Anyway, I guess that's a good segue here. I just want to remind everyone that these events are not—these meetings are not open to the press. With that, we'll get started here with the last session of the morning here. Very pleased to welcome the management team from Outset Medical, Leslie Trigg, Chief Executive Officer, and Renee Gaeta, who was very recently appointed as CFO. Congratulations on the role. Look forward to getting into some of your initial observations as you've taken the job and considered the opportunity as we go through the discussion this morning. As I've mentioned, happy to open up to any questions from people in the audience just after you. I'm happy to repeat the questions so people on the webcast can hear as well. Maybe a lot of changes at Outset over the past several months with the recap and kind of rebasing of the strategy, and maybe just kind of give us kind of an evolution of the story update and where we are in kind of the Outset journey. Yeah. First of all, thank you for having us. It's really great to be here. I'm going to be directing all questions to Renee for the rest of the time, but I'll answer just this first one. No, I'm just kidding. You can see how much she studied for the interviews. Exactly. First and foremost, we are really thrilled to welcome Renee and just really, really excited to have her on the team as a co-partner and leading the company financially. Yes, a lot has happened. I think as it does to most companies post-IPO, it has been about five years, actually almost five years. We went public in September of 2020, and we have learned a lot. I think what maybe I'll touch on is what has not changed. The size of the market is still enormous. We are still accessing a TAM of over $11 billion. Our focus hasn't changed. We are still focused on penetrating into the acute dialysis market and the home dialysis market, and that hasn't changed. What also hasn't changed is kind of the almost profound level of need for disruption in the dialysis space, again, in the acute and the home market. What has not changed is our technology lead. I think a lot has remained consistent, and we'll talk more about, I think, how we're getting stronger in some of those areas. Where we have needed to evolve the most and mature the most, to be honest, is on our commercial prosecution of the opportunity ahead. I think we stayed in startup mode for too long. We grew super fast after the IPO. In hindsight, and with the benefit of hindsight, we really whipped through—if you think about that classic adoption curve—we got through the early, early adopter part of that curve more quickly than most. We had a sales organization that was very successful with that type of customer. We quickly earned the right, without really realizing that we had shifted into a new position on that adoption curve. We were going after what I would call kind of more mainstream enterprise adoption and suddenly found ourselves kind of, unfortunately, having fallen into the chasm of did not necessarily have the right team with the right skill sets, did not have the right sales process, and really did not have a new approach to forecast methodology and pipeline management. All of that was remade, remodeled, refashioned through the course of 2024. I think as we sit here today, the balance sheet has been strengthened. The commercial transformation is largely complete. We had a couple of skirmishes with the FDA that were not helpful. The regulatory overhang is behind us. New financial leadership of the company. I think we are kind of ready to rocket ship forward here. Excellent. Maybe we could go into a few of those elements in a little bit more detail. Maybe just start on the market. This is sort of—yeah, I have some familiarity with. Do you? Dialysis. This is a really tough space because it's a high patient burden space. It's an area where there hasn't been a ton of innovation. The reimbursement is sort of so-so and sort of more socialized-ish type, closer to socialized medicine in the U.S. than any other category in med tech. Maybe help us frame—it's also in the United States. The market is really dominated by two players in the U.S. Maybe help us think about just market dynamics here and kind of where Outset—what sort of segment Outset really goes after and what the key unmet need is that you're able to address. Sure. What's really, really important to know is the dialysis space has three main segments: kind of front end, middle, and back end. We are only focused on the front end, acute care, and the back end, which is home. We are not interested at all in the chronic care middle part, which is nearly socialized, is dominated by the two big players, and is very, very, very cost-sensitive. That is not the segment of the market that we are interested in, and you will never see us go into that segment of the market. On the acute care side, the most powerful opportunity that we have—and the reason why Tablo has been adopted at the rate it has—is that dialysis is actually not reimbursed at all, which sounds like a weird thing to get excited about. The reason it is exciting is that the hospitals have been bearing an enormous cost burden. When a patient goes into the hospital and they're given dialysis in the ICU or on the floor outside the ICU, the hospital bears the cost of that. It is not separately reimbursed. It has to be covered under whatever DRG they're billing for the main