KMTS 10-K & 10-Q changes, risk factors and insider trading

Investing in our common shares involves a high degree of risk. You should consider carefully the risks and uncertainties described below, together with all of the other information in this Annual Report, including the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our consolidated financial statements and the related notes thereto, before deciding to invest in our common shares. The risks and uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of the following risks occur, our business, financial condition, results of operations and prospects could be materially and adversely affected. In that event, the market price of our common shares could decline, and you could lose all or part of your investment. Please also see “Special Note Regarding Forward-Looking StatementsStatements.”.

We are a commercial-stage, wearable medical device and digital healthcare company focused on transforming patient outcomes in cardiovascular disease usingthrough monitoringconnected monitoring, therapeutic intervention, and therapeuticdata-driven interventionclinical technologies that are intuitive, intelligent, and connected.insights. We have developed and are commercializing our Cardiac Recovery System platform, a comprehensive and advanced system that integrates monitoring, therapeutic treatment, digital health, and patient support services into a single, unified solution. The cornerstone of our Cardiac Recovery System platform is the ASSURE WCD. We completed clinical trials for our ASSURE WCD in March 2020, received our PMA for our ASSURE WCD on July 27, 2021 and fully commercially launched our ASSURE WCD in August 2022.2022, Untiland thetherefore ASSUREdo WCDnot was approved by the U.S. FDA, the WCD market was served byhave a singlelong competitor,history which was providing the only other commercially available WCD for over 20 years andoperating as a result, has a significantly longer commercial track record than our company. We are continuing to develop the capabilities and infrastructure to increase our commercial organization, distribution, supply chain and revenue cycle management capabilities to further strengthen our market penetration. However, there is no assurance as to the extent to which we will be able to continue to scale our business and expand our market penetration. Consequently, any predictions you make about our future success or viability may not be as accurate as they could be if we had a longer operating history. We may be unsuccessful for a number of reasons, including:

the limited size and geographic scope of our sales and marketing capabilities as compared to our competitorsprimary competitor and the learning curve required for our direct sales force personnel to become effective in processing prescriptions of our products and capturing market share;

In addition, as a company with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. The challenges we face in managing our evolving business place significant demands on our management, financial, operational, manufacturing, technological and other resources. In particular, rapid and continued growth increases the challenges involved in a number of areas, including recruiting and retaining sufficient skilled personnel, maintaining consistent and high-quality products and customer service to meet increased demand for our products, and developing and maintaining revenue cycle management, inventory management, payor contracting, supply chain and information technology infrastructure that can support the growing scale of our business and ensuring our compliance with the laws and regulations of our markets and new markets we may enter into. We are continuing to transitioninvest from a company with a researchin and developmentgrow focus to a company with increasingly significantour commercial activities. As we continue to grow, we may also need to invest significant resources to improve and expand our portfolio of technologies and solutions, scale up our manufacturing capabilities through our third-party suppliers and expand our distribution resources, including our network of APSs,APSs. which weWe may not be able to do sothis in a cost-effective manner or at all. We cannot assure you that any changes in scale, related quality or compliance assurance will be successfully implemented or that appropriate personnel will be available to facilitate the management of and changes to our business. If we do not adequately address these risks and difficulties, our ability to support and further grow our current commercial activities may be negatively impacted.

The development, manufacturing and distribution of medical technologies is capital intensive. From our inception in 2014 through the full commercial launch of our ASSURE WCD in August 2022, we made significant investments in research and development efforts, developing and running clinical trials to obtain regulatory approval for our ASSURE WCD, and enabling manufacturing activities in support of our product development efforts to prepare for the commercialization of our ASSURE WCD. Since the commercial launch of our ASSURE WCD, we have incurred, and expect to continue to incur, significant expenses related to our sales, marketing, product manufacturing and distribution functions and processes and establishing the infrastructure, including revenue cycle management capabilities, necessary to continue to support its commercialization. WeMore recently, we have also incurred netexpenses losses since our inception in 2014 largely duerelating to theseoperating expenses.as a public company. We had net losses of $113.8$131.6 million and $94.1$113.8 million for the fiscal years ended April 30, 20252026 and 2024,2025, respectively, and as of April 30, 2025,2026, we had an accumulated deficit of $520.2$651.9 million.

We expect our expenses to continue to increase as our business grows, including as a result of our ongoing efforts to grow our sales and commercial organization, increase our brand awareness through programmatic and industry-specific advertising, conduct clinical studies to expand the clinical evidence supporting the efficacy of our ASSURE WCD and our broader Cardiac Recovery System platform and engage in research and development initiatives and potential partnerships to enhance and broaden our suite of solutions. Our efforts to continue to grow and scale our business may not be successful or may prove more expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently to offset these higher expenses or at all. In addition, as a public company, we will incur significant additional expenses that we did not incur as a private company, including expenses related to audit, legal, regulatory, compliance, director and officer insurance, investor and public relations, and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange.

While we believe that our existing cash andcash, cash equivalents and investments will be sufficient to fund our operating and capital needs for at least the next 12 months, we may need additional funding, which may include future equity and debt financing. We may experience lower than expected cash generated from operating activities or greater than expected capital expenditures, cost of revenue or operating expenses, and we may require additional funding in the future to further our growth plans. Any additional fundraisingFundraising efforts maycan divert our management from their day-to-day activities, which may adversely affect our ability to further commercialize our ASSURE WCD.WCD and otherwise grow our business. Any disruptions in the financial markets or other adverse macroeconomic conditions may make equity and debt financing more difficult to obtain and may have a material adverse effect on our ability to meet our fundraising needs. We cannot guarantee that future financing will be available in sufficient amounts or on terms favorable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our shareholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our shares to decline. The sale of additional equity or convertible securities would dilute all of our shareholders. The incurrence of indebtedness would result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborators or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or current or future products or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, financial condition, results of operations and prospects. Additionally, if we are capital constrained and unable to raise capital when needed, we may not be able to meet our obligations, which may limit or halt our ability to continue operations, or we may be forced to delay or scale back our growth plans, including our initiatives to increase market adoption of our ASSURE WCD and further our market penetration, which could materially and adversely affect our results of operations and prospects.

