Good morning, everyone. I'm Greg Conrad with the Jefferies Aerospace and Defense Equity Research Team. Welcome to our third annual Jefferies EV Talks Summit. Today, we are lucky enough to have Rob Wiesenthal, CEO of Blade, as well as Will Heyburn, CFO, here with us. Maybe just to kick it off, if you can provide a little bit of background on Blade, what markets do you operate in, and how do you broadly think about the opportunity in the business?
Sure. Thanks a lot for having us. I appreciate it. We're actually dialing in remote from our Arizona operations here, where our medical business is based. Let's talk about the business, how we got started. We started the company about we're working on our 11th year, so 10 full years of operations. It started out as a company to do short-distance aviation, predominantly with helicopters. The thesis of the company was always, how do you create an ecosystem for short-distance aviation, focus on helicopters that can enable you to transition to EVTOL when they are ready? That's every part of the ecosystem from captive infrastructure, technology, brand, consumer-to-cockpit software, routes, marketing, customer experience, all that. Doing it on an asset-light basis because at some point, we knew that we would need to be preparing for that transition.
I think I can't be more excited about where we are in the EVTOL timeline because it really is, it's a short-term horizon. I couldn't have said that when we went public four years ago, but I can really say that now. It's now the time we're talking in terms of months and no longer years. We started out working in leisure markets in the greater New York area. We quickly added probably one of our most important businesses, which is an airport business that operates six days a week, every 20 minutes to Newark and JFK airports in New York, where we've kind of shattered the Uber Black pricing. It starts at $195. People buy airport passes for $695 a year, where they can fly for $95. We're competitive with Gram. We're one of one in the markets we serve.
The next biggest market is Europe, Southern Europe. That's Monaco, Nice, Cannes, Saint-Tropez, and the winter, Courchevel, Geneva, Milan, all of Southern Europe. It's all about great landing zones. I think one of the things that people discovered about Strata Critical Medical is that we're not trying to boil the ocean. It's all about great, convenient landing zones. I think we have the two most important markets in the world, the Northeast in the United States and in Southern Europe. Along the way, we saw an incredible opportunity. That was to use the logistics expertise that we have and the relationships we had with operators, the technology base, the team to move human organs for transplants, specifically hearts, livers, and lungs. That started out in New York. Today, we're now the largest air transporter of human organs in the United States.
It's now about 60% of our business, highly profitable, great profit margins, terrific growth, and definitely leverages a lot of our core competencies. I actually think that in the future, certain mission profiles that we do in the medical side will be aided by EVTOL. Profitability came a year early, earlier than we expected to the market. We'll have about $6 million of adjusted EBITDA on the passenger side. We'll probably add another incremental single digit of EBITDA for the full year. We haven't even lapped the structural changes that we made, including Europe and some other things that we've been working on. The passenger business has strong margins. We've been talking about double-digit margins, high double-digit margins, strong potential there. We're the largest. In passenger, we're one of one. We're the largest in the medical business.
Two terrific businesses with different but great profiles from a financial performance perspective. I think the company's working on all cylinders, very pleased with the financial performance and having overall adjusted EBITDA for the company for the first time this year, really clean balance sheet, about $120 million of cash, no debt. I think we're pretty well positioned where we are right now. Greg, just to clarify on those margins there, on the medical side, we're moving from the low teens to the high teens. On the passenger side, we've gone from not making a profit to now having a target of the high single digits for passenger.
That kind of answers where I was going to go with my next question. I mean, kind of within that and that mix of medical and passenger, I mean, anything in terms of passenger seasonality or kind of how that allows you to utilize capacity, just thinking about the growth profiles of medical versus passenger?
I will talk about, let me talk about passenger, and then I'll lead in a little bit on medical, and we'll give some expansion on that. The passenger business has very skewed right now from a seasonality perspective in Europe and in the United States. Frankly, being asset-light helps us because that allows us to kind of flex our capacity that we need to make sure there aren't ships lying around with pilots. We enter into capacity use agreements or long-term contracts with our operators. Many of them are dedicated solely to Strata Critical Medical. Many of them actually have built their companies around Strata Critical Medical. They also have other operations. Sometimes it could be news operations or other types of government contracts. They enter exclusivity arrangements with us.
