- Company and Fresenius Medical Care Announce Definitive
Agreement under which Fresenius Medical Care Will Acquire NxStage
for $30.00 Per Share
- Revenue Increases to $96.2
million, up 4% from Q2'FY16
- Company Advances Pipeline with Launch of NxGen Hemodialysis
System in NxStage Kidney Care
LAWRENCE, Massachusetts,
Aug. 7, 2017 /PRNewswire/
-- NxStage Medical, Inc. (Nasdaq: NXTM), a leading medical
technology company focused on advancing renal care, today announced
that its Board of Directors has unanimously approved a definitive
agreement under which Fresenius Medical Care will acquire all of
the outstanding shares of NxStage for $30.00 per share in a cash transaction valued at
approximately $2 billion.
"I am very proud of the impact NxStage continues to have on
advancing the standard of renal care for patients around the
world," stated Jeffrey H. Burbank,
Founder and CEO of NxStage. "We believe that the announced
transaction with Fresenius Medical Care creates significant value
for our shareholders and significant opportunities for our
patients, customers, partners and employees. I'm excited about what
this means for the future of our products and therapy, and for the
patients who will receive greater access to them."
(Please refer to the Company's press release with Fresenius
Medical Care issued earlier this morning.)
Financial Results for the Second Quarter of 2017
Total revenue for the second quarter of 2017 increased 4 percent
to $96.2 million, within its guidance
range of $95 to $97 million, compared
with revenue of $92.2 million for the
second quarter of 2016.
The Company's revenue performance was driven by the Products
Business, and more specifically, the System One segment, which
consists of the Home and Critical Care markets. Home revenue
increased 9 percent to $55.5 million
for the second quarter of 2017 compared with revenue of
$51.1 million for the second quarter
of 2016. Critical Care revenue increased 6 percent to $19.9 million for the second quarter of 2017
compared with revenue of $18.7
million for the second quarter of 2016.
The Products Business generated $4.5
million of income from operations for the second quarter of
2017. Net loss attributable to NxStage Medical, Inc.'s stockholders
was $2.1 million for the second
quarter of 2017 compared with a net loss of $1.7 million for the second quarter of 2016.
The Company announced that early customer and patient feedback
in the US at its NxStage Kidney Care centers on its next generation
hemodialysis system has been very positive, consistent with use in
the UK. This innovative system consists of new features and
capabilities, including a new touchscreen user interface and
integrated blood pressure monitor designed to enhance ease of use
for patients performing home hemodialysis.
Burbank continued, "We continue to execute on key initiatives
and advance our innovative pipeline."
Cancellation of Scheduled Conference Call
In light of the acquisition agreement between Fresenius Medical
Care and NxStage, NxStage is no longer providing financial guidance
and has canceled its previously announced conference call to
discuss its financial results for the second quarter of 2017, which
was scheduled for 9:00 a.m. Eastern
Time on Wednesday, August 9,
2017.
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 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-site 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 patient
retention, as well as 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 performance have been demonstrated by
experience with more than 14 million treatments with over 30
thousand patients around the world. www.nxstage.com.
Important Information for Investors and Security
Holders
This communication may be deemed to be solicitation
material in respect of the proposed merger of NxStage with Broadway
Renal Services, Inc., a wholly-owned subsidiary of Fresenius
Medical Care Holdings, Inc. In connection with the proposed merger,
NxStage intends to file relevant materials with the U.S. Securities
and Exchange Commission (SEC), including a preliminary proxy
statement on Schedule 14A. Following the filing of a definitive
proxy statement, NxStage will mail the definitive proxy statement
and a proxy card to each stockholder entitled to vote at the
special meeting relating to the proposed merger. INVESTORS AND
SECURITY HOLDERS OF NXSTAGE ARE URGED TO READ THESE MATERIALS
(INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER
RELEVANT DOCUMENTS IN CONNECTION WITH THE PROPOSED MERGER THAT
NXSTAGE WILL FILE WITH THE SEC WHEN THEY BECOME AVAILABLE BECAUSE
THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT NXSTAGE AND THE
PROPOSED MERGER. The preliminary proxy statement, the definitive
proxy statement and other relevant materials in connection with the
proposed merger (when they become available), and any other
documents filed by NxStage with the SEC, may be obtained free of
charge at the SEC's website at www.sec.gov. In addition, investors
and security holders may obtain free copies of the documents filed
with the SEC or by sending a request to NxStage's Investor
Relations Department at NxStage Medical, Inc., 350 Merrimack St.,
Lawrence, MA 01843.
