Initiates Process Aimed at Accelerating
Growth, Diversifying Product Portfolio and Maximizing
Stockholder Value
Revises Full-Year 2024 Revenue Guidance to a
Range of $400 million to
$405 million and Adjusted EBITDA
Guidance to a Range of $(20)
Million to $(18)
Million
Provides Third-Quarter 2024 Guidance
REDWOOD
CITY, Calif., Aug. 6, 2024
/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 2024 financial results, revised its full-year 2024
guidance, and issued third-quarter 2024 guidance. The company also
announced that it is initiating a process aimed at accelerating its
growth, diversifying its product portfolio and maximizing
stockholder value.
"Our second-quarter 2024 results were primarily driven by
ongoing softness in the U.S. spinal cord stimulation (SCS) market
and competitive pressures," said Kevin
Thornal, Nevro's CEO. "Our recent in-depth market analysis
shows that newer treatment therapies have emerged earlier in the
care continuum ahead of SCS therapy. We believe these therapies
are, in some cases, delaying patients in getting SCS therapy, which
is towards the end of the care continuum, but we believe many
patients will ultimately continue their journey to treat the
often-multiple causes of their pain through SCS therapy. While the
SCS market remains significantly underpenetrated and will remain an
important solution for patients suffering from chronic pain, we
believe our strategy to enter and build our business in more
diverse markets serving patients earlier in the care continuum will
position us to realize sustainable growth, a faster path to
profitability and value creation."
"Over the past year, we implemented our strategy that includes
tightening our commercial execution which we still need to improve
upon, acquired an SI joint company that allowed us to expand into
an adjacent market that is earlier in the care continuum, aligned
our cost structure more closely with our business and strengthened
our balance sheet," said Thornal. "In light of the evolving market
dynamics, our Board of Directors and senior management team have
begun a process aimed at building on our growth and diversification
strategy with the goal of accelerating profitability and maximizing
stockholder value. We have retained advisors, and over the next
several months, we will move aggressively to explore broader
options beyond our current standalone path that may help us
accelerate achievement of our goals."
"Importantly, we are in a solid financial position and remain
committed to bringing innovative products to our customers that
treat patients suffering from chronic pain. Our customer-facing
team is one of our largest assets, and they remain dedicated to
partnering with our physicians to provide exceptional patient
care," added Thornal.
Second-Quarter 2024 Financial Highlights
(As
compared with second-quarter 2023)
- Worldwide revenue was approximately $104.2 million, down 4.3% as reported and 4.2% on
a constant currency basis.
- U.S. revenue was $90.7 million,
down 2.4%.
- International revenue was $13.5
million, down 15.0% as reported and 14.5% on a constant
currency basis.
- U.S. trial procedures decreased approximately 9.5% mainly due
to competitive pressures and ongoing softness in the core U.S. SCS
market during the quarter.
- Net loss from operations was $19.6
million; adjusted EBITDA was $3.0
million. Refer to the financial table at the end of this
release for GAAP to non-GAAP reconciliations, definitions and
further information regarding the use of non-GAAP metrics.
- Nevro presented a biomechanical analysis at the American
Society of Pain & Neuroscience 2024 Annual Conference showing
that Nevro1™, one of the company's sacroiliac joint (SI) fusion
products, provides a significantly better opportunity for robust
arthrodesis of the SI joint compared to competing devices as it
relates to fixation, invasiveness and fusion surface area.
Second-Quarter 2024 Financial Results
Worldwide revenue for the second quarter of 2024 was
$104.2 million, a decrease of 4.3% as
reported and 4.2% on a constant currency basis, compared with
$108.8 million in the second quarter
of 2023. The year-over-year decrease was primarily the result of
competitive pressures in the U.S. SCS market and ongoing softness
in the core U.S. SCS market.
U.S. revenue in the second quarter of 2024 was $90.7 million, a decrease of 2.4% compared with
$93.0 million in the second quarter
of 2023. U.S. permanent implant procedures decreased 6.5% compared
with the second quarter of 2023, and U.S. trial procedures
decreased 9.5% compared with the second quarter of 2023.
International revenue in the second quarter of 2024 was
$13.5 million compared with
$15.8 million in the second quarter
of 2023, a decrease of 15.0% as reported and 14.5% on a constant
currency basis. The decline in revenue was primarily due to
the short-term impact of negative SCS-related media reports in
Australia that resulted in the
postponement and cancellation of cases as well the impact of
healthcare reform in Germany that
caused a delay in procedures in the second quarter of 2024.
Gross profit for the second quarter of 2024 was $67.5 million compared with $74.4 million in the second quarter of 2023.
Gross profit in the current year quarter included a $6.0 million one-time charge related to the
renegotiation of a supplier contract as the company works to
expedite the move of its manufacturing processes to its
Costa Rica manufacturing facility.
