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What changed in Outset Medical, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Outset Medical, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+428 added−494 removedSource: 10-K (2026-02-13) vs 10-K (2025-02-28)

Top changes in Outset Medical, Inc.'s 2025 10-K

428 paragraphs added · 494 removed · 340 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

104 edited+20 added−18 removed205 unchanged
Biggest changeHome Care We believe competition in the home setting is based on a system’s clinical performance, its cost efficiency, its ease of use and patient preference. In the home hemodialysis setting, competitors include Fresenius (through its acquisition of NxStage) and Quanta which received FDA 510(k) clearance for home use in 2024.
Biggest changeIn the home hemodialysis setting, competitors include Fresenius (through its acquisition of NxStage) and Quanta which received FDA 510(k) clearance for home use in 2024. We believe through Tablo’s unique advantages it is easier and faster for patients to learn, and simpler for patients to operate at home, which may position us well against existing or future competitors.
The FDA can also publish Safety Communications or Letters to Health Care Providers when the agency becomes aware of new issues involving a specific product or, or more broadly, a product family. These communications are posted on the FDA’s website and describe the FDA’s analysis of a current issue and provide specific regulatory approaches and clinical recommendations for patient management.
The FDA can also publish Safety Communications or Letters to Health Care Providers when the agency becomes aware of new issues involving a specific product or, more broadly, a product family. These communications are posted on the FDA’s website and describe the FDA’s analysis of a current issue and provide specific regulatory approaches and clinical recommendations for patient management.
Government officials continue to focus their enforcement efforts on the sales and marketing activities of medical device manufacturers and other healthcare companies, and routinely bring cases under the federal Anti-Kickback Statute and False Claims Act against individuals or entities who allegedly offer unlawful inducements to potential or existing customers in an attempt to procure their business.
Government officials continue to focus their enforcement efforts on the sales and marketing activities of medical device manufacturers and other healthcare companies and routinely bring cases under the federal Anti-Kickback Statute and federal False Claims Act against individuals or entities who allegedly offer unlawful inducements to potential or existing customers in an attempt to procure their business.
Given the breadth of the federal Anti-Kickback Statute, in order to protect certain common business arrangements and activities that may otherwise implicate the law, there are statutory exceptions and regulatory safe harbors that protect certain arrangements from liability under the law when all elements of an applicable exception or safe harbor are met.
Given the breadth of the federal Anti-Kickback Statute, and in order to protect certain common business arrangements and activities that may otherwise implicate the law, there are statutory exceptions and regulatory safe harbors that protect certain arrangements from liability under the law when all elements of an applicable exception or safe harbor are met.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: • FDA untitled letters, FDA Form 483s, FDA warning letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions;•customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • recall, detention or seizure of our products;•operating restrictions, partial suspension or total shutdown of production;•refusing or delaying our requests for regulatory approvals or clearances of new products or modified products; • withdrawing of 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: • FDA untitled letters, FDA Form 483s, FDA warning letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications or repair, replacement, refunds, recall, detention or seizure of our products; • recall, detention or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • refusing or delaying our requests for regulatory approvals or clearances of new products or modified products; 11 • withdrawing of 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
For example, the Budget Control Act of 2011, among other things, resulted in reductions in payments to Medicare providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect into 2032 unless additional Congressional action is taken, with the exception of a temporary suspension of the 2% cut in Medicare payments from May 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.
For example, the Budget Control Act of 2011, among other things, resulted in reductions in payments to Medicare providers of 2% per fiscal year, which went into effect on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect into 2032 unless additional Congressional action is taken, with the exception of a temporary suspension of the 2% cut in Medicare payments from May 17 1, 2020 through March 31, 2022 due to the COVID-19 pandemic.
TACNA is also responsible for performing internal statutory accounting and payroll services, as well as payables processing. Additional services that TACNA is obligated to provide under the TACNA Agreement include interfacing with both Mexican and U.S. governmental agencies, preparing import-export documentation, coordinating shipment of equipment, raw materials and finished products, and obtaining necessary permits and licenses required in Mexico.
TACNA is also responsible for performing internal statutory accounting and payroll services, as well as payables processing. Additional services that TACNA is obligated to provide under the TACNA Agreement include interfacing with both Mexican and U.S. governmental agencies, preparing import-export documentation, coordinating shipment of equipment, raw materials and finished products, and 7 obtaining necessary permits and licenses required in Mexico.
For instance, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (CCPA) gives California residents rights to access, correct and delete their personal information, to opt out of the sale or sharing of certain personal information, to limit uses of certain sensitive data under certain circumstances, and to receive detailed information about how their personal information is used by requiring covered companies to provide disclosures to California consumers (as that term is broadly defined).
For instance, the California Consumer Privacy Act, as amended by the California Privacy Rights Act (CCPA) gives California residents rights to access, correct and delete their personal information, to opt out of the sale or sharing of certain personal information, to limit uses of certain sensitive data under certain circumstances, and to receive detailed information about how their 14 personal information is used by requiring covered companies to provide disclosures to California consumers (as that term is broadly defined).
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
Additionally, after a trial begins, we, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. 10 Post-market Regulation After a device is cleared or approved for marketing, numerous and pervasive regulatory requirements continue to apply.
A PMA may include post-approval conditions intended to ensure the safety and effectiveness of the device, including, 8 among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported the PMA or requirements to conduct additional clinical studies post-approval.
A PMA may include post-approval conditions intended to ensure the safety and effectiveness of the device, including, among other things, restrictions on labeling, promotion, sale and distribution, and collection of long-term follow-up data from patients in the clinical study that supported the PMA or requirements to conduct additional clinical studies post-approval.
Unlike traditional hemodialysis machines, Tablo can be used seamlessly across multiple 3 care settings and a wide range of clinical applications, all with the benefit of remote system management, monitoring and maintenance through two-way wireless data transmission capabilities. Tablo is comprised of the following components: • Tablo Console.
Unlike traditional hemodialysis machines, Tablo can be used seamlessly across multiple care settings and a wide range of clinical applications, all with the benefit of remote system management, monitoring and maintenance through two-way wireless data transmission capabilities. Tablo is comprised of the following components: • Tablo Console.
Some ESRD patients, however, may have Medicaid as their primary coverage. Because Medicaid is a state-administered program, Medicaid reimbursement for dialysis services varies by state. Private Insurance Finally, some patients may have coverage through private insurance, for example through a marketplace plan set up under the ACA or through an employer or union group health plan.
Some ESRD patients, however, may have Medicaid as their primary coverage. Because Medicaid is a state-administered program, Medicaid reimbursement for dialysis services varies by state. Private Insurance 16 Finally, some patients may have coverage through private insurance, for example through a marketplace plan set up under the ACA or through an employer or union group health plan.
Talent and Pay Philosophies 18 We are committed to attracting the best talent we can find, while providing our employees with challenging work in a fast-paced environment. We recruit broadly and purposefully, and welcome diverse candidates. Our work environment is goal-driven, and we believe in paying for outstanding performance and future potential.
Talent and Pay Philosophies We are committed to attracting the best talent we can find, while providing our employees with challenging work in a fast-paced environment. We recruit broadly and purposefully, and welcome diverse candidates. Our work environment is goal-driven, and we believe in paying for outstanding performance and future potential.
A significant risk device is one that presents a potential for serious 9 risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a patient and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
Quality Systems Regulation Requirements 10 Our manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
Quality Systems Regulation Requirements Our manufacturing processes are required to comply with the applicable portions of the QSR, which cover the methods and the facilities and controls for the design, manufacture, testing, production, processes, controls, quality assurance, labeling, packaging, distribution, installation and servicing of finished devices intended for human use.
The IOTA Model, which will begin on July 1, 2025 and end on June 30, 2031, will test 17 whether performance-based incentives (including both upside and downside risk payments) for participating kidney transplant hospitals will incentivize increased numbers of kidney transplants for patients with ESRD.
The IOTA Model, which will begin on July 1, 2025 and end on June 30, 2031, will test whether performance-based incentives (including both upside and downside risk payments) for participating kidney transplant hospitals will incentivize increased numbers of kidney transplants for patients with ESRD.
The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. As a result, significant regulatory policies may be subject to increased litigation and judicial scrutiny.
The new framework is likely to increase both the frequency of such challenges and their odds of success by eliminating one way in which the government previously prevailed in such cases. As a result, significant 18 regulatory policies may be subject to increased litigation and judicial scrutiny.
This is all made possible by our growing team of experienced software, data science, and machine learning engineers. Tablo leverages cloud technology to make it possible for providers to monitor devices remotely, view treatment data, perform patient and population analytics, and automate clinical recordkeeping.
This is all made possible by our team of experienced software, data science, and machine learning engineers. Tablo leverages cloud technology to make it possible for providers to monitor devices remotely, view treatment data, perform patient and population analytics, and automate clinical recordkeeping.
Privacy and Security In the course of performing our business we obtain personally identifiable information (PII), including health-related information. Numerous federal and state laws and regulations, including the Healthcare Insurance Portability and Accountability Act 13 (HIPAA), govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information or personal information.
Privacy and Security In the course of performing our business we obtain personally identifiable information (PII), including health-related information. Numerous federal and state laws and regulations, including the Healthcare Insurance Portability and Accountability Act (HIPAA), govern the collection, dissemination, security, use and confidentiality of patient-identifiable health information or personal information.
We offer competitive, market-based salaries, an annual cash bonus program tied to individual and company performance, a broad-based equity incentive compensation program including an employee stock purchase plan, a 401(k) retirement savings plan with company match, a comprehensive benefits package, team incentives and peer incentives.
We offer competitive, market-based salaries, an annual cash bonus program tied to individual and company performance, an equity incentive compensation program including an employee stock purchase plan, a 401(k) retirement savings plan with company match, a comprehensive benefits package, team incentives and peer incentives.
Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and 7 effectiveness.
Under the FDCA, medical devices are classified into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of ‘‘off-label’’ uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
These include: • establishment registration and device listing with the FDA; • QSR requirements, which require manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and manufacturing process; • labeling regulations and FDA prohibitions against the promotion of investigational products, or the promotion of “off-label” uses of cleared or approved products; • requirements related to promotional activities; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use of one of our cleared devices, or approval of certain modifications to PMA-approved devices; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
We cannot be sure that our pending patent applications or future patent applications will result in issued patents or that any patents that have issued or might 6 issue in the future will protect our current or future products, provide us with any competitive advantage or will not be challenged, invalidated, or circumvented.
We cannot be sure that our pending patent applications or future patent applications will result in issued patents or that any patents that have issued or might issue in the future will protect our current or future products, provide us with any competitive advantage or will not be challenged, invalidated, or circumvented.
However, these exceptions and safe harbors are narrowly drawn, and there are no exceptions or safe harbors for many other common business 12 activities, like the provision of meals, educational grants or reimbursement support programs, among others.
However, these exceptions and safe harbors are narrowly drawn, and there are no exceptions or safe harbors for many other common business activities, like the provision of meals, educational grants or reimbursement support programs, among others.
ESRD patients covered by Medicare, the Medicare reimbursement rate is an important factor in a 15 healthcare provider’s decision to use Tablo and limits the fees for which we can sell or rent Tablo.
ESRD patients covered by Medicare, the Medicare reimbursement rate is an important factor in a healthcare provider’s decision to use Tablo and limits the fees for which we can sell or rent Tablo.
In addition to these federal laws, there are often state laws and regulations, including state anti-kickback and false claims laws, that may apply to our business practices, including but not limited to: research; sales and marketing arrangements; claims involving healthcare items or services reimbursed by any third- party payor, including private insurers; state laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug and device manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare professionals and entities.
In addition to these federal laws, there are state laws and regulations, including state anti-kickback and false claims laws, that may apply to our business practices, including but not limited to: research activities; sales and marketing arrangements; claims involving healthcare items or services reimbursed by any third- party payor, including private insurers; state laws that require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the U.S. federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; and state laws and regulations that require drug and device manufacturers to file reports relating to pricing and marketing information, which requires tracking gifts and other remuneration and items of value provided to healthcare 13 professionals and entities.
If a de novo request is granted, the device may be legally marketed and a new classification is established. If the device is classified as Class II, the device may serve as a predicate for future 510(k) submissions.
If a de novo request is granted, the device may be legally marketed and a new classification is established. If the device is classified as 8 Class II, the device may serve as a predicate for future 510(k) submissions.
A violation of the federal Anti-Kickback Statue includes per violation civil monetary penalties and significant criminal fines under the statute, additional civil penalties and treble damages under the False Claims Act, as discussed in more detail below, possible imprisonment, and mandatory exclusion from participation in the federal healthcare programs, meaning that federal healthcare programs would no longer reimburse (directly or indirectly) for products or services furnished by the excluded entity or individuals.
A violation of the federal Anti-Kickback Statue includes per violation civil monetary penalties and significant criminal fines, additional civil penalties and treble damages under the federal False Claims Act, as discussed in more detail below, possible imprisonment, and mandatory exclusion from participation in the federal healthcare programs, meaning that federal healthcare programs would no longer cover or reimburse (directly or indirectly) for products or services furnished by the excluded entity or individuals.
During the pendency of the FDA’s review, the FDA may issue an additional information letter, which places the de novo request on hold and stops the review clock pending receipt of the additional information requested.
During the pendency of the FDA’s review, the 9 FDA may issue an additional information letter, which places the de novo request on hold and stops the review clock pending receipt of the additional information requested.
The federal healthcare fraud statute imposes liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs.
The federal all-payor healthcare fraud statute imposes liability for, among other things, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement, in connection with the delivery of, or payment for healthcare benefits, items or services by a healthcare benefit program, which includes both government and privately funded benefits programs.
Medicare In the clinic and home setting, the largest payor of dialysis services is Medicare, and Medicare requires all dialysis patients to be under the care of a dialysis clinic provider, whether they are in the clinic or in the home.
Medicare 15 In the clinic and home setting, the largest payor of dialysis services is Medicare, and Medicare requires all dialysis patients to be under the care of a dialysis clinic provider, whether they are in the clinic or in the home.
Trigg joined the Company from Warburg Pincus, a private equity firm, where she was an Executive 19 in Residence from March 2012 to March 2014. Prior to that, Ms.
Trigg joined the Company from Warburg Pincus, a private equity firm, where she was an Executive in Residence from March 2012 to March 2014. Prior to that, Ms.
Finally, on December 10, 2020, OCR issued proposed revisions to the Privacy Rule aimed at reducing regulatory burdens that may exist in discouraging coordination of care, including creating an exception to the minimum necessary standard for healthcare coordination, and other proposals to increase patient access to their health information, among other changes.
Further, on December 10, 2020, OCR issued proposed revisions to the Privacy Rule aimed at reducing regulatory burdens that may exist in discouraging coordination of care, including creating an exception to the minimum necessary standard for healthcare coordination, and other proposals to increase patient access to their health information, among other changes.
Nash held various positions of increasing responsibility at Alere Inc., a medical technology company, where he was responsible for the transfer, consolidation and enhancement of class II and class III point of care and rapid diagnostic products globally. Mr. Nash holds a B.S. from Union College and an M.B.A. from the University of Haifa, Israel. 20
Nash held various positions of increasing responsibility at Alere Inc., a medical technology company, where he was responsible for the transfer, consolidation and enhancement of class II and class III point of care and rapid diagnostic products globally. Mr. Nash holds a B.S. from Union College and an M.B.A. from the University of Haifa, Israel. 21
In May 2022, after further discussions with the FDA and receiving indications that the clearance of this 510(k) application would be delayed beyond our original expectations, we implemented a shipment hold on the distribution and marketing of Tablo for use in the home environment pending the FDA’s review and clearance of this 510(k) application.
In May 2022, after further discussions with the FDA and receiving indications that the clearance of this 510(k) submission would be delayed beyond our original expectations, we implemented a shipment hold on the distribution and marketing of Tablo for use in the home environment pending the FDA’s review and clearance of this 510(k) submission.
In late July 2022, the FDA cleared this 510(k) application of Tablo for patient use in the home and we resumed marketing and shipping Tablo for home use. We continue to seek opportunities for product improvements and feature enhancements, which will, from time to time, require FDA clearance or approval before commercial launch.
In late July 2022, the FDA cleared this 510(k) submission of Tablo for patient use in the home and we resumed marketing and shipping Tablo for home use. We continue to seek opportunities for product improvements and feature enhancements, which will, from time to time, require FDA clearance or approval before commercial launch.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Rulemaking by the California Privacy Protection Agency (CPPA) has begun – the CPPA has administrative enforcement authority over CCPA and oversees CCPA rulemaking.
The CCPA provides for civil penalties for violations, as well as a private right of action for data breaches that is expected to increase data breach litigation. Rulemaking by the California Privacy Protection Agency (CPPA) is ongoing – the CPPA has administrative enforcement authority over CCPA and oversees CCPA rulemaking.
Our technology is designed to elevate the dialysis experience for patients, and help providers overcome traditional care delivery challenges. Our focus on flexibility, ease of use and user experience translates to meaningfully reduced training times and fixed infrastructure requirements.
Our technology is designed to elevate the dialysis experience for patients, and help providers overcome traditional care delivery challenges. Our focus on flexibility, ease of use, data analytics and user experience translates to meaningfully reduced training times and fixed infrastructure requirements.
We manufacture our Tablo consoles and a majority of Tablo cartridges at our manufacturing facility in Tijuana, Mexico.
We manufacture our Tablo consoles and a substantial majority of Tablo cartridges at our manufacturing facility in Tijuana, Mexico.
As of December 31, 2024, our manufacturing facility in Tijuana, Mexico had 187 full-time team members on-site across quality, engineering, manufacturing, supply chain, and other support functions. TACNA facilitates the hiring of new team members and is responsible for human resource functions and payroll processing. Starting in 2023 through the beginning of 2025, we implemented four workforce reductions.
