KESTRA MEDICAL TECHNOLOGIES, LTD.

(in thousands, except share, per share data and percentages)

1. Nature of Operations and Liquidity

West Affum Intermediate Holdings Corp., a Cayman Islands exempted company (the “Company”), was incorporated on August 6, 2020, in order to carry on the business of West Affum Holdings Corp. (“WAH Corp.”) and its consolidated subsidiaries. West Affum Intermediate Holdings Corp. is wholly owned by West Affum Holdings L.P., a Cayman Islands limited partnership (“West Affum LP” or the “Parent”).

The Company and its consolidated subsidiaries own certain intellectual property related to the development of personal Wearable Cardioverter Defibrillators (“WCD”) approved by the U.S. Food and Drug Administration (“FDA”).

The Company generates revenue through leasing the ASSURE© System, which consists of a Wearable Cardioverter Defibrillator, to patients.

Initial Public Offering

On March 7, 2025, Kestra Medical Technologies, Ltd. completed an initial public offering of 11,882,352 Common Shares at an offering price of $17.00 per share (“IPO”). On March 14, 2025, the underwriters purchased an additional 1,782,352 Common Shares at an offering price of $17.00 per share.

In connection with the IPO, organizational transactions were effected whereby West Affum LP contributed all of its equity interests, including preferred shares, in West Affum Intermediate Holdings Corp. to Kestra Medical Technologies, Ltd. in exchange for 37,683,952 Common Shares, including 32,485 Common Shares of Kestra Medical Technologies, Ltd. that are subject to vesting conditions, to the holders of West Affum LP Class A Common Units (defined below) and Incentive Units (defined below), including a third-party investor in West Affum Holdings Designated Activity Company, a subsidiary of West Affum Intermediate Holdings Corp (collectively, the“Organizational Transactions”). The IPO, together with the Organizational Transactions, represent a business combination between entities under common control under the principles of ASC Topic 805 Business Combinations. All Incentive Units were accelerated at time of the IPO while the Class A Common Units continue to vest subject to the original vesting schedule.

In connection with the IPO, Kestra Medical Technologies, Ltd. also entered into the 2025 Omnibus Incentive Plan to grant eligible individuals stock options in order to attract, retain and reward such individuals and strengthen the mutuality of interests between such individuals and Kestra Medical Technologies, Ltd.’s stockholders.

West Affum LP will continue to hold Common Shares of Kestra Medical Technologies, Ltd. for the benefit of holders of common units in West Affum LP, until such time that such Common Shares are distributed by West Affum LP to the remaining partners of West Affum LP, which is expected to occur approximately nine months after March 5, 2025, the pricing date of the IPO (the “Post-IPO Distribution”). The allocation of the number of Common Shares of Kestra Medical Technologies, Ltd. held by West Affum LP among the holders of common units in West Affum LP in the Post-IPO Distribution will be determined in reference to the liquidation value of West Affum LP at the time of such Post-IPO Distribution. Kestra Medical Technologies, Ltd. also issued new warrants exercisable for its Common Shares in consideration of the cancellation of certain warrants issued by West Affum LP.

Following the Organizational Transactions, pre-existing preferred interests in West Affum Intermediate Holdings Corp., as well as non-controlling interests of its subsidiary, were exchanged into Common Shares of Kestra Medical Technologies, Ltd., which became the top parent company of West Affum Intermediate Holdings Corp. and all of its subsidiaries.

Liquidity

As of January 31, 2025, and April 30, 2024, the Company’s principal sources of liquidity consisted of $54,352 and $8,249 of cash and cash equivalents, respectively.

The Company has incurred negative operating cash flows and significant losses from operations since its inception. For the three months ended January 31, 2025, and 2024, the Company incurred net losses of $21,759 and $21,619, respectively. For the nine months ended January 31, 2025, and 2024, the Company incurred net losses of $62,703 and $71,836, respectively. Cash used in operating activities was $53,909 and $57,287 for the nine months ended January 31, 2025, and 2024, respectively. As of January 31, 2025, the Company had an accumulated deficit of $468,196.

On February 25, 2025, the Company entered into the Second Amendment to Credit Agreement and Guaranty, by and among Kestra Medical Technologies, Inc., the Company, the guarantors party thereto, the lenders party thereto and Perceptive Credit Holdings IV, LP, as administrative agent (the “Second Amendment to Credit Agreement”). Pursuant to the Second Amendment to Credit Agreement, the Term Loan 2024 (as defined below) facility was amended to adjust the revenue milestones applicable to the debt covenants therein and amend the ability to draw additional loans under its third tranche to allow for the ability to draw an additional $15.0 million through July 31, 2026, upon the achievement of revenue of at least $60.0 million for anytwelve consecutive month period prior to the third tranche’s borrowing date.

In March 2025, Kestra Medical Technologies, Ltd., the top parent of the Company following the Organizational Transactions and IPO effected in March 2025, raised $215,789 in proceeds after deducting underwriting discounts and commissions and before deducting estimated offering costs.

Based on the Company’s current operating plan in consideration of cash proceeds from the IPO, the Company believes that its existing cash and cash equivalents will be sufficient to fund the Company’s planned operating expenses and capital expenditure requirements for at least the next 12 months from the date these financial statements were available to be issued.

