Outset Medical, Inc. (OM) Earnings Call Transcript & Summary

Good afternoon, everybody. This is Travis Steed. I'm the medical device analyst at Home health conference with a session on Home Hemodialysis with Outset Medical. And today, we have Leslie Trigg, CEO of Outset Medical, we have Michael -- Dr. Aragon, Chief Medical Officer at Outset. And we also have a couple of patients and caretakers. David Rush, who is a Tablo patient; and then Melvin Covington as well and his caretaker, Clio, are going to join us for a conversation.

So we'll get basically a 360-degree view of the market, which is going to be really great here. But I think this to start out, we kind of level set some people that maybe aren't quite as familiar with the opportunity and just think through. Today, there's 600,000 ESRD patients. And we've talked about like 30% potentially would qualify for home but maybe just talk about, we'll start level setting kind of the evolution of the home market, where we've been historically, the opportunity. And why is that 30% the right number going to go beyond that just to kind of level set the conversation here?

Sure. Well, first and foremost, thank you for hosting this and putting a spotlight on emphasizing the voices of people who are using home dialysis. I think it's really important to hear there from them directly on their experiences. What I think is the most fascinating about this market, and Michael can echo this from the clinical perspective, but back in the 1970s and early '80s there were about 30% of the folks dialyzing at home. They were actually all managed through hospitals and health systems at that time. But it was already 30% with equipment that was from the 1970s. And so when I think about 30% as an estimate today, to me, that seems like the most conservative bottom. I personally -- this is me as Leslie, not Outsets' modeling, but I personally think about this, at least at 50%, 60% with a device, obviously, that's easy to use and accessible. So we've already sort of had a history of moving patients home. And then what happened in the '80s and the '90s was really the rise of the in-clinic model which was focused on efficiency and throughput and cost. And so what we're trying to do is really use a consumer-centric technology to, in effect, kind of swing the pendulum back to the past and give patients more access to the flexibility and the control and the clinical outcome benefits of home.

Great and Dr. Aragon. I'm curious on your conversations when you're out, how many nephrologists still don't know about Tablo, what's the awareness level of Tablo at the moment within the community?

Awareness has actually been growing quite a bit, and it's actually fairly high where we are now. I think from a technology perspective, Tablo is very often associated with home hemodialysis. I think we very rarely get any questions about the technology or its capabilities or kind of superiority over what else is out there. I think some of the nephrology questions are more around, how do I select these patients? And we're doing a lot of education there on. It's not a selection every patient should have the opportunity and be offered the ability to do home but the awareness, I think, is high and Tablo has become very well associated with home hemodialysis specifically.

Yes. And maybe one of you could walk through kind of how the patients are informed and think about how they're educated on some of the dialysis options and how -- your perspective kind of the patient decision process?

Yes, Michael, why don't you take that?

Yes, for sure. Normally, patients are going to be educated. In an ideal fashion, we'd be educating them in late chronic kidney disease as they're kind of progressing or appear to be progressing. It's a conversation had with the physician. If it's a patient who didn't have a lot of pre-dialysis care, that will be from the multidisciplinary team at the dialysis facility. So it could be the physician, an in-center nurse, home nurse, the dietitians, social worker. I mean any of these individuals kind of carry that conversation or initiate the conversation. And then there's just a growing number of resources, both written and online to gain more knowledge. And I think the other nice benefit is we now have a good core, as you see some of the patients that have joined us today, of patients that are successfully dialyzing at home and they're a very active community both locally and online, and so they serve as additional resources to educate patients.

Yes. Maybe we can skip over to bring in some of the patient conversations. David, maybe if you just kind of tell us, maybe walk through your history with Outset and how you've gotten to know the company and started using the device and what you were doing before this.

Yes. Thanks for the opportunity to be here. Hello, everyone. David Rusch. I remember on starting Outset, I think October 2021 was around the time when it was really on the rise up and my doctor kept pushing me to get back home, get back home. I was doing home before and had some emphasis where I kind of had a little bit of patient burnout and just wasn't interested in going home. Just thinking at all home devices were kind of the same thing. But I've got a demo set up for the Tablo machine, saw it kind of from low with the technology of it. I remember telling some of the engineers that I felt like, a human designed this for a patient, felt like it was something that was for patients, and it was done with care and thought of patients and not just a machine. And the technology really is what got me, and I decided to use it in a facility and then brought it home. Actually ended up switching locations as far as states of moving in last June and actually had it put into the home here as well. So I've been on it, I've been using it. I've been advocating forward as well for the last 1.5 years. And I'm just trying to encourage patients to at least take a chance at home dialysis. The company has been great. I get to talk to the CEO like a friend, which is also pretty cool. And I'm all over dealing with all the reps and Dr. A and just being a part of the movement itself and having a voice in it is something that I really -- I love about the company, being able to be heard and seen, not just a piece, but also as a patient and a person.

All right. And then Milan, maybe you could jump in and maybe just give your perspective. Just looking an overview about what you did historically and how you got to know Outset.

Yes. Thank you for having me, by the way. I'm Milan Covington. [indiscernible] I started out with next stage, and we started out in a finance with home hemodialysis. So I've never been in center. But I started -- we saw a training and we got our training done in about 6 weeks, and we went home with the next-stage machine. And we did that about one year and a half. And then we would pick up supplies at the renal care center. And the wife went in to get them. I stayed in the car, she come back, and she say, "Guess what? Jeff got a machine that we won't have to hang bags." I said, "What?" So we took that and Jeff called us up and say, "Hey, look, you want to come look at this machine?" And it was Tablo. And we like, yeah. We started training 2 days.

Yes. I fell in love right away because when you -- next stage, you save this life and kept them going, which is a wonderful thing. But when Jeff introduced me to Tablo, I immediately fell in love. I thought the machine was so [indiscernible] and state of the art. And I was very, very interested in knowing how to operate this machine. So Jeff told me, he said, you can come in and we take care -- take you 2 weeks to train, whatever, did in 2 days. It was very, very easy. Very, very is mandatory. It explains everything to you step by step. And we love it, and we've been doing it for 2 years now. And he feels great. And so it's very, very easy process to switch over to Tablo, and we were happy to do it, and we're enjoying it.

