KESTRA MEDICAL TECHNOLOGIES, LTD. Q2 FY2026 earnings call

• Patient focus: An example of a patient in Florida who benefited from the Assure system, highlighting its comfort, care coordination, and effectiveness in detecting cardiac events.
• Financial performance: Strong revenue growth of 53%, gross margin expansion to 50.6%, and operating leverage due to revenue growth.
• WCD market: WCD therapy remains underutilized in the US, reaching only 14% of the eligible addressable market. KESTRA aims to influence clinical practice through clinical evidence.
• ACE PAS study: Presented primary results at the American Heart Association annual meeting, being the largest real-world prospective WCD study with over 21,000 patients enrolled. Key takeaways include the Assure system meeting primary endpoints, high wear time, and low false alarm rate.
• Sales organization: Expanding sales territory to 100 active territories, adding clinical specialists in select markets, and focusing on geographies with high WCD prescriptions and in-network payer coverage.
• RCM progress: In-network mix of fittings increased from 70% at IPO to low eighties, improving RCM metrics.

In the second quarter, revenue was $22.6 million, a 53% increase over the prior year period. Gross margin was 50.6%, the first time exceeding 50% in the company's history, up 11 points year over year. The Assure system segment contributed significantly to this performance, with approximately 4,700 prescriptions written for the system. Revenue contribution from the Assure system is a key component of the overall financials.

• Increased revenue guidance to $91 million for fiscal year 2026, a 52% growth from fiscal year 2025. This is driven by strong prescription growth, higher in-network mix, and improvements in revenue cycle management.
• Expect continued gross margin expansion in the back half of FY 2026, with confidence in reaching 70% plus gross margins in the next few years.

• Forward-looking statements are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes could differ materially from forward-looking statements due to various factors. Investors are advised to review the company's most recent filings with the SEC, particularly risk factors in Form 10-K.

Q: Talk about the fiscal year guidance, cadence, and seasonality, especially for Q3.

A: Vaseem Mahboob mentioned that guidance is based on daily, weekly, and monthly performance tracking, with revenue growth driven by key drivers and a focus on consistent quarterly results.

Q: How do the proceeds from the recent equity offering accelerate growth initiatives?

A: Brian Webster stated that the capital will be used to fortify the balance sheet and fund growth initiatives, with planning ongoing to outline impact on growth strategies.

Q: Impact of ACE PAS data on WCD market growth, share capture vs market expansion?

A: Brian Webster said market growth is accelerating, with anecdotal evidence of clinicians making different decisions post-data presentation, and medical education events increasing.

Q: Guidelines timing and impact on business?

A: Brian Webster noted the business doesn't rely on guidelines changing, but clinical evidence warrants review by the arrhythmia committee, with momentum for reevaluating guidelines.

Q: Prescription volume strength sustainability and prescribers?

A: Brian Webster said prescription rates are sustainable, with acquisition of new accounts and engagement with physician assistants and other clinicians.

Q: OpEx spending plans and cadence?

A: Vaseem Mahboob mentioned OpEx is invested in team expansion and revenue cycle management, with sustained investments to support growth.

Q: Innovation and new products?

A: Brian Webster stated KESTRA has innovation in three platforms (WCD, wearable, digital) with a focus on using clinical data to develop solutions for unmet needs