Outset Medical Reports Unaudited Fourth Quarter and 2023 Revenue, Provides 2024 Revenue and Non-GAAP Gross Margin Guidance

Rhea-AI Summary

Outset Medical, Inc. (OM) reported unaudited revenue for Q4 and fiscal year ended December 31, 2023, with revenue totaling $30.5 million in Q4 and $130 million for the year, a 13% increase from 2022. The period-end installed base increased 34% year-over-year to approximately 5,350 Tablo Hemodialysis Systems, with consumable revenue growing nearly 50% year-over-year. Outset's cash position is now approximately $270 million. 2024 revenue is expected to be between $145 million to $153 million, growing 12% to 18% over unaudited revenue for 2023.

Insights

Financial Analyst

The reported 13% revenue growth for Outset Medical, Inc. in 2023, compared to 2022, indicates a solid year-over-year performance, particularly in a medical technology sector where innovation and market adoption can significantly influence financial outcomes. The 34% increase in the installed base of Tablo Hemodialysis Systems is a strong indicator of market acceptance and growth potential. It's also worth noting that the 50% growth in consumable revenue suggests a successful strategy in driving recurring revenue streams, which is a key factor in financial sustainability and can lead to more predictable future earnings.

The company's liquidity position, bolstered by the $66.5 million borrowing, alongside their existing cash reserves, provides them with a robust balance sheet. This financial flexibility is crucial for funding ongoing operations and further growth initiatives. Investors should consider the implications of this capital structure on the company's ability to invest in research and development, expand market presence and potentially improve competitive positioning.

Regarding the 2024 revenue guidance, the projected growth rate of 12% to 18% is in line with the previous year's trend, which might be viewed as a conservative but stable outlook in the current economic environment. The expected expansion of the non-GAAP gross margin to the low-30% range indicates operational efficiencies and cost management strategies that could lead to improved profitability.

Medical Technology Market Analyst

The Tablo Hemodialysis System's market penetration, particularly in acute and sub-acute care settings, demonstrates the product's alignment with healthcare providers' needs for mobile and integrated dialysis solutions. The 50% recurring revenue from consumables is a testament to the system's ongoing utility and the company's successful business model that leverages both equipment sales and consumable supplies.

Outset's financial guidance for 2024 reflects confidence in the continued adoption of the Tablo system and its consumable products. The healthcare sector's increasing focus on in-home care and personalized medicine could serve as tailwinds for Outset's home provider segment. The ability to capture a larger share of the dialysis market, currently dominated by traditional, non-mobile systems, may provide Outset with a competitive edge and contribute to its revenue growth and market share expansion.

The anticipated gross margin improvements suggest that Outset is achieving economies of scale and possibly benefiting from manufacturing and operational optimizations. Stakeholders should monitor how these improvements impact overall profitability and the company's ability to reinvest in innovation and market expansion strategies.

Healthcare Economist

Outset Medical's performance and guidance must be contextualized within the broader dialysis market, which is experiencing shifts due to technological advancements and changing healthcare policies that favor cost-effective and patient-centric care models. The company's focus on reducing the cost and complexity of dialysis through innovation is aligned with these market trends and could drive demand for their products.

The financial health of Outset, particularly its cash position and access to capital, allows it to navigate the complexities of the healthcare market, which often includes lengthy reimbursement cycles and significant regulatory hurdles. The company's ability to sustain and grow its revenue while expanding margins could be indicative of effective management and a strong value proposition of its Tablo system.

Long-term, Outset's success will depend on its ability to maintain technological leadership, manage operational costs and navigate the regulatory landscape. The company's financial guidance suggests a trajectory of growth, but it will be important to track how external factors such as healthcare reforms, competitive pressures and economic conditions could influence its performance.

SAN JOSE, Calif.--(BUSINESS WIRE)-- Outset Medical, Inc. (Nasdaq: OM) (“Outset”), a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis, today reported unaudited revenue for the fourth quarter and fiscal year ended December 31, 2023, and provided 2024 financial guidance.

