NxStage Medical, Inc. - FORM 8-K - EX-99 - EXHIBIT 99 - May 9, 2017

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NXSTAGE REPORTS FIRST QUARTER FINANCIAL RESULTS
•
Revenue Increases to $96.8 million, up 9% from Q1'FY16
•
Company Reaffirms Total Revenue Guidance and Profitability for 2017
•
Company Continues to Advance NxGen Hemodialysis System and Innovative Pipeline

LAWRENCE, Mass., May 9, 2017, --NxStage Medical, Inc. (Nasdaq: NXTM), a leading medical technology company focused on advancing renal care, today reported financial results for the first quarter of 2017, reviewed recent progress on its product pipeline, and updated its outlook for 2017.
Total revenue for the first quarter of 2017 increased 9 percent to $96.8 million, at the high end of its guidance range of $95 to $97 million, compared with revenue of $89.2 million for the first quarter of 2016.
The Company's revenue performance was driven by the Products Business, and more specifically, the System One segment, which consists of the Home and Critical Care markets. Home revenue increased 10 percent to $54.6 million for the first quarter of 2017 compared with revenue of $49.5 million for the first quarter of 2016. Critical Care revenue increased 2 percent to $20.1 million for the first quarter of 2017 compared with revenue of $19.8 million for the first quarter of 2016.
Net loss attributable to NxStage Medical, Inc.'s stockholders improved to $1.2 million for the first quarter of 2017 compared with a net loss of $1.3 million for the first quarter of 2016. The net loss for the first quarter of 2017 included $3.9 million of income from operations from the Products Business.

The Company also announced that early customer and patient feedback in the UK on its recently launched next generation hemodialysis system has been very positive, validating many of the benefits it expected. This innovative system consists of new features and capabilities, including a new touchscreen user interface and integrated blood pressure monitor designed to enhance ease of use for patients performing home hemodialysis.

“We believe we are well positioned with tremendous growth opportunities. We continue to execute at a high level and advance our product pipeline at an impressive pace," stated Jeffrey H. Burbank, Founder and CEO of NxStage. "I believe that we have one of the most exciting product pipelines in the industry. Our primary objective is to deliver innovative solutions that have the potential to give ESRD patients the ability to live longer and fuller lives while on dialysis. We don’t underestimate the hard work it will take to bring these innovations to market, but we remain confident in our capabilities. We believe our products and track record speak for themselves."

Burbank continued, "We expect our peritoneal dialysis (PD) system to be transformative in the existing $3 billion worldwide PD market because of its unique design which eliminates bagged fluid and provides greater clinical flexibility for patients and their care teams. We believe, but can’t know with certainty, that we will likely be first to market. It won’t be by the end of this year as we originally targeted over 18 months ago, but we're targeting to be there before anyone else. More importantly, we're targeting to be the best technology on the market."


Guidance:
"Given the strength of the overall business, we continue to expect total company revenue in a range of $400 to $405 million and total company profitability for 2017. However, with a slower start in the Home market than we anticipated, we are revising our annual Home revenue growth target to be between 10 to




13% for 2017 versus our previous 15% target," stated Matthew Towse, Chief Financial Officer of NxStage. "Although the year isn’t building in line with our original expectations, we continue to believe we are in a great position to drive long term growth, advance our product pipeline, and make further improvements within our key financial metrics."

For the second quarter of 2017, the Company expects revenue to be in a range of $95 to $97 million, and a net loss in the range of $1 to $3 million.

Conference Call:
NxStage will host a conference call today, Tuesday, May 9, 2017, at 9:00 a.m. Eastern Time to discuss its first quarter 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 May 17, 2017. To access the replay, dial 855-859-2056 (domestic) or 404-537-3406 (international) and reference conference ID 3317702 . 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-site 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 patient retention, as well as 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 performance have been demonstrated by experience with more than 14 million treatments with over 30 thousand patients around the world.  http://www.nxstage.com/.

Forward-Looking Statements






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.
Condensed Consolidated Statements of Comprehensive Loss
(in thousands, except per share data)
(unaudited)
 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
Revenues
$
96,829

 
$
89,207

Cost of revenues
55,639

 
52,690

Gross profit
41,190

 
36,517

Operating expenses:
 
 
 
Selling and marketing
16,770

 
15,254

Research and development
9,508

 
7,154

Distribution
7,643

 
7,053

General and administrative
8,950

 
8,031

Total operating expenses
42,871

 
37,492

Loss from operations
(1,681
)
 
(975
)
Other expense:
 
 
 
Interest expense, net
(203
)
 
(241
)
Other expense, net
(270
)
 
(232
)
Total other expense
(473
)
 
(473
)
Net loss before income taxes
(2,154
)
 
(1,448
)
(Benefit from) provision for income taxes
(613
)
 
335

Net loss
(1,541
)
 
(1,783
)
Less: Net loss attributable to noncontrolling interests
(352
)
 
(507
)
Net loss attributable to stockholders of NxStage Medical, Inc.
$
(1,189
)
 
$
(1,276
)
Net loss per share, basic and diluted
$
(0.02
)
 
