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Outset Medical, Inc.

Company NameOutset Medical, Inc.
Stock SymbolOM
Class PeriodAugust 01, 2022 to August 07, 2024
Lead Plaintiff Motion DeadlineOctober 28, 2024

On July 7, 2023, after the market closed, Outset Medical disclosed that it had received a Warning Letter from the FDA which “asserted that certain materials . . . promote continuous renal replacement therapy (CRRT), a modality outside of the current indications for the Tablo Hemodialysis System” and “assert[ed] that the TabloCart with Prefiltration . . . requires prior 510(k) clearance for marketing authorization.” and that the Company would “work collaboratively with the FDA to resolve this observation, including potentially submitting a 510(k) on TabloCart.”  On this news, Outset Medical’s stock price fell $1.20, or 5.9%, to close at $19.26 per share on July 10, 2023, on unusually heavy trading volume.

On August 2, 2023, after the market closed, the Company issued a press release which announced a “Shipment Pause of TabloCart with Prefiltration Pending 510(k) Clearance.” On this news, Outset Medical’s stock price fell $1.97, or 10.18%, to close at $17.39 per share on August 3, 2023, on unusually heavy trading volume.

On October 12, 2023, after the market closed, the Company revealed that revenue growth had been significantly impacted by the FDA’s warning letter. Specifically, the Company issued a press release announcing preliminary third quarter 2023 financial results, as well as updated financial guidance for 2023 revenue, which reflected that “[g]rowth in the quarter was dampened by a larger-than-expected impact in the field from the recent FDA warning letter.”  On this news, the Company’s share price fell $3.38, or 49.9%, to close at $3.39 per share on October 13, 2023, on unusually heavy trading volume.

On August 7, 2024, after the market closed, Outset Medical released its second quarter 2024 financial results, significantly missing consensus estimates and lowering its full year 2024 revenue guidance by $39 million at the midpoint. The Company disclosed it would be forced to take “clear steps to improve our execution” including “sales team and process restructuring.”  As a result, the Company disclosed it would be unable to deliver on a post-approval sales ramp of TabloCart previously forecast.  On this news, the Company’s share price fell $2.33, or 68.53%, to close at $1.07 per share on August 8, 2024, on unusually heavy trading volume.

The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) the Tablo products were marketed for continuous renal replacement therapy, which is not one of the indications approved by the FDA; (2) that, as a result, Outset Medical was reasonably likely to submit an additional 510(k) application for the Tablo products; (3) that there was a substantial risk that the Company would cease sales of the Tablo products pending FDA approval of additional indications; (4) that Outset Medical lacked the sales team and process to execute on the ramp of Tablo sales; (5) that, as a result of the foregoing, the Company’s revenue growth would be adversely impacted; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.

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