NxStage Medical, Inc.
Feb 28, 2017

NxStage Reports Fourth Quarter and Full-Year 2016 Financial Results

LAWRENCE, Mass., Feb. 28, 2017 /PRNewswire/ --

Highlights:

  • Full-Year Revenue Increases to $366 million, up 9% from 2015
  • Full-Year Home Revenue Increases to $209 million, up over 14% from 2015
  • Full-Year Operating Income from Products Business More than Doubles to $23 million
  • Outlook for 2017 Includes Strong Revenue Growth and Total Company Profitability
  • Company Continues to Target Introduction of Peritoneal Dialysis System at End of 2017

NxStage Medical, Inc. (Nasdaq: NXTM), a leading medical technology company focused on advancing renal care, today reported record revenue for the fourth quarter and fiscal year ended December 31, 2016, topping its recent upwardly revised revenue guidance.

Fourth Quarter Financial Results

Total revenue for the fourth quarter of 2016 increased 4 percent from 2015 to a record $93.0 million, which exceeded the Company's guidance of $92 million. Net loss attributable to NxStage's stockholders was $1.6 million for the fourth quarter of 2016, compared with a net loss of $2.7 million for the fourth quarter of 2015. The net loss for the fourth quarter was within its guidance range for a net loss of $1 to $2 million and included $4.9 million of income from operations from NxStage's Products Business.

Fiscal Year 2016 Financial Results

Total revenue for the full-year 2016 increased 9 percent from 2015 to a record $366.4 million, which exceeded the top end of the Company's revenue guidance range of $360 to $365 million. Net loss attributable to NxStage's stockholders improved to $4.8 million for the full-year 2016, compared with a net loss of $15.3 million for the full-year 2015. NxStage's Products Business achieved $22.7 million in income from operations for the full-year 2016, which more than doubled compared to 2015. Income from the Products Business was offset again in 2016 by losses in connection with the Company's continued investment in NxStage Kidney Care.

The Company's performance improvements in both periods were driven by the Products Business, and more specifically, the System One segment which consists of Home and Critical Care markets. For the full-year 2016, System One revenue increased 15 percent to $283.9 million. Home revenue increased over 14 percent to $208.6 million, reflecting over half of a point of unfavorable foreign exchange impact due to the weakening of the British Pound, as expected. Critical Care revenue increased 16 percent to $75.3 million.

"NxStage had a terrific fourth quarter, finishing off a great 2016.  It's an exciting time at NxStage. Our focus on innovation and execution is delivering the results we talked about and setting the foundation for the next wave of growth. Most importantly, we believe our efforts are having a positive impact on patient lives," said Jeff Burbank, Founder and Chief Executive Officer of NxStage. "We expect this momentum to continue in 2017. For the fourth consecutive year we're targeting 15% annual home revenue growth, above market growth in critical care and solid top line revenue growth for the total company. We're also guiding to total company profitability in 2017."

Burbank continued, "We're excited about 2017 and are pleased to see our product pipeline development efforts continue to progress. We have many milestones on the horizon, including the introduction of our PD system targeted for the end of this year. We look forward to another great year."

Guidance

The Company is forecasting revenue to be between $400 and $405 million for the full fiscal year 2017, and between $95 and $97 million for the first quarter of 2017. The Company also expects to have positive net income for the full fiscal year 2017, and a net loss in the range of $1 to $3 million for the first quarter of 2017.

Conference Call:

NxStage will also host a conference call today, Tuesday, February 28, 2017, at 9:00 a.m. Eastern Time to discuss its fourth quarter and full-year 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 http://ir.nxstage.com.

A replay of the conference call will be available two hours after the completion of the call through March 8, 2017. To access the replay, dial 855-859-2056 (domestic) or 404-537-3406 (international) and reference conference ID 51587452.  An online archive of the conference call can be accessed via the investor relations section of the Company's website at http://ir.nxstage.com.

About NxStage
NxStage Medical, Inc. (Nasdaq: NXTM) is a leading medical technology company, headquartered in Lawrence, Massachusetts, USA, that develops, manufactures and markets innovative products for the treatment of end-stage renal disease (ESRD) and acute kidney failure. NxStage has also established a small number of dialysis clinics committed to the development of innovative care delivery models for patients with ESRD. For more information on NxStage and its products and services, please visit the Company's website at http://www.nxstage.com and www.nxstagekidneycare.com.

