Beyond Air (XAIR) Q2 2027 Earnings Call Transcript

Image source: The Motley Fool.

DATE

Wednesday, Nov. 11, 2026

CALL PARTICIPANTS

• Chief Executive Officer - Robert Goodman
• Chief Financial Officer - Dan Moorhead

TAKEAWAYS

• Revenue -- $2.3 million, representing a record quarterly result and growth of 28% year over year.
• Revenue Growth -- 31% compared to the June 2026 quarter, reflecting accelerated demand for the first-generation LungFit PH system.
• Gross Margin -- 8%, improving from negative 16% in the prior year period due to increased revenue and operational efficiencies.
• Gross Profit -- $200,000, comparing to a gross loss of $300,000 for the same period last year.
• Research and Development Expense -- $1.6 million, a decrease from $2.5 million year over year as development of the second-generation system is mostly complete.
• Selling, General, and Administrative Expense -- $4.6 million, down from $4.9 million in the prior year period due to lower stock-based compensation costs.
• Other Expense -- $2.2 million, an increase from $600,000 driven primarily by higher interest expense and a charge for scrap material.
• Net Loss -- $7.8 million, comparing to a net loss of $7.9 million for the same quarter last year.
• Net Loss Per Share -- $3.76, down from $24.98 per share in the prior year period.
• Cash and Equivalents -- $18.5 million, which includes $4.8 million of restricted cash and $2.7 million in assets held for sale from NeuroNOS Israel.
• CY2026 Revenue Guidance -- $8 million, reaffirmed by management and excluding any revenue contribution from the second-generation system.
• CY2027 Revenue Guidance -- $16 million to $18 million, reaffirmed and including anticipated second-generation system revenue starting in the second quarter.
• Pipeline Growth -- Fourfold increase since the first quarter of 2026, with the U.S. commercial pipeline more than doubling in that time.
• Average Deal Size -- Approximately $250,000, with individual contracts ranging from $30,000 to more than $1 million.
• International Sales -- Reported as one of the highest quarters to date, supported by distribution partnerships covering more than 40 countries.
• Operational Units -- Hundreds of units are currently deployed across dozens of hospital sites in the U.S. market.
• Beyond Cancer Funding -- $700,000 in cash held by the subsidiary as management evaluates potential development partnerships.

Need a quote from a Motley Fool analyst? Email pr@fool.com

RISKS

• Moorhead stated, "The increase in expense was attributed primarily to an increase in interest expense and a charge for scrap material," noting these factors drove other expense to $2.2 million for the quarter.

SUMMARY

Beyond Air, Inc. (NASDAQ:XAIR) reported record quarterly revenue and reaffirmed its financial targets for calendar years 2026 and 2027 as it prepares for the regulatory transition to its second-generation delivery platform. Management stated that the company is currently focused on commercial execution for the first-generation LungFit PH system while moving through the final stages of the FDA review process for its successor. Strategic resource allocation led to the divestiture of the company's controlling interest in NeuroNOS Israel and a pause in the development of the LungFit GO platform for 2027. The company is also transitioning its fiscal year-end from March 31 to Dec. 31 to align with the calendar year.

• CEO Goodman stated that adding transport capability to the second-generation system "will enable us to serve as a single-source nitric oxide provider across routine care and patient transport, which is the current standard across most U.S. hospital systems."
• The company expects to complete its audit readiness process for the second-generation system in mid-December, followed by standard FDA inspections and final approval steps.
• Management built a cushion into the 2027 guidance by excluding revenue from the second-generation system in the first quarter, relying instead on the growth of the first-generation pipeline.
• LungFit GO received FDA breakthrough device designation for the treatment of nontuberculous mycobacterial pulmonary disease, though management does not plan to allocate resources to the program in 2027.
• Beyond Air entered into a definitive agreement for UNIVO Pharmaceuticals Industries to acquire its controlling interest in NeuroNOS Israel to provide the subsidiary with dedicated funding.
• Management noted that the company's win rate is increasing due to its ease of use and positive references from respiratory therapists within its existing hospital customer base.

INDUSTRY GLOSSARY

• iNO: Inhaled nitric oxide, a gas used as a vasodilator to treat respiratory conditions such as persistent pulmonary hypertension.
• LungFit PH: A medical device platform that generates nitric oxide from ambient air for delivery to patients in a hospital setting.
• LungFit GO: A portable nitric oxide generator designed for the treatment of chronic lung infections in home or outpatient settings.
• NTM-PD: Nontuberculous mycobacterial pulmonary disease, a chronic and potentially life-threatening lung infection.
• PMA: Premarket Approval, the FDA process of scientific and regulatory review to ensure the safety and effectiveness of Class III medical devices.
• GPO: Group Purchasing Organization, an entity that helps healthcare providers realize savings by aggregating purchasing volume to negotiate discounts.

