Outset Medical at RBC Conference: Strategic Growth and Challenges

On Tuesday, 20 May 2025, Outset Medical (NASDAQ:OM) presented at the RBC Capital Markets Global Healthcare Conference 2025, showcasing a strong start to the year with promising Q1 results. Despite facing potential challenges, the company remains focused on strategic growth, leveraging its innovative Tableau system to drive financial performance.

Key Takeaways

• Outset Medical exceeded Q1 revenue expectations by 7%, marking a 23% sequential increase in console growth.
• The company’s commercial transformation is largely complete, with a new sales leader and processes enhancing sales pipeline management.
• Demand for Tableau consoles is robust, driven by cost-saving benefits in acute and home settings.
• Despite potential federal funding cuts, the company maintains its revenue growth guidance for the year.
• Outset Medical aims for profitability through gross margin expansion and disciplined operating expense management.

Financial Results

• Q1 2024 Performance:

- Revenue exceeded expectations by 7%.

- Console growth increased by 23% sequentially, the first such increase in six quarters.

- Recurring revenue grew 20% year-over-year.

- Gross margin reached 37.6%.

- Operating expenses declined year-over-year due to savings initiatives.

- Maintained full-year guidance with revenue growth between 1% and 10%.

• Cash and Debt:

- Ended the quarter with $192 million in cash and $100 million in debt.

- Reduced annualized spending by $80 million.

Operational Updates

• Commercial Transformation:

- New sales leader and processes have improved sales pipeline and deal management.

- Majority of top deals for 2025 are in later sales stages.

- Field service team investments have resulted in high customer satisfaction scores.

• Market Penetration:

- Approximately 4,500 consoles installed in acute settings, representing about 10% market penetration.

Future Outlook

• Revenue and Growth:

- Expect revenue growth throughout the year, led by recurring revenues and console placements.

- Recurring revenue opportunity estimated at $500 million from the current installed base.

• Gross Margins:

- Aim for linear expansion to 50% gross margin within the planning horizon.

• Profitability:

- Targeting adjusted EBITDA positivity at less than $200 million in sales.

- Focus on cash flow breakeven and EBITDA profitability with existing cash reserves.

• Market Strategy:

- Concentrating on the US market with potential for international expansion in the future.

Q&A Highlights

• Commercial Transformation:

- Commercial transformation and new processes have driven the company’s recent turnaround.

• Budget and Value Proposition:

- Monitoring potential impacts from reimbursement and Medicaid changes, but Tableau’s cost-saving benefits remain attractive to hospitals.

• Conservative Guidance:

- Maintains a conservative guidance strategy, with confidence in achieving full-year revenue targets.

In conclusion, Outset Medical’s strategic initiatives and robust demand for its Tableau system position the company for continued growth. For further details, refer to the full transcript of the conference call.

Full transcript - RBC Capital Markets Global Healthcare Conference 2025:

Shagun Singh, Senior Research Analyst, RBC: Everyone for being here. I’m Shagun Singh, senior research analyst at RBC, and I’m very pleased to have Outset Medical here with us as the next company speaking. Joining us from the company is Nabil Ahmed, Chief Financial Officer, as well as Jim Mazzola, VP of Investor Relations. Nabil and Jim, thank you so much for being here today, really appreciate it.

Nabil Ahmed, Chief Financial Officer, Outset Medical: Thank you, Shagun, thanks for having us, and hello everybody, great to be here.

Shagun Singh, Senior Research Analyst, RBC: Great. So, you know, obviously you guys just reported Q1 results, I thought maybe we could just kick it off right there. So it’s a pretty good quarter, you know, 7% upside surprise on the revenue front, You know, you delivered your first year over year increase in five quarters. I think on consoles, it grew about 23% sequentially, the first time in six quarters. You know, you had a strong recurring revenue growth as well in the double digits, and I think you made comments on the commercial transformation, you know, which it seems like it’s largely behind.

