##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSIONWashington, D.C.
    20549
  Form 10-K
  (Mark One)þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    December 31,
    2010ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
    SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission File Number:
    000-51567
  NxStage Medical, Inc.
 (Exact Name of Registrant as
    Specified in Its Charter)
  Delaware

04-3454702(State of
    Incorporation)

(I.R.S. Employer Identification
    No.)439 S. Union St.,
    5th

    Floor, Lawrence, MA(Address of Principal
    Executive Offices)

01843(Zip
    Code)   Registrants telephone number, including area code:
 (978) 687-4700
  Securities registered pursuant to Section 12(b) of the
    Act:
 Common Stock, $0.001 par value
  Securities registered pursuant to Section 12(g) of the
    Act:
 None
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large accelerated
    filer o

Accelerated
    filer þ

Non-accelerated
    filer o
    (Do not check if a smaller reporting company)

Smaller reporting
    company o   Rule 12b-2 o þ
      DOCUMENTS
    INCORPORATED BY REFERENCE
  Form 10-K.




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##### 





NXSTAGE
    MEDICAL, INC.
  2010 ANNUAL REPORT ON
    FORM 10-K
  TABLE OF CONTENTS
   
   
 PagePART IItem 1.

Business


4Item 1A.

Risk Factors


29Item 1B.

Unresolved Staff Comments


51Item 2.

Properties


51Item 3.

Legal Proceedings


51Item 4.

[Removed and Reserved]


52PART IIItem 5.

Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


52Item 6.

Selected Financial Data


54Item 7.

Managements Discussion and Analysis of
    Financial Condition and Results of Operations


55Item 7A.

Quantitative and Qualitative Disclosures About
    Market Risk


70Item 8.

Financial Statements and Supplementary Data


71Item 9.

Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


99Item 9A.

Controls and Procedures


99Item 9B.

Other Information


102PART IIIItem 10.

Directors, Executive Officers and Corporate Governance


102Item 11.

Executive Compensation


102Item 12.

Security Ownership of Certain Beneficial Owners and Management
    and Related Stockholder Matters


102Item 13.

Certain Relationships and Related Transactions, and Director
    Independence


102Item 14.

Principal Accounting Fees and Services


102PART IVItem 15.

Exhibits, Financial Statement Schedules


102SIGNATURES


103Exhibit Index


104EX-10.10EX-21.1EX-23.1EX-31.1EX-31.2EX-32.1EX-32.2   2




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##### Table of Contents



CAUTIONARY
    NOTICE REGARDING FORWARD-LOOKING STATEMENTS
       3




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##### Table of Contents



PART I  For convenience, in this Annual Report on
    Form 10-K,
    NxStage, we, us, and
    the Company refer to NxStage Medical, Inc. and our
    consolidated subsidiaries, taken as a whole.
  Item 1.
    Business  Overview
       4




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##### Table of Contents



ease-of-use
            Form 10-K.
 5




---



##### Table of Contents



Our
    Products and Services
  The
    System One
      
    The NxStage Cycler.  A compact portable
    electromechanical device containing pumps, control mechanisms,
    safety sensors and remote data capture functionality.
    The NxStage Cartridge.  A single-use,
    disposable, integrated treatment cartridge that loads simply and
    easily into the cycler. The cartridge incorporates a proprietary
    volumetric fluid management system and includes a pre-attached
    dialyzer.
    Premixed Dialysate.  The System One uses
    high-purity premixed dialysate for hemodialysis applications.
    The volume of fluids used varies with treatment options,
    prescription, and setting. We supply our premixed dialysate in
    sterile five liter bags or through the use of our PureFlow SL
    accessory. The PureFlow SL module allows for the preparation of
    dialysate fluid in the patients home using ordinary tap
    water and dialysate concentrate thereby reducing the need for
    bagged fluids for in-home treatments.  ReadySet
    Streamline
    AV
    Fistula and Apheresis Needles
  ®
 6




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##### Table of Contents



Our
    Business by Segment
    System
    One
               7




---



##### Table of Contents



Form S-3 Form S-3 (No. 333-170654).
  In-center
     8




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##### Table of Contents



International
    Marketing,
    Customer Support
  24-hours
  on-site
  Competition
   9




---



##### Table of Contents




    product quality;
    ease-of-use;
    cost effectiveness;
    sales force coverage; and
    clinical flexibility and performance.      ease-of-use,
    
    establish the infrastructures necessary to support a growing
    home, critical care and in-center dialysis products business;
    maintain and improve product quality;
    continue to develop sales and marketing capabilities;
    continuously improve our products and develop and obtain
    clearance for new products; and
    achieve cost reductions. 10




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##### Table of Contents



and/or
  Clinical
    Experience and Results
        quality-of-life
     11




---



##### Table of Contents



Research
    and Development
  ease-of-use,
    Intellectual
    Property
      Patent No.

Regime

Title

Issue Date


Expiration Date09/512,132

US

FLOW-THROUGH PERITONEAL DIALYZER SYSTEM AND METHODS WITH ON-LINE
    DIALYSIS SOLUTION REGENERATION


7/3/2001



2/23/202009/513,902

US

LAYERED FLUID CIRCUIT ASSEMBLIES AND METHODS FOR MAKING THEM


4/29/2003



2/14/201709/829,670

US

DEVICES FOR WARMING FLUID AND METHODS OF USE


6/3/2003



4/9/202109/900,362

US

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


6/3/2003



7/7/202109/513,773

US

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


6/17/2003



2/25/202009/027,301

US

HEMOFILTRATION SYSTEM INCLUDING ULTRAFILTRATE PURIFICATION AND
    RE-INFUSION SYSTEM


6/24/2003



2/20/2018 12




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##### Table of Contents



Patent No.

Regime

Title

Issue Date


Expiration Date09/512,927

US

EXTRACORPOREAL CIRCUITS FOR PERFORMING HEMOFILTRATION EMPLOYING
    PRESSURE SENSING WITHOUT AN AIR INTERFACE


7/8/2003



2/14/201709/513,915

US

SYSTEMS AND METHODS FOR CONTROLLING BLOOD FLOW AND WASTE FLUID
    REMOVAL DURING HEMOFILTRATION


7/22/2003



2/14/201709/513,911

US

SYNCHRONIZED VOLUMETRIC FLUID BALANCING SYSTEMS AND METHODS


10/28/2003



2/14/201709/512,929

US

FLUID REPLACEMENT SYSTEMS AND METHODS FOR USE IN HEMOFILTRATION


10/28/2003



2/25/202009/905,246

US

METHOD FOR PERFORMING RENAL REPLACEMENT THERAPY INCLUDING
    PRODUCING STERILE REPLACEMENT FLUID IN A RENAL REPLACEMENT
    THERAPY UNIT


11/18/2003



7/12/202109/513,771

US

INTERACTIVE SYSTEMS AND METHODS FOR SUPPORTING HEMOFILTRATION
    THERAPIES


1/6/2004



2/14/201709/904,712

US

DEVICES AND METHODS FOR POTTING A FILTER FOR BLOOD PROCESSING


3/9/2004



7/12/202109/907,872

US

HERMETIC FLOW SELECTOR VALVE


6/1/2004



7/17/202109/513,910

US

BLOOD TREATMENT SYSTEMS AND METHODS THAT MAINTAIN STERILE
    EXTRACORPOREAL


12/14/2004



2/14/201709/865,905

US

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW


2/8/2005



2/14/201710/393,295

US

METHOD AND APPARATUS FOR MANUFACTURING FILTERS


3/29/2005



3/20/202309/894,236

US

HEMOFILTRATION SYSTEM


10/18/2005



2/14/201710/041,949

US

SYSTEMS AND METHODS FOR PERFORMING BLOOD PROCESSING AND/OR FLUID
    EXCHANGE PROCEDURES


12/27/2005



2/14/201709/174,721

US

METHODS, SYSTEMS, AND KITS FOR THE EXTRACORPOREAL PROCESSING OF
    BLOOD


2/28/2006



2/11/201810/037,429

US

METHOD AND APPARATUS FOR LEAK DETECTION IN BLOOD CIRCUITS
    COMBINING EXTERNAL FLUID DETECTION AND AIR INFILTRATION DETECTION


5/9/2006



1/4/202210/483,142

US

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


8/8/2006



7/9/202410/672,242

US

Volumetric fluid balance control for extracorporeal blood
    treatment


9/26/2006



9/26/202310/796,787

US

MEASUREMENT OF FLUID PRESSURE IN A BLOOD TREATMENT DEVICE


12/12/2006



2/14/2017 13




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##### Table of Contents



Patent No.

Regime

Title

Issue Date


Expiration Date10/650,935

US

FLUID CIRCUITS, SYSTEMS, AND PROCESSES FOR EXTRACORPOREAL BLOOD
    PROCESSING


5/8/2007



7/12/202110/772,888

US

FLUID PROCESSING APPARATUS


6/5/2007



7/13/202110/808,213

US

Renal replacement therapy device for controlling fluid balance
    of treated patient


9/11/2007



2/24/201810/807,906

US

BLOOD PROCESSING MACHINE AND SYSTEM USING FLUID CIRCUIT CARTRIDGE


11/27/2007



5/4/202110/808,207

US

BLOOD PROCESSING MACHINE FLUID CIRCUIT CARTRIDGE


3/4/2008



6/9/201811/160,586

US

PRESSURE DETECTOR FOR FLUID CIRCUITS


3/4/2008



6/14/202410/913,815

US

Modular medical treatment replaceable component


3/25/2008



6/30/201811/695,739

US

FLUID, CIRCUITS, SYSTEMS, AND PROCESSES FOR EXTRACORPOREAL BLOOD
    PROCESSING


9/2/2008



7/12/202110/393,185

US

DUAL ACCESS SPIKE FOR INFUSATE BAGS


12/30/2008



1/11/202410/649,582

US

Hemofiltration systems and methods that maintain sterile
    extracorporeal processing conditions


1/6/2009



8/11/202011/160,764

US

BATCH FILTRATION SYSTEM FOR PREPARATION OF STERILE FLUID FOR
    RENAL REPLACEMENT THERAPY


6/9/2009



1/7/202411/742,715

US

SYSTEMS AND METHODS FOR HANDLING AIR AND/OR FLUSHING FLUIDS IN A
    FLUID CIRCUIT


9/15/2009



7/13/202110/544,124

US

WASTE BALANCING FOR EXTRACORPOREAL BLOOD TREATMENT SYSTEMS


3/30/2010



7/7/202612/434,246

US

BATCH FILTRATION SYSTEM FOR PREPARATION OF STERILE FLUID FOR
    RENAL REPLACEMENT THERAPY


7/6/2010



1/7/202411/951,142

US

FLUID LINE CONNECTOR SAFETY DEVICE


7/20/2010



5/5/202810/699,921

US

FUNCTIONAL ISOLATION OF UPGRADEABLE COMPONENTS TO REDUCE RISK IN
    MEDICAL TREATMENT DEVICES


8/10/2010



2/4/202310/796,913

US

REGISTRATION OF FLUID CIRCUIT COMPONENTS IN A BLOOD TREATMENT
    DEVICE


8/17/2010



10/28/202312/015,420

US

METHODS, DEVICES, AND SYSTEMS FOR HEMODILUTION


8/17/2010



8/11/202112/021,872

US

BLOOD TREATMENT APPARATUS


8/24/2010



2/14/201712/508,900

US

SYSTEMS AND METHODS FOR HANDLING AIR AND/OR FLUSHING FLUIDS IN A
    FLUID CIRCUIT


9/7/2010



7/13/2021 14




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##### Table of Contents



Patent No.

