--  Reported quarterly net income of $534 thousand, or $0.03 per diluted     share. This represents the eighth consecutive profitable quarter for     the Company. --  Achieved $17.1 million in revenue for the second quarter, a 32%     increase in revenues compared to the same prior year period and 7%     increase compared to the first quarter of 2009. --  Attained gross margins of approximately 13.7% compared to 14.6% in the     three months ended June 30, 2008 and 14.3% in the first quarter of     2009. --  Generated EBITDA, as adjusted, of approximately $749 thousand for the     quarter.      -- EBITDA, as adjusted, (a non-GAAP measure) is defined as income from         operations less depreciation and amortization, non-cash warrant and         option compensation expense and executive severance. EBITDA, as         adjusted, should be considered in addition to, but not in lieu of,         income (loss) from operations reported under generally accepted         accounting principles (GAAP). --  Finished the quarter with approximately $9.9 million in cash and cash     equivalents on hand and generated approximately $32 thousand in cash     from operating activities in the second quarter and approximately     $86 thousand during the first half of 2009. --  Processed claims volume increased to approximately 121 thousand for     the second quarter of 2009, up 68% over the second quarter of 2008     and 34% over the first quarter of 2009. --  Signed new provider agreement with CVS subsidiary, MinuteClinic, the     leading provider of prescriptions and related health care services in     the nation. --  Surpassed 30,000 contracted provider site mark by adding nearly 4,000     new network sites around the country since April 1, 2009. --  Elected David A. George as Chairman of the Board. 

Commenting on today's announcement, David S. Boone, stated, "Our second quarter top line results demonstrate a continuation of the strong momentum we are building in the market place. To that end we have invested significantly in our people and our technology to support that growth. During the quarter, we continued investing in our claims administration and provider development organizations to facilitate growth through the enhancement of our network of ancillary care providers, and to strengthen our claims processing and management capabilities. We also continued to recruit sales and marketing resources to further expand our national selling capability and to effectively position the business to realize future growth opportunities.

"An important part of our growth strategy is to expand our provider network. We recently signed an agreement with CVS subsidiary MinuteClinic, which is a health care provider for common conditions when a primary care physician is not available and the hospital emergency room is not appropriate. Through this agreement, American CareSource has entered a new ancillary care segment on a national scale to provide high quality care in a cost effective manner."

During the past several months, the Company expanded its provider network to nearly 4,000 providers operating in over 30,000 sites, an increase of approximately 600 providers and 4,000 sites since April 1, 2009.

Revenues for the second quarter of 2009 rose 32% to $17.1 million compared to $13.0 million in the second quarter of 2008. The Company's second quarter revenues also represent a 7% improvement over reported revenues of $16.1 million for the first quarter of 2009. The quarter-over-quarter improvement was primarily the result of incremental revenue generated from recently implemented clients including HealthMarkets and HealthScope. For the six months ended June 30, 2009, revenues from existing clients grew 26% compared to the same period in 2008. Total reported revenues for the first half of 2009 were $33.2 million, a 35% increase compared to revenues of $24.5 million in the same period of 2008.

During the three months ended June 30, 2009, the number of billed claims increased by 26% and 53%, respectively, compared to the same three month periods ended March 31, 2009 and June 30, 2008. The increase in claim volume was driven by the expansion of existing client relationships, the implementation of new clients during the first half of 2009 as well as the expansion of the service provider network.

Revenue per claim declined for the periods presented due to lower than estimated collection rates related to new client relationships, limited benefits offered by certain recently implemented clients and the change in mix of provider specialties driving claim volume during the first six months of 2009. In particular, the Company experienced accelerated growth in categories such as laboratory services with a lower average revenue per claim while other higher average revenue per claim categories such as dialysis services have not grown as rapidly. Revenue per claim can vary significantly depending upon factors including the types of services consumed by clients members, the quantity of services delivered, client negotiated pricing, provider negotiated service rates, the rate of collections based upon the client and members financial responsibility and other factors. The following table provides information with respect to claims processed, claims billed and associated revenue per claim metrics for the periods presented (claim amounts in thousands):

                                  Three months ended                                 June   March    June                                  30,     31,     30,                                 2009    2009    2008                                ------- ------- ------- Claims processed                   121      90      72 Claims billed                      101      80      66 Revenue per processed claim    $   142 $   178 $   180 Revenue per billed claim           169     201     197 

In the second quarter of 2009, the increase in cost of revenues related to provider payments compared to the first quarter of 2009 was a result of increased claims volume and increased revenues, and the fluctuation in the mix of types of services provided by the Company. The increase in provider payments as a percentage of revenues was due primarily to lower margins in dialysis services and infusion services specialties offset by improvements in diagnostic imaging specialty. These category margins were impacted by the execution of new provider agreements, pricing for associated services on recently implemented and existing client contracts, the mix of services delivered in each category, and the mix of providers delivering the services.