When you try to compare Tablo to NxStage, what are some of the other things that stand out between the 2 devices?

Well, first, like I mentioned, hanging the bag is one thing, storage is another thing. We had -- I used 4 bags of [indiscernible] with NxStage. And with my garage now, it's like half the supplies.

And I have boxes all in the hall of the house, boxes. Then my storage cabinet was overflowed, the garages has so much space taken up in the garage with NxStage. With Tablo, I have nothing in the house, but just what I need immediately in my storage cabinet. There's so much more room in the garage. It's very easy access. I can set up in 10, 15 minutes at the most. Most time taken is like 10 minutes, whereas it would take me 45 minutes to an hour to set up the NxStage. And the cleanup process is very easy. However, take me so about 30 minutes to clean up with NxStage, it takes me 10 minutes to clean up with Tablo. Tablo is a wonderful machine. It just -- if something goes wrong, was -- very rarely, it does. But say for instance, he has air in 1 of the lines, air in the veinous lines. The machine immediately give you an alarm to let you know that you have this air in the line. It tells you what you can try to do, which I tried to withdraw the air out of the line, most of the time, and it works and then will continue treatment. However, if I can't withdraw the air at line, it gives me a time. You have 3 minutes, then the machine -- the process is going to stop. Then you take the patient down and try to treat them at another time. So it gives me everything I need to know. It tells me, I don't have any problems trying to figure out what to do if there is an error. Well, like I say, we very seldom have one, but everyone once -- it's machine. So every once in a while, you're going to have an air in the line. You're going to have a machine to [indiscernible] that you're not getting complete access. So you got to readjust the needle or something. So it's very easy to tell you what you've got to do. And it works very well for us. So we've been doing great with it.

That's great. We'll continue the conversation a bit. I do want to hop back over to David because I think he had some experience in center before, right, David? Compare and contrast, if you will, your experience in center versus home with Tablo?

Well, of course, starting off and [indiscernible] crashing into dialysis like so many patients have done on just kind of getting into it and that's all you know. That's what you're told that you have to do, you're going to be in there this amount of time, these many days, these many hours, and you kind of don't have a choice of when you get to get in or when you get in line. Of course, you can access certain days, access certain time, but it's always not going to be efficient for you. So you just kind of go with the time that you get and do it aside. I personally, in center to some people, it's a community. You get to meet people that you become friends with, you get to meet staff that you kind of get really related to. And some people, if they're get away, it's some place for them to make friends, it's a place for them to get away from home sometimes and it's understood that people don't want to leave home. I don't want to leave home and be -- and love being in summer, which is fine. I feel like, for me, being young and at the time, my profession isn't full time, and I was running around a lot, and I really didn't know too much about the home dialysis stuff until I was actually going tour. When I was actually going tour, I was scrambling, trying to figure out how he's going to do this tour. We're doing dialysis and that's thing that came up on home dialysis. And first, I was also on the NxStage machine. We're toured with that machine, and that's how I started speaking about home dialysis for patients. But after a while, me personally, I was doing 5 days a week at like 3 hours and 45 minutes a day and being a 60-liter batcher, I was using up to like 8 or 9 bags and it's not even built to use that many bags at the time. So you can imagine the space I have in my house. So I just -- after leaving there, after dealing with some of our renal cancer stuff, I was just little burnout home dialysis and just wanted to be back in center where I just wanted to just put my arm out, still candidly to myself, but just wanted to be somewhere where I didn't have to clean up, didn't have to hear a machine rumbling in my house all night and just wasn't with doing anymore. But then after, again, seeing the Tablo machine and give me a chance to get that independence back that what patients like, biggest thing is time and independence on when you want to do your own treatments. That's what home dialysis can offer patients that are missing those things. The time that we have, the time that we want to do things in our original life. This allows us to take time, to stay independent with it and allows you to kind of have that independence as a person again and give you back some sort of normality in your life that you missed going in center being total when you need to do dialysis. How long you're going to be there, driving [indiscernible], crazy weather and all that type of stuff. So just eliminates that process at that time half for you and gives you independence back.

How would you describe the training process with Tablo versus NxStage? And how quickly you got up to speed on that?

Well, you heard the company say it took them 2 days. Me having prior NxStage ambiaysis experience as well. The condo was like a 1-day being. I came in, I saw it, being a little techy, it looked like an iPad, I was able to fly through the steps and everything. And it's very easy on being there with the great [indiscernible] and another tech just kind of walking me through everything. You get to learn a machine very fast. It's very self-explanatory. It explains every step over the 70 features that are in it for safety. It doesn't allow you to skip steps. So it's very good for patients who are new to the system and also allows you to see everything. I'm a visual learner. So seeing everything, allowing me to see what I needed to do and that made it a lot easier. Once you get comfortable with it, you kind of start to fly through it and it goes at the pace that you wanted to go. And learning it took me -- I technically had to do a 2-week course, so I didn't want to be -- act like I was a man like [indiscernible] something already, but we did the 2-weeks course, and I was home opposed to the 6 to 8 weeks to be with the NxStage when I first started that. And when alarm goes off, like the [indiscernible] said, when the alarm goes off, I'm not grabbing the book, I'm not looking for a book to read through what the code is and all that stuff. It's telling me, hey, your line is kind [indiscernible] line and I'll show you what line it is and all that type of stuff. So it definitely has all those features built in and make you comfortable at home, doing home treatment.

I think you were highlighting, with NxStage, you were doing 5 to 6 times a week. And now with Tablo, it's 3 or 4?

