Kestra Medical Techs achieves record revenue of $22.6 million, driven by 53% growth and gross margin expansion, while raising FY26 guidance to $91 million.

Good afternoon and welcome to Kestra Medical Techs second quarter fiscal 2026 earnings call. This conference call is being recorded for replay purposes. We will be facilitating a question-and-answer session following prepared remarks from management. At this time, all participants are in listen only mode. I would now like to turn the call over to Neil Balatka, Vice President of Investor Relations for introductory comments.

Thank you, Victor. Thank you for joining. Kestra's second quarter fiscal 2026 earnings call. With me today are Brian Webster, President and Chief Executive Officer and Vasim Mahbub, Chief Financial Officer. This call includes forward looking statements within the meaning of the Private Securities Litigation Reform act of 1995. Statements made on this call that do not relate to matters of historical fact should be considered forward looking statements. These statements are based on Kestra's current expectations, forecasts and assumptions which are subject to inherent uncertainties. Risks and assumptions that are difficult to predict. Actual outcomes and results could differ materially from any results, performance or achievements expressed or implied by the forward looking statements due to various factors. Please review Kestra's most recent filings with the SEC, particularly the risk factors described in our Form 10K for additional information. Any forward looking statements provided during this call, including projections of future performance, are based on management's expectations. As of today, Castra undertakes no obligation to update these statements except as required by applicable law. With that, I will now turn the call over to Brian.