Excluding this charge, gross profit was $73.5 million in the second quarter of 2024.
Gross margin in the second quarter of 2024 was 64.8%, or 70.5%
excluding the aforementioned supplier contract renegotiation
charge, compared with 68.4% in the second quarter of 2023.
Operating expenses for the second quarter of 2024 were
$92.6 million compared with
$100.1 million for the year-ago
period and include a $4.6 million
charge related to the company's May
2024 restructuring and $1.7
million in intangible amortization and contingent
consideration revaluations related to Nevro's acquisition of Vyrsa™
Technologies, offset by a $4.1
million reduction in litigation-related expenses. Excluding
these items, operating expenses in the second quarter of 2024
improved by $9.7 million, or 9.6%,
compared with the prior-year quarter, reflecting the benefits from
the company's January and May 2024
restructurings and continued disciplined expense management efforts
in the current-year quarter.
Litigation-related legal expenses were $0.8 million for the second quarter of 2024
compared with $4.9 million for the
second quarter of 2023. The year-over-year decrease was primarily
due to the resolution of the company's legal disputes with the Mayo
Clinic and Flathead Partners in the second quarter of 2024.
Net loss from operations for the second quarter of 2024 was
$25.1 million, or approximately
$17.0 million excluding the
previously mentioned charge related to the supplier contract
renegotiation; the May 2024
restructuring charge; intangible amortization; contingent
consideration revaluations; and year-over-year decrease in
litigation-related expenses. Net loss from operations in the second
quarter of 2023 was $25.6
million.
Adjusted EBITDA for the second quarter of 2024 was $3.0 million compared with a loss of $3.1 million for the second quarter of
2023. Adjusted EBITDA excludes interest, taxes and
non-cash items such as stock-based compensation and depreciation
and amortization, as well as litigation-related expenses,
restructuring and supplier contract renegotiation charges, and
other adjustments. Refer to the financial table at the end of this
release for GAAP to adjusted (non-GAAP) reconciliations.
Cash, cash equivalents and short-term investments totaled
$273.7 million as of June 30, 2024, a decrease of $7.8 million from March
31, 2024. This decrease was driven by cash used in
operations.
Full-Year and Third-Quarter 2024 Financial Guidance
Based on its second-quarter 2024 performance and outlook for the
remainder of this year, Nevro is revising its full-year 2024
worldwide revenue to be in the range of approximately $400 million to $405
million from its previous guidance range of $435 million to $445
million. The company's revised guidance assumes that U.S.
SCS trialing growth rates do not improve from the second quarter of
2024.
The company is revising its full-year 2024 adjusted EBITDA
guidance to a range of negative $20
million to negative $18
million from its previous guidance range of negative
$5 million to positive $2 million.
For the third quarter of 2024, Nevro expects worldwide revenue
to be in the range of approximately $92
million to $94 million and
adjusted EBITDA to be in the range of negative $10 million to negative $9
million.
Nevro has not provided a quantitative reconciliation of
forecasted adjusted EBITDA to forecasted net income (loss) within
this press release because the company is unable, without making
unreasonable efforts, to calculate certain reconciling items with
confidence. For more information regarding the non-GAAP financial
measures discussed in this press release, please see the
financial table at the end of this release for GAAP to non-GAAP
reconciliations, definitions and further information regarding the
use of non-GAAP metrics.
Conference Call and Webcast
The company will also host a conference call today beginning at
1:30 p.m. PDT (4:30 p.m. EDT) to discuss its financial
results.
The live webcast and replay of the conference call will be
available in the Investor Relations section of the company's
website at Events & Presentations. The webcast can be accessed
10 minutes prior to the conference call's start time.
For those parties that do not have internet access, the
conference call can be accessed by calling one of the below
telephone numbers and providing conference ID 9453183:
U.S. domestic
participant dial-in number (toll-free):
|
1-(888)
596-4144
|
International
participant dial-in number:
|
1-(646)
968-2525
|
An investor presentation for Nevro's second-quarter 2024
financial results is available in the "Investors" section of the
company's corporate website at Events & Presentations.
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 115,000
patients globally. Nevro's comprehensive HFX™ spinal cord
stimulation (SCS) platform includes the Senza® SCS system and
support services for the treatment of chronic pain of the trunk and
limb and painful diabetic neuropathy.
Nevro recently added a minimally invasive treatment option for
patients suffering from chronic sacroiliac joint ("SI joint") pain
and now provides the most comprehensive portfolio of products in
the SI joint fusion space, designed to meet the preferences of
physicians and varying patient needs in order to improve outcomes
and quality of life for patients.
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 HFX Coach™ support 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, X,
Facebook, and Instagram.