However, the Company may experience lower than expected cash generated from operating activities or greater than expected capital expenditures, cost of revenue or operating expenses and may require additional funding to execute on its growth plans, which may include funding raised through future equity and debt financings. Management cannot predict with certainty that adequate funding will be available on acceptable terms or at all. If the Company cannot obtain sufficient funds on acceptable terms when needed, the Company may experience a material and adverse effect on its business, financial condition, results of operations and prospects.

2. Significant Accounting Policies

Basis of Presentation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (“SEC”) and generally accepted accounting principles in the United States of America (“US GAAP”) and include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The Company's reporting currency is the U.S. dollar.

The unaudited interim condensed consolidated balance sheet as of April 30, 2024, included herein, was derived from the audited financial statements as of that date. Certain information and disclosures normally included in the financial statements prepared in accordance with US GAAP have been condensed or omitted pursuant to such regulations. Accordingly, these unaudited interim condensed consolidated financial statements and accompanying footnotes should be read in conjunction with the Company’s financial statements as of and for the years ended April 30, 2024 and 2023. The results for the interim periods are not necessarily indicative of results for the full year.

In the opinion of management, all adjustments, of a normal recurring nature, considered necessary for a fair statement have been included in the unaudited interim condensed consolidated financial statements. The Company believes that the disclosures provided herein are adequate to prevent the information presented from being misleading.

Use of Estimates

The preparation of the unaudited interim condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the unaudited interim condensed consolidated financial statements, and the reported amounts of expenses during the reporting period. Estimates are required as part of determining the collectability of lease payments for revenue recognition, estimated lives of property and equipment, losses for unreturned property and equipment, stock-based compensation expense and valuation allowance for deferred tax assets.

The Company bases its estimates on historical experience and other market-specific or relevant assumptions that it believes to be reasonable under the circumstances. Actual results could differ from those estimates.

Accounts Receivable

Accounts receivable and net revenues are based on contractually agreed-upon rates for leases for the ASSURE© System, reduced by estimated adjustments, including contractual adjustments. Inherent in these estimates is the risk that they will have to be revised or updated as additional information becomes available. The complexity of third-party billing arrangements and laws and regulations governing Medicare may result in adjustments to amounts originally recorded.

The Company performs a periodic analysis to review the valuation of accounts receivable and collectability of outstanding balances. These estimates are determined utilizing historical realization data under a portfolio approach which is then assessed by management to evaluate whether adjustments should be made based on accounts receivable aging trends, other operating trends, and relevant business conditions such as governmental and managed care payor claims processing procedures.

The Company records a reserve for estimated probable losses as part of net revenue adjustments in order to report revenue at an expected collectable amount based on the total portfolio of receivables for which collectability has been deemed probable. The accounts receivable are presented on the unaudited interim condensed consolidated balance sheets net of the adjustments.

Receivables are considered past due when not collected by established due dates. Specific patient balances are written off after collection efforts have been followed and the account has been determined to be uncollectible. Changes to reserve estimate impacts are recorded as an adjustment to net revenue in the period during which changes in circumstances support a change to the estimate. The estimates of the allowance for uncollectible accounts were$2,382 and$500 as of January 31, 2025 and April 30, 2024, respectively.

Property and Equipment

Property and equipment consist of medical rental equipment, test equipment, computer software and equipment, and leasehold improvements. Medical rental equipment used in the delivery of the ASSURE® WCD system consists of therapy cables, batteries, battery chargers, assistants and WCD monitors, all of which have different useful lives. Upon completion of use by a patient, medical rental equipment is returned to the Company’s third-party manufacturing and supply partner and inspected, tested and recertified for use by another patient. When not in use by patients, medical rental equipment resides with the Company's third-party manufacturing and supply partner, at third-party warehouses or with the Company’s territory managers. Physical counts of components are conducted at least annually at the third-party manufacturing and supply partner locations and at least quarterly at other locations.

Property and equipment are stated at cost less accumulated depreciation. Depreciation of medical rental equipment commences at the date when it becomes available for service, which represents the date that the asset is ready for intended use by the patients and continues through the estimated useful life of the asset. Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs, including planned major maintenance activities, are expensed as incurred.

Property and equipment are depreciated using the straight-line method based on the following estimated useful lives:

During the nine months ended January 31, 2025, the estimated useful life of the medical rental equipment asset class was changed prospectively from 1.5 -7 years to 2 -8 years. This change was the result of an FDA approval allowing therapy cables to be repaired up to three times which increased the estimated useful life of this component fromtwo years toeight years. The impact was a reduction of depreciation expense, which is included within costs of revenue, by$1,208 in the nine months ended January 31, 2025, compared to if the useful life of therapy cables had remained attwo years. This change in estimated useful life reduced net loss and comprehensive loss by the same amount.

When assets are retired or otherwise disposed of, the cost and related accumulated depreciation are removed from the accounts, and any resulting gain or loss is recognized in the unaudited interim condensed consolidated statements of operations and comprehensive loss for the period.

Deposits

Deposits represent advance payments to contracted suppliers for medical rental equipment. These payments are classified as long-term assets in the unaudited interim condensed consolidated balance sheets.

