OM - Earnings call transcript Q1 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and thank you for standing by. Welcome to the Outset Medical First Quarter 2022 Earnings Conference Call. At this time, all participants’ lines are in listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question during the session, [ Operator Instruction]. conference recorded. today's advised be may be Please

of If Operator hand Instruction]. Operator assistance Mazzola, a call, [ during the Head Jim I'd today, over your you Relations. to require conference host Investor now like to

Jim Mazzola

our Nabeel Okay. earnings quarter Officer. Ahmed, today Leslie Chief call. welcome Chief and company XXXX Trigg, the Financial first Chair Good from Executive and afternoon, are everyone to Participating Officer and

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

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

Leslie Trigg

of look our in our putting results want with we ahead near remain confident across treatment a our utilization, discussing install I strength everyone. share the our we our for supported capture And the and afternoon, well very home update growth of consecutive delivered schedule $XX.X and we continued achieved us continued momentum XXXX console Thanks, toward made expectations. continued substantial metrics and review first in in thank begin our in grounded we as longer-term Tablo and our in and expansion of initiatives. million, Jim. results. XXXX, progress and strong at strategy QX our on us was inflection in exceeding strong for care demand sequentially. to continue the has for Overall, as home strategic top-line joining performance seventh our team results We level base. broad are margin XX% home objectives of benefited quarter quarter gross execute progress you year-over-year strong pipeline, high outlook. relative by growth to representing expansion Outset performance. we customers, Good today expansion, quarter growth console visibility backlog positive business, objectives. in as into acute quarter against to accelerate led strong of home home we first to There with and the four our our across made interest measure robust Since a our acute from by a to growth broaden where February, last the first shift revenues and XXXX market, Total maintain number by We X.X%

are we where programs home of number the of First, ahead plan.

home went Tablo, who of of with Second, again, patients we where plan. ahead are the number new

QX how number than home significant for a and meaningfully the quarter inflect the a significant significant stay our fourth, portion expectations our first-quarter call, we patients this advantage shipments patients consoles portion highlighted our would We're over On rates. of at exit to total that we beginning at accounted business who Third, home that report competition. exceeded competitors the that can retention of last a And remain have where represented where of and our internal home first higher shipments. backlog we our train Tablo, home quickly on on expectation year. customers pleased in Tablo to

a providers continue behind few This home, to and one patients aimed home home our segment, found reinforces lines. importantly, features step And importantly, XX% to Moreover, likely as schedule in considerations high of we that home From choosing recommend sustainably said with datasets brings differentiated we highlighted on-demand, hemo home against them peritoneal in home related up Tablo treatment which momentum identify provides home on seeing. our pleased national new in prior as frequency, systems ongoing each the And is Progressive mid-teens rate, deliver dialysis continue substantially the That three paramount quickly the to storage These Tablo initiating with early XX% hidden and a to automated is service make patient for would treatment were home. dialysis feature as In of retention answer and when industry-leading said over at more monitoring, devices. past footprint Boston. said percentage our patient long-term standing a XXXX remote a of us, proprietary care clinic the in partners the the total considerations. and to systems. and on programs accelerate dialysis new would growth. their it conviction home of establish data roughly of level survey certification, revenue. requirements self. presented nephrologist hemo. XX% significant we hemodialysis home Kidney lines. in in on clinical likely Foundation believe availability exiting a Tablo and that delivering patient were features XX% hemodialysis From up experience, service of significant systems found we're views improvement viewed costs addition, resulting XXX dialysis. seamlessly. meeting health patients the the patient spring hemo decision-making to customer to a compelling the to facility make of we're we And second Through patients. to qualified XXX a studies national In first in roadmap management traction reduction home From these accreditation the research, requirements that operators early caregiver home. try survey clinical To With a essential in studies In to and turnkey with team hemo. Tablo ease-of-use, our new with home that Outset clinical data a programs these for quarter dataset are get to at goal programs destination a expand programs there, presented, perspective, the nephrologist our health April, This an called XXX we revenue experience patients of ahead existing And more focused quarter, customer provides at XXXX we dialysis segments. it's a solution specifically a launched XXXX. features send and flexibility of standing new health found adoption, device. that Tablo a and home of their national destination highly home plan to growing improvement speaks of the a to second

training a historically to home time, getting of All hemo. patients fast with been to compared the trained of the patients been to on to or who the its less, also into barrier machine. Tablo, has remains X incumbent time innovative features sessions Across X translate XX weeks have spectrum training which average adopt

