Outset Medical, Inc. (Nasdaq: OM) (“Outset” or the “Company”), a
medical technology company pioneering a first-of-its-kind
technology to reduce the cost and complexity of dialysis, today
reported financial results for the second quarter ended June 30,
2024.
“During the quarter, the number of treatments performed each
month on Tablo continued at record levels, as utilization remained
high and gross margin materially expanded as it has each quarter
for more than 3 years,” said Leslie Trigg, Chair and Chief
Executive Officer. “These results reflect the strength and
differentiation of Tablo and the positive impact it is having on
the lives of patients and providers.
“At the same time, new console placements were below our
expectations and will be lower than we originally forecasted for
the year. We are taking clear steps to improve our execution and
grow the business over the long term to bring the benefits of Tablo
to even more providers and dialysis patients.”
Second Quarter 2024 Financial Results
Revenue for the second quarter was $27.4 million compared to
$36.0 million in the second quarter of 2023, driven by a decline in
product revenue to $19.2 million. Service and other revenue was
$8.2 million, an increase of 21.5% compared to $6.7 million in the
second quarter of 2023. Recurring revenue from the sale of Tablo
cartridges and service increased by 24% as compared to the
prior-year period.
Total gross profit was $9.8 million, compared to $7.7 million
for the second quarter of 2023. Total gross margin was 35.7%,
compared to 21.4% in the second quarter of 2023. On a non-GAAP
basis, gross margin improved to 37.3% from 22.5% in the second
quarter of 2023. Product gross profit was $8.7 million, compared to
$7.1 million in the second quarter of 2023. Product gross margin
was 45.1%, compared to 24.3% in the second quarter of 2023. Service
and other gross profit was $1.1 million, compared to $0.6 million
in the second quarter of 2023. Service and other gross margin was
13.6%, compared to 8.7% in the second quarter of 2023.
Operating expenses declined 21% from the prior-year period to
$40.5 million, including research and development (R&D)
expenses of $9.7 million, sales and marketing (S&M) expenses of
$18.1 million, and general and administrative (G&A) expenses of
$12.7 million. This compared to operating expenses of $51.2 million
in the second quarter of 2023, including R&D expenses of $14.9
million, S&M expenses of $25.0 million, and G&A expenses of
$11.3 million.
Excluding stock-based compensation expense and severance and
related charges, net of adjustments to compensation accrual,
non-GAAP operating expenses were $31.2 million, including R&D
expenses of $7.5 million, S&M expenses of $15.5 million, and
G&A expenses of $8.2 million.
Net loss was $34.5 million, or $(0.66) per share, compared to
net loss of $44.0 million, or $(0.90) per share, for the same
period in 2023. On a non-GAAP basis, net loss was $24.7 million, or
$(0.47) per share, compared to non-GAAP net loss of $33.9 million,
or $(0.69) per share for the same period in 2023.
Total cash, including restricted cash, cash equivalents and
short-term investments, was $198.2 million as of June 30, 2024.
Full Year 2024 Financial Guidance
Outset now expects 2024 revenue to be approximately $110
million, revised from a prior range of $145 million to $153
million, and non-GAAP gross margin to be in the low-to-mid 30%
range, revised from prior guidance in the low-30% range for 2024
and exiting the year in the mid-30% range for the fourth
quarter.
Webcast and Conference Call Details
Outset will host a conference call today, August 7, 2024, at
2:00 p.m. PT / 5:00 p.m. ET to discuss its second quarter 2024
financial results. Those interested in listening to the conference
call may do so by registering online. Once registered, participants
will receive dial-in numbers and a unique pin to join the call.
Participants are encouraged to register more than 15 minutes before
the start of the call. A live webcast of the conference call will
be available on the Investor Relations section of the Company's
website at https://investors.outsetmedical.com. The webcast will be
archived on the website following the completion of the call.
Use of Non-GAAP Financial Measures
The Company may report non-GAAP results for gross profit/loss,
gross margin, operating expenses, operating margins, net
income/loss, basic and diluted net income/loss per share, other
income/loss, and cash flows. These non-GAAP financial measures are
in addition to, and not a substitute for, or superior to, financial
measures calculated in accordance with GAAP. As listed in the
itemized reconciliations between GAAP and non-GAAP financial
measures included in this press release, the Company’s GAAP
financial measures include stock-based compensation expense, as
well as severance and related charges net of the reversal of
compensation accruals for impacted employees. Stock-based
compensation is a non-cash expense, and severance and related
charges arise outside the ordinary course of continuing operations
and are not reflective of the Company's current operating
performance. As such, management has excluded the effects of these
items in non-GAAP measures to assist investors in analyzing and
assessing past and future operating performance and
period-to-period comparisons. There are limitations related to the
use of non-GAAP financial measures because they are not prepared in
accordance with GAAP, may exclude significant expenses required by
GAAP to be recognized in the Company’s financial statements, and
may not be comparable to non-GAAP financial measures used by other
companies. The Company encourages investors to carefully consider
its results under GAAP, as well as its supplemental non-GAAP
information and the reconciliation between these presentations, to
more fully understand its business. Reconciliations between GAAP
and non-GAAP results are presented in the Appendix A of this press
release.
