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Air Methods Reports Fourth Quarter and 2015 Full Year Results

DENVER, Feb. 25, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, today reported financial results for the quarter and year ended December 31, 2015.

Q4-2015Q4-2014YOY
Change (%)
12-Months
Ending
12/31/15
12-Months
Ending
12/31/14
YOY
Change (%)
Revenue$272.4
million
$249.2
Million
9.3%$1,085.7
million
$1,004.8
million
8.1%
Diluted EPS from
Continuing Operations
$0.57 $0.59 -3.4%$2.74 $2.56 7.0%


Aaron Todd, CEO of Air Methods, stated, “We are pleased with our fourth quarter results given the severe weather experienced in the quarter and $4.6 million in costs that were higher than normal. Same-base transports declined by 223 in the quarter, while same-base weather cancellations increased by 852. The impact to revenue of the same-base transport decline was approximately $2.8 million. Adjusting for this and the aforementioned costs, we estimate both revenue and earnings growth would have exceeded 10% in the quarter. Demand for both our air medical services and our tourism business remains strong, our pipeline of potential hospital base conversions is full, and we have a solid balance sheet that can be used either for additional acquisitions and/or to repurchase shares as we did in December and January.”

Fourth quarter 2015 results include a $1.8 million loss related to workers compensation claims from accidents in 2015, $1.0 million in acquisition-related costs, $1.0 million in severance, a $0.4 million loss related to the disposition of assets, and $0.4 million in other non-operational costs. This compares to a loss of $0.7 million from similar costs in the prior-year quarter. All losses are pre-tax.

Basic and diluted earnings per share from continuing operations for the twelve months ended December 31, 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 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 twelve-month period, basic and diluted earnings per share increased by $0.05 for the same type of adjustment.

Fourth Quarter Performance by Segment

For the fourth quarter, Air Medical Services (AMS) revenue increased by 7.6% to $236.0 million compared to $219.4 million in the prior-year quarter, while its segment net income decreased 2.2% to $49.9 million compared to $51.1 million for the fourth quarter of 2014. Community-based patient transports were 15,817 during the current-year quarter compared to 14,209 in the prior-year quarter, an 11.3% increase. Patients transported for community bases in operation greater than one year (Same-Base Transports) decreased 1.6%, or 223 transports, while weather cancellations for these same bases increased by 852 transports compared to the prior-year period. Same-base requests for community-based service increased 3.8%. Net revenue per patient transport increased 2.2% from $12,238 to $12,508 in the current-year quarter. AMS maintenance expense was 16.0% higher in the current-year quarter compared to the prior-year quarter, while total flight volume increased 3.2%. AMS fuel expense decreased $0.6 million compared to the prior-year quarter, while fuel expense per flight hour decreased 19.6%.

Tourism revenues increased 9.8% to $28.9 million in the current-year quarter compared to $26.3 million in the prior-year quarter. Tourism segment net income was $0.3 million compared to a net loss of $0.4 million in the prior-year quarter. Total passengers increased 10.2% to 104,751 during the current-year quarter compared to 95,064 in the prior-year quarter. Tourism maintenance expense increased $1.2 million or 19.9% in the current-year quarter compared to the prior-year quarter, while total flight volume increased 8.0%. Tourism fuel expense per flight hour decreased 23.8%.

United Rotorcraft’s external revenue increased 119.7% to $7.4 million compared to $3.4 million in the prior-year quarter. Its segment external earnings improved from a loss of $2.7 million in the year-ago period to a loss of $0.1 million in the current-year quarter.

Tri-State Care Flight

As previously announced, the company completed the acquisition of Tri-State Care Flight (“Tri-State”) on January 19th. Tri-State generated net revenue of approximately $81.0 million for the fiscal year ended Dec. 31, 2015. The transaction is expected to be immediately accretive to Air Methods’ earnings per share by more than $0.20 in the first year and more than $0.30 in the second year.

Share Repurchase Program

In the fourth quarter 2015 and the first quarter 2016, the company has repurchased 640,010 shares for $25.9 million, leaving $174.1 million remaining on the authorized repurchase program.

1Q16 Update

The Company also provided an update on preliminary January and February 2016 flight volume. Total community-based transports increased 14.6% to 5,216 during January 2016 compared to 4,550 in January 2015. January 2016 same-base transports were virtually flat on a weather-adjusted basis. Flight volume in February is on pace to increase approximately 27.0%.