Regime

Title

Issue Date


Expiration Date2003-512663

JP

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


5/2/2008



7/8/20222001-543177

JP

LAYERED FLUID CIRCUIT ASSEMBLIES AND METHODS FOR MAKING THEM


10/9/2009



11/29/20202001-539403

JP

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


12/4/2009



11/29/20202006-538506

JP

IMPROVED METHODS AND APPARATUS FOR LEAK DETECTION IN BLOOD
    PROCESSING SYSTEMS


12/4/2009



11/5/202404757998.2

IT

METHOD AND APPARATUS FOR MANUFACTURING FILTERS [2006/10]


3/10/2010



3/19/202407760334.8

IT

TUBING CLAMP FOR MEDICAL APPLICATIONS


8/11/2010



4/9/202704810398.0

IT

APPARATUS FOR LEAK DETECTION IN BLOOD PROCESSING SYSTEM


9/8/2010



11/5/202402761044.3

IT

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


9/8/2010



7/8/202206717769.1

IT

FILTRATION SYSTEM FOR PREPARATION OF FLUIDS FOR MEDICAL
    APPLICATIONS


10/20/2010



1/9/202600991516.6

IT

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


2/9/2011



11/29/202098904867.3

GB

HEMOFILTRATION SYSTEM


11/16/2005



2/5/201804700648.1

GB

PREPARING REPLACEMENT FLUID


6/24/2009



1/7/202400982268.5

GB

SYNCHRONIZED VOLUMETRIC FLUID BALANCING SYSTEMS AND METHODS


1/13/2010



11/29/202004757998.2

GB

METHOD AND APPARATUS FOR MANUFACTURING FILTERS [2006/10]


3/10/2010



3/19/202407760334.8

GB

TUBING CLAMP FOR MEDICAL APPLICATIONS


8/11/2010



4/9/202704810398.0

GB

APPARATUS FOR LEAK DETECTION IN BLOOD PROCESSING SYSTEM


9/8/2010



11/5/202402761044.3

GB

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


9/8/2010



7/8/202206717769.1

GB

FILTRATION SYSTEM FOR PREPARATION OF FLUIDS FOR MEDICAL
    APPLICATIONS


10/20/2010



1/9/2026 15




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##### Table of Contents



Patent No.

Regime

Title

Issue Date


Expiration Date00991516.6

GB

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


2/9/2011



11/29/202004757998.2

FR

METHOD AND APPARATUS FOR MANUFACTURING FILTERS [2006/10]


3/10/2010



3/19/202407760334.8

FR

TUBING CLAMP FOR MEDICAL APPLICATIONS


8/11/2010



4/9/202704810398.0

FR

APPARATUS FOR LEAK DETECTION IN BLOOD PROCESSING SYSTEM


9/8/2010



11/5/202402761044.3

FR

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


9/8/2010



7/8/202206717769.1

FR

FILTRATION SYSTEM FOR PREPARATION OF FLUIDS FOR MEDICAL
    APPLICATIONS


10/20/2010



1/9/202600991516.6

FR

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


2/9/2011



11/29/2020000023148-0001

EU

BLOOD TREATMENT MACHINE AND PARTS THEREOF


4/1/2003



4/1/202804700648.1

DE

PREPARING REPLACEMENT FLUID


6/24/2009



1/7/202460043710.8-08

DE

SYNCHRONIZED VOLUMETRIC FLUID BALANCING SYSTEMS AND METHODS


1/13/2010



11/29/2020602004 025 923.3-08

DE

METHOD AND APPARATUS FOR MANUFACTURING FILTERS [2006/10]


3/10/2010



3/19/2024602007008395.8

DE

TUBING CLAMP FOR MEDICAL APPLICATIONS


8/11/2010



4/9/2027602004029077.7

DE

APPARATUS FOR LEAK DETECTION IN BLOOD PROCESSING SYSTEM


9/8/2010



11/5/202460237621.1

DE

METHOD AND APPARATUS FOR LEAK DETECTION IN A FLUID LINE


9/8/2010



7/8/2022602006017654.6

DE

FILTRATION SYSTEM FOR PREPARATION OF FLUIDS FOR MEDICAL
    APPLICATIONS


10/20/2010



1/9/2026N/A

DE

FLUID PROCESSING SYSTEMS AND METHODS USING EXTRACORPOREAL FLUID
    FLOW PANELS ORIENTED WITHIN A CARTRIDGE


2/9/2011



11/29/20202,593,580

CA

FILTRATION SYSTEM FOR PREPARATION OF FLUIDS FOR MEDICAL
    APPLICATIONS


11/23/2010



1/9/2026     *
    
    EU industrial design registration 16




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##### Table of Contents



Patent No.

Regime

Title

Issue Date


Expiration Date5643190

US

Flow-Through Treatment Device


7/1/1997



1/17/20155328461

US

Blow Molded Venous Drip Chamber For Hemodialysis


7/12/1994



7/12/20115330425

US

Blow Molded Venous Drip Chamber For Hemodialysis


7/19/1994



4/30/20125360395

US

Pump Conduit Segment Having Connected, Parallel Branch Line


11/1/1994



12/20/20135520640

US

Blood Air Trap Chamber


5/28/1996



5/28/20135772638

US

Protector For Needle


6/30/1998



9/17/20165772624

US

Reusable Blood Lines


6/30/1998



7/20/20155817043

US

Flow-Through Treatment Device


10/6/1998



1/17/20155895368

US

Blood Set Priming Method And Apparatus


4/20/1999



9/23/20166440095

US

Pump Segment Having Connected Parallel Branch Line


8/27/2002



12/31/20156165149

US

Reusable Blood Lines


12/26/2000



7/20/20155951870

US

Automatic Priming Of Blood Sets


9/14/1999



10/21/20175824213

US

Separable Hemodialysis System


10/20/1998



9/7/20145895571

US

Separable Hemodialysis System Connected By A Movable Arm


4/20/1999



9/7/20146299589

US

Flow-Through Treatment Method


10/9/2001



1/17/20156290665

US

Blood Set Priming Method And Apparatus


9/18/2001



9/23/20166177049

US

Reversing Flow Blood Processing System


1/23/2001



6/10/20185980741

US

Bubble Trap With Flat Side Having Multipurpose Supplemental Ports


11/9/1999



8/1/20176010623

US

Bubble Trap With Flat Side


1/4/2000



8/1/20176019824

US

Bubble Trap Chamber


2/1/2000



6/9/20186117342

US

Bubble Trap With Directed Horizontal Flow And Method Of Using


9/12/2000



11/26/20166755801

US

Dialysis Pressure Monitoring With Clot Suppression


6/29/2004



11/8/20196319465

US

Reversing Flow Blood Processing System Having Reduced Clotting
    Potential


11/20/2001



6/3/20196387069

US

Blood Set Priming Method And Apparatus


5/14/2002



9/23/20166051134

US

Bubble Trap Having Common Inlet/Outlet Tube


4/18/2000



3/28/20176187198

US

Automatic Priming Of Connected Blood Sets


2/13/2001



10/21/20176517508

US

Set For Blood Processing


2/11/2003



11/3/20196206954

US

Blood Set And Chamber


3/27/2001



5/13/20184501729

JP

Automatic Priming Of Blood Sets


5/1/2001



10/13/20182306829

CA

Automatic Priming Of Blood Sets


5/1/2007



10/13/2018743310

AU

Automatic Priming Of Blood Sets


5/9/2002



10/13/2018 17




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Patent No.

