Outset Medical (NASDAQ:OM) reported third-quarter 2026 revenue of $33.6 million, up 14% from a year earlier, as sales of its Tablo dialysis consoles increased and recurring revenue grew. The company reiterated its full-year revenue guidance of $125 million to $130 million.
Revenue also rose 6% sequentially, with each revenue line contributing to growth on both a year-over-year and sequential basis, Chair and Chief Executive Officer Leslie Trigg said on the earnings call. Console revenue increased 26% from a year earlier, driven by new and refreshed console sales.
Chief Financial Officer Renee Gaeta said the company remained comfortable with its guidance despite the quarterly growth. She said Outset was where it expected to be and that its outlook already incorporated significant growth in the second half of 2026.
Console Sales and Margins Improve
Product revenue rose 15% year over year to $23.7 million, including $10.5 million in console revenue and $13.2 million in consumables revenue. Service and other revenue increased 12% to $9.9 million. Recurring revenue, comprising consumables and service, grew 10% to $23.1 million.
Non-GAAP gross margin improved approximately 100 basis points to 40.8%, primarily because of product cost improvements, reduced overhead and service efficiencies, Gaeta said. Product gross margin fell 150 basis points to 44.2% as consoles accounted for a larger share of product revenue. Service and other gross margin rose 760 basis points to 32.4%, helped by increased adoption of implementation services and electronic medical record software.
Non-GAAP operating expenses were $24.2 million. Excluding approximately $1 million in bad debt expense, operating expenses increased 4%, compared with revenue growth of 14%, Gaeta said. The non-GAAP net loss widened to $12.9 million from $12.4 million a year earlier.
Outset ended the quarter with $140.7 million in cash equivalents, short-term investments and restricted cash. It used $10.3 million in cash during the quarter and remained on track to use approximately $40 million for the full year, according to Gaeta.
Refresh and Expansion Opportunities
Trigg identified three drivers for future console growth: replacing older systems, expanding use among existing customers and winning new customers. The company estimates that the refresh opportunity covers more than 3,000 consoles and represents approximately $150 million in potential revenue over the next several years.
Outset signed its first significant refresh agreement with HCA in the second quarter. Trigg said the agreement added contracted backlog and revenue visibility, and that the sales team was engaged with other large health systems whose consoles are nearing the end of their lives.
Expansion opportunities include selling additional consoles to hospitals already using Tablo and extending use to other facilities within a health system. All 14 of the largest health systems by estimated console opportunity are existing customers, Trigg said. Tablo is used in at least one facility at roughly half of the 100 largest integrated delivery networks, she added.
To support growth, Outset is reducing sales territory sizes, adjusting compensation incentives and expanding its capital sales team regionally and at the national-account level. The company is focusing its commercial efforts on the nation’s 250 largest health systems, Trigg said.
Home Dialysis and Next-Generation Tablo
Trigg said a recently launched federal Kidney Care National Plan could eventually support adoption of home dialysis and new technologies, although its effect will depend on implementation. She described the plan as a potential policy tailwind, pointing to its focus on patient choice, home dialysis access and barriers to new entrants.
In response to an analyst’s question, Trigg said Outset was growing its home patient base both within existing programs and by entering additional facilities and home programs. She said the company had maintained patient retention of 90% or greater in the first 90 days as its home population grew.
Outset is also preparing for a full release of its next-generation Tablo system. Trigg said the company was prioritizing the customer experience over speed and expected to see the system in the market at scale over the coming months and quarters.
Outlook
Alongside its revenue guidance, Outset reiterated its expectation for full-year non-GAAP gross margin in the low-40% to mid-40% range. A higher mix of console sales could move the margin toward the lower end of that range, Gaeta said.
Gaeta declined to provide a specific 2027 revenue forecast, saying the company planned to discuss the year in greater detail when it reports fourth-quarter results. She said Outset wants to return to double-digit growth. Trigg added that the company was not seeing major changes in customers’ capital-spending climate, while noting that conditions could change.
About Outset Medical (NASDAQ:OM)
Outset Medical, Inc is a medical technology company that develops products for hemodialysis, a treatment that filters waste and excess fluid from the blood when the kidneys are no longer able to do so adequately. The company’s primary product is the Tablo Hemodialysis System, an integrated dialysis platform designed to simplify treatment for healthcare providers and support broader use of dialysis in hospitals, outpatient facilities and the home.
The Tablo system combines dialysis delivery, water purification and dialysate production in a single device and uses a touchscreen interface intended to guide users through treatment setup and operation.
