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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nxstage Medical, Inc. | NASDAQ:NXTM | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.00 | 29.99 | 30.00 | 0 | 01:00:00 |
|
þ
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the quarterly period ended March 31, 2017
|
¨
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
|
|
For the transition period from __________ to __________
|
Delaware
|
|
04-3454702
|
(State or Other Jurisdiction of Incorporation or Organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
350 Merrimack St., Lawrence, MA
|
|
01843
|
(Address of Principal Executive Offices)
|
|
(Zip Code)
|
Large accelerated filer
þ
|
Accelerated filer
¨
|
Non-accelerated filer
¨
|
Smaller reporting company
¨
|
Emerging growth company
¨
|
|
|
|
|
|
|
Page
|
|
||
|
||
|
Condensed Consolidated Balance Sheets at March 31, 2017 and December 31, 2016
|
|
|
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended March 31, 2017 and 2016
|
|
|
Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2017 and 2016
|
|
|
||
|
|
|
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
|
||
|
March 31,
|
|
December 31,
|
||||
|
2017
|
|
2016
|
||||
|
(In thousands, except share data)
|
||||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
55,455
|
|
|
$
|
59,632
|
|
Accounts receivable, net
|
39,260
|
|
|
32,286
|
|
||
Inventory
|
48,514
|
|
|
46,845
|
|
||
Prepaid expenses and other current assets
|
7,999
|
|
|
6,136
|
|
||
Total current assets
|
151,228
|
|
|
144,899
|
|
||
Property and equipment, net
|
61,323
|
|
|
61,561
|
|
||
Field equipment, net
|
24,395
|
|
|
22,309
|
|
||
Deferred cost of revenues
|
32,027
|
|
|
33,165
|
|
||
Intangible assets, net
|
9,180
|
|
|
9,688
|
|
||
Goodwill
|
42,648
|
|
|
42,648
|
|
||
Other assets
|
2,975
|
|
|
2,937
|
|
||
Total assets
|
$
|
323,776
|
|
|
$
|
317,207
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable
|
$
|
18,490
|
|
|
$
|
14,177
|
|
Accrued expenses
|
24,762
|
|
|
30,985
|
|
||
Current portion of long-term debt
|
334
|
|
|
328
|
|
||
Other current liabilities
|
4,111
|
|
|
3,770
|
|
||
Total current liabilities
|
47,697
|
|
|
49,260
|
|
||
Deferred revenues
|
47,773
|
|
|
49,001
|
|
||
Long-term debt
|
1,240
|
|
|
1,305
|
|
||
Other long-term liabilities
|
16,235
|
|
|
15,568
|
|
||
Total liabilities
|
112,945
|
|
|
115,134
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
||||
Noncontrolling interests subject to put provisions
|
26
|
|
|
50
|
|
||
Stockholders’ equity:
|
|
|
|
||||
Undesignated preferred stock: par value $0.001, 5,000,000 shares authorized; no shares issued and outstanding as of March 31, 2017 and December 31, 2016
|
—
|
|
|
—
|
|
||
Common stock: par value $0.001, 100,000,000 shares authorized; 66,724,350 and 65,883,026 shares issued as of March 31, 2017 and December 31, 2016, respectively
|
66
|
|
|
65
|
|
||
Additional paid-in capital
|
640,907
|
|
|
631,219
|
|
||
Accumulated deficit
|
(408,790
|
)
|
|
(407,601
|
)
|
||
Accumulated other comprehensive loss
|
(3,196
|
)
|
|
(6,101
|
)
|
||
Treasury stock, at cost: 1,017,640 and 936,360 shares as of March 31, 2017 and December 31, 2016, respectively
|
(18,479
|
)
|
|
(16,184
|
)
|
||
Total NxStage Medical, Inc. stockholders' equity
|
210,508
|
|
|
201,398
|
|
||
Noncontrolling interests not subject to put provisions
|
297
|
|
|
625
|
|
||
Total stockholders' equity
|
210,805
|
|
|
202,023
|
|
||
Total liabilities and stockholders’ equity
|
$
|
323,776
|
|
|
$
|
317,207
