Press Release - NxStage & DaVita Agreement

Hi y’all,

Here is the announcement of the new NxStage/DaVita relationship.

NxStage® Medical and DaVita Announce Agreement for Home Hemodialysis using the NxStage System One™

LAWRENCE, MA, February 7, 2007, NxStage Medical, Inc. (NASDAQ: NXTM), the manufacturer of the NxStage System One™ portable kidney dialysis machine, today announced a multi-year, national agreement with certain market rights, under which the two companies will collaborate on expanding availability of home hemodialysis to patients across the continental United States. *DaVita has purchased $20 million in NxStage stock at a price of $10 per share, representing an ownership position of approximately 7%.

As part of the agreement, DaVita has purchased outright all of its System One equipment currently in use for approximately $5 million, and will purchase the majority of its future home hemodialysis equipment requirements. Additionally, the companies have agreed to collaborate on a variety of initiatives to expand the home hemodialysis market such as public awareness, public policy and additional research efforts.

“We are pleased to expand our relationship with DaVita, “said Jeffrey H. Burbank, President & CEO of NxStage Medical. “The last year has been a pivotal one for home hemodialysis and we are grateful to all of our partners, including DaVita, for demonstrating a commitment to this treatment modality. With this partnership, we are furthering our company’s strategy of working with a select group of passionate providers in each geography in order to increase patient access to home therapy.”

“We are excited about the opportunity this partnership offers our patients,” stated Kent Thiry, CEO of DaVita. “Providing our patients with a variety of dialysis options, either in-center or at home, is consistent with our mission to be the provider of choice for dialysis patients.”

The NxStage System One is the first truly portable hemodialysis system cleared for home use by the FDA. Unlike traditional dialysis equipment, the System One plugs into standard electrical outlets, requires no special infrastructure to operate and is easy to use by trained patients accompanied by their trained partners. Patients who use the NxStage System One have the personal freedom to conduct prescribed treatments at home on their own schedule and more frequently. An additional benefit of the System One is the ability to travel with it.

About End-Stage Renal Disease:
End-stage renal disease is the permanent failure of the kidneys to filter the body’s wastes. It is most commonly caused by diabetes, hypertension or genetic disorders. In order to survive, ESRD patients must use some form of therapy to replace the function of the kidneys for the rest of their lives. Currently, over 450,000 patients in the United States suffer from ESRD, and the costs of treating ESRD patients are more than $20 billion annually in the United States. Due to increases in diabetes, hypertension and the aging of the U.S. population, those figures are projected to double within the next 10-15 years. The most common form of kidney replacement therapy in the United States today is hemodialysis, which is used by over 350,000 patients currently. The great majority of these patients are treated with conventional, in-center hemodialysis, in which they must travel to a nearby dialysis center three times per week, where they are connected to dialysis machines for treatments lasting approximately three to four hours, to cleanse their blood.

About Hemodialysis:
Today, most patients undergo hemodialysis therapy three times a week in outpatient dialysis centers. This differs significantly from the 24/7 workings of the naturally functioning kidney. Increasingly, clinicians and patients have recognized opportunities for therapy improvements with more frequent, or daily, dialysis. More than a hundred clinical papers have reported on the health and quality of life benefits of hemodialysis done more frequently. The reported benefits include reduced hypertension, reduced cardiac strain and left ventricular hypertrophy, reduced amyloid disease, and improved anemia status, appetite, and quality of life, including the ability to return to work.*

Forward-Looking Statements:
This release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements contained in this release that are not clearly historical in nature are forward-looking, and the words “anticipate,” “believe,” “expect,” “estimate,” “plan,” and similar expressions are generally intended to identify forward-looking statements. Examples of these forward-looking statements include statements as to the anticipated demand for home and or daily dialysis products, the anticipated market acceptance and demand for NxStage’s products, and anticipated increases in availability of and market and patient awareness regarding home hemodialysis. All forward-looking statements involve risks, uncertainties and contingencies, many of which are beyond NxStage’s control, which may cause actual results, performance, or achievements to differ materially from anticipated results, performance or achievements including risks related to growth in home or more frequent hemodialysis, market acceptance and demand for NxStage’s products and certain other factors that may affect future operating results and which are detailed in NxStage’s filings with the Securities and Exchange Commission, including the Quarterly Report on Form 10-Q for the three months ended September 30, 2006.

In addition, the statements in this press release represent NxStage’s expectations and beliefs as of the date of this press release. NxStage anticipates that subsequent events and developments may cause these expectations and beliefs to change. However, while NxStage may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, whether as a result of new information, future events, or otherwise. These forward-looking statements should not be relied upon as representing NxStage’s expectations or beliefs as of any date subsequent to the date of this press release.

About NxStage Medical:
NxStage Medical, Inc. (NASDAQ: NXTM) is a medical device company, headquartered in Lawrence, Massachusetts, USA, that develops, manufactures and markets innovative dialysis systems for the treatment of end-stage renal disease, or ESRD, and acute kidney failure. For more information on NxStage and its products, please visit the company’s website at <http://www.nxstage.com/>www.nxstage.com.

Contacts:

Fern Lazar or Stephanie Marks

For NxStage Investor Relations

888-698-6472

[quote=Dori Schatell;12567]Hi y’all,

Here is the announcement of the new NxStage/DaVita relationship.

NxStage® Medical and DaVita Announce Agreement for Home Hemodialysis using the NxStage System One™

Good news, indeed.

