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Outset Medical, Inc. (OM)
:OM
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Outset Medical
(NASDAQ:OM)
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Rating:49Neutral
Price Target:
$12.50
▼(-0.87% Downside)
Outset Medical's overall stock score is driven by positive earnings call sentiment and improved financial stability. However, significant profitability and cash flow challenges, along with weak technical indicators and valuation metrics, weigh heavily on the score.
Positive Factors
Revenue Growth
A 15% revenue increase indicates strong market demand and effective sales strategies, supporting long-term growth potential.
Strategic Partnerships
Partnerships with major dialysis organizations expand market access, enhancing Outset Medical's competitive position and revenue base.
Gross Margin Improvement
Improved gross margins reflect operational efficiencies and pricing power, contributing to better profitability prospects.
Negative Factors
Profitability Challenges
Persistent negative margins highlight ongoing struggles with profitability, which could hinder long-term financial sustainability.
Cash Flow Issues
Weak cash flow generation limits the company's ability to invest in growth and manage financial obligations, posing risks to future operations.
Service Margin Decline
Declining service margins due to investments in parts supply may pressure overall profitability and require strategic adjustments.
Outset Medical (OM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$223.77M
Dividend YieldN/A
Average Volume (3M)190.42K
Price to Earnings (P/E)―
Beta (1Y)1.82
Revenue Growth2.47%
EPS Growth56.93%
CountryUS
Employees354
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)-0.84
Shares Outstanding17,766,193
10 Day Avg. Volume292,489
30 Day Avg. Volume190,420
Financial Highlights & Ratios
PEG Ratio0.02
Price to Book (P/B)2.15
Price to Sales (P/S)0.51
P/FCF Ratio-0.49
Enterprise Value/Market Cap1.16
Enterprise Value/Revenue2.17
Enterprise Value/Gross Profit5.95
Enterprise Value/Ebitda-3.33
Forecast
1Y Price Target
$23.38Price Target Upside85.41% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering6
Outset Medical Business Overview & Revenue Model
Company DescriptionOutset Medical, Inc., a medical technology company, develops a hemodialysis system for dialysis. It provides the Tablo Hemodialysis System, which comprises a compact console with integrated water purification, on-demand dialysate production, and software and connectivity capabilities for dialysis care in acute and home settings. The company was formerly known as Home Dialysis Plus, Ltd. and changed its name to Outset Medical, Inc. in January 2015. Outset Medical, Inc. was incorporated in 2003 and is headquartered in San Jose, California.
How the Company Makes MoneyOutset Medical generates revenue primarily through the sale of its Tablo Hemodialysis Systems, which are sold to hospitals, clinics, and other healthcare facilities. In addition to system sales, the company earns revenue from the consumables required for the Tablo system, such as dialysate and other necessary supplies. This creates a recurring revenue stream as facilities need to continuously purchase these consumables for ongoing patient treatments. The company may also engage in partnerships with healthcare providers and payers, enhancing its market reach and potentially securing additional funding or reimbursement arrangements that further support its revenue generation. Overall, Outset Medical's business model hinges on both the initial sale of its dialysis systems and the ongoing sale of related consumables, supplemented by strategic partnerships that bolster its market position.
Outset Medical Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 11, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment with significant revenue growth, increased guidance, and strong performance in console and recurring revenue. The company's strategic agreements and improvements in gross margin and operating expenses underscore positive momentum. Despite minor challenges with manufacturing overhead absorption and service gross margin, the company's outlook remains optimistic.Q2-2025 Updates
Positive Updates
Revenue Growth and Increased Guidance
Revenue for the second quarter of $31.4 million grew 15% over the second quarter of 2024. The company raised its revenue guidance for the year from $115 million-$125 million to a range of $122 million-$126 million.
Strong Console and Recurring Revenue
Product revenue of $23.1 million, consisting of console revenue of $8.9 million and consumable revenue of $14.2 million, grew 20% from $19.2 million in the prior year. Recurring revenue increased to $22.5 million, an 11% increase over the second quarter of 2024.
Gross Margin Expansion
Non-GAAP gross margin expanded to 38.4%, a 110 basis point increase from last year, with product gross margin increasing nearly 400 basis points year-over-year to 48.9%.
New Enterprise Agreement
Closed a new enterprise agreement with one of the largest national health systems in the country, providing access to over 100 facilities and potential placement of many hundreds of Tablo consoles.
Home Market and MDO Partnerships
Finalized an agreement with the third largest midsized dialysis organization, providing approximately 15,000 dialysis patients across 30 states access to Tablo. Now have agreements with all 5 of the largest MDOs in the United States.
Reduction in Operating Expenses and Cash Use
Non-GAAP operating expenses declined 19% to $25.4 million compared to the second quarter of 2024. The company used 60% less cash than in the prior year period, keeping on track to use less than $50 million in 2025.
Negative Updates
Manufacturing Overhead Absorption
Gross margin faced a 100 basis point headwind from the under-absorption of manufacturing overhead, expected to be a 150 basis point headwind for the year with diminishing effects in 2026.
