Kestra Medical Technologies — First Quarter Fiscal 2027 Earnings Summary

Financial Performance

• Total revenue for the quarter ended July 31, 2026, was $31.0 million, representing a 60% increase compared to the prior year period.
• Gross profit was $17.5 million, up from $8.9 million in the prior year period.
• Gross margin expanded to 56.5% in F1Q27, compared to 45.7% in the prior year period, driven by volume leverage, a higher mix of in-network patients, and cost improvement programs.
• GAAP operating expenses were $55.2 million, compared to $37.7 million in the prior year period.
• Adjusted operating expenses were $44.2 million, compared to $30.3 million in the prior year period, primarily due to commercial expansion growth and accelerated R&D investment.
• GAAP net loss was $44.1 million, compared to a GAAP net loss of $25.8 million in the prior year period.
• Adjusted EBITDA loss was $24.0 million, compared to an adjusted EBITDA loss of $19.4 million in the prior year period.
• Cash, cash equivalents, and investments totaled $244.7 million as of July 31, 2026.
• Total liquidity, including committed unused availability under the term loan agreement, was approximately $320 million.
• Net cash used in operating activities was $32.3 million for the quarter.
• Net cash used in investing activities was $21.4 million, primarily due to purchases of property and equipment and marketable securities.
• Net cash provided by financing activities was $22.5 million, driven by proceeds from the issuance of long-term debt ($75.0 million) offset by debt repayments and issuance costs.
• Long-term debt, net, increased to $72.5 million as of July 31, 2026, from $42.6 million as of April 30, 2026.

Guidance and Future Outlook

• Kestra increased its full-year fiscal 2027 revenue guidance to $141 million, representing 48% growth compared to fiscal 2026.
• The new guidance of $141 million is an increase from the prior guidance of $137 million.

Business Segments and Product Lines

• Revenue growth was driven by wearable cardioverter defibrillator (WCD) market expansion, competitive share gains, new sales territories, a higher mix of in-network patients, and improvements in revenue cycle management capabilities.
• The company continues to invest in key R&D programs.

Market and Competitive Landscape

• The company reported competitive share gains in the WCD market.
• Management stated that the focus on innovation and commercial expansion positions the company to generate durable, top-tier growth and advance on its path to market leadership.

Risks and Challenges

• Risks include limited operating history, history of net losses, and the ability to achieve substantial market adoption of products.
• Potential challenges include competitive pressures, adapting manufacturing capacity to demand, product defects, liability, and maintaining adequate coverage and reimbursement levels.
• Risks also involve compliance with changing laws and regulatory requirements, dependence on a limited number of suppliers, and market condition uncertainties.

Management Commentary and Tone

• Brian Webster, President and CEO, stated the company delivered "another strong quarter of financial performance" with 60% revenue growth and gross margin expansion to over 56%.
• Management expressed confidence that their focus on innovation and commercial expansion will drive market expansion and advance Kestra toward market leadership.
• The tone emphasized executing commitments to prescribers and patients to drive durable, top-tier growth.

Other Key Points

• The company incurred a loss on extinguishment of debt of $6.3 million in the quarter.
• Financing activities included the repayment of long-term debt of $46.4 million and a payment of an early termination fee of $3.8 million.
• Proceeds from the issuance of long-term debt totaled $75.0 million.
• Share-based compensation expense was $9.5 million for the quarter, compared to $4.6 million in the prior year period.
• The company reported a loss on disposal of property and equipment of $292,000.
• Warrant liabilities were eliminated in the current period, having been $1.4 million in the prior period.
• The company hosts a conference call and webcast to discuss results, available on its investor relations website.