Prepared remarks
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1 Strata Critical Medical - Fiscal Third Quarter ended September 30, 2026 Earnings Call Script - November 3, 2026 - 8:00 am Mat Schneider (CFO Clinical Services, VP Finance and Investor Relations): Before we get started, I would like to remind you of the company's forward -looking statement and Safe Harbor language. Statements made in this conference call that are not historical facts, including statements about future time periods, may be deemed to constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties and actual future results may differ materially from those expressed or implied by the forward-looking statements. We refer you to our SEC filings, including our Annual Report on Form 10-K and our Quarterly Report on Form 10-Q, each as filed with the SEC, for a more detailed discussion of the risk factors that could cause these differences. Any forward-looking statements provided during this conference call are made only as of the date of this call. As stated in our SEC filings, Strata disclaims any intent or obligation to update or revise these forward -looking statements except as required by law. During today's call, we will also discuss certain non-GAAP financial measures, which we believe may be useful in evaluating our financial performance. A reconciliation of the most directly historical comparable consolidated GAAP financial measures to those historical non-GAAP financial measures is provided in our earnings press release and investor presentation. Our press release, investor presentation and our Form 10 -Q and 10-K filings are available on the investor relations section of our website at ir.stratacritical.com. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. Will Heyburn (Co-CEO and CFO): Our strong third quarter results speak for themselves. Q3 was not only ahead of our guidance, but also showed off Strata’s capability to generate significant cash flow with much higher conversion. As more customers turn to our integrated transplant offering for more of their cases, we are demonstrating continued market share gains in Clinical services. This helped to drive Clinical segment revenue growth of more than 20% sequentially versus Q2 2026. As Melissa will discuss in more detail: our go-to-market is all about creating alignment with
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2 our customers’ objectives, becoming that trusted long -term partner in a space that is becoming far too complex to go it alone. We saw yet another quarter of sequential margin improvement, driven in large part by achieving our 2027 Logistics gross margin target well ahead of plan. Logistics revenue came in towards the high end of our guidance framework despite both a larger -than- expected seasonal industry decline during Q3 and a reduction in industry trip distances. We are also pleased that, following our significant growth and the completion of three acquisitions during Q2, we still saw a reduction in our Adjusted SG&A base quarter-over- quarter. Most importantly, this quarter put a spotlight on the scalability and cash generation potential of our business model with a record $8.6 million of Free Cash Flow in Q3. We are also pleased to report that we’re pacing ahead of the medium-term goals we set out at our Investor Day last November. Looking ahead to 2027, we believe we are on track to achieve our target high teens organic Adjusted EBITDA growth and 30%+ Total Adjusted EBITDA growth including acquisitions, as well. On the M&A front, we’re well ahead of plan for 2026, closing on over $6 million of expected annualized Adjusted EBITDA at our targeted mid -single-digit valuation multiples. We have a strong pipeline to deploy capital at our target valuation with a focus on opportunities that will further strengthen our strategic position while enhancing our margin and free cash flow conversion profile. Given Strata’s improved cash generation, coupled with the receipt of our first Passenger sale earn-out, we ended the quarter with roughly $42 million of cash and short -term investments and that’s before our anticipated receipt of an additional $27 million of Passenger sale consideration early next year. As such, we are now in a position to both accelerate beyond our target pace of acquisitions as well as opportunistically return cash to shareholders. Today, we announced a $20 million share repurchase authorization, allowing us to take advantage of what we see as an attractive valuation for our own stock.
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3 The underlying driver of our financial performance is simple: better service, architected for efficiency, and delivered in partnership with our customers to prioritize their individual preferences and our shared goal to save more lives. Melissa Tomkiel (Co-CEO and General Counsel): It’s now been one year since our strategic transformation and the beginning of Strata. The impact of our new strategy to our financial results is self-evident, but I’d like to take a few minutes to focus on our evolving and strengthening customer value proposition. This is what we believe is driving our share gains today and what will continue to fuel our strong growth in the years to come. The fundamental challenge we face with our partners is to increase the supply of donor organs — demand has only grown. The transplant community has responded to this challenge with innovation in the form of perfusion and other preservation technologies that has led to a significant expansion in the pool of Donation after Circulatory Death (or DCD) donors, which now make up over half of all transplants. With this shift to DCD comes significantly more complexity versus traditional Donation after Brain Death (or DBD) donors: perfusion technology is generally required along with clinicians experienced in its use, cases take longer and organs are unusable (which we call a “dry run”) roughly 30% of the time. As a result, the historical system of relying upon a transplant center’s captive clinicians and technology is breaking. America’s 250 transplant centers and 50 OPOs simply do not have the national scale required to manage this complexity alone. Nor do es the patchwork of excellent, but regional providers that have historically served the industry. Strata has created an integrated platform offering organ recovery, perfusion, logistics, and placement with the scale to deliver services locally. By utilizing surgeons that can drive or fly commercially to donors, we reduce the time and cost to get to the OR.