About the NxStage System One
The NxStage System One is the first and only truly portable hemodialysis system cleared specifically by the FDA for home hemodialysis and home nocturnal hemodialysis. Its simplicity and revolutionary size (just over a foot tall) are intended to allow convenient use in patients' homes and give patients the freedom to travel with their therapy. When combined with the NxStage PureFlow SL Dialysis Preparation System, patients are able to further simplify, using ordinary tap water to create dialysis fluid on demand. Unlike conventional hemodialysis systems, the System One requires no special infrastructure to operate. Under the guidance of their physician, patients can use the NxStage System One, with their trained partners, where, how and when it best meets their needs, including while they are sleeping - at home or on vacation and at a medically appropriate treatment frequency. In addition, NxStage's Nx2Me Connected Health platform collects important NxStage System One and patient information for flexible viewing, monitoring and reporting that may improve patient management and simplify alternative site care. The System One is also used to provide a range of flexible therapy options in more traditional care settings such as hospitals and dialysis centers. Its safety and efficacy have been demonstrated by experience with more than 14 million treatments with thousands of patients around the world.  http://www.nxstage.com/.

Forward-Looking Statements
This release contains forward-looking statements concerning our business, operations and financial condition. 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, market opportunities, timing of our new product launches, and our financial guidance for 2017 and beyond, including anticipated revenues, net loss and profitability. 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 domestically and internationally, growth in home and/or more frequent hemodialysis, regulatory approvals, competition, unanticipated difficulties in achieving operational efficiencies and cost reductions, changes in reimbursement for home and more frequent 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, including in response to NxStage Kidney 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, 2016.

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

 

 

NxStage Medical, Inc.

Consolidated Statements of Comprehensive Loss

(in thousands, except per share data)

(unaudited)






Three Months Ended
December 31,


Twelve Months Ended
December 31,


2016


2015


2016


2015









Revenues

$

93,013


$

89,804


$

366,378


$

336,123

Cost of revenues

55,149


54,041


214,393


204,652

Gross profit

37,864


35,763


151,985


131,471

Operating expenses:








Selling and marketing

16,484


15,017


63,878


58,528

Research and development

7,639


6,989


31,032


26,237

Distribution

7,448


7,071


28,579


26,211

General and administrative

8,447


8,985


32,781


35,124

Total operating expenses

40,018


38,062


156,270


146,100

Loss from operations

(2,154)


(2,299)


(4,285)


(14,629)

Other income (expense):








Interest expense, net

(227)


(320)


(1,000)


(1,115)

Other (expense) income, net

57


25


(930)


561

Total other expense

(170)


(295)


(1,930)


(554)

Net loss before income taxes

(2,324)


(2,594)


(6,215)


(15,183)

Provision for (benefit from) income taxes

95


207


1,102


1,077

Net loss

(2,419)


(2,801)


(7,317)


(16,260)

Less: Net loss attributable to noncontrolling interests

(822)


(131)


(2,546)


(918)

Net loss attributable to stockholders of NxStage Medical, Inc.

$

(1,597)


$

(2,670)


$

(4,771)


$

(15,342)









Net loss per share, basic and diluted

$

(0.02)


$

(0.04)


$

(0.07)


$

(0.24)

Weighted-average shares outstanding, basic and diluted

64,832


63,871


64,520


63,384









Other comprehensive loss, net of tax

(1,773)


(80)


(2,070)


(1,839)

Total comprehensive loss

(4,192)


(2,881)


(9,387)


(18,099)

Less: Comprehensive loss attributable to noncontrolling interests

(822)


(131)


(2,546)


(918)

Total comprehensive loss attributable to stockholders of NxStage
Medical, Inc.

$

(3,370)


$

(2,750)


$

(6,841)


$

(17,181)

 

 

NxStage Medical, Inc.

