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Operator: Good day, ladies and gentlemen, and welcome to the Blade Air Mobility Fiscal Fourth Quarter 2022 Earnings Release Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, 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 Mr. Ravi Jani, Vice President of Investor Relations. You may begin.

Ravi Jani: Thanks, and good afternoon. Thank you for standing by, and welcome to the Blade Air Mobility conference call and webcast for the quarter ended December 31, 2022. We appreciate everyone joining us today. Before we get started, I would like to remind you of the company’s forward-looking statement and safe harbor language. Statements made on 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, and 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 10-K 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 disclaims 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 comparable consolidated GAAP financial measures to those non-GAAP financial measures is provided in our earnings release, and with respect to our segment non-GAAP measures in our annual report on Form 10-K.

Our press release, investor presentation and our Form 10-K will be available on our website. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Hosting today’s call are Rob Wiesenthal, Founder and Chief Executive Officer of Blade; and Will Heyburn, Chief Financial Officer. I will now turn the call over to Rob Wiesenthal. Rob?

Rob Wiesenthal: Thank you, Ravi. Good morning, everyone. I’d like to thank you for your interest in Blade and welcome you to our earnings call for the fourth quarter ended December 31, 2022. Our financial performance in the fourth quarter was once again well ahead of our expectations. Revenue in the December quarter increased 55% to $38.1 million versus $24.6 million in the comparable 2021 period. For the full year 2022, revenue increased 118% to a record $146.1 million compared to $67.2 million in 2021. Importantly, 2022 was a record year for flight profit, while corporate expenses continued to significantly decline as a percentage of revenues versus the prior year. These are not only the key building blocks that will drive us to profitability and cash generation, but also highlight the leverage provided by our shared services platform.

Our laser focus on the pursuit of profitable revenue growth should enable improvement on both of these metrics. Turning to some highlights from the quarter. Short Distance delivered another quarter of impressive growth, driven by our acquisitions in Europe and Canada, and the continued ramp of Blade Airport, which flies travelers between Manhattan and New York area airports in just five minutes. Q4 was our best quarter yet for Blade Airport, both in terms of passengers and revenue. I am also pleased with the progress we have made in integrating our European acquisitions and look forward to rolling out the Blade brand across all key European markets ahead of this summer’s peak season. MediMobility Organ Transport delivered another fantastic quarter, with growth driven by new customer wins, continued expansion with existing customers, and strong end market trends.

Today, we are the largest dedicated air transporter of human organs for transplant in the country, and, in February, we rolled out a new television and online video corporate awareness campaign for our MediMobility business titled “Saving Lives. Every Day”, highlighting the important role we play supporting transplant centers and organ procurement organizations in improving patient outcomes. All of this hard work led to another quarter of significant growth in flight profit, which increased 38% versus the prior year period, while adjusted corporate expenses as a percentage of revenue declined to 35% in the fourth quarter of 2022 versus 40% in the prior year period; again, demonstrating our strength across key metrics that will bring us to profitability.

In addition to our financial success, we continued to make progress in other strategic initiatives. In January, institutional investor RedBird Capital Partners announced that it had increased its ownership position in Blade to over 5%. RedBird’s founder, Gerry Cardinale and I have been working together for over two decades, and he has been an investor in our company since 2016. Blade’s core competencies in last mile air mobility, jet charter, and organ transplant flights overlap well with RedBird’s existing aviation portfolio, which we hope to leverage to support our continued growth across both Passenger and Medical businesses. Additionally, RedBird’s global sports and media properties provide a natural complement to Blade’s urban air mobility solutions for fans attending large sports and entertainment events.

This includes the AC Milan football club, which fits nicely within our European footprint. Lastly, both RedBird and Blade are leading supporters of aviation’s transition towards Electric Vertical Aircraft, or EVA technology. To that end, in February, we were proud to be a part of an historic moment for the EVA industry, as we demonstrated the first piloted EVA in flight in the greater New York City area in partnership with BETA Technologies. At the demonstration, government officials, media, investors, and the local community were all able to witness the ALIA-250 aircraft, with Blade livery, take flight, powered by an all-electric propulsion system. The crowd was also able to experience the dramatic noise reduction offered by the ALIA, with a live comparison against a conventional helicopter in flight, highlighting the aircraft’s sound profile that is one-tenth the decibel level of its conventional counterpart.

