þ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the quarterly period ended September 30, 2018 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from __________ to __________ |
Delaware | 04-3454702 | |
(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) | |
350 Merrimack St., Lawrence, MA | 01843 | |
(Address of Principal Executive Offices) | (Zip Code) |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ |
Emerging growth company ¨ |
Page | ||
Condensed Consolidated Balance Sheets at September 30, 2018 and December 31, 2017 | ||
Condensed Consolidated Statements of Comprehensive Income (Loss) for the Three and Nine Months Ended September 30, 2018 and 2017 | ||
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2018 and 2017 | ||
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
(In thousands, except share data) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 81,944 | $ | 64,928 | |||
Accounts receivable, net | 66,127 | 31,625 | |||||
Inventory | 53,353 | 49,212 | |||||
Prepaid expenses and other current assets | 9,819 | 7,609 | |||||
Total current assets | 211,243 | 153,374 | |||||
Property and equipment, net | 55,106 | 60,262 | |||||
Field equipment, net | 22,925 | 24,264 | |||||
Deferred cost of revenues | 33,012 | 31,410 | |||||
Intangible assets, net | 6,131 | 7,660 | |||||
Goodwill | 42,748 | 42,748 | |||||
Other assets | 6,284 | 5,911 | |||||
Total assets | $ | 377,449 | $ | 325,629 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 19,811 | $ | 14,785 | |||
Accrued expenses | 34,854 | 27,985 | |||||
Current portion of long-term debt | 101 | 101 | |||||
Other current liabilities | 3,989 | 4,559 | |||||
Total current liabilities | 58,755 | 47,430 | |||||
Deferred revenues | 75,568 | 46,874 | |||||
Long-term debt | 444 | 520 | |||||
Other long-term liabilities | 17,069 | 17,824 | |||||
Total liabilities | 151,836 | 112,648 | |||||
Commitments and contingencies (Note 10) | |||||||
Noncontrolling interests subject to put provisions | (291 | ) | (165 | ) | |||
Stockholders’ equity: | |||||||
Undesignated preferred stock: par value $0.001 per share, 5,000,000 shares authorized; no shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively | — | — | |||||
Common stock: par value $0.001 per share, 100,000,000 shares authorized; 67,756,628 and 67,341,819 shares issued as of September 30, 2018 and December 31, 2017, respectively | 68 | 67 | |||||
Additional paid-in capital | 667,620 | 657,640 | |||||
Accumulated deficit | (418,799 | ) | (421,593 | ) | |||
Accumulated other comprehensive loss | (3,527 | ) | (3,673 | ) | |||
Treasury stock, at cost: 1,083,013 and 1,046,870 shares as of September 30, 2018 and December 31, 2017, respectively | (20,170 | ) | (19,283 | ) | |||
Total NxStage Medical, Inc. stockholders' equity | 225,192 | 213,158 | |||||
Noncontrolling interests not subject to put provisions | 712 | (12 | ) | ||||
Total stockholders' equity | 225,904 | 213,146 | |||||
Total liabilities and stockholders’ equity | $ | 377,449 | $ | 325,629 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
(In thousands, except per share data) | |||||||||||||||
Revenues | $ | 108,122 | $ | 97,295 | $ | 322,390 | $ | 290,340 | |||||||
Cost of revenues | 61,589 | 56,688 | 183,745 | 167,377 | |||||||||||
Gross profit | 46,533 | 40,607 | 138,645 | 122,963 | |||||||||||
Operating expenses: | |||||||||||||||
Selling and marketing | 17,549 | 16,984 | 53,735 | 50,595 | |||||||||||
Research and development | 9,698 | 11,222 | 29,729 | 29,757 | |||||||||||
Distribution | 8,636 | 8,065 | 26,539 | 23,394 | |||||||||||
General and administrative | 9,388 | 12,619 | 29,599 | 31,237 | |||||||||||
Total operating expenses | 45,271 | 48,890 | 139,602 | 134,983 | |||||||||||
Income (loss) from operations | 1,262 | (8,283 | ) | (957 | ) | (12,020 | ) | ||||||||
Other income (expense): | |||||||||||||||
Interest expense, net | (69 | ) | (168 | ) | (266 | ) | (595 | ) | |||||||
Other income (expense), net | 109 | 26 | (858 | ) | (565 | ) | |||||||||
40 | (142 | ) | (1,124 | ) | (1,160 | ) | |||||||||
Net income (loss) before income taxes | 1,302 | (8,425 | ) | (2,081 | ) | (13,180 | ) | ||||||||
Provision for (benefit from) income taxes | 512 | 469 | 1,148 | (166 | ) | ||||||||||
Net income (loss) | 790 | (8,894 | ) | (3,229 | ) | (13,014 | ) | ||||||||
Less: Net loss attributable to noncontrolling interests | (91 | ) | (449 | ) | (62 | ) | (1,291 | ) | |||||||
Net income (loss) attributable to NxStage Medical, Inc. | $ | 881 | $ | (8,445 | ) | $ | (3,167 | ) | $ | (11,723 | ) | ||||
Add: Accretion to redemption value of noncontrolling interests | (68 | ) | (481 | ) | (68 | ) | (481 | ) | |||||||
Net income (loss) attributable to common stockholders | $ | 813 | $ | (8,926 | ) | $ | (3,235 | ) | $ | (12,204 | ) | ||||
Net income (loss) per common share: | |||||||||||||||
Basic | $ | 0.01 | $ | (0.14 | ) | $ | (0.05 | ) | $ | (0.19 | ) | ||||
Diluted | $ | 0.01 | $ | (0.14 | ) | $ | (0.05 | ) | $ | (0.19 | ) | ||||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 66,660 | 66,082 | 66,522 | 65,723 | |||||||||||
Diluted | 68,009 | 66,082 | 66,522 | 65,723 | |||||||||||
Other comprehensive income (loss): | |||||||||||||||
Unrealized income (loss) on derivative instruments, net of income taxes | 538 | (661 | ) | 177 | 2,376 | ||||||||||
Other income (loss) | 513 | 268 | (31 | ) | 1,830 | ||||||||||
Total other comprehensive income (loss) | 1,051 | (393 | ) | 146 | 4,206 | ||||||||||
Total comprehensive income (loss) | 1,841 | (9,287 | ) | (3,083 | ) | (8,808 | ) | ||||||||
Less: Comprehensive loss attributable to noncontrolling interests | (91 | ) | (449 | ) | (62 | ) | (1,291 | ) | |||||||
Total comprehensive income (loss) attributable to NxStage Medical, Inc. | $ | 1,932 | $ | (8,838 | ) | $ | (3,021 | ) | $ | (7,517 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
(In thousands) | |||||||
Cash flows from operating activities: | |||||||
Net loss | $ | (3,229 | ) | $ | (13,014 | ) | |
Adjustments to reconcile net loss to net cash flow from operating activities: | |||||||
Depreciation and amortization | 25,630 | 25,321 | |||||
Stock-based compensation | 7,061 | 8,684 | |||||
Other | 1,636 | 1,183 | |||||
Changes in operating assets and liabilities: | |||||||
Accounts receivable | (30,212 | ) | 2,443 | ||||
Inventory | (20,726 | ) | (18,154 | ) | |||
Prepaid expenses and other assets | (198 | ) | 604 | ||||
Accounts payable | 5,150 | (1,886 | ) | ||||
Accrued expenses and other liabilities | 7,081 | (1,286 | ) | ||||
Deferred revenues | 28,514 | (1,906 | ) | ||||
Net cash provided by operating activities | 20,707 | 1,989 | |||||
Cash flows from investing activities: | |||||||
Cash paid for acquisitions, net of cash acquired | — | (100 | ) | ||||
Purchase of cost method investment | — | (2,500 | ) | ||||
Purchases of property and equipment | (4,364 | ) | (7,550 | ) | |||
Net cash used in investing activities | (4,364 | ) | (10,150 | ) | |||
Cash flows from financing activities: | |||||||
Issuance of shares under stock incentive plans, net of payroll taxes paid | 2,067 | 11,019 | |||||
Proceeds from loans, lines of credit and capital lease obligations | — | 452 | |||||
Repayments on loans and lines of credit | (64 | ) | (126 | ) | |||
Repayments on capital leases | (1,191 | ) | (981 | ) | |||
Net cash provided by financing activities | 812 | 10,364 | |||||
Foreign exchange effect on cash and cash equivalents | (139 | ) | 1,144 | ||||
Increase in cash and cash equivalents | 17,016 | 3,347 | |||||
Cash and cash equivalents, beginning of period | 64,928 | 59,632 | |||||
Cash and cash equivalents, end of period | $ | 81,944 | $ | 62,979 |
1. | Nature of Operations, Proposed Merger, Basis of Presentation and Principles of Consolidation |
Balance at December 31, 2017 | $ | 293 | |
Provision | 588 | ||
Usage | (336 | ) | |
Balance at September 30, 2018 | $ | 545 |
As Reported | Adjustment due to ASC 606 | ||||||||
December 31, 2017 | January 1, 2018 | ||||||||
ASSETS | |||||||||
Accounts receivable, net | $ | 31,625 | $ | 4,419 | $ | 36,044 | |||
Prepaid expenses and other current assets | 7,609 | 1,895 | 9,504 | ||||||
Deferred cost of revenues | 31,410 | (139 | ) | 31,271 | |||||
Other assets | 5,911 | 379 | 6,290 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Noncontrolling interests subject to put provisions | (165 | ) | 49 | (116 | ) | ||||
Accumulated deficit | (421,593 | ) | 5,961 | (415,632 | ) | ||||
Noncontrolling interests not subject to put provisions | (12 | ) | 544 | 532 |
Three Months Ended September 30, 2018 | Nine Months Ended September 30, 2018 | ||||||||||||||||||
As Reported | Balance without adoption of ASC 606 | Effect of Change | As Reported | Balance without adoption of ASC 606 | Effect of Change | ||||||||||||||
Revenues | $ | 108,122 | $ | 108,259 | $ | (137 | ) | $ | 322,390 | $ | 323,986 | $ | (1,596 | ) | |||||
Cost of revenues | 61,589 | 61,630 | (41 | ) | 183,745 | 183,892 | (147 | ) | |||||||||||
Selling and marketing | 17,549 | 17,619 | (70 | ) | 53,735 | 53,970 | (235 | ) |
September 30, 2018 | |||||||||
ASSETS | As Reported | Balance without adoption of ASC 606 | Effect of Change | ||||||
Accounts receivable, net | $ | 66,127 | $ | 63,027 | $ | 3,100 | |||
Prepaid expenses and other current assets | 9,819 | 7,708 | 2,111 | ||||||
Deferred cost of revenues | 33,012 | 33,003 | 9 | ||||||
Other assets | 6,284 | 5,886 | 398 | ||||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||||
Noncontrolling interests subject to put provisions | $ | (291 | ) | $ | (295 | ) | $ | 4 | |
Accumulated deficit | (418,799 | ) | (424,386 | ) | 5,587 | ||||
Noncontrolling interests not subject to put provisions | 712 | 688 | 24 | ||||||
Accumulated other comprehensive loss | (3,527 | ) | (3,530 | ) | 3 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2018 | 2018 | ||||||
System One segment | |||||||
Home | $ | 62,387 | $ | 182,821 | |||
Critical Care | 22,958 | 69,491 | |||||
Total System One segment | 85,345 | 252,312 | |||||
In-Center segment | 15,943 | 49,689 | |||||
Other | 2,503 | 7,845 | |||||
Products subtotal | 103,791 | 309,846 | |||||
Services segment | 5,453 | 16,056 | |||||
Elimination of intersegment revenues | (1,122 | ) | (3,512 | ) | |||
Total | $ | 108,122 | $ | 322,390 |
September 30, 2018 | December 31, 2017 | ||||||
Purchased components | $ | 14,695 | $ | 14,947 | |||
Work in process | 14,530 | 13,433 | |||||
Finished goods | 24,128 | 20,832 | |||||
Total | $ | 53,353 | $ | 49,212 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
Options to purchase common stock | 1,165 | 1,069 | 1,074 | 1,126 | |||||||
Unvested restricted stock | 184 | 327 | 202 | 238 | |||||||
Total | 1,349 | 1,396 | 1,276 | 1,364 |
September 30, 2018 | December 31, 2017 | ||||||
Payroll, compensation and related benefits | $ | 17,502 | $ | 13,195 | |||
Distribution expenses | 5,217 | 4,914 | |||||
Other | 12,135 | 9,876 | |||||
Total | $ | 34,854 | $ | 27,985 |
September 30, 2018 | December 31, 2017 | ||||||
Capital lease obligations | $ | 1,996 | $ | 2,131 | |||
Deferred revenue, current portion | 1,146 | 1,473 | |||||
Other | 847 | 955 | |||||
Total | $ | 3,989 | $ | 4,559 |
September 30, 2018 | December 31, 2017 | ||||||
Capital lease obligations | $ | 10,765 | $ | 11,589 | |||
Lease incentive obligations | 2,432 | 2,652 | |||||
Benefit plan obligations | 2,129 | 2,060 | |||||
Other | 1,743 | 1,523 | |||||
Total | $ | 17,069 | $ | 17,824 |
System One | In-Center | Other | Services | Intersegment Elimination | Total | ||||||||||||||||||
Three Months Ended September 30, 2018 | |||||||||||||||||||||||
Revenues from external customers | $ | 84,223 | $ | 15,943 | $ | 2,503 | $ | 5,453 | $ | — | $ | 108,122 | |||||||||||
Intersegment revenues | 1,122 | — | — | — | (1,122 | ) | — | ||||||||||||||||
Revenues | 85,345 | 15,943 | 2,503 | 5,453 | (1,122 | ) | 108,122 | ||||||||||||||||
Segment profit (loss) | 23,526 | 2,036 | (19,065 | ) | (5,270 | ) | 35 | 1,262 | |||||||||||||||
Depreciation and amortization | 5,904 | 454 | 1,069 | 1,303 | (46 | ) | 8,684 | ||||||||||||||||
Three Months Ended September 30, 2017 | |||||||||||||||||||||||
Revenues from external customers | $ | 73,479 | $ | 15,465 | $ | 3,392 | $ | 4,959 | $ | — | $ | 97,295 | |||||||||||
Intersegment revenues | 1,197 | — | — | — | (1,197 | ) | — | ||||||||||||||||
Revenues | 74,676 | 15,465 | 3,392 | 4,959 | (1,197 | ) | 97,295 | ||||||||||||||||
Segment profit (loss) | 18,799 | 2,131 | (23,602 | ) | (5,626 | ) | 15 | (8,283 | ) | ||||||||||||||
Depreciation and amortization | 5,539 | 564 | 1,088 | 1,318 | (26 | ) | 8,483 | ||||||||||||||||
Nine Months Ended September 30, 2018 | |||||||||||||||||||||||
Revenues from external customers | $ | 248,800 | $ | 49,689 | $ | 7,845 | $ | 16,056 | $ | — | $ | 322,390 | |||||||||||
Intersegment revenues | 3,512 | — | — | — | (3,512 | ) | — | ||||||||||||||||
Revenues | 252,312 | 49,689 | 7,845 | 16,056 | (3,512 | ) | 322,390 | ||||||||||||||||
Segment profit (loss) | 68,011 | 6,771 | (59,148 | ) | (16,696 | ) | 105 | (957 | ) | ||||||||||||||
Depreciation and amortization | 17,168 | 1,405 | 3,230 | 3,965 | (138 | ) | 25,630 | ||||||||||||||||
Nine Months Ended September 30, 2017 | |||||||||||||||||||||||
Revenues from external customers | $ | 220,950 | $ | 45,397 | $ | 9,127 | $ | 14,866 | $ | — | $ | 290,340 | |||||||||||
Intersegment revenues | 3,845 | — | — | — | (3,845 | ) | — | ||||||||||||||||
Revenues | 224,795 | 45,397 | 9,127 | 14,866 | (3,845 | ) | 290,340 | ||||||||||||||||
Segment profit (loss) | 60,021 | 6,152 | (60,445 | ) | (17,724 | ) | (24 | ) | (12,020 | ) | |||||||||||||
Depreciation and amortization | 16,601 | 1,633 | 3,252 | 3,888 | (53 | ) | 25,321 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||
DaVita | 19 | % | 20 | % | 19 | % | 20 | % | |||
Fresenius | 21 | % | 20 | % | 20 | % | 19 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Cost of revenues | $ | 214 | $ | 335 | $ | 685 | $ | 902 | |||||||
Selling and marketing | 738 | 1,054 | 2,314 | 3,047 | |||||||||||
Research and development | 311 | 437 | 1,004 | 1,154 | |||||||||||
General and administrative | 821 | 1,534 | 3,058 | 3,581 | |||||||||||
Total | $ | 2,084 | $ | 3,360 | $ | 7,061 | $ | 8,684 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Balance at beginning of period | $ | 641 | $ | (145 | ) | $ | (12 | ) | $ | 625 | |||||
Adjustment due to adoption of ASC 606 | — | — | 542 | — | |||||||||||
Accretion to redemption value of noncontrolling interests | 68 | 481 | 68 | 481 | |||||||||||
Reclassification of noncontrolling interest subject to put provision | — | (744 | ) | — | (744 | ) | |||||||||
Net loss attributable to noncontrolling interest in consolidated subsidiary | 3 | (376 | ) | 114 | (1,146 | ) | |||||||||
Balance at end of period | $ | 712 | $ | (784 | ) | $ | 712 | $ | (784 | ) |
Gain (Loss) Recognized in OCI (Effective Portion) | Gain (Loss) Reclassified from OCI into Income (Effective Portion) | Classification within the Condensed Consolidated Statement of Comprehensive Income (Loss) | ||||||||
Three Months Ended September 30, 2018 | ||||||||||
Foreign exchange forward contracts | $ | 84 | $ | (240 | ) | Cost of revenues | ||||
Nine Months Ended September 30, 2018 | ||||||||||
Foreign exchange forward contracts | $ | 903 | $ | 735 | Cost of revenues | |||||
Three Months Ended September 30, 2017 | ||||||||||
Foreign exchange forward contracts | $ | 116 | $ | 733 | Cost of revenues | |||||
Nine Months Ended September 30, 2017 | ||||||||||
Foreign exchange forward contracts | $ | 4,211 | $ | 254 | Cost of revenues |
Unrealized gain (loss) on derivative instruments | Other (2) | Total | ||||||||||
Balance, net of tax, as of December 31, 2017 | $ | (1,284 | ) | $ | (2,389 | ) | $ | (3,673 | ) | |||
