Does the U by Moen shower work with a tankless heater?

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Yes. Ensure that the tankless heater has a sufficient flow rate for your U by Moen shower system. The max flow rate of the S3102 two 2-outlet valve is 9 gpm / 34 lpm at 45 psi. The max flow rate of the S3104 four 4-outlet valve is 14 gpm / 53 lpm at 45 psi.