Air Methods Reports Fourth Quarter 2016 Results

DENVER, Feb. 28, 2017 (GLOBE NEWSWIRE) -- Air Methods Corporation AIRM, the global leader in air medical transportation, today reported financial results for the quarter ended December 31, 2016.

Fourth Quarter 2016 Results:

Revenue of $297.5 million, compared to $272.4 million for the fourth quarter of 2015, an increase of 9.2%.
Diluted earnings per share from continuing operations of $0.54, compared to $0.57 for the fourth quarter of 2015, a decrease of 5.3%.
Depreciation and amortization expense of $23.5 million and interest expense of $8.1 million, compared to $21.3 million and $7.0 million for the fourth quarter of 2015, respectively, due primarily to the Tri-State Care Flight (TSCF) acquisition. This represents increases of 10.3% and 17.0%, respectively.
Adjusted EBITDA from continuing operations* (a non-GAAP measure) of $66.4 million, compared to $65.6 million for the fourth quarter of 2015, an increase of 1.2%.

Aaron Todd, CEO of Air Methods, stated, "Patient transports rebounded in the fourth quarter, increasing 11.1% in total and 1.5% on a same-base basis as the Company benefited from changes implemented towards the end of the third quarter and early in the fourth quarter and from more normal weather. We remain focused on driving shareholder value by improving the utilization of the Company's assets, increasing its net revenue per transport through improvements in the Company's revenue cycle operations and increasing the percent of commercial claims that are in network, growing the Company's air medical footprint, and increasing the revenue and profitability of the Tourism operations."

Peter Csapo, CFO of Air Methods, added, "In the fourth quarter, we continued to make significant progress on one of our highest priorities, achieving a year-over-year reduction in DSOs of 6 days to 124 days. When coupled with the 38% reduction in capital expenditures in 2016, the Company's free cash flow* (a non-GAAP measure) for 2016 improved by $111.7 million over the prior year."

* Adjusted EBITDA and free cash flow are non-GAAP measures. Reconciliations of Adjusted EBITDA to net income (loss) and free cash flow to net cash provided by continuing operating activities, the most directly comparable financial measures presented in accordance with GAAP, are set forth in the schedules accompanying this release. See "Non-GAAP Financial Measures."

Fourth Quarter Performance by Segment

For the fourth quarter, Air Medical Services (AMS) revenue increased 11.4% to $262.9 million compared to $236.0 million in the prior-year quarter. Excluding the acquisition of TSCF, revenues increased 7.1%. Key operating statistics include:

	4Q16		4Q15		YOY Change (%)
Transports		17,571		15,817	11.1	%
Transports + Weather Cancellations		23,924		22,945	4.3	%
Same-Base Transports (SBTs)		15,107		14,891	1.5	%
SBT + Weather Cancellations		20,837		21,664	(3.8	%)
Net Revenue per Transport	$	12,875	$	12,508	2.9	%

Flight center and aircraft operations expenses increased 12.3% to $156.6 million in the current quarter compared to $139.4 million in the prior year quarter. AMS maintenance expense increased 13.0% per flight hour during the fourth quarter compared to the prior-year quarter. This was offset partially by a 13.0% decline in the cost per hour for fuel during the fourth quarter compared to the fourth quarter of 2015. AMS segment adjusted EBITDA (a non-GAAP measure) increased 5.8% to $77.0 million compared to $72.7 million for the fourth quarter of 2015.

Tourism revenues increased 2.5% to $29.6 million in the fourth quarter compared to $28.9 million in the prior-year quarter. Total passengers decreased 1.6% to 101,623 during the fourth quarter compared to 103,261 in the prior-year quarter. Total revenue per passenger increased 4.3% to $292 in the fourth quarter compared to $280 in the prior-year quarter. Tourism operating expenses increased 1.5% to $20.7 million in the fourth quarter compared to $20.4 million in the prior-year quarter. Results benefitted from an 18.1% reduction in the maintenance cost per flight hour and a 4.1% reduction in the fuel cost per flight hour in the fourth quarter of 2016 compared to the fourth quarter of 2015. Tourism segment adjusted EBITDA (a non-GAAP measure) increased 18.9% to $4.9 million in the fourth quarter compared to $4.1 million in the prior-year quarter.