Full Conference Call Transcript

Operator: Good afternoon, everyone, and welcome to the Beyond Air Financial Results Call for the quarter ended September 30, 2026. [Operator Instructions] And now I would like to turn the call over to Corey Davis, LifeSci Advisors. Please go ahead.

Corey Davis: Thank you, operator. Good afternoon, everyone, and thank you for joining us. Earlier today, we issued a press release announcing the operational highlights and financial results for Beyond Air's quarter ended September 30, 2026. A copy of this press release can be found on our website, beyondair.net, under the news and Events section. Before we begin, I'd like to remind everyone that we will be making comments and various remarks about future expectations, plans, and prospects which constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Beyond Air cautions that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those indicated.

We encourage everyone to review the company's filings with the Securities and Exchange Commission, including, without limitation, the company's most recent Form 10-Q and Form 10-K, which identify specific factors that may cause actual results or events to differ materially from those described in the forward-looking statements. Additionally, this conference call is being recorded and will be available for audio rebroadcast on our website, beyondair.net. Furthermore, the content of this conference call contains time-sensitive information that is accurate only as of the date of the live broadcast, November 11, 2026. Beyond Air undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call.

With that, I'll turn it over to Robert Goodman, Chief Executive Officer of Beyond Air. Bob, go ahead. The floor is yours.

Robert Goodman: Thanks, Corey, and good afternoon, everyone. I'm pleased to speak with you today and provide an update on what has been a productive and meaningful period for Beyond Air. With me today is Dan Moorhead, our Chief Financial Officer. I'll begin with an update on our recent activities and commercial execution for LungFit PH before turning the call over to Dan to discuss our financial results for the quarter ended September 30, 2026. We'll then open the call for questions. Throughout the third quarter, we continued to focus on positioning the company for its next phase of growth.

As we prepare for the planned commercial launch of our second-generation LungFit PH system pending FDA approval, our priorities remain focused on expanding market penetration, deepening relationships with hospitals and health systems, and growing our commercial pipeline while building on the momentum of our first-generation LungFit PH system. These efforts contributed to record quarterly revenue of $2.3 million in the September quarter, up approximately 28% year-over-year and 31% from the June quarter. We achieved this growth while maintaining financial discipline and prioritizing resources to support commercial execution and preparations for the potential launch of the second-generation LungFit PH.

Underlying these results is the progress we are making in expanding market penetration and converting hospital interest into signed customer agreements that support recurring revenue over multiple years. Our in-house sales team is building these relationships supported by national GPO agreements that broaden our reach across hospitals and hospital systems. Our U.S. commercial pipeline is expanding, reflecting accelerated demand for our first-generation system and strong receptivity to our technology and the operational efficiencies it offers.

We are especially pleased with the pace of new account wins and the rate of renewals, which speak to the acceptance of our innovative technology and delivery of iNO, resulting in exceptional customer satisfaction, which gives us a foundation to build on as we prepare for the potential launch of the second-generation LungFit PH. International distribution is another important opportunity for growth, with partnerships in place covering more than 40 countries, and international sales during the quarter were one of the highest to date. Looking ahead, pending FDA approval, we believe our second-generation system has the potential to substantially expand our market opportunity and accelerate growth.

The system is smaller, has reduced weight, simplified operation, longer service intervals, and expanded operational flexibility. Our PMA supplement seeks expanded FDA labeling that would permit use during patient transport by air and ground. Turning to the regulatory process, our PMA supplement for the second generation of LungFit PH remains under FDA review. We remain encouraged by the progress we're making toward completing the remaining steps of the review process. We expect to complete our audit readiness process in mid-December. The system would then remain subject to FDA inspections and final approval. The timing and outcome of these steps remain subject to the FDA's review. We are excited to be at these final steps of the process.

As I mentioned a minute ago, the second-generation LungFit adds transport capability. This is important as it will enable us to serve as a single-source nitric oxide provider across routine care and patient transport, which is the current standard across most U.S. hospital systems. This will strengthen our competitive position and support broader adoption of our cylinder-free technology. Turning to another development program within our LungFit platform, LungFit GO received FDA breakthrough device designation during the quarter for the treatment of nontuberculous mycobacterial pulmonary disease, or NTM-PD. We believe this designation underscores a significant unmet need in NTM-PD and builds upon clinical data generated with LungFit GO in this patient population.