So I know I touched on a few few big themes here, but, you know, maybe can you elaborate and talk about what is really driving this turnaround in q one?

Nabil Ahmed, Chief Financial Officer, Outset Medical: For sure. So we were really pleased with q one sort of top to bottom. Again, Shagun, you pointed out a lot of the highlights, strong console revenue performance, really strong recurring revenue performance. As a reminder, recurring revenues for us are the consumables that we sell with Tableau as well as our service offering. And then we had gross margin continue to do really well, 37.6% here in the quarter, and, our OpEx declined year over year as we annualize some of the, savings initiatives that we’ve undertaken in previous quarters.

From a driver’s perspective, Shagun, it really is that q one was sort of one of the first proof points that our commercial transformation is taking hold led by kind of our console growth. You know, we implemented a pretty comprehensive commercial transformation starting about a year and a half ago. We can talk about that at more depth, I’m sure. But, again, q one was a very nice proof point that it’s working well. Now, you know, we gotta do it again and again and again and again, but q one was a great proof point that it’s it’s working.

Shagun Singh, Senior Research Analyst, RBC: That’s great. I wanted to touch on on on each of the drivers, so maybe we can start with Tableau consoles. You know, can you maybe talk about, you know, what would you attribute historical console purchase holdbacks to? Maybe just give us, you know, some some looks there. And then exactly what turned around this quarter?

Have you just bottomed, or is there an increase in demand because of the sales transformation and other initiatives you have in place?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yes, Shagun. Demand for Tableau has always been strong. You know, if we sort of look at the value proposition of Tableau in the acute, Tableau saves hospitals money. Hospitals today, the majority of them outsource the provision of their dialysis by insourcing with Tableau. They can get a payback of a year roughly, in some cases, under a year.

And then in the home, because of our high retention rate much higher than the incumbent technology, the product is better for both patients and for providers and payers. So the demand has always been strong. For us, what has really started to work well is this sales transformation where we hired a sales a new sales leader, changed the profile of our reps, implemented new process and tools. And, again, q one being the first of these proof points, it really is this commercial transformation, sales transformation that’s been kind of the determinant here. Early innings, we’re excited to do it again and again and again, but, again, good good first good first quarter of this working.

Shagun Singh, Senior Research Analyst, RBC: Got it. That that that’s helpful that it’s really driven by demand. You know, on the pipeline, you called out a strong pipeline. You know, historically, you guys used to give a backlog number. Is there, you know, any chance you might provide that again?

And and any color pipeline, you know, quality, quantity, you know, how has it changed versus previously?

Nabil Ahmed, Chief Financial Officer, Outset Medical: For sure. From a backlog perspective, you know, we used to provide backlog when we were nascent in our commercial journey back in ’21 2020, ’20 ’20 ’1 time frame. The metrics that we feel are really important to talk about the health of the business now are the console sales rate, the console placement rate, and then our install base. Right? Every console we sell, obviously, is revenue, but then that drives the recurring revenue, that drives the gross margin.

And so, again, the metrics that really matter for us are consoles and then the install base, and we give the install base annually. With respect to pipeline, we are really pleased with the composition, the stage, and the growth of our pipeline. From a composition perspective, you know, we’re seeing opportunities across The US in all of our markets. Again, we sell only in The United States, which is a large market, but we’re seeing good participation across the country in our pipeline. Number two, from a stage perspective, our reps are doing a nice job moving opportunities through our sales stages.

We talked in our in our call here a couple weeks ago about a majority of our deals for 2025 that we expect to close in ’25 being in the later sales stages, so that’s great. And then three, from a growth perspective, our pipeline grew in q four and then grew again in q one, which we’re really pleased with. So, again, directionally moving in the moving moving in the right in the right direction.

Shagun Singh, Senior Research Analyst, RBC: You know, I I think you also mentioned that you have better surety around closing. Can you maybe elaborate on that? Because you could have a pipeline, but, you know, you may not see see the closing. So what exactly have you changed that gives you better clarity on that front? And then, also, I think you talked about the majority of the top 25% of the deals in ’25 at the are at the end stages.

