Blade Air Mobility, Inc. — Q1 2023 Form 10-Q Summary
Filing-period note: The supplied filing identifies the registrant as Blade Air Mobility, Inc., not Strata Critical Medical, Inc. The report covers the three months ended March 31, 2023 and was filed May 11, 2023. Financial statements are unaudited and prepared under U.S. GAAP.
Business context and reporting period
Blade operates an asset-light, technology-enabled air mobility platform and does not own or operate aircraft. Its two reporting segments are Passenger, consisting of Short Distance and Jet and Other services, and Medical, consisting primarily of MediMobility Organ Transport. Blade uses contracted aircraft operators and is pursuing future adoption of electric vertical aircraft technology.
The company completed the Blade Europe acquisition in September 2022, affecting year-over-year comparability. Passenger activity totaled 28,550 seats flown, up from 18,494 in Q1 2022. Passenger demand is seasonal, while Medical demand has historically been less seasonal.
Financial performance and key metrics
| Metric | Q1 2023 | Q1 2022 | Change |
|---|---|---|---|
| Revenue | $45.3 million | $26.6 million | Up 70% |
| Cost of revenue | $38.1 million | $23.7 million | Up 61% |
| Flight profit | $7.2 million | $2.9 million | Up 145% |
| Total flight margin | 15.8% | 11.0% | Up 4.8 percentage points |
| Loss from operations | $(12.8) million | $(13.7) million | Loss narrowed |
| Net loss | $(10.2) million | $(11.0) million | Loss narrowed |
| Basic and diluted loss per share | $(0.14) | $(0.16) | Improved |
| Net cash used in operating activities | $(16.9) million | $(10.1) million | Use increased |
| Total liquidity | $176.9 million | $194.0 million at Dec. 31, 2022 | Down $17.1 million |
Revenue growth was driven by Short Distance revenue of $10.4 million, up 148%, and MediMobility Organ Transport revenue of $26.8 million, up 111%. Jet and Other revenue declined 17% to $8.1 million.
Passenger revenue increased 33% to $18.5 million, with Flight Margin improving to 15.2% from 4.9%. Medical revenue increased 111% to $26.8 million, while Medical Flight Margin declined to 16.3% from 17.6% because rapid growth required greater use of lower-margin, non-dedicated aircraft.
Operating expenses were $58.1 million, including $16.3 million of general and administrative expense, $2.6 million of selling and marketing expense, and $1.1 million of software development expense. Stock-based compensation expense totaled $2.9 million in the income statement, and total stock-based compensation cash-flow adjustments were $3.2 million.
Interest income increased to $2.0 million from $0.3 million, primarily because of higher rates and short-term investments. The company also recognized $0.6 million of non-cash income from the change in fair value of warrant liabilities. Segment Adjusted EBITDA was negative $1.2 million, comprising negative $3.1 million for Passenger and positive $1.9 million for Medical.
Financial position, liquidity, debt, and commitments
- Cash and cash equivalents were $41.7 million; restricted cash was $2.1 million; short-term investments were $135.2 million.
- The company reported zero debt and net working capital of $186.0 million.
- Total assets were $322.4 million and total liabilities were $52.2 million at March 31, 2023.
- Operating cash outflow of $16.9 million was primarily attributable to the net loss and working-capital investment, including a $5.6 million increase in accounts receivable related to Medical growth.
- Investing activities provided $16.3 million, largely reflecting short-term investment maturities and sales, partially offset by purchases of held-to-maturity securities and property and equipment.
- Capacity purchase agreement commitments totaled approximately $9.2 million for the remainder of 2023, $24.7 million for 2024, and additional commitments through 2032. Certain commitments may be terminated for convenience or upon government-imposed travel restrictions.
- Operating lease liabilities totaled $24.8 million on a present-value basis, with undiscounted future minimum lease payments of $34.1 million.
Material changes versus the prior comparable period
- Revenue increased $18.6 million, or 70%, led by Medical growth and the Blade Europe acquisition.
- Cost of revenue increased 61%, slower than revenue growth, reducing cost of revenue as a percentage of revenue from 89% to 84%.
- Flight profit and total Flight Margin improved substantially, although the company remained loss-making at the operating and net income levels.
- General and administrative expense increased 16% because of additional personnel, stock compensation, incentive-plan accruals, amortization, leases, and geographic expansion costs; prior-year legal and M&A costs were lower in the current period.
- Operating cash usage increased by $6.8 million, reflecting higher receivables, prepaid operator costs, and payments of prior-period obligations.
- Shares outstanding increased to 72.5 million from 71.7 million at year-end 2022, including 384,756 shares issued to settle Trinity contingent consideration.
Guidance, outlook, commentary, risks, and unusual items
The filing does not provide numerical revenue, profitability, or cash-flow guidance. Management expects near-term net losses while executing strategic initiatives and states that existing liquidity should support current operations for at least the next 12 months. Management states that no additional capital is expected to be needed for the current business plan over that period, although longer-term needs depend on expansion, customer retention, capital expenditures, and acquisitions.
- Management expects to continue investing in new markets, technology, infrastructure, and marketing. Passenger results may be weaker in Q1 and Q4 because of seasonality.
- Blade depends on third-party aircraft operators, aircraft availability, fixed or guaranteed capacity commitments, and the ability to pass through fuel and other cost inflation.
- The company continues to incur significant losses and has historically generated insufficient operating cash flow to fund all growth investments.
- No electric vertical aircraft are currently certified by the FAA for commercial passenger operations; timing, certification, market acceptance, and economics remain uncertain.
- Trinity Air Medical received a federal grand jury subpoena in July 2022 relating to transplant transportation services and is cooperating. The filing does not state that a material loss is probable.
- Disclosure controls and internal control over financial reporting were not effective as of March 31, 2023 because of material weaknesses involving control deficiencies across business processes and insufficient documentation supporting management’s testing of controls. Management expects remediation during 2023.
- The company adopted credit-loss and contract-liability accounting updates in 2023 without a material impact on the financial statements.
Important facts for investors to verify
- Confirm that the intended filing is Blade Air Mobility, Inc.; the request metadata names Strata Critical Medical, Inc.
- Assess whether Medical revenue growth and Passenger margin improvement are sustainable or primarily reflect acquisitions, rapid customer additions, and seasonal effects.
- Monitor operating cash burn, accounts receivable growth, and the decline in total liquidity.
- Review capacity purchase agreements, minimum flight guarantees, lease obligations, termination rights, and exposure to operator and fuel costs.
- Track remediation of the material weaknesses and whether subsequent filings report effective disclosure controls and internal controls.
- Evaluate the federal grand jury subpoena involving Trinity and any resulting regulatory, legal, financial, or reputational consequences.
- Consider dilution risk from approximately 14.2 million warrants, 7.3 million options, and 7.5 million non-vested restricted stock units excluded from diluted loss-per-share calculations.