Other comprehensive income (loss) before reclassifications, net of tax | 903 | (22 | ) | 881 | ||||||||
Gain reclassified to earnings (1) | (735 | ) | — | (735 | ) | |||||||
Total other comprehensive income (loss), net of tax | 168 | (22 | ) | 146 | ||||||||
Balance, net of tax, as of September 30, 2018 | $ | (1,116 | ) | $ | (2,411 | ) | $ | (3,527 | ) |
September 30, 2018 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||
Assets | ||||||||||||||||
Money market funds (1) | $ | 35,397 | $ | — | $ | — | $ | 35,397 | ||||||||
Foreign exchange forward contracts (2) | — | 732 | — | 732 | ||||||||||||
Liabilities | ||||||||||||||||
Foreign exchange forward contracts (2) | $ | — | $ | 407 | $ | — | $ | 407 |
December 31, 2017 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Fair Value | ||||||||||||
Assets | ||||||||||||||||
Money market funds (1) | $ | 35,020 | $ | — | $ | — | $ | 35,020 | ||||||||
Foreign exchange forward contracts (2) | — | 690 | — | 690 | ||||||||||||
Liabilities | ||||||||||||||||
Foreign exchange forward contracts (2) | $ | — | $ | 661 | $ | — | $ | 661 |
(1) | Money market funds are included within cash and cash equivalents. |
(2) | Foreign exchange forward contracts are included within prepaid expenses and other current assets or accrued expenses depending on the gain (loss) position. |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Noncash Investing and Financing Activities: | |||||||
Transfers from inventory to field equipment | $ | 15,649 | $ | 13,709 | |||
Transfers from field equipment to deferred cost of revenues | 11,875 | 7,570 | |||||
Market value of shares received in payment for exercise of stock options | 887 | 2,771 | |||||
PP&E financed by construction liability | 95 | 109 |
• | estimates of the number of end-stage renal disease (ESRD) patients that could be treated at home with the System One; |
• | expectations with respect to future demand for our products and revenue growth, with components of such revenue growth including sales of disposable products; |
• | expectation of sustaining gross profit as a percentage of revenue in our System One segment above 50% and the underlying elements of such objective; |
• | future selling and marketing, research and development, distribution, and general and administrative expenses and the drivers for such expenses; |
• | impact of the adoption of new accounting standards and the Tax Cuts and Jobs Act of 2017 (Tax Reform); |
• | the availability of, and impact of changes in, reimbursement for home and more frequent hemodialysis, and the expected impact of draft local coverage determinations on reimbursement for more frequent hemodialysis in the United States; |
• | the anticipated timing and likelihood of completion of our proposed merger of us with a subsidiary of Fresenius (Merger); |
• | disruptions to our business operations due to the pendency of the proposed Merger; |
• | anticipated benefits of manufacturing dialyzers for sale to Asahi Kasei Kuraray Medical Co. (Asahi) and future sales to Asahi; |
• | our ability to withstand supply chain disruptions; |
• | the scope and adequacy of patent protection with respect to our products; and |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Products Business (System One Segment, In-Center Segment & Other) | |||||||||||||||
Revenues | $ | 103,791 | $ | 93,533 | $ | 309,846 | $ | 279,319 | |||||||
Gross profit | $ | 49,827 | $ | 44,333 | $ | 149,082 | $ | 133,988 | |||||||
Gross margin percentage | 48 | % | 47 | % | 48 | % | 48 | % | |||||||
Income (loss) from operations | $ | 6,497 | $ | (2,672 | ) | $ | 15,634 | $ | 5,728 | ||||||
Services Segment | |||||||||||||||
Revenues | $ | 5,453 | $ | 4,959 | $ | 16,056 | $ | 14,866 | |||||||
Gross profit | $ | (3,329 | ) | $ | (3,741 | ) | $ | (10,542 | ) | $ | (11,001 | ) | |||
Gross margin percentage | n/a | n/a | n/a | n/a | |||||||||||
Loss from operations | $ | (5,270 | ) | $ | (5,626 | ) | $ | (16,696 | ) | $ | (17,724 | ) | |||
Eliminations | |||||||||||||||
Elimination of intersegment revenues | $ | (1,122 | ) | $ | (1,197 | ) | $ | (3,512 | ) | $ | (3,845 | ) | |||
Elimination of intersegment gross profit | $ | 35 | $ | 15 | $ | 105 | $ | (24 | ) | ||||||
Total Company | |||||||||||||||
Revenues | $ | 108,122 | $ | 97,295 | $ | 322,390 | $ | 290,340 | |||||||
Gross profit | $ | 46,533 | $ | 40,607 | $ | 138,645 | $ | 122,963 | |||||||
Gross margin percentage | 43 | % | 42 | % | 43 | % | 42 | % | |||||||
Income (loss) from operations | $ | 1,262 | $ | (8,283 | ) | $ | (957 | ) | $ | (12,020 | ) |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
System One segment | |||||||||||||||||||||||||||
Home | $ | 62,387 | 58 | % | $ | 55,852 | 57 | % | $ | 182,821 | 57 | % | $ | 165,949 | 57 | % | |||||||||||
Critical Care | 22,958 | 21 | % | 18,824 | 20 | % | 69,491 | 22 | % | 58,846 | 20 | % | |||||||||||||||
Total System One segment | 85,345 | 79 | % | 74,676 | 77 | % | 252,312 | 79 | % | 224,795 | 77 | % | |||||||||||||||
In-Center segment | 15,943 | 15 | % | 15,465 | 16 | % | 49,689 | 15 | % | 45,397 | 16 | % | |||||||||||||||
Other | 2,503 | 2 | % | 3,392 | 3 | % | 7,845 | 2 | % | 9,127 | 3 | % | |||||||||||||||
Products subtotal | 103,791 | 96 | % | 93,533 | 96 | % | 309,846 | 96 | % | 279,319 | 96 | % | |||||||||||||||
Services segment | 5,453 | 5 | % | 4,959 | 5 | % | 16,056 | 5 | % | 14,866 | 5 | % | |||||||||||||||
Elimination of intersegment revenues | (1,122 | ) | (1 | )% | (1,197 | ) | (1 | )% | (3,512 | ) | (1 | )% | (3,845 | ) | (1 | )% | |||||||||||
Total | $ | 108,122 | 100 | % | $ | 97,295 | 100 | % | $ | 322,390 | 100 | % | $ | 290,340 | 100 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
System One segment | $ | 45,674 | 54 | % | $ | 39,671 | 53 | % | $ | 135,830 | 54 | % | $ | 120,618 | 54 | % | |||||||||||
In-Center segment | 4,132 | 26 | % | 4,423 | 29 | % | 13,072 | 26 | % | 12,821 | 28 | % | |||||||||||||||
Subtotal | 49,806 | 49 | % | 44,094 | 49 | % | 148,902 | 49 | % | 133,439 | 49 | % | |||||||||||||||
Other | 21 | n/a | 239 | 7 | % | 180 | n/a | 549 | 6 | % | |||||||||||||||||
Products subtotal | $ | 49,827 | 48 | % | $ | 44,333 | 47 | % | $ | 149,082 | 48 | % | $ | 133,988 | 48 | % | |||||||||||
Services segment | (3,329 | ) | n/a | (3,741 | ) | n/a | (10,542 | ) | n/a | (11,001 | ) | n/a | |||||||||||||||
Elimination of intersegment gross profit | 35 | n/a | 15 | n/a | 105 | n/a | (24 | ) | n/a | ||||||||||||||||||
Gross profit | $ | 46,533 | 43 | % | $ | 40,607 | 42 | % | $ | 138,645 | 43 | % | $ | 122,963 | 42 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
System One segment | $ | 13,984 | 16 | % | $ | 13,191 | 18 | % | $ | 42,694 | 17 | % | $ | 38,303 | 17 | % | |||||||||||
In-Center segment | 1,624 | 10 | % | 1,908 | 12 | % | 4,887 | 10 | % | 5,569 | 12 | % | |||||||||||||||
Products subtotal | 15,608 | 15 | % | 15,099 | 16 | % | 47,581 | 15 | % | 43,872 | 16 | % | |||||||||||||||
Services segment | 1,941 | 36 | % | 1,885 | n/a | 6,154 | 38 | % | 6,723 | n/a | |||||||||||||||||
Total Selling and marketing | $ | 17,549 | 16 | % | $ | 16,984 | 17 | % | $ | 53,735 | 17 | % | $ | 50,595 | 17 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
Research and development | $ | 9,698 | 9 | % | $ | 11,222 | 12 | % | $ | 29,729 | 9 | % | $ | 29,757 | 10 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
System One segment | $ | 8,164 | 10 | % | $ | 7,681 | 10 | % | $ | 25,125 | 10 | % | $ | 22,294 | 10 | % | |||||||||||
In-Center segment | 472 | 3 | % | 384 | 2 | % | 1,414 | 3 | % | 1,100 | 2 | % | |||||||||||||||
Total Distribution | $ | 8,636 | 8 | % | $ | 8,065 | 8 | % | $ | 26,539 | 8 | % | $ | 23,394 | 8 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||||||
General and administrative | $ | 9,388 | 9 | % | $ | 12,619 | 13 | % | $ | 29,599 | 9 | % | $ | 31,237 | 11 | % |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Net cash provided by operating activities | $ | 20,707 | $ | 1,989 | |||
Net cash used in investing activities | (4,364 | ) | (10,150 | ) | |||
Net cash provided by financing activities | 812 | 10,364 | |||||
Foreign exchange effect on cash and cash equivalents | (139 | ) | 1,144 | ||||
Net cash flow | $ | 17,016 | $ | 3,347 |
• | Medicare and Medicaid payment rules, including coverage rules that limit the clinical circumstances under which payment will be made for more frequent dialysis treatments; |
• | anti-kickback and related laws prohibiting payments and other remuneration intended to influence the referral of health care business or selection of a provider; |
• | prohibitions on submitting false claims for government or commercial insurance reimbursement; |
• | laws regulating the use and disclosure of patient health information; and |
• | laws regulating the storage and administration of pharmaceuticals and medical devices. |
• | offering products and services that are more widely recognized by physicians, patients and providers; |
• | offering broader product lines which enable them to offer customers a single source for multiple products; |
• | having significantly more financial and human resources, more established service and customer support infrastructures and spending more on product development and marketing; |
• | having more established sales forces and distribution channels; and |
• | having more established relationships with the providers of dialysis therapy, including DaVita and Fresenius which may at any time reduce their promotion of our dialysis products to their dialysis patients. |
• | the new product may not perform as intended or may have safety concerns; |
• | the costs associated with obtaining regulatory approval or in satisfying applicable regulatory requirements may be prohibitive and, even in markets where these costs are not prohibitive, the associated efforts may significantly lengthen projected timelines for new product introduction; |
• | the FDA and other regulatory authorities may not approve the new product or the facilities in which it is manufactured in a timely manner or at all; |
• | payors may not reimburse the new product sufficiently or at all; |
• | competing products may be safer, more effective or easier to use; and |
• | we may be unable to manufacture sufficient quantities of the new product for development or commercialization activities in a timely and cost-effective manner. |
• | increase our manufacturing capacity to meet customer demand; |
• | expand our sales and marketing and on-going development capabilities; |
• | improve our information technology infrastructure, operational, financial and management controls and reporting systems and procedures; and |
• | manage the increased complexity and scope of our relationships with various partners, distributors, suppliers, manufacturers and other organizations. |
• | need for significant investment without assurance of success; |
• | potential disruption of our ongoing business; |
• | need for involvement of senior management to develop the acquired businesses, technologies or products, which will take away from the time they ordinarily spend on the remainder of our business; |
• | entry into markets or types of businesses in which we have limited experience; |
• | impairment of relationships with key partners, customers or suppliers of ours or any acquired business; |
• | addition of new complex compliance obligations; |
• | difficulty in managing geographically remote units both in the U.S. and internationally; |
• | difficulty in successfully implementing, upgrading and deploying in a timely and effective manner new operational information systems and upgrades of our finance, accounting and product distribution systems; |
• | difficulty in incorporating acquired technology and rights into our product and service offerings; |
• | unanticipated expenses and delays in completing acquired development projects and technology integration; |
• | difficulty in transitioning and integrating the operations and personnel of an acquired businesses, including with respect to differing and complex accounting and financial reporting systems; |
• | customers delaying purchases of our products pending resolution of product integration between our existing and our newly acquired products; |
• | loss of key employees of an acquired company; and |
• | inaccurate assumptions of an acquired company's product or service quality. |
• | foreign exchange risk, in particular with respect to the euro and peso, which has been amplified by the recent strength of the U.S. dollar and which could adversely affect our financial results and our ability to maintain mutually beneficial and profitable relationships with foreign vendors, distributors and customers, and increase our costs to attract and retain international personnel; |
• | expropriation and other restrictive government actions; |
• | changes in intellectual property legal protections and remedies; |
• | costs and challenges associated with sourcing and shipping goods internationally and importing and exporting goods; |
• | changes to U.S. and foreign trade policies, including enactment of tariffs or border-adjusted taxes on goods imported into the U.S.; |
• | difficulty managing operations in multiple locations; |
• | local regulations that may restrict or impair our ability to conduct our operations, increase compliance costs, and make it more expensive and complex to manage our workforce; |
• | fluctuations in local economic conditions; |
• | health issues, such as pandemic disease risk, and natural disasters, such as flooding, hurricanes and earthquakes, which could disrupt our manufacturing and logistical and import activities; and |
• | in certain locations, risks associated with local instability, including threats of violence, which could lead to disruptions in supply at our manufacturing facilities or key vendors. |
• | identify and anticipate physician and patient needs properly; |
• | develop and introduce new products or product enhancements in a timely manner; |
• | avoid infringing upon the intellectual property rights of third parties; |
• | demonstrate, if required, the safety and efficacy of new products with data from preclinical and clinical studies; |
• | obtain the necessary regulatory clearances or approvals for new products or product enhancements; |
• | comply fully with FDA and foreign regulations on marketing of new products or modified products; and |
• | provide adequate training to potential users of our products. |
• | prevent our competitors from duplicating our products; |
• | prevent our competitors from gaining access to our proprietary information and technology; or |
• | permit us to gain or maintain a competitive advantage. |
• | cease selling or using any of our products that incorporate the asserted intellectual property, which would adversely affect our revenues; |
• | pay substantial damages for past use of the asserted intellectual property; |
• | obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all and which could reduce profitability; and |
• | redesign or rename, in the case of trademark claims, our products to avoid infringing the intellectual property rights of third parties, which may not be possible and could be costly and time consuming if it is possible to do so. |
• | timing of commercial launch and acceptance of our products; |
• | timing of achieving profitability from operations; |
• | changes in estimates of our financial results or recommendations by securities analysts or the failure to meet or exceed securities analysts' expectations; |
• | actual or anticipated variations in our quarterly operating results; |
• | future debt or equity financings; |
