Nevro Reports Fourth-Quarter and Full-Year 2023 Financial Results
- Revenue growth in the fourth quarter of 2023, with worldwide revenue reaching $116.2 million, an increase of 2%.
- Acquisition of Vyrsa Technologies™ to enter the sacroiliac joint fusion space and a $200 million term loan credit facility for debt refinancing.
- Over 115,000 patients globally treated with HFX 10 kHz Therapy™.
- Restructuring in January 2024, including a 5% workforce reduction, to support long-term growth and profitability.
- Full-year 2024 revenue expected to be in the range of $435 million to $445 million, with adjusted EBITDA guidance of negative $8 million to negative $14 million.
- First-quarter 2024 revenue projected to be $97 million to $99 million, with adjusted EBITDA guidance of negative $15 million to negative $16 million.
- Net loss from operations reported in the fourth quarter of 2023 was $11.8 million.
- Reduction in U.S. trial procedures by approximately 1%.
- Litigation-related legal expenses increased to $2.9 million in the fourth quarter of 2023.
- Full-year 2023 net loss from operations was $99.3 million.
- Negative adjusted EBITDA of $17.7 million for full-year 2023.
Insights
Examining Nevro Corp's financial performance and 2024 guidance, several key factors emerge. The reported 2% year-over-year growth in Q4 2023 revenue indicates a modest expansion trajectory, which aligns with the current industry growth rates for medical device companies. However, the forecasted 2% to 5% growth for the full year of 2024, while positive, suggests a cautious outlook potentially reflecting market saturation or increased competition.
The gross margin improvement to 70.1% is notable, as it exceeds the average medical device industry gross margin of approximately 65%. This improvement can be attributed to the shift towards higher margin products and operational efficiencies. However, the net loss from operations and negative adjusted EBITDA highlight ongoing challenges in achieving profitability. The restructuring efforts and acquisition of Vyrsa Technologies may be strategic moves to expand service offerings and streamline costs, but stakeholders should monitor how these initiatives impact financial performance in the coming quarters.
The growth in Nevro's Painful Diabetic Neuropathy (PDN) Indication sales, which increased by 29%, is a critical development. PDN represents a significant market opportunity due to the rising prevalence of diabetes globally. Nevro's HFX 10 kHz Therapy™ has treated over 115,000 patients, indicating a strong market penetration in chronic pain management. The acquisition of Vyrsa Technologies™ positions Nevro in the sacroiliac joint fusion space, potentially diversifying their portfolio and addressing a broader range of chronic pain conditions.
However, the 1% decrease in U.S. trial procedures may suggest a plateau in new patient trials, which could limit future growth if not addressed. Nevro's focus on commercial execution and market penetration will be crucial in maintaining and increasing its market share, particularly in the competitive landscape of medical devices for pain management.
From a market perspective, Nevro's international revenue growth of 4% and the flat performance on a constant currency basis may reflect varying degrees of market receptivity and economic conditions abroad. The company's international strategy and ability to navigate currency fluctuations will be an important factor in sustaining growth outside the U.S. market.
The anticipated adjusted EBITDA loss for 2024, despite the restructuring intended to improve financial health, suggests that Nevro's cost-saving measures may not fully compensate for the operational expense increases and acquisition-related expenses. Investors should consider the balance between growth investments and cost management as Nevro navigates its long-term profitability path.
Provides Full-Year and First-Quarter 2024 Guidance
"Our fourth quarter performance reflects continued execution of our three-pillar strategy initiated in the second quarter of 2023," said Kevin Thornal, Nevro's CEO and president. "The actions we have taken, including our commercial realignment, strengthening our executive team with talented and experienced leaders, the acquisition of Vyrsa Technologies™ to enter the sacroiliac joint fusion space, debt refinancing, and recent restructuring, among others, further position Nevro for success."
"I especially want to thank our Nevro team members for their continued focus and dedication to freeing patients from the burden of chronic pain," Thornal continued. "We are off to a solid start as we enter 2024 and remain focused on advancing our core strategic pillars of commercial execution, market penetration and profit progress to further position our business to deliver value for all our stakeholders and achieve profitable, long-term growth."
