OM - Earnings call 3 2023 | Outset Medical, Inc.

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Operator

Thank you for standing by, and welcome to the Outset Medical's Preliminary Third Quarter Results Conference Call. [Operator Instructions] As a reminder, today's call is being recorded. I would now like to turn the conference over to your host, Mr. Jim Mazzola, Head of Investor Relations. Please go ahead, sir.

James Mazzola

Good afternoon, everyone. call third to guidance quarter the results our for of the for and purpose today discuss is preliminary XXXX. The provide updated Officer; of Financial pages with Nabeel investor release Investor presentation here Leslie Relations closed Chair of be our Chief I'm today, found market both the Trigg, and updated Ahmed, can issued Officer. We Executive Chief after a which news outsetmedical.com. and and on our Private section intent recorded being will archived of and made our Investors today's XXXX. protected website. It's Reform all This will call is of during that in be statements Securities forward-looking be the Act call under Litigation the Factors that and that, Leslie. I Outset's differ in public from could filings call will with turn quarterly those reports. With the including to over annual materially forward-looking the to statements latest discussed actual cause are SEC, results our

Leslie Trigg

Jim, and good Thanks, afternoon.

discuss and quarter we and call, preliminary quarter fourth carry today's including During will QX expect our will impacted headwinds that the into we XXXX. the that through third results, forward

larger-than-expected million, served a We in cycle delivers which the impact with over will year. elongate letter, moats, the advantages and in guidance transform the ways. a last field experience FDA what was economic the a to patient includes revenue which warning dialysis. Preliminary by X% the $XX.X setting increase The our we August several shortfall third of clear the growing changed, quarter it driven wide provided recent to in the not sales from and third the its Tablo's quarter ability competitive acute provider and to also for was home in has discuss

than available and until their again. customers TabloCart more with anticipated, we observed defer purchasing is choosing installation Tablo prefiltration console we to First,

regulatory confusion, FDA intend as which with we a served and perspective, prefiltration TabloCart achieve the strong particularly did to a IPO. From competitive to marketplace expeditiously possible work Second, we Tablo's with our submit for use experienced XXX(k) in regarding clearance. create to response, as

closing upon last XXX(k) of we addressed of and out it call, the our said we to believe other have aspects the letter receipt warning forward the on As we clearance. look

believe margin than the resolving actions strengthening gross points position. On to basis, QX QX percentage and reaching these percentage preliminary XX.X%, of in non-GAAP more further over year from X of than quarter continue of a the the X our have sequential We steps overperformed right competitive taken observations this towards more we and growth year. points last are

exiting the Our strong, nearly quarter $XXX cash position also million. remained at

revenue utilization the to quarter. in and Turning recurring

acute home to revenue We continue the and of strong setting from in software and and see Tablo service. consistent use

treatment our and revenue on a preliminary agreements XX% year-over-year, Our the results show year-over-year and increased HHS impact excluding revenue, of increased 'XX, nearly service QX more in than XX% basis. other core

sales team of and these year. I our get of overcome. they pipeline, Looking to we time additional we now QX, fall temporary cause at not will to have shipments with to while slow to to customers in decision ahead us the through past TabloCart the issues expect to cost out from Tablo's seen impact our responding warning our deals to letter acute reduction do setting, the and the value continue see we we extend serve am will down, least But it. did confident are and end need that prefiltration the

half in interest saw sales and elongate which rising Tablo's said, serving late number purchase an a also our hospitals decisions advantages fact, console of they acute towards an Additionally, increasing model. roughly of environment value benefits in-source its rates sales the QX to as of half providers. continue to away of are proven and cautious home financial turning not more with move into further spending. proposition. This to setting into customers an our from their we health expect to operational We in the to continue cycle, embrace quarter we deferring and progressed, and observe deferral balanced XXXX. That in Tablo and capital started and the is quarter systems And

to growing in approximately success and published continue both the account, operate pipeline in physician we we are for education program, factors such setting. Taking utilization. having console Further, initiatives revenue $XXX markets acute the end million. a all with with expect XXXX which into data, We to expanded be Bridge positive a seeing reduction cost near-term as and consistent impact are the

discuss November. for in XXXX earnings early outlook during call our our full will We QX

margin Looking ahead gross first, to committed achieving milestone. longer the term, our pillars: we to XX% following the remain

the achieving we call, against Second, each than year burning less and third, November update provide progress an on pillars. these will year before; cash profitability. On our our

deal great for on in Tablo a our execute ability and opportunities long-term in confidence of have We them. the to

We the large front growth into are of markets. on end end

are expand, value differentiated care Our highly care inconsistent providers deliver to And how Tablo growing remains how want with their moat. pipeline remains patients continues and compelling. lives. to models to conventional dialysis and our with with proposition want live competitive delivery a

quo tailwinds the Across that, to the intact. board, from to firmly well uniquely Tablo and the With Outset we'll up open home questions. hospital status call the with positioned for the are disrupt long-term structural

reiterating topic that, cover, We publicly that about anybody to has But have the data. if I'm GLP-X questions. And Q&A line. with open a operator, please could want during said to happy views cover having I burn we've lot if already you to my didn't that, recent remarks and prepared shared

Operator

line Suraj [Operator from Instructions] comes question first of the Kalia. Our

Suraj Kalia

right? Leslie, hear all can me you

Leslie Trigg

Yes.