procedure. It is a pure-play cost center, and hospitals forever and ever, decades, have been paying an enormous amount of money to outsource that service. They haven't been providing that service on their own. They've been outsourcing it to a DaVita or a Fresenius and paying a very hefty price tag for doing that. The main reason, in my estimation, that the market evolved that way was actually because of machines. The machines were so complicated that hospitals felt that they could not take the time to train their own nurses, maintain competency, and all these different machines that they were going to have to acquire and maintain. It was just easier to kind of set it and forget it. I'm just going to write the check to a third party, and I don't need to worry about it. We changed the game through the technology door by developing a technology that was easy enough for a regular patient to use at home. Definitionally, it's therefore going to make it accessible for the average nurse in an average hospital to be able to set up dialysis and allow the hospital to really control their own destiny. That's our main value proposition: control your own destiny financially. Usually, we'll come in if they're going from outsource to insource, against standing up their own insource service line with Tablo. They will cut the cost of their service of dialysis by 50-75% with a payback period typically inside 12 months, which is very rapid for capital. They're doing that through supplies cost reduction and labor cost reduction. The reason why that's a very compelling value proposition, again, is because it's actually not reimbursed at all. What we're really in the business of doing is actually helping hospitals expand their margin by removing or materially lessening a pure-play cost center. On the acute side, maybe just square up where Tablo fits versus SLED or CRRT. Sure. There There are two—well, yeah, maybe three—but two broad categories of the type of dialysis that's done in a hospital. One is called IHD. That's just a fancy acronym for regular dialysis. It's three to four—it's called intermittent hemodialysis. That's three to four-hour dialysis, just actually like you find in a dialysis clinic. That's about 90% to 95% of all the treatments that are performed in a hospital are just three to four-hour treatments outside the ICU. There is another modality called CRRT. That is actually a fancy acronym for long dialysis, like 24-hour dialysis or greater. That typically is about 5% to 10% of a hospital's volume. We designed Tablo so that Tablo could deliver any—not any, but any duration within 0 to 24 hours, which has given the hospital a lot of flexibility, and it's given the hospital the opportunity to downselect to effectively one machine and standardize to one machine for any treatment between 0 and 24-hour therapy. There are other machines on the market that do CRRT really, really well, those treatments that are over 24 hours. And those would be machines manufactured by Baxter, now Vantive, for example. In that sense, it's complementary. Okay. I think the other dynamic here in the acute setting is just the operational use of—I mean, using CRRT or some traditional in-hospital dialysis systems, you're changing cartridges, you're changing dialyzers. It's pretty workflow intensive. How does Tablo help get after that? Yeah. Just by simplification. Tablo takes almost all of the guesswork out of it and almost all of the manual setup out of it. I'll give you one example. With some of the conventional other machines, mostly manufactured by Fresenius, actually, they would open up a Tyvek bag, and all the tubing would just sort of spill out. It would be up to the user to remember all the steps around what's called stringing the machine. We manufacture a cartridge where all that tubing is pre-organized for them. You open the door of Tablo, you literally press the cartridge onto the front of Tablo, and you've probably done, in that single step, about 60% or 75% of the setup. Really just simplification. Also, I'd say removing all—there's no mental math, there's no memorization. We have about 74, to be precise, sensors in Tablo and a touchscreen and custom animation that really walks the user through it. Even if a nurse has been on vacation or been away from the machine for a couple of weeks, they're able to get right back on very quickly because there's really nothing to remember. Okay. And then maybe just wrapping up on the markets in the home setting, most of the home dialysis today is PD with a little bit of HHD. Is Outset—I always didn't really understand exactly where replacement is a replacement for HHD, is a replacement for PD. Where does it fit in that segment of the market? Yeah. PD, peritoneal dialysis, is another form of home dialysis. HHD is home hemodialysis, just to define terms. We've always viewed HHD as, number one, a follow-on act to PD. There's a huge opportunity there. PD is an awesome therapy, and it's a great place to start. It is a therapy that most patients are on for two to three years. We've always believed if a patient's already successful in the home with PD, why would they be going back to the clinic? The sad reality is the vast, vast majority of patients who have to come off PD, usually for clinical reasons, end up being sent right back to the dialysis clinic. There is no reason it should be that way. They should be offered an opportunity to go from PD over to HHD. My