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Date

May 6, 2026, 8 a.m. ET

Call participants

  • Co-Chief Executive Officer — William Heyburn
  • Co-Chief Executive Officer — Melissa Tomkiel
  • Chief Financial Officer — Mathew Schneider

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Takeaways

  • Total revenue -- $67.4 million, up 87.4% year over year and up approximately 1% sequentially from Q4 2025.
  • Logistics revenue -- $47.6 million, representing 32.4% organic growth year over year; declined 3.3% sequentially from Q4 2025 due to customer mix and winter airport closures.
  • Clinical revenue -- $19.8 million, did not exist in the prior year, and rose 12.7% sequentially; Transplant Clinical revenue within Clinical grew 26.7% sequentially.
  • Gross profit -- $14.1 million, up 100% year over year; gross margin of 21%, up 140 basis points versus prior year.
  • Logistics gross profit -- $9.2 million, up 29.9% year over year; Logistics gross margin 19.3%, down 30 basis points year over year and down 220 basis points sequentially from Q4 2025 due to OPO customer mix.
  • Clinical gross profit -- $5 million, up 29.2% sequentially; Clinical gross margin increased to 25% from 21.8% in Q4 2025 on favorable mix shift.
  • Adjusted SG&A -- $9.2 million, up $0.3 million sequentially; increase driven by investments in growth-related resources and infrastructure.
  • Adjusted EBITDA -- $6.4 million, down from $7 million in Q4 2025 with a margin decline to 9.5% from 10.4% sequentially on gross margin pressure and higher SG&A.
  • Operating cash flow -- $3.9 million; variance from adjusted EBITDA relates to $1 million in accounting adjustments and $1.5 million working capital increase from incentive pay timing.
  • Capital expenditures -- $5.5 million, including a $3.7 million aircraft acquisition and capitalized maintenance.
  • Free cash flow (before aircraft/engine acquisitions) -- $2.1 million in Q1 2026.
  • Cash and short-term investments -- $58.8 million at quarter end; company maintains access to a $30 million undrawn ABL facility (expandable to $50 million), and potential $45 million in earn-out payments from the Passenger business sale.
  • M&A activity -- Acquired Ohio Valley Perfusion Associates for $1 million, expected to generate $100,000 in adjusted EBITDA for remainder of year; management signaled an active pipeline and "mid-single-digit multiples of EBITDA" for future targets.
  • Clinical customer expansion -- Added new NRP and Surgical Recovery customers, cross-sold Clinical services to existing Logistics clients; multiple end-to-end customer prospects in the pipeline.
  • Operational expansion -- Opened new aviation bases, now with twenty logistics hubs; expanded into Chicago with a joint Logistics and Clinical base, targeting increased efficiency and customer reach.
  • Industry metrics -- Data indicated NRP performed on over half of all DCD donors, and yields per donor "more than offset" donor count decline since mid-2025; sequential improvement in deceased donors from Q4 2025 and Q1 2026, now "well above" Q3 2025 lows.
  • Guidance reiterated -- Full-year 2026 revenue target of $260 million to $275 million; adjusted EBITDA of $29 million to $33 million; free cash flow before aircraft/engine purchases of $15 million to $22 million.
  • Q2 2026 outlook -- Revenue expected to rise low single digits sequentially; adjusted EBITDA margin improvement to approximately 10% guided for Q2.
  • Logistics gross margin outlook -- Management expects margins to remain around 20% for the year; higher fuel surcharges and unpredictable customer mix noted as primary variables.
  • Clinical gross margin guidance -- "trending above expectations" with Q1 at 25%+; not expected to remain that high every quarter but mix shift to Transplant Clinical supports above-plan margin.
  • Warrant expiry -- Fourteen million warrants from the company’s 2021 go-public transaction are set to expire, with an exercise price of $11.50.

