Q4 2021 Outset Medical Inc Earnings Call

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Good day and thank you for standing by. Welcome to the Onset Medical Fourth Quarter and Full Year 2021 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 on your telephone. Please be advised today's conference may be recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to your host today.

Okay. Thank you for standing by welcome to the on site medical fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone please be advised.

Today's conference maybe recorded.

Or any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today, Jim Missoula head of Investor Relations. Sir. Please go ahead.

I'm Jen Mazzola, Head of Investor Relations. Please go ahead.

Okay, thank you and good afternoon everyone. Welcome to the outset medical fourth quarter and full year 2021 earnings call. Participating from the company today are Leslie Trigg, Chair and Chief Executive Officer and Nabeel Ahmed, Chief Financial Officer.

Okay. Thank you and good afternoon, everyone welcome to the outset medical fourth quarter and full year 2021 earnings call participating from the company today are Leslie Trig Chair and Chief Executive Officer, and the BLM, Ed Chief Financial Officer. During the call, we will discuss our fourth quarter and 2021 operational and financial results as well as provide our outlook.

During the call, we will discuss our fourth quarter and 2021 operational and financial results, as well as provide our outlook for 2022. After our prepared remarks, we will host a question and answer session. We issued a news release after the close of the market today and updated our investor presentation, both of which can be found on the investor relations pages of outsetmedical.com. This call is being recorded and will be archived in the investor section of our website.

For 2022 after our prepared remarks, we will host a question and answer session. We issued a news release after the close of the market today and updated our investor presentation, both of which can be found on the investor relations pages about set medical Dot Com. This call is being recorded and will be archived in the investors section of our website.

I'd also like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events, market trends, results, or performance are forward-looking statements. All forward-looking statements are based on our current estimates and various assumptions.

I'd also like to remind you that it is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1095, any statements that relate to expectations or predictions of future events market trends results or performance are forward looking statements. All forward looking statements are based on our current estimate.

<unk> and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements Outsit assumes no obligation to update these statements for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors set.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Outfit assumes no obligations, and other elements of the Hatch range attempt to better control to this level of low risk.

For list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of outset public filings with the Securities and Exchange Commission, including outset's latest annual and quarterly reports. With that, let me now turn the call over to Liz.

<unk> of outset public filings with the Securities and Exchange Commission, including the latest annual and quarterly reports with that let me now turn the call over to Leslie.

Good afternoon, everyone, and thank you for joining us to review our fourth quarter and full year 2021 results. Before I begin, I'd like to introduce and welcome Jim Izzola, who recently joined us as Vice President of Investor Relations. Jim brings two decades of medtech and life sciences experience to our team and we look forward to his contributions as we continue to grow our business.

Good afternoon, everyone and thank you for joining us to review, our fourth quarter and full year 2021 results.

Before I begin I'd like to introduce and welcome Jim Dolan, who recently joined US as Vice President of Investor Relations. Jim brings two decades of Med Tech and life Sciences experience to our team and we look forward to his contributions as we continue to grow our business.

The fourth quarter capped off a truly exceptional year for outset, during which we saw record revenue growth, meaningful progress toward growth margin expansion, success with our land and expand acute strategy, and tangible growth in home console placements, as evidenced by a tripling of our home installed base.

Quarter capped off a truly exceptional year for out that during which we thought record revenue growth meaningful progress toward growth margin expansion and success with our land and expand acute strategy and tangible growth and home console placements as evidenced by a tripling of our home installed base.

This momentum resulted in fourth quarter total revenue of $28.2 million, representing 63% growth year over year, and resulted in full year 2021 revenue of $102.6 million, representing 105% growth year over year. Our business again proved resilient as we continued to grow through COVID-19.

This momentum resulted in fourth quarter total revenue of $28 2 million, representing 63% growth year over year and resulted in full year 2021 revenue of $102 6 million, representing a 105% growth year over year. Our business again proved resilient as we continue to grow through COVID-19.

Our success in the fourth quarter extended beyond revenue with console bookings hitting a historic high. We exited 2021 with 1,251 consoles in backlog, compared to 551 in backlog exiting 2020, with a significant portion of our 2021 exit backlog consisting of consoles intended for use in the home. This backlog provides us with significant visibility and confidence in our 2022 revenue trajectory.

Our success in the fourth quarter extended beyond revenue with console bookings hitting a historic high we exited 2021 with 1251 consoles in backlog compared to 551 and backlog exiting 2020 with a significant portion of our 2021 exit backlog consisting of console.

Intended for use in the home this backlog provides us with significant visibility and confidence in our 2022 revenue trajectory.

As Nabeel will touch on in his discussion of our fiscal year 2022 revenue guidance, we are projecting another strong year ahead with good visibility to continue sales growth within acute care customers and an inflection in units deployed for home use. In addition to growing the top line, we remain confident in reaching our growth margin expansion goals, specifically our 2025 goal to achieve growth margins of approximately 15 years.

As Neil will touch on in his discussion of our fiscal year 2022 revenue guidance. We are projecting another strong year ahead with good visibility to continued sales growth within acute care customers and an inflection and units deployed for <unk> in.

In addition to growing the top line, we remain confident in reaching our gross margin expansion goals, specifically, our 2025 goal to achieve gross margins of approximately 50%.

Turning now to a review of our success in the acute market, the fourth quarter in full year 2021 exceeded our expectations with transformational progress in terms of new sales agreements, expanding with existing customers and console shipments.

Turning now to a review of our success in the acute market the fourth quarter and full year 2021 exceeded our expectations with transformational progress in terms of new sales agreement expanding within existing customers and console shipments importantly.

Importantly, we saw our Land and Expand strategy validated as customers consistently expressed interest in expanding their Tableau fleets to new sites across their networks as they experience the economic, clinical, and workflow benefits that Tableau provides.

Importantly, we saw our land and expand strategy validated as customers consistently expressed interest in expanding their tableau fleets to new sites across their network as they experience the economic clinical and workflow benefits the tableau provide.

For example, one regional health system in the Southeast was paying nearly $400 per treatment with an outsourced service provider prior to adopting Tableau. Following a successful Tableau implementation, the hospital benefited from a 70% reduction in per treatment costs and an estimated $6 million in savings over the past three years.

For example, one regional health system in the southeast with paying nearly $400 per treatment with an outsourced service provider prior to adopting tableau. Following a successful tableau implementation. The hospital benefited from a 70% reduction in per treatment costs, and an estimated $6 million in savings over.

The past three years, the economic and operational benefits as health systems saw with tableau.

The economic and operational benefits this health system saw with Tableau resulted in an expansion to multiple additional hospitals in their next...

<unk> and expansion into multiple additional hospitals in their network.

In addition to tabulate cost reduction benefits. We are also seeing recent adoption due to its ease of use which has enabled some hospitals to recover from unexpected terminations of service from outsource dialysis providers struggling with their own staffing shortages.

During 2021, we achieved our goal of signing sales agreements with seven of the eight largest US health systems. Our team also successfully drove a meaningful expansion of our commercial footprint across the United States as we landed sales agreements with roughly a third of the top 100 largest regional health systems, setting us up well for ongoing expansion in 2022 and beyond.

During 2021, we achieved our goal of fighting sales agreements with seven of the eight largest U S. U S health system. Our team also successfully drove a meaningful expansion of our commercial footprint across the United States as we landed sales agreements with roughly a third of the top 100 largest regional health system.

Setting us up well for ongoing expansion in 2022 and beyond.

This success enabled us to more than double the size of our acute install base, while significantly expanding our backlog and setting a strong foundation for 2022.

This success enabled us to more than double the size of our acute installed base, while significantly expanding our backlog and setting a strong foundation for 2022.

In addition to our success generating new orders, we also continue to see Tableau XT's clinical value to patients and operational workflow benefits to nurses resonating with couples.

In addition to our success generating new orders. We also continue to see tableau <unk> clinical value to patients and operational workflow benefits to nurses resonating with customers.

This is evidenced by another quarter of strong XT attachment rates, thanks in part to the clinical validation we received for XT through our EXTEND study, which demonstrated an impressively low clotting rate of just 4%, despite treatment times that averaged 23.5 hours.

This is evidenced by another quarter of strong equity attachment rate. Thanks in part to the clinical validation, we received Frac T through our extend study, which demonstrated an impressively low plotting rate of just 4%. Despite treatment times that averaged 23 five hours.

Our commercial success in the acute market last year taught us that Tableau solves important problems not only for the nation's largest health system, but also for smaller hospitals with fewer than 100 beds. Given our strong traction in this segment of the market, which we had previously excluded from our TAM estimate, we now believe that our immediately addressable U.S. market opportunity for the acute setting is $300 million larger than initially projected, putting the total U.S. TAM at $2.5 billion.

Our commercial success in the acute market last year taught us that tableau solves important problems not only for the nation's largest health system, but also for smaller hospitals with fewer than 100 beds.

Given our strong traction in this segment of the market, which we had previously excluded from our Tam estimate we now believe that our immediately addressable U S market opportunity for the acute setting is $300 million larger than initially projected putting the total U S. Tam at $2 5 billion.

I'd like to add that our success in these smaller hospitals is meaningful on a very human level as well. Cablo is creating health access equity in often rural communities where patients may not have had or may be at risk of losing access to dialysis care.

I'd like to add that our success in these smaller hospitals is meaningful on a very human level as well tableau is creating health access equity and often rural communities, where patients may not have had or may be at risk of losing access to dialysis care in states like Texas, and Oklahoma small hospitals have adopted tableau.

In states like Texas and Oklahoma, small hospitals have adopted Tableau to start offering in-patient dialysis to patients who previously would have had to travel hours away to receive care. We've also seen small hospitals use Tableau to in-source dialysis in order to preserve a dialysis service line their community members otherwise would have lost.

To start offering inpatient dialysis patients, who previously would have had to travel hours away to receive care. We've also seen small hospitals use tableau to in source dialysis in order to preserve a dialysis service line. There are community members otherwise would have lost we care about patients first and are proud to.

We care about patients first and are proud to serve the need wherever and whenever it exists.

Serve the needs wherever and whenever it exists.

As we look ahead, we are only single-digit penetrated in acute, and we have a tremendous runway in terms of new customer acquisition, particularly as we're observing hospitals of all sizes seeing value in Tableau. We feel we are still just at the tip of the iceberg on the acute side.

As we look ahead, we are only single digit penetrated in acute and we have a tremendous runway in terms of new customer acquisition, particularly as we are observing hospitals of all sizes being value and tableau. We feel we are still just at the tip of the iceberg on the acute side.

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Can you start this FX actually growing customer and installed base in the acute setting directly feeds our homepage centered strategy in 2021, we took a deliberate approach to building our early home presence.

In 2021, we took a deliberate approach to building our early home presence, focusing first and foremost on delivering an exceptional and highly differentiated patient and caregiver experience.

First and foremost on delivering an exceptional and highly differentiated patient and caregiver experience or <unk>.

Our second key objective last year was to build a solid operational foundation that was ready for scale from training to distribution and logistics to patient support any time of the night or day.

Second key objective last year was to build a solid operational foundation that was ready for scale from training to distribution and logistics to patient support any time of the night or day I am Leslie is pleased to report the team achieved both of these objectives, while tripling our home <unk> installed base to 300 consoles and in <unk>.

I am, Leslie is pleased to report, the team achieved both of these objectives while tripling our home and clinic install base to 300 consoles and in ways that allow us to scale in 2022 with an inflection beginning this year.

Ways that allow us to scale in 2022 with an inflection beginning this year.

After growing home revenue to mid to high single digits as a percent of total revenue in 2021, we expect our home revenue to more than double in 22, reaching mid-teens as a percentage of 2022 revenue.

Through growing room revenue to mid to high single digits as a percent of total revenue in 2021, we expect our home revenue to more than double in 22, reaching mid teens as a percentage of 2022 revenue to.

To achieve this level of growth, it is also our goal to exit the year with 100 home programs in place with both health systems and specialty providers.

To achieve this level of growth. It is also our goal to exit the year with 100 home programs in place with both health systems and specialty providers.

I'm back. Teamwork makes the dream work, as they say. Thank you, Nabil. Given that home consoles were a significant portion of our Q4 exit backlog, we believe we are set up well for strong velocity and volume in 2022. Additionally, macro factors in the home setting remain overwhelmingly in our favor. As we announced on our last call, we are very pleased to have received a favorable decision for Tableau under the TIP needs program following the submission of our application in the first quarter of 2021.

I'm back teamwork makes the Dreamworks as they say thank you to bill given that home consoles, where a significant portion of our Q4 exit backlog. We believe we are set up well for strong velocity and volume in 2022. Additionally, macro factors in the home setting remain overwhelmingly in our favor as we announced on our <unk>.

Last call. We are very pleased to have received a favorable decision for tableau under the Tiffany's program. Following the submission of our application in the first quarter of 2021.

As a reminder, TITME stands for the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies.

As a reminder, kidney fans for the transitional add on payment adjustment for new and innovative equipment and supplies, notably CMS team tableau, a substantial clinical improvement compared to the incumbent device, making it the first and only dialysis technology to benefit from this new CNS rule the kidneys decision.

The TIPNEES decision and the end stage renal treatment choices or ETC model provide additional tailwinds we believe our sales teams will capitalize on in 2020.

And the end stage renal treatment choices or DTC model provide additional tailwind we believe our sales teams will capitalize on in 2022.

Beyond our ability to drive revenue growth and build a foundation for the future, our team continues to make impressive progress on gross margin expansion, despite macro headwinds. We reached fourth quarter non-GAAP gross margin of 12%, which was in line with our expectations. We're very proud of our teams across the business in how they've effectively managed through the macro supply chain and sector volatility during the quarter and the year.

Beyond our ability to drive revenue growth and build a foundation for the future. Our team continues to make impressive progress on gross margin expansion. Despite macro headwinds, we reached fourth quarter non-GAAP gross margin of 12%, which was in line with our expectations.

We're very proud of our teams across the business and how they've effectively managed through the macro supply chain and sector volatility during the quarter and the year.

On the supply chain and manufacturing side, our ongoing cost down initiatives and programs continue to work for us, which helps drive sequential reduction in the cost of our...

On the supply chain and manufacturing side, our ongoing cost out initiatives and programs continue to work for us, which helped drive sequential reduction in the cost of our console.

On the cartridge side, we achieved an important milestone in late November when the FDA granted 510K clearance for a new Tableau cartridge. This approval enabled a second source to produce Tableau cartridges in Mexico with a new contract manufacturing partner in addition to our existing manufacturing partner in Southeast Asia.

On the cartridge side, we achieved an important milestone in late November when the FDA granted five 10-K clearance for our new tableau cartridge. This approval enables a second source to produce tableau cartridges in Mexico with a new contract manufacturing partner in addition to our existing manufacturing partner in Southeast Asia.

This clearance is an important milestone on our roadmap to continue gross margin expansion as we expect previously elevated transportation and shipping costs to decrease as this new primary source of cartridge production in Mexico ramps up. Both this new source and our other ongoing cost down initiatives are expected to contribute to long-term gross margin expansion.

This clearance is an important milestone on our roadmap to continued gross margin expansion as we expect previously elevated transportation and shipping costs to decrease as this new primary source of cartridge production in Mexico ramped up both this new source and our other ongoing cost out initiatives are expected to contribute to long term growth.

Margin expansion and.

In addition to cost reduction, we believe this approval will better enable us to optimize our manufacturing process and mitigate current supply chain challenges around lead time, capacity, and logistics.

In addition to cost reduction we believe this approval will better able will better enable us to optimize our manufacturing process and mitigate current supply chain challenges around lead time capacity and logistics.

In summary, we are very proud of our performance both in the fourth quarter and full year. Outset continues to deliver strong, consistent, and predictable revenue growth and growth margin.

In summary, we are very proud of our performance both in the fourth quarter and full year outset continues to deliver strong consistent and predictable revenue growth and gross margin expansion. In addition, we successfully achieved the key 2021 strategic initiatives, we communicated at the beginning of last year.

In addition, we successfully achieved the key 2021 strategic initiatives we communicated at the beginning of last year, expansion within the acute setting, foundation building for expansion in the home setting, increasing manufacturing capacity, and delivering cost reduction initiatives designed to enable sustainable and profitable financial growth.

Pension within the acute setting foundation building for expansion in the home setting increasing manufacturing capacity and delivering cost reduction initiatives designed to enable sustainable and profitable financial growth.

These accomplishments are a testament to our exceptional team and the transformative technology we're delivering to reduce the dialysis burden for patients and all those who support them.

These accomplishments are a testament to our exceptional team and the transformative technology, we're delivering to reduce the dialysis burden for patients and all those who support them.

As we look to 2022, we have clarity and conviction around the growth drivers that will continue to distinguish outset medical, namely expanding our acute care business from the beachhead we established last year, inflecting the trajectory of our home business, and meaningfully expanding growth margins. I remain very confident in our growth trajectory and our promise to dialysis patients and providers that better begin.

