OM — Outset Medical, Inc.

Summary of Outset Medical, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $27.9 million, a 6% decrease from $29.8 million in Q1 2025, attributed to variability in capital order timing.
• Product Revenue: $18.6 million, down 13% year-over-year.
• Capital Sales: $5.4 million; consumable sales were stronger at $13.2 million.
• Service Revenue: Increased 10% to $9.3 million.
• Gross Margin: Non-GAAP gross margin expanded 620 basis points to 43.8%; product gross margin reached 52.4%.
• Operating Loss: Non-GAAP operating loss of $13.4 million, consistent with the prior year; net loss improved 32% to $15.4 million.
• Cash Position: Ended the quarter with $161 million in cash, using approximately $12 million during the quarter, better than expected.

2. Strategic Updates and Business Highlights

• Next-Generation Tableau Launch: Set to launch later this quarter, featuring enhancements that meet FDA cybersecurity requirements, which is expected to be a competitive advantage.
• Sales Pipeline: Strong pipeline with several large deals in late stages; confident in closing these in 2026.
• Customer Engagement: Successful go-live implementations at new and existing customer sites, with significant support provided for training and operational transitions.
• Leadership Addition: Derek Elliott, the new EVP of Commercial, brings extensive experience and is focused on preparing for the Tableau launch and advancing sales.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Expected to be between $125 million and $130 million, representing a 5% to 9% increase over 2025, with growth anticipated primarily in the second half of the year.
• Gross Margin Outlook: Expected to remain in the low- to mid-40% range for the full year, influenced by the sales mix of consoles and consumables.

4. Bad News, Challenges, or Points of Concern

• Capital Sales Variability: The timing of capital orders remains unpredictable, impacting quarterly revenue performance.
• Revenue Decline: The decrease in product revenue and capital sales raises concerns about demand stability and execution in the sales process.
• Operating Losses: Continued operating losses, although improving, indicate ongoing challenges in reaching profitability.

5. Notable Q&A Insights

• Capital Order Timing: Management emphasized that while the pipeline is robust, the timing of capital orders is less predictable than console utilization.
• Quarterly Revenue Phasing: Q2 is expected to show a modest increase, with larger growth anticipated in Q3 and Q4, influenced by the timing of capital order closures.
• Next-Gen Tableau Demand: The new system is expected to drive demand, particularly due to its cybersecurity features, which are a high priority for health systems.
• Bidirectional EMR Integration: Future capabilities for bidirectional data transfer with EMRs could enhance revenue opportunities and customer value.

Overall, while Outset Medical is facing challenges with capital sales timing and ongoing losses, the company remains optimistic about its growth trajectory, driven by strategic product launches and a strong sales pipeline.