Leading manufacturer of innovative dialysis products NxStage Medical Inc. (NXTM) recently revised its fourth quarter and full year 2014 guidance. The company now expects to report revenues of more than $78 million for the fourth quarter, up approximately 12% from the year-ago guidance.
The revised revenue guidance is higher than the earlier guided range of $74.5–$76.5 million and is also better than the current Zacks Consensus Estimate of $76 million. The raised guidance reflects more than 18% year-over-year growth in the Home segment.
For 2014, management expects to report revenues of $299 million, which exceeds the high-end of its earlier guided range of $296–$298 million. The guidance suggests that revenues will increase approximately 13.5% compared to 2013, primarily driven by an almost 18% jump (up from previous outlook of 15%) in Home segment revenues.
Based on higher revenues, NxStage expects net loss for the fourth quarter and full year 2014 to improve and remain within its earlier guided range of $5–$7 million and $24–$26 million, respectively. The company is scheduled to report results on Feb 26, 2015.
The Zacks Consensus Estimate for the fourth quarter and full year 2014 is currently pegged at a loss of 10 cents and 41 cents, respectively. We note that NxStage has outperformed the Zacks Consensus Estimate by an average of 16.6% in the last four quarters.
We believe that NxStage will continue to benefit from strong adoption of its hemodialysis systems in the Home segment. The company also recently secured FDA approval for its home nocturnal hemodialysis product – System One – making it the first and only hemodialysis machine cleared for this indication.
The regulatory clearance now enables users to perform overnight hemodialysis at home. FDA-clearance of the system will open home hemodialysis therapy to new segments of patients, and improve care for End Stage Renal Disease (ESRD) patients by expanding therapeutic options and flexibility.
NxStage continues to launch new products like the new single use Streamline Express dialyzer, which will help it to drive market share in the hemodialysis market. However, we believe that NxStage will continue to face tough competition from the likes of Rockwell Medical (RMTI), Baxter International (BAX) and Fresenius Medical (FMS), which will continue to hurt its profitability going forward.
Currently, NxStage carries a Zacks Rank #3 (Hold).
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