UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 Result of Operations and Financial Condition.
On February 16, 2022, Outset Medical, Inc. (the “Company”) issued a press release and will hold its fourth quarter and full year 2021 earnings conference call announcing the Company’s financial results for the quarter and year ended December 31, 2021. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference. In connection with the earnings conference call, the Company posted an investor presentation on the Investors section of its website at www.outsetmedical.com. A copy of the investor presentation is furnished herewith as Exhibit 99.2 and incorporated herein by reference.
The information contained in this Item 2.02 and Exhibits 99.1 and 99.2 hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, (the “Securities Act”) or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 7.01 Regulation FD Disclosure.
In addition to announcing financial results as discussed above, the Company’s press release issued on February 16, 2022, also announced that its Board of Directors (the “Board”) appointed Leslie Trigg to serve as Chair of the Board, in addition to her ongoing role as the Company’s President and Chief Executive Officer. The Company also announced that former Chair of the Board, D. Keith Grossman, continues to serve on the Board and has been appointed as Lead Independent Director by the independent members of the Board. A copy of the Company’s press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference.
The information contained in this Item 7.01 and Exhibit 99.1 hereto shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit Number |
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Description |
99.1 |
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99.2 |
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104 |
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Cover Page Interactive Data File (embedded within the Inline XBRL document) |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Outset Medical, Inc.
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Date: February 16, 2022 |
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By: |
/s/Nabeel Ahmed |
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Nabeel Ahmed |
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Chief Financial Officer |
Exhibit 99.1
Outset Medical Reports Fourth Quarter and Full Year 2021 Financial Results
Record Annual Revenue of $102.6 Million; 105% Year-over-Year Growth
San Jose, CA – February 16, 2022 – Outset Medical, Inc. (Nasdaq: OM) (“Outset” or the “Company”), a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis, today reported financial results for the fourth quarter and full year ended December 31, 2021. The Company also announced that Leslie Trigg has been appointed Chair of the Board of Directors in addition to her ongoing role as President and Chief Executive Officer.
Recent Highlights
“Our entire team contributed to an exceptional 2021, driving record revenue growth, meaningful progress toward our long-term gross margin goal and excellent visibility into 2022,” said Leslie Trigg, Chair and Chief Executive Officer. “Our established relationships with 7 of the 8 largest national health systems and one-third of the largest 100 regional health systems puts us in a strong position for growth this year in both the acute and home settings.”
“On behalf of the Outset Board of Directors, I am pleased to announce Leslie’s appointment to the additional role of Board Chair,” said D. Keith Grossman, Lead Independent Director. “We look forward to continuing to support Leslie and the entire team as Outset continues to transform the dialysis industry.”
Fourth Quarter 2021 Financial Results
Revenue for the fourth quarter of 2021 was $28.2 million, representing an increase of 63.2% compared to $17.2 million in the fourth quarter of 2020. Product revenue for the fourth quarter of 2021 was $23.7 million, representing an increase of 79.5% compared to $13.2 million in the fourth quarter of 2020. Service and other revenue for the fourth quarter of 2021 was $4.5 million, representing an increase of 10.6% compared to $4.1 million in the fourth quarter of 2020.
Total gross profit for the fourth quarter of 2021 was $3.3 million, compared to a gross loss of $0.4 million for the fourth quarter of 2020. Total gross margin for the fourth quarter of 2021 was 11.8%, compared to 2.4% in the fourth quarter of 2020. On a non-GAAP basis, gross margin for the fourth quarter of 2021 improved to 12% from 2.8% in the fourth quarter of 2020. Product gross profit for the fourth quarter of 2021 was $2.2 million, compared to ($1.7) million of product gross loss in the fourth quarter of 2020. Product gross margin for the fourth quarter of 2021 was 9.3%, compared to (13.2)% in the fourth quarter of 2020. Service and other gross profit for the fourth quarter of 2021 was $1.1 million, compared to $2.2 million of service and other gross profit in the fourth quarter of 2020. Service and other gross margin for the fourth quarter of 2021 was 25.1%, compared to 53.0% in the fourth quarter of 2020.
Operating expenses for the fourth quarter of 2021 were $44.1 million, including research and development (R&D) expenses of $11.4 million, sales and marketing (S&M) expenses of $23.0 million, and general and administrative (G&A) expenses of $9.7 million. This compared to operating expenses of $32.0 million, including R&D expenses of $7.8 million, S&M expenses of $15.2 million, and G&A expenses of $9.1 million in the fourth quarter of 2020.
Excluding stock-based compensation expense, non-GAAP operating expenses for the fourth quarter of 2021 were $39.4 million, including R&D expenses of $10.2 million, S&M expenses of $21.1 million, and G&A expenses of $8.1 million.
Fourth quarter 2021 net loss was ($41.2) million, or ($0.87) per share, compared to net loss of ($32.0) million, or ($0.75) per share, for the same period in 2020. On a non-GAAP basis, net loss for the fourth quarter of 2021 was ($36.4) million, or ($0.77) per share, compared to non-GAAP net loss of ($25.8) million, or ($0.60) per share for the same period in 2020.
Full Year 2021 Financial Results
Revenue for the full year of 2021 was $102.6 million, representing an increase of 105.5% compared to $49.9 million for 2020. Product revenue for the full year of 2021 was $84.3 million, representing an increase of 112.8% compared to $39.6 million for 2020. Service and other revenue for the full year of 2021 was $18.3 million, representing an increase of 77.2% compared to $10.3 million for 2020.
Total gross profit for the full year of 2021 was $7.6 million, compared to a gross loss of ($13.0) million for 2020. Total gross margin for the full year of 2021 was 7.4%, compared to (26.1)% in 2020. Product gross loss for the full year of 2021 was ($0.3) million, compared to ($17.4) million of product gross loss in 2020. Product gross margin for the full year of 2021 was (0.4)%, compared to (44.0)% in 2020. Service and other gross profit for the full year of 2021 was $7.9 million, compared to $4.4 million of service and other gross profit in 2020. Service and other gross margin for the full year of 2021 was 43.4%, compared to 42.5% in 2020.