Revenue

The Company generates revenue from the leases of ASSURE© System, which consists of a Wearable Cardioverter Defibrillator combined with a proprietary digital healthcare platform, to at-risk patients for a fixed amount on a month-to-month basis. The lease payments generally consist of the contracted amounts based on reimbursement arrangements with third-party payors including Medicare, Medicaid and private commercial payors, and/or certain patient co-payments. The patient has the right to cancel the lease at any time during the rental period.

The equipment leases are classified as operating leases at lease commencement, and the Company recognizes the revenue associated with ASSURE© rentals in accordance with Accounting Standards Codification Topic 842, Leases (“ASC Topic 842”). The Company elected the practical expedient provided under ASC Topic 842 to combine the lease of ASSURE© System with the non-lease components, which includes the digital healthcare platform. The ASSURE© System is expected to be the predominant component and, as a result, the Company accounts for the combined revenue components under ASC Topic 842. Revenue is recognized on a straight-line basis over the contractual non-cancellable lease term, which is one month, when collectability of the lease payments is deemed to be probable. If collectability of the lease payments is not deemed to be probable, the lease income is limited to the lesser of the income that would have been recognized if collectability was probable or the lease payments collected. Collectability of all lease payments, which includes amounts reimbursed by third-party payors and/or amounts covered by the patient, is assessed for each contract upon lease commencement and is subject to subsequent reassessment throughout the lease term, as necessary.

Due to the nature of the industry and the reimbursement environment in which we operate, we periodically evaluate the need to record a general reserve under ASC 450, Contingencies, for a portfolio of operating lease receivables that are probable of collection. Inherent in the reserve estimates is the risk that they will have to be revised or updated as additional information becomes available. Specifically, the complexity of many third-party billing arrangements and the uncertainty of reimbursement amounts for certain services from certain payors may result in adjustments to amounts originally recorded. Such adjustments are expected to be identified and recorded at the point of cash application or claim denial.

Deferred Offering Costs

Deferred offering costs primarily consist of legal, accounting and other fees related to the IPO are capitalized and included in other long-term assets in the unaudited interim condensed consolidated balance sheets and will be offset against the IPO proceeds. There were$2,289 and$0 of deferred offering costs capitalized as of January 31, 2025 and April 30, 2024, respectively.

Payments on Behalf of Stockholder

During the three months ended January 31, 2025, and 2024, the Company paid administrative costs to a third party on behalf of its stockholder, Parent, of$50 and$110, respectively. During the nine months ended January 31, 2025, and 2024, the Company paid administrative costs to a third party on behalf of its stockholder, Parent, of$4,873 and$536, respectively. The payments to a third party on behalf of the Company's stockholder were recorded as a deemed dividend in the unaudited interim condensed consolidated statements of changes in redeemable preferred stock and stockholder’s deficit.

Non-controlling interests

The Company reports a non-controlling interest of a consolidated subsidiary within equity in the unaudited interim condensed consolidated balance sheet and the amount of consolidated net loss attributable to the Parent and to the non-controlling interest is presented in the unaudited interim condensed consolidated statements of operations and comprehensive loss. The amount attributed is calculated based on ownership in the consolidated subsidiary. Changes in ownership interests in the subsidiary in which the Company maintains a controlling interest are recorded in equity.

Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enables investors to better understand an entity’s overall performance and assists in assessing potential future cash flows. The guidance is effective for fiscal years beginning after December 15, 2023. The Company is still evaluating the impact that this ASU will have on their financial statement disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which enhances transparency and decision usefulness of income tax disclosures, primarily related to the income tax rate reconciliation and income taxes paid information. The guidance is effective for private business entities for annual reporting periods beginning after December 15, 2025. The Company does not anticipate a material impact to the required financial statement disclosure as a result of this ASU.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) (“ASU 2024-03”), requiring disclosure in the notes to the financial statements for specified information about certain costs and expenses. ASU 2024-03 is effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027; however early adoption is permitted and can be applied either prospectively or retrospectively. The Company is still evaluating the impact that this ASU will have on their financial statement disclosures.

The Company has reviewed other recent accounting pronouncements and concluded that they are either not applicable to the business, or that no material effect is expected on the unaudited interim condensed consolidated financial statements as a result of future adoption. No new accounting pronouncements were adopted during the nine months ended January 31, 2025.

3. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following at:

4. Property and Equipment

Property and equipment consisted of the following at:

The Company recorded$1,888 and$3,363 of depreciation expense for the three months ended January 31, 2025, and 2024, respectively. The Company recorded$6,132 and$8,058 of depreciation expense for the nine months ended January 31, 2025, and 2024, respectively.

5. Leases

In June 2021, the Company amended its office lease that began on May 1, 2020 to expand the leased space, commencing on September 1, 2021. The amendment is subject to all terms and conditions of the original office lease agreement and expires in April 2024. In October 2023, the Company amended the existing arrangements into an extended office lease set to expire in April 2029. The Company has theoption to renew for 3 or 5 years upon expiration of the extended term.

The October 2023 amendment provided rent abatement from November 1, 2023 through April 30, 2024. The same amendment further provided a tenant improvement allowance of $943 to be used as rent abatement or tenant improvement reimbursement by June 2026, and $786 specific for tenant improvements. In August of 2024, the Company amended its office lease to allow fortwo additional months of rent abatement and also allowed the specific tenant improvement reimbursement to be used for rent abatement or tenant improvements.

