10-Nov-2014 Source: Air Methods
Air Methods Corporation (Nasdaq:AIRM) reported results for the quarter ended September 30, 2014. Revenue increased 10% to $277.8 million from $252.4 million in the year-ago quarter. For the nine-month period, revenue increased 15% to $759.4 million, up from $657.8 million in the prior-year nine-month period. For the quarter, net income decreased 5% to $33.7 million, or $0.90 per diluted share, as compared with 2013 third quarter net income of $35.6 million, or $0.91 per diluted share. Net income for the nine-month period increased 50% to $73.4 million, or $1.91 per diluted share, compared to $49.1 million, or $1.25 per diluted share, for the prior-year period. Financial results for the three and nine months ended September 30, 2014 include operations associated with the Company’s acquisition of Helicopter Consultants of Maui, LLC (doing business as Blue Hawaiian Helicopters) and certain of its affiliates (collectively, Blue Hawaiian), on December 13, 2013. Revenue generated from Blue Hawaiian during the quarter and nine months ended September 30, 2014 was $15.0 million and $42.5 million, respectively.
Basic and diluted earnings per share for the quarter and nine months ended September 30, 2014 were increased by $0.05 for an adjustment to the value of an equity put option related to one of our redeemable non-controlling interests in one of our consolidated subsidiaries. While net income on the consolidated statement of comprehensive income was not increased for the valuation adjustment, earnings per share are required to be calculated after increasing net income for the change in valuation.
Third Quarter Highlights
Community-based patient transports were 15,796 during the current-year quarter, compared with 14,777 in the prior-year quarter, a 7% increase. Patients transported for community bases in operation greater than one year (Same-Base Transports) decreased by 3%, or 370 transports, while weather cancellations for these same bases increased by 60 transports compared with the prior-year quarter. Community-based service requests increased by 1% for bases open greater than one year. Net revenue per patient transport remained relatively unchanged at $11,972, compared with $11,988 in the prior-year quarter. Days’ sales outstanding for community-based patient transports (DSOs) increased from 100 days as of September 30, 2013 to 116 days as of September 30, 2014, based on 180-day annualized net revenue. DSOs decreased seven days compared with the end of the second quarter 2014.
Maintenance expense, excluding tourism operations, increased $0.4 million, or 2%, compared with the prior-year quarter, while flight volume for both community-based and hospital-based operations decreased by 3%. Excluding tourism operations, fuel expense increased by $0.4 million, or 6%, as compared with the prior-year quarter. Fuel expense per community-based and non-revenue flight hour decreased 2% over the prior-year quarter.
For the third quarter, Air Medical Services revenue increased by 3% to $237.6 million compared with $230.8 million in the prior-year quarter, while its segment net income remained relatively unchanged at $63.5 million compared to $63.6 million for the third quarter of 2013. Tourism revenues increased 112% to $33.9 million, compared to $16.0 million in the prior-year quarter, reflecting benefit of the Blue Hawaiian acquisition. Tourism segment net income decreased 13% to $3.3 million, compared with $3.8 million in the prior-year quarter. This decrease was primarily attributed to higher maintenance expense of $1.8 million over the prior-year third quarter associated with the Sundance Helicopters fleet. United Rotorcraft Division’s external revenue increased 10% to $6.2 million compared with $5.6 million in the prior-year quarter, while its external segment net income remained relatively unchanged at breakeven.
The Company also provided an update on preliminary October 2014 flight volume. Total community-based transports increased 9% to 5,201 during October 2014, compared with 4,787 in October 2013. October 2014 Same-Base Transports decreased by 34 transports and weather cancellations decreased by 108 transports compared with October 2013.
Aaron Todd, CEO, stated, “While overall flight volume growth is reflecting benefit from base expansions and hospital conversion activity, weakness in net reimbursement per patient transport was more severe than anticipated. Reduction of privately insured patients as a percentage of total transports compared with the prior-year quarter, combined with shifts from higher-paying insurers to lower-paying insurers, resulted in lower than anticipated earnings results for the quarter. An October 1st price increase, combined with strong flight volumes in October, should help offset these factors should they continue into the fourth quarter of 2014.”
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 24332617, for 3 days following the call and the web cast can be accessed at www.airmethods.com for 30 days. Concurrently, a financial supplement that contains operating statistics normally provided during previous earnings calls has been posted 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 over 400 helicopters and fixed wing aircraft.