Suraj Kalia

Perfect.

on I to supposed and flowed through. in the And Leslie, about -- correctly, seems specifically that like side, recall has be too not to low of specifically you So now? if quantify terms there what single-digit do acute impact It an impact. was changed TabloCart the the impact how

TabloCart from So maybe could CRRT? if you what us suddenly now, through and walk just vis-a-vis QX has changed to

Leslie Trigg

Suraj's I'll I the maybe turn part Why you of commentary, first provide then qualitative question. Yes. I'll to Yes. it don't the some and -- Nabeel, over for of

information and through the obviously on end. thoughts the felt we and in beginning and this on the of as couple of Actually, move Look, knowledge confident. always best provide very a we at view have. we we time quarter, our very So QX based the

we've said very in if the we significant companies are As to our falling not a of We deals med weighted pipeline. during equipment this the quarter. back-end sales did most, in observe many, deferrals tech similarly X case, did of number our the other space. In see out of quarters not capital weeks last before,

did capital their the to heightened was to a to from which really the we're causing that one, or their sense and sort analysis and going internal the of rate around also, seeing spending and lease QX of right I makes turning line to to what climate financial We have as the Tablo they're elongation over rising sort to and hearing some decision-making value that some whether just from see away of competitive factors: would sales serving and environment, whether is not say, interest proposition duration activity at cycle executives, extend fall the pertaining we purchase late health seen a to between around several quarter system going of they're time. them letter. in the to warning And or deals due the QX. Again, that customers of

we did of again, this fundamentals the business. not So of change tailwinds the

through and extended, not and pipeline to further close we continue But expect here fourth to our into has the that it did sales disappear. do elongate XXXX. served deal quarter deal cycle, Our our

turn that, Nabeel it with comments. But for to I'll additional over any

Nabeel Ahmed

some and we also warning customers QX, noise, to wait prefiltration TabloCart bit That the that saw about take wanted Suraj, And marketplace said particularly into million kind noise today, as expected saw itself. itself. roughly this deferral QX, with capital who chunks dollars spending. was question little then some your single-digit carries think TabloCart amount what letter. we impact of here, that forward the we indeed, would then before we also the the some you we of more we QX attributable and Tablo a to bit of deferrals, that of to with on get related see -- sort just in we'll than to prefiltration QX from if in was we of start taking low in was -- a of bridge And sort were of where little we we the to guidance anticipated. We to relative their console that,

bridge, if So that that's sense. of makes the kind Suraj,

Operator

Our next Markets. question comes Capital RBC from of Shagun the Singh of line

Shagun Singh Chadha

couple a guess I me. from So

canceled? So on gives on what the you side, of think respect And follow-ups. just by is the cycle, you capital about be a can this these then orders it? elaborate how many can the you're Like into how have couple that and capital with to I give extended many it? extended, should it weeks? sales Is then us not And early how will seeing, that look are much we deferred months confidence this how has you signs been -- a

Leslie Trigg

why Sure. don't Yes, I that. take

address are heard, then kind and hearing your Shagun, capital and question, is I'll part I Let of first of on and me first X. -- move so parts and what we I'll X to the seeing

keeping interest have climate the I as year. and capital med close a beginning been on have this the eye, many We companies think of tech rate spending since environment

the to then form analysis started impact leasing pressure of options. tangibly and affects in talking budgets interest financial rates, more on itself their really the capital it which manifest of us, for rising hospitals quarter This the around about

projects more even relatively justification is necessary what projects like economic for together, which a seeing a Tablo put specific short period. to allocate deliver So we're payback very hearing to with value scrutiny, in-sourcing, tangible capital and more

multiple the the them route, some buy X more customers is more processes once multiple but think in and leasing twice partners, not terms, times trying approval options, and versus more I internally. better involved facing with seeing We're certainly cases climate negotiate to to leading. lease weighing stakeholders capital longer, maybe spending evaluate leasing

we're So what seeing. again, that's

the customers Importantly, we their any get line line across forward finish and to have deals delay move on the we again, to little not closed a of seen, have to lost bit continued while time the front. deal intent in have reinforce a

looking color So versus you are environment. What for these hopefully, of us you're the the spending out confidence pipeline. do the gives deferred on in, we how know capital that gives orders that hey,

