KESTRA MEDICAL TECHNOLOGIES, LTD.

Previous wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operation should be read in conjunction with our unaudited condensed consolidated financial statements and the related notes to those statements included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal years ended April 30, 2024 and 2023 included in our IPO Prospectus. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections entitled “Special Note Regarding Forward-Looking Statements” and Part II, Item 1A, “Risk Factors” in this Quarterly Report on Form 10-Q and in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in the IPO Prospectus.

Current wording

This Management’s Discussion and Analysis of Financial Condition and Results of Operation should be read in conjunction with our unaudited interim condensed consolidated financial statements and the related notes to those statements included in this Quarterly Report and our audited consolidated financial statements and the related notes and the discussion under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for the fiscal years ended April 30, 2025 and 2024 included in our Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under the sections entitled “Special Note Regarding Forward-Looking Statements” and Part II, Item 1A, ““Risk Factors” included in this Quarterly Report and in the sections entitled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” in our Annual Report.

Previous wording

We outsource the manufacturing of our ASSURE WCD and all of its components to third-party suppliers, including contract manufacturers that manufacture garments, chargers, monitors, batteries, cables and various accessories for our ASSURE WCD. We believe that our contract manufacturing partners are recognized in their field for their competency to manufacture the respective components of our ASSURE WCD and have established quality systems that meet FDA requirements. We believe the manufacturers we currently utilize have sufficient capacity to meet our expansion requirements and can scale up their capacity to meet anticipated demand for our products for the foreseeable future.

Current wording

We outsource the manufacturing of our ASSURE WCD and all of its components to third-party suppliers, including contract manufacturers that manufacture garments, chargers, monitors, batteries, cables and various accessories for our ASSURE WCD. We believe that our contract manufacturing partners are recognized in their field for their competency to manufacture the respective components of our ASSURE WCD and have established quality systems that meet FDA requirements. We believe the manufacturers we currently utilize have sufficient capacity to meet our expansion requirements and can scale up their capacity to meet anticipated demand for our product for the foreseeable future.

Previous wording

Our fiscal year ends on April 30 of each year. We incurred net losses of $21.8 million and $21.6 million for the three months ended January 31, 2025 and 2024, respectively. We incurred net losses of $62.7 million and $71.8 million for the nine months ended January 31, 2025 and 2024, respectively. We generated revenue of $15.1 million and gross margin of $6.5 million for the three months ended January 31, 2025, compared to revenue of $8.3 million and gross margin of $0.9 million for the three months ended January 31, 2024. We generated revenue of $42.6 million and gross margin of $16.6 million for the nine months ended January 31, 2025, compared to revenue of $17.8 million and gross margin of $(1.0) million for the nine months ended January 31, 2024. As of January 31, 2025, we had cash and cash equivalents balances of $54.4 million, and an accumulated deficit of $468.2 million.

Current wording

Our fiscal year ends on April 30 of each year. We incurred net losses of $25.8 million and $20.3 million for the three months ended July 31, 2025 and 2024, respectively. For the three months ended July 31, 2025, we generated revenue of $19.4 million, with a gross profit of $8.9 million, compared to revenue of $12.8 million, with a gross profit of $4.2 million, for the three months ended July 31, 2024. As of July 31, 2025, we had cash and cash equivalents balances of $201.5 million, and an accumulated deficit of $546.1 million.

Previous wording

From our inception to the consummation of the IPO, our operations were primarily funded by proceeds from our capital contributions made by West Affum Holdings, L.P., our direct parent prior to the Organizational Transactions (as defined in Note 1, “Nature of Operations and Liquidity,” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q), in the form of common stock and redeemable preferred stock, and borrowings under our Term Loan 2024 (as defined below), as well as borrowings under our Term Loan (as defined below) prior to its repayment in September of 2023. For more information, see “—Liquidity and Capital Resources—Sources of Liquidity” and Note 10, “Redeemable Preferred Stock,” to our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

From our inception to the consummation of the IPO, our operations were primarily funded by proceeds from capital contributions made by West Affum Holdings, L.P., our direct parent prior to the Organizational Transactions (as defined in Note 1, “The Company,” to our unaudited interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report), in the form of common stock and redeemable preferred stock, and borrowings under our Term Loan 2024 (as defined below). For more information, see “—Liquidity and Capital Resources—Sources of Liquidity”.

Previous wording

Pursuant to the Organizational Transactions and the IPO, Kestra Medical Technologies, Ltd. issued and sold an aggregate of 13,664,704 Common Shares at an offering price of $17.00 per share for net proceeds of $215.8 million, after deducting underwriting discounts and commissions, which includes the net proceeds from the underwriters’ exercise in full of the over-allotment option. The Organizational Transactions and IPO were initially completed on March 7, 2025 and the underwriters’ over-allotment option was completed on March 14, 2025.

