Leslie Trigg, the company's CEO, said in an interview, "We want to fundamentally change the existing dialysis service model. With our product and technology, patients will no longer need to go to dialysis clinics for treatment.
The financing is the largest deal in the private medical technology sector this year. With the new funding, OutsetMedical can formally launch a commercial rollout campaign to get Tablo into clinical use.
Trigg described the company's business plan. In theory, their product and technology could give existing dialysis clinics a head start. Patients suffering from diseases such as kidney failure are expected to go to dialysis clinics for treatment. Typically, they go there three times a week for up to five hours of dialysis treatment each time. Trigg said, "This treatment model for dialysis services has been around since the 1970s and hasn't changed since then."
Back in the 1970s, dialysis treatments were the first health care service that people actually paid for. So every patient who needed dialysis ended up enrolled in Medicare. However, Medicare's total reimbursement for dialysis services is capped at 33,354 pounds a year, which is no more than $34 billion a year.
There are now about 6,500 dialysis clinics in the U.S. that are affiliated with large companies like DaVita and Satellite. Trigg describes dialysis clinics as a typical labor-intensive service model, with nurses and technicians responsible for every aspect of dialysis for patients.
Tablo can purify tap water and then make dialysis solutions based on the patient's needs. The device could greatly simplify the dialysis process and reduce workloads for both patients and health care providers. Under clinical conditions, patients can control our devices independently, says Trigg. In this way, healthcare providers can change staffing patterns and lay off many unnecessary employees."
Healthcare providers have been receptive to Tablo. The FDA has now approved Tablo for clinical use, but they have not yet approved OutsetMedical's new clinical trial requirements.OutsetMedical hopes that the clinical trial will prove that patients can use their device at home.
The equity investment*** in the financing totaled $51 million and was led by new investor Fidelity Research Management.WarburgPincus, TheVerticalGroup, PartnerFundManagement, PerceptiveAdvisors, and CEG also participated, with the former two invested in OutsetMedical and the latter three were new investors. The bond investment portion was $40 million, all of which was funded by CRG.