Outset Medical, Inc. (NASDAQ:OM) Q4 2022 Earnings Call Transcript

Travis Steed: All right, that’s helpful. And then I guess a last question on margins. There’s a little bit of a reset on the 2023 margin guide last month. Just want to make sure if there’s any color you can provide on €“ does that change the pathway to the 50% over three years kind of linear pathway? When you think about this year’s margins, you know the four levers that you talked about in driving margins. You know where do you think you can pull the lever a little harder this year and if revenue growth comes in a little better than expected, how well that’s going to flow through on the margin for 2023?

Leslie Trigg: Yes, look Travis, the levers are unchanged. So it continues to be console cost down. It continues to be consumable pull-through and it continues to be service leverage, as well as sort of scale and revenue growth right, so those levers are unchanged. We continue to have confidence in our ability to get from the 16% we predicted for the full year of €˜22 to roughly 20% for 2023 and exiting the year again in that mid-20% zone.

Jim Mazzola: And sorry, Travis you’re cutting in and out a little bit for us. I thought I heard him ask, is it still kind of a linear path to do that?

Nabeel Ahmed: Thank you. Yes, yes, Travis sorry, you were cutting in and out. Yes, and it continues to be a linear path to that sort of 50% next milestone that we have, yes.

Travis Steed: All right great, thanks for taking the questions.

Operator: Thank you. One moment for our next question please. It comes from the line of Rick Weiss with Stifel. Please go ahead.

Rick Wise: Hi! Good afternoon Leslie, Hi Nabeel. I guess I’ll €“ let me come back to the question that Travis was asking about, the sequential change, and Nabeel, I totally get that you’re telling us what you’re seeing. But I just want to make sure that I’m really understanding, why the sequential direction first quarter versus fourth, and why you’re so confident in acceleration after that? I mean is that just the way that customers are saying they are going to take systems, i.e., they are going to move a little more slowly in the first quarter and they are committing to accelerating thereafter. And you know it does seem like a slight in the short term, slightly greater pressure. I’m just not exactly understanding why and exactly where it’s €“ who’s moving more slowly to decide about what, the acute setting or the home. If you could just expand on your comments there would be great?

Nabeel Ahmed: Yes, Rick. I mean, it’s spot-on what you said. Sort of again, when we set guidance for any period, we look at our backlog, how that’s rolling off and then we look at our pipeline, and what our customers are telling us. And it’s exactly what you said in terms of what we’re hearing, is folks are looking for a slower start to the year and then accelerating beyond and that’s based again on the backlog pipeline and the conversion that we have sort of baked in.