Strata Critical Medical, Inc. Q1 FY2024 earnings call

• Medical Business: Best quarter in company history for medical, with record revenue and adjusted EBITDA. Closed 7 of 8 jet aircraft acquisitions. Management transition in Medical division with Seth Bacon as Executive Chairman and Scott Wunsch as CEO of Blade Medical. Growth driven by increased trip volumes, distances, and new hospital clients. Use of perfusion and organ preservation devices expanding the market.
• Passenger Business: Saw improvement in New York by-the-seat airport service with 26% year-over-year revenue growth and third consecutive quarter of positive flight margin. Continued growth in revenue per seat and airport passes outstanding. Cost rationalization programs, including elimination of unprofitable services like BladeOne.
• Cost Rationalization: Adjusted unallocated corporate expenses declined 19% year-over-year. Focus on improving profitability through various initiatives across segments.

Medical: Revenue increased 34.6% year-over-year to $36 million, with segment adjusted EBITDA rising 134.5% to $4.4 million. Medical flight profit rose 84.5% year-over-year to $8 million, and flight margin increased 6 points to 22.3%. Passenger: Excluding the impact of BladeOne, Jet and Other revenue rose 9.4% year-over-year. Passenger segment adjusted EBITDA improved by $0.4 million year-over-year despite challenges like European weather issues and lower Canadian passenger volume. Total revenue in Q1 2024 was $51.5 million, up 13.8% from the prior year.

Reiterating 2024 and 2025 guidance: positive adjusted EBITDA in 2024 and double-digit adjusted EBITDA in 2025. Q1 results seen as an important first step towards achieving these goals. Expect adjusted unallocated corporate expenses to be flat to down for the remainder of the year.

• Time delays in eVTOL (electric vertical takeoff and landing) transitions by manufacturers. - Competition in the medical organ transport business. - Weather impacts affecting Passenger business, particularly in Europe during ski season. - Uncertainties in sequential revenue growth due to timing of new client onboarding in Medical.

Q: How does Blade Air Mobility plan to grow faster than the medical industry next year?

A: Will Heyburn stated Medical can outpace market growth due to unit multipliers from organ transplants coming from further away, growth in ground business, and introduction of TOPS service.

Q: What are the expectations for Passenger margins in the rest of the year?

A: William Heyburn mentioned Q1 is seasonally light, with Europe having weather-related flight cancellations, but bookings vs revenue show a stronger picture. Summer months have higher gross margins, and Q3 is important for Europe, expecting Passenger segment adjusted EBITDA improvement.

Q: Thoughts on the buyback program?

A: Robert Wiesenthal said they have a repurchase program but evaluate it against organic growth and accretive acquisitions. Cash balance provides competitive advantage for evaluating acquisitions.

Q: Why was Canada weak for Passenger?

A: Robert Wiesenthal attributed it to a shift towards more remote meetings with government officials in British Columbia's provincial capital compared to pre-COVID times.

Q: Impact of owning aircraft on expenses?

A: Robert Wiesenthal noted moving from third-party hourly rates to owned aircraft leads to cost of revenue benefits, with fixed cost leverage and expected margin improvements outweighing depreciation and other expenses.