Thanks Neil Good afternoon everyone and thank you for joining us on today's conference call. We're excited to discuss the strong financial performance we had in the second quarter and the continued progress we are making on our key operational objectives. Before we jump in, I want to begin by grounding us in the patient focus that makes Kestra a special company at the center of Everything we do are the lives we protect each day and the impact we have on patients, their families and the providers who care for them. Recently, a patient in Florida collapsed from ventricular tachycardia and required urgent intervention. After stabilization, the patient was discharged with the competitor's wearable defibrillator and referred to electrophysiology for follow up. At his outpatient visit, the patient reported poor tolerance of that device due to discomfort and adherence risk. The physician transitioned the patient to the Assure System, citing improved comfort and care coordination for the switch. Once fitted with the Assure system, the patient expressed a clear improvement in wearability compared to the previous device. The patient and family also noted greater confidence due to the system's ability to connect them quickly to emergency care. Weeks later, the patient collapsed again at home, the Assure System detected the event and announced it was preparing to deliver therapy. Before therapy was delivered, the patient regained consciousness and successfully diverted the shock, reflecting the Assure System's ease of use and patient first design. Following the cardiac event, the patient was transported safely to the emergency department. While en route, our team delivered episode data directly to the emergency department the following morning. Care station reports guided discussion during cardiac ICU rounds. The care team described the data as detailed and and clinically useful. Two days later, the patient received an icd. This case reflects how the cardiac recovery system brings together protection, clinical insight and care coordination to change outcomes when time matters most. While this is just one patient's experience in the second quarter of fiscal 2026, our team and technology helped facilitate many similar life saving events. We remain mindful of the trust placed in us by clinicians, patients and their families every day. I would like now to turn over to our recent financial performance. In the second quarter we continue to reach more patients who are at risk of cardiac arrest, accepting approximately 4,700 prescriptions written for the assure system. Revenue was $22.6 million with growth of 53% over the prior year period. Our gross margin climbed over the 50% line for the first time in the company's history, an important milestone for Kestral. Actual gross margin of 50.6% was up 11 points year over year and reflects the attractive unit economics of our business model. This was the eighth quarter in a row of sequential gross margin expansion. We expect continued gross margin expansion in the back half of FY26 and remain confident that Kestra is on the path to 70% plus gross margins over the next few years. With the strong revenue growth that Kestra is generating, we are seeing nice operating leverage in our business. This leverage supports the investments we are making in the company's key growth drivers that we believe will yield significant long term value for Kestra and its stakeholders. Turning to the overall WCD market, we have previously noted that despite the overwhelming evidence that an external defibrillation shock is highly effective at terminating dangerous cardiac rhythms, WCD therapy remains underutilized, reaching just 14% of the eligible US addressable market. That means six out of seven patients that are indicated for a WCD are not being protected by one. The best way for Castro to positively influence clinical practice and have more patients protected by wcds is by generating highly impactful clinical evidence. So one month ago we did just that with the presentation of the primary results of ACE Pass, which is our FDA post approval study at the American Art Association Annual meeting in New Orleans. ACE PASS is the largest real world prospective WCD study to date with over 21,000 patients enrolled and protected. The study design includes pre specified performance criteria with objective performance measurements. The key takeaways from the study results were as follows. First, the Assure system met both of its primary endpoints, demonstrating a safe and highly effective device. It's worth noting that not only was ACE PASS the largest WCD study ever, but it also enrolled the largest percentage of female patients at 34%. As a reminder, 40% of indicated patients are women and the Assure system is the only WCD specifically designed for women. Next, Sudden cardiac arrest doesn't wait Patients were at high risk during the first 90 days of the study for all indicated populations. Based PASS data showed patients had a 90 day incidence rate of 1.8% and an annualized incidence rate of 7.5%, which is actually slightly higher than landmark ICD trials. Guideline Directed medical treatment is effective in improving cardiac function, but it requires time and patients need to be protected from significant SCA risk during their cardiac recovery. Third, at 23.1 hours, Assure had the highest wear time of any US WCD trial. In fact, 30% of our patients wore the device for more than 90 days, demonstrating the effective protection for extended therapy optimization. And finally, AcePass reinforces that assure has the lowest false alarm rate, with 94% of patients free from false alarms dramatically lower than other commercially available WCDs. In our discussions with clinicians after the study results were presented, the most common theme is that the risk level of their patients is higher than they understood it to be, particularly early in the recovery and treatment journey. The existing WCD guidelines were published in 2017 and have not been updated since. We believe AcePass, in conjunction with other recent studies such as SCD Protect, provide compelling data on over 40,000 patients that significantly strengthens the existing body of evidence and may help inform future updates to clinical guidelines. You've heard me say before there are three critical questions about the WCD category. The first one is there a patient population that has significant health risk? The second question is there an effective therapy to treat those patients? And the third question is will the patients wear the device? AcePass definitively answers all three of these questions. In a very large real world population, a strengthened recommendation to guidelines would have a positive impact on clinical decision making and potentially accelerate TAM penetration. Based on our estimates and data from the incumbent, we believe the WCB market growth has already accelerated to the low double digits and will continue to expand into a multibillion dollar market over the coming years. Moving on to other updates, we continue to expand our sales organization with the goal of further penetrating existing accounts as well as calling on new potential assure prescribers as we have discussed previously, we are targeting geographies in which we have a high volume of WCD prescriptions and where we also have strong in network payer coverage. We currently have approximately 100 active sales territories, up from about 80 sales territories at the end of fiscal year 2025 in April. While this will not be a data point that we will be updating on a quarterly basis, our territory additions in the second quarter were in line with our hiring plan and we continue to aggressively expand our sales coverage. In recent months we have seen the addition of clinical specialists in select markets complementing our sales territory coverage and supporting further penetration of accounts. We also continue to make progress on improving our RCM capabilities, that's revenue cycle management while also bringing a more Bringing more Payers in network at the time of our IPO nine months ago, approximately 70% of our fittings were for patients with in network benefits. This figure is now in the low 80s. The higher in network mix meaningfully increases our team's efficiency and positively impacts all RCM metrics. It's important to note There are over 3,000 payers in the United States, so there is still a long tail of regional and local payers we are working to bring under contract. As you all know, we utilize a leased business model. Our substantial investment in our fleet of devices, each with a capacity to protect approximately three patients per year, enables the business to scale with our attractive unit economic profile. While our current business asset pool can support our near term business objectives, we are continuing to add to our fleet as we grow our field team over the long term. We expect about 90% of our annual patient fittings to be accomplished with reuse of existing devices. So in conclusion, the fundamentals of the Kesstor thesis remain intact and were in Fact fortified in Q2 WCD Market growth is accelerating, Kestra revenue is growing north of 50% and gross margin has expanded beyond 50%. For the first time we have an underserved medical indication where we offer a clearly effective and superior solution. We have rapidly closed the gap on payer endorsement of our product and we are implementing a commercial expansion plan to significantly grow the business. Our commercial plan is now supported by a large body of clinical evidence that has the potential to influence the prescription guidelines. Our execution has been strong across all elements of the business and the foundation we have built has positioned KESTRE for strong growth this fiscal year and beyond. I'd like to thank our incredible team in the field and here at the home office in Kirkland for their passion and commitment to the Kestral mission. I'll now turn it over to Vaseem who will discuss second quarter financial results in more detail and provide our updated fiscal year 2026 revenue guidance.