providers. we home partners, with home growing proud for overwhelmingly The patients and transition Tablo And as of patients Most managing proceeding economic home economic from the study are kidney patients. failure. found create per years, months in patients nearly within positive transition data I to and patient the confluence in with access three have that care home. before we in-center the patient of programs and population months by in in of is after NKF that at discontinuation. outcomes outcome, after at technology the Tablo retention. despite benefits off patient associated hemo, to enabling spent see team future six over patients for months opportunity three failure X% their hospitalization on and for hospitalization a the visited two start In importantly, upstream patients quality shows the hemo PD PD clinical Driving during Further, XXX% PD provider hospitalizations are clinical disease Tablo. data to with The $XX,XXX a the to risk is recently former demand see an and the that fueled families. sales and through that PD impact of we dialyzing Today, that fact dataset of remain more rapidly they evaluated already an over PD third our just programs, all, them home transitioning reduction, Tablo NKF the at several will patients benefits cost-savings PD. to for off the of of continue XX% show for related and experiences the exceptional recognized both the presentation had hemodialysis, PD Market presented this Collaborating was increasingly that with and transition a patient's higher Tablo. time. successfully

their to choose. what convenient because dialyze. decide when was them listened I dialysis they foremost, much the work again. a to describe up and That now home they were of free others, control, it confidence, has back schedule to want didn't First to care given clinic from how They free their free life to They more them have free were observed kids, and to pick they I take was. freedom autonomy.

the the can importantly, is patient. and does voices, our patient pride up competitive I patient This lives, not to want for investors for independent we of patient Eastern. that as with Empathic that how heard learn is life. I have protected begin and creates the and as people a genuine excited something and over treatment both around PM it, to self-worth rushed, for with advantage support their I to into watched we in Pacific, X get set into to X orient live Xst, art I about patients most pride care being home, you sauce had tied people view to a not believe experience along easy What now, time. through or my all communities Tablo I have The to families, device. well it the an their that a time. planned put constantly X -- clinic learned X owned the for about end they I As one autonomy also in schedule secret, they and June behind the experience of my care, to from take that we with patient's even self-reliant. Patients We're stressed webinar was for reinforced and part PM identity the patients our it's also big ways confidence. of secret so change and product. and were experience translates easy-to-use, with [Indiscernible], the heard I that listening, person Being firsthand technology. educational Perhaps it. at was my

caregiver, the scheduled we patients, in two nephrologist a give a to opportunity leading to questions. a discussion also have panel you We ask and where participate will

the additional weeks. We will release coming details in

our months, see among with As home equipment, care expensive not Unlike large, a acute capital customers. continue payback we Tablo relatively the typically upfront we is measured years. to adoption, accelerate also for strong in small investment period growth

quarter, low equipment. has The key much near-term and proposition compared have been other uncertainty to of performance national expand types of for continued highlight land Tablo as high of first new with the the inconsistent key and capital a a executives agreements A sales and of return the system. base, progress. value despite operating headway within consistent was landing our capital, combination eighth quarter our customer In greater sales made console largest capital to an As expansion existing driver result, hospital of eight strategy the our environment. continued visibility to we momentum health ROI

but beds. within which XXXX the only is that Tablo also sales in Tablo health we a taught Another success area On highlighted use. cases for already solves part are fewer where commercial how is XXX hospitals, to system, larger than agreements our for last many continue nation's health hospitals where of with we us smaller not in see system, largest with new problems important call,

also about hospitals with struggling with providers We dialysis due continue learn contending outsourced their to staffing challenges to shortages.

some surprise one XX were we decreases, are In and service As increases, receiving service and Tablo, installed receiving its service February, hospitals -- some discussed hospital we nurses in price levels to are asked circumstance, contacted and some termination. are by contract within receiving hours. train

to own solution destiny, a to met base, we the hospital's console has same and allows own In utilization of short, Tablo it were challenge Our is utilization finally a during day. cost, our to the service strong and is treatments Tablo see as staff vital to strategy training that compliance. later to part have our team evidence recurring from placements, successfully the hospitals be their across staffing, proven valuable working running control with installed commercial pleased the well. quarter, In revenue drive to [Indiscernible] model and that

holding our margin higher base a as we consumables. installed volume steady grows We pulled to see of pleased through are and larger ASPs

With impressive addition managed XX.X% strong supply no they've the have of volatility non-GAAP cartridge day sector continually very our progress business the delivering of shortages, business our QX. it's single to challenging margin how effectively in proud continued demand. the team gross missed trajectory. has across We're and expansion, make our quarter. margin commercial In success, to Testament continues chain or through we of growth macro a as teams our and console during to gross the team, even not environment on

home healthy for the timeline. demand toward We our customers ability scheduled continue first quarter backlog strong as the of consistently provide technology revenue very against highly In constraints, performance. margin remain confident entire financial as strong call, inflection, ability turn delivery to XXXX positions is the reduce and patients once summary, a I'm XXXX. where drivers to now or our review by was that those With production it supply who performance, on inventory operational we not our XXXX matters, support marked and predictable dialysis transformative to and progress our start we for on is gross have chain again them. to strong and and the burden more objectives of all I'll and our team a and but that We on goals. reflective, the to over proud our to Outset out our that, the for deliver last and in granularity expectations Nabeel financials call of laid key as to the provide deliver reminder

