2014

NxStage Reports Record Revenue For The Second Quarter Of Fiscal 2012

LAWRENCE, Mass., Aug. 8, 2012 /PRNewswire/ --

Highlights:

  • Revenue Increases to $59.0 million, up 10% from Q2'11
  • Home Revenue Increases to $30.7 million, up 14% from Q2'11
  • Gross Margin Increases to 38%, up from 35% in Q2'11
  • Company Announces European Market Approval for Enhancements to System One

NxStage® Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported record financial results for the second quarter ended June 30, 2012, with total revenue above the top end of its guidance range. 

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

Revenue for the second quarter of 2012 increased 10% to $59.0 million, compared with revenue of $53.8 million for the second quarter of 2011.  The higher revenues were driven by increased adoption of the NxStage System One™.

Home revenue for the second quarter of 2012 increased 14% to a record $30.7 million compared with revenues of $27.0 million for the second quarter of 2011. 

"Home and more frequent hemodialysis with the System One is great therapy that has been consistently reported to give patients access to a much richer and longer life.   We continue to show that our therapy can benefit patients, providers and payors," stated Jeffrey H. Burbank, Chief Executive Officer of NxStage. "As a result, we continue to break down the barriers to adoption and deliver strong revenue growth consistent with our expectations."

Critical Care revenue increased 9% to $9.4 million for the second quarter of 2012 compared with revenues of $8.6 million for the second quarter of 2011.  Revenue in the In-Center market was $18.2 million for the second quarter of 2012. 

"Our results in the second quarter reflect solid and consistent progress. We achieved record revenues, a 300 bps improvement in gross margin, and advanced our robust product pipeline," continued Burbank. "In sum, our growth strategy remains on track and we remain confident in our outlook for 2012."

NxStage reported a net loss of $5.1 million or $(0.09) per share for the second quarter of 2012 compared with a net loss of $5.6 million or $(0.10) per share for the second quarter of 2011.  The net loss for the second quarter of 2012 includes the impact of $1.0 million for the write-off of unamortized debt discount related to the Asahi debt conversion that occurred in May 2012.

For the second quarter of 2012, the Company reported Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses, of $1.7 million compared with $1.8 million for the second quarter of 2011.  (See the exhibits for a reconciliation of this non-GAAP measure.)

Separately, the Company announced that the European regulatory authority has approved a new feature to automate the administration of bolus for use in the EU.  Burbank concluded, "This approval enables us to further advance the simplicity and safety of the System One in Europe. This is an amazing accomplishment to be able to take tap water, purify it, add concentrate, filter it, and infuse it; effectively our system produces fluid similar to that produced in a pharmaceutical plant right in a patient's home from tap water."

Guidance:

For the third quarter of 2012, the Company is forecasting revenues to be between $60.0 million and $61.0 million, a net loss in the range of $3.5 million to $4.5 million, or $(0.06) to $(0.08) per share, and Adjusted EBITDA in the range of $1.5 million to $2.5 million.  The Company is reaffirming its full year 2012 guidance, which includes Asahi dialyzer sales.

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, August 8, 2012 at 9:00 a.m. Eastern Time to discuss its second quarter 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 August 22, 2012.  To access the replay dial 855- 859-2056 (domestic) or 404-537-3406 (international) and reference conference ID 97740600.  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 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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2012.

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.

Condensed Consolidated Statements of Comprehensive Loss

(in thousands, except per share)

(unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30,


2012


2011


2012


2011









Revenues

$

59,009



$

53,768



$

115,960



$

104,332


Cost of revenues

36,620



34,903



72,259



67,434


Gross profit

22,389



18,865



43,701



36,898


Operating expenses:








Selling and marketing

9,918



9,369



19,838



18,579


Research and development

4,250



3,589



8,147



7,306


Distribution

4,582



4,431



9,114



8,589


General and administrative

6,930



5,460



13,552



11,042


Total operating expenses

25,680



22,849



50,651



45,516


Loss from operations

(3,291)



(3,984)



(6,950)



(8,618)


Other expense:








Interest expense

(1,456)



(1,170)



(2,649)



(2,327)


Other expense, net

(79)



(170)



(131)



(196)



(1,535)



(1,340)



(2,780)



(2,523)


Net loss before income taxes

(4,826)



(5,324)



(9,730)



(11,141)


Provision for income taxes

237



226



477



419


Net loss

$

(5,063)



$

(5,550)