Regime

Title

Issue Date


Expiration Date6344139

US

Arterial And Venous Blood Tubing Set


2/5/2002



10/21/20177025750

US

Set For Blood Processing


4/11/2006



1/7/20206596234

US

Reversing Flow Blood Processing System


7/22/2003



3/14/20196620119

US

Reusable Blood Lines


9/16/2003



11/12/20156464878

US

Automatic Priming Of Blood Sets


10/15/2002



10/21/20176695807

US

Blood Flow Reversing System


2/24/2004



1/18/20227166084

US

Blood Set Priming Method And Apparatus


1/23/2007



7/22/20176666839

US

Method of Using Reusable Blood Lines


12/23/2003



7/20/20155983947

US

Docking Ports For Medical Fluid Sets


11/16/1999



3/3/20174117505

JP

Flow-Trough Treatment Device


5/2/2008



7/17/20173103938

JP

Universal Connector


9/1/2000



6/6/20112064749

CA

Universal Connector


10/18/1994



6/6/20115385372

US

Luer Connector With Integral Closure


1/31/1995



1/8/20135772638

US

Protector For Needle


6/30/1998



9/17/20165433703

US

Guarded Winged Needle Assembly


7/18/1995



7/18/20125562636

US

Needle Protector Sheath


10/8/1996



7/15/20145562637

US

Needle Protector Sheath


10/8/1996



7/15/20142153091

CA

Needle Protector Sheath


1/29/2008



6/30/20155704924

US

Easy Use Needle Protector Sheath


1/6/1998



1/11/20165951529

US

Needle Protector Sheath


9/14/1999



7/15/20143809563

JP

Easy Use Needle Protector Sheath


6/2/2006



12/20/2016717410

AU

Easy Use Needle Protector Sheath


7/6/2000



12/20/20166089527

US

Squeeze Clamp For Flexible Tubing


7/18/2000



10/3/20176113062

US

Squeeze Clamp


9/5/2000



1/28/20196042570

US

Needle Point Protection Sheath


3/28/2000



2/11/20196595965

US

Needle Protector Sheath


7/22/2003



7/15/20146196519

US

Squeeze Clamp For Flexible Tubing


3/6/2001



10/3/20176193694

US

Needle Point Protection Sheath


2/27/2001



2/11/20196517522

US

Tubular Intravenous Set


2/11/2003



4/3/2020743589

AU

Needle Point Protector Sheath


5/16/2002



2/9/20206616635

US

Tubular Intravenous Set


9/9/2003



7/26/20206685680

US

Tapered Intravenous Cannula


2/3/2004



4/20/20197591804

US

Short-Winged Needle And Guard


9/22/2009



5/24/20277025744

US

Injection Site For Male Luer Or Other Tubular Connector


4/11/2006



10/4/20223843414

JP

Closure Needle Protector Sheath


8/25/2006



7/5/20156517522

US

Tubular Intravenous Set


2/11/2003



4/3/20206530911

US

Set With Angled Needle


3/11/2003



6/28/2020  18




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##### Table of Contents



non-U.S. markets,
        Manufacturing
         19




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##### Table of Contents



Government
    Regulation
  Food
    and Drug Administration
        
    Class I devices, which are subject to only general controls
    (e.g., labeling, medical devices reporting, and prohibitions
    against adulteration and misbranding) and, in some cases, to the
    510(k) premarket clearance requirements;
    Class II devices, generally requiring 510(k) premarket
    clearance before they may be commercially marketed in the United
    States; and 20




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
    Class III devices, consisting of devices deemed by the FDA
    to pose the greatest risk, such as life-sustaining,
    life-supporting or implantable devices, or devices deemed not
    substantially equivalent to a predicate device, generally
    requiring submission of a PMA supported by clinical trial data.    FDA
    Regulatory Clearance Status
  and/or
      FDA
    Clearance Procedures
  510(k) Clearance Pathway.
  and/or
  Pre-market Approval Pathway.
 21




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##### Table of Contents



Clinical Trials.
  Continuing
    FDA Regulation
    
    product listing and establishment registration, which helps
    facilitate FDA inspections and other regulatory action;
    Quality System Regulations, which require manufacturers to have
    a quality system for the design, manufacture, packaging,
    labeling, storage, installation, and servicing of finished
    medical devices;
    labeling regulations, which govern product labels and labeling,
    prohibit the promotion of products for unapproved, or off-label,
    uses and impose other restrictions on labeling and promotional
    activities;
    clearance of product modifications that could significantly
    affect safety or efficacy or that would constitute a major
    change in intended use of one of our cleared devices;
    medical device reporting, or MDR, regulations, which require
    that manufacturers report to the FDA if their device may have
    caused or contributed to a death or serious injury or
    malfunctioned in a way that would likely cause or contribute to
    a death or serious injury if it were to recur; and
    the FDAs recall authority, whereby it can ask, or under
    certain conditions order, device manufacturers to recall from
    the market a product that is in violation of governing laws and
    regulations;
    regulations pertaining to voluntary recalls; and
    notices of corrections or removals. 22




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##### Table of Contents



MDR Regulations.
  FDA Inspections.
  
    warning letters or untitled letters;
    fines, injunctions, and civil penalties;
    administrative detention, which is the detention by the FDA of
    medical devices believed to be adultered or misbranded;
    voluntary or mandatory recall or seizure of our products;
    customer notification, or orders for repair, replacement or
    refund;
    operating restrictions, partial suspension or total shutdown of
    production;
    refusal to review pre-market notification or pre-market approval
    submissions;
    rescission of a substantial equivalence order or suspension or
    withdrawal of a pre-market approval; and
    criminal prosecution.    Foreign
    Regulation of Medical Devices
       23




---



##### Table of Contents



Fraud and
    Abuse Laws
  Anti-Kickback
    Statutes
    case-by-case
  and/or
    False
    Claims Laws
   24




---



##### Table of Contents



Compliance
    Program
      Privacy
    and Security
   25




---



##### Table of Contents



Reimbursement
  Home
    and In-Center Markets
    Medicare.
  30-month
  30-month 30-month
   26




---



##### Table of Contents



and/or
  case-by-case
  Medicaid.
  Private Insurers.
 27




---



##### Table of Contents



30-month
  Critical
    Care
    Our
    Employees
    Executive
    Officers
    Name

Age

PositionJeffrey H. Burbank


48


Chief Executive OfficerRobert S. Brown


52


Senior Vice President, Chief Financial Officer and TreasurerTom Shea


48


Senior Vice President, Manufacturing OperationsWinifred L. Swan


46


Senior Vice President, General Counsel and SecretaryJoseph E. Turk, Jr.


43


President, North AmericaMichael J. Webb


44


Senior Vice President of Quality, Regulatory and Clinical
    Affairs   Jeffrey H. Burbank
  Robert S. Brown
 28




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##### Table of Contents



Tom Shea
  Winifred L. Swan
  Joseph E. Turk, Jr.
  Michael J. Webb
  Where To
    Find More Information
  Form 10-K, Form 10-Q, Form 8-K www.sec.gov
  Item 1A.
    Risk
    Factors    Risks
    Related to our Business
 29




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##### Table of Contents



We
    expect to derive a significant percentage of our future revenues
    from the rental or sale of our System One and the related
    products used with the System One and a limited number of other
    products.
    We
    cannot accurately predict the size of the home hemodialysis
    market, and it may be smaller, and may develop more slowly than
    we expect.
       30




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##### Table of Contents



Current
    Medicare reimbursement rates, at three times per week, limit the
    price at which we can market our home products, and adverse
    changes to reimbursement would likely negatively affect the
    adoption or continued sale of our home products.
  case-by-case
  and/or
 31




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We
    have limited operating experience, a history of net losses and
    an accumulated deficit of $308.4 million at December 31,
    2010. We cannot guarantee if, when and the extent to which we
    will become profitable, or that we will be able to maintain
    profitability if it is achieved.
    Our
    customers in the System One and In-Center segments are highly
    consolidated, with concentrated buying power.
      DaVita
    is a key customer for our System One and In-Center product
    lines. The partial or complete loss of DaVita as a customer
    would materially impair our financial results, at least in the
    near term.
  and/or
 32




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We
    entered into a $40.0 million term loan and security
    agreement with Asahi in May 2009. We are obligated to pay 50% of
    the interest on the first day of November and May, beginning on
    November 1, 2009, and repay the remaining interest and
    principal upon maturity in May 2013. If we fail to comply with
    all terms under this agreement, we may go into default, which
    could trigger, among other things, the acceleration of all of
    our indebtedness there under or the sale of our
    assets.
      We
    entered into a two year Loan and Security Agreement, dated as of
    March 10, 2010, with Silicon Valley Bank, or SVB. The terms
    of this Agreement may restrict our current and future
    operations, which could affect our ability to respond to changes
    in our business and to manage our operations.
      We
    compete against other dialysis equipment manufacturers with much
    greater financial resources and established products and
    customer relationships, which may make it difficult for us to
    penetrate the market and achieve significant sales of our
    products. Our competitors may also introduce new products or
    features that could impair the competitiveness of our own
    product portfolio.
   33




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Our
    continued growth is dependent on our development and successful
    commercialization of new and improved products.
    The
    success and growth of our business will depend upon our ability
    to achieve expanded market acceptance of our System
    One.
   34




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##### Table of Contents




    the failure by us to demonstrate to operators of dialysis
    clinics, hospitals, nephrologists, dialysis nurses, patients and
    others that our products are equivalent or superior to existing
    therapy options;
    competition from products sold by companies with longer
    operating histories and greater financial resources, more
    recognizable brand names and better established distribution
    networks and relationships with hospitals or dialysis clinics;
    the failure by us to continue to improve product reliability and
    the ease of use of our products;
    limitations on the existing infrastructure in place to support
    home hemodialysis, including without limitation, home
    hemodialysis training nurses, and the willingness, cost
    associated with, and ability of dialysis clinics to build that
    infrastructure;
    the ownership and operation of some dialysis providers by
    companies that also manufacture and sell competitive dialysis
    products;
    the introduction of competing products or treatments that may be
    more effective, easier to use or less expensive than ours;
    regulations that impose additional burden on patients and their
    caregivers, such as the recently adopted Medicare conditions for
    coverage which impose additional water testing requirements in
    connection with the use of our PureFlow SL;
    the number of patients willing and able to perform therapy
    independently, outside of a traditional dialysis clinic, may be
    smaller than we estimate; and
    the availability of satisfactory reimbursement from healthcare
    payors, including Medicare.  If we
    are unable to convince additional hospitals and healthcare
    providers of the benefits of our products for the treatment of
    acute kidney failure and fluid overload, we will not be
    successful in increasing our market share in the critical care
    market.
    Our
    business and results of operations may be negatively impacted by
    general economic and financial market conditions and such
    conditions may increase other risks that affect our
    business.
   35




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The
    non-cash discounts we have offered to DaVita may lead to
    reductions in our future net revenues that will fluctuate
    because the amount of the discount is based upon the number of
    warrants earned and our stock price.
      Healthcare
    reform legislation could adversely affect our revenue and
    financial condition.
    No. 111-148) No. 111-152).
  As our
    business continues to grow, we may have difficulty managing our
    growth and expanding our operations successfully.
   36




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##### Table of Contents



If we
    are unable to improve or maintain strong product reliability for
    our products, our ability to maintain or grow our business and
    achieve profitability could be impaired.
    We
    have a significant amount of System One field equipment, and our
    inability to effectively manage this asset could negatively
    impact our working capital requirements and future
    profitability.
  and/or
  If
    kidney transplantation becomes a viable treatment option for
    more patients with ESRD, or if medical or other solutions for
    renal replacement become viable, the market for our products may
    be limited.
    We
    could be subject to costly and damaging product and professional
    liability claims and may not be able to maintain sufficient
    liability insurance to cover claims against us.
   37