Vaseem thank you Brian and good afternoon everyone. Total revenue for the quarter was $22.6 million and an increase of 53% compared to prior year period. Revenue growth was driven by a 54% year over year increase in prescriptions reflecting market share gains with existing customers and activation of new accounts. Excluding the impact of one time revenue pickup in the prior year from a payer converting to accrual accounting, our revenue growth for this quarter was 60%. Gross margin was 50.6% in the second quarter compared to 39.6% in the prior year period. As Brian mentioned, we have now expanded our gross margin sequentially eight quarters in a row. The continued expansion in gross margin was driven by the attractive unit economics inherent in Kestrel's rental model, a higher revenue per fit from more in network patients and a 20% decline in cost per fit driven by volume leverage and cost improvement projects in the quarters ahead. You should expect to see steady and consistent increases in our gross margins as our rental model benefits significantly from the volume and depreciation leverage. We remain confident in our ability to achieve 70% plus margins in the next few years. As we have discussed previously, higher in network mix unlocks the power of Kestra's business model. We ended the quarter with our in network mix percentage in the low 80s and are seeing improvements in all three key drivers of our conversion rate, our prescription fill rate, our bid rate and our collections performance. Our conversion rate in the second quarter was 48.8% up from an adjusted conversion rate of 48.2% in the prior year period. As we continue to bring more payers in network and enhance our revenue cycle management capabilities, we we will see benefits in our revenue growth, our gross margins and our profitability profile. GAAP operating expenses were $43.2 million in the second quarter and included a $1 million of non recurring cost associated with professional fees and costs related to our recent equity offering. GAAP operating expenses were $25 million in the prior year period excluding nonrecurring costs and stock based compensation. Operating expenses were $33.5 million in the second quarter of fiscal year 2026 compared to $23.8 million in the prior year period. The increase was primarily attributable to investments in commercial expansion and public company costs. GAAP net loss was $32.8 million in the second quarter compared to a GAAP net loss of $20.6 million in the prior year period and adjusted EBITDA loss was $19.7 million in the second quarter compared to an adjusted EBITDA loss of $16.1 million in the prior year period. Cash and cash equivalents total $175.4 million as of October 31, 2025. This does not include the $148 million of net proceeds we received from our public equity offering last week. I will now provide our updated fiscal year 2026 guidance. We are increasing revenue guidance to $91 million, representing a growth of 52% compared to fiscal year 2025. This compares to prior guidance of $88 million and our initial fiscal year 2026 guidance of $85 million. Underpinning this guidance is our expectation that we will continue to see strong growth in prescriptions as our market share increases and the WCD market continues to expand. We expect revenue per fit to continue to benefit from a higher mix of in network patients and improvements in our revenue cycle management capabilities. With that operator, we have concluded our prepared remarks and are ready to proceed to the Q and A portion of the call.

Thank you. At this time we'll conduct a question-and-answer session. As a reminder to ask a question, you will need to press Star one one on your telephone and wait for a name to be announced. To withdraw your question, please press Star one one. Again. Please limit yourself to one question one Follow up In the interest of time, please stand by while we compile the Q and A roster. One moment for our first question. Our first question will come from the line of Matthew o' Brien from Piper Sandler. Your line is open.

