Core Insights - Kestra Medical Technologies, Ltd. is debuting its Cardiac Recovery System (CRS) platform at the 2025 Heart Failure Society of America Annual Scientific Meeting, highlighting its commitment to advancing care for heart failure patients [1][4]. Company Overview - Kestra Medical Technologies is a commercial-stage wearable medical device and digital healthcare company focused on improving patient outcomes in cardiovascular disease through intuitive, intelligent, and connected monitoring and therapeutic intervention technologies [5]. Product Features - The CRS platform includes the ASSURE Wearable Cardioverter Defibrillator, which aims to close the gap in sudden cardiac death protection by providing actionable insights during the early phase of heart failure recovery [2]. - Attendees at the conference can engage with the CRS platform through immersive experiences and hands-on demonstrations, showcasing its ability to empower clinicians and enhance patient-provider connections [3]. Industry Engagement - Kestra will also participate in the Devices in Heart Failure Meeting, allowing attendees to see the ASSURE system and understand its integration into clinical workflows to support guideline-directed medical therapy [4].

Core Insights - Kestra Medical Technologies, Ltd. has appointed Dr. Elizabeth Kwo as an independent director to its board, enhancing its leadership team with her extensive experience in digital health and patient care [1][2]. Company Overview - Kestra Medical Technologies is a commercial-stage company focused on wearable medical devices and digital healthcare, aiming to improve patient outcomes in cardiovascular disease through innovative monitoring and therapeutic technologies [3]. Leadership Appointment - Dr. Kwo's background includes roles as Chief Commercial Officer at Everly Health, Deputy Chief Clinical Officer at Anthem, and experience in founding multiple venture-backed companies, which positions her well to contribute to Kestra's mission [2][3]. - Dr. Kwo holds an M.D. from Harvard Medical School, an M.P.H. from Harvard T.H. Chan School of Public Health, an M.B.A. from Harvard Business School, and a B.A. from Stanford University, showcasing her strong academic credentials [2]. Strategic Focus - Dr. Kwo expressed her commitment to advancing Kestra's mission in cardiac recovery and improving patient outcomes through innovation, indicating a strategic alignment with the company's goals [3].

[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This section provides important disclaimers regarding forward-looking statements in the report, highlighting inherent risks and uncertainties [Forward-Looking Statements Overview](index=3&type=section&id=Forward-Looking%20Statements%20Overview) This section highlights that the Quarterly Report contains forward-looking statements based on management's beliefs and assumptions, primarily found in the 'Management's Discussion and Analysis' section - Forward-looking statements are based on management's beliefs and assumptions and are primarily located in the 'Management's Discussion and Analysis of Financial Condition and Results of Operations' section[7](index=7&type=chunk) - These statements cover future results, business strategies, technology developments, financing plans, competitive position, and regulatory environment[7](index=7&type=chunk) [Important Factors and Risks](index=3&type=section&id=Important%20Factors%20and%20Risks) The company cautions that actual results may differ materially from forward-looking statements due to various known and unknown risks, and does not undertake to update these statements - Actual results may differ materially due to factors such as the ability to expand commercialization of the ASSURE WCD, maintain regulatory approvals, achieve market acceptance, secure reimbursement, scale manufacturing, and retain qualified personnel[8](index=8&type=chunk) - Other risks include intellectual property protection, clinical trial progress, regulatory landscape changes, financial performance, public company expenses, and competitive developments[8](index=8&type=chunk) - The company does not undertake any obligation to update forward-looking statements, which represent management's beliefs only as of the report date[9](index=9&type=chunk) [PART I. FINANCIAL INFORMATION](index=4&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis of financial performance [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Kestra Medical Technologies, Ltd. and its subsidiaries, including balance sheets, statements of operations, equity changes, cash flows, and detailed notes [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets provide a snapshot of the company's financial position as of July 31, 2025, and April 30, 2025, showing a decrease in total assets and shareholders' equity, while liabilities also decreased | Metric | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------------- | :----------------------------- | :---------------------------- | | Cash and cash equivalents | $201,214 | $237,595 | | Total current assets | $220,691 | $255,328 | | Total assets | $266,296 | $295,744 | | Total current liabilities | $32,256 | $37,977 | | Total liabilities | $82,137 | $90,338 | | Total shareholders' equity | $184,159 | $205,406 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The condensed consolidated statements of operations and comprehensive loss show the company's financial performance for the three months ended July 31, 2025, and 2024, indicating increased revenue and gross profit but also a higher net loss due to significantly increased operating expenses | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :------------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Revenue | $19,371 | $12,782 | | Cost of revenue | $10,520 | $8,582 | | Gross profit | $8,851 | $4,200 | | Research and development | $4,001 | $3,404 | | Selling, general and administrative | $33,728 | $19,227 | | Total operating expenses | $37,729 | $22,631 | | Loss from operations | $(28,878) | $(18,431) | | Net loss and comprehensive loss | $(25,826) | $(20,323) | | Net loss attributable to common shareholders | $(25,826) | $(22,267) | | Net loss per share attributable to common shareholders, basic and diluted | $(0.50) | $(1.12) | [Condensed Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders' Equity (Deficit)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Preferred%20Stock%20and%20Shareholders'%20Equity%20(Deficit)) This statement details the changes in redeemable preferred stock and shareholders' equity (deficit) for the three months ended July 31, 2025, and the period from April 30, 2024, to July 31, 2024, showing the impact of share-based compensation and net loss on equity | Metric | Balances at April 30, 2025 (in thousands) | Share-based compensation expense (in thousands) | Net loss and comprehensive loss (in thousands) | Balances at July 31, 2025 (in thousands) | | :------------------------ | :---------------------------------------- | :-------------------------------------------- | :------------------------------------------- | :--------------------------------------- | | Common Shares (Amount) | $51,349 | — | — | $51,349 | | Additional Paid In Capital| $674,306 | $4,579 | — | $678,885 | | Accumulated Deficit | $(520,249) | — | $(25,826) | $(546,075) | | Total Shareholders' Equity| $205,406 | $4,579 | $(25,826) | $184,159 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows illustrate the cash inflows and outflows from operating, investing, and financing activities for the three months ended July 31, 2025, and 2024, showing a significant decrease in cash from operating and investing activities in 2025, contrasting with cash provided by financing activities in 2024 | Cash Flow Activity | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash used in operating activities | $(26,274) | $(17,499) | | Net cash used in investing activities | $(8,232) | $(7,034) | | Net cash provided by (used in) financing activities | $(1,875) | $116,253 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $(36,381) | $91,720 | | Cash, cash equivalents and restricted cash, End of period | $201,548 | $100,303 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed explanations and disclosures for the condensed consolidated financial statements, covering company background, significant accounting policies, specific asset and liability breakdowns, debt arrangements, equity changes, and other financial and operational details [1. The Company](index=9&type=section&id=1.%20The%20Company) Kestra Medical Technologies, Ltd. is a commercial-stage medical device company that generates revenue by leasing its FDA-approved ASSURE© System, a Wearable Cardioverter Defibrillator (WCD) - Kestra Medical Technologies, Ltd. is a commercial-stage medical device company primarily generating revenue from leasing its FDA-approved ASSURE© System (Wearable Cardioverter Defibrillator) to patients[23](index=23&type=chunk) - The company completed an Initial Public Offering (IPO) on March 7, 2025, issuing 11,882,352 common shares at $17.00 per share, raising **$215.8 million** in net proceeds after underwriting discounts and commissions[27](index=27&type=chunk)[33](index=33&type=chunk) | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net loss | $(25,826) | $(20,323) | | Cash used in operating activities | $(26,274) | $(17,499) | | Accumulated deficit (as of July 31, 2025) | $(546,075) | N/A | | Cash and cash equivalents (as of July 31, 2025) | $201,214 | N/A | - Management believes existing cash and cash equivalents will be sufficient to fund operating expenses and capital expenditures for at least the next 12 months[33](index=33&type=chunk) [2. Significant Accounting Policies](index=11&type=section&id=2.%20Significant%20Accounting%20Policies) This section outlines the significant accounting policies, including the basis of presentation in accordance with US GAAP, the use of estimates in financial reporting, and specific policies for accounts receivable, cash and cash equivalents, revenue recognition for operating leases, and segment information - The unaudited interim condensed consolidated financial statements are prepared in accordance with SEC rules and US GAAP, with all intercompany accounts and transactions eliminated[35](index=35&type=chunk) - Key estimates include collectability of lease payments, useful lives of property and equipment, share-based compensation, fair value of warrants, and valuation allowance for deferred tax assets[38](index=38&type=chunk) - Revenue from ASSURE© System leases is recognized on a straight-line basis over the one-month contractual non-cancellable lease term when collectability is probable; otherwise, it's limited to collected payments[46](index=46&type=chunk) | Accounting Policy | Details | | :---------------- | :------ | | Accounts Receivable Reserve | $3,806 (July 31, 2025) vs. $3,193 (April 30, 2025) for estimated probable losses | | Cash & Cash Equivalents | Highly liquid investments with original maturity of three months or less. Restricted cash for office lease ($109k) and credit card collateralization ($225k) | | Segment Information | Operates as a single operating and reportable segment, with the CEO as chief operating decision maker. All long-lived assets and revenues are in the United States | [3. Prepaid Expenses and Other Current Assets](index=13&type=section&id=3.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note details the composition of prepaid expenses and other current assets, which primarily include prepaid software fees and other miscellaneous current assets | Category | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------- | :----------------------------- | :---------------------------- | | Prepaid software fees | $1,809 | $1,387 | | Other current assets | $1,620 | $1,693 | | Total prepaid expenses and other current assets | $3,429 | $3,080 | [4. Property and Equipment](index=13&type=section&id=4.