Good day and thank you for standing by. Welcome to the Outset Medical First Quarter 2022 Earnings Conference Call. At this time, all participants’ lines are in listen-only mode. After the presentation, there will be a question-and-answer session. To ask a question during the session, [ Operator Instruction]. Please be advised today's conference may be recorded. If you require Operator assistance during the call, [ Operator Instruction]. I'd now like to hand a conference over to your host today, Jim Mazzola, Head of Investor Relations.

Okay. Good afternoon, everyone and welcome to our first quarter 2022 earnings call. Participating from the company today are Leslie Trigg, Chair and Chief Executive Officer and Nabeel Ahmed, Chief Financial Officer. During the call, we will discuss our first quarter operational and financial results, as well as provide an update on 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 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. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied. Outset 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 of Outset's public filings with the Securities and Exchange Commission, including our latest annual and quarterly report. With that, I will now turn the call over to Leslie.

Thanks, Jim. Good afternoon, everyone. And thank you for joining us to review our first quarter 2022 results. Since our last update in February, the Outset team has continued to execute well across our strategic initiatives. We delivered our seventh consecutive quarter of strong top-line growth led by continued momentum in the acute market, as we achieved continued positive performance on gross margin expansion and made substantial progress toward our home inflection objectives for 2022, with the number of home console shift in the first quarter exceeding our expectations. Total revenues for the first quarter was $30.6 million, representing 33% year-over-year growth and 8.5% growth sequentially. We benefited from strong console demand and strength and treatment utilization, as we continue to capture share across acute care customers, accelerate home expansion, and broaden our install base. Overall, we maintain a high level of visibility into our business, supported by a robust backlog and strong pipeline, grounded in broad interest in Tablo and we remain confident in our near and longer-term outlook. I want to begin today by discussing our results in home where we made very strong progress against our expansion strategy with Q1 results putting us ahead of schedule relative to our 2022 objectives. There are four metrics we look at as a measure of home growth performance. First, the number of home programs where we are ahead of plan. Second, the number of new patients who went home with Tablo, where again, we are ahead of plan. Third, how quickly patients can train on Tablo, where we have a significant advantage over our competition. And fourth, the number of patients who stay at home on Tablo where we remain meaningfully higher than competitors retention rates. On our last call, we highlighted that home consoles accounted for a significant portion…

Thanks, Leslie. Hello everyone. I am pleased with our great start to 2022. Our first quarter revenue grew 33% year-over-year to $30.6 million, driven primarily by higher consumable shipments, increased console shipments to acute and home customers, and increased services to support our growing installed base. Product revenue grew 41% year-over-year to $25.7 million. Console revenue grew by 22% year-over-year to $18.1 million, driven by higher console placements with ASPs also increasing year-over-year, given the demand for Tablo XT. We continue to see better uptake of our XT upgrade than we had initially projected, which highlights Tablo 's clinical versatility and the clinical communities recognition of Tablo 's ability to capably treat the very sickest population of patients in the ICU. Consumable revenue was $7.6 million, an increase of 121% versus the prior year. Our Q1 cartridge utilization is strong and in line with our expectations. Service and other revenue of $4.9 million was higher by 4% compared to the prior year. Our core service and other revenue almost doubled with the growth of our installed base but was offset by the planned excavate of the HHS agreement, which we previously described. Moving to gross margin and operating expenses 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 first quarter gross margin was 14.8%, an improvement at approximately 13.2 percentage points versus the prior year period and the sequential improvement of 280 basis points. This improvement compared to the prior year period, which primarily the result of the transition of our console manufacturing to our Mexico production facility, our ongoing console costs down programs, and our revenue mix with a higher percentage of our Q1 2022 revenues coming from our consumables compared to…

If you'd like to ask a question at this time, [Operator Instruction] Our first question comes from Amit Hazan with Goldman Sachs.