As we look to 2022, we have clarity and conviction around the growth drivers that will continue to distinguish outset medical namely expanding our acute care business from the beachhead, we established last year and flexing the trajectory of our home business and meaningfully expanding gross margin.

I remain very confident in our growth trajectory and our promise to dialysis patients and providers that better begins now.

Before we turn the call over to Nabil, I'd like to share a story from our annual sales training meeting, which was held last month. As we do at every sales meeting, we invited several patients and nephrologists to speak to our group. Melvin and his wife of 46 years, Cleo, were two such individuals who had an enormous impact on our team. Melvin is a veteran with end stage kidney disease and he served our country for 23 years in the Air Force, including on the team responsible for maintaining Air Force One.

Before I turn the call over to Bill I'd like to share a story from our annual sales training meeting, which was held last month as we do it every sales meeting we invited several patients and nephrologist to speak to our group.

<unk> and his wife are 46 years Cleo, we're two such individuals who've had an enormous impact on our team Melvin is a veteran with end stage kidney disease and he served our country for 23 years and the Air force, including on the team responsible for maintaining Air Force one.

He was diagnosed in 2009 and began home dialysis in 2018 with a competitor system.

He was diagnosed in 2009 and began home dialysis in 2018 with a competitor system.

Clio told us that training was difficult and that there were quote binders of information to assimilate and that it was quite overwhelming. So when Melvin's nephrologist approached the couple with a new option in April of 2021, they were eager to try Tableau.

<unk> told us that training was difficult and that their workload binders of information to assimilate and that it was quite overwhelming so when meldons nephrologist approach coupled with a new option in April of 2021, they were eager to try tableau.

Cleo told us, I simply cannot believe how much better Tableau is. Not only is disinfection easy, but setting up for treatment is so quick and simple to do. She said, Tableau walks you step by step through everything on the touchscreen and you never feel like you're lost.

Cleo told us I simply cannot believe how much better tableau has not only is this infection easy but setting up for treatment is so quick and simple to do she said tableau walks you step by step through everything on the touch screen and you never feel like your last <unk>.

She describes moving to Tableau as a night and day difference.

He described moving to tableau as a night and day difference Melvin said he likes all the time tableau safe timely and Clio can spend doing more of the things they enjoying retirement, including spending time with their four children and nine grandchildren. We love stories like this and look forward to sharing more of them as we continue to.

Melvin said he likes all the time Tableau saves. Time he and Cleo can spend doing more of the things they enjoy in retirement, including spending time with their four children and nine grandchildren. We love stories like this and look forward to sharing more of them as we continue to grow and further expand in the acute and home markets in 2022.

ROE and further expand in the acute and home markets in 2022.

And of course, none of the success we had last year would have been possible without the hard work and dedication to our mission carried out by everyone on the Outset team. And for that, I want to close by thanking all of our employees for their extraordinary work. With that, I'll now turn the call over to Nabeel to review our financials and provide more granularity on our expectations and key drivers for 2020.

And of course, none of the success, we had last year would have been possible without the hard work and dedication to our mission carried out by everyone on the outset team and for that I want to close by thanking all of our employees for their extraordinary work with that I'll now turn the call over to be able to review our financials and provide more granularity on our expectations and key drivers for 2000.

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Thanks, Leslie. Hello, everyone. Our fourth quarter revenue grew 63% year over year to $28.2 million, driven primarily by increased console shipments to acute customers, higher consumable shipments, increased services to support our growing install base and the impact of XT updates.

Thanks, Leslie Hello, everyone, our fourth quarter revenue grew 63% year over year to $28 2 million.

Primarily by increased control shipments to acute customers higher consumable shipments increased services to support our growing installed base and the impact of XT upgrades.

Full year revenue was $102.6 million, an increase of 105%.

Our full year revenue was $102 6 million.

An increase of 105% over the prior year.

Product revenue grew 80% year over year to 23.7 million.

Product revenue, 80% year over year to $23 7 million console revenue grew by 70% year over year to $18 1 million driven by higher console placements and increased ESP, given the availability of and demand for tableau X team similar to prior quarters, we can see.

Console revenue grew by 70% year over year to $18.1 million, driven by higher console placements and increased ASP given the availability of and demand for Tableau X.

Similar to prior quarters, we continue to see better uptake of our XD upgrade than we had initially projected. Consumable revenue was $5.6 million, an increase of 119% versus the prior year. We saw Q4 cartridge utilization in line with our expectation of the new upgrade.

New to see better uptick of our XT upgrades than we had initially projected consumable revenue was $5 6 million an increase of 119% versus the prior year. We saw Q4 cartridge utilization in line with our expectations.

Service and other revenue grew by 11% year over year, to four and a half million dollars as we serviced the larger install.

Service and other revenue grew by 11% year over year to four and a half million dollars. As we said was the larger installed base.

Moving to gross margin and operating expenses, I will highlight our non-GAAP results. I encourage you to review the reconciliation of GAAP to non-GAAP measures, which can be found in today's earnings results.

Moving to gross margin and operating expenses I will highlight our non-GAAP results I encourage you to review the reconciliation of GAAP to non-GAAP measures, which can be found in today's earnings release.

Our fourth quarter gross margin was 12%, an improvement of approximately nine percentage points versus the prior year period, and a sequential improvement of sixty beats.

Our fourth quarter gross margin was 12% an improvement of approximately nine percentage points versus the prior year period, and a sequential improvement of 60 basis points. This improvement compared to the prior year period was primarily the result of our ongoing cost reduction activities related to moving our consortium.

This improvement compared to the prior year period was primarily the result of our ongoing cost reduction activities related to moving our console manufacturing production to Mexico, which have meaningfully lowered console costs, while enabling increased console

Manufacturing production to Mexico, which have meaningfully lowered control costs, while enabling increased console output.

Operating expenses in the fourth quarter were $39.4 million, up $13.6 million versus the prior year period, driven primarily by headcount growth resulting from investments in our commercial organization, investments in R&D, and G&A expenses tied to operating equipment.

Operating expenses in the fourth quarter with $39 4 million.

$13 6 million versus the prior year period, driven primarily by head count growth, resulting from investments in our commercial organization investments in R&D and G&A expenses tied to operating as a public company compared to the prior quarter non-GAAP Opex increased $9 1 million.

Compared to the prior quarter, non-GAAP OPEX increased $9.1 million primarily as a result of the investments we're making in our commercial execution and...

Primarily as a result of the investments, we're making in our commercial execution and in R&D.

We reported fourth quarter gap net loss of $41.2 million, resulting in a net loss of 87 cents per share compared to a net loss of $32 million or 75 cents per share for the prior year.

We reported fourth quarter GAAP net loss of $41 2 million.

Resulting in a net loss of <unk> <unk> per share compared to a net loss of $32 million.

<unk> 75 per share for the prior year period, non-GAAP net loss was $36 4 million.

non-GAAP net loss was $36.4 million or $0.77 per share compared to a non-GAAP net loss of $25.8 million or $0.60 per share for the same period.

Or <unk> 77 per share compared to a non-GAAP net loss of $25 8 million or <unk> 60 per share for the same period in 2020.

We ended the year with approximately $372.8 million of cash, cash equivalents, restricted cash, and...

We ended the year with approximately $372 $8 million of cash cash equivalents restricted cash and investments.

Moving on to our 2022 outlook. We project revenue for the full year 2022 to range from 142 to $150 million, which represents approximately 38 to 46% growth over fiscal year 2021.

Moving on to our 2022 outlook, we project revenue for the full year of 2022 to range from $142 million to $150 million, which represents approximately 38% to 46% growth over fiscal year 2021 revenue our guidance is grounded in the visibility afforded by our.

Our backlog of both acute and home consoles exiting 2021 as well as our pipeline.

Revenue guidance assumes an inflection in our sales to home customers, we expect that our sales into the whom will double as a proportion of our revenue in 2022 compared to 2021 with a goal in the mid teens as a percentage of total revenue for full year 2022.

For modeling purposes, we assume revenue will grow in the mid to high single digits sequentially from Q4 to Q1 and then accelerate as we move through the rest.

For modeling purposes, we assume revenue will grow in the mid to high single digits sequentially from Q4 to Q1, and then accelerate as we move through the rest of the year.

Moving to gross margin, we were very pleased with our sequential improvement in the fourth quarter and our year-over-year expansion. Overcoming some of the supply chain headwinds we saw in the last quarter.

Moving to gross margin.

We're very pleased with our sequential improvement in the fourth quarter and year over year expansion overcoming some of the supply chain headwinds we faced.

We expect our gross margin to continue to benefit from our ongoing cost-down activities on the console, as well as the transition of our cartridge production to be primarily in Mexico.

Expect our gross margin to continue to benefit from ongoing cost down activities on the console as well as the transition of our cartridge production to be primarily in Mexico.

we have line of sight to non-GAAP gross margin expansion to the high teens for the full year 2022, more than a 2x expansion to 2021 full year.

Have line of sight to non-GAAP gross margin expansion to the high teens for the full year 2022 more than a two X expansion to 2021 for your gross margin.

This forecast assumes some level of continued volatility in component.

This forecast assumes some level of continued volatility in component costs, which we believe we have mitigated against as well as the cost of freight, which we expect to taper in the first half of year as our new Mexico based cartridge manufacturer ramps up.

which we believe we have mitigated against, as well as the cost of freight which we expect to taper in the first half of the year as our new Mexico-based cartridge manufacturer

As we have said throughout the last couple of years, we are fortunate to have one of the best supply chain teams in the business. And we will continue to leverage our strong balance sheet to help ensure that we have enough materials and inventory on hand to service our growing business with the product that weou use when we are

As we have said throughout the last couple of years, we are fortunate to have one of the best supply chain teams in the business and we will continue to leverage our strong balance sheet to help ensure that we have enough materials and inventory on hand to service our growing demand.

Our gross margin performance through 2021 and the structural changes we've made around our console and cartridge manufacturing give us continued confidence in our long-term margin expansion trajectory and in our path to get to roughly 50% gross margins in 2025. Now, I'd like to turn to

Our gross margin performance through 2021, and the structural changes we've made around our console and cartridge manufacturing give us continued confidence in our long term margin expansion trajectory.

Our paths to get to roughly 50% gross margins in 2025.

Now I'd like to turn to non-GAAP Opex, given our strong progress to date, the large market opportunity, we see in front of us and with <unk>, we see in the whole market.

Given our strong progress to date, the large market opportunity we see in front of us, and the tailwinds we see in the home market, our intent is to continue to invest in our business to drive long-term revenue growth, ongoing gross margin expansion, and focused R&D to help ensure that our solutions remain in the leadership position.

Our intent is to continue to invest in our business to drive long term revenue growth.

Ongoing gross margin expansion and focused R&D to help ensure that our solutions remain the leadership position.

We forecast operating expenses to increase in 2022 relative to 2021 as we annualize the investments we made in 2021.

We forecast operating expenses to increase in 2022 relative to 2021 as we annualize the investments we made in 2021 next I want to provide some color on our expected increase in stock based compensation expense, we transition to being a public company in late 2020 and did our first real set of equity grants.

Next, I want to provide some color on our expected increase in stock-based compensation.

We transitioned to being a public company in late 2020 and did our first real set of equity grants in 2021. As a result, our non-cash stock-based compensation expense will be meaningfully higher in 2022 relative to 2021.

In 2021 as a result, our noncash stock based compensation expense will be meaningfully higher in 2022 relative to 2021, and finally, a quick comment on Capex our facility in Mexico continues to be able to support our control manufacturing needs into the foreseeable future.

And finally, a quick comment on CAPEX. Our facility in Mexico continues to be able to support our console manufacturing needs into the foreseeable future. We intend to make some scheduled CAPEX investments into this facility to expand its capacity to keep up with anticipated demand. We expect total CAPEX for 2022 to be in the mid to high single-digit million.

Tend to make some scheduled capex investments into this facility to expand its capacity to keep up with anticipated demand. We expect total capex for 2022 to be in the mid to high single digit millions of dollars.

Our progress through 2021 and our expectations for 2022 give us continued confidence on our journey towards breakeven profitability on a non-gap basis exiting 2021.

Our progress through 2021, and our expectations for 2022 give us continued confidence on our journey towards breakeven profitability on a non-GAAP basis exiting 2024.

Thank you for your time. We look forward to providing an update on our Q1 progress during our next earnings call. Operator, please open the line.

Thank you for your time, we look forward to providing an update on our Q1 progress during our next earnings call. Operator, Please open the lines.

Thank you. If you have a question at this time, please press star then one on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Our first question comes from the line of Amit Hazan with Goldman Sachs. Your line is open. Please go ahead.

Our first question comes from the line of Ahmed Hassan with Goldman Sachs. Your line is open. Please go ahead.

Oh, thanks very much, and congrats on the quarter and the year. I thought maybe what we could do is just start with the macro.

Hello, Thanks, very much and congrats on the quarter and the year.

I thought maybe what we could do is just start with the macro and you gave some good color, but I wanted to just follow up on it and just ask about the supply chain and some of the issues. There that have come up and I know investors are thinking about so the component tree. It sounded like you've got your kind of <unk>.

You gave some good color, but I want to just follow up on it and just ask about the supply chain and some of the issues there that have come up that I know investors are thinking about. The componentry, it sounded like you've got your hands around this implied in your comments to suggest that if you think about your backlog or units you expect to deliver in 2022 that you think you have the components you need to be able to deliver that. I just want to get a confirmation there. And then, just as an aside, separately on dialysate and the shortage that companies I think there's some confusion out there on the extent to which you guys are even exposed to that. Maybe just if you could spend a minute helping to clarify that it would be.

Hands around this.

Implied in your comments suggest that if you think about your backlog or units you expect to deliver in 'twenty. Two that you think youll have the components you need to be able to deliver that I just wanted to get a confirmation there and then just as an aside separately on dialysis and the shortage that companies like Davita as Youre talking about I think there's some confusion out there on the extent to which you guys.

Even exposed to that maybe just if you could spend a minute helping to clarify that it would be helpful.

Yeah, I mean, absolutely. So let me maybe start with your with the first part of your question on the supply chain. So, you know, we've seen a couple of things happen over the last year. Number one, the component shortages, as I talked about

Yeah, absolutely. So let me maybe start with your first part of your question on the supply chain. So we.

We've seen a couple of things happened over the last year number one the component shortages as I talked about.

We do have one of the best supply chain teams in the business. We have leveraged our balance sheet to make sure that we have enough.

We do have one of the best supply chain teams in the business, we have leveraged our balance sheet to make sure that we have enough raw materials and components on hand, we also make sure that we've got enough tableau was on hand to serve as forward demand. So we are not concerned from a component perspective at all.

raw materials and components on hand. We also make sure that we've got enough tableaus on hand to service forward demand. So we are not concerned from a component perspective at all with respect to 2022. The other thing we saw, and I talked about this in my prepared remarks, is the cost of freight.

With respect to 2022, the other thing we saw and I talked about this in my prepared remarks was the cost of rates, particularly as it related to transporting cartridges from southeast Asia to the United States now again now that we have our Mexico based cartridge manufacturer there'll be ramping up here.

particularly as it related to transporting cartridges.

from Southeast Asia to the United States. Now, again, now that we have our Mexico-based cartridge manufacturer, they'll be ramping up here in the first half of the year. And so, again, structurally, we've mitigated that situation. And we won't have these freight costs go up.

The first half of the year and so again structurally we've mitigated that situation.

We won't have these freight costs going forward.

Good morning.

Yeah, maybe I can jump in on the second part of that. I mean, yes, we have been hearing about and reading about in the newspaper the dialysis, dialysis-safe shortages as well.

Yes, maybe I'll I can jump in on the second part of that.

Yes, we have been hearing about and reading about in the newspaper the dialysis dialysis stage shortages as well.

We've certainly gotten our fair share of calls from hospitals being put in a pretty difficult position by that.

We've certainly gotten our fair share of calls from hospitals being put in a pretty difficult position by that.

The short answer is we are open for business and anticipate being open for business well into the far future. We don't source from any of the providers, I think, that have been struggling with such shortages.

The short answer is we are open for business.

And and anticipate being opened for business well into the FERC future.

We don't source from any of the providers I think that had been struggling with such shortages and.

we have admits to be. And so if anything, it has provided us with an opportunity.

We haven't missed a beat and so if anything it has provided us with an opportunity to help out at a really critical time since we have been able to maintain a very very strong continuity of supply.

to help out at a really critical time since we have been able to maintain a very, very strong continuity of supply.

Just as one follow-up and I'll jump back into you, just on the 22 Guide, just thinking about folks still getting to know you all and thinking about the backlog that you give at the end of the year, 550 last year, maybe help us understand how last year's figure ended up materializing, how much of it and how fast. And if that informs how we should be thinking about the 1250, how much forward visibility does that afford you? And then just generally around visibility, as you think about the guidance that you gave, just the puts and takes on a low and the high end that you're thinking about for the year would be super helpful. Thanks so much and again.

Okay, good stuff and just ask one follow up and I'll jump back in queue.

Just under 22 guide just thinking about kind of folks still getting to know you all.

