Reiterates Updated 2023 Revenue Guidance of
Approximately $130 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 third quarter ended September
30, 2023.
Revenue for the third quarter was $30.4 million, a 9% increase
over revenue of $27.8 million in the third quarter of 2022, and
gross margin was 23.6%, or 25.6% on a non-GAAP basis, compared to
16.4% on a non-GAAP basis in the third quarter of 2022. Total cash,
including restricted cash, cash equivalents and short-term
investments, was $197 million as of September 30, 2023.
“Our third quarter results were in line with the expectations we
set in October, and our focus remains on ensuring the benefits of
Tablo reach as many providers and patients as possible this year
and well into the future,” said Leslie Trigg, Chair and Chief
Executive Officer. “All of the structural tailwinds for Tablo
remain firmly in place, and we have high confidence in our ability
to generate sustained long-term growth, achieve our gross margin
goals, and reach profitability.”
Third Quarter 2023 Financial Results
Revenue for the quarter was $30.4 million, including product
revenue of $23.5 million, an increase of 8.2% compared to $21.7
million in the third quarter of 2022, and service and other revenue
of $6.8 million, an increase of 13.4% compared to $6.0 million in
the third quarter of 2022.
Total gross profit was $7.2 million, compared to $4.3 million
for the third quarter of 2022. Total gross margin was 23.6%,
compared to 15.6% in the third quarter of 2022. On a non-GAAP
basis, gross margin improved to 25.6% from 16.4% in the third
quarter of 2022. Product gross profit was $6.7 million, compared to
$2.1 million of product gross profit in the third quarter of 2022.
Product gross margin was 28.4%, compared to 9.7% in the third
quarter of 2022. Service and other gross profit was $0.5 million,
compared to $2.2 million of service and other gross profit in the
third quarter of 2022. Service and other gross margin was 6.8%,
compared to 37.0% in the third quarter of 2022.
Operating expenses were $52.6 million, including research and
development (R&D) expenses of $16.1 million, sales and
marketing (S&M) expenses of $24.7 million, and general and
administrative (G&A) expenses of $11.8 million. This compared
to operating expenses of $45.3 million, including R&D expenses
of $13.1 million, S&M expenses of $22.3 million, and G&A
expenses of $10.0 million in the third quarter of 2022.
Excluding stock-based compensation expense, non-GAAP operating
expenses were $42.3 million, including R&D expenses of $13.3
million, S&M expenses of $21.0 million, and G&A expenses of
$8.1 million.
Net loss was ($46.2) million, or ($0.93) per share, compared to
net loss of ($40.8) million, or ($0.85) per share, for the same
period in 2022. On a non-GAAP basis, net loss was ($35.3) million,
or ($0.71) per share, compared to non-GAAP net loss of ($33.4)
million, or ($0.70) per share for the same period in 2022.
Full Year 2023 Financial Guidance
Outset reiterated its 2023 revenue guidance of approximately
$130 million and its previous 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, November 7, 2023, at
2:00 p.m. PT / 5:00 p.m. ET to discuss its third 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, cash burn, 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
(FDA) 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Revenue:
Product revenue
$
23,531
$
21,739
$
80,640
$
67,024
Service and other revenue
6,831
6,022
19,229
16,344
Total revenue
30,362
27,761
99,869
83,368
Cost of revenue:
Cost of product revenue (2)
16,837
19,632
59,866
60,460
Cost of service and other revenue
6,368
3,793
18,715
10,348
Total cost of revenue
23,205
23,425
78,581
70,808
Gross profit (1)
7,157
4,336
21,288
12,560
Gross margin (1)
23.6
%
15.6
%
21.3
%
15.1
%
Operating expenses:
Research and development (2)
16,076
13,059
44,775
37,411
Sales and marketing (2)
24,720
22,276
74,038
65,851
General and administrative (2)
11,815
10,000
34,892
30,493
Total operating expenses
52,611
45,335
153,705
133,755
Loss from operations
(45,454
)
(40,999
)
(132,417
)
(121,195
)
Interest income and other income, net
2,573
805
7,889
1,384
Interest expense
(3,213
)
(567
)
(9,258
)
(1,470
)
Loss before provision for income taxes
(46,094
)
(40,761
)
(133,786
)
(121,281
)
Provision for income taxes
86
20
411
231
Net loss
$
(46,180
)
$
(40,781
)
$
(134,197
)
$
(121,512
)
Net loss per share, basic and diluted
$
(0.93
)
$
(0.85
)
$
(2.72
)
$
(2.54
)
Shares used in computing net loss per
share, basic and diluted
49,913
48,129
49,364
47,835
(1) Gross profit and gross margin by
source consisted of the following:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Gross profit
Product revenue
$
6,694
$
2,107
$
20,774
$
6,564
Service and other revenue
463
2,229
514
5,996
Total gross profit
$
7,157
$
4,336
$
21,288
$
12,560
Gross margin
Product revenue
28.4
%
9.7
%
25.8
%
9.8
%
Service and other revenue
6.8
%
37.0
%
2.7
%
36.7
%
Total gross margin
23.6
%
15.6
%
21.3
%
15.1
%
(2) Include stock-based compensation
expense as follows:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Cost of revenue
$
620
$
210
$
1,381
$
493
Research and development
2,793
1,919
8,232
4,885
Sales and marketing
3,765
2,870
9,908
7,440
General and administrative
3,715
2,431
10,015
7,032
Total stock-based compensation expense
$
10,893
$
7,430
$
29,536
$
19,850
Outset Medical, Inc.
