Strata Critical Medical Aktie

Good morning, ladies and gentlemen, and welcome to the Strata Critical Medical Fiscal First Quarter 2026 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference call over to Mat Schneider, Chief Financial Officer of Clinical Services and Vice President of Finance and Investor Relations. Mat, you may begin.

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.

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.

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.

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

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?

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.

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?

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.

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

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?

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.

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.?

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.

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.

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?

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

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?

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.

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.

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

Yes.

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?

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.

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.

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.

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

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.

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.

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

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

Although I think the industry saw the same thing.

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

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

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

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.

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?

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.

Okay. Modest growth. Okay.

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

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.

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

Good morning, ladies and gentlemen, and welcome to the Strata Critical Medical Fiscal Fourth Quarter 2021 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference call over to Matt Schneider, CFO of Clinical Services as Vice President of Finance and Investor Relations. Matt, you may begin.

Thank you for standing by, and welcome to Strata 's conference call and webcast for the quarter ended December 31, 2025. 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 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 a substitute for financial results prepared in accordance with GAAP. Hosting today's call are our co-CEOs, Melissa Tomkiel and Will Heyburn.

I will now turn the call over to Melissa.

Thank you, Matt, and good morning, everyone. This was a fantastic quarter for Strata, delivering excellent results and supporting our strong confidence in the future. In Q4 specifically, our organic growth of 35% was well ahead of our expectations and led us to a full year result that beat the high end of our guidance on all fronts. Given the strength we saw in Q4 strong volumes, which have continued into 2026 and additional new customer wins, we're also raising our guidance for the full year 2026 on both revenue and adjusted EBITDA.

Continued acquisitions of smaller businesses operating directly in our areas of expertise are a key part of our strategy to accelerate growth and geographically expand our network -- while they seamlessly integrate into our existing business platform. We have multiple additional active opportunities and believe that our continued successful execution of this M&A strategy will accelerate our annualized adjusted EBITDA growth to at least 30% throughout the coming years. This period marks our first full quarter with a singular focus on medical and our first full quarter with Keystone, and I'm happy to report that we're off to a great start.

Importantly, we're capturing a larger share of logistics services for transplant clinical cases, and this contributed to the logistics strength in the quarter. More than 40% of our sequential logistics revenue growth in Q4 versus Q3 was generated from Keystone's legacy customers, demonstrating the value of our full stack one call offering. Operationally, the teams are working very well together and also taking on broader responsibility across the Strata organization. To that end, we're excited to announce an expanded role for Dr. Scott Silvestri, who was Keystone's Surgical Director as Strata's new Chief Medical Officer. Dr. Silvestri brings decades of experience leading transplant and cardiac surgery programs and is an industry leader in the area of normal thermic regional fusion.

We're very lucky to have Scott on the Strata team. And under his surgical leadership, we have already begun rolling out new capabilities to our customers, most importantly, our expanded abdominal organ recovery platform. On the regulatory front, we're encouraged by the actions taken by government agencies over the last few months. It is clear that our approach is aligned with the regulators' goals of restoring trust in the transplant system improving patient safety and increasing the number of transplants in the most efficient manner possible. Strata is incredibly well positioned to help the industry accomplish these goals. For example, in proposed rules from the centers for Medicare and Medicaid services, OPOs would now be incentivized to pursue medically complex organs, particularly those resulting from DCD donors. Historically, only some OPOs have been hyper-focused on utilizing technology to increase yields and pursue DCD or marginal organs.

Others have been slower to embrace these new opportunities. Rules designed to incentivize more DCD donors are a clear positive for Strata given our reputation as a leader in the recovery and transportation of all organ types and our unique expertise in DCD recovery. We are also very well positioned from a regulatory perspective in terms of our customer base which is over-indexed to larger, more sophisticated transplant centers and Tier 1 OPOs that are being held up as the gold standard under new and proposed regulations. Approximately 20% of Strata's revenue is generated from OPOs with Tier 3 OPOs, the lowest ranked, which could potentially be absorbed by larger OPOs under proposed regulations, representing less than 5% of our revenue, while our Tier 1 OPO customers represent 2.4x the revenue of our Tier 3 OPOs.

In the past quarter, these regulations directly resulted in new business for us when an underperforming OPO was decertified and absorbed by 1 of our existing OPO customers. Importantly, the cost intensity of organ transplant is rising as the transplant community has innovated to identify, recover and transport organs from DCD donors, which naturally have a higher cost profile compared to organs from DBD donors. Strata is incredibly well positioned to help the transplant community reduce costs in DCD donation via the utilization of our expanding regional network of logistics faces and organ recovery hubs and through the use of normothermic regional perfusion, which offers substantial cost savings versus alternative recovery methods.

NRP delivered locally exactly the way we do is the best answer to pursue DCD organs more aggressively and reduce costs. Before I hand it over to Will, I wanted to touch on our aircraft fleet. We ended the year with a fleet of approximately 30 dedicated or owned aircraft. During the quarter, we discovered corrosion during inspection on 1 of our owned aircraft and made the decision to part out the aircraft and utilize the engines to reduce future engine overhaul costs rather than invest in costly repairs. While the book loss on the aircraft is $1.7 million, we estimate the economic loss at approximately $400,000. We've completed comprehensive G inspections on 2/3 of the remaining owned fleet over the last 2 years and haven't identified any similar issues. Looking forward, we're excited to report that we've won customers in some new geographies which we expect to begin servicing in the back half of 2026. We expect to add around 2 new owned aircraft to our fleet this year to better support these new regions, both for the new accounts and for existing customers that might be flying in those areas.

We already acquired 1 aircraft during the first quarter, which is now in the conformity process. We continue to believe that we've struck the right balance with regards to our asset-light strategy. The vast majority of our flying is on third-party aircraft and will remain that way. At the same time, owning a small portion of our capacity has unlocked new business, provided important leverage in negotiations for third-party aircraft and enhanced margins. It also allows us to strategically build out our national footprint.

With that, I'll turn the call over to Will.

Thank you, Melissa. We continue to demonstrate our ability to achieve and exceed the ambitious goals we set for ourselves, both for organic growth, which at 35.3% this quarter was well ahead of our targets as well as for our M&A platform. And we are just getting started. We're working diligently towards closing several additional opportunities currently under exclusivity that are operating directly in our core competency areas and are actionable at mid-single-digit multiples of adjusted EBITDA. We expect that our successful continued execution on these acquisition opportunities will significantly accelerate our growth trajectory, enabling us to maintain an average annualized adjusted EBITDA growth rate of at least 30% over the coming years.

This is a significant increase from the organic only high-teens mid-term adjusted EBITDA growth that we discussed at Investor Day, demonstrating our increasing confidence in our ability to deploy capital. To support this M&A platform, in February, we announced the closing of a $30 million asset-based credit facility with JPMorgan with the ability to upsize to $50 million. Importantly, our aircraft remain unencumbered, creating additional future financing opportunities as needed. This facility remains undrawn but provides important flexibility for future acquisitions. We also expect to support the acquisition strategy with Joby earn-out payments of up to $45 million related to the sale of late, our former passenger business. Up to a $17.5 million portion of the earn-out will be come due at the end of August which is based on Blade's financial performance post closing. We're encouraged by the results Joby has released to date.

The balance, which will become due in March 2027, is based on the retention of former blade employees who transferred and is largely hedged by our ability to recover stock from those employees if they do not fulfill their obligations. Finally, as a reminder, if Joby elects to pay and Joby stock, the number of shares will be determined at the time the earnout is earned not based on historical Joby stock price.

On the strategic partnership front, our device-agnostic strategy is working, and it is resonating with both current and prospective customers. Our willingness and ability to always support our customers' clinical decisions regarding device usage as well as our capability to fly these devices when possible, has helped to attract new customers to the Strata platform and we're encouraged by the recent approval of yet another new machine perfusion device and the long pipeline of devices that are currently in clinical trials. As we like to say around here, we still believe that the customer is always right. We also continue to explore opportunities to leverage our existing assets and infrastructure to expand into adjacent offerings. While not material to the overall business at this point, we are now flying radiopharmaceuticals nearly every week as part of the pilot program. We've utilized existing personnel and resources for this program to date, and we'll continue to monitor progress to determine if it makes sense to invest further but we are encouraged that the positive reaction we've received in the market to date.

We'll turn to the financial results now. But before we dive in, let's review a few reporting changes we've introduced this quarter. Starting at the top of the income statement, we will now disaggregate revenue across 3 business lines. Logistics revenue was comparable to the medical revenue we disclosed before the Keystone acquisition and represents Strata's organic growth. Note that logistics revenue includes air and ground logistics, along with our organ placement business, which we market as comps. Transplant Clinical revenue includes clinical revenue generated from transplant customers including NRP, surgical or recovery, product sales and other related services. Other clinical revenue includes clinical revenue generated from cardiac surgery departments within hospitals, including perfusion services, auto transfusion, ECMO, product sales and other related services.

Moving down the income statement. We will now report 2 segments, logistics and clinical, which represents the sum of transplant clinical and other clinical all businesses that we acquired with Keystone. We have shifted away from the non-GAAP flight profit metric utilized by our divested passenger business and have migrated to the more traditional measure of GAAP gross profit as our segment profitability metric. As a result of this change, we shifted some costs from SG&A to cost of sales in our Logistics business, which has no impact on adjusted EBITDA, but results in logistics gross margins that are approximately 225 basis points below the previously reported medical flight margin metric. We will now report both logistics and clinical gross profit to provide insight into the fundamental trends of the business.

As we previously discussed, given our now consolidated corporate structure focused entirely on medical, we will no longer report SG&A by segment or unallocated corporate expenses. Instead, we will break out our SG&A into 7 categories available in the MD&A, which we expect will be more helpful in understanding the cost drivers of the business.

Finally, as a reminder, our P&L reflects continuing operations only as the result of the passenger business that we divested in August 2025 have been reclassified as discontinued operations for all periods. The cash flow statement and balance sheet, however, continue to include discontinued operations in historical periods, the impact of which is highlighted.

Moving now to the financial highlights from the quarter. Full year 2025 revenue and adjusted EBITDA of $197.7 million and $14.1 million, respectively, both beat the high end of our guidance range, driven by a strong Q4 that was ahead of expectations. In Q4 2025, revenue of $66.8 million was driven by logistics growth, which is organic of 35.3% to $49.2 million in the quarter versus $36.4 million in the prior year. Air Logistics rent was supported by new customers, existing customers and a higher logistics attachment rate for our transplant clinical customers. Clinical revenue was $17.6 million in the current quarter versus $2.8 million in Q3 2025, which reflects the mid-September 2025 close of the Keystone acquisition compared to historical unaudited financial results in prior periods before the Keystone acquisition closed, clinical revenue grew strongly in the mid-double digits year-over-year and mid-single digits quarter-over-quarter.

With in clinical transplant clinical revenue was $7.8 million in Q4 2025 and other clinical revenue was $9.8 million in Q4 2025. Compared to historical unaudited financial results in the prior year before the Keystone acquisition closed, we saw significantly faster growth in the transplant clinical business line. This strong clinical growth continued despite industry regulatory and media scrutiny in the second half of 2025, which resulted in a flattening of U.S. organ donors and NRP donors. As Melissa mentioned earlier, we're encouraged by recent regulatory updates. And while we haven't yet seen a pickup in industry data for overall donors, we have seen a recovery in NRP donors in recent months. New customer acquisitions continue to drive growth in other clinical revenue, and there's a significant opportunity to continue to acquire new cardiac perfusion customers given our strong value proposition and relatively low market shift.

Gross profit increased 90% to $14.4 million in the quarter versus $7.6 million in the prior year period, driven by organic growth and the Keystone acquisition. Gross margin increased approximately 80 basis points year-over-year to 21.6% versus 20.8% in the prior year period, driven by higher logistics gross margins and the positive mix impact from the Keystone acquisition. Logistics gross profit, which represents Strata's organic growth, increased 39.5% to $10.6 million in Q4 2025 versus $7.6 million in the prior year period, driven by strong revenue growth and an approximate 70 basis point increase in gross margin to 21.5% versus 20.8% in the year ago period. Clinical gross profit was $3.8 million in Q4 2025.

Adjusted SG&A rose to $8.9 million in the quarter versus $7.5 million in Q3 2025, which largely reflects a full quarter of Keystone SG&A. Adjusted EBITDA rose to $7 million in Q4 2025, up from $1.1 million in the year ago period and $4.2 million last quarter. Adjusted EBITDA margin rose to 10.4% in Q4 2025. Note that the year-over-year adjusted EBITDA comparison will not be particularly meaningful until we lap the passenger divestiture in Q3 of this year given significant cost savings realized during the sale that are not reflected in the prior year results.

Operating cash flow was negative $8.3 million in Q4 2025. The $15.3 million difference between adjusted EBITDA and operating cash flow was driven by $9.6 million of nonrecurring items, including a legacy legal settlement, which we disclosed last quarter, residual transaction costs and other nonrecurring items, along with an approximate $5.7 million increase in working capital which was driven in part by delays in collections during our back-office integration, which we expect to normalize in the coming quarters. Additionally, the logistics business saw significant growth into year-end, contributing to the working capital build.

Capital expenditures, inclusive of capitalized software development costs were $2 million in the quarter, driven primarily by capitalized aircraft maintenance and ground vehicle purchases. We ended the quarter with no debt and approximately $61 million of cash and short-term investments.

Moving to the outlook. Given the stronger-than-expected volume growth in Q4 that has persisted into 2026, along with the expected onboarding of new customer wins in the second half of the year, we are raising our 2026 revenue guidance range to $260 million to $275 million from $255 million to $270 million previously. We are also raising our adjusted EBITDA guidance range to $29 million to $33 million versus $28 million to $32 million previously. We are reiterating our free cash flow before aircraft and engine purchases guidance of $15 million to $22 million. For comparison purposes, assuming we closed the Keystone acquisition at the beginning of 2025 the company would have generated revenue of $243 million, while we estimate our adjusted EBITDA was consistent with the pro forma range we provided at the time of the acquisition.

In the first quarter to date, we've seen continued strength in daily logistics trips as well as clinical cases despite a soft January for the industry. However, we have seen a slight mix shift to shorter air trips so far this quarter. And separately, we did have several days where our Northeast fleet was grounded due to winter storms. We put this in the category of normal ebbs and flows of both the industry as well as our specific subset of customers. As such, we expect a modest sequential revenue decline in Q1 2026 versus Q4 2025. On the profitability front, we expect adjusted EBITDA margins to decline approximately 100 basis points sequentially in the first quarter, driven by this lower revenue. We do expect to see a sequential improvement in revenue and margin in the second quarter as well as in the back half of the year, boosted in part by expected new customer additions.

In summary, we are thrilled with our progress after our first full quarter operating the now fully integrated organ transplant platform. We're getting great feedback from customers. Our financial results are exceeding expectations or even seeing smaller competitors proactively reaching out, hoping to join forces and thus enhancing our already strong acquisition pipeline. The best is yet to come, and we look forward to continuing to achieve and exceed our goals in the months and years ahead.

With that, I'll turn it back to the operator for Q&A.

[Operator Instructions] Our first question comes from the line of Johan Ju with B. Riley.

Congratulations on a strong quarter. My first question is around regulatory policy. Can you please remind us or give us an update on the continuous distribution policy? I now have further questions there maybe to Melissa who are the stakeholders opposing this continuous distribution policy and why? And then why loans are approved earlier than other organs.

Thanks for being on the call and appreciate the question. So continuous distribution is still the goal for all organs. As you pointed out, lungs have already transferred over to that, and we're seeing a lot of positive results both for the number of organs that can successfully match to the people who need them the most. And then also as it relates to our business, we're uniquely able to handle those longer trips for our customers. As it relates to the transition for hearts and livers, we did see at the beginning of this year a deprioritization of that process as regulatory agencies focused on some of the more pressing issues that were raised by the media over the last 6 to 12 months. We've seen a lot of progress on those fronts with new proposed rules coming out of CMS and coming out of OPTN -- but we don't have a certain time line as to when they'll move that continuous distribution transfer back to the front burner again.

We do know that, that is the end goal. And once things get started, we would expect to see at least a 6-month comment period and OPT has been very clear that they'd like to gradually transition from the current Acuity Circle's model to continuous distribution over a period of about a year once that rule is set up. In terms of stakeholders that are opposed to it, I don't know if I would characterize it as opposition but there are certainly folks that want to make sure everybody is ready for what will be a more logistically challenging process when you move to a true national organ allocation program. We're very well positioned to help the entire industry support what's a more efficient way to get organs to the people that need them. But of course, we want to proceed carefully because some transplant centers and OPOs might not have the right partners like Strata to enable them to hit the ground running with a new policy like this.

Got it. If we break down this transplant value chain which part of the service has the highest value and margin. And what's the percentage of your customers using your full service portfolio.

We gave gross profit by segment, both logistics and clinical this quarter. And you'll see that on a blended basis, the profit margins are very similar. You do tend to see in the transplant clinical business, slightly higher profit margins than the nontransplant clinical business. We're already seeing a lot more of those legacy Keystone customers or our clinical customers today see the value in an integrated offering and start to use logistics. We talked about how about 40% of our sequential growth in logistics this quarter was driven by more business from those clinical customers. And oftentimes, it's not just a convenience decision for the customer we're able to harmonize the departure location where our aircraft assets are located and where the clinicians and equipment are located that are going to perform that clinical procedure and it will save the customer money to use those integrated solutions together. So the next phase for us is to try to convert more of those clinical customers to contracted logistical customers and vice versa.

We've already added a lot of our logistics customers on to rate cards that enable them to use our clinical services. But as we talked about a lot, clinical services when purchased by transplant centers tend to be a little more at top -- so we're going to give it a few quarters to see what the uptick is. But we're really happy that many of our customers have reached out to get the contracts in place to be able to use both sets of services.

Our next question comes from the line of Ben Haynor with Lake Street Capital Markets.

First off for me, just on the acquisition pipeline. As these opportunities become available, do you expect to be announcing them as they occur and then -- as it applies to kind of the adjacent offerings, I would imagine there are also some acquisition candidates that you would have there. Or is that more something that you would think about doing de novo like with the radiopharmaceuticals?

Well, our first and foremost focus as far as our acquisition pipeline or on the product servicing that we currently offer. And we're doing that because we want to increase our scale and national footprint because that provides a more cost-efficient and time-efficient solution for our customers. So we do plan on announcing as we close on acquisitions. And hopefully, there's some news in the coming months. As we mentioned, we've had -- we do have a robust pipeline that we're working through. And we're very excited about all the opportunities that are out there that we are seeking through partners like with Keystone in the past and Trinity before them, who are trusted and have credibility and enhance our service offering as well as Will mentioned earlier, we are being approached by a lot of small competitors, it's still pretty fragmented.

And a lot of smaller players realize that this can't be done the right way without scale. So they want to join forces with us and share the same strategic vision.

