NxStage Medical 8-K NxStage Reports Third Quarter 2005 Financial Results

NxStage Reports Third Quarter 2005 Financial Results

LAWRENCE, MA., December 1, 2005 /PRNewswire/ — NxStage Medical, Inc. (Nasdaq: NXTM), today released its financial results for the third quarter ended September 30, 2005.

Revenue for the quarter ended September 30, 2005 was $1.5 million, a 239% increase over revenue of $442 thousand for the third quarter of 2004. For the nine months ended September 30, 2005 revenue was $3.9 million, a 240% increase over revenue of $1.2 million for the first nine months of 2004.

Revenues in the chronic home dialysis market were $872 thousand for the third quarter of 2005, a 440% increase over revenues of $162 thousand in the chronic market for the third quarter of 2004. For the nine months ended September 30, 2005 revenues in the chronic home dialysis market were $1.8 million, a 462% increase over chronic revenues of $327 thousand for the first nine months of 2004. By the end of the third quarter, NxStage was working with 53 dialysis centers to provide home hemodialysis therapy to 212 end-stage renal disease (ESRD) patients with its System One portable dialysis machine.

“Our third quarter revenue growth demonstrates that the System One is gaining recognition as a highly-effective, more convenient therapy for patients suffering from end-stage renal disease and acute kidney failure. We are particularly pleased with our continued traction in the chronic market and we are aggressively pursuing our goal of becoming the market leader in home hemodialysis,” said Jeff Burbank, President and Chief Executive Officer of NxStage.

In the critical care market, NxStage recently won a significant competitive order for several systems. “Critical care customers continue to praise how the System One enables therapy and dose flexibility, while saving nursing time and effort. The System One is now being used by more than 40 acute care hospitals in the United States,” said Mr. Burbank.

NxStage reported a net loss of $6.6 million for the third quarter of 2005 compared with a net loss of $3.6 million for the third quarter of 2004, reflecting research and development costs for the ongoing development of System One as well as increased sales and marketing spending following clearance by the Food and Drug Administration of a home hemodialysis indication for the System One in June 2005. For the first nine months of 2005, the net loss was $17.1 million compared to $10.7 million in the first nine months of 2004.

Cash and cash equivalents at September 30, 2005 were $12.5 million, which excludes the net proceeds of approximately $56.7 million from the sale of 6,325,000 shares of common stock in an initial public offering which closed on November 1, 2005. “NxStage’s mission is to bring effective hemodialysis to the home, adding convenience and flexibility to patients’ lives, while improving their health. We welcome the support of our new shareholders in achieving this important goal,” Mr. Burbank said.

Guidance for the fourth quarter of 2005

For the fourth quarter of 2005, NxStage expects revenues in the range of $1.8 million to $2.2 million, and a net loss in the range of -$6.9 million to – $7.3 million. The Company anticipates providing guidance for the year 2006 in February 2006 after it reports the results for the fourth quarter and year ended December 31, 2005.

Conference Call

NxStage will also host a conference call today at 9:00 a.m. EST to discuss the third quarter 2005 results. To listen to the conference call, please dial (866) 713-8565 for domestic callers and (617) 597-5324 for international callers. The passcode is 30801770. A replay of the conference call will be available through December 8, 2005 by dialing 888-286-8010 (domestic) and 617-801-6888 (international), passcode 80425788. An online archive of the conference call will also be available by accessing the Investor Relations portion of the Company’s website at www.nxstage.com.

About NxStage Medical

NxStage Medical, Inc. (NASDAQ: NXTM) is a medical device company, headquartered in Lawrence, Massachusetts, USA, that develops, manufactures and markets innovative systems for the treatment of end-stage renal disease, or 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 NxStage’s products, its goal to be a market leader in home hemodialysis and expectations as to the future operating results and availability of financial guidance for future periods. 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 System One, growth in home hemodialysis, availability of financial guidance for future periods 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 the section captioned “Risk Factors” in NxStage’s Final Prospectus, dated October 27, 2005.

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.

