Company Takes Proactive Steps to Improve
Commercial Execution and Maximize Growth Opportunities
REDWOOD
CITY, Calif., Aug. 1, 2023
/PRNewswire/ -- Nevro Corp. (NYSE: NVRO), a global medical device
company that is delivering comprehensive, life-changing solutions
for the treatment of chronic pain, today reported its second
quarter 2023 financial results. The company also provided third
quarter guidance and updated its full-year 2023 guidance.
Recent Business Highlights and Guidance
- Second Quarter 2023 Worldwide Revenue of $108.8 Million Grew 4% As Reported and Constant
Currency Compared to Second Quarter 2022
- Painful Diabetic Neuropathy (PDN) Indication Sales of
Approximately $19.0 Million Grew 73%
Compared to Second Quarter 2022
- Second Quarter 2023 U.S. Trial Procedures Increased 4% Compared
to Second Quarter 2022, while U.S. PDN Trial Procedures Represented
23% of Total U.S. Trials in the Quarter
- Second Quarter 2023 Net Loss from Operations of $25.6 Million; Second Quarter 2023 Non-GAAP
Adjusted EBITDA Loss of $3.1
Million
- Greg Siller Named as New Chief Commercial Officer
- SENZA-PDN Randomized Controlled Trial Data Presented at the
American Diabetes Association 83rd Scientific Sessions
Demonstrated Positive Correlation Between Use of High-Frequency (10
kHz) Spinal Cord Stimulation and Reductions in HbA1c (A1C) and Body
Weight in Subgroup of Patients with Type 2 Diabetes at 24
Months
- Two Significant Payer Coverage Wins: Florida Blue, the Largest Commercial Payer in
Florida Representing 4.6 Million Covered Lives, Updated Their
Medical Policy to Include Coverage for Painful Diabetic Neuropathy,
Effective June 15, 2023; and Medicare
Administrative Contractors Novitas and First Coast Service Options
(FCSO) now cover PDN and Non-Surgical Back Pain following the
Medicare National Coverage Determination, Effective July 13, 2023
- Provides Third Quarter 2023 Revenue Guidance of $95 Million to $97
Million; Updates Full-Year 2023 Revenue Guidance to
$410 Million to $415 Million, or 1% to 2% Constant Currency
Growth Over 2022
- Provides Third Quarter 2023 Non-GAAP Adjusted EBITDA Guidance
of Negative $8 Million to Negative
$10 Million; Updates Full-Year 2023
Non-GAAP Adjusted EBITDA Guidance to Negative $25 Million to Negative $28 Million
Second Quarter 2023 Financial Overview
Worldwide revenue for the second quarter of 2023 was
$108.8 million, an increase of 4% as
reported and on a constant currency basis, compared to $104.2 million in the second quarter of 2022. PDN
indication sales represented approximately $19.0 million and 18% of worldwide permanent
implant procedures in the second quarter of 2023.
U.S. revenue in the second quarter of 2023 was $93.0 million, reflecting growth of 4% over
$89.0 million in the second quarter
of 2022. U.S. permanent implant procedures increased 8% compared to
second quarter of 2022, while U.S. trial procedures increased 4%
compared to second quarter of 2022. U.S. PDN trial procedures
represented approximately 23% of total U.S. trial volume and grew
approximately 64% over the second quarter of 2022.
International revenue in the second quarter of 2023 was
$15.8 million, compared to
$15.2 million in the second quarter
of 2022, an increase of 5% as reported or an increase of 4% on a
constant currency basis.
"While we are encouraged by the early signs of recovery and the
long-term outlook of the SCS market, the market recovery will not
be linear. We do expect a return to sustained historical market
growth rates and are working to lay a stronger foundation in our
commercial execution as we transition into our next phase of
growth," said Kevin Thornal, Nevro's
CEO and President. "With our new Chief Commercial Officer,
Greg Siller, on board and looking
more importantly to the second half of the year and beyond, we have
focused and reengaged our field team very intensely on patient
trial growth and referral physician education. While it's early,
we've seen some promising initial signs and responsiveness to those
efforts."
Mr. Thornal continued, "We are now clearly focused on three key
pillars that we believe will improve our commercial execution and
deliver significant long-term shareholder return:
- First, we are moving quickly to ensure we have top talent at
every position to increase sales productivity and improve physician
engagement and have optimized our field teams to enable greater
ownership, accountability, and speed to maximize growth
opportunities;
- Second, we will focus on increasing market penetration by
expanding indications and launching HFX line extensions, such as
HFX iQ, while vigorously pursuing a robust R&D pipeline and
strong clinical evidence, and by potentially adding to our product
portfolio through strategic opportunities; and
- Lastly, we plan to continue to progress on the path to
profitability by scaling our Costa
Rica manufacturing facility and improving our operational
efficiency."