We generate revenue primarily fromby the lease ofleasing our ASSURE WCD as part of our Cardiac Recovery System platform, and we are therefore highly dependent on our ASSURE WCD for our continued success.

Our ability to execute our growth strategy and become profitable will depend on our ability to educate healthcare providers, hospitals and patients on the benefits of our ASSURE WCD and associated products and services delivered as part of our Cardiac Recovery System platform over the existing product and services in the market. There is no assurance that the products and solutions we offer through our Cardiac Recovery System platform or other potential products we may develop in the future will achieve and maintain widespread market adoption over the long term or at all. Market acceptance of the solutions and services we provide through our Cardiac Recovery System platform or other potential products we may develop may be negatively impacted if healthcare providers, hospitals and patients do not perceive WCDs, including our ASSURE WCD, to be useful, safe, effective, reliable and trustworthy or do not perceive the advantages of ASSURE WCD over our main competitor, or if we are unable to provide adequate customer service and sufficient training to patients or effectively harmonize our products with healthcare providers and processes in which we operate. We are currently engaged in a post-approval study of our ASSURE WCD and may in the future engage in additional clinical trials and other clinical initiatives to support additional indications and stronger guideline recommendations for WCD therapy and to obtain regulatory approvals to market our products in new markets. Any studies we, or third parties that we sponsor, may conduct may be expensive, time consuming and may not yield positive results. Negative clinical research results from past, current or future clinical studies or negative publicity or an adverse change to published or unpublished guidelines or recommendations from third parties (including, without limitation, key opinion leaders, medical societies and clinical advisory boards) relating to the use, clinical benefit or risk profile of WCDs in general, including our ASSURE WCD, generally could result in negative perception of the efficiency and safety of our products and affect our brand and reputation. Healthcare providers play a significant role in determining the course of a patient’s treatment and, as a result, the type of product that will be used to treat a patient. If we are not successful in convincing healthcare providers of the merits of our ASSURE WCD, they may not prescribe it or recommend it to other healthcare providers and we may be unable to increase revenue, sustain our growth or achieve profitability.

Additionally, adoption of our products may be directly influenced by a number of financial factors, including the extent to which our products have broad coverage from third-party payors and have well-established reimbursement codes and adequate reimbursement rates. The efficacy, safety, performance, patient compliance benefits and cost-effectiveness of our solutions, on a stand-alone basis and relative to competing products and/or services will determine the availability and level of reimbursement received by us. There is no assurance that we will be able to obtain and maintain adequate levels of coverage and reimbursement for our products. In particular, as we seek to expand into new markets in the future, including select international markets, we may be subject to different, and potentially conflicting requirements, to obtain the necessary coverage and reimbursement for our products. Complying with various coverage and reimbursement requirements in each jurisdiction in which we distribute our products may be costly, and we may face difficulty in adequately adjusting our business to comply with any diverging requirements, which could hinder our ability to expand our market reach or launch new products. In order to generate revenue, we will need to target potential prescribers of our products, such as hospitalists, cardiologists and other healthcare providers, as well as potential end-users of our products with whom we have had little contact, which may requirerequires significant marketing and sales efforts. Even if we succeed in increasing adoption of our products by healthcare providers and hospitals, maintaining and creating new relationships with third-party payors and developing and commercializing new features or indications for our productsproducts, we may be unable to generate sufficient revenue to achieve or sustain profitability.

The revenue we generate from distributing our ASSURE WCDs also varies, in part, based on the wear time of patients who are prescribed our ASSURE WCD. We bill third-party payors for patient use of our ASSURE WCDs based on their wear time. Although we have designed our ASSURE WCD to enhance the comfort of patients and allow for more extended wear times as part of their longer-term cardiac care, the actual wear time of our ASUREASSURE WCDs can vary due to a number of factors, many of which are beyond our control. The emergence of new medical technologies, therapies and other medical advances may reduce the need to wear a WCD for an extended period. Patients may shorten their wear time due to any inconvenience or discomfort from wearing a WCD or because they do not perceive the need to wear a WCD for an extended period of time and are willing to take on the heightened risk of experiencing a SCA from not wearing a WCD. Additionally, healthcare providers may elect to prescribe our ASSURE WCD for a more limited period of time because of concerns of reduced patient compliance with longer wear times, difficulties with obtaining reimbursement from third-party payors for extended wear times, changes in medical guidelines on recommended wear times or other clinical factors that result in the need to shorten or terminate the use of a WCD, such as a patient requiring an ICD sooner than anticipated. If the average wear time of our ASSURE WCD does not increase or is reduced over time, this may limit the revenue we generate, which may negatively impact our results of operations, cash flows and the growth of our business.

