Outset Medical
(Nasdaq: OM)
has slashed its full-year revenue outlook as the maker of Tablo hemodialysis systems grapples with an FDA warning letter.
The company now expects roughly $130 million in revenue in 2023 — down from its previous forecast of $144–150 million. It’s preliminary numbers show third-quarter sales up 9% year-over-year to $30.4 million. Cash, cash equivalents and short-term investments on hand at the end of the quarter amounted to $197 million.
“Growth in the quarter was dampened by a larger-than-expected impact in the field from the recent FDA warning letter, and early signs of a more cautious outlook on capital spending that we see as a headwind continuing through the fourth quarter,” Outset Medical CEO Leslie Trigg said in a news release posted yesterday evening. “Importantly, we did not see deals fall out of our pipeline, and our economic value proposition remains resonant and differentiated. Our confidence around generating sustained long-term growth and reaching profitability remains high.”
By midday the following day, OM shared had lost about half of their value, trading at $3.43 apiece. MassDevice‘s MedTech 100 Index was up slightly today.
OM shares were trading at over $20 apiece over much of the summer. But in July, the company disclosed an FDA warning letter that included the finding that Outset Medical needed to seek 510(k) clearance for its TabloCart with Prefiltration, an accessory for Tablo. By August, the company was announcing a shipment hold for the accessory while it sought clearance.
“First, we observed more customers than we anticipated choosing to defer their Tablo console purchasing and installation until TabloCart with prefiltration is available again. Second, we experienced a strong competitive response which served to create marketplace confusion, particularly regarding Tablo’s use in the ICU,” Trigg said during a call with analysts yesterday evening.
Trigg later added that as the third quarter progressed, the company saw an increasing number of hospitals and health systems deferring their purchase decisions amid rising interest rates and more cautious capital spending.
Tablo console sales in Q3 were split roughly 50-50 between acute care and home care settings.
“We have a great deal of confidence in the long-term opportunities for Tablo and in our ability to execute on them,” Trigg said. “We are on the front end of growth into large end markets. Our pipeline continues to expand, and our value proposition remains compelling.”
