My name is Rohan Patel . I cover medical devices and supplies here at JPMorgan. I'd just like to introduce Leslie Trigg, CEO of Outset.
That's quite an introduction. Thank you. I love it. It's efficient. It only consumed 15 seconds, so thanks for the time back. I don't really have much more to add about my own introduction, but I am happy to be here. I am the Chair and CEO of Outset. Thanks to JPMorgan for including us this year. Really excited to share the story with you guys. As a reminder, you've heard it a 1 billion times during the conference, I might be making some forward-looking statements. Encourage you to look at our public filings to the SEC for more information on the risks and uncertainties around those. More important, Outset is a high-growth med tech company focused on transforming dialysis from the hospital to the home through a technology we call Tablo.
There is a lot to transform in this space, I will tell you that. There's a lot of work to do in reducing the cost, in reducing the complexity, and certainly in improving the quality of the patient experience. Providing solutions to those challenges, which is what we do, gives Outset access to a very, very, very large total addressable market, almost $11 and a half billion just here in the U.S. alone. We already have an established footprint in a $2 and a half billion acute market here in the U.S., and a rapidly growing base of patients using Tablo in the home, almost a $9 billion market here in the U.S. We did pre-announce expected 2022 revenue on Monday of approximately $115 million.
Over the last five years, we've been able to drive a compound annual growth rate of 175%. As we look forward, we see multiple tailwinds propelling the adoption of Tablo forward, really across the care continuum, again, all the way from the hospital to the home, and I'll be talking about those tailwinds throughout the presentation. Before we look forward, I'm gonna take a step back. For those of you all that are maybe less familiar with the sector, let me describe it a bit to you. Dialysis is one of the largest, most expensive, and unfortunately least changed sectors of healthcare. You may or may not know, we spend, as a country, $73 billion on the care of end-stage renal disease, ESRD, patients in this country every single year.
In fact, this data is a few years old. Of that figure, Medicare picks up the tab for approximately $41 billion, which, in and of itself is roughly 7% of the Medicare budget on less than 1% of the Medicare population. This problem also, unfortunately, is not getting smaller, it's getting bigger. Today, we have about 600,000 people on dialysis, again, here in the United States. We deliver over 90 million treatments in the United States. 90 million. I mean, 90 million episodes of care. That's about 245,000 dialysis treatments today, as we sit here at JPMorgan. The population is expected to grow over 30% just over the next eight years. Lots of work to do.
Despite the costs and the challenges, and perhaps the suggestions that things aren't quite working well, the delivery care model for dialysis has remained virtually unchanged over decades. About 135,000 people start dialysis every year. The majority of them, what we call crash into dialysis through the hospital, meaning they actually don't know that they have failing kidneys. They then go into acute renal failure in through the ER, in through the hospital, where they're stabilized on dialysis for the first time, and it's welcome to the rest of your life. They're discharged into a dialysis clinic. The other 40% are sort of managed into one of about 7,000 dialysis clinics all over the country.
The vast majority of dialysis patients do experience the therapy through the clinic. Very, very few are dialyzing today at home. We intend to change that. Just giving you a picture of the current state here, almost 90% still dialyze three times a week in the clinic. The clinic environment, I will tell you, has changed very little since the 1980s. If you walk into a clinic today in 2023, it will barely look noticeably different from a clinic in the 1980s. We'll talk a lot more about improvements in quality and cost a little bit later. This is sort of our current state. It's an expensive care delivery model.
In the inpatient environment, probably the most important thing for you to know is that when dialysis is delivered inpatient, it is not separately reimbursed. If a patient comes in, let's say, for a mitral valve replacement, and they wind up needing dialysis, or they're just a chronic dialysis patient to begin with, any dialysis that occurs during that inpatient stay, the hospital eats the cost of that. They cannot bill separately for it. That leads to data like the following, a loss of between $5,000 and $25,000 per admission if that admission involves dialysis. That's a lot of money. It turns out dialysis is typically involved in about 600 different DRGs. When you take a big step back, dialysis for a hospital is a margin eroder.