Does that come in q two, or is it just going to come ratably through the year?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. With respect to the closing, so what gives us the conviction is really, again, the improvements in our sales process. So we implemented a new sales process. We hired a new sales leader about eighteen months ago. She brought in a new sales process, knew at that time.

Now our team has had more time on task than that sales process. And by the way, this team is becoming more and more tenured. Right? By definition, they’re becoming more and more tenured. So it’s the combination of the process, the tenure of the team, and then, again, our new process is more inspection driven where we have our sales leadership better able to work with our reps on what is happening in these deals, where do they need help, where are they stuck, whatever it might be.

And so it’s the team’s ability to move through these, if you will, and move them through the sales stages that gives us the confidence in the in in the closing. And the second part of your question?

Shagun Singh, Senior Research Analyst, RBC: Did just the 25% of the deals, when does that come in?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. That’s all baked. That’s for for the full year 2025. From a revenue perspective, we’ve talked about revenue building through the year, and, again, that continues to be the case, and this pipeline is for deals throughout the year.

Shagun Singh, Senior Research Analyst, RBC: Got it. And can you talk a little bit about capital budgets? I think on the q one call, you guys indicated that, you know, federal funding cuts, you know, has kind of made it a little bit challenging and more dynamic, but then you are still, you know, seeing the case for insourcing of Tableau. Your customers are still positive on that adoption. Can you maybe, you know, elaborate on what you’re hearing, and then what are the risks that, you know, capital budgets may be slashed at some point?

How’s outset placed?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So good news. So far, we’re not seeing anything that changes our outlook. Now we are obviously monitoring what is happening, especially as it relates to reimbursement and Medicaid changes, but nothing nothing to report so far. You know, Tableau’s value proposition in hospitals is really to save money.

So at some level we feel that we are a solution for hospitals who may be facing top line uncertainty or whatever it might be. So short answer, Shagun, nothing to report that affects our outlook here, we’re watching, and again we believe we’re a part of the solution for hospitals.

Shagun Singh, Senior Research Analyst, RBC: And then as we think about the benefits of in sourcing, are there any metrics you can help us, know, help us understand, you know, the upfront acquisition cost, payback time? You know, you guys have just maybe average cost savings on Tableau in acute versus home. Any any metrics you can share? And then, you know, the one thing that really stands out to me is not just the financial front, but also on the clinical side. And you guys do allude to that on the call, you know, every now and then.

But, you know, is is there any publication or something we should be looking out for?

Nabil Ahmed, Chief Financial Officer, Outset Medical: So with respect to insourcing, so first of all, we do most hospitals today outsource the provision of dialysis to third parties. They buy Tableau and insource, and what they find so a typical hospital again, it depends on the size, but it could be anywhere from a couple of Tableau’s to sort of many, many twenty, thirty, 40 machines depending on the size of the facility. Most facilities see a payback within about a year. We have some facilities who have seen payback in as little as six months. You know, I’ll give you one example here.

So we have hospitals who customers who have told us that they were paying over a thousand dollars per treatment in the ICU to their outsourced provider. The marginal cost of a treatment on Tableau so this is the supplies, our cartridge, dialyzer, whatever disposables the hospital might need. The marginal cost is it’s about it’s under a hundred dollars. And so, again, then you you amortize Tableau. You add in labor.

There’s still a lot of daylight between the thousand plus that they’re paying to the outsourcer and the marginal hundred that you’re paying on Tableau. So it’s sort of meaningful savings for a hospital, and that’s what drives the payback of a year or less a year or less for us.

