It has been a smooth journey thus far this year for home dialysis system maker NxStage Medical Inc. (NXTM ). The stock was trading around $9 when it was recommended in February by RTTNews as a long term investment. Monday, it touched an all-time intraday high of $17.32 before closing at $17.10.
NxStage manufactures systems for the treatment of kidney failure, fluid overload and related blood treatments and procedures. The company's primary product is System One, a portable hemodialysis machine. NxStage's System One is cleared by the FDA for home hemodialysis, as well as hospital and clinic-based dialysis.
... So, what has been driving NxStage's stock price?
Though the company has yet to turn a profit, that had not deterred investors from investing in NxStage. And the reason - the company has been able to trim its losses over the quarters while growing revenue and profit margins at a decent clip.
In the first half of this year, the company narrowed its loss to $17.25 million or $0.37 per share from $24.74 million or $0.53 per share in the comparable period last year. Revenue in the six-month period of 2010 increased to $84.4 million from $70.13 million in the year-ago period.
The company has also witnessed improvement in gross profit as a percentage of revenues in the first half of 2010 , which is being attributed to its System One segment, decreased service costs resulting from improved equipment reliability and lower overall costs of manufacturing, certain cost saving initiatives and improvements in product design.
With additional process improvements and product design changes expected to be introduced, and anticipated higher sales volume, the company is optimistic that gross profit as a percentage of revenues will continue to improve over time.
Looking ahead, NxStage is optimistic that the momentum will continue and sees better results ahead.
For the third quarter of 2010, the company expects to narrow its loss further. Accordingly, the company has forecast third-quarter net loss to range between $7.5 million and $8.5 million, which equates to per share loss of $0.15 and $0.18. NxStage anticipates revenue for the third quarter to be within a range of $43 million to $45 million. This compares with a loss of $10.0 million or $0.22 per share and revenue of $38.0 million in the third quarter of 2009.
Buoyed by its performance in the first half of 2010, NxStage has raised its full-year revenue outlook and affirmed its bottom line guidance. The revised revenue forecast range of $170 million to $175 million represents 14%-17% growth over 2009. The full-year 2010 net loss guidance of $28 million to $33 million or loss per share of $0.60 to $0.71, is also significantly narrower than the net loss of $43.5 million or $0.93 per share reported in 2009.
Of late, home dialysis, a niche segment in dialysis, has been gaining attention with more patients opting for home treatment. According to reports, the demand for home medical equipment in the U.S. is expected to increase 4%-5% annually and reach more than $12 billion in 2014.
Based on the improving financials and favorable market trends, NxStage could be a stock worth watching in the days ahead.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.