Forward-Looking Statements
In addition to historical information, this press release
contains forward-looking statements reflecting the current beliefs
and expectations of the company's management, made pursuant to the
safe harbor provisions of the Private Securities Litigation Reform
Act of 1995, including: our revised full-year 2024 financial
guidance and our third quarter 2024 financial guidance; our belief
that the actions we have taken and intend to take will further
position us for growth, success, profitability and value creation;
our belief that evaluating and/or engaging in strategic
opportunities will help us diversify and grow our business, which
we believe may position us to accelerate our goals of profitability
and maximizing shareholder value; and our beliefs with regards to
the SCS market and factors impacting our results, including the
duration in which those factors will continue to impact our
results. 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, including our acquisition of Vyrsa
Technologies; our ability to attract and retain qualified
personnel; our ability to accurately forecast financial and
operating results; our ability to successfully evaluate and execute
on potential strategic opportunities; 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 23, 2024, 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
period ending June 30, 2024, are not
necessarily indicative of the company's operating results for any
future periods.
Investor and Media Contact:
Angie McCabe
Vice President, Investor Relations & Corporate
Communications
angeline.mccabe@nevro.com
Nevro
Corp.
Condensed
Consolidated Statements
of Operations and Comprehensive Loss
(in thousands,
except share and per share data)
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
|
(unaudited)
|
|
Revenue
|
|
$
|
104,161
|
|
|
$
|
108,809
|
|
Cost of
revenue
|
|
|
36,694
|
|
|
|
34,366
|
|
Gross profit
|
|
|
67,467
|
|
|
|
74,443
|
|
Operating
expenses:
|
|
|
|
|
|
|
Research and
development
|
|
|
14,117
|
|
|
|
13,320
|
|
Sales, general and
administrative
|
|
|
76,774
|
|
|
|
86,762
|
|
Amortization of
intangibles
|
|
|
737
|
|
|
|
—
|
|
Change in fair value
of contingent consideration
|
|
|
960
|
|
|
|
—
|
|
Total operating
expenses
|
|
|
92,588
|
|
|
|
100,082
|
|
Loss from
operations
|
|
|
(25,121)
|
|
|
|
(25,639)
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest income
(expense), net
|
|
|
(3,424)
|
|
|
|
1,730
|
|
Change in fair market
value of warrants
|
|
|
9,504
|
|
|
|
—
|
|
Other income
(expense), net
|
|
|
(272)
|
|
|
|
(338)
|
|
Loss before income
taxes
|
|
|
(19,313)
|
|
|
|
(24,247)
|
|
Provision for income
taxes
|
|
|
262
|
|
|
|
477
|
|
Net loss
|
|
|
(19,575)
|
|
|
|
(24,724)
|
|
Changes in foreign
currency translation adjustment
|
|
|
43
|
|
|
|
336
|
|
Changes in unrealized
gains (losses) on short-term investments
|
|
|
(150)
|
|
|
|
(192)
|
|
Net change in other
comprehensive income (loss)
|
|
|
(107)
|
|
|
|
144
|
|
Comprehensive
loss
|
|
$
|
(19,682)
|
|
|
$
|
(24,580)
|
|
Net loss per share,
basic and diluted
|
|
$
|
(0.53)
|
|
|
$
|
(0.69)
|
|
Weighted average shares
used to compute
net loss per share
|
|
|
36,936,867
|
|
|
|
35,921,539
|
|
Nevro
Corp.
Condensed
Consolidated Balance Sheets
(in thousands,
except share and per share data)
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2024
|
|
|
2023
|
|
|
|
(unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
74,702
|
|
|
$
|
104,217
|
|
Short-term
investments
|
|
|
198,991
|
|
|
|
218,506
|
|
Accounts receivable,
net
|
|
|
74,273
|
|
|
|
79,377
|
|
Inventories,
net
|
|
|
126,096
|
|
|
|
118,676
|
|
Prepaid expenses and
other current assets
|
|
|
12,125
|
|
|
|
10,145
|
|
Total current
assets
|
|
|
486,187
|
|
|
|
530,921
|
|
Property and equipment,
net
|
|
|
24,559
|
|
|
|
24,568
|
|
Operating lease
assets
|
|
|
22,401
|
|
|
|
8,944
|
|
Goodwill
|
|
|
38,209
|
|
|
|
38,164
|
|
Other intangible
assets, net
|
|
|
25,881
|
|
|
|
27,354
|
|
Other assets
|
|
|
5,492
|
|
|
|
5,156
|
|
Restricted
cash
|
|
|
606
|
|
|
|
606
|
|
Total
assets
|
|
$
|
603,335
|
|
|
$
|
635,713