While we are encouraged by this designation, we do not currently plan to allocate resources to further development of LungFit GO in 2027. Our focus remains on commercial execution for LungFit PH and preparations for the launch of our second-generation system, pending FDA approval. Let me now provide a brief update on our two indirect subsidiaries focused on development programs outside of our core LungFit business. During the September quarter, we entered into a definitive agreement under which UNIVO Pharmaceuticals Industries would acquire our controlling interest in NeuroNOS Israel. The transaction is intended to provide NeuroNOS with dedicated resources, funding, and strategic focus to advance its development programs.

In terms of Beyond Cancer, we're evaluating potential development partnerships and other strategic arrangements to support continued advancements of its pipeline, while maintaining Beyond Air's focus and resource allocation on the commercialization of LungFit PH. Before turning the call over to Dan, I want to emphasize how encouraged we are by the progress we're making with the current LungFit PH offering and the foundation we are strengthening for the potential launch of our second-generation system, pending FDA approval. With this progress, we are reaffirming our revenue guidance of $8 million for calendar year 2026, which excludes revenue from the second-generation system.

We are also reaffirming our revenue guidance of $16 million to $18 million for calendar year 2027, which includes anticipated revenue from the second-generation system pending FDA approval. With that, I'll turn the call over to Dan for a review of our financial results. Dan?

Daniel Moorhead: Thanks, Bob, and good afternoon, everyone. Let me take this time to walk through our financial results for the quarter ended September 30, 2026. Revenue for the quarter was $2.3 million compared with $1.8 million for the same period last year. This represents growth of approximately 28% year-over-year and 31% from the June 2026 quarter. Gross margin for the quarter was approximately 8% compared with negative 16% for the same period last year. Gross profit was $200,000 compared with a gross loss of $300,000 in the prior year quarter. Research and development expenses were $1.6 million compared with $2.5 million for the same period last year.

The decrease was primarily attributed to lower costs related to the second-generation LungFit PH as the majority of the development is complete. Selling, general, and administrative expenses were $4.6 million compared with $4.9 million for the same period last year. The decrease was attributed primarily to lower stock-based compensation costs, partially offset by increased salaries in our sales organization as we build out our commercial team. Other expense for the three months ended September 30, 2026, was $2.2 million as compared to other expense of $600,000 for the three months ended September 30, 2025. The increase in expense was attributed primarily to an increase in interest expense and a charge for scrap material.

Net loss attributed to common stockholders of Beyond Air for the three months ended September 30, 2026, was $7.8 million, or a loss of $3.76 per basic and diluted share, compared with a net loss of $7.9 million, or a loss of $24.98 per basic and diluted share, for the three months ended September 30, 2025. As of September 30, 2026, we reported cash, cash equivalents, restricted cash, and marketable securities of $18.5 million, which includes $2.7 million of cash held by NeuroNOS, which is shown within current assets held for sale on the balance sheet, and also includes $700,000 held by Beyond Cancer. This total also includes $4.8 million of restricted cash.

As a reminder, we are transitioning our fiscal year-end from March 31 to December 31, effective December 31, 2026. We expect to report results for the nine-month transition period ending December 31, 2026, on a Form 10-KT. The revenue guidance Bob discussed is on a calendar year basis. With that, we will now open the call for questions.

Operator: [Operator Instructions] And your first question comes from I-Eh Jen with Laidlaw & Company.

Yale Jen: Just two. The first one is that in terms of the FDA review, given that you are going -- on the go, suppose you will finish the audit readiness by mid-December. And was there any other things that the FDA may look for or simply just an inspection and then they will make decisions and have a follow-up?

Robert Goodman: Yes, it's pretty much just that, Yale. The audit will follow right after we announce our readiness, and as you mentioned, in the middle of December, and nothing that we know that would be in addition to that. So just a standard audit and feedback.

Yale Jen: Okay. Given the time and the holidays to come, presumably, would that be the best scenario? FDA make hopefully positive decisions, maybe in the first quarter, maybe even in the early first quarter of next year.

Robert Goodman: Yeah, I mean that's up to the FDA, as you know, right? But yeah, we're expecting to have a quick response. We've been communicating with them directly with all of our paperwork, couple of questions back and forth. We've satisfied those questions. So we're in great shape there. It's now just the audit part. And the good news is the audit -- it's a quick audit. Used to be up to a five-day period, but because a lot of it is done via paperwork back and forth for a couple of days, the actual audit's only like a day and a half long. And so once that happens, we expect to hear back from them within a few weeks.

