Beyond Air Financial Results for the Quarter Ended September 30, 2026 - BEYOND AIR INC

Financial Performance:

• Recorded record quarterly revenue of $2.3 million for the period ended September 30, 2026, representing a 28% year-over-year increase and a 31% sequential increase from the June 2026 quarter.
• Gross margin improved significantly to approximately 8% compared to a negative 16% in the prior year period, converting a gross loss of $300,000 to a gross profit of $200,000.
• Operating expenses were reduced: Research and Development (R&D) decreased to $1.6 million from $2.5 million due to completed development on the second-generation system; Selling, General, and Administrative (SG&A) expenses fell to $4.6 million from $4.9 million, driven by lower stock-based compensation despite higher sales salaries.
• Net loss for the quarter was $7.8 million ($3.76 per share), a slight improvement from the $7.9 million net loss ($0.98 per share) reported in the same period the previous year; the increase in "other expense" to $2.2 million was attributed to higher interest and scrap material charges.
• As of September 30, 2026, the company held $18.5 million in cash, cash equivalents, restricted cash, and marketable securities, including $4.8 million in restricted cash.
• The company is transitioning its fiscal year-end from March 31 to December 31, effective December 31, 2026, with a nine-month transition period report (Form 10-K-T) to be filed thereafter.

Guidance and Future Outlook:

• Reaffirmed full-year 2026 revenue guidance of $8 million, excluding any revenue from the second-generation system.
• Reaffirmed full-year 2027 revenue guidance of $16 to $18 million, which anticipates the inclusion of second-generation system revenue in the second, third, and fourth quarters but excludes Q1 2027 revenue from Gen 2.
• Expects to complete audit readiness for the second-generation system by mid-December 2026, followed by FDA inspections and final approval; anticipates a quick turnaround post-audit due to streamlined documentation and combined R&D/manufacturer locations.
• Plans to allocate no resources to the development of "LungFit Go" in 2027, maintaining focus on commercial execution for LungFit PH and Gen 2 launch preparations.
• Aims to capitalize on the second-generation system's expanded labeling for air and ground transport to capture the market for single-source nitric oxide providers across routine care and patient transport.

Business Segments and Product Lines:

• Commercial execution for the first-generation LungFit PH is driving growth, with a U.S. pipeline growing close to fourfold since Q1 2026 and a win rate increasing due to reduced competition and strong product reception.
• International sales reached record levels for the quarter, supported by distribution partnerships in over 40 countries and direct sales recognition; international revenue is immediately recognized.
• The second-generation OneFit PH system is pending FDA PMA supplement approval, featuring reduced weight, simplified operation, longer service intervals, and expanded transport capabilities.
• LungFit Go received FDA Breakthrough Device Designation for treating non-tuberculosis mycobacterial pulmonary disease (NTMPD), though development is paused for 2027.
• Completed the sale of controlling interest in Neuronos Israel to Univoe Pharmaceutical Industries; evaluating strategic partnerships for the Beyond Cancer subsidiary while maintaining focus on core business.
• Average deal size for current US subscriptions is approximately $250,000, with expectations for significantly larger average deal sizes upon the launch of the second-generation system.

Market and Competitive Landscape:

• The company observes a reduction in competitors within the field, contributing to an increased win rate and market share expansion.
• Strong market receptivity is driven by the technology's operational efficiency, ease of use, and the ability to generate nitric oxide on-site (cylinder-free technology).
• Utilizing national Group Purchasing Organization (GPO) agreements to broaden hospital reach; the process for adding Gen 2 to existing GPO formularies is described as a nominal extension of current agreements.
• Competitive advantage is reinforced by a growing reference base of over a few hundred units in use across dozens of hospitals, facilitating peer-to-peer validation among respiratory therapists and health systems.

Risks and Challenges:

• Regulatory timeline uncertainty remains, as final FDA approval and inspection outcomes are subject to the FDA's review process.
• Business performance remains dependent on the successful commercialization of the second-generation system pending regulatory clearance.
• Transitioning the fiscal year-end and reporting a nine-month transition period presents specific reporting complexities.
• Continued net losses and reliance on cash reserves to fund operations and commercial expansion.
• Strategic focus shift on Neuronos and Beyond Cancer requires careful resource management to avoid diluting core LungFit PH efforts.

Management Commentary and Tone:

• Management expressed high confidence and optimism, describing the quarter as "productive and meaningful" with "exceptional customer satisfaction."
• Tone was forward-looking and decisive regarding the regulatory process, characterizing the upcoming FDA audit as a standard, quick procedure (estimated at 1.5 days) facilitated by the proximity of R&D and manufacturing facilities.
• Executives highlighted a "nice inflection point" in sales pipeline growth and win rates, attributing success to product efficacy, ease of use, and a streamlined sales organization.
• Emphasis was placed on financial discipline, evidenced by reduced R&D and SG&A expenses while simultaneously scaling the commercial team.

Analyst Questions and Answers:

• FDA Timeline: Clarified that the audit readiness is scheduled for mid-December with no additional unknown requirements; a quick response is anticipated, potentially yielding approval in Q1 2027.
• Guidance Assumptions: Confirmed the 2027 guidance ($16-$18M) assumes Gen 2 revenue in Q2-Q4 only, with Q1 revenue relying on Gen 1 sales; management noted a built-in "cushion" via a dramatically expanded Gen 1 pipeline.
• Pipeline Volume: Confirmed the US sales pipeline has more than doubled recently after sanitizing legacy deals, with a high win rate expected to drive near-term revenue conversion.
• GPO Process: Stated that adding Gen 2 to GPOs is a simple administrative extension of current contracts, requiring minimal time or effort.
• Audit Duration: Addressed concerns about timeline delays by clarifying that rigorous stability and repeatability testing was required, which aligned with existing internal timelines rather than causing delays; the compact supply chain (R&D and manufacturer within 1.5 hours of each other) will expedite the audit.
• Win Rate Drivers: Attributed higher win rates to the product's ease of use, customer references, and a "viral" reputation among hospital staff, alongside a shrinking competitive field.
• Revenue Composition: Noted that revenue growth is driven by a combination of unit volume and immediate revenue recognition from international and VA system direct sales, distinct from the subscription model of US hospital deals.

Other Key Points:

• The second-generation system is designed to serve as a single-source provider for nitric oxide, addressing the current standard of separate solutions for routine care and transport.
• The sale of the Neuronos controlling interest is intended to provide the subsidiary with dedicated funding and strategic focus.
• International markets are currently contributing one of the highest sales volumes to date, with direct sales recognized immediately upon shipment.
• The company has achieved record quarterly revenue while simultaneously reducing operating costs, signaling a path toward potential path to profitability as the Gen 2 launch approaches.