OM - Earnings call transcript Q4 2021

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Operator

Good day and thank you for standing by. Welcome to the Outset Medical Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator instructions] Please be advised today's conference may be recorded. now today, hand Investor Jim would to conference Relations. I host your Mazzola, Instructions] like a to over [Operator Head of Sir, ahead. please go

Jim Mazzola

the Chief and you Medical company call. Financial today thank and Officer. Trigg, afternoon and the Welcome Okay, Chair Nabeel Leslie and Chief good Participating from fourth Officer; year full to quarter are XXXX Executive earnings everyone. Outset Ahmed,

outlook that upon Outset updated XXXX forward-looking risks statements. these materially based differ for these we issued those will the After obligation the like question-and-answer market to are These and current from intent in as forward-looking recorded discuss expectations our is operational protected during Reform today's Litigation Securities can and actual being by Any statements all and assumptions. also or our or no and material market call, today results future of Relations are made Investors statements. All to be both XXXX. Private website. quarter will I'd the of events events, predictions well estimates a financial of or to uncertainties that Act This investor the relate close involve be under the remarks, cause or statements forward-looking statements During call provide a to prepared archived be various is statements. fourth trends, section performance call will of and forward-looking and found it statements our results XXXX. our our that could of assumes anticipated update implied host after in which we pages our remind as presentation, results our the news Investor will at that release We session. you outsetmedical.com.

latest the to Exchange Factors and annual with list and Outset's of Securities Commission filings of a to and Risk Outset's now section description reports. turn let With the our Leslie. with over that, please the call including business, uncertainties me refer and associated quarterly public risks For the

Leslie Trigg

thank and results. review everyone quarter to afternoon for XXXX year and you us joining fourth Good our full

introduce two Before which Mazzola, med-tech Investor brings our of fourth and joined and sciences and welcome I team growth, for continue $XX.X million of $XXX.X strategy, us like our revenue to in expansion, we base. to and thought we record off truly a evidenced Relations. home year acute XXXX life I'd grow in year resulted during Vice look Hong year-over-year as recently quarter The total decades to million, Jim President installed we for representing contributions momentum his and our gross XX% of tripling begin representing who to Outset revenue business. by quarter capped of resulted forward as exceptional of growth Jim meaningful land with progress toward our growth growth year-over-year. full and success XXX% revenue This tangible fourth expand Kong margin placement, in as a experience

through as Our proved we continue again resilient COVID-XX. grow business to

in significant our We high. revenue visibility our fourth trajectory. exit extended in in hitting backlog XXXX XXX of compared with historic backlog X,XXX for console XXXX XXXX us to the in exiting success beyond consisting a XXXX exited bookings backlog intended Our a quarter of revenue portion home. in with with and consoles significant with consoles This provides use backlog the confidence

within sales discussion guidance, for and touch year projecting in fiscal on visibility to home an XXXX inflection acute ahead units we his use. continued strong our growth year will of in customers care with good are deployed Nabeel another As revenue

specifically gross approximately our margins expansion to XX%. remain goals, in we our margin confident In of achieve addition to growing goal the XXXX topline, reaching gross

exceeded the transformational existing our market, shipments. Turning with new success year XXXX progress and expanding in customers, terms our in fourth and an of expectations to a acute with the console review sales full now of quarter agreements,

strategy land validated consistently as saw benefits provides. economic, sites clinical Tablo and interest they expressed our new we their as experienced Importantly, and Tablo in customers the across workflow network expand fleets that expanding to their

in For example, outsourced per the southeast paying provider one an to was regional Tablo. $XXX service with health treatment system nearly prior adopting

health Following years. a and with $X past system in XX% hospital to resulted The in an Tablo implementation, benefits successful network. treatment expansion the economic the multiple a in additional Tablo benefited and costs over in three per million estimated reduction savings operational from an its hospitals their saw

recent due with reduction their we recover use, of also of benefits, unexpected dialysis own which ease its from some In are has outsourced struggling enabled to shortages. terminations staffing adoption service addition cost to providers Tablo's from seeing to hospitals

we citing seven goal achieved with the largest of U.S. of eight systems. XXXX, sales During health our agreements

in XXX Our largest up us us and States, team United expansion This regional success to ongoing we setting for with a the expanding also backlog base, acute more XXXX systems, our setting of meaningful and foundation of commercial while expansion strong top as enabled the size health successfully the roughly double of sales XXXX. drove our across significantly footprint a well than install third a beyond. landed our agreements for

workflow impressively to see another operational evidenced In part customers. with patients clinical XT's to to our orders, the thanks rate of to success by resonating also our strong despite through attachment X% generating Tablo study, addition times clinical hours. treatment averaged an that we of demonstrated new to benefits just XTEND nurses XT validation received is we in value low quarter XT clotting XX.X This and which continue rates, for