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##### Table of Contents



We
    maintain insurance at levels deemed adequate by management;
    however, future claims could exceed our applicable insurance
    coverage.
    We
    face risks associated with having international manufacturing
    operations, and if we are unable to manage these risks
    effectively, our business could suffer.
    We
    obtain some of our raw materials, components and finished goods
    from a single source or a limited group of suppliers. We also
    obtain sterilization services from a single supplier. The
    partial or complete loss of one of these suppliers could cause
    significant production delays, an inability to meet customer
    demand, and a substantial loss in revenues.
    back-up
 38




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##### Table of Contents



Our
    In-Center segment relies heavily upon third-party
    distributors.
    Unless
    we can demonstrate sufficient product differentiation in our
    blood tubing set business through Streamline or products that we
    introduce in the future, we will continue to be susceptible to
    further pressures to reduce product pricing and more vulnerable
    to the loss of our blood tubing set business to competitors in
    the dialysis industry.
    The
    activities of our business involve the import of finished goods
    into the United States from foreign countries, subject to
    customs inspections and duties, and the export of components and
    certain other products from other countries into Germany,
    Mexico, Thailand and Italy. To a lesser, but increasing degree,
    our business also involves the export of finished goods from the
    United States to foreign countries. If we misinterpret or
    violate these laws, or if laws governing our exemption from
    certain duties change, we could be subject to significant fines,
    liabilities or other adverse consequences.
   39




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The
    success of our business depends on the services of each of our
    senior executives as well as certain key engineering,
    scientific, manufacturing, clinical and marketing personnel, the
    loss of whom could negatively affect the combined
    businesses.
    Risks
    Related to the Regulatory Environment
  We are
    subject to significant regulation, primarily by the FDA. We
    cannot market or commercially distribute our products without
    obtaining and maintaining necessary regulatory clearances or
    approvals.
    Modifications
    to our marketed devices may require new regulatory clearances or
    pre-market approvals, or may require us to cease marketing or
    recall the modified devices until clearances or approvals are
    obtained.
  and/or
 40




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##### Table of Contents



Even
    if we obtain the necessary FDA clearances or approvals, if we or
    our suppliers fail to comply with ongoing regulatory
    requirements our products could be subject to restrictions or
    withdrawal from the market.
    
    untitled letters, warning letters, fines, injunctions and civil
    penalties;
    administrative detention, which is the detention by the FDA of
    medical devices believed to be adulterated or misbranded;
    customer notification, or orders for repair, replacement or
    refund;
    voluntary or mandatory recall or seizure of our products;
    operating restrictions, partial suspension or total shutdown of
    production;
    refusal to review pre-market notification or pre-market approval
    submissions;
    rescission of a substantial equivalence order or suspension or
    withdrawal of a pre-market approval; and
    criminal prosecution.  Our
    products are subject to market withdrawals or product recalls
    after receiving FDA clearance or approval, and market
    withdrawals and product recalls could cause the price of our
    stock to decline and expose us to product liability or other
    claims or could otherwise harm our reputation and financial
    results.
  and/or
  If we
    or our contract manufacturers fail to comply with FDAs
    Quality System Regulations, our manufacturing operations could
    be interrupted, and our product sales and operating results
    could suffer.
   41




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We may
    be subject to fines, penalties or injunctions if we are
    determined to be promoting the use of our products in a manner
    not consistent with our products cleared indications for
    use or with other state or federal laws governing the promotion
    of our products.
    Failure
    to obtain regulatory approval in foreign jurisdictions would
    prevent us from marketing our products outside the United
    States.
    We
    have obligations under our contracts with dialysis clinics and
    hospitals to protect the privacy of patient health
    information.
   42




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##### Table of Contents



and/or
    We are
    subject to federal and state laws prohibiting
    kickbacks and false and fraudulent claims which, if
    violated, could subject us to substantial penalties.
    Additionally, any challenges to or investigation into our
    practices under these laws could cause adverse publicity and be
    costly to respond to, and thus could harm our
    business.
   43




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##### Table of Contents



Foreign
    governments tend to impose strict price controls, which may
    adversely affect our future profitability.
    Failure
    to comply with the United States Foreign Corrupt Practices Act
    could subject us to penalties and other adverse
    consequences.
   44




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##### Table of Contents



Our
    business activities involve the use of hazardous materials,
    which require compliance with environmental and occupational
    safety laws regulating the use of such materials. If we violate
    these laws, we could be subject to significant fines,
    liabilities or other adverse consequences.
    Risks
    Related to Operations
  Resin
    is a key input material to the manufacture of our products and
    System One cartridge. Oil prices affect both the pricing and
    availability of this material. Escalation of oil prices could
    affect our ability to obtain sufficient supply of resin at the
    prices we need to manufacture our products at current rates of
    profitability.
    Distribution
    costs represent a significant percentage of our overall costs,
    and these costs are dependent upon fuel prices. Increases in
    fuel prices could lead to increases in our distribution costs,
    which, in turn, could impair our ability to achieve
    profitability.
    We
    have labor agreements with our production employees in Italy and
    in Mexico. We cannot guarantee that we will not in the future
    face strikes, work stoppages, work slowdowns, grievances,
    complaints, claims of unfair labor practices, other collective
    bargaining disputes or in Italy, anti-union behavior, that may
    cause production delays and negatively impact our ability to
    deliver our products on a timely basis.
    We do
    not have long-term supply contracts with many of our third-party
    suppliers.
   45




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##### Table of Contents



Certain
    of our products are recently developed and we have recently
    transitioned the manufacturing of certain of these products to
    new locations. We, and certain of our third-party manufacturers,
    have limited manufacturing experience with these
    products.
    Risks
    Related to Intellectual Property
  If we
    are unable to protect our intellectual property and prevent its
    use by third parties, we will lose a significant competitive
    advantage.
    
    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.        Our
    products could infringe the intellectual property rights of
    others, which may lead to litigation that could itself be
    costly, could result in the payment of substantial damages or
    royalties, and/or prevent us from using technology that is
    essential to our products.
   46




---



##### Table of Contents




    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.  Confidentiality
    agreements with employees and others may not adequately prevent
    disclosure of trade secrets and other proprietary
    information.
    We may
    be subject to damages resulting from claims that our employees
    or we have wrongfully used or disclosed alleged trade secrets of
    other companies.
    Risks
    Related to our Common Stock
  Our
    stock price is likely to be volatile, and the market price of
    our common stock may drop.
    
    timing of market launch
    and/or
    market acceptance of our products;
    timing of achieving profitability from operations; 47




---



##### Table of Contents




    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;
    disruptions in product supply for any reason, including product
    recalls, our failure to appropriately forecast supply or demand,
    difficulties in moving products across the border, or the
    failure of third party suppliers to produce needed products or
    components;
    reports by officials or health or medical authorities, the
    general media or the FDA regarding the potential benefits of the
    System One or of similar dialysis products distributed by other
    companies or of daily or home dialysis;
    announcements by the FDA of non-clearance or non-approval of our
    products, or delays in the FDA or other foreign regulatory
    agency review process;
    product recalls;
    defaults under our material contracts, including without
    limitation our credit agreement;
    regulatory developments in the United States 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;
    litigation involving our company or our general industry or both;
    announcements of technical innovations or new products by us or
    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; and  
    investors general perception of our company, our products,
    the economy and general market conditions.    Anti-takeover
    provisions in our restated certificate of incorporation and
    amended and restated bylaws and under Delaware law could make an
    acquisition of us more difficult and may prevent attempts by our
    stockholders to replace or remove our current
    management.
   48




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
    a prohibition on actions by our stockholders by written consent;
    the ability of our board of directors to issue preferred stock
    without stockholder approval, which could be used to institute a
    poison pill that would work to dilute the stock
    ownership of a potential hostile acquirer, effectively
    preventing acquisitions that have not been approved by our board
    of directors;
    advance notice requirements for nominations of directors or
    stockholder proposals; and
    the requirement that board vacancies be filled by a majority of
    our directors then in office.    If
    there are substantial sales of our common stock in the market by
    our large existing stockholders, our stock price could
    decline.
        We have filed a resale registration statement covering
    both shares of our common stock that we sold in a May 2008
    private placement and shares of our common stock issuable upon
    the exercise of a warrant held by DaVita. If the holders of
    these shares or shares issued pursuant to the terms of the
    warrant are unable to sell these shares under the respective
    registration statements, we may be obligated to pay them
    damages, which could harm our financial condition. Further,
    these resale registration statements could result in downward
    pressure on the price of our common stock and may affect the
    ability of our stockholders to realize the current trading price
    of our common stock.
   49




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##### Table of Contents



Form S-3 Form S-3 (No. 333-170654)
    Our
    outstanding warrants, and the provisions of our Term Loan with
    Asahi, may result in substantial dilution to our
    stockholders.
    Our
    executive officers, directors and current and principal
    stockholders own a large percentage of our voting common stock
    and could limit new stockholders influence on corporate
    decisions or could delay or prevent a change in corporate
    control.
    
    delaying, deferring or preventing a change in control of our
    company;
    entrenching our management
    and/or Board;
    impeding a merger, consolidation, takeover or other business
    combination involving our company; or
    discouraging a potential acquirer from making a tender offer or
    otherwise attempting to obtain control of our company.  We may
    grow through additional acquisitions, which could dilute our
    existing shareholders and could involve substantial integration
    risks.
  and/or
 50




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##### Table of Contents




    difficulty in transitioning and integrating the operations and
    personnel of the acquired businesses, including different and
    complex accounting and financial reporting systems;
    potential disruption of our ongoing business and distraction of
    management;
    potential 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 products and technology;
    unanticipated expenses and delays in completing acquired
    development projects and technology integration;
    management of geographically remote units both in the United
    States and internationally;
    impairment of relationships with partners and customers;
    customers delaying purchases of our products pending resolution
    of product integration between our existing and our newly
    acquired products;
    entering markets or types of businesses in which we have limited
    experience;
    potential loss of key employees of the acquired company; and
    inaccurate assumptions of the acquired companys product
    quality
    and/or
    product reliability.    Item 1B.
    Unresolved
    Staff Comments    Item 2.
    Properties    Item 3.
    Legal
    Proceedings   51