%20Property%20and%20Equipment) This note provides a breakdown of property and equipment, net of accumulated depreciation, highlighting medical rental equipment as the largest component | Category | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :-------------------------- | :----------------------------- | :---------------------------- | | Medical rental equipment | $59,563 | $52,670 | | Total property and equipment| $66,104 | $58,785 | | Less: accumulated depreciation | $(25,728) | $(23,955) | | Property and equipment, net | $40,376 | $34,830 | - Depreciation expense for the three months ended July 31, 2025, was **$2,028 thousand**, compared to **$2,375 thousand** for the same period in 2024[55](index=55&type=chunk) [5. Leases](index=13&type=section&id=5.%20Leases) This note details the company's operating lease agreements, primarily for office space, including amendments for expanded space and extended terms - The company amended its office lease in October 2023 to expire in April 2029 and further expanded leased space in February 2025. A new office lease in Texas commenced in May 2025[56](index=56&type=chunk)[58](index=58&type=chunk) | Lease Expense Type | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :----------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating lease expense | $221 | $174 | | Variable lease expense | $165 | $153 | | Total operating lease expense | $386 | $327 | - Cash paid for operating leases was **$491 thousand** for the three months ended July 31, 2025, compared to **$165 thousand** for the same period in 2024[60](index=60&type=chunk) [6. Accrued Liabilities](index=14&type=section&id=6.%20Accrued%20Liabilities) This note provides a breakdown of accrued liabilities, which saw a slight decrease from April 30, 2025, to July 31, 2025, primarily driven by a reduction in bonuses and commissions | Category | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :------------------ | :----------------------------- | :---------------------------- | | Bonuses and commissions | $4,536 | $6,368 | | Other accrued liabilities | $5,068 | $3,547 | | Paid time off | $2,248 | $2,305 | | Professional services | $1,423 | $1,141 | | Payroll and payroll taxes | $375 | $468 | | Total accrued liabilities | $13,650 | $13,829 | [7. Long-Term Debt](index=14&type=section&id=7.%20Long-Term%20Debt) The company's long-term debt primarily consists of a $60.0 million Senior Secured Delayed Draw Term Loan Facility (Term Loan 2024) maturing in September 2028, with $45.0 million drawn - The company has a Senior Secured Delayed Draw Term Loan Facility (Term Loan 2024) of up to **$60.0 million**, maturing on September 29, 2028[62](index=62&type=chunk) - The initial **$45.0 million** was drawn on September 29, 2023. An amendment on February 25, 2025, adjusted revenue milestones and made an additional **$15.0 million** draw available through July 31, 2026, contingent on achieving **$60.0 million** in trailing twelve-month revenue[63](index=63&type=chunk)[66](index=66&type=chunk) | Metric | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :------------------------------------------ | :----------------------------- | :---------------------------- | | Term loan | $45,000 | $45,000 | | Accumulated paid-in-kind interest | $1,395 | $1,395 | | Less: unamortized debt issuance costs and debt discount | $(4,909) | $(5,297) | | Total long-term debt, net | $41,486 | $41,098 | | Expense Type | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :------------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Cash interest expense | $1,423 | $1,220 | | Amortization of facility fee and legal fees | $88 | $118 | | Amortization of debt discount (warrant) | $380 | $82 | | Interest expense paid-in-kind | — | $233 | | Total expense related to Term Loan 2024 | $1,891 | $1,653 | [8. Fair Value Measurement](index=15&type=section&id=8.%20Fair%20Value%20Measurement) This note presents the fair value hierarchy for assets and liabilities measured at fair value on a recurring basis, with warrant liabilities classified as Level 3 due to significant unobservable inputs | Category | July 31, 2025 (in thousands) | April 30, 2025 (in thousands) | | :------------------ | :----------------------------- | :---------------------------- | | Cash and cash equivalents (Level 1) | $201,214 | $237,595 | | Restricted cash (Level 1) | $334 | $334 | | Warrant liabilities (Level 3) | $5,188 | $8,097 | - The fair value of long-term debt, net of discounts, approximated **$48,240 thousand** as of July 31, 2025, and **$47,330 thousand** as of April 30, 2025, classified as Level 2[71](index=71&type=chunk) - Warrant liabilities are valued using the Black-Scholes option-pricing model with Level 3 inputs, including fair value of common shares, remaining contractual term, risk-free interest rate, expected dividend yield, and expected volatility[73](index=73&type=chunk)[74](index=74&type=chunk) | Metric | July 31, 2025 | April 30, 2025 | | :-------------------------- | :------------ | :------------- | | Fair value of Level 3 liabilities | $5,188 | $8,097 | | Change in fair value of warrant liabilities | $(2,909) | N/A | [9. Common Shares](index=17&type=section&id=9.%20Common%20Shares) This note states that the company had 100,000,000 Common Shares authorized and 51,348,656 Common Shares issued and outstanding with a par value of $1.00 as of July 31, 2025, and April 30, 2025 - As of July 31, 2025, and April 30, 2025, the company had **100,000,000 Common Shares** authorized and **51,348,656 Common Shares** issued and outstanding, each with a par value of **$1.00**[76](index=76&type=chunk) [10. Redeemable Preferred Stock](index=17&type=section&id=10.%20Redeemable%20Preferred%20Stock) This note explains that Intermediate Holdings issued 103,400 shares of preferred stock for $103,400 thousand for the three months ended July 31, 2024, which were subsequently exchanged into Common Shares, with no preferred stock outstanding as of July 31, 2025, or April 30, 2025 - For the three months ended July 31, 2024, Intermediate Holdings issued **103,400 shares** of preferred stock for proceeds of **$103,400 thousand**[78](index=78&type=chunk) - Following the Organizational Transactions, all preferred stock was exchanged into Common Shares of Kestra Medical Technologies, Ltd., resulting in no preferred stock outstanding as of July 31, 2025, and April 30, 2025[78](index=78&type=chunk) - Preferred stock was non-voting and subject to a preferred dividend capped at **4.7%** (pre-April 30, 2023 issuances) and **6.0%** (on or after May 1, 2023 issuances). No dividends were declared for the three months ended July 31, 2025 and 2024[79](index=79&type=chunk) [11. Non-Controlling Interest](index=18&type=section&id=11.%20Non-Controlling%20Interest) This note describes a $17,100 thousand investment received by a subsidiary (DAC) from a third-party investor in July 2024, in exchange for Class A Redeemable Ordinary Shares, which were subsequently exchanged into common stock of Intermediate Holdings and then into common units of West Affum LP in connection with the IPO - In July 2024, West Affum Holdings Designated Activity Company (DAC), a subsidiary, received a **$17,100 thousand** investment from a third party for **171 Class A Redeemable Ordinary Shares**[81](index=81&type=chunk) - In connection with the IPO, all Class A Redeemable Ordinary Shares were exchanged for common stock of Intermediate Holdings, which were then exchanged for common units of West Affum LP[82](index=82&type=chunk) [12. Equity Incentive Plans](index=18&type=section&id=12.%20Equity%20Incentive%20Plans) This note details the company's equity incentive plans, including restricted common units, restricted shares, stock options, and restricted stock units (service-based, performance-based, and market-based) - The company has granted restricted common units, restricted Class A Common Units (exchanged into restricted Common Shares post-IPO), stock options, and various types of restricted stock units (service-based, performance-based, and market-based)[83](index=83&type=chunk)[84](index=84&type=chunk)[88](index=88&type=chunk)[90](index=90&type=chunk)[92](index=92&type=chunk) | Equity Instrument | July 31, 2025 (Shares/Units) | Unrecognized Compensation Cost (in thousands) | Weighted-Average Recognition Period (Years) | | :-------------------------------- | :----------------------------- | :------------------------------------------ | :------------------------------------------ | | Stock Options (Outstanding) | 4,539,300 | $23,430 | 1.54 | | Restricted Stock Units (Outstanding) | 1,263,384 | $19,489 | 2.93 | | Performance-based Restricted Stock Units (Granted) | 395,589 | $5,755 | 0.75 | | Market-based Restricted Stock Units (Granted) | 197,794 | $3,645 | 1.96 | | Expense Category | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Research and development | $455 | $44 | | Selling, general and administrative | $4,124 | $333 | | Total share-based compensation expense | $4,579 | $377 | [13. Income Taxes](index=21&type=section&id=13.%20Income%20Taxes) This note details the provision for income taxes, which was minimal for both periods, primarily related to state tax liabilities in the United States, with a full valuation allowance provided against net deferred tax assets | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Provision for income taxes | $33 | $7 | | Effective tax rate | 0.13% | 0.04% | - The company is based in Bermuda, a tax resident of Ireland, and has subsidiaries in the Cayman Islands, Ireland, and the U.S., with no income tax in Bermuda and Cayman Islands[95](index=95&type=chunk) - A full valuation allowance has been provided against net deferred tax assets due to uncertainty of realization[96](index=96&type=chunk) [14. Commitments and Contingencies](index=21&type=section&id=14.%20Commitments%20and%20Contingencies) This note addresses potential legal proceedings and indemnification agreements, with the company not expecting any material adverse effect from ordinary course litigation - The company is involved in ordinary course legal proceedings but does not expect a material adverse effect on its results, financial position, or cash flows[97](index=97&type=chunk)[99](index=99&type=chunk) - Indemnification agreements with officers and directors exist, but no claims have been made as of July 31, 2025, and April 30, 2025[98](index=98&type=chunk) [15. Defined Contribution Plan](index=21&type=section&id=15.%20Defined%20Contribution%20Plan) This note outlines the company's 401(k) Plan for U.S. employees, which includes matching and discretionary contributions - The company sponsors a 401(k) Plan for its full-time U.S. employees, offering matching and discretionary contributions[100](index=100&type=chunk) | Metric | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :-------------------------------- | :---------------------------------------------- | :---------------------------------------------- | | Company contributions (matching and discretionary) | $548 | $428 | [16. Net Loss Per Share Attributable to Common Shareholders](index=21&type=section&id=16.