Kestra Medical Technologies, Ltd.

Good afternoon and welcome to the Kestra Medical Technologies 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 Neel Baladkar, Vice President of Investor Relations, for introductory comments.

Thank you. Thank you for joining this afternoon's first quarter fiscal 2026 earnings call. With me today are Brian Webster, President and Chief Executive Officer, and Vasim Mehboob, Chief Financial Officer. This call includes forward-looking statements within the meaning of the Private Securities Litigational Form 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 the SEC, particularly the risk factors described in our Form 10-K 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'll turn the call over to Brian.

Thanks, Neil. Good afternoon, everyone, and thank you for joining us on today's conference call. We are excited to discuss the strong start we had to our fiscal 26 and the continued progress we have made in our key operational objectives. But before we jump into that, I'd like to again highlight the purpose behind the mission that drives the KESPA team. At the center of everything we do are the lives we protect each day and the impact we have on patients, their families, and the providers who care for them. Recently, one of our territory managers or sales reps gave an overview of the Assure system to a provider where they discussed how the Assure system tracks heart rate trends and how this capability can provide critical insights for identifying patients with previously undiagnosed arrhythmias. The fact that patients could trigger their own ECG recordings with a simple push of a button on their wearable vest stood out to the provider. Soon after, the impact of this capability came into sharper focus when the same provider prescribed the Assure system for a 53-year-old patient at elevated risk of sudden cardiac arrest. The patient had hypertension, non-ischemic cardiomyopathy, frequent extra heartbeats, and a cardiac output ejection fraction of just 34%. During the fitting, the patient's fiancé candidly shared her anxiety about the unpredictability of her loved one's condition. To provide reassurance, the care team advised that the patient trigger heart rhythm recordings twice a day. Those recordings captured repeated irregularities in the patient's heart rhythm. The Kessler representative promptly pointed out the recordings to the physician, illustrating the clinical value of patient-triggered rhythm recordings, and the broader role of the cardiac recovery system in guiding care. The insights were significant enough that the patient was scheduled for a cardiac ablation. However, before the patient was able to undergo the cardiac procedure, lifesaving therapy was necessary. The patient lay down for a nap after feeling unwell. While asleep, they went into a dangerous rhythm that quickly progressed into cardiac arrest. The Assure system detected this and delivered a shock, saving the patient's life. In the critical moments that followed, our Assure Assist service quickly helped connect the patient to emergency care, and the patient was safely transported to the hospital. This story illustrates the full continuum of care that our cardiac recovery system provides, equipping providers with insights to guide treatment, protecting patients with lifesaving therapy when it matters most, and ensuring rapid emergency support in the vulnerable periods that follow. And while this is just one patient's experience, in the first quarter of fiscal 2026, our team and technology helped facilitate many similar lifesaving events. We remain humbled by this responsibility and by the trust placed in us by providers, their patients, and their families. With that, I would now like to turn to our recent performance. In the first quarter, we continued to reach more patients at risk of cardiac arrest, accepting over 4,200 prescriptions written for the Assure system, an increase of 51% year over year. Revenue grew 52 percent year-over-year to $19.4 million. Continued improvements in revenue profiting from higher in-network mix and reductions in cost profiting from volume leverage drove the seventh quarter in a row of gross margin expansion. First quarter gross margin was 45.7 percent compared to 32.9 percent in the prior year period. We expect continued gross margin expansion in FY26 and remain confident that Kestra is on the path to 70% plus gross margins. With the strong revenue growth that Kestra is generating, we are seeing nice operating leverage in the business. This leverage supports the investments we are making in the company's key growth drivers that we believe will yield significant long-term value for Kestra and stakeholders. quick overview of four of those growth drivers. First, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as 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. As we noted on our last earnings call, we ended fiscal year 25 with approximately 80 sales territories. While this will not be a data point that we will be updating on a quarterly basis, I can say that our territory additions in the first quarter were in line with our hiring plan, and we continue to aggressively expand our sales coverage. Of note, we also have an updated commercial strategy That includes an expanded clinical specialist role that will complement our sales territory managers. We expect that this strategy will support further penetration of existing accounts. Second, we continue to make progress on improving our revenue cycle management capabilities while also bringing more payers in network. At the time of our IPO six months ago, approximately 70% of our fittings were for patients with in-network benefits. This figure is now approaching 80%. The higher in-network mix meaningfully increases our team's efficiency and positively impacts all key RCM metrics. It is important to note that there are over 3,000 payers in the United States, so there will be a long tail of regional and local payers we are working to bring under contract. The RCM activities that increase the speed and rate of our collections are process driven and we expect to see further improvements over time. For example, in the early days of commercialization, we have a small RCM team that was not specialized. The same individual may have been tasked with following a claim from bidding all the way to cash. RCM function has grown significantly, particularly in the last 12 months. with team members specializing in specific areas such as prior authorization, medical review, home management, et cetera. Third, as you all know, we utilize a lease business model. 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 are continuing to add to our fleet at a measured pace as we grow our field team. Fourth, we are continuing to build the body of clinical evidence supporting the safety, efficacy, and benefits of the Assure system. We recently achieved a major clinical milestone with the conclusion of enrollment in our FDA post-approval study. This is a really significant achievement for the Kestrel team and took a ton of really hard work by our entire team. We were also recently notified that our study was chosen for a late breaker presentation of our clinical data at the American Heart Association Scientific Sessions, which will be conducted in November. At the time that our post-approval study is presented, we expect this to be the single largest study ever published in the WCD category. This is the biggest stage in cardiology for our exciting results. All of these growth drivers further our mission of protecting even more patients that are at risk of sudden cardiac arrest. We have previously noted that despite the overwhelming evidence that an external fibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized. reaching just 14% of the eligible U.S. patient population. That means six out of seven patients that are indicated for a WCD are not being protected by one. Last quarter, I shared with you two examples of hospitals that transition from underutilization of WCDs to significantly expanding their use of WCDs by establishing therapy protocols with the Assure system as their preferred solution. I would like to share another data point that gives us confidence that the WCD market will continue to expand into a multibillion-dollar market over the coming years. The results of a large German WCD study sponsored by the incumbent competitor were recently published. The SCD PROTECT study evaluated the risk of sudden cardiac death in over 19,000 patients in the first few months after they were newly diagnosed with heart failure or post-myocardial infarction or heart attack. Despite wide overall use of guideline-directed medical therapy drugs, the study found higher than expected sudden cardiac arrest risk in this patient population, suggesting a need for greater WCD protection in the early high-risk period of the patient's journey. Investment in this study is further evidence that the incumbent is focused on market expansion to help make up for lost share to Kestra. In conclusion, the simplicity of the Kestra story continues. We are competing in a large existing market that is growing consistently in both unit volume and price. We have an underserved medical condition where we offer a clearly superior solution. We have rapidly closed the gap on payer endorsement of our product and we are implementing a commercial expansion plan to rapidly grow the business. We are seeing strong execution across all elements of our business and the foundation we have built has positioned Kestra for strong growth this fiscal year and beyond. I would like to thank our incredible team in the field and here at the home office in Kirkland for their passion, and commitment to the KESTRA mission. I will now turn it over to my partner, Basim, who will discuss first quarter financial results in more detail and provide our updated fiscal year 26 revenue notes.