We thank our partners at BETA for allowing us to showcase this incredible technology to our home market in New York City as part of our effort to bring safe, quiet, and sustainable air transportation to commuter and commercial customers alike. In the meantime, we remain focused on providing best-in-class air mobility solutions for all of our fliers around the world using conventional aircraft, always improving the experience, terminal infrastructure and technology that will fortify our transition to EVA, while continuing to scale our Passenger business towards profitability and free cash flow. Given our tremendous progress in 2022, it is clear that the significant investments we’ve made in our people, technology, and products have enabled us to successfully navigate an unprecedented macro environment and further build on our strengths as a company.

Across both our Passenger and Medical businesses, our team has worked tirelessly to deliver our fliers and organ transportation customers the best service in the industry, the greatest level of availability and flexibility, and fair prices; not an easy feat, however, we are seeing the results of these efforts in our continued competitive posture, increased market share, and continued strong financial performance. With that, I’ll turn the call over to Will.

Will Heyburn: Thank you, Rob. Before diving into the details from the quarter, I just wanted to highlight a remarkable year of growth across all business lines. In the full year 2022, flight profit grew by 79%, driven by revenue and flight profit growth across both our Passenger and Medical segments. With that, I’ll walk through a few highlights from our business lines during this fourth quarter. In Short Distance, revenues were up 51% to $9.4 million in the fourth quarter of 2022 versus $6.3 million in the comparable 2021 period. Growth was driven by our acquisition of Blade Europe, which closed on September 1, 2022, our acquisition of Helijet’s passenger routes in Vancouver, which closed on December 1, 2021, and growth in our Blade Airport service, which relaunched in June 2021.

A few quick highlights from specific Short Distance products. In our New York Airport business, we saw another quarter of sequential passenger growth and revenue per seat growth in Q4 2022. We’ve continued to see strong uptake from the introduction of enhanced cancellation and flexibility options for our fliers. Though Q1 is seasonally slower than Q4, we are encouraged that quarter-to-date Q1 2023 Airport revenues and seats are running at approximately double comparable Q1 2022 levels. In the off-season for our New York commuter products, we saw slightly lower demand in the fourth quarter of 2022 versus the same quarter last year, as fliers returned to pre-COVID travel patterns. Canada performance continued to improve, and was profitable in Q4 2022 after reaching breakeven during Q3 2022.

We remain upbeat on the opportunity to expand our business in Canada, following the country’s slower re-emergence from the pandemic, and we look forward to rolling out new products and deploying our technology to improve customer acquisition, operational flexibility, and flier experience. Europe performance in the quarter was impacted by an unseasonably warm winter on the continent, which weighed on seasonal ski demand. This, coupled with poor flying conditions in the Alps, resulted in additional flight cancellations and lower volumes versus the record 2021-2022 ski season. As a reminder, Q4 is seasonally the lowest volume quarter for Europe. We’re already seeing improvement thus far in Q1, which is the second lowest volume quarter in Europe from a seasonality perspective.

The softer ski season in Europe and a return to pre-COVID off-season demand for our New York commuter products more than offset growth in Canada and Blade Airport, resulting in a 5% year-over-year decline in pro forma organic revenue for Short Distance in the fourth quarter of 2022. This includes results from acquisitions in both periods and adjust for currency. The performance in Short Distance this quarter, in what is seasonally a low revenue quarter, should not eclipse the fact that 2022 was a record revenue year for the Short Distance business, with 70% revenue growth for the full year versus the prior-year period. Turning now to MediMobility Organ Transport. Revenue increased 120% to $21.6 million in the fourth quarter of 2022 versus $9.8 million in the comparable 2021 period.

Revenue increased 7% sequentially in the fourth quarter of 2022 versus the third quarter of 2022. I would note that given our acquisition of Trinity Air Medical was completed in September of last year, all of the growth this quarter was organic, with more than half of the quarter’s growth driven by the addition of new customers, and the remainder driven by growth with existing clients, in addition to strong overall market growth. In Jet and Other, revenue declined by 17% to $7.1 million in the fourth quarter of 2022 versus $8.5 million in the prior-year period. Although average price per jet charter increased in the fourth quarter of 2022 versus the prior year, the increase was offset by a decline in the volume of charter flights, as the prior-year fourth quarter benefited from unprecedented strong demand driven by the emergence of the COVID-19 Omicron variant.

Based on industry data and what we’re seeing in the first quarter of 2023 quarter-to-date, we expect continued year-over-year declines in jet charter volume and we do see pricing declining across the board. As a reminder, though jet charter is not core to our strategy, the additional flight volumes generated by this business line provide a significant aircraft sourcing benefit for our medical business and generate incremental flight margin dollars with very limited fixed costs. Given the flexibility of our asset-light model, we expect to continue achieving consistent flight margin in Jet and Other around the 10% range, irrespective of volume and pricing. Turning to flight profit. Flight profit increased 38% to $5.4 million in the current quarter versus $3.9 million in the prior-year period.