Shagun Singh, Senior Research Analyst, RBC: And then just on the clinical side, how do you leverage that information? Is there any publication we should be

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So with respect so our team is now much more facsile at talking with chief nursing officers, and chief nursing officers have realized that having control allows them to better manage the patient. It reduces wait times, reduces rates of infection. In fact, we had one hospital customer who told us that after insourcing, they saw a seventy five percent reduction in their rates of CLABSI, which was huge. And in terms of publications, mean, Shagun, we’re always looking for publications, but what we are really pleased with is that we now have a large reference account list, if you will, where for prospects or whatever, we can connect them with CFOs, chief nursing officer, heads of IT, you know, a large reference community, if you will, to sort of help them as they make their decision.

Shagun Singh, Senior Research Analyst, RBC: Got it. That’s helpful. You know, recurring revenue, that’s a big part of the story as well. You know, I thought Leslie’s comments were interesting that you guys reached about in four point eight years, you reached 1,000,000 cumulative treatments. It took seventeen months to reach 2,000,000, just over twelve months to reach 3,000,000.

So when do you get to four?

Nabil Ahmed, Chief Financial Officer, Outset Medical: It’s really the rate of installed base growth. Right? Every Tableau that we sell generates a reliable, predictable stream of recurring consumable revenue and recurring service revenue. And so, again, as the installed base grows, the rate at which we get to that next million, that rate tightens. Right?

And so, again, as we place consoles, those consoles get used, and that’s what drives the flywheel of recurring revenues.

Shagun Singh, Senior Research Analyst, RBC: And anything to call out in terms of trends in utilization, treatments per week? How’s that trending?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. Only only positive. Utilization treatments per week have been really, really predictable, really consistent, really reliable for us. In the acute setting, we’ve seen between four and five treatments per console per week. In the home, it’s between three and four.

That’s what the prescription is at home, typically, on Tableau. And so it’s been very reliable and predictable, you know, since I’ve been there.

Shagun Singh, Senior Research Analyst, RBC: Got it. And and I think it’s worth noting noting you’ve said that on the current installed base, you still have a revenue opportunity of about 500,000,000 in in recurring revenues.

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. If you look at the consoles we have based on their estimated useful life to go, there is about a half million dollar half a billion dollars worth of recurring revenues that we’ll get over the next several years. Yeah.

Shagun Singh, Senior Research Analyst, RBC: That’s great. Just, I guess, a couple of follow ups on the commercial transformation. You guys said that it is largely complete. So what is still pending out there?

Nabil Ahmed, Chief Financial Officer, Outset Medical: From an activity perspective, it is complete. What what we need to do now is rinse and repeat and go prove to ourselves and to you all that we can replicate our success from q one and q two and q three and so on and so forth. Right? So that’s the it’s just the time on task, and it’s just the rinse and repeat.

Shagun Singh, Senior Research Analyst, RBC: And you did call out making some incremental investments on the field service team side. You know, how much spending or how many heads are you looking to add there?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So our field service engineering team, these are the folks who install Tableau. They do the preventative maintenance. They would repair if needed. They would move the machine if needed.

And so that team is really our face to the customer, and they are those folks are our face to our home patients because they would enter the patient’s home if they need to do preventative maintenance. And so that team, one of the things I’ll say is we’re very proud of this. They get so we measure customer satisfaction, and they get 90 plus percent CSAT scores, 95% CSAT scores, and so they’re doing a great job. Now the first thing we had to do was make sure that we had people in all the right geos across The US where we have consoles. That’s broadly done, and we’ll continue to need to add people here and there as the volumes grow but at a slower rate than in the past.

The other areas of investment for us are in remote repair, remote diagnostics, right, where, for example, we can use the data that Tableau generates, the data that sort of we have, and help identify problems or potential problems, right, when a patient calls or a customer calls so that either we can avoid a field service engineer visit or so that when they go out, they’re much more it’s easier for them to go fix whatever needs to be fixed. So those are the investments that you’ll see.

Shagun Singh, Senior Research Analyst, RBC: Okay. Understood. And, you know, I guess a bigger picture question. You know, Outsider has had a little bit of a choppy recent history, if you will, and and it seems like, you know, you guys needed to retool on the commercial side, and the demand is still there. You know, you still have a great product.