Current wording

In the IPO, we issued and sold an aggregate of 13,664,704 common shares at an offering price to the public of $17.00 per share for net proceeds of $215.8 million, after deducting underwriting discounts and commissions, which includes the net proceeds from the underwriters’ exercise in full of the over-allotment option. The Organizational Transactions and IPO were completed on March 7, 2025 and the proceeds from the shares sold pursuant to the underwriters’ over-allotment option were received on March 14, 2025.

Previous wording

We have invested heavily in developing and commercializing our Cardiac Recovery System platform. We have also made significant investments in clinical studies to demonstrate the safety and effectiveness of our ASSURE WCD and to support applications for regulatory approvals. We have made and will continue to make significant investments to build our sales and marketing organization, and we intend to continue to increase the size of our commercial team to market our product in the United States. Based on our current operating plan, we believe that the net proceeds from our IPO, together with our existing cash and cash equivalents and cash generated from revenue transactions with patients will be sufficient to fund our operating and capital needs for at least the next 12 months. We 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 our growth plans, which may include future equity and debt financings. Adequate funding may not be available to us on acceptable terms or at all. Our failure to obtain sufficient funds on acceptable terms when needed could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Current wording

We have invested heavily in developing and commercializing our Cardiac Recovery System platform. We have also made significant investments in clinical studies to demonstrate the safety and effectiveness of our ASSURE WCD and to support applications for regulatory approvals. We have made and will continue to make significant investments to build our sales and marketing organization, and we intend to continue to increase the size of our commercial team to market our product in the United States. Based on our current operating plan, we believe that our existing cash and cash equivalents and cash generated from revenue transactions with customers will be sufficient to fund our operating and capital needs for at least the next 12 months. We 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 our growth plans, which may include future equity and debt financings. Adequate funding may not be available to us on acceptable terms or at all. Our failure to obtain sufficient funds on acceptable terms when needed could have a material and adverse effect on our business, financial condition, results of operations and prospects.

Previous wording

Commercial Organization. We have made and continue to make significant investments in recruiting, training and retaining our direct sales force and supporting commercial infrastructure. Successfully recruiting and training additional commercial team members is required to achieve growth. As of January 2025, we had approximately 70 territory managers in the United States. We have in the past and expect in the future to enter into compensation arrangements with our commercial team that may include minimum guaranteed commissions.

Current wording

Commercial Organization. We have made and continue to make significant investments in recruiting, training and retaining our direct sales force and supporting commercial infrastructure. Successfully recruiting and training additional commercial team members is required to achieve growth. We have in the past and expect in the future to enter into compensation arrangements with our commercial team that may include minimum guaranteed commissions.

Previous wording

Gross Margin. Our results of operations will depend, in part, on our ability to increase our gross margins by more effectively managing our costs to build and deliver our ASSURE WCD and obtaining higher reimbursement realization due to improved market access and shifts in patient mix towards patients with longer wear duration. We expect supply chain efficiencies to result from higher volume purchases of components, and continued manufacturing process improvements.

Current wording

Gross Profit. Our results of operations will depend, in part, on our ability to increase our gross profit by more effectively managing our costs to build and deliver our ASSURE WCD and obtaining higher reimbursement realization due to improved market access and shifts in patient mix towards patients with longer wear duration. We expect supply chain efficiencies to result from higher volume purchases of components, and continued manufacturing process improvements.

Previous wording

Costs of revenue consist of direct material, labor and indirect costs related to the lease performance of our ASSURE WCD such as the cost of disposable WCD device components, depreciation expense of reusable medical rental equipment components, shipping and order fulfillment costs, as well as other indirect costs incurred to support the manufacture and medical rental equipment delivery to and ongoing support for the patient incurred in connection with providing our ASSURE WCD to patients. Overall expenditures for disposable components and reprocessing costs will increase as the number of patients receiving our ASSURE WCD increases and to a lesser extent, depreciation expense will increase as additional reusable ASSURE WCD components are purchased. However, depreciation expense as a percentage of costs of revenue is expected to decrease in the long run through economies of scale as we continue to grow our business. For additional information on how depreciation impacts our financial results, see Note 2, “Significant Accounting Policies” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Cost of revenue consist of direct material, labor and indirect costs related to the lease performance of our ASSURE WCD such as the cost of disposable WCD device components, depreciation expense of reusable medical rental equipment components, shipping and order fulfillment costs, as well as other indirect costs incurred to support the manufacture and medical rental equipment delivery to and ongoing support for the patient incurred in connection with providing our ASSURE WCD to patients. Overall expenditures for disposable components and reprocessing costs will increase as the number of patients receiving our ASSURE WCD increases and to a lesser extent, depreciation expense will increase as additional reusable ASSURE WCD components are purchased. However, depreciation expense as a percentage of cost of revenue is expected to decrease in the long run through economies of scale as we continue to grow our business. For additional information on how depreciation impacts our financial results, see Note 2, “Significant Accounting Policies” to our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

We calculate gross margin as revenue less costs of revenue. We expect our gross margin to increase as reimbursement realization increases due to improved market access and shifts in patient mix towards patients with longer wear duration, as well as supply chain efficiencies from higher volume purchases of components and manufacturing process improvements. In addition, as the number of patients we serve continues to increase, we expect the cost of fitting per patient to continue to decrease. However, gross margin may be negatively impacted by a number of factors, including increases in prices of materials and electronics components, labor rates, shipping rates, and inflation.

