NxStage Reports Record Fourth Quarter and Full-Year 2011 Financial Results; Revenue Growth Exceeds Company Guidance

LAWRENCE, Mass., Feb. 29, 2012 /PRNewswire/ --

Highlights:

  • Full-Year Revenue Increases to $217.3 Million, 21% Annual Growth
  • Full-Year Home Revenue Increases to $108.5 Million, 27% Annual Growth
  • Full- Year Gross Margin Improves to 36%, up from 32% for 2010
  • Q4'11 Revenue Increases to a Record $57.0 Million, up 15% from Q4'10
  • Company Applauds Favorable Coverage Decision Supporting More Frequent Home Hemodialysis by UnitedHealthcare

NxStage® Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported record financial results for the three and twelve months ended December 31, 2011, that includes revenue above the top end of its guidance range.

(Logo: http://photos.prnewswire.com/prnh/20110503/MM94799LOGO )

Revenue for the full-year 2011 increased 21 percent to $217.3 million, compared with revenue of $179.2 million for the full-year 2010.  Revenue for the fourth quarter of 2011 increased 15 percent to a record $57.0 million compared with revenue of $49.8 million for the fourth quarter of 2010.  The increase in both periods was led by the Company's solid performance in the Home market as a result of growing adoption of more frequent home hemodialysis with the NxStage System One™.

Home delivered 27 percent annual growth, with revenue increasing to $108.5 million for the full-year 2011 compared with revenue of $85.8 million for the full-year 2010.  Home revenue increased to $28.2 million in the fourth quarter of 2011 compared with revenue of $23.6 million in the fourth quarter of 2010, representing a 20 percent increase.  

"Home revenue continued to show strength both on an annual and sequential basis," stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical, Inc.  "The majority of Home's sequential revenue growth in Q4 was driven by our performance in the U.S. which was in-line with normal seasonality and slightly better than our guidance."

Critical Care delivered 25 percent annual growth, with revenue increasing to $35.0 million for the full-year 2011 compared with revenue of $28.1 million for the full-year 2010.  Revenue in Critical Care increased to $9.8 million in the fourth quarter of 2011, compared with revenue of $8.6 million in the fourth quarter of 2010, representing a 14 percent increase.

The Company's in-center business, Medisystems, delivered 13 percent annual growth with revenue increasing to $73.8 million for the full-year 2011, compared with revenue of $65.4 million for the full-year 2010.  Fourth quarter revenue was $19.0 million, compared with $17.6 million in the fourth quarter of 2010.

"NxStage delivered another year of solid growth in 2011. This performance is clear evidence of the strategic progress we continue to make across our business.  We achieved both our financial and business objectives and advanced our mission to improve the lives of patients with ESRD," stated Burbank.  

Burbank continued, "Entering 2012, I believe that we have good underlying market fundamentals, a strong balance sheet, a solid operating model, as well as the deepest product pipeline in our Company's history. We see significant opportunities to advance our long term growth strategy and remain confident in our ability to deliver continued improvement and meaningful growth."

In commenting on UnitedHealthcare's recent policy update in support of reimbursement for more frequent home hemodialysis Burbank stated, "We applaud UnitedHealthcare for their leadership in providing greater access to the life changing benefits possible with our therapy. This is an exciting and important step forward in our efforts to make reimbursement simple, predictable and appropriate across all payers, including Medicare."

NxStage reported a net loss of $21.4 million or ($0.39) per share for the full-year 2011 compared with a net loss of $31.7 million or ($0.66) per share for the full-year 2010.  The Company reported a net loss of $4.6 million or ($0.08) per share for the fourth quarter of 2011 compared with a net loss of $6.3 million or ($0.13) per share for the fourth quarter of 2010.

For the full-year 2011, the Company reported Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses, of $7.3 million, compared with $0.5 million for the full-year 2010.  For the fourth quarter of 2011, Adjusted EBITDA was $2.0 million compared with $1.5 million in the fourth quarter of 2010.  (See the exhibits for a reconciliation of this non-GAAP measure.)

Guidance:

For the first quarter of 2012, the Company is forecasting revenue to be between $56.0 million and $57.0 million, a net loss in the range of $5.0 to $6.0 million or ($0.09) to ($0.11) per share, and Adjusted EBITDA in the range of $1.0 to $2.0 million.  

For the full fiscal year 2012, the Company is forecasting revenue to be between $240 million and $245 million, a net loss in the range of $14.0 to $18.0 million or ($0.25) to ($0.32) per share, and Adjusted EBITDA in the range of $8.0 million to $12.0 million.  The Company expects to achieve consolidated gross margins of between 39 percent to 43 percent in the fourth quarter of 2012.  

