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American CareSource Holdings Reports Record 2008 Fourth Quarter and Year End Financial Results  
3/31/2009 11:58:55 AM

DALLAS, TX--(Marketwire - March 31, 2009) -

American CareSource Holdings, Inc. (NASDAQ: ANCI) today announced record financial and operational results for the three months and year ended December 31, 2008. Recent highlights include:

--  Reported quarterly net income of $1.5 million, or $0.08 per diluted
    share, resulting in six consecutive quarters of profit growth.
--  Achieved $17.7 million in revenue for the fourth quarter, a 74.4%
    increase in revenues compared to the same prior year period,
    representing seven quarters of sequential revenue growth.
--  Attained quarterly gross margins of approximately 16.3% compared to
    approximately 11.8% in the three months ended December 31, 2007,
    reflecting continued leverage of the Company's fixed cost
    infrastructure.
--  Generated EBITDA, as adjusted, of approximately $1.82 million for the
    quarter.
    --  EBITDA, as adjusted, (a non-GAAP measure) is defined as income
        (loss) from operations adjusted for 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).
--  The Company finished the year with approximately $10.6 million in cash
    and cash equivalents on hand and generated approximately $2.24 million
    in cash from operating activities in the fourth quarter and
    approximately $6.5 million during the full year of 2008.
--  Claims volume increased to approximately 82,500 for the fourth quarter
    of 2008, up 62% over the fourth quarter of 2007.
--  Signed new client agreement with Principal Financial Group to provide a
    full range of ancillary care services for its newly launched
    proprietary healthcare network, Principal Edge Network.
--  Signed new client agreement with Insurers Administrative Corporation,
    expanding growth in the TPA market.
--  Signed new client agreement with InterGroup Services Corporation,
    extending reach into the Mid-Atlantic PPO market.
--  Extended contract with HealthSmart Preferred Care II, LP through 2012
    and expanded services provided.
--  The Company ranked number one stock performer on The NASDAQ Capital
    Market® for 2008.

"We are pleased to report that we exceeded our previously updated 2008 revenue guidance of $55 to $57 million," stated David S. Boone, Chief Executive Officer of American CareSource. "As we move into 2009, we expect annual revenues to range between $85 and $95 million for the year as we gain additional market share. Our 2009 revenue guidance is based on continued rapid growth which will be driven by the expansion of services offered to existing clients as well as the addition of new clients and expansion of our provider network across the United States."

Revenues for the fourth quarter of 2008 rose 74.4% to $17.7 million compared to $10.1 million in the fourth quarter of 2007. The Company's fourth quarter revenues also represent a 9.6% improvement over the third quarter of 2008 reported revenues of $16.1 million. For the full year ended December 31, 2008, the Company reported revenues of $58.3 million, a 148.2% increase compared to revenues of $23.5 million in the same period of 2007.

Net income increased to $1.5 million, or $0.08 per diluted share, for the three months ended December 31, 2008, compared to net income of approximately $318 thousand, or $0.02 per share, in the same period last year. For the full year ended December 31, 2008, net income increased to $3.6 million, or $0.21 per diluted share, compared to a net loss of $820 thousand, or $0.06 per share, for the same period in 2007. Net income for the three months ended December 31, 2008 reflected reduced bonus expenses of approximately $327 thousand related to variable compensation expense that will be paid in the form of restricted stock units in lieu of cash. Expense related to the restricted stock units will be expensed over the corresponding two year vesting period beginning March 2009.

Cash provided by operations was $6.5 million for the full year ended December 31, 2008 versus cash used in operations of approximately $281 thousand during the same period in 2007. Factors affecting the improvement in operating cash flows include earnings growth, accelerated client collections and overall effectiveness in working capital management. The Company has generated positive cash flow for six consecutive quarters and continues to operate debt free. At December 31, 2008, the Company had approximately $10.6 million in cash and cash equivalents compared to $4.3 million at December 31, 2007.