Basim? Thank you, Brian, and good afternoon, everyone. Total revenue was $19.4 million in the first quarter, an increase of 52% compared to the prior year period. Revenue growth was driven by a 51% year-over-year increase in prescriptions reflecting market share gains with existing customers and activation of new accounts. Gross margin was 45.7% in the first quarter compared to 32.9% in the prior year period. As Brian mentioned, we have now expanded our gross margins sequentially for seven quarters in a row. The continued expansion in gross margin was driven by the attractive unit economics inherent in Kestrel's rental model. A higher revenue per fit for more in-network patients and a lower cost per fit driven by volume leverage and our cost improvement projects. Cost per fit decreased approximately 20% compared to the prior year period, while adjusted revenue per fit increased approximately 20% compared to the prior year period. In the years ahead, you should expect to see steady and consistent increases in our gross margins as our rental model benefits significantly from the volume and depreciation leverage. We remain confident in our ability to achieve 70% plus margins over the next few years. As we have discussed previously, higher in-network mix unlocks the power of the Kestra business model. You can see this in our steadily expanding year-over-year conversion rate. We ended the quarter with a conversion rate of approximately 47% compared to an adjusted conversion rate of approximately 40% in the prior year period. The higher conversion rate reflected improvements in all three key drivers of our conversion rate, our prescription fill rate, our bid rate, and our collections performance. As we continue to bring more payers in-network, and enhance our revenue cycle management processes, we will see benefits in our revenue growth, gross margins, and our profitability profile. Moving on, GAAP operating expenses were $37.7 million in the first quarter and included $2.9 million of non-recurring new public company costs. GAAP operating expenses were $22.6 million in the prior year period. Excluding those non-recurring costs and our stock-based compensation expense, operating expenses were $30.3 million in the first quarter of 2026. The increase was primarily attributable to growth investments in our commercial and revenue cycle resources. Gap net loss was $25.8 million in the first quarter compared to a gap net loss of $20.3 million in the prior year period. Adjusted EBITDA loss was $19.4 million in the first quarter compared to an adjusted EBITDA loss of $15.7 million in the prior year period. Cash and cash equivalents total $201.2 million as of July 31st, 2025. We continue to expect our existing cash balance to be sufficient for Kestra to reach cash flow breakeven and profitability. I would also note that based on our trailing 12-month revenue, an additional $15 million tranche of our existing term loan has become available to us to draw on through July 31, 2026. At present, this tranche of $15 million remains undrawn. I will now provide an updated fiscal year 2026 guidance. We expect revenue of $88 million, an increase of 47% compared to fiscal year 2025. This compares to prior year guidance of $85 million. Underpinning this guidance is our expectation that we will continue to see strong growth in prescriptions as our market share increases with existing customers and as we activate new accounts. We expect Revenue Perfect to continue to benefit from a higher mix of in-network patients and improvements in our revenue cycle management capabilities. With that, operator, we have concluded our prepared remarks and are ready to proceed to the Q&A portion of the call.

