Q2 2025 Blade Air Mobility Inc Earnings Call

Good morning, ladies and gentlemen, and welcome to the blade air Mobility. Fiscal, second quarter 2025 earnings release conference call at this time, all participants are in a listen-only mode later. We'll conduct a question and answer section and instructions will follow at that time. As a reminder, this call is being recorded.

I would now like to turn the conference call over to Matt Schneider, Vice President of Investor Relations and Strategic Finance. Matt, you may now begin.

Thank you for standing by and welcome to the blade air Mobility conference, call and webcast for the quarter ended. June 30th 2025.

We appreciate everyone joining us today.

Before we get started, I would like to remind you of the company's forward-looking statement in Safe Harbor language.

Statements made in this conference call that are not historical facts including statements about future time periods. May be deemed to constitute forward-looking statements within the meaning of the private Securities. Litigation Reform, Act of 1995.

These forward-looking statements are subject to risks and uncertainties in actual future results May differ materially from those expressed or implied by the forward-looking statements.

We refer you to our SEC filings, including our annual report on form. 10K filed with the SEC for a more detailed discussion of the risk factors that could cause these differences

Any forward-looking statements provided during this conference call.

Are made only as of the date of this call.

As stated in our SEC filings blade, this claims any intent or obligation to update or revise these forward-looking statements except as required by law.

During today's call, we will also discuss certain non-gaap Financial measures which we believe may be useful in evaluating our financial performance.

A Reconciliation of the most directly historical comparable Consolidated, gaap Financial measures to those historical. Non-gaap Financial measures is provided in our earnings press release and investor presentation,

Our press release, investor presentation, and our Forms 10-Q and 10-K filings are available on the Investor Relations section of our website at IRBblade.com.

These non-gaap measures should not be considered in isolation or a substitute for financial results prepared in accordance with gaap.

Hosting today's call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade; Will Herndon, Chief Financial Officer; and Melissa Tomkiel, President.

I'll now turn the call over to Rob.

Thank you, Matt, and good morning, everyone. Yesterday, we announced the sale of the Blade passenger business to Joby Aviation for up to $125 million.

This transaction is transformational for both the blade, passenger business and Blades medical division, which will remain a standalone publicly traded company and be renamed. Strata critical medical. It will be a pure play contractual medical business operating and rapidly growing markets, uniquely situated to enjoy organic growth.

As well as an aggressive acquisition strategy.

We strongly believe that this is the best path forward to create long-term value for all stakeholders, including employees, customers partners, and shareholders.

Blades. The medical business has grown from 12% of revenue in 2020 to approximately 60% of revenue in 2024, while accounting for approximately 85% of our segment's adjusted top line. Fundamentally, the passenger and medical businesses have different growth trajectories.

Investment and investor profiles.

The strength and awareness of Blade. As a consumer brand, simply overshadows the high growth and highly profitable nature of our medical business and this transaction will unlock the full potential of each business over the coming years.

Your sales includes all our passenger operations in the US, Europe, including lounges terminals, as well as the blade brands.

Blades. Mission since Inception has been to accelerate the transition from traditional rotorcraft to Electric aircraft.

There is no stronger company than Jovi Aviation to help. Make this Mission a reality for the benefit of all stakeholders.

Our medical division has long been our fastest-growing and most profitable business line, with no direct reimbursement risk, limited economic sensitivity, and an attractive multi-year growth profile. We believe a standalone Blade Medical will have appeal with a broader set of investors versus the historical combined company structure.

I am confident that the Pure Play nature of strata combined, with the cash War chest, that should more than double in size will enable our stock to enjoy evaluation that represents the strength we have today. Coupled with the numerous opportunities, we have ahead.

We have a clear value creation strategy for strata over the coming years driven by strong underlying organic growth and a highly focused and disciplined Capital, allocation strategy supported by approximately 200 million of cash on the balance sheet for a former for The Upfront portion of the blade pasture sale. In addition to up to 35 million to be received within 12 to 18 months based on certain employee retention and financial metrics.

