NxStage® Reports Record Revenue for the First Quarter of Fiscal 2011

Highlights:

- Total Revenue Increases 25% to $50.6 million

- Home Revenue Increases 37% to $26.0 million

- Gross Margin Improves to 36% up from 29% in Q1'10

04 May, 2011, 07:07 ET from NxStage Medical, Inc.

LAWRENCE, Mass., May 4, 2011 /PRNewswire/ -- NxStage Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported financial results for the first quarter of 2011 ended March  31, 2011, with total revenue above the top end of its guidance range.

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

Net revenue for first quarter of 2011 increased 25 percent to a record $50.6 million compared with revenue of $40.4 million for the first quarter of 2010.  The increase was primarily driven by continued strong growth in the Home as a result of increased adoption of home hemodialysis with the NxStage System One™, and solid performance in Critical Care and In-Center.

Home revenue for the first quarter increased 37 percent to a record $26.0 million compared with revenues of $19.0 million for the first quarter of 2010.  

Critical Care revenue increased 23 percent to $7.4 million for the first quarter of 2011 compared with revenues of $6.1 million for the first quarter of 2010.  Revenue in the In-Center market increased to $17.1 million for the first quarter of 2011 compared with revenues of $15.3 million for the first quarter of 2010.  

"In Q1, we continued our trend of delivering solid operating and financial results, and top line revenue ahead of our expectations," stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical, Inc. "We continue to be encouraged by evidence that our strategy to increase adoption of home hemodialysis with the System One continues to gain traction. We're focused on maintaining our growth momentum across our business while continuing to execute against our long-term growth strategy, which includes creating appropriate reimbursement for home hemodialysis that is both simple and predictable. We believe we are well positioned to deliver continued improvements and are maintaining our outlook for fiscal 2011."

NxStage reported a net loss of $6.0 million or ($0.11) per share for the first quarter of 2011 compared with a net loss of $9.0 million or ($0.19) per share for the first quarter of 2010.  

For the first quarter of 2011, the Company reported Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized and other non-cash expenses, of $1.1 million, compared with an Adjusted EBITDA loss of $1.3 million in the first quarter of 2010.  (See the exhibits for a reconciliation of this non-GAAP measure.)

Guidance:

For the second quarter of 2011, the Company is forecasting revenues to be between $50.0 million and $51.5 million, a net loss in the range of $6.0 to $5.0 million or ($0.11) to ($0.09) per share, and Adjusted EBITDA in the range of $0.5 to $1.5 million.  

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, May 4, 2011, at 9:00 a.m. Eastern Time to discuss its first quarter financial results.  To listen to the conference call, please dial 800-510-0178 (domestic) or 617-614-3450 (international).  The passcode is 58429978.  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/ir.cfm

A replay of the conference call will be available 2 hours after the conclusion of the call through May 11, 2011.  To access the replay dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 63417748.  An online archive of the conference call can be accessed via the investor relations section of the Company's website at www.nxstage.com/ir.cfm

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 growth and opportunities in the Home, Critical Care and In-Center markets, anticipated operating results, including revenue, 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 major customers, including DaVita Inc. and Fresenius Medical Care, 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 Annual Report on Form 10-K for the period ended December 31, 2010.

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, and other non-cash expenses) to understand cash generated from or used in operations.  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.

Condensed Consolidated Statements of Operations

(in thousands, except per share data)

(unaudited)

Three Months Ended

March 31,

2011

2010

Revenues

$50,564

$40,408

Cost of revenues

32,531

28,595

Gross profit

18,033

11,813

Operating expenses:

Selling and marketing

9,210

8,017

Research and development

3,717

3,035

Distribution

4,158

3,411

General and administrative

5,582

4,938

Total operating expenses

22,667

19,401

Loss from operations

(4,634)

(7,588)

Other expense:

Interest expense

(1,157)

(1,108)

Other expense, net

(26)

(117)

(1,183)

(1,225)

Net loss before income taxes

(5,817)

