Outset Medical, Inc. Q4 FY2025 earnings call

• 2025 was a year of progress and transformation at Outset Medical, including reducing cost structure, investing in technology and service leadership, FDA clearance of next-gen Tablo platform, strengthening the team, recapitalizing the company, expanding published evidence of clinical/operational/financial benefits, maintaining high customer satisfaction (>95%), and signing new in-sourcing agreements.
• Substantially reduced cost structure while making significant investments in technology and service leadership, leading to FDA clearance of next-gen Tablo platform.
• Strengthened team with new talent in key roles like finance, medical affairs, and field service.
• Recapitalized the company with less debt and new capital to fund through cash flow breakeven and beyond.
• Expanded published evidence demonstrating clinical, operational, and financial benefits of in-sourcing with Outset and Tablo.
• Maintained a customer satisfaction score above 95% for exceptional customer service.
• Signed new agreements for in-sourcing dialysis at new and expansion sites, with Tablo used at roughly 1,000 acute care sites in the US.

In the fourth quarter of 2025, revenue was $28.9 million. Product revenue was $19.9 million, with console sales growing 11% to $6.4 million and consumable sales $13.5 million. Service and other revenue was $9 million, growing 6% from $8.5 million in the prior year period. For the full year 2025, revenue was $119.5 million, a 5% increase over 2024. Product revenue was $84.8 million (5% increase from 2024), service and other revenue was $34.7 million (6% increase from 2024). Non-GAAP gross margin in Q4 was 42.9%, expanding more than 500 basis points from the prior year, and for the full year, non-GAAP gross margin was 39.6%, a 400 basis point increase from 2024.

• 2026 revenue expected to be in the range of $125 million to $130 million, a 5% to 9% increase over 2025. First quarter expected to be roughly flat to Q4 2025, then stepping up through the rest of the year.
• Non-GAAP gross margin expected to be in the low to mid-40% range, with higher console mix moving gross margin lower and higher consumables mix moving it higher. Manufacturing under-absorption headwind expected to attenuate in 2026.
• Anticipate continued operating leverage with operating expense growth at roughly half the rate of expected sales growth.
• Expect Q1 2026 to be the highest cash use quarter due to planned investments in inventory and manufacturing, but full year cash use expected to be less than the $46 million used in 2025.

Q: Marie Thibault asked about next-gen Tablo's impact on target markets, sales cycle timelines, and ASP lift.

A: Leslie Trigg said the next-gen Tablo, cleared by FDA with strong cybersecurity features, could generate incremental attention and interest among hospitals regardless of size, but ASP lift specifics to be shared closer to launch. On sales cycle, larger enterprise deals have longer cycles (9-12 months+), smaller deals can be 3-6 months.

Q: Joshua Jennings asked about pipeline growth and sales cycle reduction.

A: Leslie Trigg said pipeline growth was similar to between 2024 and 2025, with diversification between new and existing customers and different hospital sizes. Sales cycle varies by deal size, with larger deals taking longer. Renee Gaeta added recurring revenue growth expected to be in line with top line growth.

Q: Kendall Au asked about gross margin timeline to 50% and cash sufficiency.

A: Renee Gaeta said they're marching towards 50% gross margin, with current cash ($173 million) sufficient to reach profitability and beyond, and cash burn reduced from $116 million in 2024 to $46 million in 2025.

Q: Rick Wise asked about next-gen Tablo upgrade opportunities, features, and impact on margins.

A: Leslie Trigg said existing installed base can upgrade to next-gen, new customers can buy new Tablos with upgrades. Renee Gaeta said they're working on commercial launch strategy with Q2 launch, and think product innovation is value accretive, with strategic consideration of launch on gross margins.