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The following discussion of our financial condition and results of operations should be read together with our unaudited condensed financial statements and related notes and other financial information included elsewhere in this Quarterly Report, as well as our audited financial statements and notes thereto and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2025 Annual Report. As used in this Quarterly Report, references to the “Company,” “we,” “us,” “our,” or similar terms refer to Outset Medical, Inc. In addition to historical financial information, this discussion and other parts of this report contain forward-looking statements within the meaning of the federal securities laws. All statements other than statements of historical fact contained in this Quarterly Report are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “could,” “would,” “project,” “predict,” “plan,” “expect” or the negative or plural of these words or similar expressions. The forward-looking statements in this report are only predictions and are based largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Such risks and uncertainties include those described throughout this Quarterly Report, including in this discussion as well as in the section titled “Risk Factors” under Part II, Item 1A below and in Part I, Item 1A, “Risk Factors” and in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our 2025 Annual Report. The forward-looking statements in this Quarterly Report are based upon information available to us as of the date of this Quarterly Report, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements, like all statements in this report, speak only as of their date, and, except as required by law we undertake no obligation to update or revise these statements, whether as a result of any new information, future developments or otherwise. These statements are inherently uncertain, and investors are cautioned not to unduly rely upon these statements. Overview Our technology is designed to elevate the dialysis experience for patients and help providers overcome traditional care delivery challenges. Requiring only an electrical outlet and tap water to operate, our Tablo® Hemodialysis System (Tablo) frees patients and providers from the burdensome infrastructure required to operate traditional dialysis machines. The integration of water purification and on-demand dialysate production in a single 35-inch compact console enables Tablo to provide clinical and operational flexibility to customers. With a simple-to-use touchscreen interface, two-way wireless data transmission and a proprietary data analytics platform, Tablo is a holistic approach to dialysis care. Unlike existing hemodialysis machines, which have limited clinical versatility across care settings, Tablo can be used seamlessly across multiple care settings and a wide range of clinical applications. Tablo is cleared by the FDA for use in the hospital, clinic, or home setting. Tablo leverages cloud technology, making it possible for providers to monitor devices remotely, view treatment data, perform patient and population analytics, and automate clinical recordkeeping. Tablo’s wireless connectivity enables us to release training, new features and enhancements over-the-air without interventions by field service engineers. Tablo’s connectedness allows continuous streaming of an average of approximately 3 million machine performance data points to the cloud for every treatment. We use this data, in conjunction with our diagnostic and predictive algorithms, to monitor device performance, identify and diagnose failures and, in some instances, predict and prevent potential future device failures or malfunctions. In effect, this contributes to a reduction in service hours and an increase in device uptime. We have generated meaningful evidence to demonstrate that providers can realize significant operational efficiencies, including reducing the cost of their dialysis programs. In addition, Tablo has been shown to deliver robust clinical care. In studies and surveys we have conducted, patients have reported quality of life benefits on Tablo compared to other dialysis machines. We believe Tablo empowers patients, who have traditionally been passive recipients of care, to regain agency and ownership of their treatment. Driving adoption of Tablo in the acute care setting has been our primary focus to date. We have invested in growing our economic and clinical evidence, built a veteran sales and clinical support team with significant expertise, and implemented a comprehensive training and customer experience program. Our experience in the acute care market has demonstrated Tablo’s clinical flexibility and operational versatility, while also delivering meaningful cost savings to the providers. In addition, we are also working with skilled nursing facilities (SNFs), sub-acute long-term acute care hospitals (LTACHs), and other post-acute providers to raise awareness of Tablo’s economic and clinical benefits to them and to patients. We plan to continue leveraging our commercial infrastructure to broaden our installed base in the acute and post-acute care markets, as well as driving utilization and fleet expansion with our existing customers. 