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Nxstage Q4 Loss in Line with Estimates, Revenues Up Y/Y

Nxstage Medical, Inc.NXTM reported adjusted loss of 4 cents per share in fourth-quarter 2015, in line with the Zacks Consensus Estimate. The adjusted loss reported in the quarter is narrower than the adjusted loss of 8 cents in the year-ago quarter. The improvement was primarily driven by higher revenues.

Segment Details

Total revenues increased 12.4% year over year to $89.8 million, driven by robust performance by all the segments.

Products business and Service segments are the two broader segments of Nxstage. Products business revenues increased 10.6% year over year to $88 million in the quarter.

This increase in Products revenues was driven by higher revenues in System1 and In-centre segments, the two sub segments of Products business.

System1 segment revenues increased 14.3% from the year-ago quarter to $65.9 million. It is the fastest growing sub segment of Nxstage in both the Home and Critical Care markets.

Home revenues increased 12.6% to $47.8 million driven by successful patient marketing activities (awareness campaigns to attract new patients) while Critical Care revenues increased 19.2% year over year to $18.1 million. Growth in the Critical Care market was driven by the expanding customer base. Good performance in both these markets was the primary reason behind the growth at the System1 segment.

However, In-centre segment revenues declined 3.2% year over year to $18.9 million. The decline was primarily due to changes in customer demand.

Going back to the broader segments of Nxstage, services segment revenues increased to $2.8 million in fourth-quarter 2015.

Full-year revenues increased 11% from the year-ago quarter to $336.1 million. This was primarily driven by the Products business and more specifically the System1 segment that performed exceptionally well throughout the year.

Margin Performance

In fourth-quarter 2015, Nxstage's gross margin expanded 120 basis points (bps) to 15.9%.

Gross margins for the total Product business of Nxstage surged 45% in fourth-quarter 2015 compared with 42% in the year-ago quarter primarily supported by the Systems1 segment.

In fourth-quarter 2015, System One gross margin increased to 53% from 48% in the year-ago quarter. This was driven by favorable currency rates that contributed about 1.5 points of the improvement. The remaining resulted from a favorable mix of good products and contractual price movements.

Operating expenses increased 7.7% year over year to $38.1 million. This was due to a 2.1% increase in Selling, General and Administrative expenses, 8.1% increase in Distribution expenses, 6.1% increase in General & Administrative expenses and a 24.6% increase in Research & Development expense.

The higher operating expenses resulted in an operating loss of $2.3 million, which was narrower than operating loss of $4.5 million in the year-ago quarter .

Guidance

Nxstage expects revenues within $87--$89 million and net loss in the range of $2 million to $4 million for the first quarter of 2016. The company estimates net loss in the quarter owing to increased investments in Nxstage Kidney Care.

Management expects full-year 2016 revenues between $355 million and $360 million. Also, the company expects a 15% increase in Home revenues and 9% increase in Critical Care revenues.

Zacks Rank & Key Picks

Nxstage carries a Zacks Rank #3 (Hold).

Better-ranked stocks in the same space include Hill-Rom Holdings, Inc. HRC , LeMaitre Vascular, Inc. LMAT and OraSure Technologies, Inc. OSUR . All the three companies sport a Zacks Rank #1 (Strong Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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