On March 18, 2025, the Honorable Edward J. Davila of the U.S. District Court for the Northern District of California appointed Berman Tabacco as sole Lead Counsel in the securities class action lawsuit against Outset Medical, Inc. (the “Company”) and certain of its executive officers. Judge Davila appointed two of the firm’s institutional clients as Lead Plaintiffs. The initial complaint alleges causes of action on behalf of all persons who acquired the common stock of Outset during the period from September 15, 2020 through August 7, 2024 (the “Class Period”).
Outset is a medical technology company whose primary products are devices used in dialysis care, including the Tablo Hemodialysis System (“Tablo”) and its accessory, the TabloCart.
In mid- 2022, the Company received clearance from the U.S. Food and Drug Administration (“FDA”) for the Tablo as “indicated for use in patients with acute and/or chronic renal failure, with or without ultrafiltration, in an acute or chronic care facility” and “in the home.” This approval did not include treatment of continuous renal replacement therapy (“CRRT”).
Then, almost a year later, Outset disclosed that it had received a Warning Letter from the FDA about marketing the Tablo for CRRT. In response, the Company paused shipments of orders and suffered a stock price decline. By October 2023, the Company revealed that revenue growth had been significantly impacted by the FDA’s warning letter, reducing financial guidance for 2023 revenue, and triggering a nearly 50% stock price decline. Eventually, the Company would significantly miss consensus estimates and lower its full year 2024 revenue guidance by $39 million at the midpoint.
The Action alleges that, throughout the Class Period, Defendants failed to disclose to investors: (1) the Tablo products were marketed for CRRT, which is not one of the indications approved by the FDA; (2) that, as a result, Outset was reasonably likely to submit an additional FDA application for the Tablo products; (3) that there was a substantial risk that the Company would cease sales of the Tablo products pending FDA approval of additional indications; (4) that Outset lacked the sales team and process to execute on the ramp of Tablo sales; (5) that, as a result of the foregoing, the Company’s revenue growth would be adversely impacted; and (6) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
The case is In re Outset Medical, Inc. Securities Litigation, Case No. 5:24-cv-06124-EJD (N.D. Cal.). The litigation team includes Nicole Lavallee, Kristin J. Moody and Alex Vahdat.