Strata (SRTA) Q3 2026 earnings review
Strata's flight profits recover, while recent acquisitions carry clinical sales
Strata, an air transport and surgical provider for organ transplants, repaired its flight margins and rebuilt its cash pile while underlying growth cooled. Pro forma revenue (which includes acquired businesses in both periods) rose 8% from a year ago, as last spring's clinical acquisitions offset a 3% drop in transport sales. Co-chief executive Melissa Tomkiel said transport gross margin topped the 20% target ahead of schedule, helping generate a record $9 million in free cash flow.
| Pro forma revenue (including acquisitions in both periods) | +8.5% from a year ago (reported revenue +50.3% to $74.1M) |
|---|---|
| Logistics gross margin | 20.8% 18.4% last quarter (21.5% a year ago) |
| Free cash flow | $8.6M $2.9M last quarter |
| Full-year 2026 outlook | Unchanged middle of the range: $290M revenue, $34M EBITDA excluding one-offs |
⚖️ Verdict: 🟢 Bullish
The story got better because the two biggest worries from last quarter — transport profitability and cash — both turned around. Transport gross margin jumped 2.4 percentage points from the second quarter to 20.8%, and a $15 million payout from the 2025 passenger unit sale lifted cash and short-term investments to $42 million, funding a new buyback plan. One caution: the Clinical unit's sequential gain came mostly from recent acquisitions rather than existing operations, and its gross margin slipped on staffing costs.
The question now is whether the Clinical division can grow on its own once this year's acquisitions are absorbed. Either new surgeon services and hospital wins drive double-digit underlying growth, or the business turns out to be a roll-up that needs constant deal-making to expand. The fourth-quarter filing's breakdown of acquired versus underlying clinical sales will tell.
🐂 Bull Case
Logistics Gross Margin Rebounded Above 20% Early
Logistics, Strata's air and ground organ transport business, saw its gross margin fall from 21.5% in late 2025 to 18.4% last quarter. Management had lowered its second-half target to 18.5–20.0% and pushed a full recovery into 2027. Instead, the margin jumped 2.4 percentage points from the second quarter to 20.8%.
"Tactically, we are happy to see Logistics gross margins back up above our 20% target faster than we anticipated," co-chief executive Melissa Tomkiel said. That recovery came even though transport sales fell 6.9% from the second quarter. However, the margin remains 0.7 percentage points below last year because of fuel pass-through billing and shorter flights.
What to watch: fourth-quarter Logistics gross margin against that 20% mark. Holding above 20% for a second straight quarter would confirm that fleet changes fixed the unit's profitability.
Joby Payment and Record Cash Fund New Buyback
Spending on three acquisitions in the second quarter had drained cash and short-term investments to $22.8 million by June. This quarter, the medical transport group generated a record $8.6 million in free cash flow and collected its first performance payout from the 2025 passenger unit sale to Joby Aviation, selling those shares for $15.3 million.
Cash and short-term investments climbed back to $41.6 million, and co-chief executive Will Heyburn announced a $20 million share repurchase plan to "accelerate our target pace of acquisitions as well as opportunistically return cash to shareholders through our new buyback program". Up to $27.5 million in further Joby payouts could arrive by early 2027, easing past worries about cash running low.
What to watch: cash and short-term investments at year-end alongside fourth-quarter share repurchases. Collecting the remaining $27.5 million from Joby by the first quarter of 2027 would fund new clinical deals at mid-single-digit cash flow multiples without tapping debt.
Lower Overhead and Clinical Mix Lifted Operating Cash Profit
Strata wants its higher-margin Clinical division — surgical organ recovery and hospital heart-lung machine staffing — to carry a larger share of the company. Clinical reached 39.4% of total revenue in the third quarter, up from 33.5% in the second, while overhead costs excluding one-offs shrank by 3.1 percentage points of revenue from a year ago to 12.0%.
Because Clinical carries a 25.6% gross margin and overhead fell $0.2 million from the second quarter even after integrating three acquired businesses, EBITDA excluding one-offs more than doubled from a year ago to $9.6 million. Its margin reached 13.0% of revenue, matching management's 2029 target three years early, though the release did not update industry adoption of normothermic regional perfusion (NRP, a technique for preserving donor organs).
What to watch: overhead costs excluding one-offs as a share of revenue in the fourth quarter. Staying near 12% would keep the EBITDA margin excluding one-offs at or above the 13.3% rate implied by the full-year outlook.
🐻 Bear Case
Acquisitions Carried Clinical While Underlying Growth Slowed
Management attributes Clinical expansion to market share gains and cross-selling its integrated "one call" organ recovery service. Clinical revenue rose 20.3% from the second quarter to $29.2 million, but the company noted this was "driven primarily by the full quarter impact of recent acquisitions as well as modest organic sequential growth".