3 or 4 days a week, 5 to 6 times a week because of my size, of course, in doing a 60-liter batch, I would have to batch every night. So that means I would have to make a batch 8 hours every night at home opposed to the insulin batching that with the Tablo. Just for instance, if I travel. And I'm not home in time, my batch expires. I didn't have to drain that batch and you create a new batch or hang 10 bags, which is a little bit harder because you only could hang 4 to 5 bags and enduring treatment, I had to switch lines again with needles in my arm and that was also a hard thing to do. So with this instant batching, I'm not switching any lines, I'm not hanging any bags. Also it eliminates the flow sheet. Having the WiFi connected, there's a real-time flow sheet going to my nurse, to my doctor, let them see everything that I'm doing in my treatment in real time. If my pressure drops, it shows them, they can see it, they can read the notes and when I've done with my treatment and I hit end, it sends an e-mail with Mark [indiscernible] already done. So that way, doctors, nurses everybody's in tune, what's going on. No more lying on flow sheets about your blood pressures and all that type of stuff. So it eliminates having to sit there with a clipboard needles and blood pressure cuff on, trying to write down your numbers. So it really helps that with the technology that it has.

I actually want to double-click on that, making the batch for -- with NxStage. So you said, it sort of took you 8 hours to make a batch?

Well, batch is about a 6- to 8-hour process, yes.

Can you walk through that process, like what it takes to make a batch with NxStage because that's how it's instantaneous built with the Tablo's and it's a big change?

So there's a [ per ] flow when you get a NxStage, there's a machine, a 75-pound smart machine about the size of a microwave and under it is a bigger base machine that has a tub in it, that's connected to your water lines as well. You then have these boxes that are full with these fold out huge bags. It may be in a bigger as a 60-liter bag. So when you put the bag in and you connect everything through the [ pure ] flow, you then start it is flat, has a little bit of solution in it that makes us with the water to create dialyse. So the creating of the dialysis is a process that has to take the water, neutralize it and then put all the stuff in it to make the dialysate in this bag that then implodes up that you use for your dialysis. So that process, filling up that big 60-liter bag, took about 6 to 8 hours through NxStage. So God forbid, you would get through half of a whole bag and a line will [indiscernible] or something like that, you would empty that bag, start over and back again. Those are some of the stuff that I've been through like [indiscernible] about that opposed to Tablo when you just come in, once you start your process on Tablo and tell them that you're ready to go, you hear the machines on a click and mix. There's filters on the bottom that start to make the solution for you right there for dialysate. You don't have to hook anything up. You don't have to use anything, but the water is ready connected to the machine. All the filters start to do it's job. You hear all the bells and whistles going while you're setting up your machine, getting your needle is ready, it's making the bet. So by the time you click through the tank stuff that it takes to get to the [indiscernible], your batch is already made, you check the chlorine and you're set up and ready to go. Now it's on you, building your needles in or using your catheter, whatever it is to do your treatments. So it's really a big difference in time and the actual making of the dialysate on site opposed to making it in 6 to 8 hours.

Yes. That's helpful. And to switch over to Melvin for a bit. Kind of curious like, I think you said you've never done [indiscernible] since you started out initially with home, right?

That's correct.

And what was the reason for that? Because I think that's kind of different because some people start in center and then move to home. Just kind of curious like why not center, how did you actually get to the home to start with?

Well, my doctor, Dr. Broumand, he suggested that he asked me do I want to do home dialysis versus going to center. And then we talked about it and we like, yes, just go for it. And like I said, when we first got to next day training, it was just we thought we was over our head. There was a lot -- but after a week or so, it was like come clear. But to get there, we started adding training. So I never had to go to -- I started at home, didn't even go to the center. But I got a family member that on dialysis and used the center back in 2004. So -- and every time I talk to him, he would say, "I'm tired, I got to go lay down." So I was like, "Oh, man." But now I don't -- I mean I have more energy, but I -- when I get on Tablo, I have more energy than I did with NxStage. And then plus effect, Tablo, it gives me -- give me more of, I won't say [indiscernible] better, but I feel like I can go and run, I feel better, and now I'm doing -- I used to do 5 days with NxStage, now I'm doing 4 days.

When we started out training on NxStage, we went directly into home hemo training. When he started dialysis when I recommend to it. And we got through it, like you say, in 6 weeks, and then we came home with it. But it is like night and day. I say that all the time because it's so true. It's night and day between NxStage and Tablo. Tablo, I noticed the difference in him. When he was doing NxStage, he would be just tired and dragging, didn't want to eat, didn't want to do anything. He would just sit. When we started doing Tablo, I noticed a difference that he would get up, he would go to the store, he would just go out or just drive. I'd say I going to go out to do something, he'd say, I'm going with you. And I was like, wow, okay? And he would walk through the store and keep up with me and everything. Yes, so much better. And like I said, the process is so easy. I agree with you, [ David ], it is hard to be dealing with all those long lines in NxStage, whereas with Tablo your solution is already prepared for you and all you have to do is just cannulate and get started. And I'm able to leave the room, go into the kitchen, prepare a meal, come back and can keep contact with him. We have those iPads, but they, like you said, the Wi-Fi connection wasn't always great or something would go wrong and then you have to run to the machine. With Tablo, I can hear everything that's going on and it's so simple. The treatment goes fast, so fast and so easy, just sometimes I feel like I'm missing something that I'm not -- I'm supposed to be doing something, so it's a big difference.

Do you think you have more energy because the dialysis is actually better and more efficient? Or is it more like you've got less trouble in your life?

I think a little bit of a combination like -- definitely combination when they ask me about my energy level when I was doing NxStage compared to now. I tell them it's kind of hard to compare because I was so young on NxStage or even in center. When I got done, I just naturally had energy to keep going because I wanted to. Now that I'm a little bit older, a little more gray, just thankful to be able to take the kids to Taekwondo or whatever afterwards. So it's really hard to compare how I feel, but I do know that I do have energy to do other things. Of course, I take my time to sit down sometimes. Just got to listen to your body, sit down and take a minute to recoup a little bit because you have just went through a process with your body and blood and stuff. So you do want to take a minute, but it's not as long as a minute as it used to be, where I can sit there, recoup and get up and continue with life. And that's what the main thing is with patients. We're just still trying to live a life in the middle of this whole thing. So as long as that's possible for us. I think that's -- I think all of us, and [indiscernible] can attest to it, it's just being able to still live while doing dialysis is what it's all about. And I think that's where we both connect on that.