Certainly. Our first question for today comes from the line of Travis Steed from B of A Securities. Your question, please.

Hey, congrats to Senator Corder. Maybe to start on guidance, nice to see raised by more than the beat. helping us understand kind of what's driving the confidence to raise this much in the beginning of the year and how to think about any cadence over the course of the year as we update our models.

Yeah, Travis, thanks for the question.

And I would say we certainly have a really strong Q1, and we're certainly bullish about the rest of the year. It's early in the year, so, you know, we're going to see a sentence play out over the next quarter or two. But right now, we're comfortable with that guidance update and, you know, excited about marching into our second quarter.

All right, great. And I wanted to maybe double-click on some of the end network mix things you mentioned, just kind of understanding, like, what you guys are doing on the ground to improve the mix, you know, where the mix can be over the course of this year and next few years, and maybe to think about the impact on gross margins as well to go forward.

Yeah, as we mentioned, you know, at the point of IPO, we were about, we have over 90% covered lives in the U.S., which just means the total number of insurance-covered lives in the US. We have about 90% of those under contract. But when you look at the actual patients that we're taking, that's where we get the real revenue from. And so we've seen that number go from 70% at the IPO to, as we mentioned here, about 80%. We think that will continue. you know, a slow incline as we add more payers. There is a long tail, as I mentioned in my comments, of, you know, some 3,000 payers. So it takes a while to engage with the local and regional payers. And quite frankly, there are some payers that, you know, we're just not going to get there on price. And so, you know, we're going to continue to work those. But You'll see this gradually go up as we engage more payers. And I think it's important to reinforce our strategy around when we are adding sales territories, we're doing it where we have known WCD demand and we have good payer coverage. So we're trying to be very efficient about territory expansion when it comes to that. But I think what you can expect is continuing gradual contribution from the in-network payers as we increase that. And then you'll see that impacting overall our revenue per fitting or per patient will continue to grow with that.

Great. Thanks a lot, and I'll hop back in queue.

Thank you. And our next question comes from the line of Rick Wise from Stifel. Your question, please.

