Kestra Medical Technologies, Ltd.

Good afternoon, and welcome to Kestra Medical Technologies' fourth quarter fiscal 2025 earnings conference call. This conference call is being recorded for replay purposes. We will be facilitating a question and answer session following prepared remarks from management. At this time, all participants are in listen-only mode. I would now like to turn the call over to Neil Beloka, Vice President of Investor Relations. Please go ahead.

Thank you for joining Kestra's fourth quarter fiscal 2025 earnings call. With me today are Brian Webster, President and Chief Executive Officer, and Vasim Mebboub, Chief Financial Officer. This call includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements made on this call that do not relate to matters of historical fact should be considered forward-looking statements. These statements are based on Kestra's current expectations forecasts, and assumptions, which are subject to inherent uncertainties, risks, and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance, or achievements expressed or implied by the forward-looking statements due to various factors. Please review Kestra's most recent filings with SEC, particularly the risk factors described in our registration statement on Form S-1 and the annual report we'll file later this week for additional information. Any forward-looking statements provided during this call, including projections of future performance, are based on management's expectations as of today. Kestra undertakes no obligation to update these statements except as required by applicable law. With that, I will turn the call over to Brian.

Thanks, Neil. Good afternoon, everyone, and thank you for joining us for today's conference call. We're calling in from Kirkland, Washington up in the great Pacific Northwest where we're enjoying about 86 degrees and summer, beautiful summer day. We're excited to discuss the details of our strong performance in the fourth quarter and significant progress Kestra made in 2025. Before we jump in, I'd like to share a patient story with you that demonstrates why the Kestra team is so passionate about our mission and the incredible impact our products and people have on the lives of patients. Recently, a 70-year-old woman from Missouri was discharged with our Assure system after being hospitalized for a myocardial infarction or heart attack. She was diagnosed with a low ejection fraction of about 25%. Ejection fraction is a measurement of cardiac output And anything below 40% is considered to be elevated risk. This patient wore the Assure system for over 23 hours per day for more than two months. This highlights the effectiveness of patient education at the time of fitting and the comfort of the Assure system. On day 66 of her wear, she experienced ventricular fibrillation or cardiac arrest. and received a life-saving shock from the Assure WCD. Within seconds, the shock activated our proprietary Assure Assist Service, which facilitated immediate connection to emergency care, enabling her to arrive at the emergency department within minutes. Following the shock, rapid transmission of her clinical data enabled timely medical intervention, demonstrating how the cardiac recovery system and care teams work seamlessly together to improve patient outcomes. She subsequently received an implantable cardioverter defibrillator, or ICD, to provide long-term protection against cardiac arrest. Her provider said it best. She's alive today because everyone played their part, the team, the technology, and the patient herself. This is just one patient's story. In fiscal year 2025, our cardiac recovery system was used to protect thousands of patients at risk of sudden cardiac arrest. We remain thankful and humbled by this responsibility entrusted to us by the prescribers, their patients, and their families. With that, I would now like to turn to our recent performance. In the fourth quarter, we continued to reach more patients at risk of cardiac arrest. generating over 3,900 prescriptions for the Assure system, an increase of 43% year-over-year. Our revenue accelerated in the fourth quarter with Kester generating revenue of $17.2 million, an increase of 71% compared to the prior year period. Our reported revenue continues to track ahead of our prescription growth, reflecting the tailwind of higher in-network patient mix. Continued improvements in revenue per fitting and reductions in cost per fit from volume leverage drove the sixth quarter in a row of gross margin expansion. Fourth quarter fiscal 25 gross margin was 44.3% compared to 13.9% in the prior year. In fiscal year 25, gross margin was 40.5% compared to just 1.3% in fiscal year 24. We expect continued improvement in fiscal year 2026 and remain confident that Kester is on the path to 70% plus gross margin over the next few years. With the strong revenue growth that Kester is generating, we are seeing nice operating leverage in our business. This growing leverage supports the investments we are making in the company's key growth drivers to take advantage of the large and attractive market opportunity that we see. The investments that we believe will drive significant near and long-term value for Kestra include expanding our commercial team, enhancing our revenue cycle management capabilities, growing our fleet of devices, innovating to extend our product advantages and growing the body of clinical evidence supporting the Assure system. First, we continue to expand our sales organization with the goal of further penetrating existing accounts and also calling on new potential Assure prescribers. We are targeting geographies in which a high volume of WCD prescriptions are being written and where we also have strong in-network payer coverage. At the end of fiscal year 25, we had approximately 80 sales territories, up about 67% from the prior year period. This was consistent with our plan. As we have previously discussed, we expect to nearly double the sales coverage over the next few years. Second, we continue to make progress in improving our RCM capabilities