NxStage Medical (NXTM) Sees Q3 Charge From Voluntary Recall

August 28, 2007 10:19 AM EDT

In Today's 8-K Filing From NxStage Medical, Inc. (Nasdaq: NXTM): In the second quarter of 2007, NxStage Medical, Inc. started to experience an increased incidence of reported dialysate leaks associated with System One cartridges. The reported incidence of leaks is higher than the Company has historically observed. In early August 2007, the Company sent a letter to patients and customers informing them of the increased incidence of leaks and reminding them of existing System One labeling responsive to the risk of leaks. The Company characterized this notification as a voluntary recall. At that time, no cartridge inventory was physically recalled in connection with the notification. The Company disclosed this voluntary recall in its quarterly report on Form 10-Q for the second quarter ended June 30, 2007, filed on August 9, 2007. In that Form 10-Q, the Company indicated the amount of potentially affected inventory was up to $2.5 million, however, at that time, any material loss to that inventory was deemed improbable, based on the facts then known by the Company....Based on these facts, the Company determined on August 24, 2007 that it would incur total charges in connection with this recall in the range of $1.9 million to $2.5 million, the principal component of which relates to the write-off of inventory in the range of $1.8 million to $2.2 million. Other charges primarily relate to increased shipping for replacement product and cycler servicing costs. Substantially all of these charges would be recorded in the quarter ending September 30, 2007.

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