Good afternoon, Brian. Two things I'd like to follow up on a little bit. One, actually, you just touched on in your response to Travis, Brian. This notion, and you've said it from the beginning, this notion of expanding into areas where there's greater in-network opportunity, or however I should phrase the words. I know you know what I mean. where are you in that in that process and i mean is there any way to quantify or give us a more granular understanding of like what happened in the last few months and what's going to happen now this year in terms of that kind of uh of a mood so just so we better understand where you are

Yeah, thanks for the question, Rick. It's obviously important to our business model. I don't think you can think of the payer additions in a straight linear line over time. You have to think of it more as sort of a sawtooth curve because, you know, in one period, we may add a good-sized regional payer. In the next period, it may be some smaller regional payers that we're trying to add to support specific territories where we have a lot of demand. So I think it will continue to go up and to the right. as we get more coverage and that will continue to benefit the business model, benefit our ability to go after these territories. It's really impactful when you're in a territory and you're a territory manager trying to sell your product and the competitor has insurance coverage and you don't. That puts you at a disadvantage. And so what we're trying to do with that strategy is we're trying to make sure that when we make the investment to add new reps, we're giving them all the tools that they need, including insurance coverage, so that they can be successful.

Gotcha.

And Rick, can I just add one more comment to that? I think, you know, and we've kind of talked about it in the past, and, you know, one of the big things that we want to remind everyone is when you think about, you know, the impact on the conversion rate as a result of the in-network mix, We have said it that, you know, we don't have to go to 80, 90%. You know, what's baked into our financial model is for us to go from the high 40s that we are today to getting to the high 50s here over the next couple of years. So to Brian's point, as you provide coverage and conversions on that 3,000 towards the higher mix, it will lend itself automatically to get to that higher conversion rate. But again, we don't have to get to all 3,000 immediately. It's just going to be a driving process, and that's already factored into the messaging that we've had in the past.

Great. And, Vasim, I just wanted to touch on the, as we reflect on the quarterly flow. I mean, obviously, this is a good quarter. You had a solid raise. Very encouraging setting the stages as I think about the rest of the year. But help us think about the quarterly flow and, I mean, you know, with these extra, you know, wonderful few million we're adding to our model, you know, do we take our current models and, you know, is it more back-end loaded? Does it change the quarterly cadence? Just help us, you know, make sure our models are in the right place, if you would. Thank you.

Yeah, that's a great question, Rick. I think, you know, again, what's really great about this quarter is now we're taking our guidance from you know, being 42% year-over-growth to a 47% growth year-over-year. And as you guys have heard us, you know, communicate in the past, we are in a ramp. We are adding new territory managers, as Brian talked about. That's where most of the APEX investment is going. So as we have said in the past, there is a start and, you know, that ramp that needs to happen. So we should expect not to be back-end loaded, but to see a really nice steady increase in our top line as we go through the remaining of the quarters for the rest of the year. But really, really excited about having to raise the guidance by the levels that we have. And just based on, as Brian said, the comfort that we take in the performance of the business in the first quarter.

Yeah. Thank you. Excellent.

Thank you. And our next question comes from the line of Matthew O'Brien from Piper Sandler. Your question, please.

Afternoon. Thanks so much for taking the questions. We'd love to talk about the prescription number in the quarter, because that was really strong, up about 300 sequentially. This time last year, we were roughly flat. So we'd just love to hear about the improvements that we're seeing on the prescription side of the business. And I think you're now roughly annualizing to about 14% of all cases that you're going after right now. So just where can we think about you know, the company kind of exiting the year in terms of percentage of all prescriptions being written for sure.

Yeah, thanks for the question, Matt. You know, I think the good news from my perspective in the prescription number is because we are ramping the commercial team, we look at the metrics broken into a couple of different buckets. One bucket is what we call a base rep or a fully onboarded, fully productive rep. And we look at the month over month, week over week, month over month, quarter over quarter metrics for those reps. And the good news there is the folks that have been here, been in the seat for a while, the metrics continue to improve with those reps. Now, that's not the full story, of course, because we're hiring a bunch of new reps. And so the question is, can you get those reps onboarded? Can they get up to some productivity levels in a reasonable amount of time And so we really aggressively track those numbers as well. And what we're seeing there is a similar story, which is they're coming up the curve. They're hitting the kind of productivity numbers, weekly, monthly kind of numbers that we're expecting. And so that bodes well and that gives us confidence, which is why we continue to expand the commercial footprint. So the The math you're seeing on the sequential growth is the impact of both of those effects on prescriptions.

