Image source: NxStage Medical.

For a growing number of chronic kidney disease and diabetes sufferers, the need for dialysis treatments is one of the most difficult aspects of keeping themselves healthy. NxStage Medical (NASDAQ:NXTM) has revolutionized the way patients get the dialysis they need, with its System One home dialysis machines making treatment more convenient and manageable. Even as dialysis outpatient clinic leader Fresenius Medical Care (NYSE:FMS) has continued to grow, NxStage has found plenty of growth opportunities in offering an alternative, and coming into its third-quarter financial report, NxStage investors hoped that the company would be able to sustain that growth and aim itself toward ending its string of losses.

NxStage didn't make money in the third quarter, but it came closer than most expected, and it also gave favorable guidance for its future. Let's take a closer look at NxStage Medical and the strides it has made toward becoming a bigger player in the industry.

NxStage sets new records
NxStage Medical's third-quarter results included some all-time highs for the company. Revenue jumped 15% to $86.5 million, easily topping the 9% growth rate that most investors had expected to see from the company. NxStage posted a net loss of $1.7 million, but that was only about a fourth of what the company lost in the year-ago quarter, and the corresponding $0.03-per-share loss was a nickel better than the consensus forecast among investors.

As we've seen repeatedly, System One was primarily responsible for NxStage's growth. Home-based revenue rose 15% to $46.5 million, while the company posted an even higher growth rate of 23% for the system's use in critical care. NxStage's In-Center traditional dialysis treatment segment held up better than in past quarters, with revenue remaining flat compared to the year-ago quarter.

CEO Jeffrey Burbank was happy to be able to report results that were well above the top end of the company's previous guidance ranges. "We are increasingly confident that 2016 will be another strong year for NxStage," Burbank said, "consistent with our target of a sustainable 15% home revenue growth rate."

Where NxStage could get even healthier
One key aspect of NxStage's future success is in making sure that new products are available as add-ons to any existing equipment that customers already own. "Both our current and next-generation fluid systems are fully interoperable with our current and next-generation hemodialysis systems," Burbank noted, "and are specifically designed to easily build on investments our customers and patients have already made in our equipment." That attention to cost-effective detail is something that the NxStage founder and CEO believes will build a loyal customer base that in turn could drive referral business and other growth-enhancing results.

NxStage's guidance upgrades were also encouraging. The company now thinks full-year 2015 sales will finish around $332 million to $333 million, or as much as $5 million above the top end of its previous guidance range. A narrower net loss for the year of $15 million to $16 million is similarly $3 million to $4 million better than previously expected, and fourth-quarter guidance for sales of $86 million to $87 million and a net loss of $2 million to $3 million show the improvements that NxStage has made recently.

That said, NxStage faces competition in the home dialysis market. In early November, Fresenius Medical Care announced a partnership with Swiss medical device maker Debiotech to develop home-based peritoneal dialysis technology. A Fresenius executive noted that the company hopes to provide new equipment that will "offer [dialysis patients] a new level of ease of use and flexibility to help them meet their goal to dialyze at home."

With such a huge potential market, NxStage Medical has plenty of room to grow. As its products gain greater acceptance, NxStage could achieve the goal of turning losses into profits sooner than many ever thought possible.