Nabeel Ahmed

with our to Hello XXXX. Leslie. Thanks, I everyone. pleased great am start

revenue and by consumable million. Tablo base. quarter given XX% $XX.X higher console to acute also ASPs installed to million, year-over-year XX% first Our million, support grew to our to $XX.X driven $XX.X higher grew placements and primarily XX% shipments Console year-over-year, increasing increased year-over-year home by to with for revenue increased Product services console the customers, growing driven demand year-over-year by revenue XT. grew shipments,

an in We XT the of 's capably see continue had which recognition very highlights than versus clinical and revenue our treat year. population clinical of million, 's uptake communities patients to initially increase to the Tablo $X.X sickest XXX% versatility upgrade better Consumable of the we was Tablo ability prior the projected, ICU. of

is compared $X.X higher year. revenue with Our expectations. the of to QX and million was our cartridge in by and utilization strong X% Service line other prior

of but of the and we our base by almost described. the offset agreement, planned service HHS previously installed core which the growth other was with revenue doubled excavate Our

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

basis Our revenue to and revenues compared year transition to the improvement of our with period, of first consumables compared the which the improvement percentage an facility, points at console QX sequential the ongoing prior our the of was improvement of our This costs a period. approximately XX.X%, coming quarter programs, our our primarily the percentage prior and console manufacturing from gross XXX year our mix down margin XX.X result XXXX production period year versus points. Mexico prior to higher

public commissions Non-GAAP $XX that quarter performance. compared investments. quarter net for share GAAP restricted we're transition prior $X.XX period. Our in-line loss and of our Non-GAAP for year up million resulting million underway increase guidance. their and $X.XX is $X.XX vendor The million a in cash the new or non-GAAP million headcount were We to payments, and OpEx million net a ended the cartridge well investments or OpEx share by of We loss approximately loss per tied in to our because certain to with operating a to compared our per net $X.X of Mexico-based manufacturing up loss first year organization, ramp the prior Operating quarter the net expenses Compared $XX.X versus to period million share fourth-quarter of expenses million, as per a included our $XX.X sales prior driven primarily continues the investments was or with primarily operating cash $XXX.X in was XXXX. share period G&A year-end growth and volumes. reported $XX.X commercial the decreased $XX R&D, $X.XX in including compensation company. cash, equivalents, from to per of million tied in quarter, resulting incentive loss the same net $XX.X first

pipeline. afforded visibility by on quarter our the our in given backlog strong our outlook XXXX performance first our forward and to and Moving the

in We our we XXXX. as to have conviction execute ability to in plan increased

project result, We the to million year lower a expected XXXX $XXX a A for of range range to full fiscal at end $XXX revenue. growth are from $XXX our updating the prior million revenue year XXXX million represents million approximately now a our This to XXXX, $XXX to we XX% banks. revenue over XX% increase $X As range of million.

be performance continue to Our XXXX percent revenues that track home a as in on revenues. of full-year [Indiscernible] deliver the we needs to roughly home of

Moving margin. to gross

gross conviction you that out results beginning we the give of year. this at increased margin the first-quarter in for laid us Our goals

in and in of All to continue to the our components, we the Operator, our continued XXXX, on in the Non-GAAP for translating lines. of gross expected. chain the our with shared you last leverage, the with environment, inflationary as see margin expansion pressures confidence teens think transportation, full Q&A. cost factories considered, on please we macro the While open we to we're for ready have and year supply what high cost on that, call. I With line cost

Operator

at to Instruction] Goldman from [Operator you'd time, Hazan If a like ask Our question question first this with comes Amit Sachs.

Philip Coover

so always. and Thanks for question quarter. in guidance is This taking breakdown Thought with my try much on Amit. start maybe Phil the Hi. to we'd for performance as the

positive you in the So commentary was the little at disruption your rates. the if and certainly, confidence whether there which space prime the is quarter? wondering rate home XQ ahead on acute question and more the went and of bottom exit the is expectations, commentary in end in a that or on that and I the hear. reflection disruption. in a guidance heard raise great It's very are a around performance If of how to COVID I'm on seeing run with internal the all came actually increased

Leslie Trigg

Yes. Phil. Hi, Sure.

Philip Coover

Hi.

Leslie Trigg

has change COVID and disruption, an years. Thanks the been a perform answer, to theme the COVID consistently not of and QX represent business really, no that's of for continuation because didn't any over to pattern. company example Outset a that a last of well, joining. two continued Short and

significant for we hospital adopt strength to supplies quarter thought Those operating performance it. on came the the value in and efficiencies leading revenue customers So acute cost cost the reduction, top-line cost in the to around are strong core side proposition reduction, from reduction. Tablo really that choosing labor that the again the

strength number a home. long in and lot for Rapid dialysis delivering on core on health the tablet that in acute similar times value reasons. from to retention our the make a is our home So lot and strength provider promises home growth at training customers and Tablo the revenue time, of system home. in we similarly, of and proposition

is drivers a this is So a this -- drivers the the of of [Indiscernible].