crystal ball would be that that mix probably won't change. I think most patients will start on PD in the clinic. What we want to avail ourselves of is an opportunity to convert more of those PD patients over to HHD. And then there will be patients who are clinically ineligible for PD upfront. In those cases, I think HHD is a great place to start. Excellent. Kind of level setting on the market, let's talk about the commercial changes that you made. I think you're already actually seeing some early success with that, just using Q1 and kind of how you finished last year as a barometer for that. Maybe just back up a little bit, talk through some of the changes that you made, and maybe you could just go into a little bit more detail on some of the proof points you're seeing that give you confidence that this is the right move. Yeah. To simplify it, the three big changes that we focused on making were people, process, and pipeline management to really break it down at a basic level. People, I talked before, we had a great team of device salespeople at a time when we did not fully realize that we were not selling a device. The majority of our sales process actually is really coaching and counseling hospitals and health systems about changing their service model. We have roughly an eight-stage sales process. I would say six of the eight stages are really about insourcing. We have become the experts. We have proprietary know-how that only comes after years and hundreds and hundreds of these deployments about exactly how to insource, especially if you have been outsourcing for a couple of decades. It is very, very new. We needed to find a group of people who had a lot of expertise in selling standardization and selling at the enterprise level. It's a really different process and skill set to be able to convince a health system to stand up a new service line in 20, 40, 60 of its hospitals versus talking to one hospital CEO about doing it one time in one institution, which is kind of what we were doing back in 2020, 2021, 2022. Almost an entirely new capital sales team that we instituted again through 2024, a new sales leadership team. Our sales team is led by an individual who led sales for CareFusion and then into Becton Dickinson on the infusion pump side. What we're doing commercially is very similar to the infusion pump standardization. Even on the product side, we are fully integrated now with Epic and Cerner. We think that's going to be a very powerful incremental growth story for us in future years as we look toward EMR revenue. First, people, we needed a whole new sales process, as I mentioned. Selling to a health system, looking at broad deployment is very different than selling to one hospital. Third, pipeline management. I think in our earlier startup days with early adopters, our sales cycle was different. Our sales process and our pipeline management was really different than it is today. It's a conservative approach. It's a very deliberate approach, and there's a heavy level of inspection and a tighter forecast methodology. Excellent. Maybe just obviously, you've been implementing this for a little bit of time now. I mean, would you say you're starting to see the initial rewards on that if you kind of take—I know one quarter, it's hard to kind of contextualize that as a trend necessarily, but you are starting to see a pickup. You saw nice sequential revenue growth Q4 to Q1, what is normally seasonally a weak quarter. Maybe just talk to us about how you're evaluating the success of this commercial transformation. We're looking in two areas. One is pipeline, and then two is the conversion of said pipeline. On the pipeline side, we're looking at the—are we seeing growth in the pipeline across the country, kind of consistent performance across territories? Are we seeing the maturity of the pipeline continue to advance? We talked last quarter about a majority of our largest forecasted deals for this year are already in the later stages of that sales process, which I wouldn't have been able to say a year ago. We also look at the distribution of the pipeline. That's part one. Then are we converting the pipeline, which is really what counts? In last quarter, what I was really pleased to see was very consistent performance in contribution. We had all of our capital sales reps contributing to the revenue that we met. This was not a quarter in which—and sometimes you see this in companies—you had one or two heroes or one or two big deals that came through and allowed the company to make the number. That was not the case. Both in Q4 and Q1, we saw really good distribution, everybody contributing, good distribution around new customers, existing customers expanding, deal size, good distribution. We had a number of smaller deals come through, really large deals come through. When I look at mix in terms of the sales rep contributions and then customer mix and distribution, those are some of the headlines for me and what gives me confidence that we're nearly complete on the commercial changes. Okay. Does your outlook for the rest of the year contemplate continued console growth on a sequential basis? It does. Yeah. I've been asked a lot about the capital spending outlook. I'll just comment on that while we're talking about rest of year. I mean, our outlook remains unchanged and enthusiastic is the way I would describe it. We're keeping—obviously, I think everybody in med