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DATE

Thursday, Aug. 6, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Chair and Chief Executive Officer - Leslie Trigg
• Chief Financial Officer - Renee Gaeta
• Investor Relations - Tina Jacobson

TAKEAWAYS

• Total Revenue -- $31.6 million, representing 1% growth year over year and 14% growth sequentially.
• Product Revenue -- $21.9 million, a decrease of 5% compared to the prior-year period.
• Console Revenue -- $9.5 million, reflecting 6% growth year over year and exceeding analyst consensus expectations.
• Consumable Revenue -- $12.4 million, a 12% decline driven by challenging prior-year comparisons and ordering timing.
• Service and Other Revenue -- $9.7 million, an increase of 17% year over year due to higher volume and average selling price increases.
• Recurring Revenue -- $22.1 million, a 2% decrease compared to the second quarter of 2025.
• Non-GAAP Gross Margin -- 42.2%, an expansion of more than 380 basis points year over year driven by product cost improvements and service efficiencies.
• Product Gross Margin -- 46.1%, a decrease of 280 basis points year over year due to a higher mix of console sales.
• Service and Other Gross Margin -- 32.6%, an increase of over 2,400 basis points from 6.9% in the prior-year period.
• Non-GAAP Operating Expenses -- $25.8 million, up 1% year over year and in line with revenue growth.
• Non-GAAP Operating Loss -- $12.4 million, representing a 7% improvement compared to the prior year.
• Total Cash and Investments -- $151 million, including cash, cash equivalents, short-term investments, and restricted cash as of June 30, 2026.
• Quarterly Cash Use -- $9.5 million, supporting management's target to use less than $40 million in cash for the full year.
• Full Year 2026 Revenue Guidance -- $125 million to $130 million, representing projected growth of 5% to 9%.
• HCA Refresh Agreement -- $40 million over three years, providing contracted backlog for console fleet updates through 2028.
• Refresh Cycle Opportunity -- 3,000 consoles, which management estimates represents up to a $150 million revenue opportunity over several years.
• Market Penetration -- 100% of the top 10 health systems and 30% of the top 100 Integrated Delivery Networks, reflecting adoption across major providers.
• New Site Implementations -- highest number of successful new implementations in several years, driven by the rollout of the clinical excellence team.
• Treatment Volume -- 956 treatments supported in the first 60 days at a single Texas health system where over 100 nurses were trained.
• GAAP Net Loss -- $18.0 million, compared to a net loss of $18.5 million in the second quarter of 2025.
• Non-GAAP Net Loss Per Share -- $0.80, representing an improvement from $0.84 in the prior-year period.
• Non-GAAP Research and Development Expense -- $4.9 million, compared to $4.5 million in the second quarter of 2025.
• Non-GAAP Sales and Marketing Expense -- $11.7 million, a decrease from $13.3 million in the prior-year period.
• Inventory -- $47.3 million as of June 30, 2026, compared to $47.6 million at the end of 2025.
• Accounts Receivable -- $29.2 million as of June 30, 2026.

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RISKS

• Trigg stated, "the natural variability of capital sales has made our performance less predictable over the past year," noting that this variability remains a challenge for the business.

SUMMARY

Outset Medical, Inc. (OM -5.56%) reported total revenue of $31.6 million for the second quarter, driven by sequential console growth and increased service revenue. Management highlighted the signing of a $40 million refresh agreement with HCA Healthcare as a significant milestone in establishing recurring console revenue cycles. The company maintained its full-year revenue guidance and reported progress toward a 50% gross margin target through operational efficiencies. Strategic initiatives during the period included the pilot phase of the next-generation Tablo system and the expansion of the clinical excellence team to support long-term customer utilization across a market that includes all top 10 health systems.

• CEO Trigg identified the $40 million HCA Healthcare agreement as the company's "first refresh win," noting it covers a fleet update through 2028 for existing facilities.
• Management reported that the next-generation Tablo system is currently in a pilot phase, featuring hardware and software enhancements designed to meet higher cybersecurity standards.
• Trigg noted that customers gave the company an average score of 8.8 out of 10 in an independent voice of the customer assessment conducted during the quarter.
• CEO Trigg confirmed the completion of "our highest number of successful new site implementations in several years" during the second quarter.
• Management indicated that the company is expanding sales coverage to target the top 250 health systems to accelerate adoption.
• The company expects positive seasonality in capital sales during the fourth quarter as hospitals spend remaining budgets before year-end.