Now, in the chronic setting, we're spending about $30 billion just on the cost of dialysis treatments in the in-center setting. It's a bit of a, unfortunately, not virtuous, but vicious cycle because there's a 34% readmission rate from the chronic environment back into the hospitals, where hospitals are not being reimbursed for the dialysis that's continued to be performed. Lot of problems to be solved and a great, almost desperate need for more solutions because of the cost. Of course, both in the past and more recently, really acute staffing challenges that more and more are leading to suboptimal care, all of it exacerbated by pretty antiquated equipment. Most of the equipment that's used in a hospital or a clinic setting was first developed in the 1980s or the 1990s.
I do have a piece of good news, after all of that sort of depressing state of affairs. There is a way forward, and I'm sure you'll be shocked to learn that a medical device company thinks it's a technology way forward. We do see a technology way forward, and the technology way forward is something called Tablo. It is a first of its kind device, and I'll talk a little bit about why and how. Specifically aimed at reducing the cost, reducing the complexity, and most importantly, dramatically elevating and changing, the patient care experience. It is the first single hardware platform. Same device, whether you're using it in the ICU or whether you're using it in the home. That's never been done before. It is connected, intelligent, and actually gets smarter over time. Never been done before.
We transmit over a half a million data points from every console, every treatment, every day, up to the cloud. That gives us a tremendous sort of almost an embarrassment of riches when it comes to data that we are then able to kind of feed into software updates, predictive algorithms that again make Tablo more and more advanced over time through two-way wireless data connectivity. The original idea for Tablo was sort of born out of observations that we had. We were a team not from dialysis, and I think that there was tremendous advantage in that. We were able to sort of come into this space fresh and take a look at what hospitals and healthcare providers were being asked. What were they being asked to do?
This is what they were being asked to do: buy and manage all of this stuff. You have to buy a bunch of different machines that all do usually one thing. They do it really well, but kind of only one thing. Then you're gonna need to build and maintain a huge water treatment room, often the size of this room, and minimally half the size of this room, which effectively is an industrial water processing facility. There's one attached to every clinic in the world. These water treatment rooms are used with industrial equipment like you see in the middle circle there to purify incoming water, make dialysate in these like huge vats, and then send the purified dialysate through plumbing in the walls and deposit it into the back of these antiquated dialysis machines. That's what you're being asked to do.
Our technology ambition, which I admit was ambitious, was to integrate all of the features and functions of all the machines and a 1,000 sq ft water treatment room into a 35-inch box. What could be easier? After eight years and a lot of blood, sweat, and tears, mostly tears, the engineers' tears. I was happy the whole time. They did make it. We did cross the finish line and de-deliver this all-in-one solution, that really enables a healthcare provider to, again, down select operational efficiency, down select to one device, that their nurses and their clinicians can use in the ICU, that folks can use in the sub-acute space, and that consumers can use in the home.
I'll talk a little bit about where is magical, wonderful Tablo being used and what problems is it solving? It is an opportunity for one device across multiple markets. As I mentioned, it's almost an $11.5 billion opportunity for us just in the U.S., with $2.5 billion of that in the acute and almost $9 billion in the home. I'll talk about the acute, which for reference also includes the sub-acute space, rehab, LTAC, where we have a nicely growing business there with a very similar value proposition. Simply put, we reduce cost and complexity in the hospital. I mentioned to you that hospitals cannot separately bill, for the most part, for dialysis, that it's a pure play cost center, and it's a pain point for hospitals.
We reduce cost, using Tablo in two ways: supplies cost reduction, labor cost reduction. On the supplies cost front, before Tablo, BT, existing ICU machines, for example, the incumbent machines require hospitals to again, buy, maintain, and store in pharmacy in a lot of variable prescriptions, bags and bags, thousands of bags of premixed sterile dialysate. Tablo makes dialysate on demand in real-time, purifies the water on demand, and makes that dialysate to the patient's prescription while the patient is dialyzing. It gets rid of all the cost and complexity of the bags. Labor. Because of the complexity of the equipment, most hospitals over time ended up actually outsourcing dialysis. They would hire a DaVita, a Fresenius, a third-party dialysis service provider, write a big check and throw it over the wall.