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##### Table of Contents



Item 4.
    [Removed
    and Reserved]  PART II
  Item 5.
    Market
    for Registrants Common Equity, Related Stockholder
    Matters, and Issuer Purchases of Equity Securities  Market
    Information
    High


Low2010First Quarter

$
11.45


$
7.69Second Quarter

$
15.50


$
10.96Third Quarter

$
19.40


$
13.59Fourth Quarter

$
24.88


$
19.352009First Quarter

$
3.98


$
2.11Second Quarter

$
5.90


$
1.93Third Quarter

$
7.04


$
4.64Fourth Quarter

$
8.43


$
5.39   Holders
    Dividends
    Issuer
    Purchases of Equity Securities
  Form 10-K
  Comparative
    Stock Performance Graph
     52




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##### Table of Contents



COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN*
    Among NxStage Medical, Inc, The NASDAQ Composite Index
    And The NASDAQ Medical Equipment Index
  
  
 53




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##### Table of Contents



Item 6.
    Selected
    Financial Data  SELECTED
    CONSOLIDATED FINANCIAL DATA
  Form 10-K.
  Years Ended December 31,2010


2009


2008


2007


2006(In thousands, except per share data)Statement of Operations Data:Revenues

$
179,218


$
148,676


$
128,763


$
59,964


$
20,812Cost of revenues


121,091



111,812



108,387



65,967



26,121Gross profit (deficit)


58,127



36,864



20,376



(6,003
)


(5,309
)Operating expenses:Selling and marketing


34,166



30,047



27,965



21,589



14,356Research and development


12,900



9,814



8,890



6,335



6,431Distribution


14,751



13,918



14,267



13,111



7,093General and administrative


22,774



19,532



19,239



13,046



8,703Total operating expenses


84,591



73,311



70,361



54,081



36,583Loss from operations


(26,464
)


(36,447
)


(49,985
)


(60,084
)


(41,892
)Other (expense) income, net


(4,480
)


(6,755
)


(852
)


1,750



2,262Net loss before income taxes


(30,944
)


(43,202
)


(50,837
)


(58,334
)


(39,630
)Provision for income taxes


768



265



374



62



Net loss

$
(31,712
)

$
(43,467
)

$
(51,211
)

$
(58,396
)

$
(39,630
)Net loss per share, basic and diluted

$
(0.66
)

$
(0.93
)

$
(1.23
)

$
(1.86
)

$
(1.60
)Weighted-average shares outstanding, basic anddiluted


48,188



46,627



41,803



31,426



24,817   December 31,2010


2009


2008


2007


2006(In thousands)Balance Sheet Data:Cash, cash equivalents and short-term investments

$
104,339


$
21,720


$
26,642


$
34,345


$
61,802Working capital


119,089



36,037



34,362



40,655



64,716Total assets


286,094



196,978



212,066



210,386



101,725Long-term liabilities


97,574



78,267



52,580



46,134



5,495Accumulated deficit


(308,426
)


(276,714
)


(233,247
)


(182,036
)


(123,640
)Total stockholders equity(1)(2)(3)(4)(5)


152,129



89,446



122,447



129,717



83,409     (1)
    
    In November 2010, we issued and sold 3.7 million shares of
    common stock pursuant to an underwriting agreement with
    Canaccord Genuity. Net proceeds from the sale were
    $73.4 million. 54




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##### Table of Contents



(2)
    
    In May 2008, we issued and sold 5.6 million unregistered
    shares of common stock and warrants to purchase 1.1 million
    shares of our common stock. In August 2008, we issued and sold
    an additional 4.0 million share of common stock and
    warrants to purchase 0.8 million shares of our common
    stock. The aggregate net proceeds of both sales was
    $42.3 million.(3)
    
    On October 1, 2007, we issued 6.5 million shares of
    common stock at $12.50 per share in connection with the
    Medisystems Acquisition.(4)
    
    On February 7, 2007, we issued and sold to DaVita
    2.0 million shares of common stock at a purchase price of
    $10.00 per share, for net proceeds of $19.9 million.(5)
    
    We closed our follow-on public offering on June 14, 2006,
    which resulted in the issuance of 6.3 million shares of
    common stock at $8.75 per share. Net proceeds from the offering
    were $51.3 million.  Item 7.
    Managements
    Discussion and Analysis of Financial Condition and Results of
    Operation  Overview
       55




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Statement
    of Operations Components
  Revenues
      month-to-month 30-day
       56




---



##### Table of Contents



Cost
    of Revenues
    Operating
    Expenses
  Selling and Marketing.
  Research and Development.
  Distribution.
  General and Administrative.
 57




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##### Table of Contents



Results
    of Operations
  Form 10-K.
  Years Ended December 31,2010


2009


2008Revenues


100
%


100
%


100
%Cost of revenues


68
%


75
%


84
%Gross profit


32
%


25
%


16
%Operating expenses:Selling and marketing


19
%


20
%


22
%Research and development


7
%


7
%


7
%Distribution


8
%


9
%


11
%General and administrative


13
%


13
%


15
%Total operating expenses


47
%


49
%


55
%Loss from operations


(15
)%


(24
)%


(39
)%Other expense:Interest income


0
%


0
%


0
%Interest expense


(3
)%


(5
)%


(3
)%Other income (expense), net


0
%


0
%


0
%Change in fair value of financial instruments


0
%


0
%


2
%(3
)%


(5
)%


(1
)%Provision for income taxes


0
%


0
%


0
%Net loss


(18
)%


(29
)%


(40
)%   Comparison
    of Years Ended December 31, 2010 and 2009
  Revenues
    Years Ended December 31,2010


2009System One segmentHome

$
85,762



48
%

$
63,461



43
%Critical Care


28,093



16
%


22,340



15
%Total System One segment


113,855



64
%


85,801



58
%In-Center segment


65,363



36
%


62,875



42
%Total

$
179,218



100
%

$
148,676



100
%      58




---



##### Table of Contents



Gross
    Profit
    Years EndedDecember 31,


%


December 31,


%2010


Revenues


2009


RevenuesSystem One segment

$
42,620



37
%

$
21,263



25
%In-Center segment


15,507



24
%


15,601



25
%Gross Profit

$
58,127



32
%

$
36,864



25
%        59




---



##### Table of Contents



Selling
    and Marketing
    Years EndedDecember 31,


December 31,





Percentage2010


2009


Change


ChangeSystem One segment

$
29,377


$
26,144


$
3,233



12
%In-Center segment


4,789



3,903



886



23
%Total Selling and marketing

$
34,166


$
30,047


$
4,119



14
%     Research
    and Development
    Years EndedDecember 31,


December 31,





Percentage2010


2009


Change


ChangeResearch and development

$
12,900


$
9,814


$
3,086



31
%     Distribution
    Years EndedDecember 31,


December 31,





Percentage2010


2009


Change


ChangeSystem One segment

$
12,960


$
12,564


$
396



3
%In-Center segment


1,791



1,354



437



32
%Total Distribution

$
14,751


$
13,918


$
833



6
%    60




---



##### Table of Contents



General
    and Administrative
    Years EndedDecember 31,


December 31,





Percentage2010


2009


Change


ChangeGeneral and administrative

$
22,774


$
19,532


$
3,242



17
%     Other
    Income and Expense
        Provision
    for Foreign Income Taxes
    Comparison
    of Years Ended December 31, 2009 and 2008
  Revenues
    Years Ended December 31,2009


2008System One segmentHome

$
63,461



43
%

$
48,319



38
%Critical Care


22,340



15
%


18,554



14
%Total System One segment


85,801



58
%


66,873



52
%In-Center segment


62,875



42
%


61,890



48
%Total

$
148,676



100
%

$
128,763



100
%  61




---



##### Table of Contents



Gross
    Profit
    Years EndedDecember 31,


%


December 31,


%2009


Revenues


2008


RevenuesSystem One segment

$
21,263



25
%

$
8,960



13
%In-Center segment


15,601



25
%


11,416



18
%Gross Profit

$
36,864



25
%

$
20,376



16
%     Selling
    and Marketing
    December 31,


December 31,





Percentage2009


2008


Change


ChangeSystem One segment

$
26,144


$
24,491


$
1,653



7
%In-Center segment


3,903



3,474



429



12
%Total Selling and marketing

$
30,047


$
27,965


$
2,082



7
%    62




---



##### Table of Contents



Research
    and Development
    Years EndedDecember 31,


December 31,





Percentage2009


2008


Change


ChangeResearch and development

$
9,814


$
8,890


$
924



10
%     Distribution
    Years EndedDecember 31,


December 31,





Percentage2009


2008


Change


ChangeSystem One segment

$
12,564


$
12,631


$
( 67
)


(1
)%In-Center segment


1,354



1,636



(282
)


(17
)%Total Distribution

$
13,918


$
14,267


$
(349
)


(2
)%     General
    and Administrative
    Years EndedDecember 31,


December 31,





Percentage2009


2008


Change


ChangeGeneral and administrative

$
19,532


$
19,239


$
293



2
%     Other
    Income and Expense
     63




---



##### Table of Contents



Form 10-K
  Provision
    for Foreign Income Taxes
    Liquidity
    and Capital Resources
         64




---



##### Table of Contents



Form S-3,
           65




---



##### Table of Contents



Years Ended December 31,2010


2009


2008(In thousands)Net cash provided by (used in) operating activities

$
3,111


$
(13,157
)

$
(53,222
)Net cash used in investing activities


(1,216
)


(2,065
)


(457
)Net cash provided by financing activities


81,163



10,031



47,575Foreign exchange effect on cash and cash equivalents


(439
)


269



(499
)Net cash flow

$
82,619


$
(4,922
)

$
(6,603
)   Net Cash Provided by (Used in) Operating
    Activities.
      Net Cash Used in Investing Activities.
  Net Cash Provided by Financing Activities.
 66




---



##### Table of Contents



Off-Balance
    Sheet Arrangements
    Contractual
    Obligations
    Less Than








More ThanTotal


One Year


1-3 Years


3-5 Years


5 YearsDebt obligations

$
51,621


$
1,665


$
49,956


$



$
Operating leases


2,134



1,578



556







Purchase obligations


63,933



39,443



21,322



3,168



Total

$
117,688


$
42,686


$
71,834


$
3,168


$
     and/or
  Summary
    of Critical Accounting Policies and Estimates
    Form 10-K Form 10-K.
  Revenue
    Recognition
   67