As of December 31, 2025, our manufacturing facility in Tijuana, Mexico had 254 full-time team members on-site across quality, engineering, manufacturing, supply chain, and other support functions. TACNA facilitates the hiring of new team members and is responsible for human resource functions and payroll processing. Starting in 2023 through the beginning of 2025, we implemented four workforce reductions.
The law provided for 1% Medicare sequestration in the second quarter of 2022, with the full 2% sequestration going into effect thereafter through the first eight months of the FY 2032 sequestration order, unless additional Congressional action is taken.
The law provided for 1% Medicare sequestration in the second quarter of 2022, with the full 2% sequestration going into effect thereafter through the first eleven months of the FY 2032 sequestration order, unless additional Congressional action is taken.
Diversity, Equity and Inclusion We are committed to creating and nurturing an inclusive workplace, where everyone feels respected, valued, and included – not only because it’s the right thing to do, but also because we strongly believe that it’s vital to our success and crucial to fully support the diverse communities we serve.
We are committed to creating and nurturing an inclusive workplace, where everyone feels respected, valued, and included – not only because it’s the right thing to do, but also because we strongly believe that it’s vital to our success and crucial to fully support the diverse communities we serve.
The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiative implemented in the future could impact our revenue from the sale of our products.
The cost containment measures that payors and providers are instituting and the effect of any healthcare reform initiatives implemented in the future could impact our revenue from the sale of our products.
HIPAA establishes a set of national privacy and security standards for the protection of individually identifiable health information, including protected health information (PHI) for certain covered entities, including healthcare providers that submit certain covered transactions electronically, as well as their ‘‘business associates,’’ which are persons or entities that perform a function or provide certain services for, or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting PHI.
HIPAA establishes a set of national privacy and security standards for the protection of individually identifiable health information, including protected health information (PHI) for certain covered entities, including healthcare providers that submit certain covered transactions electronically, as well as their “business associates,” which are persons or entities that perform a function or provide certain services for, or on behalf of, a covered entity that involve creating, receiving, maintaining or transmitting PHI.
However, this two-year eligibility period ended on December 31, 2023, meaning Tablo is no longer eligible for, and providers have not received, TPNIES since January 1, 2024. Medicaid Many ESRD patients also have Medicaid coverage that is supplemental to Medicare coverage, as it helps cover Medicare Part B coinsurance and items and services not covered by Medicare Part B.
However, this two-year eligibility period ended on December 31, 2023, meaning Tablo has not been eligible for, and providers have not received, TPNIES since January 1, 2024. Medicaid Many ESRD patients also have Medicaid coverage that is supplemental to Medicare coverage, as it helps cover Medicare Part B coinsurance and items and services not covered by Medicare Part B.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision will have a significant impact on how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.
Supreme Court issued an opinion holding that courts reviewing agency action pursuant to the Administrative Procedure Act (APA) “must exercise their independent judgment” and “may not defer to an agency interpretation of the law simply because a statute is ambiguous.” The decision affects how lower courts evaluate challenges to agency interpretations of law, including those by CMS and other agencies with significant oversight of the healthcare industry.
In early May 2024, we received 510(k) clearance from the FDA for TabloCart with Prefiltration, and we have resumed distribution of TabloCart with Prefiltration. In February 2025, we were notified by the FDA that the issues cited in the Warning Letter have been addressed.
In early May 2024, we received 510(k) clearance from the FDA for TabloCart with Prefiltration, and we subsequently resumed distribution of TabloCart with Prefiltration. In February 2025, we were notified by the FDA that the issues cited in the Warning Letter had been addressed.
Compliance efforts will likely be an increasing and substantial cost in the future. For information related to our cybersecurity risk management, strategy and governance, see the section entitled “Cybersecurity” under Part I, Item 1C below. Reimbursement in the Clinic and Home Settings We sell our Tablo to dialysis clinics.
Compliance efforts will likely be an increasing and substantial cost in the future. For information related to our cybersecurity risk management, strategy and governance, see the section entitled “Cybersecurity” under Part I, Item 1C below. Reimbursement in the Clinic and Home Settings We sell our Tablo to dialysis clinic operators (or providers).
Prior to joining the Company, from June 2016 through June 2019, Mr. Nash served as Director of Operations at Epocal Inc., a medical technology company (and a subsidiary of Alere, Inc. acquired by Siemens Healthineers), during which time he was responsible for the end-to-end manufacturing operations of point of care diagnostics products and platforms. From 2012 through 2016, Mr.
Nash served as Director of Operations at Epocal Inc., a medical technology company (and a subsidiary of Alere, Inc. acquired by Siemens Healthineers), during which time he was responsible for the end-to-end manufacturing operations of point of care diagnostics products and platforms. From 2012 through 2016, Mr.
These actions were taken to align our level of investment with our key strategic priorities, with the goal of continuing to drive efficiency and effectiveness in serving both our patients and our shareholders. There are no unions represented within our employee base and no members of our workforce are covered under collective bargaining agreements.
These actions were taken to align our level of investment with our key strategic priorities, with the goal of continuing to drive efficiency and effectiveness in serving both our patients and our shareholders. There are no unions represented within our employee base and none of our employees are covered under collective bargaining agreements.
We had an aggregate of 40 issued patents in Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, Sweden and the United Kingdom, as well as 36 pending patent applications in Australia, Brazil, Canada, China, the European Patent Office, Hong Kong, Japan, Saudi Arabia and United Arab Emirates.
We had an aggregate of 76 issued patents in Australia, Canada, China, France, Germany, Hong Kong, Japan, Spain, Sweden and the United Kingdom, as well as 32 pending patent applications in Australia, Brazil, Canada, China, the European Patent Office, Hong Kong, Japan, Saudi Arabia and United Arab Emirates.
Information on our website is not part of this report. The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov.
Our website address is www.outsetmedical.com. Information on our website is not part of this report. The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov.
Our proprietary data ecosystem provides what we believe is a unique way of connecting providers and patients for real-time treatment monitoring, automated treatment documentation, and simplified compliance and record-keeping. Our patents expire between October 2025 and April 2040. The term of individual patents depends upon the legal term for patents in the countries in which they are granted.
Our proprietary data ecosystem provides what we believe is a unique way of connecting providers and patients for real-time treatment monitoring, automated treatment documentation, and simplified compliance and record-keeping. Our patents expire between June 2027 and April 2042. The term of individual patents depends upon the legal term for patents in the countries in which they are granted.
Another key federal healthcare law is the federal healthcare fraud statute, which was added by HIPAA.
Another key federal healthcare law is the federal all-payor healthcare fraud statute, which was added by HIPAA.
Item 1. B usiness. Our Company Outset is a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis. We believe the Tablo® Hemodialysis System (Tablo) represents a significant technological advancement that transforms the dialysis experience for patients and operationally simplifies it for providers.
Item 1. B usiness. Our Company Outset is a medical technology company pioneering a first-of-its-kind technology to improve clinical outcomes in dialysis with less cost and complexity. We believe the Tablo® Hemodialysis System (Tablo) represents a significant technological advancement that transforms the dialysis experience for patients and operationally simplifies it for providers.
Manufacturers are also required to report ownership and investment interests held by the physicians described above and their immediate family members. The data are sent to the Center for Medicare and Medicaid Services (CMS) for public disclosure on the Open Payments website.
Manufacturers are also required to report ownership and investment interests held by U.S. physicians and their immediate family members in the manufacturer. The data are sent to the Center for Medicare and Medicaid Services (CMS) for public disclosure on the Open Payments website.
We do not consider peritoneal dialysis (PD) to be competitive to our products given the differences in treatment modality, that PD is clinically limited to patients with certain pre-existing conditions such as congestive heart failure and obesity and that PD is regarded as a “temporary” modality since approximately 80% of patients are on the therapy for less than three years.
We do not consider peritoneal dialysis (PD) to be competitive to our products given the differences in treatment modality, that PD is clinically limited to patients with certain pre-existing conditions such as congestive heart failure and obesity and that PD is regarded as a “temporary” modality since approximately 80% of patients are on the therapy for less than three years. 6 Intellectual Property Our success depends in part on our ability to protect our proprietary technology and intellectual property rights.
Brottem 51 General Counsel and Secretary Marc Nash 36 Senior Vice President, Operations and R&D Leslie Trigg Leslie Trigg has served as our President and CEO and a member of our Board since November 2014 and as Chair of our Board since February 2022. Ms.
Brottem 52 General Counsel and Secretary Marc Nash 37 Executive Vice President, R&D, Operations and Service Leslie Trigg Leslie Trigg has served as our President and CEO and a member of our Board since November 2014 and as Chair of our Board since February 2022. Ms.
Requiring only an electrical outlet and tap water to operate, Tablo frees patients and providers from the burdensome infrastructure required to operate traditional dialysis machines. The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to serve as a dialysis clinic on wheels.
Requiring only an electrical outlet and tap water to operate, Tablo frees patients and providers from the burdensome infrastructure required to operate traditional dialysis machines. The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to provide clinical and operational flexibility to customers.
The TACNA Agreement has an initial three-year term and will continue thereafter until terminated by us or TACNA in accordance with the terms of the TACNA Agreement. We also manufacture a portion of Tablo cartridges through Infus Medical Co. Ltd. (Infus), a contract manufacturer with two facilities in Thailand.
The TACNA Agreement has an initial three-year term and will continue thereafter until terminated by us or TACNA in accordance with the terms of the TACNA Agreement. We also manufacture a small portion of Tablo cartridges through Infus Medical Co. Ltd. (Infus), a contract manufacturer with two facilities in Thailand, to supplement our in-house manufacturing production and provide additional flexibility.
This additional point of connectedness is designed to deliver data in compliance with the federal Health Insurance Portability and Accountability Act (HIPAA) Security Rule, and does not require any special equipment from the providers: it connects to the cloud using any standard Ethernet or Wi-Fi internet connections. TabloHub strengthens care, simplifies meeting documentation requirements, and makes system management easy.
This additional point of connectedness is designed to deliver data in compliance with the federal Health Insurance Portability and Accountability Act (HIPAA) Security Rule, and does not require any special equipment from the providers: it connects to the cloud using any standard Ethernet or Wi-Fi internet connections.
With the above features and benefits in mind, we believe Tablo is well-positioned as a differentiated, all-in-one solution enabling transformational dialysis across the continuum of care, from hospital to home, in one of the largest, most expensive, least changed areas of healthcare. Competition There are a number of dialysis machine manufacturers in the United States, Europe and Asia.
With the above features and benefits in mind, we believe Tablo is well-positioned as a differentiated, all-in-one solution enabling transformational dialysis across the continuum of care, from hospital to home, in one of the largest, most expensive, least changed areas of healthcare.
This includes products, like Tablo, that are purchased and used in a service that is paid for by such programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation. Further, the term “remuneration” has been broadly interpreted to include anything of value.
This includes products, like Tablo, that are purchased and used 12 in a service that is paid for by such programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have committed a violation.
We believe our ability to compete effectively will be dependent on our ability to build the commercial infrastructure necessary to effectively demonstrate the value of Tablo, maintain and improve product quality and feature functionality, build the infrastructure to support the operating needs of the business and achieve cost reductions.
We believe our ability to compete effectively will be dependent on our ability to effectively demonstrate the value of Tablo and insourcing with Tablo, maintain and improve product quality and feature functionality, build and maintain the infrastructure to support the operating needs of the business and continue to achieve operational efficiencies.
Acute Care While historically customers in this market have focused on machine functionality and price, we believe they are increasingly focused on the total cost of patient care, which favors technology that can provide clinical versatility and improve operational efficiency. In the acute care setting, the dialysis machine manufacturers that we compete with include Fresenius, Vantive and B. Braun.
Acute Care While historically customers in this market have focused on machine functionality and price, we believe they are increasingly focused on the total cost of patient care, which favors technology and services that can provide clinical versatility and improve operational efficiency.
Information About Our Executive Officers The following table sets forth information concerning our executive officers and directors as of the date of this Annual Report: Name Age Position(s) Executive Officers Leslie Trigg 54 President, Chief Executive Officer and Chair of the Board Nabeel Ahmed 49 Chief Financial Officer John L.
Information About Our Executive Officers The following table sets forth information concerning our executive officers and director as of the date of this Annual Report: Name Age Position(s) Executive Officers Leslie Trigg 55 President, Chief Executive Officer and Chair of the Board Renee Gaeta 44 Chief Financial Officer John L.
CMS subsequently published a final rule on September 29, 2020, among other things, to implement the End-Stage Renal Disease Treatment Choices (ETC) Model. The ETC Model is a mandatory payment model that adjusts certain Medicare payments to select ESRD facilities, nephrologists, and other clinicians managing beneficiaries with ESRD starting January 1, 2021 and continuing through June 30, 2027.
For example, CMS published a final rule on September 29, 2020 that among other things, implemented the End-Stage Renal Disease Treatment Choices (ETC) Model, a mandatory payment model that adjusted certain Medicare payments to select ESRD facilities, nephrologists, and other clinicians managing beneficiaries with ESRD starting January 1, 2021.
Tablo captures more than 500,000 machine performance data points during every treatment, which is then used to fuel data analytics and machine learning algorithms that drive our research and development pipeline. Through TabloDash, data can be visualized, graphed, aggregated, and queried to answer complex business intelligence questions, and build performance monitoring dashboards.
Tablo captures approximately 3 million machine performance data points for every treatment on average, which are then used to fuel data analytics and machine learning algorithms that drive our research and development pipeline. Through TabloDash, data can be visualized, graphed, aggregated, and queried to answer complex business intelligence questions, and build performance monitoring dashboards.
MyTablo MyTablo is a version of TabloHub designed for patients who are dialyzing at home or performing self-care at a clinic. Using MyTablo, patients can access training and download their treatment reports.
TabloHub strengthens care, simplifies meeting documentation requirements, and makes system management easy. 5 MyTablo MyTablo is a version of TabloHub designed for patients who are dialyzing at home or performing self-care at a clinic. Using MyTablo, patients can access training and download their treatment reports.
More recently, on November 26, 2024, CMS issued a final rule announcing a six-year mandatory alternative payment model, the Increasing Organ Transplant Access Model (IOTA Model).
The Kidney Care Choices Model is set to run through 2027. More recently, on November 26, 2024, CMS issued a final rule announcing a six-year mandatory alternative payment model, the Increasing Organ Transplant Access Model (IOTA Model).
Additionally, the Federal Trade Commission (FTC) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online collection, use, dissemination and security of health-related and other personal information.
Additionally, the Federal Trade Commission (FTC) and many state attorneys general are interpreting existing federal and state consumer protection laws to impose evolving standards for the online collection, use, dissemination and security of health-related and other personal information. Courts may also adopt the standards for fair information practices promulgated by the FTC, which concern consumer notice, choice, security and access.
As part of the CY 2025 final rule, CMS also extended Medicare coverage to allow payment for renal dialysis services furnished to acute kidney failure (AKI) patients in their homes beginning on January 1, 2025 at a payment rate of $273.82, in line with the updated ESRD PPS base rate.
As part of the CY 2026 final rule, CMS continued to extend Medicare coverage to allow payment for renal dialysis services furnished to acute kidney failure (AKI) patients in their homes at a payment rate of $281.71, in line with the updated ESRD PPS base rate.
Human Capital Resources As of December 31, 2024, we had 354 full-time employees, with 52% in our field sales and service teams and 48% in the rest of the company. Our workforce hails from across industries, including technology, medical devices, life sciences and retail management.
Human Capital Resources As of December 31, 2025, we had 310 full-time employees, with 58% in our field sales and service teams and 42% in the rest of the company. Our workforce hails from across industries, including technology, medical devices, life sciences, hospitals and other healthcare organizations.
Trigg also serves as the Chair of the board of directors of the Medical Device Manufacturers Association (MDMA). Previously, Ms. Trigg served on the boards of directors of Adaptive Biotechnologies Corporation, a biotechnology company, from March 2021 to June 2023, and of ARYA Sciences Acquisition Corp IV, a special purpose acquisition company, from March 2021 to July 2024. Ms.
Trigg served on the boards of directors of Adaptive Biotechnologies Corporation, a biotechnology company, from March 2021 to June 2023, ARYA Sciences Acquisition Corp IV, a special purpose acquisition company, from March 2021 to July 2024, and Cardiovascular Systems, Inc., a medical device company, from 2010 to 2017. Ms.
On November 12, 2024, CMS published the final rule for Calendar Year (CY) 2025, which increased the base reimbursement rate per dialysis treatment to $273.82, an increase of $2.80 over the CY 2024 base rate of $271.02.
On November 24, 2025, CMS published the final rule for Calendar Year (CY) 2026, which increased the base reimbursement rate per dialysis treatment to $281.71, an increase of $7.89 over the CY 2025 base rate of $273.82.
Our experience in the acute market has demonstrated Tablo’s clinical flexibility and operational versatility, while also delivering meaningful cost savings to the providers. In addition, we are working with skilled nursing facilities (SNFs), long-term acute care hospitals (LTACHs), and other post-acute providers to raise awareness of Tablo’s economic and clinical benefits to them and to patients.
In addition, we are working with skilled nursing facilities (SNFs), long-term acute care hospitals (LTACHs), and other post-acute providers to raise awareness of Tablo’s economic and clinical benefits to them and to patients.
Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, available free of charge at our website as soon as reasonably practicable after they have been filed with the Securities and Exchange Commission (SEC). Our website address is www.outsetmedical.com.
We maintain a whole person wellbeing approach, providing resources to support physical, mental, financial, professional and social wellbeing. 19 Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports, available free of charge at our website as soon as reasonably practicable after they have been filed with the Securities and Exchange Commission (SEC).
