Air Methods (AIRM) 8-K Air Methods Reports Third Quarter 2016 Results

EXHIBIT 99.1

Air Methods Reports Third Quarter 2016 Results

DENVER, Nov. 03, 2016 (GLOBE NEWSWIRE) -- Air Methods Corporation (Nasdaq:AIRM), the global leader in air medical transportation, today reported financial results for the quarter ended September 30, 2016.

Third Quarter 2016 Results:

• Revenue of $311.0 million was flat compared to $311.3 million for the third quarter of 2015.
• Diluted earnings per share from continuing operations of $0.82, compared to $1.16 for the third quarter of 2015, a decrease of 29.3%.
• EBITDA from continuing operations of $81.8 million, compared to $105.2 million for the third quarter of 2015, a decrease of 22.2%.
• The company repurchased 1,694,500 shares in the third quarter.

Aaron Todd, CEO of Air Methods, stated, “Patient transports were below expectations in the quarter which impacted earnings. The Company has worked to improve its base transport utilization and to optimize its cost structure by closing and consolidating bases and adding sales resources. These changes have had the desired effect in October as preliminary same-base transports increased approximately 1.2%. We will consider other measures as appropriate.”

“Despite the challenging environment, there were a number of encouraging results to highlight in the quarter. In the Air Medical Services division, Tri-State’s performance improved sequentially, and another hospital base converted to the community base model. Additionally, the recovery in the Tourism division continued with passenger volumes growing 2.6% and segment EBITDA increasing 7.9%.”

Peter Csapo, CFO of Air Methods, added, “In the third quarter, we made significant progress on one of our highest priorities, achieving a sequential reduction in days sales outstanding of 14 days, which led to record quarterly operating cash flow of $81.0 million compared to $17.8 million in the prior year quarter.”

Third Quarter Performance by Segment

For the third quarter, Air Medical Services (AMS) revenue increased 0.4% to $267.7 million compared to $266.8 million in the prior-year quarter. The acquisition of Tri-State Care Flight (TSCF) added $14.0 million in revenues. Excluding TSCF, revenues declined 4.9%. Key operating statistics include:

	3Q16		3Q15		YOY Change (%)
Transports		18,478		17,330		6.6	%
Transports + Weather Cancellations		25,085		22,794		10.1	%
Same-Base Transports (SBTs)		15,352		16,764		(8.4	%)
SBT + Weather Cancellations		21,084		22,101		(4.6	%)
Net Revenue per Transport	$	12,421	$	12,839		(3.3	%)

Flight center and aircraft operations expenses increased 15.7% to $154.5 million in the current quarter compared to $133.5 million in the prior year quarter. TSCF added $9.4 million in flight center and aircraft operations expenses. Excluding TSCF, these expenses increased 8.6% despite revenues declining 4.9% for the corresponding AMS operations. AMS segment EBITDA decreased 22.5% to $83.9 million compared to $108.2 million for the third quarter of 2015. On a stand-alone basis, TSCF lost $0.2 million (pre-tax) in the quarter. This does not include the positive contribution from transports retained at consolidated bases. Including retained transports, the Company estimates TSCF added $0.01 in diluted EPS in the quarter and $0.06 in diluted EPS year-to-date.

Tourism revenues increased 7.1% to $38.8 million in the current quarter compared to $36.2 million in the prior-year quarter. Total passengers increased 2.6% to 137,595 during the current quarter compared to 134,157 in the prior-year quarter. Total revenue per passenger increased 4.4% to $282 in the current quarter compared to $270 in the prior-year quarter. Tourism operating expenses increased 9.7% to $24.7 million in the current quarter compared to $22.5 million in the prior-year quarter. Tourism segment EBITDA increased 7.9% to $9.8 million in the current quarter compared to EBITDA of $9.1 million in the prior-year quarter. 

United Rotorcraft’s external revenue declined by 45.9% to $4.5 million in the current quarter compared to $8.4 million in the prior-year quarter. Its segment EBITDA declined to just above breakeven from $2.1 million in the prior year period.

Basic and diluted earnings per share from continuing operations for the nine-month period ended September 30, 2016 and the three- and nine-month periods ended September 30, 2015 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 quarter ended September 30, 2016 were not impacted by the adjustment.

Share Repurchase Program

During the third quarter, the Company repurchased 1.7 million shares for $58.1 million bringing the total number and dollar amount of shares repurchased since the program was initiated to 3.1 million and $109.9 million, respectively. The company presently has $90.1 million remaining on its authorized program.

