Outset Medical, Inc.

Previous wording

We generate revenue from the placement of Tablo consoles along with accessories, and shipping and handling charged to customers, which revenue is recognized up-front. We also earn recurring revenue from sales of consumables, including Tablo cartridge, and services, which generates significant total revenue over the life of Tablo consoles. Our total revenues were $31.6 million and $31.4 million for the three months ended June 30, 2026 and 2025, respectively, and $59.5 million and $61.2 million for the six months ended June 30, 2026 and 2025, respectively.

Current wording

We generate revenue from the placement of Tablo consoles along with accessories, and shipping and handling charged to customers, which revenue is recognized up-front. We also earn recurring revenue from sales of consumables, including Tablo cartridge, and services, which generates significant total revenue over the life of Tablo consoles. Our total revenues were $33.6 million and $29.4 million for the three months ended September 30, 2026 and 2025, respectively, and $93.1 million and $90.6 million for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

We primarily sell our solutions through our direct sales organization, which covers most major metropolitan markets in the United States. Our sales organization is comprised of our capital sales team, responsible for generating new customer demand for Tablo, and our clinical sales team, responsible for driving utilization and fleet expansion of Tablo at existing customer sites. In addition, our field service team provides maintenance services and product support to our customers. Our field sales and service teams represent 47% of our total full-time employees as of June 30, 2026. The same sales organization and field service team drive Tablo penetration in both the acute and home markets. We believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business.

Current wording

We primarily sell our solutions through our direct sales organization, which covers most major metropolitan markets in the United States. Our sales organization is comprised of our capital sales team, responsible for generating new customer demand for Tablo, and our clinical sales team, responsible for driving utilization and fleet expansion of Tablo at existing customer sites. In addition, our field service team provides maintenance services and product support to our customers. Our field sales and service teams represent 48% of our total full-time employees as of September 30, 2026. The same sales organization and field service team drive Tablo penetration in both the acute and home markets. We believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business.

Previous wording

The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands):

Current wording

The following table summarizes our results of operations for the three and nine months ended September 30, 2026 and 2025 (in thousands):

Previous wording

Comparison of the Three and Six Months Ended June 30, 2026 and 2025

Current wording

Comparison of the Three and Nine Months Ended September 30, 2026 and 2025

Previous wording

Product revenue decreased by $3.9 million, or 9%, for the six months ended June 30, 2026 as compared to the same period in the prior year. This decrease was driven by a $2.7 million decrease in consumable revenue and a $1.2 million decrease in console revenue.

Current wording

Product revenue increased by $3.1 million, or 15%, for the three months ended September 30, 2026 as compared to the same period in the prior year. This increase was driven by a $2.1 million increase in console revenue and a $1.0 million increase in consumable revenue.

Previous wording

Product revenue decreased by $1.2 million, or 5%, for the three months ended June 30, 2026 as compared to the same period in the prior year. This decrease was driven by a $1.7 million decrease in consumable revenue, which was offset by a $0.5 million increase in console revenue.

Current wording

Product revenue decreased by $0.8 million, or 1%, for the nine months ended September 30, 2026 as compared to the same period in the prior year. This decrease was driven by a $1.8 million decrease in consumable revenue, which was partially offset by a $1.0 million increase in console revenue.

Previous wording

Service and other revenue increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to services associated with growth in our console installed base.

Current wording

Service and other revenue increased for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to services associated with growth in our console installed base.

Previous wording

Gross profit increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. Gross margin improved by 4.2 percentage points for the three months ended June 30, 2026 and 5.2 percentage points for the six months ended June 30, 2026 as compared to the same periods in the prior year. These improvements in gross profit and gross margin were primarily driven by higher gross margin on service and other revenue. Such improvements were offset by a lower mix of consumable revenue, which had a higher gross margin than console and service revenues, as compared to the same periods in the prior year.

Current wording

Gross profit increased for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year. Gross margin improved by 1.3 percentage points for the three months ended September 30, 2026 and 3.8 percentage points for the nine months ended September 30, 2026 as compared to the same periods in the prior year. These improvements in gross profit and gross margin were primarily driven by higher gross margin on service and other revenue. Such improvements were offset by a lower mix of consumable revenue, which had a higher gross margin than console and service revenues, as compared to the same periods in the prior year.

Previous wording

Research and development expenses for the three and six months ended June 30, 2026 were relatively consistent with the same periods in the prior year due to ongoing expense discipline and working capital management.

Current wording

Research and development expenses increased for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to an increase in consulting expense.

Previous wording

Sales and marketing expenses decreased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The decrease was primarily driven by a decrease in compensation-related and stock-based compensation expenses and infrastructure costs due to a lower headcount in 2026 compared to the prior year. This decrease was partially offset by increases in freight expense.

Current wording

Sales and marketing expenses decreased for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year. The decrease was primarily driven by a decrease in compensation-related and stock-based compensation expenses due to a lower headcount in 2026 compared to the prior year and a decrease in travel expense. These decreases were partially offset by an increase in freight expense.

Previous wording

General and administrative expenses increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to an increase in compensation-related and stock-based compensation expenses and higher legal costs related to the stockholder class action and related derivative lawsuits.

Current wording

General and administrative expenses increased for the nine months ended September 30, 2026 as compared to the same period in the prior year. The increase was primarily due to an increase in compensation-related expense, higher legal costs related to the stockholder class action and related derivative lawsuits, and an increase in the allowance for credit losses.

Previous wording

The decrease in interest income and other income, net for the three and six months ended June 30, 2026 as compared to the same periods in the prior year were driven by a lower average short-term investment balance in 2026.