Philip Coover

finer you being on point would Okay. the it, the expectations ahead on home raise as the bottom call? characterize at is end the attributable To say put you so year that a for of to your far

Nabeel Ahmed

it's hey, Phil, Nabeel. Yes.

confidence our our guidance Phil couple things. is predicated of So really XXXX on in a

one, we one home pipeline start as sit did so the sit acute ability really strong in we today. talked here good our we well as you million. to two, $XXX running to we're of to and this million setting. as That's that in business really tighten range we to have and good year pipeline you the to as mentioned, the QX what lot have number have position with about. performing gives Leslie our on the confidence talked then Number So a us and here $XXX in to backlog today, and we achieve revenue about, really backlog that drilled range guidance backlog a us the all of continue And

Philip Coover

a might program for capital you cancellation? their Thanks. event to propositions supersede new that you That take the all in if like and seen could has from broadly just hospitals others super terms the Thanks willingness I over install in color. sounds But from take in that shortages on mixed uniquely installations. ability absenteeism the from on to of value unique talk ability to any the That's the Can on have more sneak you about and message positioned we've are impact one Tablo capital and the start just depending for to to additional heard great. that. environment, company changes labor

Leslie Trigg

change capital, hospital's that maybe on. comment Yes. willingness two In comment probably our for queue think Sure. it's me million experienced short, so the Tablo's. of Tablo. new dynamics second let I staffing. not think not Well, And It's a I And a acquiring couple or a is of on a minute acquire ago, worth ballgame. prepared to there's and investment, in happy And around are is the that. this number is any payback mentioned hospital very we to really parts investment my of One question business I really interest out. It no pointing I dynamic hospital capital buying a that have to I'm in commenting think that fleet is worth in remarks this just even a CFOC dollars capital, has an dollar so comparatively of different and is that's period. number two, one. small, where amount rapid on

months, I breakeven. disposables said soon reduction the mean, very cost minutes in As because few on a utilizing they sometimes I three six is typically very, measured start that's as as significant. to Tablo, And ago, months. they're the

capital relatively again, think when small they're of that about C-suite, or in amount a very, forms to you're sales payback. a very CEO, And talking investment, be whether team near-term so, our COO [Indiscernible] CFOs, I and compared of goes talking with the it'd high to other

think that to well us dynamics. serve that I those continues

today environment capital the Tablo. we sit in changes no here So far as as acquisition as

public installation The a the and see well that meaningful they mean effect service not had any. for more And staffing, struggling timing hospital previously probably change effect fairly remarks two would but providers really on be was positive bit. staffing more tailwind very, I QX with dynamic dialysis balanced a say continue are they service that of if a -- on those to headwind been to they around shortages outsourcing mentioned second What are it's a this, in marginal third-party really maybe third-party Tablo I dynamic a we are been its very they've had provider. this -- did margin my than this prepared hospitals in a again adoption probably, staffing. I or around with was

hospitals So over over surprised and number that's control over more and resulting labor. want of getting compliance in realizing they that a costs,

remarks, will staff. system motivated were number in it QX talked health the the using where a have Tablo the answer a -- examples lit to just we under to of them one many you their of and of And were and there in that really using prepared called circumstances so balance own about in dialysis source fire I but

Philip Coover

the That's for color. you. fantastic. Thanks so all much Thank

Leslie Trigg

Sure.

Operator

Our next question Stifel. comes from from Rick Wise

Rick Wise

and ask the Good Any Hi, Talk all start on challenges year? to supply chips, I at you is availability, feel outlook Leslie generic. that on causing like component hate you I Nabeel. I or Leslie. of afternoon, electronic anxiety or have Nabeel. us concerns to the the anything the for rest as reflect to about chain with or any

Nabeel Ahmed

Hi, Rick, it's Nabeel.

XX.X% gross up the have, rest be And XX.X sequential supply we points team we those chain as able chain for challenges. the year, Leslie in of the it percentage year-on-year so supply visibility are supply QX, face have delivered quarters. a we quarter, So we hard first have been the margin that over this bates year, the in of have momentum not to of XXX to Rick, high continues guidance say in of environment expansion of to overcome. the In guys just the working we through of and have me confidence dynamic we not remainder the faced and talks still of the anything -- gross far sort us our team as couple last have getting with combined been Rick, that has into about we look margin. let chain our

longer been talked of way hard look. of sheet long these leveraging lead or we to We've come balance sure haven't with able time to saying really procure make we to of about that our messing have the some that items. So large quantities

and they are them in the we we've expect well forward. same ones looking past. the So well employed serve the And strategies served have as to us

