Profile: NxStage Medical Inc (NXTM.O)

NXTM.O on Nasdaq

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NxStage Medical, Inc. (NxStage), incorporated in 1998, is a medical device company that develops, manufactures and markets products for the treatment of kidney failure, fluid overload and related blood treatments and procedures. The Company’s primary product is the NxStage System One (System One). It also sells needles and blood tubing sets primarily to dialysis clinics for the treatment of end-stage renal disease (ESRD). It operates in two segments: System One and In-Center. It distributes its products in three markets: home, critical care and in-center. In the System One segment it derives its revenues from the sale and rental of the System One and PureFlow SL equipment, and the sale of disposable products in the home and critical care markets. In the In-Center segment, it derives its revenues from the sale of blood tubing sets and needles for hemodialysis primarily for the treatment of ESRD patients at dialysis centers and needles for apheresis, which is referred to as the in-center market.

NxStage has manufacturing facilities in Mexico, Germany and Italy. The Company’s products include the NxStage System One, ReadySet & Streamline and AV Fistula and Apheresis Needles. The Company’s single source supply relationships are with Membrana GmbH (Membrana) and Kawasumi Laboratories, (Kawasumi).

The System One

The Company’s primary product the System One is a portable hemodialysis system. During the year ended December 31, 2011, it accounted to 66% of the Company’s total sales. The System One includes components, such as the NxStage Cycler, which is a compact portable electromechanical device containing pumps, control mechanisms, safety sensors and remote data capture functionality; the NxStage Cartridge, which is a integrated treatment cartridge that loads easily into the cycler. The cartridge incorporates a volumetric fluid management system and includes a pre-attached dialyzer, and Premixed Dialysate that is used for hemodialysis applications. The Company supplies its premixed dialysate in sterile five liter bags or through the use of its PureFlow SL accessory.

The Company markets the System One to independent dialysis clinics, as well as dialysis clinics that are part of national or regional chains, providing clinics with access to a developing market, the home hemodialysis market. NxStage primarily sells the System One cycler to customers in the critical care market. It also sells related disposable cartridges and treatment fluids to perform dialysis treatment. The Company sells or rents the System One to DaVita. DaVita is its customer for the System One segment.

ReadySet & Streamline

The ReadySet blood tubing set was introduced for use in hemodialysis. During 2011, it accounted for 9% of the Company’s total sales. Streamline includes its patented LockSite needleless access sites, eliminating the need for sharp needles or costlier guarded needles to be used with the tubing set in connection with dialysis therapy.

AV Fistula and Apheresis Needles

NxStage’s AV fistula and apheresis needles have been designed for a smooth blood flow throughout the treatment, intended to result in less clotting, lower pressure drops, and less stress on the patient’s blood. The Company’s needles sold are branded MasterGuard, and include its Fingershield anchor designed to protect the operator from inadvertent needle stick injury. It also offers ButtonHole needles for hemodialysis therapies as an alternative to its AV fistula needles with MasterGuard. During 2011, sales of needles accounted for approximately 11%.

In-center

NxStage sells primarily blood tubing sets and needles to customers in the in-center market. In this market, its customers are independent dialysis clinics, as well as dialysis clinics that are part of national or regional chains. The majority of the Company’s sales in this market are made through distributors. Finished goods are shipped directly to distributor warehouses. Its two distributors include Henry Schein, Inc. (Henry Schein) and Gambro Renal Products, Inc. (Gambro).

The Company competes with B. Braun, Fresenius, Gambro, Nipro, Baxter International, Inc. and JMS.

Company Address

NxStage Medical Inc

350 MERRIMACK STREET
LAWRENCE   MA   01843
P: +1978.6874700
F: +1302.6555049

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