Air Methods Corporation (Nasdaq:AIRM) (“Air Methods” or the “Company”) today confirmed that it has received notice from Voce Capital Management, LLC of its intent to nominate two director candidates to stand for election to the Air Methods Board of Directors and has submitted a proposal for consideration at the Company’s 2016 Annual Meeting of Shareholders.
The Company issued the following statement:
The Air Methods Board of Directors is highly independent and deeply engaged with management to ensure its strategic plan is fully aligned with the best interest of all shareholders. Ten of our 11 directors are independent, including our newest director, demonstrating our commitment to objective and independent oversight and shareholder-friendly governance.
The Board and management regularly evaluate a broad range of strategies to maximize long-term value for our shareholders. The Company will provide an update on the Board’s ongoing strategic review with external advisors on its February 25, 2016 earnings conference call.
Currently, Air Methods is successfully executing on a series of strategic initiatives to further optimize the business, drive sustainable growth and position the Company for long-term success, including:
1) Driving organic revenue growth in both the air medical services and tourism businesses. By building long-term relationships with hospitals, capitalizing on positive secular trends and leveraging our broad geographic footprint, Air Methods is poised for organic revenue growth in our air medical services business, and by continuing to expand our fleet, we are driving growth in our tourism business. Integral in this initiative is adding new bases as well as base conversions. In 2015 we added 20 net new bases, including 12 Greenfields, and 13 hospital base conversions, offset by five closures. For our tourism business, we have driven organic growth through the expansion of our fleet.
2) Deploying $288 million over the past 12 months to pursue accretive, growth-enhancing acquisitions and conversions, including Tri-State Care Flight, San Antonio AirLife and Bayfront Health. These transactions, among others, have been or are expected to be immediately accretive to earnings, and demonstrate our ability to use our strong capital position to create substantial value for shareholders while maintaining low leverage and avoiding dilution. For example, the Tri-State acquisition is expected to be immediately accretive to earnings per share by greater than $0.20 in the first year and greater than $0.30 in year two.
3) Accelerating fleet rejuvenation activities to equip Air Methods with one of the youngest fleets in the industry. Our recent fleet rejuvenation efforts have allowed us to deploy capital more efficiently, significantly lowering our cash tax rates and reducing the need for future capital expenditures.
Execution on these and other initiatives has led to continued strong growth in revenue, EPS and EBITDA from continuing operations (7.6%, 10.7% and 10.1%, respectively, for the nine-month period ended September 30, 2015), despite severe weather headwinds in the first half of 2015. Our performance has delivered significant returns to shareholders, with total shareholder return of 128% over the past five years, compared to 41% and 44% for the Russell 3000 and S&P 500, respectively. Air Methods has also significantly outperformed the S&P Health Care Services Select Industry Index over the past six months, with the Company declining 4% and the index declining 24% over that period.
Just as execution is critical for Air Methods, so is accountability to our shareholders. We have always been committed to delivering superior returns, as demonstrated by the $7.00 per share (pre-split) special dividend the Company paid to shareholders in December 2012. We value input from our shareholders in recognizing this goal, and recently have taken further action to return capital to shareholders based on these discussions. In the fourth quarter of 2015 and the first quarter of 2016, Air Methods has repurchased approximately $26 million of shares, leaving approximately $174 million remaining under its repurchase program.
As indicated previously, the Air Methods Board consists of 11 highly qualified directors, 10 of whom are independent, with four having joined within the last four years. The composition of the Board has a balance of both institutional knowledge and fresh perspectives, enabling it to work effectively and collaboratively with management. Air Methods Directors provide highly relevant expertise to our businesses, with experience in the aviation and healthcare industries, including hospitals and surgical centers, complemented by executive-level operations and management experience at both private and public companies. Each Director has differentiated and complementary skill sets that contribute to the overall effectiveness and productivity of the Board. Consistent with this high standard, Air Methods announced changes to the composition of the Board on February 12, 2016, including the appointment of Major General Jessica Wright, USA (Ret.) and the upcoming retirement of George W. Belsey and Major General Carl H. McNair, USA (Ret.) two longstanding Directors, at the 2016 Annual Meeting. General Wright’s strong leadership and safety background and expertise in aviation, regulated industries, logistics, and government affairs at the state and federal level will make her a valuable addition to the Board. As an Undersecretary of Defense, she served as the senior policy advisor to the Secretary of Defense on all matters relating to recruitment, retention, pay and healthcare and benefits for the uniformed members and civilians of the department. In addition, she had supervisory responsibility for 32,000 personnel, the execution of an annual budget of $43.6 billion, overall responsibility for the world-wide Defense Health Programs which included 54 Hospitals, 350 Clinics, 280 Dental Clinics and TRICARE management and its 9.6 million beneficiaries.
Our record demonstrates that the Board is receptive to shareholder input and takes its fiduciary duties seriously. Together with management, the Board is committed to creating long-term value at Air Methods and is focused, as it always has been, on doing what is in the best interest of all shareholders. We look forward to a continued, constructive dialogue with our shareholders.
The Air Methods Board will present its formal recommendation regarding director nominations in the Company’s definitive proxy statement to be filed with the Securities and Exchange Commission. The Company has not yet scheduled its 2016 Annual Meeting of Shareholders.
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.
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