In the United States and in other countries, patients who are prescribed medical treatment generally rely on third-party payors to reimburse all or part of the costs associated with their treatment. In the United States,U.S., third-party payors include government healthcare programs such as Medicare, Medicaid, TRICARE and the Veterans Administration and private payors. Coverage and adequate reimbursement from payors are critical to new product acceptance. As we expand our business and enter into new markets, we will need to enter into new payor contracts with national, state, regional and international payors. There is no assurance that we will be able to enter into new payor contracts, or renew our existing payor contracts upon their expiration, on terms acceptable to us, or at all.

safe, effectiveeffective, and medically necessary;

In the United States,U.S., no uniform policy of coverage and reimbursement for products exists among third-party payors. Therefore, coverage and reimbursement for our products can differ significantly from payor to payor. As a result, obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that typically requires us to provide supporting scientific, clinical and cost-effectiveness data for the use of our products with no assurance that coverage and adequate reimbursement will be obtained. Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably high. There is no assurance that we will be able to maintain adequate coverage and reimbursement for our ASSURE WCD in each of the markets it is distributed.

any other change in the competitive landscape of our industry, including consolidation amongstamong our competitors or partners;

In addition, our revenue is subject to seasonality as our billings and collections efforts during January and February tend to be lower because of resetting annual patient healthcare insurance plan deductibles. In addition, as our sales grow in the United StatesU.S. and any international markets we may enter into in the future, we may experience seasonality based on holidays, vacations and other factors. The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the price of our common shares could decline substantially. Such a share price decline could occur even if we meet any previously publicly-stated guidance we may have provided.

We have limited experience supplying our ASSURE WCD in quantities and providing services on a broad scale that is both commercially successful and meets clinical needs, and we can experience issues that may lead to production or service delays or shortfalls may occur,shortfalls, which could adversely affect our business.

As we fully commercially launched our ASSURE WCD in August 2022, we have limited experience in supplying our ASSURE WCD in commercial quantities and providing services on a broad scale that is both commercially successful and meets clinical needs. As awe result,continue to scale our commercial operations, we have and may encounterin the future experience issues that can lead to production or service delays or shortfalls. Such production or service delays or shortfalls may be caused by many factors, including the following:

we and our manufacturing partners are subject to state and federal regulations, including the FDA’s Quality System Regulation (the “QSR”), for both the manufacture of our products and provision of our services, non-compliance with which could cause an interruption in our ability to manufacture and deliver our products and services; and to increase our revenue significantly and scale our services, we will be requiredability to attract, hire, train and retain qualified personnel.personnel in order to scale our services.

IfIn we are unableaddition to keepthe upabove with demand for our products, including our ASSURE WCD, our revenue could be negatively impacted, market adoption of our products could be harmed andfactors, we may not be able to compete against our current or future competitors. We utilize a lease business model, whereby when a patient’s indicated wear time has concluded, our ASSURE WCDs are returned for reprocessing and reintroduction into the distribution network. Patients are typically prescribed our ASSURE WCDs for 40 to 90 days, during which time the patient wears the ASSURE WCD primarily at home. Upon conclusion of the prescription period, the patient must return our ASSURE WCD so that we can refurbish and recondition the equipment. We rely on a third-party manufacturer to recondition our used ASSURE WCDs. If there are delays with our third party providers, if our patients fail to return their equipment on time or at all or if the equipment is severely damaged requiring extensive repairs and we are unable to timely deploy the equipment for the next customer’s use, then our business, financial condition, results of operations and prospects could be adversely affected. Although historicallyIf we haveare not experienced any material losses dueunable to damagedkeep orup unreturnedwith equipment,demand therefor isour noproducts, assuranceincluding thatour ASSURE WCD, our revenue could be negatively impacted, market adoption of our products could be harmed and we willmay not be adverselyable affectedto bycompete suchagainst lossesour incurrent theor future.future competitors.

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 also rely on a third-party manufacturing partner to recondition our ASSURE WCDs for use by subsequent patients. As a result, we depend on our third-party suppliers and contract manufacturers to provide us with materials and services in a timely manner that meet our quality, quantity and cost requirements. These suppliers and contract manufacturers maycan encounter problems during manufacturing for a variety of reasons, any of which could delay or impede their ability to meet demand for our products. Our reliance on third-party suppliers subjects us to a number of risks, including, but not limited to:

inability to obtain sufficient quantities of components used in our products in a timely manner or on commercially acceptable terms, including shortages of off-the shelfoff-the-shelf commercial components;

the outbreak of contagious diseases or other health crises;

In addition, if we fail to effectively manage our relationships with our suppliers and contract manufacturers, we may be required to change suppliers or contract manufacturers. While we believe replacement suppliers exist for all materials, components and services necessary to manufacture our ASSURE WCD, establishing additional or replacement suppliers for any of these materials, components or services, if required, could be time-consuming and expensive, and may result in interruptions in our operations and product delivery. Even if we are able to find replacement suppliers, we will be required to verify that the new supplier maintains facilities, procedures and operations that comply with our quality expectations and applicable regulatory requirements. Any of these events could require that we obtain regulatory authority approval before we implement the change, which could result in further delay and which may not be obtained at all. If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality on a timely basis, the continued commercialization of our ASSURE WCD, the supply of our products to customers and the development of any future products will be delayed, limited or prevented, which could have a material adverse effect on our business, financial condition, results of operations and prospects. Pandemics, such as the COVID-19 pandemic, other health crises, adverse weather conditions, natural disasters and accidents have in the past and may in the future result in supply chain disruptions that adversely affect our contract manufacturing partners’ ability to provide the supplies we require on a timely basis. Any significant delays or interruption in the supply of components and materials necessary for our products, or our inability to obtain substitute components or materials from alternate sources at acceptable terms and in a timely manner could impair our ability to meet demand for our products, fulfill our contractual obligations to deliver our products and harm our business.

If our suppliers’ manufacturing facilities becomeor damagedour orresearch and development facilities are damaged, inoperable, or ifotherwise they are required to vacate a facility, they may be unable to manufacture our products orunavailable, we maycould experience manufacturing disruptions, delays in productionresearch orand andevelopment increaseactivities, inincreased costs, whichand couldadverse adverselyeffects affecton our business and results of operations.