Operating expenses for the full year of 2021 were $138.1 million, including R&D expenses of $36.7 million, S&M expenses of $65.1 million, and G&A expenses of $36.3 million. This compared to operating expenses of $104.4 million, including R&D expenses of $28.9 million, S&M expenses of $45.1 million, and G&A expenses of $30.5 million for 2020.
Excluding stock-based compensation expense, non-GAAP operating expenses for the full year of 2021 were $121.0 million, including R&D expenses of $32.9 million, S&M expenses of $59.2 million, and G&A expenses of $28.8 million.
Full year 2021 net loss attributable to common stockholders was ($131.9) million, or ($2.89) per share, compared to a net loss attributable to common stockholders of ($79.3) million, or ($4.85) per share, for 2020. On a non-GAAP basis, net loss for the full year of 2021 was ($114.5) million, or ($2.51) per share, compared to a non-GAAP net loss of ($57.9) million, or ($3.54) per share for 2020.
Total cash, including restricted cash, cash equivalents and short-term investments, was $372.8 million as of December 31, 2021.
Full Year 2022 Financial Guidance
Outset projects revenue for the full year 2022 to range from $142 million to $150 million, which represents approximately 38% to 46% growth over the Company’s fiscal year 2021 revenue.
Webcast and Conference Call Details
Outset will host a conference call today, February 16, 2022, at 2:00 p.m. PT / 5:00 p.m. ET to discuss its fourth quarter and full year 2021 financial results. The dial-in numbers are (833) 614-1409 for domestic callers and (914) 987-7130 for international callers. The conference ID is 6892802. A live webcast of the conference call will be available on the Investor Relations section of the Company's website at https://investors.outsetmedical.com. The webcast will be archived on the website following the completion of the call.
Use of Non-GAAP Financial Measures
The Company may report non‐GAAP results for gross profit/loss, gross margin, operating expenses, operating margins, net income/loss, basic and diluted net income/loss per share, other income/loss, and cash flows. These non-GAAP financial measures are in addition to, and not a substitute for, or superior to, financial measures calculated in accordance with GAAP. The Company’s financial measures under GAAP include stock-based compensation expense, as listed in the itemized reconciliations between GAAP and non‐GAAP financial measures included in this press release. Management has excluded the effects of this non-cash expense item in non‐GAAP measures to assist investors in analyzing and assessing past and future operating performance and period-to-period comparisons. There are limitations related to the use of non-GAAP financial measures because they are not prepared in accordance with GAAP, may exclude significant expenses required by GAAP to be recognized in the Company’s financial statements, and may not be comparable to non-GAAP financial measures used by other companies. The Company encourages investors to carefully consider its results under GAAP, as well as its supplemental non‐GAAP information and the reconciliation between these presentations, to more fully understand its business. Reconciliations between GAAP and non‐GAAP results are presented in the Appendix A of this press release.
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect the Company’s business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. Forward-looking statements include, but are not limited to, statements about the Company’s possible or assumed future results of operations and financial position, including expectations regarding projected revenues (including sales into the home market and such sales as a percentage of revenues), gross margin, operating expenses, capital expenditures, profitability and outlook; statements regarding the Company’s overall business strategy, plans and objectives of management; the Company’s expectations regarding the market sizes and growth potential for Tablo and the total addressable market opportunities for Tablo; continued execution of the Company’s initiatives designed to reduce the cost of producing and shipping Tablo devices and its ability to achieve projected cost reductions at the level or within the timeframe estimated; the Company’s expectations with respect to anticipated benefits of the TPNIES approval, as well as the Company’s expectations regarding the continuing impact of the COVID-19 pandemic on the Company and its operations as well as the impact on its customers and suppliers. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified. Factors that could cause actual results or other events to differ materially from those contemplated in this press release can be found in the Risk Factors section of Outset’s public filings with the Securities and Exchange Commission, including Outset’s latest annual and quarterly reports. Because forward-looking statements are inherently subject to risks and uncertainties, you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of their date and, except to the extent required by law, the Company undertakes no obligation to update these statements, whether as a result of any new information, future developments or otherwise.
About Outset Medical, Inc.
Outset is a medical technology company pioneering a first-of-its-kind technology to reduce the cost and complexity of dialysis. The Tablo® Hemodialysis System, FDA cleared for use from the hospital to the home, represents a significant technological advancement that transforms the dialysis experience for patients and operationally simplifies it for providers. Tablo serves as a single enterprise solution that can be utilized across the continuum of care, allowing dialysis to be delivered anytime, anywhere and by anyone. The integration of water purification and on-demand dialysate production enables Tablo to serve as a dialysis clinic on wheels, with 2-way wireless data transmission and a proprietary data analytics platform powering a new holistic approach to dialysis care. Tablo is a registered trademark of Outset Medical, Inc.
Investor Contact
Jim Mazzola
Outset Medical
858-342-8272
jmazzola@outsetmedical.com
Lynn Lewis or Brian Johnston
Gilmartin Group
investors@outsetmedical.com |
Media Contact
Nicole Shannon
Director, Marketing Communications for Outset Medical
nshannon@outsetmedical.com
Outset Medical, Inc.