INDUSTRY GLOSSARY

• Tablo Hemodialysis System: A compact console with integrated water purification and on-demand dialysate production for use in hospitals and homes.
• IDN (Integrated Delivery Network): A formal system of providers and sites of care that offers both health care services and a health insurance plan.
• Consumables: Single-use items, such as cartridges and tubing, required for each dialysis treatment.
• Dialysate: A chemical solution used in dialysis to draw fluids and toxins out of the blood.
• Refresh Cycle: The period during which a health system replaces older medical equipment with newer versions of the same or updated technology.

Full Conference Call Transcript

Operator: Good day, and thank you for standing by. Welcome to the Outset Medical Q2 2026 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Tina Jacobson, Investor Relations. Please go ahead.

Unknown Executive: Good afternoon, everyone, and welcome to Outset Medical's Second Quarter 2026 Earnings Call. Today's speakers are Leslie Trigg, Chair and Chief Executive Officer, and Renee Gaeta, Chief Financial Officer. The company issued a news release after the close of the market today, which can be found in the investor section of outsetmedical.com. This call is being recorded and will be archived there as well. All forward-looking statements made during today's call are intended to be protected under the Private Securities Litigation Reform Act of 1995. Outset assumes no obligation to update these statements.

For a list and description of the risks and uncertainties associated with the business, please refer to Outset's public filings with the Securities and Exchange Commission, including its latest annual and quarterly reports. With that, I'll open the call to Leslie Trigg. Leslie?

Leslie Trigg: Good afternoon, everyone, and thank you for joining us. The second quarter reflected steady execution across revenue, gross margin, operating expense discipline, and cash management. We continue to make meaningful commercial progress while advancing our mission to improve dialysis patient outcomes at a lower cost and with less complexity. We are confident that the impact of that progress will become increasingly evident over time. I'll begin today with financial performance in the second quarter. Revenue of $31.6 million was up 1% year-over-year and up 14% sequentially. Our ongoing margin expansion program delivered a non-GAAP gross margin of 42%, a significant improvement compared to last year.

With the solid second quarter results, we are reiterating full year 2026 revenue guidance of $125 million to $130 million. During the second quarter, we completed our highest number of successful new site implementations in several years. At one system with several sites in Texas, our clinical excellence team trained over 100 nurses who, in turn, supported 956 treatments in their first 60 days. Other successful implementations were completed at a new top 10 health system customer for Outset, as well as at hospitals that are part of large regional health systems and post-acute care facilities. What stands out most is what happened after the initial go-live implementation.

Outset has established a clinical excellence team focused on helping our customers optimize the clinical, financial, and operational value of their Tablo in-sourcing programs over the long term. Each hospital customer is paired with a clinical excellence team member who works closely with them to identify the outcomes that matter most to their organization and then trends, tracks, and shares the key performance indicators on a regular basis. Tablo's unique data ecosystem powers this process, providing valuable treatment and clinical program insights to our customers. The impact of this structured approach to customer success is reflected in both customer satisfaction and customer expansion.

During the quarter, we conducted an independent voice of the customer assessment, and when asked how likely they were to recommend Outset, our customers gave us an average score of 8.8 out of 10. Combined with the measurable results we continue to deliver, this strong level of customer advocacy is central to our forward commercial momentum and high customer retention and creates opportunities for continued growth across our installed base. We're increasingly seeing customers expand their use of Tablo, both by deploying the technology at additional sites across their health systems and by broadening use within existing facilities. A strong customer experience was instrumental in securing a meaningful recent commercial win.

We are privileged to have signed a $40 million refresh agreement with HCA Healthcare. The agreement reinforces HCA and Outset's long-term commitment to in-source dialysis, which extends through 2028. After carefully evaluating comparative outcomes, HCA opted to recommit to Tablo, underscoring the clinical and operational value that it continues to deliver across their nationwide system. The agreement provides a meaningful foundation of contracted backlog, enhancing our visibility and supporting revenue predictability. Under the refresh agreement, HCA facilities currently partnering with Outset for in-source dialysis will update their fleet. And importantly, the $40 million value does not include the potential to expand over time into additional HCA facilities not yet equipped with Tablo.

This marks our first refresh win, and that's an important milestone as we continue to capitalize on a refresh cycle that, over the next several years, may include roughly 3,000 consoles and up to $150 million in console revenue opportunity. Given customer confidentiality considerations, we're limited in the level of detail we can provide and don't intend to disclose HCA-specific information today or going forward. That said, HCA is a recognized leader in health care, and we believe its continued commitment to Tablo serves as strong validation that, over time, can help support broader adoption across health systems of all sizes. We believe the introduction of the next-generation Tablo system will provide a great opportunity to catalyze customer refresh decisions.

