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

Good afternoon, and welcome to the first day of JPMorgan's Industrial Conference. My name is Bill Peterson, U.S. Cleantech analyst. And we're really pleased to have the team from Blade here. We have Will Heyburn, CFO. He's going to walk us through a brief presentation. The team was here last year, and we've seen really this company is at a forefront of Urban Air Mobility, but bigger a part of their business is actually been -- driving the business recently has been organ transplant. So he's going to walk us through a presentation, and then we'll move on to Q&A and would be pleased to take questions. This is on the webcast and wait for a microphone. But, Will, thanks for supporting the conference 2 years in a row.

Thanks so much for having us here, Bill. We'll do a quick walk through the company, and then we'll leave plenty of time for your tough questions. So real quick before we dive in, we'll talk about some forward-looking statements today that are subject to risks and uncertainties. Make sure you take a look at our 10-K on the Investor Relations website to learn a little bit more about that. But Blade is an air mobility business, and we're focused on 2 key areas. We have a medical segment, where we are the largest transporter of human organs by air in the United States. It's the largest part of our business today. And then in our passenger segment, we're laser-focused on the largest markets for air mobility vertical transportation in the world. It's New York City, it's Western Canada, it's Southern Europe, and we're doing all of this with an asset-light model. We rely on third-party operators of aircraft for all of our flying, and those third-party operators own about 90% of the aircraft that we utilize, about 10% in our most highly utilized areas for medical. We just announced this morning that we're going to own ourselves to get much better unit economics and really improve the level of service that we can provide to hospitals, but excited to talk more about that later. When you think about the split of the business, about 56% of the business is medical, really fast-growing business, 76% year-over-year growth for fiscal year 2023, profitable on a segment adjusted EBITDA basis. We'll talk a little bit more in a minute about how that business works, and the different kinds of services that we provide to the transplant centers we work with, but it's a very exciting, profitable growing business and a big market. On the passenger side of things, most of what we do is that short-distance transportation. We're using helicopters or seaplanes, 10 to 100 miles in dense urban areas where we can actually rival the price of taking a car and put you in a helicopter or seaplane and get you there in a fraction of the time. Sometimes when you look at a place like New York, we can do that for a price that's actually comparable to the car as well. We charge $195 a seat to fly between Manhattan and any of the New York City commercial airports here in New York. Then we also have a jet business where we're putting folks in full aircraft charters of jets. It's really important to remember that we have fleet commonality across our medical and our passenger business. The same jet that we would use to move an organ for a hospital, we'll put Bill in to fly him over to Cabo, which we know he likes. The same helicopter that we would fly to the airport in during the day is a helicopter that could be flying an organ for a hospital at night. So it gives us great economies of scale across those 2 businesses. A little bit more about the asset-light model. We kind of think of it a little bit like the power grid. You've got your baseload that's always on, extremely highly utilized, that's the 10% roughly of the flying we do on owned aircraft. These are in areas where we have multiple overlapping hospital contracts. We're flying these machines a lot. We benefit through from pass-throughs on the cost, and you get huge economies of scale as you fly more. Next up is our third-party aircraft where we have a commitment under a capacity purchase agreement. These are owned and operated by third parties, represents about 30% of our flying. We've got fixed hourly rates. We pay only for what we fly, but we do get fixed cost leverage as we fly more. Typically, once we hit whatever our guaranteed number of hours of flying are in a year, our rate is going to drop by 15%, 20%, sometimes 30%. So we're still getting those economies of scale. And then most of the flying we do, and almost all the flying we do in our passenger business is with third parties with no commitment. This helps us in the seasonality of our business to get peak capacity when we need it, still fly at those fixed hourly rates. We're only paying for the flights that we actually fly. In all cases, our operators are dealing with pilots, pilot training, maintenance, hangar. They're handling fueling, and in the rare case where we own aircraft, we're still using those third-party operators to handle all those aspects. And it allows them