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Shareholders) This note details the calculation of basic and diluted net loss per share attributable to common shareholders, noting no dilutive effect from potentially dilutive securities due to net losses - The calculation of basic and diluted net loss per share retrospectively adjusts for the exchange of Intermediate Holdings common stock into Common Shares of Kestra Medical Technologies, Ltd. in connection with the Organizational Transactions[101](index=101&type=chunk) - For both periods presented, there is no difference between basic and diluted shares outstanding due to the company's net loss position, meaning potentially dilutive securities had an antidilutive impact[103](index=103&type=chunk) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | | Net loss attributable to common shareholders | $(25,826) | $(22,267) | | Weighted average shares of common share outstanding – basic and diluted | 51,304,599 | 19,885,382 | | Net loss per share attributable to common shareholders – basic and diluted | $(0.50) | $(1.12) | | Potentially Dilutive Securities | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | | Stock options | 4,539,300 | — | | Warrants to purchase Common Shares| 434,916 | — | | Restricted stock | 40,103 | 36,893 | | Restricted stock units | 1,263,384 | — | | Performance-based restricted stock units | 395,589 | — | | Market-based restricted stock units | 395,588 | — | | Total | 7,068,880 | 36,893 | [17. Subsequent Events](index=23&type=section&id=17.%20Subsequent%20Events) This note discloses a subsequent event where Perceptive Credit Holdings IV, LP exercised their warrant on September 4, 2025, resulting in the cashless issuance of 100,397 Common Shares at an exercise price of $11.54 - On September 4, 2025, Perceptive Credit Holdings IV, LP exercised their warrant on a cashless basis, resulting in the issuance of **100,397 Common Shares** at an exercise price of **$11.54**[105](index=105&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results of operations, offering an overview of the business, key factors affecting performance, detailed comparison of financial results, and an analysis of liquidity and capital resources [Overview](index=24&type=section&id=Overview) Kestra Medical Technologies is a commercial-stage medical device and digital healthcare company focused on cardiovascular disease, commercializing its Cardiac Recovery System platform, centered on the ASSURE WCD - Kestra Medical Technologies is a commercial-stage wearable medical device and digital healthcare company focused on cardiovascular disease, commercializing its Cardiac Recovery System platform, including the ASSURE WCD[107](index=107&type=chunk) - Revenue is primarily derived from direct billing of third-party payors (Medicare, Medicaid, private payors) for leasing the ASSURE WCD, with established reimbursement codes[108](index=108&type=chunk) | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | | :-------------------------------- | :--------------------------------------------- | :--------------------------------------------- | | Revenue | $19.4 | $12.8 | | Gross profit | $8.9 | $4.2 | | Net loss | $(25.8) | $(20.3) | | Cash and cash equivalents (as of July 31, 2025) | $201.5 | N/A | | Accumulated deficit (as of July 31, 2025) | $(546.1) | N/A | - The company raised **$215.8 million** in net proceeds from its IPO in March 2025, which, along with existing cash, is expected to fund operations for at least the next 12 months[113](index=113&type=chunk)[114](index=114&type=chunk) [Key Factors Affecting Our Results of Operations and Performance](index=26&type=section&id=Key%20Factors%20Affecting%20Our%20Results%20of%20Operations%20and%20Performance) Several key factors impact the company's operating performance, including significant investments in its commercial organization, efforts to increase gross profit through cost management and improved reimbursement, effective payor coverage and revenue cycle management, and potential seasonality in billings and collections - Continued significant investments in recruiting, training, and retaining a direct sales force and supporting commercial infrastructure are crucial for growth[115](index=115&type=chunk) - Gross profit is expected to increase through more effective cost management, higher reimbursement realization due to improved market access, shifts to patients with longer wear duration, supply chain efficiencies, and manufacturing process improvements[115](index=115&type=chunk) - Revenue generation heavily depends on third-party payor coverage (Medicare, Medicaid, private payors) and effective revenue cycle management to collect cash[115](index=115&type=chunk) - Seasonality may impact billings and collections, particularly in January and February due to resetting annual patient healthcare insurance plan deductibles[115](index=115&type=chunk) [Key Components of Our Results of Operations](index=27&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) This section details the key components of the company's consolidated statement of operations, including revenue, cost of revenue, gross profit, research and development expenses, selling, general and administrative expenses, interest and other expense (income), and provision for income taxes, outlining their definitions and expected trends - Revenue is generated from leasing the ASSURE WCD on a month-to-month basis, recognized over the lease term when collectability is probable, and is expected to increase with patient growth[117](index=117&type=chunk) - Cost of revenue includes direct materials, labor, disposable components, depreciation of reusable equipment, shipping, and support costs, expected to increase with patient volume but decrease as a percentage of revenue long-term due to economies of scale[118](index=118&type=chunk) - Gross profit is expected to increase due to improved reimbursement, longer patient wear duration, supply chain efficiencies, and manufacturing improvements, but may be impacted by rising material, labor, and shipping costs[119](index=119&type=chunk) - Research and development expenses, consisting of personnel, prototype materials, and development costs, are expected to decrease as a percentage of revenue while continuing investment in new products and enhancements[120](index=120&type=chunk)[121](index=121&type=chunk) - Selling, general and administrative expenses, including personnel, marketing, and public company costs, are expected to increase in absolute terms to support growth but decrease as a percentage of revenue[122](index=122&type=chunk)[123](index=123&type=chunk)[124](index=124&type=chunk) - Interest and other expense (income) includes cash interest from borrowings and interest income, as well as non-cash components like amortization of debt discounts and warrant fair value adjustments[125](index=125&type=chunk) - Provision for income taxes is limited, with a full valuation allowance against net deferred tax assets due to uncertainty of future taxable income[126](index=126&type=chunk) [Results of Operations for the Three Months Ended July 31, 2025 and 2024](index=30&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20July%2031,%202025%20and%202024) This section provides a detailed comparison of the company's financial results for the three months ended July 31, 2025, versus the same period in 2024, highlighting significant increases in revenue, gross profit, and operating expenses, leading to a larger net loss | Metric (in thousands) | 2025 | 2024 | $ Change | % Change | | :------------------------------------------------ | :--- | :--- | :------- | :------- | | Revenue | $19,371 | $12,782 | $6,589 | 52% | | Cost of revenue | $10,520 | $8,582 | $1,938 | 23% | | Gross profit | $8,851 | $4,200 | $4,651 | 111% | | Research and development | $4,001 | $3,404 | $597 | 18% | | Selling, general and administrative | $33,728 | $19,227 | $14,501 | 75% | | Total operating expenses | $37,729 | $22,631 | $15,098 | 67% | | Loss from operations | $(28,878) | $(18,431) | $(10,447) | 57% | | Interest income | $(2,167) | $(37) | $(2,130) | NM | | Other expense (income) | $(2,830) | $48 | $(2,878) | NM | | Net loss attributable to common shareholders | $(25,826) | $(22,267) | $(3,559) | 16% | - Revenue increased by **$6.6 million (52%)** primarily due to a **54% increase** in patients using products and a **55% increase** in the revenue cycle management team for improved collections[129](index=129&type=chunk) - Cost of revenue increased by **$1.9 million (23%)** mainly due to higher disposable medical equipment supplies and reconditioning costs, reserve for lost equipment, and depreciation, partially offset by increased useful lives of components[130](index=130&type=chunk) - Gross profit increased by **$4.7 million (111%)** driven by revenue growth, improved collection efforts, and a **21% decrease** in cost of revenues per patient due to better utilization and manufacturing cost improvements[131](index=131&type=chunk) - Selling, general and administrative expenses increased by **$14.5 million (75%)** due to higher personnel expenses (including share-based compensation), public company-related professional fees, commercial support costs, travel, shipping, and software licensing fees[133](index=133&type=chunk) - Interest income increased by **$2.1 million** due to higher interest-bearing bank account balances, and other expense (income) decreased by **$2.9 million** primarily due to a decrease in the fair value of warrant liability[134](index=134&type=chunk)[135](index=135&type=chunk) [Liquidity and Capital Resources](index=31&type=section&id=Liquidity%20and%20Capital%20Resources) The company has incurred significant operating losses and negative cash flows since inception, with an accumulated deficit of $546.1 million as of July 31, 2025 - The company has incurred net losses and negative operating cash flows since inception, with an accumulated deficit of **$546.1 million** as of July 31, 2025[137](index=137&type=chunk)[142](index=142&type=chunk) | Metric | Three Months Ended July 31, 2025 (in millions) | Three Months Ended July 31, 2024 (in millions) | | :------------------------------------ | :--------------------------------------------- | :--------------------------------------------- | | Net loss | $(25.8) | $(20.3) | | Negative operating cash flows | $(26.3) | $(17.5) | | Cash and cash equivalents (as of July 31, 2025) | $201.5 | N/A | - Management believes existing cash and cash equivalents, including IPO proceeds, will be sufficient to fund operating and capital needs for at least the next 12 months, but additional funding may be required for growth[138](index=138&type=chunk)[140](index=140&type=chunk) - The company has a **$60.0 million** Term Loan 2024, with **$45.0 million** outstanding principal as of July 31, 2025. An additional **$15.0 million** draw is available through July 2026, contingent on revenue milestones[141](index=141&type=chunk)[144](index=144&type=chunk)[146](index=146&type=chunk) [Cash Flows](index=34&type=section&id=Cash%20Flows) This section provides a summary of cash flows from operating, investing, and financing activities, highlighting significant cash usage in operating and investing activities for the three months ended July 31, 2025 | Cash Flow Activity | Three Months Ended July 31, 2025 (in thousands) | Three Months Ended July 31, 2024 (in thousands) | | :------------------------------------ | :---------------------------------------------- | :---------------------------------------------- | | Net cash used in operating activities | $(26,274) | $(17,499) | | Net cash used in investing activities | $(8,232) | $(7,034) | | Net cash provided by (used in) financing activities | $(1,875) | $116,253 | | Increase (decrease) in cash, cash equivalents and restricted cash | $(36,381) | $91,720 | - Cash used in operating activities for Q1 2025 was **$26.3 million**, primarily due to net loss and decreases in operating assets and liabilities, partially offset by non-cash charges like share-based compensation and depreciation[149](index=149&type=chunk) - Cash used in investing activities