EXHIBIT 99.1
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Air Methods
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The #1 Airborne Healthcare Company
Air Methods Updates Third Quarter Outlook
FIRST TWO MONTHS IMPACTED BY HIGHER THAN ANTICIPATED MAINTENANCE EXPENSES, BAD
DEBT RESERVE INCREASES AND LOWER THAN ANTICIPATED FLIGHT VOLUME
DENVER, CO, September 23, 2004 -- Air Methods Corporation (NASDAQ: AIRM), the
world's largest air medical transportation company, provided an update of the
financial results for its third quarter ending September 30, 2004.
The Company announced that its third quarter results through August were
impacted by a $1.3 million increase in bad debt reserves primarily associated
with changes in its historical collection rates and payer mix estimates. On a
positive note, days' sales outstanding have decreased from 133 days as of March
31, 2004 to 110 days as of August 31, 2004. Bad debt reserve rates applied to
current period transports have increased only slightly as compared to June 2004
transports.
The quarter-to-date period also reflects a 17.9% increase in maintenance
expenses as compared with the prior year two-month period, despite only a 3.1%
increase in flight volume. The percentage increase not attributed to flight
volume reflects an increase of approximately $1,100,000 over the prior-year
period. The increase in expense was primarily attributed to significant engine
and transmission overhaul activity during the period, combined with annual
inflationary adjustments in parts and overhaul costs.
Additionally, community-based transports during the month of August were 229
below budget expectations. For community bases in operation greater than one
year, 360 fewer requests for service were received as compared with the
prior-year month, partially attributed to unfavorable weather patterns in the
Eastern States. Community-based operating bases in service greater than one year
in the Northeast and Southeast regions averaged almost 10 fewer requests for
service per base during August than in the prior-year period. The aggregate
unfavorable budget variance attributed to the lower flight volume was
approximately $1,000,000 based on average net revenue after bad debt expense per
transport recorded during the period.
Although the Company has remained profitable during July and August, management
anticipates the financial results for the quarter to be significantly below
budgeted expectations. In light of these developments, management believes that
it is highly improbable that the Company will achieve growth in its basic
earnings per share for 2004.
Aaron Todd, CEO of Air Methods, stated, "We are certainly disappointed with
these recent developments. While fluctuations in maintenance expenses, bad debt
expense, and flight volume are inherent within our business, it is unusual to
have all three variables impact us negatively at the same time."
"With the significant reduction in days' sales outstanding and relatively
unchanged collection rates subsequent to June 30, 2004, we are hopeful that
future adjustments will be less significant. We are also encouraged that
community-based flight volumes for the first half of September have returned to
budgeted expectations. Effective September 1, 2004, the Company has also
adjusted its pricing structure to facilitate stronger reimbursement per
transport. While these changes will not fully offset the factors discussed
above, they should position the Company for better results moving forward," said
Todd.
Air Methods Corporation (www.airmethods.com) is a leader in emergency
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aeromedical transportation, medical services and technology. The Air Medical
Services Division is the largest provider of air medical transport services for
hospitals. The LifeNet Division is the largest community-based provider 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 180 helicopters and fixed
wing aircraft.
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AIRM(TM)
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NASDAQ
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FORWARD LOOKING STATEMENTS: This news release includes certain forward-looking
statements, which are subject to various risks and uncertainties. Actual results
could differ materially from those currently anticipated due to a number of
factors, including but not limited to the size, structure and growth of the
Company's air medical services and products markets; the collection rates for
patient transports; the continuation and/or renewal of air medical service
contracts; the acquisition of profitable Products Division contracts and other
flight service operations; the successful expansion of the community-based
operations; and other matters set forth in the Company's public filings.
CONTACTS: Aaron D. Todd, Chief Executive Officer, (303) 792-7413 or Joe Dorame
at The RCG Group at (480) 675-0400. Please contact Christine Clarke at (303)
792-7579 to be included on the Company's fax and/or mailing list.