16 Tablo is also utilized for home-based dialysis. We believe our ability to reduce training time, patient dropout, and the supplies and infrastructure required to deliver dialysis in the home can drive efficiency and economic improvements to the home care model. In our home investigational device exemption trial, patients reported specific quality of life improvements compared to their experience on the incumbent home dialysis machine. To penetrate this market successfully, we have made investments in and continue to focus on refining our home distribution, logistics and support systems to help ensure they are ready for scale. We are also working with providers, patients, and payors to increase awareness and adoption of transitional care units as a bridge to home-based therapy. We generate revenue from the placement of Tablo consoles along with accessories, and shipping and handling charged to customers, which revenue is recognized up-front. We also earn recurring revenue from sales of consumables, including Tablo cartridge, and services, which generates significant total revenue over the life of Tablo consoles. Our total revenues were $31.6 million and $31.4 million for the three months ended June 30, 2026 and 2025, respectively, and $59.5 million and $61.2 million for the six months ended June 30, 2026 and 2025, respectively. We primarily sell our solutions through our direct sales organization, which covers most major metropolitan markets in the United States. Our sales organization is comprised of our capital sales team, responsible for generating new customer demand for Tablo, and our clinical sales team, responsible for driving utilization and fleet expansion of Tablo at existing customer sites. In addition, our field service team provides maintenance services and product support to our customers. Our field sales and service teams represent 47% of our total full-time employees as of June 30, 2026. The same sales organization and field service team drive Tablo penetration in both the acute and home markets. We believe the ability to leverage one team to serve both markets will result in significant productivity and cost optimization as we continue to scale our business. Key Factors Affecting Our Performance We believe that our financial performance has been, and in the foreseeable future will continue to be, primarily driven by the following factors. While we believe each of these factors presents significant opportunities for our business, they also pose important challenges that we must successfully address in order to sustain our growth and improve our results of operations. Our ability to successfully address the factors below is subject to various risks and uncertainties, including those described in the section titled “Risk Factors.” Market Acceptance of Tablo in Acute Setting We plan to further broaden our installed base by continuing to target national and regional integrated delivery networks and health systems, SNFs, LTACHs and other post-acute providers. In addition, we focus on driving utilization, fleet expansion and fleet refresh opportunities with existing customers through continued commercial engagement, an exceptional user experience delivered through our commercial team and a steady release of software enhancements that amplify Tablo’s operational reliability and clinical versatility. Our ability to successfully execute on this strategy, and thereby increase our revenue in the acute market, will depend on several factors. These factors include the success of our initiatives to optimize and further evolve our commercial organization, infrastructure and sales processes to support the growth of our business in the acute and post-acute care markets as we focus more heavily on enterprise selling and transition beyond earlier stage adoption of Tablo. Expansion of Tablo within the Home Setting We believe that a significant growth opportunity exists within the home hemodialysis market. We are partnering with innovative dialysis clinic providers, health systems and other adjacent healthcare providers who are motivated to grow their home hemodialysis population, and who share our vision of creating a seamless and supported transition to the home. We are also investing in market development over the longer term to expand the home hemodialysis market itself. The expansion of the home hemodialysis market and our ability to penetrate this market will be an important factor in driving the future growth of our business. In addition, the success of our efforts to expand within the home market, help grow new home programs and increase our revenue generated from home-based dialysis