OM Outset Medical Inc

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): November 6, 2024

Outset Medical, Inc.

(Exact name of Registrant as Specified in Its Charter)

Delaware	001-39513	20-0514392
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
3052 Orchard Dr., San Jose, California		95134
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (669) 231-8200

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common Stock, $0.001 par value per share		OM		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

---

 

 

Item 2.02 Result of Operations and Financial Condition.

 

On November 6, 2024, Outset Medical, Inc. (the “Company”) issued a press release and will hold its third quarter 2024 earnings conference call announcing the Company’s financial results for the quarter ended September 30, 2024, as well as updated financial guidance for 2024 revenue and non-GAAP gross margin. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.

 

The information contained in this Item 2.02 and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such a filing.

 

Forward-Looking Statements

 

This report and the exhibit attached hereto contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. 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 possible or assumed future results of operations and financial position, including expectations regarding projected revenues, gross margin, operating expenses, capital expenditures, cash burn, cash position, profitability and outlook; statements regarding the anticipated impacts and benefits of the Company’s cost reduction actions, initiatives to optimize the commercial organization and restructurings; 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; the Company’s 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.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits.

 

Exhibit Number		Description
99.1		Press Release entitled “Outset Medical Reports Third Quarter 2024 Financial Results” dated November 6, 2024
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

---

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		Outset Medical, Inc.
Date: November 6, 2024		By:	/s/Nabeel Ahmed
			Nabeel Ahmed
			Chief Financial Officer

 

---

Outset Medical Reports Third Quarter 2024 Financial Results

San Jose, CA – November 6, 2024 – 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, 2024.

“During the quarter, we made significant progress, achieving sequential revenue growth, expanding the Tablo footprint in both the acute and home care settings, boosting gross margin compared to last year and reaching a record level of recurring revenue,” said Leslie Trigg, Chair and Chief Executive Officer. “Meanwhile, we continued implementing our sales transformation, which is showing promising early results and is poised to significantly enhance our growth with acute-care providers.”

Third Quarter 2024 Financial Results

Revenue for the third quarter of $28.7 million increased 5% compared to $27.4 million in the second quarter and declined 6% from $30.4 million in the third quarter of 2023. Product revenue of $20.3 million rose 6% from $19.2 million in the second quarter and declined 14% from $23.5 million in the third quarter of 2023. Service and other revenue was $8.4 million, roughly even with $8.2 million in the second quarter and an increase of 22% compared to $6.8 million in the third quarter of 2023. Recurring revenue from the sale of Tablo cartridges and service reached $21 million, an increase of 4% from the second quarter and 17% as compared to the prior-year period.

Total gross profit of $9.8 million was even with the second quarter and up 37% from $7.2 million for the third quarter of 2023. Total gross margin of 34.3% declined 1.4 percentage points from 35.7% in the second quarter and rose nearly 11 percentage points compared to 23.6% in the third quarter of 2023. On a non-GAAP basis, gross margin of 36.4% declined less than 1 percentage point from 37.3% in the second quarter and rose nearly 11 percentage points from 25.6% in the third quarter of 2023. Product gross profit of $8.8 million increased 1% from $8.7 million in the second quarter and 31% compared to $6.7 million in the third quarter of 2023. Product gross margin of 43.2% declined 1.9 percentage points from 45.1% in the second quarter and increased nearly 15 percentage points from 28.4% in the third quarter of 2023. Service and other gross profit of $1.0 million was roughly even with the second quarter and doubled from $0.5 million in the third quarter of 2023. Service and other gross margin of 12.5% declined 1.1 percentage points compared to 13.6% in the second quarter and increased 5.7 percentage points from 6.8% in the third quarter of 2023.

Operating expenses of $33.7 million declined nearly 17% from the second quarter and 36% from the prior-year period. Research and development (R&D) expenses were $8.1 million, sales and marketing (S&M) expenses were $15.4 million, and general and administrative (G&A) expenses were $10.1 million. This compared to operating expenses of $52.6 million in the third quarter of 2023, including R&D expenses of $16.1 million, S&M expenses of $24.7 million, and G&A expenses of $11.8 million.

