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Air Methods (AIRM) Q1 Earnings & Revenues Top Estimates - Analyst Blog

Air Methods CorpAIRM reported adjusted earnings (EPS) of 36 cents per share in the first quarter of 2015, which beat the Zacks Consensus Estimate by a couple of cents. Adjusted EPS also surged 24.1% from the year-ago quarter on the back of robust revenue growth, partly offset by weather-related cancellations and higher-than-anticipated maintenance expenses.

Air Methods Corporation - Earnings Surprise | FindTheCompany

Following the announcement of first-quarter results on May 7, shares of Air Methods have contracted roughly 3.4% to close at $42.12 till the last trading session.

Quarter Details

Total revenues increased 7.8% year over year to $238.3 million, ahead of the Zacks Consensus Estimate of $236 million. The improved top line can be attributed to strong performances by Patient Transport (up 14.1%), Tourism (up 16%) and Dispatch and billing service (up 52.4%).

Net patient transport revenues increased 14.1% to $161.8 million. Net revenue per patient transport grew 7% to $11,651 from $10,928 in the year-ago quarter. Total patient transports from community-based locations grew 7% to 13,852.

Revenues from the company's United Rotorcraft division, excluding revenue generated from internal projects, decreased 47.4% to $4.1 million.

General and administrative expenses, as a percentage of revenues, expanded 80 basis points (bps) from the year-ago quarter to 15%. The increase was primarily owing to incremental equity and incentive compensation accruals as well as higher administrative costs.

Operating expenses, as a percentage of total revenues, increased 40 bps from the year-earlier quarter to 65.8%.

Operating margin, as a result, contracted 40 bps to 10.8%.

Financial Position

Cash and cash equivalents, as of Mar 31, 2015, was $24.8 million compared with $13.2 million as of Dec 31, 2014.

During the first quarter, net cash provided by operating activities were $34.5 million, higher than $15.9 million in the prior-year quarter.

2015 Update

The company provided an update on preliminary April flight volume and net revenue per patient transport.

Total community-based transports increased 11% to 5,070 in the month of Apr 2015, compared with 4,572 in Apr 2014. Same-Base Transports for Apr 2015 increased by 18 transports from Apr 2014, while weather cancellations for these same bases increased by 526.

Our Take

We are impressed with the company's double-digit earnings growth during the first quarter despite significant increase in weather-related cancellations and higher-than-anticipated maintenance expenditures.

In 2014, the company launched 10 new Greenfield locations and also won outsourcing contracts from 9 hospital customers while in 2015, Air Methods opened 4 Greenfield bases. In addition, through the acquisition of the Vanderbilt program, 5 existing bases began operating as community-based locations during April. We believe that this will significantly boost the company's top line.

In our view, favorable hospital outsourcing trends, strong flight volume growth, less severity and seasonality effects on net reimbursement, and reduction in fuel prices will drive growth at the company, going forward.

Stocks to Consider

Currently, Air Methods has a Zacks Rank #3 (Hold).

Better-ranked stocks in the medical services sector include AMN healthcare Services AHS , Cancer Genetics CGIX and INC Research Holdings INCR . All the three stocks sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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