OM - Earnings call transcript Q2 2024

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to Outset Medical Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would like now to turn the conference over to Jim Mazzola, Head of Investor Relations. Please go ahead.

James Mazzola

Okay. much. very you Thank and starting everyone, late few here. sorry afternoon, a for minutes Good second call. XXXX to quarter Welcome our earnings

will And Here with Financial me, of assumptions the and a Chief and associated Investor as release market always, will are latest Officer; news material uncertainties intent predictions be actual or obligation Outset's outsetmedical.com. be of Nabeel with could for implied. quarterly and Investors section Leslie section description during today, of website. It's our that of and call Securities results page forward-looking Act the which Ahmed, today's involve found the of under cause Chief SEC, a Litigation public after and events that is of no Officer. of statements assumes or business, update or to reports. Leslie? to those the and on can anticipated protected on Factors call future issued being the from to Private our XXXX. including various Executive materially our be We our close archived Trigg, Outset differ these refer events the based on recorded risks expectations relate made Chair with and statements. Risk list This uncertainties all and statements Reform are annual filings our current estimates to and risks please These

Leslie Trigg

above work the XX% included Areas which our evidence ASP, below the X% and and quarter our XX% increased margin were year-over-year; grew expectations which year-over-year; everyone, of of million substantially through in product the margin in for at more sales treatment Non-GAAP came driven top afternoon, XX% Good coming facilities of for of progress, $XX.X lighter gross we sales, XX.X%. Despite the was year-over-year. quarter, us. the expectations expected XX.X% which begin Jim. you forecast. installed number console with on and strength and as our base, our results the revenue our sales using Thanks, saw joining by grew TabloCart in console I'll the the year-over-year; cycle grew acute new second re-ramp thank Tablo, than than with which below second line, at console which elongating. quarter quarter in entirely of

to recognize, opportunities advancing While deals to the in for in longer changes of that hold was enterprise pipeline, the execution ourselves need ship helpful some come the now on the acute with cycle. typically return which TabloCart commercial our capitalize masks what of a is position better we sales

use Tablo the the think our I and there. We've was provides to low stakeholders are we driven the accordingly, sell helpful to double-digit early with the visionaries growth. This buying success longer and to past model in. where And we it learned larger enterprise cycle stage decisions in we've enterprise in and as and mainstream extend long-standing their Before Purchase launch their a next into control get requires scale to The motivated support process-oriented. as who by be destiny. now mind. that early Tablo are adopters. in market share. consensus-driven since We're to to relationships I a of reflect enterprise has takes These growth get foothold we financial, the we demonstrating the the stage operational those essential group process in expand XXXX, on adopters. often growth deliberate, setting of our how contemplated outsourced enterprise largely the next leave our comes clinical gaining adopters we the use customers may market with and acute fuel of adopters first conversion changes, mainstream benefits and have of innovators sales that been change These in-sourcing which requires sell, it from and adopters over will early experienced by

identified the as to larger our within C-suite to potential sell we've commitment also broadly deeper conversions. recognized across buy-in. systems with the a and need established the example, enterprise work large management consultative change and stakeholders on within demonstrate to gain We've more base For needs team health system that of skills exceptional they

mainstream As we X in advance involves early market, approach. movement we how go our changes enterprise adoption, the requires into the enterprise commercial it which big in-sourcing from adopters to in shifts

a capital team commercial infusing our have retooling and right the sales talent team in skill ensuring we role. who with profile have individuals First, different our by each and set

with specificity, close. introducing forecasting sales greater the injecting process underway. and of new rigorous a to along capital work already third, And improve every This discipline. management step sales accountability and timing inspection sales way at the is capital Second,

deep we a centered sales selling. capital example, equipment have place around experience with For now enterprise leadership team in

restructured our organization also trained them new our have enterprise sales on approach. We sales and

result future As sales we a nimble the process growth team enterprise changes, effectuate trajectory. these and with sales be commensurate more and a resized methodical will our expected

many and of process from it. sales quarters benefits that the depth team several breadth take restructuring, to fully and and to implement it realize will the we Given expect the come

expected to the now given be the on possible second ahead know execute As previously transformation while disruption the half we to of it forecasted. will simultaneously year, the accompanying ramp this not delivering we we look

with we half look the of the for similar first of to XXXX result, half year will approximately a $XXX million. the expect second expected revenue As

profitability. we new revenue to will as drive to continue We ensure aligned spending is toward this outlook

