Kestra Medical Technologies Reports Strong Earnings Growth

Kestra Medical Technologies Ltd. ((KMTS)) has held its Q2 earnings call. Read on for the main highlights of the call.

Kestra Medical Technologies Ltd. recently held an earnings call that painted a largely positive picture of the company’s financial health and strategic progress. The sentiment during the call was optimistic, with significant revenue growth and gross margin improvements being key highlights. Despite challenges such as net losses and operating expenses, the overall tone was upbeat, driven by positive clinical study outcomes and an expanded sales force.

Strong Revenue Growth

Kestra Medical Technologies reported a substantial increase in revenue, reaching $22.6 million, which marks a 53% rise compared to the previous year. This growth was fueled by a 54% increase in prescription volumes, indicating significant market share gains and the activation of new accounts.

Gross Margin Milestone

For the first time in its history, Kestra achieved a gross margin of 50.6%, an increase of 11 percentage points from the prior year. This milestone represents the eighth consecutive quarter of gross margin expansion, showcasing the company’s operational efficiency.

Positive Clinical Study Results

The ACE PAS study, involving over 21,000 patients, successfully met its primary endpoints, demonstrating the safety and effectiveness of Kestra’s Assure system. The study also highlighted increased wear time for the wearable cardioverter-defibrillator (WCD) and a reduction in false alarms, bolstering the system’s clinical credibility.

Expanded Sales Force

Kestra has expanded its sales organization to approximately 100 active sales territories, up from about 80 at the end of fiscal year 2025. This expansion is part of the company’s strategy to enhance market penetration and drive further revenue growth.

Improved Revenue Cycle Management

The company reported improvements in revenue cycle management, with the in-network mix increasing to the low eighties. This development is expected to support future margin expansion and enhance financial performance.

Continued Net Loss

Despite positive revenue and margin trends, Kestra reported a GAAP net loss of $32.8 million in the second quarter, compared to a $20.6 million loss in the prior year. This increase in net loss highlights ongoing financial challenges.

Dependence on Market Expansion

The WCD market remains underpenetrated, with only 14% of the eligible US addressable market currently being served. Kestra’s growth strategy heavily depends on expanding this market to capture more opportunities.

Increased Operating Expenses

Operating expenses rose to $43.2 million in the second quarter, including $1 million in non-recurring costs, compared to $25 million in the prior year. This increase reflects the company’s investments in growth initiatives and market expansion.

Forward-Looking Guidance

Looking ahead, Kestra Medical Technologies has provided robust guidance, aiming for fiscal year 2026 revenue of $91 million, representing a 52% growth from fiscal year 2025. The company plans to double its sales force over the next few years and achieve gross margins above 70%. With a market share of approximately 13% and a growing WCD market, Kestra is well-positioned for future success.

In summary, Kestra Medical Technologies’ earnings call highlighted a positive trajectory with strong revenue growth, improved gross margins, and promising clinical study results. While challenges such as net losses and increased operating expenses persist, the company’s strategic initiatives and forward-looking guidance suggest a bright future. Investors and stakeholders can remain optimistic about Kestra’s potential for continued growth and market expansion.