Flight profit excludes non-cash operator revenue guarantee amortization related to our European acquisitions, which was expensed to cost of revenue in the quarter. This unique non-cash item only impacts 2022 due to the timing of our acquisition closed for Europe on September 1, and the timing of our negotiated contract with our European operator partners, which began on January 1, 2023. Flight margin percentage of 14.3% declined in the fourth quarter of 2022 versus 16% in the prior-year period, as expected. Key drivers of the year-over-year decline include, lower utilization in our seasonal by-the-seat jet service between New York and South Florida and faster-than-expected growth in our MediMobility Organ Transport business, which saw revenues increase 120% year-over-year and now represents 57% of total revenue in the fourth quarter 2022 versus 40% in the prior-year period.

Recall that MediMobility Organ Transport tends to have lower flight margin versus our historical company average, but benefits from multi-year customer contracts, no utilization risk, limited marketing costs and demand that is uncorrelated with the overall economic environment. In Blade Airport, though we’re encouraged by continued revenue and flier growth, we continued to operate below breakeven the fourth quarter of 2022. Absent the Blade Airport ramp up, we estimate that flight margin would have been approximately 150 basis points higher in the fourth quarter. Looking ahead to the first quarter of 2023, we expect both revenue and flight margin to be similar to or slightly above our fourth quarter 2022 levels. From a seasonality perspective, we continue to expect Q1 and Q4 to remain the lowest flight margin quarters of the year, with Q1 slightly better, while our third quarter should have the highest flight margin, driven primarily by mix shift towards higher margin seasonal businesses in New York and Europe during Q3 and part of Q2.

Let’s turn now to corporate expense, which includes software development, general and administrative, and selling and marketing expenses. On a reported basis, it’s worth noting that this quarter had several unique items, in particular, an earnout payable to the Trinity management team for significantly exceeding the EBITDA target contemplated at the time of our acquisition. While we view this earnout as a purchase price adjustment, generally accepted accounting principles require us to expense this payment to G&A. When adjusting for the earnout and other non-cash or non-recurring items, we’re pleased that our adjusted corporate expense as a percentage of revenues declined to 35% of revenue in the fourth quarter of 2022, versus 40% in the prior-year period.

Like every company operating in this environment, we continue to look for opportunities to optimize our cost structure to drive further operating expense leverage, including making tough decisions where necessary. As we look to the first quarter of 2023, we expect total adjusted corporate expense to be $1 million to $2 million higher than the fourth quarter of 2022. Adjusted EBITDA in the fourth quarter of 2022 was a loss of $8 million compared to a loss of $5.9 million in the prior-year period, but improved as a percentage of revenues to negative 21% in the fourth quarter from 24% in the prior-year period. The increased loss versus the prior-year period is primarily attributable to additional corporate expenses related to Blade’s recent growth and expected future growth, including marketing and software development, in addition to Blade Europe, where this quarter felt the full burden of SG&A related to our acquisitions, despite limited revenue and flight profit, which did not cover Europe’s SG&A in the seasonally weakest fourth quarter.

With respect to our balance sheet, we continue to have zero debt and approximately (ph) in cash and short-term securities as of the end of the fourth quarter of 2022. We remain confident in our tangible and forthcoming path to profitability, and as a result, we expect a significant majority of our remaining cash will be available for tactical acquisitions that can expand the breadth of air mobility offerings and accelerate Blade’s trajectory to free cash flow generation. To that end, I wanted to direct your attention to the new segment disclosure in our investor presentation, which will also be included in our 10-K that will be filed with the SEC. You will notice from the presentation that we have broken out segment revenue, flight profit and adjusted EBITDA metrics for both our Passenger and Medical businesses, as well as our unallocated corporate expenses for the fiscal year ended December 31, 2022, and the prior year.

We hope that this added level of disclosure, which we plan to continue and enhance in the future, will help to shine light on both the strong profitability of our MediMobility Organ Transport business in addition to the historical profitability and attractive unit economics of our Passenger business. To give some additional context, total Medical segment adjusted EBITDA was positive $5.1 million in the full year 2022 versus $1.1 million in the prior-year period. The significant year-over-year improvement is a result of the tremendous work that Trinity team did to bring our MediMobility Organ Transport solutions to more customers and patients. In our Passenger segment, which includes both our Short Distance and Jet and Other business lines, segment adjusted EBITDA was negative $6.4 million in the full year 2022 versus positive $1.3 million in the prior-year period.