Excluding stock-based compensation expense and severance and related charges, net of adjustments to compensation accrual, non-GAAP operating expenses were $26.5 million, including R&D expenses of $6.6 million, S&M expenses of $13.6 million, and G&A expenses of $6.3 million.

Net loss was $27.9 million, or $(0.55) per share, compared to net loss of $46.2 million, or $(0.93) per share, for the same period in 2023. On a non-GAAP basis, net loss was $20.2 million, or $(0.39) per share, compared to non-GAAP net loss of $35.3 million, or $(0.71) per share for the same period in 2023.

Total cash, including restricted cash, cash equivalents and short-term investments, was $179.0 million as of September 30, 2024.

Full Year 2024 Financial Guidance

Outset increased 2024 revenue guidance to approximately $112 million from prior guidance of approximately $110 million, and non-GAAP gross margin guidance to the mid-30% range from the low-to-mid 30% range.

Webcast and Conference Call Details

Outset will host a conference call today, November 6, 2024, at 2:00 p.m. PT / 5:00 p.m. ET to discuss its third quarter 2024 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. As listed in the itemized reconciliations between GAAP and non-GAAP financial measures included in this press release, the Company’s GAAP financial measures include stock-based compensation expense, as well as severance and related charges net of the reversal of compensation accruals for impacted employees. Stock-based compensation is a non-cash expense, and severance and related charges arise outside the ordinary course of continuing operations and are not reflective of the Company's current operating performance. As such, management has excluded the effects of these items 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, cash position, profitability and outlook; statements regarding the anticipated impacts and benefits of the Company’s cost reduction actions, initiatives to optimize the commercial organization and restructurings; 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; the Company’s 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.

Investor Contact

Jim Mazzola

---

Investor Relations

jmazzola@outsetmedical.com

 

---

Outset Medical, Inc.

Condensed Statements of Operations

(in thousands, except per share amounts)

(unaudited)

 

		Three Months Ended										Nine Months Ended
		September 30,										September 30,
		2024					2023					2024					2023
Revenue:
Product revenue		$	20,305				$	23,531				$	59,971				$	80,640
Service and other revenue			8,361					6,831					24,251					19,229
Total revenue			28,666					30,362					84,222					99,869
Cost of revenue:
Cost of product revenue (2)			11,532					16,837					34,680					59,866
Cost of service and other revenue			7,314					6,368					21,725					18,715
Total cost of revenue			18,846					23,205					56,405					78,581
Gross profit (1)			9,820					7,157					27,817					21,288
Gross margin (1)			34.3		%			23.6		%			33.0		%			21.3		%
Operating expenses:
Research and development (2)			8,139					16,076					30,508					44,775
Sales and marketing (2)			15,417					24,720					54,593					74,038
General and administrative (2)			10,103					11,815					34,231					34,892
Total operating expenses			33,659					52,611					119,332					153,705
Loss from operations			(23,839	)				(45,454	)				(91,515	)				(132,417	)
Interest income and other income, net			2,149					2,573					7,718					7,889
Interest expense			(6,068	)				(3,213	)				(18,046	)				(9,258	)
Loss before provision for income taxes			(27,758	)				(46,094	)				(101,843	)				(133,786	)
Provision for income taxes			182					86					495					411
Net loss		$	(27,940	)			$	(46,180	)			$	(102,338	)			$	(134,197	)
Net loss per share, basic and diluted		$	(0.55	)			$	(0.93	)			$	(1.98	)			$	(2.72	)
Shares used in computing net loss per share, basic and diluted			50,501					49,913					51,685					49,364

 