And thinking about the backlog that you gave at the end of the year.

550 last year, maybe help us understand how last years figure ended up materializing, how much of it and how fast and if that informs how we should be thinking about the $12 50, how much forward visibility does that does that afford you and then just generally around visibility maybe you think about the guidance that you gave just to put some.

Takes a low and the high end that youre thinking about for the year would be super helpful. Thanks, So much and again congrats.

Yeah, of course, Yamiche.

Yes of course can be so so.

three things there. So one, we entered 2021 with 551 consoles and backlog, as you mentioned. Now, if you rewind the tape, we talked a lot about that backlog being very one-H.

Three things there. So one we entered 2021 was 551 consoles in backlog as you mentioned mountain if you rewind the tape, we talked a lot about that backlog being very one H 'twenty, one focused right the composition of that backlog and when.

21 focused, right? The composition of that backlog, and when our customers expected that backlog to deploy, was really in the first half of 21. And you may recall that it sort of led to a large amount of growth concentrated in the first half of the year in 2021.

Our customers expect that backlog to deploy was really in the first half of 'twenty, one and you may recall that it has sort of led to a large amount of growth concentrated in the first half of the year in 2021 now so that's that.

Now, so that's that. When we look at the backlog we have entering 22, so we have 1,251 consoles in backlog entering 22.

When we look at the backlog we have entering 'twenty. Two so we have 251 consoles and backlog entering 'twenty two.

And Backlog for us represents an agreement with our customers to take an order, it's a binding order, and then we work with them to determine the ship dates of that backlog. So the backlog of 550 entering 21 is very different from the backlog entering 22.

And backlog for US represents an agreement with our customers to take an order. It's a binding order and then we work with them to determine the ship dates of that backlog right. So the backlog of 550 entry in 'twenty. One is very different from the backlog entering 'twenty two based on the backlog we have entering 'twenty two to 12.

based on the backlog we have entering 22, the 1,251 consoles, and the visibility we have in our pipeline, we have a lot of confidence in the guidance range that we talked about, the $142 to $150 million. We have a lot of confidence around the range and it's supported by the visibility here that the backlog starts.

51 consoles and the visibility we have in our pipeline, we have a lot of confidence in the guidance range that we talked about the $142 million to $150 million like we have a lot of confidence around the range and it's supported by the visibility here, but the backlog starts to provide now.

Now, when you think about our guidance range, the 142 to 150, you know, we have baked in the fact

When you think about our guidance range of $1 42 to $1 50, we have baked in the fact that Covid has not really been a headwind for us as Leslie mentioned, we've managed to grow through that we've baked in the fact that nursing shortages have by and large been a tailwind for US again as Leslie mentioned we.

that COVID has not really been a headwind for us. As Leslie mentioned, we've managed to grow through that. We've baked in the fact that nursing shortages have by and large been a tailwind for us.

Again, as Leslie mentioned, we have seen situations where we have been able to step in where a hospital's incumbent outsourced provider has had their staffing shortages and been unable to service the customer.

<unk> seen situations, where we have been able to step in where our hospitals incumbent outsource provider has had their staffing shortages and been unable to service the customer right.

And so we have a lot of confidence again around the range. And look, we still have three and a half quarters of execution left to go here in 2022. And so sitting here today, we've got a lot of confidence in the range afforded by the visibility given by our bank.

So we have a lot of confidence again around the range and look we still have three and a half quarters of execution left to go here.

In 2022, and so sitting here today, we've got a lot of confidence in the range of afforded by the visibility given by our backlog and pipeline.

Good stuff. Thank you.

Thank you and our next question comes from line of Josh Jennings with Cowen. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Josh Jennings with Cowen. Your line is open. Please go ahead.

Hi, good evening and I'll echo Amit's sentiments and congratulations on the Strong's finish of the year.

Hi, good evening and I'll Echo my sentiments on.

Congratulations on a strong finish to the year.

And I wanted to add just two questions on home opportunity.

And I wanted to just two questions on home.

sounds like you're really experiencing some meaningful momentum.

Opportunity.

You really.

Interesting, so some meaningful momentum and.

And it was great to hear the guidance you laid out. We wanted to just get a better understanding of where Tableau is winning. Is it mostly new patient starts in-home or are there competitive swap-ins going on?

And it was great to hear the guidance you laid out.

Wanted to just get a better understanding of where tableau is winning is it mostly new patient starts and home or are there competitive swap games going on and also just whether or not the PD kind of burn outpatient opportunity is.

and also just whether or not the PD burnout patient opportunity is...

is contributing to some of the momentum and how you're feeling about attacking that, those PD patients that are burned out and already on some form of home dialysis. And then the second follow-up is just on the pandemic.

Is contributing to some of the momentum and how youre feeling about attacking that those PD patients had a pronounced already on some form of home.

And then the second follow up is just on.

The pandemic.

We're seeing in 2021 a pandemic tailwind in terms of more in-state renal disease patients choosing home hemodialysis, just staying out of the clinic, being high-risk, and wanting a safer dialysis haven in their home. Thanks for taking the questions.

Seeing in 2021.

<unk> tailwind in terms of more.

Renal disease patients choosing home hemodialysis are staying out of the clinic being high risk.

Wanting to say for dialysis Haven and their home thanks for taking the questions.

Yeah, sure. Josh, thanks. Thanks for listening. Well, I'll start maybe from the top. You talked about, you know, where is Tableau winning new patients or existing patients on a competitive home hemodevice? And the answer is both.

Yeah sure Josh Thanks, Thanks for that for listening well I'll start maybe from the top you talked about whereas tableau, winning new patients or existing patients on a a.

<unk> home hemo device and and the answer is both.

I would be hard pressed to give you any sort of precise breakdown there because, you know, each provider, some of them are pursuing slightly different strategies, but I would say, by and large, most providers adopting Tableau are doing so to grow their total home population to expand it.

I would be hard pressed to give you.

Any sort of precise breakdown there because you know each provider or some of them are pursuing slightly different strategies, but I would say by and large most providers adopting tableau are doing so to grow their total home population to expand it and they're they're purchasing tableau because they believe that tableau is ease of use time.

And they're purchasing Tableau because they believe that Tableau's ease of use, time saving, fewer supplies.

Savings you were supply will result in more patients, saying, yes to home. So I would say that some of our patients at home today have been not an incumbent technology in the past like there's a couple that I mentioned on the call earlier, but probably the majority are new to home as providers are looking to grow their total home hub.

will result in more patients saying yes to home. So I would say that some of our patients at home today have been on an incumbent technology in the past, like the couple that I mentioned on the call earlier, but probably the majority are new to home as providers are looking to grow their total home population as a result, I think also of the ETC and also this Tiffany's Benefit associated with tablets.

<unk> as a result, I think also with the ETP and and also this.

Kidney benefit associated with tableau.

In terms of, you also mentioned the PD, the population of patients kind of off-boarding from PD, I would say I'd like to be able to say early innings. I think we're whatever comes before the early innings. We are pre-early innings. We have

In terms of you you also mentioned the the PD the population of patients kind of off boarding from TD.

I would say I would like to be able to say early innings I think we're whatever comes before the early innings, we are pretty early innings.

We have I.

I think always viewed a PD transition to HHD on Tableau as a really fantastic and obvious opportunity for patients to be able to stay at home. And I do anticipate in the coming years that we will invest in more patient education and more transition programs. But for today, we're really focused on helping our providers do what they want to do, which is grow their HHD population.

I think always viewed our PD transition to HD on tableau.

It's a really fantastic an obvious opportunity for patients to be able to stay at home and I do anticipate in the coming years that we will invest in more patient education and more transition programs that for today.

We're really focused on helping our providers do what they want to do which is grow their ADHD population.

Lastly, on the COVID and has the pandemic served as a tailwind?

Lastly on the Covid has the pandemic served as a tailwind I would say qualitatively, yes, when you talk to patients and again very anecdotally you will hear many of them say, yes. They started to really sort of enter my equation about dialyzer and at center versus <unk> at home, but.

I would say qualitatively, yes. You know, when you talk to patients.

And again, very anecdotally, you will hear many of them say, yes, this started to really sort of enter my equation about dialyzing in a center versus dialyzing at home. But thus far, you know, we haven't necessarily seen or generated any hard and fast data about how many and how quickly, but anecdotally, absolutely, that comes up all the time, you know, at least in the conversations that I have with patients about why they're choosing home.

Thus far we haven't necessarily seen or generated any.

Hard and fast data about how many and how quickly but anecdotally absolutely that comes up all the time at least in the conversations that I have with patients about why they're choosing home.

That's super helpful. Thanks for the lovely.

Yes.

And our next question comes from the line of Siraj Khalia with Oppenheimer and Company. Your line is open. Please go ahead.

And our next question comes from the line of Suraj Kalia with Oppenheimer <unk> Company. Your line is open. Please go ahead.

Hi, Leslie, Nabeel, can you hear me all right? Yes.

Hi, Leslie and the Bill can you hear me alright.

Yes.

Perfect. Hey, congrats on the quarter. So, Leslie, a couple of questions. Actually, Nabil, let me start off with you.

Perfect Hey, congrats on the quarter, So, let's say a couple of questions actually in the Bill Let me start out with you.

In the field, the commentary implies approximately a 20 to 22 million home hemo contribution in FY 22. If I just do back of the envelope calculation, a little over 500 home hemo patients

The commentary implies approximately $20 million to $22 million.

Hemo contribution in FY 'twenty two if.

If I just do back of the envelope calculation, a little over 500 homes more patients.

expected for FY22 up from let's say around 175 or so in FY21. How off is my math on this?

Expected for FY 'twenty, two from let's say around 175 or so in FY 'twenty one.

Or is my math on this.

Suraj, I mean, you're not, I don't want to comment on the specific number, and that's not something we want to guide to, but, you know, what we did say is that our home revenues were more than double to get to this mid-teens as a percent of 22 revenue, and so your math tracks to that.

Sure.

I don't want to comment on the specific number and thats not something we want to guide to but what we did say is that our home revenues will more than double to get to this mid teens as a percentage of 22 revenue and so your math tracks to that statement.

Now we will publish our installed base annually. We'll do the same thing next year when we print Q422 results. But you're mad.

Now we will we will publish our installed base annually. We will do the same thing next year when we when we print Q4, 'twenty two results, but your math trucks.

Fair enough. Hey Leslie, I'll throw one year away and hop back and cue. When I look at the bell curve of distribution, especially in the acute centers and the 1250 consoles and backlogs.

Fair enough.

All through one year away and hop back in queue. When I look at the bell curve of distribution, especially.

<unk> centers in the $12 50, consoled some backlog.

Okay.

you know, to the extent that you can help us understand how the bell curve looks like. You know, because you did have some pretty big contract from from some, you know, concentrated users. And I'm curious how you're seeing the bell curve? Is it widening? Is it narrowing? You know, any any idea about recurring revs from acute centers would be greatly appreciated. Folks, thank you for taking my time.

The extent that you can help us understand how the bell curve looks like.

Because you did have some pretty big contracts.

Some.

Concentrated users.

Curious how youre seeing the bell curve is it widening is it narrowing.

Any any.

Idea of bulk recurring revs.

<unk> centers would be greatly appreciated folks. Thank you for taking my questions.

Yeah, sure, happy to, and I'm going to assume that by bell curve you're really maybe referring to the installed base in facilities and customer expansion, et cetera. I guess my first comment would be in 2021, the expansion was both wide and deep. So in that sense, I would call, if I'm interpreting your bell curve analogy correctly, and please jump back on the line if I'm not, but if I'm interpreting that correctly, yes, the bell curve is getting wider. What?

Yeah, sure happy to and I'm going to assume that by Bell curve, you really maybe referring to the installed the installed base and facilities and customer expansion et cetera.

I guess my my first comment would be in 2021, b expansion with both wide and deep so in that sense I would call if I'm interpreting your bell curve analogy correctly and please jump back on the line if I'm not but if.

If I'm interpreting that correctly, yes.

Perfect getting wider.

Just the utilization, you know, a utilization bell curve per center. And then how does the bell curve look like or how is it shifting?

Just the utilization.

Utilization per center and then how does the bell curve looks like or how is it shifting.

Suresh, let me maybe take a crack at that. So if we look at our utilization in Q4, and just, you know, let me back up a little bit. So internally, we look at utilization at spot rates, spot utilization rates, but what we're really focused on is trailing 12-month utilization because it gets sort of rid of some of the noise. When we look at our utilization across our portfolio or across our install base, things are trending right in line with where we expect them to be. Now,

Suraj, let me maybe take a crack of that so if we look at our utilization in Q4.

And then just let me back up a little bit so internally, we look at utilization and spot rates spot utilization rates, but what we're really focused on is trailing 12 month utilization because it gets rid of some of the noise. When we look at our utilization across our portfolio or across our installed base things are trending right in line with where we expected them to be now.

We're growing, and so as you can imagine, the new facilities that we're adding start out at lower utilization rates, and the more tenured facilities, they end up above where we want, you know, where it's sort of the midpoint utilization is, if you will, on balance in a growing environment, it all sort of works out. But we, from a utilization perspective, we're trending right in line with where we expect across the portfolio, both in the acute and for the consoles and home. Did that answer your question? Fair.

We're growing and so as you can imagine the new facilities that we're adding start out at lower utilization rates and the more tenured facilities.

Ends up above where we want sort of the midpoint utilization as if you will on volumes in a growing environment at all sort of works out but from a utilization perspective, we're trending right in line with where we expect across the portfolio both in the acute and for the consoles and home did that answer your question.

Fair enough.

Thank you.

Thank you. And our next question comes from the line of Rick Weiss with Stiesel. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Rick Wise with Stifel. Your line is open. Please go ahead.

Good afternoon, everybody, plenty of congratulations on the excellent quarter. Leslie, I'll congratulate you on your new title and hiring one of the best IR professionals in the business. Great move.

Good afternoon everybody.

Congratulations on the excellent quarter.

I congratulate you on your new title in hiring one of the best IR professionals in the business great move.

Got it.

The turning to a question on acute single digit penetration, the land and expand strategy. I was wondering if you could maybe just expand on your comments there. What's the 22 agenda? Is it more about...

Turning to <unk>.

A question on acute.

Yes.

Single digit penetration the land and expand strategy.

I was wondering if you could maybe just expand on your comments there.

Whats the 'twenty two agenda is it more about.

Is signing big new systems, is that gonna be the news we're looking for? Or is this, you're landed enough, 22 is more a year of expand to drive growth and Tableau adoption? And rephrase it, the question, however, makes sense to you, Leslie. Thank you.

It's finding big new systems is that going to be the news were looking for or is this your landed.

'twenty two is more a Europe .

Expand to drive.

Growth in tableau adoption.

Rephrasing. The question. However, it makes sense to you by the way. Thank you.

Yeah, sure. Thanks. Thank you, Rick. And thank you for the compliment, Jim.

Yes sure. Thanks, Thank you Rick and thank you for the compliment Jim that's great very kind of you.

Very kind of you. Well, I guess I would say, and I sort of started down this road with Suraj's question, which is, if you look at sort of the bell curve from a customer concentration standpoint, the spread is getting wider. So we are proliferating Tableau usage, not only with new customers, and also with new facilities within those existing customer networks.

Well I guess I would say I sort of started down this road with Suraj as question, which is if you look at sort of a bell curve from a customer concentration standpoint.

The spread is getting wider so we are proliferating tableau usage, not only with new customers and also with new facilities within those those existing customer network.

Tableau today is now used in almost every state in the country, including Alaska and Hawaii, something we're really proud of.

Tableau today is now used in almost every state in the country I'm, including Alaska and Hawaii is something we're really proud of but I think I used the furbished tip of the iceberg because when you look at the performance in 'twenty, one which was great and we're very proud of it also on an opportunity set at $2 5 billion. There is a lot of runway there to go.

But, you know, I think I used the verbiage tip of the iceberg is when you look at the performance in 21, which was great, and we're very proud of it. Also, on an opportunity set of 2.5 billion, there's a lot of runway there to go. And so, said differently, the runway that exists, exists both in new customer acquisition. There's a lot of hospitals.

And so said differently the runway that exist exist both in new customer acquisition, how there's a lot of hospitals that could benefit from from tableau as well as expansion within the customer both the regional health systems and also certainly in those national Health systems, where we have sales agreements but.

that could benefit from Tableau, as well as expansion within the customer, both the regional health systems and also certainly in those national health systems where we have failed agreements, but are some are still, you know, somewhat in the process of implementing and installing.

Our son.

We're still somewhat in the process of implementing and installing.

at more and more of their hospital facilities. So both deep and wide cancer.

Tableau at more and more of their hospital facility, so both deep and wide to answer your question.

Gotcha, and my home related question, just responding to your use of the word inflection, strong language.

Gotcha.

And.

My home related question.

Just responding to your use of the word inflection strong language.

I what's giving you so much confidence now. I mean, obviously, numbers look good. It's still very early on. But here, too, can you discuss next steps and logistics? And again, this time, you know, next year, I guess. Have you doubled the number of home programs? Is that what we're looking for? Or no, it's

What's giving you so much confidence now I mean, obviously the numbers look good.