to focus on what they do great, which is hiring and training pilots and flying the aircraft, and allows us to focus on what we're phenomenal at, which is coordinating organ logistics end-to-end, providing a great customer experience for our flyers. We have unique exclusive infrastructure at heliports around the world that allows us to provide this service at scale and a great customer-facing app that makes it easy for our customer. That all allows us to aggregate flyers into more flight hours per year that we give to those operators. It makes -- allows them to make more money, allows us to make more money and run a really efficient business. And we sell these products in 2 different ways across both of our businesses. On by-the-seat products, that's when you can pay $195 to go to the airport, we're selling you a seat, but we're paying for an entire flight. And so there's a concept of a passenger load factor that we have to get up to a breakeven. Just above 2 seats out of 6 on a helicopter is when we start making money flying people between Manhattan and JFK, for example. Our target flight margins in this business are above 20%. And of course, once we're already flying a plane, each incremental seat is going to drop down at 100% incremental margin. So that's where you've really seen, particularly in this quarter and recent quarters throughout the year, you've seen the leverage of the business because we're now at that scale where we're benefiting from each incremental seat dropping down 100% down to the profit line. The other way we sell products, about half of our passenger business and all of our medical business is on a full aircraft charter basis. So when we're quoting a price to fly an organ from Philadelphia to New York City, that's the price, and we know what we're going to pay to service that flight, so we can always price it at a consistent margin, and we're not taking risk on having to fill up some amount of capacity on an individual flight basis. The way we get fixed cost leverage in this part of our business is when we utilize capacity purchase agreements or when we utilize the aircraft that we own. In those cases, the more we fly, the less it costs to fly. So we're always looking to enter into those kind of agreements in areas where we have significant scale. And you've seen the impact quarter-over-quarter in our medical business is that flight profit margin has improved from bringing in more dedicated aircraft. Talking a little more in detail about what we actually do in the medical business. So first, who is our customer? Our customer is typically a transplant center or an Organ Procurement Organization, but it's usually a transplant center. This is the quarterback of any organ transplant process. They are the ones who have the patient that's going to be getting the organ transplant. The way that organ transplants work here in America is you have the Organ Procurement Organizations to about 55 across the U.S., they're responsible for all coordination with the donor. When they have an available donor, they will upload information about those organs into a database that's maintained by UNOS. There is also a priority list in that UNOS database of potential recipients that are patients at different transplant centers. When there's a match, the OPO will send, what's called an organ offer to a transplant center that will evaluate whether or not they believe it's a good fit for the recipient. Historically, once that transplant center accepts the organ, that's been Blade's attachment point. The next move for them is to call up Blade, and we arrange everything end-to-end, flights and sirens SUVs to get to an airport or heliport, helicopter to connect to a jet, and typically, what this transplant center will do is they will send their own team of physicians to the site of the donor, our aircraft will wait, they'll procure the organ and then you'll fly back. So there's a lot of moving pieces, ground, sometimes helicopters on both ends, sometimes using a helicopter and a jet. Blade is coordinating all that and remembering what every surgeon likes to eat, and we're trying to do that at the lowest possible cost, and we're trying to do that with 24/7 availability, which is why it's so important to have these dedicated aircraft all across the United States. I'd point out that just in Q4, we launched a new business line, which we're calling organ placement services. This is where when we talk about that offer being sent from an Organ Procurement Organization to a transplant center. Instead of the offer going to the transplant center, it will now, in some circumstances, go directly to Blade. So we started doing this in December. We've hired a team of clinicians that are trained by the hospital, and we help them evaluate whether or not they want to accept that organ for transplant. Ultimately, it's the surgeon's call. But for example, transplant center may have a number of criteria that they know for a certain recipient, we can't take an organ of this size for this recipient. We can't take an organ that's over 65 years