Summary

Strata Critical Medical (SRTA +10.58%) delivered substantial year-over-year growth fueled by both Logistics and new Clinical revenue streams, with the recently acquired Keystone unit driving clinical segment performance. The company executed on M&A strategy by acquiring Ohio Valley Perfusion Associates, aligning with the stated goal of expanding the Clinical vertical and recurring revenue. The buildout of nationwide infrastructure, including new aviation bases and the integrated Chicago hub, was emphasized as core to lowering costs and improving customer service, particularly for organ transplant providers. Cash flow generation turned positive, underpinned by improved earnings quality, while management reiterated 2026 financial guidance with full-year targets unchanged.

  • Management highlighted the company’s hybrid model and technology platform as differentiators supporting compliance, and service integration for transplant clients.
  • Higher Logistics revenue was partially offset by margin pressure from a shift toward OPO customers with shorter, lower-margin trips; management framed these as non-structural and quarter-to-quarter in nature.
  • Leadership described capital flexibility, noting substantial available cash, a scalable credit facility, and anticipated earn-outs from the Passenger divestiture to fund ongoing M&A and growth initiatives.
  • The company does not expect clinical trial logistics or specialized device transports to have a material impact on margins, as contracts are set by customer rather than device type.
  • Chief Financial Officer Mathew Schneider confirmed improvement in deceased donor volumes and an acceleration in transplant rates to mid-single digits, consistent with prior company guidance and industry trends.
  • Fuel cost inflation is effectively managed through customer pass-through mechanisms included in Logistics contracts, maintaining limited business impact from recent fuel price increases.
  • Surgeon and crew recruitment, retention, and credentialing remain priorities as regulatory scrutiny of certification increases; management is building forward-compatible capacity and training pipelines.
  • Management noted the expiration of fourteen million public warrants and provided details on earn-out structure related to the Joby transaction, including mechanisms for balance sheet protection.

Industry glossary

  • NRP: Normothermic Regional Perfusion, a surgical recovery technique applied to Donation after Circulatory Death (DCD) donors to improve organ viability.
  • OPO: Organ Procurement Organization, an entity that coordinates the donation, recovery, and transport of organs for transplantation within defined geographic regions.
  • DCD: Donation after Circulatory Death, a category of organ donors where death is declared based on circulatory criteria, requiring specialized recovery and transport protocols.
  • Keystone acquisition: The 2025 purchase of Keystone, forming the company’s Clinical business segment.
  • Joby earn-out: Contingent payments due from the sale of the Passenger division to Joby, structured based on performance and personnel retention milestones.

Full Conference Call Transcript

Mathew Schneider: Thank you for standing by, and welcome to Strata's conference call and webcast for the quarter ended March 31, 2026. We appreciate everyone joining us today. 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 the 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 a substitute for financial results prepared in accordance with GAAP. Hosting today's call are our co-CEOs, Will Heyburn and Melissa Tomkiel. I'll now turn the call over to Will.

William Heyburn: Thank you, Mat, and good morning, everyone. We're happy to report another great quarter with results ahead of our guidance for both revenue and adjusted EBITDA. Our 87% year-over-year revenue growth reflected organic growth of 32% in Logistics, coupled with a particularly strong contribution from our new Clinical business. The underlying strength of our transformed economic model is finally shining through as we began generating both operating cash flow and free cash flow before aircraft acquisitions this quarter. Our quality of earnings and cash conversion will only improve in the coming quarters as we clear the last remaining Passenger divestiture-related outflows.

We are more confident than ever, not just that the transplant ecosystem sees value in our platform, but that the capabilities we bring captive, nationwide logistics integrated with device-agnostic clinical support, are essential to solve the shortage of donor organs in this country. Melissa will talk in more detail about some of the underlying trends driving our confidence in this area, but suffice it to say that the industry practices continue to move in our direction. On the M&A front, we're delighted to announce the acquisition of Ohio Valley Perfusion Associates. While small in size, this deal is perfectly aligned with and illustrates the potential of our M&A strategy.