Condensed Statements of Operations
(in thousands, except per share amounts)
(unaudited)
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Three Months Ended |
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Years Ended |
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December 31, |
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December 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Revenue: |
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Product revenue |
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$ |
23,650 |
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$ |
13,177 |
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$ |
84,312 |
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$ |
39,612 |
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Service and other revenue |
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4,502 |
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4,070 |
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18,290 |
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10,323 |
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Total revenue |
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28,152 |
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17,247 |
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102,602 |
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49,935 |
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Cost of revenue: |
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Cost of product revenue (2) |
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21,459 |
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14,917 |
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84,639 |
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57,035 |
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Cost of service and other revenue |
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3,372 |
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1,913 |
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10,355 |
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5,937 |
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Total cost of revenue |
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24,831 |
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16,830 |
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94,994 |
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62,972 |
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Gross profit (1) |
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3,321 |
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417 |
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7,608 |
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(13,037 |
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Gross margin (1) |
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11.8 |
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% |
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2.4 |
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% |
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7.4 |
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% |
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(26.1 |
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% |
Operating expenses: |
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Research and development (2) |
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11,410 |
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7,784 |
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36,741 |
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28,850 |
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Sales and marketing (2) |
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22,991 |
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15,198 |
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65,070 |
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45,068 |
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General and administrative (2) |
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9,719 |
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9,050 |
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36,316 |
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30,512 |
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Total operating expenses |
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44,120 |
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32,032 |
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138,127 |
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104,430 |
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Loss from operations |
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(40,799 |
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(31,615 |
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(130,519 |
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(117,467 |
) |
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Other income (expense): |
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Interest income and other income, net |
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123 |
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2 |
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498 |
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526 |
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Interest expense |
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(431 |
) |
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(430 |
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(1,715 |
) |
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(2,891 |
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Change in fair value of redeemable convertible |
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— |
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— |
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— |
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(93 |
) |
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Loss on extinguishment of term loan |
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— |
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— |
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— |
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(1,567 |
) |
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Loss before provision for income taxes |
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(41,107 |
) |
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(32,043 |
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(131,736 |
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(121,492 |
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Provision for income taxes |
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125 |
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— |
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199 |
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— |
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Net loss |
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$ |
(41,232 |
) |
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$ |
(32,043 |
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$ |
(131,935 |
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$ |
(121,492 |
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Net loss attributable to common stockholders, |
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$ |
(41,232 |
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$ |
(32,043 |
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$ |
(131,935 |
) |
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$ |
(79,324 |
) |
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Net loss per share attributable to common stockholders, |
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$ |
(0.87 |
) |
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$ |
(0.75 |
) |
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$ |
(2.89 |
) |
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$ |
(4.85 |
) |
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Weighted-average shares used in computing net loss per share |
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47,169 |
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42,715 |
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45,589 |
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16,358 |
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(1) Gross profit and gross margin by source consisted of the following: |
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Three Months Ended |
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Years Ended |
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December 31, |
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December 31, |
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2021 |
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2020 |
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2021 |
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2020 |
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Gross profit |
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Product revenue |
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$ |
2,191 |
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$ |
(1,740 |
) |
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$ |
(327 |
) |
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$ |
(17,423 |
) |
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Service and other revenue |
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1,130 |
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2,157 |
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7,935 |
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|
|
4,386 |
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Total gross profit |
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$ |
3,321 |
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$ |
417 |
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$ |
7,608 |
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$ |
(13,037 |
) |
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Gross margin |
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Product revenue |
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9.3 |
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% |
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(13.2 |
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% |
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(0.4 |
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% |
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(44.0 |
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% |
Service and other revenue |
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25.1 |
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% |
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53.0 |
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% |
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43.4 |
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% |
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42.5 |
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% |
Total gross margin |
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11.8 |
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% |
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2.4 |
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% |
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7.4 |
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% |
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(26.1 |
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% |
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(2) Include stock-based compensation expenses as follows: |
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Three Months Ended |
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Years Ended |
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December 31, |
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December 31, |
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||||||||||||
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2021 |
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2020 |
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2021 |
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2020 |
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Cost of revenue |
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$ |
68 |
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$ |
74 |
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$ |
269 |
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$ |
255 |
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Research and development |
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|
1,241 |
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|
|
|
1,289 |
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|
|
|
3,809 |
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|
|
4,615 |
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Sales and marketing |
|
|
1,896 |
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|
|
|
1,595 |
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|
|
5,897 |
|
|
|
|
4,423 |
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General and administrative |
|
|
1,587 |
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|
|
3,310 |
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|
|
7,470 |
|
|
|
|
12,146 |
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Total stock-based compensation expenses |
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$ |
4,792 |
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|
|
$ |
6,268 |
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|
|
$ |
17,445 |
|
|
|
$ |
21,439 |
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(3) A reconciliation of the net loss to net loss attributable to common stockholders is as follows: |
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|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
|
Years Ended |
|
|
||||||||||||
|
|
December 31, |
|
|
|
December 31, |
|
|
||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
||||
Net loss |
|
$ |
(41,232 |
) |
|
|
$ |
(32,043 |
) |
|
|
$ |
(131,935 |
) |
|
|
$ |
(121,492 |
) |
|
Adjustment to redemption value on redeemable convertible |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
(362 |
) |
|
Deemed dividend on settlement of accrued dividend* |
|
|
— |
|
|
|
|
— |
|
|
|
|
— |
|
|
|
|
42,530 |
|
|
Net loss attributable to common stockholders, basic and diluted |
|
$ |
(41,232 |
) |
|
|
$ |
(32,043 |
) |
|
|
$ |
(131,935 |
) |
|
|
$ |
(79,324 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
* Deemed dividend on settlement of accrued dividend arose as a result of the terms and conditions associated with the Company's redeemable convertible preferred stock outstanding prior to the Company's initial public offering ("IPO"). These terms and conditions were described in the Company's previous SEC filings, including the 424(b) prospectus filed on September 16, 2020 in connection with the IPO. |
|
|
||||||||||||||||||
|
|
|
||||||||||||||||||
|
|
|
||||||||||||||||||
Outset Medical, Inc.