for Q1 2025 was **$8.2 million**, mainly for purchases of property and equipment (medical rental equipment, computer hardware, etc.) and deposits for medical rental equipment[151](index=151&type=chunk) - Cash used in financing activities for Q1 2025 was **$1.9 million**, primarily for IPO offering costs. In Q1 2024, cash provided by financing activities was **$116.2 million**, mainly from preferred stock issuance (**$103.4 million**) and non-controlling interest investment (**$17.1 million**)[153](index=153&type=chunk)[154](index=154&type=chunk) [Off-Balance Sheet Arrangements](index=35&type=section&id=Off-Balance%20Sheet%20Arrangements) As of July 31, 2025, the company had two irrevocable standby letters of credit totaling $0.1 million related to office leases and a $0.2 million Cash Pledge Agreement for its credit card program - As of July 31, 2025, the company had **$0.1 million** in irrevocable standby letters of credit for office leases and a **$0.2 million** Cash Pledge Agreement for its credit card program[155](index=155&type=chunk) - The company does not have other off-balance sheet arrangements, including participation in transactions with unconsolidated entities or guarantees of other entities' debt[155](index=155&type=chunk) [Critical Accounting Policies and Significant Management Estimates](index=35&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Management%20Estimates) This section reiterates that the preparation of financial statements requires management to make estimates and assumptions that affect reported amounts, and actual results may differ - Financial statements require management estimates and assumptions affecting reported assets, liabilities, costs, and expenses, based on historical experience and market-specific assumptions[156](index=156&type=chunk) - Actual results could differ materially from these estimates under different assumptions or conditions[156](index=156&type=chunk) - There have been no material changes in significant accounting policies and estimates since the Annual Report[157](index=157&type=chunk) [Emerging Growth Company and Smaller Reporting Company Status](index=35&type=section&id=Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company%20Status) The company qualifies as an 'emerging growth company' and a 'smaller reporting company,' allowing it to take advantage of reduced regulatory and reporting requirements - The company is an 'emerging growth company' and a 'smaller reporting company,' which provides reduced regulatory and reporting requirements[158](index=158&type=chunk)[161](index=161&type=chunk) - Benefits include exemption from auditor attestation requirements of Sarbanes-Oxley Act Section 404(b) and reduced disclosure obligations regarding executive compensation[160](index=160&type=chunk)[161](index=161&type=chunk) - The company has elected to adopt new or revised accounting standards within the same time periods as private companies[159](index=159&type=chunk) [Recently Adopted and Issued Accounting Pronouncements](index=36&type=section&id=Recently%20Adopted%20and%20Issued%20Accounting%20Pronouncements) This section refers to Note 2 for details on recently issued accounting pronouncements, indicating that no new pronouncements were adopted during the three months ended July 31, 2025, and no material effect is expected from future adoptions - Recently issued accounting pronouncements are described in Note 2 to the unaudited interim condensed consolidated financial statements[162](index=162&type=chunk) - No new accounting pronouncements were adopted during the three months ended July 31, 2025, and no material effect is expected from future adoptions[53](index=53&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section states that there have been no material changes to the company's market risk during the three months ended July 31, 2025, and refers to the Annual Report for a detailed discussion - There have been no material changes to the company's market risk during the three months ended July 31, 2025[163](index=163&type=chunk) - For a detailed discussion of market risk, refer to Part II, Item 7A of the Annual Report[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were not effective as of July 31, 2025, due to material weaknesses in internal control over financial reporting - Management concluded that disclosure controls and procedures were not effective as of July 31, 2025, due to material weaknesses in internal control over financial reporting[164](index=164&type=chunk) - Material weaknesses include: (1) ineffective control environment due to insufficient resources in accounting, finance, and IT; (2) inadequate controls for proper presentation and classification of non-routine/complex transactions; (3) lack of effective controls to ensure independent review of manual journal entries and account reconciliations; and (4) ineffective IT general controls (program change management, user access, computer operations, program development)[166](index=166&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[170](index=170&type=chunk) - Remediation plans are ongoing and include hiring additional personnel (financial planning, accounting, IT), engaging third parties for technical accounting and control implementation, designing controls for complex transactions, and enhancing IT governance processes[172](index=172&type=chunk) - The material weaknesses will not be considered remediated until controls are designed, implemented, and tested as effective over a sufficient period[174](index=174&type=chunk) [PART II. OTHER INFORMATION](index=39&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, other information, and a list of exhibits [Item 1. Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) The company is occasionally involved in various lawsuits and claims arising in the ordinary course of business but does not anticipate any material adverse effect on its results of operations, financial position, or cash flows from these proceedings - The company is a party to various lawsuits, claims, and legal proceedings in the ordinary course of business[179](index=179&type=chunk) - The company does not expect any pending legal proceedings to have a material adverse effect on its results of operations, financial position, or cash flows[179](index=179&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Investing in the company's common shares involves a high degree of risk, with no material changes to previously disclosed risk factors, though additional unknown risks may emerge - Investing in the company's common shares involves a high degree of risk[180](index=180&type=chunk) - There have been no material changes to the risk factors previously disclosed in the company's Annual Report[180](index=180&type=chunk) - Additional risk factors not presently known or currently deemed immaterial may also impair the business or results of operations[180](index=180&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=39&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities or use of proceeds to report for the period - No unregistered sales of equity securities or use of proceeds to report[181](index=181&type=chunk) [Item 3. Defaults Upon Senior Securities](index=39&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section indicates that there were no defaults upon senior securities to report - No defaults upon senior securities to report[182](index=182&type=chunk) [Item 4. Mine Safety Disclosures](index=39&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - This item is not applicable[183](index=183&type=chunk) [Item 5. Other Information](index=39&type=section&id=Item%205.%20Other%20Information) During the three months ended July 31, 2025, none of the company's directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - During the three months ended July 31, 2025, no directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement[184](index=184&type=chunk) [Item 6. Exhibits](index=40&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include the Certificate of Incorporation, Memorandum of Association, Amended and Restated Bye-laws, Certificate of Deposit of Memorandum of Increase of Share Capital, certifications of principal executive and financial officers, and Inline XBRL documents[186](index=186&type=chunk) [Signatures](index=41&type=section&id=SIGNATURES) This section contains the official signatures of the company's principal executive and financial officers, certifying the Quarterly Report [Report Signatures](index=41&type=section&id=Report%20Signatures) The Quarterly Report is duly signed on behalf of Kestra Medical Technologies, Ltd. by Brian Webster, President and Chief Executive Officer, and Vaseem Mahboob, Chief Financial Officer, on September 12, 2025 - The report is signed by Brian Webster, President and Chief Executive Officer, and Vaseem Mahboob, Chief Financial Officer, on September 12, 2025[191](index=191&type=chunk)

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $19.4 million, representing a 52% increase year-over-year [17] - Gross margin improved to 45.7% from 32.9% in the prior year period, marking seven consecutive quarters of gross margin expansion [17][19] - Cost per fit decreased approximately 20% compared to the prior year, while adjusted revenue per fit increased approximately 20% [17] Business Line Data and Key Metrics Changes - The company accepted over 4,200 prescriptions for the ASSURE system, an increase of 51% year-over-year [8] - The conversion rate improved to approximately 47% from an adjusted 40% in the prior year period, driven by enhancements in prescription fill rate, bill rate, and collections performance [18] Market Data and Key Metrics Changes - The in-network patient mix increased from approximately 70% at the time of the IPO to nearly 80% [10][21] - The company is targeting geographies with high volumes of wearable cardioverter defibrillator (WCD) prescriptions and strong in-network payer coverage [9] Company Strategy and Development Direction - The company aims to achieve 70%+ gross margins in the coming years, supported by its rental model and increasing in-network patient mix [9][18] - The strategy includes expanding the sales organization, improving revenue cycle management, and building clinical evidence for the ASSURE system [10][12][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued revenue growth and gross margin expansion, citing strong performance in the first quarter [21] - The company anticipates steady increases in gross margins as it benefits from volume and depreciation leverage [18] Other Important Information - The company has a cash balance of $201.2 million as of July 31, 2025, which is expected to be sufficient to reach cash flow breakeven and profitability [21] - The company expects fiscal year 2026 revenue of $88 million, a 47% increase compared to fiscal year 2025 [21] Q&A Session Summary Question: What is driving the confidence to raise guidance? - Management noted a strong Q1 performance and expressed optimism about the rest of the year, indicating comfort with the updated guidance [25] Question: What is being done to improve the in-network mix? - Management highlighted efforts to engage more payers and expand sales territories in areas with known WCD demand [28] Question: What is the current status of payer additions? - Management described the process as non-linear, with a gradual increase in coverage expected as new regional payers are added [33] Question: What is the expected increase in the conversion rate? - Management anticipates a 2.5 to 3-point increase in the conversion rate, driven by improvements in in-network patient mix and territory manager deployment [55] Question: What is the current market share? - Management estimated the current market share at approximately 12%, with plans to increase territory coverage to enhance market presence [58] Question: What is the role of the expanded clinical specialist? - The expanded role will allow sales representatives to focus on new accounts while clinical specialists manage existing accounts [65] Question: What are the details of the post-approval study? - The study includes 24,000 to 25,000 patients, focusing on endpoints such as shock success rate and patient compliance, with results expected to strengthen the company's clinical data position [70][72] Question: How are compliance rates evolving? - Management reported a median daily wear time of over 23 hours, indicating strong patient compliance with the ASSURE system [76] Question: What is the pace of OpEx investments? - Management indicated a steady and measured approach to OpEx investments, focusing on high-quality hires and support for new territory managers [80]

