Blade Air Mobility Sees Growth in Medical, Stagnation in Passenger Services

Soaring over Westchester County Airport (KHPN) in White Plains, New York, was Beta Technologies' ALIA-250 eVTOL aircraft, part of a flight test between Beta and partner Blade Air Mobility (NASDAQ: BLDE) as the latter looks to transition to an air taxi service.

But those aircraft are still a few years away from entering service. In the meantime, Blade is focused on the here and now. The company last week released financials for the first quarter of 2023 that reflected solid growth in its medical transport services—and a potential runway for growth in chartered, passenger-carrying helicopter services.

"We are making exceptional progress on all fronts, resulting in our seventh consecutive quarter with financial results ahead of our expectations,” Blade CEO Rob Wiesenthal said in a statement.

Blade’s total first-quarter revenue was $45.3 million. That’s an increase of 70 percent year over year attributable mostly to its MediMobility Organ Transplant service, which received a massive boost after the firm’s 2021 acquisition of Trinity Air Medical.

The company’s medical segment brought in $26.8 million for the quarter, rising 111 percent annually and 24 percent over the previous quarter. Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), meanwhile, rose from just less than $1 million last year to around $1.9 million this quarter. It attributed those gains to new hospital wins, growth with existing clients, and market factors.

Specifically, Blade sees tailwinds from organ preservation technology, which will increase the number of organs available for transplant and the distance they can travel—and, by extension, Blade’s revenue per mission.

"We continue to demonstrate our unique value proposition in medical through the addition of new customers, while supporting added volume and transport distances amongst our existing customer base,” Wiesenthal said.

In April, for example, Blade delivered lungs from organ donors in Alaska to recipients on the East and West coasts, something it said wouldn’t have been possible a few years ago. Because of those factors, the company told shareholders it expects the segment to see continued sequential growth.

Medical was also the main driver of Blade’s flight profit. Rising 145 percent year over year to $7.2 million, the figure outpaced growth in revenue and adjusted corporate expense, which improved the firm’s adjusted EBITDA margin by nearly 1,200 basis points. That means its operating profit is rising as a percentage of revenue, which bodes well for future growth.

“We expect this trend to continue in the coming quarters, resulting in year-over-year adjusted EBITDA improvement through the balance of the year,” said Blade CFO Will Heyburn. “Our resilient, flexible, and diversified business model, coupled with our strong liquidity position, puts us in a unique position to thrive in any macroenvironment.”

While MediMobility rakes it in, the firm’s passenger segment has experienced less success. It saw revenue growth of 32.6 percent annually to $18.5 million, with seats flown also rising 54.4 percent. But these trips have a lower margin than the firm’s medical deliveries, which widened the segment’s adjusted EBITDA loss slightly to $3.1 million.

According to the company’s first-quarter shareholder letter, losses were primarily the result of its Blade Europe segment, launched last year. Its performance was slightly weaker than anticipated, owing to poor weather, longer-than-expected delays in aircraft maintenance, and an unusually warm winter ski season.

However, Blade said it will have plenty of capacity for Europe’s upcoming peak season. It also launched a new by-the-seat helicopter service and marketing campaign that it expects will expand trip volume in the region.

Losses in the passenger segment were also due in part to a 17.2 percent decline in revenue in the Jet and Other segment, which focuses on long-range flights. But Blade saw that coming following a normalization in jet charter volume, and the losses were partially offset by growth in the Canadian business segment, which enjoyed revenue growth of 65 percent annually.

While the passenger business is still not profitable, there are a few promising growth indicators. Blade’s revenue from short-distance trips grew a whopping 148 percent yearly, mainly because of the firm’s acquisitions in Europe and revenue growth in Canada.

But another key factor was Blade Airport, the company’s helicopter charter service that flies passengers between two “lounges” at existing heliports in Manhattan and nearby airports. The service saw 96 percent year-over-year revenue growth, a 70 percent rise in seats flown and a double-digit increase in average revenue per seat.

That’s crucial because Blade Airport is the company’s self-described “most accessible” offering, with tickets starting at $195. It’s Blade’s “big bet” for customer acquisition, and encouragingly, the Airport segment saw a 46 percent increase in first-time passengers this quarter. The firm is also selling more premium subscriptions for the service, and it expects growth to continue.

“In [the passenger segment], our No. 1 focus remains driving the business to profitability, providing our investors with an asset-light, manufacturer-agnostic play on urban air mobility that is without peer and well-positioned to generate free cash flow, while standing ready to benefit from broader adoption with the commercialization of electric vertical aircraft,” Wiesenthal explained.

Looking ahead, Blade at the end of the first quarter had about $176 million in cash, cash equivalents and short-term investments on hand. The company considers its liquidity position to be strong and is looking to use it.

“We remain confident in our tangible and forthcoming path to profitability, and as a result, we continue to expect that a significant amount of this liquidity will be available for strategic acquisitions,” Wiesenthal wrote to shareholders.

The firm is also encouraged by acting FAA Administrator Billy Nolen’s recent comments about the air taxi industry, which the agency will support with new plans, guidelines, and standards. After Nolen departs this summer, Blade expects his successor to pick up where he left off.

Still, the firm will need to wait on certification of Beta’s ALIA-250—and any other aircraft it plans to use—before launching air taxis. But for now the company is focused on today.

“While EVA will enable exponential growth and enhance our return profile, we are not waiting idly for their arrival,” wrote Wiesenthal. “Instead, we remain laser-focused on deploying our capital in a manner that generates attractive returns today, while increasing the long-term intrinsic value of our business for the future.”