acute Our us nation's beds. for fewer XXX largest commercial important the smaller hospitals with last solves for than only market health system, problems that Tablo not in also but year taught the success

estimate, the immediately service human small hospital about putting proud exists. We market, add Tablo well. members also health our have dialysis communities where Given to is may at not to have to rural that on is million the Texas states patients travel like I'd dialysis to our success initially their start $XXX level or in of in-patient order now in billion. a as need hospitals opportunity to smaller strong like in traction away U.S. previously to creating market risk in believe of $X.X serve who care Tablo previously care. and hours that excluded for at care. access often Oklahoma, In access acute community had TAM had offering U.S. adopted our it first setting would may the to patients than we these and have segment hospitals to total this dialysis equity TAM and which a patients addressable very seen meaningful from our wherever larger is projected, be lost. the use insource dialysis whenever losing We've have Tablo preserve small had would otherwise receive to line are we

and tremendous As in we're in particularly runway the new of of in have seeing still just hospitals we tip Tablo, we look the observing as a side. are on we the single-digit only terms customer of ahead, acute we penetrated value feel at we are acquisition, acute sizes, all iceberg

we a I this talked about step as start we -- can choking, -- sorry, As talked about next -- you start about actually. before talked we

Nabeel Ahmed

the strategy. patient on and delivering a and highly we acute in our In and home exceptional experience. differentiated to building directly presence, focusing approach took an and home deliberate foremost setting caregiver XXXX, customer early install Growing feeds base our expansion first

in a more these patient to both I percentage XXXX last both that from revenue. foundation specialty also pleased while Leslie it Our in distribution with systems XXXX consoles, scale, beginning of and to this the objectives, reaching night XXX and home year second as report, After of home is than ready XXXX, was training to of our to to day. key operational base achieved growth, of high with home home our revenue our expect year. anytime of a total for inflection revenue revenue this objective us is growing team -- double programs exit build year in XXXX, place am the scale To that install health ways an solid allow mid we achieve and to to a providers. as mid-teens clinic with the was percent to in to logistics single-digits goal XXX in and tripling support to or level

Leslie Trigg

I'm as they work Nabeel. Thank dream the Teamwork you, say. makes back.

home up well that set we portion significant strong a for were counsels our Given of and in are we believe QX XXXX. volume backlog, velocity active

Additionally, favor. macro factors in in the home setting remain overwhelmingly our

our program following on last under a of we announced our submission we quarter the have application the As XXXX. first favorable Tiffany's to in very for pleased decision received of the call, Tablo are

Choices and first and incumbent compared a transitional innovative stands Tiffany reminder, only adjustments Stage this device, teams provide substantial Treatment XXXX. Notably, and a The new As on dialysis improvement the for supplies. add decision will and for technology sales the on to to in equipment benefit CMS it CMS our or ETC making rule. deem new the tailwinds additional from Tablo payment End capitalize model clinical Tiffany's the we believe Renal

future, Beyond expansion, reached gross our to make We our margin the for teams with year. of supply proud chain non-GAAP despite team of revenue and margin the on a headwinds. our ability build progress foundation drive gross continues to fourth impressive growth macro the across quarter managed effectively was sector the volatility which XX%, our We're and business how very during through they've expectations. and line the in macro and quarter

work our ongoing for initiatives and which cost helped reduction chain the drive continue supply side, On in us, our the cost programs to and sequential down console. of manufacturing

when in roadmap decrease our up. source previously we our and On This margin contract in enables a initiatives cost contribute transportation are to is a in in to of expansion, this manufacturing milestone Mexico new XXX(k) important stores to costs clearance and expected or this important This in Tablo as other we source the addition gross Tablo expect ramps November cartridge elevated produce cartridge the cartridges shipping milestone cartridge. Asia. to down expansion. Mexico an to late partner approval gross long-term for an continue granted production manufacturing a partner Southeast second new ongoing achieved margin new Both clearance side, FDA existing with to on new as primary

revenue In to and consistent cost approval and enable able both In challenges margin process reduction, optimize manufacturing very current performance believe the of predictable supply chain our growth Outset better better deliver gross lead-time, our summary, this to year. will expansion. to and continues around full -- strong, addition capacity, us will and quarter we proud we and are in logistics. fourth mitigate

them. key last acute delivering achieved the setting, manufacturing of are In addition, technology we're increasing transformative for to XXXX the we reduce for team, building cost communicated support patients capacity growth. profitable and strategic sustainable dialysis the all at initiatives we and the financial a designed reduction delivering These enable testament burden in the initiatives accomplishments year expansion and those our to home exceptional and within foundation to expansion beginning who the successfully setting,

