Sequential Revenue Growth of 8%, Ninth
Consecutive Quarter of Gross Margin Expansion
Announces Shipment Pause of TabloCart with
Prefiltration Pending 510(k) Clearance
Reiterates 2023 Revenue Range of $144
Million to $150 Million
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,
2023.
Recent Highlights
- Recorded net revenue of $36.0 million in the second quarter, a
44% increase compared to $25.1 million in the second quarter of
2022, and an 8% increase compared to $33.5 million in the first
quarter of 2023.
- Achieved gross margin for the second quarter of 21.4% (22.5% on
a non-GAAP basis), compared to 15.1% (15.9% on a non-GAAP basis) in
the second quarter of 2022.
- Initiated the first Tablo home dialysis program with one of the
country’s largest health systems with plans to expand to multiple
U.S. sites.
- Achieved the Company’s goal of signing agreements with the
majority of U.S. mid-sized dialysis providers, further expanding
its reach to patients who choose to dialyze at home.
“Our momentum entering 2023 carried through the second quarter,
led by the strong demand from hospitals due to the value realized
from insourcing dialysis with Tablo,” said Leslie Trigg, Chair and
Chief Executive Officer. “As important, Tablo’s unique ease of use
and flexibility continues to drive patient interest and demand from
home-care providers, including traditional acute-care
providers.”
The Company also announced it has paused the shipment of
TabloCart with Prefiltration, an accessory for the Tablo System,
pending the Food and Drug Administration’s clearance of a 510(k)
the Company plans to submit later this month.
“Since receiving the Warning Letter on July 6, we have made the
decision to file a 510(k) for TabloCart with Prefiltration and
pause distribution of the product until a 510(k) clearance has been
granted,” added Trigg. “As we look ahead to the second half of the
year, we expect our strong momentum both in the acute and home end
markets to continue to drive the business.”
Second Quarter 2023 Financial Results
Revenue for the second quarter of 2023 was $36.0 million,
representing an increase of 43.8% compared to $25.1 million in the
second quarter of 2022. Product revenue was $29.3 million,
representing an increase of 49.5% compared to $19.6 million in the
second quarter of 2022. Service and other revenue was $6.7 million,
representing an increase of 23.4% compared to $5.4 million in the
second quarter of 2022.
Total gross profit was $7.7 million, compared to $3.8 million
for the second quarter of 2022. Total gross margin was 21.4%,
compared to 15.1% in the second quarter of 2022. On a non-GAAP
basis, gross margin improved to 22.5% from 15.9% in the second
quarter of 2022. Product gross profit was $7.1 million, compared to
$1.9 million of product gross profit in the second quarter of 2022.
Product gross margin was 24.3%, compared to 9.7% in the second
quarter of 2022. Service and other gross profit was $0.6 million,
compared to $1.9 million of service and other gross profit in the
second quarter of 2022. Service and other gross margin was 8.7%,
compared to 34.6% in the second quarter of 2022.
Operating expenses were $51.2 million, including research and
development (R&D) expenses of $14.9 million, sales and
marketing (S&M) expenses of $25.0 million, and general and
administrative (G&A) expenses of $11.3 million. This compared
to operating expenses of $47.5 million, including R&D expenses
of $13.5 million, S&M expenses of $23.2 million, and G&A
expenses of $10.8 million in the second quarter of 2022.
Excluding stock-based compensation expense, non-GAAP operating
expenses were $41.5 million, including R&D expenses of $12.1
million, S&M expenses of $21.4 million, and G&A expenses of
$8.0 million.
Net loss was ($44.0) million, or ($0.90) per share, compared to
net loss of ($43.8) million, or ($0.92) per share, for the same
period in 2022. On a non-GAAP basis, net loss was ($33.9) million,
or ($0.69) per share, compared to non-GAAP net loss of ($36.4)
million, or ($0.77) per share for the same period in 2022.
Total cash, including restricted cash, cash equivalents and
short-term investments, was $226.1 million as of June 30, 2023.
