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NxStage(R) Reports Third Quarter 2009 Financial Results and Raises Revenue Guidance for Fiscal 2009
Date:11/5/2009

LAWRENCE, Mass., Nov. 5 /PRNewswire-FirstCall/ -- NxStage Medical, Inc. (Nasdaq: NXTM), a leading manufacturer of innovative dialysis products, today posted strong third quarter results.

Net revenue for the third quarter of 2009 was $38.0 million, compared with the Company's guidance for third quarter revenue in the range of $32.5 to $34.5 million. The Company's third quarter revenue includes approximately $2.5 million of third quarter sales within the In-Center market that management had previously expected to be deferred to the fourth quarter of 2009. The Company further exceeded its guidance as a result of stronger than anticipated machine and disposable sales in the Critical Care market and core growth in the Home market.

The Company's third quarter revenue represents an increase of 25 percent when compared with revenue of $30.5 million for the third quarter of 2008.

"Our strategy to drive further improvements in both our operating and financial positions proved to be very effective during the third quarter. Our efforts led to better overall execution compared to our expectations, and stronger than anticipated demand across our three markets," stated Jeffrey H. Burbank, Chief Executive Officer of NxStage Medical. "The third quarter also continued our trend of solid sequential improvement in other key areas including gross margin, adjusted EBITDA and cash."

Revenue within the Company's Home market was $16.4 million for the third quarter of 2009, an increase of 32 percent when compared with revenues of $12.4 million for the third quarter of 2008. Revenue for the Company's Critical Care and In-Center markets was $5.7 million and $16.0 million, respectively, for the third quarter of 2009, representing an increase of 29 percent and 17 percent, respectively, when compared with revenue for the third quarter of 2008.

Gross margin improved to 25 percent in the third quarter of 2009 as compared to 16 percent in the third quarter of 2008.

Net loss for the third quarter of 2009 was $10.0 million, or ($0.22) per share. This compares to a net loss of $15.0 million, or ($0.33) per share for the third quarter of 2008, which included the negative impact of a $1.8 million change in fair value of financial instruments.

Cash and cash equivalents as of September 30, 2009 were $22.1 million. The Company's cash usage for the third quarter of 2009 was $2.4 million.

For the third quarter of 2009, the Company had an Adjusted EBITDA loss of $2.4 million, adjusted for stock-based compensation, deferred revenue recognized and other non-recurring expenses, compared with an Adjusted EBITDA loss of $7.3 million in the third quarter of 2008. These results were better than the Company's guidance for an Adjusted EBITDA loss of $3.0 to $4.0 million for the third quarter of 2009. (See the exhibits for a reconciliation of this non-GAAP measure.)

Guidance:

For the fourth quarter of 2009, the Company is forecasting revenue to be between $37.0 to $39.0 million, a net loss in the range of $8.5 to $9.5 million or ($0.18) to ($0.21) per share, and an Adjusted EBITDA loss in the range of $1.5 to $2.5 million.

Supported by its strong performance year to date in 2009, the Company now anticipates revenue for the 2009 fiscal year to be in a range of $145 to $147 million, compared with its prior guidance for revenue to be in a range of $135 to $145 million.

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 third quarter financial results. To listen to the conference call, please dial 866-761-0749 (domestic) or 617-614-2707 (international). The passcode is 89787973. 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 November 19, 2009. To access the replay dial 888-286-8010 (domestic) or 617-801-6888 (international) and enter passcode 53620507. 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 anticipated operating results, including revenues, loss, and Adjusted EBITDA numbers, 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 June 30, 2009.

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
    978-332-5923
    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   Nine Months Ended
                                     September 30,       September 30,
                                     -------------       -------------
                                      2009      2008      2009      2008
                                      ----      ----      ----      ----

    Revenues                       $38,033   $30,466  $108,166   $93,087
    Cost of revenues                28,488    25,684    82,749    79,872
                                    ------    ------    ------    ------
        Gross profit                 9,545     4,782    25,417    13,215
                                     -----     -----    ------    ------

    Operating expenses:
      Selling and marketing          7,449     6,839    22,091    20,937
      Research and development       2,707     1,986     7,380     6,474
      Distribution                   3,267     3,472    10,476    10,202
      General and administrative     4,808     4,744    14,512    14,443
                                     -----     -----    ------    ------
        Total operating expenses    18,231    17,041    54,459    52,056
                                    ------    ------    ------    ------
    Loss from operations            (8,686)  (12,259)  (29,042)  (38,841)
                                    ------   -------   -------   -------

    Other expense:
      Interest income                    7       146        32       453
      Interest expense              (1,130)   (1,017)   (5,502)   (2,908)
      Change in fair value of
       financial instruments             -    (1,835)        -       251
      Other (expense) income, net      (59)      138        20      (155)
                                       ---       ---        --      ----
                                    (1,182)   (2,568)   (5,450)   (2,359)
                                    ------    ------    ------    ------

    Net loss before income taxes    (9,868)  (14,827)  (34,492)  (41,200)

    Provision for income taxes         179       143       298       248

                                  --------  --------  --------  --------
    Net loss                      $(10,047) $(14,970) $(34,790) $(41,448)
                                  ========  ========  ========  ========

