Strata Critical Medical, Inc. (SRTA) FY 2023 MD&A

Item 7. 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 other sections of this Annual Report on Form 10-K, including our consolidated financial statements and the related notes and other financial information included elsewhere in this Annual Report on Form 10-K.

In addition to historical consolidated financial information, the following discussion contains forward-looking statements that reflect our plans, estimates, and beliefs. For important information regarding these forward-looking statements, please see the discussion above under the caption “Note Regarding Forward-Looking Statements.”

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Overview

Blade Air Mobility, Inc. (“Blade” or the “Company”) provides air transportation and logistics for hospitals across the United States, where it is one of the largest transporters of human organs for transplant, and for passengers, with helicopter and fixed wing services primarily in the Northeast United States, Southern Europe and Western Canada. Based in New York City, Blade's asset-light model, coupled with its exclusive passenger terminal infrastructure and proprietary technologies, is designed to facilitate a seamless transition from helicopters and fixed-wing aircraft to Electric Vertical Aircraft (“EVA” or “eVTOL”), enabling lower cost air mobility that is both quiet and emission-free.

Blade operates in three key product lines across two segments (see Note 7 to the consolidated financial statements included herein for further information on reportable segments):

Passenger segment

•Short Distance – Consisting primarily of helicopter and amphibious seaplane flights in the United States, Canada and Europe between 10 and 100 miles in distance. Flights are available for purchase both by-the-seat and on a full aircraft charter basis.

•Jet and Other –  Consists principally of revenues from non-medical jet charter and by-the-seat jet flights between New York and South Florida, revenue from brand partners for exposure to Blade fliers and certain ground transportation services.

Medical segment

•MediMobility Organ Transport – Consisting primarily of transportation of human organs for transplant and/or the medical teams supporting these services. Blade also offers additional services including donor logistics coordination and support evaluating potential donor organs .

Blade Europe Acquisition

On September 1, 2022, Blade acquired, through Blade Europe SAS, a wholly-owned French société par actions simplifiée subsidiary (“Blade Europe”), 100% of the share capital and voting rights of Héli Tickets France SAS (“Héli Tickets France”), a French société par actions simplifiée, which was then renamed “Blade France SAS” (“Blade France”) and of Helicopter Monaco SARL (“Helicopter Monaco”), a Monegasque société à responsabilité limitée, which was then renamed “Blade Monaco SARL” (“Blade Monaco”). We refer to the three European legal entities (Blade Europe, Blade France and Blade Monaco) collectively as “Blade Europe”. These acquisitions are part of Blade’s growth strategy of leveraging its asset-light model, technology and recognized brand to aggregate the best use cases for urban air mobility. The routes in Southern France, Monaco, Italy and Switzerland, meet the criteria given the geography, short distances and large addressable markets. In addition these markets have connectivity to our existing service areas where the Blade brand enjoys recognition, creating the opportunity for cross pollination between our North American and European customer base. As a result of this acquisition and an Aircraft Operator Agreement Blade Europe entered into in connection with the acquisition, Blade gained the right to act as the exclusive air charter broker and/or reseller of air transportation services to be operated and provided by the operator partners at pre-negotiated fixed hourly rates and with a minimum number of annual flight hours guaranteed to the operators by Blade. The initial term of the Aircraft Operator Agreement ends on December 31, 2032 and it will automatically renew for successive three year periods.

Seats Flown

The following table reflects the key operating metric we use to evaluate the Passenger segment:

We define “Seats flown — all passenger flights” (Seats Flown) as the total number of seats purchased by paying passengers on all flights, whether sold by-the-seat or within a charter arrangement. Our long-term consumer-facing strategy is

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primarily focused on growth in by-the-seat products, and we believe that Seats Flown is an important indicator of our progress in executing on this growth strategy. This metric is not always directly correlated with revenue given the significant variability in the price we charge per seat flown across our various products and routes. For products and routes sold by-the-seat, we fly significantly more passengers at a low price per seat; which is captured by Seats Flown. Passenger revenue is heavily influenced by the Jet and Other product lines where we typically fly fewer passengers over long distances at a high price. We believe the Seats Flown metric is useful to investors in understanding the overall scale of our Passenger segment and trends in the number of passengers paying to use our service.

Our Business Model

Blade leverages an asset-light business model: we primarily utilize aircraft that are owned and/or operated by third-parties on Blade’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 Blade 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. For flights offered for sale by-the-seat, Blade schedules flights based on demand analysis and takes the economic risk of aggregating fliers to optimize flight profitability, providing predictable margins for our operators.

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. Blade provides guaranteed flight commitments to some of our third-party operators through capacity purchase agreements, which enable Blade 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 Blade trips are flown by safety-vetted operators to whom Blade makes no commitments, providing us with additional flexible capacity for high demand periods.

We prioritize the use of dedicated aircraft under capacity purchase agreements, which provide better economics, but size our commitments significantly below our expected demand to limit the risk of a guarantee shortfall and then fulfill incremental demand through our network of non-dedicated operators. In 2023, approximately 46% of Blade’s flight costs were pursuant to capacity purchase agreements that included flight volume guarantees from Blade.