Operating lease expense was as follows for the periods below:

Operating lease expense includes amortization and interest expense associated with operating lease right-of-use assets and liabilities. Variable lease expense includes payments related to taxes, insurance and maintenance costs as required by the lease.

Cash paid for operating leases was $173 and $144 for the three months ended January 31, 2025, and 2024, respectively. Cash paid for operating leases was $506 and $1,121 for the nine months ended January 31, 2025, and 2024, respectively.

The weighted average remaining lease term for the Company’s operating leases was 51 months as of January 31, 2025, and 60 months as of April 30, 2024. The weighted average discount rate used to calculate the net present value of the Company’s operating lease liabilities was 15.2% as of January 31, 2025 and April 30, 2024.

6. Accrued Liabilities

Accrued liabilities consisted of the following at:

7. Long-Term Debt

On September 24, 2020, WAH Corp. and Kestra Medical Technologies, Inc. entered into the Loan and Security Agreement (the “Loan Agreement”) with a lender, which provided for a Senior Secured Delayed-Draw Term Loan in an aggregate principal amount of up to $50.0 million (as amended, the “Term Loan”). Borrowings under the original Term Loan are made available in up tothree tranches, which are subject to the Company achieving certain funding, regulatory or revenue milestones as defined in the Loan Agreement. The term loan includes certain six month trailing revenue targets beginning in July of 2022, which, if breached, will increase the interest rate on the Term Loan by 1.0% and require the then outstanding balance to accelerate to be repaid over a 24-month period.

On December 28, 2020, the Company drew the first tranche of the Term Loan pursuant to the terms of the Loan Agreement in the amount of $20.0 million. The Company incurred a 1.0% facility fee of the total available loan amount of $50.0 million upon the drawing of the first tranche and legal fees of $832 for both the Company and the lender. The Company recognized a portion of the facility fee and legal fees as a discount to the long-term debt liability and a portion in other long-term assets, relative to the tranche draws, both of which are amortized as interest expense over the term of the loan on a straight-line basis.

In conjunction with the draw on the first tranche, the Parent issued a warrant to the lender to purchase up to 49,044 shares of the Parent’s common units at an exercise price of $22.63 per share. The fair value of the warrant is $320 and is recognized as a debt discount and as a capital contribution, and the debt discount is amortized over the term of the loan to interest expense.

On January 21, 2022, the Company drew the second tranche of the Term Loan pursuant to the terms of the Loan Agreement in the amount of $15.0 million. Relative to the second tranche draw, the Company reclassified a portion of the facility fee and legal fees from other long-term assets to the long-term debt liability as a debt discount, with both facility and legal fees being amortized as interest expense over the term of the loan on a straight-line basis.

In conjunction with the draw of the second tranche, the Parent issued a warrant to the lender to purchase up to 36,783 shares of the Parent’s common units at an exercise price of $26.24 per share. The fair value of the warrant is $375 and is recognized as a debt discount and as a capital contribution, and the debt discount is amortized over the term of the loan to interest expense.

The Term Loan originally bore interest on outstanding balances of 14.5% per annum, all of which could be paid-in-kind, accrued and added to the principal balance and compounded quarterly until the earlier of the repayment or maturity date of the Term Loan. Following achievement of Premarket Approval from the FDA of the Company’s ASSURE® WCD system, the Term Loan would bear interest of 12.5% per annum, up to 6.5% of which can be paid-in-kind, accrued and added to the principal and compounded quarterly until the earlier of either the repayment or maturity date of the Term Loan. On July 27, 2021, the Company received FDA Premarket Approval for the ASSURE®WCD system and submitted evidence of the FDA Premarket Approval to the lender of the Term Loan. As such, the Term Loan began to bear interest on outstanding balances of 12.5% per annum, up to 6.5% of which could be paid-in-kind, accrued and added to the principal and compounded quarterly until the earlier of either the repayment or maturity date of the Term Loan. On April 11, 2022, the Company and the lender entered into a First Amendment to Loan and Security Agreement (the “Amendment”), pursuant to which the parties agreed to amend the existing Loan Agreement to (i) provide for additional funding under additional tranche Loan (“Tranche D Draw”) in the amount of $10.0 million, (ii) increase the aggregated principal amount by $10.0 million, to a total of $60.0 million, (iii) increase the portion of paid-in-kind interest to 100% of a stated interest rate at 12.5% for the period starting February 1, 2022 through April 30, 2023 and thereafter at a rate of 6.5% in accordance with the terms of the loan agreement, and (iv) modify the certain revenue targets and defer the first measurement date to October of 2022. The Amendment included the ability to draw on the third tranche of the debt until March 24, 2023, provided the Company could achieve $9.0 million in three-month trailing revenue. Further, the Tranche D Draw for $10.0 million is available until July 24, 2023, upon achievement of a six-month trailing revenue of $25.0 million. The original loan maturity date of September 24, 2025, under the loan modification remained unchanged. The Company evaluated the Amendment to the Term Loan under accounting guidance ASC 470, Debt, and determined that the amendment should be treated as a debt modification, as suchno gain or loss was recognized in the year ended April 30, 2022.