and have And QX. the continue close scrutinize a for every will very in to microscopic know level. at deal We pipeline do is what single in we

has continued conversations very just specific every each and those to one intent forward. reinforce every to each had with one and as customers. And their I of move mentioned, have We

quarter. the weighted But at which Our sales or the the quarter the more the the just process, run do have does end confidence it and the deal asking fall a always flow we of that quarter the is buy, it have specific end next of is the have around is side more the an Is risk great you come we at How so the that what for about financing. our going around a sales you kind cycle, and be lease, little be you financed? deals for communicated means back-end bigger how and color bit the remainder on it quarter. Last, of end of to giving the in about of sales cycle of of I'll extension cycle. of year wrong talked handful to

Our XX-month months to X- sales has been has to cycle from that it really XX XX quite actually events. the been to specific extended over range. time last exogenous have What time steady around

if in of X- spending that. We storages QX for At the cycle did kind to prove example, XX-month a XXXX. steady-state We into it or our present, to the staffing sales to over cycle. last overcome I For be were further were it may to like capital and is sales through able extender extend stretching to environment able X, think looking back -- year back past. retain return the example,

then about that been timing more mindful to forecast. our deals, tell I'll our more our and thinking injecting these conservatism you into we talk just and of call specifically approach we've that And XXXX about during how of call. very QX November the we'll

Shagun Singh Chadha

you're that's some just And GLP-X impacted it. I as stock. sales cycle. news get follow-up, a the did about extending capital think talking Got around We of the

and can think you I this growth XX%. think color put XXXX you can the at setup we XX% think year-over-year can there around I'm growth color provide for Outset. I on is somewhere point. into for you how context Is consensus XXXX? wondering just provide if about looking is into just year-over-year year any all and should any this that

Leslie Trigg

I'll question. it of part Thank the GLP-X to the for you. that and Maybe Sure. on first turn you take over

kidney by very I next this prevalence no, comment, and so no though, U.S. important impact -- again year patients XXX,XXX, dialysis effect year, just will end-stage the do obviously ESRD population absolutely lives. from ESRD Stepping alone. break down to back of I patients, our population, many prevalent on So on which don't is rest will GLP-Xs the for this today have in or stands to years irreversible They in that. a disease, it's expect come. prevalent Those renal be no incidence. ESRD patient from GLP-X have market, bit, that their failure. for The

there XX% more said, is mortality #X mortality cardiovascular rate disease, XX% specifically. patients. And cardiovascular of that cause amongst that Now events, dialysis annual rate a the is

of our that and So over CV disease substantially it mortality view prevalent its that in imply grow then prevalent reduced is the could course, significantly lower events, and that GLP-X the time. population would, CV could population rate substantially

patient on prevalent the X part that's XXX,XXX So population.

call kidney population where, we TAM, disease patients chronic XX XXX,XXX the start disease -- is Again, new with going kidney starts the the our our disease that States. In again, chronic the CKD mortality market model the with assumes market number life. model Now the every per that means of disease, people patients is alone. kidney sees The has chronic underpins the well, million progress cause It's year. new then the every U.S. to year. XX.X cardiovascular to on potential underpins GLP-X CKD year. what That's intimate in that XX a TAM. what our USD dialysis new #X billion $XX-plus also United extend on That that of billion the X.XX% are as population market XXX,XXX dialysis There in are starts XXX,XXX side. million

the it very, summary, So I'm assumes a ever take but that progressing in population population happy to cardiovascular disease. to the to and This more to TAM on is life that and population on only around see extension to directly We with X.XX% large an turn are each population this, dialysis tie of CKD billion I prevalent of our of very questions likely an to over market model believe very extension in want large Nabeel. $XX.X and in year. very, that life we patient comorbidities CKD

So with know 'XX, And thoughts have that, now. about any I'll leave for don't you it Nabeel. I there if

Nabeel Ahmed

Yes.

respect kind our have of grow with to long the and grow long sustained So billion term, the end size of alluded term, position, the long over market, believe just Shagun, ample we $XX with to manner Tablo's in the to to we Leslie differentiated as opportunity over term.

XXXX, we color Now on our with give respect call. to additional November will

Operator

CEO, no further I'd at showing time. any turn questions back I'm closing over like to you. call Thank this the to for Leslie remarks. Trigg,

Leslie Trigg

to the evening. November November seeing the We more sharing from detail good forward you. ASN our and in Have forward-looking at on Thank many about call. of meeting a course, upcoming quarter the outlook of look you and

Operator

all Ladies you. for and does Thank Thank today's this you participating. conclude gentlemen, conference.

Have a You day. disconnect. all may great

Outset Medical (OM) 12 Oct 232023 Q3 Earnings call transcript