Kestra Medical Technologies, Ltd. (KMTS): what the price assumes

Generated: 2026-07-29 · Exported: 2026-08-01 · Source: https://boothcheck.com/report/KMTS

Headline

Field	Value
Ticker	KMTS
Company	Kestra Medical Technologies, Ltd.
Current price	$23.48/sh

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

Field	Value
Inversion basis	revenue-multiple
EV / sales paid	13.4x
Steady-state operating margin assumed	16.2%
Must persist for	19.4y

The company earns no operating profit yet; the inversion runs on the revenue multiple and an assumed steady-state margin.

Solve inputs: computed at a 11.6% cost of capital; growth searched up to the 25% self-funding ceiling; each 1pp moves the implied horizon ~2.7 years.

Reconcile: at the x-ray's 9.3% required return this reads ~13.6 years; the models below use their own rates.

How unusual the bet is: elevated (limited comparison data)

Reference	Value
sustained it ~10 years at this level	14%
implied end-window share	0%

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Family	Median price/FV	Models	Reads
Asset	5.03x	2	expensive
Earnings	—	0	—
Relative	4.20x	2	expensive
Growth	3.48x	2	expensive

Families that call it expensive: Asset, Relative, Growth

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 9.1%); the inversion above states its own rate.

Per-Model Detail (n=6)

Model	Family	FV	Price/FV	Applicable	Methodology
DCF Perpetual Growth	Growth	$0.00	—	no	Negative/zero FCF — equity value floored at $0
DCF Exit Multiple	Growth	$0.00	—	no	Negative/zero FCF or EBITDA — equity value floored at $0
Relative Valuation	Relative	$5.59	4.20x	yes	P/S fallback (negative EPS): Sector P/S 4.0x × TTM revenue — excluded from consensus
Simple DDM	Growth	—	—	no	—
Two-Stage DDM	Growth	—	—	no	—
Simple Excess Return	Asset	$4.93	4.76x	yes	Book value floor: BV/sh $4.93, ROE negative
Two-Stage Excess Return	Asset	$4.44	5.29x	yes	Book value with convergence: BV/sh $4.93, ROE converges to ke
Discounted Future Market Cap	Growth	$30.42	0.77x	yes	Rev $0.1B, growth 30% (input: historical growth; tapered), Terminal P/S: 10.5x / 15.0x / 19.5x (bear / base = today's held flat / bull, cap 15x)
Peter Lynch Fair Value	Relative	$0.00	—	no	Negative/zero EPS — earnings-based value floored at $0
Margin Trajectory	Growth	$3.79	6.20x	yes	Margin ramp: -50% → 12% over 7yr, rev growth 30% (input: historical growth; tapered)
Earnings Power Value	Earnings	—	—	no	—
Residual Income	Asset	—	—	no	—
Graham Number	Asset	—	—	no	—
EV/EBITDA Relative	Relative	—	—	no	—
FCF Yield	Earnings	—	—	no	—
SBC-Adj FCF Yield	Earnings	—	—	no	—
Ben Graham Formula	Earnings	—	—	no	—
ROIC-Justified P/B	Asset	—	—	no	—
P/Sales Sector	Relative	$5.59	4.20x	yes	Revenue $0.08B × sector P/S 4.0x
PEG Fair Value	Relative	—	—	no	—
Earnings Yield	Earnings	—	—	no	—
Funds From Operations Multiple	Relative	—	—	no	—
Clinical Phase NPV	Growth	—	—	no	—
Merton	Asset	—	—	no	—
V5 Mechanical	—	—	—	no	—

Solvency

Field	Value
Net cash	$249.1m
Interest coverage	-19.2x
Burning cash	yes

Operating profit is negative or near zero and the company has no demonstrated through-cycle (mid-cycle) operating margin to normalize against, so years-to-repay cannot be computed honestly.

Bullet Takeaways

The counterintuitive fact is that Kestra is taking share in a market long treated as a single-player franchise: ASSURE prescriptions rose 58% year over year to 5,462 in fiscal Q3 2026, and revenue grew 63% to $24.6 million.

The company is not yet profitable. The net loss widened to $34.2 million from $21.8 million, and at about 11x revenue the price implies the business eventually reaches a roughly 16% operating margin and grows near its self-funding ceiling for about 17 years.

Gross margin expanded to 52.6% from 43.4%, and cash stood at $291 million after a December 2025 secondary, so the company has runway. But only about 14% of comparable fast-growers have sustained the implied pace, and the valuation is elevated against what the fundamentals support today.

Bull Case

The surprising thing about Kestra is that it is cracking what was effectively a monopoly. The wearable cardioverter defibrillator, a vest that monitors a high-risk cardiac patient and shocks them automatically if their heart stops, has been a one-product category for years. Kestra's ASSURE system is the credible challenger, and the share data is the metric that does not fit the obvious narrative: in fiscal Q3 2026 prescriptions rose 58% year over year to 5,462, and revenue grew 63% to $24.6 million. A new entrant does not post numbers like that against an incumbent unless the product is genuinely better or the market is expanding fast enough to feed two players. Both appear to be true.

