NXSTAGE^® REPORTS FOURTH QUARTER AND FULL-YEAR 2010 FINANCIAL RESULTS;
REVENUE GROWTH EXCEEDS COMPANY GUIDANCE

Highlights:

	•	Full-Year Revenue Increases to $179.2 million, 21% Annual Growth
	•	Full-Year Home Revenue Increases to $85.8 million, 35% Annual Growth
	•	Q4’10 Revenue Increases to $49.8 million, up 23% from Q4’09
	•	Q4’10 Gross Margin Improves to 35%, up from 28% in Q4’09

LAWRENCE, Mass., February 17, 2011 — NxStage Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported financial results for the three and twelve months ended December 31, 2010, that includes revenue above the top end of its guidance range.

Net revenue for the twelve months ended December 31, 2010 increased 21 percent to $179.2 million compared with revenue of $148.7 million for the full-year 2009. Revenue for the fourth quarter of 2010 increased 23 percent to a record $49.8 million compared with revenue of $40.5 million for the fourth quarter of 2009. The increase in both periods was driven by the Company’s solid performance in Home and Critical Care, which experienced annual growth of 35 percent and 26 percent, respectively, over 2009.

Home revenue grew to $85.8 million for the full-year 2010 compared with revenue of $63.5 million for the full-year 2009. Home revenue increased to $23.6 million in the fourth quarter of 2010 compared with revenue of $17.5 million in the fourth quarter of 2009, representing a 34 percent increase.

Critical Care revenue grew to $28.1 million for the full-year 2010 compared with revenue of $22.3 million for the full-year 2009. Revenue in Critical Care increased to $8.6 million in the fourth quarter of 2010, compared with revenue of $7.0 million in the fourth quarter of 2009, representing a 23 percent increase.

Annual revenue from the Company’s Medisystems in-center business was $65.4 million for the full-year 2010, compared with revenue of $62.9 million for the full-year 2009. Fourth quarter revenue was $17.6 million, compared with $16.0 million in the fourth quarter of 2009.

“2010 was a year of solid revenue growth for NxStage. Our strong fourth quarter results capped a year in which we successfully executed against our strategic initiatives, made significant progress in the Home, and gained momentum across all three markets,” stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical, Inc.

Burbank continued, “We are on a multi-year growth agenda, and I believe that our strategy is right on course. Entering 2011, we have good underlying market fundamentals, a strong balance sheet, a solid operating model, as well as a culture of innovation. We remain confident in our ability to build on our momentum moving forward.”

NxStage reported a net loss of $31.7 million or ($0.66) per share for the full-year 2010 compared with a net loss of $43.5 million or ($0.93) per share for the full-year 2009. The Company reported a net loss of $6.3 million or ($0.13) per share for the fourth quarter of 2010 compared with a net loss of $8.7 million or ($0.19) per share for the fourth quarter of 2009.

For the full-year 2010, the Company reported Adjusted EBITDA, adjusted for stock-based compensation, deferred revenue recognized and other non-cash expenses, of $0.5 million, compared with an Adjusted EBITDA loss of $12.7 million for the full-year 2009. For the fourth quarter of 2010, Adjusted EBITDA was $1.5 million compared with an Adjusted EBITDA loss of $1.2 million in the fourth quarter of 2009. (See the exhibits for a reconciliation of this non-GAAP measure.)

Effective January 1, 2011, NxStage adopted Accounting Standards Update (ASU) 2009-13 and ASU 2009-14. Under the new accounting standards, beginning January 1, 2011 revenue from international equipment sales will be recognized upon delivery to distributors rather than ratably over a period of five years. The new accounting standards have been adopted prospectively and therefore, revenue from equipment shipped prior to January 1, 2011 will continue to be recognized ratably.

Guidance:

For the first quarter of 2011, the Company is forecasting revenue to be between $48.0 million and $49.5 million, a net loss in the range of $5.5 to $6.5 million or ($0.10) to ($0.12) per share, and Adjusted EBITDA in the range of $0.5 to $1.5 million.

For the full fiscal year 2011, the Company is forecasting revenue to be between $205 million and $213 million, a net loss in the range of $19 to $23 million or ($0.36) to ($0.43) per share, and Adjusted EBITDA in the range of $6 million to $10 million. The Company expects to achieve consolidated gross margins of between 38 percent to 42 percent in the fourth quarter of 2011.

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 at 9:00 a.m. Eastern Time on Thursday, February 17, 2011 to discuss its fourth quarter and year-end 2010 financial results. To listen to the conference call, please dial 866-804-6927 (domestic) or 857-350-1673 (international). The passcode is 25783380. 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/ir.cfm.

A replay of the conference call will be available 2 hours after the start of the call through February 24, 2011. To access the replay dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 70668341. An online archive of the conference call can be accessed via the investor relations section of the Company’s website at www.nxstage.com/ir.cfm.

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 revenue, loss, gross margin and Adjusted EBITDA numbers, expectations with respect to market momentum of further product innovation, 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 major customers, including DaVita Inc., 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 period ended September 30, 2010.

