Outset Medical gets back on track with new FDA nod for at-home dialysis systems

About a month and a half after pausing shipments of its Tablo hemodialysis system for at-home use, Outset Medical has secured the renewed FDA clearance it was waiting for, greenlighting new sales of the updated system.

The hold began in mid-June, when Outset said it would stop shipping its machines to at-home users until the FDA had completed its review of changes made to the system since its initial March 2020 clearance. Though the company didn’t specify what exactly those changes include, it did note that they weren’t related to any safety issues.

Throughout the pause, Outset continued distribution of the Tablo system for use in chronic and acute care settings, and also assured existing at-home customers that it was safe to continue using their dialysis machines.

The system runs using only tap water, a drain and a standard power outlet to function and features wheels, storage space, a touchscreen controller and automated self-cleaning abilities. It connects wirelessly to Outset’s cloud platform to access automatic software updates and share treatment data with users’ healthcare providers.

The shipment hold hit investors hard: Within hours of the announcement, Outset’s stock price had slipped to its lowest levels since its 2020 IPO, hitting an all-time low of $13.46 the day after the announcement went live. But with this week’s news of restarted shipments, the stock has climbed almost to its pre-pause levels, opening Monday morning at $19.80.

Despite that recovery on the share price front, the shipment hold still took a sizable bite out of Outset’s 2022 earnings.

After the first quarter of the year, as the California devicemaker reported its highest-ever sales of the Tablo consoles for at-home users, Outset upped its forecast to predict full-year revenues between $144 million and $150 million, which would’ve represented a whopping 40% to 46% bump over 2021’s haul.

Now, however, with six weeks of sales lost, the company is now predicting its 2022 total to land somewhere between $105 million and $110 million—a forecast that still places this year’s revenue at least 2% higher than 2021’s.

“We are pleased to begin supporting new patients in the home again and helping them achieve autonomy and control over where and when they dialyze,” said CEO Leslie Trigg. “As we look to the second half of the year, we see no change in underlying demand for Tablo. However, we have reflected in our guidance the staffing and inflationary pressures our provider customers are facing, as well as the work we need to do to regain commercial momentum following release of the Tablo ship hold.”

Meanwhile, because the shipment hold only overlapped with about two weeks of the second quarter of the year, Outset was able to almost exactly match the sales numbers for the same period last year.

This time around, total revenues clocked in at $25.1 million, compared to $25.2 million in the second quarter of 2021. Product revenues slipped a little further, totaling $19.6 million for the period, down almost 5% from the previous year’s $20.6 million.

Outset’s net loss also widened during the second quarter, putting it $43.8 million in the red, compared to the $30.2 million net loss posted during the same time span last year and the nearly $40 million deficit reported in the first quarter of 2022.