The quality of that growth is improving where it counts. Gross margin expanded to 52.6% in fiscal Q3 2026 from 43.4% a year earlier, a nine-point jump that shows the unit economics scaling as volume builds, exactly the margin leverage a hardware-plus-service medical device should deliver as it grows into its fixed cost base. The company raised its full-year fiscal 2026 revenue guidance to $93 million, growth of about 55%, and the consistency across the year, up 52% in Q1, 53% in Q2, 63% in Q3, suggests durable demand rather than a one-time pop. Revenue growth is being driven by both higher market share and expansion of the underlying WCD market.

The balance sheet buys the time the story needs. Cash stood at $291 million as of January 31, 2026, bolstered by a $149.3 million secondary offering in December 2025, against an adjusted EBITDA loss of about $21 million a quarter. That is multiple years of runway to keep taking share and growing toward profitability without a financing emergency. The peer set, Tandem Diabetes, Artivion, LivaNova, frames the opportunity: durable-medical-device companies with recurring revenue and reimbursement-backed demand can compound for a long time once they reach scale. If Kestra continues converting prescriptions into revenue and margin, the share-gain story has years to run.

Bear Case

The structural truth a Kestra holder has to face is simple: the multiple is pricing what has not happened yet. The company earns no operating profit, so the price is set against sales, and at roughly 11x revenue it embeds an eventual operating margin of about 16% and revenue growth near the self-funding ceiling for about 17 years. Only about 14% of comparable fast-growers have sustained that pace for even a decade. In other words, the stock is valued today as if the profitable, scaled, market-leading Kestra of the late 2030s already exists. It does not. What exists is a company that lost $34.2 million last quarter, a loss that widened from $21.8 million a year earlier, even as revenue grew, because it is spending to build the sales force and infrastructure to chase the incumbent.

The path from here to that priced-in future runs through the two hardest things in medical devices: reimbursement and commercial execution. A peer states the risk plainly: if third-party payors deny coverage or reduce payment levels, or if production costs rise faster than reimbursement, the company may be unable to sell its products profitably (TNDM FY2025 10-K, accession 0001438133-26-000010). For a wearable defibrillator, every prescription depends on a payor agreeing to cover it, and a single adverse coverage decision can stall growth. The same peer warns that failing to retain a high percentage of customers consistent with forecasts would materially hurt results (TNDM FY2025 10-K). Kestra is competing for those prescriptions against an entrenched rival with deep payor relationships and a long compliance track record.

The financing risk compounds the fundamental one. Burning roughly $21 million of adjusted EBITDA a quarter, the $291 million cash balance is real runway but not infinite, and the December 2025 secondary that raised $149.3 million is a reminder that this company funds itself by issuing stock. Every raise dilutes existing holders, and raises get harder if growth slows or the market sours on unprofitable names. At an elevated revenue multiple with no earnings and a multi-year wait for profitability, the downside if execution disappoints is severe: the static methods that value the company on its book and current sales land in the $5 to $8 range, a fraction of the $19.89 price (June 27, 2026). That gap is the bet.

Valuation

Kestra has to be valued on sales, because it has no profit to capitalize. Every earnings-based and cash-flow method is gated off, the DCF floors at zero on negative free cash flow, earnings power value and residual income are non-applicable on negative margins, so the only frames that run are the revenue-multiple and asset methods. Those land far below the price: the sector price-to-sales method and relative valuation near $6, the book-value floors near $5, and the margin-trajectory method, which models a ramp from a deep loss to a low-double-digit margin over seven years, near $4. The lone growth method that reaches higher, discounted future market cap near $29, does so by assuming sustained 30% growth and a rich terminal sales multiple.

The reverse-DCF is the honest center. At about 11x revenue the price implies the business eventually earns an operating margin of about 16% and grows revenue at its self-funding ceiling for roughly 17 years, computed at an 11.4% cost of capital, with each percentage point of growth shifting the required horizon by about 2.5 years. The engine rates this as elevated, above what fundamentals comfortably support, and the base rate is unforgiving: only about 14% of comparable fast-growers sustained such a pace for ten years.

The synthesis is unambiguous on the math and contingent on the story. On any frame grounded in what Kestra earns or owns today, the stock is expensive, trading at roughly two-and-a-half times the top of the revenue-based fair-value range. The entire investment case is the durability of the share-gain and margin-expansion trajectory: if Kestra becomes the scaled, profitable WCD player the price assumes, today's multiple will look reasonable in hindsight; if it stalls short of that, the valuation reverts toward the $5 to $8 the current fundamentals support. The cash balance removes near-term insolvency risk; it does not change the fact that the price is a long-duration bet on an outcome that is years away and far from certain.

Catalysts

Fiscal Q3 2026 (reported spring 2026) showed revenue of $24.6 million, up 63% year over year, on 5,462 ASSURE prescriptions, up 58%, with gross margin expanding to 52.6% from 43.4%. The net loss widened to $34.2 million and the adjusted EBITDA loss was about $21.2 million. The company raised full-year fiscal 2026 revenue guidance to $93 million, about 55% growth. The next quarterly prescription and revenue prints are the core thesis test, since the whole valuation rides on sustained growth.