And Ben, to your question on the radiopharma side, look, here's what we know so far. We know we can do this, and we know we can do it well. The question is whether relative to the other opportunities we have in front of us, which are really very excited about. Is that where we want to be investing time and resources. And so what we like to do is we like to first, get some experience actually performing a service, which we're doing almost every week. But we're not at a place right now where you would see us make an acquisition in that space in the near term. As Melissa said, we're focused on our core business lines right now, and we're going to keep learning on the Radiopharma side.

Okay. Got it. That's helpful. And on the folks that are approaching you, is part of the reason why beyond just the scale, some of the regulatory scrutiny and such that the industry is seeing as well? Or is that too much of a stretch?

No, it's not a stress at all. I mean why we're -- like we said, we like what we're seeing on the regulatory front because it's raising the standard across the industry, but it's bringing the standard to the level that we have. And we have the technology and we have the protocols and processes already in place to be able to provide the services in a way that the regulators want to see. So yes, for sure, there are smaller competitors out there that don't have those resources and don't have the infrastructure and -- or the high-caliber team that we have that want to swing up with us.

Makes sense. And then just on the shorter trips that you've seen so far early this year, it sounds like that's more luck of the draw than anything there's nothing will read into that?

I wouldn't read into it, no. It's a combination of mix shift to -- there's some customers that just generally have better luck matching closer or there's OPOs that are flying shorter distances consistently. So we see the mix shift around from a customer basis quarter-to-quarter and we also see crippling change. So this is the normal ebb and flow, and we're very encouraged to see those trip volumes both on the logistics and the clinical side, staying very strong all the way into 2026 today.

Okay. Got it. And then lastly for me, just on the new customer wins. Anything you can share on the profiles of those customers and how much of a factor were those wins in bumping up the revenue guide?

All right. Do you seem to give specific guidance on the new customers. But what I would say is that it's really encouraging to see that this integrated model is resonating with folks. We're getting a lot of new leads from the combined customer base of the much larger organization that we have today. And also, the aircraft strategies Melissa talked about is really resonating with people. We think we struck the perfect balance there. As we talked about, we will invest in 1 or 2 new aircraft to support some brand-new geographies that we'll be serving much more consistently, but this all adds to the power of the platform and allows us to sort of not just those customers but other customers as well. So as we get closer to the launch date, we'll provide a little more detail around those new customers.

Got it. I thought I have thank you so much, and congrats on the progress and the outlook.

Thanks for the great questions, Ben.

[Operator Instructions] Our next question comes from the line of Jon Hickman with Ladenburg Goldman.

Good quarter, Will. Could you just kind of reiterate how many hubs are you operating out of in the United States now? Jon, this is Matt. Are you referring to the air basis?

Yes. Our air bases are in the -- probably the overall earn the teens. We -- as Will just said, when we add new customers or we have density in a certain region, we consider adding a new base -- based on the new customer wins this year, we're likely to add at least 1 or 2 new bases. That's our plan for the year.

But remember, we have the capability to fly from anywhere through the asset-light network -- so when we talk about a base, that just means that we have either an owned or contracted aircraft that we are certain is going to be available to us in that location versus aircraft that we've safety vetted and can use but may not be held back for our use. And then on top of that, we do have some dedicated aircraft to us that can flip and move their locations around the country as needed, which gives us even more flexibility.

And then could you -- maybe I missed this, but on the logistics side, did you -- I know it's been a goal kind of to increase the ground services were you able to do that this quarter?

Yes. I mean our air business was very strong in the quarter, really in the back half of the year. So we continue to grow and scale our ground business, adding new customers, adding new hubs. But as a percentage of revenue, I believe it's about the same as it was in the prior year period. And that just reflects, as I said, the strong growth in air and other revenue, including our organ placement business.

Our next question is a follow-up from Juan Ju with B. Riley.

Maybe a quick follow-up on radio pharmaceuticals. Are you mainly handling the radio therapeutics or radio imaging agent and then you mainly supporting the commercial product versus the clinical trials?

We think we can do all of these things really well. We're probably best situated with our existing fleet is on the clinical trial side of things because most of the aircraft we have access to are not cargo configured. So a smaller load is going to be easier for us to leverage the existing fleet. But if this was something that we wanted to invest more resources in, we could support full loads on cargo aircraft as well. But that's not in the existing fleet today.

Thank you. I would now like to hand the call back over to Matt Schneider.

Great. Thank you. So we received a few investor questions that we'll now take on the call. The first 1 is on AI. And the question is, how will AI impact the transplant market over time in our business in particular? Will, why don't you take that one?

Sure. Great question, and I think this is a great business to remain extremely durable and actually benefit from AI rather than have any risk. If you think about what we do, we're operating in the physical world, scrubbing into operating rooms, flying airplanes every day and these things cannot be accomplished without access to these specialized aviation assets and credentialed medical professionals. We're driving with lights and sirens on the ground. And so as such, we really see the artificial intelligence opportunity to make this business more efficient. We're already starting to employ it for real-time error checking as we're coordinating communications amongst multiple different stakeholders and organ transplant mission.

And we think over time, it could have the potential to make our cost structure more efficient, allowing us to invest in those differentiated people and assets that make our business great and really defensible.

The next question we received is on some of the dynamics that we talked about in the first quarter in terms of the weather impact that we alluded to. Melissa, can you just talk about the impact of weather that we saw that we're seeing in the first quarter?

Sure. Normally, weather really doesn't have an impact on our operations, and that's because our flights get priority over other flights at airports. So if the call comes in, it might cause the disruption or slowdown or air traffic delays in an airport for an hour or 2, and it's not going to have any significant impact. We called it out for the first quarter because it was pretty unusual circumstances as far as the severe weather in the Northeast, which is a very important region for us. We several aircraft in the Northeast, and we have a high customer concentration there as well. And what we saw in the first quarter, which was so unusual with airports actually being closed for a number of days. So that will have an impact on the number of flights.

Now we do see case volumes surging on days after following an airport closure or something like that. So that will offset or mitigate that impact. And of course, we -- it doesn't affect our confidence for the year, as you can see with the guidance raise.

Great. And then we received the question recently just on some of the macro events and the impact of higher oil prices on our business. Melissa, can you just take that one?

Sure. Well, a raise in fuel price is going to result in higher costs for our customers. And that's not something we ever like to see. It won't impact our cost structure when we contract with our customers we negotiate fuel surcharge thresholds at a certain number and anything above that goes pass through. So if we see a surge in pricing, that's going to be passed to the customer, and it won't turn things upside down for us.

And we're above those thresholds already today. So any increase from the fuel prices today, which is get passed through.

Yes. Great. That concludes the retail investor Q&A portion of the call. I just want to point out that we will -- we're planning on participating in the Sidoti and Edam investor conferences over the next few weeks, and we're looking forward to reporting our first quarter 2026 results in early May. Thanks for everyone for joining the call today for your continued interest and support.

This concludes today's conference. Thank you for your participation. You may now disconnect.

All right. Let's get started. We're good to go? Okay. Well, welcome to Strata's 2025 Investor Day. I'm Matt Schneider, VP of Finance and Investor Relations and CFO of our Clinical Services business.

Today, if you -- for everyone here in person and for joining us online, Strata is at the early stages of a transformation. And we're really excited to be here today to share with you our plans for growth and value creation over the coming years. Our plan today, our goals today are to provide a deep dive into our business, to walk through the attractiveness of our core organ transplant market, focus on our key growth strategies and provide a financial framework for 2026 and the medium term.

A few housekeeping items before we get started. Today's presentation materials have been posted to our website. We'll start with a series of presentations from leaders across the business, and we will follow with a Q&A session. If you have questions throughout the presentation, you could e-mail [email protected], and we'll do our best to address everyone's questions during the Q&A session. Following the Q&A session, for those of you who are in person, we'll have a cocktail reception.

Please note we'll make forward-looking statements today, and actual results could differ materially from these forward-looking statements. For a full list of factors that could drive these differences, you could see our Form 10-Q and 10-K filings with the SEC.

With that, let's get started. I'd like to turn it over to our co-CEOs, Will Heyburn and Melissa Tomkiel.

Hi, everybody. It's great to see you all here. For anyone that's new to the story, I'm Melissa Tomkiel. I'm Co-CEO of Strata, and I'm thrilled to introduce you to our company.

We now have a laser-sharp focus on logistics and other critical services in one of the fastest growing and most resilient sectors of the health care industry today: organ transplant. Our differentiated end-to-end model has us well poised to outgrow the market with ample runway to accelerate that growth even further through acquisition. Our mission is simple: increase the number of organs for transplant.

Our goals are aligned with all stakeholders in the transplant ecosystem. When Strata wins, we save lives.

The majority of our business is in organ transplant, specifically logistics, which for these cases, is incredibly challenging. Organs only have a few hours outside of the body before they reach their intended recipient until they expire. Once an organ is available, it's a tremendous effort to mobilize medical teams and equipment, sometimes across the country, to respond in time.

We recently diversified into cardiac care through our acquisition of Keystone Perfusion. This is non-transplant related. We provide perfusion staffing solutions to hospitals performing heart surgeries. These perfusion resources augment our transplant program.

So let's walk through our service offerings. We bridge the gap from organ donor to transplant recipient, working alongside our customers every step along the way, an end-to-end solution for all of these critical services. Our organ placement and matching division are clinical administrative teams that work within transplant centers. They assess organ offers and accept them or reject them, depending on the patient's needs.

Our recovery and perfusion teams. Our recovery are surgeons. They go to donor ORs and they procure organs on behalf of our OPO or transplant center customers. They're assisted by our perfusionists who are using techniques like NRP, which we're going to spend a lot of time talking about today. NRP increases the viability of the organs post procurement.

Our air and ground logistics experts move the medical teams and organs quickly and safely from the donor OR to the transplant centers. I'll note now that we are the largest air provider of hearts, liver and lungs -- the transporter of heart, livers and lungs in the country. And as you can see here, there's plenty of room to grow, both in logistics and all the other business lines as well.

We are the only full-stack end-to-end organ recovery platform. We work alongside our customers while supporting any equipment they may choose. This is particularly relevant when it comes to machine perfusion which is a hot topic these days, and we're going to spend a lot of time talking about during this presentation. What's important to note is that we are a true partner with an open source philosophy. We're not a vendor pushing any particular captive asset.

We are doing all of this at national scale. We have aviation, ground, perfusion and NRP and surgical recovery teams based strategically around the country, close to donor ORs and transplant centers. Having locally-based planes reduces callout times, which for these mission-critical flights, every minute counts. Having a locally-based plane also eliminates the need for a repositioning leg, which means flying an aircraft empty from its base to the pickup site. We don't have to do that with our locally-based assets. This saves our customers' time and money.

I can't emphasize enough the importance of having locally-based surgical recovery. Every day, transplant centers fly out their medical teams on airplanes across the country only to find out when they land that the organ is not recoverable. They then pack up and fly back empty. This is called a dry run. We'll talk a lot about this later. Will's going to walk you through it next. It is a huge pain point in the industry, and we are the first provider that offers a solution to these transplant centers. They don't have to undergo that financial risk. Our hope is that this will encourage them to pursue more organs and it will increase transplant volumes, and we're already seeing this play out.

Our competitors don't have this scale. They're very small carriers with a couple of airplanes based at 1 hub. That means for every case, they have to reposition an airplane. That costs a lot of money and time. They're also typically reliant on only 1 type of aircraft, whereas our distributed asset-light model gives us the flexibility to choose the right aircraft for the mission that's based in the right location. It doesn't make sense to fly a midsized jet 200 miles from its base to do a 90-mile run from turbo to Philadelphia, when we have a locally based turboprop that can do that mission for a fraction of the price and way less time. This is how we're saving our customers time and money every single day.

We partner with our customers to support any equipment that they may choose, whether that's machine perfusion or specific aircraft make and model. We are a true open source platform with the belief that the customer is always right. Our competition is often incentivized to promote their captive assets.

As far as the quality of surgical recovery goes, all of the Strata physicians are -- all the Strata surgeons doing recoveries are licensed physicians. This is very important, because the quality of the procurement has a direct impact on the likelihood of success of the transplant. Our in-house surgeons are in -- our program overseen by one of the best heart transplant surgeons in the country, Dr. Scott Silvestry, who's here today, and you'll meet shortly. This is why transplant centers trust using Strata's local surgical recovery teams.

We are the only one-call organ recovery platform in the country. Our competitors have a more narrow focus, they only offer one or 2 of these services, which means they are saying no to the customer and having to figure it out for themselves. We, on the other hand, are fully integrated. And we coordinate every element of transplant: matching, recovery, logistics, all in-house in our program that's overseen by our highly trained logistics coordinators and our 24/7 control tower.

I've walked you through why our one-call end-to-end organ recovery platform makes us the best suited partner for our transplant center OPO customers and how our differentiated business model has us best poised to scale.

I'm going to hand it off to my co-CEO, Will, to cover why we are so excited about the growth opportunities in this industry.

Thank you, Melissa, and thank you all for being here. Let's talk for a minute about why we're here. Why is there such a growing unmet need for transplants in the United States? Why do we see an attractive opportunity to help solve this life-or-death problem? And why are we, as the market leader, positioned to grow even faster than the already rapidly expanding noncorrelated organ transplant marketplace?

Let's start with the problem. Americans are in dire need of organs. There's more than 100,000 on the transplant wait list today, and this statistic actually masks a much larger problem: millions more who are suffering but aren't sick enough to qualify for a transplant.

Failure is tragic. 13 Americans die every single day while they're waiting for an organ that won't come in time. Success, however, is a win-win. Last year, nearly 50,000 American lives were saved through the organ transplant system. It's also one of the most cost-effective life-saving interventions in the health care system.

Regulators are responding to this reality by supporting the transplant ecosystem financially and changing regulations to get organs to people who need them the most first. Look at the evolution we've seen and donor allocation methodologies. As recently as 2017, most organs had to match within an arbitrary donor service area. This prioritized getting an organ not to the person who needed it the most, but the person who's closest.

We've now evolved to acuity circles and, more recently, continuous distribution, which uses a point space matching system where geography is just one of several factors. When you get the organ to the person who doesn't have longer to wait first, you can successfully complete more organ transplants and it benefits the entire system. It also puts incremental pressure on logistics. This is a problem that we are well positioned to solve.

Even with these things still playing out, we've seen a 64% increase in the average distance between donor and recipient over the last 6 years. And only lungs have moved to the continuous distribution algorithm. When lungs made that transition, average distances between lung donors and recipients increased by 80%. Liver and heart, which form the majority of the heart, liver and lungs that we work with, they have still not moved over from acuity circles. We don't underwrite any incremental regulatory change in the guidance that we're going to talk about today, significant upside to what we'll be talking about.

This is not the only tailwind in the industry. Technology has rapidly grown what used to be a very small part of the donation system. This is donation after circulatory death, or DCD, donation after a donor's heart has stopped. Historically, this was a very small part of the ecosystem because significant damage is done to the internal organs when a donor's heart stops. Perfusion, pumping oxygenated blood through the organs, can repair this damage and make those organs just as good as an organ that comes from the more historically common brain-death donors. These technologies have massively increased the size of the donation after circulatory death donor pool. It has quadrupled in the last 7 years, growing at more than a 20% compound annual growth rate. This is another area where Strata is poised to outgrow the market because our technology that we offer directly, normothermic regional perfusion, is used in about 40% of DCD cases.

This penetration rate continues to grow. Last year, NRP accounted for about 20% of DCD donors. First half of this year, about 40%. And the most recent month where we have data, about 46%. We view this as evolving to become the standard way that DCD organs are recovered in America. But we're not underwriting that and the guidance that we talk about today.

Look at kidney as an example of a potential benchmark. Low-cost machine perfusion is available for kidneys today, and it's used in about 70% of the cases. You can see the possibility for increased penetration of NRP. It's also one of the most low-cost ways to recover a DCD organ and it's deployed locally, which has significant implications for reducing the cost of a dry run. Melissa has talked about this, and we'll talk about it even more today, because it's a really important part of how we can deliver our services to hospitals more efficiently.

Machine perfusion is also going through somewhat of a revolution. Multiple new market entrants are coming into the American marketplace. This is making machine perfusion more widely available. It's also creating competition, which we believe will lower costs. Costs are a significant barrier for hospitals when they're determining whether or not to go after a DCD organ. The lower the costs are for all kinds of perfusion, the more likely hospitals are to take an attempt of an organ recovery. And the more attempts they make, the more organs that will be successfully transplanted in America.

What has all this meant? It's meant a significant acceleration in the growth of a number of successful transplants in America, and an even faster acceleration in the overall size of the organ transplant marketplace. That's because as these processes get more complex, it pushes the boundaries of hospitals and organ procurement organizations' internal resources, and they turn to third parties like Strata to help them manage the growth often with more national scale than they could build themselves.

We are exposed to the fastest-growing parts of this marketplace and are poised to outgrow the growth in a number of cases because, as cases grow, distances grow more, and our unit of economics in our logistics business is not a case but a flight hour, one of several different ways where we're exposed to the faster-growing parts of the marketplace. On top of this, we have nearly a $1 billion market in nontransplant clinical services that we're excited to walk through with you later today.

What does this mean for us financially? In short, organically, we have an opportunity to double our adjusted EBITDA over the next 4 years with guidance that's built on conservative assumptions that doesn't incorporate many of the things we just talked about. We assume the current state regulatory environment, no move to continuous distribution for livers and hearts. We don't assume an acceleration of transplant growth beyond what's been normal in the last few years. And we don't assume that NRP becomes the standard way of recovering DCD organs.

Perhaps the most important thing that we're not including in our guidance is the significant capital allocation opportunity in this very fragmented ecosystem. We estimate that we'll have about $200 million to deploy over the next 4 years in the transplant ecosystem. This could add another $25 million of EBITDA if we deployed just 75% of it at our target mid-single-digit multiples. And that's before growth in the acquired companies and assuming no synergies. We'll talk about why we expect to have significant synergies in the businesses that we acquire.

But first, let's talk at a higher level about our capital allocation philosophy. We see a significant opportunity to acquire established, profitable businesses in our core service areas in the U.S. This is a fragmented marketplace that is full of regional players that are performing at the highest levels. Because of our national scale and because we have more customers than anyone else in the industry, we are uniquely positioned to verify those regional players' track records of success.

And for us, these acquisitions don't just generate a great financial return. They also add power to the overall Strata platform. It's because a big part of what we can provide to our customer base is that local availability of resources. By making these acquisitions, we actually make the platform more powerful for all of our customers and bring more resources for the target company's customers as well. Of course, the price has to be right, but I'm happy to report that we have multiple opportunities in the pipeline in the mid-single-digit area of adjusted EBITDA multiples.

Let's talk about the specific areas that we're focused on. At the top of the list are targets in the transplant clinical area. These are NRP businesses, normothermic regional perfusion, surgical organ recovery, organ placement or organ preservation. This significantly expands our local service footprint, and we'll talk more about why that's so important for hospitals to be able to save them money and lower the risk of recovering a DCD organ.

Also, most of these targets have very limited logistics capabilities. This gives us an opportunity to put all the pieces together for their customers and provide a lower cost seamless solution, creating a synergy for us and an opportunity for multiple buydown.