And then there's just a signature process. So, yes, to your point in your timeline, that's right around where we're pointing at.

Yale Jen: So. Okay. So maybe lastly, your $16 million to $18 million guidance for next year presumably is based on this assumption, or do you anticipate any possible sort of push out, and if that happens, would that impact on the guidance and things?

Robert Goodman: Yeah, we're sticking with our $16 million to $18 million, and that includes Gen 2 only in the second, third, and fourth quarter. So we do not have in our guidance Gen 2 revenue in that first quarter. We're not expecting to push anything out. And, yes, in fact, our pipeline has grown really, really dramatically over the last couple of quarters. So we've had a really nice increase with our Gen 1 pipeline as well as our new wins there. So we've been planning on that so that's where our coverage has been along the way, and we're not expecting to be pushing anything out, at least at this point of course.

Yale Jen: So you basically built up some cushion in that -- in your guidance?

Robert Goodman: Yes. Yes. We built that just to, as we mentioned that a few months ago, is that we didn't want to expect revenue on Day 1, Q1, but we know the pipeline will be able to spill from 1 quarter, you know, Q4 to Q1 with our real strong Gen 1. So we have Gen 2 coming in, like I said, Q2, 3, and 4.

Operator: Your next question comes from Frank Takkinen with Lake Street Capital Markets. Please state your question.

Frank Takkinen: I was hoping to follow up on your comments, Bob, about some of the record pipeline that you're referencing. Curious if you can put any numbers around that, whether that be kind of percent up year-over-year, quarter-over-quarter, number of units in backlog, just help us understand just how significant that pipeline is right now and when that could start to convert.

Robert Goodman: Yes, sure. So our pipeline from Q1 of this year, it's grown close to fourfold. All right, we actually -- it's more than doubled in the U.S., but what we had done is we did a real sanitation from the legacy team with respect to just some old deals and cleaned up a little bit of pipeline, put a little bit more rigor and definition into our pipeline. So we had grown that, so we had taken it down and then we built it up a bit, but we've now more than doubled it since then. And so, yeah, we're at a nice inflection point with respect to the growth there. Was there another part of that question?

What was that?

Frank Takkinen: Just thoughts around when that could start to translate to revenue.

Robert Goodman: Yeah, so we're already starting to see that translation, in fact. We have the range for next year as mentioned for the $16 million to $18 million. And we have our range within Q1 based off of some of the recent wins we have right now. And as far as our pipeline build, we're really bullish around how these deals are going to be converting. In the quarter we're in now, next quarter, we don't have those yet and we can't obviously share, but, yeah, our win rate is growing. It's increasing, and we're expecting to have that conversion reflected.

So, yes, it's a nice bump up because there's a couple of aspects or reasons for that, not just the increase in the pipeline, but the fact of the matter is there's less competitors in the field right now, so we're expecting just based off of that to have a higher win rate.

Frank Takkinen: Got it. Very helpful. Let's shift over to Gen 2. Once that is through the approval process, how should we think about what is required to get on formulary with the GPOs? I assume the Gen 1 doesn't suffice and you'll have to do some sort of amendment to include the Gen 2, but maybe any clarifying commentary around that would be helpful.

Robert Goodman: Yeah, that's just a quick update with the GPOs. They're really used to doing this. So it's really just an extension of what we have. It's nominal as far as time and effort. And then it's just a matter of -- and really that's it. It's a pretty simple process.

Frank Takkinen: And then just last one from me, and apologies in advance, this is splitting hairs a little bit. I think in the last conference call, the calendar Q2 conference call, we were talking a fair bit about the audit readiness process, and at least at that point in time, it seemed like it was kind of a near-term event that was going to be complete in a few months, and it feels like that maybe took a little bit longer than anticipated. Any additional color related to maybe what happened there and why that might have taken a little bit longer?

Robert Goodman: Yeah, it's not necessarily that it took longer. You know, there's a lot of rigor that's involved with this. You know, you have the install qualification aspects of a build of a product to the operational qualifications, building up to the performance and the process readiness. We didn't underestimate anything. In fact, if anything, we knew where we'd be and it would be in this part of the second half of the year, and we're expecting it to be right around where we're at now. But no, nothing was slowed down or anything like that. Everything actually was just, we did a lot of repeatability testing and a lot more stability testing.

We wanted to make sure that all of our testing was tight. And so no, nothing, no surprise. Let's put it that way. Yes.

Operator: [Operator Instructions] And your next question comes from Mike King with Rodman & Renshaw.