Unaudited Fourth Quarter and Year End Results, and Recent Highlights

• Revenue in the fourth quarter totaled $30.5 million, bringing revenue for 2023 to $130 million, a 13% increase compared to $115 million in 2022.
• Period-end installed base increased 34% year-over-year to approximately 5,350 Tablo® Hemodialysis Systems, including approximately 4,050 with acute- and sub-acute care providers and 1,300 with home providers.
• Consumable revenue grew nearly 50% year-over-year driven by strong utilization of Tablo consoles in the acute and home settings, and contributing to recurring revenue of more than 50% of total revenue in 2023.
• On January 2, the Company reported borrowing $66.5 million under its term loan agreements with SLR Investment Corp., adding to its balance as of December 31, 2023 of $207 million in cash, cash equivalents, short-term investments and restricted cash. With this additional funding, Outset’s cash position is now approximately $270 million.

“We enter 2024 with a truly differentiated offering, scale in the acute setting, recurring revenue exceeding 50% of total revenue for the year and a strengthened balance sheet to fund our continued growth,” said Leslie Trigg, Chair and Chief Executive Officer of Outset. “As the only fully integrated mobile dialysis device, Tablo’s value continues to resonate with providers and patients from the ICU to the home.”

2024 Guidance

Outset expects 2024 revenue to be between $145 million to $153 million, growing 12% to 18% over unaudited revenue for 2023 based on the assumptions previously disclosed. Non-GAAP gross margin is expected to expand to the low-30% range for the full year 2024 and exit the year in the mid-30% range for the fourth quarter of 2024.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements include, but are not limited to, statements about the Company’s unaudited results of operations, including fourth quarter and full year 2023 revenue, statements about possible or assumed future results of operations and financial position, including expectations regarding projected revenues and non-GAAP gross margin, profitability and outlook; statements regarding the Company’s overall business strategy, plans and objectives of management; the Company’s expectations regarding the market sizes and growth potential for Tablo and the total addressable market opportunities for Tablo, continued execution of the Company’s initiatives designed to expand gross margins; the Company’s ability to respond to and resolve any reports, observations or other actions by the Food and Drug Administration or other regulators in a timely and effective manner; as well as the Company’s expectations regarding the impact of macroeconomic factors on the Company, its customers and suppliers. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results or other events to differ materially from those contemplated in this press release can be found in the Risk Factors section of the Company’s public filings with the Securities and Exchange Commission, including its latest annual and quarterly reports. Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of their date and, except to the extent required by law, the Company undertakes no obligation to update these statements, whether as a result of any new information, future developments or otherwise.

Certain financial information contained in this press release is preliminary, unaudited, and subject to change or adjustment in connection with the completion of the Company’s quarter and year-end closing processes and the preparation of its audited financial statements for the fiscal quarter and year ended December 31, 2023, which will be contained in the Company’s related Annual Report on Form 10-K.

About Outset Medical, Inc.

Outset is a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis. The Tablo® Hemodialysis System, FDA cleared for use from the hospital to the home, represents a significant technological advancement that transforms the dialysis experience for patients and operationally simplifies it for providers. Tablo serves as a single enterprise solution that can be utilized across the continuum of care, allowing dialysis to be delivered anytime, anywhere and by anyone. The integration of water purification and on-demand dialysate production enables Tablo to serve as a dialysis clinic on wheels, with 2-way wireless data transmission and a proprietary data analytics platform powering a new holistic approach to dialysis care. Tablo is a registered trademark of Outset Medical, Inc.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240108847708/en/

Jim Mazzola

Vice President, Investor Relations

jmazzola@outsetmedical.com

Source: Outset Medical, Inc.

FAQ

What is the ticker symbol for Outset Medical, Inc.?

The ticker symbol for Outset Medical, Inc. is OM.

What was Outset Medical, Inc.'s revenue for the fourth quarter of 2023?

Outset Medical, Inc. reported revenue of $30.5 million for the fourth quarter of 2023.

What is Outset Medical, Inc.'s 2024 revenue guidance?

Outset Medical, Inc. expects 2024 revenue to be between $145 million to $153 million, growing 12% to 18% over unaudited revenue for 2023.

How much did Outset Medical, Inc.'s cash position increase by?

Outset Medical, Inc.'s cash position increased to approximately $270 million.

What is the percentage increase in the period-end installed base for Outset Medical, Inc.?

The period-end installed base for Outset Medical, Inc. increased by 34% year-over-year to approximately 5,350 Tablo Hemodialysis Systems.