DENVER, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, today reported financial results for the quarter ended September 30, 2016.
Third Quarter 2016 Results:
- Revenue of $311.0 million was flat compared to $311.3 million for the third quarter of 2015.
- Diluted earnings per share from continuing operations of $0.82, compared to $1.16 for the third quarter of 2015, a decrease of 29.3%.
- EBITDA from continuing operations of $81.8 million, compared to $105.2 million for the third quarter of 2015, a decrease of 22.2%.
- The company repurchased 1,694,500 shares in the third quarter.
Aaron Todd, CEO of Air Methods, stated, “Patient transports were below expectations in the quarter which impacted earnings. The Company has worked to improve its base transport utilization and to optimize its cost structure by closing and consolidating bases and adding sales resources. These changes have had the desired effect in October as preliminary same-base transports increased approximately 1.2%. We will consider other measures as appropriate.”
“Despite the challenging environment, there were a number of encouraging results to highlight in the quarter. In the Air Medical Services division, Tri-State’s performance improved sequentially, and another hospital base converted to the community base model. Additionally, the recovery in the Tourism division continued with passenger volumes growing 2.6% and segment EBITDA increasing 7.9%.”
Peter Csapo, CFO of Air Methods, added, “In the third quarter, we made significant progress on one of our highest priorities, achieving a sequential reduction in days sales outstanding of 14 days, which led to record quarterly operating cash flow of $81.0 million compared to $17.8 million in the prior year quarter.”
Third Quarter Performance by Segment
For the third quarter, Air Medical Services (AMS) revenue increased 0.4% to $267.7 million compared to $266.8 million in the prior-year quarter. The acquisition of Tri-State Care Flight (TSCF) added $14.0 million in revenues. Excluding TSCF, revenues declined 4.9%. Key operating statistics include:
| 3Q16 | 3Q15 | YOY Change (%) | |||||||
| Transports | 18,478 | 17,330 | 6.6 | % | |||||
| Transports + Weather Cancellations | 25,085 | 22,794 | 10.1 | % | |||||
| Same-Base Transports (SBTs) | 15,352 | 16,764 | (8.4 | %) | |||||
| SBT + Weather Cancellations | 21,084 | 22,101 | (4.6 | %) | |||||
| Net Revenue per Transport | $ | 12,421 | $ | 12,839 | (3.3 | %) | |||
Flight center and aircraft operations expenses increased 15.7% to $154.5 million in the current quarter compared to $133.5 million in the prior year quarter. TSCF added $9.4 million in flight center and aircraft operations expenses. Excluding TSCF, these expenses increased 8.6% despite revenues declining 4.9% for the corresponding AMS operations. AMS segment EBITDA decreased 22.5% to $83.9 million compared to $108.2 million for the third quarter of 2015. On a stand-alone basis, TSCF lost $0.2 million (pre-tax) in the quarter. This does not include the positive contribution from transports retained at consolidated bases. Including retained transports, the Company estimates TSCF added $0.01 in diluted EPS in the quarter and $0.06 in diluted EPS year-to-date.
Tourism revenues increased 7.1% to $38.8 million in the current quarter compared to $36.2 million in the prior-year quarter. Total passengers increased 2.6% to 137,595 during the current quarter compared to 134,157 in the prior-year quarter. Total revenue per passenger increased 4.4% to $282 in the current quarter compared to $270 in the prior-year quarter. Tourism operating expenses increased 9.7% to $24.7 million in the current quarter compared to $22.5 million in the prior-year quarter. Tourism segment EBITDA increased 7.9% to $9.8 million in the current quarter compared to EBITDA of $9.1 million in the prior-year quarter.
United Rotorcraft’s external revenue declined by 45.9% to $4.5 million in the current quarter compared to $8.4 million in the prior-year quarter. Its segment EBITDA declined to just above breakeven from $2.1 million in the prior year period.
Basic and diluted earnings per share from continuing operations for the nine-month period ended September 30, 2016 and the three- and nine-month periods ended September 30, 2015 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 quarter ended September 30, 2016 were not impacted by the adjustment.
Share Repurchase Program
During the third quarter, the Company repurchased 1.7 million shares for $58.1 million bringing the total number and dollar amount of shares repurchased since the program was initiated to 3.1 million and $109.9 million, respectively. The company presently has $90.1 million remaining on its authorized program.