They pass our safety standards with a very large safety team, which is obviously critical to us, the user technology, understand our customer experience. There is that flex between on-season and off-season for leisure. At the same time, as our prices go down, and you think about Europe, especially places like Monaco and elsewhere, Milan, where it is less seasonal and the fact that we have a winter business in the Alps and the airport business in New York, we are trying hard to kind of reduce the reliance just on kind of the spiky seasonal perspective. Being asset-light right now does equip us with two strengths. One is to be able to flex that capacity depending on demand and seasonality, but also to put us in a great position to help make that transition between conventional helicopters and EVTOL.
Will, do you want to just talk about the medical side for a second?
Yeah. Look, the medical business is a little bit of a different profile. It is a contractual business. It is not seasonal. It can have some lumpiness, but it is a great high single-digit growing market organically. We are continuing to add share through new customer wins. When you think about that, kind of a hybrid model is a little more appropriate and allows us to maximize our margins. Though we grew the business all the way through the beginning of last year without owning a single aircraft, you get to a certain point of scale, particularly in specific markets, and you are leaving some efficiency on the table by being 100% asset-light. By purchasing 10 aircraft, which represent about 30% of the flying that we do in medical, now we are getting the operating leverage of flying more.
On those airplanes, every hour we fly costs a little bit less than the hour before because you're amortizing those fixed costs of pilots, insurance, maintenance, hangar, etc. That has allowed us not only to improve our adjusted EBITDA margins in the medical business, it has also allowed us to provide better service to our customers. You're able to put those aircraft closer to the locations where your customers are going to be departing, and you do not charge the repositioning that you would otherwise have to charge if you were trying to have aircraft serving multiple customers in different locations. That is really important for this time-critical kind of cargo because it is not just about the cost of the repositioning. It is the reaction time as well. We are really doing everything we can, making investments to be better partners for our customers.
The good news is that that's both allowing our customers to go and recover more organs, and it's also resulting in better profit margins for us as we continue to fly more.
I think you're also hearing a common theme. On the passenger business, we are one of one. We are, without competition in the Northeast United States, we're number one in market share in Europe. It is about having the most recognized brands, frankly, in short-distance aviation and having captive infrastructure. On the medical side, as we win contracts, just like we have a competitive moat with infrastructure, we have a very strong competitive moat with placing those aircraft by our hospitals.
When you think about when your mission is improving outcomes and saving lives, the ability to scramble an aircraft really quickly for a hospital is not only imperative, but with respect to competition who may want to come in and try to do missions for a hospital, it is very tough for them to be competitive because you are repositioning an aircraft somewhere else in the United States as opposed to being in one of our hubs where we have either one or many hospitals that can be serviced literally in a minute's notice.
I guess just maybe sticking on medical for one more, I think you recently announced a partnership with OrganOx to preposition Metra perfusion devices at aviation hubs. Can you maybe talk a little bit about that partnership, kind of the opportunities as that kind of moves forward?
Sure. Maybe just 10 seconds of background since this isn't a medical call. Perfusion technology is just a fancy word for pumping oxygenated blood through an organ. The reason that's important is because there's a whole new category of donors in America, circulatory death donors, donors whose hearts have stopped. So much damage is done to organs when that happens that you need to use some form of perfusion technology to repair the damage that's done. That's what we mean when we say perfusion. It's a really exciting time for people that are on the transplant list because you now have this larger availability of organs from being able to repair the damage that's done to donors whose hearts have stopped. There's a number of different ways that we can utilize those kind of organs, competing technologies.
Our model is to be agnostic, support our customers irrespective of what third-party machine perfusion device they want to use. There's also some therapies, something called NRP, where you do not need a device to perfuse the organs. You actually perfuse the organ in the body of the donor, repair the damage there, and then take it to the recipient. It can be less expensive. We support our customers irrespective of what they decide. But OrganOx is really exciting, a company we've worked with for a long time. Currently, they have what's called a back-to-base model, meaning you bring the organ back to the location where the recipient is and is going to receive that organ transplant, and you perfuse it inside their device in order to repair the damage there.
What's really exciting is, and we've heard from our customers, many more of them want to use this device. It could be lower cost than a lot of the competing devices that are available. We came to them and worked with them to try to come up with a way to solve the constraint of supply of devices they have. We preposition these devices all around the country. We can drive them to folks who want to use them for one case. We can fly them to folks who want to use them for one case. We are also preparing for something we're really excited for, which is the potential approval for this device to be approved to perfuse organs while you're flying, which is not something the device is allowed to do today.