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands, except per share data)
|
||||||
Revenues
|
$
|
96,829
|
|
|
$
|
89,207
|
|
Cost of revenues
|
55,639
|
|
|
52,690
|
|
||
Gross profit
|
41,190
|
|
|
36,517
|
|
||
Operating expenses:
|
|
|
|
||||
Selling and marketing
|
16,770
|
|
|
15,254
|
|
||
Research and development
|
9,508
|
|
|
7,154
|
|
||
Distribution
|
7,643
|
|
|
7,053
|
|
||
General and administrative
|
8,950
|
|
|
8,031
|
|
||
Total operating expenses
|
42,871
|
|
|
37,492
|
|
||
Loss from operations
|
(1,681
|
)
|
|
(975
|
)
|
||
Other expense:
|
|
|
|
||||
Interest expense, net
|
(203
|
)
|
|
(241
|
)
|
||
Other expense, net
|
(270
|
)
|
|
(232
|
)
|
||
|
(473
|
)
|
|
(473
|
)
|
||
Net loss before income taxes
|
(2,154
|
)
|
|
(1,448
|
)
|
||
(Benefit from) provision f
or income taxes
|
(613
|
)
|
|
335
|
|
||
Net loss
|
(1,541
|
)
|
|
(1,783
|
)
|
||
Less: Net loss attributable to noncontrolling interests
|
(352
|
)
|
|
(507
|
)
|
||
Net loss attributable to stockholders of NxStage Medical, Inc.
|
$
|
(1,189
|
)
|
|
$
|
(1,276
|
)
|
Net loss per share, basic and diluted
|
$
|
(0.02
|
)
|
|
$
|
(0.02
|
)
|
Weighted-average shares outstanding, basic and diluted
|
65,275
|
|
|
64,179
|
|
||
Other comprehensive income:
|
|
|
|
||||
Unrealized gain on derivative instruments, net of income taxes
|
2,184
|
|
|
871
|
|
||
Other gain
|
721
|
|
|
190
|
|
||
Total other comprehensive income
|
2,905
|
|
|
1,061
|
|
||
Total comprehensive inco
me (loss)
|
1,364
|
|
|
(722
|
)
|
||
Less: Comprehensive loss attributable to noncontrolling interests
|
(352
|
)
|
|
(507
|
)
|
||
Total comprehensive income (loss) attributable to stockholders of NxStage Medi
cal, Inc.
|
$
|
1,716
|
|
|
$
|
(215
|
)
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
(In thousands)
|
||||||
Cash flows from operating activities:
|
|
|
|
||||
Net loss
|
$
|
(1,541
|
)
|
|
$
|
(1,783
|
)
|
Adjustments to reconcile net loss to net cash flow from operating activities:
|
|
|
|
||||
Depreciation and amortization
|
8,467
|
|
|
7,736
|
|
||
Stock-based compensation
|
2,574
|
|
|
2,614
|
|
||
Other
|
(623
|
)
|
|
(37
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(6,911
|
)
|
|
(3,849
|
)
|
||
Inventory
|
(7,848
|
)
|
|
(5,480
|
)
|
||
Prepaid expenses and other assets
|
(7
|
)
|
|
681
|
|
||
Accounts payable
|
4,200
|
|
|
3,184
|
|
||
Accrued expenses and other liabilities
|
(4,579
|
)
|
|
(1,553
|
)
|
||
Deferred revenues
|
(1,026
|
)
|
|
979
|
|
||
Net cash
(used in
) provided by operating
activities
|
(7,294
|
)
|
|
2,492
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash paid for acquisitions, net of cash acquired
|
—
|
|
|
(513
|
)
|
||
Purchases of property and equipment
|
(1,605
|
)
|
|
(3,360
|
)
|
||
Net cash
used
in investing activities
|
(1,605
|
)
|
|
(3,873
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Issuance of shares under stock incentive plans, net of payroll taxes paid
|
4,742
|
|
|
(106
|
)
|
||
Investment by noncontrolling interest holder
|
—
|
|
|
300
|
|
||
Repayments on loans and lines of credit
|
(75
|
)
|
|
(67
|
)
|
||
Repayments on capital leases
|
(338
|
)
|
|
(412
|
)
|
||
Net cash
provided
by (used in) financing
activities
|
4,329
|
|
|
(285
|
)
|
||
Foreign exchange effect on cash and cash equivalents
|
393
|
|
|
315
|
|
||
Decrease in cash and
cash equivalents
|
(4,177
|
)
|
|
(1,351
|
)
|
||
Cash and cash equivalents, beginning of period
|
59,632
|
|
|
59,065
|
|
||
Cash and cash equivalents, end of period
|
$
|
55,455
|
|
|
$
|
57,714
|
|
1.