Conference Call

As previously announced, American CareSource will hold a conference call to discuss financial results of the fourth quarter and year ended December 31, 2008 as follows:

Date:             Tuesday, March 31, 2009
Time:             10:00 a.m. (CT)/11:00 a.m. (ET)
Dial-in numbers:  877-795-3610 (U.S. & Canada) or 719-325-4819
Live webcast:     www.anci-care.com, under "Events"

The teleconference replay will be available two hours after completion through Tuesday, April 7, 2009 at 888-203-1112 (U.S. & Canada) or 719-457-0820. The replay pass code is 1234640. The archived webcast will be available for one year on the Company's investor website, www.anci-care.com, under "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 2,500 ancillary service providers at over 25,000 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.

ANCI-F

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 future engagements by clients, revenue growth, earnings, and guidance are forward-looking statements. It is possible that the assumptions made by American CareSource Holdings, Inc. for purposes of such statements may prove to be inaccurate or may not materialize. Actual results may differ materially from those projected or implied in any forward-looking statements. Such statements may involve further risks and uncertainties, including but not limited to those relating to demand for our services, pricing, market acceptance, our ability to integrate with our clients, our ability to attract and maintain providers, our ability to manage growth, the effect of economic conditions, and the affect of competitive services, risks in product development, the ability to complete transactions, and other risks identified in this release, and the Securities and Exchange Commission filings of American CareSource Holdings, Inc.

(Tables to Follow)

                 AMERICAN CARESOURCE HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF OPERATIONS


                        Three months ended              Year ended
                           December 31,                December 31,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------

Net Revenues        $ 17,659,778  $ 10,124,555  $ 58,288,775  $ 23,487,911

Cost of revenues:
  Provider payments   12,912,709     7,675,391    42,602,808    17,205,652
  Administrative
   fees                1,014,458       611,245     3,395,085     1,250,386
  Fixed costs            859,798       643,240     3,255,140     2,145,562
                    ------------  ------------  ------------  ------------
Total cost of
 revenues             14,786,965     8,929,876    49,253,033    20,601,600
                    ------------  ------------  ------------  ------------

  Contribution
   margin              2,872,813     1,194,679     9,035,742     2,886,311

Selling, general
 and administrative
 expenses              1,298,767     1,076,255     5,094,580     3,754,175
Depreciation and
 amortization            120,900        80,679       415,459       328,839
                    ------------  ------------  ------------  ------------
  Total operating
   expenses            1,419,667     1,156,934     5,510,039     4,083,014
                    ------------  ------------  ------------  ------------

  Operating income
   (loss)              1,453,146        37,745     3,525,703    (1,196,703)
                    ------------  ------------  ------------  ------------

Interest income           45,537        49,657       182,976       200,719
Interest expense            (372)       (1,414)       (4,883)      (10,700)
Debt issuance costs            -             -             -       (46,300)
                    ------------  ------------  ------------  ------------

Total interest
 income, net              45,165        48,243       178,093       143,719

Income (loss)
 before income
 taxes                 1,498,311        85,988     3,703,796    (1,052,984)
Income tax
 provision
 (benefit)                 3,710      (232,754)       65,333      (232,754)
                    ------------  ------------  ------------  ------------
Net Income (loss)   $  1,494,601  $    318,742  $  3,638,463  $   (820,230)
                    ============  ============  ============  ============

Earnings (loss) per
 common share:
  Basic             $       0.10  $       0.02  $       0.24  $      (0.06)
                    ============  ============  ============  ============
  Diluted           $       0.08  $       0.02  $       0.21  $      (0.06)
                    ============  ============  ============  ============

Basic weighted
 average common
 shares outstanding   15,166,817    14,659,757    15,083,827    14,546,796
                    ============  ============  ============  ============
Diluted weighted
 average common
 shares outstanding   18,207,577    17,253,245    17,735,576    14,546,796
                    ============  ============  ============  ============


Reconciliation of non-GAAP financial measures to reported
 GAAP financial measures

Reconciliation of EBITDA and EBITDA, as adjusted:

                        Three months ended              Year ended
                          December 31,                 December 31,
                    --------------------------  --------------------------
                        2008          2007          2008          2007
                    ------------  ------------  ------------  ------------