annualized We additional into expect to deliver XXXX. this and savings restructuring optimization

any to for growth. in revenue substantial benefits of sales size is deal While and we are challenging terms the company, believe transition enterprise the

high the over competitor. home on While clinical, and quality at itself. demand our operational performed remain we Treatment in than or our depth to sales treatments revenue seen financial, deal now stronger experiencing and the What in and not consoles, a strong this pipeline to the improvements large to delivering demand levels. percentage on having settings. thing observing health acute The need timeline we're and Tablo in the with transition X,XXX orders of distinguish is long-term. What continues to have the the we're needed process million the and pipeline for providers record negative of $X our differentiated business our execution. With strong is own a month is in date installed a each. revenue at roughly converting due we is highly remains base business in dislocation profile ever lack each continues impact care our to on sizes opportunities right near-term of Tablo a and of it's recurring have temporary customer our the changes our conviction improvements both that losing number of a business, over model

each with During of with a margin expanding and quarter has the recurring XX% second product than gross margin XX.X% as at margin for quarter, X revenue XXXX it gross the Non-GAAP second record years. XX.X% XX.X%. second the at materially more other in grew reached quarter service quarter from margin and

few the call to end add a market. highlights turning our I'd from Nabeel, like over Before to

registry continued showed of which the acute strategic new period our health of during length the publishing home the forward look XX XX%. reduction resulted XX% settings, more and country. For the and hemodialysis more rate during of Data was example, than the our In nearly second of quarter approximately XX% a retention systems our device. measurement from largest in XX% the accounts in customers versus rate incumbent to quarter, the the X at see we million. in at $X stay, in of journal with remains also industry-leading XX-day in-sourcing data our from At added rollout continue one end year. to savings at in the cumulative later just and reported average ICU mean we medical remained home, the published rates and a subacute this retention [indiscernible] And home

Our home mid-sized that, expanding nursing Tablo. With to multiple turn grow centers it continue with now skilled to organizations over I'll facilities Nabeel. dialysis and with

Nabeel Ahmed

first of revenue million, by $X.X which and quarter. decline everyone. the the the million quarter softness reasons quarter, console Hello, Leslie. revenue declined $XX.X Leslie for console from solely first of $XX.X driven in for Product million, Thanks, was X% from revenue XX% Revenue a included described. the second

to remained customers. encouraged our $X.X utilization up year-over-year. than were to all ASP strong as and end console sequentially million. XX% more The product consumable which very as second sales, well and strong. performed the our result is with of Service be to Tablo increasing also markets Consumable PRO+ see sequentially We of well, other of continued revenue nearly component performed from uptake other offering strong disciplined last that and of $XX.X revenue X% nearly to quarter rose X% pricing revenue a XX% acute million, year and across

reflects Now, XX as percentage our non-GAAP and and moving earnings X of margin in operating quarter last refer of our measures release. second points to than today's expenses, reminder, year. GAAP percentage non-GAAP from more more first second Please margin results. than from the quarter Gross to which, to points found increased gross quarter XX.X% the reconciliation of the a

we expansion, fluctuate our strong also [ and prior dynamics quarter may lower sequential second consistently at bit on service net on year-over-year reflecting driven on the here loss years of of our as a be gross record of margin, taken ongoing confident XX.X% Net gross now first for restructuring our gross our These quarter-to-quarter at to level and and profitability. margin growth. I to profitability. want quarter service by next moment hallmark from a quarter ] in expenses $X.XX drive mix, a X results programs, per $XX.X commitment year other compared to gross by ongoing lower than driven XX% which focus XX%. Operating we've sensitive a period, BK's OpEx focus million As positive was and console results back it management achieved our but commitment our for quarter than milestone focus expense the strong lower with a of XX% both reaching and first remain a product was basis. Leslie the ability we reflect XXXX. Non-GAAP since our actions million reach declined our on underlying share, renewals. to the and our on of ongoing of XX.X%. quarter XXXX, margin saw mentioned, towards margin cost-down Expanding step the for to aligning mix, is was story within XX% the which we've on revenue to loss the fourth XX% remains second and margin gross basis, continues product to materially and our utilization the or and and $XX.X