As the distinguish inflecting and XXXX, we the continue from our look I to around Outset trajectory we care trajectory confident acute year, namely, growth and now. of drivers business, our begins promise home clarity Medical, that and to conviction business to and the we expanding last established beachhead will have expanding our in providers remain better very gross growth patients margins. our meaningfully dialysis that

Nabeel, a call sales held like Before to our month. was story last annual from we meeting over the training share turn which to I'd

all Melvin speak every his sales disease and stage in dialysis with simple overwhelming." who markets Cleo told have to in had it turn to I'll With and that information were in couple One. the by two responsible and and children describes last of years grow dedication that Air to the is Tablo She with forward to day at Nabeel Tablo of much the enormous our us feel on eager were Tablo night the now our but look Force disinfection been everyone and for thanking of and approached to course, year and Not in grandchildren. the began as had the a never like mission our when in to veteran only try without team moving wife several Tablo. in an invited to they better He of home quick their said screen impact difference. easy, And was the with lost. sharing so on extraordinary to Cleo XXXX. he the maintaining the for he patients XXXX, possible competitor more cannot touch that difficult kidney nine quite nephrologists team. Cleo Tablo Melvin's success call is and do. to a more treatment time provide everything work. that, how including them and served home of Melvin individuals assimilate things you're we including you by diagnosed of saves, through up of She do on acute our training with And we and close on enjoy is years all believe XXXX. XXXX our continue Air in nephrologist we over for of XXXX setting our employees and to a spend said, Melvin want for I April meeting, time Outset expectations more likes option like is. So, group. none there can you team. the step-by-step to and further the retirement, walks XX out for and XX Cleo this such he as on four system. We doing Force, and they "binders carried and simply were review As new I spending country and told expand our work financials end and a love granularity hard stories key was that was for drivers us, their would we to time

Nabeel Ahmed

Leslie. Thanks everyone. Hello

revenue million, shipments, to console acute increased installed XT $XX.X the our fourth grew upgrades. driven and impact by Our year-over-year base, of primarily shipments customers, to consumable increased support higher to services growing quarter XX%

saw year-over-year and of million. had Similar XT. other revenue $XX.X increase Product installed revenue and better see Console by of $XXX.X we of an to and prior projected. revenue increased to million, driven Our cartridge was year-over-year with Consumable we to XX% $X.X grew year. by grew our grew increase the revenue XX% by upgrade line XX% versus XXX% Tablo than the We full as larger utilization higher to year million, prior $X.X to million prior XXX% revenue uptake Service in qX our initially million, the $XX.X given quarters, XT of year-over-year we the year. console over was service continue placements an demand availability base. for ASP expectations.

release. you expenses, will highlight to margin encourage can the non-GAAP Moving and of I found earnings to gross measures, operating our today's non-GAAP GAAP results. review which to reconciliation be I in

which lowered $X.XX commercial $XX.X driven period, restricted quarter million, in cash, a increased the to net or Operating $XX.X million as R&D. investments primarily in quarter compared per and per sequential from to same as expenses million non-GAAP in the versus period operating quarter the output. improvement and Non-GAAP primarily our share compared were year $XX.X loss cents the loss nine primarily gross of versus improvement with loss percentage in costs basis cost fourth meaningfully making of period prior per year $XX quarter $X.X improvement G&A a million of net while $XX.X increased of growth up period. cents public ongoing million, points. reduction our fourth net XX%, ended margin to in period share a year XX of console manufacturing We was $XXX.X an to console $XX.X the net cash This GAAP cash, Our R&D, million prior production the our in approximately or to resulting of year investments execution console activities the enabling share by in was XX organization, points the moving investments. and equivalents, for tied the related year to a million was for net have approximately result of company Mexico, of investments prior XXXX. headcount and prior the compared resulting a $X.XX non-GAAP or our OpEx result million, loss we're to loss commercial reported compared We share, the per of XX expenses prior fourth

the fiscal full represents million, We outlook. million the XX% revenue project which from revenue. XXXX to year to range our XXXX growth approximately $XXX XX% to to XXXX on for Moving $XXX year over

home by our acute exiting guidance both is XXXX our grounded pipeline. and afforded of backlog well as as visibility the in Our consoles

inflection guidance to customers. assumes revenue our an in sales home Our

a percentage expect with home compared our as total to as will that for revenue double goal We mid-teens revenue our the a proportion of XXXX year XXXX. in the into XXXX sales in of a full

