Outset Medical, Inc. Q1 FY2026 earnings call

• First quarter reflected consistent execution across console utilization, new customer additions, gross margin expansion, and disciplined cash management. - Variability in capital order timing impacted capital sales but confidence in growth plan remains. - Upcoming launch of next generation Tableau, deep sales pipeline, and new commercial leader Derek Elliott. - Key wins during the quarter with successful go-live implementations. - Service and implementation teams extend clinical expertise. - Well prepared for initial transition to next-generation Tableau later in the quarter, which meets FDA cybersecurity requirements and has strong reception in early customer discussions. - Reiterate strong cash position and focus on reaching profitability, with progress in supply chain, manufacturing, service organization, and partnerships.

Revenue in the first quarter was $27.9 million, down slightly from the fourth quarter due to capital sales lumpiness. Product revenue was $18.6 million, down 13%. Capital sales were $5.4 million, consumable sales were $13.2 million, and service and other revenue was $9.3 million, up 10%. Non-GAAP gross margin expanded 620 basis points to 43.8% for the quarter. Product gross margin increased 400 basis points to 52.4%. Service and other gross margin was 26.7%, increasing sequentially and growing over 1,600 basis points compared to the prior year.

• Continue to expect revenue to be in the range of $125 to $130 million, a 5% to 9% increase over 2025, with majority of growth in third and fourth quarters. - Non-GAAP gross margins expected to be in the low to mid 40% range for the full year, balancing console shipment and consumables mix factors.

Q: Rick Wise asked about capital order variability and quarterly phasing.

A: Leslie Trigg and Renee Guyetta responded that capital order lumpiness is around close timing, with delayed deals expected to close in Q2-Q4, Q2 expected to be a modest step up with sequential step up in each quarter.

Q: Colin Clark asked about confidence in large orders in the pipeline.

A: Leslie Trigg said confidence is informed by deal staging, historical data on probability of close, and next-generation Tableau launch as a demand driver.

Q: Colin Clark also asked about next-gen system accelerating trade-in timelines and bi-directional integration.

A: Leslie Trigg said next-gen system could accelerate trade-in timelines and there's potential for bi-directional data transfer with EMR, which would be an incremental revenue opportunity for recurring revenue.