I’m just wondering, like, what have you learned from this experience, and what are you incorporating in your process going forward that can give investors more confidence that, you know, this is a turnaround, and now, you know, you can deliver that on a consistent basis going forward?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So what we’ve learned is that demand for Tableau exists. It has existed, and it continues to exist because the value proposition in both acute and home end markets retains. And then we’ve also now done the hard work on our commercial transformation. Q one was our first proof point that it is working, and what we need to go do to again, for ourselves and for you all is to go do that again and again and again, meaning execute the way we expect to be able to execute again and again and again.

Shagun Singh, Senior Research Analyst, RBC: Got it. I guess just moving on to guidance. So, obviously, you know, you guys beat in q one. You did not raise your guidance. You know, why not increase it by at least the amount of the q one beat?

Is it conservatism, or are you building in a cushion for something unforeseen, like, maybe on the CapEx side? You know, why didn’t you decide to raise?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. Look. We were very pleased with our q one performance top to bottom. Leslie and I both said, I think, our call in February that we wanted to remain conservative for this year, and that’s how we’re going to remain. Q one was a strong quarter, and we’re focused on executing again in q two and beyond.

Yeah.

Shagun Singh, Senior Research Analyst, RBC: So just conservatism?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. Just conservatism. You know, with one quarter down, we have a lot of work to do here to get into our guidance range, and we’re excited to do the work. We have a lot of confidence in our outlook, but, yeah, we wanna remain conservative.

Shagun Singh, Senior Research Analyst, RBC: What about in terms of the range? It’s a pretty wide range, up 1% to up 10%. Are you tracking towards the upper end of the range? Is that a fair assumption given q one?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Well, what I can tell you is at the midpoint of our guidance range, we assumed that our installed base would grow by roughly 10% and that recurring revenues would grow by roughly 10% year on year. Now, again, we don’t guide to quarters, but what I’ll tell you is we remain confident in that outlook for the full year without giving you, yeah, any more share.

Shagun Singh, Senior Research Analyst, RBC: And recurring revenue was up 20% in q one versus guidance implying 10%?

Nabil Ahmed, Chief Financial Officer, Outset Medical: For the full year. Yeah. Recurring revenue was up 20% year on year. Yeah.

Shagun Singh, Senior Research Analyst, RBC: And then how should we think about q two sequential step up through the year given the initiatives in place?

Nabil Ahmed, Chief Financial Officer, Outset Medical: We don’t guide specific quarters. What I’ll tell you is we expect revenue to build throughout the year led by recurring revenues on our growing installed base and then based on console placements.

Shagun Singh, Senior Research Analyst, RBC: Got it. You know, gross margins has been a very consistent, you know, positive story part of your story. You know, you guys delivered about 37.6% in q one. I think if you adjust for or normalize for the lower absorption, it’s almost 40%, and you’re looking to exit the year at 40%. So is it fair to assume that you’re tracking, you know, you know, way ahead of that, you know, guidance that you’ve given on gross margins or other puts and takes to consider?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. Our so our guidance remains exiting the year in the high 30% and with a four handle excluding the effects of this under absorption. You know, the one dynamic that does affect gross margin is product mix, whether it’s consumables or consoles and then home versus acute. Acute consoles have a higher gross margin than home, so there’s a little bit of mix to factor as we move through the year. But we remain confident in our outlook here of exiting, you know, in the high 30% zone.

Shagun Singh, Senior Research Analyst, RBC: And, you know, you guys have an outlook to get to plus 50% exiting 2027. Can you maybe give us a a breakdown of what is it where would you be on capital versus consumables, and and where do you peak on capital and consumables margins over time?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So we have you know, going back to our IPO, we’ve expanded gross margins significantly every year, and we remain on this journey to expand gross margins in a roughly linear way getting to that 50% milestone and then beyond. So with respect to the individual products, consumables are our highest gross margin product. And as the installed base grows, we pull through more consumables, and then we pull through more service, which is marginally you know, has a high contribution because we’re not adding people at the same rate. So the one big driver of margin expansion for us is just the growth in install base and the pull through of recurring revenues.