old or this recipient couldn't handle a hepatitis-positive organ. We help them with all that initial screening. We put the information about the organ in exactly the format that surgeon wants to see it. And oftentimes, we help coordinate with the recipient themselves in order to make that surgery success. New business line for us. We've started generating revenue for it. We're very excited about the growth, but the most important thing is to get it right. And so we're making sure that we're delivering a great product to the first folks that we're helping out there. Moving on to the passenger business and short distance, we're laser-focused on the areas where you can be an inch wide and a mile deep, and really save people a lot of time without having to charge them very much money to move around. So in New York, the best example is going to the airport where we turn a 2- to 3-hour drive to JFK into a 5-minute flight, starting at $195. I think if you checked Uber right now, you'd probably be paying around the same thing. Nice to Monaco is another great example of that. It's a 7-minute flight. It can be a 30- to 90-minute drive. We're synchronized with the airport in Nice. When you land at Nice, we put you through security right at the helipad, and you can go directly towards gate. So that's a great example of the infrastructure we've built that's unique to Blade's offering. We have exclusivity between Nice and Monaco for by-the-seat flights that allows us to deliver a better customer experience. When you think about the unit economics for these by-the-seat, we often talked about how we have to get that passenger load factor up above the breakeven point. The great news is, for the biggest growth product, which is Blade Airport, grew 40% year-over-year this quarter. We're there. For the last 2 quarters, we've been profitable on a flight profit basis, and now we're building up from there because we continue to improve on the average price per seat sold, and we continue to put more people on every helicopter and the best is yet to come for Blade Airport. Just in front of you right now are the unit economics where you can see that even at $195 and last quarter, we averaged about $300-plus for the average seat and airport with add-ons, with fare classes that allow you for more flexibility in terms of changes, cancellations, you're still at $195 breaking even about 2.5 seats sold. And finally, we talked about jet. This is a non-core business line, but we can utilize the very same aircraft that we use for medical. The more flight hours we have to give, that's the more throw-weight we have to negotiate great deals with our operators. And we get the phone calls for it. It doesn't cost us anything to service it, and we make a consistent flight profit margin there, but it is a commodity business, and you'll see it will move up and down with jet charter demand and with the demands of the individual customers we serve. So sometimes like in the quarter that we had this quarter, you see a little bit lighter, but you can often make up for that on flight profit. And so we really do manage the business on flight profit. So before going to your questions, maybe just quickly talking about Q4. We thought this was a fantastic quarter. We made huge progress. Revenue was up 25%. But most importantly, what we watch, flight profit was up 66% year-over-year. That's really the driver of our business. If you take organ transportation, where we have a layered fee structure, we often make a fee per trip, we've set up the pricing so that we can actually save hospital's money by not having them reposition, by charging them less per hour, but still make a consistent flight profit margin. And so when you see the business ebb and flow between air, between ground, between helicopter, our priority is to provide the best possible aircraft for the mission to a hospital, and we worked on our pricing so that, that flight profit per trip is going to be the right number. So that's why we focus a little bit more on flight profit than we do on revenue. And that's why, in a quarter like this, on medical, for example, where you see a slight sequential decline in revenue, flight profit actually grew sequentially. It's because we've set the business up in the right way to go over those bumps and ebbs and flows that you see moving from ground to air, moving from long trips to short trips. So we're really pleased with the Q4 results. EBITDA improved $2.7 million year-over-year. And I think we've done a great job setting up the unit economics of the business for our first profitable year on an adjusted EBITDA basis in 2024, and double-digit adjusted EBITDA in 2025. And really where that's coming from is the growth in flight profit, and our continued demonstrated ability to keep those costs down. And in fact, we continue to shrink our unallocated corporate expenses in this quarter. So I couldn't be more excited about the way the business is set up, both financially and for growth in all of our business lines and really excited to take any of your questions. Bill?