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, and other non-cash expenses) to understand cash generated from or used in operations. 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 Operations
(in thousands, except per share data)
(unaudited)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Revenues		$	49,769			$	40,510			$	179,218			$	148,676
Cost of revenues			32,177				29,063				121,091				111,812
Gross profit			17,592				11,447				58,127				36,864
Operating expenses:
Selling and marketing			9,132				7,956				34,166				30,047
Research and development			3,531				2,434				12,900				9,814
Distribution			3,920				3,442				14,751				13,918
General and administrative			6,170				5,020				22,774				19,532
Total operating expenses			22,753				18,852				84,591				73,311
Loss from operations			(5,161	)			(7,405	)			(26,464	)			(36,447	)
Other expense:
Interest income			3				3				3				35
Interest expense			(1,165	)			(1,020	)			(4,597	)			(6,522	)
Other income (expense), net			242				(288	)			114				(268	)
			(920	)			(1,305	)			(4,480	)			(6,755	)
Net loss before income taxes			(6,081	)			(8,710	)			(30,944	)			(43,202	)
Provision for income taxes			212				(33	)			768				265
Net loss		$	(6,293	)		$	(8,677	)		$	(31,712	)		$	(43,467	)
Net loss per share, basic and diluted		$	(0.13	)		$	(0.19	)		$	(0.66	)		$	(0.93	)
Weighted-average shares outstanding, basic and diluted			50,233				46,704				48,188				46,627

NxStage Medical, Inc.
Consolidated Balance Sheets
(amount in thousands, except share data)
(unaudited)

		December 31,				December 31,
		2010				2009
ASSETS
Current assets:
Cash and cash equivalents		$	104,339			$	21,720
Accounts receivable, net			14,107				14,238
Inventory			34,950				28,117
Prepaid expenses and other current assets			2,084				1,227
Total current assets			155,480				65,302
Property and equipment, net			8,290				10,336
Field equipment, net			13,660				21,726
Deferred cost of revenues			40,081				27,799
Intangible assets, net			25,412				28,208
Goodwill			42,698				42,698
Other assets			473				909
Total assets		$	286,094			$	196,978
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable		$	16,811			$	19,827
Accrued expenses			19,537				9,377
Current portion of long-term debt			43				61
Total current liabilities			36,391				29,265
Deferred revenues			55,366				38,490
Long-term debt			40,454				37,854
Other long-term liabilities			1,754				1,923
Total liabilities			133,965				107,532
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, 2010 and 2009			—				—
Common stock: par value $0.001, 100,000,000 shares authorized; 54,043,317 shares issued as of December 31, 2010 and 46,795,859 shares issued and outstanding as of December 31, 2009			53				47
Additional paid-in capital			465,642				365,548
Accumulated deficit			(308,426	)			(276,714	)
Accumulated other comprehensive income			85				565
Treasury stock, at cost: 325,104 shares as of December 31, 2010			(5,225	)			—
Total stockholders’ equity			152,129				89,446
Total liabilities and stockholders’ equity		$	286,094			$	196,978

NxStage Medical, Inc.
Cash Flows from Operating Activities
(amounts in thousands)
(unaudited)

		Twelve Months Ended
		December 31,
		2010				2009
Cash flows from operating activities:
Net loss		$	(31,712	)		$	(43,467	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization			22,379				20,778
Stock-based compensation			15,351				9,226
Other			2,319				2,690
Changes in operating assets and liabilities:
Accounts receivable			235				(2,208	)
Inventory			(28,744	)			(9,209	)
Prepaid expenses and other assets			(877	)			1,513
Accounts payable			(2,781	)			2,568
Accrued expenses and other liabilities			10,065				(119	)
Deferred revenues			16,876				5,071
Net cash provided by (used in) operating activities		$	3,111			$	(13,157	)

NxStage Medical, Inc.
Revenues by Segment
(amounts in thousands)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
System One segment
Home		$	23,558			$	17,547			$	85,762			$	63,461
Critical Care			8,565				6,959				28,093				22,340
Total System One segment			32,123				24,506				113,855				85,801
In-Center segment			17,646				16,004				65,363				62,875
Total		$	49,769			$	40,510			$	179,218			$	148,676

NxStage Medical, Inc.
Non-GAAP Financial Measures
(amounts in millions)
(unaudited)

		Three Months Ended								Twelve Months Ended
		December 31,								December 31,
		2010				2009				2010				2009
Net loss		$	(6.3	)		$	(8.7	)		$	(31.7	)		$	(43.5	)
Less: Depreciation, amortization, interest, and taxes			6.7				6.7				27.7				27.9
Less: Adjusting items*			1.1				0.8				4.5				2.9
Adjusted EBITDA gain (loss)		$	1.5			$	(1.2	)		$	0.5			$	(12.7	)

NxStage Medical, Inc.
Non-GAAP Financial Guidance
(amounts in millions)

		Three Months Ended								Twelve Months Ended
		March 31, 2011								December 31, 2011
		High				Low				High				Low
		Estimate				Estimate				Estimate				Estimate
Net loss		$	(5.5	)		$	(6.5	)		$	(19.0	)		$	(23.0	)
Less: Depreciation, amortization, interest, and taxes			7.3				7.3				30.2				30.2
Less: Adjusting items*			(0.3	)			(0.3	)			(1.2	)			(1.2	)
Adjusted EBITDA gain		$	1.5			$	0.5			$	10.0			$	6.0