We operate in highly fragmented markets and can acquire businesses for mid-single-digit multiples of EBITDA that strengthen our existing business lines, position us for future growth and provide cost efficiencies. The Ohio Valley transaction value is approximately $1 million, and we expect it to contribute approximately $100,000 of adjusted EBITDA for the remainder of this year. As a reminder, the cardiac perfusion or Other Clinical vertical, as we call it, in which Ohio Valley sits is a great complement to our transplant business, fueling our ability to hire and train the same perfusionists we utilize for NRP services, while benefiting from recurring revenue through multiyear retainer contracts.

Our capital deployment towards M&A is just getting started, and our pipeline remains very active. As we discussed last quarter, we have several opportunities currently under exclusivity across multiple business lines, including logistics, surgical recovery, placement and cardiac perfusion. Some of these are smaller opportunities like Ohio and some are larger bolt-ons that we project will generate low single-digit millions of adjusted EBITDA annually. We expect to reach the finish line on certain of these opportunities over the coming months.

We continue to find that we are the acquirer of choice for many business leaders in our area, specifically our kind of leaders, the ones that still have gas in the tank, are hungry to keep growing, but see a larger value creation opportunity by joining forces with our team, benefiting from our nationwide platform and competing at scale.

We have significant balance sheet capacity to support this M&A strategy, including approximately $59 million of cash on hand, an undrawn $30 million asset-based lending facility that could be upsized to $50 million and up to $45 million of contingent consideration from the Passenger sale transaction that's payable over the next year, along with the underlying free cash flow generation of the business. With that, I'll turn the call over to Melissa.

Melissa Tomkiel: Thanks, Will. We've made a great deal of progress this quarter building out our national footprint of aviation, ground and clinical resources. This scale allows us to better and more efficiently service our customers and reduces costs for the transplant community. We acquired 1 new plane this quarter, providing us with a total of 10 owned aircraft and a dedicated fleet of approximately 35. We opened several new aviation bases in Q1 and now have roughly 20 logistics hubs around the country. We recently expanded into the Midwest, launching a new combined Logistics and Clinical base in the very strategic city of Chicago.

This joint base allows us to best serve our new Chicago-based transplant center customers and creates more cost-effective options for all of our customers when recovering organs from donors throughout the Midwest. On the broader transplant industry front, as Will mentioned earlier, the industry continues to embrace NRP and third-party surgical recovery, areas where we are a market leader with data now showing NRP being performed on more than half of all DCD donors.

Increased adoption of these practices has been a critical lifeline for the transplant community over the last several quarters, resulting in increased yields, or usable organs per donor that have more than offset a reduction in the overall number of donors that began following the media and regulatory scrutiny in mid-2025. Though deceased donors were still down year-over-year in Q1 2026, we saw sequential improvement starting in Q4 2025 and a larger sequential improvement in Q1 2026, putting us well above the lows of Q3 2025. A return to growth in deceased donors is welcome news for the 100,000-plus patients on the transplant waiting list and for the broader transplant community, including service provider partners like Strata.

As the industry has worked through this period of reduced donor volumes, another subtle shift has occurred. The recovery surgeon capacity that transplant centers used to keep in-house simply doesn't exist at the same levels anymore. Couple this with the increased recovery complexity associated with the industry's shift to DCD and NRP and the old system of transplant centers using their own surgeons for recovery is maxed out. What's more, this is happening even at today's still depressed donor levels. Thankfully, we have the solution with local third-party surgical recovery. As we see continued normalization of donor volumes, this will only become a more critical and larger component of the organ transplant ecosystem.

This is good news for everyone because it is giving us an opportunity to make the process more efficient, in partnership with the entire industry. Third-party recovery like what Strata offers enables surgeons to be dispatched from somewhere near the donor so they can spend more time recovering organs and less time sitting on airplanes. Additionally, by using local surgeons we can ensure that a DCD opportunity will actually result in viable organs before launching an airplane, significantly reducing logistics costs for dry runs, which can occur more than 1/4 of the time in DCD recoveries.

