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Income Taxes | 12 Months Ended
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Apr. 30, 2025
Income Tax Disclosure [Abstract] |
Income Taxes | 13. Income Taxes The components of net loss before provision for income taxes are as follows:
| April 30, |
| 2025 |  |  | 2024 |
U.S. operations | $ | (105,417 | ) |  | $ | (75,374 | )
Foreign operations |  | (8,262 | ) |  |  | (18,722 | )
Net loss before provision for income taxes | $ | (113,679 | ) |  | $ | (94,096 | )
Prior to the consummation of the IPO, the Company’s business was conducted through Intermediate Holdings and its consolidated subsidiaries. As a result of the Organizational Transactions effected in connection with the IPO, Kestra Medical Technologies, Ltd. became the top holding company, and operates and controls all of the business and affairs and consolidates the financial results of Intermediate Holdings. Kestra Medical Technologies, Ltd. is based in Bermuda and is a resident of Ireland for tax purposes. The Company has subsidiaries in the Cayman Islands, Ireland and the U.S. Under the current laws of Bermuda and the Cayman Islands, the Company is not subject to tax on income. However, the Company and its subsidiaries are subject to taxation in Ireland, the U.S. federal government, and various states. The Company accounts for the provision for income taxes in accordance with ASC 740, Income Taxes, which requires an estimate of the annual effective tax rate for the full year to be applied to the interim period, taking into account year-to-date amounts and projected results for the full year. Due to the current year restructuring effectuated in connection with its IPO, the Company’s effective tax rate varies from the statutory Irish tax rate due to the effect of U.S. federal income taxes, state income taxes and research and development credits. The Company’s effective tax rate could fluctuate from quarter to quarter based on variations in the estimated and actual level of pre-tax income or loss by jurisdiction, changes in enacted tax laws and regulations, and changes in estimates regarding the realizability of deferred tax assets. As of April 30, 2025 and 2024, the Company provided a full valuation allowance against its net deferred tax assets that are not more likely than not to be realized based on the weight of available evidence. For purposes of the reconciliation between the provision (benefit) for income taxes at the statutory rate and the effective tax rate, an Irish 25% rate is applied to pretax income as a result of the following for the year ended April 30, 2025. The U.S. statutory rate of 21% was used for the period ending April 30, 2024 due to the Company’s structure for that year:
| April 30, |
| 2025 |  |  | 2024 |
Tax benefit at U.S. statutory rate | $ | (28,420 | ) |  | $ | (19,760 | )
Non-taxable foreign income |  | 4,719 |  |  |  | (373 | )
State tax (net of federal tax benefit) |  | (4,110 | ) |  |  | (2,325 | )
Non-deductible expenses |  | 3,561 |  |  |  | 719 |
R&D credit (net of reserve) |  | (402 | ) |  |  | (704 | )
Other |  | — |  |  |  | 23 |
Change in valuation allowance |  | 24,787 |  |  |  | 22,444 |
Provision for income taxes | $ | 135 |  |  | $ | 24 |
Significant components of the deferred tax assets and liabilities are as follows:
| April 30, |
| 2025 |  |  | 2024 |
Deferred tax assets |  |  |  |  |
Loss carryforwards | $ | 52,281 |  |  | $ | 34,572 |
Interest carryforward |  | 7,211 |  |  |  | 5,786 |
Accrued liabilities |  | 4,553 |  |  |  | 2,261 |
Operating lease liability |  | 539 |  |  |  | 354 |
Disposable medical equipment supplies |  | 224 |  |  |  | 161 |
U.S. research and development credits |  | 5,517 |  |  |  | 5,116 |
Intangible asset |  | 35,375 |  |  |  | 35,375 |
Share-based compensation |  | 4,998 |  |  |  | — |
Total deferred tax assets | $ | 110,698 |  |  | $ | 83,625 |
Less: valuation allowance for deferred tax assets |  | (103,815 | ) |  |  | (79,028 | )
Net deferred tax assets | $ | 6,883 |  |  | $ | 4,597 |
Deferred tax liabilities |  |  |  |  |
Property and equipment | $ | (6,233 | ) |  | $ | (4,161 | )
Prepaid expenses |  | (533 | ) |  |  | (228 | )
Right-of-use assets |  | (257 | ) |  |  | (284 | )
Total deferred tax liabilities | $ | (7,023 | ) |  | $ | (4,673 | )
Net deferred tax liabilities | $ | (140 | ) |  | $ | (76 | )
The Company does not accrue a deferred tax liability on stock basis of its subsidiaries since the tax basis exceeds the book basis. There are no unremitted foreign earnings. Utilization of some of the federal and state net operating losses and credit carryforwards may be subject to annual limitations due to the change in ownership provisions of the Internal Revenue Code of 1986 (“Internal Revenue Code”) and similar state provisions. The Tax Reform Act of 1986 limits the use of net operating loss and tax credit carryforwards in certain situations where changes occur in the stock ownership of a company. A study has not yet been performed. If there was an ownership change, there could be an annual limitation that may result in the expiration of net operating losses and credits before utilization. In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, carry back opportunities and tax planning strategies in making the assessment. The Company believes it is more likely than not it will not realize the benefits of these deductible differences and has applied a full valuation allowance against them. Net operating losses and tax credit carryforwards as of April 30, 2025 are as follows:
| 2025 |  |  | Expiration Years
Net operating losses, federal | $ | 201,189 |  |  | Indefinite
Net operating losses, state |  | 110,475 |  |  | Various
Tax credits, federal |  | 6,336 |  |  | 2039 - 2043
Net operating losses, foreign |  | 34,307 |  |  | Indefinite
The Company determines whether a tax position is more likely than not to be sustained upon examination based on the technical merits of the position in accordance with ASC 740. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. The following table summarized the activity related to unrecognized tax benefits for the years ended:
| April 30, |
| 2025 |  |  | 2024 |
Unrecognized tax benefits at beginning of year | $ | (774 | ) |  | $ | (696 | )
Additions based on tax positions taken in the current year |  | (45 | ) |  |  | (78 | )
Additions based on tax positions taken in the prior year |  | — |  |  |  | — |
Decreases based on tax positions taken in prior years |  | — |  |  |  | — |
Unrecognized tax benefits at end of year | $ | (819 | ) |  | $ | (774 | )
All of the unrecognized tax benefits as of April 30, 2025 are accounted for as a reduction in deferred tax assets. Due to the valuation allowance, none of the $(819) of unrecognized tax benefits would affect the effective tax rate, if recognized. The Company does not believe it is reasonably possible that the unrecognized tax benefits will significantly change in the next twelve months. The Company recognizes interest and penalties related to unrecognized tax benefits as income tax expense. There were no accrued interest or penalties related to unrecognized tax benefits for the year ended April 30, 2025 or April 30, 2024. The Company does not expect any significant change in the unrecognized tax benefits during the next twelve months. The Company files Irish, U.S. federal and U.S. state income tax returns. The Company is not currently under examination but is open to audit by the I.R.S. and state tax authorities for tax years beginning in 2019. The resolutions of any examinations are not expected to be material to these financial statements. As of April 30, 2025, there are no penalties or accrued interest recorded in the financial statements. On July 4, 2025, the One Big Beautiful Bill Act (2025 US tax reform) was enacted into law. The 2025 US tax reform contains several key tax laws, including extensions and modifications of the Tax Cuts and Jobs Act. In accordance with Accounting Standards Codification (ASC) 740, Income Taxes, the Company is required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring the estimated U.S. deferred tax assets and liabilities. The Company is in the process of assessing the impacts from the 2025 US tax reform.

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