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    OM
    Earnings call· Jun 2026(Q2 FY26)

    Outset Medical Q2 FY26 earnings call OM

    Aug 6, 2026 Source

    Executive summary

    Outset Medical Q2 FY26 — Strong Console Sales and HCA Refresh Agreement Drive Performance

    Outset Medical delivered a solid second quarter, driven by strong console sales and a significant refresh agreement with HCA Healthcare, which enhances future revenue visibility. Despite a decline in consumable revenue against tough prior-year comparables, the company demonstrated strong gross margin expansion and disciplined cash management. Management is focused on scaling its commercial engine and leveraging new growth tailwinds, including the refresh cycle and the upcoming NextGen Tableau launch, to drive future adoption and profitability.

    Highlights

    5

    • Total revenue of $31.6 million, up 1% year-over-year and 14% sequentially.

    • Non-GAAP gross margin expanded to 42.2%, an improvement of over 380 basis points year-over-year.

    • Console revenue grew 6% year-over-year to $9.5 million, outperforming expectations.

    • Secured a $40 million refresh agreement with HCA Healthcare, reinforcing long-term commitment and providing backlog visibility.

    • Cash use in Q2 was $9.5 million, keeping the company on track to use less than $40 million for the full year.

    Concerns

    2

    • Consumable revenue declined 12% year-over-year to $12.4 million, against a challenging prior year comparable.

    • Recurring revenue, including consumables, service, implementation services, and freight, was down 2% compared to last year.

    Guidance & targets

    3
    CategoryTargetConfidence
    Full Year Revenue
    $125 million to $130 million
    high materiality
    High
    Full Year Cash Use
    less than $40 million
    medium materiality
    High
    Company-wide Gross Margin
    50%
    high materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Product Revenue
    Product revenue was down against a challenging prior year growth comparison. Product gross margin was down about 280 basis points compared to last year due to a higher mix of console sales within product revenue.
    Console revenue: $9.5 millionConsole revenue growth YoY: 6%Consumable revenue: $12.4 millionConsumable revenue growth YoY: -12%
    		$21.9 million-5%not stated46.1%
    Service and Other Revenue
    Service and other revenue grew on strong volume and ASP increases. Service and other gross margin was up over 2,400 basis points.
    		$9.7 million17%not stated33.4%
    Recurring Revenue
    Includes consumables, service, implementation services, and freight. Down compared to last year.
    		$22.1 million-2%not statednot stated

    Operational metrics

    12
    Non-GAAP Gross Margin
    42.2%up over 380 basis points compared to last year
    Q2 FY26

    Reflects strong execution and keeps the company on track towards a 50% company-wide gross margin.

    Non-GAAP Operating Expenses
    $25.8 millionincreased 1% compared to last year
    Q2 FY26

    Reflects continued progress towards profitability.

    Non-GAAP Operating Loss
    $12.4 millionimprovement of 7% compared to last year
    Q2 FY26

    Reflects continued progress towards profitability.

    Cash, Cash Equivalents, Short-Term Investments, and Restricted Cash
    $151 millionnot stated
    Q2 FY26 end

    Balance sheet position at the end of the quarter.

    Cash Use
    $9.5 millionnot stated
    Q2 FY26

    Reflects ongoing expense discipline and working capital management.

    Customer Recommendation Score
    8.8not stated
    Q2 FY26

    Indicates strong customer advocacy and is central to forward commercial momentum.

    New Site Implementations
    highest number in several yearsnot stated
    Q2 FY26

    Reflects a flow-through of installations after a longer delay between console sale and implementation.

    Treatments Supported Annually
    approximately 1 millionnot stated
    annual

    Reflects the scale of operations supported by Tableau and the Outset team.

    Nurses Trained (at one system)
    over 100not stated
    Q2 FY26

    Part of a successful new site implementation, supported by the clinical excellence team.

    Treatments in First 60 Days (at one system)
    956not stated
    first 60 days

    Demonstrates rapid adoption and utilization post-implementation at a new site.

    Installed Base Penetration
    all 10not stated
    Q2 FY26

    Highlights broad adoption across key healthcare providers.

    Refresh Cycle Console Opportunity
    up to $150 millionnot stated
    next several years

    Represents a significant future growth tailwind for console revenue.

