Full Press Release Details
Outset Medical, Inc.
Index to Financial Statements
| Page | ||||
| Reports of Independent Registered Public Accounting Firm | 2 | |||
| Balance Sheets | 6 | |||
| Statements of Operations | 7 | |||
| Statements of Comprehensive Loss | 8 | |||
| Statements of Stockholders Equity | 9 | |||
| Statements of Cash Flows | 10 | |||
| Notes to Financial Statements | 12 |
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Opinion on the Financial Statements
audited the accompanying balance sheets of Outset Medical, Inc. (the Company) as of December 31, 2024 and 2023, the related statements of operations, comprehensive loss, stockholders equity, and cash flows for each of the years in
the three-year period ended December 31, 2024, and the related notes (collectively, the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company s internal
control over financial reporting as of December 31, 2024, based on criteria established in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our
report dated February 26, 2025 expressed an unqualified opinion on the effectiveness of the Company s internal control over financial reporting.
These financial statements are the
responsibility of the Company s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect
to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters
communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to
the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Sufficiency of audit evidence over Tablo console revenue and service agreement revenue
As discussed in Note 2 to the financial statements, the Company derives revenue primarily from the sales of its products and services. Product revenue consists
primarily of sales of Tablo consoles and related consumables, including Tablo cartridges and accessories. Service and other revenue consists primarily of revenue generated from service agreements and other revenue from shipping and handling charged
to customers. The Company s contracts with customers often include multiple performance obligations, such as products and services. The Company determines the amount and timing of revenue recorded for each performance obligation.
We identified the evaluation of the sufficiency of audit evidence over Tablo console revenue and service agreement revenue as a critical audit matter. During
the year, two separate processes, including a manual process and a newly implemented automated process, were used in the recognition and recording of revenue. Challenging auditor judgment was required to evaluate the sufficiency of audit evidence
due to the use of multiple processes throughout the year, as well as the nature of each process used in the Company s determination of Tablo console revenue and service agreement revenue, including the timing of the revenue recognized.
The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of
procedures to be performed over the Company s determination of Tablo console revenue and service agreement revenue, including the timing of the revenue recognized. We evaluated the design and tested the operating effectiveness of certain
controls related to the Company s process to determine Tablo console revenue and service agreement revenue. This included controls over the Company s determination and timing of revenue recognized using the manual and automated processes.
We also involved IT professionals with specialized skills and knowledge who assisted in testing certain IT application and general IT controls used in the Company s determination of Tablo console revenue and service agreement revenue. For
samples of Tablo console revenue transactions and service agreement revenue transactions recorded under both the Company s manual and automated processes, we evaluated the amount and timing of revenue recognized by comparing it to the
underlying contract, and/or other supporting documentation, and recalculating the Company s determination of revenue recognized. In addition, we evaluated the overall sufficiency of audit evidence obtained over Tablo console revenue and service
agreement revenue by assessing the results of procedures performed, including the appropriateness of the nature and extent of audit effort.
as the Company s auditor since 2011.
San Francisco, California
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors Outset Medical, Inc.:
Opinion on Internal Control Over Financial Reporting
have audited Outset Medical, Inc. s (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established
in Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the balance sheets of the Company as of December 31, 2024 and 2023, the related statements of operations,
comprehensive loss, stockholders equity, and cash flows for each of the years in the three-year period ended December 31, 2024, and the related notes (collectively, the financial statements), and our report dated February 26, 2025
expressed an unqualified opinion on those financial statements.
The Company s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of
internal control over financial reporting, included in the accompanying Management s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company s internal control over financial
reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of
the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an
understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company s internal control over financial reporting includes those policies and procedures that
(1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors
of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
San Francisco, California
Outset Medical, Inc.