Mr. Thornal commented further, "The changes resulting from our
focus on these three key pillars will require some time to take
full effect, and given this and the non-linear recovery in the SCS
market, we have adjusted our guidance. However, we believe these
changes will generate significant future returns, including
improved revenue growth, enhanced margins, and increased operating
leverage, setting us up for success in 2024 and beyond. We are
enthusiastic about our plan and look forward to executing on our
current strategies, driving growth and taking advantage of the
meaningful leverage opportunities we have to drive toward
profitability and deliver shareholder value."
Gross profit for the second quarter of 2023 was $74.4 million, compared to $72.7 million in the second quarter of 2022.
Gross margin was 68.4% in the second quarter of 2023, compared to
69.8% in the second quarter of 2022. "The full market release of
the HFX iQ system continues to progress well, and the company
anticipates a meaningful shift in mix to the HFX iQ product
throughout 2023, which combined with the ramp-up of our
Costa Rica facility, is expected
to benefit gross margin beginning in the fourth quarter of this
year," added Rod MacLeod, Chief
Financial Officer.
Operating expenses for the second quarter of 2023 were
$100.1 million, compared to
$96.5 million in the second quarter
of 2022. The increase in operating expenses was primarily due to
$3.6 million in personnel-related
costs, largely specific to management changes made in the second
quarter. Litigation-related legal expenses were $4.9 million for the second quarter of 2023,
compared to $4.0 million in the
second quarter of 2022.
Net loss from operations for the second quarter of 2023 was
$25.6 million, compared to a loss of
$23.8 million in the second quarter
of 2022. Non-GAAP adjusted EBITDA for the second quarter of 2023
was a loss of $3.1 million, compared
to loss of $4.5 million in the second
quarter of 2022. Non-GAAP adjusted EBITDA excludes interest,
taxes, and non-cash items such as stock-based compensation and
depreciation and amortization, as well as litigation-related
expenses, certain litigation charges and credits and other
adjustments such as restructuring charges. Please see the
financial table below for GAAP to non-GAAP reconciliations.
Cash, cash equivalents and short-term investments totaled
$329.9 million as of June 30, 2023, a decrease of $11.8 million from March
31, 2023. This decrease was driven by cash used in
operations.
Third Quarter and Full-Year 2023 Guidance
Nevro expects third quarter of 2023 worldwide revenue of
approximately $95 million to
$97 million, or a decrease of 4% to
6% over prior year on a constant currency basis.
The company expects third quarter of 2023 non-GAAP adjusted
EBITDA to be a loss of approximately $8
million to $10 million.
Non-GAAP adjusted EBITDA excludes interest, taxes, and non-cash
items such as stock-based compensation and depreciation and
amortization, as well as litigation-related expenses, certain
litigation charges and credits and other adjustments such as
restructuring charges. Please see the financial tables for GAAP to
non-GAAP reconciliations.
The company now expects full-year 2023 worldwide revenue of
approximately $410 million to
$415 million, an increase of 1% to
2% over prior year on both an as reported and constant
currency basis, and a decrease of 3% to 5% on a constant currency
basis in the second half of the year. This compares to previous
guidance of $445 million to
$455 million.
The company now expects full-year 2023 non-GAAP adjusted EBITDA
to be a loss of approximately $25
million to $28 million,
compared to previous guidance of a loss of $5 million to $10
million and a non-GAAP adjusted EBITDA loss of $23.8 million in 2022. Please see the financial
tables for GAAP to non-GAAP reconciliations.
An investor presentation for the company's second quarter 2023
financial results is available in the "Investors" section of
Nevro's website at www.nevro.com.
Webcast and Conference Call Information
As previously announced, Nevro management will host a conference
call starting at 1:30 pm PT /
4:30 pm ET today. Investors
interested in listening to the call may do so by dialing (888)
330-2443 in the U.S. or +1 (240) 789-2728 internationally, using
Conference ID: 3583097. A live webcast, as well as an archived
recording, will also be available in the "Investors" section of
Nevro's website at: www.nevro.com.
Internet Posting of Information
Nevro routinely posts information that may be important to
investors in the "Investor Relations" section of its website at
www.nevro.com. The company encourages investors and potential
investors to consult the Nevro website regularly for important
information about Nevro.