Before considering the impact of Tri-State, preliminary net revenue per patient transport in January 2016 decreased 15.0% to $10,841 from $12,754 in January 2015. In the first quarter of 2015, net revenue per patient transport ranged from $10,055 to $12,754 and averaged $11,651.

Fourth 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 40033031, 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 provide 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 approximately 500 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 demand for the Company’s air medical services and tourism, the Tri-State acquisition being immediately accretive to the Company’s earnings per share, the Company’s January and February 2016 operational and financial results, including those related to (i) total community-based patient transports, (ii) same-base transports, (iii) weather cancellations, and (iv) net revenue per patient transport, and statements regarding hospital-based conversions, future acquisitions, 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.

Important Additional Information and Where to Find It

Air Methods intends to file a proxy statement with the SEC in connection with the solicitation of proxies for the 2016 Annual Meeting (the “2016 Proxy Statement”). AIR METHODS STOCKHOLDERS ARE URGED TO READ THE 2016 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), THE ACCOMPANYING WHITE PROXY CARD AND ANY OTHER RELEVANT DOCUMENTS THAT AIR METHODS WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

The participants in the solicitation of proxies from Air Methods’ stockholders in connection with the 2016 Annual Meeting may include the directors and director nominees of Air Methods: George W. Belsey, Ralph J. Bernstein, Mark D. Carleton, John J. Connolly, Jeffrey A. Dorsey, Claire M. Gulmi, C. David Kikumoto, Carl H. McNair, Jr., Morad Tahbaz, Aaron D. Todd and Jessica Garfola Wright. In addition, the following persons may be participating in such solicitation: Michael D. Allen (President, Domestic Air Medical Services), Trent J. Carman (Chief Financial Officer), David M. Doerr (EVP, Business Development) and Crystal L. Gordon (General Counsel, Secretary, and Senior Vice President).

As of the date of this press release, the participants may be deemed to beneficially own (within the meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) the number of shares of common stock, par value $0.06 per share, of Air Methods following their name: George W. Belsey: 77,092, Ralph J. Bernstein: 2,752,565, Mark D. Carleton: 30,343, John J. Connolly: 22,023, Jeffrey A. Dorsey: 22,023, Claire M. Gulmi: 4,506, C. David Kikumoto: 87,437, Carl H. McNair, Jr.: 181,210, Morad Tahbaz: 56,172, Aaron D. Todd: 94,677, Jessica Garfola Wright: 0, Michael D. Allen: 35,808, Trent J. Carman: 79,360, David M. Doerr: 30,457, and Crystal L. Gordon: 17,434.

Shareholders will be able to obtain, free of charge, copies of the 2016 Proxy Statement and any other documents filed by Air Methods with the SEC in connection with the 2016 Annual Meeting at the SEC’s website (www.sec.gov), at Air Methods’ website (www.airmethods.com) or by writing to Air Methods’ Corporate Secretary at Air Methods, 7211 South Peoria Street, Englewood, Colorado 80112, or by calling Air Methods’ Corporate Secretary at (303) 792-7400.

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)
December 31, 2015 December 31, 2014
ASSETS
Current assets:
Cash and cash equivalents$5,808 $13,165
Trade receivables, net 376,300 293,985
Other current assets 91,251 92,691
Total current assets 473,359 399,841
Net property and equipment 799,656 721,981
Other assets, net 284,266 239,483
Total assets$1,557,281 $1,361,305
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing$ 2,955 $ 11,442
Current portion of indebtedness 59,498 69,781
Accounts payable, accrued expenses and other 87,211 77,617
Total current liabilities 149,664 158,840
Long-term indebtedness 639,994 563,373
Other non-current liabilities 185,198 160,202
Total liabilities 974,856 882,415
Redeemable non-controlling interests 8,550 6,981
Total stockholders' equity 573,875 471,909
Total liabilities and stockholders' equity$1,557,281 $1,361,305


AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Amounts in thousands, except share and per share amounts)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
Revenue:
Patient transport revenue, net$ 198,207 174,343 765,125 676,213
Air medical services contract revenue 34,158 41,915 153,901 176,744
Tourism revenue 28,918 26,327 127,795 116,036
Product operations 7,513 3,383 24,479 24,844
Dispatch and billing service revenue 3,647 3,182 14,386 10,936
Total revenue 272,443 249,150 1,085,686 1,004,773
Expenses:
Operating expenses 170,422 151,098 656,085 603,251
General and administrative 37,693 34,743 146,391 137,477
Depreciation and amortization 21,272 20,100 83,354 80,567
229,387 205,941 885,830 821,295
Operating income 43,056 43,209 199,856 183,478
Interest expense (6,954) (5,311) (21,995) (21,750)
Other, net 786 522 2,056 1,110
Income from continuing operations before income taxes 36,888 38,420 179,917 162,838
Income tax expense (14,370) (14,792) (70,234) (63,460)
Income from continuing operations 22,518 23,628 109,683 99,378
Loss on discontinued operations, net of income taxes (20) (1,974) (398) (3,908)
Net income 22,498 21,654 109,285 95,470
Income (loss) attributable to redeemable non-controlling interests (44) 179 640 599
Net income attributable to Air Methods Corporation and subsidiaries$ 22,542 21,475 108,645 94,871
Income per common share:
Basic
Continuing operations$ 0.57 0.60 2.75 2.57
Discontinued operations - (0.05) (0.01) (0.10)
Diluted
Continuing operations$ 0.57 0.59 2.74 2.56
Discontinued operations - (0.05) (0.01) (0.10)
Weighted average common shares outstanding:
Basic 39,262,268 39,211,958 39,272,585 39,163,080
Diluted 39,418,254 39,367,533 39,420,963 39,348,291


AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Year Ended
December 31,
2015 2014
Cash flows from operating activities:
Net income$ 109,285 95,470
Loss from discontinued oeprations, net of income taxes 398 3,908
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 83,354 80,567
Deferred income tax expense 29,266 45,051
Stock-based compensation 7,458 4,134
Tax benefit from exercise of stock options (312) (1,951)
Loss on disposition of assets 3,291 455
Unrealized loss on derivative instrument 369 70
Loss from equity method investee 1,082 624
Changes in assets and liabilities, net of effects of acquisitions (63,101) (51,027)
Net cash provided by continuing operating activities 171,090 177,301
Net cash used by discontinued operating activities (92) (1,672)
Net cash provided by operating activities 170,998 175,629
Cash flows from investing activities:
Acquisition of subsidiaries - (3,182)
Acquisition of property and equipment (148,999) (119,753)
Acquisition of hospital programs (64,654) -
Buy-out of previously leased aircraft (17,747) (28,751)
Proceeds from disposition of equipment 9,664 19,001
Decrease (increase) in other assets (5,471) 1,316
Net cash used by continuing investing activities (227,207) (131,369)
Net cash provided (used) by discontinued investing activities 25 97
Net cash used by investing activities (227,182) (131,272)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 610 1,422
Tax benefit from exercise of stock options 312 1,951
Payments for purchases of common stock (13,457) -
Net borrowings (payments) under line of credit - (12,000)
Payments for financing costs (4,622) (126)
Proceeds from long-term debt 151,701 89,911
Payment of long-term debt, notes payable, and capital lease obligations (85,717) (122,310)
Proceeds from non-controlling interests - 98
Net cash provided (used) by continuing financing activities 48,827 (41,054)
Net cash provided (used) by discontinued financing activities - -
Net cash provided (used) by financing activities 48,827 (41,054)
Increase (decrease) in cash and cash equivalents (7,357) 3,303
Cash and cash equivalents at beginning of period 13,165 9,862
Cash and cash equivalents at end of period$ 5,808 13,165


AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
Quarter Ended Year Ended
December 31, December 31,
2015 2014 2015 2014
Net income attributable to Air Methods Corporation and subsidiaries$ 22,542 21,475 108,645 94,871
Loss on discontinued operations, net of income taxes (20) (1,974) (398) (3,908)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries 22,562 23,449 109,043 98,779
Interest expense * 6,954 5,272 21,874 21,604
Income tax expense * 14,370 14,792 70,234 63,460
Depreciation and amortization * 21,272 20,013 83,072 80,225
Loss (gain) on disposition of assets, net * 415 (572) 3,292 456
EBITDA from continuing operations$ 65,573 62,954 287,515 264,524
* Excludes amounts attributable to redeemable non-controlling interests




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

Source:Air Methods Corporation