|
Nature of Operations, Basis of Presentation and Principles of Consolidation
|
Balance at December 31, 2016
|
$
|
280
|
|
Provision
|
133
|
|
|
Usage
|
(114
|
)
|
|
Balance at March 31, 2017
|
$
|
299
|
|
3.
|
Inventory
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Purchased components
|
$
|
14,185
|
|
|
$
|
14,967
|
|
Work in process
|
14,679
|
|
|
13,939
|
|
||
Finished goods
|
19,650
|
|
|
17,939
|
|
||
Total
|
$
|
48,514
|
|
|
$
|
46,845
|
|
4.
|
Property and Equipment, and Field Equipment
|
5.
|
Intangible Assets
|
6.
|
Net Loss per Share
|
|
Three Months Ended March 31,
|
||||
|
2017
|
|
2016
|
||
Options to purchase common stock
|
1,331
|
|
|
510
|
|
Unvested restricted stock
|
310
|
|
|
422
|
|
Total
|
1,641
|
|
|
932
|
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Payroll, compensation and related benefits
|
$
|
11,594
|
|
|
$
|
14,086
|
|
Distribution expenses
|
4,125
|
|
|
4,804
|
|
||
General and administrative expenses
|
1,767
|
|
|
4,415
|
|
||
Other manufacturing costs
|
1,889
|
|
|
1,891
|
|
||
Other
|
5,387
|
|
|
5,789
|
|
||
Total
|
$
|
24,762
|
|
|
$
|
30,985
|
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Capital lease obligations
|
$
|
1,827
|
|
|
$
|
1,840
|
|
Deferred revenue, current portion
|
1,418
|
|
|
1,035
|
|
||
Other
|
866
|
|
|
895
|
|
||
Total
|
$
|
4,111
|
|
|
$
|
3,770
|
|
|
March 31,
2017 |
|
December 31,
2016 |
||||
Capital lease obligations
|
$
|
10,152
|
|
|
$
|
9,991
|
|
Lease incentive obligations
|
2,857
|
|
|
3,059
|
|
||
Benefit plan obligations
|
1,806
|
|
|
1,678
|
|
||
Other
|
1,420
|
|
|
840
|
|
||
Total
|
$
|
16,235
|
|
|
$
|
15,568
|
|
|
System One
|
|
In-Center
|
|
Other
|
|
Services
|
|
Intersegment Elimination
|
|
Total
|
||||||||||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
$
|
73,274
|
|
|
$
|
15,606
|
|
|
$
|
2,899
|
|
|
$
|
5,050
|
|
|
$
|
—
|
|
|
$
|
96,829
|
|
Intersegment revenues
|
1,387
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,387
|
)
|
|
—
|
|
||||||
Revenues
|
74,661
|
|
|
15,606
|
|
|
2,899
|
|
|
5,050
|
|
|
(1,387
|
)
|
|
96,829
|
|
||||||
Segment profit (loss)
|
19,848
|
|
|
2,359
|
|
|
(18,261
|
)
|
|
(5,605
|
)
|
|
(22
|
)
|
|
(1,681
|
)
|
||||||
Depreciation and amortization
|
5,634
|
|
|
525
|
|
|
1,072
|
|
|
1,268
|
|
|
(32
|
)
|
|
8,467
|
|
||||||
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Revenues from external customers
|
$
|
67,573
|
|
|
$
|
16,766
|
|
|
$
|
2,181
|
|
|
$
|
2,687
|
|
|
$
|
—
|
|
|
$
|
89,207
|
|
Intersegment revenues
|
1,730
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,730
|
)
|
|
—
|
|
||||||
Revenues
|
69,303
|
|
|
16,766
|
|
|
$
|
2,181
|
|
|
2,687
|
|
|
(1,730
|
)
|
|
89,207
|
|
|||||
Segment profit (loss)
|
18,224
|
|
|
2,559
|
|
|
(14,567
|
)
|
|
(7,021
|
)
|
|
(170
|
)
|
|
(975
|
)
|
||||||
Depreciation and amortization
|
5,622
|
|
|
494
|
|
|