Good afternoon. Excuse me. Thanks for taking the questions. For starters, maybe the CFO Brian, just talk a little bit about the guide for the year. It's nice to see it above how you beat here in fiscal Q2, but maybe just talk a little bit about the cadence of the guidance, especially Q3, which I think has some seasonality to it. And just given that you're a newer public company, maybe just talk about that and then and then just other factors you're considering as you think about the full year. And then again, I do have a follow up. Yeah, thanks for the question, Matt. As we've said in the past, we are the run rate business and we track our performance on a weekly, daily, weekly and a monthly basis. Our revenue growth has historically been driven by prescription volume growth, our in network mix and the revenue cycle management initiatives that we've been driving. We remain focused on these drivers and are tracking all of the KPIs in the right direction. Our strategy to expand our salesforce responsibility so that we continue to deliver the service level to the patients and we've talked about how critical and important that is and we are still early in our public company journey. So our guidance philosophy is based on delivering consistent quarterly results that establish trust and confidence with investors. And again, just a reminder, we have one of the fastest growth profiles in all of medtech and consensus has us growing at 45 to 50% through 2028. Thanks for that. And then as the follow up, and there's a million places I could go here, but maybe just Brian use of proceeds now and again. I don't want to skid over our skis too much as far as the impact of some of these investments. But just how do we think about this additional capital in terms of accelerating some of the growth initiatives that you have at Kestre. Thanks so much.

Yeah, thanks for the question, Matt. You know, what we're trying to do is we're trying to build a durable top tier medtech growth profile for years to come. And you know, as you know we, in the first half of the year we've gone faster than our plan and so we wanted to de risk any future capital needs and really fortify our balance sheet as we continue to invest in those key growth drivers. You know, we decided to take advantage of the timing of the strong ACE Pass clinical results and also our strong Q2 performance. And I think from our perspective, you know, we're going to now with that capital in hand, we're going to go through our planning process. On our fiscal calendar. We are just kicking into our annual planning process. We'll be doing that in conjunction with our board over the next few months and we'll be outlining what the, what the impact of that capital may be on our growth strategies for the next couple of years. So it's a, it's a strong move for us. We feel good about having the balance sheet in a good place and it gives us optionality, frankly, especially with the potential of, you know, the clinical results impacting the guidelines in the future. So we're happy to get that done.

Got it.

Thanks so much. You bet.

Thank you. One moment for our next question. Our next question will come from line of Larry Beagleson from Wells Fargo, your line is open.

Good afternoon. Thanks for taking the question. Congrats on a nice quarter here, Brian. I wanted to ask about the AHA data. You know, I heard your comment about the WCD market growing low single digits. Are you already seeing an impact from the data? Any color on is this more share capture, you know, more market expansion or both? And I had a follow up.

Yeah, hey Larry, thanks for the question. And just to clarify, the market growth is low. Double digit is our calculation which is up, you know, at least several points from at the, at the time of the ipo. So we are seeing the market expansion absolutely accelerate. Now when it comes to the post clinical results presentation, we are, you know, it's a little too early to see see it in the numbers but anecdotally we're absolutely seeing some really exciting cases where our reps have been in front of clinicians telling our story, telling the story of our clinical data and clinicians making different decisions than they had before. We've had. I know I've heard directly from a handful of reps who said when I presented the data to my physician, they said, I didn't realize the risk level was this high. I'm going to start thinking about this device for a broader spectrum of my patients. So that's really good news for us. I think another really interesting data point. Obviously with that data in hand, we're hitting the street and really working on the clinical education. And so our medical education team, actually in the month of December, this is sort of a fun fact, the month of December, we will be conducting more medical education events with providers than we have in Q1 and Q2 of FY26 combined. So we're getting after it. And so far the feedback has been terrific and the team is really excited to be out there talking about it.

That's great to hear. And Brian, could you talk a little.

Bit about the rep productivity among the base reps and the new reps and your salesforce hiring plans? I heard the 100 number but you know, the hiring plans following the recent secondary. Are you planning to accelerate your commercial plans and you know, are you willing to kind of tell us where you expect to end the year? Thank you. Yeah, thanks, Larry. If you, if you recall, at the time of the IPO we said we were, you know, we had about 70 reps at that time. We said over the next couple of years we were going to double that. As I reported, we were up to about 100 reps now. I think we'll probably in the next six to eight months get close to having that doubling of that original number. So, you know, we definitely are right on plan with our hiring plan. As I mentioned to Matt's question, we are going to be going through a planning process here over the next few months to kind of figure out what we want that rate to look like as we move into our next fiscal year 27. So we'll be taking that question up and you know, the night. The nice thing is we have, as I mentioned, we have the optionality now to look and say, okay, where might we want to evaluate, you know, an even accelerated plan?