Full Year 2023 Financial Guidance
Outset reiterated its 2023 revenue guidance range of $144
million to $150 million, and now expects to be at the low end of
this range as a result of the shipment pause for TabloCart with
Prefiltration. The Company reaffirmed its gross margin guidance for
the year to be in the low-20% range, exiting the fourth quarter in
the mid-20% range.
Webcast and Conference Call Details
Outset will host a conference call today, August 2, 2023, at
2:00 p.m. PT / 5:00 p.m. ET to discuss its second quarter 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; our
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,
2023
2022
2023
2022
Revenue:
Product revenue
$
29,330
$
19,621
$
57,109
$
45,285
Service and other revenue
6,710
5,436
12,398
10,322
Total revenue
36,040
25,057
69,507
55,607
Cost of revenue:
Cost of product revenue (2)
22,212
17,718
43,029
40,828
Cost of service and other revenue
6,125
3,557
12,347
6,555
Total cost of revenue
28,337
21,275
55,376
47,383
Gross profit (1)
7,703
3,782
14,131
8,224
Gross margin (1)
21.4
%
15.1
%
20.3
%
14.8
%
Operating expenses:
Research and development (2)
14,906
13,521
28,699
24,352
Sales and marketing (2)
24,985
23,198
49,318
43,575
General and administrative (2)
11,290
10,784
23,077
20,493
Total operating expenses
51,181
47,503
101,094
88,420
Loss from operations
(43,478
)
(43,721
)
(86,963
)
(80,196
)
Interest income and other income, net
2,668
459
5,316
579
Interest expense
(3,103
)
(481
)
(6,045
)
(903
)
Loss before provision for income taxes
(43,913
)
(43,743
)
(87,692
)
(80,520
)
Provision for income taxes
133
96
325
211
Net loss
$
(44,046
)
$
(43,839
)
$
(88,017
)
$
(80,731
)
Net loss per share, basic and diluted
$
(0.90
)
$
(0.92
)
$
(1.79
)
$
(1.69
)
Shares used in computing net loss per
share, basic and diluted
48,951
47,882
49,085
47,686
(1) Gross profit and gross margin by
source consisted of the following:
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Gross profit
Product revenue
$
7,118
$
1,903
$
14,080
$
4,457
Service and other revenue
585
1,879
51
3,767
Total gross profit
$
7,703
$
3,782
$
14,131
$
8,224
Gross margin
Product revenue
24.3
%
9.7
%
24.7
%
9.8
%
Service and other revenue
8.7
%
34.6
%
0.4
%
36.5
%
Total gross margin
21.4
%
15.1
%
20.3
%
14.8
%
(2) Include stock-based compensation
expense as follows:
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Cost of revenue
$
403
$
190
$
761
$
283
Research and development
2,824
1,808
5,439
2,966
Sales and marketing
3,545
2,864
6,143
4,570
General and administrative
3,333
2,552
6,300
4,601
Total stock-based compensation expense
$
10,105
$
7,414
$
18,643
$
12,420
Outset Medical, Inc.
Condensed Balance
Sheets
(in thousands, except per share
amounts)
June 30,
December 31,
2023
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
36,388
$
73,222
Short-term investments
186,403
214,280
Accounts receivable, net
36,902
28,070
Inventories
44,495
51,476
Prepaid expenses and other current
assets
5,216
6,597
Total current assets
309,404
373,645
Restricted cash
3,329
3,311
Property and equipment, net
14,539
15,876
Operating lease right-of-use assets
6,042
6,117
Other assets
1,128
1,166
Total assets
$
334,442
$
400,115
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
2,217
$
603
Accrued compensation and related
benefits
17,461
21,519
Accrued expenses and other current
liabilities
12,650
16,227
Accrued warranty liability
4,168
3,620
Deferred revenue, current
10,854
8,662
Operating lease liabilities, current
1,474
1,318
Total current liabilities
48,824
51,949
Accrued interest
484
113
Deferred revenue
89
151
Operating lease liabilities
5,308
5,576
Term loan
96,629
96,336
Total liabilities
151,334
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 June
30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value; 300,000
shares authorized as of June 30, 2023 and December 31, 2022; 49,629
and 48,465 shares issued and outstanding as of June 30, 2023 and
December 31, 2022, respectively
50
48
Additional paid-in capital
1,060,418
1,035,456
Accumulated other comprehensive loss
(393
)
(564
)
Accumulated deficit
(876,967
)
(788,950
)
Total stockholders' equity
183,108
245,990
Total liabilities and stockholders'
equity
$
334,442
$
400,115
Outset Medical, Inc.
