Kamada Ltd. (KMDA) Q1 2025 Earnings: A Proprietary Powerhouse Faces Near-Term Valuation Crossroads

The Q1 2025 earnings report from Kamada Ltd. (KMDA) presents a paradox: robust growth in its core proprietary therapies contrasts with a muted near-term valuation outlook. While revenue surged 17% year-over-year to $44.0 million, driven by a 18.5% leap in proprietary product sales, the stock remains weighed down by a Zacks #3 (Hold) rating and mixed EPS results. Investors must now decide: Does Kamada’s dominance in specialty plasma-derived therapies justify a strategic buy now, or are the risks of margin pressures and valuation headwinds too great?

1. Proprietary Products: The Growth Engine That Just Won’t Stop

Kamada’s proprietary segment delivered an 18.5% YoY revenue jump to $40.0 million, accounting for 91% of total Q1 revenue. This growth was fueled by:
- International Expansion: Strong sales of GLASSIA® (for alpha-1 antitrypsin deficiency) and KAMRAB® (rabies immunoglobulin) in ex-U.S. markets.
- Strategic Contracts: A $25 million three-year supply agreement for KAMRAB® and VARIZIG® in Latin America, which will add ~$8 million annually to 2025 revenue.
- Plasma Dominance: The company’s U.S. plasma collection network, now including a third facility in San Antonio, Texas, is projected to generate $8–10 million annually once operational.

This segment’s 50.7% gross margin (vs. 11.7% for distribution) underscores its profitability. Kamada’s focus on high-margin therapies like CYTOGAM® (for cytomegalovirus prevention) and its Phase 3 Inhaled AAT trial (targeting COPD patients) further positions it as a leader in niche plasma-derived treatments.

2. Distribution Stagnation: A Drag on Margins, Not Growth

The distribution segment, reliant on biosimilar launches in Israel, reported flat revenue at $4.0 million (0.6% growth). While stable, its 11.7% gross margin lags far behind proprietary products. This segment’s inability to scale risks diluting Kamada’s overall margin expansion.

3. The EPS Conundrum: Overperforming Revenue, Underwhelming Shares

Despite outpacing revenue estimates by 5.28% for the third time in four quarters, Kamada’s Q1 EPS of $0.07 merely matched expectations—up 75% YoY but still minimal in absolute terms. This discrepancy arises from:
- Operational Leverage Limits: While operating expenses rose only 2% YoY to $13.0 million, they remain a constraint on EPS growth.
- Margin Lag: The Zacks Hold rating reflects concerns that Kamada’s margin expansion (gross margin +3% to 47%) may not yet translate into sustained EPS momentum.

4. Zacks’ Contradiction: A Sector Bull, but a Hold on Kamada?

The biomedical genetics industry—Kamada’s sector—holds a bullish Zacks Industry Rank of #1, yet Kamada itself is rated #3. This inconsistency hints at near-term risks:
- Valuation Pressure: Kamada’s forward P/E of ~25x (based on $0.27 FY2025 EPS guidance) may seem elevated against peers, but its 20%+ revenue growth trajectory could justify it.
- Hold vs. Buy Dynamics: The rating likely factors in short-term risks like regulatory delays for Inhaled AAT or plasma supply chain bottlenecks.

Why This Is a Buy Despite the Hold

Kamada’s $76.3 million cash balance, disciplined cost controls, and the $25 million Latin America contract provide a sturdy foundation. With adjusted EBITDA up 54% YoY to $11.6 million, the company is scaling profitably. The Zacks Hold may underestimate the long-term value of its pipeline:
- Inhaled AAT: A successful Phase 3 trial could unlock a $1 billion market.
- Plasma Expansion: The San Antonio facility alone could add $10 million annually.

The Bottom Line: A Buy for Long-Term Growth, Despite Near-Term Hurdles

Kamada’s proprietary dominance and strategic investments make it a standout player in plasma-derived therapies. While the Zacks Hold and margin pressures warrant caution, the stock’s 13.1% YTD outperformance and undervalued multiple relative to growth suggest a compelling risk/reward trade-off. Investors with a 3–5 year horizon should consider buying dips, as Kamada’s core strengths—organic growth, plasma vertical integration, and R&D momentum—position it to thrive in a sector poised for expansion.

Act now, but do so with eyes wide open: Kamada is a buy for growth, not a short-term bet on EPS spikes.