KESTRA MEDICAL TECHNOLOGIES, LTD. Income Taxes Disclosure
13. Income Taxes
The components of loss before income taxes are as follows:
|
2026 |
|
|
2025 |
|
||
U.S. Operations |
$ |
(116,148 |
) |
|
$ |
(105,417 |
) |
Foreign Operations |
|
(15,171 |
) |
|
|
(8,262 |
) |
Total |
$ |
(131,318 |
) |
|
$ |
(113,679 |
) |
In 2025, the Company completed its restructuring in connection with its initial public offering. The Company’s parent company is based in Bermuda and is a resident for Irish tax purposes. Its subsidiaries are 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.
As a result of the restructuring completed in connection with the initial public offering, 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, 2026 and 2025, the Company provided a full valuation allowance against its net deferred tax assets that we believe, based on the weight of available evidence, are not more likely than not to be realized.
Income tax expense for the year ended April 30, 2026 differs from the amount of income tax determined by applying the applicable Irish statutory tax rate to pretax income as a result of the following differences. For purposes of the reconciliation between the provision (benefit) for income taxes at the statutory rate and the effective tax rate, an Irish 12.5% rate is applied to pretax income as a result of the following for the year ended April 30, 2026:
|
Year Ended April 30, 2026 |
|
|||||
|
Amount |
|
|
Percentage |
|
||
Irish Statutory Tax Rate |
$ |
(16,415 |
) |
|
|
12.5 |
% |
Foreign Tax Effects |
|
|
|
|
|
||
US |
|
(9,873 |
) |
|
|
7.5 |
% |
State Tax Provision (net of Federal Benefit) |
|
(2,871 |
) |
|
|
2.2 |
% |
Other |
|
503 |
|
|
|
(0.4 |
%) |
Non-deductible Expenses |
|
|
|
|
|
||
Stock-Based Compensation |
|
6,656 |
|
|
|
(5.1 |
%) |
Other |
|
696 |
|
|
|
(0.5 |
%) |
Tax Credits |
|
|
|
|
|
||
R&D Credit |
|
(395 |
) |
|
|
0.3 |
% |
Other |
|
(155 |
) |
|
|
0.1 |
% |
Change in Valuation Allowance |
|
22,148 |
|
|
|
(16.9 |
%) |
|
$ |
294 |
|
|
|
(0.2 |
%) |
As previously disclosed for the year ended April 30, 2025, prior to the adoption of ASU 2023-09, income tax expense differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income as a result of the following differences:
|
2025 |
|
|
Tax provision (benefit) at statutory rate |
$ |
(28,420 |
) |
Foreign Rate Differential |
|
4,719 |
|
State Tax Provision (net of Federal Benefit) |
|
(4,110 |
) |
Non-deductible Expenses |
|
3,561 |
|
R&D Credit |
|
(402 |
) |
Other |
|
- |
|
Change in Valuation Allowance |
|
24,787 |
|
|
$ |
135 |
|
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Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | Jul 14, 2026 | Showing above |
| 2025 | Jul 17, 2025 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.