German dialysis giant Fresenius is paying $2 billion to acquire NxStage Medical, a Lawrence, MA-based developer of products for patients dealing with kidney failure.
Fresenius is paying $30 a share for NxStage (NASDAQ: [[ticker:NXTM]]), a roughly 28 percent premium to the company’s $23.14 closing price on Friday. That price represents an all-time high for NxStage: its highest-ever close came on April 24, when shares traded at $29.89 apiece. The deal should close next year, but is subject to approval from NxStage shareholders.
Fresenius operates nearly 3,700 dialysis clinics around the world, where patients with failing kidneys can go to have toxins and water removed from their blood. NxStage, founded in 1998, sells products used in those clinics as well as systems patients can use to perform dialysis in their home. Its main product is a portable dialysis machine called the System One, though the company also has other items that support dialysis and runs a small number of independent centers. NxStage generated $366 million in revenue in 2016 but still had a $7.3 million net loss. The company has roughly 3,400 employees in Massachusetts, Mexico, Germany, and Italy.
NxStage has had a rocky year thanks to slower than expected growth for its home hemodialysis business and a delay in launching a new system for peritoneal dialysis, which is meant to be more convenient and flexible than hemodialysis. Peritoneal dialysis is a home treatment done via a catheter through the abdomen, and doesn’t require needles or bagged fluid. NxStage planned to begin selling its system at the end of the year but in May pushed back those expectations. The company is racing against Baxter International (NYSE: [[ticker:BAX]]) to finish developing a peritoneal system. Baxter’s progress—it expects to file for regulatory approval of a system in 2019—combined with NxStage’s delay and slumping sales caused the latter’s shares to fall about 20 percent from its all-time highs in late April.
“We believe, but can’t know with certainty, that we will likely be first to market,” CEO and founder Jeffrey Burbank said in a statement in May. “More importantly, we’re targeting to be the best technology on the market.”
Here’s more on NxStage, the System One, and the dialysis market.
