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Air Methods Reports Second Quarter 2016 Results

DENVER, Colo., Aug. 04, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, today reported financial results for the quarter ended June 30, 2016.

Second Quarter 2016 Results:

  • Revenue of $292.6 million, compared to $263.6 million for the second quarter of 2015, an increase of 11.0%.
  • Diluted earnings per share from continued operations of $0.70, compared to $0.69 for the second quarter of 2015, an increase of 1.4%.
  • EBITDA from continuing operations of $76.2 million, compared to $71.2 million for the second quarter of 2015, an increase of 7.0%.
  • The company repurchased 688,210 shares in the second quarter and an additional 718,000 shares in the third quarter through August 3, 2016.

Aaron Todd, CEO of Air Methods, stated, “While we continued to grow the company with 11.0% top line growth in the second quarter, lower than planned air medical transport and tourism passenger volumes resulted in weaker earnings growth. The accelerated training for Tri-State employees is mostly complete, resulting in improved in-service rates and transports in July. Tourism passenger volumes also have recovered in July, declining only 1.6% over the prior year. With these issues now behind us, we are still positioned to achieve our financial targets for the full year.”

Second Quarter Performance by Segment

For the second quarter, Air Medical Services (AMS) revenue increased by 12.6% to $252.9 million compared to $224.7 million in the prior-year quarter. The acquisition of Tri-State Care Flight (TSCF) added $11.2 million in revenues. Excluding TSCF, revenues grew 7.6%. Key operating statistics include:

2Q16 2Q15 YOY Change (%)
Transports 18,662 16,105 15.9%
Transports + Weather Cancellations 24,626 22,071 11.6%
Same-Base Transports (SBTs) 15,464 15,397 0.4%
SBT + Weather Cancellations 20,544 21,120 -2.7%
Net Revenue per Transport$11,516 $11,298 1.9%

Flight center and aircraft operations expenses increased 11.1% to $144.2 million in the current quarter compared to $129.8 million in the prior year quarter. TSCF added $8.6 million in flight center and aircraft operations expenses. Excluding TSCF, these expenses increased 4.4% despite revenues growing 7.6% for the corresponding AMS operations. Drivers of the margin expansion include the Company’s investment in its fleet and lower fuel prices. AMS segment net income increased 6.6% to $55.4 million compared to $51.9 million for the second quarter of 2015. On a stand-alone basis, TSCF lost $3.2 million (pre-tax) in the quarter. This does not include the positive contribution from transports retained at consolidated bases.

Tourism revenues decreased 6.4% to $32.2 million in the current quarter compared to $34.4 million in the prior-year quarter. Total passengers decreased 9.7% to 114,615 during the current quarter compared to 126,953 in the prior-year quarter. Total revenue per passenger increased 3.7% to $281 in the current quarter compared to $271 in the prior-year quarter. Tourism operating expenses decreased 4.1% to $22.1 million in the current quarter compared to $23.1 million in the prior-year quarter. The year-over-year decline was driven primarily by a reduction in maintenance and fuel expense. Tourism segment net income was $2.0 million in the current quarter compared to net income of $3.9 million in the prior-year quarter.

United Rotorcraft’s external revenue increased 66.4% to $7.4 million in the current quarter compared to $4.4 million in the prior-year quarter. Its segment external earnings improved from a loss of $0.4 million in the year-ago period to a loss of $0.2 million in the current-year quarter.

Share Repurchase Program

During the second quarter and current quarter-to-date through August 3, 2016, the Company repurchased 1.4 million shares for $50.6 million bringing the total number and amount of shares repurchased since the program was initiated to 2.1 million and $77.5 million, respectively. The company presently has $122.5 million remaining on its authorized program.

3Q16 Update

The Company also provided an update on preliminary July 2016 air medical and tourism flight volume. Total community-based transports increased 9.6% to 6,376 during July 2016 compared to 5,816 in July 2015. July 2016 same-base transports decreased by 354 transports as compared with July 2015. Weather cancellations during July 2016 for these same bases decreased by 6 compared with the prior-year month.

Tourism passengers declined 1.6% to 49,203 during July 2016 compared to 50,015 in July 2015.

Basic and diluted earnings per share from continuing operations for the six-month period ended June 30, 2016 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 is not decreased for the valuation adjustment, earnings per share are required to be calculated after decreasing net income for the change in valuation. Basic and diluted earnings per share in the quarters-ended June 30, 2016 and 2015 and six-month period ended June 30, 2015 were not impacted by the adjustment.

Second Quarter 2016 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 52621462, 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 (i) expected financial results for 2016; and (ii) preliminary results of community-based transports, same-base transports and weather cancellations and tourism passengers for July 2016, 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 third quarter 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; collection of future price increases for patient transports; shifts in payer mix resulting in a decrease of the number of privately insured 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, 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.