As of October 31, 2022, the Company did not meet the required revenue target for the preceding six-months trailing revenue. As a result, the Company began to make principal payments over a 24-month period, payable at the beginning of the following quarter and the interest rate increased by 1% to 13.5%. The Company made its first principal payment of $5,333 on February 1, 2023. The Company did not meet its revenue target for the preceding six months as of January 31, 2023, and principal payments continued. The Company made a second principal payment on May 1, 2023, for $5,511. The Company did not meet its revenue target for the preceding six months as of April 30, 2023, and the next principal payment was due on August 1, 2023.

On July 28, 2023, the Company entered into an agreement with the holder of the Term Loan, to defer a principal payment that was due on August 1, 2023, to extend the payment date to September 1, 2023. On August 31, 2023, the Company entered into an agreement to defer the principal payment that was due on August 1, 2023, to October 31, 2023. The agreement also changed the loan prepayment fee of 6% through from September 24, 2022, to September 24, 2023, to a loan prepayment fee of 5% from September 24, 2022, through December 31, 2023, and for the prepayment fee to be changed to 3% beyond December 31, 2023. On September 29, 2023, the Company terminated the Term Loan by paying off the loan balance of $34,209, accrued interest of $757, a prepayment fee of $1,710 and a loss on extinguishment of debt of $1,006, including the non-cash portion of $930. Loss on extinguishment of debt is part of “Other expense (income)” on the unaudited interim condensed consolidated statements of operations and comprehensive loss.

On September 29, 2023, the Company entered into a Credit Agreement with a separate lender which provided a Senior Secured Delayed Draw Term Loan Facility (as amended, the “Term Loan 2024”) in an aggregate principal amount of up to $60.0 million which matures on September 29, 2028. Borrowings are made available in up tothree tranches, the first of which is available upon closing of the agreement, which included committed equity funding of at least $75 million, and two follow on tranches of $7.5 million which become available before November 1, 2024, and February 1, 2025, and are dependent on upon achievement of revenue milestones of trailing twelve month revenues of $50.0 million and $70.0 million, respectively. The Term Loan 2024 bears interest equal to the sum of Term Secured Overnight Financing Rate plus 7.25% for each interest period which is measured monthly and is payable on the last day of each fiscal quarter. Through March 31, 2025, the Company has the ability to pay-in-kind up to 2% of the payable interest. The Term Loan 2024 requires a minimum level of cash of $3.0 million and certain revenue thresholds based upon trailing twelve month revenue results. The revenue covenant began to be measured on April 30, 2024. As of January 31, 2025, the Company was in compliance with both financial covenants.

On September 29, 2023, the Company drew the initial $45.0 million. In connection with the first draw, the Company incurred a 1% facility fee of the total available loan amount of $60.0 million upon the draw of the first tranche of $600 and legal fees of $1,753 for both the Company and the lender. The Company recognized the facility fee and legal fees as a discount of $1,765 to the Term Loan 2024 for the initial draw on the loan, and $588 as an Other long-term asset, for the remainder available to draw. Each of these will be amortized as interest expense over the term of the loan on a straight-line basis.

As of October 31, 2024, the Company determined that the revenue milestones related to the second tranche was not met and the third tranche were not probable of being achieved. As a result, the Company expensed the asset related to debt issuance costs and facility fees in the amount of $462.

In conjunction with the draw of the first tranche, the Parent issued a warrant to the lender to purchase up to 256,410 shares of the Parent’s common units at an exercise price of $17.55 per share. The fair value of the warrant was $1,632 and was recognized as a debt discount and as a capital contribution, and the debt discount is amortized over the term of the loan to interest expense.

The Company’s long-term debt consisted of the following at:

The Company recognized the expenses related to the Term Loan 2024 as follows:

The Company recognized the expenses related to the Term Loan as follows:

8. Fair Value Measurement

The following table presents the Company’s fair value hierarchy for its classified assets and liabilities measured at fair value on a recurring basis as of January 31, 2025 and April 30, 2024.

The Company classifies its money market funds, which are valued based on quoted market prices in active markets with no valuation adjustment, as cash and cash equivalents within the fair value hierarchy.

As of January 31, 2025 and April 30, 2024, the fair value of the long-term debt, net of discounts, approximated $46,420 and $43,870, respectively. The fair value of long-term debt was determined using quoted market prices, when available, or discounted cash flows based on various factors, including maturity schedules and current market rates. Long-term debt has been classified as Level 2 of the fair value hierarchy.

Term Loan was transferred out from the Level 2 fair value hierarchy during the nine months ended January 31, 2024. In the same period, Term Loan 2024 was transferred into the Level 2 fair value hierarchy. Other than those items, there wereno transfers into or out of the Level 1, 2 or 3 fair value hierarchies during thenine months ended January 31, 2025, and 2024.

9. Stockholder’s Deficit

The Company had 5,000,000 shares of common stock authorized and 105,808 shares issued and outstanding with a par value of$0.01 as of January 31, 2025 and April 30, 2024. Each share of common stock is entitled to one vote. Contributions are recorded to additional paid-in capital.

