Strata Critical Medical Inc.
11/10/2025 | Press release | Distributed by Public on 11/10/2025 10:51
Quarterly Report for Quarter Ending September 30, 2025 (Form 10-Q)
Management's discussion and analysis of financial condition and results of operations
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes and other financial information included elsewhere in this Quarterly Report on Form 10-Q and our audited consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2024.
In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs.
Forward-Looking Statements
This Quarterly Report on Form 10-Q may contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements can generally be identified using forward-looking terminology, including the terms "believes", "estimates", "anticipates", "expects", "seeks", "projects", "intends", "plans", "may", "will" or "should" or, in each case, their negative or other variations or comparable terminology. These forward-looking statements include all matters that are not historical facts. They appear in several places throughout this report and include statements regarding our intentions, beliefs or current expectations concerning, among other things, results of operations, financial condition, liquidity, prospects, growth, strategies and the markets in which we operate. Such forward-looking statements are based on available current market material and management's expectations, beliefs, and forecasts concerning future events impacting us and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are difficult to predict and generally beyond our control. Actual results and the timing of events may differ materially from the results anticipated in these forward-looking statements.
Our operations and financial results are subject to various risks and uncertainties. The following are among those factors, but are not the only factors, that could adversely affect us and/or that may cause actual results to differ materially from such forward-looking statements:
Risks Related to Our Business and Growth Strategy
•continued occurrence of net losses, which we have experienced since inception;
•the impact of our recently completed divestment of the Passenger business and acquisition of Keystone (as defined below) and our ability to realize the anticipated benefits of these transactions, including the receipt of contingent consideration in connection with the sale of the Passenger business;
•any change to the ownership of our aircraft and the operational and business challenges related thereto;
•effects of competition;
•harm to our reputation and brand;
•our ability to provide high-quality customer support;
•our reliance on contractual relationships with certain transplant centers, hospitals and Organ Procurement Organizations;
•reliance on certain customers;
•competition from providers with proprietary organ preservation technology or additional capabilities;
•the continuing availability of organ donors and viable donor organs;
•insufficient reimbursement and funding for organ transport costs;
•risks related to organ transport operations;
•new technology that could make ground or commercial air transport of organs more viable;
•negative publicity, reputational damage, litigation, claims or investigations relating to our provision of clinical services and perfusion staffing services;
•regulatory changes, legislative reforms, and civil or criminal enforcement actions;
•our ability to successfully integrate Keystone and to identify, complete and successfully integrate future acquisitions;
•impact of natural disasters, outbreaks and pandemics, economic, social, weather, growth constraints, geopolitical, and regulatory conditions or other circumstances on metropolitan areas and airports where we have geographic concentration;
•any adverse publicity stemming from accidents involving small aircraft, helicopters or charter flights and, in particular, any accidents involving our third-party operators;
•the effects of climate change;
•terrorist attacks, geopolitical conflict or security events;
•the availability of aircraft fuel;
•our ability to access additional funding to finance our operations;
•our ability to manage our growth;
•increases in insurance costs or reductions in insurance coverage;
•the loss of key members of our management team;
•our ability to maintain our company culture;
•effects of fluctuating financial results and the fact that the Company's historical financial statements included in prior periodic reports may not be comparable due to the impact of discontinued operations;
Risks Related to Our Dependence on Third-Party Providers
•our reliance on third-party operators to provide and operate aircraft;
•the availability of third-party aircraft operators to match demand;
•disruptions to third-party operators and providers workforce;
•the possibility that our third-party aircraft operators may illegally, improperly or otherwise inappropriately operate
our branded aircraft;
•our reliance on third-party web service providers;
Risks Related to Intellectual Property, Cybersecurity, Information Technology and Data Management Practices
•our ability to address system failures, defects, errors or vulnerabilities in our website, applications, backend systems or other technology systems or those of third-party technology providers;
•interruptions or security breaches of our information technology systems, especially with the continued development and increased usage of artificial intelligence (AI);
•our placements within mobile operating systems and application marketplaces;
•our ability to protect our intellectual property rights;
•our use of open source software;
Legal and Regulatory Risks Related to Our Business
•changes in our regulatory environment;
•the impact of any litigation or regulatory investigations that we may be subject to;
•regulatory obstacles in local governments;
•our ability to comply with domestic and foreign privacy, data protection, consumer protection and security laws;
•the expansion of environmental regulation;
Other Risks
•our ability to remediate any material weaknesses or maintain effective internal controls over financial reporting;
•our ability to maintain effective internal controls and disclosure controls; and
•the other factors described elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2024, included under the headings "Risk Factors," "Management's Discussion and Analysis of Financial Condition" or as described in the other documents and reports we file with the SEC.
Actual results, performance or achievements may differ materially, and potentially adversely, from any forward-looking statements and the assumptions on which those forward-looking statements are based. There can be no assurance that the data contained herein is reflective of future performance to any degree. You are cautioned not to place undue reliance on forward-looking statements as a predictor of future performance. All information set forth herein speaks only as of the date hereof and we disclaim any intention or obligation to update any forward-looking statements, whether as a result of new information, changes in expectations, future events or otherwise.
Overview
Strata Critical Medical, Inc. ("Strata" or the "Company") is a time-critical logistics and medical services provider to the United States healthcare industry. The Company operates one of the nation's largest air transport and surgical services networks for transplant hospitals and organ procurement organizations, offering an integrated "one call" solution for donor organ recovery. Strata's core services include air and ground logistics, surgical organ recovery, organ placement and normothermic regional perfusion for the transplant industry, as well as perfusion staffing and equipment solutions for cardiovascular surgery centers, offered under the Trinity Medical Solutions ("Trinity") and Keystone Perfusion brands.
Strata's mission is to increase the number of organs that are successfully transplanted while leveraging the Company's expertise and resources to provide other medical and logistics services to a broader customer base. Strata's goals are closely aligned with those of all participants in the transplant ecosystem, including transplant centers, regulators, Organ Procurement Organizations ("OPOs") and other service providers. We believe that, by working with Strata, industry participants can save money, save more lives and operate more efficiently.
Strata operates in a single segment, offering a variety of logistics and clinical services related to organ transplant and the broader healthcare industry. All of Strata's services are provided to transplant centers, organ procurement organizations, hospitals or other businesses that pay the Company directly.
