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Outset Medical (OM)
NASDAQ:OM
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Outset Medical
(NASDAQ:OM)
Rating:57Neutral
Price Target:―
Positive Factors
Cash Flow Management
Net cash used for operating activities in the recent quarter declined 44% year over year as the company continues to make progress toward profitability.
Recurring Revenue Growth
Recurring revenue from the sale of Tablo cartridges and service totaled $22.7M, reflecting a 20% improvement over the prior year.
Revenue Performance
First-quarter revenue of $29.8M comfortably beat the $27.8M Street target and was up both year over year and sequentially.
Negative Factors
Console Revenue
While encouraging, this also implied a lighter Q4 Console revenue metric than forecasted, $5.8M vs $7.3M estimate.
Market Valuation
The new price target uses a lower EV-to-sales multiple of 2.1, which reflects a broader contraction in market valuations for small-cap stocks.
Price Target Reduction
The price target for Outset Medical, Inc. has been significantly reduced from $45 to $15.
Outset Medical (OM) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$347.00M
Dividend YieldN/A
Average Volume (3M)208.22K
Price to Earnings (P/E)―
Beta (1Y)1.78
Revenue Growth-7.84%
EPS Growth42.34%
CountryUS
Employees354
SectorHealthcare
Sector Strength44
IndustryMedical - Devices
Share Statistics
EPS (TTM)-3.24
Shares Outstanding17,722,310
10 Day Avg. Volume343,810
30 Day Avg. Volume208,218
Financial Highlights & Ratios
PEG Ratio-0.04
Price to Book (P/B)2.01
Price to Sales (P/S)0.00
P/FCF Ratio-2.32
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue0.74
Enterprise Value/Gross Profit9.06
Enterprise Value/Ebitda-0.71
Forecast
1Y Price Target
$24.00Price Target Upside23.01% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering5
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 and lease of its Tablo Hemodialysis System, which is marketed to hospitals, dialysis clinics, and home users. The company also earns income from the sale of consumables and accessories required for the operation of the Tablo system. Additionally, Outset Medical may engage in service agreements for maintenance and support, contributing to its revenue streams. Strategic partnerships with healthcare providers and institutions further enhance its market reach and business growth.
Outset Medical Financial Statement Overview
Summary
Outset Medical is experiencing revenue growth but struggles with profitability and increasing leverage. Improvements in cost management and liquidity are noted, though significant challenges remain in achieving positive cash flow and reducing debt reliance.Income Statement
Outset Medical's revenue has shown growth from 2019 to 2023, with a 17.4% increase from 2022 to 2023. However, the company is currently operating at a loss with negative net profit and EBIT margins. The gross profit margin improved from 15.4% in 2022 to 22.2% in 2023, indicating better cost management. Despite these improvements, the persistent negative EBITDA and net income highlight ongoing profitability challenges.40
Negative
Balance Sheet
Outset Medical's balance sheet shows a significant decrease in stockholders' equity from $122.9M in 2023 to $26.8M in 2024, indicating financial strain. The debt-to-equity ratio has risen sharply, suggesting increased leverage, which poses a risk. However, the company maintains a high level of cash and cash equivalents, which provides liquidity and could support future operations.50
Neutral
Cash Flow
The company's operating cash flow remains negative, although there is a slight improvement in free cash flow from 2022 to 2023. The operating cash flow to net income ratio is approximately 0.85, indicating that cash flow issues are closely tied to net income losses. Despite these challenges, substantial cash reserves are helping to offset operational cash deficits.45
Neutral
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 113.69M | 130.38M | 115.38M | 102.60M | 49.94M | Gross Profit |
| 38.56M | 29.00M | 17.83M | 7.61M | -13.04M | EBIT |
| -113.38M | -169.77M | -161.02M | -130.52M | -117.47M | EBITDA |
| -97.89M | -153.79M | -152.81M | -124.86M | -114.85M | Net Income Common Stockholders |
| -127.98M | -172.80M | -162.96M | -131.94M | -120.70M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 158.69M | 203.32M | 287.50M | 339.49M | 314.87M | Total Assets |
| 275.80M | 313.80M | 400.12M | 463.46M | 403.83M | Total Debt |
| 201.86M | 136.19M | 103.23M | 37.81M | 38.60M | Net Debt |
| 77.84M | 67.68M | 30.01M | -144.54M | -256.37M | Total Liabilities |
| 248.98M | 190.91M | 154.13M | 89.38M | 75.22M | Stockholders Equity |
| 26.82M | 122.89M | 245.99M | 374.08M | 328.61M |
| Cash Flow | Free Cash Flow | |||
| -117.22M | -134.81M | -154.05M | -133.37M | -108.12M | Operating Cash Flow |
| -116.30M | -131.37M | -145.73M | -130.26M | -99.02M | Investing Cash Flow |
| 103.94M | 83.03M | -66.30M | -142.51M | 3.95M | Financing Cash Flow |
| 67.87M | 43.65M | 72.90M | 160.15M | 385.68M |
Outset Medical Technical Analysis
Positive
19.51
Price Trends
12.11
Positive
12.49
Positive
12.42
Positive
Market Momentum
2.25
Negative
70.17
Negative
78.45
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For OM, the sentiment is Positive. The current price of 19.51 is above the 20-day moving average (MA) of 14.73, above the 50-day MA of 12.11, and above the 200-day MA of 12.42, indicating a bullish trend. The MACD of 2.25 indicates Negative momentum. The RSI at 70.17 is Negative, neither overbought nor oversold. The STOCH value of 78.45 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive 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 3 New Risks
1.