Blade’s proprietary “customer-to-cockpit” technology stack enables us to manage fliers and organ transports across numerous simultaneous flights with multiple operators around the world. We believe that this technology, which provides (i) real-time tracking of organ transports and passenger flights; (ii) profit/loss information on a flight-by-flight basis; (iii) customized portals for all relevant parties including pilots, accounting teams, operator dispatch, transplant coordinators and Blade’s logistics team; and (iv) a customer-facing app for passenger missions, will enable us to continue to scale our business. This technology stack was built with future growth in mind and is designed to allow our platform to be easily scaled to accommodate, among other things, rapid increases in volume, new routes, new operators, broader flight schedules, international expansion, next-generation verticraft and ancillary services (e.g., last/first-mile ground connections, trip cancellation insurance, baggage delivery) through our mobile apps, website and cloud-based tools.

Our asset-light business model was developed to be scalable and profitable using conventional aircraft today while enabling a seamless transition to EVA, once they are certified for public use. We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the consumer’s price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new, vertical landing infrastructure (“vertiports”) in our existing and new markets.

Factors Affecting our Performance

Ability to attract and retain fliers in our Short Distance product line

Our success depends, in part, on our ability to cost-effectively attract new fliers, retain existing fliers, and increase utilization of our platform by existing fliers. Historically, we have made, and expect that we will need to continue to make, significant investments and implement strategic initiatives in order to attract new fliers, such as flier acquisition campaigns and the launching of new scheduled routes. These investments and initiatives may not be effective in generating sales growth or profits. In addition, marketing campaigns can be expensive and may not result in the acquisition of additional fliers in a cost-effective manner, if at all. As our brand becomes more widely known, future

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marketing campaigns or brand content may not attract new fliers at the same rate as past campaigns or brand content. If we are unable to attract new fliers, our business, financial condition, and results of operations will be adversely affected.

Our fliers have a wide variety of options for transportation, including business aviation, commercial airlines, private aircraft operators, personal vehicles, rental cars, taxis, public transit, and ride-sharing offerings. To expand our flier base, we must appeal to new fliers who have historically used other forms of transportation. If fliers do not perceive our urban air mobility services to be reliable, safe, and cost-effective, or if we fail to offer new and relevant services and features on our platform, we may not be able to attract or retain fliers or increase their utilization of our platform. If we fail to continue to grow our flier base, retain existing fliers, or increase the overall utilization of our platform, our business, financial condition, and results of operations could be adversely affected.

Ability to attract and retain customers in our MediMobility Organ Transport and Jet and Other product line

Our MediMobility Organ Transport product line primarily serves transplant centers, organ procurement organizations and hospitals. Transportation for the hearts, lungs and livers that make up the vast majority of this product line 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, be it jet, turboprop or helicopter, is the primary metric by which Medical Customers evaluate our performance.

The organ transportation market is highly competitive and we compete for organ transportation business 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 may face increased competition as our Medical Customers may prefer a streamlined logistics offering, including services or technology that we cannot provide, which could have a material adverse effect on our business, results of operations, and financial condition.

We utilize the same aircraft and aircraft operators in the Jet and Other business line of our Passenger segment. Historically, the combination of our Passenger and MediMobility Organ Transport demand, has been enough to incentivize operators to provide dedicated 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, jet charter, which makes up the majority of our Jet and Other business line, is highly competitive and volumes and pricing have historically been significantly influenced by overall market supply and demand.

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. To the extent we choose to own and/or operate aircraft in the future, we would be more directly exposed to inflation of aircraft operating expenses including pilot salaries, fuel, insurance, parts and maintenance.

We have historically passed through cost inflation to customers and most contracts with our MediMobility Organ Transport Customers automatically pass through any fuel surcharges, but there is no guarantee this will continue in the future.

Passenger Expansion into New Geographic Markets

Our Passenger segment growth plan is focused on dense urban areas, primarily those with existing air transportation infrastructure that are facing increasing ground congestion. Growth in our Passenger segment will depend in part on our ability to successfully enter into new markets, create and introduce new routes, and expand our existing routes by adding more frequent flights. In these areas, our urban air mobility services can provide the most time savings for our fliers, and given the short distances involved, costs for our services can be comparable to luxury, private car services. Significant changes to our existing routes or the introduction of new and unproven routes may require us to obtain and maintain applicable permits, authorizations, or other regulatory approvals. In addition, EVA may be commercially viable sooner in these markets given that battery technology constraints may limit the range of early models. Large urban markets with

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existing heliport infrastructure should be able to accommodate EVA while other cities may need several years to permit and build such infrastructure.

If these new or expanded routes are unsuccessful or fail to attract a sufficient number of fliers to be profitable, or we are unable to bring new or expanded routes to market efficiently, our business, financial condition, and results of operations could be adversely affected. Furthermore, new third-party aircraft operator or flier demands regarding our services, including the availability of superior routes or a deterioration in the quality of our existing routes, could negatively affect the attractiveness of our platform and the economics of our business and require us to make substantial changes to and additional investments in our routes or our business model. The number of potential fliers using our urban air mobility services in any market cannot be predicted with any degree of certainty, and we cannot provide assurance that we will be able to operate in a profitable manner in any of our current or targeted future markets.