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NxStage Medical, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)

	September 30,		December 31,
	2005		2004
Assets
Current assets:
Cash and cash equivalents	$	12,545,271	$	5,639,499
Marketable securities		—		12,495,000
Accounts receivable, net		935,795		524,265
Inventory		5,600,346		4,410,253
Prepaid expenses and other current assets		123,996		39,585
Total current assets		19,205,408		23,108,602
Property and equipment, net		1,286,307		759,008
Field equipment, net		3,436,589		1,041,263
Other assets		2,026,181		546,061
Total assets	$	25,954,485	$	25,454,934
Liabilities, redeemable convertible preferred stock and stockholders’ deficit
Current liabilities:
Accounts payable	$	2,752,317	$	1,409,269
Accrued expenses		2,272,212		1,020,426
Deferred revenue		—		25,720
Current portion of long-term debt		1,484,864		1,448,165
Total current liabilities		6,509,393		3,903,580
Long-term debt		2,022,328		3,005,717
Commitments		—		—
Redeemable convertible preferred stock, at redemption value:
Series B- Authorized – 1,875,000 shares; issued and outstanding–1,875,000 shares		5,006,250		5,006,250
Series C- Authorized – 1,155,169 shares; issued and outstanding–1,151,632 shares		6,000,003		6,000,003
Series D- Authorized – 5,011,173 shares; issued and outstanding–4,857,622 shares		29,000,008		29,000,008
Series E- Authorized – 2,690,846 shares; issued and outstanding-2,669,908 shares		15,939,351		15,939,351
Series F- Authorized – 2,829,671 shares; issued and outstanding-2,747,253 shares		20,000,002		20,000,002
Series F-1- Authorized – 2,197,801 shares; issued and outstanding -2,197,801 at September 30, 2005; none at December 31, 2004		15,999,993		—
Total redeemable convertible preferred stock		91,945,607		75,945,614
Stockholders’ Deficit:
Common stock, $0.001 par value – Authorized – 30,000,000 shares; Issued and outstanding – 2,568,264 shares at September 30, 2005 and 2,566,681 at December 31, 2004		2,568		2,567

	September 30,			December 31,
	2005			2004
Additional paid-in-capital		2,475,780			2,391,223
Deferred compensation		(328,845	)		(420,509	)
Accumulated deficit		(76,636,755	)		(59,496,069	)
Accumulated other comprehensive income (loss)		(35,591	)		122,811
Total stockholders’ deficit		(74,522,843	)		(57,399,977	)
Total liabilities, redeemable convertible preferred stock and stockholders’ deficit	$	25,954,485		$	25,454,934

NxStage Medical, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

	Three-months ended						Nine-months ended
	September 30,						September 30,
	2005			2004			2005			2004
Revenues	$	1,496,785		$	441,940		$	3,933,960		$	1,158,021
Cost of revenues		2,270,865			905,545			6,114,408			2,252,935
Gross profit (deficit)		(774,080	)		(463,605	)		(2,180,448	)		(1,094,914	)
Operating expenses:
Research and development		1,648,887			1,521,865			4,704,659			4,482,490
Selling and marketing		2,084,967			747,898			4,986,376			2,263,257
Distribution		623,366			152,325			1,409,030			286,350
General and administrative		1,298,249			776,248			3,501,210			2,662,052
Total operating expenses		5,655,469			3,198,336			14,601,275			9,694,149
Interest income		118,304			32,810			268,090			73,314
Interest expense		(278,667	)		(2,468	)		(592,063	)		(10,059	)
		(160,363	)		30,342			(323,973	)		63,255
Net loss	$	(6,589,912	)	$	(3,631,599	)	$	(17,105,696	)	$	(10,725,808	)
Net loss per share-basic and diluted	$	(2.57	)	$	(1.42	)	$	(6.66	)	$	(4.19	)
Weighted average shares outstanding - basic and diluted		2,567,618			2,564,972			2,566,852			2,559,990

Revenue by market:

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2005		2004		2005		2004
Critical Care	$	624,938	$	280,342	$	2,095,757	$	831,294
Chronic market		871,847		161,598		1,838,203		326,727
Total	$	1,496,785	$	441,940	$	3,933,960	$	1,158,021

Business metrics:

	September 30,		September 30,
	2005		2004
Chronic patients on therapy		212		35
Dialysis centers with System One		53		7

Contact
David N. Gill
Senior Vice President & Chief Financial Officer
978-687-4700
dgill@nxstage.com