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 possible or assumed
future results of operations and financial position, including
expectations regarding projected revenues, gross margin, operating
expenses, capital expenditures, cash burn, cash position,
profitability and outlook; statements regarding the anticipated
impacts and benefits of the Company’s cost reduction actions,
initiatives to optimize the commercial organization and
restructurings; 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.
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.
Outset Medical, Inc.
Condensed Statements of
Operations
(in thousands, except per share
amounts)
(unaudited)
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Revenue:
Product revenue
$
19,238
$
29,330
$
39,666
$
57,109
Service and other revenue
8,150
6,710
15,890
12,398
Total revenue
27,388
36,040
55,556
69,507
Cost of revenue:
Cost of product revenue (2)
10,567
22,212
23,148
43,029
Cost of service and other revenue
7,039
6,125
14,411
12,347
Total cost of revenue
17,606
28,337
37,559
55,376
Gross profit (1)
9,782
7,703
17,997
14,131
Gross margin (1)
35.7
%
21.4
%
32.4
%
20.3
%
Operating expenses:
Research and development (2)
9,734
14,906
22,369
28,699
Sales and marketing (2)
18,128
24,985
39,176
49,318
General and administrative (2)
12,684
11,290
24,128
23,077
Total operating expenses
40,546
51,181
85,673
101,094
Loss from operations
(30,764
)
(43,478
)
(67,676
)
(86,963
)
Interest income and other income, net
2,471
2,668
5,569
5,316
Interest expense
(6,010
)
(3,103
)
(11,978
)
(6,045
)
Loss before provision for income taxes
(34,303
)
(43,913
)
(74,085
)
(89,059
)
Provision for income taxes
151
133
313
325
Net loss
$
(34,454
)
$
(44,046
)
$
(74,398
)
$
(89,384
)
Net loss per share, basic and diluted
$
(0.66
)
$
(0.90
)
$
(1.45
)
$
(1.79
)
Shares used in computing net loss per
share, basic and diluted
51,880
48,951
51,391
49,085
(1) Gross profit and gross margin by
source consisted of the following:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
Gross profit
Product revenue
$
8,671
$
7,118
$
16,518
$
14,080
Service and other revenue
1,111
585
1,479
51
Total gross profit
$
9,782
$
7,703
$
17,997
$
14,131
Gross margin
Product revenue
45.1
%
24.3
%
41.6
%
24.7
%
Service and other revenue
13.6
%
8.7
%
9.3
%
0.4
%
Total gross margin
35.7
%
21.4
%
32.4
%
20.3
%
(2) Include stock-based compensation
expense and severance and related charges, net as follows:
Three Months Ended
Six Months Ended
Stock-based
compensation expense
June 30,
June 30,
2024
2023
2024
2023
Cost of revenue
$
531
$
403
$
796
$
761
Research and development
2,293
2,824
4,625
5,439
Sales and marketing
2,494
3,545
3,953
6,143
General and administrative
4,502
3,333
8,649
6,300
Total stock-based compensation expense
$
9,820
$
10,105
$
18,023
$
18,643
Three Months Ended
Six Months Ended
Severance and
related charges, net*
June 30,
June 30,
2024†
2023
2024
2023
Cost of revenue
$
(78
)
$
—
$
201
$
—
Research and development
(29
)
—
963
—
Sales and marketing
99
—
892
—
General and administrative
(41
)
—
370
—
Total severance and related charges,
net
$
(49
)
$
—
$
2,426
$
—
* Net of adjustments to compensation
accrual
† These amounts represent the change in
estimated accrual from March 31, 2024
Outset Medical, Inc.
Condensed Balance
Sheets
(in thousands, except per share
amounts)
June 30,
December 31,
2024
2023
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
37,859
$
68,509
Short-term investments
156,989
134,815
Accounts receivable, net
34,121
32,980
Inventories
61,599
49,215
Prepaid expenses and other current
assets
4,569
5,700
Total current assets
295,137
291,219
Restricted cash
3,329
3,329
Property and equipment, net
10,873
13,273
Operating lease right-of-use assets
4,675
5,375
Other assets
520
605
Total assets
$
314,534
$
313,801
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
5,255
$
5,827
Accrued compensation and related
benefits
11,431
19,005
Accrued expenses and other current
liabilities
9,747
13,459
Accrued warranty liability
2,199
3,712
Deferred revenue, current
13,108
11,727
Operating lease liabilities, current
1,693
1,593
Total current liabilities
43,433
55,323
Accrued interest
1,762
896
Deferred revenue
130
101
Operating lease liabilities
3,616
4,482
Term loans
196,994
130,113
Total liabilities
245,935
190,915
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000
shares authorized, and no shares issued and outstanding as of June
30, 2024 and December 31, 2023
—
—
Common stock, $0.001 par value; 300,000
shares authorized as of June 30, 2024 and December 31, 2023; 52,084
and 50,317 shares issued and outstanding as of June 30, 2024 and
December 31, 2023, respectively
52
50
Additional paid-in capital
1,104,994
1,084,515
Accumulated other comprehensive income
(loss)
(302
)
68
Accumulated deficit
(1,036,145
)
(961,747
)
Total stockholders' equity
68,599
122,886
Total liabilities and stockholders'
equity
$
314,534
$
313,801
Outset Medical, Inc.