Current wording

We calculate gross profit as revenue less cost of revenue. We expect our gross profit to increase as reimbursement realization increases due to improved market access and shifts in patient mix towards patients with longer wear duration, as well as supply chain efficiencies from higher volume purchases of components and manufacturing process improvements. In addition, as the number of patients we serve continues to increase, we expect the cost of fitting per patient to continue to decrease. However, gross profit may be negatively impacted by a number of factors, including increases in prices of materials and electronics components, labor rates, shipping rates, and inflation.

Previous wording

Research and development expenses consist of personnel expenses, including salaries, benefits and stock-based compensation expense for product development personnel, prototype materials and other expenses related to the development of new products. We expense research and development costs as they are incurred, although advanced payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

Current wording

Research and development expenses consist of personnel expenses, including salaries, benefits and share-based compensation expense for product development personnel, prototype materials and other expenses related to the development of new products. We expense research and development expenses as they are incurred, although advanced payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses and expensed as the related goods are delivered or the services are performed.

Previous wording

We expect our research and development costs to decrease as a percentage of revenue for the foreseeable future as our revenue increases. We will continue to invest in research and development activities related to developing new products and services, further enhancing our products and services through introducing new extensions and enhancements, conducting clinical trials as necessary and preparing any new products and services for commercialization.

Current wording

We expect our research and development expenses to decrease as a percentage of revenue for the foreseeable future as our revenue increases. We will continue to invest in research and development activities related to developing new products and services, further enhancing our products and services through introducing new extensions and enhancements, conducting clinical trials as necessary and preparing any new products and services for commercialization.

Previous wording

Selling expenses consist primarily of personnel expenses, including salaries, commissions, bonuses, benefits, travel, and stock-based compensation expense for sales, marketing and field clinical personnel, as well as investments in marketing initiatives to increase market awareness of our technology, including expenses related to travel, conferences, trade shows and consulting services.

Current wording

Selling expenses consist primarily of personnel expenses, including salaries, commissions, bonuses, benefits, travel, and share-based compensation expense for sales, marketing and field clinical personnel, as well as investments in marketing initiatives to increase market awareness of our technology, including expenses related to travel, conferences, trade shows and consulting services.

Previous wording

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation expense for personnel in executive, finance, accounting, commercial operations, distribution costs, revenue cycle management, legal, human resources, IT and administrative functions. General and administrative expenses also include direct or allocated expenses for rent and maintenance of facilities and insurance, not otherwise included in research and development expenses, selling expenses, or costs of revenue, as well as professional fees for legal, patent and consulting services. We expect expenses related to revenue cycle management to increase at higher rates than other types of general and administrative expenses as this function will continue to grow as the volume increases.

Current wording

General and administrative expenses consist primarily of personnel expenses, including salaries, benefits and share-based compensation expense for personnel in executive, finance, accounting, commercial operations, distribution costs, revenue cycle management, legal, human resources, IT and administrative functions. General and administrative expenses also include direct or allocated expenses for rent and maintenance of facilities and insurance, not otherwise included in research and development expenses, selling expenses, or cost of revenue, as well as professional fees for legal, patent and consulting services. We expect expenses related to revenue cycle management to increase at higher rates than other types of general and administrative expenses as this function will continue to grow as the volume increases.

Previous wording

Interest and other expense (income) consists of cash and non-cash components. The cash component of interest expense is attributable to borrowings under our term loans and a portion of loss on extinguishment of debt. The non-cash component consists of interest expense recognized from the amortization of debt discounts and debt issuance costs. Loss on extinguishment of debt is part of other expense (income).

Current wording

Interest and other expense (income) consists of cash and non-cash components. The cash component of interest expense (income) is attributable to borrowings under our term loan as well as interest received from various interest-bearing bank accounts. The non-cash component consists of interest expense recognized from the amortization of debt discounts, debt issuance costs and warrant fair value adjustments.

Previous wording

The following tables set forth our results of operations for the three and nine months ended January 31, 2025 and 2024. We have derived the data for the three and nine months ended January 31, 2025 and 2024 from our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. This information should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. The results for historical periods are not necessarily indicative of the results of operations for any future period, and our interim results are not necessarily indicative of the results to be expected for the full year.

Current wording

The following tables set forth our results of operations for the three months ended July 31, 2025 and 2024. We have derived the data for the three months ended July 31, 2025 and 2024 from our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report. This information should be read in conjunction with our unaudited interim condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report. The results for historical periods are not necessarily indicative of the results of operations for any future period, and our interim results are not necessarily indicative of the results to be expected for the full year.

