue contributions from three clients implemented in 2009; HealthMarkets, IAC and HealthScope.

Sequentially, third quarter revenues increased $1.1 million, or 6.4%, from $17.1 million reported during the second quarter of 2009. The improved results were attributed to increased claims volumes from HealthSmart and the addition of new client relationships such as HealthMarkets.

During the third quarter, the company added approximately 300 net new providers, which represent approximately 4,300 additional sites. As of the end of the third quarter, the Company had over 4,100 providers and over 32,000 provider sites.

Stronger Claims Volume

The Company processed 117,000 claims during the third quarter of 2009, which represents a 34% increase over the 87,000 claims processed during the same period in 2008. The increase in claims processed was driven by the expansion of the Company''s existing clients, provider relationships, and the implementation of new clients. Revenues per processed claim decreased to $156 reflecting a shift in business mix toward lower cost specialties, such as laboratory services.

The Company billed 101,000 claims during the third quarter of 2009, which represents a 29% increase over the 78,000 claims billed during the same period in 2008. Revenue per billed claim for the period decreased to $181 compared to $207 per billed claim reported during the third quarter of 2008. This decrease was attributed to a shift in business mix toward lower cost specialties, such as laboratory services.

Compared to the second quarter of 2009, processed claims declined 4%, while billed claims volume remained unchanged. Revenue per processed claim increased 10% while revenue per billed claim increased by 7% due to a shift in business mix toward higher cost specialties, such as diagnostic imaging services and surgery centers.

Margin Review

The contribution margin for the third quarter of 2009 softened to $2.4 million from $2.6 million reported during the third quarter of 2008. As a percentage of revenues, the contribution margin was 12.9%, compared to 15.9% reported during the third quarter of 2008. Higher payments to providers and increased claims administration and provider development costs, which as a percentage of revenues, were 75.7% and 6.5%, respectively, contributed to the lower contribution margin.

On a quarterly sequential basis, the contribution margin, as a percentage of revenues, decreased by 0.8% due to marginally higher provider payments and administrative fees.

Selling, General and Administrative Expenses (SG&A)

SG&A for the third quarter of 2009, excluding the restructuring charge of $223 thousand, was $1.8 million and increased 22%, or $331 thousand over the third quarter of 2008. The results were primarily driven by increased headcount in sales and marketing and increased non-cash compensation costs related to the Company''s stock-based compensation plan. The restructuring charge reflects severance costs associated with the Company''s reorganization plan.

Adjusted EBITDA

Adjusted EBITDA for the period was $936 thousand, which compares to approximately $1.3 million reported during the same period last year. Adjusted EBITDA reported for the third quarter of 2009 represents a 25% sequential increase over the second quarter of 2009.

Adjusted EBITDA, (a non-GAAP measure) is defined as income from operations less depreciation and amortization, non-cash warrant and option compensation expense and restructuring charges. EBITDA, as adjusted, should be considered in addition to, but not in lieu of, income from operations reported under generally accepted accounting principles (GAAP).

Operating Income

Operating income during the period was $159 thousand, which compares to $962 thousand reported during the same period last year. The decline reflects higher SG&A and the non-recurring, restructuring charge of $223 thousand.

Financial Liquidity

Total cash-on-hand at September 30, 2009 was $10.3 million, which compares to $10.6 million reported at December 31, 2008. Cash generated from operating activities for the nine months ended September 20, 2009 was $812 thousand and includes a $1.0 million payment associated with the extension of a key client contract. Excluding that payment, cash generated from operating activities was $1.8 million for the period. The Company has no long-term debt outstanding.

Revenue Guidance

For the full year of 2009, the Company expects to generate revenues of approximately $70 million, which is at the lower-end of its anticipated range of $70 to 85 million.

Earnings Release Conference Call

As previously announced, American CareSource management will review its audited third quarter 2009 financials during a conference call scheduled for November 10, 2009 at 8:30 AM Eastern Time. The dial-in numbers are as follows:

About American CareSource Holdings, Inc.

American CareSource Holdings is the first national, publicly traded ancillary care network services company. The Company offers a comprehensive national network of over 4,100 ancillary service providers at more than 32,000 sites through its subsidiary, Ancillary Care Services. Ancillary Care Services provides ancillary health care services through its network that offers cost effective alternatives to physician and hospital-based services. This market is estimated at $574 billion and has grown to 30% of total national health expenditures. These providers offer services in 31 categories including laboratories, dialysis centers, free-standing diagnostic imaging centers, non-hospital surgery centers, as well as durable medical equipment such as orthotics and prosthetics and others. The Company''s ancillary network and management provides a complete outsourced solution for a wide variety of health care payors and plan sponsors including self-insured employers, indemnity insurers, PPOs, HMOs, third party administrators and both federal and local governments. For additional information, please visit www.anci-care.com.

ANCI-G

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995:

Any statements that are not historical facts contained in this release, including with respect to the Company''s plans, objectives and expectations for future operations, projections of the Company''s future operating results or financial condition, and expectations regarding the health care industry and economic conditions, are forward-looking statements. Substantial risks and uncertainties could cause actual results to differ materially from those indicated by forward-looking statements, including, but not limited to, changes in national health care policy, regulation, general economic conditions, demand for ancillary services, pricing, competition, market acceptance/preference, the Company''s ability to integrate with its clients, changes in the business decisions by key clients or consolidation in the industry affecting them, the Company''s inability to attract or maintain providers or clients or to manage growth, implementation and performance difficulties, and other risk factors detailed from time to time in the Company''s periodic filings with the Securities and Exchange Commission. Except as otherwise required by law, the Company undertakes no obligation to update or revise these forward-looking statements.

Contacts:

American CareSource Holdings, Inc.
Steven J. Armond, 972-308-6847
Chief Financial Officer
or
Investor Relations
The Cockrell Group
Rich Cockrell, 404-942-3369
rich.cockrell@thecockrellgroup.com