Still very early on but here too can you discuss next steps in logistics.

Again this time.

Yes.

Next year I guess.

Have you doubled the number of home programs is that what we're looking for or no.

focus more narrowly and drive patience and sort of get more confidence in your logistics and team and everything. Again, how are we thinking about priorities there?

Focus more narrowly and drive patients and sort of get more confidence in your logistics and team and everything again, how are we thinking about priorities there.

Yeah, happy to answer that. Well, I think I said this on past calls. I mean, I have always personally believed in doing things well, not quickly, no matter what market we're serving, but particularly at home where the device company patient relationship is especially personal and obviously paramount.

Yeah happy to answer that well I think I said this on past calls I have always personally believed in doing things well not quickly no matter what market.

We're serving but particularly at home where the device company patient relationship is especially personal and obviously paramount.

So here's the bottom line entering 22. We took a hard look at everything we strove to ready for scale during 2021 and determined we're there. We are prepared to grow both well and quickly.

So here you are sort of the bottom line entering 'twenty. Two we took a hard look at everything we strove to ready for scale during 2021 and determined where there we are prepared to have to grow both well and quickly and so thats kind of the inflection in our thinking and in the velocity and pace that we think we.

And so that's kind of the inflection in our thinking and in the velocity and pace that we think we can.

Can we.

we can approach home with in 2022. Second, I'd say that, you know, TIPNES and the ETC has accelerated the urgency with which progressive providers are moving to grow their home populations. And that's continued to change in a good way.

We can approach them with in 2022 second I'd say that the kidneys and the ETE has accelerated the urgency with which progressive providers are are moving them to grow their home populations and that's that.

Continue to change in a good way a bit too which is colored our.

a bit to which is colored our sort of our bullish expectations for 22. So we're, we're ready, I think, a year from now to hit at the last part of your question, we'd want to be able to come back and report

Sort of our bullish expectations for 'twenty two so we're we're ready I think a year from now to hit the last part of your question.

We'd want to be able to come back and report that tableau is in.

Tableau was in robust use at 100 home programs across the country. We'd want to be able to come back and report, as we can report today, high retention rates, highly differentiated retention rates.

And robust use that 100 home programs across the country, we wanted to be able to come back and report as we can report today and high retention rates highly differentiate it retention rates.

And I think we want to come back and report that we were ready to, you know, to kind of further push the accelerator down for 2023. So that's what we're going to be focused on reporting back to you this time next year.

And I think we want to come back and report that we were ready to.

Further push the accelerator down for 2023 that that's what we're going to be focused on reporting back to you at this time next year.

Gotcha. And just one last one for Nabeel. Nabeel, you were kind enough to give us a little color on the quarterly revenue flow throughout the year. Maybe you could help us on the gross margin front as well. Clearly, you're heading toward higher teens, if I'm understanding, as you exit or during the, by the time you reach the fourth quarter. But do we see steady pickup? Is it a sharper step up?

And just one last one.

For <unk>.

You are kind of to give us a little color on the quarterly revenue flow throughout the year, maybe you could help us on the gross margin front as well clearly.

Heading toward higher teens, if I'm understanding as you exit or during the by the time, we reached in the fourth quarter.

But do we see steady pickup.

Sharper step up.

fourth quarter to first quarter, how do we, you know, or more or slower start because

Fourth quarter to first quarter, how do we.

Our slower start because the programs cost programs or volumes pick up how do we think about that thank you so much.

programs, cost programs, or volumes pick up. How do we think about that flow? Thank you so much.

For sure, Rick. So on gross margin, just a couple of things. Number one,

For sure Rick So on gross margin just a couple of things number one the drivers of margin expansion for US number one will be shown on the console side, our cost down programs that have benefited us in 2021 will continue throughout 2022, which is where we're looking at suppliers compete.

The drivers of margin expansion for us, number one will be, so on the console side, our cost-down programs that have benefited us in 2021 will continue throughout 2022, which is where we're looking at suppliers, components, and individual parts to redesign them to drive down costs. So number one, that's going to continue. Number two, we now have our Mexico-based cartridge manufacturer who is ramping up.

Movements in individual parts to redesign them to drive down costs. So number one that's going to continue number two we now have our Mexico based cartridge manufacturer, who is ramping up and so youll see that ramp primarily over the first half of the year, where they go from zero to the majority or from <unk>.

And so you'll see that ramp primarily over the first half of the year where they go from zero to the majority or from close to zero to the majority of our cartridge production.

Two zero to the majority of our cartridge production. So when you take all of that together, what we would really look for Rick is gross margins to expand sequentially as we move through the year from the levels that they were at in Q4. So from the 12% we just printed we'd see expansion another commentary.

So when you take all of that together, what we would really look for, Rick, is gross margins to expand sequentially as we move through the year from the levels that they were at in Q4. So from the 12% we just printed, we'd see expansion. Now the commentary I gave, our margin expectation is that for full year 22, our gross margins will be in the high teens.

Dave our margin expectation is that for full year 'twenty two our gross margins will be in the high teens.

Gotcha.

I'm possibly suggesting you end up later in the year a little higher. Thank you so much, Nabil.

Possibly suggesting you end up later in the area of little higher. Thank you so much.

Of course.

Thank you. And our next question comes from the line of Danielle Ann Palfy with SVB Leerink. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Danielle and Toffee with SBB Leerink. Your line is open. Please go ahead.

Hey, good afternoon, everyone. Thanks so much for taking the questions and congrats all around on a good year. Leslie on your new role and Jim, welcome to one of the more exciting small cap growth stories in MedTech.

Hey, good afternoon, everyone. Thanks, so much for taking the questions and congrats all around on a good year Leslie on your new role and Jim welcome to to one of the more exciting small cap growth stories in that attack.

Leslie, my question is going to be similar to the question I feel like I ask every time, and it's why not bigger, faster with home adoption? As you know, we did a lot of work on this back in June , July timeframe, and it just feels like all the tailwinds are in place. I appreciate the guidance you're giving for the year and wanting to be conservative. But I guess what's the tipping point? At what point are we at a tipping point where the avalanche really starts to...

Lastly, my question is going to be similar to the question I feel like I ask every time and it's why not bigger faster with home adoption. As you know we did a lot of work on the backend.

June July time frame and it just feels like all of the tailwind are in place I. Appreciate the guidance you are giving for the year and wanting to be conservative, but I guess, what's the tipping point like at what point are we at a tipping point where the the.

Avalanche really starts to come here.

Yeah, sure. Thanks for the editorial there.

Yeah sure thanks for that and thanks for the editorial there.

Well, I think first and foremost, as I look out to 2022, you know, sort of doubling our revenue contribution coming from home. I mean, I think it's a big deal. You know, we could quibble over words, but I think it's something that, you know, we're excited about and we're bullish. I think that is bigger and that is faster. So I think we're there and we're going to reach for bigger and faster for the next many years to come. I don't see us slowing down on this thing.

Well I think first and foremost as I look out to 2022 sort of doubling our revenue contribution coming from home.

I mean, I think it's a big deal.

Quibble over words.

But I think it's something that we're excited about and we're bullish I put that is that.

That is bigger and that is faster so I think we're there.

And we're going to reach for.

Bigger and faster for the next many years to come I don't see it slowing down on this thing.

We will always have our eye on the patient experience at the same time. We've talked about this a lot. I mean, I really have had my eye on...

We will always have our eye on the patient experience at the same time, we've talked about this a lot I mean, I really have had my eye on patient retention in the home really since day, one and studying this market for a very very long time.

patient retention in the home, really since day one, studying this market for a very, very long time. In the IBE, our patient retention rate was really.

E R patient retention rate was really high in our early experience with small number of patients our retention rate was really high and I think the question through last year at least in my mind with Hey, as we really start to scale here well the patient retention rate remained high answer that yes.

In our early experience with small number of patients, our retention rate was really high. And I think the question through last year, you know, at least in my mind was, hey, as we really start to scale here, will the patient retention rate remain high? The answer to that is yes.

So I think that, you know, we feel very confident up now about our ability to do bigger, to do faster, and to do it well, again, is defined by an exceptional patient experience, which is at the end of the day, what this is all really about.

So I think that we feel very confident now about our ability to do bigger to do faster and to do it well again as defined by a an exceptional patient experience, which is at the end of the day. What this is all really about.

Yeah, okay. And then I guess my next question is your go-to-market strategy has been focusing on the health system. Just curious about whether you're getting interest from other, you know, sort of major dialysis providers out there and at what point you might sort of entertain that idea of going out to, you know, a DaVita, for example. Thanks so much.

Yeah, Okay, and then I guess my next question is your go to market strategy has been focusing on the on the health system.

Just curious about whether you are getting interest from other sort of major dialysis providers out there and at what point you might sort of entertain that idea of going out to Davita. For example, thanks so much.

Sure. Danielle, are you talking about on the home side or the acute side? I'm sorry. On the home. On the home side. On the home. Okay. Yeah. Sure.

Sure Danielle are you talking about on the home side or the <unk> side I'm sorry.

On the home on the home side on the home Okay. Yeah sure well a couple of comments there I think that tableau is already being used by many of the major dialysis providers across the United States.

Well, a couple of comments there. I think that Tableau is already being used by many of the major dialysis providers across the United States.

in addition to health systems that are establishing their own home service dialysis, chronic

In addition to health systems that are establishing their own home.

Dialysis chronic service line for the first time. So those are the segments that we're engaged in right now I don't see that changing I see both growing equally and if you again look at the size of our backlog I think the demand and the interest in tableau was equally high both from health systems and also from conventional dialysis providers.

So those are the segments that we're engaged in right now, and I don't see that changing. I see both growing equally. And if you, again, look at the size of our backlog, I think the demand and the interest in Tableau was equally high, both from health systems and also from conventional dialysis providers.

I think as our goals, to use your words, are really focused on bigger and faster, our partners for today and for the foreseeable future will be with those that want to be progressive and those that want to move really fast.

I think as.

Our goals are to use your words are really focused on bigger and faster.

Our partners for today and for the foreseeable future will be with what those that want to be progressive and those that want to move really fast and so those are our north star is that guide us to partner selection and I see that remaining intact for 2022.

And so those are our North Stars that guide us to partner selection. And I see that remaining intact for 2022.

Got it thanks, so much.

Thank you. And again, if you have a question at this time, please press star then 1.

Thank you and again if you have a question at this time. Please press Star then one.

And our next question comes from the line of Drew Ranieri with Morgan Stanley . Your line is open. Please go ahead.

And our next question comes from the line of drew Ranieri with Morgan Stanley . Your line is open. Please go ahead.

Hi, everyone. Thanks for taking the question. Maybe for Nabeel, just on OpEx, I heard that you said that you're expecting an increase year over year. I was just hoping that you could put maybe a finer point on kind of where you're expecting OpEx to shake out and maybe what investments you're kind of putting that money towards. Is it more on the commercial side, more on the R&D and how that might translate into catalysts over the next 12 months?

Hi, everyone and thanks for taking my question maybe.

Maybe for Bill.

Just on the Opex I heard that you said that.

We're expecting an increase year over year I was just hoping that you could put maybe a finer points on kind of where youre expecting opex to shake out and maybe what investments.

You're kind of putting that money towards is it more on the commercial side.

More on the R&D and how that might translate into catalysts over the next next 12 months.

Yeah, Drew, for sure. So, first of all, OPEX, you know, we invested in 2021 in our commercial organization and in R&D. We hired a chief technology officer, as you know, back in the summer. And it is this investment that we believe has helped get to kind of the demand that we've seen and the large backlog that we enter.

Yes drew for sure so first of all Opex.

We invested in 2021, and our commercial organization and in R&D, We hired a chief Technology Officer as you know back in the summer and it is this investment that we believe has helped to get to kind of the demand that we've seen in the large backlog can be into 'twenty two with now Leslie.

22 width. Now, Leslie talked about all of the tailwinds that we see both in the acute setting, where again, we still have a lot of penetration to go in an even larger market, right? Two and a half billion dollar market.

Talks about all of the tailwind that we see both in the acute setting where again, we still have a lot of penetration to go in an even larger market right $2 billion to $5 billion market and then in the home we are still in early innings and in a year, where we do expect inflection and do expect.

And then in the home, we are still in early innings and in a year where we do expect inflection and do expect home to double as a proportion of our revenue.

Home to double as a proportion of our revenues. So our 'twenty two investments will be primarily in our commercial organization around marketing around clinical sales and around support of our installed a growing installed base. So that's on the commercial organization and then secondly on the R&D.

So our 22 investments will be primarily in our commercial organization around marketing, around clinical sales, and around support of our installed, a growing installed base.

So that's on the commercial organization. And then secondly, on the R&D side, we will continue to make investments there around hardware engineering associated with driving down costs and improving Tableau. And then around software and data with respect to our strategy to innovate around data over the long run.

Side, we will continue to make investments there around hardware engineering associated with driving down costs and improving tableau and then around software and data with respect to our strategy to innovate around data over the long run you will see some smaller investments in G&A, but those are the larger.

you'll see some smaller investments in GNA, but those will largely moderate in 22. We've made the bulk of those in 2021. Now, to put a finer point on it, Drew, if you think about our 22 OPEC.

Moderate in 'twenty two we've made the bulk of those in 2021 now to put a finer point on it drew if you think about our 'twenty two opex as our Q4 run rate times four year end of zone.

as our Q4 run rate times 4, you're in the zone.

Got it. Thank you. And then maybe just a longer term margin question, but I think you said you're still anticipating 50% gross margins by 2025. But kind of given the commentary that home is kind of moving from a gradual build to something more of an inflection point in this year, should we be expecting something higher than 50%?

Got it thank you.

And then maybe just a longer term margin question, but.

I think you said you are still anticipating 50% gross margins by 2025, but kind of given the commentary that home is kind of moving from a.

Gradual build to something more of an inflection point in this year should we be expecting something higher than 50%.

Drew, you know, we still believe in our long-term target of getting to roughly 50%.

Drew we still believe in our long term target of getting to roughly 50% in 2025.

in 2025. You know, we're sitting here a month and a half into 2022, and so there is still a long way to go from here to 2025. And our progress to date, as well as our expectations for margin expansion in 2022, give me confidence in that journey. I don't know, like I'm not prepared to say we're going to go above 50 percent.

We're sitting here a month and a half into 2022 and so there is still a long way to go from here to 2025, and our progress to date as well as our expectation for margin expansion in 'twenty to give me confidence in that journey.

I don't know like I'm not prepared to say, we're going to go above 50%.

at all, but what I will say is I have a lot of confidence in our ability to go down this journey given that we have like a little under three years.

At all but what I do what I will say is I have a lot of confidence in our ability to go down. This journey given that we have like a little under three years to go here.

Got it. And sorry, just one last one on XT. Can you maybe talk about what you are seeing in terms of attachment rate and maybe what your 2022 guidance implies? Thank you.

Got it and sorry, just one last one on <unk> could you maybe talk about what you are seeing in terms of attachment rate and maybe what your 2022 guidance implies thank you.

Yeah Drew, so we've always said that we expect XT to be round numbers in a quarter of the consoles we sell. We have seen strength, meaning we have seen higher uptake than that over the last couple of quarters here. We do think over the long term XT will likely converge at that roughly 1 in 4, but we have seen strength in the last quarter.

Yeah drew so we've always said that we expect <unk> to be round numbers in a quarter of the console as we sell we have seen strength, meaning we have seen higher uptake than that over the last couple of quarters. Here. We do think over the long term XD will likely converge at that roughly one in four.

Sure.

We have seen strength in the last couple of quarters.

Thank you and this does conclude today's question and answer session and I would like to turn the conference back over to Leslie for any further remarks.

Thank you and this does conclude today's question and answer session and I would like to turn the conference back over to Leslie for any further remarks.

Thanks, operator, and thank you all for joining today. Have a great afternoon or evening, depending on what time zone you're in. Thanks again.

Thanks, operator, and thank you all for joining today have a great afternoon or evening, depending on what time zone year end. Thanks again.

This concludes today's conference call. Thank you for participating. Everyone have a great day.

This concludes today's conference call. Thank you for participating everyone have a great day.

SUBSCRIBE!

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Good day and thank you for standing by. Welcome to the Onset Medical fourth quarter and full year 2021 earnings conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star one on your telephone. Please be advised that today's conference may be recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today.

Good day and thank you for standing by welcome to the on site medical fourth quarter and full year 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question during the session you'll make a press star one on your telephone please be advised.

Today's conference maybe recorded.

You require any further assistance. Please press Star then zero I would now like to hand, the conference over to your host today, Jim Missoula head of Investor Relations. Sir. Please go ahead.

Jim Missoula, Head of Investor Relations. Sir, please go ahead.

Okay, thank you and good afternoon everyone. Welcome to the outset medical fourth quarter and full year 2021 earnings call. Participating from the company today are Leslie Trigg, Chair and Chief Executive Officer and Nabeel Ahmed, Chief Financial Officer.