All right, thanks so much.

Thank you. One moment for our next question. Our next question will come from Michael Pollard from Wolf Research. Your line is open.

Hey, good afternoon. Maybe a question on the guidelines. You know, is there event path to identify for us, Brian, timing? You know, in a lot of these fields, guidelines can take a really long time. And it sounds like you're in front of doctors with the message from all this data anyways. But are the guidelines nice to have. Down the road or do you view. It as a needle mover? And if so, when might something like that be up for adjustment?

Yeah, thanks, Mike, for the question. You know, first, first, let me just be extremely clear in saying that, you know, our exciting growth profile that we have planned for the next five years does not rely on the guidelines changing. There's no, there's no reliance on that in our business plan. So having said that, we do believe that the clinical evidence warrants a review of that. Now the committee that is responsible for this is the arrhythmia committee that is a part of AHA and hrs. They will meet on an ad hoc basis when there's sufficient new evidence or a new product comes to market. So there's not a scheduled time for them to do that. We will obviously be seeking to get the newly established evidence by both Kestra and our competitor in front of them so they understand that maybe this is the time to start to reevaluate those guidelines. And we think there's a real reason, real strong clinical reason for them to do that. So I don't know a firm guideline meeting schedule, but I do think there's going to be some strong momentum for, for getting that ball rolling.

Helpful. And for the follow up, the comment on low double digit WCV category growth. Just doing some napkin math here. You're growing 50%, you're maybe 10 points of the market. It kind of implies your competitor hasn't Slowed down versus where they were. So you're not purely taking from them. It is market expansive. And I'm curious just to confirm the math, that the way you see your competitor, they're growing like they used to and you're adding on top of that. Thank you.

Yeah, I think the math is roughly, first of all, Zohl, they released their earnings results a month ago or so now and they did call out this, this part of their business. So they reported a little over 5% growth in that business. So if, if we have, we think we're probably at about 13% share now. So if we've grown at 53% at 13% of the market and they're growing at 5% at 87% of the market, you can do the math. And that's how we get there. And I think it's as good a data as we've ever had because in the past they haven't really called out that specific part of their business separately. So we feel like that's a really supportable data point. We of course will buttress that data with our claims data that allows us to come at that from the other direction. But we feel pretty good about, you know, what that, what that's telling us. And it definitely says that, you know, we're definitely taking share where we put reps and we're also growing the market.

Thank you.

Yep, thank you.

One moment for our next question. Our next question will come from the line of David Roman from Goldman Sachs. Your line is open.

Thank you. Good afternoon, everyone. I know there's been a lot of focus on the AcePass data here and what they might be able to do for guidelines, but as you kind of reflect on what you're seeing on a day to day, real world basis, what are some of the things that you view as contributing to this acceleration in overall category growth? And as we think through things like the conversion rate and some of the other metrics that kind of inform the model on a go forward basis, maybe just update us on where you think we are and some of the key drivers there, like the prescriptions to fitting and then the fitting to what's revenue and where you are on kind of average wear time. I know I threw a lot out there, but I'll leave it at that for my question and follow up then. Yeah, thanks, David. And by the way, your audio was a little gargly, so I think I got your questions. Talk to the, to the conversion rate stuff. But when it comes to the clinical data and what we're seeing you know, I think the biggest impact of it is it's, you know, everybody knows that external defibrillator works. We've proven that patients will wear our device for extremely long periods of time if necessary. So the remaining question was this question around and our competitor recently published a big German study which was a national registry and it was really a study that was trying to identify what the risk of cardiac arrest was in these patients, including the non ischemic cardiomyopathy patients. So now on top of that 19,000 patients study, we come in with a 21,000 patient study that has, among other metrics, it has that data and it confirms that risk level in an entirely different healthcare system, the United States system. So now we have two different countries, two different systems that are both saying the same thing about the risk of these patients, especially in the first 90 days. That is the eye opener for these clinicians. They're saying, I didn't realize the risk was that great. And that's leading them to assess the decisions that they're making about wcds. It is early, we're just getting started with the data, but the early returns are certainly positive. Seeing you want to talk a little bit about the impacts of insurance coverage and in network and conversion rates, et cetera.