What are some of the barriers? So I guess a question for both of you, whichever one wants to go first. So just like think through the barriers of like things that you're still frustrated with doing it at home. Just kind of curious because there's clearly a lot of people that are still in center. So what are the things that they may face? I don't know, maybe if you -- as you talk to your peers that are in center, I think that would be an interesting perspective. Like why -- when you tell them about all the good things on Tablo, why are they not jumping and calling Leslie and saying, get me one of these machines tomorrow?

I think, number one, they don't got Leslie's number, because can't be giving out that number. That's VIP treatment right there. But I think the real reason is, I think it's just fear of change. It's like anything. It's the fear of change, it's the lack of education, I think it's the lack of knowing how to cannulate themselves because when you tell them home, tell them all those good things and then when you get to the cannulation part, that kind of stops the process for a lot of people. It's a deal breaker for a lot of people. So after like cannulation is something that hopefully can be embedded into the beginning stages of their health care. I mean even when they're in center, I feel like they should cannulate at least once a week and at 3 days after repair without even talking about home dialysis. So then when home dialysis comes up and cannulation comes up, it's not such a big surprise to them that stops them from wanting to go home. And some people just don't have the support at home. They don't have the support, maybe where they live at is not the best place for treatments. And there's a lot of variables and moving parts that go with it. Home dialysis isn't for the weak at heart. And I'm going to say that, honestly, it's not for people who -- it's not a walk in a park. Yes, it gives all these advantages, but at the same time, you have to be willing to do this and willing to fail, willing to learn, willing to go through everything to do home dialysis. And I think candidates -- everyone has a chance to do it. It's just a matter if everyone can. And once we give everybody an option at least to know about it, I think that's the part that that's our job to at least give them the chance to want to do it and make the decision from them. There's no cookie-cutter patient at all anywhere. None of us are the same. So it all depends on the patient's practices and their wants and means.

Great. And maybe the same question for you, Melvin. Let me restart there.

Yes. [ David ] just answered all of them.

Yes. You can -- it's not something that you're just going to walk into and say, oh, here it is. It can be a little bit scary. But with the right people training you, you can get through it. And if you ask the questions, you ask your caregivers, you ask your nurses, your doctors and your office, everybody who's involved with Tablo, you ask your questions and it will make it a whole lot easier to understand.

Most of the patients I talk to, they're reluctant to change, like they say. They don't want to change. They're stuck in the in the routine now and they don't want to change. And most people I talk to, most about my age, but maybe I...

I don't talk to people in a grocery store. I talk to people in all different areas about doing home hemodialysis and tell them how great it is. And they were like, I never heard of it and oh, that's wonderful. And they go, and so you do it with him, you have to, and I say, yes, I do help him, but there are patients who do it on their own. You can get the proper training and you can do it. So hopefully, more people will listen.

Chances are I wouldn't have had her support, caregiver. I wouldn't do it because I'd probably be in a center because I don't like sticking myself. I've tried it. I don't like sticking. I don't like her doing it, but...

Yes, me too. Cleo, maybe give us a perspective of what it's like being a caregiver. You're sitting at a different view. So I just wanted to kind of get your perspective, what all was involved in that and how comfortable in the training you went through to get to where you are today?

Well, I was very lucky. I had some great people training me. Dr. Broumand and his nurses are very, very good. They are very hands-on training. They tell you exactly what you need to do and then let you do it. They don't expect for you to just look at them do it, they want you to actually participate and do it. A lot changed in my life per se, a lot of things that I used to do that I don't do anymore because I'd like to spend more time with him. When he retired, we got a chance to spend more time together, and dialysis came after retirement. So it was very easy for me to move into that role with him because we're very close, and we've been together for a long time. It do take up a lot of your time, but you adjust, you learn to figure out what I want to want to do Tuesday, I'm going to do this that hour, I'm going to do this that hour. And that's the wonderful thing about home hemodialysis, that you do it when you want to do it. We do it whenever we want to do it. If we get a meeting we have to go to or we have something that we want to do with the grandkids or our kids, we do it. We come back and we do dialysis or we do dialysis first. You get to adjust, and that is very important that you'd be able to have your own time to do what you want to do and to do dialysis.

Yes, the flexibility.

Yes. Flexibility is great. And like I said, I had a lot of help and people have told me what to do and showed me how to do it. And I just move right into the role. It didn't bother me at all because I wanted him to live longer so that we can have more time together. And Tablo provides that he feels good. We have more things we do together that we didn't do before with the NxStage. It's like our life was on hold for dialysis when we was on NxStage. But the minute we went to Tablo, we started going more, doing more things together and spending more time together and having more fun, spending time with the grandkids and kids, it's great. It's wonderful.

And how much interaction do you have with your doctor and your nurse, and just kind of curious the interaction that you have? Now that you're on therapy, maybe describe that interaction that you have and how often it is.

Great. Every month, [ we goes it ] and I talk with my nurse -- his nurse, I call her my nurse, which -- I talk with the nurse pretty much every other day about different things. If I need something, different supplies or, for instance, is it time for me to do labs or do a different iron treatment, which is another wonderful thing about Tablo. I can give him the iron treatment through the machine, and I can draw the blood through the machine, which is very simple. It used to be a little hectic with NxStage, but with Tablo, it's very easy. I did labs last night, didn't take but a few minutes to do it. And like I said, I give him his [ Jennifer ], his iron through the machine and I talk with the nurses quite often, twice a week, and we see Dr. Broumand once a month. And I have Dr. Broumand's e-mail. Well, I can e-mail him if I have a situation. I have the nurses' e-mail where I can e-mail them at night if something -- if I have a problem. But thank God, we've been lucky enough not to have any problems. But the nursing staff and the doctor is on call all the time, and they are very, very helpful.