Transplant Logistics Services
•Air Logistics - Air transportation of human organs for transplant as well as related staff, equipment, blood samples, and tissue samples. Service is typically provided on fixed wing aircraft operating specifically for each individual organ. Strata also offers on-board couriers for commercial flights and "next flight out" shipping coordination.
•Ground Logistics - Ground transportation of human organs for transplant as well as related staff, equipment, blood samples, and tissue samples.
Transplant Clinical Services
•Organ Recovery - Surgical procurement of donor organs.
•Normothermic Regional Perfusion ("NRP") - In situ perfusion of donor organs with oxygenated blood to improve clinical outcomes and enable functional assessment prior to recovery.
•Organ Placement - Services related to the evaluation and acceptance of potential donor organs for recipients as well as administrative support with the transplant process.
Other Clinical Services
•Cardiac Care - Cardiac perfusion, blood management & autotransfusion and disposables. Services are typically provided under contract with hospitals to support open-heart surgery procedures.
•Other - Extracorporeal Membrane Oxygenation (ECMO) services, perfusion temporary staffing and equipment rental offered to healthcare providers .
Outlined below are recent material transactions impacting this Quarterly Report on Form 10-Q.
Sale of Passenger business
On August 29, 2025, the Company completed the previously disclosed sale of its Passenger business to Joby Aero, Inc. ("Joby Buyer"), pursuant to an Equity Purchase Agreement, dated August 1, 2025 (the "Joby Purchase Agreement"). The Passenger business acquired by the Joby Buyer pursuant to the Joby Purchase Agreement consisted of the Company's business of offering, selling, promoting, marketing, planning, booking, brokering, coordinating and arranging the transportation of passengers on aircraft operated by other entities and related ground transportation services. The purchase price received by the Company upon the consummation of the transactions contemplated by the Joby Purchase Agreement was approximately $76.0 million based on the closing price per share of $14.27 of Joby Aviation Inc's ("Joby Aviation") common stock as of August 28, 2025), after giving effect to certain pre-closing adjustments and indemnity holdbacks pursuant to the terms of the Joby Purchase Agreement, consisting of 5,325,585 shares of Joby Aviation's common stock, par value $0.0001 per share (the "Buyer Shares"). The Company subsequently sold the Buyer Shares received in connection with closing for net proceeds of $70.2 million. The Company may receive up to an additional $35.0 million in consideration upon the satisfaction of certain financial performance and employee retention targets described in the Joby Purchase Agreement during the 12 and 18 months, respectively, following the closing of this transaction, payable in cash or Buyer Shares at Joby Buyer's election, as well as the release of up to $10.0 million in indemnity holdbacks. The number of Buyer Shares issued to the Company, if any, shall be based on the average of the daily volume-weighted average sales price per Buyer Share on the New York Stock Exchange for each of the ten consecutive trading days ending on and including the first trading day preceding the applicable measurement dates described in the Joby Purchase Agreement.
The sale qualified as a discontinued operation under ASC 205-20. The Passenger business acquired by Joby Buyer included all operations previously reported within the Passenger segment, as well as certain assets and activities currently reported within unallocated corporate expenses and software development, including certain costs related to software development personnel, the Company's former CEO and headquarter lease.
The assets and liabilities of the Passenger business as of December 31, 2024 were retrospectively classified as held for sale and presented as discontinued operations. The results of operations for the nine months ended September 31, 2025 and 2024 reflect the financial results of the Passenger business, including activity through August 29, 2025, the transaction date, as discontinued operations. The cash flows and comprehensive income of the Passenger business have not been separately presented and are included in the unaudited interim condensed consolidated statements of cash flows and unaudited interim condensed consolidated statements of comprehensive loss, respectively, for all periods presented. Unless
otherwise indicated, the information in the notes to the unaudited interim condensed consolidated financial statements refer only to Strata's continuing operations and do not include discussion of balances or activity of the Passenger business.
Acquisition of Keystone Perfusion Services, LLC.
On September 16, 2025, the Company completed the acquisition of Keystone Perfusion Services, LLC ("Keystone"), an organ recovery and normothermic regional perfusion service provider to the transplant industry, pursuant to a Purchase and Sale Agreement, dated September 16, 2025 (the "Keystone Purchase Agreement"), for the following upfront payments: cash $110.0 million (comprised of $65.6 million paid directly to the seller and $44.3 million directed by the seller to other parties on the close date) and 3,434,609 shares (where 1,717,303 are held in escrow). The purchase consideration price is subject to final adjustment, upward or downward by up to $12.4 million, based on Keystone's actual 2025 Adjusted EBITDA performance, with the adjustment to be determined by March 2026. In addition, potential earn-out payments of up to $23.0 million may be made contingent upon Keystone's achievement of gross profit targets (as defined in the Keystone Purchase Agreement) for each of the years 2026 to 2028. See Note 2 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Our Business Model
Logistics Services
We typically provide logistics services to transplant centers, organ procurement organizations and other businesses on a contractual basis including provisions stipulating that Strata will be the "first call" for any transportation needs.
Pricing is based on a fixed price per flight hour flown with a fuel cost surcharge above a set benchmark. Ancillary costs such as landing fees and de-icing are passed through to the end customer.
Strata leverages an asset-light air logistics business model: we primarily utilize aircraft that are owned and/or operated by third parties on Strata's behalf. In these arrangements, pilots, maintenance, hangar, insurance, and fuel are all costs borne by our network of operators, which provide aircraft flight time to Strata at fixed hourly rates. This enables our operator partners to focus on training pilots, maintaining aircraft and flying, while we maintain the relationship with our customer from booking through flight arrival.
When utilizing third-party aircraft and/or aircraft operators, we typically pre-negotiate fixed hourly rates and flight times, paying only for flights actually flown, creating a predictable and flexible cost structure. Strata provides guaranteed flight commitments to some of our third-party operators through capacity purchase agreements ("CPAs"), which enable Strata to ensure dedicated access to such aircraft with enhanced crew availability, lower costs and, in many cases, the ability to unlock more favorable rates when flying more than the minimum number of hours we guarantee to the operator. Additionally, a significant portion of trips are flown by safety-vetted operators to whom we make no commitments, providing us with additional flexible capacity for high demand periods.