On the logistics side of things, there is a great industry full of asset-heavy operators of aircraft that have a long track record of successfully serving a handful of transplant centers and OPOs in their specific geography. This is a great opportunity for us. They rarely have any clinical services to offer and they have no national footprint. So our platform will often be able to save money for their customers, and it gives us more aircraft and more places that we can launch without having to reposition, saving money for our customers.

There's also an opportunity to take those airplanes and fly them more. The more you fly airplanes, the less it costs to fly per hour. That can reduce the cost for the target company's customers and for our customers that are using those airplanes.

Outside of the transplant space, we see an opportunity to continue on with the great track record that our clinical team at Keystone has established acquiring small businesses in the clinical perfusion space. They've had a great record of success doing this at low to mid-single-digit multiples. And this provides not just a financial benefit to us, but it also brings us a pipeline of perfusionists that feed the transplant business as well. The same perfusionists that we recruit for this part of our business can be used to perform normothermic regional perfusion, which we use to recover DCD organs. So it feeds the entire platform. In short, this is a great opportunity to use capital allocation, not just to generate a financial return, but to improve the service that we provide to our customers.

As you can tell, we are incredibly excited for the role of our -- for our role in the transplant space and for the evolution that we're seeing in transplant right now. We've built a full-service business that is going to benefit from all the dynamics that we just talked about and has additional exposure to the fastest-growing parts of the industry: donation after circulatory death, normothermic regional perfusion, longer distance flights. And we'll realize economies of scale while we grow, leading to margin expansion. This is a non-correlated market where we can grow market share, and we get paid by hospitals, not by insurance. Our mission is aligned with regulators, with customers and with transplant recipients.

Everyone is focused on improving the number of organ transplants that happen because it saves lives and it does so cost-effectively. We're sitting in the midst of multiple growth catalysts for Strata specifically and for the industry more broadly, many of which we do not underwrite in the guidance that we're talking about today. We're also armed with a balance sheet to consolidate that will generate a great financial return and also improve the service we provide to our customers.

We're going to talk about all of these things in more detail today, but first, a little bit of history on how we got here.

Thank you. Okay. We'll take a little walk down memory lane here. So Strata was founded in 2014 as Blade, an asset-light passenger air mobility company with a focus on customer service. We leveraged our customer service mantra and 24/7 availability to partner with NYU Langone in 2019. That was our very first transplant center customer. And we did air and ground logistics for their organs and medical teams. We quickly grew to be the largest organ transporter in the Northeast.

In 2021, we went public. That gave us the capital and the opportunity to scale our medical business. We were looking for acquisition targets in the partners that we were working with that would benefit from our expertise in aviation but bring to us institutional knowledge and industry relationships in the transplant space, all wrapped in a scalable operational platform. We found that with Trinity, who we acquired in 2021.

Over the next few years, our Medical business outgrew our Passenger business. Part of the stagnation of the growth in the passenger segment was the delay of certification of eVTOL, which is electric vertical takeoff and landing aircraft. We really viewed eVTOL as the unlock for growth in Passenger. So that led us to conclude that the Passenger business would be better served within the confines of a pure-play eVTOL company. And that by separating the businesses, we could then focus 100% of our time, efforts and resources on the rapidly-growing and profitable Medical business.

This strategy came to fruition, in August of '25, we announced the sale of our passenger business and the Blade brand to Joby, which is an eVTOL manufacturer, for proceeds of up to $125 million. With the divestiture of the Passenger segment, we rebranded to Strata Critical Medical. We changed our ticker to SRTA to reflect our 100% focus on health care.

Simultaneously with the divestiture of Passenger, we were working on a very strategic acquisition of Keystone Perfusion, who has been a commercial partner for several years. The combination with Keystone brought to us the key clinical service lines: recovery, perfusion, that cemented our position as an end-to-end provider in the transplant space.

We are now a pure-play, open source, end-to-end logistics and critical services provider in a rapidly-growing contractual and macro uncorrelated marketplace. This is a great place to be. We're really excited to walk you through all of our business lines in depth. We have a deep bench of management who's here today, who are the people running these businesses and saving lives every single day. Before we do that, I'm going to hand it right back to Will. He's going to briefly walk you through how transplantation works to give you a good background on how this all comes together.

Thanks, Melissa. Before we dive more into the details, we're going to take a quick step back and talk about how the transplant ecosystem works together. We'll mostly be discussing today deceased donor transplants of hearts, livers and lungs. That's because these are the organs where time is of the essence. They have only 4 to 8 hours typically to reach their recipient for them to be usable in transplant. We'll talk about how some technology is extending that, but we'll focus on the most typical methodology for organ transplant.

First, let's talk about the different parties that are involved. We'll start with transplant centers. There's about 250 transplant centers in the United States, and these are the hospitals that have the patient that will ultimately receive the organ transplant. In a heart, liver or lung, they are the quarterback of the overall process. On the other side of the equation are 55 organ procurement organizations. They carve the country up into geographic areas where they have responsibility for identifying potential organ donors. They also obtain authorization from families and prepare that donor for the procurement process.

Within each donor service area, the geographic area that an OPO is responsible for, are any number of donor hospitals. This is the hospital where the donor initially presents, and they are primarily responsible for patient care for the donor. In most cases, the organ procurement procedure will take place at that donor hospital.

All of these groups work together and are supported by a variety of third-party service providers like Strata. It's easiest to understand if we walk through a real example of how the process works. So let's do that.

A donor hospital will first identify that someone meets the criteria to potentially become an organ donor. They will flag that donor to the OPO that is responsible for their donor service area. The OPO will then send a team to the donor hospital to evaluate that potential donor and also obtain any family authorization. They'll use third-party service providers for the logistics and the diagnostics at this step of the process.

Once they've done tissue typing and blood typing, they will make what's called an organ offer based on federally mandated allocation methodologies to a transplant center. The transplant center will then have a little bit of time to evaluate whether or not they want to accept the organ. They'll often use a third party like Strata to help them with both the clinical and administrative work of evaluating whether or not to accept that organ.

Why would you not accept an organ? There's plenty of reasons. A good example might be a younger recipient who matches to a 70-year-old plus liver and is not so sick that they need to accept an organ at exactly that moment. That's an example of when a transplant center might reject an organ and they would immediately go on and be allocated to the next person on the list.

Once the transplant centers accept the organs, the OPO will begin to prepare that donor for the transplant procurement process. Remember that each organ almost always will match to a different recipient at a different transplant center. So you have multiple parties flying in all on different aircraft from all different locations, and it's the OPO that's arranging the OR time and making sure that this goes seamlessly. They'll also use a lot of third-party service providers like Strata for logistics, for third-party surgical recovery, for normothermic regional perfusion, which we'll talk much more about later, and for machine perfusion. Once the procurement process is completed, each organ will fly immediately on its own aircraft, sometimes on ICE, sometimes on a preservation device, to the location of the recipient where it will be immediately transplanted.

This is where there are some significant differences depending on what kind of donor we're talking about. We've talked about donation after brain death, DBD, and donation after circulatory death, DCD, but let's take a minute to unpack it in a little more detail.

Donation after brain death is historically the most common kind of organ donation and it's also the most straightforward from a procurement perspective. That's because this donor has no brain activity and is legally dead. Their organs are just being kept working using machines. So once the procurement team arrives, they can immediately start the process of procuring the organs and fly them to the recipient. In this case, machine perfusion may not be necessary, particularly if the distance that's involved are not very far, though it's often used for longer distance trips or for marginal organs.

Donation after circulatory death where DCD is a very different situation. These donors are terminal, but they have low-level brain function and the family, in consultation with the organ -- with the patient care team at the donor hospital, has made the decision to withdraw life support to end their loved one's suffering. After they make that decision, they've made a separate decision to pursue organ donations so they could save other lives with their loved one's loss.

Because of this, there is an additional step once transplant teams arrive to procure those organs. Once all the teams are on site, the local hospitals or patient care team will withdraw life support and wait for the donor to decease. Only once the donor has deceased are procurement teams authorized to begin the recovery procedure. If this process takes too long, the organs may sustain too much damage to be useful in a transplant procedure. This is what's called in the industry a dry run.

If the process takes the appropriate amount of time, perfusion is almost always a best practice for a DCD recovery, and it can be completed in a number of different ways. Normothermic regional perfusion perfuses all the organs inside the body, pumping oxygenated blood through those organs to repair the damage that was done when the donor's heart stopped. And it's able to, before the organs are removed, complete that process. And then they can be carried on ice or in a preservation device to the recipient. Organs can also be removed immediately after the donor deceases and be perfused inside a machine one at a time, which can happen while in transit or it can happen once they reach the destination in what's called a back-to-base model.

We'll talk a lot more about why it could be more efficient to perfuse all the organs at the same time through normothermic regional perfusion, which Strata offers, and why that service can be delivered much more efficiently locally without needing to fly out staff and equipment.

We just walked through the most typical process for organ donation, but some areas are different. For example, in kidney transplants, it's OPOs that are the quarterbacks of the logistics. And because they can survive on ICE for 1 to 2 days, they're often shipped. We have a service offering for kidneys, where we hand-carry kidneys in the cabin of a commercial aircraft, ensuring that they're going to get to their destination and won't get lost in cargo.

In all of these cases, it is a complex, multiparty process and the stakes couldn't be higher. It's life or death. Strata puts all of these pieces together and a seamless end-to-end solution. And we're honored to be trusted by more transplant centers and OPOs to complete this work than anyone else in the United States.

So now we're ready to dive into the details, and we'll start with our Logistics business. I'm happy to turn it over to Scott Wunsch, CEO of our Logistics.

We keep -- the question was, is there a chain of custody requirement?

We keep detailed track all the way from the beginning of the clinical services that we provide. So in a few minutes, our clinical team is going to show you how we're tracking the biometrics through the entire process of recovering an organ. We'll talk about our technology that tracks the chain of custody, ground, air every step of the way in logistics. But it is an important part of the process, though it's actually something that we do better than the competition, and it's not necessarily something that has strict rules around. So we'll talk about all of that in a lot more detail.

Scott?

Great. Well, good afternoon. As Will said, I'm the CEO, Scott Wunsch, the CEO of the Logistics Division of Strata Critical Medical.

A quick introduction about myself. I spent many years taking care of kidney dialysis patients and then I spent 13 years as the Vice President of Operations for an OPO in Seattle. We covered Alaska, Washington, Northern Iowa, Montana. So as you can imagine, the logistics were great. So we navigated pilot duty times flying into Alaska, flying the Montana. All those different things were a very big part of what we did to help make sure people got transplanted within that service area.

I started at Trinity in 2018 when we were primarily serving Arizona and a bit of Nevada and California. We grew quickly and began working closely with Strata. And I will talk a little bit about our successful partnership.

After a very successful commercial part relationship, we were acquired by Strata in 2021, as Melissa said earlier. It was an outstanding -- it's been an outstanding partnership, as you can see from this graph. I'm sorry. So side by side, we -- between Strata's aviation expertise, the capital, and our operational expertise, we helped the Logistics division scale rapidly.

So today, Strata owns aircraft, has additional dedicated aircraft serving the transplant community. That growth hasn't been an accident. We have worked hand in hand to deliver an extremely high level of service, placing aircraft where customers need them, offering a true one-call solution and operating several service lines to fit each mission.

So our capabilities is built on an infrastructure at scale. More than 30 owned or dedicated aircraft across 20 bases, 50-plus vehicles across 14 ground hubs, that depth of assets create operational efficiency and real cost savings for our customers. All of this is powered by a proprietary dispatch software, which leads our team to manage complex requests and time, gives customers visibility into trip details through our [ TAC ] application system.

So within the transplant industry, Strata is a trusted partner, not just because of the depth of our footprint, but because of the deep relationships we've built over years of service. And as we continue to grow, we compete for 100% of our business. And I think it's very important, we compete for 100% of our business. The majority of that business is contractual where we provided logistics for 100% of the transplant business, rather than a case-by-case basis. This keeps us relentlessly focused on our resources, responsiveness and the level of service our customers expect.

So over time, Logistics has transformed from a background function into a strategic cornerstone of the modern transplant process, especially as the field has grown far more complex than the historical 2-party relationship between a transplant center and OPO. Today's broader organ sharing policy, as Will explained earlier, extend geographic reach and increase coordination demands, making precise logistical management essential. At the same time, advanced technologies such as machine perfusion require meticulous timing and seamless transport integration to preserve organ viability.

The involvement of multiple third-party recovery partners add additional layers of collaboration, requiring unified communication and streamlined operations across organizations nationwide. Ultimately, effective logistics directly influence outcomes, ensuring that each organ arrives safely, efficiently and in optimal condition to maximize the transplant success -- have transplant success.

So jumping into a one-call solution that we've created. Strata's scale and fleet diversity allow us to tailor the mode of service to each mission while delivering cost savings. I'll go into some detail here about the one-call model. Our communication center evaluates the mission and moves immediately, matching the need with the best mode of transportation, so our customers can focus on saving lives.

So air charter logistics is a major driver. With our expertise and aircraft positioned in the right places, we deliver the right aircraft at the right time in the right location. Ground logistics, as I said, we have 50-plus vehicles around the country, operate nationwide with our own vehicles and W2 employees moving transplant teams, organs, machine perfusion devices and other critical items. Where we don't have owned assets, we use vetted third-party providers.

Next, we provide a service called next flight out. This is when we're placing kidneys in cargo [ hold ] of commercial airlines. It's cost-effective when cold ischemic time allows. It's a good alternative to a commercial -- or a charter flight. And lastly, and Will mentioned it earlier, is hand carry. Hand carry is a newer service that we collaborate directly with the airlines to make happen, allowing kidneys, lungs and livers to travel in the cabin of a commercial airline with an attendant. The organ stays with the attendant and could be rerouted quickly if needed when time allows. This is a lower-cost alternative, but a much lower risk of delay since the organ is hours with an attendant.

These 4 services give our customers options to make the best decisions when lives are on the line, from urgent aircraft flights to cost-optimized commercial solutions so we can meet the need every time.

So on the left, you're going to see our national footprint, and we've shown this a little bit. But 30-plus aircraft, 50-plus owned vehicles dedicated to the transplant community. This fleet and our assets are working directly with our transplant centers and OPOs. The scale enables customers accept more organs more economically.

Now on the right is a great example of us placing aircraft where it can help our customers. Before Strata supported this transplant center in Jacksonville, Florida, the customer's operator was based in Gainesville and had to reposition every trip. So Gainesville to Jacksonville, Jacksonville to the donor hospital, back to Jacksonville, and then back to Gainesville. That added time cost, and at times, we acquired 2 aircraft to actually stay within the FAA duty time limits.

We based an aircraft in Jacksonville. Repositioning dropped dramatically, saving the customer thousands of dollars per flight and simplifying the mission. Jacksonville to the donor hospital and straight back to Jacksonville. We have several other saving -- cost saving measures to include one-way flights or using 1 plane with 2 pilots, again providing cost savings back to the customer.

So at the heart of all of this is safety. I'm proud to introduce Keith Trepanier, our Chief Safety Officer, to share how Strata embeds safety into the decisions we make. Keith?

Thanks, Scott. Hello, everyone. As Scott said, I am Keith Trepanier, I am the Chief of Safety here at Strata. I've been doing this for about 3.5 years. Before that, I served 25 years in the military on active duty as a -- in the Army and in the Coast Guard as a pilot and a maintainer. I did operational roles as well as leadership roles that included some safety focused positions as well.

One of the highlights was I was part of the Coast Guard's Aviation Standardization Program. We would verify that the safety and the best practices across the entire Coast Guard fleet were maintained by checks and balances with on-site visits.

After military, I was the Aviation Safety Manager at Mayo Clinic. While I was there, we established our own Part 135 to better support the medical mission. And I also worked with the transplant teams and the operators that work with the transplant teams to ensure that they have the best, safest flight possible while they went out there and do that.

As you can see, there's a lot going on in this operation. My role here at Strata is very straightforward. I'm here to keep the customers and our staff safe during the transportation process. This said, this means we work closely with our aviation providers to meet our safety expectations and to deliver reliable service to those teams.

Safety matters because the impact of an event is not just a line item. It affects families. It affects people. It affects lives. So that is a keystone of what we do in our operation.

We built a culture where safety is supported at every level and we have open communication that helps us identify issues before they become a problem that could affect us further down the line. I'm fortunate I have an experienced team of evaluators in my safety team, decades of experience, lots of aviation knowledge. And with that, we've created a lot of standards and expectations with our operators that we use that exceed the FAA requirements in many instances.

Some of the examples here is our own fleet of Strata aircraft are managed by an operator that holds an Argus Platinum rating. That's a really unusual thing to achieve in this industry. Additionally, we've implemented enhanced requirements for some of those operators. That includes dual-pilot operations for any passenger flights. And we also require higher experience level for the pilots that are flying.

Safety is not just a priority here; it's the base of what we do and it keeps our mission strong. So we want to make an operation that's dependable and reliable for all parties involved.

And with that, I'll pass it back to Scott, who can continue the conversation. Thank you.

Thanks, Keith. So I'll wrap up that we continue to be very excited about growth opportunities across air, ground and expanded use of commercial flights. We're in an extremely strong position. As we showed on last week -- or discussed on last week's earnings call, Strata continues to outpace the industry transplant volumes in both air and ground, driven by our dedicated fleet, customer focus and our national diversification that I've clearly pointed out today of our services. We see continued opportunities to gain share and win new customers.

So with that being said, I'd like to ask Andrew Marreel, our Director of Business Development, to walk through the air and ground opportunities in more detail.

Thank you, Scott. Hello, everyone. I'm Andrew Marreel, Director of Business Development at Strata. I oversee the sales team with a focus on new business acquisition and growth opportunities.

As Scott mentioned, we have seen consistent growth over the -- of our customers over the past several years, and expect this to continue for years to come. Despite our current scale, there's still significant opportunity to acquire new customers across both air and ground logistics. Our market share today stands at 30% in air and 15% in ground. Our primary acquisition channels include our sales team, competitive RFPs, customer referrals as well as cross-business referrals, particularly from our organ placement and recovery services.

Breaking down the 70% of the air market, we expect 10% of this market to come up for RFP over the next 2 years. Given our expertise, scale and capabilities, we're extremely well positioned to not only compete and win these opportunities. We have a historical win rate of 80%.

Another key focus of our sales efforts are transplant centers and OPOs currently served by non-scaled operators. These accounts stand to benefit significantly from our platform's reliability, extensive reach and integrated services, enabling greater access to organs through a streamlined one-call solution. Cross-selling from other business lines continues to be a powerful driver of logistics growth.

We provide both air and ground logistics for our transplant center customers, but in areas -- but we typically support ground services through third parties if we don't have a ground hub in that region. Once we reach efficient scale in the region, it becomes financially and operationally sound to implement a ground hub and bring services in-house to further compute for the OPO ground business. Today, we operate 11 hubs -- ground hubs nationwide and hold 15% share of the OPO ground logistics market. This represents a significant growth opportunity over the years to come, and as we expand our ground hub network and win new OPO business.