$

(10,207)



$

(11,560)


Net loss per share, basic and diluted

$

(0.09)



$

(0.10)



$

(0.18)



$

(0.22)


Weighted-average shares outstanding, basic and diluted

57,733



54,014



55,319



53,716










Other comprehensive loss:








Foreign currency (loss) gain

$

(249)



$

80



$

(100)



$

304


Other (loss) gain

(48)



1



(24)



6


Comprehensive loss

$

(5,360)



$

(5,469)



$

(10,331)



$

(11,250)




 

NxStage Medical, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)






June 30,


December 31,


2012


2011





ASSETS




Current assets:




Cash and cash equivalents

$

102,859



$

102,909


Accounts receivable, net

17,643



15,808


Inventory

34,670



32,775


Prepaid expenses and other current assets

2,084



2,777


Total current assets

157,256



154,269


Property and equipment, net

29,049



17,599


Field equipment, net

9,971



12,182


Deferred cost of revenues

39,792



41,132


Intangible assets, net

21,217



22,615


Goodwill

42,698



42,698


Other assets

2,066



1,213


Total assets

$

302,049



$

291,708


LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

14,559



$

15,634


Accrued expenses

17,932



15,165


Total current liabilities

32,491



30,799


Deferred revenues

55,668



57,014


Long-term debt



43,235


Other long-term liabilities

18,612



9,474


Total liabilities

106,771



140,522


Commitments and contingencies




Stockholders' equity:




Undesignated preferred stock: par value $0.001, 5,000,000 shares authorized;  no shares

issued and outstanding as of June 30, 2012 and December 31, 2011




Common stock: par value $0.001, 100,000,000 shares authorized; 59,391,169 and

56,167,090 shares issued as of June 30, 2012 and December 31, 2011, respectively

59



56


Additional paid-in capital

544,997



489,542


Accumulated deficit

(340,035)



(329,828)


Accumulated other comprehensive loss

(192)



(68)


Treasury stock, at cost: 541,584 and 480,923 shares as of June 30, 2012 and December

31, 2011, respectively

(9,551)



(8,516)


Total stockholders' equity

195,278



151,186


Total liabilities and stockholders' equity

$

302,049



$

291,708









 

NxStage Medical, Inc.

Cash Flows from Operating Activities

(in thousands)

(unaudited)




Six Months Ended June 30,


2012


2011





Cash flows from operating activities:




Net loss

$

(10,207)



$

(11,560)


Adjustments to reconcile net loss to net cash provided by (used in) operating activities:




Depreciation and amortization

11,580



11,459


Stock-based compensation

6,252



6,701


Other

2,345



1,737


Changes in operating assets and liabilities:




Accounts receivable

(1,851)



(1,753)


Inventory

(7,809)



(13,363)


Prepaid expenses and other assets

(170)



(546)


Accounts payable

(946)



5,471


Accrued expenses and other liabilities

3,038



(2,446)


Deferred revenues

(1,346)



629


Net cash provided by (used in) operating activities

$

886



$

(3,671)



 

NxStage Medical, Inc.

Revenues by Segment

(in thousands)

(unaudited)






Three Months Ended

June 30,


Six Months Ended

June 30,


2012


2011


2012


2011

System One segment








Home

$

30,693



$

27,013



$

60,246



$

53,058


Critical Care

9,371



8,591



19,158



16,029


Total System One segment

40,064



35,604



79,404



69,087


In-Center segment

18,229



18,164



35,840



35,245


Other

716





716




Total

$

59,009



$

53,768



$

115,960



$

104,332



 

NxStage Medical, Inc.

Non-GAAP Financial Measures

(in millions)

(unaudited)






Three Months Ended June 30,


Six Months Ended June 30,


2012


2011


2012


2011









Net loss

$

(5.1)



$

(5.6)



$

(10.2)



$

(11.6)


Less: Depreciation, amortization, interest, and taxes

7.6



7.3



14.7



14.4


Less: Adjusting items*

(0.8)



0.1



(1.0)



0.1










Adjusted EBITDA

$

1.7



$

1.8



$

3.5



$

2.9










* 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

September 31, 2012


High

Estimate


Low

Estimate





Net loss

$

(3.5)



$

(4.5)


Less: Depreciation, amortization, interest, and taxes

6.6



6.6


Less: Adjusting items*

(0.6)



(0.6)






Adjusted EBITDA

$

2.5



$

1.5






* 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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