Kestra Medical Technologies Ltd(KMTS) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Total revenue for Q2 2026 was $22.6 million, representing a 53% increase compared to the prior year period [18] - Gross margin reached 50.6%, up 11 points year over year, marking the first time it exceeded 50% in the company's history [9][19] - The adjusted EBITDA loss was $19.7 million, compared to a loss of $16.1 million in the prior year period [22] Business Line Data and Key Metrics Changes - Approximately 4,700 prescriptions were written for the Assure system, contributing to a 54% year-over-year increase in prescriptions [8][18] - The conversion rate improved to 48.8%, up from an adjusted rate of 48.2% in the prior year [20] Market Data and Key Metrics Changes - The wearable cardioverter defibrillator (WCD) market is estimated to be growing in the low double digits, with only 14% of the eligible U.S. addressable market currently utilizing WCD therapy [10][14] - The Assure system demonstrated a 90-day incidence rate of 1.8% and an annualized incidence rate of 7.5%, indicating a high-risk patient population [11] Company Strategy and Development Direction - The company aims to expand its sales organization to penetrate existing accounts and attract new prescribers, with approximately 100 active sales territories as of Q2 2026 [14][15] - The strategy includes enhancing revenue cycle management capabilities and increasing the in-network mix, which has improved from approximately 70% at IPO to the low 80s [15][19] 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 attractive unit economics of the rental model [9][19] - The company is focused on building a durable top-tier MedTech growth profile and is optimistic about the impact of recent clinical results on market penetration [30][31] Other Important Information - The company has seen a significant increase in clinical education events following the presentation of the ACE-PASS study results, which is expected to enhance clinician awareness and adoption of the Assure system [10][38] - The company is actively working to bring more regional and local payers under contract, with over 3,000 payers in the U.S. [16] Q&A Session Summary Question: Guidance for the year and Q3 seasonality - Management indicated that revenue growth is driven by prescription volume, in-network mix, and revenue cycle management initiatives, with a focus on consistent quarterly results to build investor trust [28] Question: Use of proceeds from the recent equity offering - The company plans to use the additional capital to fortify its balance sheet and invest in key growth drivers, with a focus on long-term growth strategies [30] Question: Impact of AHA data on market share and growth - Management noted that while it is early to see numerical impacts, anecdotal evidence suggests clinicians are reassessing their decisions based on the new clinical data [36] Question: Rep productivity and sales force hiring plans - The company is on track to double its sales force from 70 to approximately 140 reps, with plans to evaluate further acceleration of hiring based on recent performance [41] Question: Timing for potential guideline changes - Management clarified that while growth does not rely on guideline changes, they believe the clinical evidence warrants a review, and they will seek to present this evidence to the relevant committees [46] Question: Prescription volume sustainability - Management expects the strong prescription growth to be sustainable, driven by ongoing penetration of existing accounts and the addition of new hospitals [63] Question: OpEx spending plans - The company is committed to investing in team expansion and revenue cycle management capabilities, with a focus on maintaining a sustainable level of operating expenses [67] Question: Innovation and product pipeline - The company is innovating across three distinct platforms: WCD, wearable, and digital, with plans to develop new capabilities based on recent clinical data [82]