on the timeline that we anticipate will depend on several factors. These factors include the success of our initiatives to optimize and further evolve our commercial organization, infrastructure and sales processes as we scale our business in the home market. Gross Margin Our ability to expand our gross margins depends on: first, our ability to continue to sell Tablo cartridges, services, and accessories for Tablo consoles; second, our ability to reduce the cost of service and third, our ability to reduce the cost to manufacture Tablo consoles. Our ability to expand gross margins will also depend in part on our ability to control the average selling prices of our products and services, including by selling higher-margin accessories, consumables and services. Further, we will continue to utilize our cloud-based data system, as well as enhanced product and support performance, to improve service margin and drive down service costs per console. In addition, over the past several years, we have moved the production of Tablo consoles and a substantial majority of Tablo cartridges in-house to our manufacturing facility in Tijuana, Mexico which we operate in collaboration with TACNA, as part of our cost reduction activities. This has helped further our long-term gross margin expansion and supply continuity strategies while reducing the costs of Tablo console production and improving the flexibility of our operations. We will continue our cost reduction 17 activities by using our design, engineering, supply chain and manufacturing capabilities to help further advance and improve the efficiency of our manufacturing processes, lowering the cost of parts and components and lowering our costs of production. Our ability to expand gross margins depends on our ability to successfully execute these strategies, as well as the impact of macroeconomic factors described below, including the tariffs imposed by the current administration. Profitability Initiatives Our ability to achieve and sustain profitability depends on several key factors: first, our ability to grow our revenue while expanding gross margins, as discussed above; second, our ability to optimize operating expenses; and third, our ability to optimize working capital. We have undertaken various initiatives designed to improve operational efficiencies, reduce operating expenses to align with anticipated levels of revenue growth and streamline our overall cost structure, including several organizational restructurings implemented beginning in the fourth quarter of 2023 through early 2025. We are also taking steps to improve our ability to efficiently manage working capital, including inventory. Our ability to transition to profitability will depend on the success of our efforts to optimize spending and working capital, including inventory. Impacts of Macroeconomic Factors Global macroeconomic conditions, including global geopolitical instability (such as the ongoing hostilities in the Middle East), inflationary pressures, rising interest rates, changes in tariff or trade laws and policies (such as the tariffs imposed by the current administration), increased labor costs, staffing shortages and global supply chain disruptions, may impact our business and results of operations, and those of our customers, manufacturing partners and suppliers. As the duration and severity of these macroeconomic conditions remain uncertain and depend on various factors, we cannot predict what effects these macroeconomic conditions will ultimately have on our business and results of operations, our customers, or our suppliers. Beginning in the third quarter of 2023, we began to observe an increasing number of our existing and prospective customers deferring their decisions to purchase Tablo in an environment of rising interest rates and more cautious capital spending. These deferrals served to elongate our sales cycle and the timing of delivery and installations, which, in turn, contributed to an adverse impact on our bookings and revenues starting in the second half of 2023 and through 2026. We may see disruption from this in future periods. In addition, ongoing uncertainty relating to various policy changes under the current administration – including developments in trade policy (such as increased tariffs), changes in interest rate policy, potential reductions in government reimbursement and shifts in broader healthcare policy – could increase financial pressures faced by our existing and prospective hospital customers. These actual or anticipated policy changes may lead to higher operating costs for our customers, as well as tighter operating budgets and more cautious capital spending decisions. Additionally, broader economic uncertainty and market volatility – driven in part by these evolving policies – could exacerbate financial strain on our customers, potentially resulting in delayed or reduced purchases of our products and services. These factors could adversely impact our