While our core focus remains on heart, liver and lung logistics, we've launched new services in the past year to support our customers on logistics of kidneys, including next flight out and hand carry solutions. We currently serve 35 customers in this segment, with significant opportunity to expand within our existing customer base.

Beyond transplant logistics, we're leveraging our network logistics -- excuse me, our network of logistics resources to support time-critical shipments for radiopharma, clinical trials, tissue and blood, extending our value proposition and diversifying our logistics portfolio.

I'd like to welcome Melissa back to the stage to talk about our owned aircraft.

Thanks, Andrew. Let's talk for a minute about the strategy around aircraft ownership, as you always get a lot of questions on this one. So up until last year, we were 100% asset-light. But we're building so much scale that we realized if we invested in some aircraft, that we could generate some margin expansion. So we bought a fleet of 10 HAWK-800 aircraft in '24, and we're already seeing the benefits of margin improvement.

There are also significant strategic benefits of owning aircraft. It brought to us a significant competitive advantage. In the last year, we won 2 key accounts whose RFPs required asset ownership. By owning the planes, it allows us to select the best make and model for the mission profiles of our customers and, of course, allows us to place them around the country in the strategic way we've been doing, close to our customers to save them time and money.

We get the most operating leverage from the owned planes. The owned planes represent about 30% of our flying. Here we pay the fixed costs directly and the variable costs as we incur them. The more we fly, the more fixed cost leverage we get.

50% of our flying is done on dedicated planes. With these planes, we contract and we make guaranteed flight-hour commitments to the operators in exchange for exclusive capacity of the airplanes. And we do this at fixed rates. We do get some fixed cost leverage here because, typically, our rates will go down as we achieve certain target thresholds for hour during the year.

The least amount of flying is done through safety-vetted third-party operators. Here we pay as we fly. For every hour we fly, we pay. We don't make a guarantee for minimum net hours, but this allows us, very importantly, to scale our capacity up or down without having to take any financial risk. It also provides us with additional and deeper geographic diversity and access to more makes and models of aircraft without having to make an additional capital investment.

Our current capacity mix gives us the flexibility of being mostly asset-light with the competitive advantages of ownership.

So that was a lot of logistics, and I just want to summarize it all now here. So these transplant cases are getting more complicated. This highlights the importance of our expertise and scale and really increases our strategic value. While we are currently the largest air transporter of hearts, livers and lungs in the country, there is still plenty of room to grow, both by taking share and through acquisition. We are very well positioned given the scope and the quality of what we've built and our continued belief that the customer is always right.

So now it's my pleasure to turn it over to Lou Verdetto. Lou is the founder of Keystone. He runs our Clinical Services and Cardiac Care business lines. We're going to focus now on the clinical services. Lou?

Thank you, Melissa. And thank you all for being here, both in person and online. This is a very exciting time for our company, and I'm sure you could sense the level of excitement and enthusiasm for everything that we have going on.

My name is Louis Verdetto, and I'm the CEO of Strata's Clinical Care service lines. I'm a cardiovascular perfusionist by trade, and I have been for the last 17 years. For those of you who may not be familiar with what a perfusionist is or what they do, a perfusionist operates the heart-lung bypass machine primarily during open heart surgery. But just as in recent years, especially here within the U.S., we're taking that same clinician, and we're using them in organ procurement to operate the normothermic regional perfusion pump.

I'm accompanied today by some key members of our executive leadership team. Michael Hancock is our Vice President; Dr. Scott Silvestry, our organ recovery service line champion and Medical Director; and our Vice President of Clinical Operations, Christie Campbell. Each one of them will have an opportunity to come up and tell you a little bit more about their contributions on scaling the company into what it is today and also tell you about the service lines that they manage within Strata.

But before they do that, I'd love to give you a little bit more background on Keystone Perfusion. I'd love to tell you where we started, what we've accomplished as a private company throughout the last 12 years and what we intend to accomplish under the Strata -- excuse me, the Strata unified brand. Keystone started in 2012 as a locum tenant perfusion staffing company. Hospitals and health systems will lean on us to augment their own perfusion departments. Over time we've become a trusted perfusion staffing partner to hospitals where hospitals would outsource the entire departments. We would provide equipment, disposables and personnel to take over the entire perfusion departments within hospitals.

Since we developed a staffing platform, it was only natural to get into other adjacent services, which we'll touch on more shortly. Our company has sustained significant growth since our inception. We've grown in the mid-teens compounded annual growth rate since we started. And that's just on the organic side. Our inorganic growth, we've accomplished 6 tuck-in acquisitions throughout the last 5 years, all of which are performing very well. And as Will said earlier, we're able to acquire these companies at single to low-digit multiples.

Just in the last 2.5 years, we got into the organ recovery space, a natural extension of everything that we're already doing. We're providing perfusionists for open heart surgery programs. As I said, we could use those same clinicians for organ recovery. That business has grown significantly for us.

I couldn't be more proud and happy to merge a company that I founded into a company with like-minded individuals who are mission-driven and focused. With that said, I'd love to bring up Michael Hancock and Dr. Scott Silvestry to tell you a little bit more about our organ recovery programs.

All right. Good afternoon, everybody. My name is Michael Hancock, and I run Strata's Organ Recovery service line. Me, like Louis, I'm a perfusionist by trade. And for the last 13 years, we at Keystone have been providing perfusion services to cardiac surgery centers across the country. Some of those cases involved transplants, but on the recipient side of things.

I can honestly say that my time in organ recovery over the last few years has been the most rewarding and professionally fulfilling experience that I've had in medicine. Not only are we recovering precious organs for a mismatch between the amount of available donor organs and the number of patients on the recipient wait list, but we're doing something for donor families that I think cannot be understated. You're taking a donor family that's going through the most tragic loss, perhaps the most tragic event that they've ever gone through, and you're giving them an opportunity to establish a legacy for their loved one through organ donation. Not only are they able to save a life by donating their loved ones hard, but maybe up to 6 organs or maybe more.

We are truly right now changing the transplant landscape by innovation on the donor side of transplant and through the need for specialized recovery teams. Organ procurement is becoming more complex, more nuanced, requiring us on the third-party side to have more specialized teams, including more technically gifted cardiothoracic surgeons, abdominal transplant surgeons, and even us in the perfusion space, to be able to leverage some of these recovery technologies and techniques to pursue more donation opportunities and increase the yield from the DCD population specifically.

When we look at where we've come and where we are today, we've established ourselves as one of the premier organ recovery service providers in the country. So far, we've done over 2,000 comprehensive NRP cases and over 700 surgical recovery cases. One of our operational differentiators is that we have a hub-and-spoke model, which allows us to keep clinical resources equipment and supplies at different locations around the country. So that when a donation opportunity presents, we can mobilize our clinical team, all of the supplies and resources and these technology and devices from one of our hubs closest to where the donor hospital was presenting. What that does, it allows us to mobilize and pursue rapid donation opportunities, better, cheaper, faster. One of the big things we're all trying to do in the transplant space is reduce costs. This is one of the ways that we do this, by offering that true one-call solution, mobilizing our teams, Trinity Logistics, being able to pursue the opportunities and deliver these organs to the transplant centers for implantation for the recipient.

When we look at all of our combined service offerings in the organ recovery space, I mentioned that we are one of the only comprehensive NRP service providers in the country, allowing us to mobilize surgical teams and perfusion teams to pursue these opportunities that some host OPOs in other areas of the country don't actually possess. For our OPO partners, we allow them to consider using NRP for every DCD opportunity that presents in their DSA. Some of the top OPOs in this country, they will consider using NRP for every single DCD that comes through the door.

For our transplant center partners, we allow transplant centers to keep their internal resources at home, instead sending our specialized teams to go recover these precious organs, allowing their internal teams to stay at home, treat patients within their home facility. We, as a trusted partner, then carry out the organ recovery using the same clinical standard and expertise that they have come to expect from their program.

When we look at our traditional organ recovery service line, we have thoracic and abdominal recovery teams that can pursue both brain-dead and DCD donation opportunities.

One thing that we're really excited about is how we can support these other machine perfusion technologies. Over the next couple of years, we're going to see many other technologies and devices come to market, allowing our transplant surgeons on the recipient side to have a prescriptive ideology or plan for every single recipient that comes to the door. For us, we are -- while we favor NRP, we are agnostic to the technology. We want to be able to support every one of our partners' needs, whether that be an OPO partner or a transplant center partner.

One of the really exciting things for us in Strata is the fact that we can offer a one-call solution. Partnering with our air and ground logistics arm, we can mobilize our teams anywhere in the country better, cheaper, faster to pursue opportunities and reduce costs.

When we look at the focus and spotlight that exists in the organ procurement space right now, it's very clear that we need operational standards in the procurement space. We at Strata take this very seriously. Through our proprietary software and platform, we utilize electronic documentation, data capture and have robust policies and procedures so that we ensure that the highest level of quality is upheld for every single organ recovery case.

As Will laid out, there's simply not enough organs to meet the need or to meet the demand in this country. We have to figure out a way to pursue more organ opportunities and increase the yield, especially in the DCD population. Right now, only 1% of deaths in the United States equates to a donation opportunity. We have to do better.

Now if we look historically at the donor pool of donors presenting to us in the United States, historically, we used to see the majority of donation opportunities as brain-dead donors, growing at a rate of 3% and almost every year. If you look back in the last couple of years, the amount of DCD donors presenting is growing at a rate of over 7% each year. What's happening now in 2025 is we have more of a 50-50 split in terms of brain-dead versus DCD donors.

As Will outlined, the challenge with DCD donors is that we have to wait for the donor to pass and be pronounced dead before we can start the recovery procedure. And the time it takes for the donor to pass, there are periods of what we call ischemia or periods of diminished blood flow to these organs that we're targeting for a recovery. What does that do for these organs? It calls into question their viability for transplant the longer that wait period extends.

So the challenge in front of us is if we have more DCD donation opportunities and we know that the yield from a DCD opportunity is significantly less than a brain-dead opportunity, we can see the problem, right? The organ mismatch, while there are more donors, the challenge is how do we recover more of these organs for each one of these DCD opportunities.

One of the ways that we do that is through normothermic regional perfusion. NRP allows us to halt that ischemic period, reestablish oxygenated blood flow to these organs that we're targeting for a recovery. What that does is it allows the heart to start beating again. It allows the kidneys to start functioning again. It allows the liver and the lungs to start functioning like they normally would, so we can evaluate those organs in real time under normal physiologic conditions and then we can report that viability to the surgeon on the recipient side at the accepting facility.

What this is leading to is just more information. It's casting a wider net on donation opportunities. There are many recoveries in the DCD subset that surgeons walk away from these opportunities because the dying period lasts too long. There's simply not a way to evaluate and feel confident that this organ that's sitting in front of you is going to work when you put it into your recipient. NRP allows that to change. It's a true game changer in transplant medicine. We can give that information and assess how well that organ is going to work prior to preserving it.

So how is NRP affecting that yield that we spoke of? A traditional DCD not utilizing NRP yields about 1.7 organs per donation opportunity. If you utilize NRP, we can get a 50% and greater increase in organ yield, getting up to about 2.6 organs transplanted per donor. Not only are we covering more organs, but these organs are of better quality, okay? We're giving that physiologic environment oxygenated blood flow prior to the preservation technique. In a published study by Vanderbilt, it's been noted that the primary graft dysfunction rates of organs utilizing NRP is significantly reduced to organs procured by direct procurement not utilizing NRP. So we're getting more organs and better-quality organs.

Now if you look at how often is NRP used. The NRP utilization rate over the years used to be in the mid-single digits. As Will mentioned, September of this year, it was up to 46% of all DCD donation opportunities were pursued using NRP. Over the next 3 years, we expect that to get to 55%. We do expect NRP to become the standard recovery technique for DCD donation opportunities.

So if we look today where we're recovering 3,000 NRP donors, 65% increase over 3 years can get us up to having over 5,000 NRP donors, with an increased yield, casting a wider net for donation opportunities in this country. One of the many reasons you can see we're very excited about this technology moving forward.

Now I'd like to welcome Dr. Scott Silvestry to go over some of the growth opportunities as well as some of our operational differentiators.

Thank you. I'm Scott Silvestry, I'm a cardiac surgeon. I've been a transplant -- a thoracic transplant surgeon for over 2 decades. It's been my privilege to be in this field.

And let's talk about the operational reality in a transplant center. My good friend who runs a cardiac transplant program 15 blocks away, called me up one Sunday and said, "Can you get a heart for me?" when I was in Florida. He said, "My partner is putting it in. I'm exhausted. I've been working all week. My wife wants me to do something. They want me to get it. The fellow can't go because of the rules and hours that they work. These young guys are terrible," he said. "can you do me a favor?" I said, sure, I'll do it. He said, "I can pay you a little bit because you know the administrators want everything for free and they want value and they want it cheap. But do me a favor." And I said, okay.

And that's the operational reality today. The reality is transplant centers are under a lot of pressure. The old system of using fellows and getting organs for your partners doesn't work because they're not brain-dead donors all anymore. When we changed the system that New York started coming to Florida and Florida went to Tennessee and Tennessee went to California, the travel times went up. And the slight imposition of getting an organ for your partner became a real hassle. And so the generational cultural shift has changed to push for third-party procurement because the surgeons want their sleep back, and it makes sense and there's value.

So the old model has changed and has to change significantly. What's happened as a result of this, today, 40% of third-party procurement occurs for donation to alleviate these pressures, okay? And that is growing up significantly to 50% or more, and we believe that it will accelerate even further because of NRP, because of longer travel times, because surgeons want their sleep back. Because you go out and you spend 12 hours instead of 4 hours to get an organ and sometimes you don't come back with an organ. And all of that lost productivity and all of that extra work for the teams is taxing them. Transplant centers cannot staff to occur for all of these things.

This is a meaningful inflection point. It is generational. It is cultural, it's labor driven, and it is value driven. This is driving from 8,000 to over 11,000 third-party procurements. This difference of several thousand, we believe, we can serve very well because we already operate in these markets. These are areas where reliable partners can add value and capacity to transplant centers without compromising outcomes or compromising identity.

Our approach is trust-driven. It is partnership-driven. It is not transactional. When this friend of mine called me up, he was giving me his trust that he knew that I could get an organ for him just like he could. He was telling me that he trusted me or my team to do this for him in the same way he trusted the people working in his own program. He was allowing us to expand his capacity. He was allowing us to not change his outcomes and giving us the biggest trust he could.

So by being trust-driven, we have to be clinically quality-driven as well. All of our surgeons are vetted for education, training and experience. All of our surgeons are in the [ ALTO ASIM ] network, which is required. And our perfusionists have special training for NRP, our perfusionists have training for machine perfusion, the additional techniques to maintain the viability of organs. And they have maintained clinical standards as they moved along. We believe that it's these standards that allow us to leverage this in order to do this. The mission and operational discipline have to be aligned in order to achieve these goals, and that is who we are.

Ordinarily, when you have non-local recovery, you send a team from one place to another and bring them back. That is a significant cost. That is historically how it would occur with brain-dead donors. Transplant centers would send their teams out and come back. There was a significant cost. By using local recovery and setting up a hub-and-spoke network and a logistics network, you can allow the teams to go locally to decrease the transport costs, to decrease the dry run rate and to decrease the cost, and here associated with sending a team, spending 12 hours of investment, canceling surgeries the next day and then coming back without an organ. It makes sense for everybody to use third party and it makes sense for everybody to use it local because the costs go down, the value goes up.

Remember, if someone sits on a transplant waitlist for a year and dies, it's all cost. That's what the hospital, that's what we all see. If someone sits on a transplant waitlist for 6 months and gets transplanted and survives, that's value. And that's what we're all after, saving lives and driving value.

Our organ growth strategy is 4 coordinated pillars. The expansion of regional hubs is critical in order to provide better response times and access. Expanding thoracic presence for procurement is critically important and strategic value differentiator because thoracic surgeons do other operations besides transplant and they want to preserve their schedule as well. Building out the abdominal platform, which allows us to leverage our national network and hub and logistics model allows us to provide more service in machine perfusion and NRP.

And machine perfusion partnerships, partnerships with companies, allow us to then enhance the adoption of this technology, to allow more organs to be placed more efficiently across the country with minimal problems. These all work together. As the network grows, the response time goes down, the value goes up, the cost goes down. As both abdominal and thoracic procurement goes higher and higher, utilization increases. And as the machine perfusion rolls out, the ecosystem strengthens. This is strategic growth utilizing our strengths as we have them and as we outline them. This is not site-by-site development.

Here is our resource, our hub-and-spoke network currently and areas of markets we believe will be ripe for expansion. We generally focus on aligned OPO partners. A lot of NRP activity and dense transplant activity in these centers. By adding these other centers, we can see areas where there is strain in the system and a need for solutions as well as rising NRP adaptation and rising NRP use in order to leverage the centers we have and the local ability to deploy teams close by at value and scale.

Expanding thoracic recovery service is key. There are very few organizations that can provide skilled quality thoracic recovery and thoracic NRP at the level that we can, and this is critically important. The driver is there's a shortage of surgeons. The bottleneck is surgeons, the surgeons who want their sleep back, the surgeons who have stopped volunteering their time to go procure and organizations have to come up with a different solution. We solve the bottleneck and we maintain the quality, allowing programs to unlock their capacity untethered by the limits of their own staff, instead by utilizing quality trusted partners in order to enhance their ability.

In addition, there is significant headroom in this space. We're partnered with about 1/4 of the thoracic transplant programs. One-quarter. There's a lot of room to grow there in the small and midsized programs who have yet to realize the potential of utilizing external quality sources.

Similarly, regionalization of abdominal recovery services in our service line is important. This allows us to leverage the resources we have, the hub, the logistics, the NRP expertise, machine perfusion for kidney and liver, and allows programs to adopt new technology without the burden of having to learn how to use it in the field, and also without the burden of having to deploy teams in order to use that technology at that point.

Machine perfusion is critical. We believe that machine confusion will continue to grow, and we have a device-agnostic strategy. We can support all devices. There are 6 currently; there are 13 projected by 2030. By allowing device manufacturers to partner with us for their clinical and logistics needs, when they release, they can spread their device across the United States using our teams. That is critical, instead of having to develop their own upfront. And by doing this, we believe that machine perfusion will be an important part of the next technology innovation and growth phase for transplantation.

So in summary, NRP is accelerating and reshaping the transplant landscape. It has forced a reevaluation of what labor is available in the transplant centers. Third-party recovery has become essential to the transplant practice in the United States in 2025. We anticipate that NRP and rising NRP use will become the standard for DCD donation, and we believe that to be critical with or without machine perfusion.

This is not reflected in our current financial guidance. This assumption and this data is not reflected in there currently. Our hub and network models uniquely position us to scale responsibly. In addition, growth opportunities exist through thoracic, abdominal and machine perfusion across the country for us. And we believe that these will come together to help us partner with transplant centers and OPOs to allow more efficient market for more viable organs being placed and transplanted, more lives saved and more families kept whole.