tech is keeping a close eye on the capital or just hospital spending in general. For us, capital spending, we have not seen any movement to date in a way that's affected our pipeline, our ability to convert that pipeline, or our expectations for the rest of the year. How do you measure conversion rate? Is that over some period of time, there are X number of accounts in the pipeline and some percentage of those convert in a period of time? How is that conversion rate measured? Both. We measure that. We're forecasting, so you've got the aggregate pipeline, and then we've got a forecast expected conversion within the year, the calendar year. Within that construct, we have expected conversion within any given quarter. Yeah. What would you say is an optimal conversion rate or what you would consider the right conversion rate for the business? What are you relative to that right now? What I'm really focused on, and our leadership team is really focused on right now, is accuracy. Accuracy and forecasting. Exactly. Yes, exactly. Because that's what gives a business predictability. We know the job that we need to do this year, which is to say what we're going to do and do it. We have to do three things really, really well. We want a return to revenue growth and specifically console growth, which gets to forecast accuracy. We want to continue to make good steady progress on gross margin, and we want to execute against this path of profitability and get the company self-sustaining. Okay. And then maybe before turning over to the P&L, just on cartridge revenue, it sort of seems to have both growing the install base and then utilization per console. Do you sell—are there stocking orders that come with console placements? Very small. I mean, if somebody's going to buy consoles for the first time, yes, of course. They've got to buy cartridges for the first time. I wouldn't describe those as out of sync with whatever their first month utilization would be. Those are pretty standardized. I mean, from time to time, as we have gotten larger enterprise customers, we do see stocking orders, but I wouldn't call it a big part of our business. What I think is a unique facet and one that has given us a lot of predictability on the recurring revenue side, which continues to grow at 20+% year over year, is the utilization has been very consistent. We typically model it at all-in five treatments a week, but we have customers that are low double digits per week. It depends on whether they're doing long treatments in the ICU or mostly shorter treatments outside the ICU. I was visiting with a couple of customers yesterday here in the Miami area, and there was one customer. They said their average is 25-35 treatments per week. That would be roughly seven treatments per console per week. Is there a ramp-up period? How long does it take customers to get to that five treatments per week? Usually not very long because what we're going after as part of our commercial strategy is what we would call kind of a whole-house conversion, at least outside the ICU. For the most part, again, another kind of interesting feature of what we're doing here is that unlike a product that's maybe being sold into the cath lab where a rep's going to walk in, there's four other reps fighting for the same stent, most hospitals are converting wholly to Tablo. Think about it. If you've been outsourcing with DaVita or Fresenius, you as a hospital, you've never owned dialysis equipment before. When you're insourcing, you're buying the dialysis systems for the first time, and you're only buying Tablo. What we've discovered and been able to verify through data is our utilization isn't driven so much by the number of sales reps we have. It's actually driven by machine uptime. One place we have put a lot of investment—again, this investment has already been made—is in our field service engineering team. We have maintained consistently 97%-98% uptime with a CSAT score of 95%. What we've really continued to focus on on the utilization front is the strength of the field service team and the overarching user experience. Okay. Does that mean when someone, to maximize uptime subsequent to placing a console or selling a console, are you putting a clinical support rep in the account to help get the account on boarded and give them either—and I hate to use the word best practices. It sounds kind of hokey, but at least give them the roadmap of, "Here's what you need to do to maximize uptime. Here's how." I do not know if it is a field service rep or a clinical support rep. How much kind of TLC are you giving customers when you first initiate a relationship? Absolutely. We have the capital sales team, but then we have a clinical sales team. The clinical sales group, and it's still relatively small, and this is a group of under 30 people, but they are focused on making sure that all of the users, whether it's a dialysis nurse, a dialysis tech, what have you, are very comfortable and confident in the utilization of the machine. That for us is a week or two type experience. This is not an enduring level of TLC. Over the long term, each hospital has a field service engineer. I mean, obviously, our field service engineers are covering many hospitals and many consoles. What we've learned is that the user experience over the duration of time, these two customers from yesterday, I'll give an example, both adopted in 2021, still using Tablo, only