I with quarters, alignment on on goal, previous this you our shareholders underscored our update in have, actions. We to and related wanted

predictable and for of designed of proven an console to revenues XXXX annual expected long-term revenues revenue historically XXXX move structurally if annual from by total to is should to high QX revenues we high gross placement the half over with the first recurring forward. be leverage. we Indeed, we 'XX believe their continue These you growth margins margin our very today get $XX,XXX to growth sell ramps, of revenues. XX% by grew half and our expect at over for both $XX,XXX to expansion. the revenues QX gross recurring engine Once to we revenues First, first that between perspective, gross will continue generate and Every that come compare of on marginal We these margin recurring recurring half our XXXX. revenue as a in contribution should console our business of be and expansion. is compared operating XX% basis have to

our of margin on more improved have and initiatives since Second, we XXXX, XX deliver our publicly gross continue reported by than QX gross first expansion points margin to percentage quarter.

by the margin reduction our work to across time our is to that cost gross expect we as addition continue margin improve to expansion we product continue initiatives gross our driven over structurally In service. business, and

million. profitability. towards are quarter aligned at expected growth OpEx and with the XXXX of annualized an rate our by that $XXX reduced rate focused scales run inclusive a is of non-GAAP today, $XX our on rate roughly have the we our our we ensuring we Since over with and of that fourth expenses Third, eye discussed operating revenue actions at million, spending putting just

driving we $XX lowest we've second in loss recurring XXXX, quarter at operating quarterly around reflecting million, managing non-GAAP finally, balance gross Our since and level scale the growth, the expanding OpEx. And been the was margin its achieved commercial work moving our to revenue done sheet. for

and impacts are focused opportunities inventory supply We the cash to reduce levels. chain optimize through additional working on manufacturing to capital strategies on

up well step investments quarter will inventory cash cash, ending over the down in that the and beyond $XXX.X with equivalents, expect second period. financed, year remain We cash. this burning million second half that before We restricted of short-term

our outlook approximately $XXX expect of full year to now Turning revenue XXXX. We for million.

is Our for console to is we what expect would the the perform second that, With revenue half. base similar first as in half recurring to consistently well we assumption it utilization, has continue to revenue strong done. reported

gross increased XXXX gross conviction we Turning for margin. non-GAAP have to With margin. continued guidance our outperformance, our in

a full the by are to For is expansion the now leverage range. base, low- installed cost-down recurring we guidance to service console larger this Again, year, margin revenues be mid-XX% updating from in driven and gross programs.

OpEx to for XXXX. now Turning

down for OpEx year million, will from the million to -- to now our work additional realize guidance from $XXX roughly $XXX expect We benefit million. benefit be expect have additional done. from $XXX We of that we this anticipate prior we XXXX realize to

quarter profile. As offering annualized expenses over integrated have X rate service, end strong by run revenue million, bullish products at we on the spending the moat our just wide and finally, markets, XXXX, and reduced broad I growth we million. And remain roughly said putting earlier, proposition large non-GAAP across fourth long-term with competitive $XX of our value our $XXX since of operating

will We the call consistent Leslie. will revisit believe transition, that and this a enterprise our transition that, the return sales top over I'll complete we long-term growth. With turn outlook line back strong, following once to to is

Leslie Trigg

Thanks, Nabeel.

and our approach significant We a our as our we with making in result. are changes clearly commercial and difficult processes our people, dissatisfied performance are and

intact. it these sustainable growth. Further, products caused will fundamentals meaningful, convinced growth the continue trajectory, business near-term that and our this we steps our of console are top right While disruption it disrupt firmly return to the model has and firmly line market, company remain to are to the the

health performed over markets alone. We are dialysis in million penetrating in largest XX with one the care year world of States the United each treatments the

a have model. business proven We

X not a revenue sold as when years, be and save of fit are health our please I management expand living far During revenue above data think just Operator, this profile believe just Tablo. replicate. product now lines. that [ we XX% past do is to use since And about increased well help to the more to demonstrating well very ]. care gross for open we the the market IPO, the executed from consoles to is total margin beyond have of benefits our recurring from patients. proven providers of be consistently we business strength success of are XX% profitable difficult-to-copy hundreds very due brings of ever again, and installed customer have that them. With their proposition Tablo to operations operating model change as remain well and technology, over a goes revenue, money, the of are time. We our foundation with inherent case proprietary customers improve This a highly ready reaching can the the We device profitable These we and We fundamental business Q&A. simplify product predictable support a hard will committed business that and important ever, quality and in-sourcing profitability. and we expertise that margin and to Tablo value leverage. What have for recurring gross than differentiated, their is their that,

Operator

first come with BTIG. question will [Operator Instructions] And our Marie Thibault from