Okay. Thank you and good afternoon, everyone welcome to the outset medical fourth quarter and full year 2021 earnings call participating from the company today are Leslie Trig Chair and Chief Executive Officer, and the B O Ahmed Chief Financial Officer. During the call, we will discuss our fourth quarter and 2021 operational and financial results as well as provider.

During the call, we will discuss our fourth quarter and 2021 operational and financial results, as well as provide our outlook for 2022. After our prepared remarks, we will host a question and answer session. We issued a news release after the close of the market today and updated our investor presentation, both of which can be found on the investor relations pages of outsetmedical.com. This call is being recorded and will be archived in the investor section of our website.

Outlook for 2022 after our prepared remarks, we will host a question and answer session. We issued a news release after the close of the market today and updated our investor presentation, both of which can be found on the investor relations pages about set medical dot com.

Call is being recorded and will be archived in the investors section of our website.

I'd also like to remind you that it is our intent that all forward-looking statements made during today's call will be protected under the Private Securities Litigation Reform Act of 1995. Any statements that relate to expectations or predictions of future events, market trends, results, or performance are forward-looking statements. All forward-looking statements are based on our current estimates and various assumptions.

I'd also like to remind you that it is our intent that all forward looking statements made during today's call will be protected under the private Securities Litigation Reform Act of 1095, any statements that relate to expectations or predictions of future events market trends results or performance are forward looking statements. All forward looking statements are based on our current estimate.

And various assumptions these statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements Outsit assumes no obligation to update these statements for a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. OUTSIT assumes no obligation.

For list and description of the risks and uncertainties associated with our business, please refer to the risk factors section of outset's public filings with the Securities and Exchange Commission, including outset's latest annual and quarterly reports. With that, let me now turn the call over to Liz.

Of outset public filings with the Securities and Exchange Commission, including outfits latest annual and quarterly reports with that let me now turn the call over to Leslie.

Good afternoon, everyone, and thank you for joining us to review our fourth quarter and full year 2021 results. Before I begin, I'd like to introduce and welcome Jim Izzola, who recently joined us as Vice President of Investor Relations. Jim brings two decades of medtech and life sciences experience to our team, and we look forward to his contributions as we continue to grow our business.

Good afternoon, everyone and thank you for joining us to review, our fourth quarter and full year 2021 results.

Before I begin I'd like to introduce and welcome Jim <unk>, who recently joined US as Vice President of Investor Relations. Jim brings two decades of Med Tech and life Sciences experience to our team and we look forward to his contributions as we continue to grow our business.

The fourth quarter capped off a truly exceptional year for OUTSET, during which we saw record revenue growth, meaningful progress toward growth margin expansion, success with our land and expand acute strategy, and tangible growth in home console placements as evidenced by a tripling of our home installed base.

The fourth quarter capped off a truly exceptional year for how's that during which we saw record revenue growth meaningful progress towards gross margin expansion and success with our land and expand acute strategy and tangible growth in Hong Kong for placements as evidenced by a tripling of our home installed base. This momentum resulted in fourth quarter total revenue.

This momentum resulted in fourth quarter total revenue of $28.2 million representing 63% growth year over year and resulted in full year 2021 revenue of $102.6 million representing 105% growth year over year. Our business again proved resilient as we continue to grow through COVID-19.

A $28 2 million, representing 63% growth year over year and resulted in full year 2021 revenue of $102 6 million, representing a 105% growth year over year. Our business again proved resilient as we continue to grow through COVID-19, and our success in the fourth quarter extended beyond.

Our success in the fourth quarter extended beyond revenue, with console bookings hitting a historic high. We exited 2021 with 1,251 consoles in backlog, compared to 551 in backlog exiting 2020, with a significant portion of our 2021 exit backlog consisting of consoles intended for use in the home. This backlog provides us with significant visibility and confidence in our 2022 revenue trajectory.

<unk> revenue with console bookings hitting a historic high we exited 2021 with 1251 consoles in backlog compared to 551 and backlog exiting 2020 with a significant portion of our 2021 exit backlog consisting of Commvault intended for use in the home is.

<unk> provides us with significant visibility and confidence in our 2022 revenue trajectory.

As Nabeel will touch on in his discussion of our fiscal year 2022 revenue guidance, we are projecting another strong year ahead with good visibility to continued sales growth within acute care customers and an inflection in units deployed for home use. In addition to growing the top line, we remain confident in reaching our growth margin expansion goals, specifically our 2025 goal to achieve growth margins of approximately 50%.

As Neil will touch on in his discussion of our fiscal year 2022 revenue guidance. We are projecting another strong year ahead with good visibility to continued sales growth within acute care customers and an inflection and units deployed for home use.

In addition to growing the top line, we remain confident in reaching our gross margin expansion goals, specifically, our 2025 goal to achieve gross margins of approximately 50%.

Turning now to a review of our success in the acute market, the fourth quarter and full year 2021 exceeded our expectations with transformational progress in terms of new sales agreements, expanding with existing customers and console shipments.

Turning now to a review of our success in the acute market the fourth quarter and full year 2021 exceeded our expectations with transformational progress in terms of new sales agreement expanding within existing customers and console shipments in.

Importantly, we saw our land and expand strategy validated as customers consistently expressed interest in expanding their Tableau fleets to new sites across their networks as they experience the economic, clinical, and workflow benefits that Tableau provides.

Importantly, we saw our land and expand strategy validated as customers consistently expressed interest in expanding their tableau fleets to new sites across their network as they experience the economic clinical and workflow benefits the tableau provide.

For example, one regional health system in the Southeast was paying nearly $400 per treatment with an outsourced service provider prior to adopting Tableau. Following a successful Tableau implementation, the hospital benefited from a 70% reduction in per treatment costs and an estimated $6 million in savings over the past three years.

For example, one regional health system in the southeast was paying nearly $400 per treatment with an outsourced service provider prior to adopting tableau. Following a successful tableau implementation. The hospital benefited from a 70% reduction in per treatment costs, and an estimated $6 million in savings over.

The past three years, the economic and operational benefits as health systems saw with tableau.

The economic and operational benefits this health system saw with Tableau resulted in an expansion to multiple additional hospitals in their network.

<unk> and expansion into multiple additional hospitals in their network.

In addition to Tableau's cost reduction benefits, we are also seeing recent adoption due to its ease of use, which has enabled some hospitals to recover from unexpected terminations of service from outsourced dialysis providers struggling with their own staffing shortage.

In addition to tablets cost reduction benefits. We are also seeing recent adoption due to its ease of use which has enabled some hospitals to recover from unexpected termination of service from outsource dialysis providers struggling with their own staffing shortages.

During 2021, we achieved our goal of signing sales agreements with seven of the eight largest U.S. health systems. Our team also successfully drove a meaningful expansion of our commercial footprint across the United States as we landed sales agreements with roughly a third of the top 100 largest regional health systems, setting us up well for ongoing expansion in 2022 and beyond.

During 2021, we achieved our goal of signing sales agreements with seven of the eight largest U S. U S health system. Our team also successfully drove a meaningful expansion of our commercial footprint across the United States as we landed sales agreements with roughly a third of the top 100 largest regional health system.

Setting us up well for ongoing expansion in 2022 and beyond.

This success enabled us to more than double the size of our acute install base while significantly expanding our backlog and setting a strong foundation for 2022.

This success enabled us to more than double the size of our acute installed base, while significantly expanding our backlog and setting a strong foundation for 2022.

In addition to our success generating new orders, we also continue to see Tableau XT's clinical value to patients and operational workflow benefits to nurses resonating with customers.

In addition to our success generating new orders. We also continue to see tableau expertise clinical value to patients and operational workflow benefits to nurses resonating with customers.

This is evidenced by another quarter of strong XT attachment rate, thanks in part to the clinical validation we received for XT through our EXTEND study, which demonstrated an impressively low clotting rate of just 4% despite treatment times that averaged 23.5 hours.

This is evidenced by another quarter of strong equity attachment rate. Thanks in part to the clinical validation we received for <unk> through our extend study, which demonstrated an impressively low plotting rate of just 4%. Despite treatment times that averaged 23 five hours.

Our commercial success in the acute market last year taught us that Tableau solves important problems not only for the nation's largest health system, but also for smaller hospitals with fewer than 100 beds. Given our strong traction in this segment of the market, which we had previously excluded from our TAM estimate, we now believe that our immediately addressable U.S. market opportunity for the acute setting is $300 million larger than initially projected, putting the total U.S. TAM at $2.5 billion.

Our commercial success in the acute market last year taught us that tableau solves important problems not only for the nation's largest health system, but also for smaller hospitals with fewer than 100 beds.

Given our strong traction in this segment of the market, which we had previously excluded from our Tam estimate we now believe that our immediately addressable U S market opportunity for the acute setting is $300 million larger than initially projected putting the total U S. Tam at $2 5 billion.

I'd like to add that our success in these smaller hospitals is meaningful on a very human level as well. KABLO is creating health access equity in often rural communities where patients may not have had or may be at risk of losing access to dialysis care.

I'd like to add that our success in these smaller hospitals is meaningful on a very human level as well tableau is creating health access equity and often rural communities, where patients may not have had or may be at risk of losing access to dialysis care in states like Texas, and Oklahoma small hospitals have adopted tableau.

In states like Texas and Oklahoma, small hospitals have adopted Tableau to start offering in-patient dialysis to patients who previously would have had to travel hours away to receive care. We've also seen small hospitals use Tableau to in-source dialysis in order to preserve a dialysis service line their community members otherwise would have lost.

To start offering inpatient dialysis patients, who previously would have had to travel hours away to receive care. We've also seen small hospitals use tableau to in source dialysis in order to preserve a dialysis service line. There are community members otherwise would have lost we care about patients first and are proud to.

We care about patients first and are proud to serve the need wherever and whenever it exists.

Serve the needs wherever and whenever it exists.

As we look ahead, we are only single-digit penetrated in ACUTEs, and we have a tremendous runway in terms of new customer acquisition, particularly as we're observing hospitals of all sizes seeing value in Tableau. We feel we are still just at the tip of the iceberg on the ACUTEs side.

As we look ahead, we are only single digit penetrated in acute and we have a tremendous runway in terms of new customer acquisition, particularly as we're observing hospitals of all sizes seeing value and tableau. We feel we are still just at the tip of the iceberg on the acute side.

As we've talked about.

Sorry, we talked about these a lot.

Sorry.

You talked at all.

Sorry, as we talked about before I started choking, a.

Alright.

<unk> talked about before I started choking.

Hey.

Can you start this next section? A growing customer and install base in the acute setting directly feeds our home expansion strategy.

Grow at can you start this FX actually growing customer and installed base in the acute setting directly feeds our home center strategy in 2021 that we took a deliberate approach to building our early home presence focusing first and foremost on delivering an exceptional and highly differentiated patient and caregiver experience.

In 2021, we took a deliberate approach to building our early home presence, focusing first and foremost on delivering an exceptional and highly differentiated patient and caregiver experience.

Our second key objective last year was to build a solid operational foundation that was ready for scale from training to distribution and logistics to patient support any time of the night or day.

Our second key objective last year was to build a solid operational foundation that was ready for scale from creating to distribution and logistics to patient support any time of the night or day I am Leslie is pleased to report the team achieved both of these objectives, while tripling our home <unk> installed base to 300 consoles.

I am Leslie is pleased to report the team achieved both of these objectives while tripling our home and clinic install base to 300 consoles and in ways that allow us to scale in 2022 with an inflection beginning this year.

And in ways that allow us to scale in 2022 with an inflection beginning this year.

After growing home revenue to mid to high single digits as it presents a total revenue in 2021, we expect our home revenue to more than double in 2022, reaching mid teens as a percentage of 2022 revenue.

Through growing room revenue to mid to high single digits as it presents a total revenue in 2021, we expect our home revenue to more than double in 22, reaching mid teens as a percentage of 2022 revenue.

To achieve this level of growth, it is also our goal to exit the year with 100 home programs in place with both health systems and specialty providers.

To achieve this level of growth. It is also our goal to exit the year with 100 home programs in place with both health systems and specialty providers.

I'm back. Teamwork makes the dream work, as they say. Thank you, Nabil. Given that home consoles were a significant portion of our Q4 exit backlog, we believe we are set up well for strong velocity and volume in 2022. Additionally, macro factors in the home setting remain overwhelmingly in our favor. As we announced on our last call, we are very pleased to have received a favorable decision for Tableau under the TIP needs program following the submission of our application in the first quarter of 2021.

I'm back teamwork makes a dream work as we say thank you to bill given that home consoles, where a significant portion of our Q4 exit backlog. We believe we are set up well for strong velocity and volume in 2022. Additionally, macro factors in the home setting remain overwhelmingly in our favor as we announced on our <unk>.

Last call. We are very pleased to have received a favorable decision for tableau under the <unk> program. Following the submission of our application in the first quarter of 2021.

As a reminder, TITME stands for the Transitional Add-on Payment Adjustment for New and Innovative Equipment and Supplies.

As a reminder, Tiffany stands for the transitional add on payment adjustment for new and innovative equipment and supplies, notably CMS deemed tableau, a substantial clinical improvement compared to the incumbent device, making it the first and only dialysis technology to benefit from this new CMS rule that Tiffany's decision.

Notably, CMS deemed Tableau a substantial clinical improvement compared to the incumbent device, making it the first and only dialysis technology to benefit from this new CMS.

The TIPNEES decision and the end stage renal treatment choices or ETC model provide additional tailwinds we believe our sales teams will capitalize on in 2020.

And the end stage renal treatment choices or DTC model provide additional tailwind we believe our sales teams will capitalize on in 2022.

Beyond our ability to drive revenue growth and build a foundation for the future, our team continues to make impressive progress on growth margin expansion, despite macro headwinds. We reached fourth quarter non-gap gross margin of 12 percent, which was in line with our expectations. We're very proud of our teams across the business and how they've effectively managed through the macro supply chain and sector volatility during the quarter and the year.

Beyond our ability to drive revenue growth and build a foundation for the future. Our team continues to make impressive progress on gross margin expansion. Despite macro headwinds we reached fourth quarter non-GAAP gross margin of 12%, which was in line with our expectations. We're very proud of our teams across the business and how they are effectively managed.

Through the macro supply chain and sector volatility during the quarter and the year.

On the supply chain and manufacturing side, our ongoing cost down initiatives and programs continue to work for us, which helps drive sequential reduction in the cost of our.

On the supply chain and manufacturing side, our ongoing cost out initiatives and programs continue to work for us, which helped drive sequential reduction in the cost of our console.

On the cartridge side, we achieved an important milestone in late November when the FDA granted 510K clearance for a new Tableau cartridge. This approval enabled a second source to produce Tableau cartridges in Mexico with a new contract manufacturing partner in addition to our existing manufacturing partner in Southeast Asia.

On the cartridge side, we achieved an important milestone in late November when the FDA granted 500 10-K clearance for our new tableau cartridge. This approval enabled a second source to produce tableau cartridges in Mexico with a new contract manufacturing partner in addition to our existing manufacturing partner in Southeast Asia.

This clearance is an important milestone on our roadmap to continue gross margin expansion as we expect previously elevated transportation and shipping costs to decrease as this new primary source of cartridge production in Mexico ramps up. Both this new source and our other ongoing cost down initiatives are expected to contribute to long-term gross margin expansion.

This clearance is an important milestone on our roadmap to continued gross margin expansion as we expect previously elevated transportation and shipping costs to decrease as this new primary source of cartridge production in Mexico wrapped up both this new stores and our other ongoing cost out initiatives are expected to contribute to long term gross.

Expansion.

In addition to cost reduction, we believe this approval will better enable us to optimize our manufacturing process and mitigate current supply chain challenges around lead time, capacity and

In addition to cost reduction we believe this approval will better able will better enable us to optimize our manufacturing process and mitigate current supply chain challenges around lead time capacity and logistics.

In summary, we are very proud of our performance both in the fourth quarter and full year. Outset continues to deliver strong, consistent, and predictable revenue growth and growth margin.

In summary, we are very proud of our performance both in the fourth quarter and full year Outback continues to deliver strong consistent and predictable revenue growth and gross margin expansion. In addition, we successfully achieved the key 2021 strategic initiatives, we communicated at the beginning of last year.

In addition, we successfully achieved the key 2021 strategic initiatives we communicated at the beginning of last year. Expansion within the acute setting, foundation building for expansion in the home setting, increasing manufacturing capacity, and delivering cost reduction initiatives designed to enable sustainable and profitable financial growth.

<unk> within the acute setting foundation building for expansion in the home setting increasing manufacturing capacity and delivering cost reduction initiatives designed to enable sustainable and profitable financial growth.

These accomplishments are a testament to our exceptional team and the transformative technology we're delivering to reduce the dialysis burden for patients and all those who support them.

These accomplishments are a testament to our exceptional team and the transformative technology, we're delivering to reduce the dialysis burden for patients and all those who support them.

