Outset Medical reported third‑quarter 2025 revenue of $29.4 million, a 3% year‑over‑year increase that fell short of the $30.4 million consensus estimate. The shortfall was driven by a modest 1% decline in consumable sales, offset only partially by an 8% rise in Tablo console sales. Net loss narrowed to $17.8 million, a 36% improvement over the $27.9 million loss in Q3 2024, while the GAAP loss per share was $1.00 and the non‑GAAP loss per share was $0.69, slightly below the consensus of $-0.64.
The company’s product revenue rose to $20.6 million, up from $20.3 million a year earlier. Console sales contributed $8.3 million, reflecting the 8% growth in Tablo units, while consumable revenue was $12.2 million, a modest increase that was partially dampened by order timing. Service and other revenue grew 6% to $8.9 million, driven by higher service contract renewals. These segment dynamics explain the overall revenue growth and the flat recurring revenue figure of $21.1 million.
Gross profit climbed 18% to $11.6 million, lifting the GAAP gross margin to 39.4% from 34.3% a year earlier. Non‑GAAP gross margin reached 39.9%, up 350 basis points, thanks to a higher mix of high‑margin consumables and improved manufacturing overhead absorption. Operating expenses fell 19% to $27.4 million, a result of disciplined cost‑cutting initiatives that included reduced marketing spend and streamlined supply‑chain costs. The combination of margin expansion and expense reduction drove the narrowing of the net loss.
Management explained that the downward revision of full‑year revenue guidance to $115‑$120 million reflects a shift in the timing of large‑enterprise deals rather than a change in underlying demand. CEO Leslie Trigg noted that several significant in‑sourcing opportunities, previously expected to close in Q3, are now projected to close in Q4 and into 2026. CFO Renee Gaeta highlighted that the company’s cash‑use target remains below $50 million, a sharp improvement from the $100 million+ used in 2024, underscoring the focus on operational efficiency.
Investors responded cautiously, weighing the margin expansion and cost discipline against the revenue guidance cut. Analysts acknowledged the company’s progress toward profitability but remained wary of the timing shift in large‑enterprise deals and the modest revenue growth. The guidance maintains a high‑30% non‑GAAP gross margin target, signaling confidence in sustaining margin expansion while the company continues to manage cash burn.
Outset Medical’s Q3 results illustrate a company that is tightening its cost base and improving margins, yet still faces headwinds from order timing and a slower pace of large‑enterprise deal closures. The guidance cut signals a more conservative outlook, but the company’s focus on cash‑use reduction and margin expansion positions it for a potential path to profitability in the near term. The market’s muted reaction reflects the balance between these positive operational gains and the cautious outlook for revenue growth.
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