(8,813)

Provision for income taxes

193

186

Net loss

$ (6,010)

$ (8,999)

Net loss per share, basic and diluted

$   (0.11)

$   (0.19)

Weighted-average shares outstanding, basic and diluted

53,423

46,971

NxStage Medical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)

March 31,

December 31,

2011

2010

ASSETS

Current assets:

Cash and cash equivalents

$   99,930

$        104,339

Accounts receivable, net

14,796

14,107

Inventory

36,709

34,950

Prepaid expenses and other current assets

2,355

2,084

Total current assets

153,790

155,480

Property and equipment, net

11,382

8,290

Field equipment, net

13,710

13,660

Deferred cost of revenues

40,339

40,081

Intangible assets, net

24,712

25,412

Goodwill

42,698

42,698

Other assets

564

473

Total assets

$ 287,195

$        286,094

LIABILITIES AND STOCKHOLDERS’ EQUITY

Current liabilities:

Accounts payable

$   21,037

$          16,811

Accrued expenses

12,902

19,537

Current portion of long-term debt

31

43

Total current liabilities

33,970

36,391

Deferred revenues

55,967

55,366

Long-term debt

41,127

40,454

Other long-term liabilities

4,985

1,754

Total liabilities

136,049

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 March 31, 2011 and December 31, 2010

-

-

Common stock: par value $0.001, 100,000,000 shares authorized; 54,678,198  and 54,043,317 shares issued as of March 31, 2011 and December 31, 2010, respectively

54

53

Additional paid-in capital

473,117

465,642

Accumulated deficit

(314,436)

(308,426)

Accumulated other comprehensive income

314

85

Treasury stock, at cost: 447,929 and 325,104 shares as of March 31, 2011 and December 31, 2010, respectively

(7,903)

(5,225)

Total stockholders’ equity

151,146

152,129

Total liabilities and stockholders’ equity

$ 287,195

$        286,094

NxStage Medical, Inc.

Cash Flows from Operating Activities

(in thousands)

(unaudited)

Three Months Ended

March 31,

2011

2010

Cash flows from operating activities:

Net loss

$ (6,010)

$ (8,999)

Adjustments to reconcile net loss to net

cash used in operating activities:

Depreciation and amortization

5,690

5,464

Stock-based compensation

3,414

2,892

Other

874

477

Changes in operating assets and liabilities:

Accounts receivable

(667)

(766)

Inventory

(6,671)

(6,654)

Prepaid expenses and other assets

(324)

(556)

Accounts payable

3,985

940

Accrued expenses and other liabilities

(3,887)

2,521

Deferred revenues

602

3,065

Net cash used in operating activities

$ (2,994)

$ (1,616)

NxStage Medical, Inc.

Revenues by Segment

(in thousands)

Three Months Ended

March 31,

2011

2010

System One segment

 Home

$            26,045

$            19,043

 Critical Care

7,438

6,059

    Total System One segment

33,483

25,102

In-Center segment

17,081

15,306

Total

$            50,564

$            40,408

NxStage Medical, Inc.

Non-GAAP Financial Measures

(in millions)

(unaudited)

Three Months Ended

March 31,

2011

2010

Net loss

$                 (6.0)

$                 (9.0)

Less: Depreciation, amortization, interest, and taxes

7.1

6.9

Less: Adjusting items*

-

0.8

Adjusted EBITDA gain (loss)

$                   1.1

$                 (1.3)

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

NxStage Medical, Inc.

Non-GAAP Financial Guidance

(amounts in millions)

Three Months Ended

June 30, 2011

High Estimate

Low Estimate

Net loss

$                    (5.0)

$                    (6.0)

Less: Depreciation, amortization, interest, and taxes

7.0

7.0

Less: Adjusting items*

(0.5)

(0.5)

Adjusted EBITDA gain

$                     1.5

$                     0.5

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

SOURCE NxStage Medical, Inc.



RELATED LINKS

http://www.nxstage.com