1,093
|
|
|
1,080
|
|
|
(553
|
)
|
|
7,736
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cost of revenues
|
$
|
304
|
|
|
$
|
380
|
|
Selling and marketing
|
856
|
|
|
830
|
|
||
Research and development
|
383
|
|
|
395
|
|
||
General and administrative
|
1,031
|
|
|
1,009
|
|
||
Total
|
$
|
2,574
|
|
|
$
|
2,614
|
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Balance at beginning of period
|
$
|
625
|
|
|
$
|
1,694
|
|
Capital contributions by noncontrolling interest
|
—
|
|
|
300
|
|
||
Net loss attributable to noncontrolling interest in consolidated subsidiary
|
(328
|
)
|
|
(494
|
)
|
||
Balance at end of period
|
$
|
297
|
|
|
$
|
1,500
|
|
|
|
Gain (Loss) Recognized in OCI
(Effective Portion)
|
|
Gain (Loss) Reclassified from OCI into Income
(Effective Portion)
|
|
Classification within the Condensed Consolidated Statement of Comprehensive Loss
|
||||
Three Months Ended March 31, 2017
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
$
|
2,532
|
|
|
$
|
(601
|
)
|
|
Cost of revenues
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
||||
Foreign exchange forward contracts
|
|
$
|
184
|
|
|
$
|
(687
|
)
|
|
Cost of revenues
|
|
|
Unrealized gain (loss) on derivative instruments
|
|
Other (2)
|
|
Total
|
||||||
Balance, net of tax, as of December 31, 2016
|
|
$
|
(2,285
|
)
|
|
$
|
(3,816
|
)
|
|
$
|
(6,101
|
)
|
Other comprehensive income before reclassifications, net of $949 tax during 2017
|
|
1,583
|
|
|
721
|
|
|
2,304
|
|
|||
Loss reclassified to earnings (1)
|
|
601
|
|
|
—
|
|
|
601
|
|
|||
Total other comprehensive income, net of tax
|
|
2,184
|
|
|
721
|
|
|
2,905
|
|
|||
Balance, net of tax, as of March 31, 2017
|
|
$
|
(101
|
)
|
|
$
|
(3,095
|
)
|
|
$
|
(3,196
|
)
|
March 31, 2017
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1)
|
|
Significant Other Observable Inputs
(Level 2)
|
|
Significant Unobservable Inputs
(Level 3)
|
|
Total Fair Value
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Money market funds (1)
|
|
$
|
34,832
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,832
|
|
Foreign exchange forward contracts (2)
|
|
—
|
|
|
1,716
|
|
|
—
|
|
|
1,716
|
|
||||
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forward contracts (2)
|
|
$
|
—
|
|
|
$
|
269
|
|
|
$
|
—
|
|
|
$
|
269
|
|
December 31, 2016
|
|
Quoted Prices in Active Markets for Identical Assets
(Level 1) |
|
Significant Other Observable Inputs
(Level 2) |
|
Significant Unobservable Inputs
(Level 3) |
|
Total Fair Value
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
||||||||
Money market funds (1)
|
|
$
|
34,804
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,804
|
|
Liabilities
|
|
|
|
|
|
|
|
|
||||||||
Foreign exchange forward contracts (2)
|
|
$
|
—
|
|
|
$
|
1,771
|
|
|
$
|
—
|
|
|
$
|
1,771
|
|
(1)
|
Money market funds are included within cash and cash equivalents.