year. we purposes, modeling to For the the mid rest move sequentially of grow high we assume in revenue accelerate then will the single-digits as QX to and QX from through

to very quarter Moving were year-over-year our we faced. margin, the overcoming expansion, some of in chain pleased and we sequential supply with gross the headwinds our improvement fourth

to our benefit well primarily the gross cost as the cartridge production Mexico. continue our our activities down be expect margin as on transition from of console to We in ongoing to

have XXXX costs, level line Xx in for to full the as we margins. We sight a more we cartridge gross for than freight, continued our to some the half This margin gross which ramps year Mexico-based of up. the as cost well teens XXXX to as volatility to high expansion to year of assumes first have taper forecast of non-GAAP against component expansion expect manufacturer the mitigated the we believe which new in your of

years, strong demand. and and said have are teams the throughout growing the last As in balance service one to chain to enough to we best we we we on hand supply sheet business couple continue help will have of fortunate to inventory leverage materials our ensure have of the that our

XXXX. gross us in our and to we've expansion through margin made to our and structural in around give confidence XXXX in cartridge XX% margin trajectory, path get long-term changes our gross performance the continued console Our and margins roughly manufacturing

like turn to to I'd Now, OpEx. non-GAAP

ongoing intent the in our to relative forecast business margin see in help XXXX solutions the expenses tailwinds and see XXXX we invest the to our to front in continue strong the to we to and We our remain expansion, annualize in increase the investments focused long-term market of progress to made we large XXXX. drive gross opportunity home market, position. that revenue growth, in in R&D us is we our ensure operating to-date, leadership as Given

to our company a did of expense. increase first equity compensation We in set Next, grants real being I XXXX late expected transitioned in public on our want provide XXXX. and some color in to stock-based

finally, compensation CapEx. XXXX. on result, a non-cash expense XXXX relative comment meaningfully higher stock-based our a And quick will As in be to

Our facility able into make intend manufacturing CapEx its support facility up the our needs We in foreseeable to into Mexico scheduled with console continues future. to demand. to anticipated be some expand to keep to this investments capacity

expect CapEx high total We million in for to to the single-digit XXXX be dollars. mid

our non-GAAP next for Our please and XXXX your an time. progress basis We for journey Thank a continued to breakeven on during to QX [ph]. expectations progress us earnings our look forward profitability call. lines. give XXXX XXXX our you on on our through confidence towards update open the exiting providing Operator,

Operator

question Our [Operator with on Goldman Thank of you. Instructions] first line Sachs. Hazan comes Amit

Your line go ahead. is open, please

Amit Hazan

and year. up you that and about and to the it and are just could investors come the start quarter the I the the want follow-up much know on chain about. just thought supply some macro very what ask I with congrats I gave and of have that maybe on some we thinking there is do issues just color, Thanks good but

units would there just of to be even spend some if -- components shortage you about, a around deliver think And are just just your that. extent sounded separately in talking out Maybe helping you you your to to [indiscernible] hands the in I a clarify the to there's which guys the aside, you helpful? backlog like as that dialysate that on want companies that. there. to need expect to your I suggest you've exposed componentry, got confusion think think comments in the XXXX it confirmation then kind that you an minute if on are could you able Implied get to have deliver we So, this. that like or it about be

Nabeel Ahmed

absolutely. Yes, Amit,

let So, the supply first of with maybe start on me part chain. the with question your your

component couple do one we the shortages, have supply of as have enough make year. sure sheet a I we Tablo's hand over on happen about, and chain we have Number best So, we've things hand, the sure talked last materials on enough we've forward leverage raw our one, in the of components to that seen service teams the business, we demand. make that got also to balance

at not we concerned a So from with perspective all XXXX. component respect are to

remarks it is The other United about to as and freight, States. this the cartridges the Asia from we prepared thing cost of to I talked saw, transporting in related particularly Southeast my

Mexico-based in here have again, manufacturer, cartridge the be first Now, that we ramping the there'll now half our of up year.

won't anymore. mitigated structurally, that we going costs forward. so, we've And have these situation again, freight and

Leslie Trigg

into -- by in our we share we with Yes, that. The on of being for the source well. maybe have yes, of I'll think the don't about We I the second and of hearing that we reading well providers, from a certainly a short missed been I can position answer being been beat. shortages mean, haven't that. future. fair any difficult the jump is dialysate anticipate and newspaper, struggling in and are far such for pretty business about open shortages open as the business hospitals gotten in We have part I from put we calls

been to provided an And us a maintain a continuity really with to very, time since so we supply. has critical it opportunity have if of out very anything, strong help at able