Facilities and equipment of our suppliers could be harmed or rendered inoperable by natural or man-made disasters, including fire, earthquake, terrorism, flooding, cyberattacks, power outages and other natural disasters or infrastructure failures. Any of these may render it difficult or impossible for our suppliers to manufacture products for some period of time. If our suppliers’ manufacturing facilities are inoperable for even a short period of time, the inability to manufacture our ASSURE WCD may result in harm to our reputation and our abilityresults toof achieve profitability.operations. Our research and development facilities are subject to similar risks, and inability to access such facilities may result in interruptions to our research and development efforts for our existing products and other products we are developing. Additionally, it may be costly and time-consuming to repair or replace ourthe facilities and the equipment we use to conduct our research and development activities and manufacture our products.

Expedited, reliable shipping is essential to our operations. We rely heavily on providers of transport services for reliable and secure point-to-point transport of our ASSURE WCD to our customers and for tracking of these shipments. InThis particular,in thisparticular is because we employ a lease model whereby at the end of a prescription, each patient ships our ASSURE WCD back to our third-party manufacturing partner, who then reconditions the ASSURE WCD before it is redistributed to the next patient. Delays in the transport of our ASSURE WCDs to and from our suppliers couldcan cause shortages in our inventory of ASSURE WCDs and adversely affect our ability to respond to customer demands. Should a carrier encounter delivery performance issues such as loss, damage or destruction of any ASSURE WCDs or components thereof, it would be costly to replace such systems or components in a timely manner and such occurrences may damage our reputation and lead to decreased demand for our products and increased cost and expense to our business. In addition, any significant increase in shipping ratesrates, due to trade restrictions or otherwise, could adversely affect our operating margins and results of operations. Similarly, strikes, severe weather, natural disasters or other service interruptions affecting delivery services we use would adversely affect our ability to process orders for our products on a timely basis.

If the ASSURE WCD is not effective or if we or our competitors receive negative publicity about the effectiveness of WCDs, then our brand and reputation could suffer and our business could be adversely impacted.suffer.

Additionally, if our products or similar products offered by our competitors are involved in an instance of patient harm, even if it is through misuse of such products, it could result in decreased demand for our products and damage to our reputation. For example, our primary competitor has been subject to negative publicity from the media and medical journals relating to false alarms and inappropriate shocks delivered by their WCDs. Reports of device failures or other instances of patient harm relating to our products or similar products offered by ourthis competitor could negatively impact demand and adoption rates for our ASSURE WCD or WCDs more generally, which could adversely affect our results of operations. This adverse impact may occur whether or not we are directly related to, or otherwise control, such eventsevents, andas even the mereany perception of our involvement could dilute, tarnish or otherwise adversely affect our reputation and brand.

The rising popularityavailability of social media and other consumer-oriented technologies has increased the speed and accessibility of information dissemination and given users the ability to organize collective actions more effectively, such as boycotts and other brand-damaging events. Many,Information ifon not all, social mediathese platforms immediatelymay publishbe theirinaccurate, participants’and posts, often without filters or checks on the accuracy of the content posted. Anyany failure to respond quickly and effectively to negative or potentially damaging social media content about our products or our affiliates, regardless of the content’s accuracy, could damage our reputation, which in turn could harm our business, prospects, financial condition and results of operations. The harm may be immediate without affording us an opportunity for redress or correction.

Healthcare providers in the U.S. generally rely on third-party payors, principally Medicare, Medicaid and private payors, to cover and reimburse all or part of the cost of our ASSURE WCD. The revenue we can generate from the lease of our ASSURE WCD depends in large part on the availability of reimbursement from suchthird-party payors, namely Medicare, Medicaid and private payors. These payors may deny reimbursement if they determine that our ASSURE WCD was not medically necessary for the patient or was not used in accordance with the payor’s coverage policy. A significant component of our operational efforts includesinvolves working with private payors to ensure positive coverage decisions for our product and investing in our revenue cycle management infrastructure to collect cash from payors. Additionally, we are reimbursed for the use of our ASSURE WCD based on patient wear time and are therefore dependent, to an extent, on patients complying with their prescriptions and wearing our ASSURE WCD for the time periods prescribed by their healthcare providers. Lack of patient compliance with prescribed wear times may also result in healthcare providers becoming less likely to prescribe our ASSURE WCDs at the same volumes we have experienced in the past, or at all, which would adversely impact our revenues and the growth of our business.

differences between our expected or contract price for our products and the reimbursement by the payerspayors and/or our patients;

Federal and state governmentsgovernmental haveagencies contractedand withcommercial privatepayors entitiesconduct audits, investigations and other reviews to auditidentify potential overpayments and recoverother revenueperceived resulting from payments madeirregularities in excessclaims ofsubmitted those permitted byto government healthcare programprograms rules.and private payors. These entitiesactivities include,may butinclude arereviews notconducted limited to,by Recovery Audit Contractors that are (responsible for auditing Medicare claims,claims), Unified Program Integrity Contractors that are (responsible for the identification of suspected fraud through medical record review), and Medicaid Integrity Contractors,Contractors that are (responsible for auditing Medicaid claims.claims). We believeare regularly subject to audits, inquiries, and investigations from these contractors and othersother will occurcontractors from time to time in the ordinary course of our business.business We alsoand may bebecome subject to increased auditsscrutiny from commercialgovernmental payors. Our efforts to be responsive to these audits, inquiries,agencies and investigationscommercial may resultpayors in substantial costs and divert management’s time and attention away from the operation of our business. Moreover, an adverse outcome with respect to any audit, inquiry or investigation may result in damage to our reputation, or in fines, penalties or other sanctions imposed on us. Such pending or future audits, inquiries, or investigations, or the public disclosure of such matters, could have a material adverse effect on our business, financial condition, results of operations and prospects.future.