Development, approval and acceptance of EVA for commercial service

We intend to leverage the expected lower operating costs of EVA versus helicopters to reduce the price for our flights. Additionally, we expect the reduced noise footprint and zero carbon emission characteristics of EVA to allow for the development of new vertiports in our existing and new markets. However, EVA involves a complex set of technologies, which we rely on original equipment manufacturers (“OEMs”) to develop and our third-party aircraft operators to adopt. However, before EVA can fly passengers or cargo, OEMs must receive requisite approvals from federal transportation authorities. No EVA aircraft are currently certified by the FAA for commercial operations in the United States, and there is no assurance that OEM research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all. In order to gain government certification, the performance, reliability, and safety of EVA must be proven, none of which can be assured. Even if EVA aircraft are certified, individual operators must conform EVA aircraft to their licenses, which requires FAA approval, and individual pilots also must be licensed and approved by the FAA to fly EVA aircraft, which could contribute to delays in any widespread use of EVA and potentially limit the number of EVA operators available to our business. There is no assurance that research and development will result in government certified aircraft that are market-viable or commercially successful in a timely manner, or at all.

We believe that Blade is well positioned to introduce EVA into commercial service, once available, for a number of reasons. In our Passenger segment, we believe our existing Short Distance routes will be compatible with EVA, which are initially expected to have a limited range, and our existing terminal space will accommodate EVA. Additionally, we believe that the last-mile transports we perform using helicopters or ground vehicles in our Medical segment may be compatible with EVA, reducing organ transport time and cost for our customers. Blade’s unit economics are designed to be profitable using either conventional helicopters or EVA, even if early EVA do not deliver significant cost savings relative to helicopters. Moreover, Blade’s asset-light business model and technology platform are operator and aircraft agnostic, enabling a seamless transition to EVA.

Seasonality

Passenger segment

Historically, we have experienced significant seasonality in our Short Distance product line with flight volume peaking during the quarters ended June 30 (Q2) and September 30 (Q3) of each fiscal year due to the busy summer travel season, with lower volume during the quarters ended March 31 (Q1) and December 31 (Q4).

Jet and Other revenue has historically been stronger in the first and fourth quarter (Q1 and Q4) given that our by-the-seat jet service between New York and South Florida has historically operated only between November and April. We discontinued this service in Q4 2023 and do not expect the seasonality in our Jet and Other revenue to be significant in 2024.

Medical segment

Historically, seasonality in our MediMobility Organ Transport business has not been significant.

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Key Components of the Company’s Results of Operations

Revenue

Short Distance products are typically purchased using the Blade App and paid for principally via credit card transactions, wire, check, customer credit, and gift cards, with payments principally collected by the Company in advance of the performance of related services. The revenue is recognized as the service is completed.

Jet products are typically purchased through our Flier Relations associates and our app and are paid for principally via checks, wires and credit card. Jet payments are typically collected at the time of booking before the performance of the related service. The revenue is recognized as the service is completed.

MediMobility Organ Transport products are typically purchased through our medical logistics coordinators and are paid for principally via checks and wires. Payments are generally collected after the performance of the related service in accordance with the client's payment terms. The revenue is recognized as the service is completed.

Cost of Revenue

Cost of revenue consists of flight costs paid to operators of aircraft and cars, landing fees, ROU asset amortization and internal costs incurred in generating organ ground transportation revenue using the Company's owned cars.

Software Development

Software development expenses consist primarily of staff costs and stock-based compensation costs. Software development costs are expensed as incurred.

General and Administrative

General and administrative expenses principally include staff costs including stock-based compensation, depreciation and amortization, impairment of intangible assets, directors and officers insurance costs, professional fees, credit card processing fees and establishment costs.

Selling and Marketing

Selling and marketing expenses consist primarily of advertising costs, staff costs including stock-based compensation, marketing expenses, sales commissions and promotion costs. The trend and timing of our brand marketing expenses will depend in part on the timing of our expansion into new markets and other marketing campaigns.

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Results of Operations

The following table presents our consolidated statements of operations for the periods indicated (in thousands, except share and per share data):

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Comparison of the Year Ended December 31, 2023 and 2022

Revenue

Disaggregated revenue by product line was as follows:

For the years ended December 31, 2023 and 2022, revenue increased by $79.1 million or 54%, from $146.1 million in 2022 to $225.2 million in 2023.

Short Distance revenue increased by $25.7 million or 57% from $45.0 million in 2022 to $70.7 million in 2023. Growth in Short Distance revenue was primarily driven by the acquisition of Blade Europe in September 2022, contributing growth of $19.8 million, increased volumes of Northeast helicopter charters for a $1.1 million increase, growth in our New York by-the-seat airport transfer products for $2.0 million, and growth in Canada for a $1.9 million increase.

Jet and Other revenue decreased by $(1.5) million or (5)% from $29.4 million in 2022 to $27.9 million in 2023. Decrease in Jet was driven primarily by the discontinuation of our seasonal by-the-seat jet service between New York and South Florida in the fourth quarter ended December 2023 for a $1.7 million decrease, partially offset by increased brand partnership revenues for a $0.4 million increase.