NxStage and its directors and executive officers may be deemed
to be participants in the solicitation of proxies from NxStage's
stockholders with respect to the proposed merger. Information about
NxStage's directors and executive officers and their ownership of
NxStage's common stock is set forth in NxStage's Annual Report on
Form 10-K for the fiscal year ended December
31, 2016, which was filed with the SEC on February 28, 2017, and NxStage's proxy statement
for its 2017 Annual Meeting of Stockholders, which was filed with
the SEC on April 27, 2017.
Information regarding the identity of the potential participants,
and their direct or indirect interests in the merger, by security
holdings or otherwise, will be set forth in the proxy statement and
other materials to be filed with the SEC in connection with the
proposed merger.
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
NxStage's products, market opportunities, the timing of the
proposed merger, the ability of NxStage to complete the proposed
merger, the operations of NxStage's business during the pendency of
the proposed merger and the expectations for the business in the
event the proposed merger is completed. 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. Such risks, uncertainties and
contingencies include 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 development timelines,
operational efficiencies or 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, the
anticipated timing and likelihood of completion of the pending
merger, the possibility that the NxStage stockholders will not
adopt the merger agreement with respect to the proposed merger, the
possibility that competing offers may be made; the possibility that
various closing conditions to the proposed merger may not be
satisfied or waived in a timely manner or at all; that a material
adverse effect occurs with respect to NxStage; risks related to
disruption of management time from ongoing business operations due
to the proposed merger, limitations placed on NxStage's ability to
operate the business by the merger agreement, the risk that the
proposed merger and announcement could have an adverse effect on
NxStage's ability to retain and hire key employees and maintain
relationships with its suppliers, distributors and customers, 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 March 31,
2017.
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.
|
Condensed
Consolidated Statements of Comprehensive Income
(Loss)
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
96,216
|
|
$
|
92,207
|
|
$
|
193,045
|
|
$
|
181,414
|
Cost of
revenues
|
55,050
|
|
53,784
|
|
110,689
|
|
106,474
|
Gross
profit
|
41,166
|
|
38,423
|
|
82,356
|
|
74,940
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling and
marketing
|
16,841
|
|
16,116
|
|
33,611
|
|
31,370
|
Research and
development
|
9,027
|
|
7,961
|
|
18,535
|
|
15,115
|
Distribution
|
7,686
|
|
7,015
|
|
15,329
|
|
14,068
|
General and
administrative
|
9,668
|
|
8,511
|
|
18,618
|
|
16,542
|
Total operating
expenses
|
43,222
|
|
39,603
|
|
86,093
|
|
77,095
|
Loss from
operations
|
(2,056)
|
|
(1,180)
|
|
(3,737)
|
|
(2,155)
|
Other
expense:
|
|
|
|
|
|
|
|
Interest expense,
net
|
(224)
|
|
(288)
|
|
(427)
|
|
(529)
|
Other expense,
net
|
(321)
|
|
(409)
|
|
(591)
|
|
(641)
|
Total other
expense
|
(545)
|
|
(697)
|
|
(1,018)
|
|
(1,170)
|
Net loss before
income taxes
|
(2,601)
|
|
(1,877)
|
|
(4,755)
|
|
(3,325)
|
(Benefit from)
provision for income taxes
|
(22)
|
|
348
|
|
(635)
|
|
683
|
Net loss
|
(2,579)
|
|
(2,225)
|
|
(4,120)
|
|
(4,008)
|
Less: Net loss
attributable to noncontrolling interests
|
(490)
|
|
(493)
|
|
(842)
|
|
(1,000)
|
Net loss attributable
to stockholders of NxStage Medical, Inc.
