When Outset Medical announced in June that it would be pausing shipments of its portable Tablo hemodialysis systems to new at-home users, the company’s stock plunged to an all-time low. Just a few months later, however, its financial outlook has more than bounced back—even with a month’s worth of lost sales in the third quarter.
That ongoing recovery has outpaced even Outset’s own expectations, CEO Leslie Trigg said during a third-quarter earnings call Tuesday.
“We were unsure how many patients would choose to wait for Tablo through the home ship hold, particularly because the timeline was unclear and uncertain,” she said. “While our information is qualitative, what we now know is that a majority of the patients decided to wait for Tablo. And anecdotally, we are aware of several patients who chose to go on another home hemo system and then after provided a switch to Tablo after it became available again.”
For the period, Outset reported net revenues of $27.8 million. Not only is that a 5.5% increase compared to its earnings for the same period last year, it’s also a 10.8% improvement over the second quarter of this year.
That haul was still below what Outset took in for the first quarter of this year, when it registered all-time high sales of the Tablo systems for at-home use. Even so, the company steadily overcame the setbacks of its six-week shipping hold to fill up a lengthy order list for the third quarter, with Trigg noting on the call that Outset “entered Q4 with a healthy backlog due to Tablo home orders more than doubling compared to Q3 2021.”
Despite that growing inflow, Outset still has yet to rein in its outflow. At the end of 2021, its $104.4 million in operating expenses handily wiped out $102.6 million in revenues and deepened the company’s net loss to just under $132 million.
And it looks like Outset may dip even further into the red this year: Its third-quarter operating expenses shook out to more than $45 million, for a net loss of $40.8 million—about a 33% increase over the $30.5 million net loss it registered for the same period last year. During Tuesday’s call, Chief Financial Officer Nabeel Ahmed attributed the increased expenses largely to “head count growth resulting from investments in our commercial organization and investments in R&D.”
Even with those mounting losses, however, the dialysis devicemaker remains optimistic about its revenue prospects. On the back of the third-quarter sales boost, Outset raised its full-year forecasts: It’s now expecting year-over-year growth between 8% and 10%, landing somewhere between $111 million and $113 million, a step up from previous estimates that placed 2022 revenues between $105 million and $110 million.
Looking even further ahead into 2023, Ahmed told investors, “we do expect much stronger growth relative to our expected growth in 2022.”
Those sales may be helped along by Outset’s newest product, the TabloCart, which was introduced last month and is meant to make the Tablo system easier to transport throughout a hospital. It also offers an optional water prefiltration system to improve the quality of water sent through the hemodialysis machine.
“We closed Q3 exceeding our internal projections for TabloCart orders, indicating strong early demand for this innovative accessory,” Trigg said on Tuesday’s call.