Strata Critical Medical, Inc. Q4 FY2023 earnings call

Management Statement and Operational Highlights

• 2023 Performance: Full year revenue increased 54.1% to $225.2 million, flight profit up 84%, adjusted EBITDA negative $16.6 million for the full year.
• Blade Airport: Delivered positive flight profit for full year 2023, with a two-year ramp-up process.
• Medical Business: Acquired 8 fixed-wing jet aircraft for Medical, with revenue more than tripling since 2021 acquisition, and Q4 2023 revenue up 48%.
• Q4 2023 Highlights: Flight profit up 65.7% to $9 million, revenue up 24.5% to $47.5 million. Passenger segment adjusted EBITDA improved, Medical segment adjusted EBITDA up 57.8%.
• Corporate Expenses: Adjusted unallocated corporate expenses decreased by $0.7 million year-over-year in Q4 2023.
• New Initiatives: Launched TOPS organ placement service in December 2023, working with NYU Langone.

Segment Performance

• Medical:
  • Q4 2023 revenue: $32 million, +48% year-over-year.
  • Q4 2023 flight profit: $6.4 million, +81% year-over-year.
  • Q4 2023 adjusted EBITDA: $2.5 million, +58% year-over-year. Full year 2023 revenue increased more than threefold since the 2021 acquisition of Trinity.
• Passenger:
  • Short Distance: Q4 2023 revenue: $10.7 million, +14% year-over-year.
  • Jet and other: Q4 2023 revenue: $4.8 million, -32.4% year-over-year (due to discontinuing Blade 1).
  • Passenger segment flight profit: $2.6 million, +37% year-over-year. Blade Europe was flight profit positive for the full year 2023.

Guidance

• 2024: Expect positive adjusted EBITDA.
• 2025: Expect adjusted EBITDA in double-digit millions.
• Passenger: Flight profit margin to improve 2-3 points, with Blade Airport becoming a more material contributor.
• Medical: Flight margins to expand towards 25%+ by the end of 2024, driven by newly acquired aircraft.

Risks

• Market Competition: Competition in the MediMobility space, such as TransMedics.
• Operational Challenges: Delayed integration in Europe and seasonal variations.
• Asset Light Model: Dependence on third-party owned aircraft and potential risks in transitioning to eVTOL.

Question and Answer

Q: Could you give views on 1Q and clarify what you mean by positive adjusted EBITDA in '24?

A: First quarter is seasonally light, expect ~10% year-over-year growth in revenue, similar EBITDA to Q4. Positive adjusted EBITDA in '24 means more than zero.

Q: What's contemplated between the low end and high end of the revenue range for '24 and what's driving '25 acceleration?

A: Noise in year-over-year comp due to discontinuing BladeOne jet product and softer jet charter; '25 acceleration driven by Passenger flight profit improvement and Medical flight margin expansion.

Q: How does buying eight Hawker 800 Aircraft benefit Blade versus capacity purchase agreements?

A: Benefits from more pass through economics, economies of scale, and operating leverage; funded by existing deposits and captures fixed cost leverage when owning aircraft.

Q: Regarding current lease agreements in NYC, how many years left and what stops competition from taking landing zones?

A: Leases coterminous with operators, captive infrastructure critical as vertical transport needs specific processing areas, creating a competitive moat.

Q: Are contracts with hospitals exclusive, and how about competition from other transplant companies?

A: No lost customer contracts; work with same hospitals as other companies, focusing on best logistics at right price.

Q: How do you see competition in the MediMobility space like TransMedics?

A: TransMedics has a good device, more devices help increase organ availability, Blade focuses on logistics and servicing hospitals safely and cost-effectively.

Q: What are the operating costs of EVA and comparison with traditional helicopters, and replacement?

A: EVA operating costs expected similar to traditional helicopters initially, cohabitation phase with both EVA and conventional helicopters as EVA scales up.