Beyond Air, Inc. reported significant revenue growth and operational improvements during its third quarter fiscal 2026 earnings call, as the company continues to expand commercial adoption of its LungFit PH system. Revenue grew 105 percent year-over-year to $2.2 million, driven by expanded adoption of the first-generation LungFit PH system across more than 45 hospitals, according to company management.
The medical device manufacturer also announced a strategic divestiture of its NeuroNOS subsidiary to XTL Biopharmaceuticals, allowing the company to focus resources on core commercial operations while retaining a 19.9 percent equity stake. Additionally, Beyond Air completed a $5 million financing in January 2026 and secured a $32 million equity line of credit to support commercial readiness for its next-generation system.
Strong Customer Retention Supports LungFit PH Expansion
Customer retention for the LungFit PH system exceeds 90 percent, with over half of the current customer base secured under multiyear agreements, providing a stable foundation for future conversion to the second-generation system. The company’s commercial strategy has shifted toward high-priority hospitals that are likely to adopt the first-generation system immediately and expand usage once the transport-compatible Gen II system receives regulatory approval.
Operating expenses were reduced by 36 percent year-over-year, reflecting disciplined cost-cutting in selling, general and administrative expenses and the completion of major research and development spending for the Gen II regulatory filing. Meanwhile, international expansion reached 40 countries, with management noting a transition from initial device placement to recurring revenue from accessory reorders.
Second-Generation System Poised for FDA Review
The FDA decision for the second-generation LungFit PH system is expected before the end of calendar 2026, subject to regulatory review and contract manufacturer inspections. The Gen II system is designed to expand the addressable market by introducing compatibility with air and ground transport, a key feature requested by clinicians treating patients with pulmonary hypertension.
Management expressed high confidence in the regulatory timeline, stating there are no major regulatory hurdles and all reliability testing requirements have already been met. The primary gating factor is the completion of work at the contract manufacturer to allow for a final FDA inspection, according to company executives.
Improved Margins Expected with Next-Generation Technology
Gen II system reliability testing has surpassed the 3,000-hour mark, which is expected to triple the service interval compared to Gen I and improve long-term gross margins. Management expects the Gen II system to improve gross margins, driven by significantly lower service requirements as the service interval increases from 10 months to at least 30 months.
In contrast, Gen I margins are expected to stabilize in the 50 percent to 60 percent range, depending on final market pricing dynamics. However, management anticipates that overall cash burn will continue to decline as revenue grows, though inventory building for the Gen II launch may temporarily impact cash flow.
Veterans Affairs Network Provides Strategic Entry Point
Beyond Air achieved its first commercial sale to a VA Medical Center via partner TrillaMed, establishing a foothold in the largest U.S. healthcare network. Management clarified that products are offered through the ECAD catalog, allowing direct access for VA customers outside of traditional request for proposal processes.
The initial sale to a single VA hospital serves as a critical entry point for broader adoption across the entire federal network. Additionally, the typical sales cycle remains six to nine months, though highly organized hospitals can complete evaluations in four to five months, according to management.
Financial Runway Extended Through 2027
Current capital resources, including recent equity financing and credit lines, are projected to provide a cash runway into calendar year 2027 and potentially to profitability. The company completed a 1-for-20 reverse stock split effective July 14, 2025, which is reflected in the reported net loss of $0.85 per share for the quarter.
Phase Ib oncology studies for Beyond Cancer remain a strategic priority, but full funding commitment is contingent on reaching a more comfortable path to profitability. Management is mitigating wait-and-see behavior among potential customers by focusing Gen I sales on non-transport clinical settings, while positioning Gen II specifically for transport-heavy requirements.
The company’s immediate focus remains on securing FDA approval for the second-generation LungFit PH system before year-end 2026, though the exact timing depends on completion of contract manufacturer inspections and final regulatory review.