I will join Joby Aviation as CEO of Blade Air Mobility when the transaction closes, and as the largest individual shareholder of our parent company, I will also serve as Chairman of Strata at closing.

Melissa Tom Keel, and will haburn have overseen. Our medical division for many years and will serve as Coco's of strata while retaining their general counsel and CFO roles respectively.

Providing a seamless transition for our customers suppliers and employees. We are very lucky to have them as our co-ceos

Importantly, the financial impact of the de is expected to be adjusted, Eva Dot and free cash flow, neutral on a go forward. Annualized basis, supported by approximately 7 million in estimated corporate cost efficiencies. I'm also confident that even more economic streamlining opportunities lay ahead

Will Melissa will talk more about strata's value creation strategy, in a few moments.

lastly, we're announcing this transformation for a position of strength that is reflected in our strong Q2 2025 Financial results as Medical Revenue accelerated, its growth to 18% in Q2 2025 versus the prior year period with that, I'll turn the call over to Will

Thank you Rob. I'm excited for the opportunity to lead Serana, alongside Melissa Tokyo, and this exciting next phase of growth for the company. We are laser focused on executing a multi-year value creation strategy built on first continued share gains and product line extensions and the rapidly growing non-correlated markets. We serve and second a disciplined Capital, allocation strategy supported by approximately 200 million of cash on the balance sheet, proforma, for The Upfront proceeds from the blade passenger sale.

The company may also receive up to an additional $35 million to be received within 12 to 18 months from closing, based on certain employee retention and financial metrics.

And our core organ transplant market. We expect strong organic growth over the coming years, driven by increasing transplant volumes supported by technology adoption and regulatory change. Continued new customer acquisition and growth in ancillary businesses, including ground and organ placement.

As we've talked about before we see several additional growth opportunities both within our core organ, transplant market and an adjacent markets. There is also considerable opportunity to deploy Capital towards strategic Acquisitions. That strengthen our Core Business growth, potential and earnings power.

We're looking forward to providing more detail around our graph, value creation strategy, and our actionable M&A pipeline.

At an investor day this fall,

Before I walk through the financial results, I'll turn it over to Melissa for a few remarks.

Thanks will, I'm thrilled to help guide strata as we enter this new phase of growth, our end-to-end time. Critical air Logistics platform is second to none and is trusted by more organ transplant hospitals than any other provider. We will remain Relentless in supporting our customers. All of whom are engaged in life-saving work every day. Our 100% contracted customer retention rate over the last 12 months, the Testaments that's unwavering commitment to healthcare providers, you serve.

We're also setting ourselves up for future success. As technology continues to revolutionize, the art of the possible in organ transplantation.

To a long-term partnership with Jodie through which we will gain access to Joby. Eval aircraft for medical use anywhere, they have operations.

We expect that the quiet capabilities of Job's aircraft, coupled with his potential to operate at lower costs than traditional helicopters and other shorter-range aircraft, will provide value to strata customers and a competitive advantage for the company. In the meantime, we will provide industry-leading service. We are known for using conventional aircraft to manage costs down and improve call-out time for the hospitals. We serve by moving aircraft closer to their facility.

We'll also continue to broaden our support for all the incredible new organ preservation technologies that are available and becoming available soon. Our partnership with OrganOx is a great example of the lengths we will go to in order to ensure we can always say yes to our customers' requests.

To accommodate new technology.

We're excited about the multiple avenues for a organic growth in the medical business, including broadening our service offering within our core organ transplant Market.

We launched our organ placement service in late 2023, and we introduced a hand-carry logistics service offering targeted at kidneys.

A segment of the market that we have limited participation in historically, and this business has grown significantly year to date.

I look forward to meeting with many of you over the coming weeks and months to discuss our plans for Value creation and a unique opportunities ahead with that. I'll turn it over to will to discuss the financial results.

Thanks, Melissa. I'll now walk through the financial highlights from the quarter, starting with medical.

medical revenues Rose 17.6% year-over-year, 2-way record setting 45.1 million due to 2025

after a slow start to the year, we saw a strong Rebound in the second quarter driven primarily by new transplant center, customers along, with strengthened demand from third-party service providers

Ground and tops are working placement services. They also contributed to revenue growth ahead of the average for the rest of the business this year.

