Outset Medical (NASDAQ:OM) highlighted a year of operational progress, continued gross margin expansion, and an upcoming product launch during its fourth-quarter 2025 earnings call, as management emphasized cost reductions alongside investments aimed at extending the company’s technology and service position in dialysis.
Management outlines 2025 “progress and transformation”
Chief Executive Officer Leslie Trigg said 2025 was a “year of progress and transformation,” noting the company reduced its cost structure while investing in technology and service capabilities. Trigg also pointed to several developments the company believes strengthen its foundation, including additions in key leadership roles across finance, medical affairs, and field service, and a recapitalization that reduced debt while providing new funding “through cash flow, breakeven, and beyond.”
FDA clearance for next-generation Tablo and launch timing
Trigg said Outset received FDA clearance two weeks prior to the call for a next-generation Tablo platform, which she described as the first dialysis system cleared under the FDA’s 2025 cybersecurity requirements. She said the system includes hardware and software enhancements intended to improve performance and reliability and framed cybersecurity as an increasing priority for hospitals given the prevalence of cyberattacks.
Outset views the platform’s “secure-by-design architecture,” multilayer authentication, resilience against unauthorized access, and compliance with FDA cybersecurity standards as a competitive advantage, Trigg said. The clearance represents the company’s tenth 510(k), and management characterized the next-generation Tablo as a foundation for further innovation. Outset plans to launch the system toward the end of the second quarter.
During Q&A, Trigg said she expects the cybersecurity clearance to generate “incremental attention and interest” from potential customers and noted she has not seen a major difference in cybersecurity focus by hospital size. She said the company follows a “pricing for value” philosophy but deferred specifics on potential average selling price changes until closer to launch.
Trigg also said existing customers will have access to an upgrade, while new customers will be able to purchase new Tablo systems manufactured with the updated hardware, software, and cybersecurity features.
Q4 results: gross margin expansion and narrowing losses
Chief Financial Officer Renee Gaeta reported fourth-quarter revenue of $28.9 million, including $19.9 million in product revenue and $9.0 million in service and other revenue. Product revenue was below $21.0 million in the prior-year quarter, which Gaeta attributed in part to consumable order timing. Console sales rose 11% year over year to $6.4 million, while consumables were $13.5 million. Gaeta said consumables rebounded sequentially, growing nearly 11% over the third quarter, consistent with expectations based on Tablo utilization.
Gaeta said the company tightened its forecasting methodology for treatments, including closer collaboration with its largest customers on ordering patterns, and plans to continue monitoring utilization and ordering data.
Non-GAAP gross margin in the fourth quarter was 42.9%, expanding more than 500 basis points year over year, even with a 130 basis point headwind from under-absorption of manufacturing overhead. Product gross margin increased 640 basis points to 50.7%, marking the first time product gross margin exceeded 50%, according to Gaeta. Service and other gross margin rose to 25.6% from 20.9% a year earlier.
Non-GAAP operating expenses declined nearly 4% to $25.7 million. Non-GAAP operating loss was $13.3 million, improving from $15.5 million in the prior-year quarter, and non-GAAP net loss was $15.0 million versus $19.3 million a year earlier.
Full-year 2025: revenue up 5%, cash burn reduced
For 2025, Outset reported revenue of $119.5 million, up 5% from 2024. Product revenue increased 5% to $84.8 million, while service and other revenue grew 6% to $34.7 million. Recurring revenue (consumables plus service) was $88.7 million, up 6% year over year.
Non-GAAP gross margin for the year was 39.6%, increasing 400 basis points, or 41.1% excluding the impact of manufacturing under-absorption. Gaeta said under-absorption was a 150 basis point headwind for the year and is expected to diminish in 2026.
Non-GAAP operating expenses fell 19% to $97.8 million from $120.7 million in 2024. Non-GAAP net loss improved to $65.4 million from $94.8 million in 2024.
Outset ended the quarter with $173 million in cash, cash equivalents, short-term investments, and restricted cash, and used approximately $9 million in cash during the quarter. Gaeta said the company reduced operating cash burn from $116 million in 2024 to $46 million in 2025, and said management believes the current cash balance is sufficient to reach profitability and beyond.
2026 outlook: revenue growth expected to accelerate later in the year
For 2026, Outset guided to revenue of $125 million to $130 million, representing 5% to 9% growth. Gaeta said the first quarter is expected to be roughly flat to the fourth quarter of 2025, with revenue stepping up through the remainder of the year.
Non-GAAP gross margin is expected in the low-to-mid 40% range, with mix effects: higher console mix would pressure margins toward the lower end, while higher consumables mix would move margins toward the higher end. Gaeta also said Outset expects continued operating leverage, with operating expense growth at roughly half the rate of sales growth.
On cash use, Gaeta said the first quarter is expected to be the highest cash use quarter due to planned investments in inventory and manufacturing, and that the company expects to use less cash in 2026 than the $46 million used in 2025.
Management also addressed the sales environment and pipeline dynamics. Trigg said Outset saw pipeline growth at a similar rate to the prior year’s growth and described pipeline diversification across deal sizes, hospital sizes, and between new customers and expansion opportunities. She said larger enterprise opportunities can carry longer sales cycles—often in the “9- to 12-month-plus-plus range,” potentially as long as 18 months—while smaller deals can close in roughly three to six months. Trigg also said the company is continuing a search for a sales leader through an executive search firm, while noting the current sales leadership team has kept the organization focused.
About Outset Medical (NASDAQ:OM)
Outset Medical is a medical technology company specializing in innovations for renal care. The company’s flagship offering, the Tablo Hemodialysis System, is designed to streamline and simplify dialysis treatment across acute and outpatient settings. By integrating water purification, dialysate production, and treatment monitoring into a single device, Tablo aims to reduce the complexity and logistical burden traditionally associated with hemodialysis therapy.
Tablo’s modular design allows for rapid setup and flexible deployment in hospitals, clinics, long‐term care facilities and emergency response scenarios.