We have gone ahead and done all the work with OrganOx to get our planes ready to be able to complete that mission successfully, which we think we know our customers want to be able to do that. We also think it creates a whole new customer acquisition channel for us because we have done this work early and are already going to have aircraft around the country that are able to move this groundbreaking device. It is a really exciting time and a really great partnership with the team at OrganOx.
When we started the business, remember, this started with just helicopters on the medical side. Then it quickly moved into jets. Over the coming years, because of perfusion devices, the length of these flights are getting longer and more paid by the hour. In fact, we did the longest air transport of a human organ from Maine to Alaska, which was something that was unheard of at the time. Because of all these technologies, there are more organs available for donation. On top of that, because they can last out of the body longer, we have the ability to fly to the hospitals that need them pretty much no matter where they are in the country.
We're going to get to EVTOLs eventually. Maybe if we can weave them into some of these questions. You talked about the asset-light model. I think 15% of your aircraft are owned. Third-party agreements make up the remaining 85%, I believe. Can you maybe talk about how those third-party agreements, how you buy capacity, how that works in terms of the flexibility of having that capacity through third parties?
Just one clarification. We should just clarify that on the passenger side, we're 100% asset-light. On the medical side, what we've done to get real operating leverage and to be able to place those planes by our customer, 30% of our business is now on owned aircraft and 50% are with capacity use agreements where we kind of lock in rates and do have upside in terms of, again, the more we fly, the better the economics are for those. Will, I don't know if there's anything you want to add on that.
Yeah. Cool. And then maybe on the passenger side, if you can talk a little bit about the pricing model. You talked a little bit about the subscription basis and the cheaper flights for people who get that subscription. How does that pricing model work? I mean, how dynamic is it and just anything around general price?
Yeah, it is dynamic. We're becoming much better in terms of dynamic pricing with respect to picking peak times for airport and leisure routes and making sure that we get adequate value from those flights and places where times that may not be less competitive with respect to how much time does it take to go to places like the airport or pretty much any destination. You start to get to that kind of $195 level. To give you an example on airports, despite the fact that you can fly as little as for $95 with a pass or $195 without a pass, you're talking about turning a five to eight-minute flight, turning a two-hour drive into a five to eight-minute flight, which has a lot of value.
We want to get people on the low end, but we also want to get people who are also willing to spend more for more services. Things like flexible fares, things like cash refunds if they want, if they're not going to be around in the U.S. for a while. We have a lot of international travelers. Adding on excess luggage, cars that are harmonized with you when you land. We're now at the point where the average checkout for an airport flight is north of $300, which means that there's a spectrum of pricing options that people can have so you are in a situation where you're not alienating anybody. There is a lot more technology under the hood now that really helps us deal with dynamic pricing and making sure that we're optimizing our utilization whenever possible.
Maybe just to start touching on EVTOLs, I mean, I think you have a pretty strong strategy in terms of implementation. Can you maybe talk about the timeline, how you've selected who to partner with, and how we think about that being implemented into the broader Blade?
Yeah. I think that, again, I'm really, really excited. This is probably one of the first calls where we've recently had that we really see it on the short-term horizon. We're looking, again, the right place to get your information in terms of deployment is obviously with the OEMs, but we have great relationships with all of them. I think we're really looking at kind of late 2025, early 2026 in the Middle East, and then probably late 2027, maybe 2028 in the Northeast. I think that the Middle East is obviously pushing extremely hard to not only be tech-forward, but to enable what we call kind of city 2.0 with all the new cities that are kind of built from the ground up over there.
I think it'll be a terrific proving ground to kind of iron out any issues in the customer experience, reliability issues, understanding how these aircraft work in the wild. That's one of the things that we really bring to any manufacturer, to really see what it's like working in an urban environment with everything from heliport infrastructure to ATC to numerous airports, crowded airspace, dealing with real passengers sometimes who have real issues and everything from bags, their timing, weight, size, all that's really, really important. I think that we designed the company to pretty much work with any of these manufacturers. The other thing that's important to point out is in the beginning, this is going to be a cohabitation phase. This is not like a light switch. There's going to be kind of helicopters and EVTOL kind of living in harmony.
There are going to be certain missions based on weight, distance, weather conditions where a helicopter is going to be more appropriate. There are going to be certain instances where the mission profile might be shorter, might be more recurring, where cycles on an aircraft are not as important. Airport is a good example where EVTOL really, it will be the sweet spot for EVTOL for a decent amount of time.