Hey, you guys bring your nurses in here and deliver dialysis treatment when we have a patient who needs dialysis," which is frequently. Two problems with that model, even before we got to the staffing challenges. Length of stay. Because there might only be a handful of nurses in any given community, said nurse might be at some other hospital A, B, C, but not hospital D. Patients are waiting. In the ICU, patients are waiting on the floor to receive treatment. Obviously not ideal clinically. Very, very costly. Even a small hospital, medium hospital would be paying millions of dollars a year in these contracts. What Tablo enables, because of another benefit, simplicity, it has started enabling hospitals to terminate their service agreements and in-source dialysis using their own team.
Tablo was originally designed to be easy enough for a consumer to use, so it certainly is easy enough for a clinician in the hospital, be it a dialysis nurse or a non-dialysis nurse, to pick up and learn very quickly. The model here in labor cost reduction is to terminate the service agreement and use your own team to deliver dialysis in the inpatient setting. Typically, what we see, as a result of supplies plus labor cost reduction is a cost down trajectory of between 50% and 75% per treatment. I'll show you a case study in a second. With a potential payback, I would say a typical payback period of under one year, depending on the hospital's volume. A very, typically a very CFO-friendly capital sale. This is the case study I mentioned.
happens to be from St. Mark's, an HCA hospital in Salt Lake City. They adopted Tablo. They terminated a service agreement, took it all in-house. They estimate their savings at almost a half a million dollars a year. This is a hospital on the smaller side, but meaningfully $500 per treatment, which is a lot. It was a 70% cost reduction per treatment for them and a 50% cost reduction in labor between the outsource model and their insource model. And there are many examples of this across the country. Transitioning to the home, and actually these two segments are cross-linked for us in a commercial strategy that I'll get to in a few minutes.
Transitioning to the home, I think a lot of us, maybe most of us in this room, have heard about home dialysis for a really long time. I think it's been a great idea for a really long time. I don't always think it's been a great idea at the right time. Some of the historical barriers that probably contributed to what I consider to be kind of right idea at the wrong time. One, reimbursement. In the past, there's been a real disconnect between what CMS pays for dialysis in the clinic or the home, which is three times a week, and the number of treatments that a patient had to do in the home on the incumbent device, which was 5 or 6 times a week.
Automatically you've got a conflict there with providers losing money on the fourth, fifth, and sixth treatment. That was a barrier. Understandable. Incentives were missing. There, there were no financial incentives. In fact, there were more financial incentives to keep people in the clinic. That was a problem. Lastly, I think there was a technology problem. The incumbent technology just proved over time to be out of reach for the interests and capabilities of the majority of the patient population. Good news, things have changed. Things have changed actually so much that my view now is that home is now the right idea at the right time. We believe, of course, we have the right technology to leverage it, but right idea, right time.
The reason why I say that, it's only taken like 15 years, so you know, things move quickly. The reason why I say it's the right idea at the right time, one, we do actually have new financial incentives. CMS put a program in place that's running through 2027 that pays clinic operators or any healthcare provider more or less, depending on their growth in the home population. There are distinct advantages and incentives now to move more patients to the home. Two, for the first time starting a year ago, dialysis patients could sign up for Medicare Advantage. That was never the case.
This has really brought the payers to the table because, prior to that, if a dialysis patient had commercial insurance, the commercial insurer would pay for that for 30 months, and after month 30, it's like welcome to Medicare. The commercial insurer didn't really need to worry about the cost of dialysis anymore, but now they do. Approximately 40% of the dialysis population has already selected a Medicare Advantage plan. Those folks will be members, with the cost of dialysis for an enduring period of time, which is giving payers much greater incentive to ensure that more and more of their members, move home, which has been demonstrated, over many, many years to be a higher quality, lower cost environment. That is no longer in debate.
Three, we've had some clinic staffing shortages that you might have read about in the news that we believe will continue to persist over at least the next couple of years. Home is a solution for a clinic staffing shortage. You don't need labor in the home. Just to be clear, these are patients who are independent or with a family member dialyzing completely on their own, safely and effectively in the home. It's actually a really great solution for clinic staffing shortages. Last, maybe touching on COVID a bit, we believe patient preferences have changed quite a bit. I think we all were impacted in different ways by COVID, to say the least.