United Rotorcraft's external revenue declined by 34.2% to $4.9 million in the fourth quarter compared to $7.4 million in the prior-year quarter. Its segment adjusted EBITDA (a non-GAAP measure) declined in the fourth quarter to a loss of $1.1 million from a gain of $1.5 million in the prior year period.

Share Repurchase Program

The Company did not repurchase shares during the fourth quarter. To date, it has repurchased 3.1 million shares for $109.9 million and has $90.1 million remaining on its authorized program.

Fourth 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 10184903, 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 Company's focus on driving shareholder value by (i) improving utilization of the Company's assets (ii) increasing its net revenue per transport through, among other things, (x) improvements in the Company's revenue cycle operations; and (y) increases in the number of commercial claims that are in-network; (iii) expanding the Company's air medical footprint; and (iv) increasing the revenue and profitability of the Company's Tourism operations; 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; 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.

IMPORTANT ADDITONAL INFORMATION AND WHERE TO FIND IT
Air Methods intends to file a proxy statement with the U.S. Securities and Exchange Commission (the "SEC") with respect to its 2017 Annual Meeting (the "2017 Proxy Statement"). AIR METHODS STOCKHOLDERS ARE STRONGLY ENCOURAGED TO READ THE 2017 PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO), THE ACCOMPANYING WHITE PROXY CARD AND OTHER RELEVANT DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.

Air Methods, its directors, executive officers and other employees may be deemed to be participants in the solicitation of proxies from Air Methods stockholders in connection with the matters to be considered at Air Methods' 2017 Annual Meeting. Information about Air Methods' directors and executive officers is available in Air Methods' proxy statement, dated April 29, 2016, for its 2016 Annual Meeting. To the extent holdings of Air Methods' securities by such directors or executive officers have changed since the amounts printed in the 2016 proxy statement, such changes have been or will be reflected on Statements of Change in Ownership on Form 4 filed with the SEC. More detailed information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the 2017 Proxy Statement and other materials to be filed with the SEC in connection with Air Methods' 2017 Annual Meeting. Stockholders will be able to obtain the 2017 Proxy Statement, any amendments or supplements thereto and other documents filed by Air Methods with the SEC free of charge at the SEC's website at www.sec.gov. Copies also will be available free of charge 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.

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)


		December 31, 2016		December 31, 2015

ASSETS

Current assets:
Cash and cash equivalents	$	5,903	$	5,808
Trade receivables, net		380,249		360,542
Other current assets		100,228		91,251

Total current assets		486,380		457,601

Net property and equipment		878,009		799,656
Other assets, net		424,876		278,693

Total assets	$	1,789,265	$	1,535,950


LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Notes payable related to aircraft pending long-term financing	$	15,179	$	2,955
Current portion of indebtedness		80,584		58,304
Accounts payable, accrued expenses and other		90,133		87,211

Total current liabilities		185,896		148,470

Long-term indebtedness		810,944		635,615
Other non-current liabilities		219,883		179,129

Total liabilities		1,216,723		963,214

Redeemable non-controlling interests		-		8,550

Total stockholders' equity		572,542		564,186

Total liabilities and stockholders' equity	$	1,789,265	$	1,535,950

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,

		2016		2015		2016		2015

Revenue:
Patient transport revenue, net	$	226,219		198,207		869,267		759,877
Air medical services contract revenue		33,360		34,158		135,742		153,901
Tourism revenue		29,644		28,918		127,886		127,795
Product operations		4,895		7,513		23,794		24,479
Transfer center, dispatch and billing service revenue		3,355		3,647		13,766		14,386
Total revenue		297,473		272,443		1,170,455		1,080,438