Amit Hazan

Good just one follow-up stuff. ask queue. in And jump not back and

X,XXX, how And folks the XXXX about last informs would visibility fast? around to getting us in so puts Thanks guidance then just be still and low that last about should super we know high understand year's ended gave, helpful. that that the just all at how guide, much visibility, if and end think that about XXX on be you're again, as the backlog -- the thinking the thinking congrats. much And year about does generally end up year, maybe about much takes give thinking figure of materializing? you that help you the a how how of it the thinking you just year, you? for and the you How forward and on Just afford the

Nabeel Ahmed

course, of Amit. Yes,

So, three there. things

XXXX entered backlog with we as mentioned. XXX consoles you one, So, in

Now, that you right. backlog that XH backlog when XXXX focused, backlog composition we a and that deploy tape, to the talked The our if of the expected rewind may about being was lot very of to you of in really it And XXXX. of year first concentrated in half recall that a XXXX. of half in sort growth led first amount the customers the large

that. that's have the an When so then we consoles customers backlog -- right. look we X,XXX and backlog, an of backlog, we with at for And ship us determine Now take have to them in it's represents entering dates to we that with agreement work XXXX, so order. XXXX entering a our order, the binding backlog

of the is backlog different we $XXX guidance the our lot confidence range the have have that backlog XXXX. X,XXX from have the consoles XXX about, XXXX million So, on entering in we a in the $XXX very we the entering the to entering backlog XXXX, pipeline, visibility of Based talked and we million.

So, confidence of range starts provide. that we the a by afforded here the backlog to visibility around the and have it's lot

our Now, baked in to million, a been COVID us. the when really we fact not the that $XXX has guidance you headwind for range, have $XXX million think about

has situations nursing outsource the a been We able shortages have the incumbent been step us. have Leslie for to where mentioned, Leslie to As where grow by customer, mentioned, provider fact in hospital seen large had tailwind service been their managed we that. we baked in a that unable have Again, right. and staffing and shortages through to we've as

and lot today, we've left have here go execution here half And a in a confidence of got our of given so around range and we the a pipeline. confidence visibility range the three and and backlog again by we to the still sitting by XXXX quarters of in have afforded so lot look,

Amit Hazan

Thank you.

Operator

And from Jennings comes next of Josh line with you. our Thank question Cowen.

please go ahead. is Your line open,

Josh Jennings

of to opportunity the And momentum? attacking And have -- already that some patient the burnout how about PD feeling that in of hemodialysis, just winning? seen two on was disease clinic I'll their questions. of high renal burnout good I second We've Amit's on have home. home And wanted really more staying questions you're -- choosing patient guidance tailwind where Thanks in pandemic on the first of laid competitive evening. new follow-up PD taking home year. starts terms to the pandemic. the patients those home congratulate end-stage then is dialysis of opportunity, wanted in in better or and And you're whether and then Hi, the also Tablo swap-ins out safer just is to on meaningful mostly it get sounds of a understanding experiencing home some and going just patients the XXXX, there strong contributing some echo being the just to and on? just sentiments a dialysis? even a on not for are you I momentum hear great it risk out. the Is is like form or wanting

Leslie Trigg

them And Yes, precise home would a winning you for about answer provider from result patients But fewer it, talked the large, ease total is saving, any saying will top, maybe be their new Thanks. to breakdown sure. Thanks pressed listening. Well, adopting more of give the are device? I sort existing both. on hemo in and purchasing start patients Tablo or hard to Tablo home of there to most patients population home. that use, to believe because slightly would say time grow doing so yes of by I they're are supplies Josh. pursuing and competitive I'll because Tablo's is Tablo each different they providers where -- strategies. expand you some

home looking to today of the there's that but grow technology incumbent past. to Like I couple home our as home at patients are in probably new population. the would an some are I the So, total on say been earlier, call mentioned have their that providers a majority on

As a result, Tablo. ETC and with I benefit think associated also with the this Tiffany's

able from -- In would take to you'd to also the of kind population offboarding PD, be mentioned the patients I say I'd PD. -- of innings. terms of early like

think we comes early before whatever innings. I we're pre-early innings, are the

Tablo haven't qualitatively, yes. very But patients, sort of dialyzing versus and time, any data started in anecdotally, you absolutely but center hard generated yes, we When that many fast necessarily have thus programs. and really about today, really equation seen patients be about which do more helping HHD say a you how really anticipate lastly, a viewed more I years I think, served pandemic for the transition patient education transition and and in we PD has the fantastic will patients always that and hear quickly, choosing comes dialyzing of I coming have I our how at conversations invest many to all what with on would population. on home. as We my anecdotally, do, far at in at the we're up providers that about grow their home. enter to tailwind? do or in to why COVID a they're they them is for want on and say home. to stay least, able focused the has And to this a again, opportunity obvious the HHD will talk But

Josh Jennings

the Leslie. for Thanks answers, super That's helpful.