Adjusted EBIT margin rose to 13.4% in Q2 2025, versus 11.4% in Q1 2025, but declined 100 basis points compared with 14.4% in Q2 2024.

This was expected as maintenance downtime and costs remain elevated in the second quarter.

driven by the timing of scheduled maintenance events on our own Fleet to provide context on average, our Fleet of pin aircrafts and have approximately 3, major inspections

if you're called G inspections,

And 2 engine overhauls per year. In 2025, we have 4G inspections and 5 engine. Overhaul scheduled with these maintenance events, weighted towards the first half of the year,

Given that our own fleet provides the best unity economics on both the P&L and cash basis, elevated maintenance downtime has two negative impacts on our financial results. First, as we continue to perform all trips for our customers as contracted, we must substitute higher-cost aircraft from our asset-light network.

Second lower hours on our own Fleet results. In fixed costs under absorption and a higher fully loaded average cost.

It's important to recognize that scheduled maintenance downtime, will vary from year to year with elevated maintenance, downtime, and some years, and below normal, downtime and other years resulting in the opposite effect.

Higher Fleet uptime and improved fixed cost, absorption.

We continue to expect an improvement in Fleet uptime and medical segment, adjusted ebit down margins and the second half of the year and we'll provide more details on the Outlook shortly.

22 our passenger business excluding Canada which we ex exited in August 2024 short, distance Revenue, decreased 5.5% year-over-year driven primarily by lower Revenue in the US short distance segment partially offset, high strength in Europe.

U.S. short-distance revenue was impacted by the New York tourist helicopter incident in April 2025, along with inclement weather in June, which was an outlier versus.

Previous Jones, both of which we view, as transitory.

Encouraging. We've seen meaningful Improvement in US short business performance in July relative to Q2 2025.

Following the restructuring of our European operations last fall. We've seen 2 consecutive quarters of strong Revenue growth. We attribute the improving fundamentals in Europe to the realignment of interests that our local Partners along with important operational and Commercial changes that have reinvigorated growth and improved the customer experience and Jen and other Revenue decreased 2% year-over-year driven by a modest production in Flight volume and revenue per flight compared with a year ago, period.

Despite lower Revenue, we continue to see a significant Improvement in passenger segment profitability in Q2.

5, driven by improving flight margins and lower segment adjusted SG&A.

Flight margin rose 580 basis points year-over-year to 30.5% in Q2 2025, driven by margin expansion and short-distance operations, including the restructuring in Europe. Additionally, our exit from Canada contributed to margin improvement, along with jet and other services.

Passenger segment, adjusted sgna felt 17% year-over-year driven by lower marketing spend in the US, the restructuring in Europe and the discontinuation of Canada.

Passenger segment, adjusted keepit.com triple Universe Year from 08 million to 2.4 million.

Moving to adjusted unallocated, corporate expense and software development. We continue to focus on cost efficiencies across the business. And during the quarter expenses, declined, 2.1% year-over-year,

Returns flow given our strong sequential Revenue growth in Q2 2025 of 30% versus q1 2025. We saw a proportionate increase in working capital During the period.

The difference between our Q2 2025 adjusted EBITDA of $3.2 million and cash from operations of negative $3.1 million in the quarter was primarily driven by a $7 million increase in working capital, partially offset by an increase in deferred revenue.

It's important to notice that our collections remain healthy with Day sales at standing down to 32 days since due to 2025 compared with 34 days in a year ago, period.

Capital expenditures inclusive of capitalized software development costs, were 2.7 million in the quarter driven primarily by capitalized. Aircraft maintenance, approximately 1.8 million and

capitalized software development of 0.4 million.

Our owned aircraft Fleet is Unchained at 10 aircraft and we remain focused on optimizing the financial and operational performance of the city.

Given the significant strategic and financial benefits of our owned aircraft, it's possible that we'll add a low single-digit number of aircraft to the fleet over the next year or two. However, we are not currently in the process of buying any new aircraft.

We ended the quarter with no debt and 113.4 million of cash and short-term Investments.