4Q16 Update
The Company also provided an update on preliminary October 2016 air medical and tourism flight volume.
| Air Medical | Oct-16 | Oct-15 | YOY Change (%) | ||||
| Transports | 6,499 | 5,842 | 11.2 | % | |||
| Transports + Weather Cancellations | 8,013 | 7,527 | 6.5 | % | |||
| Same-Base Transports (SBTs) | 5,402 | 5,340 | 1.2 | % | |||
| SBT + Weather Cancellations | 6,728 | 6,915 | -2.7 | % | |||
| Tourism | Oct-16 | Oct-15 | YOY Change (%) | ||||
| Passengers | 41,293 | 40,832 | 1.1 | % | |||
2016 Outlook
Due to the softness in air medical volumes, the Company believes EBITDA in the mid-$300 million range in 2016 is no longer achievable.
Other
The company identified an immaterial accounting error in its historical financial statements that had no impact on the income statement in 2016 but did result in minor adjustments to the balance sheet and income statement in prior periods. Additional details will be available in the 10-Q.
Third 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 5511261, 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 fiscal year 2016; and (ii) preliminary results of community-based transports, same-base transports and weather cancellations and tourism passengers for October 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 fourth 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; requests for air medical services; shifts in payer mix resulting in a decrease of the number of privately insured transports, execution of the integration plan for Tri-State Care Flight; the continuation and/or renewal of air medical service contracts; general trends in the health care industry; 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.
CONTACTS: Peter P. Csapo, Chief Financial Officer, (peter.csapo@airmethods.com). Please contact Christina Brodsly at (christina.brodsly@airmethods.com) 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) | |||||||
| September 30, 2016 | December 31, 2015 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 7,417 | 5,808 | ||||
| Trade receivables, net | 385,747 | 360,542 | |||||
| Other current assets | 107,976 | 91,251 | |||||
| Total current assets | 501,140 | 457,601 | |||||
| Net property and equipment | 872,792 | 799,656 | |||||
| Other assets, net | 428,989 | 278,693 | |||||
| Total assets | $ | 1,802,921 | 1,535,950 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
| Current liabilities: | |||||||
| Notes payable related to aircraft pending long-term financing | $ | 7,229 | 2,955 | ||||
| Current portion of indebtedness | 72,963 | 58,304 | |||||
| Accounts payable, accrued expenses and other | 102,119 | 87,211 | |||||
| Total current liabilities | 182,311 | 148,470 | |||||
| Long-term indebtedness | 855,464 | 635,615 | |||||
| Other non-current liabilities | 214,179 | 179,129 | |||||
| Total liabilities | 1,251,954 | 963,214 | |||||
| Redeemable non-controlling interests | - | 8,550 | |||||
| Total stockholders' equity | 550,967 | 564,186 | |||||
| Total liabilities and stockholders' equity | $ | 1,802,921 | 1,535,950 | ||||
| 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, | |||||||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||||||
| Revenue: | ||||||||||||||||||||
| Patient transport revenue, net | $ | 229,906 | 222,842 | 643,048 | 561,670 | |||||||||||||||
| Air medical services contract revenue | 34,563 | 40,329 | 102,382 | 119,743 | ||||||||||||||||
| Tourism revenue | 38,781 | 36,212 | 98,242 | 98,877 | ||||||||||||||||
| Product operations | 4,536 | 8,379 | 18,899 | 16,966 | ||||||||||||||||
| Dispatch and billing service revenue | 3,226 | 3,580 | 10,411 | 10,739 | ||||||||||||||||
| Total revenue | 311,012 | 311,342 | 872,982 | 807,995 | ||||||||||||||||
| Expenses: | ||||||||||||||||||||
| Operating expenses | 189,094 | 168,830 | 532,859 | 485,663 | ||||||||||||||||
| General and administrative | 41,079 | 39,351 | 120,463 | 108,698 | ||||||||||||||||
| Depreciation and amortization | 23,587 | 20,884 | 69,652 | 62,082 | ||||||||||||||||
| 253,760 | 229,065 | 722,974 | 656,443 | |||||||||||||||||
