Image source: Air Methods.

Thursday turned out to be quite a big day for Denver-based Air Methods Corp. (NASDAQ:AIRM). The air medical transport company announced the acquisition of Tri-State Care Flight early in the day. After the market closed, Air Methods also released results for the third quarter. Here's how those results stacked up.

Air Methods results: The raw numbers


Q3 2015 Actuals

Q3 2014 Actuals

Growth (YOY)


$311.3 million

$276.9 million


Net Income From Continuing Operations

$46.8 million

$34.4 million






Data source: Air Methods Corp. 

What happened with Air Methods this quarter?
Highlights for Air Methods during the third quarter included: 

  • Air medical services net revenue from patient transport jumped 17.6% year over year to $222.8 million. That more than offset an 8.9% decrease in net contract revenue for the division.
  • The company's tourism division saw net revenue increase 6.7% to $36.2 million. This reflected solid gains in the number of passenger trips, although the total revenue per passenger fell slightly.
  • Air Methods' United Rotorcraft division, which provides custom aircraft interiors and engineering services to other air operators, brought in external revenue of $8.4 million, up 36.2% year over year.
  • Lower fuel costs helped considerably. Air medical services fuel expense per flight hour fell 22.3% compared to the prior-year period, while tourism fuel expense per flight hour dropped 37.8%.
  • The company increased its access to capital by $400 million through an amendment to its existing credit agreement. Up to $200 million of this amount could potentially be used for share buybacks.

What management had to say
Air Methods CEO Aaron Todd liked what his company accomplished during the third quarter. Todd said, "We are very pleased with our third quarter results, which exceeded expectations." He noted that 14 new bases had been added since the third quarter of last year, helping to increase the number of patient transports. Todd added that "momentum remains strong" for the company.

Looking forward
The company provided a little sneak peek at how the fourth quarter might turn out with its preliminary October 2015 flight volume. Total community-based patient transports were up over 12% year over year during the month. That appears to be an encouraging start for the fourth quarter.

An even bigger thing for investors to watch, though, relates to acquisitions. Air Methods bought San Antonio AirLIFE in early October. The Tri-State deal announced on Thursday was another significant development, as Tri-State's 2014 revenue topped $81 million. 

Perhaps the most important acquisition to look out for, however, is a potential buyout of Air Methods itself.  Voce Capital Management LLC, which owns just under 5% of the company, continues to actively push for Air Methods to explore a sale of the company. 

Who might be interested in scooping up Air Methods? Investment firm KKR & Co. (NYSE:KKR) could be on the short list. KKR acquired Air Medical Group Holdings (AMGH) earlier this year. AMGH ranks as the second-largest air medical transport provider after Air Methods. It's worth noting (as Voce certainly has) that Air Methods' current market cap is only $1.6 billion -- below the near $2 billion price tag that KKR reportedly paid for the smaller AMGH. 

KKR could probably achieve significant synergies should it buy Air Methods and combine operations with AMGH. For now, though, Air Methods' management team seems focused on being the hunter rather than the hunted.