Sure. So David, thanks for the question. I think when I look at the conversion rate metric, I think we've made such tremendous progress over the last few years. And just to remind everybody, our conversion rate in fiscal year 2024, 38%. Fiscal year 2025 was 44%. And we just for this quarter, our conversion rate is going to be approximately 49%. So a huge, huge improvement. And I think that kind of goes to the point that you were making, David, which is all of those KPIs, whether it's the prescription fill rate or the in network mix rate which really drives the conversion rate and our collections performance, they're all tracking in the right direction and we continue to make good progress on that. And our strategy for that in network mix remains unchanged. As we have said in the past, you know, we are deploying new reps into high prescription density areas and also deploying them into high coverage areas. So that's really helping us, you know, move the rate along. And again, I want to remind everybody the gap to close for us is not from 48% to 100%, it's just to those high 60s, which is where we think Zoell is at with 25 years. Great, thank you for all the detail.

Thank you. One moment for next question. Our next question will come from the line Marie Thibault from btig. Your line is open.

Good evening. Thanks for taking the questions. Wanted to ask here quickly about the prescription volume strength, a couple quarters here above 50%. Do you expect that to be sustainable or did you see anything kind of out of the ordinary in the quarter? And as part of that, are you also sort of seeing prescribers, kind of alternate prescribers like physician assistant and nurse practitioners starting to join up as prescribers? Just would love to hear a little bit more of what you're seeing on the ground from the prescribers.

Yeah, thanks for the question, Marie. I think when it comes to, you know, the north of 50% rate, we don't see anything that will reduce that. We were winning. Not only are we further penetrating existing accounts, but we're also continuing to add additional hospitals to our account list. So we expect to continue to see nice prescription acquisition rates. When it comes to the prescribers themselves, I think the typical prescribers for us, they're not all just the physicians. We get a lot of physician assistance, we get a lot of other people in the providers who are actually executing on those obviously under the umbrella of the. So you know, when we talk about medical education and some of our strategies around that, especially with the clinical results, you know, we're not just targeting physicians, we're also targeting apps and other clinicians in the practice because we know that, you know, they're really central to the strategy there. So I think the good news about the high prescription rate in Q2 was that, you know, that didn't have the benefit of the new clinical results. So, you know, I think those stood on their own and there was no sort of one off events or anything else that you might point to and say, hey, that's a, that's kind of a, you know, an unusual event. This is just, this is literally as Waseem said earlier, it's a day by day, week by week, month by month business and we're just out there competing every single day in the territories that we're in. And the fact is that we're winning where we're competing.

Yeah, very helpful and good point on ACE Pass not being in the quarter. Wanted to follow up here then with any detail on sort of OPEX spending plans. I noticed a little bit of a tick up this quarter. Obviously the new territory reps that that would make sense is this kind of the new sustained level going forward. Anything you want to give us on cadence of OPEX going forward, this fiscal Year. Thanks for taking the questions, Marie.

Thanks for the question. And I think on the opex, you know, we are winning, we are overachieving versus our kind of, you know, guidance that we had put out initially. And we know that that comes with some, you know, level of investment and reinvestment. And we continue to make sure that we are deploying our investments into the two key areas, which is one, expansion of the team and two, you know, on the revenue cycle management capability. And as Brian has mentioned in the past, this is a service level business. We have to make sure that not only do we have the right level of coverage, we want to make sure that we have the right level of capex to support those teams. And then at the same time, to be able to convert those prescriptions into cash and revenue, we have to have the right revenue cycle management capability. So, you know, again, we feel that, you know, the run rate that we are on will help us get to, you know, not only the guidance, but also continue to accelerate growth into 2027 and we'll continue to make those investments.