    Net loss per share, basic and
     diluted                        $(0.22)   $(0.33)   $(0.75)   $(1.03)
                                    ======    ======    ======    ======

    Weighted-average shares
     outstanding, basic and
     diluted                        46,672    45,067    46,600    40,204
                                    ======    ======    ======    ======



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

                                                    September 30, December 31,
                                                           2009         2008
                                                           ----         ----

    ASSETS
      Current assets:
        Cash and cash equivalents                          $22,095    $26,642
        Accounts receivable, net                            11,668     11,886
        Inventory                                           27,754     30,862
        Prepaid expenses and other current assets            2,073      2,011
                                                             -----      -----
          Total current assets                              63,590     71,401

        Property and equipment, net                         10,630     12,254
        Field equipment, net                                25,152     30,445
        Deferred cost of revenues                           23,592     23,711
        Intangible assets, net                              28,907     31,004
        Goodwill                                            42,698     42,698
        Other assets                                           901        553
                                                               ---        ---

          Total assets                                    $195,470   $212,066
                                                          ========   ========


    LIABILITIES AND STOCKHOLDERS' EQUITY
      Current liabilities:
        Accounts payable                                   $17,341    $17,183
        Accrued expenses                                    10,652     10,746
        Current portion of long-term debt                       62      9,110
                                                                --      -----
          Total current liabilities                         28,055     37,039

        Deferred revenue                                    32,766     29,634
        Long-term debt                                      37,226     21,054
        Other long-term liabilities                          2,008      1,892
                                                             -----      -----

          Total liabilities                                100,055     89,619

      Commitments and contingencies
      Stockholders' equity:
        Undesignated preferred stock: par value $0.001,
         5,000,000 shares authorized; no shares issued
         and outstanding, as of September 30, 2009
         and December 31, 2008                                   -          -
        Common stock: par value $0.001, 100,000,000
         shares authorized; 46,695,539 and 46,548,585
         shares issued and outstanding, as of
         September 30, 2009 and December 31, 2008,
         respectively                                           47         47
        Additional paid-in capital                         362,934    355,266
        Accumulated deficit                               (268,037)  (233,247)
        Accumulated other comprehensive income                 471        381
                                                               ---        ---

          Total stockholders' equity                        95,415    122,447
                                                            ------    -------

          Total liabilities and stockholders' equity      $195,470   $212,066
                                                          ========   ========



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

                                                     Nine Months Ended
                                                       September 30,
                                                       -------------
                                                        2009      2008
                                                        ----      ----

    Cash flows from operating activities:
    Net loss                                        $(34,790) $(41,448)
    Adjustments to reconcile net loss to net
     cash used in operating activities:
      Depreciation and amortization                   15,367    14,073
      Stock-based compensation                         6,392     4,456
      Change in fair value of financial instruments        -      (251)
      Other                                            1,977       660
      Changes in operating assets and liabilities:
        Accounts receivable                              337    (1,248)
        Inventory                                     (3,707)  (24,511)
        Prepaid expenses and other current assets        682     1,073
        Accounts payable                                  25    (4,713)
        Accrued expenses and other liabilities         1,455    (3,375)
        Deferred revenue                                (653)    8,331
                                                        ----     -----
        Net cash used in operating activities       $(12,915) $(46,953)
                                                    ========  ========



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

                              Three Months Ended  Nine Months Ended
                                  September 30,    September 30,
                                  -------------    -------------
                                    2009    2008     2009    2008
                                    ----    ----     ----    ----

    System One segment
      Home                       $16,356 $12,412  $45,914 $34,807
      Critical Care                5,672   4,401   15,381  13,107
                                   -----   -----   ------  ------
         Total System One segment 22,028  16,813   61,295  47,914
    In-Center segment             16,005  13,653   46,871  45,173
                                  ------  ------   ------  ------
      Total                      $38,033 $30,466 $108,166 $93,087
                                 ======= ======= ======== =======



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

                                         Three Months Ended  Nine Months Ended
                                              September 30,   September 30,
                                              -------------   -------------
                                                2009   2008    2009   2008
                                                ----   ----    ----   ----

    Net loss                                   $10.0  $15.0   $34.8  $41.4
    Less: Depreciation amortization, interest,
     and taxes                                  (6.6)  (5.9)  (21.2) (16.9)
    Less: Adjusting items*                      (1.0)  (1.8)   (2.1)  (1.3)

                                                ----   ----   -----  -----
    Adjusted EBITDA loss                        $2.4   $7.3   $11.5  $23.2
                                                ====   ====   =====  =====

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



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

                                                 Three Months Ended
                                                  December 31, 2009
                                                  -----------------
                                                    Low      High
                                                 Estimate  Estimate
                                                 --------  --------

    Net loss                                         $8.5      $9.5
    Less: Depreciation amortization, interest,
     and taxes                                       (6.5)     (6.5)
    Less: Adjusting items*                           (0.5)     (0.5)

                                                     ----      ----
    Adjusted EBITDA loss                             $1.5      $2.5
                                                     ====      ====

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



SOURCE NxStage Medical, Inc.


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SOURCE NxStage Medical, Inc.
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