We have been issued a Medicare Provider Number by the CMS, which enables us to bill Medicare for reimbursement for our ASSURE WCD as an accredited supplier to the extent the claim meets Medicare medical necessity and coverage requirements. We derive nearly all our revenue from the direct billing of various third-party payors, including Medicare, Medicaid, private payors and other healthcare-related organizations, for the lease of our ASSURE WCD to patients. WeAny alsocosts billassociated patientswith forour co-insurancesolution paymentsthat andare deductibles.not covered by third-party payors, such as co-payments, are billed directly to the patient by our team. As WCD therapy has existed for over 20 years in the United States, reimbursement codes are well-established, and WCDs are covered by Medicare, Medicaid and many private payors.

Our fiscal year ends on April 30 of each year. We incurred net losses of $113.8$131.6 million and $94.1$113.8 million for the fiscal years ended April 30, 20252026 and 2024,2025, respectively. For the fiscal year ended April 30, 2025,2026, we generated revenue of $95.1 million, with a gross profit of $48.9 million, compared to revenue of $59.8 million, with a gross profit of $24.2 million, compared to revenue of $27.8 million, with a gross profit of $0.4 million, for the fiscal year ended April 30, 2024.2025. As of April 30, 20252026 , we had cash, cash equivalents, and 2024,investments of $262.2 million. As of April 30, 2025, we had cash and cash equivalents balances of $237.6 millionmillion. As of April 30, 2026 and $8.22025, million,we respectively, andhad an accumulated deficit of $520.2$651.9 million and $406.4$520.2 million, respectively.

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 audited consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K), 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”.

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 andcash, cash equivalentsequivalents, investments, 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.

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 April 2025,30, 2026, we had approximately 80130 territories in the United States.States compared to 80 as of April 30, 2025. 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.

We received FDA approval for the commercialization of our ASSURE WCD on July 27, 2021 and fully commercially launched our ASSURE WCD in August 2022. We generate revenue by leasing our ASSURE WCD to 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, comprising Medicare, Medicaid, private payors and other healthcare-related organizations, and patient payments. The patient has the right to cancel the lease at any time during the lease period. We recognize lease revenue over the term of the lease when collectability is probable. If collectability of the lease payments is not deemed to be probable, the lease revenue is limited to the lesser of the income that would have been recognized if collectability was probable or the lease payments collected. If the lease payments are not deemed to be probable at inception, lease revenue is recognized when cash payments are received. We expect that our revenue will continue to increase as the number of patients that use our product increases.

Cost of revenue consistconsists 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 audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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 loans and a portion of loss on extinguishment of debtloan as well as interest received from various interest-bearing bank accounts.accounts and marketable securities. The non-cash component consists of interest expense recognized from the amortization of debt discounts anddiscounts, debt issuance costs.costs, Lossand onwarrant extinguishmentfair ofvalue debt is included in other expense.adjustments.

To date, we have recorded a limited amount of United States federal and state income statetax expense. As of April 30, 2025,2026, significant deferred tax assets include net operating loss carryforwards of $52.2$81.0 million, intangible assets of $35.4 million, interest carryforwards of $7.2$6.7 million, United States research and development credits of $5.5$5.9 million, and shared-basedshare-based compensation expense of $5.0$6.2 million. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities, projected future taxable income, carryback opportunities and tax planning strategies in making the assessment. We believe it is more likely than not that we will not realize the benefits of these deductible differences and have applied a full valuation allowance against them.our deferred tax assets.

Cost of revenue increased by $8.1$10.7 million, or 30%, to $46.3 million for the fiscal year ended April 30, 2026, from $35.6 million for the fiscal year ended April 30, 2025, from $27.5 million for the fiscal year ended April 30, 2024.2025. The increase in cost of revenue was primarily driven by an increase of $10.5$7.7 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, a $1.8 million increase in depreciation expense due to an increased number of systems and equipment in use, and an increase of $1.0$1.5 million in our reserve for lost or damaged equipment, partially offset by a $3.4$1.1 million decrease in depreciation expense due to the changes in useful life of therapyour cables and batteries.components.

Gross profit increased by $23.8$24.7 million to $48.9 million for the fiscal year ended April 30, 2026, from $24.2 million for the fiscal year ended April 30, 2025, from $0.4 for the fiscal year ended April 30, 2024.2025. The increase in gross profit was primarily due to growth in both our total revenue, which was driven by an 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.product. The increase in gross profit was also driven by a decrease in cost of revenues per patient by 47%18% for the fiscal year ended April 30, 20252026 compared to the fiscal year ended April 30, 2024,2025, 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 programsprograms, weand implementedlonger duringuseful thelives fiscalof yearour endedmedical Aprilrental 30, 2025, including a therapy cable repair program approved by the FDA in May 2024.equipment.

Selling, general and administrative expenses increased by $45.0$49.2 million, or 64%,43%, to $164.1 million for the fiscal year ended April 30, 2026, from $114.9 million for the fiscal year ended April 30, 2025, from $69.9 million for the fiscal year ended April 30, 2024.2025. The increase was primarily driven by a $34.1$33.2 million increase in personnel expenses such as salaries, benefits and share-based compensation, resulting from an increase in headcount,headcount to support commercial growth, a $5.7$0.9 million increase in professional servicesservice expensefees, and insurance related to theour IPO,transition to a $1.8public company, a $3.5 million increase in travel and entertainment expenses due to an increase in headcount, a $3.2 million increase in commercial support costs including contractors and external recruitment costs, a $2.1 million increase in commercial training costs, a $2.0 million increase related to shipping and logistics costs, a $1.7 million increase related to increased software licensing fees driven by increased headcount, a $0.9 million increase related to conference fees, and a net $3.4$1.4 million increase in other selling, general and administrative expenses.costs.