We are aligned where the field is going, and we have built a platform to support the next growth phase of transplant medicine. Thank you.

Hello, everyone. I'm here today to provide a summary of our Organ Placement Services division. My name is Jamie Bucio, and I serve as the director of this program. I was recruited here in 2023 from the University of Chicago to develop the service line. I have almost 30 years of experience in the organ transplant industry.

So our service line launched in December 2023 and currently employs a team of about 40 transplant coordinators who serve multiple transplant centers across the U.S. Since inception, we have evaluated more than 65,000 organ offers, contributing to over 1,500 life-saving transplants.

So as Will kind of gave you a little bit of a summary earlier, organ procurement organizations make organ offers to transplant centers. Transplant centers must designate staff 24 hours a day to receive and evaluate these organ offers. Our organ placement service coordinators fulfill this role. Most of our work is actually spent in the organ offer evaluation phase. But once an offer is accepted for transplant, coordination through the recipient transplant surgery typically lasts 24 to 48 hours.

Some of the key services we provide as part of this comprehensive service, you can see here below. Stepping in to provide these services significantly reduces the workload for hospital staff. In particular, customers who are also contracted with Strata for recovery and logistics services have benefited from a one-call solution through utilizing our organ placement services, because we also coordinate that on behalf of them.

So why is there a need for third-party contracted organ placement services? Recent organ allocation changes have led to a significant increase in organ offer volumes for transplant centers. This has resulted in greater workload and capacity constraints amongst hospital staff, creating the need for additional resources. In addition, regulatory oversight requires transplant centers to optimize organ evaluation and utilization while continuing to balance risk and maintain high-quality outcomes for their patients.

So this is where Strata Organ Placing Services come in. Instead of hiring additional internal staff, hospitals partner with us to manage their end-to-end transplant coordination. This allows their internal teams to refocus on patient care and strategic transplant initiatives. Our key goals are to serve as a trusted partner and extension of our customers' professional teams, and to offer flexible customized pricing models to meet their needs.

A key value proposition that we do offer to all of our partners is enhanced operational efficiency. We go into these institutions and streamline their internal workflows and processes. We optimize their organ acceptance practices. And by doing this, we're improving patient access and outcomes. We strengthen communication throughout the whole process from beginning to end. And we enable program growth and scalability because we are doing this work on their behalf.

As noted earlier, there are approximately 250 transplant centers in the U.S. We currently hold about 4% of this market share, which represents a significant opportunity for future growth. Our active pipeline is driven by targeted sales initiatives, customer referrals and cross-selling across divisions. We are exploring strategic M&A partnerships that can enhance our operations and market position. And we are focused on identifying additional needs in areas of opportunity for our current and new customers. Some of these that have recently been identified are quality review and auditing, data analysis, enhanced waitlist management and supporting industry research partners.

So in summary, rising organ offer volumes and regulatory demands are straining transplant centers' ability to manage organ placement services in-house. Strata offers clear value as a trusted partner, offering flexible pricing and improving operational efficiency. While we currently hold a low share of the market, there is significant opportunity to acquire new customers.

And I'll bring Melissa back up to close our integrated transplant offerings.

Thanks, Jamie. I hope you all have learned a lot about our transplant-related business lines. Something that's important to note is that while we do offer an end-to-end integrated solution, we don't force our customers to use all of our services. So there's a tremendous amount of potential to cross-sell our logistics services to our clinical customers and vice versa. And also, it's important to note that that upside is not included in the guidance that we laid out earlier.

We are optimistic that over time our customers use us as their one-call solution for the full stack of services. And we've already seen through our commercial relationship with Keystone prior to the acquisition that 50% of the clinical customers do opt in for our logistics services. So our job is to make sure that trend continues, and we're going to do just that.

We've now covered everything in transplant. We're going to take a short break, maybe about 5 minutes, and then we'll bring Lou back on the stage. He's going to talk through our cardio line -- cardiac care line. And we'll do some technology with our VP of Software Engineering. And we'll bring Will and Matt back on to go through the financials. And then some Q&A. Okay? Thank you.

[Break]

Okay. If you wouldn't mind gathering in. We're going to get started for the second part here.

Thank you all once again. And I know this is a lot of material, a lot of slides we're getting through. It's very important for us to get the message across. There's a lot of moving pieces to our business, which was once a passenger business, we're now a medical business. So certainly, a lot of material we're trying to get through to allow you to absorb it all.

So on the cardiac care clinical services side, I'd love to give a comprehensive overview of a little bit more on what we're doing there. So when we first started the business in 2013, we've had nearly 10 employees. And over time, we've grown the company to a national player in the perfusion staffing space. At the time we sold the company to Strata, we had over 375 clinicians.

We perform over 20,000 open heart surgery cases per year across 31 states. We're growing at a tremendous rate. We are now a national perfusion platform company, not just on the core cardiac business side, but on the NRP side, our growth is tremendous as well. Hospitals and health systems look for us at Strata to provide a comprehensive outsourced solution.

It's important to understand how this works. In cardiac surgery, you naturally have the cardiac surgeon who's carrying out the open-heart bypass procedure, the anesthesia providers who deliver the anesthesias to the patients. But the perfusionist, who's a very vital part to the operation, they control the patient's blood flow while their heart is stopped. So the surgeon could operate on their heart. So hospitals tend to look for an outsourced solution for that very niche type of clinician.

We pride ourselves on being a top player in the most respected perfusion staffing business in the field. We have strong clinical excellence. We're a company of perfusionists, founded by perfusionists for perfusionists.

So the demand for outsourced perfusion staffing is rising quickly. In the last 10 years, the attrition rate for perfusionist has been higher than the graduation rates. So there's hospitals and health systems that are struggling to employ these individuals, so they're looking for an outsourced solution for them.

A little bit more, diving deeper into our service lines. As I touched upon the perfusion service, the outsourced solution, we also provide locum tenant services to help augment hospitals in-house perfusion departments. But not just perfusionists, we're also supplying nursing staff, cardiac physician assistant staff, all within a locum tenant agreement with hospitals and health systems. We provide ECMO services. ECMO is used for patients who are experiencing acute [indiscernible] distress or cardiac failure. We're providing a perfusionist or an ECMO specialist to manage the ECMO circuitry at the patient's bedside right up until the patient gets decannulated as we say, which means they successfully made it off of the device or they get transferred to a tertiary center for greater care.

Another part of our service lines are our auto transfusion and blood management service lines. We're providing an auto transfusionist to hospitals to operate a cell saver device in procedures where there's a large anticipated blood loss, decreasing the reliance of donor blood going to those patients, hence the name autotransfusion for autologous.

We have other services that we provide, either as a complement to our full-service perfusion or stand-alone services, including perfusion equipment rental, disposables that go along with carrying out cardiac surgery. And another adjacent service that we provide being the experts in extracorporeal technology is hyperthermic intraperitoneal chemotherapy where we're circulating a chemotherapeutic agent extracorporeal outside the body for these types of oncology cases.

With that, I'll turn it over to my colleague, Christie Campbell. She'll give a brief introduction and tell you a little bit more about the cardiac care growth drivers.

Thanks, Louis, and thank you all again for your time this afternoon. I'm Christie Campbell, and I'm the Vice President of Clinical Services for Strata's Cardiac Care Service Lines. I'm also a perfusionist for the past 20 years. I lead our clinical operations and service line integrations. And together, Louis and I partner closely on the development of our KeyPort platform, the technology that powers our operations and supports how we scale.

So let's just walk you through the cardiac care service lines that we offer. And these statistics really put the demand side of that business into context. Cardiovascular disease is still the leading cause of death in the U.S., and all of the underlying factors continue to move in the wrong direction. Things like obesity, diabetes, hypertension are all core risk factors and they've been steadily increasing, especially as the population continues to age. An older, sicker population means more cardiac interventions and in turn, more perfusion procedures.

These are not discretionary procedures. These are life-saving interventions. And that means that even modest population level increases in these risk factors translates directly to sustained demand for the services that we provide.

So while demand continues to grow, the number of qualified perfusionists in the U.S. is moving in the wrong direction. There are roughly 5,000 qualified perfusionists in the United States currently. And 40% of those are over the age of 50, nearly 1/3 expect to retire within the next decade. At the same time, the number of accredited perfusion programs can't keep up with demand, graduating around 200 students per year. That's not nearly enough to keep up with retirements, let alone support new open heart surgery programs.

And that's why hospitals partner with Strata. They can't recruit or hire fast enough to keep up with demand, and we provide the stability and consistency that their programs depend on.

Great. Thank you, Christie. Very startling statistics. So on the cardiac care clinical services side, we see an opportunity to continue to grow and scale our company through 4 key areas. Certainly, through new customer acquisition, for expansion into new staffing services, our ECMO growth potential to continue to grow the existing service line, and the roll-up and bolt-on opportunities, which is an area that excites me most, especially post transaction with Strata, our ability to deploy capital for add-ons and bolt-ons. The team will share more about that here in a little bit.

So on the new customer acquisition opportunity, when you look at the outsourced perfusion staffing market in the whole, the total addressable market is $350 million, where Keystone is having 7% of that market right now. So there's a lot of runway for us to continue to grow and scale the company. We've consistently added new perfusion retainer customers over the last few years, and we'll continue to do that in many different ways: the full-service contracts, the locum tenant contracts and our fee-for-service business.

The locum tenant business has proven to be a feeder model for our full-service solutions, meaning hospitals will lean on us for locum tenant perfusion services. And when they realize that it's difficult to recruit and retain their own perfusionists, we then can partner with them to outsource the entire department.

We generally participate in every RFP that we're furnished. We've got awarded 80% of those, with the other 20% staying with the incumbent.

We continue to experience organic growth. The real opportunity is how we leverage our existing infrastructure to expand into adjacent service lines. This includes things like intraoperative neuro-monitoring, advanced cardiac care practitioners and even biomedical equipment maintenance and management. These are all natural extensions of our core services, and we're already seeing demand from our existing hospital partners.

So because we've built such a strong operational foundation, that allows us to move into these expanded service areas quickly and confidently. It's an efficient, low-friction way for us to grow while adding real value to the hospitals that we already serve.

In the cardiac care acquisition opportunities, as I was talking about, and you'll see a clear theme here, if you haven't already, our ability to deploy capital to acquire some of these other groups in this highly fragmented market, there's not one particular company that dominates the market. Instead, it's made up of national or regional players, that it's very spread out and fragmented.

A lot of the smaller players in our space are -- they generate less than $10 million of revenue, and they trade for low to mid single-digit EBITDAs. And from our experience on the 6 acquisitions that we've done throughout the last 5 years, they traded in that space as well, and they have been doing very well for us.

We have an active pipeline, and that's something that excites me the most. And we continue to lean on some of these possible companies to roll them up into our existing framework. We're looking for companies that fit our culture, they uphold our clinical standards and help expand our footprint across the country.

So that's how we're growing. We're adding new hospitals, we're expanding into new service lines, and we're rolling up smaller outsourced staffing providers.

So to close it out, the cardiac care section, we're looking -- first, this is a high-quality, high-performing business with strong fundamentals and a clear track record of execution. Second, this gives Strata a platform to move beyond transplant and into the broader nontransplant clinical services with infrastructure that's already built and proven. And last, we have multiple pathways to grow well beyond industry rates through our new customer acquisition, new service lines, expansion within our existing service lines and disciplined roll-ups and bolt-ons. We're incredibly excited about where the platform is heading and the value it can unlock across the broader Strata ecosystem.

With that, I'll hand it over to Melissa, who will walk us through the regulatory landscape.

So I want to briefly address the current regulatory environment because recent federal activity, media coverage and questions from investors have naturally raised some concerns across the sector.

Over the past few months, we have seen what appears to be a temporary cooling around DCD donation behavior. This is not surprising given the recent scrutiny and evolving expectations. As many of you have seen in recent reporting, there have been variations in how DCD has been conducted nationally. At the same time, it's very important to remember that DCD and NRP are 2 of the most important drivers of organ donation. The more organs that are donated, the more that can be recovered, the more transplants that happen and the more lives that are saved.

What we are watching now is a period of clarification, one that is moving towards greater consistency, transparency and shared expectations. That clarity is essential for everyone: OPOs, transplant centers, donor families and the public. This will reduce uncertainty and, over time, supports greater confidence in the donation process. This is what drives higher donation volumes.

From our perspective at Strata, this is not restrictive. This is stabilizing. Our clinical operations have always been built around structured protocols, rigorous documentation and reproducible practices, including detailed NRP case tracking. This positions us extremely well as standards become more clearly defined.

A related topic generating attention is allocation out of sequence. The concerns with allocation out of sequence have to do around equity, making sure that exceptions are governed by consistent, understandable criteria. As clear guardrails emerge, we believe it will reinforce fairness and strengthen trust in the decision-making process. Again, that trust is what supports more donation and more transplantation.

It's important to remember that across the field, everyone is pulling in the same direction: donor hospitals, OPOs, transplant centers, regulators and industry players like us. We all share a single objective: help more people receive the organs that they need.

Continuous distribution is an example of the policy evolution that is already showing benefits. It's prioritizing the sickest patients first regardless of geography. It highlights how well positioned we are at Strata to support these longer, more complicated missions through our logistics network and recovery networks.

So to summarize, we see these regulatory developments as constructive for the industry and constructive for Strata. Clear expectations, consistent standards and increased visibility ultimately expand transplant opportunity, and we are exceptionally well prepared for that future.

With that, I'm going to turn it over to Eric Moore. We're going to talk tech here. Eric is our VP of Software Development and Engineering.

Thank you. As you have heard from the team, these 2 platforms represent the technology foundation of our logistics and clinical operations. Each is purpose-built for its specific operational environment and both are critical to delivering safe, compliant and efficient services at scale.

When we think about what makes our Logistics division operationally excellent, TAC is the engine behind it all. No matter the type of logistics coordination, every request flows through this system from initial contact through final billing. Our customers get transparency into their service delivery across all transport types and we get the data we need to continuously improve.

This is where we're really changing how the customers interact with us. Traditionally, every trip request came in through phone calls, which works, but it introduces the potential for miscommunication. Now our customers can log in directly into the portal, submit request themselves and they control the information at the source. This is part of the broader strategy to give customers more control and visibility while making our operations more efficient.

TAC provides real-time tracking across every leg of transport with full chain of custody visibility. Works on any device. There's no special hardware investment required. This kind of transparency is what our customers expect, and it's what makes critical transport cases successful.

Data without insights is just noise. TAC turns our operational data into intelligence for our customers. Every month, our customers receive detailed reporting on their transport activity, response times, completion rates and service metrics. It changes the conversation from how are things going to here's what the data shows and here's how we can improve together. This level of transparency builds trust and our customers see we're not just providing a service, we're partnering with them.

KeyPort is our proven operational platform that we're continuing to invest in and scaling. It connects HR, compliance, clinical and financial data in ways that are essential for the clinical services. We've hardened the security, modernized key components and positioned it as a long-term platform.

This is where KeyPort really shines. It's getting actionable clinical data at the time when it matters during the procedure. What's unique here is we're capturing data from 2 sources: the perfusion team's clinical observation and directly from the perfusion equipment itself. That equipment integration is crucial. Pump flow rates, pressures, temperatures is flowing automatically into the clinical record with timestamp accuracy. We then sync that with hospital EMR systems so the patient's chart is complete and our documentation meets the facility requirements. Clinical benchmarking turns this data into insights that improve performance and demonstrates value to the hospital partners.

Just like TAC, having data is one thing, turning it into actionable insights is what creates the value. Our hospital partners get live KPI dashboards [indiscernible] case volumes, perfusionist utilization, response times and clinical outcomes. For hospital administrators, this visibility helps them optimize their OR schedule, manage the perfusion coverage and demonstrate quality metrics. From our perspective, this transparency builds trust and makes us stickier. When the customers see our performance data, they understand the value we're delivering.

KeyPort is a strategic asset. It handles operational complexity that would otherwise require multiple separate systems, automated onboarding, tracks credentials, training, compliance documentation, all in one place. Workforce management ensures the right perfusionist with the right skills, is at the right facility. Inventory intelligence tracks equipment and supplies across all the hospital sites. And accounting integration flows case data directly to billing, reducing errors and accelerating revenue cycle. This allows Strata to scale with proportional increase -- without proportional increases in administrative overhead.

Thank you. And with that, I'll turn it over to Will to talk about unit economics.

Thank you, Eric. Everybody can relax now. It's the finance section. We're going to give you some acronyms that you already know for a change. We'll start off with unit economics. How do we make money? What's our cost structure? And what structural protections do we have around our business?

Let's start with the Logistics business where our revenue unit is an hour of travel time across air and ground. When we're using a third-party aircraft, this revenue unit matches our cost unit, resulting in predictable profit margins, but profit margins that are lower than our owned aircraft. With our dedicated third-party operators, we do often have an opportunity to get some fixed cost leverage with one break point in the contract once we reach the guaranteed number of hours we promised to that operator.

With our owned aircraft, things are a little bit differently. We have an opportunity to leverage the fixed cost of things like pilots, insurance, aircraft depreciation, which is included in our cost of goods sold. This results in a higher average profit margin, but one that is more variable. It's primarily driven by aircraft maintenance schedules and the utilization of each aircraft. That's the number of hours that we fly on each tail.

On the ground, we have a similar but smaller opportunity for fixed cost leverage, only when we're using our owned ground assets. Across the logistics business, we benefit from multiyear contracts and we pass through the things that we can't control. Fuel is passed through above a particular level, FBO fees, de-icing, things like that, we pass through to the customer. And we have protections against disruptive short trips by having a minimum distance for our trips and also a per-trip launch fee. We typically include a 3% to 5% cost escalator. And the most important thing is we ask our customers to give us 100% of their logistics business. This is what allows us to maximize our pricing and it's also what allows us to move aircraft closer to those customers, which is the most important way we save them money by eliminating that repositioning. For them, it's even more important that it allows us to react more quickly when an organ comes in with little notice.

Moving to our clinical services products. In both NRP and cardiac perfusion, we operate under a retainer model. And the cardiac perfusion side of the business, this is essentially a take-or-pay contract in favor of us. Any incremental use is build above but happens very rarely.

On the NRP side of the business, we try to minimize the retainer fee to cover only the fixed cost of having our employees ready at a moment's notice to perform NRP for a transplant customer. Most of our revenue and all of our margin is in a variable fee. This matches the reality of the way our customers are reimbursed in this business, which is all linked to the number of successful transplants that they complete. In both NRP and cardiac perfusion, we benefit from 1 to 3-year contracts with built-in price escalators.

On locum tenants and surgical recovery, our revenue cost model for both sides of the equation is almost entirely variable on a per case basis. This is also a much more ad hoc customer relationship and rarely are there volume commitments.

Now I'm going to turn it over to Matt to talk about how all of this comes together into our financial guidance. Matt?

Okay. Before we look forward, let's look back over the last 5 years and see how the business has performed. For this exercise, we're going to evaluate the Medical segment revenue and adjusted EBITDA given the divestiture of our Passenger segment a few months ago.