Marie Thibault

you a understand to start on be but hate who bit I want little just to enterprise the to I enterprise more different market? challenges you're dense from trying targeting. compete had is here, sales, of are here structural the then the me, to And the it for challenges making facing. to the to here? juggernaut there MDOs want to Tablo with understand been little that else I are, is Is What for customers competition? sales it that how hard console

Leslie Trigg

Yes. the questions. things. for Thanks, a couple of Marie, Yes,

in Short we here. In challenges changes know require control. do in how work need in this. management we're way, in maybe entirely and I'll we changes and in sales pipeline our here. The all, to first control, our own way, of sales this. facing to and a a good make no. So team, No structural processes, shifts backwards are that deal our our do answer, or adjustments our We bad

large closed We deals across successfully to now before. have enterprise-level so need We consistently more country. do the

So that's point one. maybe

with is I those terms of early the your in was quickly, evidence decision-making the really less more the fueled customer processes we've all the steps consensus, without by and In tend segment? hindsight first real move kind different. hand. recognized and move think And willing of are the phase in question, tend part our adopters adopters. of of quickly between to to what move to differences are first are that, process sometimes what Early growth the in fewer

that through segment. first the which aligns innovators that to go and of double-digit low early that and classic adopters, the actually within market moved visionaries tend have adoption the We penetration We're curve kind in zone, now it. to

Now, that we clinical do and we down up adopters need decision-making influencers, a There across vertically right. to these processes support are have both operations mainstream bottom, from health finance is better It and right to top left more to to within more different. systems are the and enterprise penetrate job to and stakeholders, to earned of into building their consensus-driven.

XX-plus interest are differences consoles, of as now percentage in we significant evolved that in flip in and shifting These The that cheaper. adjustments the news those sense are conversions while cycle, much are higher that and types and from, These deals. are good of deals that some deals to early involve levels has and it, need the actually deals side team and in So XXX-plus seeing see our the smaller customers does larger commitment again, stage adopters considering prosecute we're the of that better and the our are that. we a to sales the of to the make that enterprise-wide it consoles. pipeline a of is a to that, levels are longer that's processes

Marie Thibault

I Understood. been changes to here That's do making. workforce very have with my you've helpful, guess, follow-up would the Leslie.

call, last efforts. impact On the in headcount reductions to a commercial and not you commitment discussed

looking sales you're Is Now targeting a the there's like right seat and for the team. a Is Is sort done type that place person that more done? that we're very force come and of you're right now targeting. the a of in there smaller resizing Or to It of people hiring still discussion different the does finding workforce? the and it evolution sound on the people are is at? selling?

Leslie Trigg

sure. Yes,

course. with question. the Of part start with last probably -- Understood. Again, I'll of your

So, organization, but the capital already seen the a at that zone very within yes, sales the and individuals, importantly, at and level different I'll and in of inside end profile record at these here track all outset. leadership to have deals team. our They multimillion dollar shepherding of demonstrate more being also zone kind already them the a only way successfully. are leadership end We've success the of level, not our start

happening consistently to Now it of across organization. the more rest more we see the need and broadly

different the about the of selling more spans of and the terms In talent of level and and team kind skill profile a sets. Again, the large, the very capital I focused is the size think sales By on closer same. of background, customer. size to would as layers, getting just it probably force,

anybody on we in vital experience part of Outset. changing. face The else composition areas commercial team at recurring They team. inform support and size that team other are of The the changing. our field that probably of user that's isn't that growth service really isn't and probably the The and They of our to our isn't and is see continue to want underscore key base to more really I team underappreciated all. this than they're the revenue organization key, changing the key,

Operator

from question And comes Stifel. next Wise the Rick with

Frederick Wise

X-part how maybe I'm Marie, enterprise-wide I understanding sense all total and related selling make to But, contracts, execution requires orders, sure question I'd Like evolution. bigger to that. that bigger like this a guess, makes

your hand and TabloCart were a there from comments and felt And be in been was sold. cyber the had acceleration. that mid-May, you at are quarter, attack an were that disrupted we early understanding last back with we like things, could transition Looking -- thinking Help would it about in and orders see now. what us where where delayed you now

Is large organization it Sort of where what we what understand multiple didn't counting got go materialize you're how that happen? you here. to Just I understand about that what happened you you were saying that like materializing? an -- didn't orders thought next. on trying need to as was