There are three principal drivers of the year-over-year change in Passenger segment adjusted EBITDA that are worth calling to your attention. First is the relaunch of Blade Airport, which began in June 2021 and where we continue to operate below breakeven on a flight margin basis in addition to incurring additional selling and marketing costs. As mentioned previously, the timing of the closing of our European acquisitions resulted in a level of flight profit that was insufficient to cover the fixed cost of the business during the months we owned them during calendar year 2022. We continue to expect the business to be accretive to our financials in the first full year after acquisition and thus this will result in a year-over-year tailwind in 2023.

Lastly, our Vancouver business was not profitable on a full year basis in 2022 due to the impact of Omicron primarily during our first quarter. Note that these segment adjusted EBITDA metrics exclude unallocated corporate expenses as well as non-cash and non-recurring items. For more information on our segment cost allocation methodology, please refer to our 10-K and latest investor presentation, which will be available on the Investor Relations section of our website at ir.blade.com. Before I turn it back to Rob, I wanted to briefly address the recent disruptions in the banking sector. First and foremost, Blade does not maintain an account, hold cash, or hold securities at Silicon Valley Bank or Signature Bank. Our primary depository relationship is JPMorgan Chase, and we have not identified any material exposure to Silicon Valley Bank or Signature Bank amongst our critical vendors or large customers.

With that, I’ll turn it back over to Rob for a few closing remarks.

Rob Wiesenthal: Thanks, Will. Before going into Q&A, for those on the call who may be new to the Blade story, I will take a moment to talk about our growth strategy and what sets us apart from others in our industry, including those who expect to enter our industry in the future. First, we are building the ecosystem and aggregating the world’s best use cases for air mobility that can be profitable today with existing aircraft technology. This disciplined strategy has served our company and our shareholders well, as we have built a diverse, manufacturer-agnostic portfolio of air mobility businesses, where we are a market leader and possess durable competitive advantages from our proprietary technology, exclusive terminal and passenger infrastructure, favorable cost position, superior brand and safety track record.

Second, we serve resilient customers and end markets across both our Passenger and Medical businesses. On the Passenger side, we offer fliers the opportunity to significantly reduce travel times in highly congested or geographically contested markets. For example, in our largest market of New York City, we turn two hour drives to the airport into five-minute flights at a price that is not only accessible, but competitive verses Uber ground options. In MediMobility, we are the largest dedicated air transporter of human organs for transplant in the country, a market that we believe is as recession-proof as it gets. We provide transplant centers and organ procurement organizations with unparalleled access to the right crewed aircraft at the right time at the right price, saving our customers time, and most importantly, improving patient outcomes.

Our fliers and transplant center customers value the time savings, flexibility and our unmatched technology platform and customer service, which gives us the confidence that our business is uniquely positioned versus our competitors, and will continue to thrive regardless of the broader macro environment. Third, we see significant opportunity for organic growth and a clear path to profitability from our existing business lines using conventional aircraft today. However, our business was designed from day one to allow for the rapid introduction of electric vertical aircraft, or what we call EVA, once they are certified. Over time we expect those aircraft to: one, enhance our addressable market by increasing the number of landing zones available in the key markets where we operate; two, lower the cost of urban air mobility, resulting in increased customer adoption of our services; and three, improve our margins and earnings growth outlook by reducing our average hourly flight cost.

Unlike those who may choose to compete with us in an EVA world, we have existing passenger infrastructure that is exclusive to our flyers in key markets. We do not need to wait for the build out of new landing infrastructure to begin EVA operations. Over the past few months we have been pleased by the interest from new and prospective investors who view the significant dislocation and volatility in equity markets as a unique opportunity, and who share our view that the strength of our business today and the prospects for future growth are not reflected in the current market valuation of Blade, even with consideration for our debt-free balance sheet, and nearly $200 million of cash on hand. While we do not control our stock price, we remain supremely focused on what we can control, which is pursuing profitable growth while aggressively managing our discretionary costs under the lens of ROI.

You have my commitment that we will continue to work tirelessly in the year ahead to deliver exceptional results for all of our stakeholders. With that, I’ll turn it over to Ravi for questions.

Ravi Jani: Thanks, Rob. As a reminder, we will take questions from analysts and investors on this call today. Reporters should send inquiries to me directly. Operator, we’re now ready for questions.

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Operator: Thank you. And our first question coming from the line of Jason Helfstein from Oppenheimer. Your line is open.

Jason Helfstein: Hey, thanks. So, two questions. So, obviously, we continue to see steady improvement in gross profit in MediMobility. Rob, can you just talk philosophically, do you plan to use basically the profit — incremental profits generated by MediMobility to basically fund growth in Short Distance, namely airport? And how are you thinking about kind of trade-off between schedule, I guess, service and margin, particularly around Short Distance in the airports? And then, I’ve got a follow-up. Thank you.