I guess somewhat tied to that, I mean, how do you think about the most significant near-term and long-term growth drivers of the business? Does the implementation of EVTOL maybe change some of that opportunity set or kind of how you view the business going forward?
Yeah. I mean, we've designed our strategy has been for the past year or so is to get passenger to profitability, which we did. We did it a year early to continue to optimize to build what we believe is the most recognized brands in the helicopter business today. We recently completed over Memorial Day weekend, not only the biggest part of our business in the Northeast, but flying to and from the Monaco Grand Prix from Nice, which is probably the largest non-military mission of people by helicopter on a coordinated basis over a couple-day period. We are really good at that logistics, turning those helicopters around. That will be swapped to EVTOL. What is exciting about the unlocking of EVTOL is the unlocking of the growth. That growth is driven by the fact that it is quiet and there will be more places to land.
Any pair of convenient landing zones to you is a terrific business. If you can walk across the street from your apartment building or walk a couple of blocks from your home and get into an EVTOL landing zone and fly to somewhere convenient, whether it be for work, leisure, or going home, that is a fantastic business. As we've said, in New York City, if you take a look at how we're situated, New York City is fantastic in the sense that we have three heliports on a 13-mi island. They're all on the water. We have Blade Lounge West, Blade Lounge East, and also now reopened Blade Lounge Wall Street. There is a variety of places to go to. However, in the center of Manhattan, there's a little bit of a dead zone.
I've said before, if you have one landing zone south of Central Park, north of the Port Authority, you've created a network of not only places where you can go to the airport or other markets to, but intra-city, Midtown to West Side, Midtown to East Side, Midtown to Wall Street, Midtown to an airport. All of that really creates a real network collection. It has an ability to exponentially grow the size of the business. That's what we're excited about. That's what the unlock is. That's what turns this business into a very high grower. That will take time. The first phase is getting those in operation, having all the stakeholders understand that these are quiet, emission-free, and safe. I really do believe that the cities I've spoken to and mayors and governors and other legislators all over the world, they want city 2.0.
You cannot be city 2.0 without an urban air mobility strategy. You have to look at cities and really understand there's kind of three layers. You can have underground with subways, above ground with everything from cars, eventually robotaxis, buses, scooters, bicycles. You have the upper layer, which are the jets operating in the thousands of feet, high thousands of feet area. You have that middle layer, third layer that I call it, where you're going to have urban air mobility that really is going to provide a new avenue for people to get to where they want, increase productivity by having people being able to do more business in a short amount of time and make cities more attractive that may not have been attractive in the past couple of years for a variety of reasons, everything from hybrid work to congestion.
Greg, maybe just to touch on the growth on the medical side quickly, continuing to gain share in our core market. We have about 30% market share in a really fragmented market for air transportation of organs, one, two new big customers that started on April 1. This is also a marketplace that is growing in terms of the number of organ transplants that happen in America because of a variety of factors that are continuing to play out. It has been high single-digit growth in the market. A lot of those drivers, perfusion technology is an example, that is getting cheaper. It is becoming easier for hospitals to utilize those organs from donors whose hearts have stopped. You are also seeing regulatory change that is allowing you to go pick up organs from farther away and prioritizing matching organs to the sickest patient rather than the closest patient.
Not only does that mean that more folks get organs in time because you're getting it to the sickest person first, it also means that trips are getting longer. Our unit of revenue in this business is a flight hour. If we look at the average distance between a donor and a recipient over the last six years, it's increased by almost 60%. We're still in the earlier days of moving particularly liver and heart distribution to that different set of priorities focusing first and foremost on the sickest patient. We're very excited about the core market that we're in. We've also launched a number of other ancillary products and services that are growing much more quickly than our overall medical business. That includes ground transportation, not just for organs, but for blood samples, tissue samples, things like that.
We're also helping hospitals perform the clinical matching function for organs, determining whether or not an organ is a fit for a specific recipient. We're also exploring new verticals and other time-critical cargo across healthcare and other markets. Lots of exciting ways to continue growing now and into the future in medical.
Kind of maybe just wrapping it all together, I mean, how do you think about the real IP of Strata Critical Medical around the technology and experience provided to the customer? I mean, what are the biggest areas providing that lasting competitive advantage, just thinking about technology and the lifestyle company element more so than just transportation?