Okay, that's helpful.

And then just kind of staying on that topic, Brian, just the reps as they're coming in, are they really focusing on the low-hanging fruit, which is really just converting existing accounts over to Assure from the competitor, or You know, are some of the more legacy reps, you know, really being more successful and kind of doing both, which is, you know, converting market share but also expanding the market? Because your commentary about the competitor and the clinical trial I thought was interesting, too, just given how underpenetrated the whole category is. Thanks so much.

Yeah, we, you know, I think that study is important because it's – it's all boats rise on the tide, right? And that's gonna really shine a light on the ongoing need, especially in these heart failure patients. But, you know, Matt, when it comes to getting these reps on board, we're really trying to be focused on getting them, if you're a new rep, you're coming in and you know literally the day you you open up your your salesforce.com instance you've got all the a parade of all the high prescribers and you know exactly what your initial targets are and they are absolutely uh going to go there first now the only caveat to that is some of these reps that we're hiring they come in with uh pre-existing relationships and they'll go to those relationships first and some of those may not be the high prescribers. But I think in general the strategy with the new reps is let's go where the business is and then go sideways from there and start to expand the market. As I said previously with the pre-existing reps or the already ramped reps, they have already done that and so they're focused on where they're penetrating those accounts But what they're also doing is they're going into new accounts, and they're opening up new accounts that have not been big WCD prescribers in the past. And so that's part of how we're growing the market.

Got it. Thanks so much. You bet. Thank you. And our next question comes from the line of Lawrence Peterson from Wells Fargo. Your question, please.

Good afternoon. Thanks for taking the question. Two for me. One on the conversion rate, one back on market share. So, Fassim, what does the guidance assume for the year-over-year increase in the conversion rate? It looks relatively small. A relatively small increase is assumed for the fiscal year versus the first quarter, which looks like about 700 basis points. And Secondly, if I heard correctly, in-network is now almost 80%, which is relatively high. What are the drivers to get you to that best-in-class conversion rate that I think you said on the Q4 call was 76% from 47% today?

That's a great question. Thanks, Larry. So we've seen a consistent year-over-year increase in our conversion rate, and I'm happy to report that. And as we've indicated here, we continue to make progress on all three elements of our conversion rate. And they're all trending in the right direction. Obviously, the biggest contributor of that conversion rate is the improvement in the same network patient mix. And that has, you know, gone up 10 points since the IPO, which is really positive. And as Brian said, we'll continue to move that in the right direction. So, you know, our strategy is working, and I think the main focus areas for us on the conversion rate continue to be, as Brian mentioned, deploying the therapy managers into these high prescription and high bear regions. And that will organically happen as the commercial team expands, and it will contribute to that positive growth in the conversion rate. Secondly, you know, we are focused heavily on, as Brian mentioned, again, on these Tier 2 Um, you know, for example, we signed Oscar help last week, uh, which is a nice small program. It's a regional, um, so there'll be a lot of those that are in the queue and the market access team is working on those. Finally, you know, not the least is we continue to invest in the RCM team and the capability they have on people and process on systems. So we do all of that, you know, what's reflected in the guidance here. is about a two and a half C point increase in our conversion rate. And we think it's very achievable. And obviously, you know, we got a lot of game to play here in the remainder of the year. So you'll continue to see that progress on the conversion rate. But again, you know, what we've said in the past, you know, we are, the conversion rate is a year-over-year metric that we got to be, you know, assess that and we'll continue to drive improvements on it annually.

That's helpful. Brian, on conversion, market share, the press release talked about category leadership. So I guess my question is maybe back to Matt's 14%. Where do you think you are today? And is it prescription share, fitting share? And how long is it going to take to achieve category leadership? Thanks for taking the question.

