Sep 14, 2026 earnings call — WCD revenue and margin expansion
Revenue grew 60% year-over-year to $31 million, and management raised fiscal year 2027 revenue guidance to $141 million.
Revenue $0.0B (est $0.0B) · EPS $-0.75 (est $-0.62)
Key quotes
"Revenue advanced sequentially off a strong fourth quarter and grew 60% year-over-year to $31 million."
"Based on the progress to date, we are increasingly confident that Kestra can achieve mid-70s gross margin percentage in the next few years."
"First, patient support and adherence where AI-powered patient support agents and automated outreach can help maintain patient engagement and aware compliance while increasing the productivity of the Kestra team supporting a rapidly growing patient base."
Analyst Q&A 8
Guidance increase and product pipeline
Q (Larry Biegelsen · Wells Fargo): He asked why guidance was raised by more than the beat and how revenue should progress through the year. He also asked for an update on the new pipeline product and timeline to talk more.
A: Management said the new guidance is $141 million and implies 48% growth, driven by better prescriptions, in-network mix, RCM improvements and a larger field team. They expect the second half to be faster as reps hired last year ramp and said they will discuss the new technology in more depth next quarter, noting it will add capabilities not in the current WCD product.
"Our fiscal year 2027 guidance of $141 million implies a 48% growth, which is among the highest in small-cap medtech." — Vaseem Mahboob (CFO)
Gross margin update and sales timing
Q (Matthew O'Brien · Piper Sandler): He asked what changed to make management confident in raising the gross margin target to the mid-70s and whether timing to reach it changed. He also asked how rep productivity supports the revenue cadence.
A: They said gross margin has expanded 11 quarters in a row and improved over 10 points year-over-year, helped by higher revenue per fit, in-network mix and CIP programs. They have line of sight to mid-70% gross margins over the next few years and cited cost-per-fit reductions, revenue-per-fit gains and unit economics; they also said splitting larger territories and recent rep hires will boost productivity in the back half.
"We have now expanded gross margins 11 quarters in a row with margin increasing over 10 points year-over-year in this quarter." — Vaseem Mahboob (CFO)
Revenue beat drivers and payer coverage
Q (Michael Polark · Wolfe): He asked how much of the revenue beat came from volume versus revenue per fit. He also asked where this recent commercial payer decision on non-ischemic coverage sits relative to other payers.
A: They said they would not break out elements of the conversion rate now, but all KPIs that drive revenue—fill rate, bill rate and in-period collections—are improving and prescriptions historically lag revenue by a couple of points. They said the new payer decision was an outlier among large payers because most large payers already covered that population; they see it as a positive signal and expect more payer movement.
"Most of the large payers already covered that patient population." — Brian Webster (CEO)
R&D and AI timing, conversion detail
Q (Marie Thibault · BTIG): She asked whether R&D spend will stay higher and the timing for AI to reduce operating costs. She also asked if they could quantify how much revenue came from last quarter’s strong volume.
A: They said the higher R&D this quarter was largely one-time to accelerate programs and that R&D spend should return lower in future quarters. They noted OpEx was slightly higher at $55 million due to Biobeat milestone payments, R&D was up about 70%, and they expect GAAP OpEx for the year to be $220 million in 2027 with R&D returning to the 5% to 7% range in the second half; they also said they will not provide the quarter-level prescription-to-revenue detail until the annual disclosure.
"We expect the GAAP OpEx for the year to be at $220 million in 2027, which reflects continued investment on the commercial side." — Vaseem Mahboob (CFO)
Quarterly pattern and AI timing
Q (Frederick Wise · Stifel): He asked if Q1 had any one-time strength that should change expectations for steady quarterly steps through the year. He also asked which AI/automation efforts will be meaningful and when benefits show up.
A: They said this year’s first half versus second half pattern is consistent with last year and that rep productivity is expected to continue ramping, so there is nothing different this year versus last. They said AI and automation benefits on volume-based G&A are starting to show in FY '27 and should accelerate in FY '28 and '29 as more technologies are implemented.
"We expect that to accelerate in FY '28 and '29 as we implement more of the technologies." — Brian Webster (CEO)
Market growth and faster rep training
Q (Stephanie Piazzola · BofA): She asked about market expansion and where market growth could go this year and whether market share gains are on track. She also asked why new reps are ramping faster and the split between expansion and deeper penetration.
A: They said the market is accelerating, has roughly doubled growth since the IPO, and they are around 15% U.S. market share in the most recent quarter; with their faster growth they expect to keep taking share. They said new reps ramp faster because of investments in recruiting and much more rigorous training; growth is a mix of deeper penetration in accounts, splitting territories and entering brand-new territories, and they could not give an exact ratio.
"We think in this most recent quarter, we're somewhere around 15% market share in the U.S. market." — Brian Webster (CEO)
Gross margin outlook and timing
Q (JPMorgan): He asked for an update on the previously discussed 700 basis point gross margin expansion and timing for reaching the higher margin levels.
A: They said the prior view of 70% is moving north toward the mid-70s and that a 700-point expansion next year is reasonable. They expect fiscal year 2029 to deliver 70% gross margin for the year and that the second half of that year would be above 70%, adding that mid-70s could be achieved in the next 2 to 3 years.
"We do expect that based on the current gross margin guidance, that 700-point expansion for next year, I think, is pretty solid." — Vaseem Mahboob (CFO)
Unit growth/share and AI for reps
Q (Suraj Kalia · Oppenheimer & Company): He asked Vaseem to break 14% nominal growth into unit growth and share, and asked Brian what data AI will use to improve fittings per rep and how that affects acquisition cost.
A: They said they are not disclosing prescriptions and fittings now and will provide annual detail at year-end, but conversion was up and the drivers were trading better, which led to the 60% revenue growth this quarter; prescriptions typically lag revenue by a couple of points. They said AI will give reps better data and free up time so reps can focus on account penetration, which increases fittings per rep; they view rep productivity as central to the path to profitability and are investing in tools, training and recruiting.
"As we make them more efficient, then that means they can spend more time penetrating the accounts that they get into, and that then leads to the higher fittings per sales rep." — Brian Webster (CEO)