Rockwell Medical Inc (RMTI), DaVita HealthCare Partners Inc (DVA): Why Are Investors Thrilled About This Company’s Iron Treatment?

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Therefore, any cut that hurts DaVita HealthCare Partners Inc (NYSE:DVA) and Fresenius is sure to hurt Rockwell as well.

Smaller dialysis companies state their case
Smaller dialysis companies like NxStage Medical, Inc. (NASDAQ:NXTM) have also been affected by the proposed Medicare cuts. NxStage’s primary product is a revolutionary one — the first portable hemodialysis system approved for home use by the FDA. At only a foot tall, the NxStage System One can be taken on vacation, and ordinary tap water can be used to create dialysate on demand. Since NxStage is focused on home treatment and Rockwell Medical is concentrating on dialysis clinics, the two companies do not directly compete with each other, although they face similar challenges.

NxStage Medical, Inc. (NASDAQ:NXTM) recently submitted public comments to CMS regarding proposed changes to the ESRD Prospective Payment System for 2014, claiming that current payments are insufficient for proper home hemodialysis training. The company argued that trainers should be paid more highly per hour to ensure safer care at home, and that lower pay throttles the growth of this convenient new treatment.

Shares of NxStage have been pummeled along with DaVita HealthCare Partners Inc (NYSE:DVA) and Fresenius by the proposed Medicare cuts. Over the past three months, the stock has declined 13%, even though its revenue rose 10.9% in the prior-year quarter. NxStage is currently unprofitable, although its losses have been narrowing considerably over the past five years.

The Foolish takeaway
The dialysis business is a tricky one to navigate with the lingering uncertainties of Medicare cuts, which could seriously crimp the top line growth of all of these companies next year. However, that doesn’t mean that investors should ignore the sector altogether. With the exception of Rockwell Medical — which surged 150% over the past three months as its peers fell, most dialysis-related stocks have fallen to a point where a lot of damage has already been priced in.

Brave investors with a long-term investment horizon should take a closer look at some of these companies now, as major diseases fueling the rise of dialysis treatments — such as diabetes and ESRD — aren’t showing any signs of slowing down.

The article Why Are Investors Thrilled About This Company’s Iron Treatment? originally appeared on Fool.com and is written by Leo Sun.

Leo Sun has no position in any stocks mentioned. The Motley Fool recommends NxStage Medical. The Motley Fool owns shares of NxStage Medical. 

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