|
$
|
(2,089)
|
|
$
|
(1,732)
|
|
$
|
(3,278)
|
|
$
|
(3,008)
|
Net loss per share,
basic and diluted
|
$
|
(0.03)
|
|
$
|
(0.03)
|
|
$
|
(0.05)
|
|
$
|
(0.05)
|
Weighted-average
shares outstanding, basic and diluted
|
65,821
|
|
64,428
|
|
65,544
|
|
64,302
|
Other comprehensive
income (loss):
|
|
|
|
|
|
|
|
Unrealized income
(loss) on derivative instruments, net of
income taxes
|
853
|
|
(774)
|
|
3,037
|
|
97
|
Other income
(loss)
|
841
|
|
(506)
|
|
1,562
|
|
(316)
|
Total other
comprehensive income (loss)
|
1,694
|
|
(1,280)
|
|
4,599
|
|
(219)
|
Total comprehensive
(loss) income
|
(885)
|
|
(3,505)
|
|
479
|
|
(4,227)
|
Less: Comprehensive
loss attributable to noncontrolling interests
|
(490)
|
|
(493)
|
|
(842)
|
|
(1,000)
|
Total comprehensive
(loss) income attributable to stockholders of
NxStage Medical, Inc.
|
$
|
(395)
|
|
$
|
(3,012)
|
|
$
|
1,321
|
|
$
|
(3,227)
|
NxStage Medical,
Inc. Condensed Consolidated Balance Sheets (in
thousands, except share data) (unaudited)
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
2017
|
|
2016
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
62,839
|
|
$
|
59,632
|
Accounts receivable,
net
|
31,900
|
|
32,286
|
Inventory
|
51,230
|
|
46,845
|
Prepaid expenses and
other current assets
|
9,497
|
|
6,136
|
Total current
assets
|
155,466
|
|
144,899
|
Property and
equipment, net
|
62,684
|
|
61,561
|
Field equipment,
net
|
24,512
|
|
22,309
|
Deferred cost of
revenues
|
31,610
|
|
33,165
|
Intangible assets,
net
|
8,675
|
|
9,688
|
Goodwill
|
42,648
|
|
42,648
|
Other
assets
|
2,973
|
|
2,937
|
Total
assets
|
$
|
328,568
|
|
$
|
317,207
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
14,996
|
|
$
|
14,177
|
Accrued
expenses
|
26,933
|
|
30,985
|
Current portion of
long-term debt
|
95
|
|
328
|
Other current
liabilities
|
4,481
|
|
3,770
|
Total current
liabilities
|
46,505
|
|
49,260
|
Deferred
revenues
|
47,658
|
|
49,001
|
Long-term
debt
|
553
|
|
1,305
|
Other long-term
liabilities
|
17,698
|
|
15,568
|
Total
liabilities
|
112,414
|
|
115,134
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
(22)
|
|
50
|
Stockholders'
equity:
|
|
|
|
Undesignated
preferred stock: par value $0.001, 5,000,000 shares
authorized; no shares
issued and outstanding as of June 30, 2017 and December 31,
2016
|
—
|
|
—
|
Common stock: par
value $0.001, 100,000,000 shares authorized; 66,985,587 and
65,883,026 shares issued as of June 30, 2017 and December 31, 2016,
respectively
|
67
|
|
65
|
Additional paid-in
capital
|
647,343
|
|
631,219
|
Accumulated
deficit
|
(410,879)
|
|
(407,601)
|
Accumulated other
comprehensive loss
|
(1,502)
|
|
(6,101)
|
Treasury stock, at
cost: 1,025,299 and 936,360 shares as of June 30, 2017 and December
31, 2016, respectively
|
(18,708)
|
|
(16,184)
|
Total NxStage
Medical, Inc. stockholders' equity
|
216,321
|
|
201,398
|
Noncontrolling
interests not subject to put provisions
|
(145)
|
|
625
|
Total stockholders'
equity
|
216,176
|
|
202,023
|
Total liabilities and
stockholders' equity
|
$
|
328,568
|
|
$
|
317,207
|
NxStage Medical,
Inc.