• | developments or disputes with key vendors or customers, or adverse changes to the purchasing patterns of key customers and distributors; |
• | disruptions in product supply for any reason, our failure to appropriately forecast supply or demand, difficulties in moving products across international borders, or the failure of third party suppliers to produce needed products or components; |
• | reports by officials or health, medical or regulatory authorities or the general media regarding the potential benefits of the System One, similar dialysis products distributed by other companies, or more frequent or home dialysis; |
• | delays or failures to obtain marketing approval for new products or modifications to marketed products; |
• | product recalls and withdrawals; |
• | defaults under our material contracts, including without limitation our credit agreement; |
• | regulatory developments in the U.S. and foreign countries; |
• | changes in third-party healthcare reimbursements, particularly a decline in the level of Medicare reimbursement for dialysis treatments, or the willingness of Medicare contractors to pay for more than three treatments a week where medically justified; |
• | regulatory changes that could affect our profitability, such as the imposition of import tariffs and border-adjusted taxes; |
• | litigation involving our company or our industry; |
• | announcements of technical innovations or new products by our competitors; |
• | developments or disputes concerning our patents or other proprietary rights; |
• | our ability to manufacture and supply our products to commercial standards; |
• | significant acquisitions, strategic partnerships, joint ventures or capital commitments by us or our competitors; |
• | departures of key personnel; |
• | investors' general perception of our company, our products, the economy and general market conditions; and |
• | the other risks and uncertainties described in these “Risk Factors.” |
Exhibit Number | Description | |
101.INS* | XBRL Instance Document | |
101.SCH* | XBRL Taxonomy Extension Schema | |
101.CAL* | XBRL Taxonomy Extension Calculation Linkbase | |
101.DEF* | XBRL Taxonomy Extension Definition Linkbase | |
101.LAB* | XBRL Taxonomy Extension Label Linkbase | |
101.PRE* | XBRL Taxonomy Extension Presentation Linkbase |
NXSTAGE MEDICAL, INC. | ||
By: | /s/ Matthew W. Towse | |
Matthew W. Towse | ||
Chief Financial Officer (Duly authorized officer and principal financial officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of NxStage Medical, Inc. for the period ended September 30, 2018 (this “report”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Jeffrey H. Burbank | |||
Jeffrey H. Burbank | |||
Chief Executive Officer |
1. | I have reviewed this Quarterly Report on Form 10-Q of NxStage Medical, Inc. for the period ended September 30, 2018 (this “report”); |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c) | Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and |
5. | The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. |
/s/ Matthew W. Towse | |||
Matthew W. Towse | |||
Senior Vice President and Chief Financial Officer |
(1) | This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Jeffrey H. Burbank | |||
Jeffrey H. Burbank | |||
Chief Executive Officer |
(1) | This report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) | The information contained in this report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
/s/ Matthew W. Towse | |||
Matthew W. Towse | |||
Senior Vice President and Chief Financial Officer |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 01, 2018 |
|
Document And Entity Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | NXTM | |
Entity Registrant Name | NxStage Medical, Inc. | |
Entity Central Index Key | 0001333170 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 66,684,692 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Statement of Financial Position [Abstract] | ||
Undesignated preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Undesignated preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Undesignated preferred stock, shares issued (in shares) | 0 | 0 |
Undesignated preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 100,000,000 |
Common stock, shares issued (in shares) | 67,756,628 | 67,341,819 |
Treasury stock, shares (in shares) | 1,083,103 | 1,046,870 |
Nature of Operations, Proposed Merger, Basis of Presentation and Principles of Consolidation |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Policies [Abstract] | |
Nature of Operations, Proposed Merger Agreement, Basis of Presentation and Principles of Consolidation | Nature of Operations, Proposed Merger, Basis of Presentation and Principles of Consolidation Nature of Operations We are a medical technology company that develops, manufactures, markets and provides innovative products and services for patients suffering from chronic or acute kidney failure. Our primary product, the System One, was designed to satisfy an unmet clinical need for a system capable of delivering the therapeutic flexibility and clinical benefits of traditional dialysis machines in a smaller, portable, easy-to-use form that can be used by healthcare professionals and trained lay users alike in a variety of settings, including patient homes and home-like settings, including skilled nursing facilities, as well as more traditional care settings such as hospitals and dialysis centers. Given its design, the System One is particularly well-suited for home hemodialysis and a range of dialysis therapies that are more practical to deliver in the home setting, including more frequent hemodialysis and nocturnal hemodialysis. Clinical literature suggests such therapies provide patients better clinical outcomes and improved quality of life. In addition to the System One, we provide patients with our PureFlow SL accessory which prepares on-site premixed dialysate fluid in the patient's home using ordinary tap water and dialysate concentrate. We also operate a small number of NxStage Kidney Care dialysis centers, independently and in some instances as joint ventures, that treat end-stage renal disease (ESRD) patients directly. These centers provide us with the opportunity to innovate and foster new care delivery models to advance the standard of renal care across other markets. At these centers, we offer a range of treatment options, including home hemodialysis, peritoneal dialysis and flexible in-center hemodialysis. We are headquartered in Lawrence, Massachusetts, with manufacturing facilities in Mexico, Germany and Italy. Through our international network of affiliates and distribution partners, patients in over 21 countries have been treated with our products. Proposed Merger On August 7, 2017, we entered into an Agreement and Plan of Merger (as amended, the Merger Agreement) with Fresenius Medical Care Holdings, Inc. (Fresenius), pursuant to which we will merge with a wholly-owned subsidiary of Fresenius (Merger), subject to certain conditions. At the closing of the Merger, all outstanding shares of our common stock (except those held by us, Fresenius or its wholly-owned subsidiaries or any stockholders properly exercising their appraisal rights under the General Corporation Law of the State of Delaware) would be converted into the right to receive $30.00 per share in cash, subject to any applicable tax withholdings. Fresenius' obligation to close the Merger is conditioned on (1) receipt of regulatory approval from the U.S. Federal Trade Commission (FTC) and the expiration of applicable waiting periods, or extensions thereof, under the Hart-Scott-Rodino Act of 1976, as amended (HSR Act), (2) the absence of any governmental law or order preventing the consummation of the transaction and (3) NxStage's compliance, in all material respects, with our covenants under the Merger Agreement. Pursuant to the HSR Act, we and Fresenius each submitted pre-merger notification filings to the FTC and Department of Justice, Antitrust Division. On October 18, 2017, we and Fresenius each received a Request for Additional Information and Documentary Material (also known as a Second Request) from the FTC. The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after Fresenius and we have substantially complied with the Second Request, unless that period is terminated sooner by the FTC. By agreement with the FTC, the parties may voluntarily extend the time for closing beyond the expiration of the HSR Act waiting period. The parties continue to work to obtain FTC approval of the proposed transaction. On October 27, 2017, the stockholders of NxStage Medical, Inc. voted to approve the Merger Agreement. In addition, the Merger has cleared antitrust review in Germany. See “Risk Factors” in Part I Item 1A of our 2017 Annual Report (as defined below) for additional information. In an effort to advance the process of obtaining FTC clearance of the proposed Merger under the HSR Act, on July 10, 2018 we entered into an agreement to sell our bloodlines business operated under the Medisystems name to B. Braun Medical Inc. Consummation of that transaction is subject to (1) FTC approval of that transaction, (2) the closing of the Merger, (3) and other customary conditions. The original end date for our Merger Agreement with Fresenius (End Date) was August 7, 2018. We have agreed with Fresenius to extend the End Date to February 5, 2019 to obtain required antitrust clearances. The Merger Agreement may be terminated by us or Fresenius if the Merger is not closed by February 5, 2019. The Merger Agreement generally requires each party to use its reasonable best efforts to obtain all consents and clearances required under any antitrust law, except that Fresenius is not required (i) to litigate against a governmental entity or (ii) to divest or to take any other actions with respect to any assets or business of Fresenius, its subsidiaries or the Company, other than, if necessary to obtain antitrust clearances, with respect to certain Company assets. Fresenius is required to pay us a termination fee of $100 million (the Reverse Termination Fee) if the Merger Agreement is terminated by us or Fresenius (i) if the End Date has passed or (ii) if a court or other governmental entity issues a final, nonappealable order or takes any other actions that permanently prohibits the Merger or makes closing the Merger illegal (in each case because approval under applicable antitrust laws remains the only unsatisfied closing condition). We would be required to pay Fresenius a termination fee of $60 million (the Termination Fee) if all of the following conditions were applicable: (i) the Merger Agreement is terminated because the End Date has passed or we have breached a covenant, (ii) an alternative acquisition proposal has been publicly made and not publicly withdrawn at least ten days prior to the termination, and (iii) within 12 months following such termination, we enter into an alternative acquisition agreement or an alternative acquisition is consummated. Nonetheless, we will not be required to pay the Termination Fee if the Merger Agreement is terminated due to failure to obtain required antitrust approvals by the End Date and Fresenius is required to pay the Reverse Termination Fee. The Merger Agreement includes customary representations, warranties and covenants. Pursuant to the Merger Agreement, we agreed to use commercially reasonable efforts to operate our business in all material respects in the ordinary course until closing. Basis of Presentation The accompanying condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017, and related notes, are unaudited but, in the opinion of our management, include all adjustments, consisting of normal recurring adjustments, that are necessary for fair statement of the interim periods presented. Our unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under these rules, we have condensed or omitted certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles (GAAP). Our accounting policies are described in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 (2017 Annual Report) and updated, as necessary, in this Quarterly Report on Form 10-Q (Quarterly Report). Operating results for any interim period are not necessarily indicative of results for the entire year or future periods. The December 31, 2017 condensed consolidated balance sheet contained herein was derived from audited financial statements, but does not include all disclosures that would be required for audited financial statements under GAAP. For further information, refer to the consolidated financial statements and footnotes thereto included in our 2017 Annual Report. We adopted Accounting Standards Update (ASU) No. 2014-9: “Revenue from Contracts with Customers” (ASC 606) with a date of initial application of January 1, 2018. We applied ASC 606 using the cumulative effect method, i.e., by recognizing the cumulative effect of initially applying ASC 606 as an adjustment to the opening balance of equity at January 1, 2018. Therefore, the comparative information has not been adjusted and continues to be reported under ASC 605. The details of the significant changes and quantitative impact of the changes are outlined in Note 2. The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are of a normal recurring nature. Principles of Consolidation Our condensed consolidated financial statements include the accounts of NxStage Medical, Inc. and our wholly-owned subsidiaries and other entities in which we maintain a majority voting interests or for which we maintain effective control, including variable interest entities ("VIEs") for which we are deemed the primary beneficiary. All significant intercompany balances and transactions have been eliminated. Noncontrolling interests represent the proportionate equity interests in the consolidated entities that are not wholly owned by us. Noncontrolling interests of acquired entities are recognized at their initial fair value. |
Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Revenue Recognition We recognize revenue from product sales and services when earned through fulfillment of our performance obligations. The amount of revenue recognized is based on the total consideration that we ultimately expect to collect relative to the good or service provided. We estimate the standalone selling price for an individual performance obligation based on consideration of both industry and Company-specific factors, including the profit margin for similar products, the cost to produce the deliverable and the anticipated margin on that deliverable and the characteristics of the varying markets in which the deliverable is sold. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from revenues and reported on a net basis. In general, we do not have any significant extended payment terms as payment is received at or shortly after the point of sale. The expected costs associated with our standard product warranties continue to be recognized as expense when the products are sold. When shipping and handling activities are performed after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. System One Segment We derive revenue in the home market primarily from sales of the System One hardware and sales of disposable products. We enter into arrangements with customers that may include multiple elements including equipment lease or licensing transactions pursuant to the depot service model described below or equipment sales with no post-delivery obligations other than standard warranty obligations, disposable product sales and services. The transaction price is allocated to the elements including allocation to the lease and non-lease elements of the arrangement, where applicable, based on their relative standalone selling price and recognized pursuant to the applicable guidance. System One hardware sales to dialysis clinic customers in the home market are made under the depot service model whereby equipment requiring service is picked up and a replacement device is shipped to the site of care. Accordingly, we recognize upfront fees received from equipment transactions as revenue on a straight-line basis over the term of our remaining service obligation, which generally range between 5 and 7 years, and direct costs relating to the delivered equipment are classified in deferred cost of revenues and amortized over the same expected period as the related revenue. Beginning in the third quarter of 2018, we entered into a long-term licensing arrangement with one of our customers. Under this new arrangement, a number of this customer’s previously purchased units were converted to a license arrangement in order to extend access to the service pool under the service depot model for a period beyond the initial contractual period. The customer agreed to pay up-front the fees related to this multiyear license. This amount is reflected as an increase in accounts receivable and deferred revenue as of the end of the period, and the amount in deferred revenue will be amortized on a straight line basis over the term. Disposable products sales are recognized in accordance with the contract terms. We also offer a month-to-month System One hardware rental arrangements. Under these arrangements, revenue is recognized on a monthly basis in accordance with agreed upon arrangements with the customers. Our sales arrangements with our international distributors are structured as direct product sales and have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. In the critical care market, we structure sales of the System One and disposable products as direct product sales and have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Certain of these arrangements provide for training, technical support and equipment service to our customers. We recognize training and technical support revenue when the related services are performed and our performance obligations are satisfied. In the case of equipment service contracts entered into after the initial standard warranty period, the service contract revenue is recognized ratably over the service period. Some of our contracts with customers in the System One segment contain contractually determined volume discounts offered to similar classes of customers. In addition, in many agreements we offer rebates and discounts for early payment which result in the ultimate payment being variable. The variable consideration paid by the customer is estimated and recognized when we satisfy our performance obligation (generally upon delivery) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. We are able to reliably estimate the amount of rebates and discounts and record them as a reduction to revenue and accounts receivable at the time of sale. In-Center Segment Our In-Center segment sales are structured as direct product sales primarily through distributors, and we have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Some of our distribution contracts for the In-Center segment contain rebates and discounts for early payment which results in the ultimate payment being variable. The variable fee paid by the distributor is estimated and recognized when we satisfy our performance obligation (generally upon delivery to the distributor) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. We are able to reliably estimate the amount of rebates/discounts and record them as a reduction to revenue and trade accounts receivable at the time of sale. Services Segment Revenues in our Services segment are derived from dialysis care services provided to patients at our NxStage Kidney Care dialysis centers. Revenues are recognized in the period in which services are provided. For revenues associated with Medicare, Medicaid or commercial insurers with which we have formal agreements, revenue is recognized based on contractual rates or rates established by statute or regulation in the case of Medicare and Medicaid. For certain classes of payors, for example non-contracted commercial health insurance payors and amounts due from patients (including co-pay and deductible amounts), revenue is recognized based on our estimate of the consideration that will be ultimately received from the payor which results in the ultimate payment being variable. The variable fee is estimated using historical collections experience with similar classes of payors and recognized when we satisfy our performance obligation (when services are provided) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. Overall, these estimates reflect the Company’s best estimates of the amount of consideration to which it is entitled from these customers. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we adjust these estimates, which would affect revenues and earnings in the period such variances become known. Such changes, if material, will be disclosed in the period such variances become known. Other Other revenues relate to the manufacturing of dialyzers for sale to Asahi Kasei Kuraray Medical Co. (Asahi). Sales to Asahi are structured as direct product sales and we have no significant post-delivery obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Costs to Obtain or Fulfill a Contract We capitalize commission fees as costs of obtaining a contract, when they are incremental and if they are expected to be recovered, and amortize them consistently with the pattern of transfer of the good to which the asset relates. If the expected amortization period is one year or less, the commission fee is expensed when incurred. Direct costs related to the delivered equipment within the System One home market are capitalized as deferred cost of revenues and amortized over the same expected period as the related revenue. Concentration of Credit Risk Concentration of credit risk with respect to accounts receivable is primarily limited to certain customers to whom we make substantial sales. One customer represented 40% of accounts receivable at September 30, 2018. Payment has been received against the majority of these receivables and as of October 15, 2018, the outstanding amount for this customer represented less than 10% of accounts receivable. No customer represented more than 10% of accounts receivable at December 31, 2017. Warranty Costs We accrue estimated costs that we may incur under our product warranty programs at the time the product revenue is recognized, based on contractual rights and historical experience. Warranty expense is included in cost of revenues in the condensed consolidated statements of comprehensive income (loss). The following is a rollforward of our warranty accrual (in thousands):
Intangibles and Other Long-Lived Assets Intangible assets are carried at cost less accumulated amortization. For assets with determinable useful lives, amortization is recognized using the straight-line method over the estimated economic lives of the respective intangible assets. Long-lived assets, including intangible assets, are evaluated for recoverability whenever events or circumstances indicate that their carrying value may not be recoverable. Recoverability of long-lived assets is assessed at the lowest level for which discrete cash flows are available and is measured by comparing the asset group’s carrying value to its expected non-discounted future cash flows. If the sum of the expected non-discounted future cash flows is less than the carrying amount of the long-lived assets, an impairment loss is recognized for excess of the carrying amount of the asset group over its fair value. In the third quarter 2018, events and circumstances have indicated that certain long-lived tangible assets in the Services segment may not be recoverable. Therefore, a recoverability test was performed at the center level by comparing the carrying value of each center to its estimated future undiscounted cash flows, within the initial lease term (which is the equivalent to the depreciable life of the centers' most significant asset, its leasehold improvements). As of September 30, 2018, our expected non-discounted future cash flows for the majority of our centers indicated such carrying amounts were expected to be recovered. We recorded an impairment charge during the second quarter of 2018 of $0.1 million in cost of revenue to write-down certain center level assets within our Services segment. Our expected non-discounted future cash flows used in our impairment testing are based upon cash flow projections and, if appropriate, include assumed proceeds upon sale of the asset group at the end of the cash flow period. We believe our procedures for developing cash flow projections, including the estimated sales proceeds, are reasonable and consistent with current market conditions for each of the dates when impairment testing has been performed. Developing cash flow projections requires significant estimates and judgment. Among other things, slower than expected patient ramp or lower than expected reimbursement rates would negatively impact our cash flow projections in the near term. Fair value of the asset group was estimated using a discounted cash flow approach. Estimating fair value requires significant judgment in the selection of the valuation technique and assumptions used in developing cash flow projections, growth rates and discount rates. Our assumptions are based on our best estimates, using appropriate and customary market participant assumptions. Any adverse changes in certain valuation assumptions could result in the need to record additional impairment to write down all or a portion the centers’ remaining asset carrying value. We had $11.3 million of long-lived assets at our Services segment at September 30, 2018. It is reasonably possible that our cash flow projections may change in the near term resulting in the need to record an impairment charge for at least some portion of these assets. Goodwill We test goodwill for impairment during the fourth quarter, or more frequently when events or changes in circumstances indicate that the goodwill might be impaired. This test includes first a qualitative assessment and then, if necessary, a quantitative assessment to determine if the fair value of a reporting unit is less than its carrying amount. Our System One, In-center and Services reporting units contain goodwill of $41.1 million, $0.5 million and $1.1 million, respectively. Factors considered in the qualitative assessment include, but are not limited to, both macroeconomic conditions and entity-specific conditions. For the quantitative assessment the reporting unit's fair value is estimated using a discounted cash flow or other fair value measurement. During 2017 and 2016 we utilized the qualitative assessment to assess the fair value of our System One and In-center reporting units and concluded that it was more likely than not that the fair value of our reporting units was greater than their carrying value. During 2017, we also utilized the qualitative assessment to assess the fair value of our Services reporting unit and concluded that it was more likely than not that the fair value of the reporting unit was greater than its carrying value. During 2016, for our Services reporting unit, we utilized the quantitative assessment noting that the fair value of the reporting unit exceeds its carrying value, indicating that goodwill was not impaired. We estimated the fair value of our Services reporting unit using a discounted cash flow approach. Estimating the fair value of our Services reporting unit requires significant judgment in the selection of the valuation technique and assumptions used in cash flow projections, growth rates and discount rates. Our assumptions are based on our best estimates, using appropriate and customary market participant assumptions. There have been no events or changes in circumstances since the date of our last goodwill impairment tests that would indicate it is more likely than not that the fair value of our reporting units is less than their carrying value. Developing cash flow projections involves significant judgment with respect to patient additions and reimbursement rates, operating income, capital expenditures and changes in working capital. Reductions in our cash flow projections due to slower than expected patient ramp or lower than expected reimbursement rates, among other things, or adverse changes in certain valuation assumptions or changes in the reporting units net assets could result in a goodwill impairment charge of up to $1.1 million in our Services reporting unit in the future. Recent Accounting Pronouncements Recently Implemented Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9: “Revenue from Contracts with Customers” (ASC 606). The standard provides that revenue should be recognized when an entity transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenues and cash flow arising from contracts with customers. The FASB has issued several amendments and updates to the new revenue standard, including how an entity should identify performance obligations. As amended, the new guidance was effective for us beginning January 1, 2018. We adopted ASC 606 using the modified retrospective method approach as of January 1, 2018. This approach was applied to all contracts not completed as of January 1, 2018. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See above in Note 2 for discussion of our updated Revenue Recognition policy. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. The adoption of ASC 606 impacted the timing of revenue recognition for our Services segment and resulted in enhanced footnote disclosures related to customer contracts as included in Note 3 to these condensed consolidated financial statements. It also modified the accounting for commissions fees as it requires such incremental and recoverable costs to be capitalized and amortized over the estimated life of the asset. Previously, these costs were expensed as incurred. The cumulative effect of the changes made to our condensed consolidated balance sheet for the adoption of ASC 606 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2018 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated balance sheet at September 30, 2018 was as follows (in thousands):