Expenses:
Operating expenses		189,496		170,422		722,355		656,085
General and administrative		43,553		37,693		164,016		146,391
Depreciation and amortization		23,455		21,272		93,107		83,354
		256,504		229,387		979,478		885,830

Operating income		40,969		43,056		190,977		194,608

Interest expense		(8,136	)	(6,954	)	(31,990	)	(21,995	)
Other, net		360		786		1,719		2,056

Income from continuing operations before income taxes		33,193		36,888		160,706		174,669

Income tax expense		(13,337	)	(14,370	)	(62,831	)	(68,213	)

Income from continuing operations		19,856		22,518		97,875		106,456

Loss on discontinued operations, net of income taxes		-		(20	)	-		(398	)

Net income		19,856		22,498		97,875		106,058

Income (loss) attributable to redeemable non-controlling interests		-		(44	)	(30	)	640

Net income attributable to Air Methods Corporation and subsidiaries	$	19,856		22,542		97,905		105,418

Income per common share:
Basic
Continuing operations	$	0.55		0.57		2.58		2.67
Discontinued operations		-		-		-		(0.01	)
Diluted
Continuing operations	$	0.54		0.57		2.57		2.66
Discontinued operations		-		-		-		(0.01	)

Weighted average common shares outstanding:
Basic		36,396,593		39,262,268		37,732,644		39,272,585
Diluted		36,444,558		39,418,254		37,798,690		39,420,963

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)

		Year Ended
		December 31,

		2016		2015

Cash flows from operating activities:
Net income	$	97,875		106,058
Loss from discontinued operations, net of income taxes		-		398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		93,107		83,354
Deferred income tax expense		43,984		27,245
Stock-based compensation		6,907		7,458
Amortization of debt issuance costs		1,249		1,004
Loss on disposition of assets		2,132		3,291
Unrealized loss (gain) on derivative instrument		(511	)	369
Loss from equity method investee		419		1,082
Changes in assets and liabilities, net of effects of acquisitions		(18,074	)	(57,853	)

Net cash provided by continuing operating activities		227,088		172,406
Net cash used by discontinued operating activities		-		(92	)
Net cash provided by operating activities		227,088		172,314

Cash flows from investing activities:
Acquisition of subsidiaries		(225,577	)	-
Acquisition of property and equipment		(91,946	)	(148,999	)
Acquisition of hospital programs		-		(64,654	)
Buy-out of previously leased aircraft		(17,176	)	(17,747	)
Proceeds from disposition of equipment		10,272		9,664
Decrease (increase) in other assets		(3,232	)	(6,475	)

Net cash used by continuing investing activities		(327,659	)	(228,211	)
Net cash provided (used) by discontinued investing activities		-		25
Net cash used by investing activities		(327,659	)	(228,186	)

Cash flows from financing activities:
Proceeds from issuance of common stock, net		803		610
Payments for purchases of common stock		(96,497	)	(13,457	)
Payments for financing costs		(81	)	(4,622	)
Proceeds from long-term debt		293,454		151,701
Payment of long-term debt, notes payable, and capital lease obligations		(97,013	)	(85,717	)

Net cash provided (used) by continuing financing activities		100,666		48,515
Net cash provided (used) by discontinued financing activities		-		-
Net cash provided (used) by financing activities		100,666		48,515

Increase (decrease) in cash and cash equivalents		95		(7,357	)

Cash and cash equivalents at beginning of period		5,808		13,165

Cash and cash equivalents at end of period	$	5,903		5,808

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF CASH FLOW FROM OPERATIONS TO FREE CASH FLOW
(Amounts in thousands)
(unaudited)

		Year Ended
		December 31,

		2016		2015

Net cash provided by continuing operating activities	$	227,088		172,406

Acquisition of property and equipment		(91,946	)	(148,999	)

Free cash flow		135,142		23,407

Non-GAAP Measures: This release may discuss Adjusted EBITDA from continuing operations and free cash flow, which are not calculated in conformity with U.S. Generally Accepted Accounting Principles (GAAP). The Company defines Adjusted EBITDA from continuing operations as earnings attributable to Air Methods Corp. and its subsidiaries (AMC) before interest, income taxes, depreciation, amortization, gain or loss on disposition of assets, and discontinued operations. The Company defines free cash flow as cash flow from continuing operations less capital expenditures. Buyouts of previously leased aircraft, payments for hospital contract conversions, and proceeds from the disposition of assets are excluded from the calculation. To supplement the Company's consolidated financial statements presented on a GAAP basis, management believes that these non-GAAP measures provide useful information about the Company's core operating results and thus are appropriate to enhance the overall understanding of the Company's past financial performance and its prospects for the future. Management believes the additions and subtractions from net income used to calculate Adjusted EBITDA from continuing operations reflect the measurements that its bank creditors and third party stock analysts use in evaluating the Company. These adjustments to the Company's GAAP results are made with the intent of providing both management and investors a more complete understanding of the Company's underlying operational results and trends and performance. Management uses these non-GAAP measures to evaluate the Company's financial results. The presentation of non-GAAP measures is not meant to be considered in isolation or as a substitute for or superior to financial results determined in accordance with GAAP.

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(unaudited)

	Quarter Ended				Year Ended
	December 31,				December 31,
		2016	2015		2016	2015

Net income attributable to Air Methods Corporation and subsidiaries	$	19,856	22,542		97,905	105,418
Loss on discontinued operations, net of income taxes		-	(20	)	-	(398	)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries		19,856	22,562		97,905	105,816

Interest expense *		8,136	6,954		31,990	21,874
Income tax expense *		13,337	14,370		62,831	68,213
Depreciation and amortization *		23,455	21,272		93,107	83,072
Loss (gain) on disposition of assets, net *		1,568	415		2,132	3,292

Adjusted EBITDA from continuing operations	$	66,352	65,573		287,965	282,267



* Excludes amounts attributable to redeemable non-controlling interests

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF AIR MEDICAL SERVICES DIVISION NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(unaudited)



	Quarter Ended				Year Ended
	December 31,				December 31,
		2016	2015			2016	2015

Net income attributable to Air Methods Corporation and subsidiaries	$	50,486	49,938		$	210,257	214,445
Loss on discontinued operations, net of income taxes		-	(20	)		-	(398	)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries		50,486	49,958			210,257	214,843

Interest expense		6,448	5,406			25,538	16,575
Income tax expense		-	-			-	-
Depreciation and amortization		19,705	17,661			78,078	69,687
Loss (gain) on disposition of assets, net		332	(276	)		226	1,084

Adjusted EBITDA from continuing operations	$	76,971	72,749		$	314,099	302,189

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF TOURISM DIVISION NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(unaudited)

	Quarter Ended				Year Ended
	December 31,				December 31,
	2016			2015	2016		2015

Net income from continuing operations attributable to Air Methods Corporation and subsidiaries	$	1,593		340	$	10,332	9,985

Interest expense *		1,155		978		4,340	3,296
Income tax expense *		-		-		-	-
Depreciation and amortization *		2,286		2,139		9,184	7,648
Loss on disposition of assets, net *		(113	)	681		571	2,197

Adjusted EBITDA from continuing operations	$	4,921		4,138	$	24,427	23,126


* Excludes amounts attributable to redeemable non-controlling interests

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF UNITED ROTORCRAFT DIVISION NET INCOME TO ADJUSTED EBITDA
(Amounts in thousands)
(unaudited)

	Quarter Ended				Year Ended
	December 31,				December 31,
	2016			2015	2016			2015

Net income (loss) from continuing operations attributable to Air Methods Corporation and subsidiaries	$	(1,983	)	597	$	(1,702	)	2,692

Interest expense		-		-		-		-
Income tax expense		-		-		-		-
Depreciation and amortization		843		878		3,441		3,407
Loss on disposition of assets, net		-		-		-		-

Adjusted EBITDA from continuing operations	$	(1,140	)	1,475	$	1,739		6,099

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