I think for many patients, the realization that sitting in a room with 30 or 40 other immunocompromised individuals 2 ft away from you may not be desirable. I think also the general rise of the hospital to home movement, the general rise of telehealth and just patient comfort and sort of this normalization around care, higher and higher acuity care in the home, is all serving as supplemental tailwinds to home dialysis. Those are the reasons why I think we feel very strongly that home dialysis is the right idea, these reasons why this is the right time, and our belief that this is the right technology, and here's our thesis about the right technology. One, we were able to design Tablo from the beginning. This is a huge second mover advantage.
We were able to design Tablo from the get-go to specifically target and remove the key barriers that we know from all of our patient market research and physician market research had prevented more people from adopting it in the past. three key things. I mean, I could go on and on, but this is like baby pictures, I will only regale you with three advantages. 1 is the treatments per week. I talked about that reimbursement mismatch with treatments per week. With Tablo, we designed it such that a person can maintain a three times a week schedule in the home, just like they're doing in the clinic, without being asked to do it 5 or 6 times a week. Trust me, you will never, ever meet someone who wants to do more dialysis regardless of the setting. Huge advantage.
Two, training time. The incumbent device does require, and they've published on this in the past, about 4 to 6 weeks of training. That's over 100 hours. That's like, imagine 5 days a week, 5 hours a day for 4- 6 weeks. Oh, by the way, you need to have a care partner with you the whole time. That's really obviously quite burdensome. We were really focused on getting the training time down. We did this through sensors and automation. Most of the setup of Tablo is automated. There's a few manual steps, but we have no memorization. We have no mental math. There's just a lot less to learn. We know now in our real-world experience that we've cut that by over 75%.
Most people, our mean training time is between 8 and 10 days. Lastly, prep time. With the incumbent device, patients are asked to fill up the tub on the bottom and prepare the dialysate in advance. That process takes 8- 9 hours, and you're gonna repeat that a couple times a week. With Tablo, the second the patient walks up and presses Get Started on the touchscreen, Tablo automatically starts purifying the water and making that dialysate in real time, sort of streaming dialysate on demand. No pun intended with Netflix. Anyway, what I think what that all really means is that we've just kinda changed the benefit-burden ratio, you know, benefit going up and burden going down.
This has shown up in some of the data, even as early as our clinical trial, which we completed in order to achieve, actually the second ever clearance for home from the FDA in 2020. In that trial, we had a 0% dropout rate during the in-home arm. You might say, "Well, no big deal. Why would anybody drop out?" The incumbent trial, incumbent devices trial with the exact same protocol had a much, much, much higher dropout rate. That was our first clue. Like, okay, this could be really cool. Like, maybe people will finally be able to stay on home for much, much longer. I'll kinda take you to the right. That so far has played out in the real world. We really fixate. It's beyond focus. It's an obsession.
We really obsess over the controllable attrition rate, which would not death and transplant, but somebody kinda raising their hand and saying, like, "I don't love it. I'm gonna go back in center. I don't like Tablo." For us, even as our patient numbers have grown, and admittedly, let's be clear, on a much smaller base than the incumbent device, but even as we've continued to grow rapidly, this controllable attrition rate has hovered at 10% or less. We're really proud of that and intend to keep that patient experience one that's very, very sticky. Our adherence rate to prescribed treatment is obviously very, very high, and that has been a big problem in the past. 5 and 6 treatments being prescribed, but maybe three only being done, obviously is clinically suboptimal.
Perhaps the feedback that I'm the most excited about are these patient-reported outcomes. I remember I was there the first time somebody was ever treated with Tablo, and the person automatically said, like, "I feel different." We ended up kind of a moniker around the office is the feeling better effect 'cause it was over and over and over, and almost every single person would say things like, "I don't feel like I'm on dialysis," or, "I don't feel like I just was on dialysis." I remember the first person who told me he had actually been able to go back to work.