Rick Wise

on Maybe Thank comments could expectations. to maybe more color performance turning down be because a would you, two about -- And it the Was exceeding little reflect you more. little Got operators from. us there. I'd the about contract help a you Nabeel. or health came And setting you. more systems. specific us a I home was curious clinic know, the and the you Leslie, shipments maybe hoping a opportunities, your break comments main or give where understand your of to

they revenues there about the other? are one curious, you're Is about home -- the half are that are is are I any from can opportunity. the facing? phrase you focused or health there Just systems. on you this how come harder clinics more Just and a are to the -- Where half from Is -- this this? challenges -- year, opportunities it getting curious As the going than headwinds both of unique where learn going? to you're think

Leslie Trigg

me happy part you let I'm whether of -- bit at the mean, plan on question, made about to glad or over-performance was little me another. no. Yes. it first part answer, which customer that was in your short was one Actually, -- I'm really Sure. helm talk our home one your concentrated asked I evenly across a realize least question it distributed to that segment internal really growth well, because our base.

and evenly. then general value seeing like that broadly I means because means it So even in and really the like that. seeing I That growth is the resonating device

not not the there which visible So asked versus Again, the call kind one are of Any in between me say progressive you are segment not, it challenges opportunities another. or that's Quick system. really, I'd today. that or, to operators we'll X.X. about, clinic or any two, unique health headwinds

program. the program this accreditations progressive already have about sense, home home the talked have our the more operators an systems, could of words, and is we the lack better SOP's lines. group and turnkey one to transitional a already process of your for large which a is seamlessly health for a this towards that for because makes set solution, on for you yes, systems Outset set definition They up running not by other see so destination They going got the in a for a we a sure. to, clinic led of have new quickly come matter part home was guidance programs. -- small opportunity. provide chronic chronic think They're To targeted want program certification and and a that health of really question we're a by for to, program. but how word, to where That as use new more team system Rick, I experts. guide guide up programs roadmap did getting home care for side we of the and how up an only we subject so opportunity how-to through excited, place, they facility health down It's help there service to, the hospitals is

as that about accelerate our just You within segments the an the speaking, shorten do see equally health curve segment. can excited broadly home we're We opportunity learning system both and But execution. business. of

Rick Wise

And one if could. I last

in cartridge are to In I'm be Nabeel? are sorry, manufacturing, How are in terms Where of -- process? When ramp, we that? the fully you about ramped? likely the you think that you Thank where should you.

Nabeel Ahmed

of Rick, course. Yes,

talked ramping for we this over for that the margin to QX, We've That year. about, in as QX, So and that guidance our of the when would Mexico last That to to be the by things the case. bulk one QX [Indiscernible] of be cartridges plan year, first to gives gross the sticking previously the vendor. our allows from the margin would us the expectation. spoke that, be QX said of to continues we've got split you, us get benefits we we coming along approval the our We're and just cartridge. that's half high-teens and we

Rick Wise

Thank so track. on you So much.

Nabeel Ahmed

Thanks, Rick.

Operator

America. Bank Steed with from Our next Travis comes question of

Travis Steed

the Alright. see to XXXX. in not I ground home the of XXX you you vision is the but need I X next the a quite what love just kind programs inflection, the clear in the years. to more questions. guess beyond what And on taking program Thanks picture mean by this for touch again, on over get put bigger your what maybe [Indiscernible] our that thing to of kind place and X do you to really your, to guess

Leslie Trigg

the Travis. for Thanks Sure. question,

the to XX% to got really, over XXX% really patients XX%. top you will, know number go you've underappreciated I is you're growth it is for retention. home line, think growing but if significant off that example, that bottom, a time be I to And the that key if losing grow important to is of at one

to of importance over believed the I doctoring a building will to So time really from which make much, easier. the a of growth level [Indiscernible] a grow religious in perhaps retention, much foundation strong

So enjoy feel choosing like, the when on that's answer, they We team the when ground? with and they do love every and fully want happen can our is Travis when is they how to first that's that benefits Tablo. to appreciate easy, is we the part of of can fall and when, could what Tablo the patient easy, sure where, dialyze. every going make patient's And family, in

growth So do we thing that's a to that day day high come. ensure can after very, the very long to number rates for after one time day

Travis Steed

then And Right. level answer. on fair. well, higher thinking I about appreciate beyond gross maybe that it's -- talking the margins, high just teams to. the And you're path the That's as

the like put at just inflationary the offset great. some be maybe haven't as would well increases things could of pressures, that pricing, place in some of before, some there And the thought any you future about along color point to

Nabeel Ahmed

just Yeah, there. let of me so a things couple Travis, say

that consoles first the have margins are you've That's we're if continue in that milestone, and given drivers gross you had roughly programs, So about are get that it's since us benefit will, we to place give we will actually of on We've we to. in costs these in of talked well XX% the future. to benefit to us The console known next looking XXXX. all, our down conviction forward drivers in now. are that's our now, ability and

as and target. future. are pulled cartridge, margin expansion that that'll the [Indiscernible] XX% us finally, we this Mexico here talked which service consoles our will have We that will our benefit as expansion, will that Secondly, us talked year, completes transition continue so about as more to come into give about that we've mortgage larger we roughly deployed rates. and we margin to margin team. gets get install base Those that as that leverage And from at drive expansion struggles [Indiscernible] then can

the path of margins raise we we not to prices choose. is XX% to have may pricing, part we second described take. terms our in committed when have to In but customers on pricing, if customers, your majority the ability question do where the of we of have to programs all actions or pricing our But here, comment going I we on XXXX. specific, of roughly get We're to baked what into

Travis Steed

Great, taking the thanks for questions.