Current wording

The decrease in interest income and other income, net for the three and nine months ended September 30, 2026 as compared to the same periods in the prior year were driven by a lower average short-term investment balance in 2026.

Previous wording

The interest expense for the three and six months ended June 30, 2026 were relatively consistent with the amount in the same periods in the prior year.

Current wording

The interest expense for the three and nine months ended September 30, 2026 were relatively consistent with the amounts in the same periods in the prior year.

Previous wording

The loss on extinguishment of term loan of $7.7 million was recognized for the repayment of the SLR Term Loan in 2025, which included final payment and termination fees.

Current wording

The loss on extinguishment of term loan of $7.7 million was recognized in 2025 for the repayment of our prior term loan facility, pursuant to a loan and security agreement among SLR Investment Corp., as collateral agent, the lenders from time to time party thereto, and us, which included final payment and termination fees.

Previous wording

As of June 30, 2026, we had cash, cash equivalents, restricted cash, and short-term investments of $151.0 million.

Current wording

As of September 30, 2026, we had cash, cash equivalents, restricted cash, and short-term investments of $140.7 million.

Previous wording

We are required to comply with certain covenants under the Perceptive Credit Agreement, including, among others, requirements as to financial reporting, restrictions on our ability to incur additional indebtedness and to pay any dividends or other distributions on capital stock, maintenance of a minimum cash balance, and achievement of certain specified trailing twelve-month net revenue targets. If we fail to comply with any covenants, payments or other terms of the Perceptive Credit Agreement and such failure constitutes an event of default thereunder, such event of default would give Agent the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.

Current wording

In addition, in January 2025, we entered into a credit agreement and guaranty (the Perceptive Credit Agreement) with Perceptive Credit Holdings IV, LP, as administrative agent (Agent) and the lenders from time to time party thereto, which provided a $100 million 5-year term loan at closing and will provide an additional term loan of up to $25 million at our election, which is available for funding until July 14, 2027, subject to achievement of a specified revenue milestone, as amended in August 2026, and other customary conditions. We are required to comply with certain covenants under the Perceptive Credit Agreement, including, among others, requirements as to financial reporting, restrictions on our ability to incur additional indebtedness and to pay any dividends or other distributions on capital stock, maintenance of a minimum cash balance, and achievement of certain specified trailing twelve-month net revenue targets. If we fail to comply with any covenants, payments or other terms of the Perceptive Credit Agreement and such failure constitutes an event of default thereunder, such event of default would give Agent the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.

Previous wording

The net cash used in operating activities of $22.5 million for the six months ended June 30, 2026 was due to a net loss of $37.0 million, the amortization of premiums on investments of $0.8 million, and provision for credit losses of $0.7 million, which were adjusted by stock-based compensation expense of $6.1 million, depreciation and amortization of $1.4 million, non-cash interest expense of $1.4 million, non-cash lease expense of $0.8 million, and a net cash inflow from the change in our operating assets and liabilities of $4.7 million. The net cash inflow from operating assets and liabilities was primarily due to increases in accounts payable, accrued expenses, and deferred revenue, and a decrease in prepaid expenses and other assets. This net cash inflow from operating assets and liabilities was partially offset by a decrease in accrued compensation and related benefits resulting from the payout of 2025 annual cash bonuses, an increase in accounts receivable and decreases in operating lease liabilities and accrued warranty liability.

Current wording

The net cash used in operating activities of $32.9 million for the nine months ended September 30, 2026 was due to a net loss of $51.6 million and the amortization of premiums on investments of $1.2 million, which were adjusted by stock-based compensation expense of $7.8 million, non-cash interest expense of $2.1 million, depreciation and amortization of $2.1 million, provision for credit losses of $1.6 million, and non-cash lease expense of $1.3 million, and a net cash inflow from the change in our operating assets and liabilities of $5.0 million. The net cash inflow from operating assets and liabilities was primarily due to increases in accounts payable and accrued expenses, and decreases in inventories and prepaid expenses and other assets. This net cash inflow from operating assets and liabilities was partially offset by an increase in accounts receivable, and decreases in operating lease liabilities, accrued compensation and related benefits, deferred revenue and accrued warranty liability.

Previous wording

The net cash provided by investing activities of $22.1 million for the six months ended June 30, 2026 was due to the maturities of short-term investment securities of $63.8 million, which was partially offset by purchases of short-term investment securities of $41.5 million and purchases of property and equipment of $0.2 million.

Current wording

The net cash provided by investing activities of $31.7 million for the nine months ended September 30, 2026 was due to the maturities of short-term investment securities of $97.7 million, which was partially offset by purchases of short-term investment securities of $65.6 million and purchases of property and equipment of $0.3 million.

Previous wording

The net cash provided by financing activities of $0.4 million for the six months ended June 30, 2026 was due to proceeds from ESPP purchases, partially offset by cash outflow of $0.1 million in payments on finance lease liabilities.

Current wording

The net cash provided by financing activities of $0.4 million for the nine months ended September 30, 2026 was due to proceeds from ESPP purchases, partially offset by cash outflow of $0.2 million in payments on finance lease liabilities.

Previous wording

The Company has finance leases for vehicles, which generally have a term of three years. The Company’s total finance lease liability as of June 30, 2026 was $1.7 million, which includes $0.6 million due within one year from the most recent balance sheet date and $1.1 million due thereafter.

Current wording

We have finance leases for vehicles, which generally have a term of three years. Our total finance lease liability as of September 30, 2026 was $1.7 million, which includes $0.6 million due within one year from the most recent balance sheet date and $1.1 million due thereafter.