8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 23, 2010

NxSTAGE MEDICAL, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation or organization) 000-51567
(Commission File Number) 04-3454702
(I.R.S. Employer Identification No.)

439 S. Union St, 5^th Floor, Lawrence, MA
(Address of principal executive offices) 01843
(Zip Code)

(978) 687-4700
(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On July 23, 2010, NxStage Medical, Inc. (“NxStage”) announced its financial results for the quarter ended June 30, 2010. The full text of the press release issued in connection with this announcement is set forth in Exhibit 99.1 to this Current Report on Form 8-K.

The information in this Current Report on Form 8-K, including Exhibit 99.1, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statement and Exhibits.

(d) Exhibits.

The following exhibit to this Current Report on Form 8-K pursuant to Items 2.02 shall be deemed to be furnished and not filed:

99.1 Press release dated July 23, 2010 issued by NxStage Medical, Inc.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed by the undersigned hereunto duly authorized.

	NxStage Medical, Inc.
Date: July 23, 2010	By:	/s/ Robert S. Brown
		Robert S. Brown
		Chief Financial Officer and Senior Vice President

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EXHIBIT INDEX

Exhibit No.	Document Description
99.1	Press release dated July 23, 2010 issued by NxStage Medical, Inc.

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EX-99.1

Exhibit 99.1

NXSTAGE REPORTS RECORD SECOND QUARTER 2010 FINANCIAL RESULTS AND
RAISES REVENUE GUIDANCE FOR 2010

     Highlights:

• Revenue Increases to $44.0 million, up 21% from Q2’09

• Home Market Posts Third Straight Quarter of Record Sequential Growth with Revenues of $20.8 million

• Gross Margin Increases to 31%, up from 24% in Q2’09

• Company Achieves Positive Cash Flow

• Company Announces New Strategic Agreement with DaVita in the Home Market

LAWRENCE, Mass., July 23, 2010 — NxStage Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today reported record financial results for the second quarter of 2010 ended June 30, 2010, with total revenue above the top end of its guidance range.

Net revenue for the second quarter of 2010 increased to $44.0 million, an increase of 21 percent when compared with revenue of $36.4 million for the second quarter of 2009. The increase was driven by strong performance across the Company’s three markets: Home, Critical Care and In-Center.

The Company delivered its third straight quarter of record sequential growth in its Home market with revenue of $20.8 million for the second quarter of 2010, representing an increase of 37 percent when compared with revenue of $15.2 million for the second quarter of 2009. Critical Care revenue grew to $6.7 million for the second quarter of 2010, representing an increase of 27 percent when compared with revenues of $5.2 million for the second quarter of 2009. Revenue in the In-Center market, from the Company’s Medisystems business, increased to $16.5 million for the second quarter of 2010.

“Q2 was another great quarter in all respects: we delivered record revenue with all three of our markets outperforming, and Home delivering the strongest growth; achieved positive cash flow; and, continued operational execution across all our markets,” stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical. “With a strong first half of the year and continuing momentum, we are increasing our projections for sequential growth in Home and raising our revenue guidance for 2010 to a range of revenues between $170 and $175 million.”

NxStage reported a net loss of $8.3 million, or ($0.17) per share, for the second quarter of 2010 compared with a net loss of $12.5 million, or ($0.27) for the second quarter of 2009.

For the second quarter of 2010, NxStage increased gross margins to 31%, a sequential increase of 200 basis points, and achieved positive cash flow of $1.0 million. The Company had an Adjusted EBITDA loss of $0.2 million, adjusted for stock-based compensation, deferred revenue recognized and other non-recurring expenses, for the second quarter of 2010, compared with an Adjusted EBITDA loss of $3.4 million in the second quarter of 2009. (See the exhibits for a reconciliation of this non-GAAP measure.)

NxStage also announced an amended and restated National Service Provider Agreement with DaVita Inc, the leading home hemodialysis service provider. This Agreement covers the use of NxStage’s products for home hemodialysis in the United States, and is intended to support the continued and collaborative expansion of patient access to home hemodialysis therapy with the System One.

“DaVita has made substantial investments in building its home hemodialysis capabilities over recent years under our previous Agreement, and I believe we have much that we can accomplish as partners in the coming years,” continued Mr. Burbank. “The Agreement includes a performance-based rebate payable in warrants. This is an elegant structure for achieving significant performance targets. To earn value, DaVita has to significantly increase patient access to NxStage home hemodialysis, and our share price must simultaneously increase. We are delighted to have created a unique relationship structure that can create value for both of our businesses as we collaborate to expand patient access to this life-changing therapy.”

Guidance:

For the third quarter of 2010, the Company is forecasting revenue to be within a range of $43 to $45 million. At this revenue level, the Company would expect a net loss in the range of $7.5 to $8.5 million or ($0.15) to ($0.18) per share, and Adjusted EBITDA in the range of $0 to $0.5 million for the third quarter of 2010.

Supported by its strong performance in the first half of 2010, the Company now anticipates revenue for the 2010 fiscal year to be in a range of $170 to $175 million, compared with its prior guidance for revenues to be in a range of $163 to $170 million. The Company is maintaining its guidance for a net loss in the range of $28 to $33 million or ($0.60) to ($0.71) per share, and for Adjusted EBITDA to be in the range of a positive $1 million to a loss of $3.0 million for the 2010 fiscal year. The Company expects to achieve consolidated gross margins of between 33 percent to 37 percent in the fourth quarter of 2010.