Great. Yes. Thanks for the overview, and the team announced earnings this morning and kind of a unique thing where you're actually providing '24 and 2025 guidance, both on a revenue line and a profitability line. There's a lot of things, a lot of moving parts within that, but can you help, I guess, unpack the guidance a bit more, particularly on the 2024 revenue guidance at the midpoint? I think it was around 8%, 9% type of growth year-on-year. If you could help unpack that, that would be a good starting point.

Yes. I think the thing that you have to remember is that we have some discontinued business lines that are in 2023. We used to have a by-the-seat jet service that went between New York and South Florida. And then also we've seen some softness in the non-core jet charter business. And so if you were to just run rate our Q4 jet revenue, you're actually talking about mid- to high teens growth based on our guide. And if you go into what we talked about on the earnings call, and you look at the improvement we're going to be seeing in flight profit kind of go point-by-point, we're talking about high 20% flight profit growth year-over-year based on our guide into 2024. That, to me, is fantastic. And I think there's lots of ways that we can continue to accelerate that growth, too. We've talked about how we have the cash for bolt-ons. We've talked about how additional acquisitions of aircraft can accelerate what we're doing. So I think, on a headline basis, when you don't consider the fact that there's some discontinued businesses in the 2023 number, you think, what was going on there, but you're actually talking about mid- to high teens revenue growth, high 20% flight profit growth and there's huge upside to all of that. So we're really excited about the prospects there. And most importantly, we're excited that it's going to lead to positive adjusted EBITDA this year and double digit next year.

So you're almost through the quarter here, how should we think about the first quarter? How is it looking now? What's driving -- basically, if you think about the 3 businesses, you got the medical, short distance and then jet, how is the first quarter shaping up at this point?

Look, it's looking great. As you know, it's a seasonally light quarter for our passenger business. And so typically, Q1 is going to look pretty similar to Q4. And I think that's probably true on the revenue side. But what we're seeing is that medical is on track for good sequential growth versus Q4, very excited about that. And we're continuing to see flight profit margin improvement sequentially. So historically, if you look back, EBITDA is usually in a similar zone Q4 to Q1. But given that flight profit improvement, we do expect to see sequential improvement from Q4 to Q1. I want to make that clear this year, and it should be in the high 6 figures. So we're really excited about what we're seeing quarter-to-date. We think medical is on the right track. We think airport continues to show really strong results. And I think we're well on our way to our goal for 2024.

Can you -- I want to talk first about passenger, and then we'll move on to medical. But can you speak to the kind of volumes that you're seeing or expecting this year? And then you spoke about price. So price is well above the $195 for the airport anyway. But what are the trends you're seeing in '24 as it relates to volumes and pricing for your passenger businesses, and if there's any nuance between the regions you service?

Yes, on the pricing side, what I say is we really haven't had to take price. What we've learned is that our customers want to pay for flexibility, and our customers want to pay for convenience. So getting to that $300-plus average price per seat, which is what we did in Q4 of 2023, we didn't take a price increase in the beginning of Q4. What you're seeing there is folks that just want to be able to change when they want and folks that want to have a car waiting for them when they land in Manhattan. And also, we've seen a lot of success with backup cars. Occasionally, the weather does not allow for a helicopter to take you to the airport, people just get their car from Blade. We have it waiting for them. They enter their address when they book their flight. On the rare occasion that weather does not permit flying, they got a car waiting for them right outside. They don't have to think about another thing. So all of these elements are what come together to give us that higher price. And at the same time, we're driving our cost per acquisition down. And most importantly, we're targeting on the people that are going to be super users. We have nearly 1,000 Blade Airport pass holders now. These are folks that pay about $800 a year to be able to get $100 off every flight, you can do the math. They think they're going to fly a lot more than 8x a year. So we're really focusing on acquiring those super engaged users. It's often people that live here in New York City, and with a cost per acquisition that can be in the $100 to $200 range, it's easy to see how we pay that back really quickly, particularly given the improvement in flight profit. It's been a long road. We know it's taken some patience from our investors and our analysts to be able to get that Airport product, but now 2 quarters in a row and really happy that the full year for Blade Airport this year was profitable. So we got enough profit out of those last 2 quarters to make up for some of the losses in the first half of the year and the best is yet to come.