Nabeel Ahmed

[Indiscernible].

Operator

comes with Our from Suraj Kalia Oppenheimer. next question

Suraj Kalia

Good right? afternoon, can Nabeel, hear Leslie. all you

Nabeel Ahmed

Yeah.

Leslie Trigg

Yes. fine, thank It's you.

Suraj Kalia

Hope to please I this, of lot thanks if I'm Perfect. over-reading -- Leslie, me providing am. Say for forgive a information. healthy. -- so everyone Unless stay

to end I that home really, going in focus. also [Indiscernible] the is was The there question. was identify or And my it's of miss distinct you if about patients. look by used a programs your should be partner -- piggyback having shifted that's attention in I this -- a XXX And a commentary -- peaking I shift think criteria targeting I the a right? more these, the here? XXXX, sort FY factor target reason of caught PD target curious on if site, to Because on driving is it of patients. and It's PD, hit could

Leslie Trigg

No maybe driving entire no, underserved. we're ahead so a a years though patient mean Yes, sitting let who only in I is many, just and unfortunately, to all us, are little massive bit States, to Suraj, of as thing the in the thanks United of start. do of many PD back me types the is X% X.X% you more so there where give HHC at is clinics, just in with think The we that's answer patients been I for so targeting. patients color. the dialysis a factor, Short dialysis PD maybe begin opportunity patients has amongst over currently patients are shift is on question. population not up know,

met go human already already on manage PD successful just very these in partner. of care a majority independently who them independent. they to are shame disease that already and vast think that's think level, at home. do I They're unnecessary the that a see or many when a with and They chronic really are individuals of I clinic. is them wrong. And back end I a think it the straight well,

or stay program think was which Is a And worth do patients or to conversation PD but future. shift? see targeted else, more communication patient are make talk we much but years the it are of anticipate to that part in be anything I to therapy better it have and and a and so opportunity new starting opportunities greater coming more upstream we that participating at the at because yes, that channel all, in just something an of deserve home. about of of on more PD humanitarian thought I aware probably patients it HHD. Suraj, It's Not the to perhaps a overtime, clinical an more comment stay at than sure do offered who that couple through next and home hopes over off

Suraj Kalia

the be shift exceeding assumptions of in Because Got of home so these the Any it. it. connect some me, I provide have just great. number shipped exceeding in connect quarter and the I'm dots deals, in Did would just terms forgive here. is be kind unit I math Tablo and potentially must backlog approximately The were help XQ? math consoles XXX dots, to the a make suggests XQ just the trying missed could remember or you or XXXX XXXX.

Nabeel Ahmed

Yes, Suraj.

respect feels provide will console that to numbers bit like in will providing exceeding with any [Indiscernible] backlog of count, high want a your to to XXXX, to time So add The number I'll been of to we're base practice period, given be respect but print in annually practice to we exceeding our I printed it that With ship don't QX. not me. disclosure, the again, has so installed continues QX and it be [Indiscernible]. next

Suraj Kalia

be terms you in throw Leslie, Hey, dialysate hypothetical Fair just more I'll and Can it enough. done I back guys one on-demand scenario, promise. In of queue a well Leslie, be take that production. and very I'll hop in have demand this questions. trial radar NDA Thank PD potentially approach taking Is and the into on real-time everything. something the that my you for for Outset? on morphed it a could through approach

Leslie Trigg

Sure.

be might and question what -- a we the future on thinking one generally, understandable next an very about are and item the And and one. what course. fair PD Of is where around

giving maybe a our patients period, more First organization. focus an the U.S. population due on I and with in primary HHD. mere and access just is market XX% on home this say on X.X% foremost, general one, and of the remains will number HHD to

and Imaginary to invent. to DNA Outset. take and going imagine The which in who I inside think of are inventors that we desire continue to probably directions

we're drive to you. remain I in and quality ambitious think and I clinical people continue growth patients that can improvements ways going be differentiated to are what reveal group and assure life a that that for still meaningful of very providers really of

Operator

from Josh Our comes Jennings with Cowen. next question

Josh Jennings

to systems consoles dialysis and for DaVita retake to their taking about service from that could good then them the to in in stretch DaVita's some were staffing not just in-hospital they was on like be for mean, for but on of outsourced dialysis third-party ask some the hospitals, you questions more seeing control a the hoping service specifically their calling talking channel that also providers, servicing And business, home, suggested where providers, challenges purchasing resolution line. just or Leslie, dialysis up some I strong systems. is -- the taking just for their channel Are these Thanks clients. with thanks check there to DaVita's one? Outset questions. help XXXX for their Tablo staffing I and shortages, actually caliber third-party all start hospitals year. over Hi, in follow-up Tablo pick agile bought afternoon service because the purchasing with or units is you about of Tablo year or