Moving on to the outlook, we expect the sale of our passenger business to be neutral to adjusted EBITDA and free cash flow on a go-forward basis.

We expect the loss of Passenger segment adjusted even done to be offset by a reduction in unallocated costs associated with the passenger business.

The seasonality of the passenger business where 23 is typically the strongest quarter of the Year, followed by a seasonally weak to 4 could create a modest timing impact in 2025 depending on the exact timing of the transaction. Course, we will update our revenue and adjust the debit side guidance for 2025 after the close of transaction.

For a medical segment, specifically Revenue growth accelerated in Q2, 2025 driven by new customer additions. And we've seen this strength continued into July. We expect mid teens, Revenue growth and the

7, half of the year.

as discussed previously medical segment adjusted, even though margins were impacted by elevated, scheduled maintenance downtime and costs in the first half of 2020,

We continue to expect improved own Fleet, uptime, and medical segment, adjusted ebit down margins and the second half of the year with margins of approximately 15 years.

Given uncertainty on the exact closing time for the passenger that has to turn. We are reaffirming our 2025 guidance on a full company basis.

Including the impact of the diversity.

We expect revenue between 245 million and 2655 million with double digit adjusted even down.

We will provide guidance for the Standalone medical business, following the close of the transaction.

With that, we'll turn it back over to the operator for Q&A.

Yes. Thank you at this time. We'll conduct the question and answer session to ask a question. You'll need to press Start 1 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please press star 1 1 1 again.

Please stand by while we compile our Q&A roster.

Your first question comes from the line of Laura, Lee of Duty, Deutsche Bank. Your line is now open

Hey, um, thank you for taking my question. So, uh, my first question is about, uh, with that, you know, up to $125 million process from Joby. What are your current priorities for capital allocation to have your like, either organic or inorganic growth? And also, like, how confident are we to meet that required milestones or metrics for the $35 million or not?

Hi, it's Rob Lionel. How are you? Um,

I think that, uh, in terms of, um, uh,

Deployment of capital. We see a lot of opportunities in terms of M&A opportunities that I believe are actionable and can really sustain the kind of growth that, you know, we hope we're kind of going forward on the organic side. You're well aware of what we're doing with Tops. We're aware of what we're doing with other types of verticals such as critical cargo.

And um, this is the kind of Capitol space that I think we really need to get the companies where it needs to be in terms of really scaling in an exponential way, uh, which is a real opportunity. Because there aren't a lot of companies out there that I think that can be the members of us with a kind of balance sheet that we have to, you know, in a, in a, in a very forward way. In a man in a quick way to try to get, uh, the kind of m&a deals under a belt that we see out there. So I'm happy about that in terms of

the metrics for some of the whole backs. Um, when when I evaluate and the board evaluated the transaction. Uh obviously you know we felt those were uh achievable when we view this as a, a transaction that is 125 million dollar transaction. There are some there, there is the central risk of there, obviously, but we didn't think we could do it. We wouldn't have agreed with

And Lord just some detail on that about half of the 35,000, hold back is related to retention uh mostly related to Rob specifically and then the other half is related to financial performance that that is really pegged around, just continuing the status quo, we've had. So we do believe that these are achievable obviously nothing's without risk.

Okay. Okay, gotcha. Okay, just another follow-up on that. Um, do you see any operational impacts around the device shift to the medical segment? Um, like in terms of infrastructure, lesser relationship, more than like operating teams, etc.

No. Uh, we think we're set up for success as a standalone company, and on the vertical takeoff and landing zone, we're entering into a long-term agreement with Joby. This agreement will not only continue to provide access to helicopters in the markets where we use them today, but also, on a much more exciting note, it will provide access to the Joby aircraft for medical use in any markets that they roll out to. So, we think that's actually going to be a huge value add for our customers, given the expected operational capabilities of these aircraft, lower costs, and it could provide us with a competitive advantage. We're really excited about the long-term partnership. These were always two synced businesses. In fact, you know, if you take a look at what we're saying about...

No, uh, you know, eat the dog remaining consistent here. Uh, I think there's a lot of opportunity to kind of streamline the operations. Obviously, the operators are paying.