Previous wording

Comparison of the Three and Nine Months Ended January 31, 2025 and 2024

Current wording

Comparison of the Three Months Ended July 31, 2025 and 2024

Previous wording

Revenue for the three months ended January 31, 2025 increased by $6.8 million, or 82%, compared to the three months ended January 31, 2024. Revenue growth was primarily driven by an increase in the number of patients using our products and an increase in reimbursement realization while reimbursement rates remained largely flat. There was a 57% increase in the number of patients using our products, along with a 16% increase in reimbursement realization due to additional payor contracts and a 44% increase in the size of our revenue cycle management team to improve collection efforts.

Current wording

Revenue for the three months ended July 31, 2025 increased by $6.6 million, or 52%, compared to the three months ended July 31, 2024. Revenue growth was primarily driven by an increase in the number of patients using our products while reimbursement rates remained largely flat. There was a 54% increase in the number of patients using our products and a 55% increase in the size of our revenue cycle management team to improve collection efforts.

Previous wording

Costs of revenue for the nine months ended January 31, 2025 increased by $7.2 million, or 38%, compared to the nine months ended January 31, 2024. The increase was primarily driven by an increase of $7.6 million in the cost of disposable medical equipment supplies, equipment reconditioning and other supplier costs, which were directly attributable to an increase in the number of patients using our product, an increase of $1.0 million in reserve for lost or damaged equipment, and an increase of $0.4 million in inbound freight, partially offset by a $1.8 million in savings from volume purchases of reusable and disposable components and continued manufacturing process improvements.

Current wording

Cost of revenue for the three months ended July 31, 2025 increased by $1.9 million, or 23%, compared to the three months ended July 31, 2024. The increase in cost of revenue was primarily driven by a $1.8 million increase in the cost of disposable medical equipment supplies and equipment reconditioning, which were directly attributable to an increase in the number of patients using our product, a $0.5 million increase in reserve for lost or damaged equipment, a $0.2 million increase in depreciation expense due to an increased number of monitor units, a $0.1 million increase in inbound freight due to an increase in returns, and a $0.1 million increase in standard kits costs, partially offset by a $0.6 million decrease in depreciation expense from increased useful lives of our components and a $0.2 million decrease in other supplier costs.

Previous wording

Gross margin for the three and nine months ended January 31, 2025 increased by $5.7 million and $17.6 million, or 644% and 1,702%, compared to the three and nine months ended January 31, 2024, respectively. The increase was primarily due to growth in both our total revenue, which was driven by the increased number of patients using our product, as well as an increase in revenue per patient as a result of an increase in reimbursement realization due to an increased number of payor contracts resulting in a higher percentage of patients having greater in-network coverage through their insurance providers and improved collection efforts driven by further increases in the size of our revenue cycle management team. The increase in gross margin was also driven by a decrease in cost of revenues per patient by 27% and 35% for the three and nine months ended January 31, 2025 compared to the three and nine months ended January 31, 2024, respectively, due to further improvements in the utilization of our rental pool of medical equipment and lower disposable costs driven by volume and manufacturing cost improvement programs we implemented during the nine months ended January 31, 2025, including a therapy cable repair program approved by the FDA in May 2024.

Current wording

Gross profit for the three months ended July 31, 2025 increased by $4.7 million, or 111%, compared to the three months ended July 31, 2024. The increase in gross profit was primarily due to growth in both our total revenue, which was driven by the increased number of patients using our product and improved collection efforts driven by further increases in the size of our revenue cycle management team. The increase in gross profit was also driven by a decrease in cost of revenues per patient by 21% for the three months ended July 31, 2025 compared to the three months ended July 31, 2024, due to further improvements in the utilization of our rental pool of medical equipment and lower disposable costs driven by volume and implementation of manufacturing cost improvement programs, and longer useful lives of our medical rental equipment components.

Previous wording

Research and development costs for the three months ended January 31, 2025 decreased by $0.4 million, or 10%, compared to the three months ended January 31, 2024. The decrease was primarily driven by a $0.2 million decrease in contractor costs and a $0.2 million decrease in engineering services costs.

Current wording

Research and development costs for the three months ended July 31, 2025 increased by $0.6 million, or 18%, compared to the three months ended July 31, 2024. The increase was primarily driven by an increase in contractor costs.

Previous wording

Selling, general and administrative expenses for the three months ended January 31, 2025 increased by $6.7 million, or 39%, compared to the three months ended January 31, 2024. The increase was primarily driven by a $3.6 million increase in personnel expenses such as salaries, benefits and stock-based compensation, resulting from an increase in headcount, a $1.9 million increase in professional services expense related to the IPO, a $0.6 million increase in travel expenses driven by increased headcount, and a net $0.6 million increase in other selling, general and administrative expenses.