| Operating income | 57,252 | 82,277 | 150,008 | 151,552 | ||||||||||||||||
| Interest expense | (8,146 | ) | (4,893 | ) | (23,854 | ) | (15,041 | ) | ||||||||||||
| Other, net | 585 | (266 | ) | 1,359 | 1,270 | |||||||||||||||
| Income from continuing operations before income taxes | 49,691 | 77,118 | 127,513 | 137,781 | ||||||||||||||||
| Income tax expense | (19,077 | ) | (30,235 | ) | (49,494 | ) | (53,843 | ) | ||||||||||||
| Income from continuing operations | 30,614 | 46,883 | 78,019 | 83,938 | ||||||||||||||||
| Loss on discontinued operations, net of income taxes | - | (29 | ) | - | (378 | ) | ||||||||||||||
| Net income | 30,614 | 46,854 | 78,019 | 83,560 | ||||||||||||||||
| Income attributable to redeemable non-controlling interests | - | 202 | (30 | ) | 684 | |||||||||||||||
| Net income attributable to Air Methods Corporation and subsidiaries | $ | 30,614 | 46,652 | 78,049 | 82,876 | |||||||||||||||
| Income per common share: | ||||||||||||||||||||
| Basic | ||||||||||||||||||||
| Continuing operations | $ | 0.82 | 1.17 | 2.03 | 2.10 | |||||||||||||||
| Discontinued operations | - | - | - | (0.01 | ) | |||||||||||||||
| Diluted | ||||||||||||||||||||
| Continuing operations | $ | 0.82 | 1.16 | 2.02 | 2.09 | |||||||||||||||
| Discontinued operations | - | - | - | (0.01 | ) | |||||||||||||||
| Weighted average common shares outstanding - basic | 37,354,787 | 39,293,453 | 38,181,918 | 39,276,062 | ||||||||||||||||
| Weighted average common shares outstanding - diluted | 37,413,828 | 39,420,354 | 38,260,743 | 39,408,239 | ||||||||||||||||
| AIR METHODS CORPORATION AND SUBSIDIARIES | ||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Nine Months Ended | ||||||||||||
| September 30, | ||||||||||||
| 2016 | 2015 | |||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net income | $ | 78,019 | 83,560 | |||||||||
| Loss from discontinued operations, net of income taxes | 378 | |||||||||||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
| Depreciation and amortization | 69,652 | 62,082 | ||||||||||
| Deferred income tax expense | 37,878 | 4,376 | ||||||||||
| Stock-based compensation | 5,129 | 5,733 | ||||||||||
| Amortization of debt issuance costs | 929 | 697 | ||||||||||
| Loss on disposition of assets | 564 | 2,876 | ||||||||||
| Unrealized loss on derivative instrument | (531 | ) | 369 | |||||||||
| Loss from equity method investee | 395 | 1,193 | ||||||||||
| Changes in assets and liabilities, net of effects of acquisitions | (18,732 | ) | (35,053 | ) | ||||||||
| Net cash provided by continuing operating activities | 173,303 | 126,211 | ||||||||||
| Net cash used by discontinued operating activities | - | (100 | ) | |||||||||
| Net cash provided by operating activities | 173,303 | 126,111 | ||||||||||
| Cash flows from investing activities: | ||||||||||||
| Acquisition of subsidiaries | (225,519 | ) | - | |||||||||
| Acquisition of property and equipment | (74,025 | ) | (95,494 | ) | ||||||||
| Payments for hospital contract conversions | - | (43,481 | ) | |||||||||
| Buy-out of previously leased aircraft | (13,123 | ) | (9,519 | ) | ||||||||
| Proceeds from disposition of equipment | 6,209 | 3,642 | ||||||||||
| Decrease (increase) in other assets | (3,194 | ) | (11,597 | ) | ||||||||
| Net cash used by continuing investing activities | (309,652 | ) | (156,449 | ) | ||||||||
| Net cash provided (used) by discontinued investing activities | - | 25 | ||||||||||
| Net cash used by investing activities | (309,652 | ) | (156,424 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from issuance of common stock, net | 803 | 409 | ||||||||||
| Purchases of common stock | (96,424 | ) | - | |||||||||
| Net borrowings (payments) under line of credit | 15,000 | - | ||||||||||
| Payments for financing costs | (73 | ) | (4,472 | ) | ||||||||
| Proceeds from long-term debt | 276,000 | 105,525 | ||||||||||
| Payment of long-term debt and capital lease obligations | (57,348 | ) | (69,351 | ) | ||||||||
| Net cash provided (used) by continuing financing activities | 137,958 | 32,111 | ||||||||||
