Air Methods Reports Fourth Quarter and 2015 Full Year Results

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DENVER, Feb. 25, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation 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.

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