Fresenius buys Nxstage

[smartcookie]

https://www.reuters.com/article/us-nxstage-medical-m-a-fresenius-care-idUSKBN1AN0GL

So do y'all think this is a good or bad thing?  I can see it going both ways.  One thing is for sure, Fresenius definitely has the lion's share of dialysis machinery now. 

[Simon Dog]

Funny coincidence - Fresenius sent a high level delegation from corporate to my house a week ago to ask my thoughts on home hemo.

[Bill Peckham]

I do not think it is good news. Not really anything new, more of a final nail in the coffin of home hemodialysis innovation.

• If you, genius inventor, have a great new HHD device - Aksys that works - who exactly are you going to sell it to? FMC? Not going to happen, they have the Baby K and now NxStage. DaVita? They're under contract to use NxStage.

• If you are like me and would like to use the a new version of NxStage - one that has been ready to go for 6 or more years - will this speed along the release? Unlikely. Why would you make all your machines in the field obsolete unless you were being pushed by competition? See #1 for why there will be no competition.

So no I don't think it s good news. But that is really more of the same, the potential for worse is that FMC deemphasizes NxStage in favor of the more profitable Baby K and NxStage goes the route of the absorbent column technology FMC bought 9 years ago. It would not take much for NxStage to die on the vine.

[Simon Dog]

I share Mr. Bill's concern that this could slow the implementation of new generation home machines that do 65%+ URR in a treatment by using either continuous dialysate generation (Tablo) or sorbent technology and dialysate re-use (Fresenius PAK).   

My doc is good about sharing info on pressure from corporate (the filter policy, the  calcitrol/paricalcitrol policy, etc.) and he has never even hinted there was a problem prescribing NxStage instead of BabyK.

The new NxStage machine I have heard of uses a touch screen interface, but delivers the same therapy (same filter type, solutions, rates, etc.) as the current 1 and 1S.  Is this the system Bill is thinking of or are you referring to the System 2 bicarb based machine.

[Bill Peckham]

NxStage could be half the weight if they simply separated the bag pole from the cycler but no one will want the current machine if the same machine is produced that weighs 30LB. Without a competitive push there is no incentive to make your entire inventory obsolete.

[okarol]

AUGUST 6, 2017 / 10:40 PM /

Fresenius Medical banks on home dialysis with $2 billion NxStage acquisition
Ludwig Burger


FRANKFURT (Reuters) - Germany's Fresenius Medical Care (FMC) (FMEG.DE) has struck a $2 billion deal to acquire U.S. home dialysis equipment maker NxStage Medical Inc (NXTM.O), looking to capitalize on a trend for more patients to opt for domestic treatment.

FMC, the world leader in dialysis services and also a maker of medical gear, said on Monday its cash offer was worth $30 per Nxstage share, a 22 percent premium to the target's average price over the past 90 days.

One motive for FMC's move into cheaper home dialysis is that the U.S. healthcare system is shifting to lump-sum reimbursements for the treatment of chronically ill patients rather than paying for all the services provided. It would also require FMC to build fewer clinics.

"We see it as a chance of capital (spending) avoidance," FMC Chief Executive Rice Powell told analysts on a call. "We think that helps us. We also view this as a shot at labor efficiency ... It is still pretty early in the process but that's the way we've looked at how we would position this."

The takeover marks a renewed focus on the company's core business, after a slew of medium-sized transactions in previous years that served to build its "care coordination" business to offer a wider range of healthcare services related to dialysis.

U.S. medical regulators are supportive in principle of home dialysis because it means more frequent blood cleansing sessions, bolstering long-term health. Still, not all patients are up to the task because of the demands on their abilities, their home environment, and family members.

DEVELOPMENT COSTS

FMC is aiming to have more than 15 percent of its U.S. patients on home dialysis by 2022, up from 10.2 percent last year. Yet it expects the acquisition to add to its net income only from the third year after the deal's completion, expected in 2018, since NxStage is loss-making due to the costs of product development and opening new medical centers.

Analysts at Bernstein said the deal made strategic sense. "With reimbursement increasingly moving towards an integrated care model ... the flexibility of being able to treat patients at home is likely to be more attractive," they said.

Boston, Mass. based NxStage, maker of the System One home dialysis machine, made revenue of $366 million in 2016 and narrowed its net loss to $5 million from $15 million a year earlier. Analysts said the deal valued NxStage at around 15 times expected core profit, roughly on a par with comparable medical technology deals.

FMC sees annual pretax cost saving potential of $80 to $100 million over three to five years, and integration costs of about $150 million in the next three years.

It plans to finance the acquisition with cash and debt.

Shares in FMC slipped 2.2 percent to 77.28 euros by 1325 GMT, making them the biggest decliners on the German blue-chip DAX index .GDAXI.

The deal brings the number of German acquisitions in the United States to 77 so far this year, more than any year to date figure since 2000 when the total was 111, Thomson Reuters data showed.

https://www.reuters.com/article/us-nxstage-medical-m-a-fresenius-care-idUSKBN1AN0GL

[Simon Dog]

NxStage could be half the weight if they simply separated the bag pole from the cycler but no one will want the current machine if the same machine is produced that weighs 30LB. Without a competitive push there is no incentive to make your entire inventory obsolete.

The setup might be half the weight, but the machine would still be the same weight.

You can separate them now - just set an IV pole up next to the cycler.

[Bill Peckham]

The machine weighs 70+lb because it is designed to act as a counterweight to hung bags. The weight is there to be weight, it isn't like there is a 30 pound circuit board in there. If the bags were not attached to the cycler the cycler would not NEED to be 70+lb right now because of the design it needs to weigh what it does.

The concern I heard was that the bags need to be a certain height above the cycler for the dialysate to flow correctly, so yeah one more thing to think about but I think people would be able to work it out.

The pole says it has a 25 liter load limit, but most people use 30L / treatment. Solution? A new warmer design that incorporates the weight of one bag (11lb) into the overall counter weight to the hanging bag.

Another solution would have been to separate the weight from the cycler. It would be easier to travel with two 40lb things vs one 75lb thing but really the advantage of that is only that it make it easier to eventually separate the hanging bags from the cycler.