NxStage Medical third quarter net revenue increases 18% to $45.0 million

NxStage Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported record financial results for the third quarter of 2010 ended September 30, 2010.

Net revenue for the third quarter of 2010 increased to $45.0 million, an increase of 18 percent when compared with revenue of $38.0 million for the third quarter of 2009.  Solid performance across the Home and Critical Care markets drove the year over year growth.

The Company delivered 7 percent sequential growth in its Home market with revenue of $22.3 million for the third quarter of 2010, representing an increase of 37 percent when compared with revenue of $16.4 million for the third quarter of 2009. Critical Care revenue grew to $6.8 million for the third quarter of 2010, representing an increase of 20 percent when compared with revenues of $5.7 million for the third quarter of 2009. Revenue in the In-Center market, from the Company's Medisystems business, was $15.9 million for the third quarter of 2010 compared with $16.0 million for the third quarter of 2009.

"We continued to build good momentum across our business and set new records on a number of financial metrics. Our Q3 results are strong validation of our business model particularly since we believe we are still in the early stages of growth and adoption of home hemodialysis with the System One™," stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical.   "We see significant opportunities in each of our markets to advance our long term growth strategy and remain confident in our ability to deliver continued improvement and meaningful growth."

NxStage reported a net loss of $8.2 million, or ($0.17) per share, for the third quarter of 2010 compared with a net loss of $10.0 million, or ($0.22) for the third quarter of 2009.

For the third quarter of 2010, NxStage increased gross margins to 33%, a sequential increase of 200 basis points.  With respect to Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized and other non-cash and non-recurring expenses, the Company achieved its first positive quarter, showing profits of $0.5 million, compared with an Adjusted EBITDA loss of $2.4 million in the third quarter of 2009.   (See the exhibits for a reconciliation of this non-GAAP measure.)

The Company also achieved positive cash flow of $1.9 million for the three months ended September 30, 2010.

Guidance:

For the fourth quarter of 2010, the Company is forecasting revenue to be within a range of $45 to $47 million.  At this revenue level, the Company would expect a net loss in the range of $6.5 to $7.5 million or ($0.13) to ($0.16) per share, and Adjusted EBITDA in the range of $0.5 to $1.5 million for the fourth quarter of 2010. The Company expects to achieve consolidated gross margins of between 33 percent to 35 percent in the fourth quarter of 2010.