Yeah, thanks, Larry. I think time will tell how long it takes us to get to that position. But I think there's a couple of different drivers that I would say. With regards to where we stand today, we're probably somewhere around 12% market share is my math. I would say that the key driver, now that we've got the insurance coverage in place and we've got know a high percentage of our patients are are coming in with coverage um that's not as big a focus as just pure uh sales coverage is and right now you know we're we're a little over 50 percent of the of the us uh do we have covered in terms of actually having a rep in a territory Now, that doesn't mean we're 50% of the competitor. It means that in a city, like pick a city, like let's call it Minneapolis, we might right now we don't have a rep there. They might have three reps there. So when we put a rep in there, we would say at least we've got representation there. So right now we're still just a little over 50% territory coverage in the U.S. We've got a lot of room to go in terms of being able to cover the market. And we're going deep in certain territories that we know are high-producing territories now, but also you'll see us starting to broaden that out and cover some of these other territories in the future. That's going to be the biggest driver. The rate at which we do that will determine how quickly we can get to that category leadership position.

All right. Thanks so much, guys.

Thank you. And our next question comes from the line of Mike Pollard from Wolf Research. Your question, please.

Good afternoon. Brian, I want to follow up on one of your prepared remark comments about the expanded clinical specialist role to complement certain territory managers to penetrate existing accounts. I guess, can you just help us better understand, you know, I was under the assumption you had specialists already. What's the expanded role look like? What is this person doing that's different and You know, how are they incentivized, and is this something you expect to deploy for all territories, or is this going to be focused on the biggest accounts? Any caller here would be helpful.

Yeah, Mike, thanks for the question. So, I will start by just going back to the service model that's inherent in this category. At the point in time that we receive a prescription from a prescriber, they are expecting that within 24 to 48 hours, we will have come in and fit and train that patient and allow them to then discharge the patient to go home. So there's a heavy service model that has to be deployed here, which really informs the rate at which we bring in new territories and open up our commercial footprint. And so as part of that, what we recognize is as we get strong penetration into certain accounts, we can start to adopt a model where some of the account management responsibilities can be transitioned away from the sales representative over to a clinical specialist. And that allows then that sales representative to go and cultivate new prescribers and new accounts. And so that's the strategy. It's a partnership, excuse me. And what we will initially be doing is putting those roles in some of our high-performing territories. where we've already demonstrated the ability to go in and capture significant market share so that we can give those reps some leverage to be able to go and expand beyond those accounts. And then as we see the progress we make in that, then that will really determine how far down the scale we go when it comes to adding those resources. But I think it's a strategy that's not, you know, an unusual strategy in MedTech. We've seen it in other categories. It's one that I think will be successful for us, but we will start with the high performers and kind of go from there.

That's helpful. The follow-up is on the late breaker coming at AHA, your post-approval study. Can you remind us just some of the high level specs of that post-approval study, size, kind of focus patient, the period in which it enrolled, and then, you know, without, if you want to preview the data, great. But what would you hope this shows? Is this going to be narrative changing on patient compliance? Is that the major hook? Is it simply just scale of quality data solidifies the pitch? Is it differentiated insights on the MI versus the heart failure patient, the post-MI patient? You know, the so what of this presentation will, you hope, be what? Thank you.

Well, shall I just read the whole presentation to you now, Mike, and then we'll just come to the chase? I'm kidding, obviously. You're free to do that. This is a public forum. Yeah, yeah. Hey, look, it's really a significant milestone for the company. We started the post-approval study soon after we launched the product. So, you know, we've been at it for about three years. And we expect that the study will have somewhere between 24,000 and 25,000 patients in it. And that's a huge body of work to be deriving clinical results from. The endpoints of the study include shock success rate. I'll call shock success rate as the primary endpoint. And safety endpoint would be inappropriate shocks. And then we have other endpoints that we will report on. around false alarm rate and also patient compliance. So those are sort of the big four. Now, as you start to peel back the onion of this incredible set of data, then you have the opportunity to report on some of the differences between the post-MI patients and the non-ischemic patients. and lots of other data that we expect will be published out of this data set over the coming quarters and the next couple of years. So the report out at AHA will be big news in that one of the biggest competitive reports points that the incumbent competitor makes about Kestra is we don't have as much published clinical data as they have. Now, when we bring a 25,000 patient study to the table, it takes that argument and it buries it really deep in the sand because we now have an incredible body of clinical data that we can point to And we're really excited about putting that objection away once and for all. So we're excited about it. We don't have all the analytics completed yet, but we did recently get the late breaker notification. And it's a big milestone for the company and a big milestone for a lot of folks who have been working incredibly hard. And I think what you're going to find is that the promise that we've made with the Assure system is going to come to light in the form of that clinical data coming up just in a couple months.