Intellectual Property Our success depends in part on our ability to protect our proprietary technology and intellectual property rights. We rely on a combination of federal, state, common law and international rights, as well as contractual restrictions, to protect our intellectual property. We seek patent protection for certain of our key innovations, processes and other inventions.
We rely on a combination of federal, state, common law and international rights, as well as contractual restrictions, to protect our intellectual property. We seek patent protection for certain of our key innovations, processes and other inventions. We pursue the registration of our trademarks, service marks and domain names in the United States and in certain other locations.
Trigg holds a B.S. degree from Northwestern University and an M.B.A. from The Haas School of Business, University of California, Berkeley. Nabeel Ahmed Nabeel Ahmed has served as our Chief Financial Officer since August 2021. Mr.
Trigg holds a B.S. degree from Northwestern University and an M.B.A. from The Haas School of Business, University of California, Berkeley. Renee Gaeta Renee Gaeta has served as our Chief Financial Officer since June 2025. Prior to joining the Company, Ms.
Our comprehensive and competitive benefits program is designed to help employees balance their work lives and personal lives by giving them a sense of peace of mind related to their healthcare. We maintain a whole person wellbeing approach, providing resources to support physical, mental, financial, professional and social wellbeing.
Our comprehensive and competitive benefits program is designed to help employees balance their work lives and personal lives by giving them a sense of peace of mind related to their healthcare.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

163 edited+46 added−98 removed477 unchanged
Biggest changeThe following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts: Risks Related to Our Business and Industry • Our history of net losses and expectation that we will continue to incur losses • Our ability to achieve sustainable gross margins, including by reducing manufacturing and service costs • Our ability to attain market acceptance for Tablo among providers and patients • Concentration of our revenues in a single product and concentration of a large percentage of our revenues from a limited number of customers • Financial pressures faced by our customers including capital budget constraints, staffing shortages and increased costs • Our ability to expand into the home hemodialysis market and the expansion of the home hemodialysis market itself • Risks associated with our international manufacturing operations, including the potential for tariffs and other trade disputes • Our reliance on third-party suppliers, including single source suppliers and a contract manufacturer, and our ability to overcome any manufacturing or supply chain disruptions • Our ability to retain our commercial team, optimize our sales processes and expand the adoption of Tablo as we focus more heavily on enterprise selling • Our ability to continue innovating and improving Tablo, ensure strong product performance and reliability, offer high quality support, ensure proper training and use of Tablo, and increase our sales and marketing capabilities • Our ability to compete effectively with existing manufacturers and new entrants • Our ability to effectively manage privacy, information and data security risks, including our ability to adequately defend against, respond to and manage increasingly sophisticated cyberattacks in an increasingly complex cyber ecosystem • Our estimates of the sizes of the markets for Tablo • Our ability to accurately forecast customer demand and manage our inventory • The impact of pandemics, natural or man-made disasters and similar events on our business • Potential disruptions of service provided by third parties that host our cloud-based ecosystem and information technology systems • Our ability to obtain additional financing, as well as risks related to our credit agreement, including interest rate risk and our ability to access additional capital and/or meet certain covenants Risks Related to Government Regulation • Our compliance with FDA and other medical device regulations applicable to our products and operations, including our ability to: recover from disruptions to our business and operations as a result of the warning letter we received from the FDA in 2023 and our prior distribution pause on TabloCart with Prefiltration; obtain and maintain necessary FDA regulatory clearance or approvals for Tablo, related products, or any future product modifications or new products; comply with ongoing FDA requirements, including related to the manufacturing, marketing and promotion of our products, and the ability of our suppliers to so comply; and manage the risks and expenses associated any clinical trials necessary to support future product submissions to the FDA • Impact of potential changes to scope of coverage and reimbursement rates for dialysis treatments or healthcare reform measures 21 • Impact of potential adverse medical events associated with Tablo, product failures or malfunctions, or our failure to report such events to the FDA • Our ability to comply with various laws and regulations regarding healthcare, data privacy and security, and environmental and occupational safety Risks Related to Our Intellectual Property • Our ability to obtain, maintain, protect and enforce our intellectual property rights, including our patents, copyrights, trademarks and trade secrets Risks Related to Ownership of Our Common Stock • Fluctuations in the market price of our common stock in response to numerous factors regardless of our operating performance • If our stockholders do not approve the conversion of all outstanding shares of our Series A Preferred Stock into shares of our common stock, the Series A Preferred Stock will contain rights, preferences and privileges that may limit our business flexibility or reduce the value of our common stock • Our ability to maintain the listing of our common stock on Nasdaq • Influence of principal stockholders and management over matters subject to stockholder approval • Our organizational documents include certain provisions that may make a change of control more difficult, as well as exclusive forum requirements General Risks • General economic and financial market conditions • Substantial resources associated with complying with the laws and regulations affecting public companies • Our ability to attract and retain key personnel and maintain our corporate culture • Risks associated with potential future acquisitions or investments • Our ability to comply with anti-corruption, anti-bribery, anti-money laundering and similar laws • Our estimates or judgments relating to our accounting policies • Expectations relating to ESG factors The summary risk factors described above should be read together with the text of the full risk factors below and the other information set forth in this Annual Report, including our financial statements and the related notes and the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, as well as in other documents that we file with the SEC.
Biggest changeThe following factors could result in harm to our business, reputation, revenue, financial results, and prospects, among other impacts: Risks Related to Our Business and Industry • Our history of net losses and expectation that we will continue to incur losses; • Our ability to achieve sustainable gross margins, including by reducing manufacturing and service costs; • Our ability to attain market acceptance for Tablo among providers and patients; • Concentration of our revenues in a single product and concentration of a large percentage of our revenues from a limited number of customers; • Financial pressures faced by our customers including capital budget constraints, staffing shortages and increased costs; • Our ability to expand into the home-based and post-acute hemodialysis markets and the expansion of the home hemodialysis market itself; • Risks associated with our international manufacturing operations, including the potential for tariffs and other trade disputes; • Our reliance on third-party suppliers, including single source suppliers and a contract manufacturer, and our ability to overcome any manufacturing or supply chain disruptions; • Our ability to optimize our sales processes and expand the adoption of Tablo as we focus more heavily on enterprise selling; • Our ability to continue innovating and improving Tablo, ensure strong product performance and reliability, offer high quality support, ensure proper training and use of Tablo, and increase our sales and marketing capabilities; • Our ability to compete effectively with existing manufacturers and new entrants; • Our ability to effectively manage privacy, information and data security risks, including our ability to adequately defend against, respond to and manage increasingly sophisticated cyberattacks in an increasingly complex cyber ecosystem; • Our estimates of the sizes of the markets for Tablo; • Our ability to accurately forecast customer demand and manage our inventory; • The impact of pandemics, natural or man-made disasters and similar events on our business; • Potential disruptions of service provided by third parties that host our cloud-based ecosystem and information technology systems; and • Our ability to obtain additional financing, as well as risks related to our credit agreement, including interest rate risk and our ability to access additional capital and/or meet certain covenants.
If these assumptions about the home market are inaccurate and we are unable to increase our share of the home dialysis market by attracting new patients, or retain such market share once achieved, we would need to significantly change certain aspects of our business strategy, including the pricing of Tablo console, associated consumables and support and maintenance, which could adversely affect our business, financial condition and results of operations.
If these assumptions about the home market are inaccurate and we are unable to increase our share of the home dialysis market by attracting new patients, or retain such market share once achieved, we would need to significantly change certain aspects of our business strategy, including the pricing of the Tablo console, associated consumables and support and maintenance, which could adversely affect our business, financial condition and results of operations.
In addition to unauthorized access to or acquisition of personal information, confidential information, intellectual property or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or acquisition or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information.
In addition to unauthorized access to or acquisition of personal information, confidential information, intellectual property or other sensitive information, such attacks could include the deployment of harmful malware and ransomware, and may use a variety of methods, including denial-of-service attacks, social engineering and other means, to attain such unauthorized access or otherwise affect service reliability and threaten the confidentiality, integrity and availability of information.
HIPAA enforcement actions may lead to monetary penalties and costly and burdensome corrective action plans. We are also required to report known breaches of PHI consistent with applicable breach reporting requirements set forth in applicable laws and regulations. 49 In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities and business associates.
HIPAA 49 enforcement actions may lead to monetary penalties and costly and burdensome corrective action plans. We are also required to report known breaches of PHI consistent with applicable breach reporting requirements set forth in applicable laws and regulations. In addition, HIPAA mandates that the Secretary of HHS conduct periodic compliance audits of HIPAA covered entities and business associates.
Misconduct by these persons could include intentional, reckless and/or negligent conduct or unauthorized activity that violates: • FDA requirements, including those laws requiring the reporting of true, complete and accurate information to the FDA authorities; 50 • manufacturing standards; • federal and state healthcare fraud and abuse laws and regulations; or • laws that require the true, complete and accurate reporting of financial information or data.
Misconduct by these persons could include intentional, reckless and/or negligent conduct or unauthorized activity that violates: 50 • FDA requirements, including those laws requiring the reporting of true, complete and accurate information to the FDA authorities; • manufacturing standards; • federal and state healthcare fraud and abuse laws and regulations; or • laws that require the true, complete and accurate reporting of financial information or data.
For example: • others may be able to make products that are similar to Tablo or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in Tablo that is in the public domain; • we, or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent or pending patent application that we own now or may own or license in the future; 54 • we, or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
For example: • others may be able to make products that are similar to Tablo or utilize similar technology but that are not covered by the claims of our patents or that incorporate certain technology in Tablo that is in the public domain; • we, or our future licensors or collaborators, might not have been the first to make the inventions covered by the applicable issued patent or pending patent application that we own now or may own or license in the future; • we, or our future licensors or collaborators, might not have been the first to file patent applications covering certain of our or their inventions; • others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; • it is possible that our current or future pending patent applications will not lead to issued patents; • issued patents that we hold rights to may be held invalid or unenforceable, including as a result of legal challenges by our competitors or other third parties; • our competitors or other third parties might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; • we may not develop additional proprietary technologies that are patentable; • the patents of others may harm our business; and • we may choose not to file a patent in order to maintain certain trade secrets or know-how, and a third party may subsequently file a patent covering such intellectual property.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • FDA untitled letters, FDA Form 483s, FDA warning letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; 43 • customer notifications for repair, replacement, refunds; • recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; • withdrawal of 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA and other regulatory bodies, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in, among other things, any of the following enforcement actions: • FDA untitled letters, FDA Form 483s, FDA warning letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • unanticipated expenditures to address or defend such actions; • customer notifications for repair, replacement, refunds; • recall, detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying our requests for 510(k) clearance or PMA approval of new products or modified products; • withdrawal of 510(k) clearances or PMA approvals that have already been granted; • refusal to grant export approval for our products; or • criminal prosecution.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf under Delaware law, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law (DGCL), our amended and restated certificate of incorporation or bylaws, (4) any other action asserting a claim that is governed by the internal affairs doctrine, or (5) any other action asserting an “internal corporate claim,” as defined in Section 115 of the DGCL, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal 59 district court for the District of Delaware) in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, the sole and exclusive forum for (1) any derivative action or proceeding brought on our behalf under Delaware law, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action arising pursuant to any provision of the Delaware General Corporation Law (DGCL), our amended and restated certificate of incorporation or bylaws, (4) any other action asserting a claim that is governed by the internal affairs doctrine, or (5) any other action asserting an “internal corporate claim,” as defined in Section 115 of the DGCL, shall be the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, the federal district court for the District of Delaware) in all cases subject to the court having jurisdiction over indispensable parties named as defendants.
The FDA or other regulators could delay, limit, or deny clearance or approval of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that Tablo, or any other future device, and any accessories are substantially equivalent to a legally marketed predicate device or safe or effective for their proposed intended use; • the disagreement of the FDA with the design or implementation of any clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the insufficiency of the data from preclinical studies or clinical trials to support clearance or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the failure of our manufacturing process or facilities to meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.
The FDA or other regulators could delay, limit, or deny clearance or approval of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that Tablo, or any other future device, and any accessories are substantially equivalent to a legally marketed predicate device or safe or effective for their proposed intended use; • the disagreement of the FDA with the design or implementation of any clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse device effects experienced by participants in our clinical trials; • the insufficiency of the data from preclinical studies or clinical trials to support clearance or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the failure of our manufacturing process or facilities to meet applicable requirements; and 42 • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
Later discovery of previously unknown problems with our products, including unanticipated adverse events or adverse events of unanticipated severity or frequency, manufacturing problems, or failure to comply with regulatory requirements such as QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, 44 fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects.
For example, these stockholders could attempt to delay or prevent a change in control of us, even if such change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of us or our assets and might affect the prevailing market price of our common stock due to investors’ 58 perceptions that conflicts of interest may exist or arise.
For example, these stockholders could attempt to delay or prevent a change in control of us, even if such change in control would benefit our other stockholders, which could deprive our stockholders of an opportunity to receive a premium for their common stock as part of a sale of us or our assets and might affect the prevailing market price of our common stock due to investors’ perceptions that conflicts of interest may exist or arise.
We are subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, could cause or 44 contribute to a death or serious injury.
We are subject to the FDA’s medical device reporting regulations and similar foreign regulations, which require us to report to the FDA when we receive or become aware of information that reasonably suggests that one or more of our products may have caused or contributed to a death or serious injury or malfunctioned in a way that, if the malfunction were to recur, could cause or contribute to a death or serious injury.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from 41 government funded healthcare programs, such as Medicare and Medicaid, compliance oversight and reporting requirements and the curtailment or restructuring of our operations.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, compliance oversight and reporting requirements and the curtailment or restructuring of our operations.
Treasury Department’s Office of Foreign Assets Control, U.S. domestic bribery laws and other anti-corruption, anti-bribery and anti-money laundering laws. While we have policies and procedures in place designed to promote compliance with such laws, our employees or other agents may nonetheless engage in prohibited conduct under these laws for which we or our executives might be held responsible.
Treasury Department’s Office of Foreign Assets Control, U.S. domestic bribery laws and other anti-corruption, anti-bribery and anti-money laundering laws. While we have policies and procedures in place designed to promote compliance with such laws, our employees or other agents may nonetheless engage in prohibited conduct under these laws for which we or our executives 60 might be held responsible.
Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we face significant competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.
Any of these relationships may require us to incur non-recurring and other charges, increase our near and long-term expenditures, issue securities that dilute our existing stockholders or disrupt our management and business. In addition, we face significant 38 competition in seeking appropriate strategic partners and the negotiation process is time-consuming and complex.
Many ESRD patients have Medicaid coverage that is supplemental to Medicare coverage, and some ESRD patients may have Medicaid as their primary coverage. Because Medicaid is a state-administered program, Medicaid reimbursement for dialysis services varies by state. Changes in state Medicaid or other non-Medicare government-based programs or payment rates could have an adverse effect on our customers’ business.
Many ESRD patients have Medicaid coverage that is supplemental to Medicare coverage, and some ESRD patients may have Medicaid as their primary coverage. Because Medicaid is a state-administered program, Medicaid reimbursement for dialysis services 40 varies by state. Changes in state Medicaid or other non-Medicare government-based programs or payment rates could have an adverse effect on our customers’ business.
The clinical trial process is lengthy and expensive with uncertain outcomes, and often requires the enrollment of large numbers of patients, and suitable patients may be difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any modified or new products and will adversely affect our business, operating results and prospects.
The clinical trial process is lengthy and expensive with uncertain outcomes, and often requires the enrollment of large numbers of patients, and suitable patients may be 46 difficult to identify and recruit. Delays or failures in our clinical trials will prevent us from commercializing any modified or new products and will adversely affect our business, operating results and prospects.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, including increases in revenue, and any acquisitions we complete could be viewed negatively by our customers, investors and industry analysts. 61 Future acquisitions may reduce our cash available for operations and other uses and could result in amortization expense related to identifiable assets acquired.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, including increases in revenue, and any acquisitions we complete could be viewed negatively by our customers, investors and industry analysts. Future acquisitions may reduce our cash available for operations and other uses and could result in amortization expense related to identifiable assets acquired.
Failure to achieve or maintain market acceptance and/or market share would limit our ability to generate revenue and would have a material adverse effect on our business, financial condition and results of operations. We currently derive substantially all of our revenue from the sale of Tablo and associated consumables and are therefore highly dependent on Tablo for our success.
Failure to achieve or maintain broader market acceptance and/or market share would limit our ability to generate revenue and would have a material adverse effect on our business, financial condition and results of operations. We currently derive substantially all of our revenue from the sale of Tablo and associated consumables and are therefore highly dependent on Tablo for our success.
These suppliers and contract manufacturer may cease producing the components we purchase from them 26 or otherwise decide to cease doing business with us. As part of our supply continuity planning, we maintain limited quantities of raw material, work in progress and finished good product at both suppliers and contract manufacturers.
These suppliers and contract manufacturer may cease producing the components we purchase from them or otherwise decide to cease doing business with us. As part of our supply continuity planning, we maintain limited quantities of raw material, work in progress and finished good product at both suppliers and contract manufacturers.
If we are unable to effectively manage our growth in the face of these challenges, the execution of our business plans could be delayed, which would have a material adverse effect on our business, financial condition and results of operations. The home hemodialysis market may not expand sufficiently to support our growth prospects.
If we are unable to effectively manage our growth in the face of these challenges, the execution of our business plans could be delayed, which would have a material adverse effect on our business, financial condition and results of operations. 31 The home hemodialysis market may not expand sufficiently to support our growth prospects.
While we have raised equity and taken actions to reduce operating expenses and working capital to align with anticipated revenue growth including implementing restructuring plans to streamline our overall organizational structure and renegotiating commitments with suppliers to reduce inventory, we expect to continue to incur operating losses in the near term while we make 35 investments to support our anticipated growth.