Rob Wiesenthal: Sure. With respect to MediMobility, obviously, we’re quite pleased with the tremendous growth that we have there. And even when you’re conservative going forward, it still keeps us on track for improving our EBITDA position and making sure that losses are reduced this coming year. But given our cash balance, the amount of cash that’s generated by MediMobility is not critical in terms of our growth plans that can happen just with the cash in the balance sheet not only the cash generated by Medical, but obviously, Medical does contribute to the overall bottom-line. With respect to airport, Jason, I think that right now as we get to a busier travel season later in the year, in terms of the trends that we’re seeing, I think the growth in the passenger account also with the average seat price is positive.

I think we’re dealing with right now about $245 average seat price despite the fact that you can fly for as low as $195. And this is because the introduction of fare classes and other add-ons such as car connection, that multi-modality is really important to us. So, I think that the growth, which will improve utilization and the increase of average sales price, that’s going to hopefully accelerate our movements of profitability on airport. With respect to schedule, we are trying to be a lot more surgical in terms of our flight schedule. But that being said, we need to offer a product that when you want to go to the airport, we’re there. So, clearly, we wanted a median profitability on the airport. We could fly from four to seven in the afternoon in all the airports and they’ll be wildly profitable, but that’s not a product for the long term.

That may help us in the short term, but if we want to be competitive in what we know is the largest Short Distance urban air mobility opportunity in the world with 28 million going between Manhattan (ph) area airports, we want to offer a product that can be completely — a product that can be completely fulfilling to our customer base now. Flight margin profitability, you will see during a quarter this year. We are quite confident that this year we will see a flight margin profitable quarter. It’s already there in the numbers and the combination of the growth and the average sales price per seat going up.

Jason Helfstein: And then, just a quick follow-up. You did comment about kind of using cash for acquisitions. Maybe just help us understand kind of in what area you’re thinking about? Thanks.

Rob Wiesenthal: Well, look, there’s a tremendous opportunity right now. There’s a lot of dislocations. A lot of companies that don’t have a fair amount of cash on hand. We’re seeing a lot of reverse inquiries on the acquisition side. And what I can tell you is that everything needs to fit in, needs to be tactical and also needs to leverage our shared service platform. As you’ve noticed, every quarter or every — during — over the course of the year, our percentage — our corporate expense as a percentage of sales goes down. So, we need to leverage this great shared service platform that we have to accelerate profitability of any company we purchase. We’ve always committed to buying companies and assets that are profitable day one and accretive day one.

We’ve always looking for opportunity to push more into corporate travel. That is extremely important, that connectivity between especially our airport products and the customer can’t only be direct to consumer, but also has to be in corporations, and I think we’re making some great headway there with 50,000 people who live and work in , in Hudson Yards, travel agents, already a big part of the business in Europe. And also, corporates like JetBlue. We have a tremendous program going out with JetBlue with — where with every Mint seats sold, they bundle it with an airport seat in addition to significant discount for Mosaic members in addition to TrueBlue members. Also, we’re looking at opportunities to add what we call Next Flight Out capability.

As you know, while our Medical business with respect to organ transport is growing incredibly, we’ve done that without the largest part of the business, which is kidneys. And that’s because kidneys can actually survive out of the body for a longer period of time. Hospitals tend to use Next Flight Out services, that is an area we’re looking very seriously at and should provide incremental, very strong growth outside our core transplant businesses, which are at liver, heart and lung.

Ravi Jani: Great…

Rob Wiesenthal: Thank you.

Ravi Jani: Operator, we can take the next question.

Rob Wiesenthal: Thanks, Jason.

Operator: Thank you. And our next question coming from the line of Bill Peterson with J.P. Morgan. Your line is open.

Bill Peterson: Yes. Hi. Thanks for taking the question. Can we dive in a little bit more on the flight margins for Passenger in particular? You discussed the impacts of COVID, the reintroduction of airport. On the other hand, even though you raised prices, I believe, it’s like 30% for Hampton airport and pricing and $245, that’s well above the base price. I think you also raised prices in Europe and maybe a little bit in Canada as well. So, I guess, looking ahead, how should we think about margins? I know you talked about seasonality. But I guess, how should we think about full year when you get back to sort of 20% level? Again, maybe thinking about that in the current context of the business of Canada and Europe, what’s the right way of thinking about this moving forward in terms of the (ph)?