Current wording

Selling, general and administrative expenses for the three months ended July 31, 2025 increased by $14.5 million, or 75%, compared to the three months ended July 31, 2024. The increase was primarily driven by a $9.3 million increase in personnel expenses such as salaries, benefits and share-based compensation, resulting from an increase in headcount to support commercial growth, a $2.0 million increase in legal, accounting, and professional service fees related to our transition to a public company, a $1.7 million increase in commercial support costs including contractors and external recruitment costs, a $0.7 million increase in travel and entertainment expenses due to an increase in headcount, a $0.4 million increase related to shipping and logistics costs, and a $0.4 million increase related to increased software licensing fees driven by increased headcount.

Previous wording

Interest income for the three months ended January 31, 2025 increased by $0.6 million, or 100%, compared to the three months ended January 31, 2024. The increase was due to $0.6 million interest income received from various interest-bearing bank accounts.

Current wording

Interest income for the three months ended July 31, 2025 increased by $2.1 million compared to the three months ended July 31, 2024. The increase was due to $2.1 million interest income received from various interest-bearing bank accounts as a result of higher account balances.

Previous wording

For each of the three and nine months ended January 31, 2025 and 2024, the tax provision was less than $0.1 million, which was primarily related to state tax liabilities in the United States.

Current wording

For each of the three months ended July 31, 2025 and 2024, the tax provision was less than $0.1 million, which was primarily related to state tax liabilities in the United States.

Previous wording

Since inception, we have devoted substantially all our efforts to research and development, undertaking clinical trials, enabling manufacturing activities in support of our product development efforts, hiring personnel, organizing and staffing our company, performing business planning, establishing our intellectual property portfolio, building and expanding a commercial team to market our Cardiac Recovery System platform in the United States, and raising capital to support and expand such activities. We have incurred net losses in each year since inception and expect to continue to incur net losses in the foreseeable future. Our net loss and comprehensive loss were $21.8 million and $21.6 million for the three months ended January 31, 2025, and 2024, respectively. Our net loss and comprehensive loss were $62.7 million and $71.8 million for the nine months ended January 31, 2025, and 2024, respectively. As of January 31, 2025, we had an accumulated deficit of $468.2 million. For the nine months ended January 31, 2025, and 2024, we generated negative operating cash flows of $53.9 million and $57.3 million, respectively.

Current wording

Since inception, we have devoted substantially all our efforts to research and development, undertaking clinical trials, enabling manufacturing activities in support of our product development efforts, hiring personnel, organizing and staffing our company, performing business planning, establishing our intellectual property portfolio, building and expanding a commercial team to market our Cardiac Recovery System platform in the United States, and raising capital to support and expand such activities. We have incurred net losses in each year since inception and expect to continue to incur net losses in the foreseeable future. Our net loss and comprehensive loss were $25.8 million and $20.3 million for the three months ended July 31, 2025, and 2024, respectively. As of July 31, 2025, we had an accumulated deficit of $546.1 million. For the three months ended July 31, 2025, and 2024, we generated negative operating cash flows of $26.3 million and $17.5 million, respectively.

Previous wording

As of January 31, 2025, and April 30, 2024, our principal sources of liquidity consisted of $54.4 million and $8.2 million of cash and cash equivalents, respectively. We amended the Term Loan 2024 facility on February 25, 2025, to adjust the revenue milestone to the debt covenant associated with the third tranche. We also raised $215.8 million in March 2025 in connection with the IPO after deducting underwriting discounts and commissions and before deducting estimated offering costs. Based on our current operating plan, we believe that our existing cash and cash equivalents, which includes the net proceeds from our IPO, as well as cash generated from revenue transactions with patients, will be sufficient to fund our operating and capital needs for at least the next 12 months.

Current wording

As of July 31, 2025, and April 30, 2025, our principal sources of liquidity consisted of $201.5 million and $237.9 million of cash and cash equivalents, respectively. Based on our current operating plan, we believe that our existing cash and cash equivalents, which includes the net proceeds from our IPO, as well as cash generated from revenue transactions with customers, will be sufficient to fund our operating and capital needs for at least the next 12 months.

Previous wording

We have incurred significant operating losses and negative cash flows driven by substantial research and development costs as well as our large investment in our fleet of ASSURE WCDs and building our commercial organization. Our operations have focused on developing products, establishing our intellectual property portfolio, marketing our product and staffing the Company to support continued growth. Our primary use of cash has been to fund operating expenses, which comprise research and development costs, and costs of building the commercial team and necessary infrastructure to support our growth. Cash used to fund our operating expenses is impacted by the timing of when we pay for such expenses.