Financial Data and Key Metrics Changes - Total revenue for the first quarter was $19.4 million, representing a 52% increase year over year [18] - Gross margin improved to 45.7% from 32.9% in the prior year period, marking seven consecutive quarters of gross margin expansion [18][9] - Cost per fit decreased approximately 20% compared to the prior year, while adjusted revenue per fit increased approximately 20% [18] Business Line Data and Key Metrics Changes - The company accepted over 4,200 prescriptions for the Assure system, an increase of 51% year over year [8] - The conversion rate improved to approximately 47% from an adjusted 40% in the prior year period [19] Market Data and Key Metrics Changes - The in-network patient mix increased from approximately 70% at the time of the IPO to nearly 80% [10][22] - The company estimates its current market share to be around 12% [61] Company Strategy and Development Direction - The company is focused on expanding its sales organization to penetrate existing accounts and target new prescribers [9] - A new commercial strategy includes an expanded clinical specialist role to complement sales territory managers [10][66] - The company aims to build clinical evidence supporting the Assure system, with a significant study expected to be presented at the American Heart Association Scientific Sessions [14][73] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over 70% gross margins in the coming years due to the attractive unit economics of the rental model [18][19] - The company anticipates steady revenue growth driven by increased prescriptions and improved revenue cycle management capabilities [22][20] Other Important Information - Cash and cash equivalents totaled $201.2 million as of July 31, 2025, expected to be sufficient for reaching cash flow breakeven [22] - The company raised its fiscal year 2026 revenue guidance to $88 million, a 47% increase compared to fiscal year 2025 [22] Q&A Session Summary Question: What is driving the confidence to raise guidance? - Management noted a strong Q1 performance and expressed optimism for the rest of the year, indicating comfort with the updated guidance [26] Question: What is being done to improve the in-network mix? - Management highlighted efforts to engage more payers and expand sales territories in high-demand areas, expecting gradual increases in the in-network mix [28][29] Question: What is the expected increase in the conversion rate? - Management indicated a target increase of about 2.5 to 3 points in the conversion rate, driven by improvements in in-network patient mix and sales strategies [56] Question: What is the current market share and how long to achieve category leadership? - Management estimated current market share at around 12% and emphasized the importance of expanding sales coverage to achieve category leadership [61] Question: What does the expanded clinical specialist role entail? - The expanded role will allow sales representatives to focus on acquiring new accounts while clinical specialists manage existing accounts, starting in high-performing territories [66] Question: What are the key endpoints of the FDA post-approval study? - The study includes endpoints such as shock success rate and patient compliance, with results expected to significantly enhance the company's clinical data credibility [71][73] Question: How are compliance rates evolving? - Management reported a median daily wear time of over 23 hours, indicating strong patient compliance with the Assure system [78] Question: What is the pace of OpEx investments for the year? - Management indicated a steady and measured approach to OpEx investments, focusing on high-quality hires and supporting new territory managers [80]

Financial Data and Key Metrics Changes - Total revenue for Q1 2026 was $19.4 million, representing a 52% increase year over year [17] - Gross margin improved to 45.7% from 32.9% in the prior year period, marking seven consecutive quarters of gross margin expansion [8][17] - Cost per fit decreased approximately 20% compared to the prior year, while adjusted revenue per fit increased approximately 20% [17] Business Line Data and Key Metrics Changes - The company accepted over 4,200 prescriptions for the Assure system, an increase of 51% year over year [8] - The conversion rate improved to approximately 47% from an adjusted 40% in the prior year period, driven by enhancements in prescription fill rate, bill rate, and collections performance [18] Market Data and Key Metrics Changes - The in-network patient mix increased from approximately 70% at the time of the IPO to nearly 80% [10][20] - The company is targeting a gradual increase in the in-network mix as it engages with more payers, which is expected to positively impact revenue per fitting [28] Company Strategy and Development Direction - The company is focused on expanding its sales organization to penetrate existing accounts and attract new prescribers, particularly in regions with high WCD prescription volumes [9] - A new commercial strategy includes an expanded clinical specialist role to support sales territory managers, aimed at enhancing account penetration [10][64] - The company aims to build clinical evidence supporting the Assure system, with a significant milestone achieved in the FDA post-approval study, expected to be the largest study published in the WCD category [12][70] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving over 70% gross margins in the coming years, supported by the rental model's volume and depreciation leverage [18] - The company anticipates steady revenue growth and improvements in profitability as it continues to enhance its revenue cycle management processes [19][21] - Management highlighted the ongoing need for WCD therapy, noting that only 14% of eligible U.S. patients currently receive it, indicating significant market expansion potential [13][15] Other Important Information - Cash and cash equivalents totaled $201.2 million as of July 31, 2025, with expectations that this will be sufficient to reach cash flow breakeven and profitability [20] - The company raised its fiscal year 2026 revenue guidance to $88 million, reflecting a 47% increase compared to fiscal year 2025 [20][21] Q&A Session Summary Question: What is driving the confidence to raise guidance? - Management noted a strong Q1 performance and expressed optimism about the rest of the year, indicating that it is still early in the fiscal year [25] Question: What is being done to improve the in-network mix? - The company is gradually increasing the in-network mix by engaging more payers, with a focus on territories with known WCD demand and good payer coverage [28] Question: What is the current status of payer additions? - Management described the process as a "sawtooth curve," indicating that payer additions will not be linear but will continue to increase over time [32] Question: What is the expected increase in conversion rate for the year? - Guidance reflects a 2.5 to 3-point increase in the conversion rate, with ongoing improvements expected as the commercial team expands [53] Question: What is the size and focus of the FDA post-approval study? - The study includes approximately 24,000 to 25,000 patients, focusing on endpoints such as shock success rate and patient compliance, which will provide significant clinical data [68][70]

Revenue Performance - Revenue for Q1 FY26 was $19.4 million, representing a 52% increase compared to the prior year period[7] - The company increased its FY26 revenue guidance to $88 million, reflecting a growth of 47% compared to FY25[5] - A total of 4,205 prescriptions were written for the ASSURE® system, marking a 51% increase year-over-year[7] Profitability and Loss - GAAP net loss for Q1 FY26 was $25.8 million, compared to a net loss of $20.3 million in the prior year period[7] - Adjusted EBITDA loss was $19.4 million in Q1 FY26, compared to a loss of $15.7 million in the prior year period[7] Gross Margin - Gross margin expanded to 45.7% in Q1 FY26, up from 32.9% in the prior year period[7] Cash Position - Cash and cash equivalents totaled $201.2 million as of July 31, 2025[7] Operating Expenses - Operating expenses for Q1 FY26 were $37.7 million, including $2.9 million of non-recurring costs related to being a new public company[7] - The increase in operating expenses was attributed to growth in expenses related to commercial and revenue cycle resources[7] Growth Drivers - The company experienced revenue growth driven by higher market share with existing customers and activation of new accounts[7]

Core Insights - Kestra Medical Technologies, Ltd. reported a strong start to fiscal 2026 with revenue growth exceeding 50% in the first quarter [2] - The company is focused on expanding its market share in the wearable defibrillator market while enhancing operational capabilities [2] Financial Highlights - Total revenue for Q1 FY26 was $19.4 million, marking a 52% increase compared to the same period last year [8][9] - Gross margin improved to 45.7% in Q1 FY26 from 32.9% in the prior year period [8][9] - The company has increased its FY26 revenue guidance to $88 million, representing a 47% growth compared to FY25 [5][8] Operational Performance - 4,205 prescriptions were written for the ASSURE® system, reflecting a 51% increase year-over-year [9] - Revenue growth was attributed to higher market share with existing customers and the activation of new accounts [9] - Cash and cash equivalents stood at $201.2 million as of July 31, 2025 [9] Expenses and Losses - GAAP operating expenses were $37.7 million, which included $2.9 million of non-recurring costs related to being a new public company [9] - The GAAP net loss for Q1 FY26 was $25.8 million, compared to a net loss of $20.3 million in the prior year [9][14] - Adjusted EBITDA loss was $19.4 million, an increase from a loss of $15.7 million in the prior year [9][16]

Core Viewpoint - Kestra Medical Technologies, Ltd. is set to report its first quarter fiscal 2026 financial results on September 11, 2025, with a conference call scheduled for 4:30 p.m. Eastern Time [1]. Company Overview - Kestra Medical Technologies, Ltd. is a commercial-stage company specializing in wearable medical devices and digital healthcare, aiming to improve patient outcomes in cardiovascular disease through innovative monitoring and therapeutic technologies [3]. - The company's technologies are designed to be intuitive, intelligent, and connected, reflecting its commitment to transforming healthcare delivery [3]. Investor Relations - A live and archived webcast of the upcoming conference call will be accessible in the "Events" section of the investor relations website, with participants encouraged to register at least 10 minutes before the call [2].