About Nevro
Headquartered in Redwood City,
California, Nevro is a global medical device company focused
on delivering comprehensive, life-changing solutions that continue
to set the standard for enduring patient outcomes in chronic pain
treatment. The company started with a simple mission to help more
patients suffering from debilitating pain and developed its
proprietary 10 kHz Therapy™, an evidence-based, non-pharmacologic
innovation that has impacted the lives of more than 100,000
patients globally. Nevro's comprehensive HFX™ spinal cord
stimulation (SCS) platform includes a Senza SCS system and support
services for the treatment of chronic pain of the trunk and limb
and painful diabetic neuropathy.
Senza®, Senza II®, Senza Omnia™, and HFX iQ™ are the only SCS
systems that deliver Nevro's proprietary 10 kHz Therapy™. Nevro's
unique support services provide every patient with an HFX Coach™
throughout their pain relief journey and every physician with HFX
Cloud™ insights for enhanced patient and practice management.
SENZA, SENZA II, SENZA OMNIA, OMNIA, HF10, the HF10 logo, 10 kHz
Therapy, HFX, the HFX logo, HFX iQ, the HFX iQ logo, HFX Algorithm,
HFX CONNECT, the HFX Connect logo, HFX ACCESS, the HFX Access logo,
HFX COACH, the HFX Coach logo, HFX CLOUD, the HFX Cloud logo,
RELIEF MULTIPLIED, the X logo, NEVRO, and the NEVRO logo are
trademarks or registered trademarks of Nevro Corp. Patents covering
Senza HFX iQ and other Nevro products are listed at
Nevro.com/patents.
To learn more about Nevro, connect with us
on LinkedIn, Twitter, Facebook and Instagram.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements reflecting the company's
current beliefs and expectations of management made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, including: our third quarter and updated full-year
2023 financial guidance; our expectation that the SCS market will
return to sustained historical market growth rates; our belief that
our three key pillars for our strategic focus will improve our
commercial execution and deliver significant long-term shareholder
return; our expectation that our strategic changes have the
potential to generate significant future returns, including
improved revenue growth, enhanced margins, and increased operating
leverage, setting us up for success in 2024 and beyond; and the
expectation that there will be a meaningful shift in mix to the HFX
iQ product throughout 2023, which combined with the ramp-up of our
Costa Rica facility, is expected
to benefit gross margin beginning in the fourth quarter of this
year. These forward-looking statements are based upon
information that is currently available to us or our current
expectations, speak only as of the date hereof, and are subject to
numerous risks and uncertainties, including our ability to
successfully commercialize our products; our ability to manufacture
our products to meet demand; the level and availability of
third-party payor reimbursement for our products; our ability to
effectively manage our anticipated growth and the costs and
expenses of operating our business; our ability to protect our
intellectual property rights and proprietary technologies; our
ability to operate our business without infringing the intellectual
property rights and proprietary technology of third parties;
competition in our industry; additional capital and credit
availability; our ability to successfully integrate any additive
acquisitions we may make; our ability to attract and retain
qualified personnel; our ability to accurately forecast financial
and operating results; and product liability claims. These
factors, together with those that are described in greater detail
in our Annual Report on Form 10-K filed on February 21, 2023, as well as any reports that we
may file with the Securities and Exchange Commission in the future,
may cause our actual results, performance or achievements to differ
materially and adversely from those anticipated or implied by our
forward-looking statements. We expressly disclaim any
obligation, except as required by law, or undertaking to update or
revise any such forward-looking statements. Nevro's operating
results for the second quarter ended June
30, 2023 are not necessarily indicative of our operating
results for any future periods.
Nevro
Corp.