Condensed Balance
Sheets
(in thousands, except per share
amounts)
September 30,
December 31,
2023
2022
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
36,297
$
73,222
Short-term investments
157,701
214,280
Accounts receivable, net
35,493
28,070
Inventories
48,257
51,476
Prepaid expenses and other current
assets
6,026
6,597
Total current assets
283,774
373,645
Restricted cash
3,329
3,311
Property and equipment, net
13,774
15,876
Operating lease right-of-use assets
5,713
6,117
Other assets
961
1,166
Total assets
$
307,551
$
400,115
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable
$
2,880
$
603
Accrued compensation and related
benefits
21,544
21,519
Accrued expenses and other current
liabilities
12,160
16,227
Accrued warranty liability
4,068
3,620
Deferred revenue, current
10,828
8,662
Operating lease liabilities, current
1,544
1,318
Total current liabilities
53,024
51,949
Accrued interest
680
113
Deferred revenue
99
151
Operating lease liabilities
4,901
5,576
Term loan
96,784
96,336
Total liabilities
155,488
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
September 30, 2023 and December 31, 2022
—
—
Common stock, $0.001 par value; 300,000
shares authorized as of September 30, 2023 and December 31, 2022;
50,173 and 48,465 shares issued and outstanding as of September 30,
2023 and December 31, 2022, respectively
50
48
Additional paid-in capital
1,075,413
1,035,456
Accumulated other comprehensive loss
(253
)
(564
)
Accumulated deficit
(923,147
)
(788,950
)
Total stockholders' equity
152,063
245,990
Total liabilities and stockholders'
equity
$
307,551
$
400,115
Outset Medical, Inc.
Condensed Statements of Cash
Flows
(in thousands)
(unaudited)
Nine Months Ended September
30,
2023
2022
Net cash used in operating activities
$
(106,931
)
$
(111,222
)
Net cash provided by (used in) investing
activities
59,601
(14,547
)
Net cash provided by financing
activities
10,423
7,298
Net decrease in cash, cash equivalents and
restricted cash
(36,907
)
(118,471
)
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)
$
39,626
$
97,188
(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):
September 30,
2023
2022
Cash and cash equivalents
$
36,297
$
63,877
Restricted cash
3,329
33,311
Total cash, cash equivalents and
restricted cash*
$
39,626
$
97,188
* The total cash, including restricted
cash, cash equivalents and investment securities as of September
30, 2023 was $197.3 million; compared to $260.8 million as of
September 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
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
GAAP net loss per share, diluted
$
(0.93
)
$
(0.85
)
$
(2.72
)
$
(2.54
)
Stock-based compensation expense
0.22
0.15
0.60
0.41
Non-GAAP net loss per share, diluted
$
(0.71
)
$
(0.70
)
$
(2.12
)
$
(2.13
)
Reconciliation between GAAP and
non-GAAP net loss:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
GAAP net loss, diluted
$
(46,180
)
$
(40,781
)
$
(134,197
)
$
(121,512
)
Stock-based compensation expense
10,893
7,430
29,536
19,850
Non-GAAP net loss, diluted
$
(35,287
)
$
(33,351
)
$
(104,661
)
$
(101,662
)
Reconciliation between GAAP and
non-GAAP results of operations:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
GAAP gross profit
$
7,157
$
4,336
$
21,288
$
12,560
Stock-based compensation expense
620
210
1,381
493
Non-GAAP gross profit
$
7,777
$
4,546
$
22,669
$
13,053
GAAP gross margin
23.6
%
15.6
%
21.3
%
15.1
%
Stock-based compensation expense
2.0
0.8
1.4
0.6
Non-GAAP gross margin
25.6
%
16.4
%
22.7
%
15.7
%
GAAP research and development
expense
$
16,076
$
13,059
$
44,775
$
37,411
Stock-based compensation expense
(2,793
)
(1,919
)
(8,232
)
(4,885
)
Non-GAAP research and development
expense
$
13,283
$
11,140
$
36,543
$
32,526
GAAP sales and marketing
expense
$
24,720
$
22,276
$
74,038
$
65,851
Stock-based compensation expense
(3,765
)
(2,870
)
(9,908
)
(7,440
)
Non-GAAP sales and marketing expense
$
20,955
$
19,406
$
64,130
$
58,411
GAAP general and administrative
expense
$
11,815
$
10,000
$
34,892
$
30,493
Stock-based compensation expense
(3,715
)
(2,431
)
(10,015
)
(7,032
)
Non-GAAP general and administrative
expense
$
8,100
$
7,569
$
24,877
$
23,461
GAAP total operating expense
$
52,611
$
45,335
$
153,705
$
133,755
Stock-based compensation expense
(10,273
)
(7,220
)
(28,155
)
(19,357
)
Non-GAAP total operating expense
$
42,338
$
38,115
$
125,550
$
114,398
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version on businesswire.com: https://www.businesswire.com/news/home/20231107814356/en/
Investor Contact Jim Mazzola 858-342-8272
jmazzola@outsetmedical.com
Media Contact Jennifer Sipple media@outsetmedical.com
Outset Medical (NASDAQ:OM)
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