Condensed Balance Sheets
(in thousands, except per share amounts)
|
|
December 31, |
|
|
December 31, |
|
||
|
|
2021 |
|
|
2020 |
|
||
|
|
(Unaudited) |
|
|
|
|
||
Assets |
|
|
|
|
|
|
||
Current assets: |
|
|
|
|
|
|
||
Cash and cash equivalents |
|
$ |
182,348 |
|
|
$ |
294,972 |
|
Short-term investments |
|
|
157,140 |
|
|
|
19,898 |
|
Accounts receivable, net |
|
|
25,600 |
|
|
|
6,468 |
|
Inventories |
|
|
39,185 |
|
|
|
18,384 |
|
Prepaid expenses and other current assets |
|
|
5,529 |
|
|
|
6,189 |
|
Total current assets |
|
|
409,802 |
|
|
|
345,911 |
|
Restricted cash |
|
|
33,311 |
|
|
|
33,311 |
|
Property and equipment, net |
|
|
12,964 |
|
|
|
14,998 |
|
Operating lease right-of-use assets |
|
|
7,231 |
|
|
|
8,253 |
|
Other assets |
|
|
156 |
|
|
|
1,356 |
|
Total assets |
|
$ |
463,464 |
|
|
$ |
403,829 |
|
Liabilities and stockholders' equity |
|
|
|
|
|
|
||
Current liabilities: |
|
|
|
|
|
|
||
Accounts payable |
|
$ |
1,763 |
|
|
$ |
4,948 |
|
Accrued compensation and related benefits |
|
|
24,948 |
|
|
|
16,845 |
|
Accrued expenses and other current liabilities |
|
|
13,789 |
|
|
|
7,903 |
|
Accrued warranty liability |
|
|
3,704 |
|
|
|
2,913 |
|
Deferred revenue, current |
|
|
6,340 |
|
|
|
3,201 |
|
Operating lease liabilities, current |
|
|
1,151 |
|
|
|
882 |
|
Total current liabilities |
|
|
51,695 |
|
|
|
36,692 |
|
Accrued interest, noncurrent |
|
|
721 |
|
|
|
240 |
|
Deferred revenue, noncurrent |
|
|
312 |
|
|
|
570 |
|
Operating lease liabilities, noncurrent |
|
|
6,893 |
|
|
|
8,044 |
|
Term loan, noncurrent |
|
|
29,762 |
|
|
|
29,674 |
|
Total liabilities |
|
|
89,383 |
|
|
|
75,220 |
|
Commitments and contingencies |
|
|
|
|
|
|
||
Stockholders' equity: |
|
|
|
|
|
|
||
Preferred stock, $0.001 par value; 5,000 shares authorized, and no shares issued and outstanding as of December 31, 2021 and 2020 |
|
|
— |
|
|
|
— |
|
Common stock, $0.001 par value; 300,000 shares authorized as of December 31, 2021 and 2020; 47,241 and 42,722 shares issued and outstanding as of December 31, 2021 and 2020, respectively |
|
|
47 |
|
|
|
43 |
|
Additional paid-in capital |
|
|
1,000,212 |
|
|
|
822,624 |
|
Accumulated other comprehensive (loss) income |
|
|
(184 |
) |
|
|
1 |
|
Accumulated deficit |
|
|
(625,994 |
) |
|
|
(494,059 |
) |
Total stockholders' equity |
|
|
374,081 |
|
|
|
328,609 |
|
Total liabilities and stockholders' equity |
|
$ |
463,464 |
|
|
$ |
403,829 |
|
Outset Medical, Inc.
Condensed Statements of Cash Flows
(in thousands)
(unaudited)
|
|
Years Ended December 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
Net cash used in operating activities |
|
$ |
(130,264 |
) |
|
$ |
(99,015 |
) |
Net cash provided by (used in) investing activities |
|
|
(142,507 |
) |
|
|
3,947 |
|
Net cash provided by financing activities |
|
|
160,147 |
|
|
|
385,682 |
|
Net (decrease) increase in cash, cash equivalents and restricted cash |
|
|
(112,624 |
) |
|
|
290,614 |
|
Cash, cash equivalents and restricted cash at beginning of the period |
|
|
328,283 |
|
|
|
37,669 |
|
Cash, cash equivalents and restricted cash at end of the period (1) |
|
$ |
215,659 |
|
|
$ |
328,283 |
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
||
(1) The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the accompanying condensed balance sheets that sum to the total of the amounts shown in the accompanying condensed statements of cash flows (in thousands): |
|
|||||||
|
|
|||||||
|
|
December 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
Cash and cash equivalents |
|
$ |
182,348 |
|
|
$ |
294,972 |
|
Restricted cash |
|
|
33,311 |
|
|
|
33,311 |
|
Total cash, cash equivalents and restricted cash* |
|
$ |
215,659 |
|
|
$ |
328,283 |
|
|
|
|
|
|
|
|
||
* The total cash, including restricted cash, cash equivalents and investment securities as of December 31, 2021 was $372.8 million; compared to $348.2 million as of December 31, 2020. |
|
|||||||
|
|
|||||||
Appendix A
Outset Medical, Inc.
