×

Air Methods Reports 2Q15 Results and 3Q15 Update

DENVER, Aug. 6, 2015 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, reported financial results for the quarter and six months ended June 30, 2015 and provided an update on preliminary July 2015 flight volume. For the quarter, revenue increased 2% to $263.6 million from $257.6 million in the prior-year quarter. For the six-month period, revenue increased 5% to $501.9 million, compared to $478.7 million in the prior-year six-month period.

For the quarter, net income from continuing operations was $27.4 million, or $0.69 per diluted share, compared with $29.8 million, or $0.75 per diluted share, in the second quarter of 2014. For the six-month period, net income from continuing operations was $40.3 million, or $1.01 per diluted share, compared with $41.4 million, or $1.05 per diluted share, in the prior-year six-month period.

Community-based patient transports were 16,105 during the current-year quarter, compared with 14,994 in the prior-year quarter, a 7% increase. Patients transported for community bases in operation greater than one year (Same-Base Transports) decreased by 2%, or 318 transports, while weather cancellations for these same bases increased by 1,250 transports compared with the prior-year quarter. Requests for community-based service increased 4% for bases open greater than one year. Net revenue per community-based transport decreased less than 1% from $11,353 to $11,298 in the current-year quarter due to deterioration in payer mix and collection rate net of the benefit of price increases.

Maintenance expense, excluding tourism operations, increased $2.1 million, or 10%, compared with the prior-year quarter, even though total flight volume decreased 1%. Excluding tourism operations, fuel expense decreased $1.9 million compared with the prior-year quarter, while fuel expense per flight hour decreased by 32%. During the second quarter and six-month period ending June 30, 2015, the Company incurred higher expenses related to employee health insurance and workers compensation benefits. On a year-over-year basis, these costs increased $4.0 million and $4.2 million, respectively.

For the second quarter, Air Medical Services revenue increased by 3% to $224.7 million compared with $218.8 million in the prior-year quarter, while its segment net income from continuing operations decreased 6% from $55.5 million to $52.3 million. Tourism revenue increased 10% from $31.4 million to $34.4 million, while Tourism segment net income decreased 14% from $4.9 million to $4.2 million. Maintenance expense in the Tourism division increased $2.3 million, or 50%, despite flight hours increasing only 5%. United Rotorcraft Division's external revenue decreased 40% to $4.4 million compared with $7.4 million in the prior-year quarter, while its external segment net loss was $0.4 million for the second quarter of 2015 compared to $0.1 million for the prior-year quarter.

The Company also provided an update on preliminary July 2015 flight volume. Total community-based transports increased 6% to 5,814 during July 2015, compared with 5,497 in July 2014. July 2015 Same-Base Transports decreased by 53 transports as compared with July 2014. Weather cancellations during July 2015 for these same bases increased by 393 compared with the prior-year month.

Aaron Todd, CEO, stated, "Missed flights due to weather, less favorable payor mix and collection rates, and higher maintenance expense have been headwinds for financial results year-to-date, as well as in the second quarter. Despite this, we remain optimistic for the future because of the continued growth in requests and same-base transports adjusted for weather cancellations, continued interest in hospital-based conversions, opportunities for future acquisitions, a strong balance sheet and solid cash flow as evidenced by the 7% growth in cash receipts per transport over the last twelve months and 45% growth in year-to-date cash flow from continuing operations. With our stock at its current level and our optimism about the future, our Board of Directors authorized a repurchase program of up to $200 million of the Company's common stock."

Shares will be repurchased in the open market at times and amounts considered appropriate by the Company based on factors including price and market conditions. This share repurchase program does not obligate the Company to acquire any particular amount of common stock. The Company's share repurchase program may be suspended, discontinued or resumed at any time. The Company is in the process of amending its credit agreement to allow for the execution of the share repurchase program. The amendment to the credit agreement is expected to be complete in the third quarter.

The Company will discuss these results in a conference call scheduled today at 4:30 p.m. Eastern. Interested parties can access the call by dialing (855) 601-0049 (domestic) or (720) 398-0100 (international) or by accessing the web cast at www.airmethods.com. A replay of the call will be available at (855) 859-2056 (domestic) or (404) 537-3406 (international), access number 77221453, for 3 days following the call and the web cast can be accessed at www.airmethods.com for 30 days.

Air Methods Corporation (www.airmethods.com) is the global leader in air medical transportation. The Air Medical Services Division is the largest provider of air medical transport services in the United States. The United Rotorcraft Division specializes in the design and manufacture of aeromedical and aerospace technology. The Tourism Division is comprised of Sundance Helicopters, Inc. and Blue Hawaiian Helicopters, which provides helicopter tours and charter flights in the Las Vegas/Grand Canyon region and Hawaii, respectively. Air Methods' fleet of owned, leased or maintained aircraft features over 450 helicopters and fixed wing aircraft.

Forward Looking Statements: Forward-looking statements in this news release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Statements in this press release that are "forward-looking statements", including statements we make with regard to the Company's second quarter 2015 operational and financial results, including those related to (i) total community-based patient transports, (ii) same-base transports, (iii) weather cancellations, (iv) net revenue per patient transport, and (v) net income per share, and statements regarding hospital-based conversions, future acquisitions, anticipated amendment to our credit agreement, and share repurchases, are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors, including but not limited to, the Company's completion of its final quarter-end closing and review procedures, the size, structure and growth of the Company's air medical services, United Rotorcraft Division and Tourism Division; the collection rates for patient transports; the continuation and/or renewal of air medical service contracts; weather conditions across the U.S.; development and changes in laws and regulations, including, without limitation, the impact of the Patient Protection and Affordable Care Act; increased regulation of the health care and aviation industry through legislative action and revised rules and standards; and other matters set forth in the Company's filings with the SEC. The Company is under no obligation (and expressly disclaims any obligation) to update or alter its forward-looking statements, whether as a result of new information, future events or otherwise.