while also bringing more payers in network. Covered lives for the Assure system now totals more than 285 million health plan members in the United States. Of note, we recently signed an important sole source contract with a risk-bearing provider network, which is evidence that both payers and prescribers recognize the differentiated benefit of the Assure system. We are pleased to see the steady convergence of covered lives nationally and actual sales territory in-network patient mix, which positively impacts all the revenue cycle management metrics. Third, as you know, we utilize a leased business model. When a patient's wear time is concluded, the Assure devices return for reprocessing and reintroduction into Kestra's distribution system. Our substantial investment in our fleet of devices each with a capacity for approximately three patient wares per year, enables the business to scale with our attractive unit economic profile. While our current asset pool can support our near-term business objectives, we will keep adding to the fleet at a measured pace as we scale the business. Fourth, the operating leverage that we are generating continues to support our goal of continuous innovation. Our invention engine remains robust and we now own over 365 patent assets. On the product development front, our team has some exciting projects in flight to further extend our clinical advantage with the performance of the Assure system and also bring first in category new therapeutic capabilities to the market. Finally, we are continuing to build the body of clinical evidence supporting the safety, efficacy, and benefits of the Assure system. As of April 30th, we have enrolled over 20,000 patients, and real-world findings are providing further validation of the results of our pivotal trials. Our most recent FDA submission from the study reported first shock conversion efficacy of approximately 96%, and a false alarm rate of only 6%. This extremely low false alarm rate compares very favorably to the 46% rate reported by the competitor's device. This has contributed to a median daily use of 23.2 hours per day for patients, clearly demonstrating high patient compliance. Our post-approval study is expected to be completed this summer. We will share those results in the fall and expect that our registry study will generate a steady cadence of clinical publications over the following quarters. All of these initiatives further our mission of protecting even more patients that are at risk of cardiac arrest. Despite the overwhelming evidence that a defibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized. reaching just 14% of the eligible US patient population of 850,000 patients annually. That means six out of seven patients that are indicated for WCD are not being protected by one. We believe that the low prescription rate for WCD therapy is due in part to the limitations of the incumbent commercially available device. The Assure system was purpose-built to enhance patient comfort and compliance and directly address the key barriers to adoption associated with the incumbent's device. What the science shows about WCDs is that if a patient wears the device and they experience a serious cardiac event, like a ventricular event, clinical outcomes are compelling and many lives are saved. With that in mind, the feedback from physicians and their patients on the Assure system continues to be overwhelmingly positive. Importantly, as more physicians have positive experiences with our system and our people, we are seeing examples of the market expanding at accounts that have converted to Kestrel. I would like to highlight one such market expansion study. At the start of fiscal year 2024, two regional hospitals within a large integrated health system in the Midwest had little to no adoption of WCDs. Most clinicians discharged elevated risk patients without protection. Across both sides, awareness of WCD benefits and guideline-directed use was limited, and WCDs were not embedded in the care pathways. One hospital within the network had no Assure patients in fiscal year 2024. Providers were largely unaware of updated clinical evidence and existing guidelines and therefore continued to rely on outdated methods of protecting their patients. Through focused education, in-service support, and streamlined coordination with case management and EMR teams, Kestra helped shift clinical behavior. Within a year, that hospital had placed 74 patients on Assure, and we now hold approximately 90% market share in that account. At a nearby hospital in the same network, we applied the same strategy. Patient volume rose from just six WCDs prescribed in fiscal year 2024 to 52 in fiscal 2025. As you can see, within 12 months, both hospitals transitioned from under-utilization to establishing a WCD protocol with the Assure system as the preferred solution. It's important to note that these weren't just simple market share conversions. These were patients who in prior years would have gone home without protection. Today, we are extending their care into the home. This is how market expansion is happening. Our teams are changing mindsets, embedding best practices, and enhancing the standard of care across systems and regions. This is just one example, but one that gives us a glimpse of the market expansion potential. There are multiple other health systems across the country where we are seeing a similar pattern. In conclusion, we are well positioned to take the next steps towards our goal of making the Assure system the standard of care for patients at risk of sudden cardiac arrest. We are seeing strong execution across all elements of our business, and the foundation we have built has positioned Kestra for strong growth in fiscal year 2026 and beyond. I would like to thank our incredible team out in the field and here at our home office in Kirkland for their passion and commitment to the Kestra mission. I will now turn it over to my partner, Vasim, who will discuss fourth quarter financial results in more detail and also provide our fiscal year 2026 revenue outlook. Vasim?