10. Redeemable Preferred Stock

In May 2022, the Company amended and restated the Memorandum and Articles of Association of the Company, according to which the Company’s existing share capital of 5,000,000 shares can upon the discretion of the Company be issued in the form of either common and/or preferred stock with a par value of $0.01 each. Preferred stock issued is considered non-voting and are subject to preferred dividend accrued daily with a set payment “yield” capped at 4.7%. The preferred dividend is declared upon the discretion of the directors of the Company on the interim basis and paid out on the annual basis upon discretion of the Company, provided there are funds lawfully available for distribution. No dividends were declared as of thethree and nine months ended January 31, 2025, and 2024. The cumulative unpaid dividends were$3,324 and$1,812 for the three months ended January 31, 2025, and 2024, respectively. The cumulative unpaid dividends were$9,030 and$4,727 for the nine months ended January 31, 2025, and 2024, respectively. In the event of liquidation, dissolution or winding up, assets will be applied first, to pay preferred stock dividends and second to pay issue price of preferred stock. Preferred stock may be exchanged to common shares at the option of the directors upon a successful public offering based on the criteria outlined by the directors of the Company.

For the three months ended January 31, 2025, and 2024, the Company issued a total of 0 and 12,500 preferred shares, respectively, of the Parent for proceeds of$0 and$12,500, respectively. For the nine months ended January 31, 2025, and 2024, the Company issued a total of 103,400 and 62,500 preferred shares, respectively, to the Parent for proceeds of$103,400 and$62,500, respectively.

The preferred stock is presented within mezzanine equity as it is redeemable for cash or other assets and is redeemable upon the occurrence of an event that is not solely within the control of the Company (specifically, an initial public offering that is at the directors’ request).

11. Non-Controlling Interest

In July 2024, West Affum Holdings Designated Activity Company (the “DAC”), a subsidiary of the Company, received a $17,100 investment from a third party (the “Investor”) in exchange for shares. The DAC sold the Investor 171 Class A Redeemable Ordinary Shares of the DAC at a price per share equal to $100,000 for an aggregate cash purchase price of $17,100. The Company allocates net income (loss) of the consolidated subsidiary to the Investor based on their proportional ownership. Concurrently with the execution and delivery of the agreement governing the Investor's investment into DAC, the Company entered into an agreement with the Investor and the Parent wherein, at the discretion of the Investor, the DAC’s Class A redeemable ordinary shares (“Class A Redeemable Ordinary Shares”) held by the Investor can be exchanged into common shares of the Company, and subsequently exchanged into class A common units of the Parent (“Class A Common Units”). The exchange ratio is calculated based on the DAC price per share of $100,000 and the Class A Common Unit price of $14.67 as of July 2024 which allows the Investor to exchange 171 DAC Class A Redeemable Ordinary Shares into 1,165,644.17 Class A Common Units of the Parent.

There are no freestanding features requiring recognition or embedded features requiring bifurcation and there is no redemption feature that is not solely within the Company’s control. The agreement does not allow for a redemption for cash or other assets at a fixed or determinable price on a fixed or determinable date outside the Company’s control at the option of the Investor. Any redemption is at the discretion of the DAC. Therefore, the non-controlling interest is classified within permanent equity as it does not meet the liability or mezzanine-classification criteria.

12. Equity Incentive Plan

Certain employees and contractors of the Company have been granted equity incentive units (“Incentive Units”) of the Parent. The Parent has the ability to issue any number of additional Incentive Units at its discretion. The Incentive Units allow the holder to participate in the equity of the Parent subject to participation thresholds as defined by the Parent. Upon termination, the Company has the right but not the obligation to repurchase vested Incentive Units at fair market value within seven months following termination.

The Parent has issued Incentive Units to certain employees of the Company, which vest based on continued service on a straight-line basis over the applicable service periods. Any unvested Incentive Units are automatically forfeited upon a separation. Incentive Units do not expire and have no exercise price. Compensation cost of Incentive Units is estimated on the date of grant.

As of January 31, 2025 and April 30, 2024, total Incentive Units vested were 1,876,499 and 1,262,180, respectively. The total number of Incentive Units authorized is determined at the Parent’s discretion and is not limited.

The following table summarizes Incentive Units activity:

The Company recorded stock-based compensation in the following expense categories of its unaudited interim condensed consolidated statements of operations and comprehensive loss:

As of January 31, 2025 and April 30, 2024, total unvested Incentive Units were 1,254,238 and 867,963, respectively.

As of January 31, 2025, unrecognized compensation cost for outstanding Incentive Units was $2,927, with the weighted-average period over which this cost is expected to be recognized at 2.49 years. As of April 30, 2024, unrecognized compensation cost for outstanding Incentive Units was $3,389, with the weighted-average period over which this cost is expected to be recognized at 3.18 years.

In determining the compensation cost of the Incentive Units, the fair value for each Incentive Unit has been estimated at the date of grant using the Black-Scholes or probability-weighted expected return method (“PWERM”) models.

The Company’s PWERM approach estimated its enterprise value. This method considered various exit scenarios including an initial public offering, or staying private, and assigned a probability weight to each scenario. Using the PWERM, the enterprise value under each potential exit scenario and the timing of each scenario were weighted based on the estimated probability of occurrence for such scenario. The Company’s equity values under the initial public offering scenarios were each estimated using the market approach based on the valuation of comparable public companies.