MediMobility Organ Transport revenue increased by $54.8 million or 76% from $71.8 million in 2022 to $126.6 million in 2023. Growth in MediMobility Organ Transport was driven primarily by higher activity from existing clients, resulting in a $29.4 million increase, as hospitals accepted more organs for transplant involving longer travel distances, increasing average flight hours per trip. The addition of new hospital clients resulted in a $23.2 million increase and increased revenue per flight hour resulted in a $2.7 million increase.

Cost of Revenue

For the year ended December 31, 2023 and 2022, cost of revenue increased by $59.2 million or 48%, from $123.8 million during 2022 to $183.1 million in 2023 driven by increased flight volume and an increase in the average price per trip.

Cost of revenue as a percentage of revenues decreased by 4 percentage points from 85% to 81%, attributable primarily to (i) increased use of dedicated aircraft (which are more cost efficient) and increased revenue per flight hour in our Medical business; (ii) the acquisition of Blade Europe, which operates at a lower cost of revenue as a percentage of revenue compared with our corporate average; (iii) increased passenger volumes, higher passenger load factor (i.e., percentage of available seats filled) and higher average seat pricing (attributable to fare class adoption) for our New York by-the-seat airport transfer products; and (iv) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.

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Software Development

For the years ended December 31, 2023 and 2022, software development costs decreased $(0.9) million, or (17)%, from $5.5 million during 2022 to $4.6 million in 2023, attributable primarily to a decrease in staff costs due to reduction in headcount and stock-based compensation versus the prior year period.

General and Administrative

For the years ended December 31, 2023 and 2022, general and administrative expense increased by $32.7 million, or 52%, from $62.5 million in 2022 to $95.2 million in 2023.

The primary drivers for the increase were: (i) a $20.8 million impairment in Blade Europe’s intangible assets, specifically its exclusive rights to air transportation rights (see Note 4 to the consolidated financial statements included herein) (ii) a $11.5 million increase in staff costs, of which $4.1 million is attributable to stock-based compensation, $3.6 million is related to our acquisition of Blade Europe (September 2022) and $2.8 million is attributable to increased headcount to support growth in Medical; (iii) a $3.4 million increase attributable to a contingent consideration compensation (earn-out) in connection with the Trinity acquisition (see Note 11 - “Commitments and Contingencies” to the consolidated financial statements included herein); (iv) a $1.4 million increase in intangibles amortization costs (primarily as a result of our acquisition of Blade Europe, which was included for only four months of the prior year); (v) a $1.1 million increase across various general and administrative items in line with the company’s growth and geographical expansion (including a $0.9 million increase in rent and lease costs due to new leases); and (vi) a $0.9 million increase in credit card processing fees in line with the higher revenue. Those increases were partially offset by a $6.4 million decrease in corporate costs (M&A transaction fees, legal and professional fees and insurance costs).

Selling and Marketing

For the years ended December 31, 2023 and 2022, selling and marketing expense increased by $2.7 million, or 35%, from $7.7 million in 2022 to $10.4 million in 2023. The increase is attributable primarily to: (i) a $1.4 million in European marketing expenses (which were included for only four months of the prior year), primarily sales commission; (ii) a $1.4 million increase in sales commissions attributable to MediMobility Organ Transport revenue growth from new clients; and (iii) a $1.0 million increase in US marketing staff costs. Those increases were partially offset by a $1.1 million decrease in US marketing media and promotional expenses.

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Other non-operating income (expense)

For the year ended December 31, 2023, other non-operating income consists mainly of: (i) $8.4 million interest income, net of interest expense attributable to higher interest rates on our short-term investments and our money market funds in the current year period; and (ii) $2.1 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price.

For the year ended December 31, 2022, other non-operating income consists of: (i) $24.2 million non-cash income due to fair value revaluation of warrant liabilities as the value of the warrant liabilities fluctuates with the warrants’ market price; (ii) a $2.2 million realized loss from sale of short-term investments; and (iii) $3.4 million interest income, net of interest expense. We earn interest income on our money market and short-term investments.

Segment Results of Operations

We operate our business as two reportable segments - Passenger and Medical. For additional information about our segments, see Note 7 - “Segment and Geographic Information” in the notes to the consolidated financial statements of this Annual Report on Form 10-K.

Segment Revenue, Segment Flight Profit and Segment Flight Margin

The following table presents our segment results for the periods indicated (in thousands, except percentages):

(1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information.

Passenger segment

For the years ended December 31, 2023 and 2022, Passenger revenue increased by $24.2 million or 33%, from $74.3 million in 2022 to $98.6 million in 2023. The increase was attributable to a $25.7 million increase in Short Distance and a decrease of $1.5

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million in Jet and Other. Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details.

Passenger Flight Profit increased by $8.1 million or 72% for the year ended December 31, 2023, from $11.3 million in the same period of 2022 to $19.4 million in 2023. Flight Profit is defined as revenue less cost of revenue, and in 2022 excluding non-cash right of use “ROU” asset amortization. The increase was attributable primarily to (i) the acquisition of Blade Europe in September 2022; (ii) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing; (iii) increased passenger volumes, higher passenger load factor and higher average seat pricing for our New York by-the-seat airport transfer products; and (iv) increased helicopter charter volumes in the Northeast. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.