Over the course of 2024, we acquired ten fixed wing aircraft. We made the decision to invest in a limited number of owned aircraft based in high-volume geographies as we believe direct asset ownership will enable (i) improved economies of scale; (ii) increased uptime, enabling more reliable service and higher asset utilization; and (iii) the ability to compete for certain contracts where asset ownership is preferred or required. All of these aircraft are operated and maintained by third-party service providers under Strata's oversight. We prioritize the use of owned aircraft and dedicated aircraft under CPAs, which provide better economies of scale. We size our owned fleet and our commitments under CPAs significantly below our expected demand, enabling us to maximize utilization on those aircraft while fulfilling incremental demand through our network of non-dedicated operators.
We provide ground logistics using a combination of owned vehicles, which are allocated to hub positioned near our customers across the United States, and third-party providers.
We utilize a combination of company employees and contractors as couriers to facilitate the transportation of organs, typically kidneys, aboard scheduled commercial flights. For next flight out services, where kidneys are placed in the cargo hold of a commercial flight, we coordinate with third-party providers on behalf of our customer.
Clinical Services
We employ perfusionists and transplant surgeons that are primarily dedicated to a specific customer in a particular geography. We own perfusion equipment which is often provided as part of our services or offered through a traditional leasing arrangement.
Our clinical work for Organ Procurement Organizations ("OPOs") typically consists of surgical recovery, NRP services and related equipment provided on a contractual basis with a combination of retainer and per case fees.
For transplant centers, surgical recovery and NRP services are typically provided on an ad hoc basis with pricing on a per case basis. We leverage surgeons, perfusionists and equipment in place to support our OPO customers to provide more efficient options to transplant centers, utilizing locally available resources wherever possible to avoid incremental logistics costs.
For cardiac care hospitals, we typically provide perfusion staffing, often combined with perfusion equipment, on a contractual basis with a combination of retainer and per case fees.
Organ placement services are provided on a contractual basis with a fixed monthly fee based on the size of the customer's program.
Technology
We also utilize proprietary technology to manage staffing, training and chain of custody, as well as help customers streamline organ evaluation, procurement and logistics. Our technology enhances the efficiency and cost-effectiveness of our service offerings, further strengthening our position in the organ transportation industry.
Factors Affecting our Performance
Availability of Donor Organs
The majority of our business is directly tied to the volume of heart, liver and lung transplants performed in the United States, which is driven primarily by the supply of donor organs that become available.
In recent years, the supply of donor organs has increased consistently, driven primarily by (i) increased utilization of Donation after Circulatory Death ("DCD"), which has expanded the pool of eligible donors; (ii) advancements in technology, including machine and regional perfusion; and (iii) regulatory changes enabling more efficient allocation of organs to recipients with higher need. However, there is no guarantee that this growth will continue, for example, recent months have shown decreased availability of donor organs.
The supply of donor organs is subject to numerous factors outside our control, including changes in organ donation rates, advancements in medical technology, legislative, regulatory or policy changes affecting organ procurement and allocation, and shifts in public attitudes toward organ donation. Additionally, unforeseen events such as pandemics, public health crises, or changes in accident rates may impact the availability of donor organs. If the supply of viable organs declines or if legislative, regulatory or policy changes limit our ability to efficiently transport them, our medical transport business could be adversely affected, which could negatively impact our financial condition and growth prospects.
Ability to Attract and Retain Customers
We primarily serve transplant centers, organ procurement organizations and hospitals. Logistics for the hearts, lungs and livers that make up the vast majority of our business is typically requested only hours before the required departure time. Our ability to successfully fulfill these requests with consistent pricing on the requested aircraft type is the primary metric by which our customers evaluate our logistics performance.
The organ logistics marketplace is highly competitive and we compete primarily on our ability to provide reliable, end-to-end air and ground transportation at competitive pricing. Increasingly, we compete directly with manufacturers of organ preservation equipment that also offer transportation or with providers that offer additional services, such as surgical organ recovery, that our customers find valuable.
We have responded to customer demand by introducing new services through our acquisition of Keystone, which enabled us to provide surgical recovery, NRP and other related clinical services as part of an end-to-end offering. We have also added new offerings organically, such as our TOPS organ placement offering, whereby we assist customers in evaluating
the suitability of potential donor organs for transplant. However, customers may still demand services or technology that we cannot provide, which could have a material adverse effect on our business, results of operations, and financial condition.
The market for our clinical service offerings, including surgical organ recovery, organ placement, and perfusion, both for transplant and for cardiac care hospitals, is also highly competitive. We compete primarily on our ability to provide high-quality, reliable service integrating electronic recordkeeping to demonstrate compliance with best practices. Specifically for our transplant-related clinical services, we also compete on our ability to integrate our logistics and clinical offerings, resulting in more streamlined communication and efficient transportation, saving time and money for our customers.
Ability to Secure Aircraft Capacity
Historically, our ability to aggregate significant demand for flights has been enough to incentivize operators to provide aircraft and crews for our use. However, there is no guarantee that we will continue to be able to secure dedicated aircraft at favorable rates, particularly given significant increases in demand for private jet aircraft in the United States in recent years. Periods of increased demand for private jets have historically led to increased charter costs and more limited availability in the spot jet charter market. Although this has not limited our ability to maintain or increase our access to dedicated jet aircraft at fixed prices in recent periods, there is no guarantee this will continue in the future.
To manage this risk, we enter into long-term capacity purchase agreements with aircraft owners and operators and have purchased a number of jet aircraft, all of which are 100% dedicated to Strata's needs.
Ability to Hire, Train and Retain Clinicians
Our surgical recovery, NRP, organ placement and cardiac care offerings depend on our ability to hire, train and retain clinicians, particularly perfusionists and organ recovery surgeons.
Historically, our ability to aggregate demand across transplant centers and cardiac care hospitals has made us an attractive employer for clinicians and enabled us to optimize our staffing model to offer both competitive pricing to customers and attractive pay to our employees. However, given the significant growth in these fields as well as increasing competition, there is no guarantee this will continue.
Impact of Inflation to our Business
We generally pay a fixed hourly rate to our third-party operators, based on flight hours flown. These rates are susceptible to inflation and are typically renegotiated on a yearly basis, though some multi-year contracts have fixed rate increases. Some contracts with operators allow for pass-through of fuel price increases above a set threshold. For our owned aircraft, we are more directly exposed to inflation of aircraft operating expenses, including pilot salaries, fuel, insurance, parts and maintenance.
Given significant growth in organ transplant volumes and an increasing percentage of organs that are recovered by commercial surgeons and undergo NRP, demand for clinicians skilled in these procedures is high, resulting in inflation in salaries and fees paid to these practitioners.
