Financial Data and Key Metrics Changes - Revenue for Q4 2025 was $119.5 million, representing a 5% increase over 2024 [5][15] - Non-GAAP gross margin for the year increased by 400 basis points to 39.6%, with a target of reaching 50% in the future [16][17] - Non-GAAP operating loss decreased by 14% to $13.3 million compared to the previous year [15] Business Line Data and Key Metrics Changes - Product revenue for Q4 was $19.9 million, down from $21 million in the same quarter last year, with console sales growing 11% to $6.4 million [11][12] - Service and other revenue grew by 6% to $9 million, while recurring revenue from consumables and services was $22.5 million [12][16] - Product gross margin exceeded 50% for the first time, reaching 50.7% [14] Market Data and Key Metrics Changes - Tablo is now utilized in approximately 1,000 acute care sites across the U.S., with significant customer satisfaction scores above 95% [4][6] - The company has expanded its partnerships with acute and post-acute care providers, leading to improved clinical outcomes and operational benefits [6][7] Company Strategy and Development Direction - The company aims to enhance its technology and service leadership while reducing costs, as evidenced by the recent FDA clearance of the next-generation Tablo platform [3][9] - The focus is on insourcing dialysis services, which has shown to improve clinical outcomes and operational efficiencies for healthcare providers [6][19] - The company plans to launch the next-generation Tablo platform in Q2 2026, which is expected to provide a competitive advantage due to its compliance with stringent cybersecurity standards [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about 2026, anticipating revenue growth between $125 million and $130 million, a 5%-9% increase over 2025 [17][18] - The company expects to continue reducing cash usage and improving operating leverage, with operating expense growth anticipated to be half the rate of revenue growth [18][52] - Management highlighted the importance of cybersecurity in healthcare and how the new Tablo platform addresses these concerns, potentially attracting more customers [24][25] Other Important Information - The company ended Q4 with $173 million in cash and equivalents, indicating sufficient liquidity to reach profitability [15][52] - The company has made significant investments in innovation and talent acquisition to strengthen its leadership team [3][4] Q&A Session Summary Question: What advantages will the next-gen Tablo offer and how will it affect market opportunities? - Management indicated that the next-gen Tablo will enhance cybersecurity, which is a growing concern for hospitals, potentially attracting more customers [23][24] Question: What is the current state of the sales force and deal pipeline? - Management reported stability in the sales force and a healthy pipeline, with diversification across new and existing customers [26][30] Question: Can you quantify pipeline growth entering 2025 versus 2026? - Management noted similar growth rates in the pipeline between 2024 and 2025, indicating strong demand for their services [42] Question: What is the timeline for achieving 50% gross margin? - Management confirmed that reaching 50% gross margin is within their planning horizon, but did not specify a formal timeline [51] Question: How is the hospital capital budget environment currently? - Management stated that there have been no material changes in capital spending among their customers for 2026 [53]

Core Insights - Outset Medical, Inc. (OM) has received 510(k) clearance for its next-generation Tablo hemodialysis system, marking a significant regulatory achievement and establishing Tablo as the first dialysis system compliant with the FDA's latest cybersecurity standards [1][4] - The upgraded Tablo platform features enhancements in cybersecurity, reliability, and usability, targeting hospitals, health systems, and home dialysis providers [2][5] Stock Performance - Following the announcement of the clearance, OM's shares increased by 14.3% in the trading session, although the stock has seen a decline of 68.6% over the past six months compared to a 19.8% decline in the industry [3] Long-term Implications - The clearance is expected to facilitate easier adoption of Tablo by hospitals and health systems that prioritize security and compliance, potentially leading to increased revenue visibility and a stronger market position for OM [4] - OM's current market capitalization stands at $90.2 million [4] Product Enhancements - The redesigned Tablo platform incorporates cybersecurity across its hardware, software, and cloud components, aligning with modern hospital IT requirements [5][6] - The new Tablo system is set to begin shipping in Q2 2026, with existing customers eligible for upgrades [6][8] Clinical Outcomes - Recent research indicates that Tablo has been used in over 1 million hemodialysis treatments across approximately 750 facilities, demonstrating significant clinical outcomes, including a 94% reduction in serious cardiac or respiratory events [10]