Air Methods Gets a Lift
Last Thanksgiving, an Air Methods Corp. (AIRM ) medical-rescue helicopter arrived at a horrific accident scene in Riley, Ore. A college student making a wrong turn in her car was broadsided by a Jeep and now was trapped in the wreckage with life-threatening injuries. A good samaritan who pulled over to help had been run over by a semi-truck--both his legs were crushed. Battling against time, a nurse and respiratory therapist from St. Charles Medical Center in Bend, Ore., strapped the injured into a Bell 222UT twin-engine copter, where they could administer blood and dress wounds while speeding toward the hospital 105 miles away. Thanks to the rapid response, the two eventually made full recoveries.
Air rescue has become a vital element of emergency hospital care, and Air Methods is emerging as the provider of choice. Founded in 1982 with a single helicopter, Air Methods now operates 56 helicopters and 13 airplanes serving hundreds of hospitals in 18 states. Since 1994, when CEO George W. Belsey, a company director and former hospital administrator, took over, the company has branched out beyond simple transportation. It also ties helicopters that are fully staffed with nurses and paramedics in to the community's emergency-response system. They serve hospital networks in large metropolitan areas.
The company's products unit makes kits that transform aircraft into flying hospitals. Its biggest customer is the U.S. Army. Now Air Methods, No. 57 on the Hot Growth list, is flying high: Revenues have jumped an average of 25% annually over the past three years, to $98.4 million, and profits have grown by an average 169%, to $7.7 million.
Air Methods owes much of its growth to a smart expansion strategy. Belsey, 62, figured he could save money by buying competitors, tying them together into regional services, and serving entire communities of hospitals with air transport staffed with paramedics and nurses. In 1997, he began with the acquisition of Mercy Air, a medical-transport company serving Southern California. Then Air Methods bought small helicopter operators in Las Vegas and St. Louis and opened a handful of air bases in the region. That allowed the company to serve hospitals throughout those areas without buying a lot more helicopters. "They're gaining a lot of leverage on their fixed costs, and that benefits the bottom line," says John Richardson, vice-president at Munder Capital, which owns 400,000 Air Methods shares. Air Methods says it will close another acquisition this year.
More growth could come from the products division, especially in light of September 11. After landing the contract with the U.S. Army in 1996, Air Methods developed a system that can transform a cargo helicopter into an airborne ambulance in two minutes. Lights, oxygen, medical supplies, and stretchers are built in. "It's like a small intensive-care unit," says Belsey. The Army contract could generate $200 million over the next 20 years, analysts estimate.
Still, Air Methods faces plenty of risks. Unscheduled aircraft repairs can bump costs unexpectedly, and brutal weather can ground pilots for days at a time. Such unpredictability has kept investors at arm's length--Air Methods stock has hovered around $4 a share for much of the past two years. But Wall Street has finally taken notice of the company's growth, pushing shares up to $10.50 this year and providing the company with currency to pursue more acquisitions. For now, at least, Air Methods has found an updraft.
By Arlene Weintraub in Los Angeles