revenues, results of operations and financial condition in future periods. If our customers continue to face prolonged periods of rising interest rates, capital budget constraints, volatility, uncertainty, staffing shortages, cash flow challenges, rising costs and other financial pressures, whether due to general macroeconomic conditions, evolving policy changes under the current administration (including trade policy developments, reductions in government reimbursement or shifts in healthcare policy), cybersecurity events or other factors, it could ultimately adversely impact our ability to expand existing customer relationships or attract new customers of Tablo, timely collect amounts due, effectively manage our inventory levels, and have a material adverse effect on our bookings, revenues, results of operations, financial condition, and, ultimately, our future growth and profitability. From a supply chain perspective, we have worked closely with our manufacturing partners and suppliers to enable us to source key components and maintain appropriate inventory levels to meet customer demand, and have not experienced material disruptions in our supply chain to date. However, macroeconomic factors such as rising inflation, increasing labor costs, and surges and shifts in consumer demand have disrupted the operations of certain of our third-party suppliers, resulting, in some cases, in increased lead times and higher component costs. We believe that localizing production of a substantial majority of Tablo cartridges in Mexico (in-house at our manufacturing facility) has helped achieve cost reductions through lower freight costs, further our long-term gross margin expansion and supply continuity strategies and improve the flexibility of our operations. However, we may face increased supply chain constraints in the future, which could negatively impact our ability to meet customer demand on a timely basis, result in customer dissatisfaction and adversely impact our operating margins and results of operations. Moreover, increased tariffs imposed by the current administration, including on goods imported into the United States from Mexico and China, could adversely impact our supply chain and distribution costs, as well as our ability to achieve sustainable gross margins. We currently do not believe we have exposure to these tariffs as Tablo, TabloCart and Tablo cartridge are covered under a special exemption. However, in September 2025, the U.S. Department of Commerce initiated an investigation under Section 232 of the Trade Expansion Act of 1962 to assess the national security implications of imports of personal protective equipment, medical consumables, and medical equipment, including medical devices. The outcome of this investigation could result in additional tariffs or other trade restrictions. While we continue to believe our products will remain exempt, the scope and outcome of the investigation are uncertain and could affect existing exemptions or expand coverage to additional product categories. We cannot predict what actions may ultimately be taken with respect 18 to tariffs or trade relations between the United States and other countries (including Mexico and China), what products may be subject to such actions, or what actions may be taken by the other countries in retaliation. Results of Operations The following table summarizes our results of operations for the three and six months ended June 30, 2026 and 2025 (in thousands): Three Months Ended Six Months Ended June 30, June 30, 2026 2025 2026 2025 Revenue: Product revenue $ 21,908 $ 23,082 $ 40,458 $ 44,376 Service and other revenue 9,727 8,337 19,040 16,795 Total revenue 31,635 31,419 59,498 61,171 Cost of revenue: Cost of product revenue 11,799 11,791 20,632 22,793 Cost of service and other revenue 6,554 7,761 13,489 15,445 Total cost of revenue 18,353 19,552 34,121 38,238 Gross profit 13,282 11,867 25,377 22,933 Operating expenses: Research and development 5,450 5,289 11,068 10,804 Sales and marketing 12,152 14,280 25,431 27,932 General and administrative 11,356 9,163 21,473 17,461 Total operating expenses 28,958 28,732 57,972 56,197 Loss from operations (15,676 ) (16,865 ) (32,595 ) (33,264 ) Interest income and other income, net 1,354 1,903 2,881 3,879 Interest expense (3,442 ) (3,475 ) (6,811 ) (7,035 ) Loss on extinguishment of term loan — — — (7,685 ) Loss before provision for income taxes (17,764 ) (18,437 ) (36,525 ) (44,105 ) Provision for income taxes 220 104 437 219 Net loss $ (17,984 ) $ (18,541 ) $ (36,962 ) $ (44,324 ) Comparison of the Three and Six Months Ended June 30, 2026 and 2025 Revenue Three Months Ended June 30, Change Six Months Ended June 30, Change (dollars in thousands) 2026 2025 $ % 2026 2025 $ % Revenue: Product revenue $ 21,908 $ 23,082 $ (1,174 ) (5 )% $ 40,458 $ 44,376 $ (3,918 ) (9 )% Service and other revenue 9,727 8,337 1,390 17 % 19,040 16,795 2,245 13 % Total revenue $ 31,635 $ 31,419 216 1 % $ 59,498 $ 