thousands, except per share amounts)
| December 31, | ||||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 124,014 | $ | 68,509 | ||||
| Short-term investments | 34,671 | 134,815 | ||||||
| Accounts receivable, net | 35,619 | 32,980 | ||||||
| Inventories | 59,387 | 49,215 | ||||||
| Prepaid expenses and other current assets | 4,530 | 5,700 | ||||||
| Total current assets | 258,221 | 291,219 | ||||||
| Restricted cash | 3,329 | 3,329 | ||||||
| Property and equipment, net | 8,133 | 13,273 | ||||||
| Operating lease right-of-use assets | 3,940 | 5,375 | ||||||
| Other assets | 2,172 | 605 | ||||||
| Total assets | $ | 275,795 | $ | 313,801 | ||||
| Liabilities and stockholders equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 3,862 | $ | 5,827 | ||||
| Accrued compensation and related benefits | 16,821 | 19,005 | ||||||
| Accrued expenses and other current liabilities | 8,205 | 13,459 | ||||||
| Accrued warranty liability | 1,938 | 3,712 | ||||||
| Deferred revenue, current | 12,753 | 11,727 | ||||||
| Operating lease liabilities, current | 1,799 | 1,593 | ||||||
| Total current liabilities | 45,378 | 55,323 | ||||||
| Accrued interest | 2,695 | 896 | ||||||
| Deferred revenue | 844 | 101 | ||||||
| Operating lease liabilities | 2,684 | 4,482 | ||||||
| Term loans | 197,375 | 130,113 | ||||||
| Total liabilities | 248,976 | 190,915 | ||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders equity: | ||||||||
| Preferred stock, $0.001 par value; 5,000 shares authorized, and no shares issued and outstanding as of December 31, 2024 and 2023 | ||||||||
| Common stock, $0.001 par value; 300,000 shares authorized as of December 31, 2024 and 2023; 52,944 and 50,317 shares issued and outstanding as of December 31, 2024 and 2023, respectively | 53 | 50 | ||||||
| Additional paid-in capital | 1,116,447 | 1,084,515 | ||||||
| Accumulated other comprehensive income | 42 | 68 | ||||||
| Accumulated deficit | (1,089,723 | ) | (961,747 | ) | ||||
| Total stockholders equity | 26,819 | 122,886 | ||||||
| Total liabilities and stockholders equity | $ | 275,795 | $ | 313,801 |
The accompanying notes are an integral part of these financial statements
Outset Medical, Inc.
Statements of Operations
(in thousands, except per share amounts)
| Years Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Revenue: | ||||||||||||
| Product revenue | $ | 80,977 | $ | 103,537 | $ | 93,388 | ||||||
| Service and other revenue | 32,712 | 26,839 | 21,987 | |||||||||
| Total revenue | 113,689 | 130,376 | 115,375 | |||||||||
| Cost of revenue: | ||||||||||||
| Cost of product revenue | 46,449 | 74,454 | 82,510 | |||||||||
| Cost of service and other revenue | 28,676 | 26,922 | 15,032 | |||||||||
| Total cost of revenue | 75,125 | 101,376 | 97,542 | |||||||||
| Gross profit | 38,564 | 29,000 | 17,833 | |||||||||
| Operating expenses: | ||||||||||||
| Research and development | 38,397 | 57,307 | 48,855 | |||||||||
| Sales and marketing | 70,044 | 96,232 | 89,482 | |||||||||
| General and administrative | 43,498 | 45,231 | 40,515 | |||||||||
| Total operating expenses | 151,939 | 198,770 | 178,852 | |||||||||
| Loss from operations | (113,375 | ) | (169,770 | ) | (161,019 | ) | ||||||
| Interest income and other income, net | 9,761 | 10,171 | 3,291 | |||||||||
| Interest expense | (23,871 | ) | (12,675 | ) | (3,566 | ) | ||||||
| Loss on extinguishment of term loan | (1,367 | ) | ||||||||||
| Loss before provision for income taxes | (127,485 | ) | (172,274 | ) | (162,661 | ) | ||||||
| Provision for income taxes | 491 | 523 | 295 | |||||||||
| Net loss | $ | (127,976 | ) | $ | (172,797 | ) | $ | (162,956 | ) | |||
| Net loss per share, basic and diluted | $ | (2.46 | ) | $ | (3.48 | ) | $ | (3.38 | ) | |||
| Shares used in computing net loss per share, basic and diluted | 51,951 | 49,588 | $ | 48,161 |
The accompanying notes are an
integral part of these financial statements
Outset Medical, Inc.
Statements of Comprehensive Loss
| Years Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Net loss | $ | (127,976 | ) | $ | (172,797 | ) | $ | (162,956 | ) | |||
| Other comprehensive (loss) income: | ||||||||||||
| Unrealized (loss) gain on available-for-sale securities | (26 | ) | 632 | (380 | ) | |||||||
| Comprehensive loss | $ | (128,002 | ) | $ | (172,165 | ) | $ | (163,336 | ) |
The accompanying notes are an integral part of these financial statements
Outset Medical, Inc.