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4 We have become more efficient across the board , repositioning empty airplanes less, using two airplanes less and successfully leveraging local surgeons and aircraft to reduce dry run costs. Customers are seeing the benefits of our more efficient, end -to- end platform and not just saving money, but also completing more transplants. What’s more, our expanding list of preservation device partnerships enables our transplant center customers to execute cases the best way they see fit. We currently stock devices from OrganOx, Bridge to Life, Paragonix and Traferox at our clinical hubs across the country, enabling seamless utilization by our customers according to their preferences. Our integrated go-to-market strategy is leading to continued share gains in Clinical. In addition, Strata has a much larger financial opportunity in these integrated cases, as much as three times versus a transport -only case, weighted more heavily towards Clinical revenue. This is a win-win in several ways. One, our clinicians and perfusion equipment, deployed on short trips locally, see higher utilization versus transplant center-based resources. In other words: in our system, the same number of surgeons can recover more organs. Two, Strata builds deeper clinical relationships with our customers while shifting mix to our higher margin, higher free cash flow conversion business lines. Three, of course, one of our objectives is to save our customers’ money. We do this by reducing logistics expenses for dry runs and handling transportation of our staff via ground or commercial air, which we do successfully roughly two thirds of the time. Though this is a contributor to reduced flight hours per case, it is a worthwhile investment in doing right by our customers that creates a significant long -term competitive advantage for Strata. Most importantly, by reducing the cost of a dry run, we make it financially possible for our customers to attempt more organ recoveries. A case with only a 50% probability of a successful recovery transforms from a “pass” to a 50% chance of saving multiple lives.
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5 We’re really just getting started demonstrating this value proposition to the transplant community and we’re excited about the growth potential in the business over the coming years. We continue to pursue creative opportunities to further improve the efficiency of our model and increase our total addressable market. To that end, in October, we launched with our first customer in our new cardiothoracic surgical locum tenens business lin e, loaning our surgeons and clinicians to hospitals for non -transplant use cases. This is a huge new addressable market for us that also serves to further increase the utilization of our surgeons and makes us a more attractive employer: more work means more pay for our team and ultimately better staff retention. Moving to industry trends, the transplant system exhibited above-average seasonality in Q3 with deceased donors and heart, liver and lung transplants falling approximately 7% quarter-over-quarter. While transplant volume continued to grow in the mid -single-digit range year-over-year, trip distances fell approximately 10% year -over-year driven primarily by lungs. As a reminder, lungs moved to continuous distribution in 2023 driving an increase of over 100% in lung distances between 2022 and 2025. Earlier this year, OPTN modified the lung continuous distribution composite allocation score resulting in a roughly 20% year- over-year decline in lung trip distances in Q3. Changes in organ allocation policy have been and will continue to be a clear long -term positive for the transplant community, enabling sicker patients to obtain life -saving organs. Heart and liver, which represent more than half of our transportation volume, have yet to move to the more efficient continuous distribution framework, which, similar to our experience with lungs, we expect to result in increased transplant volumes as well as another leg-up in distances. We’ve already skated to where the puck is going in transplant and, most importantly, Strata has created a business model with alignment between our customers, their patients and our shareholders.
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6 Will Heyburn (Co-CEO and CFO): Total revenue increased 50.3% to $74.1 million in Q3 2026 versus $49.3 million in the prior year period driven by Clinical acquisitions and growth partially offset by Logistics. On a pro forma basis, including the results of acquired businesses in both periods, revenue increased 8.5% year-over-year in Q3 2026. Total gross profit increased 57.9% to $16.8 million in Q3 2026 versus $10.7 million in the prior year period driven by Clinical acquisitions and growth partially offset by Logistics. Total gross margin increased 110 basis points to 22.7% in Q3 2026 versus 21.6% in the prior year period driven primarily by the positive mix impact of our larger Clinical segment, which also saw margin expansion versus the year ago period, partially offset by a slight decline in Logistics gross margin. Clinical year-over-year comparisons are not yet meaningful, so we’ll discuss it on a sequential basis. Clinical revenue increased 20.3% sequentially in Q3 2026, driven primarily by the full quarter impact of recent acquisitions as well as modest organic sequential growth. The Clinical business saw organic growth in a seasonally weak quarter for the industry, which was down approximately 7% sequentially in terms of total transplants, because we are gaining market share. Clinical gross profit increased 18.3% sequentially, driven primarily by the full quarter impact of acquisitions completed in Q2. Clinical gross margin declined 50 basis points to 25.6% versus 26.1% in Q2 2026 primarily due to investments in staff and training to support our growth and elevated use of part-time providers, which we expect to backfill with additional dedicated resources in the coming quarters. Turning to the Logistics segment, on a sequential basis, Logistics revenue decreased 6.9%, towards the high end of our guidance framework and consistent with seasonal transplant industry volume declines. This equates to a 3.5% revenue decrease vs. Q3 2025. The year-over-year comparison was impacted by an industry -wide decrease in average distances between donor and recipient of roughly 10%, which was driven in part by modifications to the lung allocation