[PART I](index=9&type=section&id=PART%20I) [Item 1. Business](index=9&type=section&id=Item%201.%20Business.) Kestra Medical Technologies, Ltd. is a medical device company focused on cardiovascular disease, offering the ASSURE WCD - Kestra Medical Technologies, Ltd. completed its initial public offering (IPO) on March 7, 2025, and its Common Shares began trading on the Nasdaq Global Select Market on March 6, 2025[4](index=4&type=chunk)[8](index=8&type=chunk)[432](index=432&type=chunk) - The company's core product, the ASSURE WCD, received FDA approval in July 2021 and was fully commercially launched in August 2022, having been worn by over **20,000 patients** since launch[25](index=25&type=chunk)[29](index=29&type=chunk)[54](index=54&type=chunk) Key Financial Highlights (Fiscal Year Ended April 30) | Metric | FY2025 (Millions) | FY2024 (Millions) | YoY Change (%) | | :----------------------- | :---------------- | :---------------- | :------------- | | Revenue | $59.8 | $27.8 | 115% | | Net Loss | $(113.8) | $(94.1) | 21% | | Gross Profit | $24.2 | $0.4 | NM | - The U.S. annual addressable market for WCD therapy is estimated at approximately **$10 billion** as of 2024, with an international market opportunity of approximately **$14 billion**, indicating significant underpenetration (only **14% of eligible U.S. patients** in 2023)[30](index=30&type=chunk)[36](index=36&type=chunk)[43](index=43&type=chunk) - The ASSURE WCD differentiates itself from competitors by offering gender-specific garments, cushioned electrodes for improved ECG signal quality, four channels of high-quality ECG with Adaptive Patient Intelligence (API) to minimize false alarms (**6% false alarm rate** vs. **46% for competitor's device**), and a higher energy shock (**170 joules** vs. **150 joules**)[30](index=30&type=chunk)[31](index=31&type=chunk)[37](index=37&type=chunk) [Overview](index=9&type=section&id=Overview) This section provides an overview of Kestra Medical Technologies, Ltd. and its business operations [Our Success Factors](index=13&type=section&id=Our%20Success%20Factors) The company's success is driven by its innovative WCD technology, patient-centric design, and strategic market penetration [Our Growth Strategies](index=16&type=section&id=Our%20Growth%20Strategies) Kestra focuses on expanding market reach, enhancing product features, and optimizing reimbursement processes to drive future growth [Market Overview](index=18&type=section&id=Market%20Overview) This section describes the wearable cardioverter defibrillator market, including patient demographics and unmet needs [WCD Therapy for Patients at Elevated Risk of SCA](index=20&type=section&id=WCD%20Therapy%20for%20Patients%20at%20Elevated%20Risk%20of%20SCA) WCD therapy provides a critical bridge to permanent implantable defibrillators for patients at high risk of sudden cardiac arrest [Limitations of the Legacy, Commercially Available WCD](index=22&type=section&id=Limitations%20of%20the%20Legacy%2C%20Commercially%20Available%20WCD) Existing WCD devices face limitations in patient comfort, false alarm rates, and overall user experience [Our Solution](index=23&type=section&id=Our%20Solution) Kestra's ASSURE WCD offers an advanced solution addressing the limitations of legacy devices through enhanced design and technology [Treatment with the ASSURE WCD](index=27&type=section&id=Treatment%20with%20the%20ASSURE%20WCD) This section details the clinical application and patient experience with the ASSURE WCD [Our Clinical Results and Studies](index=27&type=section&id=Our%20Clinical%20Results%20and%20Studies) Clinical data demonstrates the effectiveness and safety profile of the ASSURE WCD in preventing sudden cardiac arrest [Sales and Marketing](index=31&type=section&id=Sales%20and%20Marketing) The company employs a targeted sales and marketing strategy to drive adoption among healthcare providers and patients [Third Party Coverage, Reimbursement and Payor Relations](index=32&type=section&id=Third%20Party%20Coverage%2C%20Reimbursement%20and%20Payor%20Relations) Ensuring broad third-party coverage and favorable reimbursement policies is crucial for commercial success [Research & Development](index=33&type=section&id=Research%20%26%20Development) Ongoing research and development efforts focus on product innovation and expanding the Cardiac Recovery System platform [Manufacturing and Supply](index=33&type=section&id=Manufacturing%20and%20Supply) The company manages its manufacturing and supply chain to ensure product availability and quality [Competition](index=34&type=section&id=Competition) Kestra operates in a competitive market, facing established players and new entrants in the WCD and cardiovascular device space [Intellectual Property](index=36&type=section&id=Intellectual%20Property) The company protects its innovations through a portfolio of patents and other intellectual property rights [Government Regulation](index=36&type=section&id=Government%20Regulation) Kestra's products are subject to extensive government regulation, including FDA approvals and compliance requirements [Executive Officers of the Company](index=50&type=section&id=Executive%20Officers%20of%20the%20Company) This section lists the key executive officers responsible for the company's strategic direction and operations [Team Members and Human Capital Resources](index=51&type=section&id=Team%20Members%20and%20Human%20Capital%20Resources) The company's human capital strategy focuses on attracting, developing, and retaining a skilled workforce [Corporate Information](index=51&type=section&id=Corporate%20Information) This section provides general corporate information about Kestra Medical Technologies, Ltd [Item 1A. Risk Factors](index=52&type=section&id=Item%201A.%20Risk%20Factors.) The company faces risks including limited operating history, net losses, product dependence, and operational, regulatory, and market challenges - The company has a limited operating history, having fully commercially launched its ASSURE WCD in August 2022, making it difficult to evaluate future success and viability[188](index=188&type=chunk) Net Losses and Accumulated Deficit (Fiscal Year Ended April 30) | Metric | FY2025 (Millions) | FY2024 (Millions) | | :----------------- | :---------------- | :---------------- | | Net Losses | $(113.8) | $(94.1) | | Accumulated Deficit| $(520.2) | $(406.4) | - The company is highly dependent on the lease of its ASSURE WCD for revenue, and its commercial success relies on healthcare providers, hospitals, and patients adopting its solutions, which can be hindered by competition and reluctance to change existing practices[195](index=195&type=chunk)[198](index=198&type=chunk) - Material weaknesses in internal control over financial reporting have been identified, including insufficient accounting resources and control deficiencies over financial statement presentation and IT general controls, which are currently undergoing remediation[281](index=281&type=chunk)[283](index=283&type=chunk)[284](index=284&type=chunk)[524](index=524&type=chunk)[525](index=525&type=chunk)[528](index=528&type=chunk)[529](index=529&type=chunk) - Bain Capital beneficially owns approximately **52.6% of common shares** and controls approximately **48.6% of voting power**, giving it significant influence over corporate decisions, which may conflict with other shareholders' interests[384](index=384&type=chunk) [Risks Related to Our Business](index=52&type=section&id=Risks%20Related%20to%20Our%20Business) The company faces business risks including limited operating history, reliance on a single product, and challenges in market adoption and reimbursement [Risks Related to Our Intellectual Property](index=91&type=section&id=Risks%20Related%20to%20Our%20Intellectual%20Property) The company's intellectual property is subject to risks such as infringement, challenges to validity, and the inability to protect proprietary rights [Risks Related to Government Regulation](index=104&type=section&id=Risks%20Related%20to%20Government%20Regulation) Compliance with extensive and evolving government regulations, including FDA requirements, poses significant risks to the company's operations and product commercialization [Risks Related to Ownership of Our Common Shares](index=117&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Shares) Ownership of common shares involves risks related to market volatility, lack of dividends, and the influence of significant shareholders [General Risk Factors](index=126&type=section&id=General%20Risk%20Factors) This section outlines general risks that could adversely affect the company's business, financial condition, and operating results [Item 1B. Unresolved Staff Comments](index=127&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments.) The company has no unresolved staff comments to report [Item 1C. Cybersecurity](index=127&type=section&id=Item%201C.%20Cybersecurity.) Kestra maintains a robust cybersecurity risk management program aligned with NIST CSF and ISO 27001, overseen by the Audit Committee, with no material incidents reported - The company's cybersecurity risk management program is aligned with NIST Cybersecurity Framework (NIST CSF) and ISO 27001, covering data breaches, phishing, ransomware, insider threats, and third-party risks[415](index=415&type=chunk)[416](index=416&type=chunk) - All Kestra team members receive mandatory quarterly security awareness training, including phishing tests, and annual HIPAA Covered Entity training[418](index=418&type=chunk)[421](index=421&type=chunk) - The Audit Committee of the Board of Directors oversees the cybersecurity program, receiving regular briefings from the CIO, who has over **12 years of experience** in information security[424](index=424&type=chunk)[426](index=426&type=chunk) - As of the date of this Annual Report, the Company has not experienced any material cybersecurity incidents[422](index=422&type=chunk) [Item 2. Properties](index=129&type=section&id=Item%202.%20Properties.) Kestra Medical Technologies operates from leased facilities, including its Kirkland, WA headquarters and administrative offices, with plans for expansion - All company operations are conducted at leased facilities, including two in Kirkland, WA, and one in Dublin, Ireland[427](index=427&type=chunk)[428](index=428&type=chunk) Leased Facilities Overview | Location | Size (sq ft) | Purpose | Lease Expiry | | :----------------------- | :----------- | :------------------------------------ | :----------- | | 3933 Lake Washington Blvd, Kirkland, WA | 16,700 | R&D, General Admin, Corporate HQ | April 30, 2029 | | 10210 Points Dr NE, Kirkland, WA | 18,500 | General Admin | April 30, 2029 | | 28 Fitzwilliam Place, Dublin 2, Ireland | 300 | General Admin | July 31, 2025 | [Item 3. Legal Proceedings](index=131&type=section&id=Item%203.%20Legal%20Proceedings.) The company is occasionally involved in ordinary course legal proceedings, but does not anticipate material adverse effects on its financial position - The Company is from time to time a party to various lawsuits, claims and other legal proceedings that arise in the ordinary course of business[429](index=429&type=chunk) - The Company does not expect any of its pending legal proceedings to have a material adverse effect on its results of operations, financial position or cash flows[429](index=429&type=chunk) [Item 4. Mine Safety Disclosures](index=131&type=section&id=Item%204.