Results of Operations – Non-GAAP
(in thousands, except per share amounts)
(unaudited)
Reconciliation between GAAP and non-GAAP net loss per share attributable to common stockholders: |
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
|
Years Ended |
|
|
||||||||||||
|
|
December 31, |
|
|
|
December 31, |
|
|
||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
||||
GAAP net loss per share to common stockholders, diluted |
|
$ |
(0.87 |
) |
|
|
$ |
(0.75 |
) |
|
|
$ |
(2.89 |
) |
|
|
$ |
(4.85 |
) |
|
Stock-based compensation expense |
|
|
0.10 |
|
|
|
|
0.15 |
|
|
|
|
0.38 |
|
|
|
|
1.31 |
|
|
Non-GAAP net loss per share to common stockholders, |
|
$ |
(0.77 |
) |
|
|
$ |
(0.60 |
) |
|
|
$ |
(2.51 |
) |
|
|
$ |
(3.54 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reconciliation between GAAP and non-GAAP net loss attributable to common stockholders: |
|
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
|
Years Ended |
|
|
||||||||||||
|
|
December 31, |
|
|
|
December 31, |
|
|
||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
||||
GAAP net loss attributable to common stockholders, diluted |
|
$ |
(41,232 |
) |
|
|
$ |
(32,043 |
) |
|
|
$ |
(131,935 |
) |
|
|
$ |
(79,324 |
) |
|
Stock-based compensation expense |
|
|
4,792 |
|
|
|
|
6,268 |
|
|
|
|
17,445 |
|
|
|
|
21,439 |
|
|
Non-GAAP net loss per share attributable to common |
|
$ |
(36,440 |
) |
|
|
$ |
(25,775 |
) |
|
|
$ |
(114,490 |
) |
|
|
$ |
(57,885 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Reconciliation between GAAP and non-GAAP results of operations: |
||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
|
Three Months Ended |
|
|
|
Years Ended |
|
|
||||||||||||
|
|
December 31, |
|
|
|
December 31, |
|
|
||||||||||||
|
|
2021 |
|
|
|
2020 |
|
|
|
2021 |
|
|
|
2020 |
|
|
||||
GAAP gross profit |
|
$ |
3,321 |
|
|
|
$ |
417 |
|
|
|
$ |
7,608 |
|
|
|
$ |
(13,037 |
) |
|
Stock-based compensation expense |
|
|
68 |
|
|
|
|
74 |
|
|
|
|
269 |
|
|
|
|
255 |
|
|
Non-GAAP gross profit |
|
$ |
3,389 |
|
|
|
$ |
491 |
|
|
|
$ |
7,877 |
|
|
|
$ |
(12,782 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP gross margin |
|
|
11.8 |
|
% |
|
|
2.4 |
|
% |
|
|
7.4 |
|
% |
|
|
(26.1 |
) |
% |
Stock-based compensation expense |
|
|
0.2 |
|
|
|
|
0.4 |
|
|
|
|
0.3 |
|
|
|
|
0.5 |
|
|
Non-GAAP gross margin |
|
|
12.0 |
|
% |
|
|
2.8 |
|
% |
|
|
7.7 |
|
% |
|
|
(25.6 |
) |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP research and development expense |
|
$ |
11,410 |
|
|
|
$ |
7,784 |
|
|
|
$ |
36,741 |
|
|
|
$ |
28,850 |
|
|
Stock-based compensation expense |
|
|
(1,241 |
) |
|
|
|
(1,289 |
) |
|
|
|
(3,809 |
) |
|
|
|
(4,615 |
) |
|
Non-GAAP research and development expense |
|
$ |
10,169 |
|
|
|
$ |
6,495 |
|
|
|
$ |
32,932 |
|
|
|
$ |
24,235 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP sales and marketing expense |
|
$ |
22,991 |
|
|
|
$ |
15,198 |
|
|
|
$ |
65,070 |
|
|
|
$ |
45,068 |
|
|
Stock-based compensation expense |
|
|
(1,896 |
) |
|
|
|
(1,595 |
) |
|
|
|
(5,897 |
) |
|
|
|
(4,423 |
) |
|
Non-GAAP sales and marketing expense |
|
$ |
21,095 |
|
|
|
$ |
13,603 |
|
|
|
$ |
59,173 |
|
|
|
$ |
40,645 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP general and administrative expense |
|
$ |
9,719 |
|
|
|
$ |
9,050 |
|
|
|
$ |
36,316 |
|
|
|
$ |
30,512 |
|
|
Stock-based compensation expense |
|
|
(1,587 |
) |
|
|
|
(3,310 |
) |
|
|
|
(7,470 |
) |
|
|
|
(12,146 |
) |
|
Non-GAAP general and administrative expense |
|
$ |
8,132 |
|
|
|
$ |
5,740 |
|
|
|
$ |
28,846 |
|
|
|
$ |
18,366 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
GAAP total operating expense |
|
$ |
44,120 |
|
|
|
$ |
32,032 |
|
|
|
$ |
138,127 |
|
|
|
$ |
104,430 |
|
|
Stock-based compensation expense |
|
|
(4,724 |
) |
|
|
|
(6,194 |
) |
|
|
|
(17,176 |
) |
|
|
|
(21,184 |
) |
|
Non-GAAP total operating expense |
|
$ |
39,396 |
|
|
|
$ |
25,838 |
|
|
|
$ |
120,951 |
|
|
|
$ |
83,246 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Outset Medical Investor Presentation February 2022 Exhibit 99.2
Forward-looking statements and non-GAAP information This presentation and the accompanying oral statements contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “expect,” “plan,” anticipate,” “believe,” “estimate,” “predict,” “intend,” “potential,” “would,” “continue,” “ongoing” or the negative of these terms or similar expressions. Forward-looking statements are based on management’s current assumptions and expectations of future events and trends, which affect or may affect our business, strategy, operations or financial performance, and actual results and other events may differ materially from those expressed or implied in such statements due to numerous risks and uncertainties. These forward-looking statements include, but are not limited to, statements about our possible or assumed future results of operations and financial position, including expectations regarding projected revenues, and revenue growth rate, gross margin, profitability and outlook, statements regarding our overall business strategy, plans and objectives of management, our expectations regarding the market sizes and growth potential for Tablo and the total addressable market opportunities for Tablo, our planned expansion within the home hemodialysis market (including projections regarding sales into the home market and such sales as a percentage of revenues), our expectations with respect to anticipated benefits of the TPNIES approval, as well as our expectations regarding the continuing impact of the COVID-19 pandemic on us and our operations as well as the impact on our customers and suppliers. Forward-looking statements are inherently subject to risks and uncertainties, some of which cannot be predicted or quantified, which could cause actual results to differ materially from those expressed or implied in these forward-looking statements. These risks and uncertainties include: our future financial performance, including our expectations regarding our revenues, cost of revenues, operating expenses, gross margin and our ability to achieve and maintain future profitability; continued execution of our initiatives designed to reduce the cost of producing and shipping Tablo devices and our ability to achieve projected cost reductions at