In earnings released 14 November, the medical helicopter air services business reported $59m in adjusted EBITDA for the quarter ended 30 September, down 57% from 3Q 21. Revenue, meanwhile, came in at $315m, down 22% year-over-year, the sources said.

Air Methods collects the majority of its revenue by providing medical air lifting services.

As such, its revenue has been hit by the NSA, which was intended to protect medical patients from surprise medical bills. And like other healthcare providers, costs have increased largely thanks to employee shortages. In Air Methods’ case that includes both pilots and medical practitioners.

“Between the NSA and wage pressures, that’s enough to cause some damage,” an analyst following the company said.

The American Securities-backed company was levered 8.2x at quarter end, based on $257m in LTM adjusted EBITDA and around $2.1bn in total debt.

Air Methods burned through $82m in cash in 3Q, the sources said, leaving it with $5m in cash on hand and slightly over $100m in revolver availability. The company’s cash balance should get a boost in the near term via expected payments from insurers United Healthcare and Aetna, one of the sources noted.

Nevertheless, Air Methods has pressing liquidity challenges. Aside from its ongoing cash burn, it is facing an April 2024 maturity on its Libor + 350bps $1.25bn TLB, followed up by $500m in 8% senior unsecured notes due May 2025.

Moody’s downgraded Air Methods’ corporate family rating to Caa3 from B3 earlier this month, citing ongoing cash burn, looming maturities. The company also has a 7.05x springing secured leverage ratio covenant if it exceeds 30% revolver usage. However, Moody’s noted it “would have adequate headroom if tested in the next several quarters.”

Air Methods’ unsecured bonds have sold off sharply in recent days, falling from a cash price of around 52 at the beginning of November to 20 on Tuesday. Its term loan is currently quoted in the high 50s, according to a trading desk, compared to 65.25 on 1 November.

The company will hold a quarterly investor call on Thursday 17 November.

American Securities declined to comment. Air Methods did not immediately respond to requests for comment.