Most dialysis patients in the clinic, they will sleep the rest of the day and a lot of the next day, and then they're back in the clinic, and they repeat that over and over and over again. I think all of us can scarcely even imagine that lifestyle. With Tablo, people are going back to work, and they are reporting in big numbers, less cramping, fewer headaches, less fatigue. We're really proud of people just feeling well and being able to obviously enjoy the things that they really wanna do and value in life. Which brings us to: so how are we gonna get it out into the world, and how do patients access Tablo? Really, it's a two-pronged commercial strategy. The first prong is through actually the clinics.
Our current partners, our current customer base are, we would describe as kinda progressive mid-size dialysis clinic operators who are nimble, who are moving fast, who are very responsive to some of these new financial incentives and have very clear goals in mind about how many new patients they wanna send home every single year. Those are the kind of partners, obviously, that we want and that we can help with. The benefits and the feedback we've gotten from customers so far, they're using Tablo preferentially to actually drive higher adoption rates. We do have enough evidence now with kinda 2 commercial years under our belt. We know that patients choose Tablo almost every time when offered a choice and that more patients agree to go home with Tablo. Why? Because it doesn't look intimidating at first blush.
It isn't intimidating. It is very fast for people to train on, and it's easier to manage. It's easy to manage in the home. I think providers have seen benefits in faster throughput because the training doesn't require as much time, and then longer retention rates. Again, this differentiated, kind of 90% retention rate. The second prong for us, though, is to expand the provider universe. This is what I'm the most excited about. We need to expand the channels, through which, a patient is gonna be able to access and go home. There is no structural reason why a patient has to pass through a clinic to get to the home.
That's just kind of the way it's been, but there's no reason it needs to be that way. This is where I talked about cross link between acute and home. This is where the strategy comes together. We are using our very kind of thick and growing foundation of acute customers, hospitals, and health systems to stand up their own home programs. I talked about the majority of new patients every year actually coming in through the hospital. The hospitals control the referral stream, not the, not the downstream clinics. More and more hospitals are eyeing moves into home dialysis for the following reasons. One, it is a new chronic predictable revenue stream that's very complementary to perhaps what we now know through COVID was a more volatile elective procedure volume. Two, it comes with a very attractive contribution margin for them.
Three, more recently, it's a solution for discharge management. Because of some of these clinic staffing shortages, a lot of these clinics may be going down from three shifts to two shifts or the 2- 1. Hospitals have increasingly been talking to us about difficulty in discharging their dialysis patients into a clinic. If a hospital or a health system stands up their own home program, which by the way, was the way it was done in the 1970s, sort of before the rise of kind of the industrial complex around dialysis, this is not a new idea, but hospitals can control discharge and also really control costs. They're gonna do a better job in a value-based care environment in ensuring that patients don't return to the hospital and stay home. This is, you know, sort of current state moving to future state.
I'm realizing the slide design probably should have been more left to right, but we're going right to left, with the intent around a much, much bigger home market for all. As we penetrate into these markets and grow markets like home, we also will and already do leverage a very efficient business model. I hate the analogy razor, razorblade, but I'm gonna use it 'cause I don't have a better one. Yes, it is a razor, razorblade model, with the purchase of the Tablo consoles, then generating a very long tail recurring revenue stream through the sale of disposables. There's a disposable component to every treatment and service.
All of that adds up to roughly about $20,000 per year recurring revenue in the acute setting per console and about $15,000 per year per console in the home setting. We, moving to kinda 2022 and 2023, I wanna make sure we save enough room for questions here, we did exit 2022 in a very strong financial position. As mentioned, pre-announced revenue of about $115 million for 2022. Exited the year with an installed base of 4,000 consoles. This compares to about 2,600 consoles as we exited the prior year, we saw some really nice growth there. Roughly 3,200 of those in the acute setting. We more than doubled the installed base in the home, the chronic, to 800.
The company continues to make very good, consistent progress against gross margin. We expanded gross margin approximately 800 basis points in 2022 and left with a very strong balance sheet. $261 million as of September 30th. As some of you may have read, we also announced a debt arrangement in November, which gives the company access to an additional up to $300 million in capital over time as needed. We are entering 2023 with a lot of conviction and confidence in this plan. We did on Monday announce revenue guidance of between $140 million and $150 million, which would represent somewhere between 22% and 30% growth. We, of course, continue to march upward on gross margin.
