NxStage second quarter revenue increases 22% to $53.8 million

NxStage® Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported record financial results for the second quarter of 2011 ended June 30, 2011, with total revenue well above the top end of its guidance range.

Revenue for the second quarter of 2011 increased to $53.8 million, an increase of 22 percent when compared with revenue of $44.0 million for the second quarter of 2010.  The increase was driven by strong performance across all three markets: Home, Critical Care and In-Center.

The Company grew Home revenue to $27.0 million for the second quarter of 2011, representing an increase of 30 percent when compared with revenue of $20.8 million for the second quarter of 2010. Critical Care revenue grew to $8.6 million for the second quarter of 2011, representing an increase of 29 percent when compared with revenue of $6.7 million for the second quarter of 2010.  Revenue in the In-Center market, from the Company's Medisystems business, increased to $18.2 million for the second quarter of 2011, representing an increase of 10 percent when compared with revenue of $16.5 million for the second quarter of 2010.  

"Building on last quarter's momentum, we delivered strong results across our business and topped expectations," stated Jeffrey H. Burbank, CEO of NxStage Medical, Inc.  "With the first and only truly portable hemodialysis system cleared for home use by the FDA and similar competition still a number of years away, we see significant opportunities for growth, continued innovation and expansion within the Home. Given the strength that we're seeing across all markets and the growth in our opportunity pipeline, we're raising our revenue outlook for 2011 to a range of $210 million to $215 million."

NxStage reported a net loss of $5.6 million, or ($0.10) per share, for the second quarter of 2011 compared with a net loss of $8.3 million, or ($0.17) per share, for the second quarter of 2010.

For the second quarter of 2011, the Company reported Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized, manufacturing transition costs and other non-cash expenses of $1.8 million, compared with an Adjusted EBITDA loss of $0.2 million in the second quarter of 2010.  (See the exhibits for a reconciliation of this non-GAAP measure.)

NxStage announced that it recently concluded its renegotiation of its United States home market agreement with one of its largest customers and signed an amendment to that agreement, extending the term to December 31, 2012, and up to one additional year thereafter.  The amended agreement covers the use of NxStage's products for home hemodialysis.

Separately, NxStage announced that pursuant to its agreement with DaVita, for the period ended June 30, 2011, DaVita achieved System One home patient growth targets that entitled it to become vested in warrants to purchase 250,000 shares of NxStage common stock.  

Guidance:

For the third quarter of 2011, the Company is forecasting revenue to be within a range of $53.5 to $54.5 million.  At this revenue level, the Company would expect 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 third quarter of 2011.  

Supported by its strong performance in the first half of 2011, the Company now anticipates revenue for the 2011 fiscal year to be in a range of $210 to $215 million, compared with its prior guidance for revenues to be in a range of $205 to $213 million.  The Company is maintaining its guidance for a net loss in the range of $19 to $23 million or ($0.36) to ($0.43) per share, and for Adjusted EBITDA to be in the range of $6.0 million to $10.0 million for the 2011 fiscal year.   As a result of the impact of unfavorable foreign exchange and the acceleration of the transition of our blood tubing sets to in-house manufacturing, the Company expects fourth quarter gross margin percentage to be at around the low end of its previously announced guidance of 38 to 42 percent.