Current wording

We have incurred significant operating losses and negative cash flows driven by substantial research and development expenses as well as our large investment in our fleet of ASSURE WCDs and building our commercial organization. Our operations have focused on developing products, establishing our intellectual property portfolio, marketing our product and staffing the Company to support continued growth. Our primary use of cash has been to fund operating expenses, which comprise research and development expenses, and costs of building the commercial team and necessary infrastructure to support our growth. Cash used to fund our operating expenses is impacted by the timing of when we pay for such expenses.

Previous wording

We obtained the PMA for our ASSURE WCD from the FDA on July 27, 2021 and fully commercially launched our ASSURE WCD in August 2022. We will continue to scale the business and therefore expect operating losses to continue. Based on our current operating plan, we believe that our existing cash and cash equivalents, which includes the net proceeds from our IPO, as well as cash generated from revenue transactions with patients, will be sufficient to fund our operating and capital needs for at least the next 12 months. We 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 our growth plans, which may include future equity and debt financings. Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties.

Current wording

We obtained the PMA for our ASSURE WCD from the FDA on July 27, 2021 and fully commercially launched our ASSURE WCD in August 2022. We will continue to scale the business and therefore expect operating losses to continue. Based on our current operating plan, we believe that our existing cash and cash equivalents, which includes the net proceeds from our IPO, as well as cash generated from revenue transactions with customers, will be sufficient to fund our operating and capital needs for at least the next 12 months. We 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 our growth plans, which may include future equity and debt financings. Our assessment of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement and involves risks and uncertainties.

Previous wording

Our future obligations primarily consist of our debt obligations. From our inception to the consummation of the IPO, our operations were primarily funded by proceeds from our capital contributions made by West Affum Holdings, L.P., our direct parent prior to the Organizational Transactions, borrowings under our Term Loan 2024 and, prior to its repayment in September of 2023, our Term Loan, and our revenues. We expect our cash generation from operations and future ability to refinance or secure additional equity or financing to be sufficient to repay our outstanding debt obligations. As of January 31, 2025, the outstanding principal amount under the Term Loan 2024 was approximately $45.0 million. The Term Loan was repaid in full in September 2023. For further information, see Note 7, “Long-Term Debt,” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

Our future obligations primarily consist of our debt obligations. From our inception to the consummation of the IPO, our operations were primarily funded by proceeds from our capital contributions made by West Affum Holdings, L.P., our direct parent prior to the Organizational Transactions, borrowings under our Term Loan 2024 and our revenues. We expect our cash generation from operations and future ability to refinance or secure additional equity or financing to be sufficient to repay our outstanding debt obligations. As of July 31, 2025, the outstanding principal amount under the Term Loan 2024 was approximately $45.0 million. For further information, see Note 7, “Long-Term Debt,” to our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.

Previous wording

In the nine months ended January 31, 2025 and 2024, we received $103.4 million and $62.5 million, respectively, in cash from West Affum Holdings, L.P. in return for the issuance of redeemable preferred stock as described in Note 10, “Redeemable Preferred Stock,” to our unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q. Additionally, in July 2024, one of our subsidiaries received $17.1 million from a third-party investor in return for redeemable shares of the subsidiary. As of January 31, 2025, we had cash and cash equivalents and restricted cash balances of $54.7 million and an accumulated deficit of $468.2 million. In the three months ended January 31, 2024, we received $12.5 million in cash from West Affum Holdings, L.P. in return for the issuance of redeemable preferred stock.

Current wording

In the three months ended July 31, 2024, we received $103.4 million in cash from West Affum Holdings, L.P. in return for the issuance of redeemable preferred stock as described in Note 10, “Redeemable Preferred Stock,” to our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report. Additionally, in July 2024, one of our subsidiaries received $17.1 million from a third-party investor in return for redeemable shares of the subsidiary.

Previous wording

On September 29, 2023, we entered into a Credit Agreement with Perceptive Credit Holdings IV, LP, as administrative agent, which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $60.0 million (“Term Loan 2024”). The Term Loan 2024 matures on September 29, 2028. Borrowings under the Term Loan 2024 are made available in up to three tranches, the first of which is available upon closing of the Term Loan 2024 and two follow-on tranches of $7.5 million which become available before November 1, 2024 and February 1, 2025 and are dependent upon achievement of revenue milestones of trailing twelve month revenues of $50.0 million and $70.0 million, respectively. We did not meet the revenue milestone required to draw on the November 1, 2024 follow-on tranche of the Term Loan 2024. As of October 31, 2024, we determined it was not likely that we would meet the revenue milestone required to draw on the February 1, 2025 follow-on tranche of the Term Loan 2024. As a result, we expensed the asset related to debt issuance costs and facility fees in the amount of $0.5 million. The Term Loan 2024 bears interest on outstanding balances of Term SOFR plus a margin of 7.25% per annum. On or prior to March 31, 2025, up to 2.00% of the margin can be paid-in-kind, accrued and added to the principal balance and compounded quarterly. All interest is due and payable quarterly in arrears.