– FINANCIAL STATEMENTS ATTACHED –

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(unaudited)
June 30, 2016 December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents$6,619 5,808
Trade receivables, net 414,470 376,300
Other current assets 83,724 91,251
Total current assets 504,813 473,359
Net property and equipment 866,950 799,656
Other assets, net 435,889 278,693
Total assets$1,807,652 1,551,708
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing$- 2,955
Current portion of indebtedness 70,187 58,304
Accounts payable, accrued expenses and other 95,453 87,211
Total current liabilities 165,640 148,470
Long-term indebtedness 865,397 635,615
Other non-current liabilities 190,348 185,198
Total liabilities 1,221,385 969,283
Redeemable non-controlling interests 155 8,550
Total stockholders' equity 586,112 573,875
Total liabilities and stockholders' equity$1,807,652 1,551,708


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,
2016 2015 2016 2015
Revenue:
Patient transport revenue, net$ 215,310 182,260 413,142 344,076
Air medical services contract revenue 34,175 38,775 67,819 79,414
Tourism revenue 32,234 34,444 59,461 62,665
Product operations 7,406 4,450 14,363 8,587
Dispatch and billing service revenue 3,447 3,673 7,185 7,159
Total revenue 292,572 263,602 561,970 501,901
Expenses:
Operating expenses 177,341 160,090 343,765 316,833
General and administrative 39,992 33,622 79,384 69,347
Depreciation and amortization 23,499 21,154 46,065 41,198
240,832 214,866 469,214 427,378
Operating income 51,740 48,736 92,756 74,523
Interest expense (7,908) (5,163) (15,708) (10,148)
Other, net 464 1,172 774 1,536
Income from continuing operations before income taxes 44,296 44,745 77,822 65,911
Income tax expense (17,315) (17,339) (30,417) (25,629)
Income from continuing operations 26,981 27,406 47,405 40,282
Loss on discontinued operations, net of income taxes - (340) - (349)
Net income 26,981 27,066 47,405 39,933
Income attributable to redeemable non-controlling interests (1) 243 (30) 482
Net income attributable to Air Methods Corporation and subsidiaries$ 26,982 26,823 47,435 39,451
Income per common share:
Basic
Continuing operations$ 0.70 0.69 1.21 1.01
Discontinued operations - (0.01) - (0.01)
Diluted
Continuing operations$ 0.70 0.69 1.20 1.01
Discontinued operations - (0.01) - (0.01)
Weighted average common shares outstanding - basic 38,396,241 39,272,325 38,600,029 39,267,222
Weighted average common shares outstanding - diluted 38,461,238 39,405,889 38,664,976 39,400,193


AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
Six Months Ended
June 30,
2016 2015
Cash flows from operating activities:
Net income$ 47,405 39,933
Loss from discontinued operations, net of income taxes - 349
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 46,065 41,198
Deferred income tax expense 7,003 2,491
Stock-based compensation 3,140 3,604
Loss on disposition of assets 178 269
Unrealized loss (gain) on derivative instrument (970) 256
Loss from equity method investee 264 353
Changes in assets and liabilities, net of effects of acquisitions (10,746) 19,933
Net cash provided by continuing operating activities 92,339 108,386
Net cash used by discontinued operating activities - (47)
Net cash provided by operating activities 92,339 108,339
Cash flows from investing activities:
Acquisition of subsidiaries (225,519) -
Acquisition of property and equipment (57,675) (48,355)
Payments for hospital contract conversions - (43,481)
Buy-out of previously leased aircraft (10,529) (7,569)
Proceeds from disposition of equipment 5,189 2,664
Decrease (increase) in other assets (6,542) (10,741)
Net cash used by continuing investing activities (295,076) (107,482)
Net cash provided (used) by discontinued investing activities - 25
Net cash used by investing activities (295,076) (107,457)
Cash flows from financing activities:
Proceeds from issuance of common stock, net 803 408
Purchases of common stock (38,288) -
Net borrowings (payments) under line of credit 8,000.00 -
Payments for financing costs (68) (54)
Proceeds from long-term debt 271,792 55,321
Payment of long-term debt and capital lease obligations (38,691) (40,861)
Net cash provided (used) by continuing financing activities 203,548 14,814
Net cash provided (used) by discontinued financing activities - -
Net cash provided (used) by financing activities 203,548 14,814
Increase (decrease) in cash and cash equivalents 811 15,696
Cash and cash equivalents at beginning of period 5,808 13,165
Cash and cash equivalents at end of period$ 6,619 28,861


AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
Quarter Ended Six Months Ended
June 30, June 30,
2016 2015 2016 2015
Net income attributable to Air Methods Corporation and subsidiaries$26,982 26,823 $47,435 39,451
Loss on discontinued operations, net of income taxes - (340) - (349)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries 26,982 27,163 47,435 39,800
Interest expense * 7,908 5,118 15,708 10,063
Income tax expense * 17,315 17,339 30,417 25,629
Depreciation and amortization * 23,499 21,061 46,065 41,017
Loss on disposition of assets, net * 508 531 178 269
EBITDA from continuing operations$76,212 71,212 $139,803 116,778
* Excludes amounts attributable to redeemable non-controlling interests

CONTACTS: Peter P. Csapo, Chief Financial Officer, (303) 792-7561.

Source:Air Methods Corporation