Um, in Arizona.

And we're happy about that. And I think in terms of the kind of uh business overhead, that we need to run the business. Uh I think that we really have the opportunity to be extremely lean and efficient so we feel pretty good about that.

And definitely like we I see outside of it.

Okay, gotcha. Yeah, I appreciate it.

Thank you.

Your next question comes from the line of Bill Peterson with J.P. Morgan. Your line is now open.

Morning, everyone. Uh, thanks for the, the information thus far and can grab some of the transaction. Um, I have a few questions, I guess, first, starting off, I guess, you know, if we think about the passenger business sale,

Why. Now versus 1. Maybe at a later point, it could have been more profitable. I understand, you know, obviously 1 of the bolster of the medical, but how long were discussions on going to sell this piece of the business? Um, I guess were there any concerns on your prior announced sort of evolved Partnerships? Maybe that they'd be too late or like just any sort of additional context on the on the sale, please.

Sure. Um, I I think that, um, you know why now? Uh, I think that, you know, you know, frankly, when I take a look at, uh,

The stock and listen to investors. It was clear that they were discounting um,

The value of the passenger business; we were not getting value for it. At the same time, we were unable to invest the kind of capital that I think it needs to grow, without hampering the overall earnings of the company.

Business with high growth and high growth and high margin prospects. Um, is, uh, was the right move to create shareholder value. Uh, and then with respect to, um, you know, the, you know, live Joby, I think early, uh, on I think we identified them as, uh,

The company that we built had the best path to certification, the capital to execute in the right technology and that would be first to Market. Uh, I'm an equivocal about that. Um, you know, we up to this point, we were not sick. Uh, We've watched all the all the, uh, other companies out there, in terms of what they've been able to get to and what Milestones they've hit. Um, and I do believe they have a, you know, it's your question. I do think they have much more of a head start uh with respect to getting to the point of flying will be flying in Dubai next year.

And hopefully uh, uh, in the US, uh, thereafter, is that answer your question bill or do you have any follow-ups?

Uh, Dennis. Is that part of the question? I want to pivot to the medical business a bit, and I realize you're planning an Investor Day. We’ll get a lot more information, but...

I want to try to get a sense as you look at it today on how you think.

The growth Outlook would look, let's say first from an inorganic point of organic point of view. And then inorganic, I guess, especially when we think about, you know, Revenue growth kegger, you know, steady state margins. Just trying to get a sense of your latest snapshot view there.

Yeah. Bill will hear uh, still incredibly enthusiastic about the growth prospects in this industry. Uh, broadly. And for us specifically, uh, seeing or organic growth in the long form, kind of supported by all, all the new technology that we've been talking about, on our prior calls. We're seeing more and more providers of organ preservation. Technology. Come into the fold, starting to look into a lot of the that use, that kind of some new therapies. As we talked about, like, NRP normal, thermic, Regional profusion, it's giving more access to those donation after circulatory death donors, uh, which previously had been a pretty expensive and and somewhat risky in terms of actually being able to successfully complete the transplant prospects for for folks, to go after those kind of organs. And all of those things, we believe are still in the early Innings of of playing out. And in the early,

Early Innings of becoming more broadly available at an affordable cost for hospitals. So we expect to continue to see that strong growth in the number of people that are getting successful transplants in America. And then when we think about the specific opportunity for us, this quarter is a great Testament to our ability to provide a better value proposition than the competition and win new customers and continue.

In This Very fragmented Market. Uh, so so I think still lots of opportunity there and and, and the last piece of it is just our ability to provide other services to those same customers or provide other services like what we're already doing to folks outside of the direct transplant community that we're serving today. We talked about it in in in the uh scripts how we've seen faster growth in our tops program and our ground program than we are in the overall business on average. So you're going to continue to see those things. Help us accelerate our growth. And and then all of those things come together to help us get to our long term High teams adjusted even job margin Target, uh which we still think is is readily. Uh, achievable. And now that we've built the business with more operating leverage from the owned aircraft, the the more we fly the less it's going to cost for us. So long term thesis very much intact and couldn't be more excited about our opportunity.