In short, the evolving system, driven by third-party recovery, NRP and machine perfusion, is making the whole process more efficient and fueling the next leg of growth in transplants for all that desperately need them. Given the trends we've been discussing here, it should come as no surprise that our clinical division posted especially great results this quarter, with growth driven by continued new customer acquisitions across both NRP and Surgical Recovery as well as higher volumes within our existing customer base. We started providing NRP services to a new OPO in the Pacific Northwest during Q1, and we onboarded new Transplant Center clinical customers, several of which are existing Logistics customers, illustrating some early cross-sell wins.

There is more work to do integrating our placement, clinical and logistics service offerings, but we have multiple end-to-end customers in the pipeline, customers that will utilize our entire suite of transplant service offerings. We remain well positioned to provide these critical services to the transplant community given our dedication to clinical excellence, geographic scale, and the technology and reporting platform that ensures strict compliance with national protocols and standards. On the regulatory front, we continue to see increased scrutiny around certification and qualification standards for donor surgeons, both abdominal and thoracic. This is an important and expected evolution as the field matures and scales.

It is important to emphasize that in anticipation of this, we have designed our recovery service line to be forward-compatible with formal certification requirements and are actively expanding capacity to meet both current and anticipated demand. We have a growing pipeline of licensed surgeons, and we are deliberately building additional depth. In parallel, we have initiated development of a dedicated training pathway for thoracic donor recovery and NRP, drawing from a pool of already highly qualified surgeons. As the field gains broader recognition and demand increases, we believe this structured approach to training and credentialing will be essential to ensuring quality, consistency and scalability.

We remain focused on several key value drivers, including strengthening our national organ recovery platform, acquiring new customers across all businesses, optimizing the profitability of our existing operations and executing on our M&A strategy. As you can see from our financial performance to date, we're making excellent progress on all of these initiatives. With that, I'll turn the call back over to Will.

William Heyburn: Thank you, Melissa. We'll now turn to the financial results for the quarter. Total revenue increased 87.4% to $67.4 million in Q1 2026 versus $35.9 million in the prior year period and increased approximately 1% sequentially versus Q4 2025. Logistics revenue, which represents the company's organic growth, excluding Keystone, increased 32.4% to $47.6 million in the current quarter versus $35.9 million in the prior year period, driven primarily by higher Air revenue where both new and existing customers contributed to the strong performance in the period. Logistics revenue fell 3.3% sequentially versus Q4 2025 as customer mix drove shorter trip distances and winter storms resulted in the closure of key airports for several days during the quarter.

Clinical, which did not exist in the prior year period, saw revenue increase 12.7% sequentially to $19.8 million in Q1 2026 versus $17.6 million in Q4 2025, driven primarily by Transplant Clinical revenue, which rose 26.7% sequentially, driven by both NRP and Surgical Recovery services. As mentioned earlier, new customers in both of these areas contributed to the results in the quarter. Other Clinical revenue rose 1.6% in Q1 2026 sequentially versus Q4 2025. Gross profit increased 100% to $14.1 million in Q1 2026 versus $7.1 million in the prior year period, driven by growth in Logistics and the addition of our Clinical business through the Keystone acquisition.

Gross margin increased approximately 140 basis points year-over-year to 21% versus 19.6% in the prior year period, driven primarily by the positive mix impact from the Keystone acquisition, partially offset by a modest decline in Logistics gross margins. Logistics gross profit, which represents the company's organic growth, excluding Keystone, increased 29.9% to $9.2 million in Q1 2026 versus $7.1 million in the prior year period. Logistics gross margin of 19.3% in Q1 2026 decreased 30 basis points versus 19.6% in the year ago period and decreased 220 basis points versus 21.5% in Q4 2025, both driven primarily by customer mix. As discussed earlier, we saw a customer mix shift to OPOs during the quarter that have shorter trip lengths.

