Air Methods Corp. Reports Operating Results (10-K)
Air Methods Crp has a market cap of $1.16 billion; its shares were traded at around $90.23 with a P/E ratio of 24.2 and P/S ratio of 2.1. Air Methods Crp had an annual average earning growth of 17.7% over the past 10 years. GuruFocus rated Air Methods Crp the business predictability rank of 3.5-star.
Highlight of Business Operations:Hospital-Based Services (HBS) - provides air medical transportation services to hospitals throughout the U.S. under exclusive operating agreements. Revenue consists primarily of fixed monthly fees (approximately 78% of total contract revenue) and hourly flight fees (approximately 22% of total contract revenue) billed to hospital customers. In 2011 the HBS Division generated 30% of our total revenue, compared to 35% in 2010 and 39% in 2009.
United Rotorcraft (UR) Division - designs, manufactures, and installs aircraft medical interiors and other aerospace and medical transport products for domestic and international customers. In 2011 the UR Division generated 5% of our total revenue, compared to 4% in 2010 and 5% in 2009.
Flight volume. Fluctuations in flight volume have a greater impact on CBS operations than HBS operations because almost all of CBS revenue is derived from flight fees, as compared to approximately 22% of HBS revenue. By contrast, 80% of our costs primarily associated with flight operations (including salaries, aircraft ownership costs, hull insurance, and general and administrative expenses) incurred during the year ended December 31, 2011, are mainly fixed in nature. While flight volume is affected by many factors, including competition and the effectiveness of marketing and business development initiatives, the greatest single variable has historically been weather conditions. Adverse weather conditions—such as fog, high winds, or heavy precipitation—hamper our ability to operate our aircraft safely and, therefore, result in reduced flight volume. Total patient transports for CBS operations were approximately 45,500 for 2011 compared to approximately 40,000 for 2010. Patient transports for CBS bases open longer than one year and excluding transports for Omniflight bases (Same-Base Transports), were approximately 36,600 in 2011 compared to 39,400 in 2010. Cancellations due to unfavorable weather conditions for CBS bases open longer than one year were 508 higher in 2011 compared to 2010. Requests for community-based services decreased by 4.5% for the year ended December 31, 2011, for bases open greater than one year.
General and administrative (G&A) expenses increased $16,274,000, or 23.5%, for the year ended December 31, 2011, compared to 2010. G&A expenses include executive management, accounting and finance, billing and collections, information services, human resources, aviation management, pilot training, dispatch and communications, and CBS and HBS program administration. G&A expenses were 12.9% of revenue for 2011, compared to 12.3% of revenue for 2010. Expenses for 2011 included approximately $2,283,000 in transaction costs and employee severance related to the acquisition of Omniflight. We also incurred approximately $1,678,000 in expenses related to transitioning Omniflight s G&A functions into existing Air Methods departments. The increase in expense also reflects additional headcount in our safety department to support the ongoing implementation of our Safety Management System (SMS) and in our billing, dispatch, and transfer center departments to support the increase in third party contracts.
We had cash and cash equivalents of $3,562,000 and working capital of $85,011,000 at December 31, 2011, compared to cash and cash equivalents of $60,710,000 and working capital of $122,599,000 at December 31, 2010. Cash generated by operations totaled $94,771,000 in 2011 compared to $110,036,000 in 2010. In 2011, we paid approximately $8.0 million for deposits on new aircraft purchases. Days sales outstanding for CBS operations, measured by comparing net revenue for the annualized previous 6-month period to outstanding open net accounts receivable, increased from 94 days at December 31, 2010, to 100 days at December 31, 2011, primarily because of administrative changes in the methods required to submit reimbursement claims to certain insurance providers.
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