Further, in the second quarter of 2009, administrative fees decreased despite increased revenue and claim volume as compared to the first quarter of 2009. The decrease in administrative fees as a percentage of net revenues was due to a shift in revenues to clients that carry lower contracted administrative fee rates.

In the second quarter or 2009, the costs of claims administration and provider development organizations increased primarily due to headcount investments made to support the growth of claims volume and to facilitate growth through the enhancement of the network of ancillary care providers. As of June 30, 2009, the Company's claims administration organization added eight incremental employees, while its provider development organization added six incremental employees, compared to June 30, 2008.

The following table sets forth a comparison of the components of the cost of revenues as a percentage of revenue. The detail of the costs of claims administration and provider development organizations are attached for further reference.

                                 Three months                                    ended                                 June   March                                  30,     31,                                 2009    2009   Change                                ------  ------  ------ Provider payments                75.2%   74.3%    0.9% Administrative fees               4.5%    5.1%   -0.6% Claims administration and   provider development            6.6%    6.3%    0.3%                                ------  ------ Total cost of revenues           86.3%   85.7%    0.6%                                ======  ====== 

The Company reported SG&A expenses of $1,981,000 and $1,901,000 for the quarters ending June 30, 2009 and March 31, 2009, respectively. The approximate $80 thousand increase was due to sales and marketing related investments in people offset by reductions in professional fees and consulting costs. The detail of SG&A related costs is attached for further reference.

The Company reported net income of $534 thousand, or $0.03 per share, for the three months ended June 30, 2009, compared to $621 thousand, or $0.04 per share, in the same period last year. For the six months ended June 30, 2009, the Company reported net income of $813 thousand, or $0.04 per diluted share, compared to $1.1 million, or $0.07 per share, for the same period in 2008. Included in net income during the three and six months ended June 30, 2009, are unrealized gains of $279 thousand and $254 thousand, respectively, related to warrants that are accounted for under Emerging Issues Task Force Issue No. 07-5 ("EITF 07-5"). Because of provisions included in the warrants, EITF 07-5 requires the Company to adjust the related liability based on the fair value of the warrants. During the second quarter, the fair value of the warrants declined, creating the unrealized gains.

Cash provided by operations was $86 thousand for the six months ended June 30, 2009 versus cash provided by operations of $2.1 million during the same period in 2008. Factors affecting the change in operating cash flows included a one-time investment in a key client relationship of $1 million, investments in developing sales and marketing capabilities, the provider development function and other support areas to enable business scale. At June 30, 2009, the Company had approximately $9.9 million in cash and cash equivalents compared to $10.6 million at December 31, 2008.

Conference Call

As previously announced, American CareSource will hold a conference call to discuss financial results of the second quarter ended June 30, 2008 as follows:

 Date:   Wednesday, August 12, 2009         Time: 7:30 a.m. (CT)/8:30 a.m. (ET)         Dial-in numbers: 888-645-4404 (U.S. & Canada) or 201-604-0169         Live webcast: www.anci-care.com, under "Events" 

The teleconference replay will be available three hours after completion through Wednesday, August 19, 2009 at 888-632-8973 (U.S. & Canada) or 201-499-0429. The replay passcode is 58754250. The archived webcast will be available for one year on the Company's investor website, www.anci-care.com, "Events."

About Ancillary Healthcare Services

American CareSource provides ancillary healthcare 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 over 30 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.

About American CareSource Holdings, Inc.

American CareSource Holdings, the first national, publicly traded ancillary care network services company, offers a comprehensive national network of approximately 4,000 ancillary service providers at over 30,000 sites through its subsidiary, Ancillary Care Services. The Company's ancillary network and management provides a complete outsourced solution for a wide variety of healthcare 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.