Dive Brief:
- Outset Medical has received a contract that enables it to sell its Tablo Hemodialysis System, an all-in-one hemodialysis system, to 106 Department of Veterans Affairs hospitals in the U.S.
- The five-year contract enables VA centers to acquire Tablo consoles that can be sent to veterans homes and expand use in the acute setting.
- Stifel analysts called the contract “a modest incremental positive” for the company that could generate additional sales of as much as $50 million over five years.
Dive Insight:
The Centers for Medicare & Medicaid Services last year made the portable hemodialysis system the first device to receive an add-on payment under end-stage renal disease after Outset convinced it Tablo is a “substantial clinical improvement” over a rival technology sold by a Fresenius Medical Care subsidiary.
Still, 2022 brought challenges for the company, with Outset temporarily pausing shipments of Tablo for home use over a regulatory issue. Outset recently resumed shipments and has followed up with a VA contract.
“The news is an encouraging sign that Outset is making positive progress in rebuilding Tablo’s commercial pipeline. Checking in with management, we are reminded that contracts like this essentially are opportunities to market Tablo to individual hospitals, and that it will take time to build the commercial pipeline,” the Stifel analysts wrote in a note to investors.
Given the nature of the contract, the analysts expect the deal to start generating revenue in the second half of next year. Outset posted sales of $55.6 million the first half of 2022, up from $48.1 million in the first half of 2021.
Outset’ has said that hospitals currently lose money on dialysis while “patient outcomes remain poor.” Tablo is designed to improve the situation by enabling anyone to carry out the procedure from any location that has an electrical outlet and tap water.
Despite the news, Outset’s stock price was down 6.2% to $20.36 Tuesday morning.