I don’t know if Davita thought of it this way…but I say it’s a pretty good strategy to get Fresenius dialysis patients. Let’s face it alot of patients are choosing the NxStage over Fresenius for obvious reasons, travel, less time involved etc. As the home market continues to grow, I can see Davita getting patients they may not have had just because they have NxStage and are aggressively pursuing home hemo dialysis. I think it’s also a good thing as I think Davita will get the minor bugs worked out faster and maybe even get into nocturnal with the NxStage.

Marty

Just saw another article on Renalweb about DaVita buying NxStage. It pretty much agreed with my thinking on Davita vs Fresenius.

DaVita did not “buy NxStage.” DaVita is now buying instead of leasing the NxStage machines it uses (not the ones used by other centers), and DaVita bought 7% of the company. So, 93% of NxStage has other ownership…

I think the new relationship will help make home HD available to more folks–and will also motivate both companies to do even more promotion of home options.

Dori, You are more in the know than I am. But what I read said Davita bought 7% of NxStage and all of its systems one machines currently in use.
(I took this to mean it, it included machines being used by all centers). And will purchase the majority of it’s future home hemodialysis equipment. (I took the to mean Davita was going to purchase from NxStage all it’s future home hemodialysis equipment).
Then today on renal web the article stated…Davita can only sell the system one to it’s rival Fresenius. If Davita is only purchasing the machines they use; why does it even mention them selling to Fresenius?
Your probably right on this…but you can see why it is a little confusing.

Marty

Do you have the link to this, Marty? I couldn’t find it on Renalweb & have only seen the original press release that’s posted here (and the info about NxStage stock prices).

Dori, I don’t know the link. But if you go to renalweb and look under the news headlines it’s the 3rd article down. Titled NxStage Shares Jump on Davita Deal. Click on that and it takes you to the article in Business Week.

Do not underestimate Davita

http://www.businessweek.com/ap/financialnews/D8N5NV400.htm

Thanks, Bill!

So the statement Marty was talking about was:

Andrew said one interesting part of the deal is that DaVita, which runs roughly one-third of the 4,000 dialysis facilities in the U.S., can only sell the System One to its rival in the dialysis market, Fresenius Medical Care, which makes its own home machine. The analyst said that Fresenius may actually end up buying the “more elegant” machine from DaVita rather than lose patients to the company.

It will be interesting to see how that plays out. This suggests that DaVita can’t sell to independent centers, which only leaves Fresenius centers. But it doesn’t mean Fresenius would have to buy them–they might choose to invest in another machine or design their own portable machine. IMHO, this will drive innovation and more patient choices.

The article also estimated that 15,000 folks would be using NxStage by 2010–which is only 3 years away! I like the sound of that.

5% is not bad but I really would like to get to 10% by 2010. I guess I can settle for 8%, so long as PD picks up too.

Did a little web browsing this morning and see Fresenius is coming up with some new machines also being develped in Germany. They have the genius machine which is a concept similiar to the Aksys. It is no longer dependent on external support or on clean drinking water (eliminating the need for the RO). and a connection to an electrical power source is sufficient. Doesn’t look portable though. Then they have the multifiltrate machine which will determine a persons dryweight and is set up with a cartridge not running the lines. Still not portable though. Also found this to be interesting since 2002 they have been developing a heparin-free anticoagulant for dialysis. Also they are developing a computer based system to read the machine and if connected will replace the need for patients to do charting.

Currently the Allient Sorbent machine is being tested. And there are others developing home dialysis machine.

Unless some of these newer developments can’t sustain themselves economically it appears the future of dialysis will have a larger selection of dialysis machines.

My concern going forward is … with all the new machines that will eventually become available how can a system be setup that will allow the “patient” to make the choice of dialysis machine and not the center they are connected too. Just as I think the day should come when being a home patient shouldn’t be rather or not your center offers home hemo but rather or not the patient is capable and wants to do home hemo.

Are we approaching the time when the CMS rules and regulations need to be revised? Are we approaching the time when machine manufactures should become DME’s. and home patients become Method II.?

We all want to see the home market grow and I think it will. But so far that growth can only take place if a center already has a home program. In order for it to continue to grow beyond the point of already available home program centers more home programs need to be started or the availablity of home dialysis has to be found in a different way.

It’s time to invest in Davita. Their stock is like 50$ a share now, but after getting in with NxStage they are just going to do better. They are opening a door in to future with this. Home Hemo is the way to go and soon everyone will agree. As the world ages and more people live longer. There will be a need for more machines and more people to train people to use them. Davita is moving in the right direction with this. All medical stocks are the way to go these days though.
LSB

[quote=Leafsunbear;12613]It’s time to invest in Davita. Their stock is like 50$ a share now, but after getting in with NxStage they are just going to do better. They are opening a door in to future with this. Home Hemo is the way to go and soon everyone will agree. As the world ages and more people live longer. There will be a need for more machines and more people to train people to use them. Davita is moving in the right direction with this. All medical stocks are the way to go these days though.
LSB[/quote]

Except for Aksys. I bet the wrong horse on that one. Buyer beware. Erich

Hi y’all,

NxStage now has a FAQ section on their website to explain the relationship with DaVita more clearly. Here’s the link: http://www.nxstage.com/our_community/chronic_community/patients/Davita_Agreement_FAQs.cfm.

[quote=Leafsunbear;12613]It’s time to invest in Davita. Their stock is like 50$ a share now, but after getting in with NxStage they are just going to do better. They are opening a door in to future with this. Home Hemo is the way to go and soon everyone will agree. As the world ages and more people live longer. There will be a need for more machines and more people to train people to use them. Davita is moving in the right direction with this. All medical stocks are the way to go these days though.
LSB[/quote]

Sure is a win win for both NxStage and Davita, with Davita beeing a BIG corp I mean c’mon! They have very deep pockets…hehehe