EXHIBIT 99.1
AIR METHODS
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The #1 Airborne Healthcare Company
AIR METHODS ANNOUNCES 3RD QUARTER FINANCIAL RESULTS
Decrease in EPS Reflects Impact of Previously Reported Events
DENVER, CO, November 11, 2004 -- Air Methods Corporation (NASDAQ: AIRM) reported
financial results for the third quarter and nine months ended September 30,
2004.
For the quarter, revenue increased 2.9% to $68.9 million compared to $67.0
million in the prior-year period. Net income decreased 46.1% to $1.5 million, or
$0.13 per basic and diluted share, compared to prior-year net income of $2.7
million, or $0.28 per basic and $0.27 per diluted share.
For the nine months, revenue increased 15.9% to $204.8 million compared to
$176.7 million for the prior-year period. Net income was $12.0 million, or $1.11
per basic and $1.06 per diluted share, compared to prior-year net income of $3.5
million, or $0.36 per basic and $0.35 per diluted share. The current nine-month
period results include a first quarter increase to net income of $8.6 million or
$0.79 per basic and $0.76 per diluted share, from the cumulative effect of a
change in accounting principle, net of tax effect. Income before cumulative
effect of change in accounting principle was $3.4 million or $0.32 per basic and
$0.30 per diluted share.
The cumulative effect stated above relates to the Company's decision to change
its method of accounting for major engine and airframe component overhaul costs
from the accrual method to the direct expense method effective January 1, 2004.
Under the direct expense method, maintenance costs are recognized as expense as
maintenance services are performed. Pro forma results, assuming the change in
accounting principle had been applied retroactively, would reflect net income of
$3.3 million or $0.35 per basic and $0.34 per diluted share for the quarter
ended September 30, 2003. Pro forma results for the nine-month period ended
September 30, 2003 would reflect net income of $6.8 million, or $0.71 per basic
and $0.68 per diluted share.
As disclosed on September 23, 2004, the current year third quarter was impacted
by higher than anticipated maintenance expenses, bad debt reserve increases and
lower than anticipated flight volume during the first two months of the quarter.
The aggregate effect of these factors reduced income before income taxes by over
$3.3 million through August.
For the nine-month period, net cash provided by operating activities increased
significantly from $0.2 million in 2003 to $13.2 million for the same period in
2004. This is partially attributed to a reduction in days' sales outstanding in
accounts receivable from 115 days as of the beginning of 2004 to 109 days as of
the end of September. Days' sales outstanding had reached a high of 133 days as
of March 31, 2004. The increase in cash provided by operating activities has
also resulted in a decrease in long-term indebtedness, net of cash, from $80.4
million as of December 31, 2003 to $73.8 million as of the end of September.
THIRD QUARTER HIGHLIGHTS:
- - Community-Based Operations: Community-based services revenue increased 3.7%
to $43.5 million from $42.0 million, while segment net income decreased
31.4% to $2.7 million from $3.9 million in the prior-year quarter. Total
patient transports for the quarter were 8,018 as compared with 7,142 in the
prior-year quarter. Revenue did not increase in proportion to increases in
patient activity due to higher contractual discount allowances which
reduced net revenue, with corresponding reductions in bad debt expense. Net
revenue after bad debt expense per patient transport decreased from $4,454
per transport in the prior-year quarter to $4,339 during the current-year
quarter, due to lower than anticipated collection rates. For bases in
operation greater than one year, patient transports (Same-Base Transports)
increased by less than 1% or 55 transports. Requests for transport for
bases in operation greater than one year decreased 3.6% from the prior year
period, partially attributed to hurricanes and tropical storms which
affected the southeast and mid-Atlantic operations.
- - Hospital-Based Operations: Revenue from hospital-based operations increased
by 1.8% to $23.5 million from $23.1 million, while segment net income
decreased by 61.2% to $0.9 million from $2.3 million. The decrease in
segment net income was almost entirely attributed to higher maintenance
expenses. Maintenance expense increased 26.9% to $8.2 million from $6.4
million, despite a 1.1% decrease in medical flights.
- - Products Division: The Products Division external revenue increased 15.9%
to $2.0 million from $1.7 million, while segment net income (excluding
internal sales) increased 116.2% to $1.2 million from $0.5 million for the
prior-year period.