Then [ David ], I don't know if you want to answer a similar question?

So my nurses are very in touch with -- being new to the -- where I'm living at now in Georgia, I haven't had a chance to lock in with the doctors like I was used to in Jersey. But out here, definitely have had the privilege of having a great nurse. My nurse, [indiscernible], is always in touch with me, always checking on me. For instance, the other day, just -- my fistula of 16 years maybe clotted out on me for the first time ever. And I had to -- I couldn't get in touch with a place to go get declotted at. It was a Friday afternoon, around 3:30, and she made some calls for me and got me into a center on Saturday. Unfortunately, the doctor said that the arm was too clotted to save it. He wouldn't work on it because he was scared that the clot would go to my heart or anything. So I had to put a catheter in. So I was, of course, distraught about that and not wanting to get a catheter right now. I'm just trying to figure everything out. This was on Saturday, this past Saturday. So I called my nurse immediately and let her know what was happening. It was her day off and she met me at the center with supplies and gave me a quick run-through of how to do treatment with the catheter at home. She was there for me. She was responsive. Made me feel a little bit better about going home. And so my wife usually doesn't have to be so involved in my care, I've been doing dialysis so long. She's just kind of a phone call away if I need her. She's not really in here given my treatments, but recently with the catheter she's been having to administer my dialysis for me. So it's a blessing to have her with me doing my treatments for now until we figure out kind of what the next move is as far as getting another fistula put in or transplant. I'm not sure yet. But I just think having that relationship with your nurse and being able to call her in any situation like that is something that's invaluable. And even the care attached with it, Outset, I get text messages from my rep here, hey, how are you doing, do you need anything? Even the care team that calls to check on seeing if you need supplies. I don't know if you need more filters. Do you need me to change anything, anything going on with the machine, getting those text messages every other week, every week, just to check in, those are things that you remember and you always like -- like man, these people care about you. I know it's their job but as well, it also feels like a friend kind of checking in and make sure everything is straight. So you always want that without asking for it, and I never had to ask for that from anybody on the team. So it's very good to have communication between the team to kind of know that, hey, if I forget I need to refill all my stuff, someone's checking on me every week to remind you to refill and [ whisper often ], and it's just good to have that kind of team going on.

Right. Yes, and Melvin, curious your interaction with Outset, like on a -- how often Outset's interacting with you and discuss? They're very focused on keeping patients on the therapy. And so I'm just kind of curious what they're doing to help you stay on therapy.

Melvin, he talks to them all the time. [ Vanessa Davis ], she calls me and she asks me when do I need any more supplies. Do I need anything? Is there anything that Outset can do to make our life better. So Outset calls me, I'll say, at least maybe 3 to 4x a month, yes, sometimes more. And they always call me to check and see how the supply is doing, what convenient date will be for me for the supplies to be delivered, ask me if I have any questions, do I have anything that I need. So they are very in touch with us and let us know. Like I said, [ Vanessa Davis ], we had a long conversation talking about Tablo and talking about how wonderful it is. And she gave me her phone number and told me I can call her at any time and if I had any questions to let her now. And they call me, and we talk quite often, so.

And that's a different interaction than you had with NxStage?

I didn't have any interaction with NxStage, none. The only time I would talk to NxStage was if I had to call tech support if I had a problem. No one ever called. They called just about supplies, yes, that was the only thing. Half the time, that was wrong. I'm sorry, but it was. They would say they're going to deliver the supplies and they don't deliver the supplies. So they would tell you that your supplies are going to sit outside, and that's a no, no, because we have a space for the supplies to be set up. So I didn't have any interaction with NxStage, only just to tell me the supplies were coming or if I had to call technical support. Whereas with Tablo, Outset calls me all the time.

I can agree with that deal a bit, Vanessa calling me just checking in and it turns into a regular conversation half the time, where we do a call and she checks the supply, but it's also how you're doing, how are you, how's treatments? And it sounds like you're friend just checking in having more [indiscernible] text me, hey, how are you doing? Let me know if everything is cool with the machine, if I could do anything. Those text messages are vital. You kind of -- as patients, sometimes we feel alone doing this. Even if there are people behind you, kind of like you are alone in this world of dialysis. But having that team and having that support just not from your family, but your extended family, which is the people you deal with, your doctors, your techs, your nurses, all that stuff, it's good to have that surrounding barrier knowing, okay, I'm not alone in this. And even though I'm home doing analysis kind of by myself, I still have support of the team, and that's always good to know. And there's not a lot of companies that focus on that part of the patient experience, which is what they call it. So the fact that that's implemented into Outset to have a patient experience for people to feel like they have support, I think it's a big variable for the patients' mental health and safety and just mean that we use the machine knowing that someone has your back.

Right. When you think about like people that are on Tablo, what are some of the reasons they might would switch, though, with all the support? Like are there reasons why like maybe they might go back to in center or maybe even back to NxStage?