We have historically passed through cost inflation to customers and most logistics contracts with customers automatically pass through any fuel surcharges, but there is no guarantee this will continue in the future.
Seasonality
Our trip volumes are correlated with the overall supply of donor hearts, livers and lungs in the United States, which can be volatile due to a variety of factors. Over the last several years, industry transplant volumes exhibited modest seasonal softness in the calendar third quarter.
Key Components of the Company's Results of Operations
Revenue
Services are typically purchased through our coordinators and are paid for principally via checks and wires. Logistics servicers are typically provided and billed on a fee-for-service basis, clinical services are provided and billed on both fee-for-service and retainer basis. Payments are generally collected after the performance of the related service in accordance with the client's payment terms. A fee-for-service revenue is recognized when the service is completed, retainer revenue is recognized over the retainer contractual term.
Cost of Revenue
Cost of revenue consists of costs of operating our aircraft fleet including pilots' salaries, flight costs paid to operators of aircraft and vehicles, depreciation of aircraft, vehicles & medical devices, staff costs associated with providing clinical services and costs of disposable medical products.
Software Development
Software development expenses consist primarily of staff costs including stock-based compensation costs and capitalized software amortization costs.
General and Administrative
General and administrative expenses consist primarily of staff costs including stock-based compensation, intangibles amortization, depreciation, establishment costs, impairment of intangible assets, insurance costs, pilot training costs for owned aircraft and professional fees.
Selling and Marketing
Selling and marketing expenses consist primarily of staff costs including sales commissions & stock-based compensation and promotion costs.
Discontinued Operations
On August 29, 2025, we completed the sale of our Passenger business to the Joby Buyer pursuant to the Joby Purchase Agreement. We determined that the sale of the Passenger business represented a strategic shift that will have a major effect on our operations and financial results. Accordingly, the sale is classified as discontinued operations.
We present discontinued operations when a disposal of a component or group of components represents a strategic shift that will have a major effect on our operations and financial results. The results from discontinued operations of the Passenger business prior to and through its sale are presented as net income (loss) from discontinued operations, net of income taxes, in the unaudited interim condensed consolidated statements of operations and comprehensive loss for all periods presented. The assets and liabilities of the Passenger business have been classified as discontinued operations and segregated for all periods presented in the unaudited condensed consolidated balance sheets. See Note 3 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Results of Operations
The following table presents our unaudited interim condensed consolidated statements of operations for the periods indicated:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (in thousands) | |||||||||||||||||||||||
| Revenue | $ | 49,298 | $ | 36,062 | $ | 130,354 | $ | 110,429 | |||||||||||||||
|
Operating expenses
|
|||||||||||||||||||||||
|
Cost of revenue
|
37,684 | 28,554 | 100,898 | 85,854 | |||||||||||||||||||
|
Software development
|
453 | 417 | 1,354 | 1,031 | |||||||||||||||||||
|
General and administrative
|
16,301 | 13,869 | 42,954 | 39,140 | |||||||||||||||||||
|
Selling and marketing
|
482 | 314 | 1,096 | 1,025 | |||||||||||||||||||
|
Total operating expenses
|
54,920 | 43,154 | 146,302 | 127,050 | |||||||||||||||||||
|
Operating loss from continuing operations
|
(5,622) | (7,092) | (15,948) | (16,621) | |||||||||||||||||||
| Other non-operating income (loss) | |||||||||||||||||||||||
|
Interest income
|
1,127 | 1,764 | 3,603 | 5,624 | |||||||||||||||||||
|
Change in fair value of warrant liabilities
|
33 | (299) | 2,862 | 2,266 | |||||||||||||||||||
| Realized loss from sales of short-term investments | (5,195) | - | (5,195) | - | |||||||||||||||||||
| Total other non-operating income (loss) | (4,035) | 1,465 | 1,270 | 7,890 | |||||||||||||||||||
| Loss from continuing operations before income taxes | (9,657) | (5,627) | (14,678) | (8,731) | |||||||||||||||||||
| Income tax expense (benefit) from continuing operations | - | - | - | - | |||||||||||||||||||
| Net loss from continuing operations | $ | (9,657) | $ | (5,627) | $ | (14,678) | $ | (8,731) | |||||||||||||||
| Net income (loss) from discontinued operations | 67,073 | 3,673 | 64,858 | (8,783) | |||||||||||||||||||
|
Net income (loss)
|
$ | 57,416 | $ | (1,954) | $ | 50,180 | $ | (17,514) | |||||||||||||||
Revenue
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Revenue | $ | 49,298 | $ | 36,062 | 36.7 | % | $ | 130,354 | $ | 110,429 | 18.0 | % | ||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025 and 2024, revenue increased by $13.2 million, or 36.7%, from $36.1 million in 2024 to $49.3 million in 2025, driven by growth in flight hours, ground transportation, revenue per flight hour and other services, as well as the inclusion of Keystone, acquired in mid-September 2025, which contributed approximately $2.8 million. The increase in flight hours was evenly attributable to both existing and new clients.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025 and 2024, revenue increased by $19.9 million or 18.0%, from $110.4 million in 2024 to $130.4 million in 2025, driven by growth in flight hours, ground transportation, revenue per flight hour and other services, as well as the inclusion of Keystone, acquired in mid-September 2025, which contributed approximately $2.8 million. The increase in flight hours was attributable to both existing and new clients, with several major new contracted clients commencing operations in the second quarter of the year 2025.
Cost of Revenue
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Cost of revenue | $ | 37,684 | $ | 28,554 | 32.0 | % | $ | 100,898 | $ | 85,854 | 17.5 | % | ||||||||||||||||||||||||||
| Percentage of revenue | 76 | % | 79 | % | 77 | % | 78 | % | ||||||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025 and 2024, cost of revenue increased by $9.1 million, or 32.0%, from $28.6 million during 2024 to $37.7 million in 2025, primarily driven by increased revenue.
Cost of revenue as a percentage of revenues decreased by 3 percentage points from 79% in 2024 to 76% in 2025 driven by higher utilization for our owned fleet following the addition of three aircraft, as well as enhanced operational leverage in ground services.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025 and 2024, cost of revenue increased by $15.0 million, or 17.5%, from $85.9 million during 2024 to $100.9 million during 2025 driven by increased revenue.
Cost of revenue as a percentage of revenues decreased by 1 percentage points from 78% in 2024 to 77% in 2025 attributable primarily to improved operational leverage in ground services with expansion of ground hub, partially offset by elevated maintenance and pilot costs relative to the prior year period for our owned fleet.
