NxStage Medical, Inc. - FORM 8-K - EX-99 - PRESS RELEASE - February 10, 2016

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NxStage Reports Record Fourth Quarter and Full-Year 2015 Revenue
Highlights:
•
Full-Year Revenue Increases to $336 million, up 11% from 2014
•
Full-Year Home Revenue Increases to $183 million, up 16% from 2014
•
Full-Year Operating Income from Products Business Increases to $9 million
•
Company Highlights Significant Product Introductions for the Next Three Years
•
For Third Consecutive Year, Company Targets 15% Annual Home Revenue Growth

LAWRENCE, Mass., February 10, 2016 -- 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, 2015, topping its recent upwardly revised revenue guidance.
Fourth Quarter Financial Results
Total revenue for the fourth quarter of 2015 increased 12 percent from 2014 to a record $89.8 million, which exceeded the top end of the Company’s revenue guidance range of $86 to $87 million. Net loss attributable to NxStage Medical, Inc.'s stockholders was $2.7 million for the fourth quarter of 2015, compared with a net loss of $4.9 million for the fourth quarter of 2014. The net loss included $3.8 million of income from operations from the Products Business.
Fiscal Year 2015 Financial Results
Total revenue for the full-year 2015 increased 11 percent from 2014 to a record $336.1 million, which exceeded the top end of the Company’s revenue guidance range of $332 to $333 million. Net loss attributable to NxStage Medical, Inc.'s stockholders was $15.3 million for the full-year 2015, compared with a net loss of $23.9 million for the full-year 2014. The net loss for the full-year included $9.2 million of income from operations from the Products Business.
The Company’s performance improvements in both periods were driven by the Products Business, and more specifically, outperformance in NxStage’s largest segment, the System One segment which consists of Home and Critical Care markets. For the full-year 2015, System One revenue increased 16 percent to $247.8 million. Home revenue increased 16 percent to $182.6 million, exceeding the Company's target for 15 percent annual growth. Critical Care revenue increased 17 percent to $65.2 million.
"It was a strong year for NxStage. We’re very pleased to again exceed our guidance on revenue, narrow our net loss and deliver a year of increasing profitability in our Products Business,” said Jeff Burbank, Founder and Chief Executive Officer of NxStage. “We have a rich portfolio of current products that are expected to drive continued growth within Home and Critical Care, our largest high growth markets, in 2016 and beyond."

Burbank continued,"In addition, we continue to advance our innovative pipeline, including our next generation hemodialysis system, our new peritoneal dialysis (PD) system and our next generation critical care system. As we are beginning pilot production of our next generation hemodialysis system, we continue to align our assets and focus our execution in support of these tremendous long-term growth opportunities."

Guidance

The Company is forecasting revenue to be between $355 million and $360 million for the full fiscal year 2016, and between $87 million and $89 million for the first quarter of 2016. The Company also expects a net loss in the range of $7 million to $12 million for the full fiscal year 2016, and a net loss in the range of $2 million to $4 million for the first quarter of 2016. The Company's net loss guidance for both periods reflects expectations for continued




operating income from the Products Business offset by the Company’s continued investment in NxStage Kidney Care.

"Our guidance for the full fiscal year 2016 includes continued strong performance from our System One segment, with expectations for annual growth within Home and Critical Care of 15 percent and 9 percent, respectively, and a modest increase in our Services segment. We've also guided to a much lower revenue level for our low margin In-Center segment," stated Matt Towse, Chief Financial Officer. "As we continue to scale the higher margin System One segment and align our business in support of our growth opportunities, we remain on track to achieve our long-term growth and profitability targets."

Conference Call:

NxStage will also host a conference call today, Wednesday, February 10, 2016, 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 February 17, 2016.  To access the replay, dial 855-859-2056 (domestic) or 404-537-3406 (international) and reference conference ID 26460722.  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 12 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 2016 and beyond, including anticipated revenues and net loss. 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, 2015.
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,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
Revenues
$
89,804

 
$
79,911

 
$
336,123

 
$
301,501

Cost of revenues
54,041

 
49,059

 
204,652

 
185,598

Gross profit
35,763

 
30,852

 
131,471

 
115,903

Operating expenses:
 
 
 
 
 
 
 
Selling and marketing
15,017

 
14,705

 
58,528

 
55,385

Research and development
6,989

 
5,611

 
26,237

 
22,635

Distribution
7,071

 
6,539

 
26,211

 
26,001

General and administrative
8,985

 
8,470

 
35,124

 
34,069

Total operating expenses
38,062

 
35,325

 
146,100

 
138,090

Loss from operations
(2,299
)
 
(4,473
)
 
(14,629
)
 
(22,187
)
Other income (expense):
 
 
 
 
 
 
 
Interest expense
(320
)
 
(215
)
 
(1,115
)
 
(863
)
Other income (expense), net
25

 
(6
)
 
561

 
(10
)
Total other expense
(295
)
 
(221
)
 
(554
)
 
(873
)
Net loss before income taxes
(2,594
)
 
(4,694
)
 
(15,183
)
 
(23,060
)
Provision for (benefit from) income taxes
207

 
280

 
1,077

 
1,253

Net loss
(2,801
)
 
(4,974
)
 
(16,260
)
 
(24,313
)
Less: Net loss attributable to noncontrolling interests
(131
)
 
(122
)
 
(918
)
 
(367
)
Net loss attributable to stockholders of NxStage Medical, Inc.
$
(2,670
)
 
$
(4,852
)
 
$
(15,342
)
 
$
(23,946
)
 
 
 
 
 
 
 
 
Net loss per share, basic and diluted
$
(0.04
)
 
$
(0.08
)
 
$
(0.24
)
 
