Air Methods Reports Second Quarter 2016 Results

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DENVER, Colo., Aug. 04, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation 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.

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