Leslie Trigg

Yes.

Operator

with a And of our line comes Kalia Co. next question Suraj Oppenheimer from &

please ahead. is go Your open, line

Suraj Kalia

Hi, Leslie, hear me all you right. Can Nabeel.

Leslie Trigg

Yes.

Suraj Kalia

on Hey, quarter. Perfect. congrats the

the little actually, hemo do in just -- calculation, $XX XXX is So, XXXX, from a me XXXX. around out XXX my Nabeel, $XX questions approximately FY of say, Leslie FY If XXXX. so let's envelope expected Nabeel, off million you. a contribution to million or start hemo for back over home of this? implies in math couple I on patients let up with commentary How home the FY

Nabeel Ahmed

number did mean, the our that you're and we revenue. don't I we Suraj, want on gets than a comment home were as of not want guide to more specific to. say that's what revenues But is -- this to double something percent I XXXX to mid-teens not to

your statement. so And tracks math that to

results. installed XXXX will same your when we print base tracks. do We'll QX we year the thing But next annually. Now, publish our math

Suraj Kalia

some backlog. To one the understand the and I'll away back bell of bell consoles Leslie have that you're be the did X,XXX curve, looks the it at When like Hey the Is look us help acute is centers hop centers big curve thank enough. for revs widening? queue. questions. Fair contract I'm curve my And it users. extent pretty appreciated? bell can from narrowing? recurring you idea and in how especially taking how greatly you the you curious Folks, acute you Any because from year distribution, and throw some concentrated in would about and seeing

Leslie Trigg

my first Yes, to really would that maybe in the and and customer you're expansion Happy deep. assume installed curve, XXXX, be wide to cetera. base and going I referring was both by facilities comment sure. and et expansion I'm guess the bell to

the but What? sense, if is in if So, that getting I yes, correctly, would I'm line on back wider. jump -- interpreting I'm curve correctly, that analogy not, bell bell curve I'm please call and your interpreting if

Suraj Kalia

the is Just the center? And then how or shifting? utilization bell how does like curve curve it per bell look

Nabeel Ahmed

Suraj, take a maybe let me that. at crack

bit. me up So, back if a QX we just little utilization in look and let our at

rates, in of look focused are sort at look we really right installed we the but it or spot some utilization XX-month rates, because to where be. internally, portfolio utilization We at them trailing So, spot gets utilization trending rid utilization base, of with is noise. of our line things across expect our on what our we're across at

start in you where the and where will, and facilities, utilization the Now, we're can new sort environment, answer of lower of portfolio, question? we we sort -- your where Does from both we're above consoles growing unbalanced that that all home. the trending a works with the utilization you it in acute rates growing out midpoint adding, across more the right the end in up imagine, we But utilization if a and at so expect they for tenured we're want as -- is, in facilities line perspective, out.

Suraj Kalia

enough Fair and Nabeel thank you. Leslie,

Operator

next of open, Thank you. from Your line ahead. question line comes Wise Stifel please with go Rick is And a our

Rick Wise

the professionals Plenty this Single-digit XXXX best drive your is on expand Good a quarter. IR and land in could your the expand of maybe on expand new makes business. if turning the move. you one is -- afternoon going comments however, about it's The to Thank it excellent I the title sense everybody. new looking Leslie. just I -- to -- congratulations systems, of of What's the Leslie big more on -- signing the penetration, and acute. was adoption? a for? question you to landed strategy, that news is enough Or it congratulate on growth there. the in wondering we're is hiring And be year XXXX question, more agenda, Tablo rephrase Great your -- you.

Leslie Trigg

for sort road say you, I wider. of with the the Suraj's I Well, if is, customer Thanks. would and at down standpoint, you question, sort Yes, concentration Rick that's spread very you guess a compliment, started kind getting of was thank is from looked the sure. you. very, curve which bell it Thank this of

the in of use look usage great, was proliferating set at Alaska today also also XXXX, those billion, a $X.X really every almost opportunity it, tip and runway customers, in Hawaii, not country, with and of there's and something we an customer of in So, But verbiage Tablo only the we're is existing lot I used performance go. networks. we're to with facilities when I are which think within because new on there the very Tablo state including you of the proud iceberg, new of. proud now

exists And so said new acquisition. both exists, the in differently, runway that customer

and national but still in hospital in their of are of as systems the those lot installing Tablo at a more the health have somewhat certainly failed systems there's we where both Now, could facility. agreements, customer, from that more benefit some are and also process and Tablo, hospitals expansion as of within well implementing the regional -- health

wide deep to your both and answer question. So,

Rick Wise

doubled of focused team narrowly get and I it's about and for? more the you language. much looking you good. Or just can you. logistics discuss obviously, on, now? year, look we inflection, that but word the number of related how use too, the home so Is guess, we're no, strong competence to are Got my and next what I home next thinking programs? And And of you What's time in steps priorities question, early Again, very numbers confidence responding this again, everything? logistics? mean, giving have your your sort still there? drive here more patience and It's and

