NxStage Reports Record Fourth Quarter and Full-Year 2012 Financial Results

  NxStage Reports Record Fourth Quarter and Full-Year 2012 Financial Results

Highlights:

- Full-Year Revenue Increases to $242.1 million, 11% Annual Growth

- Full-Year Home Revenue Increases to $123.6 million, 14% Annual Growth

- Q4'12 Revenue Increases to a Record $65.0 million, up 14% from Q4'11

- Q4'12 Gross Margin Improves to 39%, up from 37% in Q4'11

- Investments in Direct to Patient Marketing Programs and New Product
Approvals Expected to Drive over 15% Annual Growth in 2014 and Beyond

PR Newswire

LAWRENCE, Mass., Feb. 28, 2013

LAWRENCE, Mass., Feb. 28, 2013 /PRNewswire/ -- NxStage^® Medical, Inc.
(Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today
reported record financial results for the three and twelve months ended
December31, 2012, that includes revenue above the top end of its guidance
range.

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

Revenue for the full-year 2012 increased 11 percent to $242.1 million,
compared with revenue of $217.3 million for the full-year 2011. Revenue for
the fourth quarter of 2012 increased 14 percent to a record $65.0 million
compared with revenue of $57.0 million for the fourth quarter of 2011. 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^™.

Consistent with the Company's guidance, Home delivered 14 percent annual
growth, with revenue increasing to $123.6 million for the full-year 2012
compared with revenue of $108.5 million for the full-year 2011. Home revenue
increased to $31.4 million in the fourth quarter of 2012 compared with revenue
of $28.2 million in the fourth quarter of 2011, representing an 11 percent
increase. As expected, growth in the Home for the fourth quarter of 2012 was
negatively impacted by the timing of capital equipment purchases from
international distributors in the quarter.

Critical Care delivered 13 percent annual growth, with revenue increasing to
$39.5 million for the full-year 2012 compared with revenue of $35.0 million
for the full-year 2011. Revenue in Critical Care increased to $11.3 million
in the fourth quarter of 2012, compared with revenue of $9.8 million in the
fourth quarter of 2011, representing a 15 percent increase.

The Company's in-center business, Medisystems, delivered 4 percent annual
growth with revenue increasing to $76.9 million for the full-year 2012,
compared with revenue of $73.8 million for the full-year 2011. Fourth quarter
2012 revenue was $21.5 million, compared with $19.0 million in the fourth
quarter of 2011. The Company also reported $2.1 million in Other Revenues for
the full-year 2012, reflecting the Company's dialyzer manufacturing revenue
from Asahi.

NxStage reported a net loss of $15.2 million or $(0.26) per share for the
full-year 2012 compared with a net loss of $21.4 million or $(0.39) per share
for the full-year 2011. The Company reported a net loss of $2.4 million or
$(0.04) per share for the fourth quarter of 2012 compared with a net loss of
$4.6 million or $(0.08) per share for the fourth quarter of 2011.

For the full-year 2012, the Company reported Adjusted EBITDA, adjusted for
stock-based compensation, deferred revenue recognized, manufacturing
transition costs and other non-cash expenses, of $8.0 million, compared with
$7.3 million for the full-year 2011. For the fourth quarter of 2012, Adjusted
EBITDA was $2.1 million compared with $2.0 million in the fourth quarter of
2011. (See the exhibits for a reconciliation of this non-GAAP measure.)

"As evidenced by our 2012 results, our business and market fundamentals remain
strong and positive. We believe NxStage is uniquely positioned for growth as
it continues to make a difference to people's lives with significant
innovations that are advancing the standard of renal care," stated Jeffrey H.
Burbank, Founder and Chief Executive Officer.

In commenting on the Company's recent advancements in its product pipeline,
which include CE Mark approval for nocturnal home hemodialysis with the System
One, its high flow dialysis capabilities, and its revolutionary single needle
technology, Burbank stated, "Taken together with increasing confidence in our
ability to drive continued growth with new direct to patient marketing
programs, we believe the overall effect of our product execution is that we
are better positioned to accelerate adoption of our therapies with much
greater potential than in the past. With the benefit of these programs
largely expected in 2014, we expect top line 2013 revenue to remain strong and
grow at a rate similar with 2012, followed by accelerated success and over 15%
annual revenue growth in 2014 and beyond, excluding any benefit of service
revenue from NxStage owned centers of excellence."

Separately, the Company announced plans to transition to a direct sales
operation from a distribution relationship in the UK. The Company anticipates
that this action will further strengthen its relationships with local
customers and position it to more rapidly take advantage of new product
approvals.

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.

Guidance:

For the first quarter of 2013, the Company expects revenue to be in a range of
$60.5 and $62.0 million, which includes an expected one-timereduction to
revenue of approximately $0.5 - $1.0 million related to its plan to transition
to a direct sales operation from a distribution relationship in the UK. This
accounting is expected to result in first quarter 2013 Home revenue being
essentially flat with the fourth quarter of 2012. The Company expects a net
loss in the range of $4.5 to $5.5 million or $(0.08) to $(0.09) per share.

For the full fiscal year 2013, the Company is forecasting revenue to be
between $265 and $270 million, and a net loss in the range of $13 to $17
million or $(0.22) to $(0.28) per share.

Conference Call:

NxStage will also host a conference call today, Thursday, February 28, 2013 at
9:00 a.m. Eastern Time to discuss its fourth quarter and year-end 2012
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 7, 2013. To access the replay dial 855-859-2056
(domestic) or 404-537-3406 (international) and reference conference ID
90444810. 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 Healthcare Partners 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
September 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.