Next-gen Tablo combines hardware and software enhancements designed to improve performance and reliability with advanced cybersecurity capabilities that are increasingly crucial for health systems. We're working on the pilot phase now in preparation for a successful broader launch, and we'll continue to share updates as we progress. Reflecting on the quarter's performance from a commercial perspective, the addition of Derek Elliott as our new Executive Vice President of Commercial has marked our next phase of commercial evolution. Over the last several years, we've standardized our sales process, built systems to support it, and refined our go-to-market strategy to create a more disciplined and predictable commercial engine. We're now scaling that foundation to increasingly execute with consistency, conversion, and impact.

Our near-term objectives include further infusing the capital sales organization with the right quantity and quality of talent. We're expanding sales coverage to further accelerate our inroads into the top 250 health systems where we believe Tablo can deliver significant impact. We believe we have the right combination of commercial rigor and clinical expertise to guide this next phase. Derek's impact is being reinforced by our Chief Nursing Officer, Brittni McGill, whose first-hand understanding of our customers' pain points and workflows brings an invaluable clinical perspective. We're excited about our commercial and clinical leadership and expect their complementary expertise to position us well to engage health systems, address their most pressing needs, and accelerate customer adoption and conversion.

And with that, I will turn the call over to Renee.

Renee Gaeta: Thank you, Leslie, and good afternoon, everyone. Total revenue in the second quarter was $31.6 million, up approximately 1% compared to the second quarter of last year. Product revenue was $21.9 million, down 5% against a challenging prior year growth comparison. Console revenue of $9.5 million grew 6% year-over-year, and consumable revenue of $12.4 million was down 12% against a double-digit growth comparison last year. Service and other revenue of $9.7 million grew 17% compared to last year on a strong volume and ASP increases. Recurring revenue, which includes consumables, service, implementation services, and freight, was $22.1 million, down 2% compared to last year. Turning next to the P&L.

Please refer to the tables in today's earnings release for a reconciliation of GAAP to non-GAAP measures. Second quarter non-GAAP gross margin was 42.2%, up over 380 basis points compared to last year, and driven primarily by product cost improvements, reduced overhead, and service efficiencies. Product gross margin was 46.1%, down about 280 basis points compared to last year due to a higher mix of console sales within product revenue. And service and other gross margin was 33.4% (sic) [ 32.6% ] up over 2,400 basis points. Gross margin performance reflects strong execution and keeps us on track towards our next milestone of a 50% company-wide gross margin. Moving to operating expenses.

Second quarter non-GAAP operating expenses of $25.8 million increased 1% compared to last year, in line with revenue growth. Non-GAAP operating loss was $12.4 million, an improvement of 7% compared to last year. These results reflect continued progress as we work to achieve profitability. Moving to the balance sheet, we ended the quarter with $151 million in cash, cash equivalents, short-term investments, and restricted cash. With ongoing expense discipline and working capital management, cash use was $9.5 million in the second quarter, keeping us on track to use less than $40 million in cash for the full year.

Turning to our guidance for 2026, we continue to expect full year revenue of $125 million to $130 million, representing growth of 5% to 9% over last year, with most of the growth expected in the third and fourth quarters. Importantly, our confidence in this outlook is supported by a strong commercial pipeline and the foundational contracted backlog provided by the HCA refresh agreement. With that, I will turn the call back over to Leslie.

Leslie Trigg: Thanks, Renee. I'd like to close by thanking everyone on this call for your continued support. While the natural variability of capital sales has made our performance less predictable over the past year, we are confident in our ability to continue strengthening our commercial organization and sales process to improve visibility and predictability. The opportunity ahead of Outset has never been more compelling. With a customer base that now includes all 10 of the largest 10 health systems, all 10 of the largest 10 post-acute providers, and approximately 30% of the top 100 IDNs, we are reshaping how dialysis care is delivered across a large, untapped market that needs better, lower-cost solutions.

Over the next few years, we expect several new console growth tailwinds to emerge. First, the refresh cycle. Second, our launch of the next-gen Tablo. Third, our newly formalized customer success team and program, which is designed to expand same-store console and treatment sales, while also driving new site expansion within our existing customer base. Further, we continue to expand our layers of recurring revenue, starting with consumables and service, and buttressed by EMR annual maintenance and implementation services. We're demonstrating traction against a sizable new refresh opportunity, and we're well positioned to capitalize on it, with a next-generation platform and a commercial team strengthened by proven leadership.