---

(1)  Gross profit and gross margin by source consisted of the following:
		Three Months Ended										Nine Months Ended
		September 30,										September 30,
		2024					2023					2024					2023
Gross profit
Product revenue		$	8,773				$	6,694				$	25,291				$	20,774
Service and other revenue			1,047					463					2,526					514
Total gross profit		$	9,820				$	7,157				$	27,817				$	21,288
Gross margin
Product revenue			43.2		%			28.4		%			42.2		%			25.8		%
Service and other revenue			12.5		%			6.8		%			10.4		%			2.7		%
Total gross margin			34.3		%			23.6		%			33.0		%			21.3		%
(2)  Include stock-based compensation expense and severance and related charges, net as follows:
		Three Months Ended										Nine Months Ended
Stock-based compensation expense		September 30,										September 30,
		2024					2023					2024					2023
Cost of revenue		$	296				$	620				$	1,092				$	1,381
Research and development			1,400					2,793					6,025					8,232
Sales and marketing			945					3,765					4,898					9,908
General and administrative			3,747					3,715					12,396					10,015
Total stock-based compensation expense		$	6,388				$	10,893				$	24,411				$	29,536
		Three Months Ended										Nine Months Ended
Severance and related charges, net*		September 30,										September 30,
		2024					2023					2024					2023
Cost of revenue		$	317				$	—				$	518				$	—
Research and development			161					—					1,124					—
Sales and marketing			873					—					1,765					—
General and administrative			20					—					390					—
Total severance and related charges, net		$	1,371				$	—				$	3,797				$	—
* Net of adjustments to compensation accrual

 

 

---

Outset Medical, Inc.

Condensed Balance Sheets

(in thousands, except per share amounts)

 

		September 30,				December 31,
		2024				2023
		(Unaudited)
Assets
Current assets:
Cash and cash equivalents		$	33,287			$	68,509
Short-term investments			142,346				134,815
Accounts receivable, net			34,259				32,980
Inventories			61,436				49,215
Prepaid expenses and other current assets			3,945				5,700
Total current assets			275,273				291,219
Restricted cash			3,329				3,329
Property and equipment, net			9,492				13,273
Operating lease right-of-use assets			4,312				5,375
Other assets			484				605
Total assets		$	292,890			$	313,801
Liabilities and stockholders' equity
Current liabilities:
Accounts payable		$	4,295			$	5,827
Accrued compensation and related benefits			14,719				19,005
Accrued expenses and other current liabilities			6,749				13,459
Accrued warranty liability			2,156				3,712
Deferred revenue, current			12,766				11,727
Operating lease liabilities, current			1,745				1,593
Total current liabilities			42,430				55,323
Accrued interest			2,222				896
Deferred revenue			77				101
Operating lease liabilities			3,157				4,482
Term loans			197,182				130,113
Total liabilities			245,068				190,915
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, 2024 and December 31, 2023			—				—
Common stock, $0.001 par value; 300,000 shares authorized as of September 30, 2024 and December 31, 2023; 52,538 and 50,317 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively			52				50
Additional paid-in capital			1,111,503				1,084,515
Accumulated other comprehensive income			352				68
Accumulated deficit			(1,064,085	)			(961,747	)
Total stockholders' equity			47,822				122,886
Total liabilities and stockholders' equity		$	292,890			$	313,801

 

---

Outset Medical, Inc.

Condensed Statements of Cash Flows

(in thousands)

(unaudited)

 

		Nine Months Ended September 30,
		2024				2023
Net cash used in operating activities		$	(99,815	)		$	(106,931	)
Net cash (used in) provided by investing activities			(4,215	)			59,601
Net cash provided by financing activities			68,808				10,423
Net decrease in cash, cash equivalents and restricted cash			(35,222	)			(36,907	)
Cash, cash equivalents and restricted cash at beginning of the period			71,838				76,533
Cash, cash equivalents and restricted cash at end of the period (1)		$	36,616			$	39,626
(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,
		2024				2023
Cash and cash equivalents		$	33,287			$	36,297
Restricted cash			3,329				3,329
Total cash, cash equivalents and restricted cash*		$	36,616			$	39,626
* The total cash, including restricted cash, cash equivalents and investment securities as of September 30, 2024 was $179.0 million; compared to $197.3 million as of September 30, 2023.