The Company also announced that Same Base Transports for October were down 318
transports or 13.3%, primarily as a result of missed transports due to weather
cancellations which were up 343 transports or 86.0%. The Company noted that
October 2003 weather patterns were more benign than average, while October 2004
weather patterns were more severe, especially in the mid-west region.
Aaron Todd, CEO of Air Methods, noted, "As we stated in our earlier press
release, fluctuations in maintenance expenses, reserves for uncollectible
accounts, and flight volume are inherent within our business model. However, it
is unusual for all three variables to impact us negatively at the same time.
Despite the weaker flight volumes in October, we remain optimistic that these
variables will normalize over the coming months and quarters. Changes in
pricing structure effective September 1, 2004, combined with positive benefits
from having reduced our days' sales outstanding significantly, should improve
our reimbursement for current and future transports. In addition, we continue
to pursue numerous opportunities to expand our operations within both service
delivery models to further enhance our economies of scale. Having reduced our
net indebtedness significantly in 2004 to-date, our stronger balance sheet will
help ensure we have the capital resources to take advantage of these
opportunities."
The Company will discuss these results in a conference call scheduled today at
4:15 p.m. Eastern. Interested parties can access the call by dialing (888)
396-5640 (domestic) or (706) 643-0580 (international) or by accessing the web
cast at www.airmethods.com. A replay of the call will be available at (800)
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642-1687 (domestic) or (706) 645-9291 (international), access number 2020497,
for 3 days following the call; and the web cast can be accessed at
www.airmethods.com for 30 days.
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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 in the world. 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.
AIRM(TM)
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NASDAQ
LISTED
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 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.
-- FINANCIAL STATEMENTS ATTACHED --
AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(Amounts in thousands)
September 30, 2004 December 31, 2003
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ASSETS
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Current assets:
Cash and cash equivalents $ 7,461 5,574
Trade receivables, net 64,581 61,208
Other current assets 22,708 17,204
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Total current assets 94,750 83,986
Net equipment and leasehold improvements 93,895 113,077
Other assets, net 17,067 18,586
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Total assets $ 205,712 215,649
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
Notes payable $ 4,748 --
Current installments of long-term indebtedness 8,414 8,996
Accounts payable, accrued expenses and other 31,084 31,308
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Total current liabilities 44,246 40,304
Long-term indebtedness 72,819 76,931
Other non-current liabilities 15,620 37,726
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Total liabilities 132,685 154,961
Total stockholders' equity 73,027 60,688
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Total liabilities and stockholders' equity $ 205,712 215,649
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AIR METHODS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except share and per share amounts)
Three Months Ended Nine Months Ended
September 30, September 30,
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2004 2003 2004 2003
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Revenue:
Flight operations $ 66,958 65,041 199,396 171,381
Product operations 1,991 1,936 5,442 5,340
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Total revenue 68,949 66,977 204,838 176,721
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Expenses:
Operating expenses 55,007 52,049 165,543 141,494
General and administrative 7,201 5,444 20,318 15,668
Depreciation and amortization 2,729 2,905 8,140 8,461
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64,937 60,398 194,001 165,623
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Operating income 4,012 6,579 10,837 11,098
Interest expense (1,816) (2,218) (5,936) (6,152)
Other, net 182 52 745 764
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Income before income taxes 2,378 4,413 5,646 5,710
Income tax expense (926) (1,721) (2,220) (2,227)
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Income before cumulative effect of change in accounting principle 1,452 2,692 3,426 3,483
Cumulative effect of change in accounting principle, net - - 8,595 -
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Net income $ 1,452 2,692 12,021 3,483
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Income per common share - basic:
Income before cumulative effect of change in accounting principle $ 0.13 0.28 0.32 0.36
Cumulative effect of change in accounting principle, net - - 0.79 -
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Net income $ 0.13 0.28 1.11 0.36
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Income per common share - diluted:
Income before cumulative effect of change in accounting principle $ 0.13 0.27 0.30 0.35
Cumulative effect of change in accounting principle, net - - 0.76 -
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Net income $ 0.13 0.27 1.06 0.35
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Weighted average common shares outstanding:
Basic 10,921,369 9,577,916 10,873,783 9,554,040
Diluted 11,296,854 9,974,973 11,272,876 9,926,561