As we look to 2022, we have clarity and conviction around the growth drivers that will continue to distinguish outset medical, namely expanding our acute care business from the beachhead we established last year, inflecting the trajectory of our home business and meaningfully expanding gross margins. I remain very confident in our growth trajectory and our promise to dialysis patients and providers that better begin.

As we look to 2022, we have clarity and conviction around the growth drivers that will continue to distinguish outset medical namely expanding our acute care business from the beachhead, we established last year and flexing the trajectory of our home business and meaningfully expanding gross margin I remain very.

<unk> confidence in our growth trajectory and our promise to dialysis patients and providers that better begins now.

Before I turn the call over to Nabil, I'd like to share a story from our annual sales training meeting, which was held last month. As we do at every sales meeting, we invited several patients and nephrologists to speak to our group. Melvin and his wife of 46 years, Cleo, were two such individuals who had an enormous impact on our team. Melvin is a veteran with end-stage kidney disease, and he served our country for 23 years in the Air Force, including on the team responsible for maintaining Air Force One.

Before I turn the call over to Bill I'd like to share a story from our annual sales training meeting, which was held last month as we do at every sales meeting we invited several patients and nephrologist to speak to our group.

<unk> and his wife are 46 years Cleo, we're two such individuals who've had an enormous impact on our team. Now then is a veteran with end stage kidney disease and he served our country for 23 years and the Air force, including on the team responsible for maintaining Air Force one.

He was diagnosed in 2009 and began home dialysis in 2018 with a competitor system.

He was diagnosed in 2009 and began home dialysis in 2018 with a competitor system.

Cleo told us that training was difficult and that there were quote, binders of information to assimilate and that it was quite overwhelming. So when Melvin's nephrologist approached the couple with a new option in April of 2021, they were eager to try Tableau.

Leo told us it training with difficult and that there were quote binders of information to assimilate and that it was quite overwhelming so when meldons nephrologist approach coupled with a new option in April of 2021, they were eager to try tableau.

Cleo told us, I simply cannot believe how much better Tableau is. Not only is disinfection easy, but setting up for treatment is so quick and simple to do. She said, Tableau walks you step by step through everything on the touchscreen and you never feel like you're lost.

Cleo told us I simply cannot believe how much better tableau is not only is this infection easy but setting up for treatment is so quick and simple to do she said tableau walks you step by step through everything on the touch screen and you never feel like your lost she described moving to tableau as a night and day.

She describes moving to Tableau as a night and day difference.

Melvin said he likes all the time Tableau saves. Time he and Cleo can spend doing more of the things they enjoy in retirement, including spending time with their four children and nine grandchildren. We love stories like this and look forward to sharing more of them as we continue to grow and further expand in the acute and home markets in 2022.

Difference Melvin said he likes all the time tableau safe timely and Clio can spend doing more of the things they enjoying retirement, including spending time with their four children and nine grandchildren.

We love stories like this and look forward to sharing more of them as we continue to grow and further expand in the acute and home markets in 2022.

And of course, none of the success we had last year would have been possible without the hard work and dedication to our mission carried out by everyone on the Outset team. And for that, I want to close by thanking all of our employees for their extraordinary work. With that, I'll now turn the call over to Nabeel to review our financials and provide more granularity on our expectations and key drivers for 2020.

And of course, none of the success, we had last year would have been possible without the hard work and dedication to our mission carried out by everyone on the outset team and for that I want to close by thanking all of our employees for their extraordinary work with that I'll now turn the call over to Bill to review, our financials and provide more granularity on our expectations and key drivers for <unk>.

'twenty two.

Thanks, Leslie. Hello, everyone. Our fourth quarter revenue grew 63% year over year to $28.2 million, driven primarily by increased console shipments to acute customers, higher consumable shipments, increased services to support our growing install base, and the impact of XT updates.

Thanks, Leslie Hello, everyone. Our fourth quarter revenue grew 63% year over year to $28 $2 million, driven primarily by increased control shipments to acute customers higher consumable.

Shipments increased services to support our growing installed base and the impact of XT upgrades.

Full year revenue was $102.6 million, an increase of 105%.

Our full year revenue was $102 6 million, an increase of 105% over the prior year.

year. Product revenue grew 80% year-over-year to $23.7 million.

Product revenue grew 80% year over year to $23 7 million console revenue grew by 70% year over year to $18 1 million.

Console revenue grew by 70% year-over-year to $18.1 million, driven by higher console placements and increased ASP given the availability of and demand for Tableau XP.

Driven by higher console placements and increased ESP, given the availability of and demand for tableau XT similar to prior quarters, we continue to see better uptake of our XT upgrades than we had initially projected consumable revenue was $5 6 million.

Similar to prior quarters, we continue to see better uptake of our XD upgrade than we had initially projected. Consumable revenue was $5.6 million, an increase of 119% versus the prior year. We saw Q4 cartridge utilization in line with our expectation.

An increase of 119% versus the prior year.

So Q4 cartridge utilization in line with our expectations service in W. Revenue grew by 11% year over year, so $45 million as we serve as the larger installed base.

Service and other revenue grew by 11% year over year, to four and a half million dollars as we serviced the larger install.

Moving to gross margin and operating expenses, I will highlight our non-GAAP results. I encourage you to review the reconciliation of GAAP to non-GAAP measures, which can be found in today's earnings report.

Moving to gross margin and operating expenses I will highlight our non-GAAP results I encourage you to review the reconciliation of GAAP to non-GAAP measures, which can be found in today's earnings release.

Our fourth quarter gross margin was 12%, an improvement of approximately nine percentage points versus the prior year period, and a sequential improvement of 60 basis points.

Our fourth quarter gross margin was 12% an improvement of approximately nine percentage points versus the prior year period, and a sequential improvement of 60 basis points. This improvement compared to the prior year period was primarily the result of our ongoing cost reduction activities related to moving our console.

This improvement compared to the prior year period was primarily the result of our ongoing cost reduction activities related to moving our console manufacturing production to Mexico, which has meaningfully lowered console costs, while enabling increased console

Manufacturing production to Mexico, which have meaningfully lowered control costs, while enabling increased console output.

Operating expenses in the fourth quarter were $39.4 million, up $13.6 million versus the prior year period, driven primarily by headcount growth resulting from investments in our commercial organization, investments in R&D, and G&A expenses tied to operating expenses.

Operating expenses in the fourth quarter with $39 4 million.

Up $13 $6 million versus the prior year period, driven primarily by head count growth, resulting from investments in our commercial organization investments in R&D and G&A expenses tied to operating as a public company compared to the prior quarter non-GAAP Opex increased $9 1 million.

Compared to the prior quarter, non-GAAP OPEX increased $9.1 million primarily as a result of the investments we're making in our commercial execution and...

Primarily as a result of the investments, we're making in our commercial execution and in R&D.

We reported fourth quarter gap net loss of $41.2 million, resulting in a net loss of 87 cents per share compared to a net loss of $32 million or 75 cents per share for the prior year.

We reported fourth quarter GAAP net loss of $41 $2 million, resulting in a net loss of 87 per share compared to a net loss of $32 million or.

<unk> 75 per share for the prior year period, non-GAAP net loss was $36 4 million.

non-GAAP net loss was $36.4 million or $0.77 per share compared to a non-GAAP net loss of $25.8 million or $0.60 per share for the same period.

Or <unk> 77 per share compared to a non-GAAP net loss of $25 8 million or <unk> 60 per share for the same period in 2020.

We ended the year with approximately $372.8 million of cash, cash equivalents, restricted cash, and investment.

We ended the year with approximately $372 $8 million of cash cash equivalents restricted cash and investments.

Moving on to our 2022 outlook. We project revenue for the full year 2022 to range from 142 to $150 million, which represents approximately 38 to 46% growth over fiscal year 2021.

Moving on to our 2022 outlook, we project revenue for the full year 2022 to range from $142 million to $115 million, which represents approximately 38% to 46% growth over fiscal year 2021 revenue our guidance is grounded in the visibility afforded by our.

Our guidance is grounded in the visibility afforded by our backlog of both acute and home consoles exiting 2021, as well as our pipeline. Our revenue guidance assumes an inflection in our sales to home customers. We expect that our sales into the home will double as a proportion of our revenue in 2022 compared to 2021, with a goal in the mid-teens as a percentage of total revenue for full year 2021.

Our backlog of both acute and home consoles exiting 2021 as well as our pipeline our revenue guidance assumes an inflection in our sales to home customers. We expect that our sales into the home will double as a proportion of our revenue in 2022 compared to 2021 with a goal in the <unk>.

Mid teens as a percentage of total revenue for full year 2022.

For modeling purposes, we assume revenue will grow in the mid to high single digits sequentially from Q4 to Q1, and then accelerate as we move through the rest.

For modeling purposes, we assume revenue will grow in the mid to high single digit sequentially from Q4 to Q1, and then accelerate as we move through the rest of the year.

Moving to gross margin, we were very pleased with our sequential improvement in the fourth quarter and our year-over-year expansion. Overcoming some of the supply chain headwinds we saw in the last quarter.

Moving to gross margin.

We're very pleased with our sequential improvements in the fourth quarter and year over year expansion overcoming some of the supply chain headwinds. We faced we expect our gross margin to continue to benefit from our ongoing cost down activities on the console as well as the transition of our cartridge production to be primarily in Mexico.

We expect our gross margin to continue to benefit from our ongoing cost-down activities on the console, as well as the transition of our cartridge production to be primarily in Mexico.

we have line of sight to non-GAAP gross margin expansion to the high teens for the full year 2022 more than a 2x expansion to 2021 for you.

We have line of sight to non-GAAP gross margin expansion to the high teens for the full year 2022 more than a two X expansion to 2021 full year gross margin.

This forecast issues some level of continued volatility inyls we hope to compare all your earnings earnings

This forecast assumes some level of continued volatility in component costs, which we believe we have mitigated against as well as the cost of freight, which we expect to taper in the first half of the year as our new Mexico based cartridge manufacturer ramps up.

which we believe we have mitigated against, as well as the cost of freight, which we expect to taper in the first half of the year as our new Mexico-based cartridge manufacturer rolls out.

As we have said throughout the last couple of years, we are fortunate to have one of the best supply chain teams in the business. And we will continue to leverage our strong balance sheet to help ensure that we have enough materials and inventory on hand to service our growing business.

As we have said throughout the last couple of years, we are fortunate to have one of the best supply chain teams in the business and we will continue to leverage our strong balance sheet to help ensure that we have enough materials and inventory on hand to service our growing demand.

Our gross margin performance through 2021 and the structural changes we've made around our console and cartridge manufacturing give us continued confidence in our long-term margin expansion trajectory and in our path to get to roughly 50% gross margins in 2025. Now, I'd like to turn to

Our gross margin performance through 2021, and the structural changes we've made around our console and cartridge manufacturing give us continued confidence in our long term margin expansion trajectory.

Our paths to get to roughly 50% gross margins in 2025.

Now I'd like to turn to non-GAAP Opex, given our strong progress to date, the large market opportunity, we see in front of us and the tailwind we see in the whole market. Our intent is to continue to invest in our business to drive long term revenue growth ongoing gross margin expansion and focused R&D.

Given our strong progress to date, the large market opportunity we see in front of us, and the tailwinds we see in the home market, our intent is to continue to invest in our business to drive long-term revenue growth, ongoing gross margin expansion, and focused R&D to help ensure that our solutions remain in the leadership position.

To help ensure that our solutions remain the leadership position.

We forecast operating expenses to increase in 2022 relative to 2021 as we annualize the investments we made in 2020.

We forecast operating expenses to increase in 2022 relative to 2021 as we annualize the investments we made in 2021 next I want to provide some color on our expected increase in stock based compensation expense, we transitioned to being a public company in late 2020 ended our first real set of equity grants in.

Next, I want to provide some color on our expected increase in stock-based compensation.

We transitioned to being a public company in late 2020 and did our first real set of equity grants in 2021. As a result, our non-cash stock-based compensation expense will be meaningfully higher in 2022 relative to 2021.

2021, as a result, our noncash stock based compensation expense will be meaningfully higher in 2022 relative to 2021.

And finally, a quick comment on CAPEX. Our facility in Mexico continues to be able to support our console manufacturing needs into the foreseeable future. We intend to make some scheduled CAPEX investments into this facility to expand its capacity to keep up with anticipated demand. We expect total CAPEX for 2022 to be in the mid to high single-digit million.

And finally, a quick comment on Capex, our facility in Mexico continues to be able to support our console manufacturing needs into the foreseeable future. We intend to make some scheduled capex investments into this facility to expand its capacity to keep up with anticipated demand. We expect total capex for.

<unk> 2022 to be in the mid to high single digit millions of dollars.

Our progress through 2021 and our expectations for 2022 give us continued confidence on our journey towards break-even profitability on a non-GAAP basis exiting 2020.

Our progress through 2021, and our expectations through 2022 give us continued confidence on our journey towards breakeven profitability on a non-GAAP basis exiting 2024.

Thank you for your time. We look forward to providing an update on our Q1 progress during our next earnings call. Operator, please open the line.

Thank you for your time, we look forward to providing an update on our Q1 progress during our next earnings call. Operator, Please open the lines.

Thank you. If you have a question at this time, please press star then 1 on your touch tone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key.

Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.

Our first question comes from the line of Amit Hazan with Goldman Sachs. Your line is open. Please go ahead.

Our first question comes from the line of Amit <unk> with Goldman Sachs. Your line is open. Please go ahead.

Oh, thanks very much, and congrats on the quarter and the year. I thought maybe what we could do is just start with the macro.

Hello, Thanks, very much and congrats on the quarter and the year.

I thought maybe what we could do is just start with the macro and you gave some good color, but I wanted to just follow up on it and just to ask about the supply chain and some of the issues. There that have come up and I know investors are thinking about so the componentry it sounded like you've got your hands around this.

You gave some good color, but I want to just follow up on it and just ask about the supply chain and some of the issues there that have come up that I know investors are thinking about. So, the componentry, it sounded like you've got your hands around this, implied in your comments to suggest that if you think about your backlog or units you expect to deliver in 2022 that you think you have the components you need to be able to deliver that. I just want to get a confirmation there. And then, just as an aside, separately on dialysate and the shortage that companies I think there's some confusion out there on the extent to which you guys are even exposed to that. Maybe just if you could spend a minute helping to clarify that, it would be.

Implied in your comments suggest that if you think about your backlog or units you expect to deliver in 'twenty. Two that you think you have the components you need to be able to deliver that I just wanted to get a confirmation there and then just as an aside separately on dialysis and the shortage that companies like Davita. They are talking about I think there's some confusion out there on the extent to which you guys are.

Or even exposed to that maybe just if you could spend a minute helping to clarify that it would be helpful.

Yeah, I mean, absolutely. So let me maybe start with your with the first part of your question on the supply chain. So, you know, we've seen a couple of things happen over the last year. Number one, the component shortages, as I talked about

Yeah, absolutely. So let me maybe start with your first part of your question on the supply chain. So we.

We've seen a couple of things happened over the last year number one the component shortages as I talked about we do have one of the best supply chain teams in the business, we have leveraged our balance sheet to make sure that we have enough raw materials and components on hand, we also make sure that we've got enough tableau was on hand to service forward demand. So we're not concerned from a.

We do have one of the best supply chain teams in the business. We have leveraged our balance sheet to make sure that we have enough.

raw materials and components on hand. We also make sure that we've got enough tableaus on hand to service forward demand. So we are not concerned from a component perspective at all with respect to 2022. The other thing we saw, and I talked about this in my prepared remarks, is the cost of freight.

Conan perspective at all with.

With respect to 2022, the other thing we saw and I talked about this in my prepared remarks is the cost of freight, particularly as it related to transporting cartridges from southeast Asia to the United States now again now that we have our Mexico based cartridge manufacturer there'll be ramping up here.

particularly as it related to transporting cartridges.

from Southeast Asia to the United States. Now, again, now that we have our Mexico-based cartridge manufacturer, they'll be ramping up here in the first half of the year. And so, again, structurally, we've mitigated that situation and we won't have these freight costs go up.

In the first half of the year and so again structurally we've mitigated that situation.

We won't have these freight costs going forward.

Anymore.

Yeah, maybe I can jump in on the second part of that. I mean, yes, we have been hearing about and reading about in the newspaper the dialysis, dialysis-state shortages as well.

Yes, maybe I'll I can jump in on the second part of that.

Yes, we have been hearing about and reading about in the newspaper the dialysis dialysis stage shortages as well.

We've certainly gotten our fair share of calls from hospitals being put in a pretty difficult position by that. The short answer is we are open for business and anticipate being open for business well into the far future. We don't source from any of the providers, I think, that have been struggling with such shortages.

We certainly gotten our fair share of calls from hospitals being put in a pretty difficult position by that.

The short answer is we are open for business.

And anticipate being opened for business well into the <unk> future.

We don't source from any of the providers I think that had been struggling with such shortages and.

We have been missed a beat, and so if anything, it has provided us with an opportunity to help out at a really critical time, since we have been able to maintain a very, very strong continuity of supply.

We haven't missed a beat and so if anything it has provided us with an opportunity to help out at a really critical time since we have been able to maintain a very very strong continuity of supply.