Leslie Trigg

have happy past to device on market well, not answer doing said where Yes, I what Well, quickly, matter company-patient and I've home that. especially always paramount. we're the relationship personal personally think no at this obviously I things mean, is serving. believed I in calls, But particularly,

took And at So, to look during we're ready hard there. strove here's XXXX, the for we bottom-line XXXX. scale everything sort determined, entering of we a

prepared are both We well quickly. grow and to

And thinking so we and velocity in that's kind in our approach of the that the inflection think with in XXXX. can and we pace home

to and accelerated Tiffany's grow say our and has with ETC XXXX. populations, their moving I'd that, which sort progressive continued the a colored too, in bit way, of a good to the Second, are providers that's urgency expectations home which bullish for change is

ready. we're So,

a able the think be We'd part last were report, I come across to kind want as you that reporting be we'd XXXX. on next from That's time able be further in retention accelerator high for And to to what back to XXX want and back report down to we're the ready Tablo we year differentiated retention want that hit that focused country. of robust the rates. report this rates back was we I to to push we to now going and highly today, and to question, back of -- use your think year. programs it come can come home report

Rick Wise

of pickup? as Got during kind the Nabeel. quarter. or quarter flow? cost gross we teams, quarterly more think you. or the on as you you the How programs well. a understanding give you're revenue do steady How for But toward us -- by pickup? that throughout heading you sharper the Nabeel, do so you're do help reach one fourth see you little front volumes Clearly, step margin about it just And the a could year. color quarter? start one Is or or the I'm slower up Thank we flow we first time the to because Maybe to if fourth on us programs higher last exit much.

Nabeel Ahmed

Rick. sure, For

us, be expansion margin, margin number our us of programs and couple looking throughout drivers down one in of so parts we're gross suppliers, cost down on So, to to just at have will redesign continue on where for that them XXXX, which Number console costs. a one, the individual components, is benefited XXXX will things. drive the side,

is up. that's now one, ramping Number number continue. Mexico-based going our to we So, two, who manufacturer have cartridge

zero production. that they of first where the the over you'll so see from or go to year from majority to cartridge the primarily And majority zero close -- our of to ramp the half

you that as the QX. to when move we gross what margins Rick levels for through expand year So, is together look at we all the take of in sequentially they that would from were really

So, just we'd XX%, see we from printed, expansion. the

is Now, our the commentary margins the I in expectation gave for our year margin gross high XXXX, full teens. that will be

Rick Wise

higher. year you Got so in Nabeel? you. much Thank up suggesting later you the a Possibly end little

Nabeel Ahmed

course. Of

Operator

you. comes question Thank Antalffy from of our Leerink. line Danielle next with SVB And the

go ahead. please Your line open, is

Danielle Antalffy

afternoon, in a exciting the Leslie, new on good welcome on to Jim, around congrats and, the one good more Hey, role, I Thanks And everyone. so small stories year, be it's like why to growth and much med similar question adoption. for asked to of I the tech. every your all going taking is time questions. bigger, question home with feel faster, cap Leslie, not my

did really to come year at point and the the work As know, But at just be we tipping are place. guess a tipping we in back a of lot on what it all the avalanche this to you're tailwinds giving timeframe. where like appreciate point? wanting guidance feels And you I in for starts the conservative. the Like here? June-July are point what's I

Leslie Trigg

deal. Thanks we're I over home. excited we're think mean, as that but sure. and look We something out quibble and first think bullish. could doubling it's big coming contribution from for there. the about, Well, I to foremost, think sort Yes, a I XXXX editorial I revenue it's words, our of I

I think and is that bigger faster. that is

down thing. to think we're don't and reach next bigger And the there. going I So, years we're this I see come. on faster many for to a for slowing

early retention one a remain high? question this talked number the very, hey, last experience think about rate the have high. the have lot. to answer patient The mean, the of a eye home, for is time. eye experience really studying will was, through start scale We here, year, patient our retention mind had was as And retention In rate the least IDE, I patient same really rate on very I really since in with market I at retention will this We've In high. our always small the my my in patients, patient time. really at really we our day our was long yes. on

do confident is exceptional our ability to So, it's is Again, well. defined that all do an it this experience, really the and very about now patient of at to end what day feel do the faster, to bigger about. by I we think which of

Danielle Antalffy

sort And Yes, of go-to-market of okay. major has is you're out of getting your example? DaVita, so health to so And the for Thanks might strategy from out next there. idea that point question focusing what guess dialysis whether on then just my about going system. a been I other curious sort you interest I'm entertain at providers much.

