Strata Critical Medical, Inc. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Passenger Strength: Revenue grew 11% excluding Canada, with Passenger segment revenue up 42% year-over-year excluding Canada. The segment had its first adjusted EBITDA profitable first quarter since going public. Strength in Europe post-restructuring led to revenue growth and improved profitability. Exit from Canada and cost rationalization initiatives were key drivers.
• Medical Performance: Medical results exceeded guidance, with service launched at two new large hospitals in April, contributing to an all-time trip volume record. The strategy of increasing dedicated fleet size for lower costs and shorter call-out times is in place, though Q1 had a revenue impact but improved average profitability per trip.
• Operational Focus: Focus on optimizing fleet operational and financial performance. Discipline in capital allocation, evaluating investments in the Medical business and potential acquisitions. $120 million in cash and short-term investments as of Q1, positioning for opportunities.

Segment Performance

• Passenger: Excluding Canada (exited in August 2024), short distance revenue grew 28.1% year-over-year, driven primarily by growth in Europe. Jet and Other revenue increased 60% year-over-year. Passenger segment achieved its first adjusted EBITDA profitable first quarter since going public, with an 840 basis point improvement in flight margin and a 16% reduction in Passenger segment adjusted SG&A.
• Medical: Medical revenue was roughly flat year-over-year at $35.9 million. April set an all-time record for trip volumes, driven by the launch of two new large hospitals on April 1st. However, Medical segment adjusted EBITDA margin fell 80 basis points year-over-year to 11.4% due to elevated scheduled maintenance downtime on the own fleet. Ground and TOPS revenue continued strong growth.

Guidance

• Reiterating 2025 revenue and adjusted EBITDA guidance. Medical expected double-digit revenue growth after Q1, with single-digit growth in Q2 and improving margins in the second half. Passenger confident in asset light model to respond to demand variations. Adjusted unallocated corporate expenses and software development expected to decline slightly, with positive free cash flow before aircraft acquisitions barring large unforeseen items.

Risks

• Macro uncertainty impacting Passenger demand, particularly post-helicopter tour incident in NY area. Elevated maintenance downtime in Medical business affecting segment margins in Q1, though expected to improve in the second half. Potential impact of airport issues (e.g., Newark) on Passenger volumes.

Question and Answer

Q: Themes for Passenger and Medical, strategic direction, partnerships A: Focus on Europe growth, airline partnerships, dynamic pricing. Medical facing maintenance impact but strategy to improve, Passenger confident in asset light model Q: Passenger segment revenue contribution from Europe, capital allocation A: Europe revenue ~$6M in Q1. M&A focus on Medical, organic growth, share buyback via withhold-to-cover Q: Bookings trend in May, Newark impact A: Bookings better than last year for summer. Newark impact transient, focusing on JFK utilization Q: eVTOL timing, New Jersey heliport A: Expect eVTOL deployment late 2025/early 2026. New Jersey heliport used for charter, focus on eVTOL transition Q: Repositioning revenue quantification, aircraft acquisition impact A: Repositioning a low to mid-single digit headwind. Aircraft acquisitions planned in single digits over 12-18 months, no current process but opportunistic