As you can see from the charts, revenue, EBITDA and margins have scaled significantly over the last 5 years. Revenue has grown at over a 40% organic CAGR over this period, including 15% over the last 2 years. This strong organic revenue growth has been driven by significant new customer acquisition and high single-digit industry transplant volume growth. We've also completed 2 major acquisitions over this period: Trinity Medical in September of '21 and Keystone Perfusion a few months ago in September '25.

On margins -- on EBITDA, the significant increase in EBITDA has been driven by the strong revenue increase along with an almost doubling of adjusted EBITDA margins, from 7.5% in 2021 to the mid-14% range in 2025. This margin expansion has been largely driven by our owned fleet that we purchased in 2024 and a mix shift to our dedicated aircraft as well.

Moving to our 2026 financial guidance. We're introducing revenue of between $255 million to $270 million, adjusted EBITDA between $28 million to $32 million and free cash flow before aircraft or engine acquisitions of between $15 million and $22 million. Let's walk through some of the key assumptions embedded within this guidance framework. Starting with revenue.

At the midpoint of the range, we assume high single-digit organic revenue growth in 2026, as we assume some of the factors that are currently weighing on industry transplant volume growth to persist in the near term. As such, we assume mid-single-digit industry transplant volume growth in '26. We're also only assuming a modest improvement in NRP penetration, which translates into mid-teens NRP donor growth. And we're also only assuming a modest level of new customer acquisitions.

Moving to margins, we expect adjusted EBITDA margin in the low to high 11% range, versus 7% in 2025. The margin expansion we expect is mostly driven by our owned fleet, where lower scheduled maintenance will translate into improved utilization and profitability. There will also be a mix benefit from the Keystone acquisition as Keystone has a higher margin versus our base business.

On free cash flow, we expect CapEx of between $7 million to $8 million, including $1 million of capitalized software development costs. On a like-for-like basis, CapEx will be down year-over-year. This will be offset by Keystone CapEx. Working capital will be about 10% of revenue and will consume some cash as we grow.

Moving beyond '26, we're introducing a medium-term value creation framework that covers the period of '27 to '29. The key tenets of this value creation framework include low double-digit organic revenue growth, adjusted EBITDA margins reaching 13% by 2029, and free cash flow conversion of adjusted EBITDA between 60% to 70%. This should translate into high-teens organic adjusted EBITDA growth over the period. On top of this, we expect significant value creation from capital deployment, where we have approximately $200 million of cash available for deployment over this period.

Starting with the low double-digit revenue growth over this period, the medium term that we're laying out right now, '27 to '29, we expect some of the factors that are weighing on industry transplant revenue growth in '25 and '26 to moderate, driving a rebound in industry transplant volume growth to the high single digits. We also expect a modest uptick in NRP growth to the mid to high teens, but it only implies NRP penetration of DCD donors to the mid to high 50% range. And as Will mentioned earlier, we're at 40% in the first half of this year and 46% in the latest month.

Importantly, this outlook does not assume any change in organ allocation policies. While we believe that the regulator is moving towards continuous distribution of hearts and livers over the coming years, the timing of this remains uncertain. So we're not including it in our forecast.

Margin expansion beyond 2026 will be largely driven by SG&A operating leverage as we expect revenue to grow faster than our operating expenses over the coming years, given the largely fixed cost nature of our operating expenses. We also expect to see a mix shift to higher-margin clinical services versus logistical services. As we talked about, a lot of the secular growth drivers and penetration stories of NRP and third-party recovery are in this clinical services business line.

On free cash flow, we expect CapEx of between $7 million to $10 million over the period, also including $1 million of capitalized software development costs. And the timing of CapEx in any given year will be driven by scheduled maintenance on our own fleet. This outlook does not include any CapEx for aircraft or engines, but we expect spending on those areas will be pretty limited over the next few years. It's important to note that the free cash flow conversion, excluding working capital would be over 70% in the medium term.

Putting this all together, we expect adjusted EBITDA to organically double by 2029. And importantly, this framework is built on conservative assumptions that we're confident in achieving and are not -- do not require any heroic assumptions.

As Will mentioned earlier, there are several drivers that are not factored into this framework, including NRP penetration, moving towards the standard of DCD donation of 70% plus, stronger industry transplant volume growth, customer cross-selling or continuous distribution of hearts or livers, and last but not least, capital allocation. As we discussed earlier, we have approximately $200 million of cash available to deploy over this period given our strong starting cash position, cash flows over the coming years and a conservative estimate of borrowing capacity.

To illustrate the potential upside from these factors that are not included in our guidance framework, if we were to deploy 75% of this cash at a mid-single-digit multiple over the coming years, EBITDA would triple relative to our pro forma 2025. This is one of the most exciting aspects of the Strata investment case. We've laid out a framework to organically double EBITDA by 2029 with conservative assumptions. And this does not include several upside drivers that could drive upside to this framework moving beyond -- moving to the medium term.

So that concludes our financial portion of the presentation. We'll now move to Q&A. I'd like to invite the team back on stage for the Q&A session.

[Operator Instructions]

When you closed the Keystone acquisition, my impression was Keystone was adding about $20 million to $23 million in revenue year-over-year, '24 to 2025. Is that flattered by acquisitions Keystone made prior to the acquisition? Is there any reason why that amount of revenue couldn't be added in 2026?

I could take that one. So Keystone is growing. The Keystone clinical services business overall is one of the fastest-growing areas that we expect for the business in '26 and the medium term. I think we laid out a framework here, as we said many times throughout the presentation, of fairly conservative assumptions that we're really confident in. So we weren't assuming NRP penetration really rise as our third-party surgical recovery really rises significantly over the next few years. That's all upside.

Other factor just to keep in mind is Keystone really launched their organ recovery business a few years ago, and we're at the really early stages of scaling that in '24 and for a portion of '25. And so that growth, 50% plus, that will normalize, but we expect really attractive growth from their business from clinical services moving forward.

I'm Justin Wang with Morgan Stanley. So I guess right now, I appreciate that Strata is focusing more so on next flight out or hand carry for kidney. But do you expect the possibility of requiring private charter aviation for kidney even for some DCD cases? Or do you think that the organ is just so resilient that there's no real need for this?

Will, I'll take this one. Ultimately, as we all know, look at what just happened in the government, is commercial aviation is not the most reliable. And so today, we are moving kidneys with private aircraft. But from a cost perspective and the resiliency of a kidney, the best way to go is go commercial and go that route. So we will continue to see a mix, the majority will be on commercial, but there will be some charter in the future.

Got it. And one more from me. I guess, longer term, where do you expect the volume mix to be between air logistics and ground logistics. I think over the past couple of years, that's been trending more towards ground in the industry. I mean do you see this continuing in the next few years?

I wouldn't say we've seen a trend towards ground in our business. And the air piece because, as we talked about, you're seeing the distance between donor and recipient increase. It's still going on. You've got a number of regulatory factors that could cause livers and hearts start being matched to people who need the most that are farther away. So we actually think the opposite, that there's a lot more catalyst to increase the amount of revenue that's coming through air, and that's all aligned with getting more transplants to people who need them.

So you've seen our ground business historically maybe grow a little more quickly. That's because we were building out that ground capability. And remember, when we're on the ground, particularly when we're serving OPOs, we're moving many other kinds of things. We're moving tissue samples, blood samples, we're moving staff and equipment to prepare that donor for the transplant process. So there's a lot of different factors that go into the ground side of the business. But air is really poised for significant growth going forward.

I just had a quick one on maybe the target mix between owned aircraft and then dedicated third-party leasing, and then maybe if you still expect like a nondedicated third-party aspect to like kind of move into the mix in the future?

Sure. Well, so we do have 3 categories now. We have owned, dedicated, which is contracted for exclusive capacity. And then we do -- 20% of our flying is done through noncontracted, safety-vetted third parties. So we do have those 3 categories now. And this -- about 30% of flying is done on the owned fleet. And we like this capacity mix right now. It's allowing us to utilize our owned assets pretty well. We'd actually like to see a little bit more robust use there. And it also gives us a lot of flexibility still by being mostly asset-light while we get all the competitive advantages that we've seen, like a couple of RFPs that require asset ownership, we still get the competitive advantage there of owning the planes.

So it's not that we're -- I'm not saying we'll never buy more aircraft in the future, but it's not going to be a significant amount of capital.

I just wanted to follow up on the Keystone question. When you announced the acquisition, you said $65 million of revenue. If you look at the pro forma 9-month numbers and make an assumption for fourth quarter based off the third quarter, it would seem like it's running a little bit above that. So question one, is that the case? Second question is, in terms of your guidance for '26, what are you assuming for Keystone relative to, say, that initial $65 million?

Yes. So we talked on our earnings call that we've had an excellent start to Q4, consistent with what you've seen in the industry data. So I think things are off to an awesome setup for us going into '26. We are guided by our historical experience that organ transplant volumes for our particular 1/3 of the market that we serve can be somewhat lumpy. So we always want to see some consistency of growth, and we're not going to guide nor did we in this situation, off of a sequential comp of what was the best quarter we've ever had in the company's history for the Medical business.

So I think there's different ways that you could look at that. If it truly was a seasonally weak quarter and we just significantly outperformed, then there's probably a lot of upside to what we talked about today in terms of guidance. But we always like to be cautious, particularly when building a base off of 1 quarter. Does that answer your question, Will?

A little bit, yes. And so if I take, though, the revenue drivers of the mid-teens industrial -- industry NRP growth, that would be a number to apply to the Keystone number for '26 based on this...

Apply it to all of Keystone, just the...

NRP side. What would be the cardiac care side?

It's the majority of the revenue of Keystone.

The NRP -- sorry.

The cardiac side.

Okay. And then just one additional question. Of the things you did not include in your long-term guidance, one was the cross-selling. You touched on it a little bit, but I was wondering if you could just sort of expand a little bit more on that opportunity in terms of -- how are you going to sort of tackle the opportunity what is the potential revenue that could come from that as well?

Can talk maybe about the customer, the sales part?

Yes, absolutely. So as Dr. Silvestry pointed out, our presence in the thoracic landscape is about 25% of all transplant centers right now. We feel as though that we could conceivably partner with a significantly higher amount. So right now, we have our book of business in the transplant center space. Our other adjacent service lines may have partnerships with other transplant centers. So naturally us opening doors for one another is a strategy that we can employ moving forward.

Right now, so much of our growth is organic due to performance, either by transplant centers that talk to other transplant centers, or if we're doing cases for one of our OPO partners that happened to be operating on behalf of another transplant center, that also opens other doors. I don't know if Dr. Silvestry wants to maybe elaborate a little further?

Well, the other opportunity is the TOPS program, which Jamie described. Transplant centers love easy, they love seamless and they love cheap. And so putting that together with the TOPS programs have adopted our services, because if 2 services are equivalent and one has integrated it inside the ecosystem, it makes it easy, as well as equivalent. So I think it goes both ways. And I think we're starting to see a lot of that getting steam already.

And then maybe just on the financial side of it, we said when we did the deal, we have very minimal customer overlap. I think we said it's about 10%. I think a big part of this is the logistics revenue that we get as they're growing. So that's what's coming in day 1, right? Because Keystone clinical services group is continuing to add new customers. As they add new customers and grow and we get attached to that, that's growth for our logistics business, and that's happening now, and we expect that to continue over the coming years.

We put a statistic in the investor presentation that's about $0.20 of the dollar as the clinical services revenue grows, that the logistics revenue grows along with that. So that's a significant opportunity.

And then beyond that, which we're working on as a team, is how do we then take our logistics customers and then work with them to procure some of the clinical services on top of that. And vice versa. So that's a significant opportunity that we're working on. And we said that that's a high -- mid to high single-digit millions opportunity of addressable spend that they're spending today with third parties that we can go after.

So we're working on that. The whole team is coordinated on it. And we can provide updates to the investment community over the coming months and quarters as we work on that.

I think one of the things that's really important in our space is instilling trust with our partners, and that's something that our organization at Keystone and Trinity on the logistics side has done very well for all of our existing partnerships. When we happen to recommend Trinity Logistics for one of our partners that trusts us as an organization and thinks that we are a quality provider, they trust our opinion and vice versa. So that's a significant opportunity in this space.

It's difficult for OPOs and transplant centers to outsource some of this work when they have this high bar of quality and there may not be a lot of providers out there, prior to our arrival, that can uphold that same quality standard. And that's something we feel, under the Strata umbrella, we're doing at a very, very high level.

First, can you talk a little bit about the relationship between NRP and machine perfusion? Like do you do one and then the other? Are they -- can you forgo the second, if you don't -- with NRP? And then related to that, can you talk a little bit just, obviously, you guys don't have your own devices, but as more devices come on to the market, how do you guys see that landscape evolving?

That's a great critical question. Think about machine perfusion as being good for the individual organ. Think about NRP as being good for all the organs. And so if you have an organ in Alaska, you want to transplant it on the east side here, then you're likely going to do NRP in, let's say, a liver and then put it on a perfusion machine so that the 8 hours of transport keep the organ as viable as possible to minimize the damage. And so they can be layered on top of each other.

They can also not be layered on top of each other. So if you are in New Jersey and you do an NRP and you just put it on ice or controlled ice or controlled temperature and bring it to the west side, in this case, or Spanish Harlem, you can get that organ done with a smaller, shorter ischemic time without the need.

Now there's another element. Remember how I said surgeons like sleep? So what they're doing in a lot of places is they're putting it on machine perfusion and they're using that time to time the operation when it fits into their workflow. And for a surgeon, that might mean during the day or the afternoon as opposed to working all night.

And so we're using the tools fundamentally to change the work process to fit in, in medicine, for a number of incentives, not all of them are direct patient benefit. Does that make sense?

As far as the advent of new machine perfusion coming to the marketplace, I mean, we welcome that. It's very important that we maintain our open source model because that is -- that ties directly to a core value that the customer is always right. So transplant centers down to the surgeons doing the transplantation are going to have their own individual preference on NRP, machine perfusion, back to base, in-flight, all sorts of different criteria that go into this. And what we are doing and what we're going to continue to do is scale a platform that supports any and all of those decisions.

Any more questions from anyone in the audience?

Just on continuous distribution, I know it's not in the guidance, but what would be the, I don't know, the expected benefit to volumes if that transition happen?

So we talked about the data on lungs, which have already moved to continuous distribution as a potential benchmark. You saw distances between organ donors and organ recipients increase by about 80% once that switch was made. So if you think about our unit economic model, we bill by the flight hour, that would be an 80% increase in the average revenue per trip for those organs. So could be a very meaningful increase. We're not underwriting that because we don't know exactly how it would be implemented for liver. We don't know how it will be implemented for heart. It could have a very different impact. And so we've also somewhat limited a couple of years of data on the lung.

In any respect, it would certainly get the organs to folks who need them first and not focus primarily on geography as the matching system does today. So it's a good thing. It's in the public comment period right now, and that's why we're reserving common as to what the exact financial impact would be. So something, I think probably what happened with lungs is probably a little on the high end of what the impact could be. But again, it's one of these many ways where our positioning is such that we are in the faster growing parts of the market and we'll outgrow whatever the market growth is.

Probably also worth mentioning that lungs represented like about 20%, 25% of overall heart liver lung volume. So a significant amount of the market in terms of available transplants are going to be moving towards [ distribution ] we believe, over the coming years.

Maybe in the context of stressed industry volumes. I think Dr. Silvestry, you said that if someone sits on the transplant waitlist for 6 months and dies, it's lost value and vice versa, that obviously the hospitals are incentivized to save lives. But any additional detail on how that correlates to sort of the economics of the business of operating as a hospital and why you think that recovers at some point?

Yes. I think what we're establishing -- so this -- actually, you understand this better than I do. What we're creating is a more efficient market with these tools enabling technology. You're matching aggressive centers in Location A with organ opportunities in Location, B, C and D. And so these organs are available for a moment in time. And if the right place cannot have access to those organs, then those organs don't get used.

And that's critically important. It goes back to what you said, there's never been any allocation change in the history of organized organ transplantation that decreased donor distance. It's always about matching the organ. So my friends in Tampa go to Anchorage, Alaska. The guys in Paris went to the Caribbean to get an organ to put it on machine perfusion. The distances are opening up. And so I think that all of this enables saving lives at a lower cost ultimately because the market is more efficient. And I think that's a language most of you get that, in medicine, we don't get, right? You make an efficient market cost go down.

Anyone else?

My question is on acquisition of equipment. When you acquire aircraft or equipment for perfusion, are these leased or do you buy them? Under the owned aircraft, when you say 30% of aircraft are owned, -- are they leased or are they purchased?

No. We own them outright.

Okay. So therefore, it will affect the EBITDA when you depreciate the asset, quite a bit.

Yes, they depreciate.

And what is the EBIT in that case? Where does it come to? Because that was done.

Yes. So you saw the slide of the increase in margins over the last 5 years. If you would look at it, there would still be a significant increase in margins after depreciation. I think it -- maybe it's like 150, 200 basis points lower, but still a significant improvement in the profitability after depreciation.

In our slides, when we talk about the flight profit increase that we get, that metric is net of the depreciation. So we're seeing that increased profitability for the owned aircraft even taking in that into account.

We have no debt on them either.

Okay. We could take -- I got a few questions, e-mail, so we could take those and we can wait to see if anyone else has any questions in person here. But maybe just starting off. We're expecting the industry to -- industry transplant volumes to reaccelerate in '27. The question was, why do we think that? Maybe, Will, you can take that one?

Sure. I think Melissa covered this well in the presentation, but we think there's been a transitory impact really in conversions of potential donors from some of the negative attention that's been coming through the press. The ultimate outcome of this has been really positive, which is the regulators and all market participants are working to restore trust in the system, create uniform procedures across the country for how organ transplant is carried out. And as the team talked about, particularly on the clinical side, we have best-of-breed tracking in terms of our ability to ensure that our training is going to result in that predictable outcome every single time, and then we have the technology to prove that it was done the right way through KeyPort and through the monitoring of the actual biometric systems that we're using during these procedures.

So we really think, A, the industry needs this standardization. But B, we are set up to be best-in-class in terms of being able to comply with whatever bar is set in the future. And we hope it's set as high as possible because once you restore trust in the system, then folks get comfortable and they go back to the old equation, which is there's something tragic that happened as it relates to my loved one, but I can save 1, 2, 3, 4, 5 lives through this tragedy. And that's what the conversation should be about, not about the process of organ procurement.

And so we see that playing out right in front of us with regulators and with participants, and that's why we see an expectation of growth returning to those mid to high single digits. And frankly, with what we've seen already recently in recent months, we're seeing things start to improve already.

Great. We covered this a few times, but Dr. Silvestry, we got a question on NRP and the regulatory scrutiny, but about how do we think about the dynamics there and the risk around NRP. Why don't you just cover, maybe summarize what will be talked about in terms of our view on NRP and what's going on right now with regulation?

So we think that NRP is the maximum benefit for the organs for the individual donors specifically, and that we have been sort of set back because the process grew up all over in every OPO in different processes. And all of that came together, and some of you may have seen the hearings on the Hill. And so what has happened is the [ OVT ] and HRSA have come up with very clear operational parameters to define. And this clarity will help ensure process, high-fidelity process, make sure that there are policies and make sure that every contingency is taken into account.