I think some patients do -- there's a thing called patient burnout where patients go on to hospice, they just want to go in and don't want to have to deal with setting up and breaking down, and maybe something going on at home and they just need a minute. And that's fine. That's okay to go in and take a break from dialysis. As far as switching companies and switching, I think it all comes down to preference. You hear NxStage talking about the traveling aspect of their machine and how you can travel with it and all that type of stuff as well. I've traveled extensively with the NxStage where that 75 pound machine turns to a 100 pound machine when you put into that metal case. And when you're packing, you've got to pack everything, needles, gauzes you have to packs. So you're [indiscernible] check-in time because you also got bags that you got to pack to go on trips and you've got to send over all your supplies. And when I tried, there were maybe 6 people that look like me. I'm talking kind of big guys, but we were able to -- so your average little [ back home ], little guy, so I'm a big guy. I mean it's going to be kind of hard for me to travel around with that machine. So I was able to do it because I had a lot of support of my brother and 5 other friends that went on board for me to do this. And we still had complications and everything like that on tours for our supplies and stuff not showing up on time, and oh, man, I forgot my needles in Utah, we're already 6 hours from there. So now we've got to find a center to get more supplies, and I've been through all that. So the travel aspect is probably the only thing that they would try to put over with Tablo, but with Tablo, I've traveled as far as Hawaii with the patient key into treatment in center and not having to pack anything other than a patient key for dialysis. So yes, we could travel when we were out long, but at the same time, if there's a center having Tablo, I can treat there. And we said by being halfway across the world, the place I've never been, and I was just able to pop in a key in treatment, pop it out and go home. So things like that will kind of level off as far as traveling for me. I can deal with taking a 20-minute ride to go get treatment and not having to pack any supplies or worry about a shipment not getting there and stuff like that. So that's -- I think that's the only variable, not something we'd want to leave just because of that. There's a lot of moving parts that come with that traveling stuff. And I just hope they really do their homework before they decide to jump ship.

No, go ahead. Yes, I'd love to hear your perspective there.

I agree with you. The traveling part was different compared to Outset. However, what NxStage doesn't tell you, the difficulties that you can have with that traveler. And trust me, we ran into quite a few. You got -- like you said, David, it's a very, very heavy machine, and you got to have somebody -- when we went to travel with it, we had to pay somebody to lift the machine onto the conveyor belt to put it -- to set it on the airplane. Then we got to have to pay somebody to take it off the conveyor belt, get someone to put it into the car, get someone to take it out of the car, take it into the hotel...

A lot of tips.

A lot of tips.

Got to keep a lot of cash on hand when you're traveling with the machine.

Yes, you do have the convenience of having the machine there, but you got to turn around and pack up all that stuff to get it back home and go through the same process all over again. I'd rather just have him go to a center with Tablo and, like you said, and get it done. It is a hassle, trust me. I told him, I said, I don't ever want to travel with this thing again. I mean we did it about 3, 4 times.

One time we put it back in our car.

Put it back in our car. We had our boys and we drove it, but we still had to pay somebody to take it out of the car. And it's just a hassle, so it ain't worth it for us.

Some people, it's great. People who take it and can do it, put it back into their car, stuff like that. Like I said, it's all about preference and I just -- like you said, there's a lot of moving parts to it when it comes to traveling. Me, I really rather this way of just flying to a city, popping in and going to a treatment center and go back home without worrying about packing this machine up, because it really is a hassle, because you do have to leave about 3 to 4 hours earlier to get to the airport, because they look at you like you're crazy when you roll up with this near 100 pound machine. So they think you're bringing something else on and they want to charge you for everything. And when you explain what it is, then everybody and their mom has been on dialysis and they love you, they give you first class and all that stuff. But at the same time, it could be a hassle, most definitely.

That's a good conversation. I'll bring Leslie in because...

I cannot follow this. I'd be like shrieking if I share, and like I cannot follow these stories, but yes, I'll try. You guys are upping the entertainment ante here.

I know, this is very entertaining. I guess just the conversation on retention and like, obviously, you've heard what they've said. Just making sure, like you've had really good retention so far, like 10% global attrition.

We talked about that. Yes, it's around 10%, what we call the opt-off rate, if you will, yes.

Yes. And I guess it's like as you scale, we've heard some of these like very high touch points that you're having with these patients. Like how do you think you can keep this retention level as you scale and get more patients?

Yes. Well, I was going to ask you if you wanted to come over and join the team. We're looking for new recruits. No, only kidding. It's not -- it's funny, I guess, I think we are all consumers, right? And I think we've all -- I know I have had a lot of experiences as a consumer where very small things that really don't take that much time, make a huge difference. Like how long does it take for somebody to text David? Two seconds, right? And yes, maybe they have an exchange back and forth. But I think that genuine caring is infinitely scalable. And it doesn't -- in our experience so far, it really doesn't take an army. You have to have a really solid foundation set up and maybe some technology tools like texting and auto, et cetera. But I have not found that it's difficult to scale caring, genuinely caring about people.

And then I guess anything that you'd highlight that they didn't in terms of the things that you're doing to manage retention?

No, no. I think we -- look, I mean we do, and David alluded to this, which makes me very happy, like we do really think about this as an experience, not a device,. Like I don't consider us to be in the device business. I think we're in the experience business and the support business. And so that's a mindset that's really important to establish from the get-go. I think the technology itself and these differences have been highlighted, but we hear from many others that not having to dialyze 5 or 6 a week is a big, big driver of retention because it doesn't require as much stamina, literally, to kind of keep going over time. And then David also alluded to just getting a lot of time back because somebody isn't batching a couple of times or every day, you're getting 25, 30-plus hours back per week. And we've seen -- I've heard a lot of other folks talking about that as an enabler of allowing them to stay home for longer. I think what we try to do with this technology is really change the benefit burden ratio. Whereas in the past, with other things, kind of the burden has been higher than the benefit. And so what we thought about from the design, and Michael was there at such an early period, but we went through a very methodical process of talking to a lot of people who were on the incumbent system point by point by point, what's challenging, what's onerous, what would you want to see different, what would you want to change, and we went after every single one of those things in the device.

That's helpful. One of the things they were saying in terms like patients don't like change, like that's a big barrier to people moving from in-center to home. And so I guess, if you -- a lot of patients crash in the hospital, the ICU. And so you've been focused on getting the hospitals opening centers. So kind of want to make sure, like understand exactly what you're doing, the opportunity there? Because it seems like there's a big opportunity in my mind, like the patient at the hospital, the hospitals are putting them in a home like they've never been in the center in the past. And so there's like -- there's no change friction there.