Software Development
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Software development | $ | 453 | $ | 417 | 8.6 | % | $ | 1,354 | $ | 1,031 | 31.3 | % | ||||||||||||||||||||||||||
| Percentage of revenue | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025 and 2024, software development costs increased by approximately 8.6%, from $0.4 million during 2024 to $0.5 million in 2025, with minor increases year over year.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025 and 2024, software development costs increased by $0.3 million, or 31.3%, from $1.0 million during 2024 to $1.4 million during 2025, driven by higher amortization of capitalized software costs, as more development projects were completed and entered the amortization phase.
General and Administrative
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | 16,301 | $ | 13,869 | 17.5 | % | $ | 42,954 | $ | 39,140 | 9.7 | % | ||||||||||||||||||||||||||
| Percentage of revenue | 33 | % | 38 | % | 33 | % | 35 | % | ||||||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025 and 2024, general and administrative expense increased by $2.4 million, or 17.5%, from $13.9 million during 2024 to $16.3 million in 2025.
The primary drivers of the increase were legal expenses and advocacy fees provisions related to the Druliaslawsuit discussed in "- Legal and Environmental" within Note 9 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, M&A transaction costs related to the acquisition of Keystone, and the addition of Keystone's results in mid-September. This increase was partially offset by a $3.9 million reduction in staff costs, of which $3.5 million related to share-based compensation, primarily reflecting a credit from the forfeiture of grants previously awarded to the former CEO prior to his transfer to the Joby Buyer.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025 and 2024, general and administrative expense increased by $3.8 million or 9.7%, from $39.1 million during 2024 to $43.0 million in 2025.
The primary drivers of the increase were legal and advocacy fee provision associated with the Drulias lawsuit discussed in "-Legal and Environmental" within Note 9 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, M&A transaction costs related to the acquisition of Keystone, the inclusion of Keystone's results beginning in mid-September, and higher owned-aircraft expenses, reflecting nine months of activity in 2025 compared with only six months in 2024, as the program was launched in April 2024. Together, these items accounted for a $7.8 million increase. These increases were partially offset by a $3.8 million reduction in staff costs, of which $3.9 million related to share-based compensation, primarily reflecting a credit from the forfeiture of grants previously awarded to the former CEO prior to his transfer to the Joby Buyer.
Selling and Marketing
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Selling and marketing | $ | 482 | $ | 314 | 53.5 | % | $ | 1,096 | $ | 1,025 | 6.9 | % | ||||||||||||||||||||||||||
| Percentage of revenue | 1 | % | 1 | % | 1 | % | 1 | % | ||||||||||||||||||||||||||||||
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025 and 2024, selling and marketing expense increased by $0.2 million, or 53.5%, from $0.3 million during 2024 to $0.5 million in 2025. The increase is attributable to higher staff costs due to new hires and increased sales commissions, as well as an increase in promotion costs. This was partially offset by a decrease in share-based compensation.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025 and 2024, selling and marketing expense increased by $0.1 million, or 6.9%, from $1.0 million during 2024 to $1.1 million in 2025. The increase is attributable primarily to new hires and an increase in promotion costs. This was partially offset by a decrease in share-based compensation.
Other Non-Operating income
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Interest income | $ | 1,127 | $ | 1,764 | $ | 3,603 | $ | 5,624 | ||||||||||||||||||||||||||||||
| Change in fair value of warrant liabilities | 33 | (299) | 2,862 | 2,266 | ||||||||||||||||||||||||||||||||||
| Realized loss from sales of short-term investments | (5,195) | - | (5,195) | - | ||||||||||||||||||||||||||||||||||
| Total other non-operating income (loss) | $ | (4,035) | $ | 1,465 | NM (1) | $ | 1,270 | $ | 7,890 | (83.9)% | ||||||||||||||||||||||||||||
(1) Percentage not meaningful.
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025, total other non-operating income consisted primarily of: (i) $1.1 million interest income, attributable to our short-term investments and our money market funds in the current year period (lower interest income is attributable to lower invested balances compared to the prior year period); and a (ii) $(5.2) million realized loss on the sale of securities received as consideration in the Passenger business divestiture.
For the three months ended September 30, 2024, total other non-operating income consisted of: (i) $1.8 million interest income, attributable to our short-term investments and our money market funds; and (ii) $(0.3) million non-cash loss due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants' market price.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025, total other non-operating income consists of: (i) $3.6 million interest income, attributable to our short-term investments and our money market funds in the current year period (lower interest income is attributable to lower invested balances compared to the prior year period); (ii) $2.9 million non-cash gain due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants' market price; and a (iii) $(5.2) million realized loss on the sale of securities received as consideration in the Passenger business divestiture.
For the nine months ended September 30, 2024, total other non-operating income consisted of: (i) $5.6 million interest income, attributable to our short-term investments and our money market funds; and a (ii) $2.3 million non-cash gain due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants' market price.
Income (loss) from discontinued operations, net of tax
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | |||||||||||||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||||||||||||||
| Net income (loss) from discontinued operations | $ | 67,073 | $ | 3,673 | 1726% | $ | 64,858 | $ | (8,783) | NM (1) | ||||||||||||||||||||||||||||
(1) Percentage not meaningful.
Comparison of the Three Months Ended September 30, 2025 and 2024
For the three months ended September 30, 2025, total net income from discontinued operations was $67.1 million and primarily consisted of: (i) gain on disposal of discontinued operations of $60.4 million, (ii) operating income before tax of $7.2 million attributable to revenue of $32.5 million from air transportation for passengers in the United States and Europe on a by-the-seat and on a full aircraft charter basis, and (iii) $0.6 million tax expenses attributable to the capital gain from the sale of the Passenger business.
For the three months ended September 30, 2024, total net income from discontinued operations was $3.7 million and primarily consisted of: (i) operating income before tax of $3.6 million attributable to revenue of $38.8 million from air transportation for passengers in the United States, Canada and Europe on a by-the-seat and on a full aircraft charter basis, and (ii) deferred tax benefit of $0.1 million.
The year-over-year improvement in operating income before tax, from $3.6 million to $7.2 million, was driven primarily by significant improvement in the profitability of the Europe operations following restructuring in October 2024.
