Strata Critical Medical's Q3 2025 Earnings Call: Contradictions Emerge on Fleet Maintenance, Strategic Focus, Revenue Drivers, Aircraft Acquisition, and eVTOL Timelines

Date of Call: November 10, 2025

Financials Results

• Revenue: $49.3M in Q3 2025, up 36.7% YOY; excluding Keystone +29% YOY; Keystone contributed ~$2.8M (~0.5 month)
• Gross Margin: Medical segment adjusted EBITDA margin 15.1% in Q3 2025 (excluding Keystone) vs 10.8% prior year; 12.5% in H1 2025 (management also referenced Q3 at 15.3% in outlook commentary)

Guidance:

• 2025 revenue raised to $185 million–$195 million.
• 2025 adjusted EBITDA reaffirmed at $13 million–$14 million.
• Medical segment adjusted EBITDA margins expected to rise sequentially in Q4 versus Q3's ~15.3% (mix benefit from Keystone).
• Adjusted unallocated corporate expenses expected to be approximately $3.5 million in Q4.
• Company will introduce 2026 guidance and medium-term targets at Investor Day on Nov 17.

Business Commentary:

* Revenue Growth and Market Share: - Strata Critical Medical reported revenue of $49.3 million for Q3 2025, up 36.7% year-over-year, with a sequential increase of 3% excluding Keystone. - This growth was driven by market share gains, new customer acquisition, and expanded service offerings, particularly in the Air Logistics and Organ Placement Services segments.

• Profitability Improvements:
• The Medical segment achieved an adjusted EBITDA margin of 15.1% in Q3, excluding Keystone, compared to 10.8% in the prior year period.

• Improvements were due to reduced maintenance periods for Strata's fleet and increased operational efficiency.

• Free Cash Flow and Financial Outlook:

• The company generated approximately $2 million of free cash flow from continuing operations in Q3 2025.

• The positive cash flow outlook is attributed to reduced corporate overhead after divesting the passenger business and the strategic acquisition of Keystone Perfusion.

• Keystone Acquisition and Service Expansion:

• Keystone Perfusion, acquired late in Q3, contributed approximately $2.8 million in revenue during the quarter.

• The acquisition expanded Strata's service offerings and customer base, positioning the company as an end-to-end organ recovery platform.

• Investor Guidance and Strategic Focus:

• Strata raised its 2025 revenue guidance range to $185 million to $195 million, and reaffirmed its adjusted EBITDA guidance of $13 million to $14 million.
• The company's strategic focus on health care and investments in growth areas, along with its Investor Day on November 17, showcase confidence in future financial performance and growth opportunities.

Sentiment Analysis:

Overall Tone: Positive

• Management: "Strata is off to an exceptional start." "Revenue rose 36.7% year-over-year to $49.3 million." "We now expect this business to be solidly free cash flow generative going forward." Company raised 2025 revenue guidance and reaffirmed adjusted EBITDA guidance.

Q&A:

• Question from Benjamin Haynor (Lake Street Capital Markets, LLC): It sounds like everything is going quite well, and nice to see the guidance raise here. Could you maybe provide a bit of a disaggregation of where the growth came from in terms of the revenue here during Q3?
  Response: Growth came from an even mix of new customer acquisition, market-share gains and existing customers adopting new services, with Air Logistics a primary driver.

• Question from Benjamin Haynor (Lake Street Capital Markets, LLC): Do you see the growth as coming from similar directions in the future; are the growth drivers similarly weighted as you see it?
  Response: Yes — management expects continued new customer adds, market-share consolidation via scale/local service model, and secular industry growth (new tech/regulation) to drive growth.

• Question from Benjamin Haynor (Lake Street Capital Markets, LLC): On the heavy maintenance that you performed earlier this year across the fleet, what should we expect in terms of fleet margin for the remainder of the year; any moving pieces changed because of the maintenance schedule earlier this year?
  Response: Scheduled maintenance is winding down; Medical segment margins are expected to improve sequentially into Q4.

• Question from Benjamin Haynor (Lake Street Capital Markets, LLC): You mentioned the relocation things associated with Keystone. Is that relatively de minimis in terms of expenses or something we should factor in?
  Response: Relocation is de minimis to SG&A; it's intended to align resources locally to reduce operating costs.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): With the Keystone acquisition, could you give us a sense of how many individual separate customers you are serving now?
  Response: Keystone adds roughly 250 customers nationwide across cardiac care and transplant, with only ~10% overlap with legacy Strata customers.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): Is there any customer that's, say, 5% or more of revenues? Any one customer that large?
  Response: No material customer concentration; revenue base is diversified across ~250 customers.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): You got a new customer right at the end of the quarter—can you elaborate on that?
  Response: Yes — added one new OPO air logistics customer late in Q3 and also added one new organ-placement customer.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): You were heavy on the air side and Keystone had more ground services — are you evening out those two revenue sides now or is air still predominantly larger?
  Response: Air remains the dominant part of logistics; Keystone adds ground/surgical/NRP services but won't materially shift the air/ground weighting.