Passenger Flight Margin increased from 15.2% in the year ended December 31, 2022 to 19.7% in the same period in 2023. The increase was attributable primarily to: (i) the acquisition of Blade Europe, which operates at a higher average Flight Profit Margin compared with our Passenger average; (ii) increased passenger volumes, higher passenger load factor and higher average seat pricing for our New York by-the-seat airport transfer products; and (iii) a reduction in spot market jet charter costs, which decreased more quickly than our jet charter pricing. These improvements were partially offset by a lower passenger load factor on our seasonal by-the-seat jet service between New York and South Florida and our subsequent discontinuation of the service in the fourth quarter ended December 31, 2023.

Medical segment

For the years ended December 31, 2023 and 2022, Medical revenue increased by $54.8 million or 76%, from $71.8 million in 2022 to $126.6 million in 2023. Refer to the disaggregated revenue discussion above under “—Comparison of the Year Ended December 31, 2023 and 2022—Revenue” for more details.

Medical Flight Profit increased by $11.1 million or 96% for the year ended December 31, 2023, from $11.6 million in the same period of 2022 to $22.7 million in 2023. The increase was attributable primarily to increased revenue from new and existing clients and an increase in average flight hours per trip.

Medical Flight Margin increased from 16.1% in the year ended December 31, 2022 to 17.9% in the same period in 2023. The increase was attributable primarily to an increase in average flight hours per trip, which reduces the margin impact of certain operator and facility fees we pass through to our customers at cost, increased revenue per flight hour, increased utilization of dedicated aircraft, which are more cost efficient, and higher volumes of ground transportation serviced by owned vehicles, which are more cost efficient than using third parties.

Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and/or items that management does not believe are reflective of our ongoing core operations.

(1) See section titled “Reconciliations of Non-GAAP Financial Measures” for more information and reconciliations to the most directly

comparable GAAP financial measure.

(2) Percentage not meaningful.

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Passenger segment

For the years ended December 31, 2023 and 2022, Passenger net loss increased by $19.5 million or (139)%, from $(14.0) million in 2022 to $(33.5) million in 2023. The increase in net loss is attributable primarily to a $20.8 million impairment in Blade Europe’s intangible assets, specifically its exclusive rights to air transportation rights (see Note 4 to the consolidated financial statements included herein), the acquisition of Blade Europe, which operated at a net loss during the period; and a $1.0 million increase in marketing staff costs ($0.3 million is attributable to stock-based compensation) due to increased headcount. The increase in net loss was partially offset by higher Flight Profit in the US and Canada of $4.3 million, a decrease of $1.2 million in legal fees and a decrease of $1.1 million in US marketing media and promotional expenses.

Passenger Adjusted EBITDA increased by $1.4 million or 22% for the year ended December 31, 2023 from $(6.4) million in the same period of 2022 to $(5.0) million in 2023. The increase is attributable primarily to higher Flight Profit in the US and Canada of $4.3 million and a decrease of $1.1 million in US marketing media and promotional expenses, this improvement was partially offset by the acquisition of Blade Europe, which operated at a negative Adjusted EBITDA during the period; and a $0.7 million increase in marketing staff costs due to increased headcount.

Medical segment

For the years ended December 31, 2023 and 2022, Medical net loss decreased by $1.5 million or 53%, from $(2.9) million in 2022 to $(1.4) million in 2023. The decrease in net loss is attributable to an $11.1 million increase in Flight Profit driven by (i) higher trip volumes and increased flight hours per trip, (ii) increased utilization of dedicated aircraft, which are more cost efficient, and (iii) higher volumes of ground transportation serviced with our internal car fleet, as we continue to add owned vehicles (which are more cost efficient) to provide integrated ground transfers in key markets. The decrease in net loss were partially offset by a $3.4 million increase in contingent consideration compensation (earn-out) expense in connection with the Trinity acquisition (2023 is the last year subject to an earn-out payment), a $4.7 million increase in fixed costs, primarily staff costs in order to support the higher activity, and a $1.4 million increase in sales commissions attributable to revenue growth from new clients.

Medical Adjusted EBITDA increased by $5.6 million or 110%, for the year ended December 31, 2023 from $5.1 million in same period of 2022 to $10.8 million in 2023. The increase is attributable to an $11.1 million increase in Flight Profit driven by (i) higher trip volumes and increased flight hours per trip (ii) increased utilization of dedicated aircraft, which are more cost efficient, and (iii) higher volumes of ground transportation serviced with our internal car fleet, as we continue to add owned vehicles (which are more cost efficient) to provide integrated ground transfers in key markets. Those increases were partially offset by a $4.1 million increase in fixed costs, primarily staff costs in order to support the higher activity, and a $1.4 million increase in sales commissions attributable to revenue growth from new clients.

Reconciliations of Non-GAAP Financial Measures

Certain non-GAAP measures included in this segment results of operations review have been derived from amounts calculated in accordance with GAAP but are not themselves GAAP measures. Blade believes that the non-GAAP measure 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 measure presented herein may not be comparable to similarly titled measures presented by other companies. These include Flight Profit, Flight Margin and Segment Adjusted EBITDA, which we define, explain the use of and reconcile to the nearest GAAP financial measure below.

