Blade Air Mobility, Inc. — Form 10-Q Summary
Reporting period: Three and nine months ended September 30, 2023. The source filing identifies the registrant as Blade Air Mobility, Inc., not Strata Critical Medical, Inc. The filing was submitted November 8, 2023 and contains unaudited U.S. GAAP interim financial statements.
Business context
Blade operates an asset-light air mobility platform and does not own or operate aircraft. Its two reporting segments are Passenger, including Short Distance and Jet and Other services, and Medical, primarily MediMobility Organ Transport. Services are provided through contracted aircraft operators and, for some medical ground transportation, company-owned vehicles.
Key financial metrics
| Metric | Q3 2023 | Q3 2022 | 9M 2023 | 9M 2022 |
|---|---|---|---|---|
| Revenue | $71.4 million | $45.7 million | $177.7 million | $108.0 million |
| Revenue growth | 56% | 65% | ||
| Loss from operations | $(7.4) million | $(10.4) million | $(32.5) million | $(33.9) million |
| Net income (loss) | $0.3 million | $(9.2) million | $(22.1) million | $(11.8) million |
| Operating margin | (10.4%) | (22.8%) | (18.3%) | (31.3%) |
| Net margin | 0.4% | (20.2%) | (12.5%) | (11.0%) |
| Net cash used in operating activities | $(23.0) million | $(28.0) million | ||
| Total flight profit | $15.6 million | $9.3 million | $33.1 million | $17.3 million |
| Total flight margin | 21.8% | 20.3% | 18.6% | 16.0% |
Q3 net income was aided by $7.9 million of other non-operating income, including $2.1 million of interest income and $5.7 million of non-cash warrant-liability fair-value gains. For the nine-month period, other non-operating income was $9.9 million, including $6.2 million of interest income and $3.8 million of warrant-liability gains.
At September 30, 2023, cash and cash equivalents were $36.8 million, restricted cash was $1.5 million, and short-term investments were $136.4 million, for reported total liquidity of $173.2 million. The company reported zero debt, $178.4 million of net working capital, total liabilities of $54.6 million, and stockholders’ equity of $262.9 million.
Segment performance and material changes
- Passenger: Q3 revenue increased 49% to $38.0 million; nine-month revenue increased 44% to $83.1 million. Passenger flight margin increased to 24.8% in Q3 and 20.3% for nine months, compared with 23.9% and 16.0%, respectively.
- Medical: Q3 revenue increased 65% to $33.4 million; nine-month revenue increased 89% to $94.6 million. Medical flight margin increased to 18.4% in Q3 and 17.2% for nine months, compared with 15.7% and 16.0%, respectively.
- Product drivers: Short Distance revenue increased 49% in Q3 and 69% for nine months. MediMobility Organ Transport revenue increased 65% in Q3 and 89% for nine months, driven by new hospital clients, existing-client growth, higher trip volumes, and longer average travel distances.
- Passenger activity: Seats flown increased to 50,821 in Q3 and 121,008 for nine months, compared with 28,440 and 75,175, respectively, in the prior-year periods.
- Cost structure: Cost of revenue increased 53% in Q3 and 59% for nine months, but declined as a percentage of revenue to 78% and 81%, respectively, from 80% and 84%. Management attributed the improvement to dedicated medical aircraft, Blade Europe, improved New York airport-transfer pricing and utilization, and lower spot-market jet charter costs.
- Corporate costs: General and administrative expense rose 22% in Q3 and 29% for nine months, primarily due to staffing, stock-based compensation, Blade Europe-related costs, and Trinity earn-out expense. Software development expense declined 47% in Q3 and 7% for nine months.
- Liquidity movement: Cash, cash equivalents and restricted cash declined by $6.1 million during the first nine months, despite $17.0 million of net investing cash inflow, principally because operating activities used $23.0 million.
Guidance, outlook, risks and unusual items
Management expects net losses in the short term but stated that existing liquidity should fund current operational needs and the current business plan for at least the next 12 months. No formal revenue, earnings, or margin guidance is provided in the filing.
- The company expects an approximately $7.6 million Trinity acquisition earn-out payment in early 2024 for 2023 performance; $5.7 million had been accrued through September 30, 2023, and at least 70% must be paid in cash.
- Remaining capacity-purchase obligations totaled $2.955 million for the remainder of 2023 and $18.710 million for 2024. Certain obligations may be terminated for travel restrictions or convenience, subject to contractual terms.
- Operating lease liabilities totaled $24.3 million on a present-value basis, with $32.7 million of undiscounted future minimum payments.
- The federal grand jury investigation relating to transplant transportation services was closed in August 2023, and the company stated that it was no longer bound by the subpoena-related obligations.
- The company expects Jet and Other revenue to be affected because its by-the-seat New York–South Florida jet service was not expected to operate beginning in the fourth quarter of 2023.
- Key risks include continued losses, dependence on third-party aircraft operators, aircraft availability and costs, demand and seasonality, safety incidents, regulatory restrictions, technology and cybersecurity failures, international expansion, acquisitions, access to funding, and uncertainty regarding certification and commercial deployment of electric vertical aircraft.
- Management concluded that disclosure controls and procedures were not effective as of September 30, 2023 because of material weaknesses in internal control over financial reporting, including deficiencies across business processes and IT controls and insufficient documentation supporting control-effectiveness assessments. Remediation was underway, with completion targeted during 2023.
Most important facts to verify
- Confirm that this filing belongs to Blade Air Mobility, Inc.; the request metadata names Strata Critical Medical, Inc.
- Assess whether strong revenue and flight-margin growth can translate into sustainable operating profitability, given the $32.5 million nine-month operating loss and $23.0 million operating cash burn.
- Review the collectability and timing of the $21.0 million accounts receivable balance, which increased from $10.9 million at year-end 2022.
- Validate the amount, assumptions, and cash timing of the estimated Trinity earn-out, including the expected approximately $7.6 million payment in early 2024.
- Monitor remediation of the material weaknesses and whether subsequent filings report effective disclosure controls and internal control over financial reporting.
- Evaluate contractual capacity guarantees, lease obligations, reliance on third-party operators, and the potential effect of discontinuing the New York–South Florida by-the-seat jet service.