the levels or within the timeframe we estimate; our ability to attain market acceptance among providers and patients; our ability to manage our growth; our expansion into the home hemodialysis market; our ability to ensure strong product performance and reliability; our relations with third-party suppliers, including contract manufacturers and single source suppliers; our ability to overcome manufacturing disruptions; the impact of COVID-19, natural or man-made disasters, and similar events, on our industry, business and results of operations; our ability to offer high-quality support for Tablo; our expectations of the sizes of the markets for Tablo; our ability to innovate and improve Tablo; our ability to effectively manage privacy, information and data security; concentration of our revenues in a single product and concentration of a large percentage of our revenues from a limited number of customers; our ability to compete effectively; our ability to accurately forecast customer demand and manage our inventory; our ability to ensure the proper training and use of Tablo; and our compliance with FDA and other regulations applicable to our products and business operations; as well as other risks and uncertainties described in the Risk Factors section of our public filings with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. Forward-looking statements should be considered in light of these risks and uncertainties, and you should not rely on these forward-looking statements as predictions of future events. These forward-looking statements speak only as of their date and we undertake no obligation to publicly update or revise any forward- looking statement, whether as a result of new information, future developments or otherwise. This presentation and the accompanying oral presentation also contain statistical data, estimates and forecasts that are based on independent industry publications or other publicly available information, as well as other information based on our internal sources. This information involves many assumptions and limitations, and you are cautioned not to give undue weight to such information. We have not independently verified the accuracy or completeness of the information contained in the industry publications and other publicly available information. Accordingly, we make no representations as to the accuracy or completeness of that information nor do we undertake to update such information after the date of this presentation. In addition to financial information presented in accordance with U.S. generally accepted accounting principles ("GAAP"), this presentation and the accompanying oral statements include certain non-GAAP financial measures, which may include non-GAAP gross profit/loss, gross margin, operating expenses, net income/loss, and basic and diluted net income/loss per share. Any non-GAAP measure is presented for supplemental informational purposes only and should not be considered a substitute for or superior to financial information presented in accordance with GAAP. There are limitations related to the use of non-GAAP financial measures because they are not prepared in accordance with GAAP, may exclude significant expenses required by GAAP to be recognized in our financial statements, and may not be comparable to non-GAAP financial measures used by other companies. A reconciliation of these measures to the most directly comparable GAAP measures is included at the end of this presentation. 2
Tablo is a disruptive, first-of-its-kind technology designed to reduce the cost and complexity of dialysis. 3
Investment highlights SUMMARY Proven management team with track record of execution $11.4B U.S. U.S. total addressable market1 Recent reimbursement tailwinds expected to drive home dialysis adoption Established footprint in $2.5B U.S. acute care market is a strategic entry point for $8.9B U.S. home market Guidance of 38% – 46% revenue growth in 2022 and ~50% gross margin in 2025 271% 3-year revenue CAGR (2018–2021) Growth in recurring revenue from higher-margin consumables and services 1. Company estimates based on data contained in U.S. Renal Data System’s 2021 Annual Data Report 4
Dialysis is one of the largest, most expensive, least-changed sectors of healthcare $73B Annual spending on dialysis in the U.S. $41B Paid by Medicare Percentage of entire Medicare budget spent on dialysis for ESRD patients, who comprise 1% of the Medicare population (2019) 2020 810,000 ESRD patients 85,000,000 annual dialysis treatments 2030 7% for 1% Company estimates based on and data contained in U.S. Renal Data System’s 2021 Annual Data Report Expected ESRD patient population growth by 2030 as a result of aging, diabetes, hypertension and obesity 30% 5
CURRENT STATE Patients are treated with dialysis across multiple settings of care ACUTE CARE Hospital & sub-acute based dialysis 4.5 million Treatments/year1 ~ 3% Annual growth rate 81 million Treatments/year2 8–10% Annual growth rate for home dialysis CHRONIC CARE In-center, transitional care & home hemodialysis Company estimates based on 2020 Definitive Healthcare data Company estimates based on data contained in U.S. Renal Data System’s 2021 Annual Data Report 6
130,000 new ESRD patients diagnosed annually in the U.S.2 60% “crash” into dialysis $5,000–$15,000 Average loss by hospital for each inpatient stay for renal failure with dialysis1 $25 billion spent on in-center dialysis treatments annually2 34% readmission 30-day hospital readmission rate for hemodialysis patients3 88% of chronic patients undergo dialysis in clinic The result: hospitals lose money while patient outcomes remain poor CURRENT STATE ACUTE CHRONIC CLINIC 2019 Medicare Claims data for MS-DRG 682 and MS-DRG 683 Company estimates based on, and data contained in, U.S. Renal Data System’s 2021 Annual Data Report Hickson LJ. et al. Nephron. 2018 ; 139(1): 1–12. 7
Complicated Burdensome Inflexible Expensive labor and supplies Operational inefficiency Low adoption and retention at home Innovation is desperately needed 8
A first-of-its-kind enterprise solution that replaces multiple machines and a water treatment room with a single device Anywhere An electrical outlet and tap water instead of costly fixed infrastructure Anytime Water purification and dialysate on demand, customized to the patient’s prescription Anyone Sensors, data analytics and a touchscreen interface make Tablo easy to learn and use 9
