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01/10 16:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows strong financial performance with reduced losses and improved cash position. Conservative guidance is balanced by optimism in recurring revenue and pipeline strength. The Q&A section highlights strategic improvements in sales productivity and market expansion, particularly in enterprise and home hemodialysis channels. Concerns about cash burn in 2026 are noted but don't overshadow the overall positive outlook. Given the strategic initiatives and strong recurring revenue, the stock is likely to experience a positive movement in the short term.
Revenue Revenue in the second quarter of $31.4 million grew 15% over last year, driven by strong Tablo console sales and consistent utilization.
Recurring Revenue Recurring revenue of $22.5 million in the quarter increased 11% over the second quarter of last year, including a 17% increase in consumable revenue.
Non-GAAP Gross Margin Non-GAAP gross margin reached 38.4%, expanding more than 1 percentage point from last year, despite a 100 basis point headwind from under-absorption of manufacturing overhead.
Product Revenue Product revenue of $23.1 million grew 20% from $19.2 million in the prior year, driven by console revenue of $8.9 million and consumable revenue of $14.2 million.
Service and Other Revenue Service and other revenue of $8.3 million grew 2% from $8.2 million in the prior year period.
Product Gross Margin Product gross margin increased nearly 400 basis points year-over-year to 48.9%.
Service and Other Gross Margin Service and other gross margin was 6.9% compared to 13.6% in the second quarter of 2024, due to short-term investments in parts supply.
Non-GAAP Operating Expenses Non-GAAP operating expenses declined 19% to $25.4 million compared to the second quarter of 2024.
Non-GAAP Operating Loss Non-GAAP operating loss was $13.4 million, 36% below the operating loss of $21 million in the prior year period.
Net Loss Net loss of $18.5 million was 46% lower than the second quarter of 2024.
Cash Balances Ended the quarter with $187.4 million in cash, cash equivalents, short-term investments, and restricted cash.
Tablo console sales: Revenue in the second quarter of $31.4 million grew 15% over last year, driven by strong Tablo console sales and consistent utilization. Console sales increased sequentially and year-over-year.
Tablo consumables: Recurring revenue of $22.5 million in the quarter, 11% over the second quarter of last year, included a 17% increase in consumable revenue.
Home dialysis market: Finalized an agreement with the third largest midsized dialysis organization, providing access to approximately 15,000 dialysis patients across 30 states. Growing interest in Tablo from patients and providers. Agreements with all 5 of the largest midsized dialysis organizations in the U.S.
Acute care market: Tablo is now in use at more than 900 acute and subacute sites in the U.S. Closed a new enterprise agreement with one of the largest national health systems, providing access to over 100 facilities with potential for hundreds of Tablo console placements.
Gross margin expansion: Non-GAAP gross margin reached 38.4%, expanding more than 1 percentage point from last year. Product gross margin increased nearly 400 basis points year-over-year to 48.9%.
Cost reductions: Actions taken to remove approximately $80 million of annualized spend delivered leverage in the quarter, with a record low non-GAAP operating loss.
Cash management: Used approximately 60% less cash than in the prior year period, on track to use less than $50 million in 2025.
Sales organization transformation: Restructured, retrained, and enhanced the commercial organization, including retooling the capital sales team and implementing a new capital sales process.
Insourcing strategy: Hospitals adopting Tablo for insourcing dialysis services have reported reduced hospital-acquired infections, improved patient care, and better nurse retention.
Federal Funding Cuts: Potential impact from proposed federal funding cuts in healthcare, which could affect customer capital expenditures and demand for Tablo systems.
Manufacturing Overhead Absorption: Lower absorption of manufacturing overhead has been a headwind, impacting gross margins and requiring optimization of inventory levels and production.
Service Gross Margin Decline: Service and other gross margin declined due to short-term investments in parts supply, which could affect profitability.
Cash Use Increase in 2026: Anticipated increase in cash use in 2026 due to ramping up inventory purchasing and production, which could strain financial resources.
Macro Environment Monitoring: Uncertainty in the macroeconomic environment could pose risks to revenue growth and operational execution.
Revenue Guidance for 2025: The company raised its revenue guidance for 2025 from $115 million to $125 million to a range of $122 million to $126 million.
Gross Margin Expectations: Gross margin for the full year is expected to be in the high 30% range. Excluding the impact of under-absorption, gross margin is anticipated to exit the year above 40% in the fourth quarter of 2025. The path to 50% gross margin will be driven by higher-margin recurring revenue, service leverage, and a console cost-down program.
Operating Expenses: Operating expenses in 2025 are anticipated to be in the low $90 million range.
Cash Usage: The company expects to use under $50 million in cash in 2025, which is less than half of the cash used in 2024.
Market Demand and Pipeline: The company remains confident in its pipeline and strong market demand for the rest of the year. Customers prioritize capital expenditures for 2025, and the financial and clinical case for insourcing with Tablo remains compelling.
Production and Inventory: The company plans to increase inventory purchasing and ramp production in 2026, with the first quarter of any year expected to be the highest cash-consuming quarter due to incentive compensation payouts.
Strategic Focus Areas: The company is focused on three priorities for 2025: growing console revenue, expanding gross margin, and driving profitability.
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The earnings call presents a mixed picture. Financial performance shows improvement with increased gross margins and reduced losses, but challenges remain with sales leadership changes and guidance reduction. The Q&A reveals uncertainties in deal timing and sales leadership, though no order cancellations occurred. Raised revenue guidance for 2025 is positive, yet the lack of 2026 guidance and management's vague responses add uncertainty. Overall, the sentiment is neutral due to balancing positive financial trends with leadership and guidance concerns.
The earnings call shows strong financial performance with reduced losses and improved cash position. Conservative guidance is balanced by optimism in recurring revenue and pipeline strength. The Q&A section highlights strategic improvements in sales productivity and market expansion, particularly in enterprise and home hemodialysis channels. Concerns about cash burn in 2026 are noted but don't overshadow the overall positive outlook. Given the strategic initiatives and strong recurring revenue, the stock is likely to experience a positive movement in the short term.
The earnings call presents a positive outlook with revenue and recurring revenue growth, improved gross margins, and reduced operating expenses. The Q&A section reinforced confidence in sales transformation and balance sheet improvements. Despite conservative guidance, the company is on track for a strong 2025 with reduced cash usage and a focus on market expansion. The shareholder return plan is also a positive aspect. However, regulatory and supply chain risks are noted, but the overall sentiment is positive, predicting a 2% to 8% stock price increase.
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