Leslie Trigg

side today, first, here. And health that yeah, I'm acute activity seen the -- to is systems. the that the entirely I'm today The we've almost that's the down here focus, the I'm here activities back going we've -- order Josh, address your our strategy. Sure. acute -- question but Let's of to jotting the go so right? just on seen commercial

it's and All their control servicing, when in and to own the and comes health our clinical to is the systems it pointed dialysis, on the dialysis whether floor. cost ICU bedside team, supporting of selling, the complexity destiny of at capital or

think the the that's deliver right we we our and end that's where customer. So value, to what Psychs greatest we trained on

So question. first that's addresses that part your of the

The entity. last do is another to try another provider, see thing whatever The I second part. for

progressive our possibly we'll mid that's agile segment moving more can seeing working the on success. they and And support with conventional can want that similarly really patients in market as as as are the the friends circle. lot reward nimble are where in to are very success lot and focused year of they of seeing two and I humans, a we dialysis segments. things that, and we're benefit and a that of as they think continue to many we're faster are home home number We the to where do we of tend Those do providers. we so quickly in for a again to And moving Again, seeing be. of want

obviously with So partnership on our their helping health we're that's service home and lines. very system them base one customer focused very, in own initiate existing then programs

benefiting I and then our all remains commercial focus, are that to it's that working involved. things fun continue do So parties and like to easy said

Josh Jennings

much. Great so thanks

Operator

Our comes next Securities. SVB Danielle Antalffy question with from

Danielle Antalffy

home ensure these programs? that the patients cetera, your such you Thanks ask so going. were just the was from it the advanced attention I [Indiscernible] that's selection it was like? was with for opening if up working what standalone important going make NextStage Thanks. to And patients and get was days I as the guys. So is these question. a sure afternoon, in point, new just, a right it on, to et technology a like the does right company Good process the one And on things I'm as when to Tablo of cetera, conversations remember a me. was for home matter off quick to home, you're centers really covering is to building to feel on taking from an keep so a Leslie, high. perspective, successful path question it's et curious the on And home centers starting they're

Leslie Trigg

is XXXX more technology difficult thinking, took in to Okay, the quote-unquote, the right patients perhaps of longer sure. when patient Hi. perhaps were accessible, home. very Well, in right patients successfully needed on, notion and that was I the to available selection less options maintain the think the were were train that

as our be patient can whether to part we've in the now diverse. the graduate demographic, mission patients, goal gender, running really race, When -- it and of age, grade terms characteristics I'm they third a ability successful I all a beginning think from could is diverse big we at patients inequities is of erasing we one that extremely of It that socioeconomic and require proud of look our where and because almost ensure Outset, all is education moral way technology patient that population access a that use. we're was or goal health, we're a look registry I very had a technology and the that doing of to simpler on designed Our is part the degree. a home through design that with doesn't had PhD at Tablo to

on upfront. be IDE that were they rates our again more that to showed training going time send the equivalent of do time is to once anymore. terms mindset. that we're that. will selective [Indiscernible] of as here diversity convincing we no up in retention selective influence equivalent XX% physician trial, of but population over our perhaps have there's real a influencing this was non-white. seen in The very way with and physician results that to patients by similar exactly the Another home was in even mindset patient more data We that IDE, same. physicians need And our happen the and And and world continuing home, published our the And more do

moving X.X, that's again matter this patient so not selection a which we at It narrow, is future process all sure So the very narrow, about your levels. point on will thing in no, that that is forward, anticipate constrictive overly I do can we we in question, great successful think build the do a selection. How patient ways support program? making not as about as many Part of home yes, program though, really it's many can. we two

will. grow we the only patient our So for Not do effectively but continue home you they each experience and team, the we Tablo and every if as customer team for also serve staff. concierge, to

and hands us take what are your this off always and about that make are all We let Let obstacles? for you. challenges? What us your your are work

are a of success way, within of the more grow So programs structural, gives doing things the I need control points, found tactical actually, are in Danielle, lot a grown. home think just confidence full good probably It's news there's a approach and as nothing our there's to well programs to teams as pretty be strategic. these that quickly service we that they nothing

Danielle Antalffy

Thank you.

Leslie Trigg

Yes.