---



##### Table of Contents



System
    One Segment
  and/or
          In-Center
    Segment
    Inventory
    Valuation
   68




---



##### Table of Contents



Field
    Equipment
      Accounting
    for Stock-Based Awards
    Valuation
    of Intangibles and Other Long-Lived Assets
    Goodwill
   69




---



##### Table of Contents



Accounting
    for Income Taxes
      Related-Party
    Transactions
  Form 10-K.
  Recent
    Accounting Pronouncements
  Form 10-K.
  Item 7A.
    Quantitative
    and Qualitative Disclosures About Market Risk  Interest
    Rate Exposure
    Foreign
    Currency Exposure
   70




---



##### 



Item 8.
    Financial
    Statements and Supplementary Data  NXSTAGE
    MEDICAL, INC.
  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS
   
 Report of Independent Registered Public
    Accounting Firm


72Consolidated Balance Sheets


73Consolidated Statements of Operations


74Consolidated Statements of Changes in
    Stockholders Equity


75Consolidated Statements of Cash Flows


76Notes to Consolidated Financial Statements


77   71




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM            
    72




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  CONSOLIDATED BALANCE SHEETS
  December 31,2010


2009(In thousands, except share data)ASSETSCurrent assets:Cash and cash equivalents

$
104,339


$
21,720Accounts receivable, net


14,107



14,238Inventory


34,950



28,117Prepaid expenses and other current assets


2,084



1,227Total current assets


155,480



65,302Property and equipment, net


8,290



10,336Field equipment, net


13,660



21,726Deferred cost of revenues


40,081



27,799Intangible assets, net


25,412



28,208Goodwill


42,698



42,698Other assets


473



909Total assets

$
286,094


$
196,978LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
16,811


$
19,827Accrued expenses


19,537



9,377Current portion of long-term debt


43



61Total current liabilities


36,391



29,265Deferred revenues


55,366



38,490Long-term debt


40,454



37,854Other long-term liabilities


1,754



1,923Total liabilities


133,965



107,532Commitments and contingencies (Note 11)Stockholders equity:Undesignated preferred stock: par value $0.001,
    5,000,000 shares authorized; no shares issued and
    outstanding as of December 31, 2010 and 2009






Common stock: par value $0.001, 100,000,000 shares
    authorized; 54,043,317 shares issued as of
    December 31, 2010 and 46,795,859 shares issued and
    outstanding as of December 31, 2009


53



47Additional paid-in capital


465,642



365,548Accumulated deficit


(308,426
)


(276,714
)Accumulated other comprehensive income


85



565Treasury stock, at cost: 325,104 shares as of
    December 31, 2010


(5,225
)


Total stockholders equity


152,129



89,446Total liabilities and stockholders equity

$
286,094


$
196,978    73




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  CONSOLIDATED STATEMENTS OF
    OPERATIONS
  Years Ended December 31,2010


2009


2008(In thousands, except per share data)Revenues

$
179,218


$
148,676


$
128,763Cost of revenues


121,091



111,812



108,387Gross profit


58,127



36,864



20,376Operating expenses:Selling and marketing


34,166



30,047



27,965Research and development


12,900



9,814



8,890Distribution


14,751



13,918



14,267General and administrative


22,774



19,532



19,239Total operating expenses


84,591



73,311



70,361Loss from operations


(26,464
)


(36,447
)


(49,985
)Other expense:Interest income


3



35



485Interest expense


(4,597
)


(6,522
)


(3,877
)Other income (expense), net


114



(268
)


4Change in fair value of financial instruments










2,536(4,480
)


(6,755
)


(852
)Net loss before income taxes


(30,944
)


(43,202
)


(50,837
)Provision for income taxes


768



265



374Net loss

$
(31,712
)

$
(43,467
)

$
(51,211
)Net loss per share, basic and diluted

$
(0.66
)

$
(0.93
)

$
(1.23
)Weighted-average shares outstanding, basic and diluted


48,188



46,627



41,803    74




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC
  CONSOLIDATED STATEMENTS OF CHANGES IN
    STOCKHOLDERS EQUITY
  OtherAdditional





Comprehensive





TotalCommon Stock


Paid-In


Accumulated


Income


Treasury


StockholdersShares


Amount


Capital


Deficit


(Loss)


Stock


Equity(In thousands, except share data)Balance at December 31, 2007


36,771,893


$
37


$
311,172


$
(182,036
)

$
544






$
129,717Comprehensive loss:Net loss














(51,211
)










(51,211
)Foreign currency translation adjustment


















(163
)






(163
)Total comprehensive loss


























(51,374
)Issuance of common stock, net of issuance costs


9,555,556



10



37,880















37,890Exercise of stock options


71,547







103















103Shares issued under employee stock purchase and incentive plan


95,102







377















377Shares issued to Directors in lieu of cash


54,487







220















220Stock-based compensation expense










5,514















5,514Balance at December 31, 2008


46,548,585



47



355,266



(233,247
)


381







122,447Comprehensive loss:Net loss














(43,467
)










(43,467
)Foreign currency translation adjustment


















184







184Total comprehensive loss


























(43,283
)Reclassificaion warrant liability to equity










1,858















1,858Exercise of stock options


86,927







270















270Shares issued under employee stock purchase and incentive plan


116,799







403















403Shares issued to Directors in lieu of cash


43,548







196















196Stock-based compensation expense










7,555















7,555Balance at December 31, 2009


46,795,859



47



365,548



(276,714
)


565







89,446Comprehensive loss:Net loss














(31,712
)










(31,712
)Foreign currency translation adjustment


















(480
)






(480
)Total comprehensive loss


























(32,192
)Issuance of common stock, net of issuance costs


3,680,000



4



73,350















73,354Exercise of stock options


1,831,253



1



12,034











(642
)


11,393Exercise of warrants


250,610







415















415Shares issued under employee restricted stock and bonus plans


1,412,453



1



1,600











(4,583
)


(2,982
)Shares issued under employee stock purchase plan


61,387







638















638Shares issued to Directors in lieu of cash


11,755







186















186Stock-based compensation expense










11,871















11,871Balance at December 31, 2010


54,043,317


$
53


$
465,642


$
(308,426
)

$
85


$
(5,225
)

$
152,129    75




---



##### Table of Contents





NXSTAGE
    MEDICAL, INC.
  CONSOLIDATED STATEMENTS OF CASH
    FLOWS
  Years Ended December 31,2010


2009


2008(In thousands)Cash flows from operating activities:Net loss

$
(31,712
)

$
(43,467
)

$
(51,211
)Adjustments to reconcile net loss to net cash provided by (used
    in) operating activities:Depreciation and amortization


22,379



20,778



19,201Amortization of inventory
    step-up










52Stock-based compensation


15,351



9,226



5,842Change in fair value of financial instruments










(2,536
)Other


2,319



2,690



1,038Changes in operating assets and liabilities:Accounts receivable


235



(2,208
)


(4,761
)Inventory


(28,744
)


(9,209
)


(23,431
)Prepaid expenses and other assets


(877
)


1,513



747Accounts payable


(2,781
)


2,568



(4,626
)Accrued expenses and other liabilities


10,065



(119
)


(3,641
)Deferred revenues


16,876



5,071



10,104Net cash provided by (used in) operating activities


3,111



(13,157
)


(53,222
)Cash flows from investing activities:Purchases of property and equipment


(1,556
)


(1,725
)


(3,037
)Maturities of short-term investments










1,100Decrease (Increase) in other assets


340



(340
)


1,480Net cash used in investing activities


(1,216
)


(2,065
)


(457
)Cash flows from financing activities:Issuance of common stock


73,354







42,284Proceeds from stock option and purchase plans


12,446



673



372Purchase of treasury stock


(4,583
)






Proceeds from loans and lines of credit






39,895



5,000Repayments on loans and lines of credit


(54
)


(30,537
)


(81
)Net cash provided by financing activities


81,163



10,031



47,575Foreign exchange effect on cash and cash equivalents


(439
)


269



(499
)Increase (decrease) in cash and cash equivalents


82,619



(4,922
)


(6,603
)Cash and cash equivalents, beginning of year


21,720



26,642



33,245Cash and cash equivalents, end of year

$
104,339


$
21,720


$
26,642Supplemental DisclosuresCash paid for interest

$
1,628


$
4,749


$
3,308Cash paid for taxes

$
365


$
401


$
641Noncash Investing ActivitiesTransfers from inventory to field equipment

$
20,567


$
10,315


$
21,833Transfers from field equipment to deferred cost of revenues

$
21,185


$
7,358


$
12,759    76




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS
  1.
    Nature of
    Operations      2.
    Summary
    of Significant Accounting Policies  Principles
    of Consolidation and Basis of Presentation
    Use of
    Estimates
   77




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Revenue
    Recognition
        System
    One Segment
  and/or
          In-Center
    Segment
   78




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Foreign
    Currency Translation and Transactions
    Cash,
    Cash Equivalents, Marketable Securities and Restricted
    Cash
      Concentration
    of Credit Risk
        Balance at


Provision





Balance atYear Ended

Beginning of Year


(Recoveries)


Write-offs


End of YearDecember 31, 2010

$
725



(86
)

$
(38
)

$
601December 31, 2009

$
918






$
(193
)

$
725December 31, 2008

$
296


$
694


$
(72
)

$
918    79




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Fair
    Value Measures
    Inventory
  first-in
  Property
    and Equipment and Field Equipment
          EstimatedUseful LifeManufacturing equipment and tooling


5 to 6 yearsMolds


4 yearsLeasehold improvements


Lesser of 5 years or lease termComputer and office equipment


3 yearsFurniture


5 to 7 yearsField equipment


5 to 7 years  80




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Intangibles
    and Other Long Lived Assets
    Goodwill
    Stock-Based
    Compensation
     81




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Warranty
    Costs
    Balance at





Balance atYear Ended

Beginning of Year

Provision

Usage

End of YearDecember 31, 2010

$
205


$
452


$
(389
)

$
268December 31, 2009

$
235


$
331


$
(361
)

$
205December 31, 2008

$
220


$
366


$
(351
)

$
235   Distribution
    Expenses
    Research
    and Development Costs
    Income
    Taxes
        Comprehensive
    Loss
   82