Okay, good stuff and I would just ask one follow up and I'll jump back in queue.

Just as one follow-up and I'll jump back in queue, just on the 22 Guide, just thinking about folks still getting to know you all and thinking about the backlog that you give at the end of the year, 550 last year, maybe help us understand how last year's figure ended up materializing, how much of it and how fast, and if that informs how we should be thinking about the 1250, how much forward visibility does that afford you? And then just generally around visibility, as you think about the guidance that you gave, just the puts and takes on the low and the high end that you're thinking about for the year would be super helpful. Thanks so much and again. What more people not Owens this uidentified It was that I like I mentioned we used two

Just on the 'twenty two guide just thinking about getting folks still getting to know you all.

And thinking about the backlog that you gave at the end of the year.

<unk> hundred 50 last year, maybe help us understand how last year's figure ended up materializing, how much of it and how fast and if that informs how we should be thinking about the $12 50, how much forward visibility does that does that afford you and then just generally around visibility as you think about the <unk>.

So you gave just the puts and takes are low and the high end that youre thinking about for the year would be super helpful. Thanks, So much and again congrats.

Yeah, of course you meet.

Yes of course, so so.

Three things there. So one, we entered 2021 with 551 consoles in backlog, as you mentioned.

Three things there. So one we entered 2021 was 551 consoles in backlog as you mentioned now if you rewind the tape we talked a lot about that backlog being very one H 'twenty, one focused right the composition of that backlog and when.

Now, if you rewind the tape, we talked a lot about that backlog being very 1H.

21 focused, right? The composition of that backlog and when our customers expected that backlog to deploy was really in the first half of 21. And you may recall that it sort of led to a large amount of growth concentrated in the first half of the year in 2021.

Our customers expect that backlog to deploy was really in the first half of 'twenty, one and you may recall that it sort of led to a large amount of growth concentrated in the first half of the year in 2021 now so that's that.

Now, so that's that. When we look at the backlog we have entering 22, so we have 1251 consoles in backlog entering 22.

When we look at the backlog we have entering 'twenty. Two so we have 251 consoles and backlog entering 'twenty two.

And backlog for us represents an agreement with our customers to take an order, it's a binding order, and then we work with them to determine the ship dates of that backlog, right? So the backlog of 550 entering 21 is very different from the backlog entering 22.

And backlog for US represents an agreement with our customers to take an order. It's a binding order and then we work with them to determine the ship dates of that backlog right. So the backlog of 550 <unk> hundred 21 is very different from the backlog entering 'twenty two based on the backlog we have entering 'twenty two to 12 months.

based on the backlog we have entering 22, the 1,251 consoles, and the visibility we have in our pipeline, we have a lot of confidence in the guidance range that we talked about, the $142 to $150 million. We have a lot of confidence around the range, and it's supported by the visibility here that the backlog starts to grow.

51 consoles and the visibility we have in our pipeline, we have a lot of confidence in the guidance range that we talked about the $142 million to $150 million like we have a lot of confidence around the range and it's supported by the visibility here, but the backlog starts to provide.

Now, when you think about our guidance range, the 142 to 150, you know, we have baked in the fact

Now when you think about our guidance range of $1 42 to $1 50, we have baked in the fact that Covid has not really been a headwind for us as Leslie mentioned, we've managed to grow through that we baked in the fact that nursing shortages have by and large we are a tailwind for us again as Leslie mentioned.

that COVID has not really been a headwind for us. As Leslie mentioned, we've managed to go through that. We've baked in the fact that nursing shortages have, by and large, been a tailwind for us.

Again, as Leslie mentioned, we have seen situations where we have been able to step in where a hospital's incumbent outsource provider has had their staffing shortages and been unable to service the customer, right?

We have seen situations, where we have been able to step in where our hospitals incumbent outsource provider has had their staffing shortages and been unable to service the customer right.

And so we have a lot of confidence again around the range. And look, we still have three and a half quarters of execution left to go here in 2022. And so sitting here today, we've got a lot of confidence in the range afforded by the visibility given by our bank.

So we have a lot of confidence again around the range and look we still have three and a half quarters of execution left to go here.

In 2022, and so sitting here today, we've got a lot of confidence in the range of afforded by the visibility given by our backlog and pipeline.

Good stuff. Thank you.

Thank you and our next question comes from line of Josh Jennings with Cowen. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Josh Jennings with Cowen. Your line is open. Please go ahead.

Hi, good evening and I'll echo Amit's sentiments and congratulations on a strong finish of the year.

Hi, good evening.

I mean sentiments on.

And congratulation on the strong finish to the year.

And I wanted to add just two questions on home opportunity.

And I wanted to just two questions on home.

Opportunity.

Sounds like you're really experiencing some meaningful momentum.

You really.

Interesting so some meaningful momentum and it was great to hear the guidance you laid out.

And it was great to hear the guidance she laid out. We wanted to just get a better understanding of where Tableau is winning. Is it mostly new patient starts at home, or are there competitive swap-ins going on?

Wanted to just get a better understanding of where tableau is winning is it mostly new patient starts and home or are there competitive swap gains going on and also just whether or not the PD kind of burn outpatient opportunity is.

and also just whether or not the PD kind of burnout patient opportunity is...

is contributing to some of the momentum and how you're feeling about attacking that, those PD patients that are burned out and already on some form of home dialysis. And then the second follow-up is just on the pandemic.

This is contributing to some of the momentum and how youre feeling about attacking that those PV patients that a pronounced already on some form of home dialysis and then the second follow up is just on the other.

Are we seeing in 2021 a pandemic tailwind in terms of more and adrenal disease patients choosing home hemodialysis, just staying out of the clinic, being high risk, and wanting a safer dialysis haven in their home? Thanks for taking the questions.

Pandemic.

You're seeing in 2021 pandemic tailwind in terms of more.

In stage renal disease patients choosing home hemodialysis are staying out of the clinic being high risk and wanting a safer dialysis haven tumor home thanks for taking the questions.

Yeah, sure. Josh, thanks. Thanks for listening. Well, I'll start maybe from the top. You talked about where is Tableau winning new patients or existing patients on a competitive home hemodevice? I mean, the answer is both.

Yeah sure Josh Thanks, Thanks for listening well I'll start maybe from the top you talked about whereas tableau, winning new patients so our existing patients on <unk>.

Our competitive home hemo device and the answer is both.

I would be hard pressed to give you any sort of precise breakdown there because, you know, each provider, some of them are pursuing slightly different strategies. But I would say, by and large, most providers adopting Tableau are doing so to grow their total home population, to expand it.

I would be hard pressed to give you.

Any sort of precise breakdown there because you know each provider or some of them are pursuing slightly different strategies, but I would say by and large most providers adopting tableau are doing so to grow their total home population to expand it and they're they're purchasing tableau because they believe that tableau.

and they're purchasing Tableau because they believe that Tableau's ease of use, time-saving, fewer supplies.

Use of your time saving fewer supply will result in more patients, saying, yes to home. So I would say that some of our patients at home today have been not an incumbent technology in the past like the couple that I mentioned on the call earlier, but probably the majority are new to home as providers are looking to grow.

will result in more patients saying yes to home. So I would say that some of our patients at home today have been on an incumbent technology in the past, like the couple that I mentioned on the call earlier.

But probably the majority are new to home as providers are looking to grow their total home population as a result, I think also of the ETC and also this TIPNI benefit associated with tablets.

Their total home population as a result, I think also of the ETP and and also this.

Any benefit associated with tableau.

In terms of, you also mentioned the PD, the population of patients kind of off boarding from PD. I would say, I'd like to be able to say early innings. I think we're whatever comes before the early innings. We are pre early innings. We have.

In terms of you also mentioned the PD the population of patients kind of off boarding from PD I would say I would like to be able to say early innings. I think we're whatever comes before the early innings, we are pre early innings.

We have.

I think always viewed a PD transition to HHD on Tableau as a really fantastic and obvious opportunity for patients to be able to stay at home. And I do anticipate in the coming years that we will invest in more patient education and more transition programs. But for today, we're really focused on helping our providers do what they want to do, which is grow their HHD population.

I think always viewed our PD transition to HD on tableau as a really fantastic an obvious opportunity for patients to be able to stay at home and I do anticipate in the coming years that we will invest in more patient education and more transition program.

But for today.

We're really focused on helping our providers do what they want to do which is grow their HD population.

Lastly, on the COVID and has the pandemic served as a tailwind.

Lastly on the Covid has the pandemic served as a tailwind I would say qualitatively, yes, when you talk to patients and again very anecdotally you will hear many of them say, yes. They started to really sort of enter my equation about dialyzer and accenture versus <unk> at home, but.

I would say qualitatively, yes. You know, when you talk to patients.

And again, very anecdotally, you will hear many of them say, yes, this started to really sort of enter my equation about dialyzing in a center versus dialyzing at home. But thus far, you know, we haven't necessarily seen or generated any hard and fast data about how many and how quickly, but anecdotally, absolutely, that comes up all the time, you know, at least in the conversations that I have with patients about why they're choosing home.

Thus far we haven't necessarily seen or generated any.

Hard and fast data about how many and how quickly but anecdotally absolutely that comes up all the time at least in the conversations that I have with patients about why they're choosing home.

That's super helpful. Thanks for the lovely.

Yes.

And our next question comes from the line of Siraj Khalia with Oppenheimer and Company. Your line is open. Please go ahead.

And our next question comes from the line of Suraj Kalia with Oppenheimer <unk> Company. Your line is open. Please go ahead.

Hi, Leslie, Nabil, can you hear me all right? Yes.

Okay.

Hi, Leslie and the Bill can you hear me all right.

Yes.

Perfect. Hey, congrats on the quarter. So Leslie, couple of questions actually in the field. Let me start off with you.

Perfect Hey, congrats on the quarter, so let's take a couple of questions actually in the Bill Let me start off with you.

In the field, the commentary implies approximately a 20 to 22 million home hemocontribution in FY 22. If I just do back of the envelope calculation, a little over 500 home hemo patients.

W. The commentary implies approximately 20 to 22 million home hemo contribution in FY 'twenty two.

If I just do back of the envelope calculation.

Over 500 home hemo patients.

expected for FY22 up from let's say around 175 or so in FY21. How off is my math on this?

Expected for FY 'twenty, two up from let's say around 175 or so.

Slide 21.

Is my math on this.

Suraj, I mean, you're not, I don't want to comment on the specific number, and that's not something we want to guide to, but, you know, what we did say is that our home revenues were more than double to get to this mid-teens as a percent of 22 revenue, and so your math tracks to that.

Sure.

Youre not I don't want to comment on the specific number and thats not something we want to guide to but what we did say is that our home revenues will more than double to get to this mid teens as a percent of 'twenty to revenue and so your math tracks to that statement now.

Now we will publish our installed base annually. We'll do the same thing next year when we print Q422 results. But you're mad.

We will we will publish our installed base annually. We will do the same thing next year when we when we printed Q4 'twenty two results for your Max trucks.

Fair enough. Hey Leslie, I'll throw one year away and hop back and queue. When I look at the bell curve of distribution, especially in the acute centers and the 1250 consoles and backlogs.

Fair enough Heedlessly ultra one year away and hop back in queue. When I look at the bell curve of distribution, especially acute centers in the $12 50, consoled some backlog.

you know, to the extent that you can help us understand how the bell curve looks like. You know, because you did have some pretty big contract from from some, you know, concentrated users. And I'm curious how you're seeing the bell curve? Is it widening? Is it narrowing? You know, any any idea about recurring revs from acute centers would be greatly appreciated. Folks, thank you for taking my time.

To the extent that you can help us understand how the bell curve looks like.

Because you did have some pretty big contracts from some from some.

Concentrated users.

Curious how youre seeing the bell curve is it widening is it narrowing.

Any any.

<unk> idea about recurring revs from acute centers would be greatly appreciated folks. Thank you for taking my questions.

Yeah, sure. Happy to. And I'm going to assume that by bell curve, you're really maybe referring to the installed base and facilities and customer expansion, et cetera. I guess my first comment would be in 2021, the expansion was both wide and deep. So in that sense, I would call, if I'm interpreting your bell curve analogy correctly, and please jump back on the line if I'm not, but if I'm interpreting that correctly, yes, the bell curve is getting wider. What?

Yeah, sure happy to and I'm going to assume that by Bell curve, you really maybe referring to the.

<unk> installed the installed base and facilities and customer expansion et cetera.

I guess my my first comment would be in 2021, the expansion with both wide and deep so in that sense I would call if I'm interpreting your bell curve in LNG correctly and please jump back on the line if I'm not but.

If I'm interpreting that correctly, yes.

Sal curve is getting wider.

just the utilization, you know, utilization bell curve per center, and then how does the bell curve look like, or how does it shift?

Just the utilization.

Utilization Bell curve per center, and then how does the bell curve looks like or how is it shifting.

Siraj, let me maybe take a crack at that. So if we look at our utilization in Q4, and just, you know, let me back up a little bit. So internally, we look at utilization at spot rates, spot utilization rates, but what we're really focused on is trailing 12-month utilization because it gets sort of rid of some of the noise. When we look at our utilization across our portfolio or across our install base, things are trending right in line with where we expect them to be. Now.

She has let me maybe take a crack at that so if we look at our utilization in Q4.

And just let me back up a little bit so internally, we look at utilization and spot rates spot utilization rates, but what we're really focused on is trailing 12 month utilization because it gets rid of some of the noise. When we look at our utilization across our portfolio or across our installed base things are trending right in line with where we expected them to be now.

we're growing. And so as you can imagine, the new facilities that we're adding start out at lower utilization rates. And the more tenured facilities, they end up above where we want, where sort of the midpoint utilization is, if you will, unbalanced in a growing environment. It all sort of works out. But we, from a utilization perspective, we're trending right in line with where we expect across the portfolio, both in the acute and for the consoles and home. Did that answer your question? Fair.

We're growing and so as you can imagine the new facilities that we're adding start out at lower utilization rates and the more tenured facilities.

Ends up above where we want sort of the midpoint utilization as if you will on balance in a growing environment at all sort of works out but from a utilization perspective, we're trending right in line with where we expect across the portfolio both in the acute and for the consoles and whom did that answer your question.

Fair enough.

Lastly, thank you.

Thank you. And our next question comes from the line of Rick Weiss with Stiefel. Your line is open. Please go ahead. Good afternoon, everybody. Plenty of congratulations on the excellent quarter. Leslie, I'll congratulate you on your new title and hiring one of the best IR professionals in the business. Great move.

Thank you and our next question comes from the line of Rick Wise with Stifel. Your line is open. Please go ahead.

Good afternoon everybody.

Congratulations on the excellent quarter.

I congratulate you on your new title in hiring one of the best IR professionals in the business great move.

Got it.

Turning to a question on ACUTE, the single-digit penetration, the land and expand strategy, I was wondering if you could maybe just expand on your comments there. What's the 22 agenda? Is it more about?

Turning to.

A question on acute.

The single digit penetration the land and expand strategy.

I was wondering if you could maybe just expand on your comments there.

Whats the 'twenty two agenda is it more about.

Is signing big new systems, is that going to be the news we're looking for? Or is this you're landed enough, 22 is more a year of expand to drive growth and have low adoption. And we phrase it, the question, however, makes sense to you, Leslie. Thank you.

Finding big New systems is that going to be the news were looking for or is this your landed enough.

Two is more of Europe .

Expand to drive.

Growth in tableau adoption.

Rephrasing. The question. However, it makes sense to you by the way. Thank you.

Yeah, sure. Thanks. Thank you, Rick. And thank you for the compliment, Jim.

Yes sure. Thanks, Thank you Rick and thank you for the compliment Jim that's great very kind of you.

Very kind of you. Well, I guess I would say, and I sort of started down this road with Suraj's question, which is if you look at sort of the bell curve from a customer concentration standpoint, the spread is getting wider. So we are proliferating Tableau usage not only with new customers and also with new facilities within those existing customer networks.

Well I guess I would say I sort of started down this road with Suraj as question, which is if you look at sort of a bell curve from a customer concentration standpoint.

The spread is getting wider so we are proliferating tableau usage, not only with new customers and also with new facilities within those those existing customer networks.

You know, Tableau today is now used in almost every state in the country, including Alaska and Hawaii, something we're really proud of.

Tableau today is now used in almost every state in the country, including Alaska and Hawaii is something we're really proud of but I think I used the garbage tip of the iceberg because when you look at the performance in 'twenty, one which was great and we're very proud of it also on an opportunity set at $2 5 billion. There's a lot of runway there to go.

But, you know, I think I used the verbiage tip of the iceberg because when you look at the performance in 21, which was great and we're very proud of it, also on an opportunity set of 2.5 billion, there's a lot of runway there to go. And so said differently, the runway that exists, exists both in new customer acquisition, there's a lot of hospitals that could benefit from Tableau, as well as expansion within the customer, both the regional health systems, and also certainly in those national health systems where we have failed agreements, but are still somewhat in the process of implementing and installing.