|
(2)
|
Foreign exchange forward contracts are included within prepaid expenses and other current assets or accrued expenses depending on the gain (loss) position.
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Noncash Investing and Financing Activities:
|
|
|
|
||||
Transfers from inventory to field equipment
|
$
|
5,903
|
|
|
$
|
5,163
|
|
Transfers from field equipment to deferred cost of revenues
|
2,313
|
|
|
4,133
|
|
||
Market value of shares received in payment for exercise of stock options
|
2,295
|
|
|
42
|
|
||
PP&E financed by constructions and liability
|
109
|
|
|
—
|
|
•
|
our strategic initiatives to grow home hemodialysis adoption, expand globally, enhance our product offerings, expand into high growth adjacencies and enter the peritoneal dialysis market and their ability to unlock market opportunity;
|
•
|
the market opportunity within and outside the U.S.;
|
•
|
expectations with respect to future demand for our products and revenue growth and the components of such revenue growth;
|
•
|
expansion to new markets where our current and future technology has the ability to deliver value for our patients and customers;
|
•
|
anticipated benefits of manufacturing dialyzers for sale to Asahi Kasei Kuraray Medical Co. (Asahi) and future sales to Asahi;
|
•
|
the availability of, and impact of changes in, reimbursement for home and more frequent hemodialysis, including home nocturnal hemodialysis; and
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Products Business (System One Segment, In-Center Segment & Other)
|
|
|
|
||||
Revenues
|
$
|
93,166
|
|
|
$
|
88,250
|
|
Gross profit
|
$
|
44,650
|
|
|
$
|
41,336
|
|
Gross margin percentage
|
48
|
%
|
|
47
|
%
|
||
Income from operations
|
$
|
3,946
|
|
|
$
|
6,216
|
|
Services Segment
|
|
|
|
||||
Revenues
|
$
|
5,050
|
|
|
$
|
2,687
|
|
Gross profit
|
$
|
(3,438
|
)
|
|
$
|
(4,649
|
)
|
Gross margin percentage
|
n/a
|
|
|
n/a
|
|
||
Loss from operations
|
$
|
(5,605
|
)
|
|
$
|
(7,021
|
)
|
Eliminations
|
|
|
|
||||
Elimination of intersegment revenues
|
$
|
(1,387
|
)
|
|
$
|
(1,730
|
)
|
Elimination of intersegment gross profit
|
$
|
(22
|
)
|
|
$
|
(170
|
)
|
Total Company
|
|
|
|
||||
Revenues
|
$
|
96,829
|
|
|
$
|
89,207
|
|
Gross profit
|
$
|
41,190
|
|
|
$
|
36,517
|
|
Gross margin percentage
|
43
|
%
|
|
41
|
%
|
||
Loss from operations
|
$
|
(1,681
|
)
|
|
$
|
(975
|
)
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
System One segment
|
|
|
|
|
|
|
|
||||||
Home
|
$
|
54,561
|
|
|
56
|
%
|
|
$
|
49,536
|
|
|
56
|
%
|
Critical Care
|
20,100
|
|
|
21
|
%
|
|
19,767
|
|
|
22
|
%
|
||
Total System One segment
|
74,661
|
|
|
77
|
%
|
|
69,303
|
|
|
78
|
%
|
||
In-Center segment
|
15,606
|
|
|
16
|
%
|
|
16,766
|
|
|
19
|
%
|
||
Other
|
2,899
|
|
|
3
|
%
|
|
2,181
|
|
|
2
|
%
|
||
Products subtotal
|
93,166
|
|
|