Leslie Trigg

home or acute sides? the side the on about talking you are Danielle, Sure.

Danielle Antalffy

sorry. I'm

side. on the home home, the On

Leslie Trigg

On a the couple home, there. sure. okay. comments Well, Yes,

establishing think Tablo that their first the used are being States, dialysis, is service already chronic across to many home major that the lines, service addition of time. providers by systems dialysis the I for United in own health

high, both see at that So, of from I those now. was I right conventional engaged backlog, also from if interest the and providers. are equally. in both our size that systems Tablo changing, the And you see and don't the in we're the equally I look growing segments demand And health again, dialysis think

your really I are bigger faster. on words, to as and our think focused use goals,

to foreseeable to want want the be move for for progressive that really that those today those with partners will future and fast. and Our be

intact and XXXX. see And that us I remaining are our so for Stars that those partner North selection, to guide

Danielle Antalffy

much. so Thanks it. Got

Operator

with Thank you. comes of our [Operator the question Drew Ranieri Instructions] Stanley. line And next Morgan from

line Your go is open, ahead. please

Drew Ranieri

a towards? maybe side? that that Hi, you're into you're over that catalysts to putting the And OpEx on the increase might finer on OpEx, XX translate was expecting kind R&D? just that More the money on it you're I that shake Thanks commercial taking said Maybe points how out? you year-over-year, what for put Is heard where maybe hoping on months? of for expecting I the everyone. And of more just you investments an could next Nabeel, question. kind

Nabeel Ahmed

for Yes, sure. Drew

investment seen first with. organization summer. we So, demand that Chief and the invested And all, in in of Officer, Technology XXXX that hired commercial we you XXXX, as R&D, it of this we the to and we get OpEx, is in in back a believe as we've our know, enter the has large kind you that helped backlog

do of the our innings. home, all we we still right, lot and about inflection talks where early then again, in And we revenues. acute of Leslie a larger And have in proportion tailwinds to that a still expect both double the home Now, in markets, do penetration see are go setting, the even year we $X.X market. an in as where a of expect to billion in

clinical and marketing investments a organization, our will in of sales support around commercial primarily growing XXXX be installed base. So, our installed around around our

long data secondly, around to on over And engineering strategy then organization. make And the R&D then side, run. and data the and continue improving Tablo. software with costs our down will there around driving So, commercial we around investments that's to to on hardware with associated innovate respect the

in in some bulk those You'll made smaller largely the of see XXXX. will those in G&A, We've XXXX. moderate but investments

QX put the finer you're point on about run a zone. in four, to our Drew, Now, as times rate our OpEx if XXXX think a you

Drew Ranieri

to you. longer margin something a we point given gradual inflection than then commentary by I said And question. you're of still kind expecting XX%? maybe higher this an Thank of a Should gross margins But be is XXXX, in he something moving just of but think home it. anticipating from that the term kind XX% Got year. build more

Nabeel Ahmed

as XXXX that prepared but a in lot month to still me XXXX. under XXXX. a our I like believe is here -- I XX% that above expansion say ability well progress half our to what confidence not have journey. years way say to so know to a go what in our in all, as at here getting there's I well like roughly And our I'm this given margin in confidence go XXXX long will target to we and we a of of have -- here. and little don't to-date three Drew XX% down journey, I do give for in into sitting still We're from to long-term expectations go a

Drew Ranieri

it. Got

Can implies? in and And you. talk what maybe on your attachment XXXX you of XT. terms about you maybe sorry, just one seeing what guidance Thank last are rate, one

Nabeel Ahmed

Drew. Yes,

in sell. that be So, said we've a the numbers always expect consoles of quarter we we to XT round

couple strength, over we here. last XD in likely of have strength uptake do meaning four. We the in at converge couple We the seen long-term roughly last than one But we will quarters. think seen quarters that have that seen higher the have over of

Operator

And today's further remarks. would back Thank you. turn I And this like over the does conclude question-and-answer Leslie any conference to session. to for

Leslie Trigg

time you all for today. again. on zone joining thank afternoon Thanks a Have and what operator Thanks great depending you're evening in. or

Operator

have for day. conference concludes This call. participating. you Thank a Everyone, today's great

Outset Medical (OM) 17 Feb 222021 Q4 Earnings call transcript