Outset Medical - a crash or a misunderstanding?

Outset’s stock, one of our year’s favorite, dropped 34% last week on the shipment of a lead product being suspended. Indeed, updating a medical device is not as riskless as updating your computer. Time for a review of the issue.

Bottom line

Outset Medical strives to bring dialysis care at home through Tablo, a system cleared by the FDA in 2020. After some changes to improve the device since its original certification, Outset submitted a new FDA review. Still, the regulatory body asked for more data, resulting in a stoppage of shipments of Tablo to new homes. We don’t see the situation as a catastrophe but as part of the typical risk management process. So far, the hold does not seem related to any safety issue, leading us to assume that the company is going through a temporary setback and will be able to recover its losses as soon as the device gets the approval. We keep our position unchanged as we monitor the situation and look for more clarity on the duration of the disruption.

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