Kestra Medical Technologies, Ltd.

Good afternoon. Welcome to Cash for 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 like to turn the call over to Neil Blodker, Vice President of Investor Relations, for introductory comments.

Thank you, Victor. Good afternoon. Thank you for joining Kestra's Third Quarter Fiscal 2026 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 meanings of the Private Securities Litigational 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 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 now turn the call over to Brian.

Thanks, Neil. Good afternoon, and thank you for joining us on today's conference call. Happy St. Patrick's Day to all of our friends in Ireland. We are a Irish Domiciled Company, so we're happy to celebrate along with them. We're excited to discuss the strong financial performance we had in the third quarter and the continued progress we were making on our key operational objectives. I'd like to begin, though, by grounding us again in the KESPER mission, the lives we help protect each day and the patients, families, and clinicians we serve. The reality in cardiac care is that risk doesn't always resolve when a patient leaves a hospital. For many patients, vulnerability persists and care needs evolve. During periods when risk remains elevated, our cardiac recovery system provides critical protection supported by clinical insight and patient support. We saw the value of this approach in a recent patient case. In this case, a 64-year-old man with severe heart failure and a cardiac output measurement of only 10 to 15% was prescribed the Assure system. In the weeks that followed, a pattern of escalating clinical risk began to emerge. Over the course of about 20 days, the Assure system detected many episodes of SVT which is a heart condition characterized by a rapid resting heart rate stemming from issues in the upper chambers of the heart. Automated Kestra care station alerts were generated for each episode, and the Kestra team stayed closely engaged with both the patient and the clinic. The physician responded to the alerts by promptly adjusting the patient's medications. Despite this, the arrhythmias persisted. During the Christmas holidays, the Assure system detected a severe ventricular arrhythmia and delivered a lifesaving shock. Immediately, the Kestra team coordinated with the emergency department, spoke directly with the on-call physician, and transmitted rhythm strips to facilitate informed clinical decision making. After stabilization, this patient's situation required transfer to a higher acuity hospital. During helicopter transport, the Assure system detected another life-threatening arrhythmia and delivered a second shock, protecting the patient at a critical moment while en route to advanced care. Because early detection was matched with clinician engagement and because Protection traveled with them across every transition of care. This vulnerable patient survived a rapidly declining clinical episode. This story represents more than a single intervention. It illustrates how the cardiac recovery system supports patients across the recovery journey. What differentiates KISTRA is not just the therapy we deliver, but the system we surround it with, intelligent detection and protection, clinical insight, and human engagement working together. In the third quarter of fiscal 2026, our team and technology supported many similar moments of intervention. As always, we remain mindful of the trust placed in us by clinicians, patients, and their families every day. I would now like to turn to our recent financial performance. In the third quarter, we continued to reach more patients at risk of cardiac arrest, accepting over 5,400 prescriptions written for the Assure system. Revenue was $24.6 million. with growth of 63% compared to the prior year period. Gross margin of 52.6% was up nine points year over year and 200 basis points sequentially, reflecting the attractive unit economics of our business model. This was the ninth quarter in a row of sequential gross margin expansion. We remain confident that Kestra is on a path to 70% plus gross margins over the next few years. With the strong revenue growth and margin expansion that Kestra is generating, we are seeing nice operating leverage in our 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 its stakeholders. Turning to the WCD market, we have previously noted that despite the overwhelming evidence that an external defibrillation shock is effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized. Six out of seven patients that are indicated for a WCD are not being protected by one. We believe the innovation and clinical evidence we have brought to the category is beginning to change this. Based on our recent financials and that of the incumbent, we estimate the WCB market groomed in the low mid-teens on a dollar basis in calendar year 2025. We are still in the early innings of market expansion, and we see this category growing into a multi-billion dollar market in the years ahead. On last quarter's earnings call, we discussed the results from ACE Pass, our FDA post-approval study, which was presented at AHA in November. As a reminder, ACE Pass was the largest real-world prospective WCD study to date, with over 21,000 patients enrolled and protected. The study's findings corroborated what patients experience every day with the Assure system. low