Hi. This is Phil on for Amit. Thanks so much for taking my question as always. Thought maybe we'd start with guidance and try to breakdown the performance in the quarter. So certainly, I heard all of the positive commentary on the home prime which is great to hear. I'm wondering with a very little commentary around COVID disruption. If 1Q actually came in ahead of your internal expectations, or if the increased confidence and guidance and the raise at the bottom end is more a reflection on the run rate that you are seeing in the exit rates. It's a question on acute and how performance went and whether there was disruption in that space in the quarter?

Yes. Sure. Hi, Phil.

Hi.

Thanks for joining. Short answer, no COVID disruption, and really, a continuation of the theme over the last two years. Outset has been an example of a company and a business that's continued to perform consistently well, not because of COVID and Q1 didn't represent any change to that pattern. So the strength that we thought in the quarter leading to strong performance on the top-line revenue side really came again from the core Tablo value proposition in the acute around significant cost reduction. Those supplies cost reduction, labor cost reduction, and operating efficiencies for the hospital customers that are choosing to adopt it. So a lot of strength in acute from core tablet value proposition and similarly, a lot of strength in home and growth in the home revenue number for similar reasons. Tablo is delivering on the promises that we make to our health system and our dialysis provider customers on the home. Rapid training time, and long retention times at home. So this is a drivers of the -- this is a drivers of the [Indiscernible].

Okay. To put a finer point on it, would you say that the raise at the bottom end is attributable to home being ahead of your expectations for the year so far as you characterize on the call?

Yes. Phil, hey, it's Nabeel. So Phil our confidence in our 2022 guidance is really predicated on a couple of things. So one, as Leslie mentioned, we did have a strong start to the year with Q1 performing really well on revenue in the acute and the home setting. Number one and then number two, we continue to have really good backlog and pipeline as we sit here today, as we talked about, we're running this business in the backlog position so we really have good backlog and pipeline as you sit here today. And all of that gives us a lot of confidence in our ability to achieve the guidance range that you talked about. That's what drilled us to tighten our range to $144 million to $150 million.

That's great. Thanks for the additional color. But if I could sneak just one more in on the capital environment, we've heard from others mixed message depending on the company in terms of the ability to install and the impact from labor shortages and absenteeism on installations. That sounds like the unique value propositions for Tablo has positioned you all uniquely to supersede that are super event that. Can you just talk broadly about any changes that you might have seen from hospitals willingness to take in capital and their ability to start a new program over to take cancellation? Thanks.

Yes. Sure. I'm happy to comment on that. Well, I think there's maybe two parts to that question or queue dynamics that are worth commenting on. One is hospital's willingness to acquire new capital, so let me comment on that and I think the second dynamic is around staffing. In short, no we really have not experienced any change in our business of hospital interest in acquiring Tablo. And I think it's probably worth pointing out. And I mentioned this in my prepared remarks just a minute ago, the capital investment, even for a hospital is buying a fleet of Tablo's. It really is a different ballgame. It's not a couple of million dollars of capital, and so this is a dollar amount that's comparatively small, number one. And number two, an investment where CFOC has very rapid payback period. As I said a few minutes ago, typically measured in months. I mean, sometimes as soon as three to six months, they're breakeven. And that's because they start utilizing Tablo, the cost reduction on the disposables is very, very significant. And so, I think that when our sales team goes in and they're talking to the C-suite, whether it'd be CFOs, COO or CEO, you're talking about a relatively small amount of investment, again, compared to other forms of capital with a very, very high [Indiscernible] near-term payback. I think that that continues to serve us well those dynamics. So no changes in the capital acquisition environment as we sit here today as far as Tablo. The second dynamic around staffing, I would say on balanced staffing shortages continue to probably be -- well they not probably, they are a tailwind for Tablo adoption more than they are a headwind on the margin in Q1 did we see a hospital or two change it's timing of installation a bit. I mean maybe but this was a very, very marginal effect if any. What really had a more meaningful positive effect was this dynamic -- again that I mentioned in my prepared remarks around hospitals that had previously been outsourcing dialysis to its third-party service provider. And those third-party service providers and they've been fairly public with this, are really struggling with staffing. So that's resulting in a number of hospitals getting surprised and realizing that they want more control over costs, over compliance and over labor. And so we were called to answer the balance you will have a number of circumstances in Q1 I just talked about one of them in the prepared remarks, but there were many examples of that where it really motivated -- lit a fire under the health system to in source dialysis and using Tablo and using their own staff.