Our next mile marker on margin that we talk about is a 50% gross margin, not as a terminal value, but as our next goal, and intend to exit 2023 in the mid-20% again on that trajectory up to 50. Then we continue to or intend to continue very disciplined, determined execution to the same commercial strategy that has worked so well for us over the last two years. On the acute side, what we call land and expand, big contracts with the national IDNs, large regional players that put Tablo in an insourcing program into a couple of their hospitals and then expand and proliferate those programs through the rest of their network over time.
Then what we call sort of high growth, high retention, again, premium on retention in the home, high growth, high retention strategy for our home segment. I wanna leave you with perhaps the most important goal and aspiration and prediction that we have for 2023. I think 2023 will be another year of deep impact for patients, for people and their families. You know, dialysis patients have been, in my view, served up good enough for a really, really long time. They do deserve great. They deserve the experience that we would all wanna have. I was reading something actually this week. It was a quotation from Emerson, and it read something like, "A good indignation reveals one's powers." I will tell you, like, we're a pretty indignant group.
We absolutely will not rest, and we will not be done until a new human experience is the new norm. We will continue to relentlessly execute toward profound and permanent change in the where and the how and the who can perform dialysis on behalf of patients and all of their families. With that, I wanna thank you for your interest in this story, and we can transition to Q&A. I'd also like to invite Jim Mazzola, our Vice President of Investor Relations, up here with me. No clapping. It's a clapping algorithm.
You can take a first question from there. Just if you wanna wait for the mic. Sorry.
Okay. Thanks, Leslie. Wanted to understand the value prop for your acute care customers. If I'm thinking about this right, you had $450,000 savings from the HCA hospital, I think you said that each customer, acute care customer is about $20,000. Does that mean that hospitals pay about $470,000 a year for clinic referrals or the clinic process? Am I thinking about that right? What's the.
Y-yeah.
What are the components in that?
Sure. Maybe we'll talk about it on a per treatment basis, and then you can sort of multiply that by volume, right, of the hospital's volume. A hospital that's outsourcing dialysis, and this number has continued to escalate, is probably paying, actually somewhere between like $1,000-$1,500 per treatment, let's say for a treatment in the ICU. Compared to an insourced, let's say, even with their own labor rates, escalating, maybe for a treatment, you know, $300 for their own team to perform the dialysis. All of the disposables that would be related to Tablo and, you know, a dialyzer and other things that are outside of Tablo. You know, you might be all in sort of, you know, $75-$100.
You're really looking at a delta potentially of like $1,500 down to $200.
Okay.
I'm not clear. Do you have distributors or, because I see like, for sleep apnea and oxygen, which are significantly simpler products, they have very successful distribution with all those companies that does that?
No, we don't have distributors. It's not a DME model, I'm really glad you asked that, in the home. Let's say that we have a partner, that's a dialysis clinic operator, right?
Mm-hmm.
They might have, I don't know, you know, 100 clinic locations. They have home programs. Our customer actually is the clinic provider.
Mm-hmm.
They have home training nurses. We go in and train the home training nurses. It's a train the trainer model. Then their patients are trained by their own, their own clinical team.
Why not utilize the network of people who do oxygen and other things at the home?
Yeah, it's an interesting idea. We're pretty margin-sensitive. We take our commitments to shareholders pretty seriously about our gross margin goals and cash goals. I think that would ultimately prove out to be a more expensive model for us in the way that we're currently doing it.
Could you talk at all about the TPNIES add-on payments and what impact that's had and what might happen when that rolls off?
Sure, yeah. Maybe just some brief background. CMS set up a new program. It's effectively a new technology add-on payment called Tipnies, Tiponies. Choose your favorite pronunciation. Anyway, TPNIES. There were a set of criteria that new technologies, specifically in the renal space, needed to meet. We applied, a number of other companies and technologies have applied for it, and Outset was fortunate enough to be the only technology and company to receive it. It equates to about $25 per treatment. It's a two-year duration, which is the genesis of the question, so we're now in year two. I would say that it's...