Because we, at Keystone, had been some of the most experienced clinicians in NRP. 2,000 or more in a year, what has happened is we saw things and develop process, documentation and contingencies that OPOs in Kansas, in Milwaukee and other places had ever seen. When we were doing briefs and huddles, we would raise questions, what do you do? What is your policy on? They would say, we don't know, we have to check. Because they have never seen it.

And so we have brought as leaders in this field, collaborating with the OPOs and HRSA, we have brought structure and our high-fidelity process, which is forward-compatible, so that when we see things, everyone has clarity in the room as to what happens. Because at 2:00 in the morning, all sorts of things can happen with inexperienced players in a room. That's how these things happen.

Everyone wants to do the right thing. Everyone wants to get the organs. Everyone wants to do the right thing for the donor, for the families. But learning how to do that takes time. And it was a very nascent field. Keystone has had tremendous experience. A perfusionist is used to safety, redundancy, communication, and we brought that to this process. And now it's being franchised with all the organizations in HRSA and CMS and UNOS throughout the country. And we think that this will double set and allow it to grow significantly moving forward.

We also think that the central cost of doing this through the OPOs at the donor level makes sense economically and will be the driver for many of these things moving forward. My opinion for what I've seen. Again, everyone wants the least cost possible.

Great. Thank you. Any last questions from the audience?

Great. Well, that's a wrap. Thank you for everyone for joining us today. I hope you learned a lot about the business and about how we're thinking about the future and how excited we are for the coming years. So appreciate everyone's time today.

All right. Good job, team.

Good morning, ladies and gentlemen, and welcome to Strata Critical Medical Fiscal Third Quarter 2025 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference call over to Matt Schneider, Vice President of Finance and Investor Relations and CFO of Strata Keystone Perfusion subsidiary. Matt, you may begin.

Thank you for standing by, and welcome to the Strata Critical Medical Conference Call and Webcast for the quarter ended September 30, 2025. 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 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'll 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. Hosting today's call are our co-CEOs, Will Heyburn and Melissa Tomkiel. I'll now turn the call over to Will.

Thank you, Matt, and good morning, everyone. It's been a very exciting few months as we closed 2 transformational transactions during the quarter, both the divestiture of our passenger business and the acquisition of Keystone Perfusion, setting us up incredibly well for long-term growth and value creation. We also rebranded the company in Strata Critical Medical and change our ticker symbol at SRTA to reflect our sharpened focus on health care. I'm happy to report that Strata is off to an exceptional start. In Q3, year-over-year revenue growth accelerated to 29%, excluding Keystone well above of our expectation for mid-teens revenue growth in the second half of the year. This resulted in record segment adjusted EBITDA performance, which saw 80% year-over-year growth, excluding Keystone this quarter.

This great profit improvement was driven both by volume and significant improvements in aircraft performance as we emerge from a period of particularly heavy maintenance on our own fleet. This resulted in a medical segment adjusted EBITDA margin increased to over 15% in Q3 2025, excluding Keystone versus our 10.8% in the prior year period and 12.5% in the first half of this year. Our sequential growth in Q3 2025 versus Q2 2025 is particularly impressive in the context of the seasonal sequential decline in industry transplant volumes, demonstrating a significant impact of Strata's continued market share gains and our customers' adoption of new services. We're also encouraged by the positive free cash flow from continuing operations in the quarter, and we expect to consistently generate free cash flow moving forward.

Before I walk through the financial results in more detail, I'll turn it over to Melissa.

Thank you, Will. It's an honor to be here as co-CEO discussing this exceptional first quarter performance at Strata. Our integration of Keystone and our launch of Strata's new clinical services division is off to a fantastic start. With these new capabilities, we are now truly an end-to-end organ recovery platform, and the team is focused on tailoring solutions that deliver operational efficiencies and cost savings to the transplant community broadly starting with our existing customers. Our go-to-market strategy uses the same playbook we've employed successfully in our core logistics business, locating resources closer to our customers.

We are colocating staff and equipment acquired through Keystone near our existing logistics hubs, enabling us to offer all in lower cost to deliver these services. We are also rolling out new offerings to reduce the cost of DCD dry run recoveries, a consistent pain point for our customers. By utilizing local surgical, NRP and air resources in strategic service areas, we enable our customers to avoid incurring what can be very significant air transportation costs and wasting their surgeons valuable time until we know that the organ will be accepted.

This is an industry first, and we're thrilled to have a way to make the transplant process more cost efficient for our customers. We hope it will enable centers to go after organs that otherwise may not have been worth the time and expense increasing transplant volumes. We continue to strategically focus on where the puck is going and industry data shows the market is heading in our direction. Industry-wide NRP adoption rates continued to increase during Q3 with transplants of organs that have undergone NRP approximately doubling versus the prior year. This is an encouraging validation of our strategy to increase exposure to the fastest-growing sectors of the transplant ecosystem. It also further aligns our mission with that of our customers, enabling more reliable and lower cost access to life-saving organs. We've also seen great responses from our colleagues across the transplant industry.

This is a particularly exciting quarter for our friends at OrganOx as they received FDA approval to perfuse livers with the metra device while in flight. We've already done the work to support our customers who choose to utilize this technology, all part of our device-agnostic strategy.

We still believe that the customer is always right, and we will always do everything we can to support the rapidly broadening set of life-saving technologies driving growth in organ transplant volumes.

With that, I'll turn it back over to Will.

Thanks, Melissa. I'll now walk through the financial highlights from the quarter. All financial results discussed during this call reflect continuing operations only as the results of the passenger business have now been reclassified as discontinued operations for all periods. Revenue rose 36.7% year-over-year to $49.3 million in Q3 2025. Excluding Keystone, revenue increased 29% versus the prior year period. Despite the sequential seasonal decline of industry-wide heart, liver and lung transplants in Q3 of approximately 6%, our revenue increased 3% sequentially, excluding Keystone. Organic revenue growth in Q3 was driven primarily by strength in Air Logistics, where both new and existing customers contributed to the strong results in the quarter. We added 1 new OPO air logistics customer late in Q3. I'd also highlight that organ placement services revenue more than doubled year-over-year, albeit on a small base as we continue to scale the business and acquire new customers.

During the quarter, we added 1 new organ placement customer. Revenue growth can be noisy quarter-to-quarter, but our year-to-date growth rate, excluding Keystone of 15% reflects strong outperformance relative to the industry transplant volume growth of approximately 4%. Keystone, which closed on September 16 saw only a 0.5 month of revenue contribution during the quarter for a $2.8 million impact. For the full month of September, Keystone's revenue increased over 40% year-over-year.

Moving to margins. As expected, we saw a significant sequential improvement in Medical segment adjusted EBITDA margins to 15.1% in Q3 2025, excluding Keystone versus 12.5% in the first half of the year driven primarily by improved performance in our own fleet. Adjusted unallocated corporate expenses of $3.3 million in Q3 2025 are down approximately 40% from our run rate prior to the passenger divestiture reflecting our significantly reduced corporate overhead as a purely medical-focused business, and this also came in ahead of our guidance for $3.5 million.

Turning to cash flow. There's been a lot of noise this quarter given the unique transactions completed during the period and accounting that unfortunately is not particularly intuitive in our situation. As such, we'll take a minute to walk through all the nuances, but we'll start with the most important point. We now expect this business to be solidly free cash flow generative going forward. And if you cut through all the noise this quarter, we generated approximately $2 million of free cash flow from continuing operations in the quarter and $2.7 million of free cash flow from continuing operations before Aircraft and Engine acquisitions.

Now we'll dive into the details. Due to the unique nature of Keystone's capital structure or employees participated in a phantom equity plan, a portion of the upfront consideration was paid to employees participating in this plan through Keystone's payroll system post-close. As a result of this structure, accounting rules required us to recognize $44.3 million of the Keystone purchase consideration and operating cash flow instead of investing. While the underlying total cash consideration from the Keystone transaction is unchanged, this accounting treatment resulted in a negative operating cash flow in the quarter. So the difference between adjusted EBITDA of $4.2 million in the quarter, and cash from operations of negative $37.3 million was primarily driven by this $44.3 million impact from the Keystone acquisition consideration mentioned above and Joby transaction costs of $6 million. This was partially offset by operating cash flow from discontinued operations of approximately $8 million.

Capital expenditures, inclusive of capitalized software development costs were $3.2 million in the quarter, driven primarily by capitalized aircraft maintenance of approximately $2.5 million and capitalized software development of $0.3 billion. We ended the quarter with no debt and approximately $76 million of cash and short-term investments. Before moving to the outlook, there are a few quick housekeeping items to review.

First, the Joby transaction closed during the quarter. As a reminder, the total value of the transaction was up to $125 million, consisting of an $80 million upfront consideration in cash or stock, $35 million in 2 separate earn-outs over a total of 18 months that can also be paid in cash or stock and an indemnity holdback of $10 million. Joby chose to pay the $80 million upfront consideration in stock, and we monetized the shares during the quarter for cash proceeds of approximately $70 million. The $10 million difference was driven by a significant decline in Joby's stock price during both the pre-closed VWAP measurement period, which determined the number of shares we received and immediately after we received the shares.

We have clear capital deployment priorities and took a market-neutral view as we liquidated the Joby shares. Lastly, we booked a legal provision during the quarter for ongoing litigation related to our go-public transaction that's been disclosed in our SEC filings over the last several years.

Moving now to the outlook. Due to the strong demand we saw in Q3, which continued in October, we are raising our 2025 revenue guidance range to $185 million to $195 million. We are also reaffirming the adjusted EBITDA guidance range of $13 million to $14 million for 2025. Medical segment adjusted EBITDA margins are expected to rise sequentially in Q4 versus Q3's 15.3%, primarily due to the mix impact of the Keystone acquisition. Adjusted unallocated corporate expenses are expected to be approximately $3.5 million in Q4.

Finally, we are looking forward to Monday, November 17, when we are hosting our inaugural Investor Day at the NASDAQ market site in New York City at 2:00 p.m. There has been considerable change at Strata over the last few months and we are excited to provide a deep dive on the business and share our plans for significant growth and value creation over the coming years. Leaders from across the business will participate in the event and will be on hand to answer questions afterwards. We will also introduce our formal 2026 financial guidance and medium-term financial targets during the event. We hope you can join us next week.

With that, I'll turn it back over to the operator.

[Operator Instructions] It comes from the line of Ben Haynor with Lake Street Capital.

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?

Sure. Happy to do that, Ben. Thanks for being on the call. Look, it was a pretty even mix of new customer acquisition. We continue to take market share and some strength within our existing customers. And some of that strength can also come from customers taking new services from us. We've broadened the suite of services that we offer. So very happy to see all of those things coming together for revenue growth that far exceeded.

And maybe this is a question for the event next week. Do you see the growth as coming from similar directions in the future. Are the growth drivers similarly weighted as you see it?

Yes. Look, we continued to add new customers in the quarter, as we talked about during the call, and we see an equally attractive opportunity to consolidate market share in a very fragmented marketplace where we think our offering is significantly stronger just given our scale and our local service model. And then we also see a really attractive underlying industry growth trajectory where you have new technology and evolving regulations that are resulting in really attractive growth. And that really attractive growth means more people get organs that need them ultimately resulting in lives being saved. So we think everything is aligned to create multiple ways for us to achieve our growth objectives here. And we're really excited to talk about that in a lot more detail next week at our Investor Day.

Okay. Great. Looking forward to that. And then on the heavy maintenance that you performed earlier this year across the fleet. What should we expect in terms of fleet margin kind of the remainder of the year downtime impact? Any moving pieces that's changed because of the maintenance schedule earlier this year?

Ben, this is Matt. Yes, so we did see scheduled maintenance events kind of come down into the third quarter that will continue into the fourth quarter. As we said on the call, prepared remarks, we do expect margins to increase sequentially within the Medical segment. So we are seeing that benefit and we'll talk more next week about the margin expectations moving forward. But I think you see that improvement in the first half versus the third quarter, what we're expecting in the fourth quarter, all kind of in line with how we've been talking about it over the last few quarters.

Okay. Great. And then lastly for me, you mentioned the relocation things associated with Keystone. Is that relatively de minimis in terms of expenses that, that will generate? Or is that something that we should kind of factor in?

I don't think it's anything you need to factor into the SG&A. It's just more about aligning our resources so that we're not flying people across the country when we don't have to deliver these services. So that's one of the big advantages here is putting those things together.

[Operator Instructions] Our next question is from Jon Hickman with Ladenburg Thalmann.

Yes, I don't know who this question is for, but with the Keystone acquisition, could you give us a sense of how many individual separate customers you are serving now?

So Keystone has a number of different business lines, Jon, Will here. Across both the cardiac care business and the transplant business, there's almost 250 different customers across the country. So it's a really great geographic diversity across the country. And that's one of the reasons that we like this model because the perfusionists that serve those cardiac care customers could also be utilized to provide those NRP services that we provide to transplant center customers. So there's this really strong foundation of trained personnel that are based locally across the country for the cardiac care business that can then support the transplant business as well. And we see a big opportunity to bring those valuable services to our mutual customer base because there's only about 10% overlap of the transplant customers between the legacy Strata business and Keystone. So great opportunity there.

So is there any customer that's like, I don't know, 5% or more now of revenues. Any one customer that's that large.

We don't break out the customers on a business line by business line basis, but it's a very diversified business given that 250 customers for the revenue base there.

Okay. And then could you elaborate -- I couldn't -- you gave us a lot of information pretty quickly. You said you got a new customer right at the end of the quarter?

Yes. On the logistics business, we added a new customer on the logistics side for organ procurement organization. And if you recall, Jon, those contracts tend to be a little more focused on the ground than on the air, but they'll do a little bit of both. And so excited to see that continued momentum for new customer acquisition. And a lot of that market share gain is what drove our outsized growth in this quarter from customers we added earlier in the year. And then we also mentioned that we added a new customer for organ placement as well.

Okay. So as far as on the logistics side or the organ transplant side, so you were very heavy in the -- on the air side and Keystone had more ground services. Is that my recollection? Are you kind of evening out that those 2 revenue sides now? Or is air still predominantly the larger part?

Air is still a much larger part of the business, Jon, though, you're correct in a sense that Keystone is weighted more towards some of the organ procurement organization customers, which do -- they do have a lot of ground business that, that generates, though Keystone's revenue is really generated by surgical recovery services and NRP services that they're providing to those customers. But it creates a ground opportunity for us to provide the logistics to those underlying Keystone customers. But it won't create a material shift in the logistics business in terms of the weighting between air and ground.

Okay. And then are you going to get to a point where you're going to break out like 2 different like logistics versus the Perfusion aside?

Yes. So if you look at our investor deck that we just posted this morning, you'll see that we've added a breakout on a pro forma 2025 basis of what the business mix is assuming Keystone was acquired on January 1 of this year. So that's sort of the best indicator of what the go-forward business mix is likely to be. I would flag for you that the Keystone business is concentrated in some of these really fast-growing subsectors of the transplant industry. So we talked on the call about how it grew more than 40% year-over-year in the month of September. So you will see a little bit of shift towards those services because we do expect, for example, NRP to continue growing as a percentage of the overall DCD recovery. So some of those underlying industry dynamics, we'll talk about a lot of it in much more detail next week at the Investor Day, will result in some mix shifts towards those services.

And as I see no further questions in the queue, I will pass it back to Matt.

Great. So we got a few questions from investors directly, and we're just going to address that now. So the first question is, just a question about the seasonality that we saw in the third quarter with transplant volumes down mid-single digits. Will, why don't you take that one?

Sure, Matt. This is something that we expected, and we've seen it in the industry volumes the last 3 years or so in a row. At the end of the day, there's a supply and availability of transplant surgeons factor that drives the amount of volumes that can take place in the industry. And just historically, we've seen more vacations, more unavailability of surgeons and it does, unfortunately, impact the volumes. This year was no different. There could be some other factors at play on the year-over-year. There's always some lumpiness as we like to say, and the transplant volumes. But as you can see, given our market share growth, our new offerings and expanded service lines, we're growing right through that seasonality, which is where we want to be.

Great. Multiple ways to outgrow the industry. We also got a question just how is the Keystone acquisition going so far, we closed about 7, 8 weeks ago. Melissa, why don't you handle that one?

Sure. Thanks, Matt. We're getting real good positive reaction from our customers on the Keystone acquisition, and it's really a great team of people that we're thrilled to have join us. With Keystone surgical recovery and NRP capabilities, it truly makes us an end-to-end organ recovery platform. So the customers are really excited about having us as a one call option.

Great. Well, we received a few other questions, but we're going to save those for the Investor Day next week. We're going to hand it over back to Carmen.

Thank you so much. And ladies and gentlemen, this concludes our conference. Thank you for your participation, and you may now disconnect.

Good morning, ladies and gentlemen, and welcome to the Blade Air Mobility Fiscal Second Quarter 2025 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to turn the conference call over to Matt Schneider, Vice President of Investor Relations and Strategic Finance. Matt, you may now begin.

Thank you for standing by, and welcome to the Blade Air Mobility Conference Call and Webcast for the quarter ended June 30, 2025. 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 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 filed with the SEC for a more detailed discussion of 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, Blade disclaims any intent or obligation to update or revise these forward-looking statements, except as required by law. During today's call, we'll 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.blade.com. These non-GAAP measures should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP.

Hosting today's call are Rob Wiesenthal, Founder, Chief Executive Officer of Blade; and Will Heyburn, Chief Financial Officer; and Melissa Tomkiel, President. I'll now turn the call over to Rob.

Thank you, Matt, and good morning, everyone. Yesterday, we announced the sale of the Blade Passenger business to Joby Aviation for up to $125 million. This transaction is transformational for both the Blade Passenger business and Blade's Medical division, which will remain a stand-alone publicly traded company and be renamed Strata Critical Medical. It will be a pure-play contractual medical business, operating in rapidly growing markets uniquely situated to enjoy organic growth as well as an aggressive acquisition strategy. We strongly believe that this is the best path forward to create long-term value for all stakeholders, including employees, customers, partners and shareholders.

Blade's Medical business has grown from 12% of revenue in 2020 to approximately 60% of revenue in 2024, while accounting for approximately 85% of our segment's adjusted EBITDA. Fundamentally, the Passenger and Medical businesses have a different growth, investment and investor profiles. The strength and awareness of Blade as a consumer brand simply overshadows the high-growth and highly profitable nature of our Medical business and this transaction will unlock the full potential of each business over the coming years.

The Blade Passenger sale includes all our passenger operations in the U.S., Europe, including lounges, terminals as well as the Blade brands. Blade's mission since inception has been to accelerate the transition from traditional rotorcraft to electric aircraft. There is no stronger company than Joby Aviation to help make this mission a reality for the benefit of all stakeholders. Our Medical division has long been our fastest-growing and most profitable business line with no direct reimbursement risk, limited economic sensitivity and an attractive multiyear growth profile, we believe a stand-alone Blade Medical will have appeal with a broader set of investors versus the historical combined company structure.