Very helpful call there, Brian. Thank you.

Thank you. And our next question comes from the line of Daniel Downs from Goldman Sachs. Your question, please.

Good afternoon, guys, and thank you for taking the questions. A key topic at last week's HRX conference was on compliance rates and that it still remains a key barrier on WCD utilization. Can you just detail a little further what you were seeing and how compliance rates are evolving across your user basis experience grows?

Yeah, sure. Thank you for the question. You know, I would say that compliance in any at-home patient and any at-home category, whether it's blood pressure monitoring or drugs or wearables like ours. Compliance is the single biggest challenge. And the therapies don't work if the patients aren't willing to take them, use them, wear them. And so compliance has been the single biggest priority for us as we designed our product. And we think about compliance in two different ways. We think about what is the daily average sort of the median daily rate of wear time, and then what does that wear time look like as you go from one month to second month to third month and beyond? In other words, do they continue to be compliant? And so, you know, I think our metrics are pretty clear. We've published before that our Our daily median rate is over 23 hours a day. That answers that question very clearly that patients are willing to wear our product. And then the second half of that, which is what's the duration that they're willing to wear it, and you see a downward slope and a curve over time. Do they get sick of wearing it? And the answer to that is remarkably sound that once patients, once they get past that sort of first week of wearing our device, they will wear it through the duration of their prescription. and um and that means that they can tolerate it not just for the short term but for the long term and that gives them the protection that they need so these are two goals that we had as i mentioned and we feel really good about you know the way our data is tracking for those goals that's very helpful thank you and just the second question is just on the cadence of opex investments through the course of the year at last quarter we had talked about some of the

investments the new commercial offer was making. We've discussed the new territory manager expansion today, but any color on the pace of those investments through the rest of the year and what those might be focused on? Thank you.

I think the name of the game is going to be steady and measured. We are adding to our commercial footprint, as we've talked about. I think last quarter we talked about, you know, the prior quarter we got a little bit aggressive with some of our OPEX because we had an opportunity to really invest in the leadership team and the training capability of all these new reps, etc., Now, as we've gotten into our new fiscal year, we have a business plan for the year. We're executing to it with pretty tight precision at this point. And what you're going to see is steady additions to the team so that we can consume those new territories and those new territory managers and provide them with all the support that they need to be successful. And I think that's really the strategy behind Up to Pace. This is not one of those categories where you can just say, hey, I'm going to go out and hire as many reps as I can as quickly as I can. That's not the game. We want high-quality reps that are going to come in, do a great job of serving our customers and their patients, and really build a durable commercial team.

That's our strategy. Thank you.

This does conclude the question and answer session of today's program. I'd like to hand the program back to Brian Webster, President and CEO, for any further remarks.

Okay, thank you. Thank you for the great questions. You know, I think, again, the story of Q1, we're off to a new start in a new festival year, and it's an exciting start, but we've got a business plan. We're executing to that plan, and I'm thrilled by the level of commitment that the Kestra team has and the culture that we're building around performance and commitment And we're looking forward to getting back with you all, you know, in 90 days or so and giving you an update on Q2. We continue to put a really bright, shiny light on the focus we have around patients and the lives that we save every day, every week. We report on those to our team. Every Monday we report on the patient's lives that were saved by our product. last week, and that continues to be the guiding light for this company and will continue to be so. So thank you for attending today, and we'll look forward to updating you again in 90 days. Thank you.

Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.