Condensed Statements of Cash
Flows
(in thousands)
(unaudited)
Six Months Ended June
30,
2023
2022
Net cash used in operating activities
$
(72,932
)
$
(76,910
)
Net cash provided by (used in) investing
activities
29,796
(34,706
)
Net cash provided by financing
activities
6,320
4,765
Net decrease in cash, cash equivalents and
restricted cash
(36,816
)
(106,851
)
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)
$
39,717
$
108,808
(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,
2023
2022
Cash and cash equivalents
$
36,388
$
75,497
Restricted cash
3,329
33,311
Total cash, cash equivalents and
restricted cash*
$
39,717
$
108,808
* The total cash, including restricted
cash, cash equivalents and investment securities as of June 30,
2023 was $226.1 million; compared to $295.4 million as of June 30,
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
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
GAAP net loss per share, diluted
$
(0.90
)
$
(0.92
)
$
(1.79
)
$
(1.69
)
Stock-based compensation expense
0.21
0.15
0.38
0.26
Non-GAAP net loss per share, diluted
$
(0.69
)
$
(0.77
)
$
(1.41
)
$
(1.43
)
Reconciliation between GAAP and
non-GAAP net loss:
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
GAAP net loss, diluted
$
(44,046
)
$
(43,839
)
$
(88,017
)
$
(80,731
)
Stock-based compensation expense
10,105
7,414
18,643
12,420
Non-GAAP net loss, diluted
$
(33,941
)
$
(36,425
)
$
(69,374
)
$
(68,311
)
Reconciliation between GAAP and
non-GAAP results of operations:
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
GAAP gross profit
$
7,703
$
3,782
$
14,131
$
8,224
Stock-based compensation expense
403
190
761
283
Non-GAAP gross profit
$
8,106
$
3,972
$
14,892
$
8,507
GAAP gross margin
21.4
%
15.1
%
20.3
%
14.8
%
Stock-based compensation expense
1.1
0.8
1.1
0.5
Non-GAAP gross margin
22.5
%
15.9
%
21.4
%
15.3
%
GAAP research and development
expense
$
14,906
$
13,521
$
28,699
$
24,352
Stock-based compensation expense
(2,824
)
(1,808
)
(5,439
)
(2,966
)
Non-GAAP research and development
expense
$
12,082
$
11,713
$
23,260
$
21,386
GAAP sales and marketing
expense
$
24,985
$
23,198
$
49,318
$
43,575
Stock-based compensation expense
(3,545
)
(2,864
)
(6,143
)
(4,570
)
Non-GAAP sales and marketing expense
$
21,440
$
20,334
$
43,175
$
39,005
GAAP general and administrative
expense
$
11,290
$
10,784
$
23,077
$
20,493
Stock-based compensation expense
(3,333
)
(2,552
)
(6,300
)
(4,601
)
Non-GAAP general and administrative
expense
$
7,957
$
8,232
$
16,777
$
15,892
GAAP total operating expense
$
51,181
$
47,503
$
101,094
$
88,420
Stock-based compensation expense
(9,702
)
(7,224
)
(17,882
)
(12,137
)
Non-GAAP total operating expense
$
41,479
$
40,279
$
83,212
$
76,283
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version on businesswire.com: https://www.businesswire.com/news/home/20230802278579/en/
Investor Contact Jim Mazzola Outset Medical 858-342-8272
jmazzola@outsetmedical.com
Media Contact Nicole Shannon Director, Marketing
Communications for Outset Medical nshannon@outsetmedical.com
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