Tablo, still insourced. The first two names, as they mentioned to me when I asked the team experience, were the field service engineers. That's the principal relationship transitions over time to field service engineers who make sure that those machines are humming and ready to roll when they're needed. Excellent. Maybe we could turn over to the financials. Renee, I know you're new to the job, but before we kind of jump into the details, maybe just give us a sense of what attracted you to the opportunity and what are you thinking about as your kind of top priorities here over the first six months in the job? Sure. Yeah. Super excited to not only be at the company but be here. I think for me, number one is always about the technology. What is the company trying to do? I did take a little bit of time off over the past year and looked at a lot of organizations, but Leslie, team, and in particular Tablo really stood out for me as something that is trying to change an industry that unfortunately has seen no innovation and is really crowded with two big behemoths in the room. How can we do something different? That was sort of the starting point for an initial conversation and really for me to be able to sort of get behind that. What we are going to do for this year and me coming in is no different from what Leslie and the team have indicated for 2025. We are very focused on executing for top-line growth, reinstating console revenue growth, which we saw for Q1, which is great, making sure that we continue on the journey that the company has seen for gross margin expansion, continuing to push on those levers at all components of gross margin, and what are the steps towards near-term profitability. Those outlined targets felt very comfortable for me. Of course, the due diligence that I did within the organization prior to joining, how I could get behind that. You can see we obviously reiterated those points with my joining last week. Excellent. Maybe we could start on gross margins. I think that is probably the key lever on the whole profitability story, you've restructured OpEx, but at some point, you're going to have to grow investments. I think you're not going to cut your way to a growth company. Gross margins came in close to, yeah, I think 40% when you exclude the impact of underabsorption here in Q1. You've talked about on a reported basis exiting the year above 40%, high 30s for the year. Help us think about, contextualize that gross margin for us. Is that the peak gross margin? Where can that go? Yeah. Certainly. I think we have three really big levers within that: our recurring revenue that is the attach of the consoles after we've placed the unit. We're looking at service leverage. Of course, I would say right-sizing our inventory levels and making sure that we're producing at the right level for the scale of our business today and going forward. You can see within Outset, they've done a great job of that over time. Gross margins have improved. We still have some work to do. We have publicly disclosed that we have a milestone out there, 50% in the future, and we are clearly on that pathway. As you mentioned, our Q1 results, we're very happy with. There's more work to do there, but it's something that I believe is certainly attainable. I think one of the practical realities of this business, unlike pure disposable companies, is you do have a lot of other costs in gross margin, whether that's warranty or field service engineers. You don't have the same freight burden that the other dialysis companies have. How big a gap is there between your standard margin and your fully burdened gross margin? Yeah. I mean, we have not disclosed sort of the elements or the components of that. What I can tell you is we like the sales model that we have such that we have got a console, and then we have got the cartridge reoccurring, which definitely has a higher gross margin as a component, and that sort of lives on as the unit is utilized. We can certainly leverage on the field service side, obviously, as Leslie has mentioned, a very important component to the uptime of that machine, which then sort of feeds back into the cycle. It is a more complicated gross margin profile than, yes, some of the other companies that are out there in med device. I think that also gives us a lot of levers and opportunities to be able to continue to drive that mix and that gross margin improvement over all of those facets. What do you have to, what has to play out to get to 50%? What are the operational factors that need to unfold over the next several years to reach that 50% target in 2027? Yeah. For us, I think the things that we've mentioned with regards to reoccurring revenue, continuing cartridge placement and utilization of those machines, service leverage, and certainly, again, sort of optimizing the balance sheet, the devices that we have, and making improvements on those consoles, bringing those costs down as best we can. Those are the three pillars that will sort of get us there. We have not indicated a specific timeline for when that's going to happen. We are clearly on the pathway to that, and it's a milestone that is near and dear to our heart. Okay. Lastly, on gross margin, to what extent can pricing play a tailwind for you? Because you have this fairly compelling ROI value proposition of the hospital. I recognize that it's always competitive, and price is a tough path to go down