NxStage recalls faulty dialysis cartridgesPosted on: 08/28/2007
LAWRENCE, Mass.—NxStage Medical Inc. has initiated a recall of dialysis cartridges experiencing dialysate leaks that could cost the company up to $2.5 million, according to a regulatory filing.
In the second quarter of 2007, NxStage started to receive an increasing number of reports about dialysate leaks associated with cartridges used in its System One portable dialysis machine, according an August 28 filing with the U.S. Securities and Exchange Commission.
“The reported incidence of leaks is higher than the company has historically observed,” NxStage wrote in the filing.
In early August, the company sent a voluntary recall letter to patients and customers informing them of the leaks, but none of the cartridge inventory was physically recalled by the company at the time of the notification, the filing said.
In the SEC filing, NxStage said that it continued its investigation through August as customers dissatisfaction continued to rise with the increasing number of leaks. The company found certain lots of cartridges were connected to the leaks. In addition, NxStage found that new lots of the cartridge inventory were less susceptible to dialysate leaks.
After discussing the leakage issue with the U.S. Food and Drug Administration, NxStage said in the SEC filing that it decided on August 24 to physically recall the affected lots of cartridge inventory being used by customers and patients, who would receive replacement cartridges at no charge. In addition, NxStage told patient and customers to destroy all affected cartridges.
As a result of the recall, NxStage said it could incur charges between $1.9 million and $2.5 million. The company said it expects to write-off all the inventory of affected cartridges the company still has in-house, which could range between $1.8 million and $2.2 million. Other charges are associated with the costs of shipping replacements and cycler servicing costs, which have increased with the number of reported leaks.
In the filing, NxStage said the short-term affect of the recall could impede its ability to meet customer demand. But the company does not expect the recall to affect its revenue guidance or patient/center counts for the rest of the year. As of June 30, 1,615 end-stage renal disease patients were using the System One machine at 265 clinics.
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