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 today at 9:00 a.m. Eastern Time to discuss its second quarter financial results and its new agreement with DaVita. To listen to the conference call, please 800-573-4840 (domestic) or 617-224-4326 (international). The passcode is 72236162. 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 3 hours after the start of the call through August 6, 2010. To access the replay dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 86233006. 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 revenues, loss, gross margin and Adjusted EBITDA numbers, expectations regarding achievement of improved cash flow, 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 March 31, 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-recurring expenses) to understand operational cash usage. 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.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Revenues	$	44,008		$	36,398		$	84,416		$	70,133
Cost of revenues		30,246			27,581			58,841			54,261
Gross profit		13,762			8,817			25,575			15,872
Operating expenses:
Selling and marketing		8,565			7,411			16,582			14,642
Research and development		3,202			2,271			6,237			4,673
Distribution		3,632			3,525			7,043			7,209
General and administrative		5,643			4,749			10,581			9,704
Total operating expenses		21,042			17,956			40,443			36,228
Loss from operations		(7,280	)		(9,139	)		(14,868	)		(20,356	)
Other expense:
Interest income		—			14			—			25
Interest expense		(1,148	)		(3,337	)		(2,256	)		(4,372	)
Other income (expense), net		330			(14	)		213			79
		(818	)		(3,337	)		(2,043	)		(4,268	)
Net loss before income taxes		(8,098	)		(12,476	)		(16,911	)		(24,624	)
Provision for income taxes		158			39			344			119
Net loss	$	(8,256	)	$	(12,515	)	$	(17,255	)	$	(24,743	)
Net loss per share, basic and diluted	$	(0.17	)	$	(0.27	)	$	(0.37	)	$	(0.53	)
Weighted-average shares outstanding, basic and diluted		47,492			46,575			47,228			46,565

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

	June 30,			December 31,
	2010			2009
ASSETS
Current assets:
Cash and cash equivalents	$	20,045		$	21,720
Accounts receivable, net		14,769			14,238
Inventory		30,889			28,117
Prepaid expenses and other current assets		1,888			1,227
Total current assets		67,591			65,302
Property and equipment, net		8,633			10,336
Field equipment, net		17,340			21,726
Deferred cost of revenues		33,760			27,799
Intangible assets, net		26,810			28,208
Goodwill		42,698			42,698
Other assets		550			909
Total assets	$	197,382		$	196,978
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	18,868		$	19,827
Accrued expenses		11,695			9,377
Current portion of long-term debt		53			61
Total current liabilities		30,616			29,265
Deferred revenue		47,234			38,490
Long-term debt		39,123			37,854
Other long-term liabilities		1,763			1,923
Total liabilities		118,736			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 June 30, 2010 and December 31, 2009		—			—
Common stock: par value $0.001, 100,000,000 shares authorized; 48,731,290 shares issued as of June 30, 2010 and 46,795,859 shares issued and outstanding as of December 31, 2009		48			47
Additional paid-in capital		374,320			365,548
Accumulated deficit		(293,969	)		(276,714	)
Accumulated other comprehensive income		(12	)		565
Treasury stock, at cost: 174,757 shares as of June 30, 2010		(1,741	)		—
Total stockholders’ equity		78,646			89,446
Total liabilities and stockholders’ equity	$	197,382		$	196,978

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

	Six Months Ended
	June 30,
	2010			2009
Cash flows from operating activities:
Net loss	$	(17,255	)	$	(24,743	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		11,077			10,229
Stock-based compensation		6,875			3,877
Other		1,128			1,197
Changes in operating assets and liabilities:
Accounts receivable		(527	)		2,494
Inventory		(13,327	)		(2,179	)
Prepaid expenses and other assets		(404	)		700
Accounts payable		(399	)		(2,788	)
Accrued expenses and other liabilities		3,060			(144	)
Deferred revenue		8,745			672
Net cash used in operating activities	$	(1,027	)	$	(10,685	)

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2010		2009		2010		2009
System One segment
Home	$	20,815	$	15,205	$	39,858	$	29,559
Critical Care		6,652		5,241		12,711		9,709
Total System One segment		27,467		20,446		52,569		39,268
In-Center segment		16,541		15,952		31,847		30,865
Total	$	44,008	$	36,398	$	84,416	$	70,133

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2010			2009			2010			2009
Net loss	$	(8.3	)	$	(12.5	)	$	(17.3	)	$	(24.7	)
Less: Depreciation amortization, interest, and taxes		6.5			8.4			13.4			14.6
Less: Adjusting items*		1.6			0.7			2.4			1.1
Adjusted EBITDA gain (loss)	$	(0.2	)	$	(3.4	)	$	(1.5	)	$	(9.0	)

* Adjusting items include stock-based compensation, deferred revenue recognized and other non-recurring expenses

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

	Three Months Ended
	September 30, 2010
	High			Low
	Estimate			Estimate
Net loss	$	(7.5	)	$	(8.5	)
Less: Depreciation amortization, interest, and taxes		6.5			6.5
Less: Adjusting items*		1.5			2.0
Adjusted EBITDA gain (loss)	$	0.5		$	—

* Adjusting items include stock-based compensation, deferred revenue recognized and other non-recurring expenses