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Nxstage Medical, Inc. Message Board

  • davebugs davebugs Feb 12, 2008 3:49 PM Flag

    Earnings bad, call must have been worse

    Just got back. I won't rush and do anything today.

    Anyone have the cliffnotes version of the call before I listen tonight?

    At first look the numbers looked bad, the outlook must not be too spiffy either.

    Dave

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    • It was a rather bad call. And it's all about cash.

      Nxstage once told us they had enough cash to get to cash flow positive now they are saying they are anywhere from 20 to 40 million short of being able to do this. As things stand now it's going to be a real close shave to get through 2008 with their current cash burn. Nxstage was not really clear where they would get financing. I expect we will see another stock offering or loan with an outrageous interest rate.

      Seems like if someone wanted to buyout the company now would be the time to make a play. Management flat out said they could add patients faster if they had the money for marketing.

      There doesn't seem to be any problem with the product and margins are improving, just not fast enough to cover the cash crunch. The call still suggested turning profitable in 2009.

      I guess the question is do you have faith in management to execute.

      On the positive side it seems the system one is about to get FDA approval for nocturnal dialysis. If i understand correctly nocturnal dialysis has been done for quite awhile by patients but there is no machinery with FDA approval.

      • 2 Replies to traderjack98
      • I do not beleive marketing will help much.The area I work in has made every single patient well aware of the nxstage machine yet less than 1% have opted for that modality (.484%). The area north of me is about the same.

        Nocturnal dialysis is hardly a possible option and has a very,very small patient population.
        I will not argue with the clinical results but the practicality of it is unrealistic.
        Just to mention a few obstacles
        -Staffing
        -Storage
        -Lack of nocturnal patients.

        Actually,the nxstage would help the staffing problem because you could theortically have one RN watching 10 patients-the problem is getting 10 patients.
        Where would you store the machines during the day as these clinics would run normal dialysis in the dayight hours and the clinic would be full of conventional machines.

        Dont get me wrong-there is a need for the nxstage and there are patients who benefit immensly from it-just not that many.

      • I just finished reading the transcript of the CC.

        First two things that come to mind. Unwilling to share expected sales and marketing expected costs - but yet they can guess at how much cash they're gonna come up short. This means they have a good idea - just don't want to share it.

        I smell another secondary. Neither option is good - a terrible loan or floating another secondary. No collateral needed for a secondary and all those bankers won't have a thing to do since the market is so bad. They'll probably be beating the door down.

        I'm hoping that someone does take a closer look at buying them. I wished they could have executed better. I like the question something like 'these things should sell themselves'. And a response about dogs/food.

        I didn't go back and check. But in round numbers 10% of the money they will be short(20-40 mil) was used or will be used for stock compensation this year and next. Seems to me 1.2-1.4 million for 2007 and 2008. I'd feel a little better if they were getting rewarded when the stockholders are rewarded. If they are unwilling to wait a few years for the payoff then they must foresee execution problems. Imagine what our opportunity cost on in essence financing their options will be.

        Most shareholders are willing to wait a few years. These folks already get a paycheck - what's wrong with a little faith in the future if they believe?

        If they don't believe we don't want them there!!

        I'll reread and try to clean up the English a little. Perhaps actually listen to the call.

        Other than another leak or other serious issue this is about the worst call that I could expect.

        Alteast they have outsourced IR - that seems to have helped the execution a lot. Simplifying sales model while adding a layer in IR.

        This company and product is long on potential. Execution is still murky.

        I'll be trading and lightening up myself.

        I did buy a few shares at 8.25 at the very end of the day. It's still all house money - I just thought it was a better house.

        So much potential....

        Dave

    • Full disclosure-I got hammered today-sold at 8.85

      I've been working in the dialysis field over 20 years and have seen home programs come and go.I thought this was different with Nxstage but have always had my doubts.

      Only a certain % of the dialysis pop. is eligible or meets the criteria for home dia.and from that small group only a few are willing to do what it takes to dia at home by themselves.After all-these are very sick people and they want to be taken care of.

      I have worked directly with the nxstage machine,have talked to patients,RN,mgrs and other dialysis staff-its what I do.
      It is quite a challenge setting up and training a patient for the home program-regardless I thought the numbers would be better today-Now I have doubts the expectations will ever be met.

      I may buy back around 8.00 or perhaps closer to 7.00 because I still have some hope for this product.

      Not sure what to think on this.

    • How can they reduce cost? They leep adding employee's and pushing vendors for stepper discounts but are not changing thier processes. Until they figure out how to manage thier distribution process it's going to remain a very costly product.

    • Worse drop of any stock today...

 
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