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Blade Air Mobility, Inc. (NASDAQ:BLDE) - Soaring Towards Profitability with Robust Medical Segment Growth
Published on September 24, 2024 | Ticker: BLDE

Blade Air Mobility, Inc. (NASDAQ:BLDE) has delivered a strong start to 2024, with its medical business segment emerging as the standout performer. The company's total revenue for the fiscal year ended December 31, 2023, reached $146.12 million, while the net loss stood at $27.26 million. The annual operating cash flow and free cash flow were -$37.13 million and -$37.86 million, respectively.

In the first quarter of 2024, Blade reported a 13.8% year-over-year increase in total revenue to $51.5 million. This impressive growth was primarily driven by a 34.6% surge in the company's Medical segment revenue, which reached $36 million. The Passenger segment, on the other hand, saw a 5.9% decline in revenue due to poor weather conditions in Europe and lower passenger volumes in Canada, partially offset by a 26% increase in the company's New York airport service.

Business Overview

Blade operates in two key segments: Passenger and Medical. The Passenger segment consists of Short Distance flights, primarily helicopter and amphibious seaplane services in the United States, Canada, and Europe, as well as Jet and Other services, including non-medical jet charter and by-the-seat jet flights. The Medical segment focuses on the transportation of human organs for transplant and the medical teams supporting these services.

Blade's asset-light business model leverages third-party aircraft and operators, enabling the company to scale its operations efficiently. The company also owns a small fleet of fixed-wing aircraft, primarily utilized for its Medical segment. Blade's proprietary technology stack, which includes real-time tracking, flight profitability analysis, and customer-facing applications, allows the company to manage its operations effectively.

Medical Segment Shines

The standout performer in Blade's portfolio has been the Medical segment, which reported a 34.6% year-over-year increase in revenue during the first quarter of 2024. This growth was driven by several factors, including the addition of new hospital clients, increased trip volumes and distances from existing clients, and the growing adoption of perfusion and organ preservation technologies that have expanded the overall market.

Blade's Medical segment adjusted EBITDA surged 134.5% year-over-year, with margins improving by over 500 basis points to 12.2%. The company's increased use of dedicated aircraft and ground vehicles, as well as the rise in average trip distance, have contributed to the improved profitability in this segment.

Looking ahead, Blade expects to see single-digit sequential quarter-over-quarter revenue growth in the Medical segment for the remainder of 2024, with some potential lumpiness due to the timing of new client onboarding. The company also anticipates single-digit sequential growth in Medical SG&A as it continues to ramp up its organ placement and ground offerings.

Passenger Segment Navigates Challenges

The Passenger segment faced some headwinds in the first quarter of 2024, with a 5.9% year-over-year decline in revenue. This was primarily due to poor weather conditions in Europe, which led to a significant increase in flight cancellations, as well as lower passenger volumes in Canada. The discontinuation of the company's BladeOne scheduled jet service between New York and South Florida also contributed to the revenue decline in the Jet and Other product line.

Despite these challenges, Blade's Passenger segment adjusted EBITDA improved by $0.4 million year-over-year, driven by cost-saving initiatives and the optimization of the segment's cost structure. The company expects to see continued year-over-year improvement in Passenger segment adjusted EBITDA, supported by SG&A cost efficiencies.

In the Passenger segment, Blade's New York airport service remains a strategic focus, with a 26% year-over-year increase in revenue. The company has also seen improvements in revenue per seat and a growing number of airport passes outstanding, indicating strong customer demand for this service.

Liquidity and Capital Position

Blade ended the first quarter of 2024 with no debt and $151 million in cash and short-term investments, providing the company with ample financial flexibility for strategic investments, acquisitions, and opportunistic share repurchases. The company's cash flow usage in the quarter was primarily driven by a $2.6 million increase in accounts receivable and a $10.2 million reduction in accounts payable and accrued expenses, which included payments related to the Trinity contingent consideration and the 2023 short-term incentive plan.

Capital expenditures during the quarter amounted to $1.1 million, primarily for leasehold improvements and software development. Blade has reiterated its 2024 and 2025 guidance, which includes the achievement of positive adjusted EBITDA in 2024 and double-digit adjusted EBITDA in 2025.

Geographic and Segment Breakdown

Blade's revenue is primarily generated in the United States, which accounted for 87.9% of total revenue in the first quarter of 2024. The remaining 12.1% of revenue was derived from international markets, primarily in Canada and Europe.

In terms of segment breakdown, the Medical segment contributed 70.0% of total revenue in the first quarter of 2024, while the Passenger segment accounted for the remaining 30.0%. The Medical segment's strong performance, with a 34.6% year-over-year increase in revenue, was a key driver of Blade's overall growth during the quarter.

Risks and Challenges

Blade faces several risks and challenges, including the company's ability to continue attracting and retaining fliers in its Passenger segment, particularly in the face of competition from various transportation options. The company's reliance on third-party aircraft operators and the availability of such operators could also impact its operations.

Additionally, the development, approval, and widespread adoption of electric vertical aircraft (EVA) technology remain critical to Blade's long-term strategy. Delays or setbacks in the commercialization of EVA could affect the company's ability to leverage the expected cost and environmental benefits of these new aircraft.

Conclusion

Blade Air Mobility has delivered a strong start to 2024, with its Medical segment leading the charge. The company's asset-light business model, coupled with its proprietary technology stack, has enabled it to scale its operations efficiently and capitalize on the growing demand for organ transportation services. While the Passenger segment faced some challenges in the first quarter, Blade's focus on cost optimization and profitability improvements in this segment bodes well for its future performance.

With a robust liquidity position, Blade is well-positioned to pursue strategic investments, acquisitions, and opportunistic share repurchases to drive long-term shareholder value. As the company continues to execute on its growth initiatives and navigate the evolving air mobility landscape, investors should closely monitor Blade's progress in both its Passenger and Medical segments.

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