This dynamic contributed to the Logistics gross margin softness in the quarter as OPOs are typically lower margin versus Transplant Centers due to shorter trip lengths and the aircraft types that are used, small jets and turboprops. Quarter-to-quarter customer mix shifts are a normal part of the business, and we don't anticipate any structural mix shift to OPOs versus Transplant Centers. Clinical gross profit rose 29.2% sequentially to $5 million in Q1 2026 from $3.8 million in Q4 2025. Clinical gross margin rose to 25% in Q1 2026 versus 21.8% in Q4 2025, primarily due to margin improvement in, and a mix shift towards transplant Clinical revenue.

Given the noise associated with last year's transactions, year-over-year comparisons of SG&A are not particularly meaningful. Instead, looking sequentially, adjusted SG&A increased $0.3 million to $9.2 million in Q1 2026 versus $8.9 million in Q4 2025. We continue to take a disciplined approach to SG&A. The modest increase in adjusted SG&A sequentially was driven by investments in resources and infrastructure to support growth in the business. Similarly, year-over-year adjusted EBITDA comparisons are not illuminating.

Looking sequentially, adjusted EBITDA fell to $6.4 million in Q1 2026 versus $7 million in Q4 2025, driven by a 90 basis point reduction in adjusted EBITDA margin to 9.5% in Q1 2026 versus 10.4% in Q4 2025, consistent with our guide for an approximate 1 point decline sequentially. The 90 basis point decline in adjusted EBITDA margin versus Q4 2025 was driven by the reduction in gross margin and slight increase in adjusted SG&A we discussed previously. Operating cash flow was $3.9 million in Q1 2026.

And the $2.5 million difference between adjusted EBITDA and operating cash flow was driven by approximately $1 million of income statement adjustments and a $1.5 million increase in working capital, which was primarily a function of incentive compensation payments that are accrued throughout the year but paid in Q1. Capital expenditures of $5.5 million in Q1 2026 were driven primarily by the $3.7 million acquisition of 1 aircraft, along with aircraft capitalized maintenance. Free cash flow before aircraft and engine acquisitions was $2.1 million in Q1 2026. We're encouraged by the cash generation in the quarter, especially considering the non-recurring cash items that burden cash flow, along with the timing of annual incentive compensation payouts during the quarter.

We ended Q1 2026 with $58.8 million in cash and short-term investments. We continue to expect to receive Joby earn-out payments related to our Passenger divestiture of approximately $45 million. Up to $17.5 million of this earn-out would become due at the end of August based on Blade's financial performance post close. The balance, which would become due in March 2027, is based on the retention of former Blade employees who transferred to Joby and is largely hedged by our ability to recover stock from those employees if they do not fulfill their obligations.

Note that the value of those shares is held as a liability on the balance sheet today and will be revalued based on the current share price each quarter flowing through the income statement. Finally, as a reminder, if Joby elects to make the earn-out payments in the form of Joby stock, the number of shares will be determined at the time the earn-out is earned, not based on a historical Joby stock price. We would also like to note that the 14 million warrants issued as part of our 2021 going public transaction are set to expire tomorrow, according to their terms. The exercise price of the warrants is $11.50. Moving to the outlook.

Revenue is trending above the midpoint of our guidance range, partially due to higher-than-anticipated fuel surcharges for the remainder of the year. On Logistics gross margins, there are several key drivers in a given quarter, including the mix between air capacity types, owned fleet uptime, customer mix and the timing of contractual pricing escalators or contract renewals that include cost increases. For the rest of the year, we expect Logistics gross margins to remain in the 20% range as we anticipate higher fuel surcharges, along with the impact of customer mix that we have limited visibility into quarter-over-quarter. As we discussed, Clinical gross margins were very strong in Q1 2026.

