NxStage Medical jumps on Q3 beat-and-raise, reveals pipeline

NxStage Medical (NSDQ:NXTM) shares started up today as investors reacted to beat-and-raise results for the home hemodialysis company’s 3rd-quarter and details about its development pipeline.

Lawrence, Mass.-based NxStage said it narrowed its losses by -47.8% to -$1.7 million, or -3¢ per share, on sales growth of 14.9% to $86.5 million compared with Q3 2014. The consensus outlook on Wall Street was for losses of -8¢ on sales of $82.1 million.

“Based on our performance and confidence around the 4th quarter, we are again raising our total revenue guidance for the year,” founder & CEO Jeffrey Burbank said in prepared remarks. “We remain confident in our 15% annual home revenue growth target for 2015. We are also increasingly confident that 2016 will be another strong year for NxStage, consistent with our target of a sustainable 15% home revenue growth rate.”

NxStage said it now expects to report losses of -$15 million to -$16 million, down from prior guidance for -$18 million to -$20 million. Sales are now forecast at $332 million to $333 million, up from $324 million to $328 million, the company said.

Fourth-quarter losses are expected to be -$2 million to -$3 million, on sales of $86 million to $87 million, NxStage said.

The news sent NXTM shares up 5.0% to $17.74 apiece today in early trading.

NxStage, which is hosting an analyst meeting in Lawrence today, also revealed details about the development pipeline it’s been teasing since the summer. A key of the pipeline is a universal fluid delivery and on-demand dialysate system designed to be compatible across all of its devices – home dialysis, peritoneal dialysis and critical care.

Leerink Partners analyst Danielle Antalffy wrote that the fluids system “could not only meaningfully improve economics to centers, but also dramatically reduce burden to the patients and caregivers” in a note to investors this morning.

NxStage is also working on the next iteration of its System One home hemodialysis unit, designed for higher flow rates and no need for water batching or purification. The new system is slated for launch in late 2016, the company said.

A 2017 launch is slated for what Antalffy termed a “revolutionary and differentiated” peritoneal dialysis system designed to eliminate the need for bags of fluid, “which should dramatically improve margins for the provider as well as eliminate potential supply shortages that have occurred fairly frequently in recent history,” the analyst wrote. A new critical care device is slated for a 2018 launch.

“A significant advantage of our innovations is that both our current and next generation fluid systems are fully interoperable with our current and next-generation hemodialysis systems, our new peritoneal dialysis system and our next-generation critical care system, and are specifically designed to easily build on investments our customers and patients have already made in our equipment. This simple, yet elegant approach is expected to help customers bridge from our existing systems to our new technologies and access other modalities and therapy paradigms in a cost effective manner,” Burbank said.

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