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 andwas comprehensive loss were $113.8$131.6 million and $94.1$113.8 million for the fiscal years ended April 30, 2025,2026, and 2024,2025, respectively. As of April 30, 2025,2026, we had an accumulated deficit of $520.2$651.9 million. For the fiscal years ended April 30, 2025,2026, and 2024,2025, we generated negative operating cash flows of $77.6$81.7 million and $72.2$77.6 million, respectively.

As of April 30, 20252026, our principal sources of liquidity consisted of $262.2 million of cash, cash equivalents, and 2024,investments. As of April 30, 2025, our principal sources of liquidity consisted of $237.6 million and $8.2 million of cash and cash equivalents, respectively.equivalents. Based on our current operating plan, we believe that our existing cash andcash, cash equivalents, and investments, which includes the net proceeds from our IPO,IPO and follow on offering, 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 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, whichand includes the net proceeds from our IPO,investments, 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.

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,2024, and our revenues. We expect the proceeds from our IPO and secondary offering, 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 April 30, 2025,2026, 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 audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

As of April 30, 2025,2026, we had cash, cash equivalents, and cash equivalents and restricted cash balancesinvestments of $237.9$262.2 million and an accumulated deficit of $520.2$651.9 million.

In the fiscal years ended April 30, 2025May and July of 2024, we received $103.4 million and $75.0 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 audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 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.

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”) and used a portion of our borrowings to repay the Term Loan.. 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 would have become available before November 1, 2024 and February 1, 2025 and are2025, 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.

On February 25, 2025, we amendedentered the Term Loan 2024 pursuant tointo 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 (the “2033 Warrant”) to purchase up to 325,847 of our common shares with an exercise price of $11.54 per share. On September 4, 2025, Perceptive Credit Holdings IV, LP fully exercised the 2033 Warrant to purchase Common Shares on a cashless basis, resulting in the issuance of 100,397 Common Shares and the cancellation of the 2033 Warrant.

For the fiscal year ended April 30, 2025,2026, cash used in operating activities was $77.6$81.7 million, which primarily consisted of a net loss of $113.8$131.6 million and a net decrease of $6.3$1.8 million in operating assets and liabilities, offset by a net increase of $42.5$48.0 million in non-cash charges. The non-cash charges primarily consisted of share-based compensation expense of $33.6 million, depreciation and amortization of $8.0$8.7 million, share-based compensation expense of $24.3 million, interest paid-in-kind of $0.9 million related to the Term Loan 2024, loss on disposal of property and equipment of $2.1$1.2 million, non-cash lease expense of $0.4$0.3 million, amortization of debt discounts and issuance costs of $1.4$1.9 million, a change in fair value of warrant liability of $2.6$2.7 million, provision for uncollectible accounts receivable of $2.7 million, and deferred income tax expense of $0.1$2.6 million. The net change in our operating assets and liabilities consisted of increases in accounts payable of $2.8$4.3 million, accrued liabilities of $4.6$8.2 million driven by increases in accrued compensation due to increased headcount and a reserve for claims repayments, and operating lease liabilities of $0.4$0.7 million, partially offset by increases in account receivables of $8.8$9.1 million, disposable medical equipment supplies of $3.4$0.5 million, and prepaid expenses and other current assets of $1.9$0.6 million related to prepayments for insurance, commercial materials, and software licenses and fees.million.

For the fiscal year ended April 30, 2024,2025, cash used in operating activities was $72.2$77.6 million, which primarily consisted of a net loss of $94.1$113.8 million,million and a net decrease of $6.2 million in operating assets and liabilities, offset by a net increase of $3.9 million in operating assets and liabilities and $18.0$42.4 million in non-cash charges. The non-cash charges primarily consisted of depreciation and amortization of $11.6$8.0 million, share-based compensation expense of $1.5$24.3 million, interest paid-in-kind of $1.1$0.9 million related to the Term Loan 2024 and the Term Loan,2024, loss on disposal of property and equipment of $1.1 million, non-cash loss on extinguishment of debt related to the Term Loan of $0.9$2.1 million, non-cash lease expense of $0.7$0.4 million, amortization of debt discounts and issuance costs of $0.6$1.4 million, anda change in fair value of warrant liability of $2.6 million, provision for uncollectible accounts receivable of $0.5$2.7 million, and deferred income tax expense of $0.1 million. The net change in our operating assets and liabilities consisted of changesincreases in accounts payable of $7.4$2.8 million, accrued liabilities of $0.4$4.6 million driven by increases in accrued compensation due to increased headcount,headcount and a reserve for claims repayments, and operating lease liabilities of $0.4 million, partially offset by increases in account receivables of $8.8 million, disposable medical equipment supplies of $3.4 million, and prepaid expenses and other current assets of $0.3 million related to prepayments for commercial materials and software licenses and fees, partially offset by changes in account receivables of $2.5 million, disposable medical equipment supplies of $1.2 million, and operating lease liabilities of $0.5$1.9 million.

For the fiscal year ended April 30, 2024,2026, cash provided by financing activities was $77.7$147.1 million, which primarily consisted of $75.0proceeds of $149.3 million from the secondary offering offset by $2.5 million of payments of equity offering costs and $0.6 million in proceeds from the issuance of redeemable preferred stock andoption $45.0 million in proceeds from the initial draw on the Term Loan 2024 in September 2023.exercises. The increase in cash provided by financing activities was partially offset by re-payments of long-term debt of $39.1 million, debt issuance costs of $2.4 million and deemed dividend payments of $0.8$0.3 million.

