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Air Methods Reports 3Q15 Results

Revenue Increases 12.4% Compared to Prior Year Period

EPS from Continuing Operations Increases 27.5% Compared to Prior Year Period

DENVER, Nov. 5, 2015 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, today reported financial results for the quarter ended September 30, 2015.

Q3-2015 Q3-2014 YOY
Change (%)
9-Months
Ending
9/30/15
9-Months
Ending
9/30/14
YOY
Change (%)
Revenue $311.3
million
$276.9
million
12.4% $813.2
million
$755.6
million
7.6%
Diluted EPS from
Continuing Operations
$1.16 $0.91 27.5% $2.17 $1.96 10.7%

Aaron Todd, CEO of Air Methods, stated, "We are very pleased with our third quarter results, which exceeded expectations. Same-base transports in the Air Medical Services division increased 2.4%. When coupled with the addition of fourteen new bases since the third quarter of 2014 from both Greenfields and base conversions, total patient transports increased 9.7%. The Company's tourism business also performed well. The number of passengers grew 6.9% year-over-year and bottom-line results increased 47.4% aided by lower fuel and maintenance costs. Primarily as a result of these factors, the Company's quarterly diluted EPS from continuing operations grew 27.5% year-over-year. With the conversion of eight more hospital bases in early October, our momentum remains strong."

Third quarter 2015 results include a $2.6 million pre-tax loss related to the disposition of assets. This compares to a pre-tax gain of $0.2 million in the prior-year quarter.

Basic and diluted earnings per share from continuing operations for the quarter and nine months ended September 30, 2015 were decreased by $0.02 for an adjustment to the value of equity put options related to both of our redeemable non-controlling interests in our consolidated subsidiaries. While net income on the consolidated statement of comprehensive income was not decreased for the valuation adjustment, earnings per share are required to be calculated after decreasing net income for the change in valuation. For the prior year three and nine-month period, basic and diluted earnings per share increased by $0.05 for the same type of adjustment.

Third Quarter Performance by Segment

For the third quarter, Air Medical Services (AMS) revenue increased by 12.7% to $266.8 million, compared with $236.7 million in the prior-year quarter, while its segment net income increased 34.6% to $85.9 million, compared to $63.8 million for the third quarter of 2014. Community-based patient transports were 17,330 during the current-year quarter, compared with 15,796 in the prior-year quarter, a 9.7% increase. Patients transported for community bases in operation greater than one year (Same-Base Transports) increased 2.4%, or 367 transports, while weather cancellations for these same bases increased by 53 transports compared with the prior-year period. Same-base requests for community-based service increased 3.6%. Net revenue per community-based transport increased 7.2% from $11,972 to $12,839 in the current-year quarter. AMS maintenance expense was flat in the current-year quarter, compared with the prior-year quarter despite total flight volume increasing 5.7%. AMS fuel expense decreased $0.9 million compared with the prior-year quarter, while fuel expense per flight hour decreased 22.3%.

Tourism revenues increased 6.7% to $36.2 million in the current-year quarter, compared to $33.9 million in the prior-year quarter. Tourism segment net income increased 47.4% to $4.9 million compared with $3.3 million in the prior-year quarter. Total passengers increased 6.9% to 134,157 during the current-year quarter, compared with 125,515 in the prior year quarter. Tourism maintenance expense decreased $0.6 million or 8.3% in the current-year quarter, compared with the prior-year quarter despite total flight volume increasing 3.9%. Tourism fuel expense per flight hour decreased 37.8%.

United Rotorcraft's external revenue increased 36.2% to $8.4 million, compared to $6.2 million in the prior-year quarter. Its segment external earnings improved from a loss of $0.8 million in the year-ago period to income of $0.5 million in the current-year quarter.

Credit Facility Refinancing

In the third quarter 2015, the Company completed the previously announced amendment to its existing credit agreement, expanding its access to capital by $400 million of which up to $200 million can be used to repurchase shares.

October Preliminary Flight Volume

The Company also provided an update on preliminary October 2015 flight volume. Total community-based transports increased 12.3% to 5,840 during October 2015, compared with 5,199 in October 2014. October 2015 Same-Base Transports increased by 20 transports as compared with October 2014. Weather cancellations during October 2015 for these same bases increased by 193 compared with the prior-year month.

Third Quarter 2015 Conference Call

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 54925007, for 3 days following the call and the web cast can be accessed at www.airmethods.com for 30 days. Concurrently, the Company will post a financial supplement that contains final operating statistics on its website, www.airmethods.com.