This release contains a non-GAAP financial measure; a reconciliation of the Company's non-GAAP financial measure to its most comparable GAAP financial measure is in the exhibits to this press release.

Conference Call:

NxStage will also host a conference call today, Wednesday, February 29, 2012, at 9:00 a.m. Eastern Time to discuss its fourth quarter and year-end 2011 financial results. To listen to the conference call, please dial 877-392-9886 (domestic) or 707-287-9329 (international).  The call will also be webcast LIVE and can be accessed via the investor relations section of the Company's website at www.nxstage.com.

A replay of the conference call will be available 2 hours after the completion of the call through March 14, 2012.  To access the replay, dial 855- 859-2056 (domestic) or 404- 537-3406 (international) and reference conference ID 45478602.  An online archive of the conference call can be accessed via the investor relations section of the Company's website at www.nxstage.com.

About NxStage

NxStage Medical, Inc. (Nasdaq: NXTM) is a medical device company, headquartered in Lawrence, Massachusetts, USA, that develops, manufactures and markets innovative products for the treatment of ESRD and acute kidney failure. For more information on NxStage and its products, please visit the company's website at www.nxstage.com.

Forward-Looking Statements

This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words "anticipate," "believe," "expect," "estimate," "plan," and similar expressions are generally intended to identify forward-looking statements. Examples of these forward-looking statements include statements as to the anticipated demand for the Company's products, anticipated operating results, including revenues, loss, gross margin and Adjusted EBITDA numbers, and other expectations as to future operating results. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond NxStage's control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements, including market acceptance and demand for NxStage's products, growth in home and/or daily hemodialysis, unanticipated difficulties in achieving operational efficiencies and cost reductions, changes in reimbursement for home and daily hemodialysis, changes in the regulatory environment, changes in the historical purchasing patterns and preferences of our customers, including DaVita Inc. and Fresenius, and certain other factors that may affect future operating results and which are detailed in NxStage's filings with the Securities and Exchange Commission, including its Quarterly Report on Form 10-Q for the period ended September 30, 2011.

In addition, the statements in this press release represent NxStage's expectations and beliefs as of the date of this press release. NxStage anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while NxStage may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, whether as a result of new information, future events, or otherwise. These forward-looking statements should not be relied upon as representing NxStage's expectations or beliefs as of any date subsequent to the date of this press release.

Contact:
Kristen K. Sheppard, Esq.
VP, Investor Relations
ksheppard@nxstage.com

Non-GAAP Financial Measure

The Company discloses a certain non-GAAP financial measure to supplement the Company's consolidated financial statements presented on a GAAP basis. This non-GAAP measure is not in accordance with, or an alternative for, generally accepted accounting principles in the United States and may be different from similar non-GAAP financial measures used by other companies. The non-GAAP financial measure disclosed by the Company is not meant to be considered superior to or a substitute for results of operations prepared in accordance with GAAP. Management uses Adjusted EBITDA (EBITDA adjusted for stock based-compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses) to understand operational cash usage.  The Company believes the non-GAAP financial measure provides useful and supplementary information allowing investors greater transparency to one measure used by management.  The non-GAAP financial measure is meant to supplement, and to be viewed in conjunction with, GAAP financial measures.  The non-GAAP financial measure is reconciled to the most comparable GAAP financial measure below.

NxStage Medical, Inc.

Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)










Three Months Ended

Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010









Revenues

$57,021


$49,769


$217,256


$179,218

Cost of revenues

35,851


32,177


139,648


121,091

Gross profit

21,170


17,592


77,608


58,127









Operating expenses:








Selling and marketing

9,525


9,132


37,550


34,166

Research and development

3,743


3,531


14,437


12,900

Distribution

4,618


3,920


17,916


14,751

General and administrative

6,456


6,170


23,206


22,774

Total operating expenses

24,342


22,753


93,109


84,591

Loss from operations

(3,172)


(5,161)


(15,501)


(26,464)









Other expense:








Interest income

4


3


4


3

Interest expense

(1,201)


(1,165)


(4,714)


(4,597)

Other income (expense), net

50


242


(292)


114


(1,147)


(920)


(5,002)


(4,480)









Net loss before income taxes

(4,319)


(6,081)


(20,503)


(30,944)









Provision for income taxes

245


212


899


768









Net loss

$ (4,564)


$ (6,293)


$ (21,402)


$ (31,712)