    Industry KPIs

    8
    MetricValueDetails
    System utilizationstable
    New product launch rampNextGen Tableau System
    FCF conversion leverage guidanceless than $40 millionUSD
    Installed base system placementshighest number in several yearsinstallations
    Segment franchise organic growth1%%
    Consumables recurring revenue mix$22.1 millionUSD
    Sales force commercial capacity build—
    Indicated addressable patient population—

    Product announcements

    1
    ProductTypeDetails
    NextGen Tableau Systemupdate

    Deals & partnerships

    1
    HCA HealthcareRefresh agreement for in-source dialysis$40 millionthrough 2028

    HCA facilities currently partnering with Outset for in-source dialysis will update their fleet. This marks Outset's first refresh win, underscoring the clinical and operational value of Tableau across HCA's nationwide system.

    Risks & headwinds

    2
    Natural variability of capital salespast year

    made our performance less predictable over the past year

    Mitigation: strengthening our commercial organization and sales process to improve visibility and predictability.

    Challenging prior year comparable for consumable revenueQ2 FY26

    consumable revenue of $12.4 million was down 12% against a double-digit growth comparison last year.

    Mitigation: device utilization information that we have and we continue to see strong utilization across our customer segments. Consumable revenue growth is anticipated to be in line with total revenue expectations for the year.

    What to watch in Q3 FY26

    4

    Consumable Revenue Growth

    H2 FY26
    Current-12% YoY
    TargetIn line with total revenue expectations (5-9% growth)

    Why it matters

    Consumable revenue is a key recurring revenue stream, and its recovery is important for overall revenue growth and predictability.

    consumable revenue growth is anticipated to be in line with total revenue expectations for the year.

    Q&A highlights

    5

    How much of the $9.5M console revenue outperformance was due to HCA, NextGen Tableau early impact, or lingering Q1 orders? Is it sustainable or a pull-forward?

    Renee confirmed HCA was part of the Q2 pipeline and contributed to strong console performance, but couldn't give specifics due to confidentiality. Leslie added that it reflected current customer expansion, new customer acquisition, and early signs of new tailwinds like the refresh opportunity and new commercial leadership.

    “HCA was a part of our Q2 pipeline and a part of our strong console performance during the quarter.”

    asked by Rick Wise · answered by Renee Gaeta

    2 min read6 chapters

    Detailed Narrative

    01

    Commercial Momentum and Customer Success

    Outset completed its highest number of new site implementations in several years during Q2 FY26, including a new top 10 health system customer. At one Texas system, the clinical excellence team trained over 100 nurses, supporting 956 treatments in their first 60 days. An independent voice of the customer assessment revealed an average recommendation score of 8.8 out of 10, indicating strong customer advocacy and retention, which is central to forward commercial momentum.

    02

    HCA Refresh Agreement

    The company signed a significant $40 million refresh agreement with HCA Healthcare, reinforcing HCA's long-term commitment to in-source dialysis through 2028. This agreement provides a meaningful foundation of contracted backlog, enhancing revenue visibility and predictability. It marks Outset's first refresh win and does not include potential expansion into additional HCA facilities not yet equipped with Tableau, highlighting further growth opportunities.

    03

    NextGen Tableau System Development

    Outset is currently in the pilot phase for its NextGen Tableau System, which integrates hardware and software enhancements designed to improve performance, reliability, and cybersecurity. The company is taking a measured approach to the rollout to ensure a successful broader launch, given the significance of the update and the size of the installed base. Customer receptivity is high, particularly due to the advanced cybersecurity capabilities and new user experience features.

    04

    Strengthening Commercial Organization

    The appointment of Derek Elliott as Executive Vice President of Commercial marks a new phase of commercial evolution. The focus is on enhancing the capital sales organization with talent and expanding sales coverage to accelerate inroads into the top 250 health systems. This strategic move, supported by the Chief Nursing Officer, aims to improve consistency, conversion, and customer adoption by addressing health systems' pressing needs.

    05

    Gross Margin Expansion and Profitability Path

    Non-GAAP gross margin significantly improved to 42.2% in Q2 FY26, up over 380 basis points year-over-year. This expansion was primarily driven by product cost improvements, reduced overhead, and service efficiencies. The company remains on track towards its next milestone of a 50% company-wide gross margin, demonstrating strong execution and disciplined operating expense management, which contributed to a 7% improvement in non-GAAP operating loss.

    06

    Future Growth Tailwinds

    Management identified several console growth tailwinds expected to emerge over the next few years. These include the refresh cycle, which represents an opportunity for roughly 3,000 consoles and up to $150 million in console revenue. Additionally, the launch of the NextGen Tableau and a newly formalized customer success program are designed to expand existing customer use and drive new site expansion within the installed base.

    AI-generated summary of the company’s earnings call. Not investment advice.