And Finally, we've built a foundation to support scale with improving gross margin, disciplined expense and cash management, and a clear path to profitability. We have the strategy, the technology, and the team in place to execute consistently and create long-term value, and we look forward to sharing continued progress in the years ahead. With that, we are ready for Q&A. Operator, please open the line.

Operator: [Operator Instructions] And your first question today comes from the line of Rick Wise from Stifel.

Frederick Wise: It's great to see the quarter, and particularly on the console side. And maybe we can just start there. So console revs at $9.5 million were nicely above, I think, a consensus number, is something like $6.4 million or so. That's really solid outperformance, good to see. Maybe unpack that for us, if you could. How much of that outperformance is tied to the HCA agreement? How much is tied -- how do we break it down between that and the early impact of broadly next-gen Tablo launch versus that first quarter lingering capital order, maybe did it close this quarter or some of it?

Or you said, hopefully, Is this a new console run rate or a one-time pull forward? Just help us understand all the moving pieces there. Obviously, it's an important number, and it's good to see.

Renee Gaeta: Sure, Rick. This is Renee. I'll take a stab at that and then have Leslie jump in if she has any elements to add. I would say it's sort of all of that, to some extent, one or another. I would say, yes, we are definitely pleased with our Q2 performance. And coming off of the announcement of the HCA refresh, I will provide some color there and that HCA was a part of our Q2 pipeline and a part of our strong console performance during the quarter. Due to customer confidentiality reasons, I'm not going to give much more specifics than that. But that is not to say that we also had new expansion customers, other console placements included.

We continue to have a broad range within our pipeline of deal size, and we were glad to see the closed completion of certain of those deals in the quarter.

Leslie Trigg: I think that was well said. I would just add that I think this was a quarter when all parts of the business performed as we had expected. And I was very pleased to see the distribution across sort of the 2 big parts of our commercial strategy, which is one, current customer expansion; and two, new customer acquisition. And then you alluded to some of these new tailwinds, new growth that we haven't necessarily had at our back in the past. And I think that some of those new tailwinds, be it the refresh opportunity ahead of us, a new commercial leader, this new very sort of structured and formalized customer success program and team.

I think this was sort of the first quarter where we were seeing some green shoots of all of those tailwinds coming into play in a nice way.

Frederick Wise: Great. And also, what stood out to me, that you called out, but maybe you could talk about it a little more and help us better understand. Consumable revenue growth was down 9%, steeper than the first quarter's decline. I just want to make sure I'm understanding what that's all about. And to what impact, if at all, is this new systems and volume not quite up yet? Or does HCA or the next-gen launch reverse that trend? Or just -- again just what does it mean and how do we think about the rest of the year from that perspective?

Renee Gaeta: Yes, it's a great question, Rick, and a fair one. I would say I would start off with, we are certainly up against a tough comparable from the prior year. 2025 had a really strong Q1 and Q2 on the consumable side, partly driven by the flu season and census in that year, which we have not seen as strong of an impact in 2026. And then, of course, as you might remember, we had some of the ordering cadence volume in 2025, which we believe is now past us.

I think when we take a look at understanding that our consumable revenue is going to be driven by ordering timing, we really look down a layer into the device utilization information that we have, and we continue to see strong utilization across our customer segments. And so there is nothing alarming or concerning for us. Again, we're just up against a really hard comp. And then I would say, as we look forward to the back half of the year and when we talk about our guidance as a whole, consumable revenue growth is anticipated to be in line with total revenue expectations for the year.

And we hope that those have tailwinds going forward and utilization not only holds up but maybe expands beyond that.

Leslie Trigg: The only thing I would add to that, that's maybe important to note, we had just mentioned a second ago in the prepared remarks that we did our largest number of new site implementations over the past several years in this past quarter. That is a reflection -- and I think we had talked about this in a past quarter, that is a reflection of a little bit longer delay that we had seen between console sale and the timing of the actual installation and training of the site. And so we did actually see a lot of this finally flow through Q2 to install and implementation.

So we believe that will also lead to more normal order patterns going forward. But to Renee's point, we have sort of exquisite data on utilization because Tablo is transmitting after every treatment, every day, every console, everywhere in the nation. So we can view this on an hour-by-hour and day-by-day basis. So our visibility into actual console utilization is pristine, and we have continued to see very stable utilization, no material changes in Q2.