Statements of Stockholders Equity
| Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Total Stockholders Equity | ||||||||||||||||||||
| Shares | Amount | |||||||||||||||||||||||
| Balance as of December 31, 2021 | 47,241 | $ | 47 | $ | 1,000,212 | $ | (184 | ) | $ | (625,994 | ) | $ | 374,081 | |||||||||||
| Issuance of common stock through employee stock purchase plan | 193 | 4,202 | 4,202 | |||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | 241 | |||||||||||||||||||||||
| Stock option exercises | 790 | 1 | 3,839 | 3,840 | ||||||||||||||||||||
| Stock-based compensation expense | 27,203 | 27,203 | ||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | (380 | ) | (380 | ) | ||||||||||||||||||||
| Net loss | (162,956 | ) | (162,956 | ) | ||||||||||||||||||||
| Balance as of December 31, 2022 | 48,465 | $ | 48 | $ | 1,035,456 | $ | (564 | ) | $ | (788,950 | ) | $ | 245,990 | |||||||||||
| Issuance of common stock through employee stock purchase plan | 559 | 1 | 7,509 | 7,510 | ||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | 708 | |||||||||||||||||||||||
| Stock option exercises | 585 | 1 | 2,916 | 2,917 | ||||||||||||||||||||
| Stock-based compensation expense | 38,634 | 38,634 | ||||||||||||||||||||||
| Unrealized gain on available-for-sale securities | 632 | 632 | ||||||||||||||||||||||
| Net loss | (172,797 | ) | (172,797 | ) | ||||||||||||||||||||
| Balance as of December 31, 2023 | 50,317 | $ | 50 | $ | 1,084,515 | $ | 68 | $ | (961,747 | ) | $ | 122,886 | ||||||||||||
| Issuance of common stock through employee stock purchase plan | 1,040 | 1 | 2,200 | 2,201 | ||||||||||||||||||||
| Issuance of common stock for settlement of RSUs | 1,515 | 2 | 293 | 295 | ||||||||||||||||||||
| Stock option exercises | 72 | 83 | 83 | |||||||||||||||||||||
| Stock-based compensation expense | 29,356 | 29,356 | ||||||||||||||||||||||
| Unrealized loss on available-for-sale securities | (26 | ) | (26 | ) | ||||||||||||||||||||
| Net loss | (127,976 | ) | (127,976 | ) | ||||||||||||||||||||
| Balance as of December 31, 2024 | 52,944 | $ | 53 | $ | 1,116,447 | $ | 42 | $ | (1,089,723 | ) | $ | 26,819 |
The accompanying notes are an integral
part of these financial statements
Outset Medical, Inc.
Statements of Cash Flows
| Years Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Cash flows from operating activities: | ||||||||||||
| Net loss | $ | (127,976 | ) | $ | (172,797 | ) | $ | (162,956 | ) | |||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||
| Stock-based compensation expense | 29,356 | 38,634 | 27,203 | |||||||||
| Depreciation and amortization | 5,728 | 5,810 | 5,169 | |||||||||
| Non-cash lease expense | 1,435 | 1,271 | 1,114 | |||||||||
| Non-cash interest expense | 2,574 | 1,828 | 381 | |||||||||
| Accretion (amortization) of discount (premium) on investments, net | (4,720 | ) | (6,369 | ) | 449 | |||||||
| Provision for inventories | 561 | 733 | 2,610 | |||||||||
| Loss on disposal of property and equipment | 53 | 106 | 39 | |||||||||
| Allowance for credit losses | 2,374 | 184 | 37 | |||||||||
| Loss on extinguishment of term loan | 1,367 | |||||||||||
| Changes in operating assets and liabilities: | ||||||||||||
| Accounts receivable | (5,012 | ) | (5,094 | ) | (2,506 | ) | ||||||
| Inventories | (10,857 | ) | 1,647 | (14,730 | ) | |||||||
| Prepaid expenses and other assets | 784 | 739 | (1,215 | ) | ||||||||
| Accounts payable | (1,948 | ) | 5,312 | (1,281 | ) | |||||||
| Accrued compensation and related benefits | (1,889 | ) | (2,515 | ) | (3,428 | ) | ||||||
| Accrued expenses and other current liabilities | (5,168 | ) | (2,621 | ) | 1,811 | |||||||
| Accrued warranty liability | (1,774 | ) | 91 | (83 | ) | |||||||