96
|
%
|
|
88,250
|
|
|
99
|
%
|
||
Services segment
|
5,050
|
|
|
5
|
%
|
|
2,687
|
|
|
3
|
%
|
||
Elimination of intersegment revenues
|
(1,387
|
)
|
|
(1
|
)%
|
|
(1,730
|
)
|
|
(2
|
)%
|
||
Total
|
$
|
96,829
|
|
|
100
|
%
|
|
$
|
89,207
|
|
|
100
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
System One segment
|
$
|
39,833
|
|
|
53
|
%
|
|
$
|
36,136
|
|
|
52
|
%
|
In-Center segment
|
4,620
|
|
|
30
|
%
|
|
4,582
|
|
|
27
|
%
|
||
Subtotal
|
44,453
|
|
|
49
|
%
|
|
40,718
|
|
|
47
|
%
|
||
Other
|
197
|
|
|
n/a
|
|
|
618
|
|
|
n/a
|
|
||
Products subtotal
|
$
|
44,650
|
|
|
48
|
%
|
|
$
|
41,336
|
|
|
47
|
%
|
Services segment
|
(3,438
|
)
|
|
n/a
|
|
|
(4,649
|
)
|
|
n/a
|
|
||
Elimination of intersegment gross profit
|
(22
|
)
|
|
n/a
|
|
|
(170
|
)
|
|
n/a
|
|
||
Gross profit
|
$
|
41,190
|
|
|
43
|
%
|
|
$
|
36,517
|
|
|
41
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
System One segment
|
$
|
12,713
|
|
|
17
|
%
|
|
$
|
11,330
|
|
|
16
|
%
|
In-Center segment
|
1,890
|
|
|
12
|
%
|
|
1,552
|
|
|
9
|
%
|
||
Products subtotal
|
14,603
|
|
|
16
|
%
|
|
12,882
|
|
|
15
|
%
|
||
Services segment
|
2,167
|
|
|
n/a
|
|
|
2,372
|
|
|
n/a
|
|
||
Total Selling and marketing
|
$
|
16,770
|
|
|
17
|
%
|
|
$
|
15,254
|
|
|
17
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
Research and development
|
$
|
9,508
|
|
|
10
|
%
|
|
$
|
7,154
|
|
|
8
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
System One segment
|
$
|
7,272
|
|
|
10
|
%
|
|
$
|
6,582
|
|
|
9
|
%
|
In-Center segment
|
371
|
|
|
2
|
%
|
|
471
|
|
|
3
|
%
|
||
Total Distribution
|
$
|
7,643
|
|
|
8
|
%
|
|
$
|
7,053
|
|
|
8
|
%
|
|
Three Months Ended March 31,
|
||||||||||||
|
2017
|
|
2016
|
||||||||||
General and administrative
|
$
|
8,950
|
|
|
9
|
%
|
|
$
|
8,031
|
|
|
9
|
%
|
|
Three Months Ended March 31,
|
||||||
|
2017
|
|
2016
|
||||
Net cash
(used in
) provided by operating
activities
|
$
|
(7,294
|
)
|
|
$
|
2,492
|
|
Net cash
used
in investing activities
|
(1,605
|
)
|
|
(3,873
|
)
|
||
Net cash
provided
by (used in) financing
activities
|
4,329
|
|
|
(285
|
)
|
||
Foreign exchange effect on cash and cash equivalents
|
393
|
|
|
315
|
|
||
Net cash flow
|
$
|
(4,177
|
)
|
|
$
|
(1,351
|
)
|
•
|
Medicare and Medicaid payment rules, including coverage rules that limit the clinical circumstances under which payment will be made for more frequent dialysis treatments;
|
•
|
anti-kickback and related laws prohibiting payments and other remuneration intended to influence the referral of health care business or selection of a provider;
|
•
|
prohibitions on submitting false claims for government or commercial insurance reimbursement;
|
•
|
laws regulating the use and disclosure of patient health information; and
|
•
|
laws regulating the storage and administration of pharmaceuticals and medical devices.
