Nevro up 24% on Monster Q3 Earnings and Increased 2019 Revenue Guidance

Posted on November 07, 2019 by Medtech[y] Staff

Nevro (NYSE: NVRO) is up 24% after announcing a monster third quarter earnings report and also increasing their financial guidance for worldwide revenue in 2019.

The company posted revenue of $100.2 million for the quarter, which is a 5% increase from last quarter where they reported revenue of $95.6 million. Nevro attributed the revenue increases to SCS procedure growth in the U.S., which was partially offset by the impact of Nevro's decision to alter its practice regarding certain-high volume product orders.

"Our strong third quarter 2019 financial results demonstrate our continued improvement in commercial focus and execution across the organization. In the U.S., we saw an 18% year-over-year increase in both patient trial procedures and permanent implant procedures," said D. Keith Grossman, Chairman, CEO and President. "Yesterday we announced the commercial launch of our groundbreaking Senza Omnia system, the only SCS system that offers HF10 therapy in addition to all other SCS frequencies, as well as frequency pairing with HF10. We're excited by the early customer feedback we've received, and we believe this new product introduction, along with our ongoing operational initiatives, positions us for continued growth in 2020 and beyond."

While operating expenses increased in the quarter to 85%, which is a 12% increase compared to $76.5 million in the same period in the prior year, the increased costs shouldn't be a concern as they were driven by U.S. sales and marketing costs.

The company also posted a loss of $16 million compared to $9.2 million in the same quarter last year.

The news that likely jolted the stock was the company's announcement that they are raising full-year 2019 guidance from $368-$374 million to $383-$386 million. Gross margins are also expected to be in the 68-70% range for the year.

In additional news, Nevro announced earlier this week that they have launched Omnia in the U.S., which is their next generation SCS system.

"We are excited to launch Nevro's next-generation spinal cord stimulation system as we believe it will allow physicians to help even more patients," said Keith Grossman, Chairman and CEO of Nevro. "The Omnia system was developed based on feedback from the pain community and has resulted in a product that Nevro is uniquely able to provide. Omnia not only offers HF10, the most studied therapy available in the market that physicians have provided to over 53,000 patients, but it also gives physicians access to all other SCS frequencies, either independently or paired with HF10. With Omnia, our goal is to provide physicians the peace of mind that when they implant the system, they will have the versatility needed to achieve the best possible outcomes for their patients."

Nevro also announced that CFO Andrew Galligan has decided to retire and will remain as CFO until a successor is named. At that point, Galligan will serve in a transitional role for some period of time thereafter.

"Andrew has played a very significant role in Nevro's growth as he oversaw the Company's evolution from its early days as a small private company," Grossman continued. "Since my arrival in March of 2019, Andrew has not only been an exceptional leader, but on a personal level he has been an invaluable partner to me. I want to thank Andrew for his many contributions and I look forward to continuing to benefit from his perspective in the coming months."

Nevro stated that cash, cash equivalents and short-term investments totaled $232.8 million as of September 30, 2019. Net cash used during the third quarter of 2019 was $1.2 million and $31.8 million for the nine months ended September 30, 2019.