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Outset Medical (OM) Q2 FY26 earnings call: guidance and Q&A

Earnings call· Jun 2026 (Q2 FY26)· Aug 6, 2026

Source: earnings call transcript

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

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

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

Product announcements

ProductTypeDetails
NextGen Tableau Systemupdate

Deals & partnerships

HCA Healthcare Refresh agreement for in-source dialysis $40 million through 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

Natural variability of capital sales past 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 revenue Q2 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

Consumable Revenue Growth

H2 FY26
Current -12% YoY
Target In 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.

Find out whether OM delivers this. Inve re-checks your case every morning.

Q&A highlights

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 read 6 chapters

Detailed narrative

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.

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.

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.

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.

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.

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.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.