|
•
|
offering products and services that are more widely recognized by physicians, patients and providers;
|
•
|
offering broader product lines which enable them to offer a broader bundle of products;
|
•
|
having significantly more financial and human resources, more established service and customer support infrastructures and spending more on product development and marketing;
|
•
|
having more established sales forces and distribution channels; and
|
•
|
having more established relationships with the providers of dialysis therapy, including Fresenius which is the world’s largest provider of dialysis services and products and may at any time reduce its promotion of our dialysis products to its dialysis patients in favor of other, including its own, dialysis products.
|
•
|
the new product may not perform as intended or may have safety concerns;
|
•
|
the FDA and other regulatory authorities may not approve the new product or the facilities in which it is manufactured in a timely manner or at all;
|
•
|
payors may not reimburse the new product sufficiently or at all;
|
•
|
competing products may be safer, more effective or easier to use;
|
•
|
we may be unable to manufacture sufficient quantities of the new product for development or commercialization activities in a timely and cost-effective manner; and
|
•
|
market demand for the new product may fall below expectations.
|
•
|
increase our manufacturing capacity to meet customer demand;
|
•
|
expand our sales and marketing and on-going development capabilities;
|
•
|
improve our information technology infrastructure, operational, financial and management controls and reporting systems and procedures; and
|
•
|
manage the increased complexity and scope of our relationships with various partners, distributors, suppliers, manufacturers and other organizations.
|
•
|
need for significant investment without assurance of success;
|
•
|
potential disruption of our ongoing business;
|
•
|
need for involvement of senior management to develop the acquired businesses, technologies or products, which will take away from the time they ordinarily spend on the remainder of our business;
|
•
|
entry into markets or types of businesses in which we have limited experience;
|
•
|
impairment of relationships with key partners, customers or suppliers of ours or any acquired business;
|
•
|
addition of new complex compliance obligations;
|
•
|
difficulty in managing geographically remote units both in the United States and internationally;
|
•
|
difficulty in successfully implementing, upgrading and deploying in a timely and effective manner new operational information systems and upgrades of our finance, accounting and product distribution systems;
|
•
|
difficulty in incorporating acquired technology and rights into our product and service offerings;
|
•
|
unanticipated expenses and delays in completing acquired development projects and technology integration;
|
•
|
difficulty in transitioning and integrating the operations and personnel of an acquired businesses, including with respect to differing and complex accounting and financial reporting systems;
|
•
|
customers delaying purchases of our products pending resolution of product integration between our existing and our newly acquired products;
|
•
|
loss of key employees of an acquired company; and
|
•
|
inaccurate assumptions of an acquired company's product or service quality.
|
•
|
foreign exchange risk, in particular with respect to the euro and peso, which has been amplified by the recent strength of the U.S. dollar and which could adversely affect our financial results and our ability to maintain mutually beneficial and profitable relationships with foreign vendors, distributors and customers, and increase our costs to attract and retain international personnel;
|
•
|
expropriation and other restrictive government actions;
|
•
|
changes in intellectual property legal protections and remedies;
|
•
|
costs and challenges associated with sourcing and shipping goods internationally and importing and exporting goods;
|
•
|
changes to U.S. and foreign trade policies, including enactment of tariffs or border-adjusted taxes on goods imported into the U.S.;
|
•
|
difficulty managing operations in multiple locations;
|
•
|
local regulations that may restrict or impair our ability to conduct our operations, increase compliance costs, and make it more expensive and complex to manage our workforce;
|
•
|
fluctuations in local economic conditions;
|
•
|
health issues, such as pandemic disease risk, and natural disasters, such as flooding, hurricanes and earthquakes, which could disrupt our manufacturing and logistical and import activities; and
|
•
|
in certain locations, risks associated with local instability, including threats of violence, which could lead to disruptions in supply at our manufacturing facilities or key vendors.
