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 fourth quarter and full year
ended December 31, 2023.
Fourth Quarter, Year-End Results, and Recent
Highlights
- Recorded net revenue of $30.5 million in the fourth quarter,
bringing 2023 revenue to $130.4 million, a 13% increase compared to
$115.4 million in 2022.
- Increased gross margin in the fourth quarter by nearly 900
basis points from the prior-year period. Fourth quarter gross
margin reached 25.3% (26.7% on a non-GAAP basis) compared to 16.5%
(17.1% on a non-GAAP basis) in the fourth quarter of 2022. Gross
margin for the full year was 22.2% (23.6% on a non-GAAP basis)
compared to 15.5% (16.1% on a non-GAAP basis) in 2022.
- As previously reported, recurring revenue consisting of Tablo
consumables and services, exceeded 50% of total revenue in 2023,
and the Tablo installed base reached 5,350 consoles exiting 2023,
including approximately 4,050 with acute- and sub-acute care
providers and 1,300 with home providers.
“As we announced in January, our results for the fourth quarter
and full year reflect the scale we have built in the acute setting
and progress we are making to expand Tablo’s use at home, with our
growth in both end markets contributing to a 34% increase in the
Tablo installed base and nearly 50% growth in consumable revenue,”
said Leslie Trigg, Chair and Chief Executive Officer of Outset. “We
exited 2023 with a record 50% recurring revenue, fourth-quarter
gross margin expanding nearly 9 percentage points, and a strong
balance sheet to continue to fund our growth. We are proud of the
difference Tablo and our team made in 2023 to help providers save
substantially on the cost to deliver life-sustaining dialysis, and
patients regain control that has been historically lost with their
diagnosis.”
Fourth Quarter 2023 Financial Results
Revenue for the fourth quarter of 2023 was $30.5 million,
representing a decrease of 4.7% compared to $32.0 million in the
fourth quarter of 2022. Product revenue was $22.9 million,
representing a decrease of 13.2% compared to $26.4 million in the
fourth quarter of 2022. Service and other revenue was $7.6 million,
representing an increase of 34.9% compared to $5.6 million in the
fourth quarter of 2022.
Total gross profit was $7.7 million, compared to $5.3 million
for the fourth quarter of 2022. Total gross margin was 25.3%,
compared to 16.5% in the fourth quarter of 2022. On a non-GAAP
basis, gross margin improved to 26.7% from 17.1% in the fourth
quarter of 2022. Product gross profit was $8.3 million, compared to
$4.3 million of product gross profit in the fourth quarter of 2022.
Product gross margin was 36.3%, compared to 16.4% in the fourth
quarter of 2022. Service and other gross loss was ($0.6) million,
compared to $1.0 million of service and other gross profit in the
fourth quarter of 2022. Service and other gross margin was (7.8)%,
compared to 17.0% in the fourth quarter of 2022.
Operating expenses were $45.1 million, including research and
development (R&D) expenses of $12.5 million, sales and
marketing (S&M) expenses of $22.2 million, and general and
administrative (G&A) expenses of $10.3 million. This compared
to operating expenses of $45.1 million, including R&D expenses
of $11.4 million, S&M expenses of $23.6 million, and G&A
expenses of $10.0 million in the fourth quarter of 2022.
Excluding stock-based compensation expense, non-GAAP operating
expenses were $36.4 million, including R&D expenses of $10.2
million, S&M expenses of $19.7 million, and G&A expenses of
$6.5 million.
Net loss was ($38.6) million, or ($0.77) per share, compared to
net loss of ($41.4) million, or ($0.86) per share, for the same
period in 2022. On a non-GAAP basis, net loss was ($29.5) million,
or ($0.59) per share, compared to non-GAAP net loss of ($34.1)
million, or ($0.71) per share for the same period in 2022.
Total cash, including restricted cash, cash equivalents and
short-term investments, was $206.7 million as of December 31, 2023,
compared to $290.8 million as of December 31, 2022.
Full Year 2023 Financial Results
Revenue for 2023 was $130.4 million, representing an increase of
13.0% compared to $115.4 million for 2022. Product revenue was
$103.5 million, representing an increase of 10.9% compared to $93.4
million for 2022. Service and other revenue was $26.8 million,
representing an increase of 22.1% compared to $22.0 million for
2022.
Total gross profit was $29.0 million, compared to $17.8 million
for 2022. Total gross margin was 22.2%, compared to 15.5% in 2022.
On a non-GAAP basis, gross margin improved to 23.6% from 16.1% in
2022. Product gross profit was $29.1 million, compared to $10.9
million of product gross profit in 2022. Product gross margin was
28.1%, compared to 11.6% in 2022. Service and other gross loss was
($0.1) million, compared to $7.0 million of service and other gross
profit in 2022. Service and other gross margin was (0.3)%, compared
to 31.6% in 2022.