Current wording

On September 29, 2023, we entered into a Credit Agreement with Perceptive Credit Holdings IV, LP, as administrative agent, which provides for a senior secured delayed draw term loan facility in an aggregate principal amount of up to $60.0 million (“Term Loan 2024”). The Term Loan 2024 matures on September 29, 2028. Borrowings under the Term Loan 2024 are made available in up to three tranches, the first of which is available upon closing of the Term Loan 2024 and two follow-on tranches of $7.5 million which become available before November 1, 2024 and February 1, 2025 and are dependent upon achievement of revenue milestones of trailing twelve month revenues of $50.0 million and $70.0 million, respectively. We did not meet the revenue milestone required to draw on the November 1, 2024 follow-on tranche of the Term Loan 2024. As of October 31, 2024, we determined it was not likely that we would meet the revenue milestone required to draw on the February 1, 2025 follow-on tranche of the Term Loan 2024. As a result, we expensed the asset related to debt issuance costs and facility fees in the amount of $0.5 million. The Term Loan 2024 bears interest on outstanding balances of Term SOFR plus a margin of 7.25% per annum. All interest is due and payable quarterly in arrears.

Previous wording

On September 29, 2023, we drew the initial $45.0 million under the Term Loan 2024. In conjunction with the draw of the first tranche, West Affum Holdings, L.P. issued a warrant to the lender to purchase up to 256,410 shares of West Affum Holdings, L.P.’s common units at an exercise price of $17.55 per share. The fair value of the warrant is $1.6 million 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.

Current wording

On September 29, 2023, we drew the initial $45.0 million under the Term Loan 2024. In conjunction with the draw of the first tranche, West Affum Holdings, L.P. issued a warrant to the lender to purchase up to 256,410 shares of West Affum Holdings, L.P.’s common units at an exercise price of $17.55 per share. The fair value of the warrant was $1.6 million and recognized as a debt discount and as a capital contribution, and the debt discount was amortized over the term of the loan to interest expense.

Previous wording

On February 25, 2025, we amended the Term Loan 2024 pursuant to the Second Amendment to Credit Agreement to adjust the revenue milestones set forth in the Term Loan 2024 and to amend our ability to draw on additional funds. Upon the completion of the IPO, an additional $15.0 million term loan draw is available to us through July 31, 2026 upon achievement of a twelve-month trailing revenue run rate of $60.0 million. In connection with the Second Amendment to Credit Agreement and 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 per share.

Current wording

On February 25, 2025, we 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”) which amended the Term Loan 2024 to adjust the revenue milestones set forth in the Term Loan 2024 and to amend our ability to draw on additional funds. Under the Second Amendment to Credit Agreement, an additional $15.0 million term loan draw is available to us through July 31, 2026 upon achievement of a twelve-month trailing revenue run rate of $60.0 million. In connection with the Second Amendment to Credit Agreement and 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 of our common shares with an exercise price of $11.54 per share.

Previous wording

For further information, see Note 7, “Long-Term Debt,” and Note 17, “Subsequent Events,” to our unaudited condensed consolidated financial statements for the three and nine months ended January 31, 2025 and 2024 included elsewhere in this Quarterly Report on Form 10-Q and our consolidated financial statements for the fiscal years ended April 30, 2024 and 2023 included in the IPO Prospectus.

Current wording

For further information, see Note 7, “Long-Term Debt,” to our unaudited interim condensed consolidated financial statements for the three months ended July 31, 2025 and 2024 included elsewhere in this Quarterly Report and our consolidated financial statements for the fiscal years ended April 30, 2025 and 2024 included in the Annual Report.

Previous wording

For the nine months ended January 31, 2025, cash used in operating activities was $54.0 million, which primarily consisted of a net loss of $62.7 million and a net decrease of $2.8 million in operating assets and liabilities, offset by a net increase of $11.5 million in non-cash charges. The net change in our operating assets and liabilities consisted of changes in accounts payable of $3.0 million, accrued liabilities of $2.7 million, driven by increases in professional services fees related to the IPO, and operating lease liabilities of $0.2 million, partially offset by changes in account receivables of $5.9 million, disposable medical equipment supplies of $2.7 million and prepaid expenses and other current assets of $0.1 million. The non-cash charges primarily consisted of depreciation and amortization of $6.1 million, stock-based compensation expense of $2.0 million, interest paid-in-kind of $0.7 million related to the Term Loan 2024, loss on disposal of property and equipment of $1.4 million, non-cash lease expense of $0.3 million, and amortization of debt discounts and issuance costs of $1.0 million.