$
(0.39
)
Weighted-average shares outstanding, basic and diluted
63,871

 
62,271

 
63,384

 
61,700

 
 
 
 
 
 
 
 
Other comprehensive loss, net of tax
(80
)
 
(1,609
)
 
(1,839
)
 
(2,404
)
Total comprehensive loss
(2,881
)
 
(6,583
)
 
(18,099
)
 
(26,717
)
Less: Comprehensive loss attributable to noncontrolling interests
(131
)
 
(122
)
 
(918
)
 
(367
)
Total comprehensive loss attributable to stockholders of NxStage Medical, Inc.
$
(2,750
)
 
$
(6,461
)
 
$
(17,181
)
 
$
(26,350
)





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

 
December 31,
 
2015
 
2014
 
 
 
 
ASSETS
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
59,065

 
$
52,884

Accounts receivable, net
25,195

 
24,099

Inventory
38,391

 
45,401

Prepaid expenses and other current assets
6,254

 
6,767

Total current assets
128,905

 
129,151

Property and equipment, net
66,711

 
66,574

Field equipment, net
20,744

 
21,118

Deferred cost of revenues
33,068

 
34,039

Intangible assets, net
11,744

 
14,370

Goodwill
42,710

 
41,817

Other assets
2,992

 
2,657

Total assets
$
306,874

 
$
309,726

LIABILITIES AND STOCKHOLDERS’ EQUITY
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
10,767

 
$
13,845

Accrued expenses
27,266

 
24,653

Current portion of long-term debt
315

 
93

Other current liabilities
4,394

 
6,165

Total current liabilities
42,742

 
44,756

Deferred revenues
51,362

 
52,943

Long-term debt
1,664

 
848

Other long-term liabilities
17,367

 
19,624

Total liabilities
113,135

 
118,171

Commitments and contingencies (Note 10)
 
 
 
Noncontrolling interests subject to put provisions
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, 2015 and 2014
—

 
—

Common stock: par value $0.001 per share, 100,000,000 shares authorized; 64,873,038 and 63,429,005 shares issued as of December 31, 2015 and 2014, respectively
64

 
63

Additional paid-in capital
612,487

 
593,073

Accumulated deficit
(402,830
)
 
(387,488
)
Accumulated other comprehensive loss
(4,031
)
 
(2,192
)
Treasury stock, at cost: 822,059 and 772,273 shares as of December 31, 2015 and 2014, respectively
(13,864
)
 
(12,989
)
Total NxStage Medical, Inc. stockholders’ equity
191,826

 
190,467

Noncontrolling interests not subject to put provisions
1,694

 
1,088

Total stockholders’ equity
193,520

 
191,555

Total liabilities and stockholders’ equity
$
306,874

 
$
309,726






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

 
Twelve Months Ended December 31,
 
2015
 
2014
 
 
 
 
Cash flows from operating activities:
 
 
 
Net loss
$
(16,260
)
 
$
(24,313
)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
 
 
 
Depreciation and amortization
30,715

 
27,697

Stock-based compensation
12,598

 
12,881

Other
1,302

 
1,877

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
(1,130
)
 
(4,188
)
Inventory
(12,113
)
 
(35,063
)
Prepaid expenses and other assets
(77
)
 
(2,214
)
Accounts payable
(2,775
)
 
(212
)
Accrued expenses and other liabilities
635

 
4,235

Deferred revenues
(2,353
)
 
(973
)
Net cash provided by (used in) operating activities
$
10,542

 
$
(20,273
)





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

 
Three Months Ended December 31,
 
Twelve Months Ended December 31,
 
2015
 
2014
 
2015
 
2014
System One segment
 
 
 
 
 
 
 
Home
$
47,812

 
$
42,475

 
$
182,572

 
$
157,822

Critical Care
18,143

 
15,224

 
65,203

 
55,609

Total System One segment
65,955

 
57,699

 
247,775

 
213,431

In-Center segment
18,898

 
19,525

 
74,768

 
78,885

Other
3,180

 
2,367

 
10,302

 
8,282

Products subtotal
88,033

 
79,591

 
332,845

 
300,598

Services segment
2,845

 
694

 
6,412

 
1,749

Elimination of intersegment revenues
(1,074
)
 
(374
)
 
(3,134
)
 
(846
)
     Total
$
89,804

 
$
79,911

 
$
336,123

 
$
301,501






NxStage Medical, Inc.
Segment Financial Performance
(in thousands)
(unaudited)
 
Twelve Months Ended December 31,
 
2015
 
2014
 
2013
Products Business (System One Segment, In-Center Segment & Other)
 
 
 
 
 
Revenues
$
332,845

 
$
300,598

 
$
263,077

Gross profit
$
146,188

 
$
123,011

 
$
103,295

Gross margin percentage
44
%
 
41
%
 
39
%
Income (Loss) from operations
$
9,197

 
$
(7,261
)
 
$
(12,108
)
Services Segment
 
 
 
 
 
Revenues
$
6,412

 
$
1,749

 
$
352

Gross profit
$
(14,717
)
 
$
(7,108
)
 
$
(792
)
Gross margin percentage
n/a

 
n/a

 
n/a

Loss from operations
$
(23,826
)
 
$
(14,926
)
 
$
(5,690
)
Eliminations
 
 
 
 
 
Elimination of intersegment revenues
$
(3,134
)
 
$
(846
)
 
$
—

Total Company
 
 
 
 
 
Revenues
$
336,123

 
$
301,501

 
$
263,429

Gross profit
$
131,471

 
$
115,903

 
$
102,503

Gross margin percentage
39
%
 
38
%
 
39
%
Loss from operations
$
(14,629
)
 
$
(22,187
)
 
$
(17,798
)



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