The metrics to watch are prescription volume, the cleanest leading indicator of share gains against the incumbent, gross-margin progression toward the implied mid-teens operating margin, and the quarterly cash burn against the $291 million balance. Continued margin expansion would validate the operating-leverage case; a stall in prescriptions would undercut it directly.

The structural swing factors are reimbursement and competition. Any change in payor coverage or payment levels for wearable cardioverter defibrillators would move the stock sharply, and the competitive response from the established WCD provider is the other variable. Watch for new coverage decisions, any clinical or product updates on ASSURE, and the timing and size of any future capital raise over the next 90 days, since this remains a cash-burning, equity-funded growth company.

Sources: StockTitan (KMTS Q3 FY2026 results and raised guidance), SEC 8-K earnings releases, Quartr, StockAnalysis, company investor releases.

Peer Cohorts (Per Segment, With Filing Citations)

Kestra Medical (ASSURE WCD) (reported)

• HTFL (Heartflow, Inc.)
• FY2025 10-K: …seasonal factors that impact the number of radiologists and support staff available to conduct CCTAs at customer accounts. Competition We consider our primary competition to be traditional non-invasive tests for CAD including primarily stress tests such as SPECT, stress echocardiography and PET. The primary providers…
• FY2025 10-K: …on the same CCTA scan as Heartflow FFR CT Analysis, we expect favorable operating and gross margin leverage as its adoption increases. • Invest in additional clinical evidence to support adoption and expand our indications: We believe we have developed the largest clinical evidence base supporting a non-invasive…
• AORT (ARTIVION, INC.)
• FY2025 10-K: …of new and next-generation products and services focused on aortic repair; • New Indications - Through regulatory approvals in new markets and for new products, and through approvals for expanded indications for our existing products and services; • Global Expansion - By entering new international markets,…
• FY2025 10-K: …and recorded $ 3.5 million and $ 3.3 million of PerClot revenues in the Consolidated Statements of Operations and Comprehensive Income (Loss) during the year ended December 31, 2025 and 2024, respectively. We accounted for the TMSA in accordance with the provision of ASU 2016-02, Leases Topic 842 ("ASC 842") by…
• LMAT (LEMAITRE VASCULAR, INC.)
• FY2025 10-K: …bovine graft in Thailand and Malaysia in August 2024 and South Africa in October 2024, and the XenoSure patch for cardiac indications in China in December 2024; and approvals to sell the Artegraft bovine graft in the European Union (EU) in April 2025, Australia in June 2025, and Canada in December 2025, the Pruitt…
• FY2025 10-K: …of the manufacturing process of our Artegraft product line in an effort to apply for its CE mark under the EU Medical Device Regulation, or MDR. In April 2025, we received the CE mark and began marketing the device in the EU. In addition, in 2024 we invested in our allograft preservation services business,…
• AXGN (AXOGEN, INC.)
• FY2025 10-K: 1, thus aligning payment rates more consistently with the lesser costs of a direct repair. Effective January 1, 2026, CMS created a new Ambulatory Payment Category 5433 for level 3 nerve repair. CPT 64912 was moved into this new code group, which further improves payment adequacy for advanced nerve repair. As a result…
• FY2025 10-K: …plastic hand surgeons, and certain oral and maxillofacial surgeons to review the benefits of our products. While surgeons make the decision to implant our products in appropriate patients, hospitals make the decision to purchase the products from us. In today's budget constrained environment, hospital committees…
• PRCT (PROCEPT BioRobotics Corporation)
• FY2025 10-K: 27, 2020, all MACs cover procedures involving Aquablation therapy for Medicare patients (including Medicare Advantage plans). We believe Medicare accounts for approximately 50% of all hospital-based resective BPH procedures performed in the United States. For certain customers, our reimbursement strategy includes…
• FY2025 10-K: …the CE Mark to its medical devices after having drawn up and signed a related EC Declaration of Conformity. As a general rule, demonstration of conformity of medical devices and their manufacturers with the GSPRs must be based, among other things, on the evaluation of clinical data supporting the safety and…
• BFLY (Butterfly Network, Inc.)
• FY2025 10-K: …subscriptions and other services and is reduced as the revenue recognition criteria are met. Deferred revenue is classified as current or non-current on the consolidated balance sheets based on whether the expected timing of revenue recognition is within the next twelve months or thereafter, respectively. Warranties…
• FY2025 10-K: …insured limits. The Company has not experienced any significant losses on such accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. As of December 31, 2025 and 2024, no customers and one customer accounted for more than 10 % of the Company's accounts receivable,…
• ESTA (Establishment Labs Holdings Inc.)
• FY2025 10-K: …we believe many do not mimic natural breast tissue. 10-year Competitor CORE Study Date, Primary Augmentations The table below reports key adverse event information from published data from 10-year prospective Core clinical trials conducted by the only three competitor companies currently approved to market silicone…
• FY2025 10-K: $1 trillion by reducing Medicaid spending and enrollment and making changes to federal Medicare spending. The law also made changes to ACA marketplace enrollment that are projected to decrease the number of individuals with marketplace coverage. It is unclear if these changes will impact demand for our products. We…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.