- Pro forma revenue growth (assuming all 2025 and 2026 acquisitions happened on January 1, 2025): 8.5% from a year ago, down from 14.9% in the second quarter
- Clinical gross margin: 25.6%, down 0.5 percentage points from 26.1% in the second quarter
- Transplant Clinical share of Clinical revenue: 52.1%, up from 51.6% in the second quarter
In the second quarter, Clinical sales from businesses already owned grew 15.1% sequentially; slowing to a modest gain shows the roll-up is doing the heavy lifting. Meanwhile, Clinical gross margin dipped because of "investments in staff and training to support future growth", moving away from the 27–28% second-half target management gave last quarter.
What to watch: fourth-quarter Clinical gross margin and the 10-Q breakdown of sales from acquired businesses. A margin below 27% would mean staffing costs are eating into the profit benefit of the Clinical shift.
Transport Sales Shrank From a Year Ago
Logistics still brings in 60.6% of Strata's revenue, and its top line is now shrinking. Segment sales fell 3.5% from a year ago to $44.9 million and dropped 6.9% from the second quarter, which the healthcare provider said was "towards the high end of our guidance framework and consistent with seasonal transplant industry volume declines".
The company also pointed to an "increase in fuel surcharge pass through revenue, and a reduction in average distances between donor and recipient" across the US transplant system. When hospitals match organs with closer patients, Strata flies shorter routes and earns less on its owned jets, a pressure that has persisted for four straight quarters.
What to watch: fourth-quarter Logistics revenue against the second quarter's $48.2 million level. Failing to rebound near that mark would show that customer losses and shorter flights are outweighing new hospital contracts.
Deal Accounting and Stock Pay Keep Net Income Negative
While management highlights record cash flow, standard accounting profit remains deep in the red because buying clinical businesses carries heavy non-cash and deal-related charges. Net loss from continuing operations was $7.6 million, or 10.3% of revenue, as four expense items wiped out operating gains.
- Amortization of intangible assets (writing down acquired customer lists and contracts): $5.5 million, up 6.7 percentage points of revenue from a year ago to 7.4%
- Stock-based compensation: $5.0 million, up 3.4 percentage points of revenue from a year ago to 6.8%
- Earn-out liability revaluation: a $2.6 million charge as acquired units hit performance targets
- Sale of Joby Aviation stock: a $1.3 million realized loss upon cashing out the earn-out shares
What to watch: future earn-out revaluation charges and cash payouts in the fourth quarter. Current liabilities now include $29.9 million of other short-term obligations, meaning past acquisitions will soon require cash settlements.
💲 Other KPIs
Uncollected customer bills fell from $43.4 million in the second quarter to $42.8 million, generating $1.4 million of operating cash inflow in the third quarter. Since year-end 2025, receivables have risen 7.0% by our math, staying well behind the company's acquisition-driven revenue expansion.
Weighted-average diluted shares rose 7.1% from a year ago and 2.4% from the second quarter by our math. The organ transport provider issued stock to help pay for the Keystone and HLT-NRP acquisitions and to pay employees, though the new $20 million buyback plan aims to offset this dilution.
Spending on property, equipment and software fell from $2.8 million in the second quarter and $5.5 million in the first quarter to $0.8 million, or 1.1% of revenue by our math. Strata bought no aircraft or engines for a second straight quarter, allowing nearly all operating cash flow to become free cash flow.
🔮 Guidance
Unchanged. The full-year plan still points to 47.1% reported growth at the middle of the range, or $295–305 million on a pro forma basis. By our math, that leaves $76.0 million for the fourth quarter, or 13.8% growth from a year ago as the company laps the first full quarter of its Keystone acquisition. Strata raised this target twice earlier before holding it steady.
Unchanged. Management kept its full-year target for EBITDA excluding one-offs at $34.0 million in the middle of the range (or $36–38 million pro forma). By our math, that leaves $10.1 million for the fourth quarter, representing a 13.3% margin against implied fourth-quarter sales, up from 13.0% in the third quarter.
Unchanged. The outlook still calls for $18.5 million at the middle of the range. After generating $8.6 million in the third quarter, nine-month cash flow before aircraft purchases reached $13.6 million by our math. That leaves $4.9 million needed in the fourth quarter to hit the middle of the range, making the full-year goal easily reachable.
❓ Key Questions
What was Clinical sales growth excluding this year's acquisitions?
Clinical revenue rose 20.3% from the second quarter, but the release said recent deals drove most of the gain while underlying growth was modest. In the second quarter, underlying Clinical sales grew 15.1% sequentially; the exact third-quarter figure will show how fast it slowed.
Does management still expect 27–28% Clinical gross margins?
Last quarter, management forecast second-half Clinical gross margins of 27–28%. In the third quarter, the margin slipped 0.5 percentage points to 25.6% on staffing and training investments, leaving a steep climb for the fourth quarter if that target still holds.
What is inside the $29.9 million of other current liabilities?
Other current liabilities jumped from zero at year-end 2025 to $29.9 million in September, while non-current liabilities fell by $17.7 million. How much of this balance is acquisition earn-outs due in cash over the next twelve months?
Did NRP adoption among DCD donors keep rising?
In the first two quarters of 2026, management reported that normothermic regional perfusion (NRP) reached 57% and then 59% of donation-after-circulatory-death (DCD) donors. The third-quarter release omitted this figure; an update will show if the main industry tailwind is still strengthening.