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  Subsequent
    Events
    Recent
    Accounting Pronouncements
  Accounting for Transfers and Servicing of Financial Assets
    and Extinguishments of Liabilities Consolidation of Variable
    Interest Entities (revised)
    No. 2009-13, Multiple-Deliverable Revenue Arrangements No. 2009-14, Certain Revenue Arrangements That Include Software
    Elements
  3.
    Significant
    Revenue Contracts  National
    Service Provider Agreement with DaVita Inc., or
    DaVita
   83




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Revenue Recognition
    Asahi
    Strategic Business Alliance
     84




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  System
    One Segment Distribution Arrangements
    Revenue
    Recognition
  4.
    Inventory    December 31,


December 31,2010


2009Purchased components

$
14,928


$
10,110Work in process


6,372



5,744Finished goods


13,650



12,263$
34,950


$
28,117   5.
    Property
    and Equipment, Field Equipment and Deferred Cost of
    Revenues    December 31,


December 31,2010


2009Manufacturing equipment and tooling

$
10,683


$
9,804Leasehold improvements


3,913



4,846Computer and office equipment


2,272



2,283Molds


1,848



1,803Furniture


238



471Construction-in-process


1,179



1,61920,133



20,826Less accumulated depreciation


(11,843
)


(10,490
)Property and equipment, net

$
8,290


$
10,336    85




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,


December 31,2010


2009Field equipment

$
42,753


$
48,381Less accumulated depreciation


(29,093
)


(26,655
)Field equipment, net

$
13,660


$
21,726       6.
    Goodwill
    and Intangible Assets    December 31, 2010


December 31, 2009


EstimatedAccumulated





Accumulated


UsefulCost


Amortization


Cost


Amortization


LifeBloodline, needle and other patented and unpatented technology

$
6,200


$
(2,519
)

$
6,200


$
(1,744
)


8 yearsTrade names


2,300



(534
)


2,300



(370
)


14 yearsCustomer relationships


26,000



(6,035
)


26,000



(4,178
)


14 yearsIntangible assets

$
34,500


$
(9,088
)

$
34,500


$
(6,292
)     7.
    Net Loss
    per Share      Years EndedDecember 31,2010


2009


2008Options to purchase common stock


3,072



584



275Restricted stock


913



888



Warrants to purchase common stock


989







Total


4,974



1,472



275  86




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  8.
    Accrued
    Expenses    December 31,


December 31,2010


2009Payroll, compensation and related benefits

$
7,109


$
4,433Customer prepayment


4,316



Distribution expenses


2,228



1,616Other


5,884



3,328Total

$
19,537


$
9,377   9.
    Debt     87




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        2011

$
432012


2013(1)


42,667$
42,710     (1)
    
    Amount includes $2.7 million of deferred interest related
    to the Asahi term loan.  10.
    Business
    Segment and Geographic Information         88




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        System One

In-Center

Unallocated

TotalYear Ended December 31, 2010Revenues from external customers

$
113,855


$
65,363


$



$
179,218Segment profit (loss)


283



8,927



(35,674
)


(26,464
)Segment assets


86,469



16,329



183,296



286,094Year Ended December 31, 2009Revenues from external customers

$
85,801


$
62,875


$



$
148,676Segment (loss) profit


(17,445
)


10,344



(29,346
)


(36,447
)Segment assets


74,534



17,346



105,098



196,978Year Ended December 31, 2008Revenues from external customers

$
66,873


$
61,890


$



$
128,763Segment (loss) profit


(23,092
)


10,075



(36,968
)


(49,985
)       Years Ended December 31,2010

2009

2008Customer A


22
%


22
%


18
%Customer B


16
%


28
%


39
%Customer C


13
%






    89




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    December 31,


December 31,2010


2009Total segment assets

$
102,798


$
91,880Corporate assets:Cash and cash equivalents


104,339



21,720Property and equipment, net


8,290



10,336Intangible assets, net


25,412



28,208Goodwill


42,698



42,698Prepaid and other assets


2,557



2,136Total assets

$
286,094


$
196,978     December 31,


December 31,


December 31,2010


2009


2008United States

$
16,796


$
25,922


$
35,924Europe


4,536



5,290



5,679Mexico


618



850



1,096$
21,950


$
32,062


$
42,699   11.
    Commitments
    and Contingencies      30-day
   90




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##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  60-day
      2011

$
1,5782012


5512013


5$
2,134   12.
    Income
    Taxes      December 31,


December 31,2010


2009Deferred tax assets:Net operating loss carryforwards

$
105,578


$
95,610Research and development credits


6,438



5,271Other


5,495



6,843Total deferred tax assets


117,511



107,724Deferred tax liabilities:Depreciation


(2,432
)


(4,938
)Intangible assets


(9,707
)


(11,048
)Total deferred tax liabilities


(12,139
)


(15,986
)Net deferred tax assets before valuation allowance


105,372



91,738Less: Valuation allowance


(105,372
)


(91,738
)Net deferred tax assets

$



$
  91




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
          Years Ended December 31,2010


2009


2008Federal statutory rate


34.0
%


34.0
%


34.0
%Stock compensation


9.2
%


(2.6
)%


(2.3
)%State income tax, net of federal tax benefit


5.3
%


4.9
%


0.0
%Valuation allowance


(53.0
)%


(38.5
)%


(34.2
)%Other, net


2.0
%


1.6
%


1.8
%Effective tax rate


(2.5
)%


(0.6
)%


(0.7
)%     13.
    Stock
    Plans and Stock-Based Compensation  Stock
    Incentive Plans
   92




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##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        Stock
    Options
    WeightedAverage





AverageExercise


Aggregate


RemainingStock Options

Shares


Price


Intrinsic Value


Contractual Life(In thousands)


(In years)Outstanding at beginning of year


6,850,050


$
6.87Granted


1,398,300


$
10.86Exercised


(1,831,253
)

$
6.57Forfeited or expired


(194,135
)

$
10.85Outstanding at end of year


6,222,962


$
7.75


$
106,578



4.26Fully vested and exercisable


3,709,004


$
7.76


$
63,507



3.51Fully vested, exercisable and expected to vest


6,015,966


$
7.75


$
103,073



4.22   out-of-the-money
 93




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
      Years Ended December 31,2010

2009

2008Expected life (in years)

4.75

4.75

4.75Risk-free interest rate

1.17% - 2.58%

1.71% - 2.58%

2.40% - 3.70%Expected stock price volatility

64% to 65%

65% to 75%

67%Expected dividend yield





   Restricted
    Stock
    Weighted Average





Weighted AverageGrant-date


Aggregate


RemainingShares


Fair Value


Intrinsic Value


Contractual Life(In thousands)


(In years)Nonvested at December 31, 2009


1,226,564


$
2.23Granted


757,144


$
10.00Vested


(804,075
)

$
2.22Forfeited


(26,250
)

$
2.11Nonvested at December 31, 2010


1,153,383


$
7.34


$
28,696



5.8   Employee
    Stock Purchase Plan
    Years Ended December 31,2010

2009

2008Expected life (in months)

6

6

6Risk-free interest rate

0.20% - 0.22%

0.18% - 0.33%

1.6% - 3.4%Expected stock price volatility

64%

65%

65% - 67%Expected dividend yield





    94




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##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
    Stock-based
    Compensation Expense
    Years Ended December 31,2010


2009


2008Cost of revenues

$
2,347


$
1,593


$
1,053Selling and marketing


5,540



3,507



2,247Research and development


2,222



774



520General and administrative


5,242



3,352



2,022Total stock-based compensation expense

$
15,351


$
9,226


$
5,842     Other
    Compensation Plans
    14.
    Employee
    Benefit Plan    15.
    Stockholders
    Equity  Form S-3,
   95




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
              16.
    Related-Party
    Transactions   96




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
        17.
    Fair
    Value Measurements       97




---



##### Table of Contents



NXSTAGE
    MEDICAL, INC.
  NOTES TO
    CONSOLIDATED FINANCIAL
    STATEMENTS  (Continued)
  18.
    Quarterly
    Financial Data (Unaudited)    Three Months EndedMarch 31,

June 30,

September 30,

December 31,2010

2010

2010

2010Revenues

$
40,408


$
44,008


$
45,033


$
49,769Gross profit(1)


11,813



13,762



14,960



17,592Net loss


(8,999
)


(8,256
)


(8,164
)


(6,293
)Net loss per common share, basic and diluted

$
(0.19
)

$
(0.17
)

$
(0.17
)

$
(0.13
)   Three Months EndedMarch 31,

June 30,

September 30,

December 31,2009

2009

2009

2009Revenues

$
33,735


$
36,398


$
38,033


$
40,510Gross profit


7,055



8,817



9,545



11,447Net loss(2)


(12,228
)


(12,515
)


(10,047
)


(8,677
)Net loss per common share, basic and diluted

$
(0.26
)

$
(0.27
)

$
(0.22
)

$
(0.19
)     (1)
    
    During the fourth quarter of 2010, we changed the estimated
    useful life of certain of our field equipment assets from five
    to seven years which resulted in a reduction in costs of
    revenues of $0.5 million during the three months ended
    December 31, 2010.(2)
    
    During the three months ended June 30, 2009, we incurred
    prepayment and other transaction fees of $2.0 million,
    which were recorded to interest expense, to pay off the entire
    debt obligation owed under our credit and security agreement
    with GE. 98




---



##### Table of Contents



Item 9.
    Changes
    in and Disagreements with Accountants on Accounting and
    Financial Disclosure    Item 9A.
    Controls
    and Procedures  Rules 13a-15(e) 15d-15(e)
    Managements
    Report on Internal Control over Financial Reporting
    
    Pertain to the maintenance of records that in reasonable detail
    accurately and fairly reflect the transactions and dispositions
    of our assets;
    Provide reasonable assurance that transactions are recorded as
    necessary to permit preparation of financial statements in
    accordance with generally accepted accounting principles, and
    that our receipts and expenditures are being made only in
    accordance with authorizations of our management and
    directors; and
    Provide reasonable assurance regarding prevention or timely
    detection of unauthorized acquisition, use or disposition of our
    assets that could have a material effect on our financial
    statements. 99




---



##### Table of Contents



100




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
                
    101




---



##### Table of Contents



Item 9B.
    Other
    Information  PART III
    Items 10-14
  http://www.nxstage.com.
  PART IV
  Item 15.
    Exhibits,
    Financial Statement Schedules  Financial Statements
    Report of Independent Registered Public Accounting Firm


72Consolidated Balance Sheets


73Consolidated Statements of Operations


74Consolidated Statements of Changes in Stockholders Equity


75Consolidated Statements of Cash Flows


76Notes to Consolidated Financial Statements


77   Exhibits
  Form 10-K.
  Financial Statement Schedules
  None. 10-K
 102




---



##### Table of Contents



SIGNATURES
  Form 10-K
     By:
    /s/  Jeffrey
    H. Burbank   President and Chief Executive Officer
 February 18, 2011
  Form 10-K
  Signature

Title

Date/s/  Jeffrey
    H. BurbankJeffrey
    H. Burbank

President, Chief Executive Officer and Director

February 18, 2011/s/  Robert
    S. BrownRobert
    S. Brown

Chief Financial Officer and Senior Vice President (Principal
    Financial and Accounting Officer)

February 18, 2011/s/  Philippe
    O. ChambonPhilippe
    O. Chambon, M.D., Ph.D.

