Strata Critical Medical, Inc. (SRTA) Earnings Call Transcript & Summary

What is it from the West side Helipad to East Hampton?

East Hampton time?

Yes.

[indiscernible] a type of helicopter C-Plane can be as little as 30 minutes. And you can have we fly to Montauk as well. That could be -- we've known a lot of times, and we track traffic very carefully where doubler weekends where they had 5, 6 hour drives. Yes. So it definitely -- when you add that up and you think about how much people are spending for their weekends or the spend for their house, over the course of the summer, you literally create an entire their weekend of waking hours by flying. And that's obviously the one of the only things we can't buy is time. So it's been a very profitable product for a very, very long time, and it's close to 100% market share as you can I think we actually are now this summer on a by the seat basis, we'll be at 100% market share for that region. But the real growth we see is on the medical side and on Europe, which is really -- we took 3 companies, we put them under a comminent brand. They didn't have any marketing. They had no technology. There was no consistent customer experience. We built lounge and can, Nice, Monaco, really feel good about that. It will be -- RedBird Capital took a 5% stake in us. They own AC Milan, we'll be doing Monaco to Milan, a lot more events -- because our Monaco heliport is literally inside the streets of the track of the Monaco Grand Prix. So we do a lot with Formula One. I'm on the Board of TripAdvisor, which is a Liberty owned company. So I'm looking forward to doing a lot more events. We do Courchevel this year. Any place where there's a use case where a lot of people are going at the same place at the same time and the infrastructure was to build to surge capacity is a great way to showcase our product, and we do it with sponsorship. So we have a lot of brands, different verticals for everything from spirits to close technology and people to participate in events for us. But I think overall, like the growth is strong. Medical is very strong. And it's a great Symbiosis, as I mentioned, between both those in terms of logistics team, but also the aircraft, getting more hours on the aircraft.

Last question on the airport, airport side. But with 30% of your airport customers going on to international flights, I would assume I think that's probably JFK number.

And Newark to, yes.

Right -- in Newark, do you think there's more brand awareness for the Blade product in the U.S. or in Europe?

Well, I think -- well, there's definitely more in the U.S., but it -- we were shocked that when we went to Europe that people immediately knew about Blade. And I think that's been the power of the airport product because if you think of New York as a capital of the United States or epicenter in the United States, people are coming from all over the world into New York, and they were using the airport product to get back and forth in the airports that are aware of Blade for that. And now they're seeing Blade in Europe. And now we're moving people who are comfortable in the U.S. with Blade as opposed to -- We know 6 on the helicopter companies that they own in the name of or airline companies. So we definitely have built that business moving a lot more people, I'm expecting this summer from the U.S., but also I think the brand has resonated very well in Europe because of me a being in the port business for so long.

Maybe changing gears a little bit to kind of the EVA opportunity. You clearly have the real estate with your helipads. How far away is this technology from reality?

Well, the thesis always was for us we're going to build a great and profitable business with conventional aircraft today, both on the medical side and on the passenger side. And when EVA arrives early, your NPV is higher. EVA arrives later, we're going to be that much bigger, right? And the big reason why this is important to us is at the great unlock for exponential growth in the passenger side is more landing zones. And the only way we get more landing zones is with quiet aircraft. That's why you'll see in New York City, all the Blade terminals are on the water in the Hudson River on the East River on Wall Street on the southern tip of Manhattan, it's always on the water even in Europe because of noise, generally. If we had one landing zone south of Central Park in North of 43rd Street, that could be bigger than the entire New York business itself because you're not only going to the airport from Midtown, but you have interconnectivity between Wall Street, Midtown, Midtown East Side, at West Side, East side.

So I'm not getting that helipad at Brighton Park anytime so not.

So -- not -- they'll be listen, I think that's so -- back to your question -- we've always been very conservative. We were -- I think when we went public saying kind of '25, I think we're about '26 right now, 2026, when you're first going to start seeing them. But also understand that in the beginning, shares, you're not going to have maybe the number of seats that you want, the matter of weight that I would want. So we need a portfolio of different types of aircraft. And so you're going to see this kind of cohabitation phase of helicopters and EVA kind of living together. And I think what's really interesting to us, and we're grateful forward to a certain extent, is that the EVA manufacturers who used to want the build the entire stack, be a service like Blade, have a brand, have a technology -- I think they may say, "You know what, let's just build these aircraft -- right now". We can worry about that later. So I think that our operators will be the biggest customers by far in the industry. So that's why we have such a great relationship with all of them. And while we're not weighing around for them, obviously, with this growing medical business and our passive business, it's -- there's a lot of money behind it and the issue is really a certification issue. It's not a technology issue. These things are flying every day.

