Outset Medical (OM) Stifel 2024 Healthcare Conference summary

Recent performance and strategic priorities

• Overcame significant headwinds in 2023–2024, including self-induced challenges, regulatory issues, and sales force misalignment, all now resolved.

• Achieved $70 million in annualized operating expense reductions and realigned the sales team to target mainstream customers.

• Regulatory hurdles, including a warning letter and product clearance delays, have been addressed, restoring product availability and market confidence.

• Recurring revenue now exceeds 60% of total revenue, providing strong visibility and predictability.

• Installed base and acute site count grew nearly 15% year over year, despite a challenging environment.

Market expansion and customer adoption

• Acute and post-acute segments are expanding due to cost reduction and service model transformation, with strong uptake in skilled nursing facilities.

• Reference accounts and published cost reduction data are accelerating adoption, with over 700 sites and nearly a million annual treatments.

• Largest post-acute operators have rapidly rolled out the technology, serving as a blueprint for future growth.

• Penetration remains in low double digits, leaving significant runway for expansion in both acute and post-acute markets.

Sales transformation and pipeline quality

• Sales process overhaul included a more conservative pipeline review and new enterprise-focused sales talent.

• Pipeline size and quality have improved, with more large-scale deals expected in 2025.

• Early signs of improved sales productivity appeared in Q3, with expectations for broader consistency in coming quarters.

• Shift from single-site to multi-site, enterprise-level deals requires more strategic sales skills.