That's fantastic. Thanks so much for all the color. Thank you.

Sure.

Our next question comes from Rick Wise from Stifel.

Good afternoon, Leslie. Hi, Nabeel. I hate to start with the generic. Talk to us about supply chain challenges and I feel like I have to ask Leslie or Nabeel. Any concerns at all on electronic component availability, or chips, or anything that is causing you any anxiety as you reflect on the outlook for the rest of the year?

Hi, Rick, it's Nabeel. So Rick, supply chain continues to be a dynamic environment for us as it has been over the last couple of quarters. Leslie talks about our supply chain team and let me just say that those guys are working hard and we have not faced anything so far that we have not been able to overcome. In Q1, we delivered 14.8% gross margin sequential expansion of 280 bates up 13.2 percentage points year-on-year in the face of the supply chain challenges. And as we look through the rest of this year, the momentum we have, in the first quarter, Rick, combined with sort of the visibility we have into the remainder of the year, we have -- still have confidence in our guidance of getting to high team gross margin. So long way of saying with the messing that we haven't been able to really come look. We've talked about leveraging our balance sheet to make sure that we have large quantities of some of these longer lead time or hard to procure items. So the strategies we've employed are the same ones and they have served us well in the past. And we expect them to serve as well looking forward.

Got you. Thank you, Nabeel. And Leslie, maybe turning to your comments about home shipments exceeding expectations. Maybe you could give us a little more color there. Was it a specific setting or because of a contract or maybe help us understand where the performance came from. And I was hoping you would break down a little more. I'd be curious to reflect more on the -- your comments about two main opportunities, you know, the clinic operators and the health systems. Just curious, are they -- how can I phrase this? As you think about this year, is it -- you're focused on half the revenues are going to come from the clinics and a half from the home health systems. Is there -- are there any unique challenges or opportunities of getting both going? Where are you -- where are the headwinds that you're facing? Is one harder than the other? Just curious to learn more about this opportunity.

Sure. Yes. I'm happy to -- well, let me talk a little bit about your first part of your question, which was whether our over-performance at least to our internal plan on helm was concentrated in one part -- one segment or another. I mean, short answer, no. Actually, I'm really glad you asked that question because it made me realize that it was really evenly distributed growth across the home customer base. So I like seeing that. That really means I like seeing even growth in general because it means that the device then and the value is resonating broadly and evenly. So that's kind of 0.1. Quick two, which you asked about, are there any unique challenges or opportunities between we'll call it the progressive clinic operators versus the health system. Any headwinds in one segment or, or another. Again, I'd say not, not really, not that are visible to me today. I think that we talked about this program destination home that is targeted more towards health systems, which makes sense, because the progressive group of clinic operators by and large already have home programs. They got accreditations and certification for our home program. They have the SOP's in place, they have the other facility already you set up for a transitional care program. That part is new for health systems for sure. They're going to set up a new chronic service lines. It's a question of we want to, we're excited, how to, how to, and so we did see an opportunity. To use one of your words, Rick, yes, there was an opportunity on the health system side to provide a turnkey solution, for lack of a better word, where we could guide -- help guide the hospitals through the process more quickly and seamlessly so the definition home programs is really a how-to roadmap for getting a chronic come down for this program up and running guidance as led by not only Outset but a small team of subject matter experts. You can just shorten the learning curve and accelerate execution. We do see that as an opportunity within the health system segment. But broadly speaking, we're equally excited about both segments of our home business.

And one last if I could. In terms of the ramp, where are you -- I'm sorry, in the cartridge manufacturing, Nabeel? Where are you in that process? When are you likely to be fully ramped? How should we think about that? Thank you.