And so said differently the runway that exist exist both in new customer acquisition, how there's a lot of hospitals that could benefit from from tableau as well as expansion within the customer both the regional health systems and also certainly in those national Health systems, where we have sales agreements but.

Our son.

We're still somewhat in the process of implementing and installing.

at more and more of their hospital facilities. So both deep and wide cancer.

Tableau at more and more of their hospital facility, so both deep and wide to answer your question.

Gotcha, and my home related question, just responding to your use of the word inflection, strong language.

Sure.

And.

My home related question.

Just responding to your use of the word inflection strong language.

What's given you so much confidence now? I mean, obviously the numbers look good. It's still very early on, but here too, can you discuss next steps and logistics? And again, this time, you know, next year, I guess, have you doubled the number of home programs? Is that what we're looking for? Or no, it's not.

What's giving you so much confidence now I mean, obviously the numbers look good.

Still very early on but here too can you discuss next steps in logistics and in it.

Again this time.

Yes.

Next year I guess.

Have you doubled the number of home programs.

We're looking for.

Or no.

focus more narrowly and drive patience and sort of get more confidence in your logistics and team and everything. Again, how are we thinking about priorities there?

Focus more narrowly and drive patients and sort of get more competence in your logistics and team and everything again, how are we thinking about priorities there.

Yeah, happy to answer that. Well, I think I said this on past calls. I mean, I have always personally believed in doing things well, not quickly, no matter what market we're serving. But particularly at home where the device company patient relationship is especially personal and obviously paramount.

Yeah happy to answer that.

I think I said this on past calls I have always personally believed in doing things well not quickly no matter what market.

We're serving but particularly at home where the device company patient relationship is especially personal and obviously paramount.

So here's here's sort of the bottom line entering 22 we took a hard look at everything we strove to ready for scale during 2021 and determined we're there, we are prepared to to grow up both well and quickly.

Here you are sort of the bottom line entering 'twenty. Two we took a hard look at everything we strove to ready for scale during 2021 and determined where there we are prepared to have to grow both well and quickly and so thats kind of the inflection in our thinking and in the velocity and pace that we think we.

And so that's kind of the inflection in our thinking and in the velocity and pace that we think we can.

Can.

we can approach home with in 2022. Second, I'd say that Tiffany's and the ETC has accelerated the urgency with which progressive providers are moving to grow their home populations. And that's, yeah, that's continued to change in a good way.

We can approach them with in 2022 second I'd say that the kidneys and the ETE has accelerated the urgency with which progressive providers or are moving to grow their home populations and that's.

That's continued to change in a good way.

a bit to which is colored our sort of our bullish expectations for 22. So we're, we're ready, I think, a year from now to hit at the last part of your question, we'd want to be able to come back and report

Two which is colored our.

Sort of our bullish expectations for 'twenty two so we're we're ready I think a year from now to hit the last part of your question.

We'd want to be able to come back and report that tableau is in.

Tableau was in robust use at 100 home programs across the country. We want to be able to come back and report, as we can report today, high retention rates, highly differentiated retention rates.

And robust use that 100 home programs across the country, we wanted to be able to come back and report as we can report today and high retention rates highly differentiate it retention rates.

And I think we'd want to come back and report that we were ready to, you know, to kind of further push the accelerator down for 2023. So that's what we're going to be focused on reporting back to you this time next year.

And I think we want to come back and report that we were ready to.

Further push the accelerator down for 2023, so that's what we're going to be focused on reporting back to you at this time next year.

Gotcha. And just one last one for Nabil. Nabil, you were kind of to give us a little color on the quarterly revenue flow throughout the year. Maybe you could help us on the gross margin front as well. Clearly, you're heading toward higher teens, if I'm understanding as you exit or during the by the time you reach the fourth quarter. But do we see steady pickup? Is it a sharper step up?

And just one last one.

For mobile.

Youre kind of to give us a little color on the quarterly revenue flow throughout the year, maybe you could help us on the gross margin front as well clearly.

Heading toward higher teens, if I'm understanding as you exit or during the <unk> by the time you reach the fourth quarter.

But do we see steady pickup.

Sharper step up.

fourth quarter to first quarter, how do we, you know, or more or slower start because

Fourth quarter to first quarter, how do we.

We're slower start because the programs cost programs or volumes pick up how do we think about that slope. Thank you so much.

programs, cost programs, or volumes pick up. How do we think about that flow? Thank you so much.

For sure, Rick. So on gross margin, just a couple of things. Number one.

For sure Rick So on gross margin just a couple of things number one the drivers of margin expansion for US number one will be sold on the console side, our cost down programs that have benefited us in 2021 will continue throughout 2022, which is where we're looking at suppliers compete.

The drivers of margin expansion for us, number one will be, so on the console side, our cost-down programs that have benefited us in 2021 will continue throughout 2022, which is where we're looking at suppliers, components, and individual parts to redesign them to drive down costs. So number one, that's going to continue. Number two, we now have our Mexico-based cartridge manufacturer who is ramping up.

<unk> and individual parts to redesign them to drive down costs for number one that's going to continue number two we now have our Mexico based cartridge manufacturer, who is ramping up and so youll see that ramp primarily over the first half of the year, where they go from zero to the majority or from <unk>.

And so you'll see that ramp primarily over the first half of the year where they go from zero to the majority or from close to zero to the majority of our cartridge production.

Zero to the majority of our cartridge production. So when you take all of that together, what we would really look for Rick is gross margins to expand sequentially as we move through the year from the levels that they were at in Q4. So from the 12% we just printed we'd see expansion another commentary.

So when you take all of that together, what we would really look for, Rick, is gross margins to expand sequentially as we move through the year from the levels that they were at in Q4. So from the 12% we just printed, we'd see expansion. Now the commentary I gave, our margin expectation is that for full year 22, our gross margins will be in the high teens.

Gabe our margin expectation is that for full year 'twenty to our gross margins will be in the high teens.

Possibly suggesting you end up later in the year a little higher. Thank you so much, Nabil.

Gotcha.

Possibly suggesting you end up later in the area a little higher.

So much.

Of course.

Thank you, and our next question comes from the line of Danielle Ann Tolfi with SVB Leerink. Your line is open. Please go ahead.

Thank you and our next question comes from the line of Danielle and Toffee with SBB Leerink. Your line is open. Please go ahead.

Hey, good afternoon everyone. Thanks so much for taking the questions and congrats all around on a good year. Leslie on your new role and Tim, welcome to one of the more exciting small cap growth stories in MedTech.

Hey, good afternoon, everyone. Thanks, so much for taking the questions and congrats all around on a good year Leslie on your new role and Jim welcome to to one of the more exciting small cap growth stories in that tech.

Leslie, my question is going to be similar to the question I feel like I ask every time, and it's why not figure faster with home adoption? As you know, we did a lot of work on this back in June , July time frame, and it just feels like all the tailwinds are in place. I appreciate the guidance you're giving for the year and wanting to be conservative, but I guess what's the tipping point? At what point are we at a tipping point where the avalanche really starts to kick in?

Lastly, my question is going to be similar to the question I feel like I ask every time and it's why not bigger faster with home adoption. As you know we did a lot of work on this back in.

June July timeframe and it just feels like all of the tailwind are in place I. Appreciate the guidance you are giving for the year and wanting to be conservative, but I guess, what's the tipping point like at what point are we at a tipping point where the the.

Avalanche really starts to come here.

Yeah, sure. Thanks for the editorial there.

Yeah sure thanks for that and thanks for the editorial there well.

Well, I think first and foremost, as I look out to 2022, you know, sort of doubling our revenue contribution coming from home. I mean, I think it's a big deal. You know, we could quibble over words. But I think it's something that, you know, we're excited about and we're bullish. I think that is bigger and that is faster. So I think we're there. And we're going to reach for bigger and faster for the next many years to come. I don't see it slowing down this thing.

Well I think first and foremost as I look out to 2022 sort of doubling our revenue contribution coming from home.

I mean, I think it's a big deal.

Quibble over words.

But I think it's something that we're excited about and we're bullish I think that is that.

That is bigger and that is faster so I think we're there.

And we're going to reach for.

Bigger and faster for the next many years to come I don't see it slowing down in this thing.

we will always have our eye on the patient experience at the same time. We've talked about this a lot. I mean, I really have had my eye on.

We will always have our eye on the patient experience at the same time, we've talked about this a lot I mean, I really have had my eye on patient retention in the home really since day, one studying this market for a very very long time.

patient retention in the home really since day one, studying this market for a very, very long time. In the IDE, our patient retention rate was really high. In our early experience with small number of patients, our retention rate was really high. And I think the question through last year, at least in my mind, was, hey, if we really start to scale here, will the patient retention rate remain high? The answer is yes.

Any idea ER patient retention rate was really high in our early experience with small number of patients our retention rate was really high and I think the question through last year at least in my mind with Hey, as we really start to scale here wells the patient retention rate remained high the answer is yes.

So I think that, you know, we feel very confident up now about our ability to do bigger, to do faster, and to do it well. Again, it's defined by an exceptional patient experience, which is, at the end of the day, what this is all really about.

So I think that we feel very confident now about our ability to do bigger to do faster and to do it well again as defined by a an exceptional patient experience, which is at the end of the day. What this is all really about.

Yeah, okay. And then I guess my next question is your go-to-market strategy has been focusing on the health system. Just curious about whether you're getting interest from other, you know, sort of major dialysis providers out there, and at what point you might sort of entertain that idea of going out to, you know, a DaVita, for example. Thanks so much.

Yeah, Okay, and then I guess my next question is your go to market strategy has been focusing on the on the health system.

Im just curious about whether you are getting interest from other sort of major dialysis providers out there and at what point, you might sort of entertain that idea of going out to do.

Data for example, thanks so much.

Sure. Danielle, are you talking about on the home side or the Q side? I'm sorry. On the home. On the home side. On the home. Okay. Yeah. Sure.

Sure Danielle are you talking about on the home side or the <unk> side I'm sorry.

On the home on the home side upon the home Okay, Yes sure.

Well, a couple of comments there. I think that Tableau is already being used by many of the major dialysis providers across the United States.

Well a.

A couple of comments there I think that tableau is already being used by many of the major dialysis providers across the United States in.

in addition to health systems that are establishing their own home service dialysis, chronic

In addition to health systems that are establishing their own home.

Service dialysis chronic service lines for the <unk>.

So those are the segments that we're engaged in right now, and I don't see that changing. I see both growing equally. And if you, again, look at the size of our backlog, I think the demand and the interest in Tableau was equally high, both from health systems and also from conventional dialysis providers.

First time, so those are the segments that we're engaged in right now I don't see that changing I see both growing equally and if you again look at the size of our backlog I think the demand and the interest in tableau was equally high both from health systems and also from conventional dialysis providers.

I think as our goals, to use your words, are really focused on bigger and faster, our partners for today and for the foreseeable future will be with those that want to be progressive and those that want to move really fast.

I think as.

Our goals to use your words are really focused on bigger and faster.

Our partners for today and for the foreseeable future will be with what those that want to be progressive and those that want to move really fast and so those are our north star is that guide us to partner selection and.

And so those are our North Stars that guide us to partner selection. And I see that remaining intact for 2022.

I see that remaining intact for 2022.

Got it thanks, so much.

Thank you. And again, if you have a question at this time, please press star then 1.

Thank you and again if you have a question at this time. Please press Star then one.

And our next question comes from the line of Drew Raniere with Morgan Stanley . Your line is open. Please go ahead.

And our next question comes from the line of drew <unk> with Morgan Stanley . Your line is open. Please go ahead.

Hi everyone, thanks for taking the question. Maybe for Nabil, just on OpEx, I heard that you said that you're expecting an increase year over year. I was just hoping that you could put maybe a finer point on where you're expecting OpEx to shake out and maybe what investments you're putting that money towards. Is it more on the commercial side, more on the R&D and how that might translate into catalysts over the next 12 months?

Hi, everyone and thanks for taking the question maybe.

Maybe for Bill.

Just on the Opex I heard that you said that.

We're expecting an increase year over year I was just hoping that you could put maybe a finer points on kind of where youre expecting opex to shake out and maybe what investments.

You're kind of putting that money towards is it more on the commercial side.

More on the R&D and how that might translate into catalysts over the next next 12 months.

Yeah, Drew, for sure. So first of all, OpEx, you know, we invested in 2021 in our commercial organization. And in R&D, we hired a chief technology officer, as you as you know, back in the summer. And it is this investment that we believe has helped get to kind of the demand that we've seen and the large backlog that we enter.

Yes drew for sure so first of all Opex.

We invested in 2021, and our commercial organization and in R&D, We hired a chief Technology Officer as you know back in the summer and it is this investment that we believe has helped get to kind of the demand that we've seen in the large backlog and we enter 'twenty two with now Leslie.

22 with. Now, Leslie talked about all of the tailwinds that we see both in the acute setting, where again, we still have a lot of penetration to go in an even larger market, right? Two and a half billion dollar market.

Talks about all of the tailwind that we see both in the acute setting where again, we still have a lot of penetration to go in and even larger markets to $2 $5 billion market and then in the home. We are still in early innings and in a year, where we do expect inflection and do expect.

And then in the home, we are still in early innings and in a year where we do expect inflection and do expect home to double as a proportion of our revenue.

Home to double as a proportion of our revenues. So our 'twenty two investments will be primarily in our commercial organization around marketing around clinical sales and around support of our installed a growing installed base. So that's on the commercial organization and then secondly on the R&D.

So our 22 investments will be primarily in our commercial organization around marketing, around clinical sales, and around support of our installed, a growing installed base.

So that's on the commercial organization. And then secondly, on the R&D side, we will continue to make investments there around hardware engineering associated with driving down costs and improving Tableau, and then around software and data with respect to our strategy to innovate around data over the long run.

Side, we will continue to make investments there around hardware engineering associated with driving down costs and improving tableau and then around software and data with respect to our strategy to innovate around data over the long run you will see some smaller investments in G&A, but those will largely.

you'll see some smaller investments in GNA, but those will largely moderate in 22. We've made the bulk of those in 2021. Now, to put a finer point on it, Drew, if you think about our 22 OPEC.

Moderate in 'twenty two we've made the bulk of those in 2021 now to put a finer point on it drew if you think about our 'twenty two opex as our Q4 run rate times four you're in the zone.

as our Q4 run rate times four, you're in the zone.

Got it. Thank you. And then maybe just a longer term margin question, but I think you said you're still anticipating 50% gross margins by 2025, but kind of given the commentary that home is kind of moving from a gradual build to something more of an inflection point in this year, should we be expecting something higher than 50%?

Got it thank you.

And then maybe just a longer term margin question, but.

I think you said you are still anticipating 50% gross margins by 2025, but kind of given the commentary that home is kind of moving from a.

Gradual build to something more of an inflection point in this year should we be expecting something higher than 50%.

Drew, you know, we still believe in our long-term target of getting to roughly 50%

Drew we still believe in our long term target of getting to roughly 50%.

in 2025. You know we're sitting here a month and a half into 2022 and so there is still a long way to go from here to 2025 and our progress to date as well as our expectations for margin expansion in 2022 give me confidence in that journey. I don't know like I'm not prepared to say we're going to go above 50 percent.

In 2025.

We're sitting here a month and a half into 2022 and so there is still a long way to go from here to 2025, and our progress to date as well as our expectations for margin expansion in 'twenty to give me confidence in that journey.

No look I am not prepared to say, we're going to go above 50%.

at all, but what I will say is I have a lot of confidence in our ability to go down this journey given that we have a little under three years.

At all but what I do what I will say is I have a lot of confidence in our ability to go down. This journey given that we have like a little under three years to go here.

Got it. And, sorry, just one last one on XT. Can you maybe talk about what you are seeing in terms of attachment rate and maybe what your 2022 guidance implies? Thank you.

Got it and sorry, just one last one on <unk> could you maybe talk about what you are seeing in terms of attachment rate and maybe what your 2022 guidance implies thank you.

Yeah, Drew, so we've always said that we expect XT to be round numbers in a quarter of the consoles we sell. We have seen strength, meaning we have seen higher uptake than that over the last couple of quarters here. We do think over the long term, XT will likely converge at that roughly one in four. But we have seen strength in the last.

Yes drew so we've always said that we expect <unk> to be round numbers in the quarter of the consoles. We sell we have seen strength, meaning we have seen higher uptake than that over the last couple of quarters. Here. We do think over the long term XD will likely converge at that roughly one in four.

Sure.

But we have seen strength in the last couple of quarters.

Thank you. And this does conclude today's question and answer session. I would like to turn the conference back over to Leslie for any further remarks.

Thank you and this does conclude today's question and answer session and I would like to turn the conference back over to Leslie for any further remarks.

Thanks operator and thank you all for joining today. Have a great afternoon or evening depending on what time zone you're in. Thanks again.

Thanks, operator, and thank you all for joining today have a great afternoon or evening, depending on what time zone, you're in thanks again.

This concludes today's conference call. Thank you for participating. Everyone have a great day.

This concludes today's conference call. Thank you for participating.

Have a great day.