Stephanie Piazzola

Stephanie Piazzola asked for an update on the expanded clinical specialist role, its strategy, and its impact on business and penetration within existing accounts. She also inquired about the path to achieving 70% gross margins in the next few years and how to project gross margin for the current fiscal year.

Answer

Brian Webster, President and Chief Executive Officer, explained that clinical specialists maintain high-performance accounts, allowing territory reps more bandwidth to open new ones, with early feedback being positive. Vaseem Mahboob, Chief Financial Officer, highlighted eight consecutive quarters of gross margin expansion, driven by unit economics, depreciation/volume leverage, and progress in in-network mix and revenue cycle management, providing clear line of sight to 70%+ margins.

Stephanie Piazzola asked for an update on the expanded clinical specialist role, inquiring about its impact on business and penetration within existing accounts. She also followed up on Kestra's gross margin expansion, which surpassed 50%, asking about the path to reach 70% in the next few years and for guidance on gross margin for the current fiscal year.

Answer

President and CEO Brian Webster explained that clinical specialists help maintain high-performing accounts, allowing territory reps more bandwidth to open new accounts, with early feedback being positive. CFO Vaseem Mahboob attributed gross margin expansion to attractive unit economics, volume and depreciation leverage, and progress in in-network mix and revenue cycle management, expressing clear line of sight to sustained expansion towards 70%+ margins in the coming years.

Stephanie Piazzola of Bank of America inquired about the underlying assumptions for Kestra's fiscal 2026 revenue guidance and sought additional details on the potential for gross margin expansion.

Answer

President and CEO Brian Webster stated that key revenue drivers include sales territory productivity, expansion into new accounts, and improved in-network payer metrics. CFO Vaseem Mahboob added that the company will start the year with 80 sales territories and expects gradual improvements in conversion rates. Regarding margins, Webster highlighted that increasing patient volumes and higher revenue per fit from new payer contracts are the primary catalysts for expansion.

Stephanie Piazzola of Bank of America inquired about the underlying assumptions for the fiscal 2026 revenue guidance of $85 million, including market growth, share capture, and conversion rates. She also asked for color on the potential for gross margin expansion.

Answer

President and CEO Brian Webster stated that key revenue drivers include sales territory productivity, expansion, and improved in-network payer metrics. CFO Vaseem Mahboob added that Kestra will start the year with 80 sales territories and expects conversion rates to improve gradually. Regarding margins, Brian Webster highlighted benefits from increasing volumes, higher revenue per fit from in-network contracts, and cost improvement projects.

Stephanie Piazzolla from Bank of America, on for Travis Steed, asked for more detail on what changed regarding the 'commercial evolution' that contributed to the lowered U.S. guidance.

Answer

President & CEO John Sheridan explained that the commercial transformation involves both salesforce expansion and system upgrades. While rep productivity improved quarter-over-quarter, the new systems and sales tools are not yet fully implemented. He stated they are being realistic about the second half, acknowledging they are not where they want to be on implementation and are also being cautious due to a new competitor with a large sales force.

Stephanie Piazzola from Bank of America asked about the drivers behind the increased full-year guidance and the underlying assumptions for Q3 revenue and new patient starts. She also requested details on the CMS proposal timeline.

Answer

CFO Stephen Feider explained the guidance raise reflects high confidence in H2 performance. He attributed the flat Q3 new patient start forecast to typical industry seasonality, a very strong Q2, and a conservative guidance philosophy. Regarding the CMS proposal, Feider outlined that the comment period closes in early September, with a final ruling expected in November and implementation not anticipated before 2027 at the earliest.

Stephanie Piazzola questioned the drivers for raising the full-year revenue guidance by more than the Q1 beat and inquired about the confidence in maintaining mid-80% gross margins despite potential Q4 tariff impacts, asking for details on mitigation strategies.

Answer

CFO Scott Blumberg explained that the guidance raise reflects increased confidence from strong execution and visibility, not just the Q1 beat. Regarding margins, he noted a multi-quarter inventory buffer against tariffs and expressed high confidence in returning to mid-80% levels through mitigation strategies like automation, vendor negotiations, and potential manufacturing reshoring, which are ready to be executed upon policy clarification.

Stephanie Piazzola questioned the drivers behind the full-year revenue guidance raise, which exceeded the Q1 beat, and asked for details on the company's confidence in maintaining gross margins despite future tariff impacts.

Answer

CFO Scott Blumberg explained that the guidance raise reflects increased conviction in their strategy following another quarter of strong execution and visibility into account utilization. Regarding tariffs, he noted Ceribell has enough U.S. inventory to last through Q3 2025, mitigating immediate impact. He projected a potential future impact of less than 10 percentage points on gross margin, excluding mitigation efforts like automation, vendor negotiation, and potential manufacturing reshoring.

Stephanie Piazzola inquired about the underlying assumptions for CeriBell's 2025 revenue guidance, including account additions, utilization, and pricing, as well as the expected quarterly cadence. She also asked for more detail on the strength of Q4 account additions and the outlook for Q1.

Answer

CFO Scott Blumberg explained that 2025 growth is expected to be consistent with 2024, as recent sales investments will primarily accelerate growth in 2026. He noted the guidance includes a level of conservatism and that Q4 and Q1 typically see slightly higher volume due to ICU census. Blumberg added that strong Q4 account adds resulted from effective planning that pulled some launches forward, suggesting Q1's performance would be similar to Q4's.

Stephanie Piazzola inquired about the underlying assumptions for CeriBell's 2025 guidance, including account additions, utilization, and pricing, as well as any expected quarterly cadence. She also asked for color on the strength of Q4 account adds and the outlook for Q1.

Answer

CFO Scott Blumberg explained that 2025 growth is expected to be consistent with 2024, with sales investments accelerating growth more significantly in 2026. He noted the guidance includes a level of conservatism and that Q4 and Q1 typically see higher volume due to ICU census. Blumberg added that Q4's strong account additions were due to effective planning that pulled some launches forward, suggesting Q1's performance would be similar to Q4's.

Stephanie Piazzola of BTIG inquired about CeriBell's utilization trends in Q3, the outlook for Q4 and 2025, and the company's plans for investing its recent IPO proceeds, particularly regarding sales force expansion and new center additions.

Answer

CFO Scott Blumberg stated that Q3 utilization growth was consistent with expectations and that the company continues to drive it effectively, noting that product revenue per account is a good metric to track. Regarding the IPO proceeds, he explained that CeriBell is evaluating opportunities to accelerate growth, such as in sales and R&D, within its 2025 operating plan, while ensuring the cash is sufficient to reach breakeven.

Stephanie Piazzola inquired about CeriBell's utilization trends in Q3, the outlook for Q4 and beyond, and how the company plans to deploy its recent IPO proceeds for future growth investments.

Answer

CFO Scott Blumberg explained that Q3 utilization growth was consistent with expectations and that the company is actively evaluating how to best use the larger-than-expected IPO proceeds to fund sales and R&D initiatives during its 2025 planning process, while ensuring it has a clear path to cash flow breakeven.

Asked about the timing of the CFO transition and Mitch Hill's retirement plans. Also inquired about procedural volume trends throughout Q2, particularly regarding seasonality, and how that informs the guidance for Q3 and Q4.

Answer

Mitch Hill stated it's a great time to transition the CFO role to Kevin Strange as part of a long-term succession plan, and while he will not take another executive role, his post-Inari plans are TBD. Management confirmed that Q2 experienced typical seasonality, but despite this, they delivered strong growth. They expect underlying procedure trends to improve in the second half of the year.