Current wording

For the three months ended July 31, 2025, cash used in operating activities was $26.3 million, which primarily consisted of a net loss of $25.8 million and a net decrease of $6.1 million in operating assets and liabilities, offset by a net increase of $5.6 million in non-cash charges. The net change in our operating assets and liabilities consisted of changes in accounts payable of $2.9 million, account receivables of $1.8 million, accrued liabilities of $0.9 million, disposable medical equipment supplies of $0.5 million, and operating lease liabilities of $0.1 million, partially offset by prepaid expenses and other current assets of $0.1 million. The non-cash charges primarily consisted of share-based compensation expense of $4.6 million, depreciation and amortization of $2.0 million, provision for uncollectible accounts receivable of $0.6 million, amortization of debt discounts and issuance costs of $0.5 million, reserve for lost medical supplies of $0.4 million, loss on disposal of property and equipment of $0.3 million, and non-cash lease expense of $0.1 million, partially offset by change in fair value of warrant liability of $2.9 million.

Previous wording

For the nine months ended January 31, 2024, cash used in operating activities was $57.3 million, which primarily consisted of a net loss of $71.8 million offset by a net increase of $1.6 million in operating assets and liabilities, and $12.9 million in non-cash charges. The net increase in our operating assets and liabilities was primarily due to changes in accounts payable of $5.7 million and prepaid expenses and other current assets of $0.1 million, partially offset by changes in accounts receivable of $1.4 million, accrued liabilities of $0.8 million, operating lease liabilities of $0.6 million attributable to operating lease repayments, and disposable medical equipment supplies of $1.4 million. The non-cash charges primarily consisted of interest paid-in-kind of $0.9 million related to the Term Loan 2024 and the Term Loan, depreciation and amortization expense of $8.1 million, stock-based compensation expense of $1.1 million, non-cash lease expense of $0.7 million, loss on disposal of property and equipment of $0.8 million, amortization of debt discounts and issuance costs of $0.4 million, and non-cash loss on debt extinguishment of $0.9 million.

Current wording

For the three months ended July 31, 2024, cash used in operating activities was $17.5 million, which primarily consisted of a net loss of $20.3 million and a net decrease of $1.5 million in operating assets and liabilities, offset by a net increase of $4.3 million in non-cash charges. The net change in our operating assets and liabilities was primarily due to changes in accounts receivable of $2.9 million, disposable medical equipment supplies of $0.6 million, and prepaid expenses and other current assets of $0.4 million, partially offset by changes in accounts payable of $2.3 million and accrued liabilities of $0.1 million. The non-cash charges primarily consisted of depreciation and amortization expense of $2.4 million, provision for uncollectible accounts receivable of $0.7 million, share-based compensation expense of $0.4 million, interest paid-in-kind of $0.2 million related to the Term Loan 2024, non-cash lease expense of $0.2 million, loss on disposal of property and equipment of $0.2 million, and amortization of debt discounts and issuance costs of $0.2 million.

Previous wording

For the nine months ended January 31, 2025 and 2024, cash used in investing activities was $15.5 million and $8.1 million, respectively, which primarily consisted of purchases of property and equipment such as medical rental equipment, computer hardware, test equipment and other research and development activities, and leasehold improvements.

Current wording

For the three months ended July 31, 2024, cash used in investing activities was $7.0 million, which primarily consisted of purchases of property and equipment such as medical rental equipment, computer hardware, test equipment and other research and development activities, and leasehold improvements.

Previous wording

For the nine months ended January 31, 2025, cash provided by financing activities was $115.6 million, which primarily consisted of $103.4 million in proceeds from the issuance of redeemable preferred stock and $17.1 million in proceeds from issuance of stock to non-controlling interest. The increase in cash provided by financing activities was offset by equity issuance costs of $3.2 million, deemed dividend payments of $1.6 million, and payments of deferred offering costs of $0.1 million.

Current wording

For the three months ended July 31, 2024, cash provided by financing activities was $116.2 million, which primarily consisted of proceeds from the issuance of redeemable preferred stock of $103.4 million and $17.1 million in proceeds from issuance of stock to non-controlling interests. The increase in cash provided by financing activities was offset by equity issuance costs of $3.3 million and deemed dividend payments of $1.0 million.

Previous wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience, known trends and events and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions, could have a material impact on the Company’s business, financial condition, results of operations and prospects.

Current wording

Our management’s discussion and analysis of our financial condition and results of operations are based on our unaudited interim condensed consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles. The preparation of our consolidated financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses and related disclosures. We base our estimates on historical experience, known trends and events and various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ materially from these estimates under different assumptions or conditions, could have a material impact on the Company’s business, financial condition, results of operations and prospects.

Previous wording

See Note 2 to our unaudited condensed consolidated financial statements elsewhere in this Quarterly Report on Form 10-Q for information about our significant accounting policies and how estimates are involved in the preparation of our financial statements. There have been no material changes to our significant accounting policies and estimates as described in the IPO Prospectus.

Current wording

Information about our significant accounting policies and how estimates are involved in the preparation of our financial statements are described in our Annual Report filed with the SEC on July 17, 2025. See also Note 2 to our unaudited interim condensed consolidated financial statements elsewhere in this Quarterly Report. There have been no material changes in our significant accounting policies and estimates since our Annual Report.