| Net cash provided (used) by discontinued financing activities | - | - | ||||||||||
| Net cash provided (used) by financing activities | 137,958 | 32,111 | ||||||||||
| Increase (decrease) in cash and cash equivalents | 1,609 | 1,798 | ||||||||||
| Cash and cash equivalents at beginning of period | 5,808 | 13,165 | ||||||||||
| Cash and cash equivalents at end of period | $ | 7,417 | 14,963 | |||||||||
| AIR METHODS CORPORATION AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF NET INCOME TO EBITDA | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income attributable to Air Methods Corporation and subsidiaries | $ | 30,614 | 46,652 | $ | 78,049 | 82,876 | ||||||||||
| Loss on discontinued operations, net of income taxes | - | (29 | ) | - | (378 | ) | ||||||||||
| Net income from continuing operations attributable to Air Methods Corporation and subsidiaries | 30,614 | 46,681 | 78,049 | 83,254 | ||||||||||||
| Interest expense * | 8,146 | 4,857 | 23,854 | 14,920 | ||||||||||||
| Income tax expense * | 19,077 | 30,235 | 49,494 | 53,843 | ||||||||||||
| Depreciation and amortization * | 23,587 | 20,783 | 69,652 | 61,800 | ||||||||||||
| Loss on disposition of assets, net * | 386 | 2,607 | 564 | 2,876 | ||||||||||||
| EBITDA from continuing operations | $ | 81,810 | 105,163 | $ | 221,613 | 216,693 | ||||||||||
| * Excludes amounts attributable to redeemable non-controlling interests | ||||||||||||||||
| AIR METHODS CORPORATION AND SUBSIDIARIES | ||||||||||||||||
| RECONCILIATION OF AIR MEDICAL SERVICES DIVISION NET INCOME TO EBITDA | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
| (unaudited) | ||||||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||||||
| September 30, | September 30, | |||||||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||||||
| Net income attributable to Air Methods Corporation and subsidiaries | $ | 57,333 | 85,909 | $ | 159,771 | 164,507 | ||||||||||
| Loss on discontinued operations, net of income taxes | - | (29 | ) | - | (378 | ) | ||||||||||
| Net income from continuing operations attributable to Air Methods Corporation and subsidiaries | 57,333 | 85,938 | 159,771 | 164,885 | ||||||||||||
| Interest expense | 6,488 | 3,747 | 19,090 | 11,169 | ||||||||||||
| Income tax expense | - | - | - | - | ||||||||||||
| Depreciation and amortization | 19,808 | 17,412 | 58,373 | 52,026 | ||||||||||||
| Loss (gain) on disposition of assets, net | 252 | 1,085 | (106 | ) | 1,360 | |||||||||||
| EBITDA from continuing operations | $ | 83,881 | 108,182 | $ | 237,128 | 229,440 | ||||||||||
| AIR METHODS CORPORATION AND SUBSIDIARIES | ||||||||||||
| RECONCILIATION OF TOURISM DIVISION NET INCOME TO EBITDA | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Net income from continuing operations attributable to Air Methods Corporation and subsidiaries | $ | 6,255 | 4,900 | $ | 8,739 | 9,645 | ||||||
| Interest expense * | 1,070 | 747 | 3,185 | 2,318 | ||||||||
| Income tax expense * | - | - | - | - | ||||||||
| Depreciation and amortization * | 2,317 | 1,901 | 6,898 | 5,509 | ||||||||
| Loss on disposition of assets, net * | 141 | 1,522 | 684 | 1,516 | ||||||||
| EBITDA from continuing operations | $ | 9,783 | 9,070 | $ | 19,506 | 18,988 | ||||||
| * Excludes amounts attributable to redeemable non-controlling interests | ||||||||||||
| AIR METHODS CORPORATION AND SUBSIDIARIES | ||||||||||||
| RECONCILIATION OF UNITED ROTORCRAFT DIVISION NET INCOME TO EBITDA | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Quarter Ended | Nine Months Ended | |||||||||||
| September 30, | September 30, | |||||||||||
| 2016 | 2015 | 2016 | 2015 | |||||||||
| Net income (loss) from continuing operations attributable to Air Methods Corporation and subsidiaries | $ | (824 | ) | 1,182 | $ | 281 | 2,095 | |||||
| Interest expense | - | - | - | - | ||||||||
| Income tax expense | - | - | - | - | ||||||||
| Depreciation and amortization | 853 | 873 | 2,598 | 2,529 | ||||||||
| Loss on disposition of assets, net | - | - | - | - | ||||||||
| EBITDA from continuing operations | $ | 29 | 2,055 | $ | 2,879 | 4,624 | ||||||