Operating expenses were $198.8 million, including R&D
expenses of $57.3 million, S&M expenses of $96.2 million, and
G&A expenses of $45.2 million. This compared to operating
expenses of $178.9 million, including R&D expenses of $48.9
million, S&M expenses of $89.5 million, and G&A expenses of
$40.5 million for 2022.
Excluding stock-based compensation expense, non-GAAP operating
expenses were $161.9 million, including R&D expenses of $46.8
million, S&M expenses of $83.8 million, and G&A expenses of
$31.4 million.
Net loss was ($172.8) million, or ($3.48) per share, compared to
a net loss of ($163.0) million, or ($3.38) per share, for 2022. On
a non-GAAP basis, net loss was ($134.2) million, or ($2.70) per
share, compared to a non-GAAP net loss of ($135.8) million, or
($2.82) per share for 2022.
Full Year 2024 Financial Guidance
Outset reaffirmed its previously provided guidance for 2024,
including revenue of $145 million to $153 million, growing 12% to
18% over 2023, and non-GAAP gross margin in the low-30% range for
2024, exiting the year in the mid-30% range for the fourth
quarter.
Webcast and Conference Call Details
Outset will host a conference call today, February 21, 2024, at
2:00 p.m. PT / 5:00 p.m. ET to discuss its fourth quarter and full
year 2023 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. The Company’s
financial measures under GAAP include stock-based compensation
expense, as listed in the itemized reconciliations between GAAP and
non-GAAP financial measures included in this press release.
Management has excluded the effects of this non-cash expense item
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, 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.
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
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Revenue:
Product revenue
$
22,897
$
26,364
$
103,537
$
93,388
Service and other revenue
7,610
5,643
26,839
21,987
Total revenue
30,507
32,007
130,376
115,375
Cost of revenue:
Cost of product revenue (2)
14,588
22,050
74,454
82,510
Cost of service and other revenue
8,207
4,684
26,922
15,032
Total cost of revenue
22,795
26,734
101,376
97,542
Gross profit (1)
7,712
5,273
29,000
17,833
Gross margin (1)
25.3
%
16.5
%
22.2
%
15.5
%
Operating expenses:
Research and development (2)
12,532
11,444
57,307
48,855
Sales and marketing (2)
22,194
23,631
96,232
89,482
General and administrative (2)
10,339
10,022
45,231
40,515
Total operating expenses
45,065
45,097
198,770
178,852
Loss from operations
(37,353
)
(39,824
)
(169,770
)
(161,019
)
Interest income and other income, net
2,282
1,907
10,171
3,291
Interest expense
(3,417
)
(2,096
)
(12,675
)
(3,566
)
Loss on extinguishment of term loan
—
(1,367
)
—
(1,367
)
Loss before provision for income taxes
(38,488
)
(41,380
)
(172,274
)
(162,661
)
Provision for income taxes
112
64
523
295
Net loss
$
(38,600
)
$
(41,444
)
$
(172,797
)
$
(162,956
)
Net loss per share, basic and diluted
$
(0.77
)
$
(0.86
)
$
(3.48
)
$
(3.38
)
Shares used in computing net loss per
share, basic and diluted
50,254
48,375
49,588
48,161
_____________________________________________________
(1) Gross profit and gross margin by
source consisted of the following:
Three Months Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Gross profit
Product revenue
$
8,309
$
4,314
$
29,083
$
10,878
Service and other revenue
(597
)
959
(83
)
6,955
Total gross profit
$
7,712
$
5,273
$
29,000
$
17,833
Gross margin
Product revenue
36.3
%
16.4
%
28.1
%
11.6
%
Service and other revenue
(7.8
)
%
17.0
%
(0.3
)
%
31.6
%
Total gross margin
25.3
%
16.5
%
22.2
%
15.5
%
(2) Include stock-based compensation
expense as follows:
Three Months Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
Cost of revenue
$
424
$
208
$
1,805
$
701
Research and development
2,306
1,960
10,538
6,845
Sales and marketing
2,511
2,829
12,419
10,269
General and administrative
3,857
2,356
13,872
9,388
Total stock-based compensation expense
$
9,098
$
7,353
$
38,634
$
27,203
Outset Medical, Inc.