Chairman of the Board of Directors

February 18, 2011/s/  Daniel
    A. GianniniDaniel
    A. Giannini

Director

February 18, 2011/s/  Craig
    W. MooreCraig
    W. Moore

Director

February 18, 2011/s/  Reid
    PerperReid
    Perper

Director

February 18, 2011/s/  Earl
    R. LewisEarl
    R. Lewis

Director

February 18, 2011/s/  Nancy
    J. HamNancy
    J. Ham

Director

February 18, 2011/s/  David
    S. UtterbergDavid
    S. Utterberg

Director

February 18, 2011  103




---



##### Table of Contents



EXHIBIT INDEX  Incorporated by Reference toExhibit



Form or



Filing Date

SEC FileNumber

Description

Schedule

Exhibit No.

with SEC

Number3
.1

Restated Certificate of Incorporation

S-1/A


3.4


10/7/2005

333-1267113
.2

Amended and Restated By-Laws

S-1/A


3.5


10/7/2005

333-1267114
.1

Specimen Certificate evidencing shares of common stock

S-1/A


4.1


10/7/2005

333-1267114
.2

Form of Securities Purchase Agreement, dated May 22, 2008
    and a schedule of signatories thereto

8-K


4.1


5/23/2008

000-515674
.3

Form of Warrant to Purchase Common Stock

8-K


4.2


5/23/2008

000-5156710
.1#

1999 Stock Option and Grant Plan, as amended

S-1/A


10.1


10/7/2005

333-12671110
.2#

Form of Incentive Stock Option Agreement under the 1999 Stock
    Option and Grant Plan, as amended

S-1/A


10.2


10/7/2005

333-12671110
.3#

Form of Nonstatutory Stock Option Agreement under the 1999 Stock
    Option and Grant Plan, as amended

S-1/A


10.3


10/7/2005

333-12671110
.4#

2005 Stock Incentive Plan, as amended by Amendment No. 1,
    together with Form of Incentive Stock Option Agreement, Form of
    Nonstatutory Stock Option Agreement and Form of Restricted Stock
    Agreement

10-Q
    S-1/A
    10-K


10.3
    10.22
    10.5


11/7/2007
    10/20/2005
    3/16/2007

000-51567
    333-126711
    000-5156710
.5#

2005 Employee Stock Purchase Plan, as amended by Amendment
    No. 1

10-K


10.5


3/7/2008

000-5156710
.6#

Employment Agreement dated October 19, 2005 between the
    Registrant and Jeffrey H. Burbank

S-1/A


10.12


10/20/2005

333-12671110
.7#

Employment Agreement dated October 18, 2005 between the
    Registrant and Joseph E. Turk, Jr.

S-1/A


10.15


10/20/2005

333-12671110
.8#

Employment Agreement dated October 18, 2005 between the
    Registrant and Winifred L. Swan

S-1/A


10.16


10/20/2005

333-12671110
.9#

Employment Agreement dated November 27, 2006 between
    Registrant and Robert S. Brown

10-K


10.1


3/16/2007

000-51567*10
.10

Employment Agreement dated August 16, 2007 between
    Registrant and Michael J. Webb10
.11#

Form of Indemnification Agreement entered into between the
    Registrant and each of its Directors and Executive Officers

S-1/A


10.21


9/21/2005

333-12671110
.12#

Summary of 2006 Executive Compensation and 2006 Corporate Bonus
    Plan10
.13#

Director Compensation Policy

10-Q


10.2


5/5/2006

000-5156710
.14

Standard Form Commercial Lease dated October 17, 2000
    between the Registrant and Heritage Place, LLC, as amended by
    Modification to Standard Form Commercial Lease

S-1


10.1


7/19/2005

333-12671110
.15

Supply Agreement dated as of October 26, 2004 between the
    Registrant and B. Braun Medizintechnologie GmbH

S-1


10.17


7/19/2005

333-12671110
.16

Supply Agreement dated as of January 5, 2007 between the
    Registrant and Membrana GmbH

10-K


10.27


3/16/2007

000-51567 104




---



##### Table of Contents



Incorporated by Reference toExhibit



Form or



Filing Date

SEC FileNumber

Description

Schedule

Exhibit No.

with SEC

Number10
.17

First Amended and Restated National Service Provider Agreement
    dated as of July 22, 2010 between the Registrant and DaVita
    Inc.

10-Q


10.01


8/6/2010

000-5156710
.18

Extracorporeal Disposables Distribution Agreement, dated
    July 25, 2007, by and between Medisystems Corporation and
    Henry Schein

10-Q


10.4


11/7/2007

000-5156710
.19

Supply and Distribution Agreement, dated February 1, 2001
    by and between Medisystems Corporation and Kawasumi
    Laboratories, Inc.

10-Q


10.6


11/7/2007

000-5156710
.20

Investors Rights Agreement dated June 30, 1999
    between the Registrant and the Investors, as amended on
    January 24, 2000, May 24, 2001, April 15, 2003,
    August 18, 2004, December 23, 2004 and July 8,
    2005

S-1


10.9


7/19/2005

333-12671110
.21

Needle Purchase Agreement, dated January 6, 2008, by and
    between the Registrant and DaVita Inc.

10-K


10.37


3/7/2008

000-5156710
.22

Shelter Agreement, dated March 21, 2007 by and among the
    Registrant, Entrada Partners and Entrada Group de Mexico, S. de
    R.L. de C.V.

10-Q


10.6


5/9/2007

000-5156710
.23

Supply and Distribution Agreement, dated May 6, 2008, by
    and between Medisystems Corporation and Kawasumi Laboratories,
    Inc.

10-Q


10.43


8/8/2008

000-5156710
.24

Supply Agreement, dated April 10, 2009, by and between the
    Registrant and Laboratorios PiSA

10-Q/A


10.45


10/19/2009

000-5156710
.25

Extracorporeal Disposables Distribution Agreement, dated
    June 15, 2009, by and between Medisystems Corporation and
    Gambro Renal Products, Inc.

10-Q


10.46


8/7/2009

000-5156710
.26

Term Loan and Security Agreement effective June 5, 2009 by
    and between the Registrant, EIR Medical, Inc., Medisystems
    Services Corporation, Medisystems Corporation, as Borrowers, and
    Medimexico s. de R.L. de C.V., NxStage Verwaltungs GmbH, NxStage
    GmbH & Co. KG and Medisystems Europe S.p.A., as
    Guarantors and Asahi Kasei Kuraray Medical, Co., Ltd., as the
    Lender

10-Q


10.47


8/7/2009

000-5156710
.27

Amendment, dated as of March 10, 2010, to the Term Loan and
    Security Agreement, effective June 5, 2009, by and between
    the Registrant, EIR Medical, Inc., Medisystems Services
    Corporation, Medisystems Corporation, as Borrowers, and Asahi
    Kasei Kuraray Medical, Co., Ltd., as the Lender

10-Q


10.49


5/5/2010

000-5156710
.28

Technology and Trademark License Agreement effective
    June 15, 2009 by and between the Registrant and Asahi Kasei
    Kuraray Medical Co., Ltd.

10-Q


10.48


8/7/2009

000-51567 105




---



##### Table of Contents



Incorporated by Reference toExhibit



Form or



Filing Date

SEC FileNumber

Description

Schedule

Exhibit No.

with SEC

Number10
.29

Loan and Security Agreement, dated March 10, 2010, by and
    among Silicon Valley Bank, as the Lender, and the Registrant,
    EIR Medical, Inc., Medisystems Corporation and Medisystems
    Services Corporation, as Borrowers

10-Q/A


10.48


7/22/2010

000-5156710
.30

Warrant to Purchase Shares of Common Stock, dated July 22,
    2010, issued to DaVita Inc.

10-Q


10.2


8/6/2010

000-5156710
.31

Registration Rights Agreement, dated July 22, 2010, between
    the Registration and DaVita Inc.

10-Q


10.3


8/6/2010

000-51567*21
.1

List of Subsidiaries*23
.1

Consent of Ernst & Young LLP*31
.1

Certification of Chief Executive Officer pursuant to Exchange
    Act
    Rules 13a-14a
    or 15d-14a, as adopted pursuant to Section 302 of
    Sarbanes-Oxley Act of 2002*32
.1

Certification of Chief Financial Officer pursuant to Exchange
    Act
    Rules 13a-14a
    or 15d-14a, as adopted pursuant to Section 302 of
    Sarbanes-Oxley Act of 2002*32
.1

Certification of Chief Executive Officer pursuant to Exchange
    Act
    Rules 13a-14(b)
    or 15d-14(b) and 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of Sarbanes-Oxley Act of 2002*32
.2

Certification of Chief Financial Officer pursuant to Exchange
    Act
    Rules 13a-14(b)
    or 15d-14(b) and 18 U.S.C. Section 1350, as adopted
    pursuant to Section 906 of Sarbanes-Oxley Act of 2002     *
    
    Filed herewith.
    
    Confidential treatment requested as to certain portions, which
    portions are omitted and filed separately with the Securities
    and Exchange Commission.#
    
    Management contract or compensatory plan or arrangement filed as
    an Exhibit to this report pursuant to 15(a) and 15(c) of
    Form 10-K. 106