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 preliminary October 2015 operational results, including those related to (i) total community-based patient transports, (ii) same-base transports, and (iii) weather cancellations, and statements regarding potential 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)
September 30, 2015 December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents $ 14,963 13,165
Trade receivables, net 359,768 293,985
Other current assets 92,562 92,691
Total current assets 467,293 399,841
Net property and equipment 768,598 721,981
Other assets, net 273,779 239,483
Total assets $ 1,509,670 1,361,305
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing $ 11,112 11,442
Current portion of indebtedness 72,433 69,781
Accounts payable, accrued expenses and other 111,744 99,044
Total current liabilities 195,289 180,267
Long-term indebtedness 597,249 563,373
Other non-current liabilities 145,920 138,775
Total liabilities 938,458 882,415
Redeemable non-controlling interests 8,585 6,981
Total stockholders' equity 562,627 471,909
Total liabilities and stockholders' equity $ 1,509,670 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 Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Revenue:
Patient transport revenue, net $ 222,842 189,469 566,918 501,870
Air medical services contract revenue 40,329 44,278 119,743 134,829
Tourism revenue 36,212 33,941 98,877 89,709
Product operations 8,379 6,237 16,966 21,461
Dispatch and billing service revenue 3,580 2,992 10,739 7,754
Total revenue 311,342 276,917 813,243 755,623
Expenses:
Operating expenses 168,830 160,061 485,663 452,153
General and administrative 39,351 35,602 108,698 102,734
Depreciation and amortization 20,884 19,972 62,082 60,467
229,065 215,635 656,443 615,354
Operating income 82,277 61,282 156,800 140,269
Interest expense (4,893) (5,342) (15,041) (16,439)
Other, net (266) 322 1,270 588
Income from continuing operations before income taxes 77,118 56,262 143,029 124,418
Income tax expense (30,235) (21,891) (55,864) (48,668)
Income from continuing operations 46,883 34,371 87,165 75,750
Loss on discontinued operations, net of income taxes (29) (531) (378) (1,934)
Net income 46,854 33,840 86,787 73,816
Income attributable to redeemable non-controlling interests 202 123 684 420
Net income attributable to Air Methods Corporation and subsidiaries $ 46,652 33,717 86,103 73,396
Income per common share:
Basic
Continuing operations $ 1.17 0.92 2.18 1.97
Discontinued operations -- (0.01) (0.01) (0.05)
Diluted
Continuing operations $ 1.16 0.91 2.17 1.96
Discontinued operations -- (0.01) (0.01) (0.05)
Weighted average common shares outstanding - basic 39,293,453 39,168,873 39,276,062 39,146,609
Weighted average common shares outstanding - diluted 39,420,354 39,343,405 39,408,239 39,329,121
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Nine Months Ended
September 30,
2015 2014
Cash flows from operating activities:
Net income $ 86,787 73,816
Loss from discontinued operations, net of income taxes 378 1,934
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 62,082 60,467
Deferred income tax expense 6,397 17,998
Stock-based compensation 5,733 2,866
Tax benefit from exercise of stock options (184) (1,779)
Loss on disposition of assets 2,876 1,028
Unrealized loss on derivative instrument 369 70
Loss from equity method investee 1,193 738
Changes in assets and liabilities, net of effects of acquisitions (40,301) (38,762)
Net cash provided by continuing operating activities 125,330 118,376
Net cash used by discontinued operating activities (100) (1,843)
Net cash provided by operating activities 125,230 116,533
Cash flows from investing activities:
Acquisition of subsidiaries -- (3,182)
Acquisition of property and equipment (95,494) (87,803)
Payments for hospital contract conversions (43,481) --
Buy-out of previously leased aircraft (9,519) (17,296)
Proceeds from disposition of equipment 3,642 12,378
Decrease (increase) in other assets (10,900) (660)
Net cash used by continuing investing activities (155,752) (96,563)
Net cash provided (used) by discontinued investing activities 25 97
Net cash used by investing activities (155,727) (96,466)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 409 1,190
Tax benefit from exercise of stock options 184 1,779
Net borrowings (payments) under line of credit -- (12,000)
Payments for financing costs (4,472) (81)
Proceeds from long-term debt 105,525 54,503
Payment of long-term debt and capital lease obligations (69,351) (58,586)
Proceeds from non-controlling interests -- 98
Net cash provided (used) by continuing financing activities 32,295 (13,097)
Net cash provided (used) by discontinued financing activities -- --
Net cash provided (used) by financing activities 32,295 (13,097)
Increase (decrease) in cash and cash equivalents 1,798 6,970
Cash and cash equivalents at beginning of period 13,165 9,862
Cash and cash equivalents at end of period $ 14,963 16,832
AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
Quarter Ended Nine Months Ended
September 30, September 30,
2015 2014 2015 2014
Net income attributable to Air Methods Corporation and subsidiaries $ 46,652 33,717 $ 86,103 73,396
Loss on discontinued operations, net of income taxes (29) (531) (378) (1,934)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries 46,681 34,248 86,481 75,330
Interest expense * 4,857 5,304 14,920 16,332
Income tax expense * 30,235 21,891 55,864 48,668
Depreciation and amortization * 20,783 19,893 61,800 60,220
Loss on disposition of assets, net * 2,607 (186) 2,876 1,027
EBITDA from continuing operations $ 105,163 81,150 $ 221,941 201,577
* Excludes amounts attributable to redeemable non-controlling interests

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

Source:Air Methods Corporation