4Q16 Update

The Company also provided an update on preliminary October 2016 air medical and tourism flight volume.

Air Medical	Oct-16	Oct-15	YOY Change (%)
Transports	6,499	5,842		11.2	%
Transports + Weather Cancellations	8,013	7,527		6.5	%
Same-Base Transports (SBTs)	5,402	5,340		1.2	%
SBT + Weather Cancellations	6,728	6,915		-2.7	%
Tourism	Oct-16	Oct-15	YOY Change (%)
Passengers	41,293	40,832		1.1	%

2016 Outlook
Due to the softness in air medical volumes, the Company believes EBITDA in the mid-$300 million range in 2016 is no longer achievable.

Other

The company identified an immaterial accounting error in its historical financial statements that had no impact on the income statement in 2016 but did result in minor adjustments to the balance sheet and income statement in prior periods. Additional details will be available in the 10-Q.

Third 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 5511261, 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 fiscal year 2016; and (ii) preliminary results of community-based transports, same-base transports and weather cancellations and tourism passengers for October 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 fourth 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; 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. 

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)
		September 30, 2016	December 31, 2015
ASSETS
Current assets:
Cash and cash equivalents	$	7,417	5,808
Trade receivables, net		385,747	360,542
Other current assets		107,976	91,251
Total current assets		501,140	457,601
Net property and equipment		872,792	799,656
Other assets, net		428,989	278,693
Total assets	$	1,802,921	1,535,950
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable related to aircraft pending long-term financing	$	7,229	2,955
Current portion of indebtedness		72,963	58,304
Accounts payable, accrued expenses and other		102,119	87,211
Total current liabilities		182,311	148,470
Long-term indebtedness		855,464	635,615
Other non-current liabilities		214,179	179,129
Total liabilities		1,251,954	963,214
Redeemable non-controlling interests		-	8,550
Total stockholders' equity		550,967	564,186
Total liabilities and stockholders' equity	$	1,802,921	1,535,950

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Amounts in thousands, except share and per share amounts)
(unaudited)
		Three Months Ended					Nine Months Ended
		September 30,					September 30,
			2016		2015			2016		2015
Revenue:
Patient transport revenue, net	$		229,906		222,842			643,048		561,670
Air medical services contract revenue			34,563		40,329			102,382		119,743
Tourism revenue			38,781		36,212			98,242		98,877
Product operations			4,536		8,379			18,899		16,966
Dispatch and billing service revenue			3,226		3,580			10,411		10,739
Total revenue			311,012		311,342			872,982		807,995
Expenses:
Operating expenses			189,094		168,830			532,859		485,663
General and administrative			41,079		39,351			120,463		108,698
Depreciation and amortization			23,587		20,884			69,652		62,082
			253,760		229,065			722,974		656,443
Operating income			57,252		82,277			150,008		151,552
Interest expense			(8,146	)	(4,893	)		(23,854	)	(15,041	)
Other, net			585		(266	)		1,359		1,270
Income from continuing operations before income taxes			49,691		77,118			127,513		137,781
Income tax expense			(19,077	)	(30,235	)		(49,494	)	(53,843	)
Income from continuing operations			30,614		46,883			78,019		83,938
Loss on discontinued operations, net of income taxes			-		(29	)		-		(378	)
Net income			30,614		46,854			78,019		83,560
Income attributable to redeemable non-controlling interests			-		202			(30	)	684
Net income attributable to Air Methods Corporation and subsidiaries	$		30,614		46,652			78,049		82,876
Income per common share:
Basic
Continuing operations	$		0.82		1.17			2.03		2.10
Discontinued operations			-		-			-		(0.01	)
Diluted
Continuing operations	$		0.82		1.16			2.02		2.09
Discontinued operations			-		-			-		(0.01	)
Weighted average common shares outstanding - basic			37,354,787		39,293,453			38,181,918		39,276,062
Weighted average common shares outstanding - diluted			37,413,828		39,420,354			38,260,743		39,408,239

AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(unaudited)
				Nine Months Ended
				September 30,
					2016		2015
Cash flows from operating activities:
	Net income		$		78,019		83,560
	Loss from discontinued operations, net of income taxes						378
	Adjustments to reconcile net income to net cash provided by operating activities:
		Depreciation and amortization			69,652		62,082
		Deferred income tax expense			37,878		4,376
		Stock-based compensation			5,129		5,733
		Amortization of debt issuance costs			929		697
		Loss on disposition of assets			564		2,876
		Unrealized loss on derivative instrument			(531	)	369
		Loss from equity method investee			395		1,193
		Changes in assets and liabilities, net of effects of acquisitions			(18,732	)	(35,053	)
		Net cash provided by continuing operating activities			173,303		126,211
		Net cash used by discontinued operating activities			-		(100	)
		Net cash provided by operating activities			173,303		126,111
Cash flows from investing activities:
	Acquisition of subsidiaries				(225,519	)	-
	Acquisition of property and equipment				(74,025	)	(95,494	)
	Payments for hospital contract conversions				-		(43,481	)
	Buy-out of previously leased aircraft				(13,123	)	(9,519	)
	Proceeds from disposition of equipment				6,209		3,642
	Decrease (increase) in other assets				(3,194	)	(11,597	)
		Net cash used by continuing investing activities			(309,652	)	(156,449	)
		Net cash provided (used) by discontinued investing activities			-		25
		Net cash used by investing activities			(309,652	)	(156,424	)
Cash flows from financing activities:
	Proceeds from issuance of common stock, net				803		409
	Purchases of common stock				(96,424	)	-
	Net borrowings (payments) under line of credit				15,000		-
	Payments for financing costs				(73	)	(4,472	)
	Proceeds from long-term debt				276,000		105,525
	Payment of long-term debt and capital lease obligations				(57,348	)	(69,351	)
		Net cash provided (used) by continuing financing activities			137,958		32,111
		Net cash provided (used) by discontinued financing activities			-		-
		Net cash provided (used) by financing activities			137,958		32,111
Increase (decrease) in cash and cash equivalents					1,609		1,798
Cash and cash equivalents at beginning of period					5,808		13,165
Cash and cash equivalents at end of period			$		7,417		14,963

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
	Quarter Ended				Nine Months Ended
	September 30,				September 30,
		2016	2015			2016	2015
Net income attributable to Air Methods Corporation and subsidiaries	$	30,614	46,652		$	78,049	82,876
Loss on discontinued operations, net of income taxes		-	(29	)		-	(378	)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries		30,614	46,681			78,049	83,254
Interest expense *		8,146	4,857			23,854	14,920
Income tax expense *		19,077	30,235			49,494	53,843
Depreciation and amortization *		23,587	20,783			69,652	61,800
Loss on disposition of assets, net *		386	2,607			564	2,876
EBITDA from continuing operations	$	81,810	105,163		$	221,613	216,693
* Excludes amounts attributable to redeemable non-controlling interests

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF AIR MEDICAL SERVICES DIVISION NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
	Quarter Ended				Nine Months Ended
	September 30,				September 30,
		2016	2015			2016		2015
Net income attributable to Air Methods Corporation and subsidiaries	$	57,333	85,909		$	159,771		164,507
Loss on discontinued operations, net of income taxes		-	(29	)		-		(378	)
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries		57,333	85,938			159,771		164,885
Interest expense		6,488	3,747			19,090		11,169
Income tax expense		-	-			-		-
Depreciation and amortization		19,808	17,412			58,373		52,026
Loss (gain) on disposition of assets, net		252	1,085			(106	)	1,360
EBITDA from continuing operations	$	83,881	108,182		$	237,128		229,440

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF TOURISM DIVISION NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
	Quarter Ended			Nine Months Ended
	September 30,			September 30,
		2016	2015		2016	2015
Net income from continuing operations attributable to Air Methods Corporation and subsidiaries	$	6,255	4,900	$	8,739	9,645
Interest expense *		1,070	747		3,185	2,318
Income tax expense *		-	-		-	-
Depreciation and amortization *		2,317	1,901		6,898	5,509
Loss on disposition of assets, net *		141	1,522		684	1,516
EBITDA from continuing operations	$	9,783	9,070	$	19,506	18,988
* Excludes amounts attributable to redeemable non-controlling interests

AIR METHODS CORPORATION AND SUBSIDIARIES
RECONCILIATION OF UNITED ROTORCRAFT DIVISION NET INCOME TO EBITDA
(Amounts in thousands)
(unaudited)
	Quarter Ended				Nine Months Ended
	September 30,				September 30,
		2016		2015		2016	2015
Net income (loss) from continuing operations attributable to Air Methods Corporation and subsidiaries	$	(824	)	1,182	$	281	2,095
Interest expense		-		-		-	-
Income tax expense		-		-		-	-
Depreciation and amortization		853		873		2,598	2,529
Loss on disposition of assets, net		-		-		-	-
EBITDA from continuing operations	$	29		2,055	$	2,879	4,624