always, but it would seem like there's an opportunity for you to take some pricing that is commensurate with the value that you're providing. Sure. I'll sort of speak to it, how we think about it within the context of gross margin and our goals for this year, but certainly have Leslie sort of maybe speak more on the sales side. I would say pricing is not necessarily a requirement or a lever to be able to get to that 50% milestone. It is exactly those three things that I've indicated, and those will be what helps get us to the achievement. Certainly, our team looks at pricing, evaluates opportunities. One thing that I've been pleasantly surprised by is really the rigor that our team has around pricing and the consistency that our ASPs have had. I would maybe add both on margin and future revenue growth, but certainly going back to, "Okay, so you hit 50%, then what?" Right? We're not done when we get to 50%. There is no reason why gross margin will not be substantially higher than 50% for this company. One new lever as we look beyond 50% are new, I'll call them kind of concentric rings of recurring revenue. The way we think about this is you buy your baseline Tablo, and then we already have a recurring revenue stream around a software that allows it to do some special features in the ICU. We have Tablo Cart, which is an accessory to Tablo. We now have EMR and a big opportunity, I think, in EMR, not only to increase the switching costs and an increase in bulletproof retention, but also introduce new subscription models. There might be an introductory level of EMR. There might be a premium level of EMR that offers those customers different features. That's just an example as we look to new recurring revenue streams in the future that will also offer us incremental gross margin. Excellent. I'm maybe just toggling through some of the OpEx. I think we've talked a lot about sales and marketing. Maybe on the R&D side, I think you've pivoted your investment from console development to really doubling down on software. Maybe help us think about the trajectory of R&D and where those priority investments are right now. Sure. On the hardware side, our priorities remain focused on, and they always will be focused on device performance, right? We're always going to look to seek ways to just make sure that device performance continues to reach its potential. Really, device performance, what I'll call kind of sustaining engineering, and then just cost-down programs that Renee alluded to. On the software side, yes, we have made and will continue to make investments not only in software but in EMR integration, interoperability, and data analytics. We mentioned on the last quarter's call that we transmit 3 million data points after every treatment. We have over 3 trillion data points in our cloud. That offers, and it's way too early to talk about it, that offers a lot of opportunity around everybody's favorite buzzword, AI. Too premature, but there are any number of ways that we do plan to leverage the data that we already have and that's being fed every day, both in terms of, let's say, field service efficiency and cost down, but also potentially new clinical features for customers that may add to this subscription revenue model that I was just talking about. Maybe we're just going to close on cash. I know you've obviously executed this recap of the company. You've gone to this significant rebasing of OpEx. You're seeing gross margins improve. It sounds like we're now at a point where you can comfortably say cash on hand can get you to not just cash flow break even, but cash flow positive. Right. That's right. Yeah. No change. Okay. Maybe with that, I'll turn it back to you then to kind of wrap things up here. Any kind of key takeaways that you want to leave folks on the webcast or in the room with as you kind of think about the trajectory of Outset here, not just for the balance of 2025, but kind of the go-forward message? Yeah. Thanks. And again, thanks for the opportunity to share the story. I think about the next couple of years as Outset 2.0. We've had the opportunity to create a 2.0, which not every company has the opportunity to do. As I think about what's possible in one of the largest markets of healthcare with a real paucity of competitors, a consistent need for change, and I think quite a proprietary technology and sort of change ecosystem around it, I frankly have never been more bullish. I'll say I didn't think I would ever say that because I was pretty bullish to begin with. You'd probably expect me to be fairly enthusiastic. I do think as we sit here today, we have the right team, we have the right technology, and I think we have a renewed focus on what matters most. Maybe not all, but many companies. I think we got in our own way a little bit and lost our way a little bit in the intervening years post-IPO, but we are back. The market has never left us. We're back as an organization that knows what we need to do with a clear rigor around getting it done, a re-rate to revenue growth. We are going to get to that 50% and more gross margin, and this company will be a profitable one in the not-too-distant future. Excellent. Thank you very much for taking the time to share the updates here, Renee. Congrats on the job and welcome to the role. Leslie, we'll look forward to getting updates here in August. Thank you so much again. Thank you. Thanks. Thanks Thanks for attending.