There isno intrinsic value or exercise price associated with these Incentive Units as they are participation units rather than options. The weighted average significant assumptions used in these calculations were summarized as follows:

The weighted average grant date fair value of Incentive Units outstanding as of January 31, 2025 and April 30, 2024 were$4.38 and$5.65, respectively.

Certain directors and advisors of the Company have also been granted 17,149 shares of restricted common shares and 25,562 shares of restricted class A common units of the Parent (“RSA”) between September 1, 2022 and November 3, 2024, with a vesting period of 3 years. As of January 31, 2025,8,575 and 8,575 restricted common units and 3,408 and 32,379 of restricted class A common units were vested and unvested, respectively. As of April 30, 2024,2,858 and 14,291 restricted common units were vested and unvested, respectively. All restricted class A common units were granted after April 30, 2024. Share-based compensation expense associated with restricted common units and restricted class A common units has historically been immaterial and recorded within selling, general and administrative expense.

13. Income Taxes

The following table presents details of the provision for income taxes and effective tax rates:

The Company is subject to U.S. federal income tax as well as income tax in various states. Additionally, the Company consists of a Cayman Islands parent company with subsidiaries in the U.S. and Ireland. Under the current laws of the Cayman Islands, the Company is not subject to tax on its income. The Company accounts for the provision for income taxes in accordance with ASC 740, Income Taxes, which requires an estimate of the annual effective tax rate for the full year to be applied to the interim period, taking into account year-to-date amounts and projected results for the full year.

The Company’s effective tax rate varies from the statutory Irish tax rate due to the effect of state income taxes and research and development credits. The Company’s effective tax rate could fluctuate from quarter to quarter based on variations in the estimated and actual level of pre-tax income or loss by jurisdiction, changes in enacted tax laws and regulations, and changes in estimates regarding the realizability of deferred tax assets. As of January 31, 2025 and April 30, 2024, the Company provided a full valuation allowance against its net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized.

14. Commitments and Contingencies

From time to time, the Company may become involved in litigation relating to claims arising from the ordinary course of business. The Company considers the likelihood of loss or impairment of an asset, or the incurrence of a liability, as well as the ability to reasonably estimate the amount of loss, in determining loss contingencies. An estimated loss contingency is accrued when information available prior to issuance of the unaudited interim condensed consolidated financial statements indicates that it is probable that an asset has been impaired or a liability has been incurred at the date of the unaudited interim condensed consolidated financial statements, and the amount or range of loss can be reasonably estimated. Legal costs are expensed as incurred. Gain contingencies are not recognized until they’re realized or realizable.

The Company enters into indemnification agreements with its officers and directors, and the Company’s certificate of incorporation and bylaws include similar indemnification obligations to its officers and directors. To date, there have been no claims under any indemnification provisions, therefore there isno accrual of such amounts as of January 31, 2025 and April 30, 2024. The Company is unable to determine the maximum potential impact of these indemnifications on the future results of operations.

Management believes that there are currently no other claims or actions pending against the Company where the ultimate disposition could have a material effect on the Company’s results of operations, financial condition or cash flows.

15. Defined Contribution Plan

The Company sponsors a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code of 1986, as amended (the “401(k) Plan”), for its full-time employees, which covers all eligible employees in the United States. The 401(k) Plan provides for matching and discretionary contributions by the Company. For the three months ended January 31, 2025, and 2024, matching and discretionary contributions by the Company totaled$444 and$290, respectively. For the nine months ended January 31, 2025, and 2024, matching and discretionary contributions by the Company totaled$1,210 and$971, respectively.

16. Net Loss Per Share Attributable to Common Stockholder

Basic net loss per share attributable to the common stockholder is calculated by dividing net loss by the weighted average number of shares of common stock outstanding during the period and excludes any dilutive effects of employee stock-based awards. Diluted net loss per share attributable to the common stockholder is computed giving effect to all potentially dilutive shares of common stock, including common stock issuable upon vesting of stock-based payment awards. For the nine months ended January 31, 2025, and 2024, the Company didnot have any dilutive shares. For both periods presented, there is no difference in the number of shares used to compute basic and diluted shares outstanding due to the Company’s net loss position.

Potentially anti-dilutive shares excluded from the calculation of diluted net loss per share for the periods ended January 31, 2025 and April 30, 2024 include 280,510 and 177,110 shares of redeemable preferred stock, respectively. Based on the conversion terms of the redeemable preferred stock and circumstances existing as of January 31, 2025 and April 30, 2024, the Company is unable to quantify the quantity of shares of common shares the redeemable preferred stock is exchangeable into.

The Organizational Transactions represent a business combination between entities under common control under the principles of ASC Topic 805, Business Combinations. In connection with the Organizational Transactions, Parent contributed its 105,808 shares of common stock in the Company for 19,885,382 Common Shares of Kestra Medical Technologies, Ltd. (“Exchange”). Under the principles of ASC 260, Earnings Per Share, the Exchange was applied retrospectively for purposes of calculating basic and diluted net loss per share. The total number of outstanding shares disclosed on the face of the unaudited condensed consolidated balance sheets and unaudited condensed consolidated statements of changes in redeemable preferred stock and stockholder’s deficit represents the number of shares legally outstanding as of the latest unaudited condensed balance sheet date. This differs from the number of outstanding shares disclosed for basic and diluted net loss per share, which has been retrospectively adjusted to reflect the Exchange.