Net loss per share, basic and diluted

$   (0.08)


$   (0.13)


$     (0.39)


$     (0.66)









Weighted-average shares outstanding, basic and diluted

54,997


50,233


54,217


48,188



NxStage Medical, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)





December 31,


December 31,



2011


2010

ASSETS





Current assets:





Cash and cash equivalents


$        102,909


$        104,339

Accounts receivable, net


15,808


14,107

Inventory


32,775


34,950

Prepaid expenses and other current assets


2,777


2,084

Total current assets


154,269


155,480






Property and equipment, net


17,599


8,290

Field equipment, net


12,182


13,660

Deferred cost of revenues


41,132


40,081

Intangible assets, net


22,615


25,412

Goodwill


42,698


42,698

Other assets


1,213


473






Total assets


$        291,708


$        286,094











LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





Accounts payable


$          15,634


$          16,811

Accrued expenses


15,165


19,537

Current portion of long-term debt


-


43

Total current liabilities


30,799


36,391






Deferred revenues


57,014


55,366

Long-term debt


43,235


40,454

Other long-term liabilities


9,474


1,754






Total liabilities


140,522


133,965






Commitments and contingencies





Stockholders' equity:





Undesignated preferred stock: par value $0.001, 5,000,000 shares authorized; no shares issued and outstanding as of December 31, 2011 and 2010


-


-

Common stock: par value $0.001, 100,000,000 shares authorized; 56,167,090  and 54,043,317 shares issued as of December 31, 2011 and 2010, respectively


56


53

Additional paid-in capital


489,542


465,642

Accumulated deficit


(329,828)


(308,426)

Accumulated other comprehensive income


(68)


85

Treasury stock, at cost: 480,923 and 325,104 shares as of December 31, 2011 and 2010, respectively


(8,516)


(5,225)






Total stockholders' equity


151,186


152,129






Total liabilities and stockholders' equity


$        291,708


$        286,094



NxStage Medical, Inc.

Cash Flows from Operating Activities

(in thousands)

(unaudited)






Twelve Months Ended


December 31,


2011


2010

Cash flows from operating activities:




Net loss

$ (21,402)


$ (31,712)

Adjustments to reconcile net loss to net




cash (used in) provided by operating activities:




Depreciation and amortization

23,087


22,379

Stock-based compensation

13,093


15,351

Other

3,064


2,319

Changes in operating assets and liabilities:




Accounts receivable

(1,773)


235

Inventory

(16,371)


(28,744)

Prepaid expenses and other assets

(1,491)


(877)

Accounts payable

(1,047)


(2,781)

Accrued expenses and other liabilities

(324)


10,065

Deferred revenues

1,648


16,876

Net cash (used in) provided by operating activities

$   (1,516)


$    3,111



NxStage Medical, Inc.

Revenues by Segment

(in thousands)

(unaudited)










Three Months Ended


Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010









System One segment








 Home

$ 28,213


$ 23,558


$ 108,489


$   85,762

 Critical Care

9,792


8,565


34,991


28,093

    Total System One segment

38,005


32,123


143,480


113,855

In-Center segment

19,016


17,646


73,776


65,363

Total

$ 57,021


$ 49,769


$ 217,256


$ 179,218



























NxStage Medical, Inc.

Non-GAAP Financial Measures

(in millions)

(unaudited)










Three Months Ended


Twelve Months Ended


December 31,


December 31,


2011


2010


2011


2010









Net loss

$ (4.6)


$ (6.3)


$ (21.4)


$ (31.7)

Less: Depreciation, amortization, interest, and taxes

7.1


6.7


29.0


27.7

Less: Adjusting items*

(0.5)


1.1


(0.3)


4.5









Adjusted EBITDA

$  2.0


$  1.5


$    7.3


$    0.5









* Adjusting items include stock-based compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses



NxStage Medical, Inc.

Non-GAAP Financial Guidance

(in millions)

(unaudited)










Three Months Ended


Twelve Months Ended


March 31, 2012


December 31, 2012


High
Estimate


Low
Estimate


High
Estimate


Low
Estimate









Net loss

$                    (5.0)


$                    (6.0)


$              (14.0)


$             (18.0)

Less: Depreciation, amortization, interest, and taxes

7.4


7.4


30.7


30.7

Less: Adjusting items*

(0.4)


(0.4)


(4.7)


(4.7)









Adjusted EBITDA

$                     2.0


$                     1.0


$                12.0


$                8.0









* Adjusting items include stock-based compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses



SOURCE NxStage Medical, Inc.



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