And while they might not stay at 25% plus each quarter, Clinical gross margins are trending above expectations given the mix shift to Transplant Clinical. Lastly, the contribution from Ohio Valley Perfusion is limited for the remainder of 2026, as we mentioned earlier. We are reiterating all aspects of our 2026 guidance, including revenue of $260 million to $275 million, adjusted EBITDA of $29 million to $33 million, and free cash flow before aircraft and engine purchases of $15 million to $22 million. For the second quarter, we expect revenue to increase in the low single digits sequentially. Adjusted EBITDA margin is expected to improve to approximately 10%.

In summary, we're very happy with the performance of the business, and we see significant value creation potential ahead through organic growth and executing on our M&A strategy. We're participating in several investor conferences over the next few weeks, including Craig-Hallum's Institutional Investor Conference, B. Riley's Investor Conference, William Blair's Growth Conference and a Non-Deal Roadshow with Lake Street. We hope to see many of you at these upcoming events. With that, I'll turn it back to the operator for Q&A.

Operator: [Operator Instructions] And it comes from the line of Bill Bonello with Craig-Hallum.

William Bonello: So a couple of things real quick. You talked about onboarding some of your Transplant Center Logistics customers as Clinical customers, which was great to hear. I think last quarter, you had talked about a lot of the Logistics growth sequential being driven by capturing some of the Keystone customers. Is that trend still continuing?

William Heyburn: Bill, thanks for the question. It's Will here. Yes, we continue to get an extremely high percentage of the clinical cases where we're performing services, having those customers use our logistics. I think there was an initial step-up of that after we closed the Keystone transaction. So you're not going to see a big step-up like that again because we do believe we're capturing all that. But you will continue to see that benefit the Logistics business as the Clinical business continues its slightly faster growth.

William Bonello: Yes. Okay. That's really helpful. And then just one other thing. Curious -- and I'll hop back in the queue. Curious on Chicago. Is there anything you can sort of extrapolate from prior market expansions in terms of how adding a new base impacts growth in that area?

William Heyburn: This is a unique one for us because it is a combined Clinical and Logistics base. So it gives us a lot of flexibility in an area where, frankly, we had limited -- more limited capabilities historically. Now we'll be able to have airplanes on standby for organs that are being recovered in that area. We'll be able to dispatch surgeons locally for organs that are going to be recovered in that area. And then also, we'll be able to fly out perfusionists and surgeons from that Chicago hub to anywhere in the area if it's not within driving distance. So there's a lot of new capabilities.

We've been able to do that in a number of other areas for a period of time, but it does allow us to cover a large part of the country that we haven't been able to cover very well previously.

Operator: Our next question comes from the line of Yuan Zhi with B. Riley.

Yuan Zhi: And congrats on a strong quarter. Maybe a first question to Will. So if the oil price stays at this high level, can you give more details about how this oil price will impact your top line and the bottom line?

Melissa Tomkiel: This is Melissa. So we build into our Logistics contracts a fuel pass-through above a certain threshold, which most of our customers have already been at prior to these most recent increases. So this happens on a trip-by-trip basis. So as we incur cost for fuel, that is passed through to the customers, and we provide them with the fuel invoices for each trip. So there's full visibility there. We're always trying to minimize the cost for our customers, which is why we're building out this national infrastructure to have planes strategically located throughout the countries, which will reduce repositioning of those planes, which drives that fuel cost.

So we -- it doesn't have that much of an impact on our business.

Yuan Zhi: Got it. And I think maybe just to follow on the prior questions. I see you guys have an update on the regional hub chart. I'm just curious about your thinking behind how -- what are the required criteria or thinking behind entering a new market in the U.S.?

Melissa Tomkiel: We are responsive to our customers' needs. So our value proposition is to be able to offer dedicated capacity with aviation assets to our customers. So this -- we picked up some new customers in Chicago, and we immediately were able to relocate or provide additional resources in that region. And because we know that the most efficient way we can provide the service is by having those locally based surgeons and aviation assets.

William Heyburn: But I would point out that those new customers in Chicago are not yet flying. We're expecting that in the back half of the year, but we're already using that hub to support our existing customers in the region.