%20Mine%20Safety%20Disclosures.) This item is not applicable to the company [PART II](index=132&type=section&id=PART%20II) [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=132&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Kestra Medical Technologies' common shares began trading on Nasdaq in March 2025 post-IPO, with no immediate dividend plans, and proceeds used for growth - Kestra Medical Technologies' common shares began trading on the Nasdaq Global Select Market under the symbol 'KMTS' on March 6, 2025[432](index=432&type=chunk) - As of July 16, 2025, there were **361 registered holders** of record for the company's common shares[433](index=433&type=chunk) - The company has never declared or paid cash dividends and does not expect to do so in the foreseeable future, prioritizing reinvestment of earnings into business operations and growth[434](index=434&type=chunk)[125](index=125&type=chunk) IPO Proceeds (March 2025) | Item | Amount (Millions) | | :--------------------------------- | :---------------- | | Shares Issued and Sold | 13,664,704 | | Public Offering Price per Share | $17.00 | | Gross Proceeds | $232.3 | | Underwriting Discounts & Commissions | $16.5 | | Net Proceeds | $215.8 | [Item 6. [Reserved]](index=132&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=133&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section reviews Kestra's financial performance, highlighting rapid revenue growth, continued net losses, and significantly boosted liquidity from its recent IPO - The company is a commercial-stage medical device and digital healthcare company focused on cardiovascular disease, with its Cardiac Recovery System platform centered around the ASSURE WCD[440](index=440&type=chunk) Financial Performance Summary (Fiscal Year Ended April 30) | Metric | FY2025 (Millions) | FY2024 (Millions) | YoY Change (%) | | :----------------- | :---------------- | :---------------- | :------------- | | Revenue | $59.8 | $27.8 | 115% | | Gross Profit | $24.2 | $0.4 | NM | | Net Loss | $(113.8) | $(94.1) | 21% | | Cash & Equivalents | $237.6 | $8.2 | 2797.6% | | Accumulated Deficit| $(520.2) | $(406.4) | 28% | - Revenue growth was primarily driven by an **88% increase** in the number of patients using the product and a **15% increase** in reimbursement realization due to additional payor contracts and enhanced collection efforts[462](index=462&type=chunk) - Gross profit significantly increased due to revenue growth and a **47% decrease** in cost of revenues per patient, resulting from improved medical equipment utilization and manufacturing cost reduction programs[464](index=464&type=chunk) - The company's liquidity was significantly boosted by **$215.8 million** in net proceeds from its IPO in March 2025, which, along with existing cash and revenue, is expected to fund operations for at least the next **12 months**[446](index=446&type=chunk)[447](index=447&type=chunk)[472](index=472&type=chunk) [Overview](index=133&type=section&id=Overview) This section provides an overview of the company's financial condition and results of operations [Key Factors Affecting Our Results of Operations and Performance](index=134&type=section&id=Key%20Factors%20Affecting%20Our%20Results%20of%20Operations%20and%20Performance) Key factors influencing financial results include patient adoption, reimbursement rates, and operational efficiency [Key Components of Our Results of Operations](index=134&type=section&id=Key%20Components%20of%20Our%20Results%20of%20Operations) This section details the primary components of revenue, cost of revenue, and operating expenses [Results of Operations](index=136&type=section&id=Results%20of%20Operations) This section provides a detailed analysis of the company's financial performance for the reported periods [Liquidity and Capital Resources](index=139&type=section&id=Liquidity%20and%20Capital%20Resources) The company's liquidity and capital resources are discussed, including cash position, debt, and funding strategies [Off-Balance Sheet Arrangements](index=144&type=section&id=Off-Balance%20Sheet%20Arrangements) This section discloses any off-balance sheet arrangements that could have a material effect on the company's financial condition [Critical Accounting Policies and Significant Management Estimates](index=144&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Management%20Estimates) This section outlines the critical accounting policies and significant management estimates used in financial reporting [Emerging Growth Company and Smaller Reporting Company Status](index=147&type=section&id=Emerging%20Growth%20Company%20and%20Smaller%20Reporting%20Company%20Status) The company's status as an emerging growth and smaller reporting company impacts its regulatory compliance and disclosure requirements [Recently Adopted and Issued Accounting Pronouncements](index=148&type=section&id=Recently%20Adopted%20and%20Issued%20Accounting%20Pronouncements) This section details the impact of recently adopted and issued accounting pronouncements on the company's financial statements [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=148&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk.) Kestra Medical Technologies faces market risks from interest rates, credit concentrations, and inflation, though current impacts are not significant - The company's exposure to interest rate risk from cash deposits and the Term Loan is not significant, with a hypothetical **10% change** in rates having no material impact on financial statements[515](index=515&type=chunk)[516](index=516&type=chunk) Cash, Cash Equivalents and Restricted Cash Balances (Fiscal Year Ended April 30) | Metric | FY2025 (Millions) | FY2024 (Millions) | | :----------------------------------- | :---------------- | :---------------- | | Cash, Cash Equivalents & Restricted Cash | $237.9 | $8.6 | | Uninsured Balances (Cayman Islands) | $0.3 | $0.3 | - The effects of inflation on the company's results of operations and financial condition have been immaterial to date, but future inflation could have an adverse impact[519](index=519&type=chunk) [Item 8. Financial Statements and Supplementary Data](index=150&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data.) The consolidated financial statements and supplementary data are filed as part of this Annual Report - The consolidated financial statements and notes are included in this Annual Report starting on page F-1[520](index=520&type=chunk) [Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=150&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure.) There have been no changes in or disagreements with accountants on accounting and financial disclosure [Item 9A. Controls and Procedures](index=150&type=section&id=Item%209A.%20Controls%20and%20Procedures.) Management concluded disclosure controls were ineffective as of April 30, 2025, due to material weaknesses in internal control over financial reporting, with ongoing remediation - Management concluded that the company's disclosure controls and procedures were not effective as of April 30, 2025, due to material weaknesses in internal control over financial reporting[522](index=522&type=chunk) - Identified material weaknesses include an ineffective control environment (lack of sufficient accounting, finance, and IT resources), ineffective controls for non-routine/complex transactions, inadequate segregation of duties for manual journal entries, and deficiencies in IT general controls[524](index=524&type=chunk)[525](index=525&type=chunk)[526](index=526&type=chunk)[528](index=528&type=chunk)[529](index=529&type=chunk) - Remediation plans are ongoing and include hiring additional qualified personnel, engaging third parties for technical accounting and control design, and enhancing IT governance processes, with full remediation anticipated beyond fiscal year 2025[530](index=530&type=chunk)[531](index=531&type=chunk)[532](index=532&type=chunk) [Item 9B. Other Information](index=152&type=section&id=Item%209B.%20Other%20Information.) No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during FY2025 - No directors or officers adopted, modified, or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during the fiscal year ended April 30, 2025[536](index=536&type=chunk) [Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=152&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections.) There are no disclosures regarding foreign jurisdictions that prevent inspections [PART III](index=154&type=section&id=PART%20III) [Item 10. Directors, Executive Officers and Corporate Governance](index=154&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance.) Information on directors, executive officers, and corporate governance is incorporated by reference from the 2025 Proxy Statement - Information on directors, executive officers, and corporate governance is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[539](index=539&type=chunk) - The company has adopted a Code of Business Conduct and Ethics applicable to all directors, officers, and employees, and insider trading policies to ensure compliance with relevant laws and regulations[540](index=540&type=chunk)[542](index=542&type=chunk) [Item 11. Executive Compensation](index=154&type=section&id=Item%2011.%20Executive%20Compensation.) Executive compensation information is incorporated by reference from the 2025 Proxy Statement - Information on executive compensation is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[543](index=543&type=chunk) [Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=154&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters.) Security ownership information for beneficial owners and management is incorporated by reference from the 2025 Proxy Statement - Information on security ownership of certain beneficial owners and management is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[544](index=544&type=chunk) [Item 13. Certain Relationships and Related Transactions, and Director Independence](index=154&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence.) Information on related transactions and director independence is incorporated by reference from the 2025 Proxy Statement - Information on certain relationships and related transactions, and director independence, is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[545](index=545&type=chunk) [Item 14. Principal Accounting Fees and Services](index=154&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services.) Principal accounting fees and services information is incorporated by reference from the 2025 Proxy Statement - Information on principal accounting fees and services is incorporated by reference from the definitive Proxy Statement for the 2025 Annual Meeting of Shareholders[546](index=546&type=chunk) [PART IV](index=155&type=section&id=PART%20IV) [Item 15. Exhibits, Financial Statement Schedules](index=155&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules.) This section lists financial statements, schedules, and various exhibits filed as part of the Annual Report - The Annual Report includes financial statements, schedules, and a comprehensive list of exhibits[549](index=549&type=chunk)[551](index=551&type=chunk) - Exhibits include corporate governance documents (Certificate of Incorporation, Bye-laws), financial agreements (Warrants, Credit Agreement), compensation plans (Omnibus Incentive Plan, Employment Agreements), and regulatory certifications (SOX 302/906)[553](index=553&type=chunk)[555](index=555&type=chunk) [Item 16. Form 10-K Summary](index=155&type=section&id=Item%2016.