Frederick Wise: Got you. And I'm going to be selfish and ask one more if I could. I'm right in the middle as I look at the year as a whole on a revenue basis. I'm right in the middle of your $125 million, $130 million range. That's my number. You just beat my second quarter number by $2.8 million. Just help me, help us think through -- so one, what do I do with the $2.8 million? Or is -- just help me think about the cadence of the second half is, because of seasonality or anything else? Is the third quarter more in line, or more likely in line with the second quarter performance for some reason?

Or it's all going to come home in the fourth? Or I just want to make sure we know what to do with these moving pieces in a thoughtful way.

Renee Gaeta: Yes, it's a great question. I would certainly anchor to your comments around there is an element of seasonality within med tech in Q3. I would say that's also driven by census of what's happening in our hospitals, customers, and effectively you looking towards -- certainly Q4 is a stronger quarter for us is how I would sort of frame it that yes, we've kept the full year guide. So that's the full year number that we are targeting towards. And we don't -- while we don't get guidance to the quarters certainly you're thinking about could potentially that be -- Q3 be impacted by some seasonality and we would expect a stronger Q4, that is an appropriate assumption.

Leslie Trigg: Also because there's sometimes in Q4, some seasonality -- positive seasonality on the capital sales side, right? For capital equipment businesses like ours, do often see a stronger Q4 as hospitals and health systems spend through budget prior to year-end.

Operator: We will now take the next question. And the next question comes from the line of Josh Jennings from TD Cowen.

Unknown Analyst: This is Brian here for Josh. On HCA, I'm not sure what constitutes specifics, but can you speak broadly about the phasing of the agreement across the 3 years? I guess my question is really, is it fair to assume that 2027 will likely be the biggest year for revenue recognition from the agreement?

Renee Gaeta: Brian, it's a great question. You're not the only one to ask it. I would say we certainly are working very closely with HCA. As you pointed out, it goes all the way through 2028. We have visibility to 2026 and of course, have included our revenue guidance numbers, have factored that in when we reiterated guidance for the year. Beyond that, we look forward to providing 2027 guidance at the appropriate time, and we do that consistently every year. It's effectively at this point not going to speak to how much of that is going to be in '27 or '28.

And look, I also look forward to having other agreements, other refresh opportunities that we've now started to highlight and think that we're entering this cycle with our customers as well as continued penetration in existing accounts such that it isn't necessarily one item that we're going to be highlighting or speaking to. We've got a robust pipeline, a robust customer list and dynamics, and plenty of opportunity to penetrate into customers that we have in hand today.

Unknown Analyst: Okay, that makes sense. Maybe changing topics to next-gen Tablo, what's been the feedback to date from the initial users? Can you remind us of the milestones you're looking forward to achieve in order to transition to a full launch?

Leslie Trigg: Sure, I'm happy to take that. Brian, this is Leslie. So we are working on the pilot phase right now and looking forward to a full launch. I think maybe taking a half step back, philosophically speaking, given the significance of this update, we obviously want to make sure we really, really, really get this right and that the experience out of the gate goes exactly as expected, just given the size of the installed base and the size of the customer base that we support, and we support now Tablo and our team support about 1 million treatments a year.

So it's critically important to kind of take a very measured approach to the rollout and focus on doing it well versus quickly. The sales team has started to educate our customers about the benefits and the value. And in terms of the other part of your question about what's the receptivity, we are hearing a lot of enthusiasm. The why behind that enthusiasm. Health systems really are increasingly looking for medical devices that meet FDA's highest cybersecurity bar, as we do. This next-gen release is also packed with a couple of really kind of cool new features and functions that both improve the user experience, the clinician experience, but also day-to-day device performance that we're excited about as well.

So we do expect customer receptivity to be high when we progress to full launch, which we're excited to do. In terms of the metrics that we're looking for, obviously, I'm not going to get into a ton of detail just for competitive reasons about that. But we with any new release, whether it's software, hardware, in this case both, we're going to make sure that, as mentioned, the user experience, the user feedback, the performance of the system, and the performance of the update are as absolutely perfect as they can possibly be.

So we will be looking to metrics and data coming out of the pilot phase to ensure that it's meeting the mark before we roll it out in full.

Operator: That was our final question for today. I will now hand back to Leslie for final remarks.

Leslie Trigg: Thank you, and thanks to all of you for joining today. I'd like to close by thanking our customers and our team for the difference that they make every day in the lives of dialysis patients. Thank you again, and have a great evening.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.