Segment Flight Profit and Flight Margin

Flight Profit is calculated as revenue less cost of revenue excluding non-cash timing of ROU asset amortization. Cost of revenue consists of flight costs paid to operators or aircraft and cars, landing fees and internal costs incurred in generating organ ground transportation revenue using the Company’s owned cars. 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. Blade believes that Flight Profit and Flight Margin provide a more accurate measure of the profitability of the Company's flight and ground operations, as they focus solely on the direct costs associated with those operations. Blade believes the exclusion of the ROU asset amortization from Flight Profit and Flight Margin is helpful as it better represents the Company's actual payable expenses in

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exchange for the flights served by the operators in the fourth quarter. We also believe that excluding this non-cash ROU amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.

The following table shows a reconciliation of segment revenue to segment Flight Profit and segment loss:

(1) All other operating expenses refer to the total of software development, general and administrative and selling and marketing expense.

Segment Adjusted EBITDA

Segment Adjusted EBITDA is defined as segment income (loss) excluding non-cash items or certain transactions that are not indicative of ongoing Company operating performance and / or items that management does not believe are reflective of our ongoing core operations (as shown in the table below).

(1) Represents certain legal and regulatory advocacy fees for specific matters (primarily the proposed restrictions at East Hampton Airport and the potential operational restrictions on large jet aircraft at Westchester Airport) 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. It is worth noting that we do not anticipate incurring any further legal fees related to the Westchester litigation.

(2) Represents contingent consideration compensation of $10,073 in connection with the Trinity acquisition in respect of 2023 results and a $339 credit recorded in connection with the settlement of the equity-based portion of Trinity's contingent consideration that was paid in the first quarter of 2023 in respect of 2022 results. 2023 is the last year subject to an earn-out payment.

(3) We believe that excluding this non-cash ROU asset amortization expense will aid in comparing to prior and future periods as we do not expect it to re-occur after the fourth quarter of 2022.

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Liquidity and Capital Resources

Sources of Liquidity

As of December 31, 2023 and December 31, 2022, we had total liquidity of $166.1 million and $192.1 million, respectively, consisting of cash and cash equivalents of $27.9 million and $41.3 million, respectively, and short-term investments of $138.3 million and $150.7 million, respectively. In addition, as of December 31, 2023 and December 31, 2022, we had restricted cash of $1.1 million and $3.1 million, respectively. As of December 31, 2023, $138.3 million of short-term investments consisted of securities that are traded in highly liquid markets.

With $166.1 million of total liquid funds as of December 31, 2023, 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 Annual Report.

Liquidity Requirements

As of December 31, 2023, the Company had net working capital of $170.8 million, zero debt, cash and cash equivalents of $27.9 million and short-term investments of $138.3 million. The Company had net losses of $56.1 million and $27.3 million for the year ended December 31, 2023 and 2022, respectively.

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 December 31, 2023, we had commitments to purchase flights from various aircraft operators with aggregate minimum flight purchase guarantees of $14.0 million and $21.6 million for the years ending December 31, 2024 and 2025, respectively. $5.0 million and $13.3 million, respectively, of which may be cancelled by us immediately if a government authority enacts travel restrictions and $3.1 million and $0.0 million, respectively, of which could be terminated by Blade for convenience upon 30 or 60 days’ notice with the annual minimum guarantee being pro-rated as of the termination date. See “—Capacity Purchase Agreements” within Note 11 to the consolidated financial statements for additional information and for information about future periods. Additionally, the Company has operating lease obligations related to real estate and vehicles with expected annual minimum lease payments of $1.9 million and $0.9 million for the years ending December 31, 2024 and 2025, respectively. See Note 5 “Right-of-Use Asset and Operating Lease Liability” to the consolidated financial statements for additional information and for information about future periods.

We have non-cancellable commitments which primarily relate to cloud services and other items in the ordinary course of business. The amounts are determined based on the non-cancellable quantities to which we are contractually obligated. In December 2023, the Company entered into a technology service agreement with a vendor for cloud computing services where we are committed to spend $0.6 million and $1.1 million for the years ending December 31, 2024 and 2025, respectively.

In addition, as of December 31, 2023, the Company anticipates making an earn-out payment related to the Trinity acquisition of approximately $10.1 million, of which $7.1 million is in cash (2023 is the last year subject to an earn-out payment). This amount is expected to be paid in the first quarter of 2024, in respect of the year ended December 31, 2023.

We expect to incur net losses in the short term, as we continue to execute our strategic initiatives. 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.

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Cash Flows

The following table summarizes our cash flows for the periods indicated:

Cash Used In Operating Activities

For the year ended December 31, 2023, net cash used in operating activities was $32.3 million, driven by a net loss of $56.1 million and $6.7 million of cash used for working capital requirements, adjusted for non-cash items consisting of impairment of intangible assets of $20.8 million, stock-based compensation expense of $12.5 million, depreciation and amortization of $7.1 million, non-cash accretion of interest income on held-to-maturity securities of $6.5 million, income from change in fair value of warrant liabilities of $2.1 million, and a deferred tax benefit of $1.5 million. The $6.7 million of cash used for working capital requirements was primarily driven by an increase in accounts receivable of $10.3 million (attributable to the rapid revenue growth in MediMobility Organ Transport), an increase in prepaid expenses and other current assets of $6.0 million, driven by prepayments made to operators in connection with capacity purchase agreements; partially offset by an increase in accounts payable and accrued expenses of $9.0 million, driven by the accrual for the Trinity contingent consideration compensation payment and for the 2023 short term incentive plan, and an increase in lease liabilities of $0.4 million.