|
Condensed
Consolidated Statements of Operations and Comprehensive
Loss
|
(in thousands,
except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
Revenue
|
|
$
|
108,809
|
|
|
$
|
104,213
|
|
|
$
|
205,136
|
|
|
$
|
192,055
|
|
Cost of
revenue
|
|
|
34,366
|
|
|
|
31,479
|
|
|
|
66,069
|
|
|
|
60,229
|
|
Gross profit
|
|
|
74,443
|
|
|
|
72,734
|
|
|
|
139,067
|
|
|
|
131,826
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
|
13,320
|
|
|
|
12,552
|
|
|
|
28,075
|
|
|
|
25,088
|
|
Sales, general and
administrative
|
|
|
86,762
|
|
|
|
83,973
|
|
|
|
172,954
|
|
|
|
163,298
|
|
Total operating
expenses
|
|
|
100,082
|
|
|
|
96,525
|
|
|
|
201,029
|
|
|
|
188,386
|
|
Loss from
operations
|
|
|
(25,639)
|
|
|
|
(23,791)
|
|
|
|
(61,962)
|
|
|
|
(56,560)
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
1,730
|
|
|
|
(1,326)
|
|
|
|
3,395
|
|
|
|
(2,786)
|
|
Other income
(expense), net
|
|
|
(338)
|
|
|
|
368
|
|
|
|
(384)
|
|
|
|
453
|
|
Loss before income
taxes
|
|
|
(24,247)
|
|
|
|
(24,749)
|
|
|
|
(58,951)
|
|
|
|
(58,893)
|
|
Provision for income
taxes
|
|
|
477
|
|
|
|
241
|
|
|
|
802
|
|
|
|
422
|
|
Net loss
|
|
|
(24,724)
|
|
|
|
(24,990)
|
|
|
|
(59,753)
|
|
|
|
(59,315)
|
|
Changes in foreign
currency translation adjustment
|
|
|
336
|
|
|
|
(1,411)
|
|
|
|
842
|
|
|
|
(1,603)
|
|
Changes in unrealized
gains (losses) on short-term
investments
|
|
|
(192)
|
|
|
|
(261)
|
|
|
|
395
|
|
|
|
(1,282)
|
|
Net change in other
comprehensive loss
|
|
|
144
|
|
|
|
(1,672)
|
|
|
|
1,237
|
|
|
|
(2,885)
|
|
Comprehensive
loss
|
|
$
|
(24,580)
|
|
|
$
|
(26,662)
|
|
|
$
|
(58,516)
|
|
|
$
|
(62,200)
|
|
Net loss per share,
basic and diluted
|
|
$
|
(0.69)
|
|
|
$
|
(0.71)
|
|
|
$
|
(1.67)
|
|
|
$
|
(1.69)
|
|
Weighted average shares
used to compute
net loss
per share
|
|
|
35,921,539
|
|
|
|
35,317,766
|
|
|
|
35,753,112
|
|
|
|
35,196,488
|
|
Nevro
Corp.
|
Condensed
Consolidated Balance Sheets
|
(in thousands,
except share and per share data)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2023
|
|
|
2022
|
|
|
|
(unaudited)
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
65,186
|
|
|
$
|
120,373
|
|
Short-term
investments
|
|
|
264,756
|
|
|
|
254,012
|
|
Accounts receivable,
net
|
|
|
69,400
|
|
|
|
78,930
|
|
Inventories,
net
|
|
|
120,088
|
|
|
|
99,638
|
|
Prepaid expenses and
other current assets
|
|
|
11,918
|
|
|
|
9,984
|
|
Total current
assets
|
|
|
531,348
|
|
|
|
562,937
|
|
Property and equipment,
net
|
|
|
23,526
|
|
|
|
22,271
|
|
Operating lease
assets
|
|
|
11,231
|
|
|
|
13,430
|
|
Other assets
|
|
|
2,807
|
|
|
|
3,164
|
|
Restricted
cash
|
|
|
606
|
|
|
|
606
|
|
Total
assets
|
|
$
|
569,518
|
|
|
$
|
602,408
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
30,298
|
|
|
$
|
26,849
|
|
Accrued liabilities
and other
|
|
|
47,231
|
|
|
|
52,363
|
|
Total current
liabilities
|
|
|
77,529
|
|
|
|
79,212
|
|
Long-term
debt
|
|
|
187,489
|
|
|
|
186,867
|
|
Long-term operating
lease liabilities
|
|
|
7,551
|
|
|
|
10,296
|
|
Other long-term
liabilities
|
|
|
2,199
|
|
|
|
2,157
|
|
Total
liabilities
|
|
|
274,768
|
|
|
|
278,532
|
|
Stockholders'
equity
|
|
|
|
|
|
|
|
|
Common stock, $0.001
par value, 290,000,000 shares authorized;
36,763,038 and
36,203,423 shares issued at June 30, 2023
and December
31, 2022, respectively; 36,080,122 and 35,520,507
shares
outstanding at June 30, 2023 and December 31,
2022,
respectively
|
|
|
36
|
|
|
|
35
|
|
Additional paid-in
capital
|
|
|
963,521
|
|
|
|
934,132
|
|
Accumulated other
comprehensive loss
|
|
|
(1,857)
|
|
|
|
(3,094)
|
|
Accumulated
deficit
|
|
|
(666,950)
|
|
|
|
(607,197)
|
|
Total stockholders'
equity
|
|
|
294,750
|
|
|
|
323,876
|
|
Total liabilities and
stockholders' equity
|
|
$
|
569,518
|
|
|
$
|
602,408
|
|
Nevro Corp.