The impacts noted above are primarily attributable to the change in the timing of revenue recognition for our Services segment as the standard requires revenues to be estimated and recognized upon transfer of the promised goods and services and accounting for capitalization of certain commissions. In January 2016, the FASB issued ASU No. 2016-01: “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” which impacts the recognition, measurement, presentation and disclosure of financial assets and financial liabilities. Among other things, the standard generally requires all equity investments (except those accounted for under the equity method and those that result in consolidation of the investee) be measured at fair value through earnings. For those equity instruments that do not have readily determinable fair values, the standard permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer with such changes recognized in net income. The new guidance was effective for us beginning January 1, 2018. We have made this measurement alternative policy election for our equity investments without readily determinable fair values. The adoption of this standard did not have an impact on our financial position or results of operation. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02: "Accounting for Leases" which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than twelve months. For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU is required to be applied with a modified retrospective approach which gives the option of applying the new lease requirements as of the effective date with enhanced disclosure requirements for comparative periods presented under the current guidance or applying the new standard at the beginning of the earliest comparative period presented. The new guidance is effective for us beginning January 1, 2019 and early adoption is permitted. We are evaluating the method of adoption and the potential impact of the standard on our consolidated financial statements and related disclosures and are comparing our current policies and practices to the requirements of the standard. We have developed a project plan to develop processes and tools in order to adopt the standard on January 1, 2019. We have periodically briefed our Audit Committee on our progress made towards adoption. In August 2017, the FASB issued ASU 2017-12: "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" which amends the hedge accounting recognition and presentation requirements. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. The update is effective for us beginning January 1, 2019, with early adoption permitted. We are currently evaluating the potential impact this update will have on our financial statements. |
Revenues |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenues | Revenues The following table disaggregates our revenues by market (in thousands):
For the three and nine months ended September 30, 2018, revenue recognized from performance obligations related to prior periods, including changes to variable consideration estimates, was not material. Capitalized commission fees are amortized consistently with the pattern of transfer of the good to which the asset relates which is approximately 21 months. Capitalized commission fees were $2.3 million and $2.0 million as of September 30, 2018 and January 1, 2018, respectively, and are included in prepaid expenses and other current assets and other assets on our condensed consolidated balance sheet. During the nine months ended September 30, 2018, we recorded $1.8 million of amortization expense related to capitalized commissions, which is included in sales and marketing expense, and there was no impairment loss in relation to the costs capitalized. Long-term deferred revenues primary relate to sales of System One hardware to dialysis clinic customers in the home market made under the depot service model which is deemed to be a lease element of the respective home transactions and, to a lesser extent, deferred revenue related to our Dialyzer Production Agreement with Asahi which is recognized in revenues on a straight-line basis over the expected term of the agreement. Other revenue expected to be recognized in future years related to remaining performance obligations, excluding revenue pertaining to contracts that have an original expected duration of one year or less and contracts where revenue is recognized as invoiced, is immaterial. |
Inventory |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory | Inventory Inventory includes material, labor and overhead, and is stated at lower of cost (first-in, first-out) or market (net realizable value). The components of inventory are as follows (in thousands):
|
Property and Equipment and Field Equipment |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Field Equipment and Deferred Cost of Revenues | Property and Equipment, Field Equipment and Deferred Cost of Revenues Accumulated depreciation on property and equipment was $65.7 million and $56.8 million at September 30, 2018 and December 31, 2017, respectively. Accumulated depreciation on field equipment was $76.8 million and $51.6 million at September 30, 2018 and December 31, 2017, respectively. Accumulated amortization on deferred costs of revenues was $93.8 million and $106.3 million at September 30, 2018 and December 31, 2017, respectively. |
Intangible Assets |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets | Intangible Assets Accumulated amortization of intangible assets was $28.5 million and $27.0 million at September 30, 2018 and December 31, 2017, respectively. |
Net Income (Loss) per Share |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Income (Loss) per Share | Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing loss attributable to NxStage Medical, Inc. common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. The computation of diluted income (loss) per share is similar to basic income (loss) per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. The following potential common stock equivalents, as calculated using the treasury stock method, were not included in the computation of diluted net loss per share for the three months ended September 30, 2017 and the nine months ended September 30, 2018 and 2017 as their effect would have been anti-dilutive due to the net loss incurred (in thousands):
|
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities | Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities The components of accrued expenses are as follows (in thousands):
The components of other current liabilities are as follows (in thousands):
The components of other long-term liabilities are as follows (in thousands):
|
Segment Disclosures |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosures | Segment Disclosures We have three reportable business segments: System One, In-Center and Services. The operating results of NxStage Kidney Care are included in our Services segment. We refer to our System One segment, In-Center segment and Other category as our products business. Our System One segment includes revenues from sales and rentals of the System One and PureFlow SL dialysate preparation equipment and the sale of disposable products to customers in the home market, including through our NxStage Kidney Care dialysis centers, and critical care market. The home market is devoted to the treatment of ESRD patients in the home or a home-like setting, including skilled nursing facilities, while the critical care market is devoted to the treatment of hospital-based patients with acute kidney failure or fluid overload. Some of our largest customers in the home market provide outsourced renal dialysis services to some of our customers in the critical care market. Sales of product to both markets are made primarily through dedicated sales forces and distributed directly to the customer, or the patient, with certain products sold through distributors. Our In-Center segment includes revenues from the sale of blood tubing sets and needles for hemodialysis primarily for the treatment of ESRD patients at dialysis centers and needles for apheresis. Nearly all In-Center products are sold through national distributors. The remainder of our products business, which is included within the Other category, relates to the manufacturing of dialyzers for sale to Asahi Kasei Kuraray Medical Co., Ltd. (Asahi) and research and development and general and administrative expenses that are excluded from the segment operating performance measures. Our Services segment includes revenues from dialysis services provided to patients at our NxStage Kidney Care dialysis centers. Sales of the System One and related products to our NxStage Kidney Care dialysis centers are included in System One segment revenues, which are then eliminated upon consolidation. The accounting policies of our reportable segments are described in Note 2 to the consolidated financial statements included in our 2017 Annual Report and updated, as necessary, in Note 2 to the condensed consolidated financial statements included in this Quarterly Report. Our chief operating decision maker allocates resources to our business segments and assesses segment performance based on segment profit (loss), which consists of revenues less cost of revenues, selling and marketing and distribution expenses. The following summarizes the operating performance of our reportable segments (in thousands):
Substantially all of our revenues are derived from the sale of the System One and related products, which cannot be used with any other dialysis system, and from needles and blood tubing sets in the U.S.. The following table summarizes the number of customers who individually make up greater than ten percent of total revenues:
Sales to DaVita HealthCare Partners Inc. (DaVita) and Fresenius are in the System One segment. |
Commitments and Contingencies |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Significant commitments and contingencies at September 30, 2018 are consistent with those discussed in Note 10 to the consolidated financial statements in our 2017 Annual Report. |
Income Taxes |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes We recognized a provision for income taxes during the three and nine months ended September 30, 2018 and 2017 related to the profitable operations of certain foreign subsidiaries. In addition, the provision recognized during both periods includes the impact of an allocation of U.S. tax expense between continuing operations and total other comprehensive income (loss) of $0.1 million for both the three months ended September 30, 2018 and 2017 and $1.1 million for the nine months ended September 30, 2017. This allocation has no impact on total comprehensive income (loss) or total stockholders' equity for 2018. However, it did result in a net tax benefit from income taxes in continuing operations of less than $0.1 million and $0.2 million during the three and nine months ended September 30, 2017, respectively. In accordance with Staff Accounting Bulletin 118, we recognized provisional tax impacts related to the Tax Cuts and Jobs Act of 2017 (Tax Reform) for the year ended December 31, 2017. Specifically, we remeasured our tax assets at December 31, 2017 based on the new Federal income tax rate of 21%. No additional adjustments were recorded in the current quarter. We are still in the process of completing our evaluation of the impact of the Tax Reform on our financial statements. We will continue to make and refine our calculations as additional analysis is completed and gain a more thorough understanding of the Tax Reform. As of September 30, 2018, we had a liability for unrecognized tax benefits included in the balance sheet of approximately $1.0 million, including a nominal accrual for interest and penalties of less than $0.1 million. There have been no significant changes to these amounts during the three and nine months ended September 30, 2018. |
Stock-Based Compensation |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Stock-Based Compensation Stock-based Compensation Expense The following table presents stock-based compensation expense included in our condensed consolidated statements of comprehensive income (loss) (in thousands):
Stock Options and Restricted Stock Units The Company granted no new options during the three and nine months ended September 30, 2018. The Company granted options to purchase 7,480 and 675,358 shares of common stock during the three and nine months ended September 30, 2017, which vest based on continued employment over a period of one to four years. The weighted-average fair value of options granted during the nine months ended September 30, 2017 was $9.92 per option. The Company awarded no new restricted stock units during the three and nine months ended September 30, 2018. The Company awarded 20,970 and 175,895 restricted stock units during the three and nine months ended September 30, 2017, which vest based on continued employment over a period of three to four years. The weighted-average fair value of these restricted stock units awarded during the nine months ended September 30, 2017 was $27.23 per unit. |
Stockholders' Equity |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity We received 36,143 and 97,828 shares of common stock that were surrendered in payment for the exercise of stock options during the nine months ended September 30, 2018 and 2017, respectively. |
Noncontrolling Interest |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest | Noncontrolling Interest As of September 30, 2018, we have 4 VIEs included in our consolidated financial statements, all of which are NxStage Kidney Care dialysis centers. We are the managing member or we have a majority seat on the entity’s board of managers, manage these entities through a management services agreement. The analysis upon which these consolidation determinations rest are complex, involve uncertainties and require significant judgment on various matters. At September 30, 2018 and December 31, 2017, total assets of our VIEs were $6.2 million and $5.6 million, respectively, and total liabilities and noncontrolling interests of our VIEs were $5.8 million and $5.8 million, respectively. We have potential obligations to purchase the noncontrolling interests held by third parties in certain of our consolidated subsidiaries. These obligations are in the form of put provisions and are contingently exercisable at the third-party owners' discretion given specific facts and circumstances as outlined in each specific put provision. If these put provisions were exercised, we would be required to purchase all the third-party owners' noncontrolling interests at a fair value at the time of exercise pursuant to the terms of the agreement. At September 30, 2018 the Company's noncontrolling interests subject to put provisions were $(0.3) million and none of the rights were exercisable. The following table sets forth the changes in noncontrolling interest not subject to put provisions for the three and nine months ended September 30, 2018 and 2017 (in thousands):
|
Derivative Instruments and Hedging |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging | Derivative Instruments and Hedging We operate manufacturing and service facilities in Mexico, Germany and Italy, and we purchase materials and pay our employees at those facilities in pesos and euros, and as such, we are potentially exposed to adverse as well as beneficial movements in currency exchange rates. We enter into foreign exchange forward contracts to minimize the impact of currency exchange rate fluctuations on these peso and euro denominated expenses. These contracts have durations of up to twelve months and are designated as cash flow hedges. The counterparties to these foreign exchange forward contracts are creditworthy financial institutions; therefore, we do not consider the risk of counterparty nonperformance to be material. As of September 30, 2018 and December 31, 2017, the notional amount of our outstanding contracts that are designated as cash flow hedges was $21.9 million and $24.1 million, respectively. The fair value of these contracts is recorded on the balance sheet within prepaid expenses and other current assets or accrued expenses depending on the gain (loss) position. The fair value of these contracts was a net asset of $0.3 million at September 30, 2018 and a net asset of less than $0.1 million at December 31, 2017. The cash flows related to our currency exchange contracts are classified as operating cash flows, which is consistent with the cash flow treatment of the underlying items being hedged. Gains or losses related to hedge ineffectiveness recognized in earnings were not material during the nine months ended September 30, 2018 and 2017. Given the short-term nature of our contracts, any gains or losses recorded within accumulated other comprehensive income (loss) will be recognized in earnings within the next twelve months. The following table presents the effect of these contracts designated as cash flow hedges on our condensed consolidated financial statements (in thousands):
|
Accumulated Other Comprehensive (Loss) Income |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accumulated Other Comprehensive (Loss) Income | Accumulated Other Comprehensive (Loss) Income The following additional information is provided with respect to the accumulated other comprehensive (loss) income as presented on the condensed consolidated balance sheets (in thousands):
(1) Reclassifications of gains (losses) on derivative instruments are included in cost of revenues on the condensed consolidated statement of comprehensive income (loss). See Note 15, Derivative Instruments and Hedging for further information. (2) Other includes cumulative translation adjustments and, to a lesser extent, pension benefits. |
Fair Value Measurements |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We have certain financial assets and liabilities measured at fair value on a recurring and non-recurring basis recorded in our condensed consolidated balance sheets. The fair value measurements used are based on quoted prices, when available, or through the use of alternative approaches. The inputs used to determine fair value have been classified as Level 1, 2 or 3. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves for similar instruments and model-derived valuations whose inputs are observable. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability. We measure the fair value of our foreign exchange forward contracts classified as derivative instruments using an income approach, based on prevailing market forward rates less the contract rate multiplied by the notional amount. The product of this calculation is then adjusted for counterparty risk. We did not have any transfers between Level 1 and Level 2 and Level 3 during the nine months ended September 30, 2018. The following tables present assets and liabilities measured at fair value on a recurring basis and their level within the value hierarchy (in thousands):
The carrying amount of our long-term debt approximates fair value at September 30, 2018 and December 31, 2017. The fair value of our long-term debt was estimated using inputs derived principally from market observable data, including current rates offered to us for debt of the same or similar remaining maturities. Within the hierarchy of fair value measurements, these are Level 2 inputs. The carrying amounts reflected in the condensed consolidated balance sheets for cash and cash equivalents (including money market funds), accounts receivable, prepaid expenses and other current and non-current assets, accounts payable and accrued expenses approximate fair value due to their short-term nature. At September 30, 2018 and December 31, 2017, we had an equity instrument without readily determinable fair values of $2.5 million for which we have elected the measurement alternative. We have evaluated this investment for any impairment, as well as any observable price changes for an identical or similar equity instrument of the same issuer, and determined that no material adjustment in the carrying value was required for the nine months ended September 30, 2018. |
Supplemental Cash Flow Information |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Information | Supplemental Cash Flow Information The following additional information is provided with respect to the condensed consolidated statements of cash flows (in thousands):
|
Summary of Significant Accounting Policies (Policies) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements as of September 30, 2018 and December 31, 2017 and for the three and nine months ended September 30, 2018 and 2017, and related notes, are unaudited but, in the opinion of our management, include all adjustments, consisting of normal recurring adjustments, that are necessary for fair statement of the interim periods presented. Our unaudited condensed consolidated financial statements have been prepared following the requirements of the Securities and Exchange Commission (SEC) for interim reporting. As permitted under these rules, we have condensed or omitted certain footnotes and other financial information that are normally required by U.S. generally accepted accounting principles (GAAP). Our accounting policies are described in the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2017 (2017 Annual Report) and updated, as necessary, in this Quarterly Report on Form 10-Q (Quarterly Report). Operating results for any interim period are not necessarily indicative of results for the entire year or future periods. The December 31, 2017 condensed consolidated balance sheet contained herein was derived from audited financial statements, but does not include all disclosures that would be required for audited financial statements under GAAP. For further information, refer to the consolidated financial statements and footnotes thereto included in our 2017 Annual Report. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Use of Estimates | The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Such financial statements reflect all adjustments that, in the opinion of management, are necessary for a fair presentation of the results of the periods presented. All such adjustments are of a normal recurring nature. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation Our condensed consolidated financial statements include the accounts of NxStage Medical, Inc. and our wholly-owned subsidiaries and other entities in which we maintain a majority voting interests or for which we maintain effective control, including variable interest entities ("VIEs") for which we are deemed the primary beneficiary. All significant intercompany balances and transactions have been eliminated. Noncontrolling interests represent the proportionate equity interests in the consolidated entities that are not wholly owned by us. Noncontrolling interests of acquired entities are recognized at their initial fair value. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue Recognition We recognize revenue from product sales and services when earned through fulfillment of our performance obligations. The amount of revenue recognized is based on the total consideration that we ultimately expect to collect relative to the good or service provided. We estimate the standalone selling price for an individual performance obligation based on consideration of both industry and Company-specific factors, including the profit margin for similar products, the cost to produce the deliverable and the anticipated margin on that deliverable and the characteristics of the varying markets in which the deliverable is sold. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from revenues and reported on a net basis. In general, we do not have any significant extended payment terms as payment is received at or shortly after the point of sale. The expected costs associated with our standard product warranties continue to be recognized as expense when the products are sold. When shipping and handling activities are performed after the transfer of control to the customer (e.g., when control transfers prior to delivery), they are considered as fulfillment activities, and accordingly, the costs are accrued for when the related revenue is recognized. System One Segment We derive revenue in the home market primarily from sales of the System One hardware and sales of disposable products. We enter into arrangements with customers that may include multiple elements including equipment lease or licensing transactions pursuant to the depot service model described below or equipment sales with no post-delivery obligations other than standard warranty obligations, disposable product sales and services. The transaction price is allocated to the elements including allocation to the lease and non-lease elements of the arrangement, where applicable, based on their relative standalone selling price and recognized pursuant to the applicable guidance. System One hardware sales to dialysis clinic customers in the home market are made under the depot service model whereby equipment requiring service is picked up and a replacement device is shipped to the site of care. Accordingly, we recognize upfront fees received from equipment transactions as revenue on a straight-line basis over the term of our remaining service obligation, which generally range between 5 and 7 years, and direct costs relating to the delivered equipment are classified in deferred cost of revenues and amortized over the same expected period as the related revenue. Beginning in the third quarter of 2018, we entered into a long-term licensing arrangement with one of our customers. Under this new arrangement, a number of this customer’s previously purchased units were converted to a license arrangement in order to extend access to the service pool under the service depot model for a period beyond the initial contractual period. The customer agreed to pay up-front the fees related to this multiyear license. This amount is reflected as an increase in accounts receivable and deferred revenue as of the end of the period, and the amount in deferred revenue will be amortized on a straight line basis over the term. Disposable products sales are recognized in accordance with the contract terms. We also offer a month-to-month System One hardware rental arrangements. Under these arrangements, revenue is recognized on a monthly basis in accordance with agreed upon arrangements with the customers. Our sales arrangements with our international distributors are structured as direct product sales and have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. In the critical care market, we structure sales of the System One and disposable products as direct product sales and have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Certain of these arrangements provide for training, technical support and equipment service to our customers. We recognize training and technical support revenue when the related services are performed and our performance obligations are satisfied. In the case of equipment service contracts entered into after the initial standard warranty period, the service contract revenue is recognized ratably over the service period. Some of our contracts with customers in the System One segment contain contractually determined volume discounts offered to similar classes of customers. In addition, in many agreements we offer rebates and discounts for early payment which result in the ultimate payment being variable. The variable consideration paid by the customer is estimated and recognized when we satisfy our performance obligation (generally upon delivery) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. We are able to reliably estimate the amount of rebates and discounts and record them as a reduction to revenue and accounts receivable at the time of sale. In-Center Segment Our In-Center segment sales are structured as direct product sales primarily through distributors, and we have no significant post-delivery obligations with the exception of standard warranty obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Some of our distribution contracts for the In-Center segment contain rebates and discounts for early payment which results in the ultimate payment being variable. The variable fee paid by the distributor is estimated and recognized when we satisfy our performance obligation (generally upon delivery to the distributor) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. We are able to reliably estimate the amount of rebates/discounts and record them as a reduction to revenue and trade accounts receivable at the time of sale. Services Segment Revenues in our Services segment are derived from dialysis care services provided to patients at our NxStage Kidney Care dialysis centers. Revenues are recognized in the period in which services are provided. For revenues associated with Medicare, Medicaid or commercial insurers with which we have formal agreements, revenue is recognized based on contractual rates or rates established by statute or regulation in the case of Medicare and Medicaid. For certain classes of payors, for example non-contracted commercial health insurance payors and amounts due from patients (including co-pay and deductible amounts), revenue is recognized based on our estimate of the consideration that will be ultimately received from the payor which results in the ultimate payment being variable. The variable fee is estimated using historical collections experience with similar classes of payors and recognized when we satisfy our performance obligation (when services are provided) to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized to date will not occur. Overall, these estimates reflect the Company’s best estimates of the amount of consideration to which it is entitled from these customers. The amount of variable consideration which is included in the transaction price may be constrained, and is included in the sales price only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may differ from our estimates. If actual results in the future vary from our estimates, we adjust these estimates, which would affect revenues and earnings in the period such variances become known. Such changes, if material, will be disclosed in the period such variances become known. Other Other revenues relate to the manufacturing of dialyzers for sale to Asahi Kasei Kuraray Medical Co. (Asahi). Sales to Asahi are structured as direct product sales and we have no significant post-delivery obligations. Revenue from direct product sales is recognized upon delivery in accordance with contract terms. Costs to Obtain or Fulfill a Contract We capitalize commission fees as costs of obtaining a contract, when they are incremental and if they are expected to be recovered, and amortize them consistently with the pattern of transfer of the good to which the asset relates. If the expected amortization period is one year or less, the commission fee is expensed when incurred. Direct costs related to the delivered equipment within the System One home market are capitalized as deferred cost of revenues and amortized over the same expected period as the related revenue. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration of Credit Risk | Concentration of Credit Risk Concentration of credit risk with respect to accounts receivable is primarily limited to certain customers to whom we make substantial sales. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Warranty Costs | Warranty Costs We accrue estimated costs that we may incur under our product warranty programs at the time the product revenue is recognized, based on contractual rights and historical experience. Warranty expense is included in cost of revenues in the condensed consolidated statements of comprehensive income (loss). |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangibles and Other Long-Lived Assets | Intangibles and Other Long-Lived Assets Intangible assets are carried at cost less accumulated amortization. For assets with determinable useful lives, amortization is recognized using the straight-line method over the estimated economic lives of the respective intangible assets. Long-lived assets, including intangible assets, are evaluated for recoverability whenever events or circumstances indicate that their carrying value may not be recoverable. Recoverability of long-lived assets is assessed at the lowest level for which discrete cash flows are available and is measured by comparing the asset group’s carrying value to its expected non-discounted future cash flows. If the sum of the expected non-discounted future cash flows is less than the carrying amount of the long-lived assets, an impairment loss is recognized for excess of the carrying amount of the asset group over its fair value. In the third quarter 2018, events and circumstances have indicated that certain long-lived tangible assets in the Services segment may not be recoverable. Therefore, a recoverability test was performed at the center level by comparing the carrying value of each center to its estimated future undiscounted cash flows, within the initial lease term (which is the equivalent to the depreciable life of the centers' most significant asset, its leasehold improvements). As of September 30, 2018, our expected non-discounted future cash flows for the majority of our centers indicated such carrying amounts were expected to be recovered. We recorded an impairment charge during the second quarter of 2018 of $0.1 million in cost of revenue to write-down certain center level assets within our Services segment. Our expected non-discounted future cash flows used in our impairment testing are based upon cash flow projections and, if appropriate, include assumed proceeds upon sale of the asset group at the end of the cash flow period. We believe our procedures for developing cash flow projections, including the estimated sales proceeds, are reasonable and consistent with current market conditions for each of the dates when impairment testing has been performed. Developing cash flow projections requires significant estimates and judgment. Among other things, slower than expected patient ramp or lower than expected reimbursement rates would negatively impact our cash flow projections in the near term. Fair value of the asset group was estimated using a discounted cash flow approach. Estimating fair value requires significant judgment in the selection of the valuation technique and assumptions used in developing cash flow projections, growth rates and discount rates. Our assumptions are based on our best estimates, using appropriate and customary market participant assumptions. Any adverse changes in certain valuation assumptions could result in the need to record additional impairment to write down all or a portion the centers’ remaining asset carrying value. We had $11.3 million of long-lived assets at our Services segment at September 30, 2018. It is reasonably possible that our cash flow projections may change in the near term resulting in the need to record an impairment charge for at least some portion of these assets. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill | Goodwill We test goodwill for impairment during the fourth quarter, or more frequently when events or changes in circumstances indicate that the goodwill might be impaired. This test includes first a qualitative assessment and then, if necessary, a quantitative assessment to determine if the fair value of a reporting unit is less than its carrying amount. Our System One, In-center and Services reporting units contain goodwill of $41.1 million, $0.5 million and $1.1 million, respectively. Factors considered in the qualitative assessment include, but are not limited to, both macroeconomic conditions and entity-specific conditions. For the quantitative assessment the reporting unit's fair value is estimated using a discounted cash flow or other fair value measurement. During 2017 and 2016 we utilized the qualitative assessment to assess the fair value of our System One and In-center reporting units and concluded that it was more likely than not that the fair value of our reporting units was greater than their carrying value. During 2017, we also utilized the qualitative assessment to assess the fair value of our Services reporting unit and concluded that it was more likely than not that the fair value of the reporting unit was greater than its carrying value. During 2016, for our Services reporting unit, we utilized the quantitative assessment noting that the fair value of the reporting unit exceeds its carrying value, indicating that goodwill was not impaired. We estimated the fair value of our Services reporting unit using a discounted cash flow approach. Estimating the fair value of our Services reporting unit requires significant judgment in the selection of the valuation technique and assumptions used in cash flow projections, growth rates and discount rates. Our assumptions are based on our best estimates, using appropriate and customary market participant assumptions. There have been no events or changes in circumstances since the date of our last goodwill impairment tests that would indicate it is more likely than not that the fair value of our reporting units is less than their carrying value. Developing cash flow projections involves significant judgment with respect to patient additions and reimbursement rates, operating income, capital expenditures and changes in working capital. Reductions in our cash flow projections due to slower than expected patient ramp or lower than expected reimbursement rates, among other things, or adverse changes in certain valuation assumptions or changes in the reporting units net assets could result in a goodwill impairment charge of up to $1.1 million in our Services reporting unit in the future. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Implemented Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued ASU No. 2014-9: “Revenue from Contracts with Customers” (ASC 606). The standard provides that revenue should be recognized when an entity transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In addition, the standard requires disclosure of the nature, amount, timing and uncertainty of revenues and cash flow arising from contracts with customers. The FASB has issued several amendments and updates to the new revenue standard, including how an entity should identify performance obligations. As amended, the new guidance was effective for us beginning January 1, 2018. We adopted ASC 606 using the modified retrospective method approach as of January 1, 2018. This approach was applied to all contracts not completed as of January 1, 2018. We recognized the cumulative effect of initially applying the new revenue standard as an adjustment to the opening balance of retained earnings. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. See above in Note 2 for discussion of our updated Revenue Recognition policy. We do not expect the adoption of the new revenue standard to have a material impact to our net income on an ongoing basis. The adoption of ASC 606 impacted the timing of revenue recognition for our Services segment and resulted in enhanced footnote disclosures related to customer contracts as included in Note 3 to these condensed consolidated financial statements. It also modified the accounting for commissions fees as it requires such incremental and recoverable costs to be capitalized and amortized over the estimated life of the asset. Previously, these costs were expensed as incurred. The cumulative effect of the changes made to our condensed consolidated balance sheet for the adoption of ASC 606 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2018 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated balance sheet at September 30, 2018 was as follows (in thousands):
The impacts noted above are primarily attributable to the change in the timing of revenue recognition for our Services segment as the standard requires revenues to be estimated and recognized upon transfer of the promised goods and services and accounting for capitalization of certain commissions. In January 2016, the FASB issued ASU No. 2016-01: “Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities” which impacts the recognition, measurement, presentation and disclosure of financial assets and financial liabilities. Among other things, the standard generally requires all equity investments (except those accounted for under the equity method and those that result in consolidation of the investee) be measured at fair value through earnings. For those equity instruments that do not have readily determinable fair values, the standard permits the application of a measurement alternative using the cost of the investment, less any impairments, plus or minus changes resulting from observable price changes for an identical or similar investment of the same issuer with such changes recognized in net income. The new guidance was effective for us beginning January 1, 2018. We have made this measurement alternative policy election for our equity investments without readily determinable fair values. The adoption of this standard did not have an impact on our financial position or results of operation. Recent Accounting Pronouncements Not Yet Adopted In February 2016, the FASB issued ASU No. 2016-02: "Accounting for Leases" which amends the existing accounting standards for leases. The new standard requires lessees to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than twelve months. For lessees, leases will continue to be classified as either operating or financing in the income statement. This ASU is required to be applied with a modified retrospective approach which gives the option of applying the new lease requirements as of the effective date with enhanced disclosure requirements for comparative periods presented under the current guidance or applying the new standard at the beginning of the earliest comparative period presented. The new guidance is effective for us beginning January 1, 2019 and early adoption is permitted. We are evaluating the method of adoption and the potential impact of the standard on our consolidated financial statements and related disclosures and are comparing our current policies and practices to the requirements of the standard. We have developed a project plan to develop processes and tools in order to adopt the standard on January 1, 2019. We have periodically briefed our Audit Committee on our progress made towards adoption. In August 2017, the FASB issued ASU 2017-12: "Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities" which amends the hedge accounting recognition and presentation requirements. The update is intended to more closely align hedge accounting with companies’ risk management strategies, simplify the application of hedge accounting and increase transparency as to the scope and results of hedge programs. The update is effective for us beginning January 1, 2019, with early adoption permitted. We are currently evaluating the potential impact this update will have on our financial statements. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss per Share | Net Income (Loss) per Share Basic net income (loss) per share is computed by dividing loss attributable to NxStage Medical, Inc. common stockholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. The computation of diluted income (loss) per share is similar to basic income (loss) per share, except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potentially dilutive common shares had been issued. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Disclosure | We have three reportable business segments: System One, In-Center and Services. The operating results of NxStage Kidney Care are included in our Services segment. We refer to our System One segment, In-Center segment and Other category as our products business. Our System One segment includes revenues from sales and rentals of the System One and PureFlow SL dialysate preparation equipment and the sale of disposable products to customers in the home market, including through our NxStage Kidney Care dialysis centers, and critical care market. The home market is devoted to the treatment of ESRD patients in the home or a home-like setting, including skilled nursing facilities, while the critical care market is devoted to the treatment of hospital-based patients with acute kidney failure or fluid overload. Some of our largest customers in the home market provide outsourced renal dialysis services to some of our customers in the critical care market. Sales of product to both markets are made primarily through dedicated sales forces and distributed directly to the customer, or the patient, with certain products sold through distributors. Our In-Center segment includes revenues from the sale of blood tubing sets and needles for hemodialysis primarily for the treatment of ESRD patients at dialysis centers and needles for apheresis. Nearly all In-Center products are sold through national distributors. The remainder of our products business, which is included within the Other category, relates to the manufacturing of dialyzers for sale to Asahi Kasei Kuraray Medical Co., Ltd. (Asahi) and research and development and general and administrative expenses that are excluded from the segment operating performance measures. Our Services segment includes revenues from dialysis services provided to patients at our NxStage Kidney Care dialysis centers. Sales of the System One and related products to our NxStage Kidney Care dialysis centers are included in System One segment revenues, which are then eliminated upon consolidation. The accounting policies of our reportable segments are described in Note 2 to the consolidated financial statements included in our 2017 Annual Report and updated, as necessary, in Note 2 to the condensed consolidated financial statements included in this Quarterly Report. Our chief operating decision maker allocates resources to our business segments and assesses segment performance based on segment profit (loss), which consists of revenues less cost of revenues, selling and marketing and distribution expenses. |
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Measurements | Fair Value Measurements We have certain financial assets and liabilities measured at fair value on a recurring and non-recurring basis recorded in our condensed consolidated balance sheets. The fair value measurements used are based on quoted prices, when available, or through the use of alternative approaches. The inputs used to determine fair value have been classified as Level 1, 2 or 3. Fair values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and yield curves for similar instruments and model-derived valuations whose inputs are observable. Fair values determined by Level 3 inputs utilize unobservable data points for the asset or liability. We measure the fair value of our foreign exchange forward contracts classified as derivative instruments using an income approach, based on prevailing market forward rates less the contract rate multiplied by the notional amount. The product of this calculation is then adjusted for counterparty risk. |
Summary of Significant Accounting Policies (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Rollforward of Warranty Accrual | The following is a rollforward of our warranty accrual (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of New Accounting Pronouncements and Changes in Accounting Principles | The cumulative effect of the changes made to our condensed consolidated balance sheet for the adoption of ASC 606 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated statement of comprehensive income (loss) for the three and nine months ended September 30, 2018 was as follows (in thousands):
In accordance with the new revenue standard requirements, the disclosure of the impact of adoption on our condensed consolidated balance sheet at September 30, 2018 was as follows (in thousands):
|