Yes, Rick, of course. So we just split for the cartridge. We've got the approval in Q4 and when we last spoke to you, we said that we would be ramping over the first half of this year, and by Q3, Q4, the bulk of our cartridges would be coming from our Mexico vendor. That continues to be the case. That the Q2 [Indiscernible] expectation. We're sticking along to plan and that's one of the things that, as we've talked previously about, gives us the gross margin benefits that allows us to get to our high-teens margin guidance for the year.

So on track. Thank you so much.

Thanks, Rick.

Our next question comes from Travis Steed with Bank of America.

Alright. Thanks for taking the questions. I guess what our touch on the home program again, I guess kind of more bigger picture is not quite clear what you mean by inflection, but just love to see what you need to do on the ground beyond the a 100 programs in 2022. And the thing that maybe put in place to really get this to [Indiscernible] and you kind of your, your vision over the next 2 to 3 years.

Sure. Thanks for the question, Travis. I think that one key that is underappreciated to really, really significant growth over time is retention. And I know that it is important to be growing the top line, if you will, number of patients at home but for example, if you're losing 50% off the bottom, you've got to go a 100% to grow 50%. So I believed in a really [Indiscernible] perhaps to a religious doctoring level of the importance of retention, building a strong foundation from which to grow will make the growth over time much, much easier. So that's the first part of the answer, Travis is like, what can we do on the ground? We can make sure every patient and every patient's family, fall in love with Tablo. And that's going to happen when our team is easy, when Tablo is easy, when they feel that they could fully appreciate and enjoy the benefits of choosing when, where, and how they want to dialyze. So that's the number one thing that we can do day after day after day to ensure very, very high growth rates for a long time to come.

Right. That's fair. And then -- I appreciate the answer. And on gross margins, maybe it's higher level as well, just thinking about the path beyond the high teams that you're talking to. And some of the things you could put in place that maybe haven't thought about before, like pricing, increases at some point along the future as well to offset some of the inflationary pressures, just any color there would be great.

Yeah, so Travis, let me just say a couple of things there. So first of all, we continue to have conviction in our ability to get to roughly 50% gross margins in 2025. That's the next milestone, if you will, that we're looking forward to. The drivers of that are well known and these are drivers that we are actually on now. We've talked about our console costs down programs, that's in place now, it's given us benefit since you've had consoles and we will give us benefit in the future. Secondly, we've talked about our cartridge, so as that transition to Mexico completes here this year, that will give us benefit that will continue into the future. We talked about our service margin expansion, which will come as we have more consoles deployed and as we get leverage from that team. And then finally, as we can larger install base and mortgage struggles pulled to that'll drive margin expansion rates. Those are [Indiscernible] margin expansion that [Indiscernible] gets us at that roughly 50% target. In terms of the second part of your question on pricing, we have customers where we have committed pricing, but to the majority of our customers, we do have the ability to raise prices if when we choose. We're not going to comment on specific, pricing programs or actions we may take. But all of what I described here, is baked into our path to get to roughly 50% margins in 2025.

Great, thanks for taking the questions.

[Indiscernible].

Our next question comes from Suraj Kalia with Oppenheimer.

Good afternoon, Leslie. Nabeel, can you hear all right?

Yeah.

Yes. It's fine, thank you.

Perfect. Hope everyone to stay healthy. Say -- so -- Leslie, thanks for providing a lot of information. Unless I'm over-reading this, please forgive me if I am. I think there should be a distinct shift in your commentary about targeting PD patients. And the reason I -- it caught my attention is peaking patients. It's a hit or miss of having a partner on site, right? Because that's -- it's -- I was curious if this was going to sort of [Indiscernible] in a more shifted focus. And also if I could piggyback on that question. The 100 home programs you look target by end of FY 2022, the criteria used to identify and target these, is PD, really, the driving factor here?