By and large, number one, it's been a new program for CMS, and so I think it took a little bit of time, as you can imagine, for them to figure out, okay, here's how we're administering it, and here's how you apply for it, et cetera. I would say it has generally been very helpful, but in a different way. It really added a pretty significant halo effect to Tablo. It's really tough criteria to meet. You have to prove that your device is a substantial clinical improvement over what's already in the marketplace. I think that perhaps its greatest benefit was one that I didn't predict, and probably a qualitative one, where it really sort of sent shockwaves through the industry that Tablo got it.
It really was a pretty significant stamp of approval from a government agency.
Anything.
Hi, Leslie.
Hi.
Can you expand on the opportunity in assisted living and congregate living types of facilities where otherwise I think so many people have to be transported by BLS ambulance to great expense to the system.
Yes.
I mean, people have thought about that before, but what's it gonna take for that to become real? You know, is your system the right system for that?
Thank you. That's a great question. The question is really about the sub-acute space and specifically skilled nursing. The components for the sub-acute space for us are skilled nursing, rehab facilities, and long-term acute care. We chose to focus first on the rehab and LTAC segments, frankly, for a very practical reason. First of all, we had a great product market fit. It gets cost reduction and operational efficiency. 2, it's a much more concentrated segment of the market. There are a handful of big players in LTACs and rehabs, and we've been fortunate to partner with almost all of them now. I think skilled nursing is on our horizon. It's an area of high interest. It's an area of high need. You're absolutely right.
There are an estimated 70,000 folks who are on dialysis in the SNF environment, who are typically forced to go outside the SNF three times a week and be transported to a clinic. Again, very costly. Not a great experience, the outcomes are poor. I think, you know, when does it change? I'll be so bold as to. Well, maybe when we start focusing on it. I think that is in our future, but we started with kind of more the low-hanging fruit first.
It looks like based on your St. Mark's experience, this is all cleared in the U.S.
Correct.
Have you entered emerging markets like Latin America, where the need could be massive, and especially in European markets with some other big players like Fresenius?
Mm-hmm.
I think it's Diaverum.
Diaverum, yeah.
Diaverum. Have you any foray into those markets?
I'll give you a short and then a technical and then a longer answer. No, and not yet. The technical answer with regard to Europe, where Diaverum is, it could be a really interesting market for us. The technical answer is with the EU MDR regulations now in place, all medical device companies now are effectively back on the starting line. We did carry and maintain a CE mark for years. Passion topic, don't get me started. Anyway, we're back to the starting line. We will be doing the regulatory work to seek the EU MDR clearance for Tablo. Like all medical device companies, that's gonna take us a while because of the limitations and the number of notified bodies, it's like the snake eating the lion right now on Europe.
There are other markets, as you point out, that could be where the need is high. I think our philosophy about international, I will tell you, is, with the particulars of Outset, our filters will be first, the country has to be margin accretive for Outset. We aren't going to do anything that's gonna put that part of the car in reverse. It's gotta be margin accretive. We'll probably focus on countries, again, a practical point that are English-speaking first, because we do have a very sophisticated GUI in English that also is connected to the operating system of the, of the platform. I think those are just some examples of filters that we would apply to where we might initiate Tablo introduction first.
I think, we have time for one more question if you want.
If a clinic provider's training the patient and they don't do a good job, how do you get information about that and make sure you can intervene?
Well, it's interesting. Because Tablo is connected, 2-way in the home, we actually have the ability to, or any provider has the ability to do remote monitoring in real time. We do get all the data on every treatment. For example, we can see into Tablo, let's say the prevalence of certain alarms or the same alarm over and over again. That might be, to your point, an indication of a training issue. All of that data also is remitted up to the provider. If a patient's suddenly skipping treatments, that could be an indicator I'm not comfortable, and this is not working for me, and the provider, or Outset, but in most cases, it's the provider would make an outreach and do a check-in.
Great. Thanks so much, Leslie and Jim, for being here.
Thank you. Thanks for everything.
Thank you.
Yeah. Thanks.