All right, thanks so much.

Thank you. One moment for our next question. Our next question will come from the line of Travis Steed from Bank of America securities. Your line is open.

Hi, this is Stephanie Piazzalon for Travis. Thanks for taking the question and congrats on a good quarter. You know, last quarter you talked about the expanded clinical specialist role to support further penetration in existing accounts. So just wanted to follow up on that and see if there's anything you can share on how that strategy is going and the impact on the business and penetration within existing accounts since making that change.

You bet. Thanks, Stephanie, for the question. Yeah, I think as we reported last quarter, we were starting to hire some clinical specialists to put those in some of our really high producing accounts. And you know, the basic strategy there is once you get a high performance account up and running, you have a clinical specialist who can come in and really maintain that account and give that territory rep a little more bandwidth to go open up new accounts. And that's really the core of the strategy. We started to implement that program in the last quarter quarter and we hired our first kind of cohort of those clinical specialists. So far the feedback on that has been really good. I don't see this as a case where we're going to, you know, add one to one for every rep, but I do think that we will selectively put more clinical specialists out there to help manage the just the day to day you know, care and feeding of those significant accounts. So so far so good on that. The early returns are positive and we like the strategy.

Thank you, that's helpful. And then for my follow up, just wanted to ask on gross margin, it was another great quarter of expansion there, you know, reached above 50% and have talked about getting to 70% in the next few years. So just wanted to follow up on the path to get there and then any help in how we should think about the gross margin for this year. Thank you.

Yeah, thanks Stephanie for the question on gross margins. Again, as Brian mentioned on his prepared remarks, eight quarters in a row we have expanded our gross margins. And I think that goes back to the high seidu that we have kind of constantly said we're going to deliver something and done it. And we feel really good about the work that's gone into getting us to the 50% plus range. And I think the unit economics that we have talked about, plus the leverage that you get on the depreciation and the volume and the fact that the progress we are making with the in network mix on rev cycle is really, really helping us expand our gross margins. And we feel at this point that we have good, clear line of sight to the margins in the next couple of years and we'll continue that journey that as we run more volume through the P and L and as we continue to make progress on that in network mix, we should see sustained margins expansion in the near term and the long term line of sight to the 70% plus gross margins.

Thank you. One moment for our next question. Our next question comes line of Rick Weiss from Stifel. Your line is open.

Hi, this is Annie on for Ric. Thanks for taking our question. So last quarter you hinted at the potential for new product or technology launches at Kestra. Could you give us a sense for what kind of innovation you might be working on? You know, are you focused on updating your existing systems or potentially developing completely new products? Thanks.

Yeah, hey, thanks for the question. You know, we're not ready to disclose our full product pipeline for competitive reasons, of course, but we do have, you know, we very intentionally design the assure system to be three distinct platforms. The WCD platform, the wearable platform and the digital platform. And what we're doing is in our pipeline, we're innovating in each of those three platforms. Some of that innovation is extending our current capabilities to further differentiate our product. Some of that is bringing new capability, new therapeutic capability and diagnostic capability of the product. I'll say this, we just published a 21,000 patient clinical study with an incredible amount of data. And we are going to follow that data to develop solutions for unmet needs and other patient conditions where our technologies can be useful. And that's really our focus. And I think if you look into the details of that data, it will give you some clues as to where we're going. And we're excited about using that data to help us to be an even better solution. So we've got a steady stream of innovation coming over the next two or three years, and we'll be excited to, you know, get that out into the market at the appropriate times. So thank you for the question.

Thanks, Brian.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Brian Webster for closing remarks.

Okay. Well, thank you, everyone for joining the call today. And you know, as we mentioned earlier, we're pleased with the quarter that we have. We've got really exciting momentum going. And as I said, you know, the core Castra thesis is intact and we're picking up steam on it. So we're excited about the back half of the year. And I'm very proud of the Kestre team for the the way they, the team has executed our business plan every, every day, every week and throughout the quarter. So thank you for joining us. We'll look forward to seeing you on the next call. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect, everyone. Have a great day.