| Deferred revenue | 1,769 | 3,015 | 2,161 | |||||||||
| Operating lease liabilities | (1,593 | ) | (1,347 | ) | (1,150 | ) | ||||||
| Accrued interest | (721 | ) | ||||||||||
| Net cash used in operating activities | (116,303 | ) | (131,373 | ) | (145,729 | ) | ||||||
| Cash flows from investing activities: | ||||||||||||
| Purchases of property and equipment | (912 | ) | (3,440 | ) | (8,325 | ) | ||||||
| Purchases of investment securities | (156,584 | ) | (172,284 | ) | (261,154 | ) | ||||||
| Sales and maturities of investment securities | 261,434 | 258,750 | 203,184 | |||||||||
| Net cash provided by (used in) investing activities | 103,938 | 83,026 | (66,295 | ) | ||||||||
| Cash flows from financing activities: | ||||||||||||
| Proceeds from stock option exercises and ESPP purchases | 2,284 | 10,427 | 8,042 | |||||||||
| Proceeds from issuance of term loans, net of issuance costs | 66,524 | 33,225 | 96,059 | |||||||||
| Repayment of term loan and extinguishment costs | (31,203 | ) | ||||||||||
| Payment of deferred financing costs | (938 | ) | ||||||||||
| Net cash provided by financing activities | 67,870 | 43,652 | 72,898 | |||||||||
| Net increase (decrease) in cash, cash equivalents and restricted cash | 55,505 | (4,695 | ) | (139,126 | ) | |||||||
| Cash, cash equivalents and restricted cash as of beginning of period | 71,838 | 76,533 | 215,659 | |||||||||
| Cash, cash equivalents and restricted cash as of end of period | $ | 127,343 | $ | 71,838 | $ | 76,533 | ||||||
| Summary of cash, cash equivalents and restricted cash reported within the balance sheets: | ||||||||||||
| Cash and cash equivalents | $ | 124,014 | $ | 68,509 | $ | 73,222 | ||||||
| Restricted cash | 3,329 | 3,329 | 3,311 | |||||||||
| Total cash, cash equivalents and restricted cash | $ | 127,343 | $ | 71,838 | $ | 76,533 | ||||||
| Supplemental cash flow disclosures: | ||||||||||||
| Cash paid for income taxes | $ | 593 | $ | 491 | $ | 385 | ||||||
| Cash paid for interest | $ | 20,685 | $ | 10,847 | $ | 3,185 | ||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 1,593 | $ | 1,347 | $ | 1,150 |
The accompanying notes are an integral part of these financial statements
Outset Medical, Inc.
Statements of Cash Flows
| Years Ended December 31, | ||||||||||||
| 2024 | 2023 | 2022 | ||||||||||
| Supplemental non-cash investing and financing activities: | ||||||||||||
| Capital expenditures included in accounts payable and accrued expenses | $ | 31 | $ | 159 | $ | 167 | ||||||
| Transfer of inventories to property and equipment | $ | 148 | $ | 119 | $ | 28 | ||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | $ | 528 | $ | ||||||||
| Deferred offering costs included in accrued expenses | $ | 266 | $ | $ | 750 | |||||||
| Transfer of property and equipment to inventories | $ | 24 | $ | $ | 199 |
The accompanying notes are an integral part of these financial statements
Notes to Financial Statements
1. Description of Business
Medical, Inc. (the Company) is a medical technology company pioneering a first-of-its-kind technology to reduce the cost and
complexity of dialysis. Tablo Hemodialysis System, cleared by the FDA for use from the hospital to the home, represents a significant technological advancement designed to transform the
dialysis experience for patients and operationally simplify it for providers. Tablo serves as a single enterprise solution designed to be utilized across the continuum of care, allowing dialysis to be delivered anytime, anywhere, and by virtually
anyone. The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to serve as a dialysis clinic on
wheels. With a simple-to-use touchscreen interface, two-way wireless data transmission and a proprietary data analytics platform,