Operating income
 (loss)             $  1,453,146  $     37,745  $  3,525,703  $ (1,196,703)
Depreciation and
 amortization            120,900        80,679       415,459       328,839
                    ------------  ------------  ------------  ------------
  EBITDA               1,574,046       118,424     3,941,162      (867,864)
Executive severance            -             -        21,844       338,010
Non-cash
 stock-based
 compensation
 expense                 241,307       216,805       781,340       705,965
                    ------------  ------------  ------------  ------------
  EBITDA, as
   adjusted         $  1,815,353  $    335,229  $  4,744,346  $    176,111
                    ============  ============  ============  ============




                   AMERICAN CARESOURCE HOLDINGS, INC.
                        CONSOLIDATED BALANCE SHEETS


                                               December 31,   December 31,
                                                   2008           2007
                                               -------------  -------------
ASSETS

Current assets:
Cash and cash equivalents                      $  10,577,829  $   4,272,498
Accounts receivable, net                           5,788,457      3,651,203
Prepaid expenses and other current assets            495,814        409,445
                                               -------------  -------------
  Total current assets                            16,862,100      8,333,146

Property and equipment, net                          915,224        332,450

Other assets:
Certificate of Deposit, restricted                         -        145,000
Other non-current assets                           1,127,114        492,977
Intangible assets, net                             1,280,656      1,494,238
Goodwill                                           4,361,299      4,361,299
                                               -------------  -------------
Total assets                                   $  24,546,393  $  15,159,110
                                               =============  =============

LIABILITIES and SHAREHOLDERS' EQUITY

Current Liabilities:
Due to service providers                       $   5,964,392  $   3,344,278
Accounts payable and accrued liabilities           3,100,839      1,320,036
Current maturities of long-term debt                  11,023         55,697
                                               -------------  -------------
  Total current liabilities                        9,076,254      4,720,011

Long-term debt                                         3,053         50,348
Shareholders' equity                              15,467,086     10,388,751
                                               -------------  -------------
Total liabilities and shareholders' equity     $  24,546,393  $  15,159,110
                                               =============  =============




                   AMERICAN CARESOURCE HOLDINGS, INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                       Year ended
                                                       December 31,
                                               ---------------------------
                                                   2008           2007
                                               ------------   ------------
Cash flows from operating activities:
  Net income (loss)                            $  3,638,463   $   (820,230)
  Adjustments to reconcile net income (loss)
   to net cash provided by (used in)
   operations:
      Stock-based compensation expense              698,863        418,058
      Depreciation and amortization                 415,462        328,839
      Amortization of debt issuance costs                 -         46,300
      Client administration fee expense
       related to warrants                           82,478         35,276
      Deferred income taxes                          11,772       (255,731)
      Changes in operating assets and
       liabilities:
         Accounts receivable                     (2,137,254)    (2,316,253)
         Prepaid expenses and other assets          346,575       (542,626)
         Accounts payable and accrued
          liabilities                               780,803        558,110
         Due to service providers                 2,620,114      2,267,104
                                               ------------   ------------
           Net cash provided by (used in)
            operating activities                  6,457,276       (281,153)
                                               ------------   ------------

Cash flows from investing activities:
  Investment in software development costs         (492,185)             -
  Additions to property and equipment              (292,469)      (181,153)
  Redemption of certificate of deposit              145,000              -
                                               ------------   ------------
           Net cash used in investing
            activities                             (639,654)      (181,153)
                                               ------------   ------------

Cash flows from financing activities:
  Payments on long-term debt                        (91,969)      (348,215)
  Proceeds from exercise of stock warrants          127,428              -
  Proceeds from exercise of stock options           452,250         57,639
                                               ------------   ------------
           Net cash provided by (used in)
            financing activities                    487,709       (290,576)
                                               ------------   ------------

Net increase (decrease) in cash and cash
 equivalents                                      6,305,331       (752,882)
Cash and cash equivalents at beginning of
 period                                           4,272,498      5,025,380
                                               ------------   ------------
Cash and cash equivalents at end of period     $ 10,577,829   $  4,272,498
                                               ============   ============

Contact:
Steven J. Armond
Chief Financial Officer
American CareSource Holdings, Inc.
Tel: 972-308-6847


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