Condensed Statements of Cash
Flows
(in thousands)
(unaudited)
Six Months Ended June
30,
2024
2023
Net cash used in operating activities
$
(79,247
)
$
(72,932
)
Net cash (used in) provided by investing
activities
(20,090
)
29,796
Net cash provided by financing
activities
68,687
6,320
Net decrease in cash, cash equivalents and
restricted cash
(30,650
)
(36,816
)
Cash, cash equivalents and restricted cash
at beginning of the period
71,838
76,533
Cash, cash equivalents and restricted cash
at end of the period (1)
$
41,188
$
39,717
(1) The following table provides a
reconciliation of cash, cash equivalents and restricted cash
reported within the accompanying condensed balance sheets that sum
to the total of the amounts shown in the accompanying condensed
statements of cash flows (in thousands):
June 30,
2024
2023
Cash and cash equivalents
$
37,859
$
36,388
Restricted cash
3,329
3,329
Total cash, cash equivalents and
restricted cash*
$
41,188
$
39,717
* The total cash, including restricted
cash, cash equivalents and investment securities as of June 30,
2024 was $198.2 million; compared to $226.1 million as of June 30,
2023.
Appendix A
Outset Medical, Inc.
Results of Operations –
Non-GAAP
(in thousands, except per share
amounts)
(unaudited)
Reconciliation between GAAP and
non-GAAP net loss per share:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
GAAP net loss per share, diluted
$
(0.66
)
$
(0.90
)
$
(1.45
)
$
(1.79
)
Stock-based compensation expense
0.19
0.21
0.35
0.38
Severance and related charges, net
—
—
0.05
—
Non-GAAP net loss per share, diluted
$
(0.47
)
$
(0.69
)
$
(1.05
)
$
(1.41
)
Reconciliation between GAAP and
non-GAAP net loss:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
GAAP net loss, diluted
$
(34,454
)
$
(44,046
)
$
(74,398
)
$
(89,384
)
Stock-based compensation expense
9,820
10,105
18,023
18,643
Severance and related charges, net
(49
)
—
2,426
—
Non-GAAP net loss, diluted
$
(24,683
)
$
(33,941
)
$
(53,949
)
$
(70,741
)
Reconciliation between GAAP and
non-GAAP results of operations:
Three Months Ended
Six Months Ended
June 30,
June 30,
2024
2023
2024
2023
GAAP gross profit
$
9,782
$
7,703
$
17,997
$
14,131
Stock-based compensation expense
531
403
796
761
Severance and related charges, net
(78
)
—
201
—
Non-GAAP gross profit
$
10,235
$
8,106
$
18,994
$
14,892
GAAP gross margin
35.7
%
21.4
%
32.4
%
20.3
%
Stock-based compensation expense
1.9
1.1
1.4
1.1
Severance and related charges, net
(0.3
)
—
0.4
—
Non-GAAP gross margin
37.3
%
22.5
%
34.2
%
21.4
%
GAAP research and development
expense
$
9,734
$
14,906
$
22,369
$
28,699
Stock-based compensation expense
(2,293
)
(2,824
)
(4,625
)
(5,439
)
Severance and related charges, net
29
—
(963
)
—
Non-GAAP research and development
expense
$
7,470
$
12,082
$
16,781
$
23,260
GAAP sales and marketing
expense
$
18,128
$
24,985
$
39,176
$
49,318
Stock-based compensation expense
(2,494
)
(3,545
)
(3,953
)
(6,143
)
Severance and related charges, net
(99
)
—
(892
)
—
Non-GAAP sales and marketing expense
$
15,535
$
21,440
$
34,331
$
43,175
GAAP general and administrative
expense
$
12,684
$
11,290
$
24,128
$
23,077
Stock-based compensation expense
(4,502
)
(3,333
)
(8,649
)
(6,300
)
Severance and related charges, net
41
—
(370
)
—
Non-GAAP general and administrative
expense
$
8,223
$
7,957
$
15,109
$
16,777
GAAP total operating expense
$
40,546
$
51,181
$
85,673
$
101,094
Stock-based compensation expense
(9,289
)
(9,702
)
(17,227
)
(17,882
)
Severance and related charges, net
(29
)
—
(2,225
)
—
Non-GAAP total operating expense
$
31,228
$
41,479
$
66,221
$
83,212
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version on businesswire.com: https://www.businesswire.com/news/home/20240807985057/en/
Investor Contact Jim Mazzola Investor Relations
jmazzola@outsetmedical.com
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