Nxstage Medical CEO Discusses Q3 2010 Results - Earnings Call Transcript
Nxstage Medical, Inc. (
)
Q3 2010 Earnings Call
November 03, 2010 09:00 am ET
Executives
Kristen Sheppard - VP, IR
Jeff Burbank - President, CEO
Robert Brown - CFO, SVP
Analysts
Kim Gailun - JP Morgan
Bill Plovanic - Canaccord
Matthew O'Brien - William Blair
Danielle Antalffy - Leerink Swann
Jeff Hornman - Salto and Company
Suraj Kalia – Rodman & Renshaw
Darren Lehrich - Deutsche Bank
Kevin Ellich - RBC Capital Markets
Presentation
Operator
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NxStage Medical Inc. Q3 2008 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the NxStage Medical third quarter financial results call. My name is Michele and I will be your operator for today. At this time, all participants are in a listen-only mode. Later we will conduct a question and answer session. (Operator Instructions). As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the call over to your host, Mrs. Kristen Sheppard with NxStage. Please go ahead.
Kristen Sheppard
Thank you, and good morning. Welcome to NxStage Medical’s third quarter 2010 conference call. My name is Kristen Sheppard and with me here today are Jeff Burbank, our CEO and Robert Brown, our CFO.
For your convenience a replay of this call will be available shortly after the conclusion of two weeks. In addition, the press release for the third quarter and recording of this call will also be archived on our website under the Investor Information section.
Before starting, I’d like to remind you that statements we make on this call, which are not purely historical, regarding the company’s or our intentions, beliefs, expectations and strategies for the future are forward-looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995.
These forward-looking statements may include topics such as the results for operations, growth of the home and more frequent hemodialysis market in general, market adoption and demand for our product. Our expectations regarding cash, cash flow and relationship with key customers as well as our expectations regarding a nocturnal indication but reassess to the expected impact of current economic, reimbursement or regulatory conditions on our business, anticipated improvements in the operating efficiencies, gross margins, product quality and financial guidance for the future.
Because such statements deal with future events, they are subject to various risks and uncertainties and actual results may differ materially from these forward-looking statements. Important factors that could cause actual results to differ materially from those in the forward-looking statements are disclosed in our SEC filings, including our quarterly report on Form 10-Q for the quarter ended June 30, 2010. In addition, any forward-looking statements made on this call represent the company's views only as of today and should not be relied upon as representing our views as of subsequent dates.
Future events and developments may cause these expectations to change and, while we may elect to update forward-looking statements at some point in the future, the company disclaims any obligations to do so. And therefore, you should not rely on these forward-looking statements as representing our views on any date subsequent to today.
Now, I’d like to hand the call over to Jeff Burbank.
Jeff Burbank
Thanks Christine and good morning everyone. Q3 was another solid quarter for NxStage. We continue to build good momentum across our business and set new record in a number of financial metrics. We achieved record revenues of 45 million, that’s up 18% over the prior September’s quarter’s results. In the home market revenues were 37% year-over-year and now represent 50% of our total revenues. We increased gross margins to 33% up to 200 basis point improvement from Q2. For the first time in our history we achieved our goal of positive adjusted EBITDA with $0.5 million for the quarter. We also had our second straight quarter of positive cash flow with 1.9 million.
Overall, our third quarter reflects systematic execution, solid operational performance and good financial discipline. We feel good about our ability to deliver continued improvement and meaningful growth over the long term. Regarding our fourth quarter revenue in a range of 45 to 47 million, which will bring us in around the high end of our annual revenue guidance of 170 to 175.
In addition, to these financial milestones I’d like to touch on some other accomplishments during the quarter. On the home side, revenue was 37% year-over-year and up 1.5 million sequentially at the top end of our guidance range. Key drivers of our momentum include our progress and reimbursement, clinical data, our go deep strategy and continued product improvements.
Medicare reimbursement is critical to the growth of patient access to daily home hemodialysis. Since our last call the bundle’s final role has been released. It goes into effect this January. We think that this is has stepped in the right direction in payment for a therapy. The new bundle will pay by treatment and the IV drugs are now included in this payment. We are moving disincentive to home therapy that exists under today’s payment system.
CMS also reiterated the process of documentation of medical necessity for payment of more than 3 treatments per week, allowing our customers to seek appropriate payment for the therapy they delivered.
Finally, the new payment system retains and slightly increases payment for hemodialysis training, which is positive. CMS’s intent to incur its hemodialysis therapy is good, however there is still work to be done. Daily home hemodialysis still won’t enjoy this simple, predictable and appropriate reimbursement that other dialysis therapies such as PD and In-Center receive.
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