The Company’sOur long-lived assets consist of property and equipment, which includes leasehold improvements and right-of-use assets. TheWe Company doesdo not have long-lived assets held for sale. Long-lived assets are reviewed for potential impairment at such time that events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When evaluating long-lived assets for potential impairment, the Companywe will first compare the carrying amount of the assets to estimated future net undiscounted cash flows expected to result from the use of the assets, including cash flows from disposition. If the estimated future cash flows are less than the carrying amounts of the assets, an impairment loss is recognized and measured based upon the excess of the carrying value of the asset over its estimated fair value. There were no impairments of long-lived assets during the fiscal years ended April 30, 20252026 and 2024.2025.

• our stage of development;

• our history and the timing of the introduction of new technology;

• our actual operating results and performance and financial condition, including our levels of available capital resources;

• current business conditions and projections;

• the prices, rights, preferences, and privileges of our redeemable preferred stock relative to those of our common equity;

• market and economic conditions;

• conditions of the medical device industry;

• the stock price performance, volatility, and valuation multiples of comparable publicly-traded companies;

• the likelihood and timing of achieving a liquidity event, such as an initial public offering, given prevailing market conditions;

• the prices of redeemable preferred stock sold by us to third-party investors in arms-length transactions;

• recent stock transactions in shares of our preferred and common equity;

• relevant mergers and acquisitions in targeted industries;

This Management’s Discussion and Analysis of Financial Condition and Results of OperationOperations 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, 20252026 and 20242025 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” and Part I, Item 1A "Risk Factors" in our Annual Report.

We have been issued a Medicare Provider Number by the CMS, which enables us to bill Medicare for reimbursement for our ASSURE® WCD as an accredited supplier to the extent the claim meets Medicare medical necessity and coverage requirements. We derive nearly all our revenue from the direct billing of various third-party payors, including Medicare, Medicaid, private payors and other healthcare-related organizations, for the lease of our ASSURE® WCD to patients. WeAny alsocosts billassociated patientswith forour co-insurancesolution paymentsthat andare deductibles.not covered by third-party payors, such as co-payments, are billed directly to the patient by our team. As WCD therapy has existed for over 20 years in the United States, reimbursement codes are well-established, and WCDs are covered by Medicare, Medicaid and many private payors.

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.

Our fiscal year ends on April 30 of each year. We incurred net losses of $34.2$44.1 million and $21.8$25.8 million for the three months ended January 31, 2026 and 2025, respectively. We incurred net losses of $92.8 million and $62.7 million for the nine months ended JanuaryJuly 31, 2026 and 2025, respectively. For the three months ended JanuaryJuly 31, 2026, we generated revenue of $24.6$31.0 million, with a gross profit of $12.9$17.5 million, compared to revenue of $15.1$19.4 million, with a gross profit of $6.5$8.9 million, for the three months ended January 31, 2025. For the nine months ended January 31, 2026, we generated revenue of $66.5 million, with a gross profit of $33.2 million, compared to revenue of $42.6 million, with a gross profit of $16.6 million, for the nine months ended JanuaryJuly 31, 2025. As of JanuaryJuly 31, 2026, we had cash and cash equivalents and investment balances of $291.3$244.7 million, and an accumulated deficit of $613.0$695.9 million.

From our inception to the consummation of theour IPO,initial public offering ("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”.

In connection with 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.

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 andcash, cash equivalentsequivalents, investments, 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.

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.

Payor Coverage and Revenue Cycle Management. Healthcare providers in the United States generally rely on third-party payors, principally Medicare, Medicaid and private payors, to cover and reimburse all or part of the cost of our product. The revenue we can generate from the lease of our ASSURE® WCD depends in large part on the availability of reimbursement from such payors. A significant component of our operational efforts includes working with private payors to ensure positive coverage decisions for our product and investing in our revenue cycle management infrastructure to collect cash from payors.

The following discussion describes certain key components of our interim unaudited condensed consolidated statementstatements of operations.operations and comprehensive loss.

We received FDA approval for the commercialization of our ASSURE WCD on July 27, 2021 and fully commercially launched our ASSURE WCD in August 2022. We generate revenue by leasing our ASSURE® WCD to 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, comprising Medicare, Medicaid, private payors and other healthcare-related organizations, and patient payments. The patient has the right to cancel the lease at any time during the lease period. We recognize lease revenue over the term of the lease when collectability is probable. If collectability of the lease payments is not deemed to be probable, the lease revenue is limited to the lesser of the income that would have been recognized if collectability was probable or the lease payments collected. If the lease payments are not deemed to be probable at inception, lease revenue is recognized when cash payments are received. We expect that our revenue will continue to increase as the number of patients that use our product increases.

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.

We expect that our overall selling, general and administrative expenses will increase in the foreseeable future as we increase our headcount to support the continued growth of our business. We alsohave anticipate incurringincurred additional expenses associated with operating as a public company, including increased expenses related to audit, legal, regulatory, compliance, director and officer insurance, investor and public relations, and tax-related services associated with maintaining compliance with the rules and regulations of the SEC and standards applicable to companies listed on a national securities exchange. These expenses may further increase when we no longer qualify as an “emerging growth company” under the JOBS Act, which will require us to comply with certain reporting requirements from which we are currently exempt. However, we expect overall general and administrative expenses to decrease as a percentage of revenue primarily as, and to the extent, our revenue grows.

Interest and Other Expense (Income), net

Interest and other expense (income), net consists of cash and non-cash components. The cash component of interest expense (income) is attributable to borrowings under our term loanloans 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 costsaccounts and warrantinvestments fairin valuemarketable adjustments.securities.

Results of Operations for the Three and Nine Months Ended JanuaryJuly 31, 2026 and 2025

The following tables set forth our results of operations for the three and nine months ended JanuaryJuly 31, 2026 and 2025. We have derived the data for the three and nine months ended JanuaryJuly 31, 2026 and 2025 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.