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
22,938
|
|
|
$
|
22,520
|
|
Accrued liabilities
and other
|
|
|
38,922
|
|
|
|
45,297
|
|
Short-term
debt
|
|
|
37,841
|
|
|
|
—
|
|
Contingent
liabilities, current portion
|
|
|
1,864
|
|
|
|
9,836
|
|
Other current
liabilities
|
|
|
369
|
|
|
|
5,722
|
|
Total current
liabilities
|
|
|
101,934
|
|
|
|
83,375
|
|
Long-term
debt
|
|
|
180,558
|
|
|
|
211,471
|
|
Long-term operating
lease liabilities
|
|
|
23,890
|
|
|
|
4,634
|
|
Contingent liabilities,
non-current portion
|
|
|
14,856
|
|
|
|
12,257
|
|
Warrant
liability
|
|
|
5,676
|
|
|
|
28,739
|
|
Other long-term
liabilities
|
|
|
2,168
|
|
|
|
2,092
|
|
Total
liabilities
|
|
|
329,082
|
|
|
|
342,568
|
|
Stockholders'
equity
|
|
|
|
|
|
|
Common stock, $0.001
par value, 290,000,000 shares authorized;
37,879,790 and 37,044,390 shares issued at June 30, 2024 and
December 31, 2023, respectively; 37,204,214 and 36,361,474
shares
outstanding at June 30, 2024 and December 31, 2023,
respectively
|
|
|
37
|
|
|
|
36
|
|
Additional paid-in
capital
|
|
|
1,019,741
|
|
|
|
992,762
|
|
Accumulated other
comprehensive income (loss)
|
|
|
(1,131)
|
|
|
|
(243)
|
|
Accumulated
deficit
|
|
|
(744,394)
|
|
|
|
(699,410)
|
|
Total stockholders'
equity
|
|
|
274,253
|
|
|
|
293,145
|
|
Total liabilities and
stockholders' equity
|
|
$
|
603,335
|
|
|
$
|
635,713
|
|
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
|
|
|
|
June 30,
|
|
|
|
2024
|
|
|
2023
|
|
|
|
(unaudited)
|
|
GAAP Net Income
(Loss)
|
|
$
|
(19,575)
|
|
|
$
|
(24,724)
|
|
Non-GAAP
Adjustments:
|
|
|
|
|
|
|
Interest (income)
expense, net
|
|
|
3,424
|
|
|
|
(1,730)
|
|
Provision for income
taxes
|
|
|
262
|
|
|
|
477
|
|
Depreciation and
amortization
|
|
|
2,014
|
|
|
|
1,711
|
|
Stock-based
compensation expense and other equity related charges
|
|
|
13,332
|
|
|
|
16,166
|
|
Amortization of
intangibles
|
|
|
737
|
|
|
|
—
|
|
Change in fair value
of contingent consideration
|
|
|
960
|
|
|
|
—
|
|
Change in fair market
value of warrants
|
|
|
(9,504)
|
|
|
|
—
|
|
Litigation-related
expenses
|
|
|
834
|
|
|
|
4,934
|
|
Restructuring
charges
|
|
|
4,555
|
|
|
|
41
|
|
Supplier renegotiation
charge
|
|
|
6,000
|
|
|
|
—
|
|
Adjusted
EBITDA
|
|
$
|
3,039
|
|
|
$
|
(3,125)
|
|
Reconciliation of
guidance:
|
|
|
|
Three Months
Ended
|
|
|
Year
Ended
|
|
|
|
September 30,
2024
|
|
|
December 31,
2024
|
|
|
|
(Low
Case)
|
|
|
(High
Case)
|
|
|
(Low
Case)
|
|
|
(High
Case)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Loss
|
|
$
|
(32,900)
|
|
|
$
|
(31,600)
|
|
|
$
|
(110,400)
|
|
|
$
|
(107,100)
|
|
Non-GAAP
Adjustments
|
|
|
22,900
|
|
|
|
22,600
|
|
|
|
90,400
|
|
|
|
89,100
|
|
Adjusted
EBITDA
|
|
$
|
(10,000)
|
|
|
$
|
(9,000)
|
|
|
$
|
(20,000)
|
|
|
$
|
(18,000)
|
|
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 and other equity-related
charges – 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.
- Amortization of intangibles – The company excludes amortization
of intangibles from the acquisition of businesses.
- Change in fair value of contingent consideration – The company
excludes the changes in the fair value of its contingent
consideration liability.
- Change in fair market value of warrants – The company excludes
the changes in the fair value of its warrant liability.
- 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.
- Supplier contract renegotiation charge – The company
excluded one-time costs associated with the renegotiation of a
supplier contract.
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.
Nevro has not provided a quantitative reconciliation of
forecasted adjusted EBITDA to forecasted net income (loss) within
this press release because the company is unable, without making
unreasonable efforts, to calculate certain reconciling items with
confidence. These items include, but are not limited to,
stock-based compensation expenses, amortization of intangibles,
change in fair value of contingent consideration, change in fair
value of warrants, and litigation-related expenses.
Amounts may not add due to rounding.
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SOURCE Nevro Corp.