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7 methodology as well as the reduced flying by a non-exclusive customer, discussed last quarter. Logistics gross margin rebounded 240 basis points sequentially to 20.8% in Q3 from 18.4% in Q2 2026, well ahead of our goal to reach 20% in 2027, driven by improvements across the Logistics business including Air, Ground and TOPS. On a year-over-year basis, Logistics gross profit decreased 6.6% to $9.3 million in Q3 2026 versus $10.0 million in the prior year period. Logistics gross margin of 20.8% in Q3 2026 declined versus 21.5% in the prior year period driven primarily by an increase in fuel surcharge pass-through revenue, and a reduction in average distances between donor and recipient, industry -wide and at Strata, which results in lower margins on owned aircraft. On a sequential basis, Adjusted SG&A decreased $0.2 million and has been about flat over the last four quarters. We’re especially proud of this given our significant organic growth over that same period, as well as our completion of three bolt-on acquisitions. On a year-over-year basis, Adjusted SG&A increased $1.5 million to $8.9 million in Q3 2026 versus $7.5 million in Q3 2025 driven primarily by Clinical acquisitions. It is important to note that stock-based compensation expense has been elevated in 2026 broadly and in Q3 2026 in particular, at $5.0 million. This was driven in large part by performance stock units linked to the receipt of the first Passenger sale earn-out, which was delivered this quarter. We expect a sequential decline in stock -based compensation expense of approximately 20 -30% moving into Q4 and we expect this lower run-rate to persist into 2027 alongside a continued reduction in SG&A as a percentage of revenue. Adjusted EBITDA increased both year-over-year and sequentially to $9.6 million in Q3 2026 versus $4.2 million in Q3 2025 and $7.9 million in Q2 2026. Adjusted EBITDA margin rose to 13.0% in Q3 2026 versus 8.5% in Q3 2025 and 10.9% in Q2 2026. GAAP net loss from continuing operations of $(7.6) million in Q3 2026 was driven entirely by non -cash, transaction -related items including $5.5 million of intangible asset
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8 amortization, of which $3.1 million was related to the retirement of legacy trademarks following our brand integration, $1.3 million of losses from the sale of the Joby earn-out shares and a $2.6 million change in fair values of assets and liabilities related to the revaluation of acquisition earn-outs. Excluding these items, net income would have been positive over the last two quarters. Many of these non-cash items will sunset in the near term as we completed the trademark amortization in Q3 and will pass our remaining Passenger sale earn-out opportunity in early 2027. Cash flow from operating activities was $9.5 million in Q3 2026. Free Cash Flow was strong at $8.6 million in Q3 2026 and benefited from a low level of aircraft capitalized maintenance resulting in only $0.8 million of capital expenditures in Q3 2026. We ended Q3 2026 with $41.6 million in cash and short-term investments. During the quarter, we achieved our first earn -out from the sale of our Passenger business last year. We realized net proceeds of $15.3 million after the sale of all Joby earn-out shares. There is an additional $27.5 million of potential earn-out consideration and holdback release in Q1 2027. Moving to the outlook, we are reiterating all aspects of our 2026 guidance including revenue of $285-295 million, Adjusted EBITDA of $33-35 million and Free Cash Flow, before aircraft and engine acquisitions of $15-22 million. At the midpoint, this implies a low-single-digit sequential increase in revenue in the fourth quarter. While transplant volumes are often volatile month to month, we have not yet seen the typical seasonal sequential improvement in industry volumes or our own Logistics volumes so far in Q4. As such, we expect sequential growth in Q4 to be driven primarily by Clinical while Logistics is expected to be about flat quarter-over-quarter. Gross margin is expected to remain about flat sequentially in the fourth quarter. We anticipate an increase in Clinical gross margins in 2027 as we leverage investments in clinicians and training, and backfill part-time providers with dedicated resources.
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9 We will provide 2027 financial guidance when we report Q4 2026 results early next year but we remain confident in our medium-term financial targets for high teens organic Adjusted EBITDA growth and 30%+ Adjusted EBITDA growth including acquisitions. We expect our growth in 2027 to be led by the Clinical division, driven by a strong new customer pipeline for our integrated transplant offering. Clinical also benefits from exposure to rising penetration rates of both NRP and third -party surgical recovery. Together, we expect these tailwinds to more than offset slower topline growth in Logistics, a function of both shorter industry trip distances and the efficiency improvements discussed earlier. We expect the resulting mix shift to drive continued improvement in our Free Cash Flow conversion in 2027 relative to 2026. We don’t expect a material allocation of capital towards aircraft purchases in the near term and any such purchases we would expect to be largely funded by sales of other aircraft or the release of deposits with third -party operators. We’re excited about the growth potential of our integrated organ recovery platform in Transplant, the strong operating leverage and cash generation potential of the business and our ability to create value through capital deployment towards M&A and share repurchases. We are participating in several investor conferences over the next few weeks including UBS’s Healthcare Conference and the Sidoti Conference in December.