Other transactions that closed contemporaneously with the Organizational Transactions, including conversions of preferred stock, non-controlling interests, and equity awards were not given retrospective treatment as they changed the relative subordination characteristics of the securities owned by the respective holders after the effective date of the Organizational Transactions. Similarly, the shares issued upon the IPO and exercise of the underwriters’ overallotment option were not given retrospective treatment.

Due to the Company’s net losses, all potential common shares of the Company prior to the Exchange continued to be anti-dilutive following the Exchange. Additionally, Kestra Medical Technologies, Ltd. has no assets, liabilities, or operations and did not have any material equity transactions during the periods presented in these unaudited condensed financial statements. Therefore, the impact of the retrospective application of the Exchange for purposes of calculating basic and diluted net loss per share was limited to reflecting the shares of Kestra Medical Technologies, Ltd. issued in connection with the Exchange as the weighted average number of shares of common stock outstanding for basic and diluted net loss per share.

The following table sets forth the computation of basic and diluted net loss per share attributable to the common stockholder:

The Company has Incentive Units issued and outstanding under an equity incentive plan that may be settled in common units of the Parent. The Parent also issued warrants in connection with the draws of the first and second tranches under the Term Loan and the first tranche under the Term Loan 2024 that may be settled in common units of the Parent. The Incentive Units and warrants are not considered participating securities as they do not participate in undistributed earnings of the Company and therefore, would not be included in the calculation of both the basic and diluted loss per share.

The non-controlling interest is in the form of Class A redeemable ordinary shares and can be exchanged into common shares of the Company and subsequently exchanged into Class A common units of the Parent. There is no redemption feature that is not solely within the Company’s control, thus, the non-controlling interest is not entitled to receive dividends from the Company. The non-controlling interest is not considered to be participating securities and is not included in the calculation of basic or diluted loss per share.

The restricted common units and restricted Class A common units granted to certain directors represent equity interests in the Parent. Each of these classes of units are not considered to be participating securities and are not included in the calculation of basic or diluted loss per share.

17. Subsequent Events

The Company has evaluated subsequent events through the date the unaudited interim condensed consolidated financial statements were available to be issued on April 17, 2025.

On February 25, 2025, the Company amended the Term Loan 2024 facility to adjust the revenue milestones applicable to the debt covenants therein and amend the ability to draw additional loans under the third tranche to allow for the ability to draw an additional $15.0 million through July 31, 2026 upon the achievement of revenue of at least $60.0 million for anytwelve consecutive month period prior to the third tranche borrowing date.

On March 7, 2025, Kestra Medical Technologies, Ltd. completed an initial public offering in which it issued and sold 11,882,352 Common Shares at an offering price of $17.00 per share for total net proceeds of $187.6 million after deducting underwriting discounts and commissions of $14.4 million. On March 14, 2025, the underwriters exercised the option to purchase 1,782,352 additional Common Shares at an offering price of $17.00 per share, resulting in additional net proceeds of $28.2 million after deducting underwriting discounts and commissions of $2.1 million. In connection with the IPO, the Company’s outstanding redeemable preferred stock and common stock were exchanged into Common Shares of Kestra Medical Technologies, Ltd. Also in connection with the IPO, Class A Redeemable Ordinary Shares of the DAC were exchanged into common units of the Parent, and the Parent will hold Common Shares of Kestra Medical Technologies, Ltd. for the benefit of the holders of common units in the Parent. Following the IPO, Kestra Medical Technologies, Ltd. controls and operates all business and affairs and consolidates the financial results of the Company and its subsidiaries.

In connection with the IPO, the warrant issued to Perceptive Credit Holdings IV, LP on September 29, 2023 was cancelled and replaced with a new warrant to purchase up to 325,847 Common Shares of Kestra Medical Technologies, Ltd. with an exercise price of $11.54. Perceptive Credit Holdings IV, LP is the administrative agent and a lender under the Term Loan 2024, which was amended in February 2025 to adjust the revenue milestones applicable to the debt covenants therein and amend the ability to draw additional loans under its third tranche of Term Loan 2024 to allow for the ability to draw an additional $15.0 million through July 31, 2026, upon the achievement of revenue of at least $60.0 million for anytwelve consecutive month period prior to the third tranche’s borrowing date. Upon the funding of additional amounts under the third tranche of Term Loan 2024, Kestra Medical Technologies, Ltd. will issue additional warrants to Perceptive Credit Holdings IV, LP equal to 10% of the amount funded. Additionally, in connection with the IPO, warrants issued to Kennedy Lewis Capital Partners Master Fund II LP on December 28, 2020 and March 7, 2022 were cancelled and replaced with new warrants to purchase up to 62,325 Common Shares of Kestra Medical Technologies, Ltd. with an exercise price of $17.81 per Common Share and 46,744 Common Shares of Kestra Medical Technologies, Ltd. with an exercise price of $20.65 per Common Share, respectively.