Will Heyburn: Sure, Bill. Will here. Thanks for the question. I’ll hit a couple of the different points. On the seasonality side of things, just to reiterate, we’ll always see our best margin in Q3. We can still think that is true even pro forma for the acquisitions we’ve made, particularly Europe. It had that same summer, spring, where you’re going to see slightly better margins. We, obviously, see that in our U.S. Short Distance business as well. Q2 will be second best in terms of margins. And then, from a flight margin perspective, Q1 and Q4 are going to continue to be lighter. And that’s really driven by mix shift to Medical and Jet and Other, which are going to make up a larger percentage of revenues in Q1 and Q4. However, we don’t think that blended overall flight margin is really the right thing to focus on given the massive growth in Medical, because it’s going to be driven more by mix shift than anything else.

And as you can see from the segment reporting, though Medical does have a slightly lower average flight margin in that kind of 15% to 20% range as we’ve talked about, there are fewer fixed direct costs in that business. And so, it’s a great contributor to our overall adjusted EBITDA. So, we’re not as concerned about the blend toward a slightly lower flight margin, though, Europe, you’ll see be closer to our average mature route flight margin for Short Distance around that 30% range. So that should be a boost to overall flight margin in 2023. And then, of course, we continue to have a slight drag on flight margin from our Blade Airport product, which is still ramping up to that breakeven utilization. We talked about that being about 150 basis point drag in this quarter.

So, you’ve got a number of moving pieces, but hopefully the new segment disclosure is going to help you figure out what are the drivers and also make it clear that even though the flight margin is a little bit lower for MediMobility, we think we make up for it below the line there.

Bill Peterson: Yes, my question is really where do you want the Passenger margins to go. And look, I certainly understand your numbers still at MediMobility is going faster, and that’s fine, it’s already EBITDA positive. So, that’s okay. And the second question actually is related to MediMobility. I think — I don’t believe you said you added more hospital organizations, but just to clarify that I think exited third quarter of last year at 57. Where was fourth quarter? And maybe as we look into the first quarter, I’m trying to get a feel for how we should think about the further market share opportunities (ph) not only from more (ph) coming your way in where you already have relationships, but as your — hospitals and organ procurement organizations growth through the year?

Will Heyburn: Yes. And so just to make sure I hit your passenger question, Bill, we do still think that’s going to be a 20% to 30% margin business for mature routes and it’s just really airport that’s pulling that down right now. Europe is already in that range. So, we want to make sure you have the right number for your model there. In terms of the passenger count on MediMobility, we continue to sign up new customers. We haven’t onboarded anyone new to update you on right now. Although you’re going to continue to see that growth because the onboarding process takes some time. So, you continue to expect to see sequential growth in Medical during this year. May not always be the same quarter-over-quarter, because it is going to be lumpy depending on the size of customers. But we have a number of new customers that are in final stages of contract, but nothing to announce on this call that we do continue to expect substantial growth each quarter.

Bill Peterson: Okay. Thanks for the color.

Ravi Jani: Great. Thanks, Bill. Operator, we can take the next question.

Operator: Thank you. Our next question coming from the line of Hillary Cacanando with Deutsche Bank. Your line is open.

Hillary Cacanando: Yes, hi. Thanks for your time. You just mentioned for MediMobility expect sequential growth every quarter. But could you just remind us if there is any seasonality, like noticeable change in seasonality for that business? And how we should think about growth for the year in terms of — I know there will be sequential growth, but what type of growth for the year and any seasonality to that business?

Will Heyburn: There’s really not much — Hillary, thanks for the question. There’s really not much seasonality in that business. We see pretty consistent. If there is a quarter that is maybe a touch lower, it might be Q4, really just driven by vacations for doctors and things like that. But I think we won’t always see the same sequential growth that we saw in this quarter, but we expect to see it consistent.

Hillary Cacanando: Okay. So, like in terms of modeling, Q4 touch lower and then the remaining three quarters kind of evenly distributed in terms of growth, do you think?

Will Heyburn: Yes, I think that’s a fair way to model it.

Hillary Cacanando: Okay. Sounds good. And then, you mentioned potentially getting into the kidney transport business, and then your presentation also mentioned potentially getting into medical, radioisotopes and critical cargo and parts delivery. Could you kind of provide more color in terms of do you need to make another acquisition in order to get into these businesses? Or can you do this organically? And what the timeframe would be?

Will Heyburn: Sure. So, Rob touched on this. The good news is we have the customers for this already. And that we’re serving all these transplant centers for heart, liver, lung already. We think they’re very pleased with our service and we’d love to be able to serve them on the kidney side as well. We do think that that’s a capability that is probably best brought on through acquisition in terms of the Next Flight Out. So, it’s something that we’re looking at. Given that we have very significant 120% growth, that I’ll remind you was all organic this quarter, we have our hands full at the moment, but we see it as a huge growth opportunity and we think our customers would appreciate kind of the one-stop shop solution we could offer if we had that Next Flight Out capability.