While we have raised equity and taken actions to reduce operating expenses and working capital to align with anticipated revenue growth including implementing restructuring plans to streamline our overall organizational structure and renegotiating commitments with suppliers to reduce inventory, we expect to continue to incur operating losses in the near term while we make investments to support our anticipated growth.
Obtaining clearances or 39 approvals can be a time-consuming and costly process , which may in some cases require us to conduct clinical trials, and delays in obtaining required future clearances or approval could adversely affect our ability to make updates and enhancements to Tablo in a timely manner, which in turn would harm our future growth.
Obtaining clearances or approvals can be a time-consuming and costly process , which may in some cases require us to conduct clinical trials, and delays in obtaining required future clearances or approval could adversely affect our ability to make updates and enhancements to Tablo in a timely manner, which in turn would harm our future growth.
At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement or dilution claims brought by owners of other trademarks.
At times, competitors or other third parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. In addition, there could be potential trade name or trademark infringement or dilution claims brought by owners of other 53 trademarks.
Moreover, we believe that localizing production of a majority of Tablo cartridges in Mexico (in-house at our manufacturing facility) has helped achieve cost reductions through lower freight costs, further our long-term gross margin expansion and supply continuity strategies and improve the flexibility of our operations.
Moreover, we believe that localizing production of a substantial majority of Tablo cartridges in Mexico (in-house at our manufacturing facility) has helped achieve cost reductions through lower freight costs, further our long-term gross margin expansion and supply continuity strategies and improve the flexibility of our operations.
District Court for the Northern District of California against current and former members of our Board of Directors and certain of our officers, alleging that the defendants breached their fiduciary duties to the Company in connection with the same alleged events and alleged materially false and misleading statements asserted in the stockholder class action lawsuits.
District Court for the Northern District of California against current and former members of our Board of Directors and certain of our officers, alleging that the defendants breached their fiduciary duties to the Company in connection with the same alleged events and alleged materially false and misleading statements asserted in the stockholder securities class action lawsuits.
We may experience delays in our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing or successful completion of our clinical trials, including related to the following: • we may be required to submit an IDE application to the FDA, which must become effective prior to commencing certain human clinical trials of medical devices, and the FDA may reject our IDE application and notify us that we may not begin clinical trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators and/or an IRB, or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical trials for various reasons, including the withdrawal of approval of an IDE by the FDA based on, for example, a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; • approval policies or regulations of the FDA or applicable foreign regulatory agencies may change in a manner rendering our clinical data insufficient for approval; • our current or future products may have undesirable side effects or other unexpected characteristics; and • impacts of regional or global public health crises such as the recent COVID-19 pandemic could adversely affect any clinical trials we are conducting or plan to conduct, including delays or difficulties in enrolling or onboarding patients, initiating clinical sites, or obtaining the requisite regulatory approvals, interruption of key clinical trial activities, or supply chain disruptions that delay or make it more difficult or costly to obtain the supplies and materials we need for clinical trials. 47 Any of these occurrences may significantly harm our business, financial condition and prospects.
We may experience delays in our ongoing clinical trials for a number of reasons, which could adversely affect the costs, timing or successful completion of our clinical trials, including related to the following: • we may be required to submit an IDE application to the FDA, which must become effective prior to commencing certain human clinical trials of medical devices, and the FDA may reject our IDE application and notify us that we may not begin clinical trials; • regulators and other comparable foreign regulatory authorities may disagree as to the design or implementation of our clinical trials; • regulators and/or an IRB, or other reviewing bodies may not authorize us or our investigators to commence a clinical trial, or to conduct or continue a clinical trial at a prospective or specific trial site; • we may not reach agreement on acceptable terms with prospective contract research organizations (CROs), and clinical trial sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites; • clinical trials may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs; • the number of subjects or patients required for clinical trials may be larger than we anticipate, enrollment in these clinical trials may be insufficient or slower than we anticipate, and the number of clinical trials being conducted at any given time may be high and result in fewer available patients for any given clinical trial, or patients may drop out of these clinical trials at a higher rate than we anticipate; • our third-party contractors, including those manufacturing products or conducting clinical trials on our behalf, may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all; • we might have to suspend or terminate clinical trials for various reasons, including the withdrawal of approval of an IDE by the FDA based on, for example, a finding that the subjects are being exposed to unacceptable health risks; • we may have to amend clinical trial protocols or conduct additional studies to reflect changes in regulatory requirements or guidance, which we may be required to submit to an IRB and/or regulatory authorities for re-examination; • regulators, IRBs, or other parties may require or recommend that we or our investigators suspend or terminate clinical research for various reasons, including safety signals or noncompliance with regulatory requirements; • the cost of clinical trials may be greater than we anticipate; • clinical sites may not adhere to the clinical protocol or may drop out of a clinical trial; • we may be unable to recruit a sufficient number of clinical trial sites; • regulators, IRBs, or other reviewing bodies may fail to approve or subsequently find fault with our manufacturing processes or facilities of third-party manufacturers with which we enter into agreement for clinical and commercial supplies, the supply of devices or other materials necessary to conduct clinical trials may be insufficient, inadequate or not available at an acceptable cost, or we may experience interruptions in supply; 47 • approval policies or regulations of the FDA or applicable foreign regulatory agencies may change in a manner rendering our clinical data insufficient for approval; • our current or future products may have undesirable side effects or other unexpected characteristics; and • impacts of regional or global public health crises such as the recent COVID-19 pandemic could adversely affect any clinical trials we are conducting or plan to conduct, including delays or difficulties in enrolling or onboarding patients, initiating clinical sites, or obtaining the requisite regulatory approvals, interruption of key clinical trial activities, or supply chain disruptions that delay or make it more difficult or costly to obtain the supplies and materials we need for clinical trials.
This may change, however, with the development of 29 new medications designed to reduce the incidence of kidney transplant rejection, progress in using kidneys harvested from genetically engineered animals as a source of transplants as demonstrated by the first pig-to-human kidney transplant in 2021, and other advances in kidney transplantation.
This may change, however, with the development of new medications designed to reduce the incidence of kidney transplant rejection, progress in using kidneys harvested from genetically engineered animals as a source of transplants as demonstrated by the first pig-to-human kidney transplant in 2021, and other advances in kidney transplantation.
Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our product candidates and generate 48 revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the future product’s profile.
Any delay or termination of our clinical trials will delay the filing of our product submissions and, ultimately, our ability to commercialize our product candidates and generate revenues. It is also possible that patients enrolled in clinical trials will experience adverse side effects that are not currently part of the future product’s profile.
Should a carrier encounter delivery performance issues such as loss, damage or 36 destruction of any systems, it would be costly to replace such systems in a timely manner and such occurrences may damage our reputation and lead to decreased demand for Tablo and increased cost and expense to our business.
Should a carrier encounter delivery performance issues such as loss, damage or destruction of any systems, it would be costly to replace such systems in a timely manner and such occurrences may damage our reputation and lead to decreased demand for Tablo and increased cost and expense to our business.
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. 22 Our revenue is derived, and we expect it to continue to be derived, primarily from sales of Tablo, its associated consumables and related services.
We have based this estimate on assumptions that may prove to be wrong, and we could use our capital resources sooner than we currently expect. Our revenue is derived, and we expect it to continue to be derived, primarily from sales of Tablo, its associated consumables and related services.
Despite the implementation of security measures, our internal computer systems and those of our third-party service providers, suppliers and other partners are vulnerable to damage from computer viruses, hacking and other means of unauthorized access, denial of service and other attacks, natural disasters, terrorism, war and telecommunication and electrical failures.
Despite the implementation of security measures, our internal computer systems and those of our third-party service providers, suppliers and other partners are vulnerable to damage from computer viruses, hacking and other means of unauthorized access, denial of service and other attacks, natural disasters, terrorism, war 30 and telecommunication and electrical failures.
Currently, we carry business interruption coverage to mitigate certain potential losses but this insurance is limited in amount, and we cannot be certain that such potential losses will not exceed our policy limits. We are increasingly dependent on complex information technology to manage our infrastructure.
Currently, we carry business interruption coverage to mitigate certain 35 potential losses but this insurance is limited in amount, and we cannot be certain that such potential losses will not exceed our policy limits. We are increasingly dependent on complex information technology to manage our infrastructure.
We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The sale or issuance of equity to finance any such acquisitions would result in dilution to our stockholders.
We may have to pay cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial condition or the value of our common stock. The sale or issuance of equity or convertible debt to finance any such acquisitions would result in dilution to our stockholders.
In addition, we may face liability for inadequate training and training materials for nurses and other providers who use our products. Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
In addition, we may face liability for inadequate training and training materials for nurses and other providers who use our products. 33 Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide.
For these reasons, in the event we experience a change of control, we may not be able to utilize a material portion of the existing NOLs, research and development credit carryforwards or future disallowed interest expense carryovers, even if we attain profitability.
For these reasons, in the 39 event we experience a change of control, we may not be able to utilize a material portion of the existing NOLs, research and development credit carryforwards or future disallowed interest expense carryovers, even if we attain profitability.
Moreover, we may periodically adjust our sales organization or sales strategies in response to market shifts or opportunities, changes in our current or prospective customers, competitive threats, management changes, sales headcount changes, product and service introductions or enhancements, sales performance, cost reduction initiatives, and other internal and external considerations.
We may periodically adjust our sales organization or sales strategies in response to market shifts or opportunities, changes in our current or prospective customers, competitive threats, management changes, sales headcount changes, product and service introductions or enhancements, sales performance, cost reduction initiatives, and other internal and external considerations.
Technological interruptions or malfunction would disrupt our 34 operations, including our ability to timely ship and track Tablo orders, project inventory requirements, ensure the integrity of our data analytics services, manage our supply chain and otherwise adequately service our customers or disrupt our customers’ ability to use Tablo.
Technological interruptions or malfunction would disrupt our operations, including our ability to timely ship and track Tablo orders, project inventory requirements, ensure the integrity of our data analytics services, manage our supply chain and otherwise adequately service our customers or disrupt our customers’ ability to use Tablo.
In that event, our reputation could 45 be damaged, and adoption of the products could be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of Tablo, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
In that event, our reputation could be damaged, and adoption of the products could be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of Tablo, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion.
The value to employees of equity awards that vest over time may be significantly affected by movements in our stock price that are beyond 60 our control and may at any time be insufficient to counteract more lucrative offers from other companies.
The value to employees of equity awards that vest over time may be significantly affected by movements in our stock price that are beyond our control and may at any time be insufficient to counteract more lucrative offers from other companies.
Over the past several years, we have moved the production of Tablo consoles and a majority of Tablo cartridges in-house to our manufacturing facility in Tijuana, Mexico which we operate in collaboration with our outsourced business administration service provider, TACNA.
Over the past several years, we have moved the production of Tablo consoles and a substantial majority of Tablo cartridges in-house to our manufacturing facility in Tijuana, Mexico which we operate in collaboration with our outsourced business administration service provider, TACNA.
The commercial success of Tablo will depend upon attaining significant market acceptance among providers and patients. Our success will depend, in part, on the acceptance of Tablo as safe, easy to learn, easy to use, clinically flexible, operationally versatile and, with respect to providers, cost effective.
The commercial success of Tablo will depend upon attaining significant market acceptance among providers and patients. Our success will depend, in part, on growing acceptance of Tablo as safe, easy to learn, easy to use, clinically flexible, operationally versatile and, with respect to providers, cost effective.
The terms of our credit agreement require us to meet certain operating and financial covenants, place restrictions on our operating and financial flexibility and subject us to interest rate risk, and our ability to access additional borrowings is subject to us achieving certain net revenue milestone and obtaining lenders’ credit approval.
The terms of our credit agreement require us to meet certain operating and financial covenants, place restrictions on our operating and financial flexibility and subject us to interest rate risk, and our ability to access additional borrowings is subject to us achieving certain revenue milestone and obtaining lenders’ credit approval.
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations ‒ Liquidity and Capital Resources ‒ Debt Obligations ‒ Perceptive Credit Agreement.” On January 8, 2025, we repaid in full all amounts due under our two prior senior secured credit facilities with (i) SLR Investment Corp. and (ii) Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL, respectively, each dated as of November 3, 2022 using the proceeds of the Initial Term Loan, together with cash on hand.
See the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations ‒ Liquidity and Capital Resources ‒ Debt Obligations ‒ Perceptive Credit Agreement.” On January 8, 2025, we repaid in full all amounts due under our two prior senior secured credit facilities with (i) SLR and (ii) Gemino Healthcare Finance, LLC d/b/a SLR Healthcare ABL, respectively, each dated as of November 3, 2022 using the proceeds of the Initial Term Loan, together with cash on hand.
In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and The Nasdaq Stock Market, may increase legal and financial compliance costs and make some activities more time consuming.
In addition, changing laws, regulations, and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and The Nasdaq Stock Market, may increase legal and financial compliance costs and 59 make some activities more time consuming.
In 46 addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in preclinical studies and earlier clinical trials have nonetheless failed to replicate results in later clinical trials.
In addition, preclinical and clinical data are often susceptible to various interpretations and analyses, and many companies that have believed their products performed satisfactorily in preclinical studies and earlier clinical trials have nonetheless failed to replicate results in later clinical trials.
These risks could be difficult to eliminate or manage, and, if not addressed, could harm our business, financial condition and results of operations. Intellectual property rights do not necessarily address all potential threats.
These risks could be difficult to eliminate or manage, and, if not addressed, could harm our business, financial condition and results of operations. 54 Intellectual property rights do not necessarily address all potential threats.
We have insourced the production of Tablo consoles, and a majority of Tablo cartridges, at our manufacturing facility in Tijuana, Mexico which we operate in collaboration with our outsourced business administration service provider, TACNA.
We have insourced the production of Tablo consoles, and a substantial majority of Tablo cartridges, at our manufacturing facility in Tijuana, Mexico which we operate in collaboration with our outsourced business administration service provider, TACNA.
Additionally, even if Tablo achieves widespread market acceptance, it may not maintain that market acceptance over time if competing products or technologies, which are more cost effective or received more favorably, are introduced.
Additionally, even if Tablo achieves widespread market acceptance, it may not maintain that market acceptance over time if competing products or technologies, that are more cost effective or received more favorably, are introduced.
We train nurses and dialysis technicians on the appropriate use of Tablo, as well as how to train other users, including patients and care partners who use Tablo in the home setting, on the appropriate use of 32 Tablo.
We train nurses and dialysis technicians on the appropriate use of Tablo, as well as how to train other users, including patients and care partners who use Tablo in the home setting, on the appropriate use of Tablo.
The Delayed Draw Loan is available for funding until July 14, 2027, subject to the achievement of a specific revenue milestone and other customary conditions. As a result, we cannot rely on further borrowings under the Term Loan Facility to fund our operations. In addition, outstanding Loans accrue interest at variable interest rates tied to Secured Overnight Financing Rate (SOFR).
The Delayed Draw Loan is available for funding until July 14, 2027, subject to the achievement of certain revenue milestone and other customary conditions. As a result, we cannot rely on further borrowings under the Term Loan Facility to fund our operations. In addition, outstanding Loans accrue interest at variable interest rates tied to Secured Overnight Financing Rate (SOFR).
In May 2022, after further discussions with the FDA and receiving indications that the clearance of this 510(k) application would be delayed beyond our original expectations, we implemented a shipment hold on the distribution and marketing of Tablo for use in the home environment pending the FDA’s review and clearance of this 510(k) application.
In May 2022, after further discussions with the FDA and receiving indications that the clearance of this 510(k) submission would be delayed beyond our original expectations, we implemented a shipment hold on the distribution and marketing of Tablo for use in the home environment pending the FDA’s review and clearance of this 510(k) submission.
For example, since Tablo’s original clearance by the FDA for home use in March 2020, we have made certain changes to the device over time and, where appropriate, have submitted 510(k) applications for certain modifications to Tablo. In May 2021, we submitted a 510(k) application to the FDA covering the design changes for patient use in the home.
For example, since Tablo’s original clearance by the FDA for home use in March 2020, we have made certain changes to the device over time and, where appropriate, have submitted 510(k) notifications for certain modifications to Tablo. In May 2021, we submitted a 510(k) application to the FDA covering the design changes for patient use in the home.
For example, the new administration has advocated greater restrictions on trade generally and, in particular, tariff increases on certain goods imported into the United States, including from Mexico and China. In February 2025, the new administration issued executive orders imposing additional 25% tariffs on products imported from Mexico and additional 10% tariffs on products imported from China.
For example, the current administration has advocated greater restrictions on trade generally and, in particular, tariff increases on certain goods imported into the United States, including from Mexico and China. In February 2025, the current administration issued executive orders imposing additional 25% tariffs on products imported from Mexico and additional 10% tariffs on products imported from China.
In late July 2022, the FDA cleared this 510(k) application of Tablo for patient use in the home and we resumed marketing and shipping Tablo for home use. Changes to the reimbursement rates for dialysis treatments and measures to reduce healthcare costs may adversely impact our business.
In late July 2022, the FDA cleared this 510(k) submission of Tablo for patient use in the home and we resumed marketing and shipping Tablo for home use. Changes to the reimbursement rates for dialysis treatments and measures to reduce healthcare costs may adversely impact our business.
Moreover, increased tariffs imposed by the new administration, including on goods imported into the United States from Mexico and China, could adversely impact our supply chain and distribution costs, as well as our ability to achieve sustainable gross margins.
Moreover, increased tariffs imposed by the current administration, including on goods imported into the United States from Mexico and China, could adversely impact our supply chain and distribution costs, as well as our ability to achieve sustainable gross margins.
We determined that this shift requires additional training, skill-building and optimization of our sales team and sales processes.
We determined that this shift requires additional training, skill-building and optimization of our sales 28 team and sales processes.
In addition, our ability to deduct net interest expense may be limited if we have insufficient taxable income for the year during which the interest is incurred, and any future carryovers of such disallowed interest would be subject to the limitation rules similar to those applicable to NOLs and other attributes.
In addition, our ability to deduct net interest expense may be limited if we have insufficient taxable income for the year during which the interest is incurred, and any future carryovers of such disallowed interest would be subject to the limitation rules similar to those applicable to NOL carryforwards and other attributes.
The degree of market acceptance of Tablo will depend on a number of factors, including: • whether providers and others in the medical community consider Tablo to be a safe and cost-effective treatment method; • the potential and perceived advantages of Tablo over traditional machines; • the potential and perceived advantages of Tablo relative to our customers’ other capital and operating purchase requirements; • the cost of treatment, maintenance and upkeep using Tablo in relation to traditional machines; • the cost of treatment, and convenience and ease of use of Tablo in the acute setting relative to outsourcing dialysis services to third-party providers; • the convenience and ease of use of Tablo relative to traditional machines; • the effectiveness of our sales and marketing efforts for Tablo; • our ability to expand into the acute market as well as the post-acute market, including SNFs, LTACHs, and other post-acute providers; • the success of our initiatives to optimize our commercial organization, infrastructure and sales processes to support the growth of our business in the acute care market as we focus more heavily on enterprise selling; • our ability to provide incremental data that show the clinical benefits and cost effectiveness of, and operational benefits from, Tablo; • any changes to the availability of coverage and adequate reimbursement for dialysis from payors, including government authorities; • pricing pressure, including from Group Purchasing Organizations (GPOs), seeking to obtain discounts on Tablo based on the collective buying power of their GPO members; • product labeling or product insert requirements by the FDA or other regulatory authorities; and • limitations or warnings contained in the labeling cleared or approved by the FDA or other authorities.
The degree of market acceptance of Tablo and our service offerings will depend on a number of factors, including: • whether providers and others in the medical community consider Tablo to be a safe and cost-effective treatment method; • the potential and perceived advantages of Tablo, and insourcing with Tablo, compared to traditional machines or outsourcing dialysis services to third-party providers, including cost of treatment, convenience, ease of use and maintenance; • the potential and perceived advantages of Tablo, and insourcing with Tablo, relative to our customers’ other capital and operating purchase requirements; • the effectiveness of our sales and marketing efforts for Tablo; • our ability to expand into the acute market as well as the post-acute market, including SNFs, LTACHs, and other post-acute providers; • the success of our initiatives to optimize our commercial organization, infrastructure and sales processes to support the growth of our business in the acute care market as we focus more heavily on enterprise selling; • our ability to provide incremental data that show the clinical benefits and cost effectiveness of, and operational benefits from, Tablo; • any changes to the availability of coverage and adequate reimbursement for dialysis from payors, including government authorities; • pricing pressure, including from Group Purchasing Organizations (GPOs), seeking to obtain discounts on Tablo based on the collective buying power of their GPO members; • product labeling or product insert requirements by the FDA or other regulatory authorities; and • limitations or warnings contained in the labeling cleared or approved by the FDA or other authorities.
In the future, we may also face competition from new entrants or companies spun off from our larger competitors. For example, in February 2025, Baxter International, Inc. completed its previously announced spin off of its kidney care segment into a new independent company named Vantive.
In the future, we may also face competition from new entrants or companies spun off from our larger competitors. For example, in 2025, Baxter International, Inc. completed its spin off of its kidney care segment into a new independent company named Vantive.
These fluctuations may occur due to a variety of factors, including, but not limited to: • the level of demand for Tablo, which may vary significantly, our ability to accurately forecast and meet customer demand and the timing of customer orders and installation schedules; • the cost of manufacturing Tablo, which may vary depending on the quantity of production, the terms of our agreements with third-party suppliers and manufacturers, costs of raw materials and components, and any related foreign currency impact; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • unanticipated pricing pressures; • the degree of competition in our industry and any change in the competitive landscape of our industry, including product enhancements or the introduction of new products or technologies by our competitors, or consolidation among our competitors or future partners; • coverage and reimbursement policies with respect to dialysis equipment, and potential future products that compete with Tablo; • the timing and success or failure of clinical trials for Tablo or any enhancements to Tablo we develop, or changes made to competing products; • positive or negative coverage, or public perception, of our company, Tablo or products of our competitors or broader industry trends; • our customers’ ability to maintain their financial condition and to pay us amounts due; • the impact, if any, that public health crises such as the COVID-19 pandemic may have on our operations, financial results and the number of patients treated; • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to Tablo, which may change from time to time; • our ability to effectively retain, leverage and optimize our commercial team, the speed at which any newly hired salespeople become effective, and the cost and level of investment therein, as well as the success of our initiatives to optimize our commercial organization, infrastructure and sales processes to support the growth of our business in the acute care market as we focus more heavily on enterprise selling; • the timing and cost of obtaining and maintaining regulatory approvals or clearances for our products or product enhancements, or other regulatory actions with respect to our products (such as the Warning Letter we received in July 2023 and our prior distribution pause on TabloCart with Prefiltration); • pricing and discounts for Tablo or competing products; • legal, accounting and other expenses we may incur as a result of operating as a public company, including costs related to compliance with new compliance initiatives and requirements; • future accounting pronouncements or changes in our accounting policies; and • general economic and financial market conditions or political instability, including changes in tariff or trade laws and policies, as well as inflationary pressures (whether caused by economic policy or by other disruptions). 33 The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual financial results.
These fluctuations may occur due to a variety of factors, including, but not limited to: • the level of demand for Tablo, which may vary significantly, our ability to accurately forecast and meet customer demand and the timing of customer orders and installation schedules; • the cost of manufacturing Tablo, which may vary depending on the quantity of production, the terms of our agreements with third-party suppliers and manufacturers, costs of raw materials and components, and any related foreign currency impact; • expenditures that we may incur to acquire, develop or commercialize additional products and technologies; • unanticipated pricing pressures; • the degree of competition in our industry and any change in the competitive landscape of our industry, including product enhancements or the introduction of new products or technologies by our competitors, or consolidation among our competitors or future partners; • coverage and reimbursement policies with respect to dialysis equipment, and potential future products that compete with Tablo; • the timing and success or failure of clinical trials for Tablo or any enhancements to Tablo we develop, or changes made to competing products; • positive or negative coverage, or public perception, of our company, Tablo or products of our competitors or broader industry trends; • our customers’ ability to maintain their financial condition and to pay us amounts due; • the impact, if any, that public health crises such as the COVID-19 pandemic may have on our operations, financial results and the number of patients treated; • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to Tablo, which may change from time to time; • our ability to effectively retain, leverage and optimize our commercial team, the speed at which any newly hired salespeople become effective, and the cost and level of investment therein, as well as the success of our initiatives to optimize our commercial organization, infrastructure and sales processes to support the growth of our business in the acute care market as we focus more heavily on enterprise selling; • the timing and cost of obtaining and maintaining regulatory approvals or clearances for our products or product enhancements, or other regulatory actions with respect to our products (such as the Warning Letter we received in July 2023 and our prior distribution pause on TabloCart with Prefiltration); • pricing and discounts for Tablo or competing products; • legal, accounting and other expenses we may incur as a result of operating as a public company, including costs related to compliance with new compliance initiatives and requirements; • future accounting pronouncements or changes in our accounting policies; and • general economic and financial market conditions or political instability, including changes in tariff or trade laws and policies (such as the tariffs imposed by the current administration on products imported into the United States from Mexico and China), as well as inflationary pressures (whether caused by economic policy or by other disruptions).
From time to time we may become involved in legal proceedings relating to patent and other intellectual property matters, product liability claims, employee claims, tort or contract claims, federal regulatory investigations, securities class action and other legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.
From time to time we may become involved in legal proceedings relating to patent and other intellectual property matters, product liability claims, employee claims, tort or contract claims, federal regulatory investigations, securities and stockholder actions and other legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency, which may include any of the following sanctions: • adverse publicity, warning letters (such as the Warning Letter we received in July 2023), untitled letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • repair, replacement, refunds, recall or seizure of Tablo; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance or PMA approval of new products or services, new intended uses or modifications to existing products or services; 42 • withdrawal of regulatory clearance or PMA approvals that have already been granted; or • criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by any such agency, which may include any of the following sanctions: • adverse publicity, warning letters, untitled letters, it has come to our attention letters, fines, injunctions, consent decrees and civil penalties; • repair, replacement, refunds, recall or seizure of Tablo; • operating restrictions, partial suspension or total shutdown of production; • denial of our requests for regulatory clearance or PMA approval of new products or services, new intended uses or modifications to existing products or services; • withdrawal of regulatory clearance or PMA approvals that have already been granted; or • criminal prosecution.
The market price of our common stock has been and may continue to be highly volatile and may continue to fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: 55 • actual or anticipated changes in our operating results, and variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • regulatory actions with respect to our products or our competitors’ products, or announcements by us in relation to such regulatory actions (for example, the Warning Letter we received in July 2023 and our subsequent pause on the distribution of TabloCart with Prefiltration); • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from political conditions, election cycles, war or incidents of terrorism, or responses to these events.
The market price of our common stock has been and may continue to be highly volatile and may continue to fluctuate or decline significantly in response to numerous factors, many of which are beyond our control, including: • actual or anticipated changes in our operating results, and variations between our actual operating results and the expectations of securities analysts, investors and the financial community; • any forward-looking financial or operating information we may provide to the public or securities analysts, any changes in this information or our failure to meet expectations based on this information; • actions of securities analysts who initiate or maintain coverage of us, changes in financial estimates by any securities analysts who follow our company or our failure to meet these estimates or the expectations of investors; • additional shares of our common stock being sold into the market by us or our existing stockholders, or the anticipation of such sales; • hedging activities by market participants; • regulatory actions with respect to our products or our competitors’ products, or announcements by us in relation to such regulatory actions; • announcements by us or our competitors of significant products or features, technical innovations, acquisitions, strategic partnerships, joint ventures or capital commitments; • changes in operating performance and stock market valuations of companies in our industry, including our competitors; • price and volume fluctuations in the overall stock market, including as a result of trends in the economy as a whole; • lawsuits threatened or filed against us; • developments in new legislation and pending lawsuits or regulatory actions, including interim or final rulings by judicial or regulatory bodies; and • other events or factors, including those resulting from political conditions, election cycles, war or incidents of terrorism, or responses to these events.
Also, to the extent outstanding options or warrants to purchase shares of our common stock are exercised or options, restricted stock units or other stock-based awards are issued or become vested, there will be further dilution. For example, in connection with the Term Loan Facility, we issued a warrant to purchase up to 5,625,000 shares of our common stock.
Also, to the extent outstanding options or warrants to purchase shares of our common stock are exercised or options, restricted stock units or other stock-based awards are 57 issued or become vested, there will be further dilution. For example, in connection with the Term Loan Facility, we issued a warrant to purchase up to 375,000 shares of our common stock.
As previously disclosed, on September 23, 2024, we received notice from the Listing Qualifications staff of The Nasdaq Stock Market LLC (Nasdaq) that, because the closing bid price for our common stock had fallen below $1.00 per share for 30 consecutive trading days, we no longer complied with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5450(a)(1).
As previously disclosed, in September 2024, we received notice from The Nasdaq Stock Market LLC (Nasdaq) that, because the closing bid price for our common stock had fallen below $1.00 per share for 30 consecutive trading days, we no longer complied with the minimum bid price requirement for continued listing on the Nasdaq Global Select Market under Nasdaq Listing Rule 5450(a)(1).
Further, with home dialysis as a growing trend in the industry and the implementation of the ETC and IOTA Models, a failure to implement our expansion into home dialysis could have a material adverse impact on our business.
Further, with home dialysis as a growing trend in the industry and the implementation of the IOTA Model, a failure to implement our expansion into home dialysis could have a material adverse impact on our business.
Any limitation on using NOLs could adversely impact operating results and result in our retaining less cash after payment of U.S. federal and state income taxes.
Any limitation on using NOL carryforwards could adversely impact operating results and result in our retaining less cash after payment of U.S. federal and state income taxes.
If we ever achieve profitability, we may not be able to sustain it. We have incurred losses since our inception and expect to continue to incur significant net losses for the foreseeable future. We have incurred net losses of $128.0 million, $172.8 million and $163.0 million for the years ended December 31, 2024, 2023, and 2022, respectively.
If we ever achieve profitability, we may not be able to sustain it. We have incurred losses since our inception and expect to continue to incur significant net losses for the foreseeable future. We have incurred net losses of $81.7 million, $128.0 million and $172.8 million for the years ended December 31, 2025, 2024, and 2023, respectively.
Global macroeconomic conditions and the world’s financial markets remain susceptible to significant stresses, including global geopolitical instability (such as the current conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others or the ongoing conflict between Israel and Hamas and in the Red Sea as well as the potential escalation or geographic expansion of such conflicts), pandemics (such as the COVID-19 pandemic), changes in tariff or trade laws and policies (such as the tariffs imposed by the new administration on products imported into the United States from Mexico and China), inflationary pressures (such as current inflation related to global supply chain disruptions), extreme weather conditions and natural disasters, market declines and uncertainty, fluctuating interest and foreign currency rates and credit availability, government austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices, and general uncertainty regarding the overall future economic environment.
Global macroeconomic conditions and the world’s financial markets remain susceptible to significant stresses, including global geopolitical instability (such as the ongoing conflict between Russia and Ukraine and related economic and other retaliatory measures taken by the United States, European Union and others, the ongoing hostilities in the Middle East as well as the potential escalation or geographic expansion of such conflicts, and the risk of increased tensions between China and Taiwan), pandemics (such as the COVID-19 pandemic), changes in tariff or trade laws and policies (such as the tariffs imposed by the current administration on products imported into the United States from Mexico and China), inflationary pressures (such as current inflation related to global supply chain disruptions), extreme weather conditions and natural disasters, market declines and uncertainty, fluctuating interest and foreign currency rates and credit availability, government austerity measures, fluctuating fuel and other energy costs, fluctuating commodity prices, and general uncertainty regarding the overall future economic environment.
In connection with steps we are taking to help optimize our commercial organization, and to help improve operational efficiencies and reduce operating expenses to align with anticipated revenue growth, in the third quarter of 2024, we completed a restructuring primarily impacting our commercial organization.
In connection with our initiatives to help optimize our commercial organization, and to help improve operational efficiencies and reduce operating expenses to align with anticipated revenue growth, in the third quarter of 2024, we completed a restructuring primarily impacting our commercial organization.
We traditionally have had significant customer concentration. For the year ended December 31, 2024, our largest customer accounted for 16% of revenues. There are risks whenever a large percentage of total revenues are concentrated with a limited number of customers.
We traditionally have had significant customer concentration. For the year ended December 31, 2025, our largest customer accounted for 15% of revenues. There are risks whenever a large percentage of total revenues are concentrated with a limited number of customers.
Our ability to accurately forecast demand for Tablo could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for Tablo or for products of our competitors, our failure to accurately forecast customer acceptance of new products, potential disruption in our supply chain from regional or global public health crises such as the COVID-19 pandemic, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer 31 confidence in future economic conditions.
Our ability to accurately forecast demand for Tablo could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for Tablo or for products of our competitors, our failure to accurately forecast customer acceptance of new products, failure of our initiatives to optimize the commercial organization and improve forecasting and order visibility, potential disruption in our supply chain from regional or global public health crises such as the COVID-19 pandemic, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
Additionally, outside parties may attempt to fraudulently induce employees to disclose sensitive information in order to gain access to the data and personal information we maintain, including through phishing or smishing attacks.
Additionally, outside parties may attempt to fraudulently induce employees to disclose sensitive information in order to gain access to the data and personal information we maintain, including through phishing or other social engineering attacks.
For example, on August 29, 2024 and October 18, 2024, two purported stockholder class action lawsuits were filed against the Company, our Chief Executive Officer and our Chief Financial Officer, in the U.S.
For example, on August 29, 2024 and October 18, 2024, two purported securities class action lawsuits were filed against the Company, our Chief Executive Officer, then-Chief Financial Officer and prior Chief Financial Officer, in the U.S.
Our continued success depends on our ability to: • further penetrate the acute care market and drive utilization and fleet expansion among our existing customers in the acute care setting; • successfully expand within the home dialysis market; • maintain and widen our technology lead over competitors by continuing to innovate and deliver new product enhancements on a continuous basis; • cost-effectively manufacture Tablo and its component parts as well as drive down the cost of service; • increase adoption of Tablo in the chronic outpatient facility setting via transitional care programs within existing dialysis clinics; • demonstrate Tablo’s economic, clinical, compliance and operational benefits relative to outsourcing dialysis services; • overcome potential customer sentiment around our perceived financial health as a result of our low stock price; and • overcome the adverse impact in the field from the Warning Letter and our prior distribution pause on TabloCart with Prefiltration which created a certain amount of marketplace confusion (exacerbated, we believe, in some cases by our competitors) particularly regarding Tablo’s use in the intensive care unit (ICU).
Our continued success depends on our ability to: • demonstrate the financial, clinical and operational benefits of Tablo and insourcing with Tablo relative to traditional dialysis machines or outsourcing dialysis services; 29 • further penetrate the acute care market and drive utilization and fleet expansion among our existing customers in the acute care setting; • successfully expand within the home dialysis market; • maintain and widen our technology lead over competitors by continuing to innovate and deliver new product enhancements on a continuous basis; • cost-effectively manufacture Tablo and its component parts as well as drive down the cost of service; • overcome potential customer sentiment around our perceived financial health as a result of our low stock price; and • overcome the adverse impact in the field from the Warning Letter and our prior distribution pause on TabloCart with Prefiltration which created a certain amount of marketplace confusion (exacerbated, we believe, in some cases by our competitors) particularly regarding Tablo’s use in the intensive care unit (ICU).
If we are unable to prevent or mitigate the impact of such security breaches or other cyber events that impact our operations, our ability to attract and retain new customers, patients, and other partners could be harmed, as they may be reluctant to entrust us with their data, and we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business or other adverse consequences. 30 We may encounter difficulties in managing our growth, which could disrupt our operations.
If we are unable to prevent or mitigate the impact of security breaches or other cyber events that impact our operations, our ability to attract and retain new customers, patients, and other partners could be harmed, as they may be reluctant to entrust us with their data, and we could be exposed to litigation and governmental investigations, which could lead to a potential disruption to our business or other adverse consequences.
These customers could also potentially pressure us to reduce the prices we charge for Tablo, which could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations. If any of our largest customers terminates its relationship with us, such termination could negatively affect our revenues and results of operations.
These customers could also potentially pressure us to reduce the prices we charge for Tablo, which could have an adverse effect on our margins and financial position and could negatively affect our revenues and results of operations. If any of our large customers terminate their relationship with us, such termination could negatively affect our revenues and results of operations.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected.
If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected. 48 The results of our clinical trials may not support our product candidate claims or may result in the discovery of adverse side effects.
The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found.
The FDA’s authority to require a recall must be based on a finding that there is reasonable probability that the device could cause serious injury or death. We may also choose to voluntarily recall a product if any material deficiency is found and we have done so from time to time.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeFor example, we currently consult with third party firms to assist with our annual penetration testing for the Tablo device, Tablo cloud and IT infrastructure.
Biggest changeFor example, we have engaged a leading third-party information security consulting firm for CISO advisory services to support our information security program, which will continue to be overseen by our VP of Information Technology. We also currently consult with third party firms to assist with our annual penetration testing for the Tablo device, Tablo Cloud and IT infrastructure.
In addition, In addition, we used a third-party audit firm accredited by the American Institute of Certified Public Accountants (AICPA) to support us in the SOC 2 certification process for Tablo cloud. • VENDOR ASSESSMENT: We leverage a third-party risk assessment tool to help us identify cybersecurity, privacy, and operational related risks associated with our use of certain third-party service providers. • INCIDENT PREPAREDNESS AND RESPONSE: We maintain a Cybersecurity Incident Response Plan (IRP) which establishes a framework designed to enable us to respond to cybersecurity incidents in a consistent, timely and effective manner.
In addition, we used a third-party audit firm accredited by the American Institute of Certified Public Accountants (AICPA) to support us in the SOC 2 certification process for Tablo Cloud. • VENDOR ASSESSMENT: We leverage a third-party risk assessment tool to help us identify cybersecurity, privacy, and operational related risks associated with our use of certain third-party service providers. • INCIDENT PREPAREDNESS AND RESPONSE: We maintain a Cybersecurity Incident Response Plan (IRP) which establishes a framework designed to enable us to respond to cybersecurity incidents in a consistent, timely and effective manner.
We periodically examine our security controls and take steps to review, prioritize and address key compliance gaps where identified, using a risk-based approach. • TECHNICAL SAFEGUARDS : We perform information security maturity assessments and penetration testing for the Tablo device and Tablo cloud (including in connection with new product features and services), as well as for our IT infrastructure.
We periodically examine our security controls and take steps to review, prioritize and address key compliance gaps where identified, using a risk-based approach. • TECHNICAL SAFEGUARDS : We perform information security maturity assessments and penetration testing for the Tablo device and Tablo Cloud (including in connection with new product features and services), as well as for our enterprise IT infrastructure.
These updates generally cover topics such as our cybersecurity strategy, the threat landscape, key cybersecurity risk areas facing the organization, any key findings of audits and testing, the status of key initiatives, as well as a review of any major incidents. MANAGEMENT Executive management plays a significant role in assessing and managing material risks from cybersecurity threats.
These updates generally cover topics such as our cybersecurity strategy, the threat landscape, key cybersecurity risk areas facing the organization, any key findings of audits and testing, the status of key initiatives, as well as a review of any major incidents. 61 MANAGEMENT Executive management plays a significant role in assessing and managing material risks from cybersecurity threats.
This committee, which is sponsored by our VP of Information Technology, is comprised of Company leaders from information security, information technology (IT), legal, privacy, finance, operations, and other functions, who have experience in managing cybersecurity risks, who review the cybersecurity threat landscape, and who evaluate key emerging data security risks.
This committee, which is sponsored by our VP of Information Technology, is comprised of our information security advisor and Company leaders from IT, legal, privacy, finance, operations, and other functions, who have experience in managing cybersecurity risks, who review the cybersecurity threat landscape, and who evaluate key emerging data security risks.
Depending on the severity of the cybersecurity incident, our IRP contemplates escalation to our executive leadership team and the Audit Committee and/or the full Board, as well as periodic briefings on developments related to the incident response. We periodically review and update our IRP and have conducted training of key team members regarding the IRP.
Depending on the severity of the cybersecurity incident, our IRP contemplates escalation to our executive leadership team and the Audit Committee and/or the full Board, as well as periodic briefings on developments related to the incident response. We periodically review and update our IRP and have 62 conducted training of key team members regarding the IRP.
Item 1C. Cybersecurity At Outset, we strive to protect the confidentiality, integrity and availability of the personal data entrusted to us. We continue to invest in our cybersecurity program in an effort to enhance our ability to prevent, detect, contain, and mitigate cybersecurity threats.
Item 1C. Cybersecurity At Outset, we strive to protect the confidentiality, integrity and availability of the data entrusted to us. We continue to invest in our cybersecurity program in an effort to enhance our ability to prevent, detect, contain, and mitigate cybersecurity threats.
We assess and prioritize the remediation of vulnerabilities and other cybersecurity risks identified through these activities, using a risk-based approach. • THREAT LANDSCAPE AWARENESS: We regularly receive and review threat landscape bulletins from Health Information Sharing and Analysis Center (H-ISAC), Cybersecurity and Infrastructure Security Agency (CISA) and others, and incorporate enhancements into our ongoing cybersecurity program based on this review. • INSURANCE : We maintain information security risk insurance coverage to mitigate potential losses in the event of a business disruption. 64 • TRAINING : All Outset employees are assigned HIPAA and information security training as part of the new employee onboarding process and refresher training is assigned annually.
We assess and prioritize the remediation of vulnerabilities and other cybersecurity risks identified through these activities, using a risk-based approach. • THREAT LANDSCAPE AWARENESS: We regularly receive and review threat landscape bulletins from Health Information Sharing and Analysis Center (H-ISAC), Cybersecurity and Infrastructure Security Agency (CISA) and other sources, and incorporate enhancements into our ongoing cybersecurity program based on this review. • INSURANCE : We maintain information security risk insurance coverage to mitigate potential losses in the event of a business disruption. • TRAINING : All Outset employees are assigned HIPAA and information security awareness training as part of the new employee onboarding process and refresher training is assigned annually.
The committee reviews certain cybersecurity-related risks facing the company; discusses open policy exceptions and key risk indicators; and manages cybersecurity risks presented by the information security team and proposed mitigation actions. Members of this committee review the key risks identified as an outcome of our cybersecurity risk management strategy described below.
The committee reviews certain cybersecurity-related risks facing the company; discusses open policy exceptions and key risk indicators; and manages cybersecurity risks presented by the team and proposed mitigation actions. Members of this committee review the key risks identified as an outcome of our cybersecurity risk management strategy described below.
Our VP of Information Technology manages our information security program. Executive leadership Our VP of Information Technology and the information security team periodically present information about the Company’s information security program, including program goals and actions, progress against key initiatives and key risks, to our executive leadership team.
Our VP of Information Technology manages our information security program. Executive leadership Our VP of Information Technology periodically presents information about the Company’s information security program, including program goals and strategy, and progress against key initiatives and key risks, to our executive leadership team.
As described above, significant risks related to cybersecurity are escalated to the Audit Committee and/or the full Board as appropriate. Cross-functional management engagement We have established a committee comprised of leaders from key functions across the Company including, but not limited to, information security, IT, engineering, legal, privacy, finance, and people operations.
As described above, significant risks related to cybersecurity are escalated to the Audit Committee and/or the full Board as appropriate. Cross-functional engagement We maintain an integrated cybersecurity program that involves collaboration across key functions, including information technology (IT), software engineering, regulatory, legal, privacy, finance, and operations.
Members of this committee generally meet regularly to review the Company’s cybersecurity program, the evolving threat landscape and key related action items. 63 Governance of information security risks We have also established a risk governance committee, which generally meets on a quarterly basis.
This cross-functional approach supports alignment with regulatory requirements and proactive risk management, and representatives of these functions meet regularly to review our cybersecurity posture, evolving threats, and related action plans. Governance of information security risks We have also established a risk governance committee, which generally meets on a quarterly basis.
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For example, we have received SOC 2 certification for Tablo cloud and we are working to align our processes, protocols and product software with the FDA’s recent cybersecurity guidance finalized in September 2023.
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The IRP also includes an addendum that specifically addresses incidents involving protected health information and describes our obligations under HIPAA, including compliance with the HIPAA breach notification rule and our applicable contractual requirements.
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For example, we have received SOC 2 certification for Tablo Cloud. In addition, in January 2026, the FDA granted 510(k) clearance of our next-generation Tablo platform which incorporates the FDA’s recent guidance on medical device cybersecurity published in June 2025.
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Moreover, we have engaged a leading third-party information security consulting firm for CISO advisory services to support our information security program, which will continue to be overseen by our VP of Information Technology.
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While this consulting firm has significant 63 experience in supporting and managing information security programs, has previously been involved in various aspects of our cybersecurity risk management program and ongoing cybersecurity operations, and the engagement is designed to enhance our program, there can be no assurance that the integration of external resources for CISO advisory services will be seamless or free of operational or security risks, which could result in unforeseen vulnerabilities or costs.
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Moreover, any unauthorized access to, or compromise of, Tablo devices could result in device malfunction, interruption or alteration of treatment or inaccurate data transmission, any of which could adversely affect patient health or safety. Any such incident could subject us to product liability claims, FDA or other regulatory enforcement actions, increased regulatory scrutiny, and reputational harm.
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In addition, certain privacy and data protection laws provide for private rights of action, and we could also be subject to contractual claims by customers or other counterparties in connection with a cybersecurity or privacy incident.
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Even the perception that Tablo is vulnerable to cybersecurity threats could reduce patient and provider confidence and materially harm adoption and use of Tablo and our business.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeIn Tijuana, Mexico, we also lease 87,187 square feet of space for our manufacturing facility under a lease agreement that will expire in 65 2026 and 7,739 square feet of office space for certain research and development and general and administrative activities under a lease agreement that will expire in 2028.
Biggest changeIn Tijuana, Mexico, we also lease 87,187 square feet of space for our manufacturing facility under a lease agreement that will expire in 2026 (or 2031 if and when our renewal option is exercised and mutually agreed) and 7,739 square feet of office space for certain research and development and general and administrative activities under a lease agreement that will expire in 2028.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeItem 3. Legal Proceedings. From time to time, we may become involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.
Biggest changeFrom time to time, we may become involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.
We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. Item 4. Mine Saf ety Disclosures. Not applicable. 66 PART II
We are not presently a party to any legal proceedings that, if determined adversely to us, would individually or taken together have a material adverse effect on our business, results of operations, financial condition or cash flows. Item 4. Mine Saf ety Disclosures. Not applicable. 64 PART II
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Item 3. Legal Proceedings. The information set forth under “Litigation” in Note 6, Commitments and Contingencies, of the notes accompanying our audited financial statements in this Annual Report is incorporated herein by reference.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Common Stock As of February 24, 2025, there were 98 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
Biggest changeAs of February 10, 2026, there were 104 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial owners but whose shares are held in street name by brokers and other nominees.
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Recent Sales of Unregistered Securities On January 3, 2025, we entered into the Securities Purchase Agreements with various investors pursuant to which we sold 843,908 shares of Series A Preferred Stock at a price of $200.00 per share in the Private Placement.
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Holders of Common Stock We effected a 15:1 reverse stock split of our common stock on March 20, 2025 (the Reverse Stock Split). All share and per share information has been retroactively adjusted to give effect to the Reverse Stock Split for all periods presented, unless otherwise indicated.
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Subject to the stockholder approval and beneficial ownership limitations, each share of Series A Preferred Stock will automatically convert into 250 shares of common stock for an aggregate of 210,977,000 shares of common stock.
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Stock Performance Graph The following shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference into any of our other filings under the Exchange Act or the Securities Act of 1933, as amended, except to the extent we specifically incorporate it by reference into such filing.
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Pursuant to the Securities Purchase Agreements, we also agreed to sell 19,432 shares of Series A Preferred Stock to certain members of our Board of Directors and management, subject to obtaining stockholder approval.
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The following graph compares the cumulative total return on our common stock relative to the cumulative total returns of the NASDAQ Composite Index and the S&P Healthcare Equipment Select Industry Index (SPSIHE) for the period from December 31, 2020 through December 31, 2025.
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The shares of Series A Preferred Stock were offered and sold pursuant to an exemption from the registration requirements of the Securities Act of 1933, as amended (Securities Act) afforded by Section 4(a)(2) of the Securities Act, have not been registered under the Securities Act, and may not be offered or sold in the United States absent registration or an exemption from registration under the Securities Act and any applicable state securities laws.
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The graph assumes an investment of $100 on December 31, 2020 and its relative performance is tracked through December 31, 2025. Pursuant to applicable SEC rules, all values assume reinvestment of the full amount of all dividends, however no dividends have been declared on our common stock to date.
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Concurrently with the execution of the Securities Purchase Agreements, we and the investors entered into a registration rights agreement pursuant to which we agreed to file a registration statement with the SEC registering the sale of the shares of common stock underlying the shares of Series A Preferred Stock sold in the Private Placement.
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Note that historic stock price performance is not necessarily indicative of future stock price performance. Per share data has been adjusted on a retroactive basis to reflect the Reverse Stock Split effected on March 20, 2025 for activity prior to that date. 65 Recent Sales of Unregistered Securities None. Issuer Purchases or Equity Securities None. Item 6. [ R eserved].
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The Company expects to use the net proceeds from the Private Placement for general corporate purposes. Issuer Purchases or Equity Securities None. Item 6. [ R eserved]. 67

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations In this section, we discuss the results of our operations for the year ended December 31, 2024 compared to the year ended December 31, 2023. 72 The following table sets forth, for the years indicated, our results of operations (in thousands): Years Ended December 31, 2024 2023 2022 Revenue: Product revenue $ 80,977 $ 103,537 $ 93,388 Service and other revenue 32,712 26,839 21,987 Total revenue 113,689 130,376 115,375 Cost of revenue: Cost of product revenue 46,449 74,454 82,510 Cost of service and other revenue 28,676 26,922 15,032 Total cost of revenue 75,125 101,376 97,542 Gross profit 38,564 29,000 17,833 Operating expenses: Research and development 38,397 57,307 48,855 Sales and marketing 70,044 96,232 89,482 General and administrative 43,498 45,231 40,515 Total operating expenses 151,939 198,770 178,852 Loss from operations (113,375 ) (169,770 ) (161,019 ) Interest income and other income, net 9,761 10,171 3,291 Interest expense (23,871 ) (12,675 ) (3,566 ) Loss on extinguishment of term loan — — (1,367 ) Loss before provision for income taxes (127,485 ) (172,274 ) (162,661 ) Provision for income taxes 491 523 295 Net loss $ (127,976 ) $ (172,797 ) $ (162,956 ) Revenue Years Ended December 31, Change (dollars in thousands) 2024 2023 $ % Revenue: Product revenue $ 80,977 $ 103,537 $ (22,560 ) (22 )% Service and other revenue 32,712 26,839 5,873 22 % Total revenue $ 113,689 $ 130,376 (16,687 ) (13 )% Product revenue decreased by $22.6 million, or 22%, for the year ended December 31, 2024 as compared to the prior year.
Biggest changeResults of Operations In this section, we discuss the results of our operations for the year ended December 31, 2025 compared to the year ended December 31, 2024. 71 The following table sets forth, for the years indicated, our results of operations (in thousands): Years Ended December 31, 2025 2024 2023 Revenue: Product revenue $ 84,808 $ 80,977 $ 103,537 Service and other revenue 34,668 32,712 26,839 Total revenue 119,476 113,689 130,376 Cost of revenue: Cost of product revenue 43,765 46,449 74,454 Cost of service and other revenue 28,957 28,676 26,922 Total cost of revenue 72,722 75,125 101,376 Gross profit 46,754 38,564 29,000 Operating expenses: Research and development 21,235 38,397 57,307 Sales and marketing 54,361 70,044 96,232 General and administrative 37,864 43,498 45,231 Total operating expenses 113,460 151,939 198,770 Loss from operations (66,706 ) (113,375 ) (169,770 ) Interest income and other income, net 7,408 9,761 10,171 Interest expense (13,952 ) (23,871 ) (12,675 ) Loss on extinguishment of term loan (7,685 ) — — Loss before provision for income taxes (80,935 ) (127,485 ) (172,274 ) Provision for income taxes 718 491 523 Net loss $ (81,653 ) $ (127,976 ) $ (172,797 ) Revenue Years Ended December 31, Change (dollars in thousands) 2025 2024 $ % Revenue: Product revenue $ 84,808 $ 80,977 $ 3,831 5 % Service and other revenue 34,668 32,712 1,956 6 % Total revenue $ 119,476 $ 113,689 5,787 5 % The increase in product revenue was mainly due to a $2.9 million increase in consumables revenue attributable to the growth in our console installed base and a $0.9 million increase in console revenue as a result of a higher average selling price in 2025 as compared to the prior year.
Financing Activities Net cash provided by financing activities of $67.9 million for the year ended December 31, 2024 was due primarily to the net proceeds of $66.5 million from borrowings under the SLR Term Loan Facility and the proceeds of $2.3 million from employee exercises of stock options and employee stock purchase plan purchases.
Net cash provided by financing activities of $67.9 million for the year ended December 31, 2024 was due primarily to the net proceeds of $66.5 million from borrowings under the SLR Term Loan Facility and the proceeds of $2.3 million from employee exercises of stock options and employee stock purchase plan purchases.
Debt Obligations Perceptive Credit Agreement On January 3, 2025, we entered into a senior secured credit facility for borrowings up to an aggregate principal amount of $125.0 million pursuant to the Perceptive Credit Agreement among Perceptive Credit Holdings IV, LP, as administrative agent (Agent), the lenders from time to time party thereto and the Company.
Debt Obligations Perceptive Credit Agreement On January 3, 2025, we entered into a senior secured credit facility for borrowings up to an aggregate principal amount of $125.0 million pursuant to the Perceptive Credit Agreement among Perceptive Credit Holdings IV, LP, as Agent, the lenders from time to time party thereto and the Company.
We believe that localizing production of a majority of Tablo cartridges in Mexico (in-house at our manufacturing facility) has helped achieve cost reductions through lower freight costs, further our long-term gross margin expansion and supply continuity strategies and improve the flexibility of our operations.
We believe that localizing production of a substantial majority of Tablo cartridges in Mexico (in-house at our manufacturing facility) has helped achieve cost reductions through lower freight costs, further our long-term gross margin expansion and supply continuity strategies and improve the flexibility of our operations.
However, we may face increased 70 supply chain constraints in the future, which could negatively impact our ability to meet customer demand on a timely basis, result in customer dissatisfaction and adversely impact our operating margins and results of operations.
However, we may face increased supply chain constraints in the future, which could negatively impact our ability to meet customer demand on a timely basis, result in customer dissatisfaction and adversely impact our operating margins and results of operations.
The estimates are based on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent 76 from other sources.
The estimates are based on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.
Revenue is recognized when control of our Tablo consoles is transferred, generally upon shipment, and excludes the value of the initial service agreement, which is recognized as service and other revenue over the term of the initial service agreement. Leases of Tablo consoles are considered operating leases and recognized as revenue over their lease term.
Revenue is recognized when control of our Tablo consoles is transferred, generally upon shipment, and excludes the value of the initial service 69 agreement, which is recognized as service and other revenue over the term of the initial service agreement. Leases of Tablo consoles are considered operating leases and recognized as revenue over their lease term.
Gross Margin Our ability to expand our gross margins depends on: first, our ability to continue to sell Tablo cartridges, services, and accessories for Tablo consoles; second, our ability to reduce the cost of service and third, our ability to reduce the cost of Tablo consoles.
Gross Margin Our ability to expand our gross margins depends on: first, our ability to continue to sell Tablo cartridges, services, and accessories for Tablo consoles; second, our ability to reduce the cost of service and third, our ability to reduce the cost to manufacture Tablo consoles.
While the significant accounting policies are more fully described in Note 2 to our audited financial statements included elsewhere in this Annual Report, we believe that the following critical accounting policy is most important to understanding and evaluating our reported financial results. Revenue Recognition Our contracts with customers often include multiple performance obligations, such as products and services.
While the significant accounting policies are more fully described in Note 2 to our audited financial statements included elsewhere in this Annual Report, we believe that the following critical accounting estimate is most important to understanding and evaluating our reported financial results. Revenue Recognition Our contracts with customers often include multiple performance obligations, such as products and services.
These factors the success of our initiatives to optimize and further evolve our commercial organization, infrastructure and sales processes as we scale our business in the home market.
These factors include the success of our initiatives to optimize and further evolve our commercial organization, infrastructure and sales processes as we scale our business in the home market.
Pursuant to the terms and conditions of the Perceptive Credit Agreement, the lenders agreed to extend term loans to us in an aggregate principal amount of up to $125.0 million, comprised of (i) a term loan of $100.0 million (the Initial Term Loan), which was funded at the closing of the Perceptive Credit Agreement on January 8, 2025, and (ii) a delayed draw term loan of up to $25.0 million (the Delayed Draw Loan).
Pursuant to the terms and conditions of the Perceptive Credit Agreement, the lenders agreed to extend term loans to us in an aggregate principal amount of up to $125.0 million, comprised of (i) a term loan of $100.0 million (the Initial Term Loan), which was funded at the closing of the Perceptive Credit Agreement on January 8, 2025, and (ii) a delayed draw term loan of up to $25.0 million (the Delayed Draw Loan, together with the Initial Term Loan, the Perceptive Term Loan).
We determine the standalone sale prices (SSP) based upon the facts and circumstances of each performance obligation (product or services), which often requires management's judgement. We use an observable price to estimate SSP for items that are sold separately, including service agreements.
We determine the standalone sale prices (SSP) based upon the facts and circumstances of each performance obligation (product or services), which often requires management’s judgment. We use an observable price to estimate SSP for items that are sold separately, including service agreements.
These deferrals served to elongate our sales cycle and the timing of delivery and installations, which, in turn, contributed to an adverse impact on our bookings and revenues starting in the second half of 2023 and through 2024. We may see disruption from this in future periods.
These deferrals served to elongate our sales cycle and the timing of delivery and installations, which, in turn, contributed to an adverse impact on our bookings and revenues starting in the second half of 2023 and through 2025. We may see disruption from this in future periods.
Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, located in our annual report on Form 10-K for the year ended December 31, 2023 for reference to discussion of the year ended December 31, 2023, the earliest of the three fiscal years presented.
Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, located in our annual report on Form 10-K for the year ended December 31, 2024 for reference to discussion of the year ended December 31, 2024, the earliest of the three fiscal years presented.
We believe that our existing cash, cash equivalents and short-term investments, cash generated from sales, and proceeds recently received from the debt financing described below under “Debt Obligations ‒ Perceptive Credit Agreement” as well as proceeds received from the Private Placement described in Note 13 to the financial statements will be sufficient to meet our anticipated needs for at least the next 12 months from the issuance date of this Annual Report.
We believe that our existing cash, cash equivalents and short-term investments, cash generated from sales, and proceeds received from the debt financing described below under “Debt Obligations ‒ Perceptive Credit Agreement” as well as proceeds received from the Private Placement described in Note 8 to the financial statements will be sufficient to meet our anticipated needs for at least the next 12 months from the issuance date of this Annual Report.
Our sales organization is comprised of our capital sales team, responsible for generating new customer demand for 68 Tablo, and our clinical sales team, responsible for driving utilization and fleet expansion of Tablo at existing customer sites. In addition, our field service team provides maintenance services and product support to our customers.
Our sales organization is comprised of our capital sales team, responsible for generating new customer demand for Tablo, and our clinical sales team, responsible for driving utilization and fleet expansion of Tablo at existing customer sites. In 67 addition, our field service team provides maintenance services and product support to our customers.
In addition, over the past several years, we have moved the production of Tablo consoles and a majority of Tablo 69 cartridges in-house to our manufacturing facility in Tijuana, Mexico which we operate in collaboration with TACNA as part of our cost reduction activities.
In addition, over the past several years, we have moved the production of Tablo consoles and a substantial majority of Tablo cartridges in-house to our manufacturing facility in Tijuana, Mexico which we operate in collaboration with TACNA, as part of our cost reduction activities.
Moreover, increased tariffs imposed by the new administration, including on goods imported into the United States from Mexico and China, could adversely impact our supply chain and distribution costs, as well as our ability to achieve sustainable gross margins.
Moreover, increased tariffs imposed by the current administration, including on goods imported into the United States from Mexico and China, could adversely impact our supply chain and distribution costs, as well as our ability to achieve sustainable gross margins.
Our ability to expand gross margins depends on our ability to successfully execute these strategies, as well as the impact of macroeconomic factors described below, including the tariffs imposed by the new administration.
Our ability to expand gross margins depends on our ability to successfully execute these strategies, as well as the impact of macroeconomic factors described below, including the tariffs imposed by the current administration.
Starting January 2025, we are required to comply with certain covenants under the Perceptive Credit Agreement, including, among others, requirements as to financial reporting, restrictions on our ability to incur additional indebtedness and to pay any 74 dividends or other distributions on capital stock, maintenance of a minimum cash balance, and achievement of certain specified trailing twelve-month net revenue targets.
We are required to comply with certain covenants under the Perceptive Credit Agreement, including, among others, requirements as to financial reporting, restrictions on our ability to incur additional indebtedness and to pay any dividends or other distributions on capital stock, maintenance of a minimum cash balance, and achievement of certain specified trailing twelve-month net revenue targets.
For the years ended December 31, 2024, 2023, and 2022, sales of our consumables accounted for 45%, 32% and 25% of our revenue, respectively, and sales of service and other accounted for 29%, 21% and 19% of our revenue, respectively. We primarily sell our solutions through our direct sales organization, which covers most major metropolitan markets in the United States.
For the years ended December 31, 2025, 2024, and 2023, sales of our consumables accounted for 45%, 45% and 32% of our revenue, respectively, and sales of service and other accounted for 29%, 29% and 21% of our revenue, respectively. We primarily sell our solutions through our direct sales organization, which covers most major metropolitan markets in the United States.
Our ability to successfully address the factors below is subject to various risks and uncertainties, including those described in the section titled “Risk Factors.” Market Acceptance of Tablo in Acute Setting We plan to further broaden our installed base by continuing to target national and regional IDNs and health systems, as well as SNFs, LTACHs and other post-acute providers.
Our ability to successfully address the factors below is subject to various risks and uncertainties, including those described in the section titled “Risk Factors.” Market Acceptance of Tablo in Acute Setting We plan to further broaden our installed base by continuing to target national and regional integrated delivery networks and health systems, SNFs, LTACHs and other post-acute providers.
Our field sales and service teams represent 52% of our total full-time employees as of December 31, 2024. The same sales organization and field service team drive Tablo penetration in both the acute and home markets.
Our field sales and service teams represent 58% of our total full-time employees as of December 31, 2025. The same sales organization and field service team drive Tablo penetration in both the acute and home markets.
The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to serve as a dialysis clinic on wheels. With a simple-to-use touchscreen interface, two-way wireless data transmission and a proprietary data analytics platform, Tablo is a holistic approach to dialysis care.
The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to provide clinical and operational flexibility to customers. With a simple-to-use touchscreen interface, two-way wireless data transmission and a proprietary data analytics platform, Tablo is a holistic approach to dialysis care.
Tablo leverages cloud technology, making it possible for providers to monitor devices remotely, view treatment data, perform patient and population analytics, and automate clinical recordkeeping. Tablo's wireless connectivity enables us to release training, new features and enhancements over-the-air without interventions by FSEs. Tablo’s connectedness allows continuous streaming of over 500,000 device performance data points to the cloud for every treatment.
Tablo leverages cloud technology, making it possible for providers to monitor devices remotely, view treatment data, perform patient and population analytics, and automate clinical recordkeeping. Tablo’s wireless connectivity enables us to release training, new features and enhancements over-the-air without interventions by FSEs.
However, if our customers continue to face prolonged periods of rising interest rates, capital budget constraints, volatility, uncertainty, staffing shortages, cash flow challenges, rising costs and other financial pressures, whether due to general macroeconomic conditions, cybersecurity events or otherwise, it could ultimately adversely impact our ability to expand existing customer relationships or attract new customers of Tablo, timely collect amounts due, effectively manage our inventory levels, and have a material adverse effect on our bookings, revenues, results of operations, financial condition, and, ultimately, our future growth and profitability.
If our customers continue to face prolonged periods of rising interest rates, capital budget constraints, volatility, uncertainty, staffing shortages, cash flow challenges, rising costs and other financial pressures, whether due to general macroeconomic conditions, evolving policy changes under the current administration (including trade policy developments, reductions in government reimbursement or shifts in healthcare policy), cybersecurity events or other factors, it could ultimately adversely impact our ability to expand existing customer relationships or attract new customers of Tablo, timely collect amounts due, effectively manage our inventory levels, and have a material adverse effect on our bookings, revenues, results of operations, financial condition, and, ultimately, our future growth and profitability.
As we continue to drive the expansion of Tablo, we expect shipping and handling costs to also increase. However, the full year impact of mid-year cost saving initiatives in 2024 will result in lower year over year spend.
Shipping and handling costs, as well as the associated personnel expenses, are included in sales and marketing expenses. 70 As we continue to drive the expansion of Tablo, we expect shipping and handling costs to also increase. However, the full year impact of mid-year cost saving initiatives in 2024 will result in lower year over year spend.
Net cash used in operating activities of $131.4 million for the year ended December 31, 2023 was due to a net loss of $172.8 million and a net cash outflow from the change in our operating assets and liabilities of $0.8 million, partially adjusted by the primary non-cash adjustments for stock-based compensation expense of $38.6 million, amortization of premium on investments of $6.4 million, depreciation and amortization of $5.8 million, non-cash interest expense of $1.8 million, and non-cash lease expense of $1.3 million.
Net cash used in operating activities of $116.3 million for the year ended December 31, 2024 was due to a net loss of $128.0 million, a net cash outflow from the change in our operating assets and liabilities of $25.7 million, and amortization of premium on investments of $4.7 million, partially adjusted by the primary non-cash adjustments for stock-based compensation expense of $29.4 million, depreciation and amortization of $5.7 million, non-cash interest expense of $2.6 million, change in provision for credit losses of $2.4 million, and non-cash lease expense of $1.4 million.
The decrease was primarily driven by an overall decrease in compensation-related and stock-based compensation expense, travel and consulting expense resulting from our cost reduction efforts implemented in 2024 and the fourth quarter of 2023. These decreases were partially offset by higher freight expenses due to higher volume in consumable sales.
The decrease in sales and marketing expenses was primarily driven by an overall decrease in compensation-related and stock-based compensation expenses, travel and freight expenses resulting from our cost reduction efforts. These decreases were partially offset by higher marketing expenses due to an increase in marketing activities and higher consulting expense.
Provision for Income Taxes Provision for income taxes primarily consists of foreign taxes in Mexico. We have a full valuation allowance for deferred tax assets, including net operating loss carryforwards and tax credits related primarily to research and development.
We have a full valuation allowance for deferred tax assets, including net operating loss carryforwards and tax credits related primarily to research and development.
These factors include our ability to recover from the adverse impact in the field from the Warning Letter as we resume distribution of TabloCart with Prefiltration, as well as the success of our efforts to further evolve our initiatives to optimize our commercial organization, infrastructure and sales processes to support the growth of our business in the acute and post-acute care markets as we focus more heavily on enterprise selling and transition beyond earlier stage adoption of Tablo.
These factors include the success of our initiatives to optimize and further evolve our commercial organization, infrastructure and sales processes to support the growth of our business in the acute and post-acute care markets as we focus more heavily on enterprise selling and transition beyond earlier stage adoption of Tablo.
We believe Tablo empowers patients, who have traditionally been passive recipients of care, to regain agency and ownership of their treatment. Driving adoption of Tablo in the acute care setting has been our primary focus to date.
In studies and surveys we have conducted, patients have reported quality of life benefits on Tablo compared to other dialysis machines. We believe Tablo empowers patients, who have traditionally been passive recipients of care, to regain agency and ownership of their treatment. Driving adoption of Tablo in the acute care setting has been our primary focus to date.
Recent Accounting Pronouncements Refer to Note 2, “Summary of Significant Accounting Policies” in our audited financial statements included in Part II, Item 8 of this Annual Report for a discussion of recent accounting pronouncements that may impact us. Item 7A. Quantitative and Qualitati ve Disclosures About Market Risk. Not applicable. 77
Recent Accounting Pronouncements Refer to Note 2, “Summary of Significant Accounting Policies” in our audited financial statements included in Part II, Item 8 of this Annual Report for a discussion of recent accounting pronouncements that may impact us.
We continue to use our design, engineering, and manufacturing capabilities to further advance and improve the efficiency of our manufacturing processes, which, if successful, we believe will lower production 71 costs and enable us to increase our gross margin.
We continue to use our design, engineering, and manufacturing capabilities to further advance and improve the efficiency of our manufacturing processes, which, if successful, we believe will lower production costs and enable us to increase our gross margin. While we expect gross margin to increase over the long term, we also anticipate it will likely fluctuate from quarter to quarter.
The net cash outflow from operating assets and liabilities was primarily due to an increase in accounts receivable due to 75 timing of collections and billings, a decrease in accrued expenses and other current liabilities, a decrease in accrued compensation and related benefits, and a decrease in operating lease liabilities.
The net cash inflow from operating assets and liabilities was primarily due to a decrease in inventories, a decrease in accounts receivable due to timing of collections and billings, an increase in accrued expenses and other current liabilities, and an increase in deferred revenue due to the growth in service agreements.
Other sales and marketing expenses include marketing and promotional activities, costs of outside consultants, customer services costs, and infrastructure costs including facilities, depreciation, and information technology. Shipping and handling costs, as well as the associated personnel expenses, are included in sales and marketing expenses.
Other sales and marketing expenses include marketing and promotional activities, costs of outside consultants, customer services costs, and infrastructure costs including facilities, depreciation, and information technology.