You just alluded to it, but could you speak to the latest trends about customer acquisition costs? How -- first of all, how is that -- how did that trend last year? And what are your expectations looking ahead on the customer acquisition?

We're spending less and less, and we're still getting great growth. That's what I would say. We're optimizing our spend for people who are going to fly multiple times. We're acquiring folks for less, and generally, the internal goal is, let's make sure we're paid back this year even if it's someone who's not going to be one of these super users. That's kind of how we try to target our CPA. And then, of course, when we get a super user, you're paid back in a couple of flights, and you're going to make a lot -- a much higher return on somebody like that. So it's really about the different cohorts. You're not going to be able to spend as much to acquire somebody who lives in Idaho and comes to New York every 3 years. But someone who lives in New York is going to be an airport pass holder, we can actually acquire them for the same as we acquire someone who flies once a week, so let's focus on them.

I'm going to switch to medical in a bit, but you guys have consistently talked about moats around infrastructure and whereas a lot of the eVTOL companies, UAM are -- they don't really have infrastructure yet, but they're not seeing partnerships as well. But is this a competitive moat, and why? And how do you see this evolving? And I guess, how does your current infrastructure footprint benefit Blade?

Well, the infrastructure, when you got 6 people flying on the same helicopter, arriving in 6 different Ubers, all to have their bags weighted, all to have their IDs checked. You got other flights going to different places at the same time. You simply can't do that without a dedicated terminal. So we think it's absolutely critical. Our leases are coterminous with the folks that actually operate them on behalf of the city. So we think we've got a good structural barrier there to someone coming in. And people have tried to compete with us in some of these products, and they found that they don't have a safe way to operate from the most convenient heliports where we have terminals at West 30th Street and East 34th Street. So is there an opportunity out at the sightseeing terminal at Wall Street? Maybe. But we've seen big companies like Uber try to do that and not have a lot of success. So we think it's really important to have the most convenient terminals at the heliports that folks want to use. And that's what's resulted in our scale, and we talked about it a little bit when we think about the asset-light model. But if you don't have scale in this business, you're in trouble. You're going to be losing a lot of money. So we've done the hard part already. Not only do we have enough people on every flight to make money on a per flight basis, but we have so many flight hours to give that we're getting lower rates. They drop down once we hit our bogey. We have so many hours on some aircraft that it makes more sense for us to own them. So we're really in a fantastic spot. And it's hard to replicate that. It takes real time. It takes real brand loyalty. It takes getting people, almost 1,000 signing up for passes that say they're going to fly us more than 8x a year, that's not something that you can build overnight.

It's a good segue, so I want to pivot to medical. But I want to tell you, one of the really new things that came out of earnings was, I don't know, call it a pivot, but I guess I wasn't anticipating an aircraft. That wasn't on my bingo card this morning about purchasing an aircraft. So can you shed some more light on, I guess, why now? How does it benefit the company? And what is the timing for this to really enter your portfolio?

So we've really outgrown the balance sheets of some of the operators we work with. And what I would say is we're putting deposits down to bring in new aircraft into the system on a 100% dedicated basis to Blade, and yet we weren't getting the full fixed cost leverage of that deposit that we put down. It made more sense to -- instead of putting a deposit down and put that in prepaid expense to buy the aircraft, get passed through economics and generate a lot more free cash flow for our investors. So from us, it's just a financial decision. If we have to outlay the capital anyway in the form of deposit, why not go ahead and take our most highly utilized aircraft, bring them on the balance sheet and be able to generate a lot more free cash flow, but also improve the availability. You can keep more spare parts on hand. You can get aircraft into service more quickly. You can make some decisions as a company that knows there's 2-, 3-, 5-year contracts behind all the demand on those aircraft, you can make different decisions than someone that maybe has a deal that we can get out of in 30 to 60 days. They might have to take a more cautious approach to investment in the interior of the aircraft, things like that, we can be much more aggressive and have much better availability and a much better financial outcome. We talked about being a 5- to 10-point uplift on a flight profit basis for the flights where we use those aircraft. So I think there's going to be some situations where it's a no-brainer, and you'll see us make the no-brainer financial decision, but we're always going to have the vast majority of our flying with third-party owned and operated aircraft. And I'd point out that the aircraft that we purchased that we announced this morning, continue to be operated by the same operator that we've used for the last several years with the same pilots, same maintenance techs, everything. So we're really trying to change as little as possible. It's the economic arrangement that we're improving here.