So, don’t have any specific timing for you on that front, but it is something we’re acutely focused on. And same is true with other critical cargo. We’re not really set up with the customer relationships for critical cargo, for example, for manufacturing. We do do some radioisotope work in Canada today, just cargo on flights that are already going. So, there’s some touch points there. But that’s probably a capability that you leverage the existing platform in terms of the operation center. So, you wouldn’t need to add a ton of cost, but you probably use acquisition to build those relationships.

Hillary Cacanando: Got it. Great. Thank you so much.

Will Heyburn: Thanks, Hillary.

Operator: Thank you. And our next question coming from the line of Stephen Ju with Credit Suisse. Your line is open.

Stephen Ju: Okay. Thank you. So, hi, Rob. I think we’ve talked in the past about how fragmented the MediMobility sector is today. So, going forward, as we’re thinking about your potential regional expansion plans, should we be baking in rollouts for both organ and consumer transport? Does a particular region have to be attractive for both segments in order for you to be thinking about regional expansion there? Thanks.

Rob Wiesenthal: Sure. Thanks for the question. Two very, very different businesses. Right now, on Passenger, we’re focused on the biggest markets in the world that are as deep as possible. We always talk about New York, which is where any company that’s looking at MediMobility is saying it’s the number one market opportunity in the world. And our goal, and I think we’re actually should get on the road achieving that goal is to have the biggest presence, the most amount of critical infrastructure, the strongest brand and the largest amount of passengers flying every single day to and from all New York area airport serving those 28 million people who are only flying between Manhattan and those airports at a price that’s competitive with Uber ground transportation.

We’re doing that today. On Medical, because of the scale of our acquisition of Trinity and MediMobility in general, we can service on a multi-modality basis whether it be by ambulance, helicopter or even jet across the United States. So, we are not bound by geographic barriers and there is no detriment from us operating MediMobility in a place that does not have passenger service. And with respect to new contracts and new geographies, it does not require incremental cost. In fact, because it is so fragmented, when we look at acquisition opportunities, outside of this kidney portion of the business, we have found that given the team that we have out with respect to sales and the infrastructure, it is a lot more cost effective for us to go out and pitch that business, win that business on long-term contract, and build that into our business as opposed to paying a multiple for our mom-and-pop operator that may have a few contracts here and there.

So, I think this kind of going at it surgically, tactically, market-by-market with our existing team is the highest ROI and most effective way for us to continue growing this business.

Stephen Ju: Thank you.

Operator: Thank you. And I am showing we have a follow-up question from Bill Peterson with J.P. Morgan. Your line is open.

Bill Peterson: Yes. Thanks for taking the follow-up question. And again, you guys talked about seasonality. But specific to areas like (ph), you, obviously, benefitted from your Hamptons product, maybe they always fly to one airport currently there. What are the latest bookings trends? And I guess, how should we think about that as we go into the summer and into the fall given that, obviously, things due to the pandemic look a lot different now relative to they been over the past few years?

Rob Wiesenthal: Okay. I think you’re coming in and out. Can you just maybe repeat the question one more time? I guess, it’s very difficult to hear you.

Bill Peterson: My apologies. I wanted to talk about your flight to and from Hamptons that maybe — that benefited from — and sort of explains the — how a lot of those tied to the pandemic, people going back and forth. Curious on how that should look moving forward? (ph) fly to one airport now at higher price points, but just trying to get a feel for how that business should trend out that we’re, I guess, largely past the pandemic?

Rob Wiesenthal: Sure. Okay. With respect to airports, I understand that we are flying both to Newark and , not just one airport and we’re flying both in the east side and the west side. But going back to your Hamptons question, during Omicron, a year ago, as a courtesy to customers, we offered a very low price with past is that $295 to allow people who wanted to live out of the city. I think there was a fear of staying in the city and they wanted to come into the city for a short amount of time and go back, call it home or their secondary homes close to 100 miles away. We quickly saw this returning a lot more to a resort/remote working environment as we did last summer where Fridays essentially became Thursdays and Mondays became Sundays.

And in fact, we layered on a price increase from the previous number of $795 to $1025, and that went right through the system, no problems, we didn’t see a lot of — didn’t see any, in fact, any kind of decline in terms of that ability of people willing to take that price across most of our products. So, what I would say is going forward, it’s kind of a little bit of a hybrid, which is — and good for us because whereas we used to have potentially, I don’t want to say difficulty, but it was strenuous to say the least to find all enough operators to find this massive fleet that has to go out on a Friday and come back on a Sunday given the fact that it’s spread out, you have a lot more opportunities to recover in case that there’s a mechanical, people are a lot more flexible in terms of going in different times because of weather, there still is that back and forth, it has become a seven-day business.