For the year ended December 31, 2022, net cash used in operating activities was $37.1 million, primarily driven by a net loss of $27.3 million and $17.0 thousand cash used for working capital requirements, adjusted for non-cash items consisting of income from change in fair value of warrant liabilities of $24.2 million, stock-based compensation expense of $8.3 million, depreciation and amortization of $5.7 million, realized loss of $2.2 million from the sale of short-term investments, accretion of interest income on held-to-maturity securities of $1.1 million, and a deferred tax benefit of $0.8 million. The $17.0 thousand cash used for working capital requirements was primarily driven by an increase in accounts receivable of $5.3 million, due to the rapid growth in MediMobility Organ Transport, an increase in prepaid expenses and other current assets of $5.3 million, driven by prepayments to operators in connection with new capacity purchase agreements, and an increase in other non-current assets of $0.7 million driven by an office lease deposit; fully offset by an increase in accounts payable and accrued expenses of $9.9 million, driven by timing of accruing for the Trinity contingent consideration compensation payment and for the 2022 short term incentive plan, an increase in deferred revenue of $0.7 million (driven by client prepayments), and a $0.6 million increase in lease liabilities (attributable to new leases entered into in 2022).

Cash Provided by Investing Activities

For the year ended December 31, 2023, net cash provided by investing activities was $17.1 million, driven by $264.5 million of proceeds from maturities of held-to-maturity investments, $20.5 million of proceeds from the sales of other short-term investments, offset by $265.8 million in purchases of held-to-maturity investments, $2.1 million in purchases of property and equipment, consisting of leasehold improvements, furniture and fixtures for lounges used by the Passenger segment, and vehicles used by the Medical segment.

For the year ended December 31, 2022, net cash provided by investing activities was $79.3 million, driven by $258.4 million of proceeds from the sales of other short-term investments, $98.0 million of proceeds from maturities of held-to-maturity investments, partially offset by $227.3 million in purchases of held-to-maturity investments, $48.1 million in consideration paid for the acquisition of Blade Europe, $0.7 million in purchases of other short-term investments, $0.7 million in purchases of property and equipment, consisting of leasehold improvements and vehicles, and $0.2 million additional investment in the joint venture in India.

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Cash Used In Financing Activities

For the year ended December 31, 2023, net cash used in financing activities was $0.1 million, reflecting $0.1 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.

For the year ended December 31, 2022, net cash used in financing activities was $1.1 million, reflecting $1.2 million cash paid for payroll tax payments on behalf of employees in exchange for shares withheld by the Company (“net share settlement”), partially offset by $0.1 million of proceeds from the exercise of stock options.

Critical Accounting 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.

We consider an accounting estimate to be critical if: (1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimate was made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that we reasonably could have used in the current period, would have a material impact on our financial condition or results of operations.

We believe that of our significant accounting policies, which are described in the notes to the consolidated financial statements, the following accounting policies involve a greater degree of judgments, estimates and assumptions. Accordingly, these are the policies that we believe are the most critical to aid in fully understanding and evaluating our consolidated financial condition and results of operations. For information on the Company’s significant accounting policies and estimates refer to Note 2 “Summary of Significant Accounting Policies” and to “Use of Estimates” section of Note 1 “Business and Basis of Presentation” in the consolidated financial statements.

Business Combinations

We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. Such valuations require management to make significant estimates and assumptions, especially with respect to intangible assets. Significant estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows from acquired exclusive rights to air transportation services, customer list and trademark, based on expected future growth rates and margins, attrition rates, and royalty for similar brand licenses, useful lives, and discount rates.

Management's estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. Allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over the useful life, whereas any indefinite lived intangible assets, including goodwill, are not amortized. During the measurement period, which may be up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed, with the corresponding offset to goodwill. Upon the conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill Assessment

We review goodwill annually (in the fourth quarter) and whenever events or changes in circumstances indicate that goodwill might be impaired. We make certain judgments and assumptions to determine our reporting units and in allocating shared assets and liabilities to determine the carrying values for each of our reporting units. Determination of

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reporting units is based on a judgmental evaluation of the level at which senior management reviews financial results, evaluates performance, and allocates resources.

We assess goodwill for impairment initially using a qualitative approach; however, should the qualitative assessment indicate potential impairment, a subsequent quantitative test must be performed.

Judgment in the assessment of qualitative factors of impairment include, among other factors: reviewing factors such as macroeconomic conditions, industry and market considerations, cost factors, entity-specific financial performance and other events, such as changes in the Company’s management, strategy and primary customer base, and factors affecting the reporting unit. To the extent we determine that it is more likely than not that the fair value of a reporting unit is less than its carrying value, the Company performs a quantitative goodwill and indefinite-lived intangible asset impairment analysis by comparing the carrying amount to the fair value of the reporting unit.