Pursuant to the terms of the Securities Purchase Agreements, we are required to recommend that our stockholders approve the conversion of all outstanding shares of our Series A Preferred Stock into shares of our common stock. We cannot guarantee that our stockholders will approve this matter, and if they fail to do so, the Series A Preferred Stock will contain rights, preferences and privileges that may limit our business flexibility or reduce the value of our common stock. Q4, 2024
2.
We may not be able to maintain the listing of our common stock on Nasdaq, which could adversely affect our liquidity and the trading volume and market price of our common stock. Q4, 2024
3.
We recently qualified as a "smaller reporting company" and an "accelerated filer," and any decision on our part to comply only with certain reduced reporting and disclosure requirements applicable to such companies could make our common shares less attractive to investors. Q4, 2024
Outset Medical Peers Comparison
Overall Rating
UnderperformOutperform
Sector (53)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
76 Outperform | $184.41M | 27.84 | 16.56% | ― | 14.85% | 64.96% | |
57 Neutral | $347.00M | ― | -86.53% | ― | -7.84% | 42.34% | |
53 Neutral | $5.24B | 3.07 | -43.58% | 2.80% | 16.87% | -0.11% | |
52 Neutral | $182.25M | ― | -76.01% | ― | 25.62% | 11.86% | |
51 Neutral | $203.20M | ― | 271.41% | ― | 85.03% | 53.73% | |
45 Neutral | $168.58M | ― | -14.10% | ― | 5.73% | 72.50% | |
43 Neutral | $134.46M | ― | -60.68% | ― | 19.84% | 5.77% |
* Healthcare Sector Average
Performance Comparison
OM
Outset Medical
18.60
-39.98
-68.25%
ELMD
Electromed
22.22
5.96
36.65%
INGN
Inogen
5.96
-2.68
-31.02%
LUNG
Pulmonx
3.14
-5.81
-64.92%
TLSI
TriSalus Life Sciences
5.44
-4.24
-43.80%
CVRX
CVRx
6.26
-2.27
-26.61%
Outset Medical Earnings Call Summary
Earnings Call Date:May 07, 2025
(Q1-2025)
| % Change Since: 66.18%|
Next Earnings Date:Jul 30, 2025
Earnings Call Sentiment Positive
The earnings call presented a positive outlook for Outset Medical, with significant growth in revenue, console sales, and recurring revenue. Operational improvements and strong customer satisfaction add to the positive sentiment, despite challenges such as federal funding cuts and manufacturing overhead issues.Q1-2025 Updates
Positive Updates
Revenue Growth
Revenue for Q1 2025 was $29.8 million, reflecting a 6% growth from the first quarter of last year.
Console Revenue Growth
Console revenue saw a 23% sequential growth, marking a key metric for the company's growth strategy.
Recurring Revenue Increase
Recurring revenue of $22.7 million grew 20% over the first quarter of last year, showing strong utilization of Tablo consoles.
Gross Margin Improvement
Non-GAAP gross margin improved to 37.6%, with a product gross margin increase of 860 basis points year-over-year.
Operational Progress
Non-GAAP operating loss was $13.4 million, 49% lower than the prior year period, indicating progress towards profitability.
Strong Customer Satisfaction
The field service team received customer satisfaction scores consistently above 95%.
Negative Updates
Federal Funding Cuts
Federal funding cuts have made the healthcare environment more dynamic since the guidance provided in February.
Lower Absorption of Manufacturing Overhead
Gross margin was adversely affected in the short term due to lower absorption of manufacturing overhead.
Company Guidance
During the Outset Medical first quarter 2025 earnings call, Leslie Trigg, Chair and CEO, highlighted several key metrics and aspects of the company's performance. Revenue for the first quarter reached $29.8 million, marking a 6% increase from the prior year, with console revenue growing 23% sequentially. The company also achieved a recurring revenue of $22.7 million, a 20% increase from the previous year, driven by strong utilization of the Tablo installed base. The non-GAAP gross margin expanded to 37.6%, with indications that it could reach 50% in the future. The company shipped its 3 millionth treatment, achieving this milestone in just over 12 months compared to the previous 17-month period. Outset Medical also reported a significant reduction in non-GAAP operating loss and maintained a robust cash position of $192.3 million. Despite fiscal challenges in the healthcare sector, Trigg affirmed that Outset Medical's guidance for 2025 remains on track, emphasizing their focus on growing console revenue, increasing gross margins, and driving towards profitability.Outset Medical Corporate Events
Executive/Board Changes
Outset Medical Appoints Kevin O’Boyle to Board
Neutral
May 14, 2025
On May 14, 2025, Outset Medical announced the resignation of Dale E. Jones from its Board of Directors and the appointment of Kevin O’Boyle as a new board member and Chair of the Audit Committee. Mr. O’Boyle, an experienced healthcare executive with a background in capital equipment and recurring revenue business models, is expected to guide Outset through its next growth phase. His appointment follows his extensive experience on the boards of several medical device companies, enhancing Outset’s strategic positioning in the medical technology industry.
The most recent analyst rating on (OM) stock is a Buy with a $6.00 price target. To see the full list of analyst forecasts on Outset Medical stock, see the OM Stock Forecast page.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
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.