Michael King: Hey guys, thanks for taking the question. I also want to drill down a little bit more on this FDA review process, Bob, that we met with you and Dan a couple of weeks ago. We were discussing the necessity for FDA to get comfortable that the units could be used in ambulances and on helicopters and that kind of thing. Is that still part of it, or is there something new that's arisen, or is this all part of the same process that you're going through with the auditing?

Robert Goodman: Yeah, no, nothing's new. That was part of our PMA supplement paperwork build as well as our testing. So we did a lot of testing on altitude testing, so we worked all of that actually months ago. That was part of this process and that's all been documented in part of our paperwork. So that's actually all behind us and this audit part is really just the back end of the high-level assembly assessment and audit. But that's all done. We're completely done with that and we're really happy with how that all worked out. So we're past all that.

Michael King: And are there any personnel limitations or other aspects of the device division at FDA that are making turnaround times longer than you would anticipate?

Robert Goodman: I don't think so. I mean, what I do know is on the speed side, it's something that's going to bode well for us is that our R&D facility is an hour and a half away from our contract manufacturer. So what ends up happening when you get into the audit phase, often for a situation like this when you're dealing with a medical device, you could have a research and development division that's in California, but the contract manufacturer could be in Massachusetts and then you have to deal with two different audit teams in order to manage that, or it could be an overseas and U.S. location where ours, we're an hour and a half away from each.

So this is actually going to, if anything, speed up the audit process because it will be one team. And, again, that day-and-a-half process really is something that works well for us.

Michael King: Okay. And then just real quick on the win rate side, can you just talk about what's responsible, what's driving that? Is it the GPO partnerships, the hospitals better understanding of the device, and maybe you can talk a little bit about the win rate.

Robert Goodman: Yes, I mean our technology has been really well received and that's what is the ease of use with respect to our product is just really well received. So our customers are really happy with that, they're really happy with how easy it is to use. And that's helping us with win rates because as you start growing your customer base -- and remember, we just started putting this product out a few years ago, the first-generation product. The first year there was a few sites that were using the product and now we have dozens and dozens of hospitals with that many more sites.

So we have a couple hundred units that are out there that are being used and we have so many more referenceable customers that are out there that are speaking on our behalf and that's really helping because people are saying, hey, listen, it's not just that this is a real innovative product, it's actually really easy to use on top of being innovative. You know, as you know, this is a drug that's being delivered through a medical device that we're creating out of thin air.

And, well, that's all well and good, but if you're not doing that easily for the customer, all that is really kind of a catchy phrase, and we're able to kind of win on both ends there. And that reflects and goes right to the customer, and the customer sees that and that's what's helping our win rates because, as we're getting into conversations with hospital systems that might be across the city or across the state or it might be a respiratory therapist that knows somebody in that hospital across the country, they're calling each other and they're hearing really good things about us. And that's why we're winning. So, yeah, it's pretty good stuff.

Michael King: Got you. Also, can you say, I don't know if revenue is still kind of small, so I don't know if it's really relevant right now, but can you say anything about your average ticket size? Is your average sale increasing, or is it more unit volume that is driving the revenues?

Robert Goodman: Yeah, so it's two things. It's the volume and it's the international business that's driving our revenue up right now. Our average deal size is about the same, and I could say roughly it's right around $250,000 is the average deal size. We have these deals anywhere from $30,000 to north of $1 million and can go way higher than that, and we're working on a number of larger deals, but the net of it is our average deal size is about $250,000. We do know, when we have our next-generation product, we're going to be competing for much larger deals, which will definitely increase our overall deal size.

So our average deal size will be bumping up significantly from $250,000. Our international business is really helping as well as far as revenue because that is immediate recognized revenue. We get direct sales internationally. We get direct sales also in the VA system. We've had a couple of recent wins there as well, and that drops right to the revenue line there, different than, of course, as you know, the U.S. business, which is a subscription model. But yes, that's the net of it.

Operator: Thank you, and we have reached the end of the question and answer session. I will now turn the call over to Robert Goodman for closing remarks.

Robert Goodman: All right, I want to thank everybody for joining the call today, for all your support and all your interest, and look forward to speaking with everybody next quarter. Have a great night. Thank you.

Operator: Thank you. All parties may now disconnect.

This article is a transcript of this conference call produced for The Motley Fool. While we strive for our Foolish Best, there may be errors, omissions, or inaccuracies in this transcript. Parts of this article were created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. As with all our articles, The Motley Fool does not assume any responsibility for your use of this content, and we strongly encourage you to do your own research, including listening to the call yourself and reading the company's SEC filings. Please see our Terms and Conditions for additional details, including our Obligatory Capitalized Disclaimers of Liability.

The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.