Comparison of the Nine Months Ended September 30, 2025 and 2024
For the nine months ended September 30, 2025, total net income from discontinued operations was $64.9 million and primarily consisted of: gain on disposal of discontinued operations of $60.4 million and operating income before tax of $5.0 million attributable to revenue of $76.6 million from air transportation for passengers in the United States and Europe on a by-the-seat and on a full aircraft charter basis.
For the nine months ended September 30, 2024, total net loss from discontinued operations was $(8.8) million and primarily consisted of operating loss before tax of $(8.9) million attributable to revenue of $83.9 million from air transportation for passengers in the United States, Canada and Europe on a by-the-seat and on a full aircraft charter basis.
The year-over-year improvement in operating income before tax, from $(8.9) million to $5.0 million, was driven primarily by a $5.8 million impairment charge associated with Blade Canada during the prior year period coupled with a reduction in associated amortization costs, a significant improvement in the profitability of the European operations following restructuring in October 2024, and a reduction in selling and marketing expense.
Net loss from Continuing Operations, Adjusted EBITDA, Gross Profit, Flight Profit, Gross Margin, and Flight Margin
The following table presents our condensed consolidated results on a continuing operations basis for net loss from continuing operations, Adjusted EBITDA, Gross Profit, Flight Profit, Gross Margin and Flight Margin results:
| Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||
| 2025 | 2024 | % Change | 2025 | 2024 | % Change | ||||||||||||||||||||||||||||||
| (in thousands, except percentages) | |||||||||||||||||||||||||||||||||||
| Net loss from continuing operations | $ | (9,657) | $ | (5,627) | 71.6 | % | $ | (14,678) | $ | (8,731) | 68.1 | % | |||||||||||||||||||||||
| Adjusted EBITDA (1) | $ | 4,214 | $ | 67 | 6189.6 | % | $ | 7,096 | 2,677 | 165.1 | % | ||||||||||||||||||||||||
| Gross Profit (1) | $ | 9,545 | $ | 5,427 | 75.9 | % | $ | 23,198 | $ | 19,624 | 18.2 | % | |||||||||||||||||||||||
| Flight Profit (1) | $ | 11,614 | $ | 7,508 | 54.7 | % | $ | 29,456 | $ | 24,575 | 19.9 | % | |||||||||||||||||||||||
| Gross Margin (1) | 19.4 | % | 15.0 | % | 17.8 | % | 17.8 | % | |||||||||||||||||||||||||||
| Flight Margin (1) | 23.6 | % | 20.8 | % | 22.6 | % | 22.3 | % | |||||||||||||||||||||||||||
(1) See section titled "Reconciliations of Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measure.
Comparison of the Three Months Ended September 30, 2025 and 2024
Net loss from continuing operationsincreased by $(4.0) million for the three months ended September 30, 2025 from $(5.6) million in the same period of 2024 to $(9.7) million in 2025. See "Results of Operations" above for further discussion.
Adjusted EBITDA improved by $4.1 million for the three months ended September 30, 2025 from $0.1 million in the same period of 2024 to $4.2 million in 2025. The improvement is attributable to the revenue growth along with improved flight profit margin in logistics services and further improvement with reduced corporate staff costs.
Gross Profitincreased by $4.1 million for the three months ended September 30, 2025 from $5.4 million in the same period of 2024 to $9.5 million in 2025.
Flight Profitincreased by $4.1 million, or 54.7%, for the three months ended September 30, 2025 from $7.5 million in the same period of 2024 to $11.6 million in 2025 attributable to a 36.7% increase in revenue coupled with higher Flight Margin (as discussed below).
Gross Margin increased from 15.0% in the three months ended September 30, 2024 to 19.4% in the same period of 2025.
Flight Marginincreased from 20.8% in the three months ended September 30, 2024 to 23.6% in the same period of 2025, primarily driven by higher utilization for our owned fleet following the addition of three aircraft, as well as enhanced operational leverage in ground services.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Net loss from continuing operationsincreased by $5.9 million for the nine months ended September 30, 2025 from $(8.7) million in the same period of 2024 to $(14.7) million in 2025. See "Results of Operations" above for further discussion.
Adjusted EBITDA improved by $4.4 million for the nine months ended September 30, 2025 from $2.7 million in the same period of 2024 to $7.1 million in 2025. The improvement is attributable to the revenue growth, with further improvement due to reduced professional fees. Partially offset by increases in staff costs and promotion costs associated with increased sales and revenue growth of our continuing operations.
Gross Profitincreased by $3.6 million for the nine months ended September 30, 2025 from $19.6 million in the same period of 2024 to $23.2 million in 2025.
Flight Profitincreased by $4.9 million, or 19.9%, for the nine months ended September 30, 2025 from $24.6 million in the same period of 2024 to $29.5 million in 2025 attributable to an 18.0% increase in revenue coupled with slightly higher Flight Margin (as discussed below).
Gross Margin remained unchanged at 17.8% in both periods.
Flight Margin increased from 22.3% in the nine months ended September 30, 2024 to 22.6% in the same period of 2025, a minimal increase attributable primarily to improved operational leverage in ground services, partially offset by elevated maintenance and pilot costs relative to the prior year period for our owned fleet.
Reconciliation of Non-GAAP Financial Measures
Certain non-GAAP measures included in this results of operations review have been derived from amounts calculated in accordance with GAAP but are not themselves GAAP measures. Strata believes that the non-GAAP measures discussed below, viewed in addition to and not in lieu of our reported U.S. GAAP results, provide useful information to investors by providing a more focused measure of operating results, enhance the overall understanding of past financial performance and future prospects, and allow for greater transparency with respect to key metrics used by management in its financial and operational decision making. The non-GAAP measures presented herein may not be comparable to similarly titled measures presented by other companies. These include Adjusted EBITDA, Flight Profit, and Flight Margin, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.
Adjusted EBITDA
Adjusted EBITDA is defined as net loss from continued operations adjusted to exclude (1) depreciation and amortization, (2) stock-based compensation, (3) change in fair value of warrant liabilities, (4) interest income (5) income tax, (6) realized gains and losses on short-term investments, (7) impairment of intangible assets and (8) certain other non-recurring items (shown below) that management does not believe are indicative of ongoing Company operating performance and would impact the comparability of results between periods.