Yuan Zhi: Got it. And my last question is related to ongoing clinical trials in the transplant space. There are several clinical trials ongoing involving specialized medical device for organ transplantation. I wonder, do you see the logistics associated with those activities have a higher margin or higher revenue versus the routine procedures?

William Heyburn: With our agnostic philosophy, our relationship is with the customer, the transplant center or the OPO. And we're not charging them anything different based on what device they may or may not be using. So our goal is to support all of our customers with any clinical decision they might make and any medical device they might want to use, whether that's a device that's already certified or whether that's a device that's going through a clinical trial in which they're participating.

So don't think that, that will have much impact on us one way or another because if you recall, our contracts simply say that we're going to do 100% of the flying that, that customer is going to do, and that would be inclusive of that kind of work.

Operator: [Operator Instructions] We have a question from Ben Haynor with Lake Street Capital Markets.

Benjamin Haynor: First off for me, just on becoming kind of the acquirer of choice in the space. Just curious on what folks are looking for in terms of structure on some of these acquisitions. I mean, is it going to be typically an upfront cash payment, as the guys with gas in the tank and -- guys with gas in the tank on sort of earn-out, equity? How broad is the structure spectrum of these acquisitions that you're looking at?

Melissa Tomkiel: Well, it will vary on a case-by-case basis, but we are flexible. What we are seeing with the structure. There's not just one formula. What we're seeing though with the companies that we're speaking to, to partner with is a lot of excitement on their end to partner with us, knowing that together, we're going to have a larger footprint, and we're going to have more resources. And they want to participate in the upside, which is why we do tend to discuss structures that will involve some equity component. There's just a lot of excitement in the space and the belief that partnering with us as a strategic is a much better outcome for those companies.

William Heyburn: I think we do have a little bit of an advantage when we're being considered versus a private equity acquirer, because it's just a simpler structure that we can offer relative to maybe a less transparent incentive plan structure. It's publicly traded equity. They can see what it's worth. They have a little more confidence that it could lead to liquidity down the line. And so, I think, that's been a nice benefit for us. And also, just our strategic approach. Really, what we see as an advantage with these acquisitions is building on our platform and our capabilities versus the financial arbitrage of it is secondary to the strategic benefit that we see.

And I think that entrepreneurs really appreciate that mindset.

Benjamin Haynor: So strategic benefit and incentive alignment will match up, and you offer both.

William Heyburn: Yes.

Benjamin Haynor: Got it. And then on the organ recovery hubs getting up to 13, I guess, over time, where do you see that ultimately going? Is that something that you want to give more of them sooner rather than later? How do you see that kind of tracking over time?

William Heyburn: As Melissa said, it's really driven by our customers. So if we have a customer that can support a new hub, that is usually the first step and us feeling like we have enough demand for flight hours that we can justify the presence of an airplane there. And it's also a tremendous benefit to that customer because, again, as Melissa pointed out, the best way we can make their costs more efficient and reduce things like fuel costs is to not fly unnecessary repositioning flights.

And so that's why our strategy, which I think our customers have appreciated is always to put airplanes either at the home airport that they're going to depart from or as close to there as possible.

Melissa Tomkiel: And specifically on the clinical side, there is opportunity there. There are very strategic regions that we have not yet expanded into that we're looking to do so over the next several quarters.

Mathew Schneider: Ben, this is Mat. I would just encourage you to look at our investor presentation that has an updated map of all the hubs. There's a lot of white space still out there, particularly in the West and Southwest. So I think that's important just to think about geographically, we have a much -- we have a very strong footprint on the East Coast. And we're kind of filling that in over time. We're doing so based on demand and where we see customers looking to expand the relationship with us. So it's really contingent paced by that, but there's a lot of opportunity to grow from here.

Operator: One moment for our next question. It comes from Bill Bonello with Craig-Hallum.