Broad technology innovation drives execution against key strategic initiatives Benefits to customers EMR-integrated treatment data and Tablo fleet management Remote diagnostics and predictive maintenance Remote treatment monitoring and clinical analytics Benefits to Outset Operating efficiencies and gross margin expansion State-of-the-art, cloud-based manufacturing and quality documentation system Digitized supply chain, virtual distribution and logistics tracking Tablo Cloud 2-way wireless data ecosystem 10
$8.9 billion1 U.S. Home market $2.5 billion1 U.S. Acute Care market Hospitals, Long-Term Acute Care, Skilled Nursing Facilities $11.4B U.S. addressable market DIALYSIS CARE LANDSCAPE 88% Dialysis in clinic 12% Dialysis at home Note: “CKD” represents Chronic Kidney Disease; “ESRD” represents End Stage Renal Disease 1. Company estimates based on data contained in U.S. Renal Data System’s 2021 Annual Data Report 60% Crash into dialysis 40% Managed into dialysis ACUTE CHRONIC CKD/ESRD PATIENTS 11
Dialysis is a cost center for hospitals ACUTE CARE No separate DRG for inpatient dialysis; ~600 DRGs involved dialysis in 2018 60% of hospitals stays involving dialysis resulted in negative operating margin, with average loss of $5,000–$15,000 per stay 536,000 ESRD annual admissions 454,000 Additional Acute Kidney Injury annual admissions Company estimates based on data contained in U.S. Renal Data System’s 2021 Annual Data Report and 2020 Definitive Healthcare data; 2019 Medicare claims data for MS-DRG 682 and MS-DRG 68 12
Significant cost savings generated for leading hospitals and health systems ACUTE CARE $5.4M Pre-Tablo $1.5M Supplies savings $1.4M Labor savings $2.4M Post-Tablo Case Study ICU Dialysis Cost Cut by 55% Cleveland Clinic 55% Total potential cost savings $300–$500/Tx Potential payback period <1 year PROJECTED ANNUAL ICU DIALYSIS COST Source: Cleveland Clinic; company estimates based on data provided by third party health system 13
Tablo enables health systems to optimize patient care from the ICU to the home ACUTE CARE Home peritoneal dialysis Home hemodialysis Incident ESRD patients Chronic kidney disease patients ACUTE CHRONIC 01 Reduce acute labor and supplies cost by up to 80%1 02 Over 50 % of chronic dialysis patients managed at home2 03 Drive $15,000–$17,000 in annual profit per Tablo Home patient3 Based on costs for dialysis in the ICU Chan CT. et al. Kidney International (2019) 96, 37–47 Based on 5-year calculation for Tablo Home program. Key assumptions: $350 per treatment ✗ 3.5 treatments per week 14
The Tablo Home program brings economic opportunity ACUTE CARE $15,000– $17,000 Amount of annual profit each patient has the potential to generate for the provider1 ESRD patients Annual revenue outsourced to 3rd party dialysis operators2 Converting 30% of ESRD patients to home program drives 1,000 ~$36 million ~$5 million in annual profit Based on 5-year calculation for Tablo Home program. Key assumptions: $350 per treatment ✗ 3.5 treatments per week Key assumptions: $350 per treatment, factoring in an estimated 65% Medicare payer mix from hospital cost report data for home-only programs 15
Physicians and patients prefer Tablo ACUTE CARE NEPHROLOGISTS n=184 IN-CENTER & PERITONEAL DIALYSIS PATIENTS n=138 77% Rated Tablo as a significant clinical improvement 98% Said Tablo’s benefits make them more likely to recommend home dialysis 72% Rated Tablo as a significant clinical improvement 77% Rated Tablo’s benefits as making them more likely to try home dialysis Company analysis undertaken with a third party. For additional clinical evidence, including from the XTEND and The First 1,000 Real-World Treatment studies, visit https://outsetmedical.com/clinical-evidence/ XTEND Study Highlights 50 Consecutive Tablo XT treatments 23.5 hrs Median treatment time in the ICU setting 4 % Ended due to clotting 14 sec Average alarm resolution time The First 1,000 Real-World Treatments Study Highlights 100 % Patient retention, with no patients opting out of Home Hemodialysis (HHD) 93% Treatment adherence 95% Treatments completed within 10% of prescribed time 16
The home market is significantly underpenetrated HOME CARE Company estimates based on, and data contained in, U.S. Renal Data System’s 2021 Annual Data Report ~570,000 Chronic dialysis patients 30% Patients eligible for home hemodialysis 2% Patients on home hemodialysis Historical barriers Medicare reimbursement misaligned with treatment frequency Inadequate provider payment incentives Cumbersome technology and training 17
Tablo addresses key barriers to home dialysis adoption and retention HOME CARE 3x Treatments per week <25 hours Training per patient 0 hours Dialysate prep time 5–6 Treatments per week 100 hours Training per patient 16–24 hours Dialysate prep time per week Historical device 18
Trial participants Met efficacy endpoints Achieved weekly Std Kt/V ≥ 2.1 Met safety endpoints 1.8% overall incidence of adverse events High home retention rate and treatment compliance 0 % Drop-out during in-home period 99 % Adherence to prescribed home treatment frequency 0 Pre-specified adverse events related to Tablo HOME CARE IDE trial demonstrated Tablo’s safety and effectiveness in the home 26–71 Years of age 43% Black / Hispanic 27% Latino 60% History of diabetes 96% History of hypertension In-Center % weeks that met primary endpoint 2.8 Avg In-Home % weeks that met primary endpoint 2.8 Avg 99.5% 98.3% For additional clinical evidence, visit https://www.outsetmedical.com/clinical-evidence/ 19
Touchscreen System simplicity of training tools Treatment setup Alarm troubleshooting Adaptability into your home environment Treatment take-down Machine clean-up and general care Management of dialysis supplies Ease of saline bolus application User flexibility Overall ease of use 100% 89.3% 86.4% 85.3% 84% 83.7% 83.7% 80.6% 78.3% 75.8% 85.6% 0% 10.7% 13.6% 14.7% 16% 16.3% 16.3% 19.4% 21.7% 24.2% 14.4% Felt more energized after dialysis 34% Reported less cramping during treatment 61% Felt more relaxed during treatment 48% Experienced fewer headaches after dialysis 47% Reported fewer alarms during treatment 78% PATIENT PREFERENCE RESULTS—TABLO VS PRIOR HOME SYSTEM Patients prefer Tablo for home1 Surveyed 13 patients in the IDE previously at home using the incumbent HHD machine Preferred Tablo Preferred prior system Patients report fewer symptoms on Tablo2 Patient-reported outcomes survey comparing in-clinic treatments on Tablo vs. their previous dialysis machine Outset 2019 IDE trial Alvarez L, May Y, Chertow G. Early Patient Experience with the Tablo Hemodialysis System Positive Tablo patient experience HOME CARE 20