Yes, Suraj, thanks for the question. Short answer is no, PD is not at all a driving factor, so let me back up and maybe give a little bit more color. No shift in the types of patients we're targeting. I mean as you know, unfortunately, the entire dialysis patient population in the United States, only 1.5% to 2% of patients are on HHC to begin with so there is just a massive opportunity ahead of us, amongst patients who are currently just sitting in dialysis clinics, so that's maybe where we start. The thing though is I do think PD patients over many, many years has been underserved. I think these are individuals that met many of them who are already really successful at home. They're already independent. They already manage a chronic disease very well, independently or with a care partner. And I do think that on a human level, it is a shame and unnecessary to see the vast majority of them when they end PD and go straight back in the clinic. I just think that's wrong. And so we do see an opportunity in the future. Is it a targeted program or something new or shift? Not at all, but I thought it was worth starting to talk about and have it be a part of the conversation because I think that PD patients deserve much better and greater channel through which to stay at home. It's perhaps more of a clinical and humanitarian comment more than anything else, Suraj, but overtime, yes, we probably do anticipate hopes that participating in upstream patient communication over the next couple of years just to make sure that more and more PD patients who are coming off that therapy are aware of an offered opportunities to stay at home on HHD.

Got it. The math or the deals, the math suggests approximately 600 Tablo consoles were shipped in the quarter and forgive me, I must have missed it. Did you provide a backlog number exceeding 1Q? Because I remember 1250 or so exceeding 4Q 2021. I'm just trying to connect the dots, just make some assumptions in terms of these in unit shift is potentially could be home and just kind of connect the dots here. Any help would be great.

Yes, Suraj. So with respect to backlog disclosure, our practice has been and continues to be to provide that number annually so we printed it exceeding Q4. The next time will print it will be exceeding Q4 of 2022, [Indiscernible]. With respect to your console ship count, I don't want to add again, we're not in the practice of providing installed base numbers in any given period, but like that feels a bit high to me. I'll [Indiscernible]

Fair enough. Hey, Leslie, I'll just throw it one more and I'll hop back in queue I promise. In a hypothetical scenario, Leslie, you guys have done very well in terms of on-demand dialysate production. Can this approach be morphed into a real-time on demand PD approach and take it through the NDA trial and everything. Is that something that potentially could be on the radar for Outset? Thank you for taking my questions.

Sure. Of course. And the question around PD and generally, where -- what are we thinking about next and what might be on the future item is a very fair one and an understandable one. First and foremost, with 1.5% of the population on HHD and maybe just a mere 12% on home period, our primary focus remains on the U.S. market number one, and giving patients more access in general due to HHD. I will say this is an organization. I think Imaginary and inventors who are probably going to continue to desire to imagine and invent. The directions in which we take that DNA inside of Outset. I think are still be reveal that what we're going to remain a very ambitious group of people in ways that continue to drive differentiated growth and really meaningful quality of life and clinical improvements for patients and providers that I can assure you.

Our next question comes from Josh Jennings with Cowen.

Hi, good afternoon thanks for taking in the questions and resolution to strong stretch of the year. Leslie, you were talking about hospitals calling in the caliber year or Outset to help them with their staffing challenges and retake control over their dialysis service line. I was hoping to ask about actually outsourced service providers, third-party like DaVita's because some agile check suggested that they bought some Tablo systems for their servicing of some hospitals, dialysis units or or service clients. Are you seeing that channel pick up from third-party providers, purchasing Tablo consoles for one? And then just to follow-up is just on DaVita's specifically with all these staffing shortages, not just for their in-hospital dialysis business, but also on the home, I mean, is there a channel in 2022 where DaVita could be -- start purchasing more Tablo systems. Thanks for taking the questions.

Sure. I'm -- yeah, I'm just jotting down the order of your question here. The -- so the activity that we've seen here today, I'm going to address the acute first, Josh, but the activities that we've seen here today -- on the acute side is almost entirely health systems. And that's our focus, right? Let's go back to the commercial strategy. All of our team, clinical and capital is pointed at selling, servicing, and supporting the health systems to control their own destiny when it comes to the cost and complexity of dialysis, whether it's in the ICU or bedside dialysis on the floor. So that's what we trained our Psychs on and that's where we think we deliver the greatest value, right to the end customer. So that's that addresses the first part of your question. The second part. The last thing I whatever do is try to see for another provider, another entity. We are again similarly focused on the home in two segments. And seeing a lot of benefit reward for that, I think as humans, we tend to continue to do things that are working and where we're seeing success. And we're seeing a lot of success with a number of more conventional dialysis providers. Again, of in the mid year segment of the market and they are really progressive and nimble and agile and moving very faster to moving many patients home as they can possibly support as quickly as they can do so we'll that's where we want to be. Those are the friends that we want in our circle. So that's one and then we're obviously very, very focused on partnership with our existing health system customer base in helping them initiate their own home programs service lines. So that remains our commercial focus, then like I said it's easy and fun to continue to do things that are working and benefiting all parties involved.

Great thanks so much.

Our next question comes from Danielle Antalffy with SVB Securities.

Good afternoon, guys. Thanks for taking the question. Leslie, it's just, I was quick to ask a question on home, so I'm going to keep the home conversations going. And just curious as you were opening up these new home centers [Indiscernible] the process is like? So one of the things I remember from a days covering NextStage when it was a standalone company as it was really important to get the right patients on, et cetera, et cetera, to make sure to your point, the attention was was high. And if feel so like Tablo is in such an advanced from a technology perspective, does patients selection matter and what you're working with these centers on to ensure that they're starting off on the right path building a successful home programs? And that's it for me. Thanks.

Okay, sure. Hi. Well, I think that the notion of the right patients is very 2005 thinking, and perhaps patient selection in the quote-unquote, right patients was needed when the technology options that were available were less accessible, perhaps took longer to train on, were more difficult to successfully maintain in the home. Our goal -- our design goal from the very beginning with Tablo was to ensure that we designed a technology that all patients, almost all patients could be successful on whether they had a third grade education or a graduate degree. When I look at our patient population and we've had the ability now we're running a registry where we can look at patient demographic, it is extremely diverse. It is diverse in terms of age, gender, race, socioeconomic characteristics and I'm really proud of that because I think as part of the moral mission of Outset, a big part of that is erasing inequities and access to home health, and one way we're doing that is through the simpler technology that doesn't require a PhD to use. Another way that we're going to do that is by continuing to influence the physician mindset. And this will happen over time as they do send more and more patients home, but influencing the physician mindset that perhaps once was more selective and convincing physicians that there's no need to be selective anymore. And that showed up even in our home trial, our IDE, 70% of our IDE was non-white. We published on that. The results were exactly the same. And we have seen again a very similar data in terms of diversity of our patient population here in the [Indiscernible] real world with equivalent retention rates and equivalent training time upfront. So that's point 0.1, so no, we…

Thank you.

Yes.

Our next question comes from Drew Ranieri with Morgan Stanley.

Hi Leslie and Nabeel, thanks for taking the questions. Sorry to break the home trend, but to go to acute for a moment. Leslie, you highlighted -- you added your ACE of the eighth largest national healthcare systems and also highlighted that you continue to capture share in the acute setting. I was just wondering if you might be able to give us an update there on where Tablo is in terms of penetration at the larger healthcare systems, and are you seeing still conversions or some of the accounts sticking with some incumbent technologies, but also augmenting with Tablo.

Yes, sure, I'm happy to talk about that. The -- so first part of your question, what's sort of what's the runway and what are the next steps? I mean, I think [Indiscernible] over year we landed on the shores of the eight national health systems and obviously landing on the shore was -- is not the same as conquering. I think we saw a lot of the continents to explore, not to overdue my Columbus analogy, but so I think the next aspiration is to make our way across the selected continents and to grow penetration. There is a very significant console team, just within the largest eight that we now have access to and we intend to go after. We are still relatively under penetrated in most all of those national customers. High single, low double-digits across working toward this $2.5 billion TAM more broadly in the acute. I think tremendous runways in the largest age are still ahead of us, which I'm excited about. And then of course, low the eighth, we've got hundreds of hospitals across the country and parts of big regional health systems still ahead of us. So I think, Drew, at the risk of sounding boring and repetitive, the land and expand is really working. In this past quarter, we did land new customers, we also saw expansion was an existing customers and that's frankly what I care about the most having participated in the ramps of many other medical device products over time is, you know, if your current customers are having a great experience, they will buy more. And so I always excessively keep my eye on expansion within the current customer base. That is my personal leading indicator and its greatness is absolutely fun to go on higher -- excuse me, land new customers. And we're doing that. But where I take -- I think the greatest pride is that the devices delivering on its promises leading to a lot of same-store sales, not only within specific hospitals, but across the health networks regionally and nationally. And I think about of your question was, are we still seeing full conversion is it ad hoc? And I would say I didn't notice any new trends to be honest, in Q1. I think we do have many customers when they in source that typically is up bulk convergence. We have many customers who are using Tablo to in source. We also do have some customers that maybe already homes their own dialysis service line and patient. And are you thing Tablo in concert with other devices has maybe earlier in their experience and we expect them to grow into full conversion over time. So it's still, a bit of a mix.

[Indiscernible] maybe for Nabeel. But it looks like our OpEx declined or maybe it was about flat sequentially versus the fourth quarter. But maybe how are you thinking about OpEx throughout the year? And maybe this is more for Leslie, but can you remind us of anything on the new product side coming in 2022, whether it's a hardware or more on the software side, any updates on international? Thank you.

Do you want to take it?

Yeah. So with respect to OpEx Drew, so you might remember when we last spoke in February, we talked about OpEx declining sequentially Q4 to Q1. That's just because we have commissions and those incentive comp payments that go out in Q4 that don't recur in Q1. So that's the decline. All OpEx itself is trending late in line with what we've shared from a guidance perspective on our last call, we said OpEx was roughly the Q4 2021 times four and we continue to track essentially that for the full year.

I'll maybe cover [Indiscernible] the new products have at international. So, Drew, on the new product side -- and maybe we don't talk about this enough. We -- every year in the last two years and this year will be no different. We have a continuous updating and upgrading on the software and data analytics side. And again, yes, I do forecast that for 2022. The cool thing about where we are now is that new features and enhancements principally are done on Tablo through remotes offer update. This is not and no longer a hardware upgrade story as maybe it was four or five years ago and I love that because it allows us to deliver new and better and different to customers much more rapidly in at much lower expense compared to hardware. So yes, I do see that in our future for 2022. We're super excited about it, and we will never, ever, ever continue or discontinue trying to improve the provider in the patient experience and offering them things that have new functionality, and then maybe new surprising, delight moments alongside that. International, we are remained focused, obviously in the near term on the U.S.. market, which is still an asset and barely penetrated for Tablo and our march toward world domination -- I'm kidding. But we do recognize that the U.S. is about 30% of the worldwide market for dialysis. There is a lot of opportunity there, but we don't want to -- and I don't think we ever have sort of do anything other than measure five times and cut ones and same thing with U.S. because we do take our commitments on the margin side seriously and the cash spend side seriously. And so our calculus around where in the world and when and why and how is a pretty detailed thought exercise for us. And one that we want to do with careful deliberations so I would still say don't anything to report near-term. A lot, a lot of work going on behind the scenes internally, and I would still forecast that yes, I think you will find Tablo outside the United States. More detail to be revealed and we're very, very confident about the where, when, why and how.

Thank you.

Yes.

That concludes today's question-and-answer session. I'd like to turn the call back to Leslie Trigg for closing remarks.

Great. Thank you well I just want to thank everybody on the call for joining us this afternoon, and I hope you all have a really great evening. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect.