Air Methods Corporation, the largest air medical transportation company in the world, provided an update on second quarter 2011 preliminary results, as well as a status update on pending acquisition of OF Air Holdings and its subsidiaries (together, Omniflight).
Based on preliminary 2011 second quarter results, total community-based patient transports were 10,319. Patients transported for community bases in operation greater than one year decreased 630 transports, or 6%, while weather cancellations for these same bases increased by 345 transports compared with the prior-year quarter. Preliminary net revenue per community-based transport was $8,999, as compared with $8,181 in the prior-year quarter, a 10% increase.
Preliminary maintenance expense increased $5.5 million, or 30%, as compared with the prior-year quarter, despite a decrease in total flight hours of 1%. The increase was attributed in part to significant blade replacement costs for the Company’s fleet of BK-117 twin-engine aircraft. These associated costs are not expected to be repeated in future quarters and accounted for approximately $1.2 million of the increase. Maintenance expense for the second quarter of 2010 was 14% below the average of the other 2010 quarters, thus creating a more difficult comparative against the second quarter of 2011.
Second quarter preliminary results also include a pre-tax, non-cash loss of approximately $0.8 million, compared with a loss of $0.1 million in the prior-year quarter, associated with the mark to market of a fuel derivative. In addition, transaction costs of $0.3 million associated with the pending Omniflight acquisition were expensed during the quarter.
As a result of these factors, the Company expects to report a reduction of approximately 25% in fully-diluted earnings per share as compared with the prior-year second quarter. The Company noted that these preliminary results are subject to final quarter-end closing and review procedures and are therefore subject to change.
The Company is continuing to work cooperatively with the U.S. Federal Trade Commission in its review of the Company’s pending acquisition of Omniflight. The waiting period under the Hart-Scott Rodino Anti-Trust Improvement Act (HSR) is scheduled to expire on August 1, 2011 at 11:59 p.m. Eastern Time unless this period is terminated earlier. Pending the expiration of the HSR waiting period, the Company expects to close the Omniflight acquisition shortly thereafter.
The Company has completed the necessary agreements to finance the $200 million purchase price for the pending acquisition of Omniflight. The Company has presently in place a $100 million line of credit, which is currently unused. Subject to completion of standard closing conditions, the Company will also draw down upon a newly-originated $200 million term loan to finance the contemplated acquisition of Omniflight. Both facilities have a 5-year term and include a floating interest rate, which is currently 2.4%. This rate is before debt origination costs of approximately $1 million, which will be amortized over the 5-year term of the credit facilities.
Aaron Todd, CEO, stated, “While we are disappointed by the weak patient flight volumes and very high maintenance expenditures experienced during our second quarter, current-month community-based patient flight volume through July 19th projects a return to growth in total transports as compared with the prior-year month. This improvement is attributed, in part, to more moderate weather conditions. Maintenance costs experienced during the latter half of 2010 were significantly higher than the first half of 2010, thus providing for more favorable quarterly comparatives during the second half of 2011 as well. We are pleased that we have secured financing for our pending acquisition of Omniflight at significantly lower costs than anticipated in our original forecasts. We remain hopeful that all necessary approvals will be obtained to allow for closing of the transaction in the near-term.”
Air Methods Corporation ( www.airmethods.com ) is a leader in emergency aeromedical transportation and medical services. The Hospital Based Services Division is the largest provider of air medical transport services for hospitals. The Community Based Services Division is one of the largest community-based providers of air medical services. The Products Division specializes in the design and manufacture of aeromedical and aerospace technology. The Company’s fleet of owned, leased or maintained aircraft features over 300 helicopters and fixed wing aircraft.
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