Revenues (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The following table disaggregates our revenues by market (in thousands):
|
Inventory (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Inventory | The components of inventory are as follows (in thousands):
|
Net Income (Loss) per Share (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Anti-dilutive Net Loss Per Share | The following potential common stock equivalents, as calculated using the treasury stock method, were not included in the computation of diluted net loss per share for the three months ended September 30, 2017 and the nine months ended September 30, 2018 and 2017 as their effect would have been anti-dilutive due to the net loss incurred (in thousands):
|
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Payables and Accruals [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Accrued Expenses | The components of accrued expenses are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Current liabilities | The components of other current liabilities are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Other Long-term Liabilities | The components of other long-term liabilities are as follows (in thousands):
|
Segment Disclosures (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Operating Performance of Reportable Segments | The following summarizes the operating performance of our reportable segments (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Customers Who Individually Make Up Greater than 10% of Total Revenues | The following table summarizes the number of customers who individually make up greater than ten percent of total revenues:
|
Stock-Based Compensation (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock-Based Compensation Expense in Consolidated Statements of Comprehensive Loss | The following table presents stock-based compensation expense included in our condensed consolidated statements of comprehensive income (loss) (in thousands):
|
Noncontrolling Interest (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Noncontrolling Interest [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Changes in Noncontrolling Interest | The following table sets forth the changes in noncontrolling interest not subject to put provisions for the three and nine months ended September 30, 2018 and 2017 (in thousands):
|
Derivative Instruments and Hedging (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of Contracts Designated as Cash Flow Hedges on Consolidated Financial Statements | The following table presents the effect of these contracts designated as cash flow hedges on our condensed consolidated financial statements (in thousands):
|
Accumulated Other Comprehensive (Loss) Income (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Additional Information on Accumulated Other Comprehensive (Loss) Income | The following additional information is provided with respect to the accumulated other comprehensive (loss) income as presented on the condensed consolidated balance sheets (in thousands):
(1) Reclassifications of gains (losses) on derivative instruments are included in cost of revenues on the condensed consolidated statement of comprehensive income (loss). See Note 15, Derivative Instruments and Hedging for further information. (2) Other includes cumulative translation adjustments and, to a lesser extent, pension benefits. |
Fair Value Measurements (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on Recurring Basis | The following tables present assets and liabilities measured at fair value on a recurring basis and their level within the value hierarchy (in thousands):
|
Supplemental Cash Flow Information (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Supplemental Cash Flow Information | The following additional information is provided with respect to the condensed consolidated statements of cash flows (in thousands):
|
Nature of Operations, Proposed Merger, Basis of Presentation and Principles of Consolidation (Details) $ / shares in Units, $ in Millions |
Oct. 27, 2017
USD ($)
|
Oct. 18, 2017 |
Sep. 30, 2018
country
|
Aug. 07, 2017
$ / shares
|
---|---|---|---|---|
Accounting Policies [Abstract] | ||||
Number of countries in which entity operates | country | 21 | |||
Fresenius Medical Care Holdings, Inc. | ||||
Business Acquisition [Line Items] | ||||
Share price (in dollars per share) | $ / shares | $ 30.00 | |||
Business combination, waiting period, extension term | 30 days | |||
Termination of merger agreement, fee paid to acquiree | $ 100 | |||
Termination of merger agreement, fee paid to acquirer | $ 60 | |||
Termination of merger agreement, period to publicly withdraw from the agreement before termination | 10 days | |||
Termination of merger agreement, period to not enter into alternative acquisition after termination | 12 months |
Summary of Significant Accounting Policies - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Accounting Policies [Line Items] | |||
Goodwill | $ 42,748 | $ 42,748 | |
System One | |||
Accounting Policies [Line Items] | |||
Goodwill | 41,100 | ||
Services | |||
Accounting Policies [Line Items] | |||
Asset impairment recognized | $ 100 | ||
Long-lived assets | 11,300 | ||
Goodwill | 1,100 | ||
In-Center | |||
Accounting Policies [Line Items] | |||
Goodwill | $ 500 | ||
Minimum | System One | |||
Accounting Policies [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 5 years | ||
Maximum | System One | |||
Accounting Policies [Line Items] | |||
Revenue, remaining performance obligation, expected timing of satisfaction, period | 7 years | ||
Fresenius Medical Care Holdings, Inc. | Customer Concentration Risk | Accounts Receivable | |||
Accounting Policies [Line Items] | |||
Concentration Risk, Percentage | 39.50% |
Summary of Significant Accounting Policies - Schedule of Rollforward of Warranty Accrual (Details) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
| |
Movement in Standard and Extended Product Warranty Accrual, Increase (Decrease) [Roll Forward] | |
Balance at beginning of period | $ 293 |
Provision | 588 |
Usage | (336) |
Balance at end of period | $ 545 |
Summary of Significant Accounting Policies - Comprehensive Loss (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | $ 108,122 | $ 97,295 | $ 322,390 | $ 290,340 |
Cost of revenues | 61,589 | 56,688 | 183,745 | 167,377 |
Selling and marketing | 17,549 | $ 16,984 | 53,735 | $ 50,595 |
Calculated under Revenue Guidance in Effect before Topic 606 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | 108,259 | 323,986 | ||
Cost of revenues | 61,630 | 183,892 | ||
Selling and marketing | 17,619 | 53,970 | ||
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09 | ||||
Revenue, Initial Application Period Cumulative Effect Transition [Line Items] | ||||
Revenues | (137) | (1,596) | ||
Cost of revenues | (41) | (147) | ||
Selling and marketing | $ (70) | $ (235) |
Inventory - Components of Inventory (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Purchased components | $ 14,695 | $ 14,947 |
Work in process | 14,530 | 13,433 |
Finished goods | 24,128 | 20,832 |
Total | $ 53,353 | $ 49,212 |
Property and Equipment, Field Equipment and Deferred Cost of Revenues - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Property, Plant and Equipment [Line Items] | ||
Deferred costs, accumulated amortization | $ 93.8 | $ 106.3 |
Property And Equipment Excluding Field Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Accumulated depreciation | 65.7 | 56.8 |
Field Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Accumulated depreciation | $ 76.8 | $ 51.6 |
Intangible Assets - Additional Information (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Accumulated amortization of intangible assets | $ 28.5 | $ 27.0 |
Net Income (Loss) per Share - Schedule of Anti-dilutive Net Loss Per Share (Details) - shares shares in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common stock equivalents excluded from computation of earnings per share (in shares) | 1,349 | 1,396 | 1,276 | 1,364 |
Options to purchase common stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common stock equivalents excluded from computation of earnings per share (in shares) | 1,165 | 1,069 | 1,074 | 1,126 |
Unvested restricted stock | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Potential common stock equivalents excluded from computation of earnings per share (in shares) | 184 | 327 | 202 | 238 |
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities - Components of Accrued Expenses (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Payroll, compensation and related benefits | $ 17,502 | $ 13,195 |
Distribution expenses | 5,217 | 4,914 |
Other | 12,135 | 9,876 |
Total | $ 34,854 | $ 27,985 |
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities - Components of Other Current Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Capital lease obligations | $ 1,996 | $ 2,131 |
Deferred revenue, current portion | 1,146 | 1,473 |
Other | 847 | 955 |
Total | $ 3,989 | $ 4,559 |
Accrued Expenses, Other Current Liabilities and Other Long-Term Liabilities - Components of Other Long-term Liabilities (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Payables and Accruals [Abstract] | ||
Capital lease obligations | $ 10,765 | $ 11,589 |
Lease incentive obligations | 2,432 | 2,652 |
Benefit plan obligations | 2,129 | 2,060 |
Other | 1,743 | 1,523 |
Total | $ 17,069 | $ 17,824 |
Segment Disclosures - Additional Information (Details) |
9 Months Ended |
---|---|
Sep. 30, 2018
segment
| |
Segment Reporting [Abstract] | |
Number of reporting segments | 3 |
Segment Disclosures - Summary of Customers Who Individually Make Up Greater than 10% of Total Revenues (Details) - Sales Revenue, Net - Customer Concentration Risk |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
DaVita | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenues | 19.00% | 20.00% | 19.00% | 20.00% |
Fresenius | ||||
Revenue, Major Customer [Line Items] | ||||
Percentage of revenues | 21.00% | 20.00% | 20.00% | 19.00% |
Income Taxes - Additional Information (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Tax Contingency [Line Items] | ||||
Benefit from income taxes | $ (512,000) | $ (469,000) | $ (1,148,000) | $ 166,000 |
Allocation adjustments, amount | 100,000 | 100,000 | 1,100,000 | |
Liability for unrecognized tax benefits | 1,000,000 | 1,000,000 | ||
Interest and penalties accrued | 100,000 | 100,000 | ||
Interest and penalties accrued during period | $ 0 | $ 0 | ||
Maximum | ||||
Income Tax Contingency [Line Items] | ||||
Benefit from income taxes | $ 100,000 | $ 200,000 |
Stockholders' Equity - Additional Information (Details) - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Equity [Abstract] | ||
Shares delivered or surrendered in payment for the exercise of stock options (in shares) | 36,143 | 97,828 |
Noncontrolling Interest - Additional Information (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
entity
|
Jan. 01, 2018
USD ($)
|
Dec. 31, 2017
USD ($)
|
---|---|---|---|
Noncontrolling Interest [Abstract] | |||
Number of VIEs | entity | 4 | ||
Total assets of variable interest entities | $ 6,200 | $ 5,600 | |
Total liabilities and noncontrolling interest of variable interest entities | 5,800 | 5,800 | |
Noncontrolling interests subject to put provisions | $ (291) | $ (116) | $ (165) |
Noncontrolling Interest - Schedule of Changes in Noncontrolling Interest (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Jun. 30, 2018 |
Dec. 31, 2017 |
Jun. 30, 2017 |
Dec. 31, 2016 |
|
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||||||
Balance at beginning of period | $ 641 | $ (145) | $ (12) | $ 625 | ||||
Adjustment due to adoption of ASC 606 | $ 0 | $ 542 | $ 0 | $ 0 | ||||
Accretion to redemption value of noncontrolling interests | 68 | 481 | 68 | 481 | ||||
Reclassification of noncontrolling interest subject to put provision | 0 | (744) | 0 | (744) | ||||
Net loss attributable to noncontrolling interest in consolidated subsidiary | 3 | (376) | 114 | (1,146) | ||||
Balance at end of period | $ 712 | $ (784) | $ 712 | $ (784) |
Derivative Instruments and Hedging - Additional Information (Details) - USD ($) |
9 Months Ended | ||
---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Hedging Transactions And Derivative Financial Instruments [Line Items] | |||
Period of cash flow hedges (up to) | 12 months | ||
Gain (loss) on ineffectiveness in earnings | $ 0 | $ 0 | |
Foreign exchange forward contracts | Cash Flow Hedges | |||
Hedging Transactions And Derivative Financial Instruments [Line Items] | |||
Notional amount of outstanding contracts | 21,900,000 | $ 24,100,000 | |
Fair value of outstanding contracts assets | $ 300,000 | $ 100,000 |
Derivative Instruments and Hedging - Effect of Contracts Designated as Cash Flow Hedges on Consolidated Financial Statements (Details) - Foreign exchange forward contracts - Cost of revenues - Cash Flow Hedges - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Gain (Loss) Recognized in OCI (Effective Portion) | $ 84 | $ 116 | $ 903 | $ 4,211 |
Gain (Loss) Reclassified from OCI into Income (Effective Portion) | $ (240) | $ 733 | $ 735 | $ 254 |
Fair Value Measurements Additional Details (Details) - USD ($) $ in Millions |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Fair Value Disclosures [Abstract] | ||
Investment not readily marketable, fair value | $ 2.5 | $ 2.5 |
Supplemental Cash Flow Information - Summary of Supplemental Cash Flow Information (Details) - USD ($) $ in Thousands |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Noncash Investing and Financing Activities: | ||
Transfers from inventory to field equipment | $ 15,649 | $ 13,709 |
Transfers from field equipment to deferred cost of revenues | 11,875 | 7,570 |
Market value of shares received in payment for exercise of stock options | 887 | 2,771 |
PP&E financed by construction liability | $ 95 | $ 109 |
(N , 29$I'Q/
M M GL(<.'?XK<' 1R"^ O!D@0T L^(1[&J%EV ^?K$GA$'/^XP,;)2IM?NL]V=S!\&8&2DJ)R'EV]@=,+1[TJ
MX)3>WV5+O SA"B6;+C\%70F'23?9EU1W&;1\.%3[;*6TE.%_5S%5]\1=10GT
MQ*._2[9PRG&!GE%P"-3!*4R_@[6@?%M7A>B!J1XWX%6* ,":U3+Y$TN9"]SE
M.M?A1JY24$;!/-FM^;BC"8JS0KL0-1\*.ORE )LIPJ@R2T?BFQU >&MQ1Z!D]A%)N5#1MYA4
M[%'8[L$:6P))-V@JL0-RYW^+)VI5)JC4[BC$!><*WB+M<@O*5:E*NJ%DS(9'
MAG/!]V'O!\-HPSERGESLL[2OZ=7M+^Z.9?@+G8SHSN?8E.1+.04]\!?04&&R
MJ,C&SN& ZVUADY:M/_) UL6^ZVS3VIKP>J.7>6O)32KU8%&0M
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M,1=$ASN5 PA
M&P@@+WD,VV9;3[WV)TB=*3S/6+S$KDQ;*K/$]M(X*G? $WO$8!YP/ 1X39:Q
M(K\36T1-,GL I418"X]LI#(%4X%N<
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M'T>T=&U9BG0A)>16?T'5_7YHN*G)UYZ8NC)C)XN-L!%9'Z!U"N0.O1\
M(> B"K] YA7('/IF(> B0.Q7R+T*N6?A!=%9LU([-3[7H0G3@X<>U,&9VQ%O$/Q#KV7(KG=9^P2
MB.:8XQ3#US%+!$/V)07?2G'D_\#Y-GR_J7 ?X?L_%*;;!.DF01H)TO^6N!5S
M_5<2MNJI!MO$:7*D-$,7)WGE70;VGLU,%9VQ%O//)
M6^^]E#3=Y^02A&;,<<+0%29=$,2K+R'H5H@C_42GV_3=9H:[2-^MHV?9MD"V
M*9!%@>Q=B5\^E+B!H->UN
M(5ECWR/4/XKY/U!+ P04 " [AF=-R2C I[*[\B/4^@^V& IJ%XY?_=E,8S89#OOY!['E&Q=_ 5!+ P04
M " [AF=-8Y](>K8! #2 P &0 'AL+W=O
WZ>-H&
M? 3\;J"WLS,)E5P07X+QHTCI*B0$$G(7%(3?KG '4@8AG\;?49-.(0-Q?OY0
MOX^U^UHNPL(=RC]-X>J4'B@IH!2==$_8/\!8SXZ2L?B?< 7IX2$3'R-':>-*
M\LXZ5*.*3T6)UV%O=-S[X6:_'VG+!#X2^$0XQ#AL"!0S_RZ-#OC\K_(3D5#;4VF/&
M>Y#L%$>,&>+VW0>^J0I^/!DF%3HR,8SYF/0]NI\PW*KSAS,<@M;_ 5!+ P04
M " [AF=->QR<'-(" #["@ &0 'AL+W=O
//BA5BYU[$4"X"(0,&]
MP'0HK3I1H[G&CVBRHZ-MQH:>&YR!<(X@58I->N 4O._0+RX>T?Y^+''U(%]N
MFI+Y[19M"&0IU; :5_%5RM(+1
(B
XL;0&5_>E44.RB*)55#WHD_9*D_A_"2@_97I
M6?1V#R^7&7SY08>/89)I=/50@:(0O2C8GN0)_CT?"G4WJ_[?GJ4P8+6$7Y
MOJQH%Y.E7-$Q.F+OTS4&AZ(-&JN6'C1U'1"X !T'%7RK(M'*7W8TP_L#EG$6
M_0C[ 1?93K>WOO51AA<)*$K+/1@[ZP?Z_FFU1S61MAD7 \3;%&YL4JZBD@0N
M[KG^GG<;!071'Z=+B]BBR.#34BB'(&5Q(C2Z+,H2B5Z\*4$V$FGKG\\+/%!(
M%?NGL^A"F0H(BH<63W"UO[V5F N0S$]2CI\_6-