I am confident that the pure-play nature of Strata, combined with the cash war chest that should more than double in size will enable our stock to enjoy a valuation that represents the strength we have today coupled with the numerous opportunities we have ahead. We have a clear value creation strategy for Strata over the coming years, driven by strong underlying organic growth and a highly focused and disciplined capital allocation strategy, supported by approximately $200 million of cash on the balance sheet for pro forma for the upfront portion of the Blade [Passer] sale in addition to up to $35 million to be received within 12 to 18 months based on certain employee retention and financial metrics.

Trinity Medical Solutions, the company's operating business in the Medical segment and one of the largest air transfers of human organs for transplant in the United States will remain Strata's wholly owned subsidiary. I will join Joby Aviation as CEO of Blade Air Mobility when the transaction closes, and as the largest individual shareholder of our parent company, I will also serve as Chairman of Strata at closing. Melissa Tomkiel and Will Heyburn have overseen our Medical division for many years and will serve as Co-CEOs of Strata while retaining their General Counsel and CFO roles, respectively, providing a seamless transition for our customers, suppliers and employees. We are very lucky to have them as our co-CEOs.

Importantly, the financial impact of the divestiture is expected to be adjusted EBITDA and free cash flow neutral on a go-forward annualized basis, supported by approximately $7 million in estimated corporate cost efficiencies. I'm also confident that even more economic streamlining opportunities lay ahead. Will and Melissa will talk more about Strata's value creation strategy in a few moments. Lastly, we are announcing this transformation from a position of strength that is reflected in our strong Q2 2025 financial results as Medical revenue accelerated its growth to 18% in Q2 2025 versus the prior year period.

With that, I'll turn the call over to Will.

Thank you, Rob. I'm excited for the opportunity to lead Strata alongside Melissa Tomkiel and this exciting next phase of growth for the company. We are laser-focused on executing a multiyear value creation strategy built on, first, continued share gains and product line extensions and the rapidly growing non-correlated markets we serve. And second, a disciplined capital allocation strategy supported by approximately $200 million of cash on the balance sheet pro forma for the upfront proceeds from the Blade Passenger sale.

The company may also receive up to an additional $35 million to be received within 12 to 18 months from closing based on certain employee retention and financial metrics. In our core organ transplant market, we expect strong organic growth over the coming years, driven by increasing transplant volumes supported by technology adoption and regulatory changes, continued new customer acquisition and growth in ancillary businesses, including ground and organ placement.

As we've talked about before, we see several additional growth opportunities, both within our core organ transplant market and in adjacent markets. There is also a considerable opportunity to deploy capital towards strategic acquisitions to strengthen our core business, growth potential and earnings power. We're looking forward to providing more detail around our value creation strategy and our actionable M&A pipeline at an Investor Day this fall.

Before I walk you through the financial results, I'll turn it over to Melissa for a few remarks.

Thanks, Will. I'm thrilled to help guide Strata as we enter this new phase of growth. Our end-to-end time-critical air logistics platform is second to none and is trusted by more organ transplant hospitals than any other provider. We will remain relentless in supporting our customers, all of whom are engaged in lifesaving work every day. Our 100% contracted customer retention rate over the last 12 months is a testament to this unwavering commitment to health care providers we serve.

We're also setting ourselves up for future success as technology continues to revolutionize the art of the possible in organ transplantation. As part of this transaction, Strata is entering into a long-term partnership with Joby through which we will gain access to Joby eVTOL aircraft for medical use, anywhere they have operations. We expect that the quiet capabilities of Joby's aircraft, coupled with his potential to operate at lower cost than traditional helicopters and other shorter-range aircraft will provide value to Strata customers and a competitive advantage for the company.

In the meantime, we will provide the industry-leading service we are known for using conventional aircraft, managing costs down and improving callout times for the hospitals we serve by moving aircraft closer to their facility. We'll also continue to broaden our support for all the incredible new organ preservation technologies that are available and becoming available soon. Our partnership with OrganOx is a great example of the length we will go to, to ensure we can always say yes to our customers' requests to accommodate new technology.

We're excited about the multiple avenues for organic growth in the Medical business, including broadening our service offering within our core organ transplant market. We launched TOPS, our organ placement service in late 2023, and we introduced a hand-carry logistics service offering targeted at kidney, a segment of the market that we have limited participation in historically, and this business has grown significantly year-to-date. I look forward to meeting with many of you over the coming weeks and months to discuss our plans for value creation and the unique opportunities ahead.

With that, I'll turn it over to Will to discuss the financial results.

Thanks, Melissa. I'll now walk through the financial highlights from the quarter, starting with Medical. Medical revenues rose 17.6% year-over-year to a record setting $45.1 million in Q2 2025. After a slow start to the year, we saw a strong rebound in the second quarter, driven primarily by new transplant center customers, along with strengthened demand from third-party service providers. [indiscernible] and TOPS, our organ placement service also contributed to revenue growth ahead of the average for the rest of the business this year. Medical segment adjusted EBITDA margin rose to 13.4% in Q2 2025 versus 11.4% in Q1 2025, but declined 100 basis points compared to 14.4% in Q2 2024.

This was expected as maintenance downtime and costs remain elevated in the second quarter, driven by the timing of scheduled maintenance events on our own fleet. To provide context, on average, our fleet of 10 aircraft have approximately 3 major inspections, which are called G inspections and 2 engine overhauls per year. In 2025, we have 4 G inspections and 5 engine overhaul scheduled with these maintenance events weighted towards the first half of the year. Given that our own fleet provides the best unit economics on the P&L and cash basis, elevated maintenance downtime has 2 negative impacts on our financial results.

First, though we continue to perform all trips for our customers is contracted, we must substitute higher cost aircraft from our asset-light network. Second, lower hours on our own fleet results in fixed cost under absorption and a higher fully loaded average cost per flight hour. It's important to recognize that scheduled maintenance downtime will vary from year-to-year with elevated maintenance downtime in some years and below normal downtime in other years, resulting in the opposite effect, higher fleet uptime and improved fixed cost absorption. We continue to expect an improvement in fleet uptime and Medical segment adjusted EBITDA margins in the second half of the year, and we'll provide more details on the outlook shortly.

Turning to our Passenger business. Excluding Canada, which we exited in August 2024, short distance revenue decreased 5.5% year-over-year, driven primarily by lower revenue in the U.S. Short Distance segment, partially offset by strength in Europe. U.S. Short Distance revenue was impacted by the New York Tourist helicopter incident in April 2025, along with inclement weather in June, which was an outlier versus previous years, both of which we view as transitory. Encouragingly, we've seen meaningful improvement in U.S. Short Distance performance in July relative to Q2 2025.

Following the restructuring of our European operations last fall, we've seen 2 consecutive quarters of strong revenue growth. We attribute the improving fundamentals in Europe to the realignment of interest with our local partners, along with important operational and commercial changes that have reinvigorated growth and improved the customer experience. In Jet & Other revenue decreased 2% year-over-year, driven by a modest reduction in flight volume and revenue per flight compared with the year-ago period.

Despite lower revenue, we continue to see a significant improvement in Passenger segment profitability in Q2 '25 driven by improving flight margins and lower segment adjusted SG&A. Passenger segment flight margin rose 580 basis points year-over-year to 30.5% in Q2 2025, driven by margin expansion in short distance including the restructuring in Europe and our exit from Canada, along with margin improvement in Jet & Other.

Passenger segment adjusted SG&A fell 17% year-over-year driven by lower marketing spend in the U.S., the restructuring in Europe and the discontinuation of Canada. Passenger segment adjusted EBITDA tripled year-over-year from $0.8 million to $2.4 million. Moving to adjusted unallocated corporate expense and software development, we continue to focus on cost efficiencies across the business. And during the quarter, expenses declined 2.1% year-over-year.

Turning to cash flow. Given our strong sequential revenue growth in Q2 2025 of 30% versus Q1 2025, we saw a proportionate increase in working capital during the period. The difference between our Q2 2025 adjusted EBITDA of $3.2 million and cash from operations of negative $3.1 million in the quarter was primarily driven by a $7 million increase in working capital, partially offset by an increase in deferred revenue. It's important to notice that our collections remain healthy with days sales outstanding down to 32 days in Q2 2025 compared with 34 days in the year ago period. Capital expenditures, inclusive of capitalized software development costs were $2.7 million in the quarter, driven primarily by capitalized aircraft maintenance for approximately $1.8 million and capitalized software development of $0.4 million.

Our owned aircraft fleet is unchanged at 10 aircraft, and we remain focused on optimizing the financial and operational performance of the fleet. Given the significant strategic and financial benefits of our owned aircraft, it's possible that we'll add a low single-digit number of aircraft to the fleet over the next year or 2, but we are not currently in the process of buying any new era. We ended the quarter with no debt and $113.4 million of cash and short-term investments.

Moving on to the outlook. We expect the sale of our Passenger business to be neutral to adjusted EBITDA and free cash flow on a go-forward basis. We expect the loss of Passenger segment adjusted EBITDA to be offset by a reduction in unallocated costs associated with Passenger business. The seasonality of the Passenger business, where Q3 is typically the strongest quarter of the year, followed by a seasonally weak Q4 could create a modest timing impact in 2025 depending on the exact timing of the transaction close. We will update our revenue and adjusted EBITDA guidance for 2025 after the close of the transaction.

For our Medical segment specifically, revenue growth accelerated in Q2 2025, driven by new customer additions, and we've seen this strength continue into July. We expect mid-teens revenue growth in the second half of the year. As discussed previously, Medical segment adjusted EBITDA margins were impacted by elevated scheduled maintenance downtime and costs in the first half of 2025. We continue to expect improved owned fleet uptime and Medical segment adjusted EBITDA margins in the second half of the year with margins of approximately 15%. Given uncertainty on the exact closing time for the passenger divestiture, we are reaffirming our 2025 guidance on a full company basis, excluding the impact of the divestiture. We expect revenue between $245 million and $265 million with double-digit adjusted EBITDA. We will provide guidance for the stand-alone Medical business following the close of the transaction.

With that, we'll turn it back over to the operator for Q&A.

[Operator Instructions] Your first question comes from the line of Laura Lee of Deutsche Bank.

So my first question is about with that up to $125 million proceeds from Joby, what are your current priorities for capital allocation to help your like either organic or inorganic growth? And also like how confident are we to meet that required milestones or metrics for the $35 million earnout?

It's Rob Wiesenthal. I think that in terms of deployment of capital, we see a lot of opportunities in terms of M&A, opportunities that I believe are actionable and can really sustain the kind of growth that we hope for kind of going forward. On the organic side, you're well aware what we're doing with TOPS, we're aware of what we are doing with other types of verticals such as critical cargo. And this is the kind of capital base that I think we really need to get the company to where it needs to be in terms of really scaling in an exponential way which is a real opportunity because there aren't a lot of companies out there that I think that can be nimble as us with the kind of balance sheet that we have to -- in a very forward way, in a quick way to try to get the kind of M&A deals under our belt that we see out there. So I'm happy about that.

In terms of the metrics for some of the holdbacks when I evaluated and the Board evaluated the transaction, obviously, we felt those were achievable when we view this as a transaction that is a $125 million transaction. There is some -- there is potential risk there, obviously, but if we didn't think we could do it when everyone agrees with.

And Laura, just some detail on that. About half of the $35 million holdback is related to retention, mostly related to Rob specifically. And then the other half is related to financial performance that is really pegged around just continuing the status quo performance we've had. So we do believe that these are achievable. Obviously, nothing is without risk.

Okay. Got you. Okay. Just another follow-up on that. Do you see any operational impact from the divestiture to the Medical segment, like in terms of infrastructure, less relationship or the like operating team, et cetera?

No. We think we're set up for success as a stand-alone company. And on the vertical takeoff and landing side, we're entering into a long-term agreement with Joby, both to continue providing access to helicopters in the markets where we use them today, but also on a much more exciting note, providing access to the Joby Aircraft for medical use in any markets that they roll out to. So we think that's actually going to be a huge value add for our customers given the expected client quiet operation of these aircraft, expected to lower cost and also could provide us with a competitive advantage. So we're really excited about the long-term partner.

These were always 2 distinct businesses. And in fact, if you take a look at what we're saying about EBITDA remaining consistent here, I think there's a lot of opportunity to kind of streamline the operations. Obviously, the operators are stying in Arizona, and we're happy about that. And I think in terms of the kind of business overhead that we need to run the business, I think we really have the opportunity to be extremely lean and efficient. So we feel pretty good about that. And definitely, I see upside.

Your next question comes from the line of Bill Peterson with JPMorgan.

Congrats on the transaction. I have a few questions. I guess, first, starting off, I guess, if we think about the Passenger business sale why now versus one maybe at a later point, it could have been more profitable. I understand, obviously, wanted to bolster the Medical, but how long were discussions ongoing to sell this piece of the business? I guess were the concerns on your prior announced sort eVTOL partnerships, maybe that they'd be too late or like just any sort of additional context on the sale, please?

Sure. I think that -- why now? I think that, frankly, when I take a look at the stock and listen to investors, it was clear that they were discounting the value of the Passenger business. We were not getting value for it. And at the same time, we were unable to invest the kind of capital that I think it needs to grow without hampering the overall earnings of the company. And it just was too confusing story on the investor side. And I think the opportunity to really be a pure-play medical kind of M&A machine here and to roll up what I view is a pretty fragmented business with high-growth and high-margin prospects was the right move to create shareholder value.

And then with respect to the why Joby? I think early on, I think we identified them as the company that we felt had the best path to certification, the capital to execute in the right technology and that would be first to market. I'm unequivocal about that. We -- up to this point, we were agnostic. We've watched all the other companies out there in terms of what they've been able to get to and what milestones they've hit. And I do believe they have -- to your question, I do think they have much more of a head start with respect to getting to the point of flying. We'll be flying in Dubai next year and hopefully, in the U.S. thereafter. Does that answer your question, Bill? Or do you have any follow-ups?

That answers that part of the question. I want to pivot to the Medical business a bit. And I realize you're planning an Investor Day, we'll get a lot more information. But I want to try to get a sense as you look at it today on how you think the growth outlook would look, let's say, first, from an organic point of view and then inorganic. I guess how should we think about revenue growth, CAGR, steady-state margins? Just trying to get a sense of your latest snapshot view there?

Yes, it's Bill, Will here. Still incredibly enthusiastic about the growth prospects in this industry broadly and for us specifically, seeing organic growth in [Technical Difficulty] in the long term, we're kind of seeing supported by all the new technology that we've been talking about on our prior calls, we're seeing more and more providers of organ preservation technology come into the fold, starting [Technical Difficulty] to hospitals to use that kind of seeing some new therapies as we talked about, like NRP, normothermic regional perfusion. It's giving more access to those donation after circulatory death donors, which previously has been pretty expensive and somewhat risky in terms of actually being able to successfully complete the transplant prospects for folks to go after those kind of organs.

And all of those things, we believe, are still in the early innings of playing out and in the early innings of becoming more broadly available at an affordable cost for hospitals. So we expect to continue to see that strong growth in the number of people that are getting successful transplants in America. And then when we think about the specific opportunity for us, this quarter is a good testament to our ability to provide a better value proposition than the competition and win new customers and continue to gain share in this very fragmented market.

So I think still lots of opportunity there. And the last piece of it is just our ability to provide other services to those same customers. We provide other services like what we're already doing to folks outside of the direct transplant community that we're serving today. We talked about in the script how we've seen faster growth in our TOPS program and our [indiscernible] program than we are in the overall business on average. So we're going to continue to see those things help us accelerate our growth.

And then all of those things come together to help us get to our long-term high teens adjusted EBITDA margin target, which we still think is readily achievable. And now that we've built the business with more operating leverage from the owned aircraft, the more we fly, the less it's going to cost for us. So long-term thesis is very much intact and couldn't be more excited about our opportunities ahead.

If I can just finish up on a near-term and housekeeping question. I guess just on the Medical business, how should we think about any seasonality in the business, I mean, in the third quarter? Just trying to get a sense that there is seasonality as you see it today, how is the business trending quarter-to-date? And then on the housekeeping side, can you speak to any tax implications of the transaction?

Sure, Bill. On the seasonality, look, I wouldn't call it a seasonal business. You do occasionally see a little bit of a slowdown in the summer months driven just by kind of staffing of folks being on vacation. We've not seen that quarter-to-date. We had a great July, continue to see similar trends that we saw in Q2. But we have seen in years past a moderate slowdown in kind of the late summer, but have not seen that show up in our numbers yet.

On the tax side, we have enough NOLs to offset the capital gain associated with the Passenger divestiture. Assuming we receive that full $125 million of proceeds, we use about 1/3 of the NOLs that we have. That would leave us with just under $50 million remaining. Can't offset 100% within NOLs, as you know, under the rules, but we would expect the cash tax impact to be a couple of million dollars, something immaterial. So we think we're in a great shape on that front.

Okay. I'll pass it on. But again, congratulations on the transaction. Best wishes going forward to the full team.

Thank you, Bill.

[Operator Instructions] The next question comes from the line of Ben Klieve with Lake Street Capital Markets.

Yes, I echo the sentiment. Congratulations on the successful divestiture here. First question is around kind of the process with the divestiture. And I'm curious, the -- Rob, you kind of noted how specifically advantaged you believe Joby is in this world. And I'm wondering the extent to which the process was kind of a sweeping one where you considered all possible strategics and financial buyers or if you really had kind of a laser-focused view that Joby would be best able to be a successful partner in this divestiture?

Yes. I think -- thanks for your question. I think since we started this company, the name of the company was never Blade Helicopters, it was always Blade Air Mobility. So we knew we had to make this transition at some point. We were a bit agnostic. We met and worked with pretty much every single OEM out there, both from the major companies out there like Boeing and others as well as the eVTOL manufacturers. And so I would say, it was definitely a sweeping process that I was personally involved in.

And it went from everywhere from OEMs to luxury good companies to private equity, you name it. And it was clear that the right move for us was doing something with Joby because I truly believe that their time to market, capital and technology is going to get them and especially with this transaction to market much sooner than others. As important for the Medical side, I wanted to make sure that we had a partner where there was an actionable strategy in terms of eVTOL because I really think it can change the financial architecture of how we fly surgeons and organs in kind of short to midterm -- short to mid-range flights. So it really was a 2-part decision there.

Got it. Got it. That's helpful and good to hear. Second question, and then I'll get back in queue is around the $7 million of corporate efficiencies you've noted are going to be going away. Can you kind of characterize what these expenses were? Is this personnel that's going to be going to Joby? Is this internal development cost that you're just kind of backing away from? Just any context there would be great.

Ben, this is Matt. So these are just costs that are really associated with the Passenger segment that we're unallocated expenses. So everything from staff cost to IT cost to portion of the lease costs. So several different categories of costs that are closely related to the operation of the Passenger business.

Thank you. This concludes the question-and-answer session. Thank you for your participation on today's conference. This does conclude the program, and you may now disconnect.