Outset Medical has created a 37-inch dialysis clinic on wheels for the home

Key Points
  • Outset Medical has raised more than $300 million for its new take on kidney dialysis machines. 
  • The company's CEO Leslie Trigg said she joined after realizing that this corner of health care hadn't changed in 30 years. 
  • The new funding was led by Abu Dhabi's Mubadala, which is looking to get into U.S. health care investing. 
Outset Medical CEO Leslie Trigg

Kidney dialysis machines are bulky and expensive, and haven't changed much in decades. But a company called Outset Medical has been working on an upgrade so that someday soon patients will be able to get lifesaving treatment at home rather than at the hospital.

Outset's technology works through a combination of software and sensors that automate the manual steps that are typically required to get a machine up and running. It also purifies water and produces dialysate (one of the fluids used in dialysis) in real time, and it takes a patient's blood pressure. To get it started, the system only needs a electrical outlet and access to water.

All the treatment data it collects gets shared to the company's cloud, making it an attractive technology play as well as a medical device company.

The company's CEO, Leslie Trigg, said she realized before joining Outset that health care wasn't a $3 trillion market. In fact, it's a collection of multimillion- and billion-dollar opportunities. And one lucrative slice is the kidney dialysis segment, which includes software, hardware and services.

The market alone is expected to be worth $22.8 billion by 2022. In the U.S. alone, almost half a million people are dialysis patients, and that number is expected to grow as the population ages. More than 2 million people globally are currently receiving dialysis, according to the National Kidney Foundation.

"It hit me my first week at Outset that this was a huge corner of health-care market," said Trigg in a phone interview. Trigg previously was an executive-in-residence at the investment firm Warburg Pincus. "Nurses were still pushing around these huge machines in hospitals," she said. "We went from that to a 37-inch dialysis clinic on wheels that plugs into any faucet, essentially providing self-service on demand."

That's Outset's device on the left, compared with traditional dialysis equipment on the right:

Trigg likes to think of it as the "Tesla of kidney dialysis," drawing an analogy to how Elon Musk's company upgraded the definition of the car. Well, minus the tweets.

This week, the company told CNBC it has raised $132 million from the Abu Dhabi investment group Mubadala, as well as its existing investors including T. Rowe Price and Warburg Pincus. Mubadala in 2017 reportedly put $15 billion into SoftBank's Vision Fund, which has begun making health investments, as well as starting new venture capital firms of its own.

"We selected Outset Medical as our first U.S. private med tech investment because of Tablo's ability to significantly improve global dialysis care and address one of the biggest areas of worldwide health-care spend," said Camilla Macapili Languille, senior vice president of pharma and medical technology at Mubadala.

That brings Outset's funding to more than $320 million, making it one of Silicon Valley's best-funded private medical tech companies.

Outset is already approved by federal regulators for its technology, dubbed Tablo, to be used in medical clinics and hospitals. A clinical trial is currently underway to test whether it can also be used by patients in the home. It's also interested in expanding to retail environments, skilled nursing facilities and urgent-care offices, said Trigg.