I think you mentioned that 10% of your flights or capabilities will be, I guess, with these internal aircraft. Is there an upper bound of that? I mean is there -- is that going to grow? Is that going to scale as this medical business scales? Or how do you see this evolving?

We're growing so quickly that the number of aircraft could grow without increasing too much as a percentage of our overall flying. I think there's room for that to go up a little bit, particularly if it's highly accretive for us to do it, you're going to see us do it, but we always want to maintain that margin of safety. So don't -- half of the business plus is right now 100% no commitment, third-party owned and operated. That's what gives us that spring that allows us to go through the peak periods of our seasonality of the business. And so we're always going to need to maintain that shock absorber in the business, but medical is contracted, and so like we said, if you see 3, 4 contracts in the same area, overlapping clear demand, we're already flying the hours, we're just giving them the aircraft where we don't get fixed cost leverage, that's really the opportunity for us to improve the P&L.

This market has been really consistent and high pace growth. And I think that's obviously just more transplants being done, but at the same token, it seems like you've gained share. So can you comment on the competitive landscape where it stands today in the U.S.? And how do you see your share evolving in this growing business?

It's still a really fragmented marketplace. And so we see a big opportunity to help transplant centers that are maybe using a smaller, less flexible operator, get lower pricing, more flexible aircraft availability. Another big benefit of the asset-light model as it relates to medical is that we have a network of aircraft that are all over. It's much easier for us to find a one-way flight from X location to Y location than if we were 100% dependent on 10 aircraft that are based in one place. So we have a distributed model where we have some aircraft that are based specifically near some of our big customers. Some of the customers even have that in our contracts. That works great for the round-trip model, but then we also have even more non-dedicated aircraft all across the U.S. when you need to fly from A to B. You're seeing many more transplant centers do one-way trips. Maybe they don't even send their own team, and so that's where we can be flexible with whatever they need. And I think, at the end of the day, we're always going to have the most flexible model in terms of how big of an aircraft do you need for this trip? Is it a rotorcraft? Is it a vehicle? Is it a long-range jet? Is it a midsized jet? We can do anything and we can do it at a great price because of our scale. So I think, competitively, we're in a fantastic position, and I think we'll continue to build share. And we'll also continue to benefit from the intrinsic market growth. You're seeing a lot more organs, heart, liver and lungs getting transplant in America, and you're seeing folks fly farther than they've ever flown to get them. So some of that is changing in the rules of how are organs allocated and how important is the geographic proximity. And some of that is really cool technology that's coming from perfusion companies that just allows you to preserve that organ for longer in transit. And also allows you to retrieve an organ. We talk about what the industry calls DCD, donor cardiac death, retrieve an organ from someone who's had their heart stopped, that's not something you used to do very much a few years ago. Now this exciting new technology, you can actually utilize that organ and save somebody's life. So there's multiple exciting things that are happening in the industry today that we're benefiting from. But also, I think our biggest benefit is that we've got the right price, and we've got the right availability.

I want to pause and see if there is any questions before moving on. Can you wait for a microphone, please? Sorry.

eVTOL, how do you -- what's the view at Blade? And do you see that as a threat or some sort of intersection of integration eventually?