Please contact Christina Brodsly at (303) 256-4122 to be included on the Company's e-mail distribution list.

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(unaudited)
June 30, 2015 December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents $ 28,861 13,165
Trade receivables, net 306,114 293,985
Other current assets 83,653 92,691
Total current assets 418,628 399,841
Net property and equipment 751,534 721,981
Other assets, net 273,548 239,483
Total assets $ 1,443,710 1,361,305
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing $ 16,314 11,442
Current portion of indebtedness 69,891 69,781
Accounts payable, accrued expenses and other 115,551 99,044
Total current liabilities 201,756 180,267
Long-term indebtedness 578,001 563,373
Other non-current liabilities 141,410 138,775
Total liabilities 921,167 882,415
Redeemable non-controlling interests 7,582 6,981
Total stockholders' equity 514,961 471,909
Total liabilities and stockholders' equity $ 1,443,710 1,361,305
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share amounts)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Revenue:
Patient transport revenue, net $ 182,260 170,539 344,076 312,401
Air medical services contract revenue 38,775 45,790 79,414 90,551
Tourism revenue 34,444 31,430 62,665 55,768
Product operations 4,450 7,404 8,587 15,224
Dispatch and billing service revenue 3,673 2,474 7,159 4,762
Total revenue 263,602 257,637 501,901 478,706
Expenses:
Operating expenses 160,090 147,496 316,833 292,092
General and administrative 33,622 35,807 69,347 67,132
Depreciation and amortization 21,154 20,123 41,198 40,495
214,866 203,426 427,378 399,719
Operating income 48,736 54,211 74,523 78,987
Interest expense (5,163) (5,569) (10,148) (11,097)
Other, net 1,172 292 1,536 266
Income from continuing operations before income taxes 44,745 48,934 65,911 68,156
Income tax expense (17,339) (19,132) (25,629) (26,777)
Income from continuing operations 27,406 29,802 40,282 41,379
Loss on discontinued operations, net of income taxes (340) (878) (349) (1,403)
Net income 27,066 28,924 39,933 39,976
Income attributable to redeemable non-controlling interests 243 134 482 297
       
Net income attributable to Air Methods Corporation and subsidiaries $ 26,823 28,790 39,451 39,679
Income per common share:
Basic
Continuing operations $ 0.69 0.75 1.01 1.05
Discontinued operations (0.01) (0.02) (0.01) (0.04)
Diluted
Continuing operations $ 0.69 0.75 1.01 1.05
Discontinued operations (0.01) (0.02) (0.01) (0.04)
Weighted average common shares outstanding - basic 39,272,325 39,151,012 39,267,222 39,135,292
Weighted average common shares outstanding - diluted 39,405,889 39,318,480 39,400,193 39,314,872
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Six Months Ended
June 30,
2015 2014
Cash flows from operating activities:
Net income $ 39,933 39,976
Loss from discontinued operations, net of income taxes 349 1,403
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 41,198 40,495
Deferred income tax expense 2,491 9,207
Stock-based compensation 3,604 1,513
Tax benefit from exercise of stock options (160) (1,010)
Loss on disposition of assets 269 1,213
Unrealized loss on derivative instrument 256 64
Loss from equity method investee 353 603
Changes in assets and liabilities, net of effects of acquisitions 19,933 (18,871)
   
Net cash provided by continuing operating activities 108,226 74,593
Net cash used by discontinued operating activities (47) (1,198)
Net cash provided by operating activities 108,179 73,395
Cash flows from investing activities:
Acquisition of subsidiaries -- (3,182)
Acquisition of property and equipment (48,355) (65,752)
Payments for hospital contract conversions (43,481) --
Buy-out of previously leased aircraft (7,569) (17,296)
Proceeds from disposition of equipment 2,664 9,156
Decrease (increase) in other assets (10,741) 447
   
Net cash used by continuing investing activities (107,482) (76,627)
Net cash provided (used) by discontinued investing activities 25 (157)
Net cash used by investing activities (107,457) (76,784)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 408 479
Tax benefit from exercise of stock options 160 1,010
Net borrowings (payments) under line of credit -- 1,000
Payments for financing costs (54) (75)
Proceeds from long-term debt 55,321 34,429
Payment of long-term debt and capital lease obligations (40,861) (40,497)
Proceeds from non-controlling interests -- 98
   
Net cash provided (used) by continuing financing activities 14,974 (3,556)
Net cash provided (used) by discontinued financing activities -- --
Net cash provided (used) by financing activities 14,974 (3,556)
Increase (decrease) in cash and cash equivalents 15,696 (6,945)
Cash and cash equivalents at beginning of period 13,165 9,862
   
Cash and cash equivalents at end of period $ 28,861 2,917
AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2015 2014 2015 2014
Net income attributable to Air Methods Corporation and subsidiaries $ 26,823 28,790 $ 39,451 39,679
Loss on discontinued operations, net of income taxes (340) (878) (349) (1,403)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries 27,163 29,668 39,800 41,082
Interest expense * 5,118 5,533 10,063 11,028
Income tax expense * 17,339 19,132 25,629 26,777
Depreciation and amortization * 21,061 20,038 41,017 40,327
Loss on disposition of assets, net * 531 806 269 1,213
       
EBITDA from continuing operations $ 71,212 75,177 $116,778 120,427
* Excludes amounts attributable to redeemable non-controlling interests

CONTACT: Trent J. Carman, Chief Financial Officer, (303) 792-7591

Source:Air Methods Corporation