61,171 (1,673 ) (3 )% Product revenue decreased by $1.2 million, or 5%, for the three months ended June 30, 2026 as compared to the same period in the prior year. This decrease was driven by a $1.7 million decrease in consumable revenue, which was offset by a $0.5 million increase in console revenue. Product revenue decreased by $3.9 million, or 9%, for the six months ended June 30, 2026 as compared to the same period in the prior year. This decrease was driven by a $2.7 million decrease in consumable revenue and a $1.2 million decrease in console revenue. Service and other revenue increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to services associated with growth in our console installed base. 19 Gross Profit and Gross Margin Three Months Ended June 30, Change Six Months Ended June 30, Change (dollars in thousands) 2026 2025 $ % 2026 2025 $ % Gross profit and gross margin: Gross profit $ 13,282 $ 11,867 $ 1,415 12 % $ 25,377 $ 22,933 $ 2,444 11 % Gross margin 42.0 % 37.8 % 42.7 % 37.5 % Gross profit increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. Gross margin improved by 4.2 percentage points for the three months ended June 30, 2026 and 5.2 percentage points for the six months ended June 30, 2026 as compared to the same periods in the prior year. These improvements in gross profit and gross margin were primarily driven by higher gross margin on service and other revenue. Such improvements were offset by a lower mix of consumable revenue, which had a higher gross margin than console and service revenues, as compared to the same periods in the prior year. Operating Expenses Three Months Ended June 30, Change Six Months Ended June 30, Change (dollars in thousands) 2026 2025 $ % 2026 2025 $ % Operating expenses: Research and development $ 5,450 $ 5,289 $ 161 3 % $ 11,068 $ 10,804 $ 264 2 % Sales and marketing 12,152 14,280 (2,128 ) (15 )% 25,431 27,932 (2,501 ) (9 )% General and administrative 11,356 9,163 2,193 24 % 21,473 17,461 4,012 23 % Total operating expenses $ 28,958 $ 28,732 226 1 % $ 57,972 $ 56,197 1,775 3 % Research and development expenses for the three and six months ended June 30, 2026 were relatively consistent with the same periods in the prior year due to ongoing expense discipline and working capital management. Sales and marketing expenses decreased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The decrease was primarily driven by a decrease in compensation-related and stock-based compensation expenses and infrastructure costs due to a lower headcount in 2026 compared to the prior year. This decrease was partially offset by increases in freight expense. General and administrative expenses increased for the three and six months ended June 30, 2026 as compared to the same periods in the prior year. The increase was primarily due to an increase in compensation-related and stock-based compensation expenses and higher legal costs related to the stockholder class action and related derivative lawsuits. Other Income (Expenses), Net Three Months Ended June 30, Change Six Months Ended June 30, Change (dollars in thousands) 2026 2025 $ % 2026 2025 $ % Other income (expenses), net: Interest income and other income, net $ 1,354 $ 1,903 $ (549 ) (29 )% $ 2,881 $ 3,879 $ (998 ) (26 )% Interest expense (3,442 ) (3,475 ) 33 (1 )% (6,811 ) (7,035 ) 224 (3 )% Loss on extinguishment of term loan — — — — — (7,685 ) 7,685 * Total other expenses, net $ (2,088 ) $ (1,572 ) (516 ) 33 % $ (3,930 ) $ (10,841 ) 6,911 (64 )% * Not meaningful The decrease in interest income and other income, net for the three and six months ended June 30, 2026 as compared to the same periods in the prior year were driven by a lower average short-term investment balance in 2026. The interest expense for the three and six months ended June 30, 2026 were relatively consistent with the amount in the same periods in the prior year. The loss on extinguishment of term loan of $7.7 million was recognized for the repayment of the SLR Term Loan in 2025, which included final payment and termination fees. 20 Liquidity and Capital Resources Sources of Liquidity Since our inception, we have incurred net losses and negative cash flows from operations. To date, we have financed our operations and capital expenditures primarily through sales of equity securities, revenue from sales, debt financings, and proceeds from ESPP purchases. As of June 30, 2026, we had cash, cash equivalents, restricted cash, and short-term investments of $151.0 million. In addition, in January 2025, we entered into a credit agreement and guaranty (the Perceptive Credit Agreement) with Perceptive Credit Holdings IV, LP, as administrative agent (Agent) and the lenders from time to time party thereto, which provided a $100 million 5-year term loan at closing and will provide an additional term loan of up to $25 million at our election, which is available for funding until July 14, 2027, subject to achievement of a specified revenue milestone and other