Quite the opposite. I think we see it as a huge boost to our business in the future. I think we're more and more cautious as we believe that there's going to be a gradual transition to eVTOL. And in fact, the medical business might be the first place that you can make sense when you're moving an unattended organ. When it's just cargo and it's mission-critical and it has to move, that might actually be the first place where the unit economics for an eVTOL makes sense. In the passenger business, here you're probably talking about shorter visual flight rules only routes to start, we've got a lot of those. We've got more scale in that than anyone, and we've got the infrastructure to make it a great customer experience. And we've already got enough flight hours and enough people so you can make money doing it. So I think that's probably a great place to start to transition. But if you look at some of the specs on early eVTOL, if your visual flight rules only, some of the longer routes, areas where there's inclement weather, if you were only using eVTOL, you might not be able to provide the reliable service that your customers need. Because at the end of the day, you've got to get people where they want to go. You can't tell Bill that he's going to be late to Michael Rubin's White Party. It's not going to work. He's got to get to the party on time, okay? And so you need to have something that can fly in bad weather. We do that. We have instrument-rated aircraft like our amphibious seaplanes. If for whatever reason a VFR-only aircraft is unable to fly, we move our customers on to the seaplane so that they can safely get where they need to go, using the capabilities that these more advanced aircraft have. So I think our hybrid model is actually set up perfectly for that transition phase, and it's going to allow us to keep the head start because it's not going to be binary. And they're probably not going to be as many of these on day 1. They're not going to be as affordable maybe as folks think. We do believe there'll be a significant cost reduction, but we think it will have to be a gradual transition, both from the customers' perspective, but also just from any new aircraft, there's some gremlins in terms of maybe more maintenance issues than you thought, things like that, nothing to compromise the safety, but you'll want to have a turbine aircraft on backup for those flights probably for a couple of years. And I think our platform is set up really well to do that.

Maybe -- and you just now discussed that it could actually make more sense in medical, how do you -- thinking about pricing and maybe there's some upward pricing you could employ in medical, how do you see steady-state margins in that business? And is there any further uplift in eVTOL if and when -- I mean, maybe 5 years out?

Yes, I think on the eVTOL side, there's definitely an uplift in the future years. In the near term, there's an uplift just from doing what we've been doing. We showed on the slide, still a really small percentage of our flying is even under capacity purchase agreements where we get fixed cost leverage. So we need to benefit from more fixed cost leverage as we fly. You can see the massive impact it's had on our flight profit margin, and it makes us more competitive. It allows us to provide a better service to these hospitals. So in the near term, we've talked about how we can get to 25% plus flight profit margins in medical by the end of the year. And for 2025, we can be 25% plus for the entire year. That is driven by more hours on aircraft where we get the benefit from flying more. And so that's what you're going to see us do in the near term, and it will provide a huge uplift. And then it also allows us to run our business in a way that works better for hospitals. We want to provide them the lower cost option. We want to save them money. That's why we're focused on aircrafts that meet their mission requirements in terms of range, but may not be the exact plane you would find if you buy the NetJets' here. We're getting the exact right aircraft that they need in any given day. And sometimes, that's a single-engine helicopter that can do the trip, and 1/4 of the time that you would have done if you were taking a jet. So we're always picking the right aircraft for the mission, and we're going to make that consistent flight profit for trip when we do that, and we're going to make our customers happy.

Yes. Maybe last question. So I mean the stock is not responding as well as you'd hoped today. Sounds like pretty good earnings, I'd say. It's your outlook that shows a nice profitability growth. But I guess, how do you think of any other tools you might have to maximize shareholder value from here?

Look, first and foremost, we're focused on growing the business. We're focused on finding accretive acquisitions or investments that we can make to generate more free cash flow and beat the goals that we put out on the earnings call today. But I will say, when you're in a situation where now we're going to have a profitable 2024, and we believe double-digit adjusted EBITDA in 2025, some of the tools that didn't make as much sense like a buyback, and then you start to think about that more in the context of being a profitable company. And so all I can say is that we'll consider all those things in the context of how the company has evolved, grown and started to -- as we guided this year, gets to positive adjusted EBITDA.

Well, with that, we're out of time, but we really enjoyed this insightful presentation and look forward to following the targets you set forth for '24 and '25.

Thanks, Bill.

Thanks.