$
(0.02
)
Weighted-average shares outstanding, basic and diluted
65,275

 
64,179

Other comprehensive income:
 
 
 
Unrealized gain on derivative instruments, net of income taxes
2,184

 
871

Other gain
721

 
190

Total other comprehensive income
2,905

 
1,061

Total comprehensive income (loss)
1,364

 
(722
)
Less: Comprehensive loss attributable to noncontrolling interests
(352
)
 
(507
)
Total comprehensive income (loss) attributable to stockholders of NxStage Medical, Inc.
$
1,716

 
$
(215
)




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

 
March 31,
 
December 31,
 
2017
 
2016
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
55,455

 
$
59,632

Accounts receivable, net
39,260

 
32,286

Inventory
48,514

 
46,845

Prepaid expenses and other current assets
7,999

 
6,136

Total current assets
151,228

 
144,899

Property and equipment, net
61,323

 
61,561

Field equipment, net
24,395

 
22,309

Deferred cost of revenues
32,027

 
33,165

Intangible assets, net
9,180

 
9,688

Goodwill
42,648

 
42,648

Other assets
2,975

 
2,937

Total assets
$
323,776

 
$
317,207

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
18,490

 
$
14,177

Accrued expenses
24,762

 
30,985

Current portion of long-term debt
334

 
328

Other current liabilities
4,111

 
3,770

Total current liabilities
47,697

 
49,260

Deferred revenues
47,773

 
49,001

Long-term debt
1,240

 
1,305

Other long-term liabilities
16,235

 
15,568

Total liabilities
112,945

 
115,134

Commitments and contingencies
 
 
 
Noncontrolling interests subject to put provisions
26

 
50

Stockholders’ equity:
 
 
 
Undesignated preferred stock: par value $0.001, 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2017 and December 31, 2016
—

 
—

Common stock: par value $0.001, 100,000,000 shares authorized; 66,724,350 and 65,883,026 shares issued as of March 31, 2017 and December 31, 2016, respectively
66

 
65

Additional paid-in capital
640,907

 
631,219

Accumulated deficit
(408,790
)
 
(407,601
)
Accumulated other comprehensive loss
(3,196
)
 
(6,101
)
Treasury stock, at cost: 1,017,640 and 936,360 shares as of March 31, 2017 and December 31, 2016, respectively
(18,479
)
 
(16,184
)
Total NxStage Medical, Inc. stockholders' equity
210,508

 
201,398

Noncontrolling interests not subject to put provisions
297

 
625

Total stockholders' equity
210,805

 
202,023

Total liabilities and stockholders’ equity
$
323,776

 
$
317,207

 
 
 
 





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

 
Three Months Ended March 31,
 
2017
 
2016
 
 
 
 
Cash flows from operating activities:
 
 
 
Net loss
$
(1,541
)
 
$
(1,783
)
Adjustments to reconcile net loss to net cash flow from operating activities:
 
 
 
Depreciation and amortization
8,467

 
7,736

Stock-based compensation
2,574

 
2,614

Other
(623
)
 
(37
)
Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(6,911
)
 
(3,849
)
Inventory
(7,848
)
 
(5,480
)
Prepaid expenses and other assets
(7
)
 
681

Accounts payable
4,200

 
3,184

Accrued expenses and other liabilities
(4,579
)
 
(1,553
)
Deferred revenues
(1,026
)
 
979

Net cash (used in) provided by operating activities
$
(7,294
)
 
$
2,492



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

 
Three Months Ended March 31,
 
2017
 
2016
System One segment
 
 
 
Home
$
54,561

 
$
49,536

Critical Care
20,100

 
19,767

Total System One segment
74,661

 
69,303

In-Center segment
15,606

 
16,766

Other
2,899

 
2,181

Products subtotal
93,166

 
88,250

Services segment
5,050

 
2,687

Elimination of intersegment revenues
(1,387
)
 
(1,730
)
     Total
$
96,829

 
$
89,207






NxStage Medical, Inc.
Segment Financial Performance
(in thousands)
(unaudited)
 
Three Months Ended March 31,
 
2017
 
2016
Products Business (System One Segment, In-Center Segment & Other)
 
 
 
Revenues
$
93,166

 
$
88,250

Gross profit
$
44,650

 
$
41,336

Gross margin percentage
48
%
 
47
%
Income from operations
$
3,946

 
$
6,216

Services Segment
 
 
 
Revenues
$
5,050

 
$
2,687

Gross profit
$
(3,438
)
 
$
(4,649
)
Gross margin percentage
n/a

 
n/a

Loss from operations
$
(5,605
)
 
$
(7,021
)
Eliminations
 
 
 
Elimination of intersegment revenues
$
(1,387
)
 
$
(1,730
)
Elimination of intersegment gross profit
$
(22
)
 
$
(170
)
Total Company
 
 
 
Revenues
$
96,829

 
$
89,207

Gross profit
$
41,190

 
$
36,517

Gross margin percentage
43
%
 
41
%
Income (loss) from operations
$
(1,681
)
 
$
(975
)



NxStage Medical, Inc. Reports