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||
| Net loss from continuing operations | $ | (9,657) | $ | (5,627) | $ | (14,678) | $ | (8,731) | ||||||||||||||||||
| Add (deduct): | ||||||||||||||||||||||||||
| Depreciation and amortization | 1,445 | 833 | 3,892 | 2,185 | ||||||||||||||||||||||
| Stock-based compensation | 1,646 | 5,125 | 10,372 | 14,294 | ||||||||||||||||||||||
| Change in fair value of warrant liabilities | (33) | 299 | (2,862) | (2,266) | ||||||||||||||||||||||
| Realized loss from sales of short-term investments (1) | 5,195 | - | 5,195 | - | ||||||||||||||||||||||
| Interest income | (1,127) | (1,764) | (3,603) | (5,624) | ||||||||||||||||||||||
| Legal expenses and regulatory advocacy fees (2) | 5,045 | 165 | 5,748 | 427 | ||||||||||||||||||||||
| Executive severance costs | - | 140 | - | 140 | ||||||||||||||||||||||
| SOX readiness costs | - | 220 | - | 302 | ||||||||||||||||||||||
| M&A transaction costs (3) | 1,134 | 85 | 1,168 | 169 | ||||||||||||||||||||||
| Corporate staff costs included in the sold Passenger business (4) | 566 | 591 | 1,864 | 1,781 | ||||||||||||||||||||||
| Adjusted EBITDA | $ | 4,214 | $ | 67 | $ | 7,096 | $ | 2,677 | ||||||||||||||||||
| Revenue | $ | 49,298 | $ | 36,062 | $ | 130,354 | $ | 110,429 | ||||||||||||||||||
| Adjusted EBITDA as a percentage of revenue | 8.5 | % | 0.2 | % | 5.4 | % | 2.4 | % | ||||||||||||||||||
(1) Consists of realized loss on the sale of securities of Joby Aviation received in consideration in the Passenger business divestiture.
(2) Includes legal expenses and advocacy fees that we do not consider representative of legal and regulatory advocacy costs that we will incur from time to time in the ordinary course of our business. For the three and nine months ended September 30, 2025 and 2024 these costs were related primarily to the Druliaslawsuit (see "- Legal and Environmental" within Note 9 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q).
(3) Consists of non-recurring M&A transaction costs including professional fees incurred over a short period of time that do not represent ongoing operating expenses of the business.
(4) Represents corporate staff costs associated with certain employees who transferred to Joby following the sale of the Passenger business on August 29, 2025. This adjustment is intended to present more comparable results by excluding from all the periods costs associated with
transferred employees. These employees previously performed certain corporate functions that were not replaced after that date. Under U.S. GAAP (ASC 205-20), such costs were included in Continuing Operations in periods prior to August 29, 2025, because staff costs not directly attributable to discontinued operations must remain in continuing operations, even when the employees depart following a divestiture.
Flight Profit and Flight Margin
Flight Profit is calculated as revenue less cost of revenue. Flight Margin is calculated as Flight Profit divided by revenue. Flight Profit and Flight Margin are measures that management uses to assess the performance of the business. The Company believes that Flight Profit and Flight Margin provide a useful measure of the profitability of the Company's operations, as they focus solely on the non-discretionary direct costs associated with generating revenue.
Gross Profit and Gross Margin
Gross Profit, which is the most directly comparable GAAP financial measure to Flight Profit, is calculated as revenue less cost of revenue and other costs directly related to revenue generating transactions, including depreciation and amortization, direct staff costs including stock-based compensation and commercial costs. Gross Margin is calculated as Gross Profit divided by revenue. The reconciliation of Revenue to Gross Profit and Gross Profit to Flight Profit can be found in the table below.
Reconciliation of Revenue to Gross Profit and Gross Profit to Flight Profit
| Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||||||||||||
| (in thousands, except percentages) | ||||||||||||||||||||||||||
| Revenue | $ | 49,298 | $ | 36,062 | $ | 130,354 | $ | 110,429 | ||||||||||||||||||
| Less: | ||||||||||||||||||||||||||
| Cost of revenue (1) | 37,684 | $ | 28,554 | 100,898 | 85,854 | |||||||||||||||||||||
|
Depreciation and amortization (2)
|
364 | 275 | 1,128 | 961 | ||||||||||||||||||||||
|
Other (3)
|
1,705 | 1,806 | 5,130 | 3,990 | ||||||||||||||||||||||
| Gross Profit | $ | 9,545 | $ | 5,427 | $ | 23,198 | $ | 19,624 | ||||||||||||||||||
| Gross Margin | 19.4 | % | 15.0 | % | 17.8 | % | 17.8 | % | ||||||||||||||||||
| Gross Profit | $ | 9,545 | $ | 5,427 | $ | 23,198 | $ | 19,624 | ||||||||||||||||||
| Reconciling items: | ||||||||||||||||||||||||||
| Depreciation and amortization (2) | 364 | 275 | 1,128 | 961 | ||||||||||||||||||||||
| Other (3) | 1,705 | 1,806 | 5,130 | 3,990 | ||||||||||||||||||||||
| Flight Profit | $ | 11,614 | $ | 7,508 | $ | 29,456 | $ | 24,575 | ||||||||||||||||||
| Flight Margin | 23.6 | % | 20.8 | % | 22.6 | % | 22.3 | % | ||||||||||||||||||
(1) Cost of revenue consists of costs of operating our aircraft fleet including pilots' salaries, flight costs paid to operators of aircraft and vehicles, depreciation of aircraft, vehicles & medical devices, staff costs associated with providing clinical services and costs of disposable medical products.
(2) Represents real estate depreciation and intangibles amortization included within general and administrative.
(3) Other costs include logistics and coordination staff costs.
Liquidity and Capital Resources
Sources of Liquidity
As of September 30, 2025 and December 31, 2024, we had total liquidity of $75.9 million and $124.8 million, respectively, consisting of cash and cash equivalents of $22.8 million and $16.1 million, respectively, and short-term investments of $53.2 million and $108.8 million, respectively. In addition, as of September 30, 2025 and December 31, 2024, we had restricted cash of $0.3 million and $0.3 million, respectively. As of September 30, 2025, $53.2 million of short-term investments consisted of securities that are traded in highly liquid markets. The Company had net income of $50.2 million for the nine months ended September 30, 2025. During the nine months ended September 30, 2025, we realized net proceeds of $70.2 million from the sale of Buyer Shares received from the sale of the Passenger business.
With $75.9 million of total liquid funds as of September 30, 2025, we anticipate that we have sufficient funds to meet our current operational needs for at least the next 12 months from the date of filing this Quarterly Report. Although we have not historically sought external sources of financing to help fund our operational needs, we may in the future seek to take advantage of market opportunities to obtain financing on terms we deem attractive.
