Kestra Medical Technologies surges 9.8% on revenue beat, lifted guidance
Wearable device maker raises full-year outlook as quarterly sales jump 63%, gross margins expand to 52.6%
Kestra Medical Technologies shares jumped nearly 10% on Tuesday after the wearable medical device maker reported third-quarter fiscal 2026 revenue of $24.6 million, beating analyst estimates by 7.3% and surging 63% from the prior year.
The Kirkland, Washington-based company, which develops wearable cardiac monitoring devices, told investors it now expects full-year revenue of $93 million, up from its previous guidance of $91 million. The revised outlook represents 55% year-over-year growth and signals accelerating demand for the company's technology in the cardiovascular monitoring market.
Investors overlooked a modest earnings miss, focusing instead on top-line momentum and improving profitability. The company reported a loss of $0.61 per share, slightly wider than the $0.60 loss analysts anticipated. However, gross margins expanded dramatically to 52.6% from 43.4% in the year-ago period, indicating strong operational leverage as Kestra scales its business.
The stock rose 9.8% to $21.14, adding to gains that have already pushed shares up more than 50% over the past six months. The rally reflects growing confidence among analysts that the company is gaining traction in the competitive cardiac monitoring space.
Analysts remain overwhelmingly bullish on Kestra's prospects, with six of the seven covering analysts rating the stock a buy or strong buy and one maintaining a hold rating. The consensus price target of $29 represents 37% upside from current levels, suggesting significant room for further appreciation if the company continues its growth trajectory.
The $1.1 billion company's rapid revenue growth comes at a time of heightened interest in wearable medical technology, particularly for cardiovascular applications that can detect arrhythmias and other cardiac events outside of hospital settings. Kestra's devices compete with established players like iRhythm Technologies and newer entrants in the remote patient monitoring market.
Institutional investors have taken notice, with 98.3% of shares held by institutions, reflecting confidence among professional money managers in the company's long-term potential. The stock has been volatile, trading between $13.25 and $30.00 over the past 52 weeks, but has shown resilience despite broader market turbulence in high-growth healthcare names.
The company's fiscal year ends in April, putting investors on watch for fourth-quarter results that will determine whether Kestra can meet or exceed its raised full-year guidance. With trailing 12-month revenue of $74.3 million and a price-to-sales ratio of roughly 15 times, the stock trades at a premium to many medical device peers, justified by its superior growth rate and expanding margins.
Kestra's focus on the cardiac monitoring market positions it at the intersection of several powerful healthcare trends, including the shift toward preventive care, the growing adoption of remote patient monitoring, and increasing awareness of cardiovascular disease. The company's ability to sustain its growth rate while improving margins will be critical to justifying its valuation and maintaining investor confidence.