Leslie Trigg

we think our masked slow sales I We set on fair getting track Yes. first and on pretty think benefit Very, think helping TabloCart hindsight, foremost, we're also recognize to additional factors of questions back -- Well, hindsight, I principally and were with to in there. that very we elongate clearly some focused the certainly, as market. of on cycle. it back TabloCart I

with that thing percentage very shift composition is again, the enterprise-level toward are sit mainstream the we very our today in first now base, here and missed, deals discernible of as we which of customer our a adopters. earlier from and the that away pipeline, think adopters this large is in I

a the team than we've to is different Now, past. much convert requires and what that had sales sales process in

and process customers is steps. the contemplating understandable mentioned, which of I've and commitment is stakeholders level more more more these with quite that they're consensus-driven deliberation, As more the with given

second quarter. term And all these occluded more it larger thinking the of didn't expect did them. TabloCart I deals make elongate this able of of pretty We've here, is, what itself think the there capitalize TabloCart with after side, more larger to while level realization when flip something second lack to for think need to past close the to and level, in led surface on to we to a needed that in Rick, and I did adopters." our elongate we was "Hey, that, they we commercial didn't, early much it execution we're to really better which deeper that the on apparent to good the probably something be of And a our became is examine going really on advance alone news, experience going deals after commitment. need high back need our on that. What earned and the of full deals, in go and that to footprint, certainly of helps. quarter to adjustments Again, to take yes, change, with us, these demand right mainstream most sort of enterprise enterprise-wide our reflects with we're I change with our it. shift to -- to but results, high customers just hope order go for conversion, the we some advantage

Frederick Wise

a here. I well, you basically. this But -- And all Yes. questions go How the through gross lower-than-anticipated so these transition, stop this things -- transition, And XX% you of change? through reiterated there's flow I'll I revenue the about does couple go mean, impact margins? breakeven, does as we as questions the many timing, timing guess, other there. cash

Nabeel Ahmed

Rick, it's Nabeel.

and now we've to of the So timing, $XXX XXXX flow respect with kind for so after breakeven rate OpEx run actions our million. about taken cash is

is gross $XXX million. actually came lower so, conviction rate margin, that have than revenue in move gross Rick, is And it we which above when to previous margin, XX% then, below a breaking $XXX we bit that even. run as can our continue guidance at get now rate little we there means XX% a to, of revenue million, which a And run to at getting that

and minute be the Now, That's higher to talking underpinned margin is come consumables, about. than about with growth I margins by case the these a revenues, and been the here, gross particularly our talked case. Leslie for recurring gross continue And that consoles. revenues really the will recurring

so, conceivably the path more to And else with XX%, recurring being revs equal. actually shift mix all associated accelerates our

so, sort actually in that XX% continue to and hopefully, break for a milestone. gross at conviction have lower you look, gives of that even run rate a size margin And we

I see your question. pause me Let to answered if

Frederick Wise

last for Nabeel. for me helpful, And, guess, the very That's Yes. moment. I

You've I'm as into a through as guided or And to go able to do sales sure. clearly, But for execution we you you've Do half to first said beyond. answer, us to how we something do you the second -- should Leslie, equal do roughly plug impossible we transition. models very -- half, you our again, this hope imagine have mean, -- point? we 'XX, 'XX a are imagine -- dreaming the we'll this what that and in at starting And you that and we hoping this I -- is get-go should demand translate you process? X-month from How into about some that transition hope think be execution million $X the sales. to beyond, frankly? and and better translate do 'XX better see of we into contracts these

Leslie Trigg

the do Sure. overnight. position us to guidance we'll to implement. that along to it's very which 'XX Nabeel Again, put of And taking year. and It's turn will on to the to and the jump it take underway. that timing, I as good fully time. the we several here, any better to provide in comment never get the for Yes. but way, quarters I obviously Suffice it have root, in get we're immediate And on effects, expect short-term at say, in the better closer about obviously focused results, the executing transformation. visibility happens a this

