Why Outset Medical Shares Are Plummeting Today

Outset Medical, Inc. OM shares are trading lower Friday morning. The company announced preliminary revenue for the third quarter of $30.4 million, below the consensus estimate of $36.03 million.

"Growth in the quarter was dampened by a larger-than-expected impact in the field from the recent FDA warning letter, and early signs of a more cautious outlook on capital spending that we see as a headwind continuing through the fourth quarter," said Leslie Trigg, Chair and Chief Executive Officer. 

Q3 preliminary revenues represent a 9% increase over revenue of $27.8 million in the third quarter of 2022.

Preliminary non-GAAP gross margin for Q3 is 25.6%, up 920 basis points.

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Total cash, including restricted cash, cash equivalents and short-term investments, was $197 million as of Sept. 30, 2023.

Outset now expects revenue for 2023 to be approximately $130 million, below the consensus estimate of $144.62 million. Earlier in its Q2 report, Outset reiterated its 2023 revenue guidance range of $144 million-$150 million, expecting to be at the low end of the range due to the shipment pause for TabloCart with Prefiltration.

"Importantly, we did not see deals fall out of our pipeline and our economic value proposition remains resonant and differentiated. Our confidence around generating sustained long-term growth and reaching profitability remains high," Trigg added.

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Price Action: OM shares are trading lower by 47.6% to $3.55 on the last check Friday.