Yes. Well, and I think that the -- and Michael, I'd love you to chime in on this, too. But David alluded to patients, people -- I mean people don't like change, right? It's not just the patients. I mean we're all people, we're all consumers. And I would say, and Michael, I'll pick on Michael, the group of folks sometimes who are the most resistant to change also have an MD after their name. And so I think if we see an accelerator in the future to growth, it is physician education. And I think that the Covingtons alluded to Dr. Broumand. Think about how powerful impacts just one physician made on them because he was the physician who said, "Hey, why don't you guys bypass the clinic and go straight home." And so we are very, very focused, Michael and his team, around scaling. We're not talking about what do we really want to scale, we really want to scale physician education. And anyway, Michael, I don't know if you want to add on to that, but that's the biggest accelerator of growth that I see in our future.

Yes. And I think it's a great point, Leslie, about just change in general. The physician is kind of the head of this care team and so they can drive that passion. But I think we've been spending -- we spent 30-something years trying to drive everybody in-center because that was kind of the model. Right? And now what we're asking people to do is change that model. Patients in the acute setting, they gear at centers where dialysis is done and then a select few move on to home. And I think what we've seen with our patient population with the technology is, everybody should have that opportunity for home. There is no default treatment, right? Home is an option. And what we've seen is when we talk about the patients being a little resistant to change, getting comfortable in clinic, if they understand that the option is to go home and they start learning how to do things themselves, David referenced self-cannulation, if we learn to do some in-center self-care as well, have the patients start doing certain parts of their treatment, they realize this isn't that onerous. This isn't such a big ask. And then all of a sudden, they start wondering why are they coming to the clinic when they could easily do this at home. And so all of that is important to the process. From a physician perspective, again, you've got generations of physicians now that they never did home hemodialysis in fellowship because of the low penetration in a lot of areas in the country. Originally when they went through training, home hemodialysis wasn't an option. Then they had a technology that had a very unique prescribing that is specific only to the incumbent device. And so they have this learning curve that now they have to go out while they're in practice and growing a practice, realizing, boy, this is complicated, I don't get it. I'm not sure my patients are going to be able to get this, and they've got to memorize all those steps, and it's going to take them 2 months to learn. And so I think from a physician perspective, it's a little bit the easy button. It's comfortable, it's easy, and I know I can get a patient in center. So that education that any patient deserves the opportunity to learn about home, that the technology has drastically changed and that this is much easier. And even from a physician perspective, the prescription now is very simple with Tablo compared to this learning some new way of dialyzing to a specific device's restrictions. We're a conventional prescription. This is what physicians have learned to do. We just need to help them understand that the barriers to home, a lot of them have been resolved with technology and technology. And so we know we can get this done. And so we're spending a lot. We're -- we've done home summits. We've got the key opinion leaders throughout the country that are helping speak for us and help drive the conversation. We were talking about cannulation earlier. Cannulation has been identified as a barrier. I'll tell you, in practice, when you have a patient that is interested in home, cannulation is an easily surmountable barrier with the right training team, with the right program. And even looking at dialyzing with catheters at home, we had this mindset every patient needed a fistula at home in the past. National Kidney Foundation's Kidney Disease Outcomes, Quality Initiative just came out with the ESKD life plan a few years ago that said, you know what, patients need the right access for the right patient for the right reason at the right time. And so we're seeing more catheters going home. We're seeing patients manage them well. Again, that mindset where David can just continue doing his treatment with his catheter, why would we do anything different because he doesn't now have a fistula. So I think there's a lot of that education and change that's already happening, and we're trying to drive it internally, both the benefits of home hemodialysis but also the value of the technology.

Great. How do you think about the ability of kind of what you were talking about educating the physician about Tablo versus opening up new home programs? Like how are you balancing those 2? Where do you think the growth is going to come from?

Yes. I mean I think we're doing both. I mean I think when you look at the footprint and some of the partners we already have, I mean we are continuing to work with the physicians that affiliate or maybe are medical directors at a lot of their clinics and helping them understand the benefit of technology and the value here. So I think there's a lot of that. There have been surveys of physicians in the U.S. before. Physicians would use home hemodialysis for themselves above any other modality. They would go home first, but then even at the home modalities, they would choose home hemodialysis. So the disconnect a little bit is, I don't think my patients can do it, right? And so we're educating those physicians on that. The clinical benefits, I think, have been pretty clear from a physician perspective. And so now new physicians that have never done home are definitely approaching us, how do I open up a new home program? How do I open a small clinic somewhere where it's all transitional care into home? So I think the growth is going to come from both areas. The shorter term, there's facilities already there, work with those physicians that already have access to the technology. Long term, we're going to see, I think, a lot of growth in physicians opening new clinics and with some regulatory change, even seeing potentially physicians just opening dialysis through their own chronic kidney disease clinic and providing that kind of traditional program.

Great. And a question for you would be, we've home launched initially, it was a slow launch focused on retention. And Leslie has been talking about stepping on the gas pedal a little bit. So curious what does that mean to you, like stepping on the gas pedal for home? And like is that on the ground day-to-day in terms of like developing this market.

Yes. I think there's a couple of things there. One, to Leslie's point earlier, we are about the whole experience, not just the technology. So I think we wanted to get -- we wanted to get going. We wanted to make sure that we're supporting David, the Covingtons and all the new patients well, right, that the technology is providing them the experience and our support is appropriate, and then scale that so that we don't outgrow our ability to support them well. So I think that was kind of the early phases was making sure we're doing the right processes. We're doing all of those things. I think step on the gas pedal to me is we're seeing the early adopters are successful. They're sending a lot of patients home. Now we're starting to move into that middle range of adoption where the physicians that may not have done home or have been very selective are now starting to recognize that patients that they thought were ideal aren't the only ones that can go home. And so we're seeing broader adoption, wider opportunities for patients that may have been declining the opportunity before due to inherent physician bias, not because of any medical contraindication. So I think that's where the gas pedal comes. We've got the scale. We know we're doing well. We're supporting patients, and we're getting the physicians getting beyond those early adopters and innovators and into that middle scale [ production ].

And the dialysis nurses has always been sort of a challenge lately in terms of cost and availability. And it was a conversation I was having with one home provider. I was talking about how like this is an opportunity actually, and actually, the economics are pushing this to the home. Maybe -- is that what you're hearing in your conversations as you think about even some of the people that are doing in-center, there's a motivation to push people out because it's lower staffing and a little bit more lower cost for some of the centers?

Well, I think it is a motivator. I would say when you think of it in-center, there's staffing requirements in a lot of the states. You need technicians, you need nurses. You're going to need a charge nurse, you're going to need a nursing staff, right, so that not every nurse is working 6 days a week. So that's a lot of staff to support patients who are 100% dependent on your staff, right? The patient is not traditionally contributing any part of their treatment. They're just there and they need 100% support. So when you start transitioning to home, one nurse can manage 20 or 25 patients by themselves and the patient is now contributing a significant portion. Not only the fact that, that patient is also an educated, informed empowered patient, so they're much more knowledgeable about their treatment. So now it's a care team. It's a communication where the patient is in the lead as opposed to the nurse having to provide everything. And so yes, I think staffing is a huge benefit to home. And the flexibilities now of telemedicine make that even easier to manage a larger number of patients with less nursing staff and the patients contributing a greater percentage of their care.

I did want to cover some reimbursement, because economics matters a lot in devices as in health care. And I don't know maybe you want to cover and just kind of go through how reimbursement works for Tablo, as maybe a base versus the alternatives that patients have.

Sure. So dialysis -- taking a big step back, dialysis in general is covered by Medicare under and paid for under one single, bundled rate. And it's been that way really for the last decade plus. That rate that, what I'll call it, the base rate, is the same whether somebody receives their dialysis in center or in the home. In the inpatient setting, it's not really separately reimbursable at all, which is a lot of what drives kind of the cost reduction benefit for Tablo in the inpatient setting, which I know we're not talking about today. So on the chronic outpatient, it is the same base rate regardless of in-center or home. Now in this time -- well, it was about a year ago, actually in 2021, individuals who had ESRD became eligible to sign up for Medicare Advantage. That rate is about 1.2x the Medicare base rate. And I saw one of the LDOs, one of the big providers, in a recent earnings call, I think they said they figure that about 40%of their population was already on Medicare Advantage. So the uptake to MA has been really, really high. And so that's about 1.2x the Medicare base rate. On top of that, CMS came out with a program they call the ETC model, the SRD treatment choices model, and that is mandatory for about 1/3 of the country. And to simplify it, CMS said, hey, we're going to pay the clinics either more or less depending on their success in moving greater and greater numbers of patients home. And so that's predicated on the growth of their transplant program and the growth of their home dialysis program. That runs through 2027 and gets up to about plus 8% or negative 10%, depending on kind of how their cover data stacks up. So that's one incremental payment option or decrement. And then the other one is very specific to Tablo, and we've talked before about this [ titonies ] or [ titonies ] depending on your favorite pronunciation program. And we were awarded that as a result of CMS' determination that Tablo was a significant clinical improvement over the incumbent device. And that adds about another 10% on top of the base rate. So the providers, whether you're a health system or as our conventional dialysis clinic operator have now, for the first time, a number of incremental sort of upside opportunities, if you will, on the reimbursement side, which we believe will continue to be a tailwind for home adoption.

What happens if [ titonies ] ends, and when does that happen?

So that is running through 2023 and we'll -- and we'll see. I think that there might be an opportunity to see whether we can get that extended. But we have no insight or visibility into that. But if it doesn't end in 2023, it actually sort of transitions nicely right into the more elevated levels of the ETC model. And so a lot of providers are thinking about [ titonies ] as, hey, I'm going to use this [ titonies ] extra payment to see whether I can elevate my home census and then take advantage of the SRD opportunities afterwards.

How has the ETC model impacted your conversations when you're talking to customers and potential customers. Does it come up often?

Yes, Michael, what do you think? You want to give your two cents?

Yes. I think the ETC did, I think, get some of the physicians who may have thought about home but weren't necessarily doing it. And if they're in ETC areas, obviously much more interested in trying to learn a little bit more about home. And again, when we talk technology, it's much easier to learn how to do that with Tablo than with other devices. So we have seen a lot of interest. There was a publication showing in the very first year that there hasn't been a significant movement at home yet. But again, there was a lot of issues with getting started, and I think you have a lot of programs ramping up, which is what we're seeing, a lot of programs that are really starting to ramp and grow quickly. So there is a lot of interest. And I even think in non ETC markets, a lot of providers are national. So what they're doing in their ETC markets, they're doing in their non-ETC markets as well, so to be -- to standardize. So I think we're going to see growth. What was interesting, that paper I referenced, there was growth across all markets. It wasn't different in ETC, and that's probably a reflection of national providers growing home across the board as opposed to just doing it in 30% of the country.

And quick question. The TabloCart that you talked about, is that for home? Or is it more acute?

It can be, but we really developed it for the acute setting. I would say thus far, and we may have a different experience as we continue to scale, but thus far, we really haven't had any water challenges in home. And it's a little curious to me because I probably expected that we would see wider variability in water quality, folks on well water or city water [indiscernible], but that has not been our experience to date. It's been very -- remarkably consistent.

Is there -- now that we have everybody, we're at the hour, but anything that you think that we should have highlighted with Melvin or David, either of you, that you think would be important for the audience to hear?

Michael, did we miss anything?

No, I think we covered it from the patient perspective. Again, I wanted to make sure they could share a little bit about the difference in experiences and how they're feeling because ultimately that's, the end of the day, this is most important is quality of life. There are clinical benefits, mortality benefits, et cetera, to home hemodialysis, but most importantly is the quality of that life that patients can have and that freedom to live. And I think both of them shared a lot of that, which to me was most important.

Great. I think we'll end it there then. And thanks, David and Melvin, for joining us. It was a really insightful conversation.

Thank you all.