HOME CARE Reimbursement tailwinds for home dialysis on Tablo 2022–2023 TPNIES ~$23-25/treatment on top of the Medicare base rate for each Tablo home treatment over 2 years CMS determined Tablo to be a substantial clinical improvement over incumbent device Payment is per treatment, irrespective of number of treatments per week 2024–2027 ESRD Treatment Choices Model (ETC) ETC provides for additional payments (up to ~8%) or for reductions in payments (down by ~10%) depending on ability to drive home dialysis adoption and transplant wait list additions Biden Administration further strengthened the ETC for 2022 by further elevating the home dialysis rates providers must achieve to receive the incremental improvement and/or avoid penalties New Health Equity Incentive (HEI) starts July 2022 and rewards providers for a 2.5% increase in home dialysis and transplant adoption by low-income patients CMS methodology: Price of console/5 yr useful life = $X/156 treatments per year = $Y/Tx x 0.65 = $Z/Tx - $9.50/Tx to account for what CMS already pays for equipment/Tx 21
Outset’s highly efficient business model PROFILE SINGLE PLATFORM Optimizes commercial outreach and manufacturing DATA ECOSYSTEM Streamlines service and support CONSOLE UTILIZATION Leads to higher treatment revenue mix ONGOING REVENUE Initial console purchase generates recurring and predictable consumable and service revenue INITIAL CONSOLE PURCHASE 22
Integrated commercial strategy drives acute growth and home expansion PROFILE CLINICAL SALES REPS Utilization and fleet expansion CAPITAL SALES TEAM System-wide console adoption FIELD SERVICE ENGINEERS Technical support Top-down installed base growth through national and regional customers Expand within each location and across the system Target health systems and innovative care providers Grow patient adoption, retention and cost of care evidence base SAME CUSTOMERS, PHYSICIANS, TRAINING AND SUPPORT ACUTE STRATEGY HOME STRATEGY 23
+113% CAGR 102.6 28.2 17.2 49.9 15.1 2022E 2021 2019 2020 2.8% GM%2 12.0% Fourth quarter revenue ($M) Annual revenue ($M) Strong financials PROFILE as of Dec. 31, 2021 Acute Strong momentum with both new and existing customers Home Encouraging results on faster training and differentiated retention Secured landmark TPNIES approval from CMS Gross margin Achieved console insourcing goal and 100% of consoles now manufactured in Mexico facility Units deployed Total: ~2,600 Acute Care: 2,000 Sub-Acute: 300 Clinics & Home: 300 Year-end backlog 2020: 551 2021: 1,251 Total cash $372.81 million +63% Includes restricted cash and short-term investments Non-GAAP; see GAAP to non-GAAP reconciliation in the appendix 4Q 2020 4Q 2021 24 142– 150
Strategic focus and key 2022 priorities PROFILE Revenue growth Guidance of 38%–46% revenue growth in 2022 Health system-centric enterprise solution sold through ongoing land- and-expand model into national and regional health systems Inflection in Tablo home sales Gross margin improvement Guidance of gross margin expansion to the high teens for the full year 2022 Deliver on ongoing cost reduction roadmap Drive Tablo treatment utilization Home expansion Guidance of a more than doubling of home revenue exiting 2022, representing mid-teens percentage of total revenue 100 home programs in place with both health systems and specialty providers Maintain highly differentiated patient retention rate 25
Outset Medical 3052 Orchard Drive San Jose, CA 95134 outsetmedical.com 26
Appendix 27
Reconciliation between GAAP and non-GAAP net loss attributable to common stockholders: Reconciliation between GAAP and non-GAAP net loss per share attributable to common stockholders: Reconciliation between GAAP and non-GAAP results of operations: Three Months Ended Years Ended December 31, 2021 2020 December 31, 2021 2020 $ (0.87) $ (0.75 ) $ (2 . . 89) $ (4.85) GAAP net loss per share to common stockholders, diluted Stock-based compensation expense 0.10 0.15 0.38 1.31 Non-GAAP net loss per share to common stockholders, diluted $ (0.77) $ (0.60 ) $ ( 2.51) $ (3.54) Three Months Ended Years Ended December 31, 2021 2020 December 31, 2021 2020 $ (41,232 ) $ ( 32,043) $ (1 3 1 ,935 ) $ (79,324 ) GAAP net loss attributable to common stockholders, diluted Stock-based compensation attributable to common stockholders, diluted $ (3 6,440 ) $ ( 2 5,775 ) $ ( 1 1 4,490 ) $ (57,885 ) Years Ended December 31, Three Months Ended December 31, 2021 2020 $ 3,321 $ 417 68 74 GAAP gross profit Stock-based compensation expense Non-GAAP gross profit 2020 $(13,037) 255 $(12,782) GAAP gross margin Stock-based compensation expense Non-GAAP gross margin $ 3,389 11.8 % 0.2 12.0 % $ 491 2.4 % 0.4 2.8 % 2021 $ 7,608 269 $ 7,877 7.4 % 0.3 7.7 % (26.1) % 0.5 (25.6) % GAAP research and development expense $ 11,410 $ 7,784 $ 36,741 $ 28,850 Stock-based compensation expense (1,241 ) (1,289 ) (3,809 ) (4,615 ) Non-GAAP research and development expense $ 10,169 $ 6,495 $ 32,932 $ 24,235 GAAP sales and marketing expense $ 22,991 $ 15,198 $ 65,070 $ 45,068 Stock-based compensation expense (1,896 ) (1,595 ) (5,897 ) (4,423 ) Non-GAAP sales and marketing expense $ 21,095 $ 13,603 $ 59,173 $ 40,645 GAAP general and administrative expense $ 9,719 $ 9,050 $ 36,316 $ 30,512 Stock-based compensation expense (1,587 ) (3,310 ) (7,470 ) (12,146 ) Non-GAAP general and administrative expense 4,792 6,268 17,445 21,439 expense $ 8,132 $ 5,740 $ 28,846 Non-GAAP net loss per share GAAP total operating expense $ 44,120 $ 32,032 $ 138,127 $ 18,366 $ 104,430 Stock-based compensation expense (4,724 ) (6,194 ) (17,176 ) (21,184 ) Non-GAAP total operating expense $ 39,396 $ 25,838 $ 120,951 $ 83,246 Non-GAAP reconciliations APPENDIX Results of Operations—Non-GAAP (unaudited) (in thousands, except per share amounts) 28