Number two, you know, we talked a little bit about the investments we’re making in remote repair, remote diagnostics. Those investments are bearing fruit, and so we’ll see further leverage from our field service engineering teams, from our service offering, and so you’ll see service gross margins expand. And then finally, on the console side, we’ve had what we call console cost down programs where we reduce the cost of individual components in the console either through r and d or supply chain strategies. And so, again, you’ll see the cost of the console decrease and the console gross margin expand over time. So we remain on track for this linear expansion to 50% gross margin within our planning horizon.

Shagun Singh, Senior Research Analyst, RBC: And any specific metrics in terms of or numbers in terms of what the 50% split is between capital and consumables, and where could it peak even beyond the 50%?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So that as we move beyond 50 and as the installed base continues to grow, we will pull through these higher margin recurring revenues. So 50% is not a peak. There’s no reason why we cannot be in the 60% gross margin or higher as we move forward in time. Again, it just depends on the installed base growing and the pull through of recurring revenues.

Nothing new needs to happen.

Shagun Singh, Senior Research Analyst, RBC: Got it. You know, I thought it was interesting you said that you you expect to get to adjusted EBITDA positive at less than 200,000,000 in sales. You know, I think we are there, I think, in the 2028 time frame. Just what is your reaction to that? And, you know, just curious, you know, what are the assumptions around gross margins and OpEx levels to kind of get get you there?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So we’re not I don’t wanna comment on the time frame. What I can tell you, the most important thing for us is getting gross margin to 50%. So, again, we’re on a linear journey there. Number two, our OpEx guidance for this year, roughly $90,000,000 of OpEx, that’ll grow at inflationary rates at most.

And so if you think about roughly 90,000,000 of OpEx, if you think about 50% gross margin, we can break even on an EBITDA basis at a revenue run rate of under $200,000,000. So the structure works, and, again, you know, we do have that within our planning horizon.

Shagun Singh, Senior Research Analyst, RBC: And and, Nabil, I think, you know, you guys have had a lot of initiatives, you know, on on the p and l, really, balance sheet. You know, you’ve done a series of transactions, you know, on the debt front. You’ve, you know, significant cost containment, I think, $80,000,000 in annualized spending. You guys have kind of taken out. You know, can you just comment on profitability?

I think you’ve said that you don’t need to approach capital markets. You know, just give us a look into the health of the balance sheet of the company financially.

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So we exited the quarter with a hundred and $92,000,000 in cash and a hundred million dollars of debt. This was following kind of the capital raise and the debt refinancing activities we announced in early January. We are fully aligned with shareholders here around getting to cash flow breakeven, getting to EBITDA profitability with the cash we have on our balance sheet. And and for us, it’s again tied to the gross margin expansion that I talked about, and it’s tied to the OpEx discipline that we’ve demonstrated and will continue to demonstrate.

So that’s all within our planning horizon. And, yes, we do have the ability and the cash to get through cash flow breakeven.

Shagun Singh, Senior Research Analyst, RBC: Is there a minimum level of revenue growth we need to see for for this math to work and for you guys to approach profitability, you know, that you can share? And, previously, you guys had a LRP out there. You know, you you had pulled it. Are there any plans of reinstating that in the next twelve months or so?

Nabil Ahmed, Chief Financial Officer, Outset Medical: We still have an LRP. We still have one internally.

Shagun Singh, Senior Research Analyst, RBC: Okay.

Nabil Ahmed, Chief Financial Officer, Outset Medical: What we pulled was the guidance with the LRP. So we’re not guiding to any period beyond 2025. And, I mean, you know, our focus as we sit here today with one strong quarter downtrodden is really on executing through this year and executing through the guidance range. Right? So we are heads down here focused on two q, and then we’ll do the same thing for three, four.