Okay. Yes I've seen a lot of the videos from the OEMs. What's your anticipated time line in terms of certification? When do you think that -- is that the '26 ?...

That's '26.

Okay. So when does it become a '26 certification how long until commercial reality?

I think you'll start seeing them in fleet potentially '26, I mean, '27 would be probably an outside time. What I mean in 'fleet is -- which is great for us because if you think about it, it's a branded type of propulsion and brand-new type of aerodynamics. There are going to be some people who say, you know what, am I going to get on this thing, right?

[indiscernible] the helicopter let someone else trying.

But if there's anybody who's going to get on one, right, it's going to be someone that's been on a helicopter first, and we've got hundreds of thousands of those people. So as opposed to an OEM that doesn't have a brand that has never flown people before. We're probably in a better situation. So it's going to be an introduction. In the beginning, there'll be kind of early adopters who are thrilled to fly, pay any price, and then you'll see it become more mainstream over time. But it's definitely -- look, it's huge upside option value in the company, but it's nothing that we rely on to our numbers work right now.

Of course. Yes. And when I think about the -- just the future of EVA, right, figure '26 certification, '27 commercially viable, probably prove it out at your helipads first? And then is that when we start to see -- okay. Maybe we can move into more dense markets with this.

Exactly -- so it's -- when people can see that it is safe, see that it's quiet, And it's zero emissions. That's when the local legislators and the public get behind it and in order to be Citi 2.0, you have to have an urban mobility strategy. So if you talk to people that routine of transportation, if you talk to any kind of city planner they'll just tell you like, look, you look even sees Manhattan as an example. It's my home town, fine. A couple of hundred years ago, we had just houses there than we had to build vertically, right, to put people in offices and in homes and apartments. And the same thing is going happen in transportation . We're starting on the ground where infrastructure has been there for ages and really hasn't been updated. We have some subways underneath. I took the second half, your subway years to get done, still not done yet. And we are that middle layer between the jets in the sky and the cars on the ground, that middle layer will be a transportation corridor with electric vertical aircraft. I don't think in especially in the early years, this is not going to eliminate congestion. It's going to put companies on the map, make it easier to do business. Clearly, like in India, with Blade now, you can visit 4 companies in a day or 2, Mumbai, Shirdi, Pune -- we used to before Blade in India, like you can be in India for 5 days to visit all these cities because of the traffic and how difficult to skip by air. So I think cities realize that if they want to improve productivity and make it an easy place to do business, you need that. But this is not like -- we never envisioned the Jetsons future. This is not like going or hitting a button. And for $4, you get your own aircraft. This is going to be a shared aircraft, just like we do right now that our port on a consistent basis, various routes, portable pricing, relatively competitive with grams. But it's going to be more additive and accretive as opposed to everyone. It's not a flying card.

Right. Do you envision sourcing your operators and pilots in EVA, the same way you source helicopters?

Yes. If you take a look at the certification path is really it's kind of -- it's -- most of these aircraft are Part Fixed-wing, part rotorcraft in terms of technology, right? They can take off and land vertically like a helicopter, but they can go forward like a plane, a lot of them do have -- so I think what we can do is offer our operators ours in terms of how many hours that we could fly so they can finance against basically what we can do for them. So which happens right now with Textron from Bell and Airbus, we'll get calls ever was saying, okay, so one say I wants to buy this helicopter, how many hours do you think you can do it on the Blade program because like they want to how much they can on them. And so we're going to become part of the financing solution, not as owners or debt holders. But as people who that can show a history of being on our platform and how many hours that they've done. And most of we have about 29 key operators now. There are a lot of operators who solely work with Blade at this point. Nobody else because it just -- they get to reduce their costs. They have lower marketing costs. They don't have to worry about customer service. It's a credit card dispute. We deal with it, it's weather recovery, we deal with it. so they could focus on what they do best, which is flying and maintaining aircraft.

Got it. Interesting. Last topic with 8 or so minutes, 8 or 10 minutes left here, MediMobility. Obviously, there's been a great story for you -- why do you think you've been so successful in gaining share?