I think that there's no question in my mind after 10 years, the most important IP of Strata Critical Medical is the brand, the recognition, the trust that people have in it, and the emotional connection they have with it because people really do enjoy the experience. As much as we talk about saving time and efficiency in city 2.0, flying in three dimensions above ground, taking off vertically is something that people really love to do. I think the experience that we've created in our infrastructure, which are captive to Strata Critical Medical, when you walk into a Strata Critical Medical terminal, you're only with other Strata Critical Medical customers.
It gives us the ability to make sure that we manage their mission, that we have the ability to do everything from assess luggage to do security, make sure people are enjoying themselves while they're waiting for the flight, if they wait for the flight at all, depending on what time they arrive. That customer experience starts with marketing, goes to literally the app when you're booking, the people you speak to on the phone if you have any issue, if you have questions, the people that not only are greeting you in these lounges and making sure you're all set, but walking you to the aircraft, placing that aircraft, dealing with weight and balance, make sure you have a great experience getting into that aircraft and doing so safely, then greeting you on the other side.
In the case of the airport product, putting you directly into a car that takes you straight to as close to your gate as possible groundside, that curbside. I think that is the special sauce. We figured out how to do it. The market is great. If you think about it, as much as we talk about growth of EVTOL, 28 million people in the greater New York area go by private car between the New York City airports and Manhattan. That is excluding subways, shared buses, all that. We are really only hitting a, the penetration is quite small.
There is a lot of upside, but we've been smart about it as we were only focused on the most important markets of the world where there's either a lot of congestion or contested geography, so to speak, where the Alps is a perfect example where you have five-hour drives to get to certain areas in the Alps as opposed to flying a straight line over them. That is a big part of the IP. Obviously, on the technology side, our tech stack took a lot of money, and we're finally where it needs to be. That does two things. It not only integrates the booking experience with our logistics people on the ground, but also goes directly to our operators.
Unlike the way it was for the industry a couple of years ago, we can change weight and balance on the fly in terms of adding or subtracting passengers. We can make sure those aircraft are properly fueled and make sure that all these missions happen safely, but allowing that dynamic changes so people can book 20 minutes in advance or there could be people moving between different aircraft based on the time that they are there. That technology is quite important. The other side of it is the data exhaust, understanding how people are interacting with the app, understanding when they drop out, when to offer them certain types of incentives to book a return, having that message happen at that moment of truth when they are landing about booking the return.
So much stuff on the marketing side is now coming from that data exhaust on the app that we've cut marketing costs significantly, leveraging not only the strength of our brands and great word of mouth, but also the information we're getting from our flyers.
Maybe just to wrap it up and leave it on a fun note, I mean, what are you most excited about as the industry moves closer to entry into service? I'll weave that into what are the main messages investors should walk away with from today?
Let me start with what the main messages are. We finally crossed the Rubicon of profitability. These are two solid businesses, both with real competitive stature in the industries that they serve. The medical business is, as you can imagine, kind of not, it's resistant to tariffs, resistant to recession. It is paid for by the hospitals. We're not reimbursed by insurance companies. I think we offer the best service in the business, really good competitive moat in terms of placing these aircraft where the hospitals need them to be. We're building market share every day. We're really, really good at this. The prospects for enhanced profitability are there because we now own a fair amount of aircraft, where the more we fly, the more we make. Ancillary services that we're now adding on, like organ matching services.
Beyond that, our ground business, which has licensed sirens, SUVs with very high margins, and then the opportunities to put other add-ons such as organ recovery, moving other products such as what I call mission-critical parts, even radioisotopes. Radio Farmer is a great opportunity for us because anything that needs to get there quickly, efficiently, and without failure, Strata Critical Medical is perfectly positioned for that. On the passenger side, we got this business to profitability. We are one of the United States largest in Europe.
We are well positioned to both accelerate and de-risk any manufacturer's entry into that market because the very big difference between building an aircraft and having commercialized and having it certified, which is an incredibly daunting task that I'm glad that we're not doing, but having that compared to having the ecosystem where that can be slotted in and you have people that are used to flying in three dimensions, used to getting places quickly, willing to pay for that privilege, I just think it's going to be a great, we're going to be a great jumpstart for the industry.
We'll leave it at that, Rob. We really appreciate the time today and look forward to following Strata Critical Medical's success.
Great. Thank you. Thanks for your time. We appreciate it.