I can just finish up on a near-term and housekeeping question. I guess, just on the medical business, how should we think about any seasonality in the business? I mean, in the third quarter, just trying to get a sense that there is seasonality. As you see it today, how is the business trending quarter to date? And then on the housekeeping side, can you speak to any tax implications of the transaction?

Sure, bill on the seasonality, you know, look, I I wouldn't call it a, a seasonal business, uh, you do occasionally see a, a little bit of a Slowdown in the summer months or even just by kind of tapping of folks being on vacation. We've not seen that quarter date. We had a great July continued to see similar trends that we saw on Q2, uh, but we have seen in years past

Show up in our, in our numbers yet.

Uh, on the tax side, we have enough nols to, to offset the capital gain associated with the passenger domestic Church. Uh, assuming we received that full 125 million of proceeds, we'd use about a third of the nols that we have, that would leave us with just under 15 million remaining uh can't offset 100% within a nols as you know, under the rules. Uh but we would expect the cash tax impact to be a couple million dollars something in material. Uh, so so we think we're in a great shape on that problem.

Okay, thanks for that uh detail. I'll pass it on, but again to congratulations on the the transaction and you know, best wishes going forward to the full team.

Thank you, Bill.

Thank you.

As a reminder to ask a question, you'll need to press *1, 1 on your telephone and wait for your name to be announced.

The next question comes in the line of Bill Khalif with Lake Street Capital markets. Your line is now open.

All right, thanks for taking my questions and yeah, I Echo the sentiments. Congratulations on the uh, successful capacitor here. Um, first question is around uh, kind of the process with the domestic or I'm curious the, you know, Robbie you, you kind of noted, how, you know, specific, uh specifically Advantage. Uh you believe, jovia is in this, in this world. Um, and I'm wondering

the extent to which the process was, kind of a sweeping 1, where you considered all possible strategic and and, and, and, you know, Financial buyers, or if you really had kind of a laser focused, uh, view, that, that Joey would be best able to, um, you know, be a successful partner, um, in this deer

Yeah, I think thanks for your question. Um,

I think since this, you know, we started this company uh,

The name of the company was never really helicopters, always blade, Urban or ability. So we knew we had to make this transition at some point. Um, we were been agnostic, we met and worked with pretty much every single um, OEM out there. Um, both from, you know, the major companies.

Out there uh like you know, Boeing and others as well as the beach all manufacturers. Uh, and so I would say it was definitely a sweeping process that I was personally involved in. Uh, and it's got it went from everywhere, from oems to luxury, good companies to private Equity, you you name it. Uh, and it was clear that the right move for us was doing something with Joey because truly believe that their time to Market capital and technology is going to get them and especially with this transaction.

Uh, to Market much sooner, um, um, than others as important. Uh, for the medical side, I wanted to make sure that we had a partner where there were, there was an actionable strategy in terms of if you need to talk because I really think it can change the financial architecture of how we apply surgeons in organs and kind of shorts and Midterm, uh, shorts and mid-range, uh, flights. So, it really was a 2-part decision there.

Got it. That's that's

Helpful and good to hear. Um, uh, the second question, I'm only get back in queue is, is around the 7 million dollars of corporate efficiencies that you've, uh, noted are going to be, uh, going away. Can can you kind of characterize? What, what these uh expenses were, you know, are is this Personnel that that's, you know, going to be going to Joby, is this, uh, you know, is this, is this internal development cost that that you're just uh you know kind of backing away from uh just any, any contact there would be great.

Hey, hey Ben, this is Matt. So these are just costs that are really associated with the passenger segments that were in unallocated expenses. So,

Everything from staff costs to it cost. So, a portion of um the uh the lease costs. So uh, several different categories um, of costs that are closely related to the operation of the passenger business.

Okay, very good. Um, I appreciate that. Thanks Matt. Uh, thanks, Rob, and uh, congratulations. Again, to all I'll get back in queue.

Thanks B.

Thank you. This concludes the question and answer session. Thank you for your participation. On today's conference, this does conclude the program, and you may now disconnect.