Service and Other Gross Margin Decline
Service and other gross margin decreased to 6.9% from 13.6% in the second quarter of 2024 due to short-term investments in parts supply.
Company Guidance
During the second quarter of 2025 earnings call, Outset Medical raised its revenue guidance for the year, projecting a range of $122 million to $126 million, up from the previous $115 million to $125 million. The company reported a 15% increase in revenue to $31.4 million, driven by strong sales of Tablo consoles and consistent utilization, leading to recurring revenue of $22.5 million. Non-GAAP gross margin expanded to 38.4%, with product gross margin reaching 48.9%. Outset's commercial transformation efforts, including restructuring and a new sales process, contributed to improved forecast accuracy and pipeline growth. The company ended the quarter with $187.4 million in cash and expects to use less than $50 million in cash for the year, maintaining a path to profitability.Outset Medical Financial Statement Overview
Summary
Outset Medical shows modest revenue growth and improved financial stability with reduced leverage. However, significant challenges remain in profitability and cash flow, with negative margins and cash flow ratios indicating ongoing operational issues.Income Statement
Outset Medical shows a modest revenue growth rate of 3.5% TTM, indicating some positive momentum. However, the company is struggling with profitability, as evidenced by negative net profit margins (-82.1% TTM) and EBIT margins (-67.5% TTM). The gross profit margin has improved to 36.5% TTM, but the persistent negative margins highlight ongoing operational challenges.45
Neutral
Balance Sheet
The balance sheet reflects a significant improvement in financial stability, with a low debt-to-equity ratio of 0.02 TTM, down from 7.53 in the previous year. This indicates reduced leverage and better financial health. However, the return on equity remains negative (-98.1% TTM), suggesting that the company is not yet generating positive returns for shareholders.55
Neutral
Cash Flow
Cash flow analysis reveals challenges, with a negative free cash flow growth rate of -29.3% TTM. The operating cash flow to net income ratio is -1.83 TTM, indicating cash flow issues. Despite a free cash flow to net income ratio of 1.01 TTM, the overall cash flow position remains weak, reflecting the company's struggle to generate positive cash flow.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 119.30M | 113.69M | 130.38M | 115.38M | 102.60M | 49.94M |
| Gross Profit | 43.50M | 38.56M | 29.00M | 17.83M | 7.61M | -13.04M |
| EBITDA | -77.78M | -97.89M | -153.79M | -152.81M | -124.86M | -114.85M |
| Net Income | -97.90M | -127.98M | -172.80M | -162.96M | -131.94M | -120.70M |
Balance Sheet | ||||||
| Total Assets | 288.80M | 275.80M | 313.80M | 400.12M | 463.46M | 403.83M |
| Cash, Cash Equivalents and Short-Term Investments | 184.09M | 158.69M | 203.32M | 287.50M | 339.49M | 314.87M |
| Total Debt | 3.62M | 201.86M | 136.19M | 103.23M | 37.81M | 38.60M |
| Total Liabilities | 134.02M | 248.98M | 190.91M | 154.13M | 89.38M | 75.22M |
| Stockholders Equity | 154.78M | 26.82M | 122.89M | 245.99M | 374.08M | 328.61M |
Cash Flow | ||||||
| Free Cash Flow | -68.39M | -117.22M | -134.81M | -154.05M | -133.37M | -108.12M |
| Operating Cash Flow | -67.54M | -116.30M | -131.37M | -145.73M | -130.26M | -99.02M |
| Investing Cash Flow | 14.79M | 103.94M | 83.03M | -66.30M | -142.51M | 3.95M |
| Financing Cash Flow | 54.45M | 67.87M | 43.65M | 72.90M | 160.15M | 385.68M |
Outset Medical Technical Analysis
Negative
12.61
Price Trends
13.92
Negative
16.43
Negative
14.46
Negative
Market Momentum
-0.19
Positive
43.90
Neutral
20.33
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OM, the sentiment is Negative. The current price of 12.61 is below the 20-day moving average (MA) of 14.37, below the 50-day MA of 13.92, and below the 200-day MA of 14.46, indicating a bearish trend. The MACD of -0.19 indicates Positive momentum. The RSI at 43.90 is Neutral, neither overbought nor oversold. The STOCH value of 20.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for OM.
Outset Medical Risk Analysis
Outset Medical disclosed 83 risk factors in its most recent earnings report. Outset Medical reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Outset Medical Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
70 Outperform | $201.22M | 28.96 | 17.18% | ― | 16.97% | 48.56% | |
60 Neutral | $220.65M | ― | -13.46% | ― | 5.15% | 73.29% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $199.44M | 252.54 | -2.52% | ― | 2.68% | 89.63% | |
49 Neutral | $223.77M | ― | -87.65% | ― | 2.47% | 56.93% | |
48 Neutral | $234.06M | ― | -92.33% | ― | 23.11% | 18.06% | |
47 Neutral | $258.87M | ― | -32.87% | ― | 17.36% | 9.38% |
* Healthcare Sector Average
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Outset Medical
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.