Over the it beyond, longer think in term, 'XX ways. of and I couple a about

foremost, this nothing The fundamentals. and changed. opportunity the First has structure about of

this. own we said, I As

and in as goes is actually, new And the The our mature demonstrated there the accounts needed fashion. in subacute fact, that become the really need are in enterprise cohort foundation to consistently close in-flight. a accounts. deals across do get all more a again. to time revenue ability the over shows powerful interestingly, have acute of standardized steps growth up and engine. to country the that We past. seen our large time analysis console recurring strength utilization space just We it more We've actually more in And

very to encouraging obviously see. that's So,

consoles, the several Second, to been the today larger The has of that hundred been growth is earlier, deals alluded actually higher. has consoles and our with never pipeline never demand. it very I XX XXX number in than overall indicates pipeline consoles, it strong forward

the consistently. My of remark make to the it's need execution, larger, our a incrementally get So, a converting to drive do to deals longer just many growth to pertain We stronger they in where this take to is The this. need not is actually and that are is, regard getting problem, to close do with final kind do our changes in need to to doesn't double-edged we deals growth. it sword pipeline. order with actually, it that we pipeline control, term demand to how in know do sales we

QX small Now, the to obviously, our and seen the forward, that the to, don't other near-term what better, and It's we've informed which seen But that sizable you on is of impact the that timeline getting -- consoles work of guidance a QX are, deals revenue, them back predictable a more number way. happening has half XX-plus with year. expect execution call it, here, looking be growth on close for in it back deals. on several what relatively actually on can achieved larger we've

Nabeel Ahmed

any kind models. this now, period provide your may, we of model. providing for We're not color if just of XXXX think right how sort love you as but hopefully, our beyond about help you will Rick, give I the I'd any to guidance think about

to a million the more So, grow as first matures start revenues. for of recurring and in has that, all, grows going That's guidance as sort in always it Implied with XXXX. revenues will be always XXXX or bit installed of recurring base we is roughly little done. the $XX our

or console flat. And shared, into revenue low previously beyond. this revenue means the revenue you total easily year-on-year Now, grow double-digit growth gets as console total even that for placements remained range then, we console any if can recurring growth revenues growth Rick, or we

how you giving So, the guidance, hopefully, not sort that helps think model. we're but about again, of with we

Operator

Yes, our comes Shagun RBC from next question Markets. with Capital Singh

Shagun Singh Chadha

than Is commercial, strategy? Yes, does it Outset guys multiple seem calling it I'm Leslie, on it into I'm out you an sure in something wondering, there's have And detail. is at fronts. it execution looked but like issue Is broader commercial? more that? it you're just

sales the not metrics a TabloCart us how forward? it with your you give just here going it's us that share So, perhaps Have how can earlier, going this? to share know issue us that into it's issue? that visibility that's stand I'm can a market. into more do you're then Rick's forward elongation Because comfortable but a thought year? know you of there in you the curious, you make us does question, story to gives like being have and with you the look are? And confidence thinking were versus some of last where pipeline, what any And I is questions, we going findings you this just lot are can

Leslie Trigg

those questions. Yes, happy I'm Sure. address to

year the front, all pipeline a was to across On across larger our point compared pipeline last acute, of totality end And it than that's actually the significantly home markets, kind in one. that's ago the board. today, subacute year, is and of

way look stage. this we of sales Stage trained pipeline we too. introduced Another new that process that at everybody, by have and our is

the of in ever of deals before. the than sales process have percentage have stages a late We greater we

size. So, process year the to this i.e., we deal third ago through sales look the greater time. And at is thing compared progress a

pipeline. bit large in or in a We $X of XX% size percentage, have more deals approximately million to above deal that sitting roughly the a equate substantially

ways the So the those at we are that pipeline. look

as year. All trend you lines those are them to of compare up last

other?" "Hey, tell execution, that execution Regarding it strongly strategy We the feel you your is or that. question it about, for and or it reasons is I'll is

has clinical evidence operational Tablo driven financial for foremost, ever and outcomes base provided now had customers, around cost the and First it we have that the largest efficiencies. has the the we've that savings

XX and been abstracts studies The higher in improving Tablo. current of have spent I reduction to interest and value in-sourcing time sales on, the around And a in add team with has and the of been all show their is Tablo. feedback white proposition resoundingly and the that day XX never from innumerable customers the continue with pressing our their qualitatively by in-sourcing is margins answer level expense papers field. $X producing have that's benefits I'll own implementation?" that the papers X, lot that and to we tangibly something changed has and customers or with case tangible no. get prospective there "Hey, We really

that the at year the sites subacute the we segment, our model in nursing with last base, the to a look do one point year-over-year and growth the an the I using here for growth right. strategy customers points installed fastest-growing in has when Tablo technology. of and that in been and with acute. Subacute customer the expansion or think data and on of XX% also all for about to is is market our So which us expansion are point segments and number facilities the the up skilled validation LTAC with number year-over-year We talked facility X of in in rehab, XX%

have We ever have evolve couple early of really company sales that our the than enterprise we to first transition advantage available years It's which for market, shelf would adopters. are is again, us for the need What and do part could to our get we next we us to that, up around processes it. to ago. a any reach after I of take were now. and mainstream more that's way adoption the now oriented sales can device those for evolve so of the team, I hope demand say the medical time

Operator

comes Yes, our next Oppenheimer. with Kalia question Suraj from

Suraj Kalia

can Leslie, hear me you all right?

