Air Methods ‘operating normally’ as it files for bankruptcy protection
Posted by Vertical Magazine
Air Methods, the U.S. air medical giant, has filed for bankruptcy protection as it enters into a restructuring agreement aimed at shedding $1.7 billion in debt.
The company, headquartered in Greenwood Village, Colorado, said it is operating normally, without service disruptions, during the court-supervised process. It said it continues to serve hospitals, healthcare systems, and customers with its fleet of 365 medical helicopters and fixed-wing aircraft, operated from 275 bases and serving 47 states.
“By strengthening our balance sheet, we are taking an important step forward in delivering on our transformation plan while answering every call with the highest level of service and patient care,” said Air Methods CEO JaeLyn Williams in a statement.
The company’s United Rotorcraft division, which provides equipment integration, aircraft completion and maintenance, repair and overhaul; and its Blue Hawaiian tourism business, are also operating normally, the company said. Blue Hawaiian, which conducts helicopter tours and charter flights in Hawaii, is not included in the court-supervised process.
Air Methods traces its history back more than 40 years, to when founder Roy Morgan created the company in 1980 with a single helicopter and one hospital contract in Colorado. It steadily expanded through a series of acquisitions and now transports about 100,000 patients a year.
American Securities, a private equity firm, acquired Air Methods in 2017 and has a 95 percent equity stake in the company, Reuters reported. It’s expected Air Methods’ lenders will control the company when it emerges from bankruptcy, wiping out American Securities’ equity stake.
“We are pleased to have reached this agreement with our key stakeholders, which will enable Air Methods to continue supporting patients with lifesaving care and serving as an integral link between the nation’s top healthcare facilities and people in rural and remote communities,” said Williams, who became CEO of Air Methods in 2020.
“Over the past year, we have made meaningful progress optimizing our field operations, going in-network with leading commercial insurers, and improving our cost structure. We’ve also seen record numbers of transports, and we’ve opened several new bases across the country this year as there is a great demand for air medical services.”
Air Methods said in a release the planned restructuring provides for vendors and suppliers to be paid in full, and “for teammates to continue receiving their pay and benefits without interruption.”
The company said it expects to emerge from Chapter 11 bankruptcy protection, “with an optimal capital structure,” by year-end.
“With increased financial flexibility and access to additional capital, we will be better positioned to continue opening new greenfield bases, accelerate our talent acquisition initiatives, execute on our growth initiatives, and equip more emergency personnel with the expertise needed to safely deliver the highest quality air medical care for generations to come,” said Williams.
In court filings obtained by Reuters, the company reportedly cited rising interest rates, higher labor costs, and a recent ban on “surprise” medical bills, for influencing its financial woes.
The federal No Surprises Act has impeded the company’s ability to collect payments from health insurers for out-of-network medical bills, according to the court filings cited by Reuters. Billing disputes have “complicated the company’s ability to make payments on its own debt,” the news agency reported.
Air Methods said in a release it has also obtained commitments for $80 million of debtor-in-possession financing from first-lien lenders party to its restructuring support agreement (RSA).
This new financing, pending court approval, will support the company’s financial obligations and day-to-day operations during the process, including paying employee wages and benefits, suppliers, partners, and vendors, “in the ordinary course of business.”
“We appreciate the support of our debtholders and equity sponsor in enabling us to achieve this positive outcome,” said Williams. “I also thank our team members across the country who put our mission into action every day. Together with our healthcare and community partners, we will continue to close the gap between our patients and the critical care they need.”