NxStage shares dive despite new regulatory approvals and record Q1 revenues

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Shares of NxStage Medical Inc. (NSDQ:NXTM) dove nearly 14 percent yesterday despite record first-quarter sales growth and news of regulatory approvals on the international market.

Less than two hours after the opening bell, NXTM shares had fallen nearly 13 percent and recovered only slightly before closing at $20.43.

The fall came despite the Lawrence, Mass.-based company beating Wall Street’s Q1 revenues estimates of $49.0 million by more than $1.5 million. Net losses of 11 cents per share were in the middle of analysts’ prediction of 10 to 13 cents per share.

NxStage reported losses of $6.0 million on sales of $50.6 million during the three months ended March 31. That compares with net earnings of $9.0 million, or 19 cents per diluted share, on sales of $40.4 million during the same period last year.

The top-line boost was attributed to sales of the in-home version of the company’s System One hemodialysis system, which increased almost 37 percent from $19.0 million in 2010 to $26.0 million in 2011, and the Total System One, which had a sales increase of more than 33 percent from $25.1 million to $33.5 million.

In a note to investors, Leerink Swann analyst Danielle Antalffy wrote that home system sales were basically in line with her firm’s expectations.

"Management reiterated 2011 sales guidance of $205 million – $213 million, vs. [Leerink] at $210.6 million and the Street at $210.5 million, which likely reflects no meaningful increase to the company’s current $1.2 million – $1.6 million sequential home sales growth guidance," Antalffy wrote.

"Still, this is a historically conservative management team and … we’re inclined to think the company is taking a cautious stance for now and 2011 guidance could ultimately prove too low," she added

Read more NxStage coverage from MassDevice.com

NxStage also announced that it won regulatory approval for its home hemodialysis system Down Under.

An approval from Australia’s Therapeutic Goods Administration gives the company the right to market and sell its device in both in Australia and New Zealand. NxStage signed a five-year contract with Australian medical products distributor Regional Health Care Group, giving RHCG the rights to sell the NxStage System One and the company’s PureFlow dialysate preparation system to dialysis centers in both Australia and New Zealand.

Last week, NxStage named Michael Miller to fill the newly created post of president of the company’s international division. Miller is charged with promoting NxStage’s sale in the European Union, Asia-Pacific and Middle East.

The company recently handed out pay raises to several members of its leadership team after 2010 saw the dialysis maker boost sales 20 percent and cut its net losses. The year’s sales rose to $179 million, a 20 percent increase from $148 million in 2009. The strong sales helped the company cut its net losses by some $11 million, to just under $32 million. NxStage has steadily managed to cut into its net losses every year since 2007.

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