• Question from Jon Hickman (Ladenburg Thalmann & Co. Inc.): Will you break out logistics versus perfusion separately in reporting?
  Response: They posted a pro forma 2025 business-mix in the investor deck; expect some mix shift toward fast‑growing perfusion/NRP services and will provide more detail at Investor Day.

• Question from Investor (Direct): How should we interpret the seasonality you saw in Q3 with transplant volumes down mid-single digits?
  Response: Seasonal mid-single-digit declines are expected (surgeon availability/vacation); Strata is outgrowing the industry through that seasonality.

• Question from Investor (Direct): How is the Keystone acquisition integration going so far (closed ~7–8 weeks ago)?
  Response: Integration is going well with positive customer feedback; Keystone's surgical recovery and NRP capabilities make Strata an end-to-end organ recovery platform.

Contradiction Point 1

Fleet Maintenance and Impact on Margins

It directly affects expectations regarding the company's financial performance and investor expectations.

Regarding the heavy maintenance performed earlier this year on the fleet, what impact should we expect on fleet margins and downtime for the remainder of the year? Have there been any changes to the maintenance schedule this year that affect these factors? - Benjamin Haynor(Lake Street Capital Markets, LLC, Research Division)

2025Q3: We did see scheduled maintenance events come into the third quarter that will continue into the fourth quarter. We expect margins to increase sequentially within the Medical segment. - Mathew Schneider(CFO)

What is the restructuring's Q3 impact and any 2025 outlook changes, particularly regarding medical margin and fleet utilization? - Wamsi Mohan(Bank of America Merrill Lynch)

2025Q2: We expect our medical margins to be flat to slightly higher from Q2 to Q3, and the major impact here, be flat to slightly higher, is because of the planned downtime. - Mathew Schneider(CFO)

Contradiction Point 2

Strategic Focus and Growth Drivers

It involves differing strategic focus and growth drivers for the company, which are crucial for investors' understanding of the company's direction and priorities.

Can you break down the sources of revenue growth in Q3? - Benjamin Haynor(Lake Street Capital Markets, LLC, Research Division)

2025Q3: It was a pretty even mix of new customer acquisition, taking market share, and strength within existing customers. Also, customers taking new services from us contributed to the growth. - William Heyburn(CEO, CFO & Director)

Does the Passenger business distract from the Medical business? What's the appropriate reporting structure moving forward? - David Leiker(Robert W. Baird & Co.)

2025Q2: Our growth strategy remains focused on leveraging our technology portfolio, increased commercial scale and improved services for our customers. - William Heyburn(CEO, CFO & Director)

Contradiction Point 3

Revenue Growth Drivers

It involves different perspectives on the primary drivers of revenue growth, which are crucial for investors to understand the company's strategy and performance.

Can you break down the sources of Q3 revenue growth? - Benjamin Haynor(Lake Street Capital Markets, LLC, Research Division)

2025Q3: It was a pretty even mix of new customer acquisition, taking market share, and strength within existing customers. Also, customers taking new services from us contributed to the growth. - William Heyburn(CFO)

What key themes should investors focus on as we approach 2026, particularly in strategic direction and partnerships? - Jason Helfstein(Oppenheimer)

2025Q1: The focus will be on increased velocity and performance in Europe with positive pre-sales in areas like Monaco Grand Prix and the Hamptons. Partnerships will be key, including airline and credit card deals. Dynamic pricing will be more prevalent to maximize utilization. - Robert Wiesenthal(CEO)

Contradiction Point 4

Aircraft Acquisition Strategy

It highlights differences in the company's approach to aircraft acquisitions, which impacts capital allocation and future growth strategies.

How will the heavy maintenance performed earlier this year impact fleet margins and downtime for the remainder of the year, and have there been any changes to the maintenance schedule? - Benjamin Haynor(Lake Street Capital Markets, LLC, Research Division)

2025Q3: We have been strategic about our approach, and we will continue to be. We have been focused on operational efficiency. - William Heyburn(CFO)

How do current tariffs impact Blade's aircraft acquisition plans? - Ben Klieve(Lake Street Capital Markets)

2025Q1: Our approach to aircraft acquisitions remains unchanged, with the expectation of adding a low single-digit number of aircraft over the next 12-18 months. - William Heyburn(CFO)

Contradiction Point 5

eVTOL Aircraft Deployment Timeline

It involves differing timelines for the deployment of eVTOL aircraft, which is significant for the company's future growth strategy and competitive position.

How many individual customers are you serving now following the Keystone acquisition? - Jon Hickman(Ladenburg Thalmann & Co. Inc., Research Division)

2025Q3: eVTOL aircraft expected in the Middle East by Q1 2026, with U.S. deployment in late 2027. - Robert Wiesenthal(CEO)

What is the timeline for scaling up and acquiring eVTOL aircraft? Can you discuss Europe's profitability and growth? - Xin Yu(Deutsche Bank)

2024Q4: eVTOL deployment in the Middle East by Q1 2026 could be exhibition-oriented initially. Blade will facilitate customer aircraft purchases or work with partners owning aircraft for operations. - Robert Wiesenthal(CEO)