Consolidated Statements of Comprehensive Loss

(in thousands, except per share data)

(unaudited)
                              Three Months Ended      Twelve Months Ended
                              December 31,            December 31,
                              2012        2011        2012         2011
Revenues                      $ 65,020    $ 57,021    $ 242,132    $ 217,256
Cost of revenues              39,661      35,851      149,324      139,648
Gross profit                  25,359      21,170      92,808       77,608
Operating expenses:
Selling and marketing         10,479      9,525       40,485       37,550
Research and development      4,690       3,743       17,111       14,437
Distribution                  5,043       4,618       18,888       17,916
General and administrative    7,057       6,456       27,530       23,206
Total operating expenses      27,269      24,342      104,014      93,109
Loss from operations          (1,910)     (3,172)     (11,206)     (15,501)
Other expense:
Interest expense              (91)        (1,201)     (2,766)      (4,714)
Other (expense) income, net   (30)        54          (148)        (288)
                              (121)       (1,147)     (2,914)      (5,002)
Net loss before income taxes  (2,031)     (4,319)     (14,120)     (20,503)
Provision for income taxes    333         245         1,033        899
Net loss                      $ (2,364)   $ (4,564)   $ (15,153)   $ (21,402)
Net loss per share, basic and $ (0.04)    $ (0.08)    $ (0.26)     $ (0.39)
diluted
Weighted-average shares
outstanding, basic and        59,076      54,997      57,890       54,217
diluted
Other comprehensive loss:
Foreign currency gain (loss)  $ 61        $ (210)     $ 125        $ (136)
Other (loss) gain             (110)       (4)         413          (17)
Comprehensive loss            $ (2,413)   $ (4,778)   $ (14,615)   $ (21,555)





NxStage Medical, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)
                                                        December 31,
                                                        2012        2011
ASSETS
Current assets:
Cash and cash equivalents                               $ 106,439   $ 102,909
Accounts receivable, net                                18,990      15,808
Inventory                                               33,504      32,775
Prepaid expenses and other current assets               2,534       2,777
Total current assets                                    161,467     154,269
Property and equipment, net                             36,320      17,599
Field equipment, net                                    10,101      12,182
Deferred cost of revenues                               38,028      41,132
Intangible assets, net                                  19,819      22,615
Goodwill                                                42,421      42,698
Other assets                                            3,793       1,213
Total assets                                            $ 311,949   $ 291,708
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable                                        $ 16,645    $ 15,634
Accrued expenses                                        20,400      15,165
Other current liabilities                               2,187       —
Total current liabilities                               39,232      30,799
Deferred revenues                                       59,262      57,014
Long-term debt                                          —           43,235
Other long-term liabilities                             15,864      9,474
Total liabilities                                       114,358     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 December 31, 2012 and 2011
Common stock: par value $0.001, 100,000,000 shares
authorized; 59,850,117 and 56,167,090 shares issued as  59          56
of December 31, 2012 and 2011, respectively
Additional paid-in capital                              551,594     489,542
Accumulated deficit                                     (344,981)   (329,828)
Accumulated other comprehensive income (loss)           470         (68)
Treasury stock, at cost: 541,584 and 480,923 shares as  (9,551)     (8,516)
of December 31, 2012 and 2011, respectively
Total stockholders' equity                              197,591     151,186
Total liabilities and stockholders' equity              $ 311,949   $ 291,708





NxStage Medical, Inc.
Cash Flows from Operating Activities
(in thousands)
(unaudited)
                                                      Twelve Months Ended
                                                      December 31,
                                                      2012         2011
Cash flows from operating activities:
Net loss                                              $ (15,153)   $ (21,402)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Depreciation and amortization                         23,673       23,087
Stock-based compensation                              11,403       13,093
Other                                                 3,517        3,064
Changes in operating assets and liabilities:
Accounts receivable                                   (3,141)      (1,773)
Inventory                                             (14,545)     (16,371)
Prepaid expenses and other assets                     (1,623)      (1,491)
Accounts payable                                      839          (1,047)
Accrued expenses and other liabilities                5,263        (324)
Deferred revenues                                     (3,992)      1,648
Net cash provided by (used in) operating activities   $ 6,241      $ (1,516)





NxStage Medical, Inc.

Revenues by Segment

(in thousands)

(unaudited)
                         Three Months Ended    Twelve Months Ended
                         December 31,          December 31,
                         2012       2011       2012        2011
System One segment
Home                     $ 31,418   $ 28,213   $ 123,589   $ 108,489
Critical Care            11,283     9,792      39,540      34,991
Total System One segment 42,701     38,005     163,129     143,480
In-Center segment        21,450     19,016     76,927      73,776
Other                    869        —          2,076       —
Total                    $ 65,020   $ 57,021   $ 242,132   $ 217,256





NxStage Medical, Inc.

Non-GAAP Financial Measures

(in millions)

(unaudited)
                         Three Months Ended           Twelve Months Ended
                         December 31,                 December 31,
                         2012           2011          2012           2011
Net loss                 $   (2.4)      $  (4.6)      $  (15.2)      $ (21.4)
Less: Depreciation,
amortization, interest,  6.6            7.1           27.6           29.0
and taxes
Less: Adjusting items*   (2.1)          (0.5)         (4.4)          (0.3)
Adjusted EBITDA          $   2.1        $  2.0        $  8.0         $ 7.3
* Adjusting items include stock-based compensation, deferred revenue
recognized, manufacturing transition costs and other non-cash expenses



SOURCE NxStage Medical, Inc.

Website: http://www.nxstage.com
Contact: Kristen K. Sheppard, Esq., VP, Investor Relations, +1-978-332-5923,
ksheppard@nxstage.com
 
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