%20Form%2010-K%20Summary.) This item indicates that no Form 10-K Summary is provided [Financial Statements](index=160&type=section&id=Financial%20Statements) [Report of Independent Registered Public Accounting Firm](index=161&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) PricewaterhouseCoopers LLP issued an unqualified opinion on Kestra's consolidated financial statements, noting a history of negative operating cash flows and losses - PricewaterhouseCoopers LLP provided an unqualified opinion on the consolidated financial statements for FY225 and FY2024, affirming fair presentation in accordance with US GAAP[565](index=565&type=chunk) - The report highlights the company's history of negative operating cash flows and significant losses from operations since its inception[569](index=569&type=chunk) [Consolidated Balance Sheets](index=162&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets show a significant increase in total assets and a shift to positive shareholders' equity in FY2025, driven by the IPO Consolidated Balance Sheet Highlights (in thousands) | Metric | April 30, 2025 | April 30, 2024 | | :------------------------- | :------------- | :------------- | | Total Assets | $295,744 | $45,949 | | Cash and cash equivalents | $237,595 | $8,249 | | Total Liabilities | $90,338 | $78,216 | | Redeemable Preferred Stock | $0 | $177,110 | | Total Shareholders' Equity (Deficit) | $205,406 | $(209,377) | - Cash and cash equivalents increased significantly from **$8.2 million** in FY2024 to **$237.6 million** in FY2025, largely due to IPO proceeds[573](index=573&type=chunk) - Shareholders' equity transitioned from a deficit of **$209.4 million** in FY2024 to a positive **$205.4 million** in FY2025, reflecting the impact of the IPO and capital contributions[573](index=573&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=163&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) The consolidated statements show substantial revenue growth and improved gross profit in FY2025, but also increased operating expenses leading to a higher net loss Consolidated Statements of Operations Highlights (in thousands) | Metric | Year Ended April 30, 2025 | Year Ended April 30, 2024 | YoY Change (%) | | :--------------------------------------- | :------------------------ | :------------------------ | :------------- | | Revenue | $59,815 | $27,814 | 115% | | Cost of revenue | $35,605 | $27,452 | 30% | | Gross profit | $24,210 | $362 | NM | | Research and development | $15,652 | $15,490 | 1% | | Selling, general and administrative | $114,936 | $69,935 | 64% | | Total operating expenses | $130,588 | $85,425 | 53% | | Loss from operations | $(106,378) | $(85,063) | 25% | | Net loss and comprehensive loss | $(113,814) | $(94,120) | 21% | | Net loss per share (basic and diluted) | $(5.13) | $(5.07) | 1.2% | - Revenue increased by **$32.0 million (115%)** in FY2025, driven by increased patient usage and higher reimbursement realization[462](index=462&type=chunk)[574](index=574&type=chunk) - Gross profit saw a substantial increase of **$23.8 million**, reaching **$24.2 million** in FY2025, primarily due to revenue growth and a **47% decrease** in cost of revenues per patient[464](index=464&type=chunk)[574](index=574&type=chunk) - Selling, general and administrative expenses increased by **$45.0 million (64%)** in FY2025, mainly due to higher personnel expenses and professional services related to the IPO[466](index=466&type=chunk)[574](index=574&type=chunk) [Consolidated Statements of Changes in Redeemable Preferred Stock and Shareholders' Equity (Deficit)](index=164&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Redeemable%20Preferred%20Stock%20and%20Shareholders%27%20Equity%20%28Deficit%29) The consolidated statements reflect a significant capital structure transformation, with preferred stock conversion and IPO proceeds boosting equity despite ongoing net losses - Redeemable preferred stock, which stood at **$177.1 million** in FY2024, was fully converted into Common Shares in connection with the IPO in FY2025[578](index=578&type=chunk)[691](index=691&type=chunk) - The IPO resulted in the issuance of **13,664,704 common shares**, contributing significantly to additional paid-in capital[579](index=579&type=chunk) - Total shareholders' equity shifted from a deficit of **$(209.4) million** in FY2024 to a positive **$205.4 million** in FY2025, primarily due to the IPO proceeds and capital contributions, despite a net loss of **$(113.8) million** in FY2025[578](index=578&type=chunk)[580](index=580&type=chunk) - Share-based compensation expense recognized was **$24.3 million** in FY2025, a significant increase from **$1.5 million** in FY2024, partly due to the acceleration of vesting for Incentive Units during the IPO[579](index=579&type=chunk)[699](index=699&type=chunk)[706](index=706&type=chunk) [Consolidated Statements of Cash Flows](index=167&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements show continued negative operating cash flow, offset by a surge in financing activities from IPO proceeds, leading to a substantial cash increase Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Year Ended April 30, 2025 | Year Ended April 30, 2024 | | :--------------------------------- | :------------------------ | :------------------------ | | Net cash used in operating activities | $(77,608) | $(72,235) | | Net cash used in investing activities | $(23,308) | $(12,229) | | Net cash provided by financing activities | $330,262 | $77,725 | | Net increase (decrease) in cash, cash equivalents and restricted cash | $229,346 | $(6,739) | | Cash, cash equivalents and restricted cash (End of period) | $237,929 | $8,583 | - Cash used in operating activities increased by **$5.4 million (7.4%)** in FY2025, primarily due to the net loss and changes in operating assets and liabilities[485](index=485&type=chunk) - Cash provided by financing activities dramatically increased by **$252.5 million (324.9%)** in FY2025, driven by **$215.8 million** in IPO proceeds and **$103.4 million** from redeemable preferred stock issuances[489](index=489&type=chunk) - Purchases of property and equipment, including medical rental equipment, increased from **$12.2 million** in FY2024 to **$22.9 million** in FY2025[487](index=487&type=chunk)[488](index=488&type=chunk) [Notes to Consolidated Financial Statements](index=169&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail the company's formation, IPO, significant accounting policies, debt, fair value, income taxes, and emerging growth company status - Kestra Medical Technologies, Ltd. was formed in Bermuda in May 2021 for its IPO, which completed on March 7, 2025, leading to organizational transactions where pre-existing interests were exchanged into Common Shares[589](index=589&type=chunk)[592](index=592&type=chunk)[593](index=593&type=chunk)[594](index=594&type=chunk) - The company changed the estimated useful life of medical rental equipment (therapy cables from **2 to 8 years**, batteries from **2 to 6 years**) prospectively in FY2025, reducing depreciation expense by **$1.4 million**[614](index=614&type=chunk)[615](index=615&type=chunk) - The company accounts for revenue from ASSURE WCD leases as operating leases, recognizing revenue on a straight-line basis over the one-month non-cancellable lease term when collectability is probable[630](index=630&type=chunk)[631](index=631&type=chunk) - As of April 30, 2025, the company had **$45.0 million** outstanding under the Term Loan 2024, which bears interest at Term SOFR plus **7.25%** and includes financial covenants[679](index=679&type=chunk) Deferred Tax Assets and Liabilities (in thousands) | Metric | April 30, 2025 | April 30, 2024 | | :------------------------- | :------------- | :------------- | | Total Deferred Tax Assets | $110,698 | $83,625 | | Valuation Allowance | $(103,815) | $(79,028) | | Net Deferred Tax Assets | $6,883 | $4,597 | | Total Deferred Tax Liabilities | $(7,023) | $(4,673) | - The company has applied a full valuation allowance against its net deferred tax assets due to the unlikelihood of realizing the benefits of these deductible differences, given its history of net losses[712](index=712&type=chunk)[716](index=716&type=chunk) [1. The Company](index=169&type=section&id=1.%20The%20Company) This note describes the company's formation, business, and recent initial public offering [2. Significant Accounting Policies](index=170&type=section&id=2.%20Significant%20Accounting%20Policies) This note outlines the key accounting principles and methods used in preparing the consolidated financial statements [3. Prepaid Expenses and Other Current Assets](index=176&type=section&id=3.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) This note provides details on the composition of prepaid expenses and other current assets [4. Property and Equipment](index=177&type=section&id=4.%20Property%20and%20Equipment) This note details the company's property and equipment, including depreciation policies and changes in useful lives [5. Leases](index=177&type=section&id=5.%20Leases) This note describes the company's lease arrangements, including operating lease liabilities and right-of-use assets [6. Accrued Liabilities](index=178&type=section&id=6.%20Accrued%20Liabilities) This note provides a breakdown of the company's accrued liabilities [7. Long-Term Debt](index=178&type=section&id=7.%20Long-Term%20Debt) This note details the company's long-term debt obligations, including terms, interest rates, and covenants [8. Fair Value Measurement](index=181&type=section&id=8.%20Fair%20Value%20Measurement) This note explains the methodologies and inputs used for fair value measurements of financial instruments [9. Common Shares](index=182&type=section&id=9.%20Common%20Shares) This note provides information on the company's common shares, including authorized and issued amounts [10. Redeemable Preferred Stock](index=182&type=section&id=10.%20Redeemable%20Preferred%20Stock) This note details the redeemable preferred stock, including its conversion to common shares during the IPO [11. Non-Controlling Interest](index=182&type=section&id=11.%20Non-Controlling%20Interest) This note describes the non-controlling interest in the company's consolidated financial statements [12. Equity Incentive Plan](index=183&type=section&id=12.%20Equity%20Incentive%20Plan) This note outlines the company's equity incentive plan, including stock options and share-based compensation [13. Income Taxes](index=185&type=section&id=13.%20Income%20Taxes) This note provides information on income tax provisions, deferred tax assets and liabilities, and valuation allowances [14. Commitments and Contingencies](index=188&type=section&id=14.%20Commitments%20and%20Contingencies) This note discloses the company's commitments and contingencies, including legal proceedings and contractual obligations [15. Defined Contribution Plan](index=188&type=section&id=15.%20Defined%20Contribution%20Plan) This note describes the company's defined contribution retirement plan for eligible employees [16. Net Loss Per Share Attributable to Common Shareholders](index=188&type=section&id=16.%20Net%20Loss%20Per%20Share%20Attributable%20to%20Common%20Shareholders) This note details the calculation of basic and diluted net loss per share attributable to common shareholders