Leslie Trigg

Yes.

Suraj Kalia

Perfect.

did given question, capabilities? the commentary connect be to is, shortfall, almost have forecasting guidance term. understand may execution is, understand. having Was actually you any me these the all help a here. X very PO versus I I'm to XXXs can of Is short something of the about time X a Has a But multipart last mentioned over connecting pipeline. I there QX Are signed? the Leslie, reconcile So, pockets trying trying guess, things question. sensitivity in reasons a the deals one bullish there finally, deals console the but you cannot implement to increased price that's I'm console is multipart I just I on it XX, because -- understand in factor? hard that weakness? And internal the hopefully, hand? geographic cuts years, I a issue dots of of you What is Leslie, every the dots that question, know times an price And increase, of would QX [ multiple an ] for especially ask confess, year. X% more I'm that to but the I

Leslie Trigg

of X Sure. a let that Well, yes, kind piece take time. at me

about factors year. half half couple for There So considered the developing were for sort in here connecting impact dots the of you second guidance back the year. of the of magnitude asked the our we the of a on of the the

First, we disruption do this expect restructuring. restructuring, of force some sales from level the process

of guidance was our in element we to development so, process all an implement And implement the and continue thought that as certainly changes.

has the larger more that a that I is way. mentioned enterprise our with much can of Second, It populated pipeline good XX-plus complexion in agreements consoles. be changed these heavily

level, so, a deals And doesn't revenue significant. that pretty deals. is to at arrive take at it many all million so dozen really a that's or impact that $XX roughly

part you on first of connection point so, little a bit your that the provides And for there a color question. and hopefully, of

that Tablo. drives significant, well setting. sensitivity. for subacute No. as extremely acute documented to implementation this hospital's factor has And We of because published in again, savings total dialysis XX% on the demonstrated is after you really of XX% experienced the and the asked Tablo sensitivity Second, in-sourcing price on a and price have cost and cost the in not the magnitude been subacute the of with a down and line setting acute about expense

no factor sensitivity a has all. not not -- has at really So, been price

about then pipeline. You asked the

stage in any have definition pipeline equipment You sales with them deals a forecasting, our like deals are in the future at PO forward. just issues These capital a mean, in are I are stages various of and these is company. hand? that cycle. We

I of the front strength talk And in future us that pipeline, pipeline, of and pipeline opportunities the across and size about the end to our visibility we're referring stage of so, of market. the the when the our are the

it believe us Of forecasting. We need the process and think will to that the adjust we forecasting, teams course, it reap and are visibility, mature execute we greater way predictability one our will lastly and why methodologies give of greater sales and benefits do because reasons moving in to going against control we the greater forward. see

Operator

Our question from come CL will Stewart King. next with Kristen

Kristen Stewart

to I focus the expenses of just company. on the wanted

And organization said you What I make Where this selling million this had were is that just for they confidence about that cuts? these that from? disruptive for confidence the going I to you from year. $XXX to of think you gives you are expenses a if more coming be heard mentioned $XXX run you million be operating right, And rate going can perspective? XXXX. the kind

Nabeel Ahmed

on the with with our one. rate that are so respect to in number about that first you are -- of areas million the number to with we all Kristen, the for that really of XXXX. remain in OpEx Yes. about our right, our $XXX And OpEx around us guided a for to Leslie we time 'XX And talked $XXX million cuts all, then sure this revenue and run structure both it's levels, about making about. And two, path rightsizing commitment profitability. to

Operator

Our next of Securities. America Stephanie from comes Bank question with Piazzola

Stephanie Piazzola

thought moving level, a you you the disruption guidance a about wanted $XX year, in similar second how would half the new if bit dive it just more more and to million about assumptions first changes. and to half. thought, bit you little I guidance with by up being little But the follow the the over could commercial underlying being maybe into for about from right this confidence be this expected here said maybe execution some just this

Nabeel Ahmed

Yes, Stephanie.

second expect recurring us base, about least a little stable, other the period, half any That then grow of for in is at to for or when being first the the the guidance here we half that which would $XX and service start we equal. P&L. and million, else line about kind just and think first million, in $XX we with all, under is revenue consumables for stay So, bit our of all

at $XX what leaves out look start revenue million. And second in of for half XH recurring done of million. we've console you $XX total So the $XX you base. again, which if revenue implied kind about first million, consoles half, the about at with revenue $XX was The million is

how placement So, half we thought of expect as -- in as same we did the about That's console that first the it's the second again, we year. in the guidance. level of half

Operator

is next question with Your TD from Cowen. Josh Jennings

Okay.