Comparison of the Three and Nine Months Ended JanuaryJuly 31, 2026 and 2025

Revenue for the three months ended JanuaryJuly 31, 2026 increased by $9.5$11.6 million, or 63%,60%, compared to the three months ended JanuaryJuly 31, 2025. Revenue growth was primarily driven by a 58%an increase in the number of patients using our products.

Cost of revenue for the three months ended JanuaryJuly 31, 2026 increased by $3.1$3.0 million, or 36%,28%, compared to the three months ended JanuaryJuly 31, 2025. The increase in cost of revenue was primarily driven by a $1.9$1.0 million increase in the cost of disposable medical equipment supplies and equipment reconditioning, attributable to the increase in the number of patients using our product, a $0.9 million increase in depreciation expense due to an increased number of systems and equipment in use, a $0.5$1.1 million increase in reserve for lost or damaged equipment, and a $0.5$0.3 million increase in other costs, partially offset by a $0.7$0.3 million decrease in depreciation expense from increased useful lives of our components.

Gross profit for the three months ended JanuaryJuly 31, 2026 increased by $6.4$8.6 million, or 97%,98%, compared to the three months ended JanuaryJuly 31, 2025. The increase in gross profit was primarily due to growth in our total revenue. The increase in gross profit was also driven by a decrease in cost of revenues per patient by 14%9% for the three months ended JanuaryJuly 31, 2026 compared to the three months ended JanuaryJuly 31, 2025, 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.

Research and development costs for the ninethree months ended JanuaryJuly 31, 2026 increased by $3.6$2.8 million, or 35%,70%, compared to the ninethree months ended JanuaryJuly 31, 2025. The increase was primarily driven by a $2.8$0.9 million increase in personnel expenses such as salaries, benefitsbenefits, and share-based compensation expense, resulting from increased headcount, and a $0.7$0.9 million increase in contractor costs.costs, and $1.0 million of development expenses from our strategic collaboration with Biobeat Technologies.

Selling, general and administrative expenses for the three months ended JanuaryJuly 31, 2026 increased by $18.9$14.6 million, or 79%,43%, compared to the three months ended JanuaryJuly 31, 2025. The increase was primarily driven by a $15.3$10.7 million increase in personnel expenses such as salaries, benefits and share-based compensation, resulting from an increase in headcount to support commercial growth, a $0.9$1.4 million increase in commercial support costs including contractors, a $0.6 million increase in travel and entertainment expenses due to an increase in headcount, a $0.8$0.6 million increase in commercial support costs including contractors and external recruitmenttraining costs, a $0.6$0.5 million increase related to shipping and logistics costs, a $0.5 million increase related to increased software licensing fees driven by increased headcount, a $0.4 million increase related to conference fees,and a $0.3 million increase in commercial training costs, and a $0.2 million increase in other costs.

Interest and Other Expense (Income), net

Interest income and interest expense for the three months ended JanuaryJuly 31, 2026 increasedwere byconsistent $0.1 million compared towith the three months ended JanuaryJuly 31, 2025.

Other expense (income), net for the ninethree months ended JanuaryJuly 31, 2026 increased by $2.4$3.1 million compared to the ninethree months ended JanuaryJuly 31, 2025. The increase was primarily due to the addition of the warrant liability.liability remeasurement.

For each of the three and nine months ended JanuaryJuly 31, 2026 and 2025, the tax provision was less than $0.1 million, which was primarily related to state tax liabilities in the United States.

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 werewas $34.2$44.1 million and $21.8$25.8 million for the three months ended January 31, 2026 and 2025, respectively. Our net loss and comprehensive loss were $92.8 million and $62.7 million for the nine months ended JanuaryJuly 31, 2026 and 2025, respectively. As of JanuaryJuly 31, 2026, we had an accumulated deficit of $613.0$695.9 million. For the ninethree months ended JanuaryJuly 31, 2026 and 2025, we generated negative operating cash flows of $63.0$32.3 million and $53.6$26.3 million, respectively.

As of JanuaryJuly 31, 2026 and April 30, 2025,2026, respectively, our principal sources of liquidity consisted of $291.3$244.7 million and $237.6$262.2 million of cash andcash, cash equivalents, respectively.and investments. Based on our current operating plan, we believe that our existing cash and cash equivalents, which includes the net proceeds from our IPO,IPO and follow on offering, 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 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.

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 andcash, cash equivalents, whichand includes the net proceeds from our IPO,investments, 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.

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 the proceeds from our IPO and secondary offering, 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 JanuaryJuly 31, 2026, the outstanding principal amount under the 2026 Term Loan 2024 was approximately $45.0$75.0 million. For further information, see Note 7, “Long-Term Debt,” to our unaudited interim condensed consolidated financial statements included elsewhere in this Quarterly Report.

As of JanuaryJuly 31, 2026, we had cash, cash equivalents, and cash equivalents and restricted cash balancesinvestments of $291.3$244.7 million and an accumulated deficit of $613.0$695.9 million.

On December 4, 2025, the Company completed a public underwritten offering and issued an aggregate of 6,900,000 Common Shares at a price of $23.00 per share, resulting in net proceeds to the Company of $149.3 million, after deducting underwriting discounts but before expenses paid by the Company. The aggregate number of Common Shares offered pursuant to the public offering included 900,000 Common Shares issued pursuant to the exercise in full of the underwriters’ option to purchase additional shares. The Common Shares were sold pursuant to an Underwriting Agreement, dated December 2, 2025, between the Company and BofA Securities, Inc., Piper Sandler & Co., J.P. Morgan Securities LLC and Goldman Sachs & Co. LLC as representatives of the underwriters named therein.

For further information, see Note 7, “Long-Term Debt,” to our unaudited interim condensed consolidated financial statements 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.