|
•
|
violation letters;
|
•
|
fines, injunctions, and civil penalties;
|
•
|
recall or seizure of products;
|
•
|
administrative detention, which is the detention by regulatory authorities of medical devices believed to be adulterated or misbranded;
|
•
|
operating restrictions, partial suspension or total shutdown of production;
|
•
|
failure of the government to grant pre-market clearance or pre-market approval for devices;
|
•
|
withdrawal of marketing clearances or approvals; and
|
•
|
criminal prosecution.
|
•
|
prevent our competitors from duplicating our products;
|
•
|
prevent our competitors from gaining access to our proprietary information and technology; or
|
•
|
permit us to gain or maintain a competitive advantage.
|
•
|
cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our revenues;
|
•
|
pay substantial damages for past use of the asserted intellectual property;
|
•
|
obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all and which could reduce profitability; and
|
•
|
redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time consuming if it is possible to do so.
|
•
|
timing of market launch and market acceptance of our products;
|
•
|
timing of achieving profitability from operations;
|
•
|
changes in estimates of our financial results or recommendations by securities analysts or the failure to meet or exceed securities analysts' expectations;
|
•
|
actual or anticipated variations in our quarterly operating results;
|
•
|
future debt or equity financings;
|
•
|
developments or disputes with key vendors or customers, or adverse changes to the purchasing patterns of key customers and distributors;
|
•
|
disruptions in product supply for any reason, our failure to appropriately forecast supply or demand, difficulties in moving products across international borders, or the failure of third party suppliers to produce needed products or components;
|
•
|
reports by officials or health, medical or regulatory authorities or the general media regarding the potential benefits of the System One, similar dialysis products distributed by other companies, or more frequent or home dialysis;
|
•
|
delays or failures to obtain marketing approval for new products or modifications to marketed products;
|
•
|
product recalls and withdrawals;
|
•
|
defaults under our material contracts, including without limitation our credit agreement;
|
•
|
regulatory developments in the United States and foreign countries;
|
•
|
changes in third-party healthcare reimbursements, particularly a decline in the level of Medicare reimbursement for dialysis treatments, or the willingness of Medicare contractors to pay for more than three treatments a week where medically justified;
|
•
|
regulatory changes that could affect our profitability, such as the imposition of import tariffs and border-adjusted taxes;
|
•
|
litigation involving our company or our industry;
|
•
|
announcements of technical innovations or new products by our competitors;
|
•
|
developments or disputes concerning our patents or other proprietary rights;
|
•
|
our ability to manufacture and supply our products to commercial standards;
|
•
|
significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors;
|
•
|
departures of key personnel;
|
•
|
investors' general perception of our company, our products, the economy and general market conditions; and
|
•
|
the other risks and uncertainties described in these
“Risk Factors
.
”
|
•
|
a prohibition on stockholder actions by written consent;
|
•
|
the ability of our board of directors to issue preferred stock without stockholder approval, which could be used to institute a “shareholders rights plan” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors;
|
•
|
advance notice requirements for nominations of directors or stockholder proposals;
|
•
|
the requirement that board vacancies be filled by a majority of our directors then in office; and
|
•
|
the prohibition on a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
|
Exhibit
Number
|
|
Description
|
31.1*
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
|
|
31.2*
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of Sarbanes-Oxley Act of 2002.
|
|
|
|
32.1**
|
|
Certification of Chief Executive Officer pursuant to Exchange Act Rules 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
|
|
|
32.2**
|
|
Certification of Chief Financial Officer pursuant to Exchange Act Rules 13a-14(b) or 15d-14(b) and 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
NXSTAGE MEDICAL, INC.
|
||
By:
|
/s/
Matthew W. Towse
|
|
|
Matthew W. Towse
|
|
|
Chief Financial Officer
(Duly authorized officer and principal financial officer)
|
1 Year Nxstage Medical Chart |
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