 

---

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,
		2024					2023					2024					2023
GAAP net loss per share, diluted		$	(0.55	)			$	(0.93	)			$	(1.98	)			$	(2.72	)
Stock-based compensation expense			0.13					0.22					0.47					0.60
Severance and related charges, net			0.03					—					0.07					—
Non-GAAP net loss per share, diluted		$	(0.39	)			$	(0.71	)			$	(1.44	)			$	(2.12	)
Reconciliation between GAAP and non-GAAP net loss:
		Three Months Ended										Nine Months Ended
		September 30,										September 30,
		2024					2023					2024					2023
GAAP net loss, diluted		$	(27,940	)			$	(46,180	)			$	(102,338	)			$	(134,197	)
Stock-based compensation expense			6,388					10,893					24,411					29,536
Severance and related charges, net			1,371					—					3,797					—
Non-GAAP net loss, diluted		$	(20,181	)			$	(35,287	)			$	(74,130	)			$	(104,661	)
Reconciliation between GAAP and non-GAAP results of operations:
		Three Months Ended										Nine Months Ended
		September 30,										September 30,
		2024					2023					2024					2023
GAAP gross profit		$	9,820				$	7,157				$	27,817				$	21,288
Stock-based compensation expense			296					620					1,092					1,381
Severance and related charges, net			317					—					518					—
Non-GAAP gross profit		$	10,433				$	7,777				$	29,427				$	22,669
GAAP gross margin			34.3		%			23.6		%			33.0		%			21.3		%
Stock-based compensation expense			1.0					2.0					1.3					1.4
Severance and related charges, net			1.1					—					0.6					—
Non-GAAP gross margin			36.4		%			25.6		%			34.9		%			22.7		%
GAAP research and development expense		$	8,139				$	16,076				$	30,508				$	44,775
Stock-based compensation expense			(1,400	)				(2,793	)				(6,025	)				(8,232	)
Severance and related charges, net			(161	)				—					(1,124	)				—
Non-GAAP research and development expense		$	6,578				$	13,283				$	23,359				$	36,543
GAAP sales and marketing expense		$	15,417				$	24,720				$	54,593				$	74,038
Stock-based compensation expense			(945	)				(3,765	)				(4,898	)				(9,908	)
Severance and related charges, net			(873	)				—					(1,765	)				—
Non-GAAP sales and marketing expense		$	13,599				$	20,955				$	47,930				$	64,130
GAAP general and administrative expense		$	10,103				$	11,815				$	34,231				$	34,892
Stock-based compensation expense			(3,747	)				(3,715	)				(12,396	)				(10,015	)
Severance and related charges, net			(20	)				—					(390	)				—
Non-GAAP general and administrative expense		$	6,336				$	8,100				$	21,445				$	24,877
GAAP total operating expense		$	33,659				$	52,611				$	119,332				$	153,705
Stock-based compensation expense			(6,092	)				(10,273	)				(23,319	)				(28,155	)
Severance and related charges, net			(1,054	)				—					(3,279	)				—
Non-GAAP total operating expense		$	26,513				$	42,338				$	92,734				$	125,550

 

---

v3.24.3

Document and Entity Information	Nov. 06, 2024
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Nov. 06, 2024
Entity File Number	001-39513
Entity Registrant Name	Outset Medical, Inc.
Entity Central Index Key	0001484612
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-0514392
Entity Address, Address Line One	3052 Orchard Dr.
Entity Address, City or Town	San Jose
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	95134
City Area Code	669
Local Phone Number	231-8200
Title of 12(b) Security	Common Stock, $0.001 par value per share
Trading Symbol	OM
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false

---