Performing a quantitative goodwill impairment test includes the determination of the fair value of a reporting unit by considering both public company multiples (a market approach) and projected discounted future cash flows (an income approach) and involves significant estimates and assumptions. These estimates and assumptions include, among others, revenue growth rates and operating margins used to calculate projected future cash flows, risk-adjusted discount rates, future economic and market conditions, and the determination of appropriate market comparables.

As of December 31, 2023, for the Blade Europe reporting unit, the first step of the goodwill impairment test (“Step 1 test”) was performed as it was determined that it is more likely than not that the fair value of the reporting unit was less than its carrying amount. Based on our Step 1 test, we determined that the fair value was greater than its respective carrying value and therefore, no further action was necessary.

The key assumptions with significant uncertainty and impact used on our evaluation of the Blade Europe reporting unit for the year ended December 31, 2023 were as follows:

a.EVA introduction timeline

b.Operating margins increase by 10%-15% in the initial years after the introduction of EVA

c.Weighted average cost of capital (“WACC”) of 12.5%

We assumed the introduction of EVA will drive higher profitability as operational costs are anticipated to be lower compared to conventional aircraft.

We performed a sensitivity analysis for the reporting unit. The sensitivity analyses are based on a change in one assumption while holding all other assumptions constant so that interdependencies between the assumptions are excluded. The results of this sensitivity analysis on our impairment test as of December 31, 2023 indicated that the WACC needed to be raised by approximately 300 basis points for Blade Europe’s goodwill to be impaired.

Additionally, if the expansion in operating margins, following the introduction of EVA, does not materialize by 2031 and long term projected operating margins fall short by more than 30%, it would trigger goodwill impairment.

Impairment of Finite-Lived Intangible Assets

As discussed in Note 4 “Goodwill and Intangible Assets”, fair value was determined using the discounted estimated cash flows. These estimates include revenue growth, operating margin, capital expenditures, weighted average cost of capital (“WACC”) and expected long-term cash flow growth rates. The assumptions that have the most significant effect on our discounted estimated cash flow calculation are: (i) EVA introduction timeline (ii) the expected increase in operating margins upon initial introduction of EVA and (iii) the WACC.

The key assumptions with significant uncertainty and impact used in our evaluations of Blade Europe’s finite-lived intangible assets as of December 31, 2023 were as follows:

•EVA introduction timeline

•Operating margins - 10%-15% increase in the initial introduction of EVA.

•WACC of 12.5%

Operating margins for the years prior to EVA commercialization represents our estimate of the operating margins similar to the overall Blade business. EVA manufacturers forecast potential decreases in operational costs of up to 75%, mainly due to lessened maintenance demands and the relative affordability of electricity versus jet fuel. The Company assumed moderate decrease in operational costs of 10% to 15% during the initial introduction of EVA.

Our determination of projected cash flows are sensitive to the risk of future variances due to industry and market conditions as well as business unit execution risks. Management assesses the projected cash flows by considering factors unique to its

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assets, including recent operating results, business plans, economic projections, anticipated future cash flows, and other data. Projected cash flows can also be significantly impacted by the future growth opportunities for the cash generating assets as well as for the Company itself, general market and geographic sentiment.

Assumptions used in impairment testing are made at a point in time and require significant judgment; therefore, they are subject to change based on the facts and circumstances present at each annual and interim impairment test date. Additionally, these assumptions are generally interdependent and do not change in isolation. Consequently, if future results fall below our forward-looking projections for an extended period of time, the results of future impairment tests could indicate there is an impairment.

Income Tax

The Company periodically assesses the likelihood that its deferred tax assets will be recovered from future taxable income and, to the extent it believes, based upon the weight of available evidence, that it is more likely than not that all or a portion of the deferred tax assets will not be realized, a valuation allowance is established through a charge to income tax expense. Potential for recovery of deferred tax assets is evaluated by considering, among other things, taxable income in carryback years, existing taxable temporary differences, prudent and feasible tax planning strategies and estimated future taxable profits. In evaluating the likelihood of utilizing our net deferred income tax assets, the significant factors that we consider include (1) strong earnings history exclusive of the loss that created the future deductible amount, coupled with evidence indicating loss is not an ongoing condition, (2) growth in the U.S. and global economies, (3) forecast of air transportation revenue trends, (4) impact of future taxable profits.

Leases

Blade’s operating leases consist of airport and heliport terminals, offices and aircraft leases that are embedded within certain capacity purchase agreements (“CPAs”). Judgements and assumptions that we apply in the accounting for leases:

•The determination of whether an arrangement is a lease at inception.

•Classifying leases as either operating or finance leases.

•Estimating the incremental borrowing rate - the Company calculates the present value of lease payments over the lease term, based on the incremental borrowing rate. Our incremental borrowing rate is an estimate based on an analysis of publicly traded debt securities of companies with credit and financial profiles similar to our own.

•Determining the lease term when a renewal option exists - some of the Company's leases include options to extend the lease, the Company uses judgement in determining whether a lease extension option would be exercised, this decision drives the ROU amortization period and the value of the ROU asset and the lease liability.

•In embedded leases under certain CPAs with third-party aircraft operators, we use estimates in determining what portion of the minimum guarantee represents a lease component.