Business Context and Reporting Period
The filing is a Form 10-Q for the quarter and six months ended June 30, 2022. The filing identifies the registrant as Blade Air Mobility, Inc., not Strata Critical Medical, Inc. Blade operates an asset-light air mobility platform using contracted aircraft operators across Short Distance, MediMobility Organ Transport, and Jet and Other services. The company changed its fiscal year-end from September 30 to December 31 effective in 2022.
Financial Highlights
| Metric | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2022 |
|---|---|---|
| Revenue | $35.6 million | $62.3 million |
| Gross profit | $5.1 million | $8.0 million |
| Gross margin | 14% | 13% |
| Loss from operations | $9.7 million | $23.4 million |
| Operating margin | (27%) | (38%) |
| Net income/(loss) | $8.4 million | $(2.6) million |
| Net margin | 24% | (4%) |
| Net cash used in operating activities | Not separately reported for the quarter | $21.7 million |
Second-quarter revenue increased 175% year over year, while six-month revenue increased 180%. Revenue included $11.0 million from Short Distance, $17.2 million from MediMobility Organ Transport, and $7.4 million from Jet and Other in the quarter. Six-month amounts were $15.2 million, $29.9 million, and $17.2 million, respectively.
Cost of revenue was $30.5 million in the quarter and $54.2 million for the six months, representing 86% and 87% of revenue, respectively. The company attributed the elevated cost ratio to revenue mix shifts toward organ transport, the below-breakeven ramp of airport transfer service, and, for the six-month period, Omicron-related restrictions affecting Vancouver demand.
Second-quarter net income was primarily driven by a $19.3 million non-cash gain from the change in fair value of warrant liabilities. For the six-month period, the comparable gain was $21.8 million. The company also recorded realized losses on short-term investments of $1.6 million for the quarter and $1.7 million year to date.
Liquidity, Capital Resources and Balance Sheet
- Cash and cash equivalents were $186.6 million at June 30, 2022, compared with $2.6 million at December 31, 2021.
- Restricted cash was $1.7 million, and short-term investments were $69.6 million. Management stated that short-term investments could be liquidated with one day’s notice.
- Total cash, cash equivalents, and restricted cash were $188.2 million at June 30, 2022.
- Net working capital was $259.7 million. Management believes available cash and short-term investments are sufficient for current operating needs for at least 12 months from filing.
- The company reported no outstanding note payable at June 30, 2022. Liabilities totaled $31.9 million, including $9.5 million of warrant liabilities and $6.1 million of operating lease liabilities.
- Operating cash use increased from $9.8 million in the prior-year period to $21.7 million. Investing cash inflow of $207.6 million primarily reflected the sale of short-term investments and transfer of proceeds into cash and money market funds.
Material Changes Versus the Prior Comparable Period
- Revenue growth was driven by the September 2021 acquisition of Trinity, the November 2021 acquisition of exclusive Helijet scheduled-route rights in Canada, and organic growth.
- MediMobility Organ Transport revenue increased 1,013% in the quarter and 937% for the six months, primarily due to the Trinity acquisition, new hospital clients, and expansion with existing clients.
- Short Distance revenue increased 89% in the quarter and 121% year to date, supported by Helijet routes, higher helicopter charter demand, resumed airport-transfer products, and price increases.
- Operating expenses increased to $45.4 million in the quarter and $85.7 million for the six months, reflecting higher flight activity, hiring, public-company costs, amortization, marketing, and technology investment.
- Seats flown on passenger flights increased to 28,241 in the quarter and 46,735 year to date, compared with 5,971 and 8,226, respectively, in the prior-year periods.
- Warrant liabilities declined from $31.3 million at December 31, 2021 to $9.5 million at June 30, 2022, producing a non-cash gain in earnings.
Guidance, Outlook, Risks and Unusual Items
Management expects to incur net losses in the short term while executing strategic initiatives and stated that no additional capital is expected to be needed for the current business plan over the next 12 months. The filing does not provide quantified revenue, earnings, or profitability guidance.
On May 18, 2022, Blade agreed to acquire the commercial passenger transport activities of Monacair, Héli Sécurité, and Azur Hélicoptère for approximately $50.1 million in cash. Closing was expected in late summer 2022, subject to conditions and termination provisions.
Capacity purchase commitments with aircraft operators totaled approximately $4.2 million for the remainder of 2022, $7.1 million for 2023, $8.6 million for 2024, and $7.5 million for 2025. Certain commitments may be terminated upon travel restrictions or with 30-to-60 days’ notice.
- COVID-19, new variants, reduced business travel, travel restrictions, and weaker air-travel demand could delay recovery and route expansion.
- Inflation, fuel costs, private-jet demand, operator availability, and pricing pressure could reduce margins.
- The company depends on third-party aircraft operators and faces aviation safety, insurance, regulatory, airport, heliport, and infrastructure risks.
- Commercial adoption of electric vertical aircraft remains dependent on technological development and regulatory certification; no such aircraft were certified by the FAA for U.S. commercial passenger operations as of the filing.
- Trinity received a federal grand jury subpoena for records relating to transplant transportation services and is cooperating. The filing does not state whether any liability will result.
- Disclosure controls were ineffective as of June 30, 2022 because of a material weakness in internal control over financial reporting. Management planned to hire a Director of Internal Controls and expected remediation during 2022.
- The Shoreline Aviation litigation was dismissed with prejudice on March 16, 2022, with no admission of wrongdoing or liability by Blade.
Investor Verification Priorities
- Confirm the registrant identity: the supplied filing is for Blade Air Mobility, Inc., although the request metadata names Strata Critical Medical, Inc.
- Assess whether reported earnings are representative by excluding the $19.3 million quarterly and $21.8 million year-to-date non-cash warrant remeasurement gains.
- Monitor operating cash burn, including the $21.7 million six-month use of cash, against the planned approximately $50.1 million acquisition and ongoing operator commitments.
- Evaluate whether the MediMobility Organ Transport growth rate is sustainable and whether its higher cost structure will continue to suppress gross margins.
- Track remediation of the material weakness and whether subsequent filings report effective disclosure controls.
- Follow the federal grand jury subpoena involving Trinity and any resulting financial, regulatory, or operational consequences.
- Verify completion, financing, and integration of the proposed French and Monaco acquisitions.