Our Stanley. Morgan Ranieri next from question will with Drew come

Andrew Ranieri

to, an But it's of one, ending your just it kind and at of what base XXXX. on on you're recurring where gets of annualized million. about you're least us and revenue $XXX to of our kind when second pointing quarter basis installed like I kind numbers Maybe think about the

like about for It a So for a number revenue holding constant then numbers, similar point sounds around back XXXX think can the half per good some start is in maybe have and consoles, quarterly that but at million thinking quarter? for like somewhere on $X least at next to year. just that levering we that you least about visibility

Nabeel Ahmed

Yes, Drew.

a of things. couple So,

about think per setting. tell So, week consumable acute So X not maybe first treatments to beyond we're you assume all, right? of but between now XXXX we recurring console per if in or you right any guiding X the components, per unpack the and period me side, here, XXXX revenues way let setting. have again, between X for we do the need on the per this per console ramp more, some console do obviously per And in the but week X to of bit treatments home, some some we on average acute. it's week home less, in at and up, treatments X it's consoles then a And the notion between and X

of the contract typically and they zone. So renew number. Service, you in the service XX% how get kind it's consumable they that's then renew, the

you're assumption console second the the think with year, number. about kind have and the again, we used the So, left least of we of at that's then as half that

the specific with on want I about you construct don't helps a that to how 'XX. but number, So think of comment to hopefully

Andrew Ranieri

You also rate gave 'XX run for...

Nabeel Ahmed

a yes, for perspective rate $XX and you, then it's from 'XX our yes, thank run million And revs -- guidance. given run rate, recurring 'XX and

Operator

Okay.

TD comes with Our next Josh question from Jennings Cowen.

Joshua Jennings

me you hear Can okay?

Leslie Trigg

Yes.

Joshua Jennings

Okay, great.

we Sorry for thinking the to revenues it's in pushed installed base And like through should I pipeline not, of out in just and increase Any we fall that bolus don't of when the conversion you seeing being mean, I And out just orders, be ask if the delays Are could these pipeline pipeline? wanted it sounds system technical they to about see about XXXX? flush. pipeline. some issue. the in convert, thinking of so, a help dynamic? XXXX?

Leslie Trigg

take answer, no, that. this not pipeline. Short seeing I'll Thanks, Yes, deals of we Josh. are out fall

push deals out the we which in expect into from quarter are We close seeing them another quarter. to

stronger get I to that do anticipate. we and timeline the to try is on so, want on we And what close better think converting and pipeline at the to revenue

of any one. the we of out movement point seen So, not really these falling have has But that's kind no, of And pipeline deals grow. continued the pipeline. Yes. to

your of don't that part as really that's deals be us been second not will those time. XXXX, in the to in our about is is for point the deals So that's still And in at XXXX. really available question, -- really a pipeline new think pipeline, that us. had of falling are that, we yes, out any XXXX, close the have our in We phenomenon. new not not expectation That

attacking we're make when party realize execution was closing there not and the the sales the the another we behind behind progress reason, I to couple fruition that quarters. coming in And to next focused or on elongation to them were why of TabloCart to. that this on intended think, another deals to are hindsight were we exactly those factor again, some and and in late these of here significant overly challenges of cycle sales expect

Operator

in would Trigg turn the questions I like for call now this Leslie no to time. remarks. closing show at to the further back queue I

Leslie Trigg

you. many families, joining great you I'd very in our you dialysis to I entire by conferences forward of patients look of for day We as as the they're for that and lives everybody in have thanking Thanks Thank team a Great. investor September, and evening. the meaningful hope to today. making in like providers. to their every seeing close difference well

Operator

today's does your conference call. Thank for This participation. conclude you

disconnect. You may now

Outset Medical (OM) 7 Aug 242024 Q2 Earnings call transcript