Negative Points

• Outset Medical Inc ( NASDAQ:OM )'s consumable revenue declined 12% year-over-year in Q2 2026, impacted by a challenging double-digit growth comparison from the prior year and reduced flu season census effects.

• Product revenue decreased 5% year-over-year, reflecting a higher mix of console sales within product revenue, which pressured product gross margin down about 280 basis points to 46.1%.

• Recurring revenue, including consumables, service, implementation services, and freight, was down 2% compared to last year, indicating softness in the recurring revenue stream.

• The company continues to face variability in capital sales, which has made performance less predictable over the past year, despite efforts to improve visibility and predictability.

• Outset Medical Inc ( NASDAQ:OM ) reiterated full-year 2026 revenue guidance of $125 million to $130 million, implying most growth is expected in the second half, with Q3 potentially impacted by seasonality and a stronger Q4 anticipated.

• The HCA refresh agreement's $40 million value does not include potential expansion into additional HCA facilities, and the company is limited in disclosing specifics due to customer confidentiality, which may limit investor visibility.

• Non-GAAP operating loss was $12.4 million in Q2, though improved 7% year-over-year, indicating the company is still not profitable and relies on continued expense discipline to achieve profitability.

Q & A Highlights

Q: Can you unpack the strong console revenue performance in Q2, which came in well above consensus? How much was tied to the HCA agreement versus new customer expansion or other tailwinds? A: Renee Gaeta (CFO): The Q2 console performance was driven by a combination of factors, including the HCA refresh agreement, which was part of the quarter's pipeline, alongside other new expansion customers and console placements. Due to customer confidentiality, we can't provide specific breakdowns, but we saw a broad range of deal sizes close during the quarter. Leslie Trigg (CEO) added that this was the first quarter where all parts of the business performed as expected, with green shoots emerging from new tailwinds like the refresh opportunity, new commercial leadership, and the formalized customer success program.

Q: Consumable revenue declined 12% year-over-year. What is driving this decline, and will the HCA agreement or NextGen launch reverse this trend? A: Renee Gaeta (CFO): The decline is primarily due to a tough comparable from 2025, which had a strong flu season and census that boosted consumable sales, as well as some ordering cadence volume that is now behind us. We look at device utilization data, which remains strong and stable across our customer segments, so there is nothing alarming. For the back half of the year, consumable revenue growth is anticipated to be in line with total revenue expectations. Leslie Trigg (CEO) added that Q2 saw the highest number of new site implementations in several years, which should lead to more normal order patterns going forward, and that Tablo's data ecosystem provides pristine visibility into utilization.

Q: Given the Q2 beat, how should we think about the revenue cadence for the second half of the year? Should we expect Q3 to be in line with Q2, or will the growth be more heavily weighted to Q4? A: Renee Gaeta (CFO): We are maintaining our full-year guidance of $125 million to $130 million. There is an element of seasonality in MedTech, particularly in Q3, which can be impacted by hospital census. We would expect a stronger Q4, as capital equipment businesses often see a stronger fourth quarter when hospitals spend through budgets prior to year-end. The full-year guidance remains the target, and we don't provide quarterly guidance.

Q: Regarding the $40 million HCA refresh agreement, can you speak to the phasing of revenue recognition across the agreement's term? Is it fair to assume 2027 will be the biggest year? A: Renee Gaeta (CFO): We are working closely with HCA on the agreement, which extends through 2028. We have visibility into 2026 and have factored the agreement into our reiterated revenue guidance. We will provide 2027 guidance at the appropriate time, consistent with our annual practice, and won't speculate on the split between '27 and '28. We also look forward to other refresh opportunities and continued penetration of existing accounts, so this isn't a single item we'll be highlighting.

Q: What has been the feedback on the Next Generation Tablo System from initial users, and what milestones are needed to transition to a full launch? A: Leslie Trigg (CEO): We are in the pilot phase and taking a measured approach to ensure the rollout is done well, given the size of our install base and the fact that we support about a million treatments a year. The sales team has begun educating customers, and we are hearing a lot of enthusiasm, particularly around the system's advanced cybersecurity features that meet the FDA's highest bar, as well as new features that improve the clinician and user experience. We expect high receptivity at full launch. While we won't disclose specific metrics for competitive reasons, we are monitoring user feedback, system performance, and data from the pilot to ensure it meets our high standards before a broader rollout.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .