Kestra Medical Technologies Q1 Earnings Call Highlights

Kestra raised its fiscal 2027 revenue outlook to $141 million from $137 million after first-quarter revenue reached $31 million, up 60% year over year. Growth was driven by WCD market expansion, market-share gains, new accounts, improved payer mix and revenue-cycle improvements. Gross margin expanded to 56.5% , marking the 11th consecutive quarter of sequential improvement, and management lifted its longer-term target to the mid-70% range. However, the GAAP net loss widened to $44.1 million as the company increased commercial and late-stage R&D investments. Kestra reported roughly $320 million in total liquidity , including cash and unused term-loan capacity, while investing in AI-enabled operational tools, expanded payer coverage and new ASSURE platform capabilities. Kestra Medical Technologies NASDAQ: KMTS reported first-quarter fiscal 2027 revenue of $31 million, with President and Chief Executive Officer Brian Webster saying revenue rose 60% from a year earlier and advanced sequentially from the fourth quarter. The company raised its full-year revenue outlook to $141 million from a prior forecast of $137 million, representing expected growth of 48% over fiscal 2026. Management attributed growth to expansion of the wearable cardioverter defibrillator, or WCD, market, competitive share gains, deeper penetration of existing accounts, new account activations, a greater proportion of in-network patients and revenue-cycle-management improvements. “The KPIs are all tracking the right direction and give us a lot of confidence in increasing our guidance,” Chief Financial Officer Vaseem Mahboob said during the company’s earnings call. Kestra reported a gross margin of 56.5%, up from 45.7% in the prior-year period and 175 basis points sequentially. Webster said the first quarter marked the company’s 11th consecutive quarter of sequential gross-margin expansion. Mahboob said margin improvement reflected higher revenue per fitting as in-network patient mix increased, along with lower cost per fitting from volume leverage, supplier reductions and cost-improvement programs. Kestra now expects to reach gross margins in the mid-70% range over the next two to three years, increasing its previous target of 70%. Management also said it expects steady sequential gross-margin gains in future quarters as the company’s rental model benefits from additional fittings. Mahboob said Kestra expects to achieve a 70% gross margin for fiscal 2029, implying a margin above that level during the second half of the year. Despite the higher gross margin, Kestra’s GAAP net loss widened to $44.1 million from $25.8 million a year earlier. Adjusted EBITDA loss was $24 million, compared with a $19.4 million loss in the prior-year period. GAAP operating expenses increased to $55.2 million from $37.7 million. The total included $1.4 million of nonrecurring costs associated with a Biobeat milestone payment and one-time professional fees related to a late-stage research and development project. Excluding nonrecurring costs and stock-based compensation, operating expenses were $44.2 million, compared with $30.3 million a year earlier. Mahboob said the increase primarily reflected commercial expansion and accelerated investments in late-stage R&D. He said the company expects GAAP operating expenses of approximately $220 million for fiscal 2027, including continued commercial investment, while R&D spending is expected to return to a historical range of roughly 5% to 7% in the second half of the year. Commercial expansion and market access Webster said the company’s sales organization is gaining share in competitive accounts while expa...