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Air Methods Wins U.S. Air Force Contract to Develop Spinal Cord Injury Transport System
DENVER, Sept. 15 /PRNewswire/ -- Air Methods Corporation (Nasdaq: AIRM) Products Division announced today that it has been selected as a prime contractor by the U.S. Air Force (USAF) -- Human Systems Center (AFMC), Brooks AFB, Texas, to develop and manufacture a new generation Spinal Cord Injury Transport System (SCITS). This selection followed a full and open competition.
If all contract options are exercised, total revenues could exceed $9 million between now and 2002. In addition, since Air Methods retains the intellectual property rights, the Company also has the opportunity to generate additional revenue through product sales in the commercial and foreign military markets.
George W. Belsey, Chairman and CEO, said SCITS represents the Products Division's first entry into the healthcare medical device market. One of the Products Division's business development strategies is to diversify into new, complementary markets by leveraging its core competencies in emergency air medical systems for commercial and government applications. Mr. Belsey also said the award again confirms the Products Division as a Department of Defense (DoD) contractor and demonstrates the Company's successful strategy to pursue opportunities in the DoD aeromedical evacuation system.
Michael G. Prieto, Vice President of the Products Division, said this program would provide the U.S. Armed Forces with an improved platform and stretcher for the aeromedical evacuation and care of spinal cord injury, burn, and other trauma patients. It will be compatible with a wide variety of air and ground vehicles used by U.S. military services. "The SCITS will replace the Stryker Turning Frame and Collins Traction Device, both of which are no longer manufactured," said Mr. Prieto. "It is our understanding that there are over 500 of these obsolete units in the USAF inventory. The SCITS Program is vital to the U.S. Air Force commitment to provide the best possible medical care to members injured serving their country."
This Program has two phases: development and production. The development phase includes product design and engineering, development test and evaluation, operational test and evaluation, and certification (Federal Aviation Administration and Federal Drug Administration). There will be four units manufactured for prototype and ten units for operational test and evaluation. This is under a cost reimbursable structure with target revenue value of approximately $2,300,000 over eighteen months.
The contract includes a firm-fixed price option for the production phase exercisable by the U.S. Air Force for a minimum of 75 units to a maximum of 250 units. The option would be exercised in the 2nd half of 2000. Deliveries would occur over a two-year period with approximate revenue between $2,000,000 to $7,000,000.
Air Methods Corporation is a leading provider in the estimated $1 billion market for aeromedical services. The Flight Service Division is one of the largest providers of air medical transport services for hospital systems around the country. The Mercy Air subsidiary is one of the largest independent providers of air medical services. The Company's fleet of owned, leased or maintained aircraft features 39 helicopters and 5 fixed wing aircraft.
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