This really -- it's been a mom-and-pop business when we go into hospitals, partially in the early days, people would have a posted note with the name of an ambulance company and a jet company and we really came in, in certain areas, not in all areas, but professionalized it, when I say all are not all hospitals is really good programs. And we provided this end-to-end solutions. So we have lights and sirens SUVs. They can move Organ that you saw in that video -- run by third parties also. We have our helicopters now jets also, they are doing longer distance because of perfusion. And we manage chain of custody. We have a technology platform for them, and we are there and we're reliant. And I think when you do the hospital contracts, you can imagine, is that kind of that never underestimate the power of incumbency. It's kind of like the -- there's some contracts like in schools or hospitals or things that have been on for a long time for everything for I don't know, from like food to cleaning and eventually, I don't want to say people get lazy, but they get -- take it for granted. And so we go to the procurement parts of these companies, talk about how much money we can save them and how we can transplant surgeons and heads of transplant centers say like how we can really improve outcomes. And when we started, we became #1 in New York, and we saw the guys at Trinity, and we saw what we could build together and our ability to source the aircraft and leverage our helicopters. This business has grown 5x from when we brought up of $20 million in revenues to over $100 million run rate based on Q1 and you're talking about 15 points or more of margin, high-teens margin. So just...

Better margin than the airport business, right?

Yes. yes, better than the airport business, not as good as leisure, but it definitely -- this is -- it's only getting bigger. The definition of an organ that is suitable for transplant and a patient who is suitable for being a recipient, that aperture has improved in addition to organs living longer out of the body because of perfusion devices that we actually put on the planes. So we can fly an organ literally that we've done it to Alaska in the past couple of months.

[indiscernible] have for that type of?

Well, generally, they're shorter distances -- they'll be kind of like [indiscernible] 800s things like that. And then we have to go out of our core network for something longer. We obviously can do that. But this is also where like our people on the ground, we're still use hailing people in the ground game and the helicopters getting lot of value to make sure they're safe on a tarmac like we need people to actually put these reperfusion devices onboard the aircraft may know what type of device how to load an aircraft safely and things like that. So it really fits in well. And I think investors are finally saying like, there is no other way to play this part of medical. We don't get paid by the insurance companies. It's not like EMS at all. The hospitals pay us net 30 or 60, the terms depend. But it's we're not like we're collecting from -- so all the kind of real shrapnel that you've seen in this industry really difficult for them. We don't have in the already built business. It is just -- it's blue skies for us had to admit -- now we take the job really seriously, and we kind of earn stripes every day. Right now, about mid-20s market share, and I can absolutely see that double in a short while.

I was going to ask, do you see any -- with your success? Have there been any sort of new entrants lately?

No, I think we do a good job getting contracts from hospitals. We've seen some acquisitions. There could be some of them on the horizon, but you have to really balance your ability to get contracts on your own versus buying a company that has existing contracts. And most of them are long term. But it's also interesting that we've now been -- have a lot of analysts and funds, investors who are really focusing on this part of the business like exciting for us.

Great. Lastly, on this, are there any regulatory issues in the medical side of things that investors should be aware of?

No. I mean, it's really -- I mean, I would say that all the wins are formalized like that, anything that can be done to improve outcomes and lower the cost to hospitals and patients the support is really there. So it's just been great. And then when you think about the first use cases for EVA -- once we get out of line of sight regulations for drones, we're doing a lot more movements of organs without doctors. You normally fly a doctor with an organ. So it's a great use case for drones and it will be a great use case for EVA as well. So that is definitely part of our EVA road map.

Okay. Great. With a minute or 2 left, any questions from the audience? Great. Any kind of last thoughts you would like to leave in investors' minds?

Yes. I mean I think -- look, I think that we're coming off a heavy investor -- investment period, but we've made a lot of acquisitions. And I think that -- if you take a look at our path to profitability, our LTM EBITDA was about negative 20. If you take the acquisition we just did in Europe, we're just kind of single-digit millions. You get to 20, if you even take medical is growing 100% organically and they're doing -- we do 15% to 20% margins, you slow that down you'll get another $10 million of EBITDA. So now we're in single-digit EBITDA levels now on the negative side. And then that's before any increase in airport profitability, which I'm really counting on as we reduce marketing costs and enjoy the kind of growth we're having and showing the pricing power. So I feel I think investors really need to focus on that, see that profitability within eyesight for sure. And then also, is clearly that people meet them every day, I had no idea we had a medical business. it's literally half of our revenues and just...

That's why I started this off us a little about.

No. Really, it is terrific. And we appreciate your support and then also letting us explain the 2 big pillars of the company.

Perfect. Great. Thank you very much.

Thank you. Appreciate it.