And we’ll we’ll look we’ll always look at the metrics that we disclose, at the right time, yeah, maybe we will share an LRP, but, yeah, I don’t wanna commit.

Shagun Singh, Senior Research Analyst, RBC: Okay. I I meant you guys had given a a top line growth trajectory previously for the LRP range. So is that something you might reinstate at some point?

Nabil Ahmed, Chief Financial Officer, Outset Medical: We might. But, again, what I would tell you is our focus for inter is really on 2025 right now. But, yeah, that never say never. Yeah.

Shagun Singh, Senior Research Analyst, RBC: Alright. You know, I I also wanted to get your thoughts on just around, you know, just just portfolio and M and A. You know, how do you think about interest from larger players or partnerships? Is there any opportunity? Is is OUS I know you’re very focused on on getting things on a you know, going on on a consistent basis in The US, but you did have an international strategy earlier.

How should we think about that?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. So other opportunities may be interesting. OUS other opportunities OUS, all interesting in the theoretical. We have large markets here in The US, Eleven Billion Dollars of TAM that we are in the very, very early innings of addressing, and we now have the right team in place. We’re really, really confident in our strategy with respect to both penetrating acute and home end markets and are really focused on executing against those.

Right? So in the theoretical, we’re absolutely open, but as a practical matter, our focus really is heads down on 2025 and and executing our plan.

Shagun Singh, Senior Research Analyst, RBC: And, you know, I mean, you do have a really massive market out there. The dialysis market is is massive at, I think, 11. Does it make sense for you to partner with a bigger player or consider partnerships to really be able to drive into that TAM? How are you thinking about that?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. I mean, look, we’d be open, but, again, we think we have the right capital sales infrastructure, the right clinical sales infrastructure to capitalize on this market opportunity and the, you know, one proof point being our performance in q one working well, and we wanna replicate that. And another proof point being, again, our pipeline, which as we’ve talked about, grew in the first quarter here and contains a number of sort of really interesting enterprise deals, you know, that we’re excited to play out.

Shagun Singh, Senior Research Analyst, RBC: Got it. You know, we have about a minute left. I was just wondering if you can maybe touch a little bit on on the acute versus subacute versus home. You know, where are you in terms of penetration? You know, I think last year, it said, at least on the acute side, it was high single, low double digit.

Is it teens? Where are you? Because it is a massive opportunity you’re still tracking to.

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. In the acute, we believe the total console TAM is between forty and forty five thousand, so we could 40 to 45,000 consoles in the acute. Our installed base entering this year was roughly 4,500 in the acute, so we’re, call it, 10% ish penetrated. In the home, we have 1,500 consoles sold into the home end market against 600,000 chronic patients on dialysis. So that’s, again, in its in its infancy.

And the subacute, particularly in the SNF area, is a new market opportunity for us. What we like about the subacute market is that the value proposition is It’s an economic value proposition for the subacute just like it is for the acute, and it’s the same sales team that we have that can address all three markets. So lots of runway to go.

Shagun Singh, Senior Research Analyst, RBC: Got it. I know we’re out of time, but, Nabil, any any last, you know, last thoughts from you? Any key messages from investors? You know, q one was a good proof point. You know, the stock is really cheap still.

You know, just just, you know, any messages for investors?

Nabil Ahmed, Chief Financial Officer, Outset Medical: Yeah. For sure. So first of all, we’re really pleased with our q one performance, and we’re focused on doing that again and again and again and getting back to executing the way we know our business can execute. Number two, we are fully aligned with stockholders and and all of you around getting to profitability, getting to breakeven with the cash we had. And then number three, you know, what we have learned through all this is the value proposition of Tableau remains very, very strong in acute, subacute, and home, and we’re excited to capitalize on all these opportunities.

Thank you.

Shagun Singh, Senior Research Analyst, RBC: Great. Thank you so much, Nabil and Jim. Appreciate your time.

Nabil Ahmed, Chief Financial Officer, Outset Medical: Thank

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