Liquidity Requirements
As of September 30, 2025, the Company had net working capital of $94.6 million, cash and cash equivalents of $22.8 million and short-term investments of $53.2 million. The Company had net loss of $17.5 million for the nine months ended September 30, 2024.
In the course of our business, we have certain contractual relationships with third-party aircraft operators pursuant to which we may be contingently required to make payments in the future. As of September 30, 2025, we had commitments to purchase flights from various aircraft operators with aggregate minimum flight purchase guarantees of $3.2 million for the years ending December 31, 2025 and 2026. See "-Capacity Purchase Agreements" within Note 9 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information. Additionally, the Company has operating lease obligations related to real estate and vehicles with expected annual minimum lease payments of $0.2 million and $0.6 million for the years ending December 31, 2025 and 2026, respectively.
We may be required to make earn-out payments of up to $35.4 million, contingent upon the satisfaction of certain financial
performance targets described in the Keystone Purchase Agreement. This contingent consideration will be payable in a mix
of cash and shares of the Company's common stock as described in the Keystone Purchase Agreement. See Note 2 to the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Based on our current liquidity, we believe that no additional capital will be needed to execute our current business plan over the next 12 months. Our longer-term liquidity requirement will depend on many factors including the pace of our expansion into new markets, our ability to attract and retain customers for our existing products, capital expenditures and acquisitions.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| Nine Months Ended September 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (in thousands) | |||||||||||
| Net cash used in operating activities | $ | (40,607) | $ | (767) | |||||||
| Net cash provided by / (used in) investing activities | 51,485 | (4,992) | |||||||||
| Net cash used in financing activities | (7,170) | (1,885) | |||||||||
| Effect of foreign exchange rate changes on cash balances | (339) | 29 | |||||||||
| Net increase (decrease) in cash and cash equivalents and restricted cash | $ | 3,369 | $ | (7,615) | |||||||
Cash Used In Operating Activities
For the nine months ended September 30, 2025, net cash used in operating activities was $40.6 million, driven by: a net income of $50.2 million, adjusted for net non-cash charges of $43.3 million; transaction costs paid related to the sale of the Passenger business of $6.0 million; $44.3 million paid in connection with the Keystone acquisition for settlement of seller-assumed liabilities, which were directed to third parties and therefore classified within operating activities; and net $2.8 million of cash provided by changes in our working capital assets and liabilities. The $2.8 million net cash provided by changes in our working capital assets and liabilities was primarily driven by an increase in accounts payable and accrued liabilities of $8.4 million attributable to legal fees provision and other transaction costs, an increase in deferred revenue of $1.6 million; a decrease in prepaid and other current assets of $0.8 million and a decrease in other non-current assets of $0.7 million; partially offset by an increase of $8.6 million in accounts receivable attributable to the revenue growth and the consolidation of Keystone in September 2025.
For the nine months ended September 30, 2024, net cash used in operating activities was $0.8 million, driven by a net loss of $17.5 million, net non-cash charges of $20.0 million and net $3.2 million of cash used by changes in our working capital assets and liabilities. The $3.2 million cash used by changes in our working capital assets and liabilities was primarily driven by a decrease in accounts payable and accrued expenses of $8.3 million, driven by the cash payment for the Trinity contingent consideration compensation and for the 2023 short term incentive plan paid in March 2024 and an increase in accounts receivable of $3.6 million (attributable to the revenue growth) and a decrease in deferred revenue of $0.2 million (driven by Passenger client prepayments and gift cards); partially offset by a decrease in prepaid expenses and other current assets of $8.3 million (driven by the utilization of $9.3 million of prepaid deposits under CPAs with M&N as part of the purchase of seven aircraft, partially offset by new prepayments made to operators in connection with new CPAs) and an decrease in other non-current assets of $0.5 million (driven by a lease deposit refund).
Cash Provided by Investing Activities
For the nine months ended September 30, 2025, net cash provided by investing activities was $51.5 million, driven by: $70.2 million of proceeds from the sale of Buyer Shares received from the sale of the Passenger business; partially offset by $65.2 million in cash consideration paid in connection with the Keystone acquisition; $7.9 million in purchases of property and equipment, consisting primarily of a spare engine, aircraft capitalized maintenance costs, purchase of vehicles used for organ ground transportation; $1.3 million in capitalized software development costs; $1.2 million in cash transferred with the sale of the Passenger business and $203.0 million of proceeds from maturities of held-to-maturity investments net of $146.3 million in purchases of held-to-maturity investments.
For the nine months ended September 30, 2024, net cash used in investing activities was $5.0 million, driven by $142.8 million in purchases of held-to-maturity investments, $26.3 million in purchases of property and equipment, consisting primarily of $22.8 million in the acquisition of ten aircraft and related capitalized costs to support the Medical segment, with the remaining in furniture and fixtures for new office space in Arizona used by the logistics business, purchase of vehicles used in generating revenue by the logistics business, $2.2 million in consideration paid for the acquisition of CJK and $1.7 million in capitalized software development costs, partially offset by $168.0 million of proceeds from maturities of held-to-maturity investments.
Cash Used In Financing Activities
For the nine months ended September 30, 2025, net cash used in financing activities was $7.2 million, driven by $7.3 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company; partially offset by $0.1 million of proceeds from the exercise of stock options.
For the nine months ended September 30, 2024, net cash used in financing activities was $1.9 million, reflecting $1.8 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company and $0.2 million in repurchases and retirement of common stock under a share repurchase program (expired on March 31, 2025); partially offset by $0.1 million of proceeds from the exercise of stock options.
Critical Accounting Policies and Significant Judgments and Estimates
This discussion and analysis of the Company's financial condition and results of operations is based on the Company's consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported periods. In accordance with U.S. GAAP, the Company bases its estimates on historical experience and on various other assumptions the Company believes are reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.
For information on the Company's significant accounting policies and estimates refer to "Management's Discussion and Analysis of Financial Condition and Results of Operations-Critical Accounting Estimates" in our Annual Report on Form 10-K for the year ended December 31, 2024. Except for the accounting policy related to Business Combinations and Contingent Consideration, as discussed in Note 1 of the unaudited interim condensed consolidated financial statements included in this Quarterly Report on Form 10-Q under the caption "Business Combinations and Contingent Consideration,", and other transaction-related updates, including the recognition of share-based payment and contingent consideration liabilities, there been no material changes to these policies and estimates as of September 30, 2025.
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