Strata Critical Medical, Inc. Q2 FY2025 earnings call

• Announced sale of Blade Passenger business to Joby Aviation for up to $125 million, which is transformational. • Medical business grew from 12% of revenue in 2020 to ~60% in 2024 and saw 18% revenue growth in Q2 2025. • Entered long-term partnership with Joby for access to eVTOL aircraft for medical use. • Passenger business saw improved profitability with flight margin up and adjusted SG&A down. • Company has ~$200 million cash on balance sheet post-Blade Passenger sale, with potential for additional $35 million earnout.

Medical revenue in Q2 2025 was $45.1 million, a 17.6% year-over-year increase. Medical segment accounted for a significant portion of revenue and adjusted EBITDA. For the Passenger business, excluding Canada, short distance revenue decreased 5.5% year-over-year, while Europe saw strong revenue growth post-restructuring. Jet & Other revenue decreased 2% year-over-year. The Passenger segment adjusted EBITDA tripled year-over-year to $2.4 million, with flight margin at 30.5% and adjusted SG&A down 17% year-over-year.

• Sale of Passenger business is expected to be adjusted EBITDA and free cash flow neutral on an annualized basis. • Medical segment expects mid-teens revenue growth in the second half of 2025 and adjusted EBITDA margins of approximately 15% in the second half. • Reaffirming 2025 full company revenue guidance between $245 million and $265 million with double-digit adjusted EBITDA, excluding the impact of the divestiture. • Guidance for stand-alone Medical business to be provided after transaction close.

• Risk of not achieving the $35 million earnout metrics as there are some associated risks. • Elevated maintenance downtime in the Medical business in the first half of 2025 impacted adjusted EBITDA margins due to scheduled maintenance events on the fleet.

Q: With that up to $125 million proceeds from Joby, what are your current priorities for capital allocation to help either organic or inorganic growth? And also like how confident are we to meet that required milestones or metrics for the $35 million earnout?

A: Rob Wiesenthal said priorities include M&A opportunities and organic growth like TOPS and critical cargo. William Heyburn said about half of the $35 million holdback is related to retention and the other half to financial performance, and they believe they are achievable though nothing is without risk.

Q: Do you see any operational impact from the divestiture to the Medical segment, like in terms of infrastructure, less relationship or the like operating team, et cetera?

A: William Heyburn said they're set up for success as a stand-alone company with a long-term agreement with Joby for access to helicopters and eVTOL aircraft, which is a huge value add.

Q: If we think about the Passenger business sale why now versus one maybe at a later point, it could have been more profitable. I understand, obviously, wanted to bolster the Medical, but how long were discussions ongoing to sell this piece of the business?

A: Rob Wiesenthal said discussions were ongoing and it was clear Joby was the right partner as they have the best time to market, capital, and technology.

Q: How should we think about any seasonality in the Medical business?

A: William Heyburn said it's not a seasonal business, though a slight slowdown in late summer has been seen in past years but not yet in current numbers.

Q: Can you speak to any tax implications of the transaction?

A: William Heyburn said there are enough NOLs to offset the capital gain associated with the Passenger divestiture, with cash tax impact being immaterial.