false alarm rates, comfort that drives higher wear time compliance, and 100% successful conversion of dangerous arrhythmias. ACE Pass continues to be a major topic of conversation with clinicians, particularly the studies finding that patients were at elevated risk during the first 90 days post-hospitalization. Clinicians now have robust clinical data that shows the risk level of their patients is higher than they understood it to be, particularly early in the recovery and treatment journey. We have also continued to learn from the body of data generated from the ACE-PASS study, and we're pleased to announce today the FDA approval of our latest innovation, a new Assure algorithm update. This update further strengthens the performance of the Assure system. With this new update, we expect to see an even lower rate of false alarms and inappropriate shocks, which are critical measures of both patient experience and clinical performance. Enhancements like this are an important part of how we continue to improve the system and further differentiate Kestra's technology in the wearable defibrillator market. In mid-January, we announced another innovation, a strategic collaboration with BioBeat Technologies to expand diagnostic insight for patients prescribed the Assure WCD. The agreement is anchored by an exclusive license and co-development arrangement and included a $5 million equity investment in BioBeat. By way of background, BioBeat has developed the only clinically validated FDA-cleared, coupless, patch-borne ambulatory blood pressure monitoring device. It delivers continuous, non-invasive blood pressure measurement over a 24-hour period for hypertension diagnosis and management in the outpatient cardiac recovery setting. Kessler intends to integrate BioBeach technology into our product portfolio to make ABPM data available for patients prescribed the Assure WCD. Hypertension affects approximately 120 million Americans, and results from ACE-PAS underscore the clinical relevance of the collaboration with BioB. As you may recall, 72% of the 21,000 patients studied in ACE-PAS were hypertensive. highlighting the complexity of managing blood pressure during cardiac recovery, particularly during guideline-directed medical therapy optimization. Over time, we believe this collaboration will help us win additional market share by further differentiating our product from the incumbent. And more importantly, by providing additional clinical value and diagnostic insights to physicians, We believe it will result in them prescribing WCDs to more of their patients than heretofore have gone unprotected. Moving on to other updates, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as calling on new potential Assure prescribers. As we have discussed previously, 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. We ended calendar year 2025 with about 100 active sales territories and are tracking towards our goal of having about 130 sales territories by the end of our fiscal year in April. I'd also like to share a few updates on market access and reimbursement. First of all, as you may know, Florida is one of our largest states by patient fittings and also one of the states in which we have our highest market share. We have accomplished this despite not having a managed Medicaid provider number to utilize with Florida's managed Medicaid payers. Managed Medicaid plans cover nearly 90% of Florida's Medicaid enrollees. I am very pleased to share that we recently became an approved Florida managed Medicaid provider and have subsequently signed contracts with two of the state's four largest managed Medicaid plans. We are consuming contracts with all the remaining managed Medicaid plans in Florida. Second, Kestrel was recently added to the federal supply schedule for the U.S. Department of Veterans Affairs. The VA is the largest integrated healthcare network in the U.S. and covers 9 million members, nearly 50% of whom are over the age of 65. We are honored to have the opportunity to protect veterans that are at risk of sudden cardiac arrest. And third, the monthly Medicare reimbursement rate for WCDs increased 2% up to $3,589 a month on January 1st. As you can see, we continue to bring more payers in network while also making progress on improving our RCM capabilities. At the time of our IPO 12 months ago, approximately 70% of our fittings were for patients with in-network benefits. This figure is now in the low 80s. The higher in-network mix meaningfully increases our team's efficiency and positively impacts all of our revenue cycle management metrics. It is important to note that there are over 3,000 payers in the U.S., so there will still be a long tail of regional and local payers we are working to bring under contract. In conclusion, the fundamentals of Kestra's story and business remain strong. The WCV market is expanding. Kestra's revenue growth accelerated to over 60 percent. Gross margin has increased meaningfully, and we have fortified our balance sheet. In the 12 months since our IPO, our execution has been strong across all elements of the business. The foundation we have built positions Kestra for strong and durable growth for years to come. I'd 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. With that, I will now turn it over to Vasim, who will discuss third quarter financial results in more detail and provide our updated fiscal year 2026 revenue guidelines.