Consolidated Balance Sheets

(in thousands, except share data)

(unaudited)




December 31,


2016


2015





ASSETS




Current assets:




Cash and cash equivalents

$

59,632


$

59,065

Accounts receivable, net

32,286


25,195

Inventory

46,845


38,391

Prepaid expenses and other current assets

6,136


6,254

Total current assets

144,899


128,905

Property and equipment, net

61,561


66,711

Field equipment, net

22,309


20,744

Deferred cost of revenues

33,165


33,068

Intangible assets, net

9,688


11,744

Goodwill

42,648


42,710

Other assets

2,937


2,992

Total assets

$

317,207


$

306,874

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

14,177


$

10,767

Accrued expenses

30,985


27,266

Current portion of long-term debt

328


315

Other current liabilities

3,770


4,394

Total current liabilities

49,260


42,742

Deferred revenues

49,001


51,362

Long-term debt

1,305


1,664

Other long-term liabilities

15,568


17,367

Total liabilities

115,134


113,135

Commitments and contingencies (Note 10)




Noncontrolling interests subject to put provisions

50


219

Stockholders' equity:




Undesignated preferred stock: par value $0.001 per share, 5,000,000 shares authorized;
no shares issued and outstanding as of December 31, 2016 and 2015


Common stock: par value $0.001 per share, 100,000,000 shares authorized; 65,883,026
and  64,873,038 shares issued as of December 31, 2016 and 2015, respectively

65


64

Additional paid-in capital

631,219


612,487

Accumulated deficit

(407,601)


(402,830)

Accumulated other comprehensive loss

(6,101)


(4,031)

Treasury stock, at cost: 936,360 and 822,059 shares as of December 31, 2016 and 2015,
respectively

(16,184)


(13,864)

Total NxStage Medical, Inc. stockholders' equity

201,398


191,826

Noncontrolling interests not subject to put provisions

625


1,694

Total stockholders' equity

202,023


193,520

Total liabilities and stockholders' equity

$

317,207


$

306,874

 

 

NxStage Medical, Inc.

Cash Flows from Operating Activities

(in thousands)

(unaudited)




Twelve Months Ended
December 31,


2016


2015





Cash flows from operating activities:




Net loss

$

(7,317)


$

(16,260)

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




Depreciation and amortization

32,637


30,715

Stock-based compensation

10,117


12,598

Other

2,445


1,302

Changes in operating assets and liabilities:




Accounts receivable

(7,388)


(1,130)

Inventory

(31,069)


(12,113)

Prepaid expenses and other assets

(68)


(77)

Accounts payable

3,532


(2,775)

Accrued expenses and other liabilities

4,141


635

Deferred revenues

(2,443)


(2,353)

Net cash provided by operating activities

$

4,587


$

10,542

 

 

NxStage Medical, Inc.

Revenues by Segment

(in thousands)

(unaudited)






Three Months Ended
December 31,


Twelve Months Ended
December 31,


2016


2015


2016


2015

System One segment








Home

$

54,189


$

47,812


$

208,586


$

182,572

Critical Care

18,643


18,143


75,337


65,203

Total System One segment

72,832


65,955


283,923


247,775

In-Center segment

15,048


18,898


63,038


74,768

Other

2,976


3,180


12,166


10,302

Products subtotal

90,856


88,033


359,128


332,845

Services segment

4,134


2,845


14,781


6,412

Elimination of intersegment revenues

(1,977)


(1,074)


(7,530)


(3,134)

     Total

$

93,013


$

89,804


$

366,378


$

336,123

 

 

NxStage Medical, Inc.

Segment Financial Performance

(in thousands)

(unaudited)




Twelve Months Ended December 31,


2016


2015


2014

Products Business (System One Segment, In-Center Segment & Other)






Revenues

$

359,127



$

332,845



$

300,598


Gross profit

$

169,389



$

146,188



$

123,011


Gross margin percentage

47

%


44

%


41

%

Income (Loss) from operations

$

22,695



$

9,197



$

(7,261)


Services Segment






Revenues

$

14,781



$

6,412



$

1,749


Gross profit

$

(16,657)



$

(14,717)



$

(7,108)


Gross margin percentage

n/a



n/a



n/a


Loss from operations

$

(26,233)



$

(23,826)



$

(14,926)


Eliminations






Elimination of intersegment revenues

$

(7,530)



$

(3,134)



$

(846)


Elimination of intersegment gross profit

$

(747)



$



$


Total Company






Revenues

$

366,378



$

336,123



$

301,501


Gross profit

$

151,985



$

131,471



$

115,903


Gross margin percentage

41

%


39

%


38

%

Loss from operations

$

(4,285)



$

(14,629)



$

(22,187)


 

 

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SOURCE NxStage Medical, Inc.

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