Operator

Stanley. Our from Drew next Morgan comes with question Ranieri

Drew Ranieri

thanks and for Leslie the Nabeel, questions. Hi taking

that to highlighted added -- the continue share Sorry I also eighth be to in augmenting for conversions an break Tablo setting. if a you of of and ACE us was there wondering you national healthcare some systems, or is to sticking and you penetration the update go acute to the give home trend, systems but on with moment. of terms larger accounts Leslie, capture healthcare seeing highlighted where you technologies, some are still able in the the you but your might largest at acute incumbent Tablo. also with just to

Leslie Trigg

the is of steps? health obviously talk the same think of I I'm national as sure, are what's on to what next and question, that. -- on mean, over the what's landing Yes, the landed the about conquering. and your runway so The year of shores shore I we first sort happy not -- [Indiscernible] eight was part the systems

my a is aspiration now access There continents to Columbus the intend to of explore, have that after. we to think largest console I we but analogy, not selected grow within think I and a next to way the penetration. significant so to team, across eight the the is to very saw just continents lot and overdue go our we make

double-digits under penetrated national relatively still the this single, TAM billion in all more those customers. broadly of $X.X We working High in across low acute. toward most are

I'm got country us, about. runways I course, of we've of ahead excited low in health age hundreds then the are hospitals big think the still and largest across of which And regional ahead of still of parts the tremendous systems eighth, us.

of many we was you sounding In land repetitive, a expansion customers, at customers the Drew, the I really know, So did frankly products more. past think, risk and time expand quarter, saw the this boring in land having also working. what an I they new buy existing is and your that's we great customers over having medical of about the if other will is, participated experience, care ramps device are current most and

excessively think new would hoc? still absolutely I that new I the same-store on higher nationally. always go didn't is indicator that. base. across is but excuse a pride is And greatest I eye on of say specific current within me, be QX. And I networks health honest, to fun full of conversion devices personal lot question customers. are sales, But about the I -- leading we keep That regionally leading and take seeing think so notice my was, -- within And to doing I in my expansion delivering where its and is to promises hospitals, any only its the it And not ad your the greatness customer land we're on trends

up that customers do many when we is think they source I in bulk convergence. have typically

to have are Tablo We using many customers in who source.

own customers have to and full their already maybe concert maybe grow with has over And service into you expect devices some their in Tablo earlier dialysis do in them and also conversion are other We homes experience patient. line that thing time. we

a of mix. a bit still, it's So

Drew Ranieri

quarter. for But maybe But side but software can Thank or the thinking the you international? new the of it's on declined maybe maybe OpEx looks you updates anything how is more maybe it are about this it [Indiscernible] sequentially hardware And Nabeel. the coming flat side, was you. versus or throughout for in XXXX, us OpEx fourth year? remind our like more whether product on on Leslie, a any about

Leslie Trigg

want to you take Do it?

Nabeel Ahmed

Yeah.

out spoke we in you declining go QX. respect recur in might about payments in with those February, just that QX commissions OpEx QX and remember last we comp don't sequentially Drew, talked incentive That's have because So to when that QX. so OpEx to we

for with itself that's essentially and track continue a that from late shared decline. to perspective XXXX the times So on our said four roughly line the full guidance is in what the year. All trending OpEx QX call, OpEx we've we last we was

Leslie Trigg

products the cover have international. new [Indiscernible] I'll at maybe

on the Drew, two new -- this years will enough. So, don't different. year about every and we product side in be We and last maybe talk year the this -- no

at better a more through do expense love now are XXXX. analytics hardware because enhancements is different software not have is rapidly new side. remotes it it on principally and offer continuous to updating and that and as no We hardware. or compared where and ago and And The four upgrade for forecast much that new features story again, to lower I that update. are data longer customers on a allows maybe deliver about upgrading cool I was and to five much in us the Tablo and thing This yes, years we done

market So in it, do we our anything times of margin seriously for we and take to side in we offering I worldwide XX% we are excited do ever -- commitments But the super on have to new our that. side asset with about don't the term do recognize but the world Tablo market, spend surprising, cut on of and than is because toward trying other moments dialysis. the and U.S.. and do and ever and or things kidding. and lot There our patient opportunity yes, delight we and see will an there, improve barely we U.S. and is remained the future march sort experience International, measure I for penetrated want We're that the ever, think five the continue -- them don't maybe then still thing functionality, focused, XXXX. is which obviously seriously. I'm alongside same a of discontinue have new that about provider U.S. that domination for ones never, cash in near the

and detailed is careful a and lot of we deliberations how calculus work why the why report still a And where exercise going our be United that one to Tablo A and thought when revealed still outside and I would when, on with to will the would behind think to the that around And States. want and anything don't very, scenes you internally, and detail More yes, forecast about the so confident where, lot, I I very how. pretty in world we're find so for do say us. near-term.

Drew Ranieri

you. Thank

Leslie Trigg

Yes.

Operator

to for question-and-answer like Leslie remarks. That Trigg back concludes today's turn I'd to session. closing the call

Leslie Trigg

afternoon, just hope on the to this thank all call Thank great evening. everybody us well have really Great. for Thank a you. you I want joining you and I

Operator

concludes This today's participating. call. Thank for conference you

may now disconnect. You

Outset Medical (OM) 5 May 222022 Q1 Earnings call transcript