Condensed Balance
Sheets
(in thousands, except per share
amounts)
December 31,
2023
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
68,509
$
73,222
Short-term investments
134,815
214,280
Accounts receivable, net
32,980
28,070
Inventories
49,215
51,476
Prepaid expenses and other current
assets
5,700
6,597
Total current assets
291,219
373,645
Restricted cash
3,329
3,311
Property and equipment, net
13,273
15,876
Operating lease right-of-use assets
5,375
6,117
Other assets
605
1,166
Total assets
$
313,801
$
400,115
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
5,827
$
603
Accrued compensation and related
benefits
19,005
21,519
Accrued expenses and other current
liabilities
13,459
16,227
Accrued warranty liability
3,712
3,620
Deferred revenue, current
11,727
8,662
Operating lease liabilities, current
1,593
1,318
Total current liabilities
55,323
51,949
Accrued interest
896
113
Deferred revenue
101
151
Operating lease liabilities
4,482
5,576
Term loans
130,113
96,336
Total liabilities
190,915
154,125
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 5,000
shares authorized, and no shares issued and outstanding as of
December 31, 2023 and 2022
—
—
Common stock, $0.001 par value; 300,000
shares authorized as of December 31, 2023 and 2022; 50,317 and
48,465 shares issued and outstanding as of December 31, 2023 and
2022, respectively
50
48
Additional paid-in capital
1,084,515
1,035,456
Accumulated other comprehensive loss
68
(564
)
Accumulated deficit
(961,747
)
(788,950
)
Total stockholders' equity
122,886
245,990
Total liabilities and stockholders'
equity
$
313,801
$
400,115
Outset Medical, Inc.
Condensed Statements of Cash
Flows
(in thousands)
(unaudited)
Years Ended December
31,
2023
2022
Net cash used in operating activities
$
(131,373
)
$
(145,729
)
Net cash provided by (used in) investing
activities
83,026
(66,295
)
Net cash provided by financing
activities
43,652
72,898
Net decrease in cash, cash equivalents and
restricted cash
(4,695
)
(139,126
)
Cash, cash equivalents and restricted cash
at beginning of the period
76,533
215,659
Cash, cash equivalents and restricted cash
at end of the period (1)
$
71,838
$
76,533
(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):
December 31,
2023
2022
Cash and cash equivalents
$
68,509
$
73,222
Restricted cash
3,329
3,311
Total cash, cash equivalents and
restricted cash*
$
71,838
$
76,533
* The total cash, including restricted
cash, cash equivalents and investment securities as of December 31,
2023 was $206.7 million; compared to $290.8 million as of December
31, 2022.
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
Years Ended
December 31,
December 31,
2023
2022
2023
2022
GAAP net loss per share, diluted
$
(0.77
)
$
(0.86
)
$
(3.48
)
$
(3.38
)
Stock-based compensation expense
0.18
0.15
0.78
0.56
Non-GAAP net loss per share, diluted
$
(0.59
)
$
(0.71
)
$
(2.70
)
$
(2.82
)
Reconciliation between GAAP and
non-GAAP net loss:
Three Months Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
GAAP net loss, diluted
$
(38,600
)
$
(41,444
)
$
(172,797
)
$
(162,956
)
Stock-based compensation expense
9,098
7,353
38,634
27,203
Non-GAAP net loss, diluted
$
(29,502
)
$
(34,091
)
$
(134,163
)
$
(135,753
)
Reconciliation between GAAP and
non-GAAP results of operations:
Three Months Ended
Years Ended
December 31,
December 31,
2023
2022
2023
2022
GAAP gross profit
$
7,712
$
5,273
$
29,000
$
17,833
Stock-based compensation expense
424
208
1,805
701
Non-GAAP gross profit
$
8,136
$
5,481
$
30,805
$
18,534
GAAP gross margin
25.3
%
16.5
%
22.2
%
15.5
%
Stock-based compensation expense
1.4
0.6
1.4
0.6
Non-GAAP gross margin
26.7
%
17.1
%
23.6
%
16.1
%
GAAP research and development
expense
$
12,532
$
11,444
$
57,307
$
48,855
Stock-based compensation expense
(2,306
)
(1,960
)
(10,538
)
(6,845
)
Non-GAAP research and development
expense
$
10,226
$
9,484
$
46,769
$
42,010
GAAP sales and marketing
expense
$
22,194
$
23,631
$
96,232
$
89,482
Stock-based compensation expense
(2,511
)
(2,829
)
(12,419
)
(10,269
)
Non-GAAP sales and marketing expense
$
19,683
$
20,802
$
83,813
$
79,213
GAAP general and administrative
expense
$
10,339
$
10,022
$
45,231
$
40,515
Stock-based compensation expense
(3,857
)
(2,356
)
(13,872
)
(9,388
)
Non-GAAP general and administrative
expense
$
6,482
$
7,666
$
31,359
$
31,127
GAAP total operating expense
$
45,065
$
45,097
$
198,770
$
178,852
Stock-based compensation expense
(8,674
)
(7,145
)
(36,829
)
(26,502
)
Non-GAAP total operating expense
$
36,391
$
37,952
$
161,941
$
152,350
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version on businesswire.com: https://www.businesswire.com/news/home/20240221381198/en/
Investor Contact Jim Mazzola Investor Relations
jmazzola@outsetmedical.com
Outset Medical (NASDAQ:OM)
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