That is a truism. But the peakishness in terms of weekends where you make a lot of your cash has definitely spread from outgoing on Thursdays and Fridays and incoming on Sundays and Mondays, plus the returns which typically were empty, no longer empty. People are flying in both directions. But I think that the key point is compared to a year ago, this idea that I want to predominantly live out of the city and come into the city maybe once a week, that’s kind of gone. What we’re seeing now is more back to, “This is my second home. I made you some remote work there. It’s not going to just be a Friday to Sunday type product. It’s going to move around a week depending on my needs at the office and my needs at home.”

Will Heyburn: And Bill, just in case you were asking about the destinations we serve on Long Island, it’s not just one airport and in fact we made a concerted effort to diversify the different landing locations we have. So…

Rob Wiesenthal: Yes. So, right now, just to make that clear, we have scheduled service to Sag Harbor, East Hampton, Montauk, and Southampton throughout the high seasons. And that’s serviced both by amphibious seaplane, which we view as urban air mobility, because it lands in Manhattan, in addition to various types of helicopters.

Bill Peterson: Okay. Yes. Great. Thanks for additional questions.

Rob Wiesenthal: Thanks, Bill.

Operator: One moment, please, for our next question. And our next question coming from the line of Itay Michaeli from Citi. Your line is open.

Itay Michaeli: Great. Thank you. Good morning, everybody. Just wanted to go back to the comment around the confidence in the path to the profitability in the release as well as a significant amount of cash for M&A. Maybe just hoping as a bigger picture question, you could just kind of remind us how you view the path to profitability and kind of what gives you the confidence that you’re on that path to be able to deploy a significant majority of your cash for M&A?

Will Heyburn: Yes, absolutely. Thanks for the question. Look, to just give sort of a high-level bridge from the negative $27.5 million of adjusted EBITDA for the full year, on the one hand, right, we talked about how, given the timing of Europe, that was actually a headwind for us this year just because we only owned it during the lowest volume part of the year. So, call that somewhere in the mid-$100,000s of a headwind where we’ve said that it should be adding mid-single digit adjusted EBITDA. So just the full year impact of Europe gets you down to kind of the low (ph) on adjusted EBITDA in terms of a negative adjusted EBITDA. And then, Medical is the biggest driver that we’ve talked about. And as we’ve said, we continue to believe that this is a business that can grow 100% organically over time.

So, if you add another $70 million of revenue from where it was in the calendar year 2022 over some period of time at 15% to 20% flight margins, which is what we’ve talked about, that brings our adjusted EBITDA down to somewhere in the negative single digits and that’s before we make any improvement in airport profitability, which is a significant drag before we’ve made any kind of incremental improvements to our businesses in Europe and Vancouver, which we’re still in the process of launching the brand and technology in both of those new markets for us. And so, we think either of those moves can help reduce that negative adjusted EBITDA even further. And so given the significant growth, particularly in Medical, I don’t think we’re ready to put a stake in the ground on this call as to precisely when we’ll cross into positive adjusted EBITDA territory, but we definitely expect 2023 adjusted EBITDA to improve versus 2022.

And as we get closer into the (ph) part of our year, we hope to be able to give a little more precision on that.

Rob Wiesenthal: And even I’ll add to that, even if you saw any type of mitigation in the stratospheric growth that we’re experiencing in Medical, you would still see an improvement in terms of reducing EBITDA — improving EBITDA for this year. We don’t need to keep the growth consistent or to get to where Will is talking about.

Itay Michaeli: Yes, that’s very, very helpful. Maybe as a quick follow-up, any kind of high-level view on the airport ramp impact on flight margin in Q1 versus the 150 basis points in Q4?

Will Heyburn: Q1 is seasonally, as you know, a weaker quarter for commercial air travel, in general. So, I think probably expect a similar drag for Q1 though we are encouraged that if you look quarter-to-date in Q1 2023 as we talked about on the call, airports running at about double of the same period last year, both in terms of volumes and revenues. So, still encouraged with the growth, but just given that seasonally lower quarter, probably not going to see a meaningful sequential step up in profitability.

Itay Michaeli: Got it. That’s all very helpful. Thank you.

Operator: Thank you. And I am showing no further questions in the queue at this time. Ladies and gentlemen, thank you for participating in today’s conference. This does conclude your program, and you may now disconnect. Everyone, have a great day.