William Bonello: Thanks for allowing me to follow-up with one more. So the donor metrics, as you discussed, all look really strong. One item that did stand out to us is maybe a little bit less positive was a modest reduction in average transport distance. And just curious if you have any thoughts on if there's anything structural or what might be driving that or if it's just normal variability? And then I'm pretty sure you said this, but I just want to confirm that the Logistics mix shift to OPOs is just normal quarter-to-quarter variability.

Mathew Schneider: Bill, this is Mat again. I think quite the opposite in terms of our view, and we talked about this at Investor Day and the last few times we all got together about a continued increase in the distance organs are traveling over time, driven by several factors, including regulatory change in terms of organ allocation policies. Over the last 5 years, you've seen about a 60% increase in the distance organs are traveling. Any given quarter, it could move around depending on our customer mix. We have -- we don't have great visibility into a particular mix of customers in a given month or quarter, but we are confident over time in the distance increasing.

William Bonello: Okay. So even at the macro level, what we saw most recently, just think of that as kind of normal variability.

Mathew Schneider: I think what we saw in the quarter was really our customer mix. I think that's the way to think about it.

William Heyburn: Although I think the industry saw the same thing.

William Bonello: Yes, industry saw the same thing. That's okay. We can follow up offline.

Operator: Our last question comes from the line of Jon Hickman with Ladenburg Thalmann.

Jon Hickman: Could you -- Will, could you elaborate a little bit on the weather, the effects of the weather during Q1?

William Heyburn: Yes. Really, this was pretty unusual in that we had particularly Peterborough, where we have a number of airplanes based, the airport was actually closed for several days during the quarter. I don't want to overemphasize the impact of that because Transplant Centers are nimble. They'll try to reschedule cases. They'll push things back, they'll pull things up. And so I do think a lot of cases still get done. But certainly, if you have multiple days in a quarter where you can't fly the airplanes, there's some impact there. But I wouldn't say it was a determinative impact.

Jon Hickman: Okay. And then could you elaborate a little bit on your comments about SG&A going forward? So you said like the adjusted SG&A was $9 million, $9.5 million. And what -- can you give us some idea of what you expect growth going the rest of the year?

Mathew Schneider: Yes. So the adjusted SG&A -- this is Mat. It was $9.2 million in the quarter. I think you really have to look at just given all the changes, the divestiture, the acquisition of our -- of Keystone, our Clinical business, really look at the last 2 quarters as the baseline. So you saw a modest increase of about $300,000 sequentially. So that's the base. Our guidance implies a modest increase from these levels throughout the rest of the year, really just to support growth in the business. So adding some staff and infrastructure across the businesses to really support that growth. So I think we should look at it.

It makes sense to look at it sequentially versus the fourth quarter, first quarter going forward throughout the rest of the year.

Jon Hickman: Okay. Modest growth. Okay.

Operator: And this concludes my Q&A session. I will pass it back to Mat for any additional comments.

Mathew Schneider: We would like to take one question we got from retail investors that we ask what they're thinking about each quarter. We got a question on the transplant industry growth and if we expect it to improve this year. I think the important thing to think about here is we've seen an improvement in deceased donor activity over the last few months. Deceased donors slowed down really in the second half of the year, and they picked up a bit in the fourth quarter and then more meaningfully in the first quarter following some regulatory media scrutiny in the first half of 2025.

And transplant growth has also reaccelerated from a low single-digit rate to the -- back to the mid-single digits in the first quarter. This is really in line with our guidance. If you recall, we assumed transplant industry growth would moderate towards this mid-single-digit level in line with what we saw last year as a result of the slowdown in deceased donors. So it's very much in line with our guidance. If we do see a continued recovery of deceased donors, we think there's upside to the number of transplants, which is great for the community, for everyone on the transplant waiting list, but we're not underwriting that in our guidance.

Operator: Thank you. And ladies and gentlemen, this concludes our conference. Thank you for participating, and you may now disconnect.