GAAP to Non-GAAP
Adjusted EBITDA Reconciliation
(unaudited)
(in
thousands)
The following table presents a reconciliation of GAAP net loss,
as prepared in accordance with U.S. Generally Accepted Accounting
Principles ("GAAP"), to Adjusted EBITDA, a non-GAAP financial
measure.
Reconciliation of
actual results:
|
|
|
|
|
|
Three Months
Ended
|
|
|
Six Months
Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2023
|
|
|
2022
|
|
|
2023
|
|
|
2022
|
|
|
|
(unaudited)
|
|
|
(unaudited)
|
|
GAAP Net
Loss
|
|
$
|
(24,724)
|
|
|
$
|
(24,990)
|
|
|
$
|
(59,753)
|
|
|
$
|
(59,315)
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (income)
expense, net
|
|
|
(1,730)
|
|
|
|
1,326
|
|
|
|
(3,395)
|
|
|
|
2,786
|
|
Provision for income
taxes
|
|
|
477
|
|
|
|
241
|
|
|
|
802
|
|
|
|
422
|
|
Depreciation and
amortization
|
|
|
1,711
|
|
|
|
1,602
|
|
|
|
3,293
|
|
|
|
3,137
|
|
Stock-based
compensation expense
|
|
|
16,166
|
|
|
|
13,377
|
|
|
|
29,726
|
|
|
|
26,785
|
|
Litigation-related
expenses
|
|
|
4,934
|
|
|
|
3,953
|
|
|
|
8,688
|
|
|
|
7,629
|
|
Restructuring
charges
|
|
|
41
|
|
|
|
—
|
|
|
|
373
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
(3,125)
|
|
|
$
|
(4,491)
|
|
|
$
|
(20,266)
|
|
|
$
|
(18,556)
|
|
Reconciliation of
guidance:
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
September 30,
2023
|
|
|
December 31,
2023
|
|
|
|
(Low
Case)
|
|
|
(High
Case)
|
|
|
(Low
Case)
|
|
|
(High
Case)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss
|
|
$
|
(30,300)
|
|
|
$
|
(28,300)
|
|
|
$
|
(105,100)
|
|
|
$
|
(102,100)
|
|
Non-GAAP
Adjustments
|
|
|
20,300
|
|
|
|
20,300
|
|
|
|
77,100
|
|
|
|
77,100
|
|
Adjusted
EBITDA
|
|
$
|
(10,000)
|
|
|
$
|
(8,000)
|
|
|
$
|
(28,000)
|
|
|
$
|
(25,000)
|
|
Management uses certain non-GAAP financial measures, most
specifically Adjusted EBITDA, as a supplement to GAAP financial
measures to further evaluate the company's operating performance
period over period, analyze the underlying business trends, assess
performance relative to competitors and establish operational
objectives.
Management believes it is important to provide investors with
the same non-GAAP metrics it uses to evaluate the performance and
underlying trends of the company's business operations to
facilitate comparisons to its historical operating results and
evaluate the effectiveness of its operating strategies. Disclosure
of these non-GAAP financial measures also facilitates comparisons
of the company's underlying operating performance with other
companies in the industry that also supplement their GAAP results
with non-GAAP financial measures.
EBITDA is a non-GAAP financial measure, which is calculated by
adding interest income and expense, net; provision for income
taxes; and depreciation and amortization to net income. In
calculating non-GAAP Adjusted EBITDA, the company further adjusts
for the following items:
- Stock-based compensation expense – The company excludes
non-cash costs related to the company's stock-based plans, which
include stock options, restricted stock units and performance-based
restricted stock units as these expenses do not require cash
settlement from the company.
- Litigation-related expenses – The company excludes legal and
professional fees as well as charges and credits associated with
certain legal matters, which management considers not related to
the underlying operating performance of the business.
- Restructuring charges – The company excludes charges incurred
as a direct result of restructuring programs, such as salaries and
other compensation-related expenses.
Full-year guidance excludes the impact of foreign currency
fluctuations.
The non-GAAP financial measure should not be considered in
isolation from, or as a replacement for, the most directly
comparable GAAP financial measures, as it is not prepared in
accordance with U.S. GAAP.
Amounts may not add due to rounding.
Investors and Media:
Rod MacLeod, CFO
Nevro Corp.
650-433-3247 | rod.macleod@nevro.com
Greg Chodaczek
Gilmartin Group LLC
610-368-6505 | greg@gilmartinir.com
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SOURCE Nevro Corp.