customary conditions. We are required to comply with certain covenants under the Perceptive Credit Agreement, including, among others, requirements as to financial reporting, restrictions on our ability to incur additional indebtedness and to pay any dividends or other distributions on capital stock, maintenance of a minimum cash balance, and achievement of certain specified trailing twelve-month net revenue targets. If we fail to comply with any covenants, payments or other terms of the Perceptive Credit Agreement and such failure constitutes an event of default thereunder, such event of default would give Agent the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable. While we have taken actions to reduce operating expenses and working capital to align with anticipated revenue growth including implementing restructuring plans to streamline our overall organizational structure and renegotiating commitments with suppliers to reduce inventory, we expect to continue to incur operating losses in the near term while we make investments to support our anticipated growth. We may raise additional capital through the issuance of additional equity financing, debt financings, which may require refinancing or amending the terms of our existing debt, or other sources. If this financing is not available to us at adequate levels or on acceptable terms, we may need to further evaluate our operating plans. If we do raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our existing stockholders’ rights. We are subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional capital through debt financing (including through our existing debt), we may be subject to an increase in our interest expense which may negatively affect our cash flow. We believe that our existing cash, cash equivalents and short-term investments, and cash generated from sales will be sufficient to meet our anticipated needs for at least the next 12 months from the issuance date of this Quarterly Report. Cash Flows Summary The following table summarizes the cash flows for each of the periods indicated (in thousands): Six Months Ended June 30, 2026 2025 Net cash (used in) provided by: Operating activities $ (22,479 ) $ (30,486 ) Investing activities 22,065 (109,241 ) Financing activities 413 55,272 Net decrease in cash, cash equivalents and restricted cash $ (1 ) $ (84,455 ) Operating Activities The net cash used in operating activities of $22.5 million for the six months ended June 30, 2026 was due to a net loss of $37.0 million, the amortization of premiums on investments of $0.8 million, and provision for credit losses of $0.7 million, which were adjusted by stock-based compensation expense of $6.1 million, depreciation and amortization of $1.4 million, non-cash interest expense of $1.4 million, non-cash lease expense of $0.8 million, and a net cash inflow from the change in our operating assets and liabilities of $4.7 million. The net cash inflow from operating assets and liabilities was primarily due to increases in accounts payable, accrued expenses, and deferred revenue, and a decrease in prepaid expenses and other assets. This net cash inflow from operating assets and liabilities was partially offset by a decrease in accrued compensation and related benefits resulting from the payout of 2025 annual cash bonuses, an increase in accounts receivable and decreases in operating lease liabilities and accrued warranty liability. Investing Activities The net cash provided by investing activities of $22.1 million for the six months ended June 30, 2026 was due to the maturities of short-term investment securities of $63.8 million, which was partially offset by purchases of short-term investment securities of $41.5 million and purchases of property and equipment of $0.2 million. 21 Financing Activities The net cash provided by financing activities of $0.4 million for the six months ended June 30, 2026 was due to proceeds from ESPP purchases, partially offset by cash outflow of $0.1 million in payments on finance lease liabilities. Finance Leases The Company has finance leases for vehicles, which generally have a term of three years. The Company’s total finance lease liability as of June 30, 2026 was $1.7 million, which includes $0.6 million due within one year from the most recent balance sheet date and $1.1 million due thereafter. Critical Accounting Estimates Management’s discussion and analysis of the financial condition and results of operations is based on the financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported revenues and expenses incurred during the reporting periods. The estimates are based on historical experience and on various other factors that are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. There have been no new or significant changes in our critical accounting estimates as compared to the critical accounting estimates disclosed in Part II Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2025 Annual Report.