Cash Flows from Operating Activities
(in thousands)
(unaudited)
|
|
|
|
Six Months Ended
June 30,
|
|
2017
|
|
2016
|
|
|
|
|
Cash flows from
operating activities:
|
|
|
|
Net loss
|
$
|
(4,120)
|
|
$
|
(4,008)
|
Adjustments to
reconcile net loss to net cash flow from operating
activities:
|
|
|
|
Depreciation and
amortization
|
16,838
|
|
15,649
|
Stock-based
compensation
|
5,324
|
|
5,394
|
Other
|
(211)
|
|
(561)
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts
receivable
|
607
|
|
(4,980)
|
Inventory
|
(15,160)
|
|
(12,533)
|
Prepaid expenses and
other assets
|
(272)
|
|
150
|
Accounts
payable
|
401
|
|
2,785
|
Accrued expenses and
other liabilities
|
(2,159)
|
|
276
|
Deferred
revenues
|
(1,446)
|
|
991
|
Net cash (used in)
provided by operating activities
|
$
|
(198)
|
|
$
|
3,163
|
NxStage Medical,
Inc. Revenues by Segment (in
thousands) (unaudited)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
System One
segment
|
|
|
|
|
|
|
|
Home
|
$
|
55,536
|
|
$
|
51,102
|
|
$
|
110,097
|
|
$
|
100,638
|
Critical
Care
|
19,922
|
|
18,745
|
|
40,022
|
|
38,512
|
Total System One
segment
|
75,458
|
|
69,847
|
|
150,119
|
|
139,150
|
In-Center
segment
|
14,326
|
|
16,731
|
|
29,932
|
|
33,497
|
Other
|
2,836
|
|
3,408
|
|
5,735
|
|
5,589
|
Products
subtotal
|
92,620
|
|
89,986
|
|
185,786
|
|
178,236
|
Services
segment
|
4,857
|
|
4,114
|
|
9,907
|
|
6,801
|
Elimination of
intersegment revenues
|
(1,261)
|
|
(1,893)
|
|
(2,648)
|
|
(3,623)
|
Total
|
$
|
96,216
|
|
$
|
92,207
|
|
$
|
193,045
|
|
$
|
181,414
|
NxStage Medical,
Inc.
Segment Financial Performance
(in thousands)
(unaudited)
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Products Business
(System One Segment, In-Center Segment
& Other)
|
|
|
|
|
|
|
|
Revenues
|
$
|
92,620
|
|
$
|
89,986
|
|
$
|
185,786
|
|
$
|
178,236
|
Gross
profit
|
$
|
45,005
|
|
$
|
42,097
|
|
$
|
89,655
|
|
$
|
83,433
|
Gross margin
percentage
|
49%
|
|
47%
|
|
48%
|
|
47%
|
Income from
operations
|
$
|
4,454
|
|
$
|
4,989
|
|
$
|
8,400
|
|
$
|
11,205
|
Services
Segment
|
|
|
|
|
|
|
Revenues
|
$
|
4,857
|
|
$
|
4,114
|
|
$
|
9,907
|
|
$
|
6,801
|
Gross
profit
|
$
|
(3,822)
|
|
$
|
(3,454)
|
|
$
|
(7,260)
|
|
$
|
(8,103)
|
Gross margin
percentage
|
n/a
|
|
n/a
|
|
n/a
|
|
n/a
|
Loss from
operations
|
$
|
(6,493)
|
|
$
|
(5,949)
|
|
$
|
(12,098)
|
|
$
|
(12,970)
|
Eliminations
|
|
|
|
|
|
|
|
Elimination of
intersegment revenues
|
$
|
(1,261)
|
|
$
|
(1,893)
|
|
$
|
(2,648)
|
|
$
|
(3,623)
|
Elimination of
intersegment gross profit
|
$
|
(17)
|
|
$
|
(220)
|
|
$
|
(39)
|
|
$
|
(390)
|
Total
Company
|
|
|
|
|
|
|
|
Revenues
|
$
|
96,216
|
|
$
|
92,207
|
|
$
|
193,045
|
|
$
|
181,414
|
Gross
profit
|
$
|
41,166
|
|
$
|
38,423
|
|
$
|
82,356
|
|
$
|
74,940
|
Gross margin
percentage
|
43%
|
|
42%
|
|
43%
|
|
41%
|
Loss from
operations
|
$
|
(2,056)
|
|
$
|
(1,180)
|
|
$
|
(3,737)
|
|
$
|
(2,155)
|
Logo -
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