Cash Flows Summary The following table summarizes the cash flows for each of the periods indicated (in thousands): Years Ended December 31, 2024 2023 2022 Net cash (used in) provided by: Operating activities $ (116,303 ) $ (131,373 ) $ (145,729 ) Investing activities 103,938 83,026 (66,295 ) Financing activities 67,870 43,652 72,898 Net increase (decrease) in cash, cash equivalents and restricted cash $ 55,505 $ (4,695 ) $ (139,126 ) Operating Activities Net cash used in operating activities of $116.3 million for the year ended December 31, 2024 was due to a net loss of $128.0 million, a net cash outflow from the change in our operating assets and liabilities of $25.7 million, and amortization of premium on investments of $4.7 million, partially adjusted by the primary non-cash adjustments for stock-based compensation expense of $29.4 million, depreciation and amortization of $5.7 million, non-cash interest expense of $2.6 million, allowance for credit losses of $2.4 million, and non-cash lease expense of $1.4 million.
Cash Flows Summary The following table summarizes the cash flows for each of the periods indicated (in thousands): Years Ended December 31, 2025 2024 Net cash (used in) provided by: Operating activities $ (46,327 ) $ (116,303 ) Investing activities (97,684 ) 103,938 Financing activities 55,503 67,870 Net (decrease) increase in cash, cash equivalents and restricted cash $ (88,508 ) $ 55,505 Operating Activities Net cash used in operating activities of $46.3 million for the year ended December 31, 2025 was due to a net loss of $81.7 million, and amortization of premium on investments of $2.3 million, partially adjusted by the primary non-cash adjustments for stock-based compensation expense of $15.6 million, loss on extinguishment of term loan of $7.7 million, depreciation and amortization of $4.3 million, change in provision for credit losses of $3.5 million, non-cash interest expense of $2.8 million, a net cash inflow from the change in our operating assets and liabilities of $2.2 million, and non-cash lease expense of $1.6 million.
While we do not believe we have exposure to these potential tariffs as Tablo, TabloCart and Tablo consumables are covered under a special exemption, we cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries (including Mexico and China), what products may be subject to such actions, or what actions may be taken by the other countries in retaliation.
We cannot predict what actions may ultimately be taken with respect to tariffs or trade relations between the United States and other countries (including Mexico and China), what products may be subject to such actions, or what actions may be taken by the other countries in retaliation.
Net cash provided by investing activities of $83.0 million for the year ended December 31, 2023 was due to the maturities of investment securities of $258.8 million, partially offset by purchases of investment securities of $172.3 million and purchases of property and equipment of $3.4 million.
Investing Activities Net cash used in investing activities of $97.7 million for the year ended December 31, 2025 was due to purchases of investment securities of $222.0 million and purchases of property and equipment of $0.8 million, partially offset by the sales and maturities of investment securities of $125.1 million.
Key Factors Affecting Our Performance We believe that our financial performance has been and in the foreseeable future will continue to be primarily driven by the following factors.
We believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business. Key Factors Affecting Our Performance We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by the following factors.
We have generated meaningful evidence to demonstrate that providers can realize significant operational efficiencies, including reducing the cost of their dialysis programs. In addition, Tablo has been shown to deliver robust clinical care. In studies and surveys we have conducted, patients have reported quality of life benefits on Tablo compared to other dialysis machines.
In effect, this contributes to a reduction in service hours and an increase in device uptime. We have generated meaningful evidence to demonstrate that providers can realize significant operational efficiencies, including reducing the cost of their dialysis programs. In addition, Tablo has been shown to deliver robust clinical care.
If such contracts result in a material right, we allocate part of the transaction price to that right and recognize the associated revenue when those future goods and services are transferred to the customer. SSP is assigned based on the estimated value of the material right. We establish SSP ranges for our products and services and reassess them periodically.
We may offer additional goods or services to customers at the inception of customer contracts at prices not at SSP. If such contracts result in a material right, we allocate part of the transaction price to that right and recognize the associated revenue when those future goods and services are transferred to the customer.
Gross Profit and Gross Margin Years Ended December 31, Change (dollars in thousands) 2024 2023 $ % Gross profit and gross margin: Gross profit $ 38,564 $ 29,000 $ 9,564 33 % Gross margin 33.9 % 22.2 % Gross profit increased by $9.6 million, or 33%, for the year ended December 31, 2024 as compared to the prior year.
Gross Profit and Gross Margin Years Ended December 31, Change (dollars in thousands) 2025 2024 $ % Gross profit and gross margin: Gross profit $ 46,754 $ 38,564 $ 8,190 21 % Gross margin 39.1 % 33.9 % The gross margin percentage improved by 5.2 percentage points for the year ended December 31, 2025 as compared to the prior year.
For the years ended December 31, 2024, 2023, and 2022, sales of our consoles, which includes Tablo consoles and accessories, accounted for 26%, 47% and 56% of our revenue, respectively. We also earn recurring revenue from sales of consumables, including Tablo cartridge, and services, which generates significant total revenue over the life of Tablo console.
We also earn recurring revenue from sales of consumables, including Tablo cartridge, and services, which generates significant total revenue over the life of Tablo console.
While we expect gross margin to increase over the long term, we also anticipate it will likely fluctuate from quarter to quarter. Operating Expenses Research and Development Research and development expenses primarily consist of personnel and related costs, regulatory fees, consulting services, laboratory supplies and materials expenses, and infrastructure costs including facilities, depreciation and information technology.
Operating Expenses Research and Development Research and development expenses primarily consist of personnel and related costs, regulatory fees, consulting services, laboratory supplies and materials expenses, and infrastructure costs including facilities, depreciation and information technology.
The Delayed Draw Loan is available for funding until July 14, 2027, subject to the achievement of a specific revenue milestone and other customary conditions.
The Delayed Draw Loan is available for funding until July 14, 2027, subject to the achievement of certain revenue milestone and other customary conditions. Critical Accounting Estimates Our financial statements have been prepared in accordance with U.S. GAAP.
Service and other revenue increased by $5.9 million, or 22%, for the year ended December 31, 2024 as compared to the prior year. The increase was primarily due to services associated with the growth in our console installed base.
The increase in service and other revenue was primarily due to services associated with the growth in our console installed base.
If we fail to comply with any covenants, payments or other terms of the Perceptive Credit Agreement and such failure constitutes an event of default thereunder, such event of default would give Agent the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable (see the section entitled "Debt Obligations" below).
If we fail to comply with any covenants, payments or other terms of the Perceptive Credit Agreement and such failure constitutes an event of default thereunder, such event of default would give Agent the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable (see the section entitled “Debt Obligations” below). 73 While we have taken actions to reduce operating expenses and working capital to align with anticipated revenue growth including implementing restructuring plans to streamline our overall organizational structure and renegotiating commitments with suppliers to reduce inventory, we expect to continue to incur operating losses in the near term while we make investments to support our anticipated growth.
We use this data, in conjunction with our diagnostic and predictive algorithms, to monitor device performance, identify and diagnose failures and, in some instances, predict and prevent potential future device failures or malfunctions. In effect, this contributes to a reduction in service hours and an increase in device uptime.
Tablo’s connectedness allows continuous streaming of an average of approximately 3 million machine performance data points to the cloud for every treatment. We use this data, in conjunction with our diagnostic and predictive algorithms, to monitor device performance, identify and diagnose failures and, in some instances, predict and prevent potential future device failures or malfunctions.
Impacts of Macroeconomic Factors Global macroeconomic conditions, including inflationary pressures, rising interest rates, increased labor costs, staffing shortages and global supply chain disruptions, may impact our business and results of operations, and those of our customers, manufacturing partners and suppliers.
Our ability to transition to profitability will depend on the success of our efforts to optimize spending and working capital, including inventory. 68 Impacts of Macroeconomic Factors Global macroeconomic conditions, including inflationary pressures, rising interest rates, changes in tariff or trade laws and policies (such as the tariffs imposed by the current administration), increased labor costs, staffing shortages and global supply chain disruptions, may impact our business and results of operations, and those of our customers, manufacturing partners and suppliers.
Investing Activities Net cash provided by investing activities of $103.9 million for the year ended December 31, 2024 was due to the sales and maturities of investment securities of $261.4 million, partially offset by purchases of investment securities of $156.6 million and purchases of property and equipment of $0.9 million.
Net cash provided by investing activities of $103.9 million for the year ended December 31, 2024 was due to the sales and maturities of investment securities of $261.4 million, partially offset by purchases of investment securities of $156.6 million and purchases of property and equipment of $0.9 million. 74 Financing Activities Net cash provided by financing activities of $55.5 million for the year ended December 31, 2025 was due to net proceeds of $161.5 million from the issuance of Series A Convertible Preferred Stock, net proceeds of $98.3 million from borrowings under the Perceptive Term Loan Facility, and proceeds from ESPP purchases, partially offset by cash outflow of $205.0 million in repayment of the SLR Term Loan which included final payment and termination fees.
Other Income (Expenses), Net Years Ended December 31, Change (dollars in thousands) 2024 2023 $ % Other income (expenses), net: Interest income and other income, net $ 9,761 $ 10,171 $ (410 ) (4 )% Interest expense (23,871 ) (12,675 ) (11,196 ) 88 % Total other expenses, net $ (14,110 ) $ (2,504 ) (11,606 ) 463 % The decrease in interest income and other income, net, for the year ended December 31, 2024 as compared to the prior year was driven by the changes in interest rates.
Other Income (Expenses), Net Years Ended December 31, Change (dollars in thousands) 2025 2024 $ % Other income (expenses), net: Interest income and other income, net $ 7,408 $ 9,761 $ (2,353 ) (24 )% Interest expense (13,952 ) (23,871 ) 9,919 (42 )% Loss on extinguishment of term loan (7,685 ) — (7,685 ) * Total other expenses, net $ (14,229 ) $ (14,110 ) (119 ) 1 % * Not meaningful The decrease in interest income and other income, net, for the year ended December 31, 2025 as compared to the prior year was driven by the changes in interest rates and a lower average short-term investment balance in 2025.
The increase in interest expense for the year ended December 31, 2024 as compared to the prior year was due to the increase in interest rate and higher outstanding balance under the SLR Term Loan Facility in 2024 as compared to 2023.
The decrease in interest expense for the year ended December 31, 2025 as compared to the prior year was due to a lower outstanding term loan balance in 2025. The loss on extinguishments of term loan of $7.7 million was recognized for the repayment of the SLR Term Loan in 2025, which included final payment and termination fees.
We are also working with providers, patients, and payors to increase awareness and adoption of TCUs as a bridge to home-based therapy. We generate revenue from the placement of Tablo consoles along with accessories, and shipping and handling charged to customers, which revenue is recognized up-front.
We generate revenue from the placement of Tablo consoles along with accessories, and shipping and handling charged to customers, which revenue is recognized up-front. For the years ended December 31, 2025, 2024, and 2023, sales of our consoles, which includes Tablo consoles and accessories, accounted for 26%, 26% and 47% of our revenue, respectively.
The higher consumable gross margin mainly resulted from a lower cost per unit as well as a higher average selling price for consumables. 73 Operating Expenses Years Ended December 31, Change (dollars in thousands) 2024 2023 $ % Operating expenses: Research and development $ 38,397 $ 57,307 $ (18,910 ) (33 )% Sales and marketing 70,044 96,232 (26,188 ) (27 )% General and administrative 43,498 45,231 (1,733 ) (4 )% Total operating expenses $ 151,939 $ 198,770 (46,831 ) (24 )% Research and development expenses decreased by $18.9 million, or 33%, for the year ended December 31, 2024 as compared to the prior year.
This improvement in gross margin was primarily driven by a higher console gross margin resulting from a lower cost per unit as well as a higher average selling price, a higher consumable gross margin mainly resulting from a higher average selling price, and a higher service gross margin. 72 Years Ended December 31, Change (dollars in thousands) 2025 2024 $ % Operating expenses: Research and development $ 21,235 $ 38,397 $ (17,162 ) (45 )% Sales and marketing 54,361 70,044 (15,683 ) (22 )% General and administrative 37,864 43,498 (5,634 ) (13 )% Total operating expenses $ 113,460 $ 151,939 (38,479 ) (25 )% The decrease in research and development expenses was primarily due to an overall decrease in compensation-related and stock-based compensation expenses, infrastructure costs and consulting expense resulting from our cost reduction efforts.
The net cash outflow from operating assets and liabilities was partially offset by an increase in accounts payable due to timing of vendor payments, an increase in deferred revenue due to the growth in service agreements and a decrease in inventories.
The net cash inflow from operating assets and liabilities was partially offset by decreases in accrued compensation and related benefits, accounts payable, accrued interest, operating lease liabilities and accrued warranty liabilities, and an increase in prepaid expenses and other assets.
General and administrative expenses decreased by $1.7 million, or 4%, for the year ended December 31, 2024 as compared to the prior year. The decrease was primarily driven by an overall decrease in consulting, compensation-related expense resulting from our cost reduction efforts implemented in 2024 and the fourth quarter of 2023.
The decrease in general and administrative expenses was primarily driven by an overall decrease in compensation-related and stock-based compensation expenses resulting from our cost reduction efforts. These decreases were partially offset by increases in the allowance for credit losses and legal fees related to the stockholder class action and related derivative lawsuits.
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We believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business. Recent Developments In July 2023, we received a warning letter (the Warning Letter) from the FDA that raised two observations.
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In addition, ongoing uncertainty relating to various policy changes under the current administration – including developments in trade policy (such as increased tariffs), changes in interest rate policy, potential reductions in government reimbursement and shifts in broader healthcare policy – could increase financial pressures faced by our existing and prospective hospital customers.
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The first observation asserted that certain content reviewed by the FDA and found on our website promotes Continuous Renal Replacement Therapy (CRRT), a modality outside of the current indications for Tablo. The second observation asserted that TabloCart with Prefiltration required prior 510(k) clearance for marketing authorization.
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These actual or anticipated policy changes may lead to higher operating costs for our customers, as well as tighter operating budgets and more cautious capital spending decisions.
Removed
TabloCart with Prefiltration is an accessory to Tablo launched in the third quarter of 2022. We took action to address the first observation regarding CRRT promotion through revision of processes and procedures and updates to existing labeling and promotional materials. We also took action to address the second observation regarding TabloCart with Prefiltration.
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Additionally, broader economic uncertainty and market volatility – driven in part by these evolving policies – could exacerbate financial strain on our customers, potentially resulting in delayed or reduced purchases of our products and services. These factors could adversely impact our revenues, results of operations and financial condition in future periods.
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Although we evaluated TabloCart with Prefiltration prior to marketing and distributing the product and concluded that no marketing authorization was necessary, we paused distribution of TabloCart with Prefiltration pending the FDA’s review and clearance of a 510(k) application for the same that we submitted in September 2023.
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We currently do not believe we have exposure to these tariffs as Tablo, TabloCart and Tablo cartridge are covered under a special exemption. However, in September 2025, the U.S.
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In early May 2024, we received 510(k) clearance from the FDA for TabloCart with Prefiltration, and we have resumed distribution of TabloCart with Prefiltration. In February 2025, we were notified by the FDA that the issues cited in the Warning Letter have been addressed.
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Department of Commerce initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to assess the national security implications of imports of personal protective equipment, medical consumables, and medical equipment, including medical devices. The outcome of this investigation could result in additional tariffs or other trade restrictions.
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Our ability to transition to profitability will depend on the success of our efforts to optimize spending and working capital, including inventory.
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While we continue to believe our products will remain exempt, the scope and outcome of the investigation are uncertain and could affect existing exemptions or expand coverage to additional product categories.
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Beginning in 2022, our existing and prospective customers faced shortages of skilled nurses and other clinical personnel as well as increased labor costs, combined with economic pressures resulting from general economic and financial market conditions, primarily escalating inflation, tightening hospital operating budgets and increased scrutiny of capital purchase decisions, all of which generally have the effect of lengthening the average sales cycle and elongating the timing of installations.
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Loss on Extinguishment of Term Loan Loss on extinguishment of term loan is related to the repayment of the SLR Term Loan in January 2025, which included final payment and termination fees. Provision for Income Taxes Provision for income taxes primarily consists of foreign taxes in Mexico.
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These factors negatively impacted our customer base on pipeline development and installation schedules, which, in turn, negatively impacted our bookings, delayed our shipments and adversely impacted our revenues for 2022 and, to a lesser extent, 2023. We have generally seen some stabilization in these challenging labor market dynamics for healthcare providers during 2023 and thereafter as compared to 2022.
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As of December 31, 2025, we had a total cash, cash equivalents, restricted cash and short-term investments balance of $172.8 million.
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Moreover, we believe Tablo offers automation and ease-of-use benefits over traditional machines that can enhance our existing and potential customers’ ability to support their patient populations despite staffing shortages.
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SSP is assigned based on the estimated value of the material right. We establish SSP ranges for our products and services and reassess them periodically.
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In 2022, we launched a pilot clinical and administrative services program designed to help bridge our healthcare provider customers, particularly those challenged by staffing shortages, as they transition from using an outsourced inpatient dialysis provider to offering on-site inpatient dialysis services on their own.
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In return for a fair market value service fee, we assign members of our own employed nurses on a temporary basis to support participating providers to launch and manage an inpatient dialysis program using Tablo and, as full-time staff is hired, to help train and onboard those nurses.
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However, our pilot clinical and administrative services program may not be successful in achieving the objectives we intend and anticipate, may fail to meet our customers’ expectations, may not generate sufficient returns to justify our investment, or may result in unanticipated costs, which could harm our reputation and customer relationships, and adversely impact our operating margins and results of operations.
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The decrease was mainly due to a $31.5 million decrease in console revenue as a result of a lower number of consoles sold in 2024 as compared to the prior year. This decrease was partially offset by an $8.9 million increase in consumables revenue attributable to the growth in our console installed base.
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The gross margin percentage improved by 11.7 percentage points for the year ended December 31, 2024 as compared to the prior year. This improvement in gross margin was primarily driven by a higher mix of consumable and service and other revenue in 2024 as compared to the prior year.

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