Fourth-Quarter 2023 Financial Highlights and Recent Business Developments
- For the fourth quarter of 2023 (as compared with the fourth quarter of 2022):
- Worldwide revenue grew to
$116.2 million 2% as reported and on a constant currency basis. - Painful Diabetic Neuropathy (PDN) Indication sales increased
29% to approximately$22.4 million . U.S. trial procedures decreased approximately1% , in line with the company's expectations; U.S. PDN trial procedures were24% of totalU.S. trials.- Reported a fourth quarter 2023 net loss from operations of
$11.8 million $8.4 million
- Worldwide revenue grew to
- As previously announced on November 30, 2023:
- Nevro acquired Vyrsa Technologies™ (Vyrsa), a medical technology company focused on a minimally invasive treatment option for patients suffering from chronic sacroiliac joint (SI joint) pain.
- The company closed a 6-year,
$200 million
- Over 115,000 patients now globally treated with HFX 10 kHz Therapy™
- As previously announced on January 9, 2024, Nevro implemented a restructuring, including laying off
5% of its workforce, a vast majority of which affected internally focused employees and not customer-facing personnel in the field to support the company's long-term growth and profitability. - For the full-year and first-quarter of 2024, Nevro currently expects the following:
- Full-year 2024 revenue to be in the range of
$435 million $445 million 2% to5% growth on a reported and constant currency basis over 2023, and adjusted EBITDA to be in the range of negative$8 million $14 million - First-quarter 2024 revenue to be in the range of
$97 million $99 million 1% to3% constant currency growth over 2023, and adjusted EBITDA guidance of negative$15 million $16 million
- Full-year 2024 revenue to be in the range of
Fourth-Quarter 2023 Financial Results
Worldwide revenue for the fourth quarter of 2023 was
International revenue in the fourth quarter of 2023 was
Gross profit for the fourth quarter of 2023 was
Operating expenses for the fourth quarter of 2023 were
Net loss from operations for the fourth quarter of 2023 was
Cash, cash equivalents, and short-term investments totaled
Full-Year 2023 Financial Results
Nevro's full-year 2023 worldwide revenue was
Net loss from operations for the full year of 2023 was
Full-Year and First-Quarter 2024 Financial Guidance
Nevro currently expects full-year 2024 worldwide revenue to be in the range of approximately
Nevro currently expects full-year 2024 adjusted EBITDA to be a loss of approximately
For the first quarter of 2024, the company currently expects worldwide revenue of approximately
Nevro currently expects first quarter of 2024 adjusted EBITDA to be a loss of approximately
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.
An investor presentation for the Company's fourth-quarter and full-year 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 will host a conference call today to discuss its financial results. The call will begin at 1:30 pm PT / 4:30 pm ET. Investors interested in listening to the call may do so by dialing (888) 330-2443 in the
A live webcast of this event, as well as an archived recording, will be available in the Investors section of Nevro's website at Events & Presentations. The live webcast should be accessed 10 minutes prior to the conference call start time.
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
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 first quarter and updated full-year 2024 financial guidance; our belief that the actions we have taken further position us for success; and our belief that our focus on our three key strategic pillars will improve our commercial execution and deliver significant long-term shareholder return. 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; and product liability claims. These factors, together with those that are described in greater detail in our Annual Report on Form 10-K to be filed shortly after the date hereof, 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 full year and fourth quarter ended December 31, 2023, are not necessarily indicative of our operating results for any future periods.
Investor and Media Contact:
Angie McCabe
Vice President, Investor Relations & Corporate Communications
angeline.mccabe@nevro.com
Nevro Corp. | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(unaudited) | ||||||||||||||||
Revenue | $ | 116,176 | $ | 113,844 | $ | 425,174 | $ | 406,365 | ||||||||
Cost of revenue | 34,699 | 38,605 | 135,114 | 129,998 | ||||||||||||
Gross profit | 81,477 | 75,239 | 290,060 | 276,367 | ||||||||||||
Operating expenses: | ||||||||||||||||
Research and development | 12,420 | 13,947 | 54,418 | 53,065 | ||||||||||||
Sales, general and administrative | 80,598 | 80,650 | 334,704 | 322,138 | ||||||||||||
Amortization of intangibles | 246 | — | 246 | — | ||||||||||||
Certain litigation charges (credits) | — | — | — | (105,000) | ||||||||||||
Total operating expenses | 93,264 | 94,597 | 389,368 | 270,203 | ||||||||||||
Income (loss) from operations | (11,787) | (19,358) | (99,308) | 6,164 | ||||||||||||
Other income (expense): | ||||||||||||||||
Interest income (expense), net | 781 | 855 | 6,152 | (2,411) | ||||||||||||
Change in fair market value of | (8,051) | — | (8,051) | — | ||||||||||||
Other income (expense), net | (436) | (333) | (586) | 511 | ||||||||||||
Gain on extinguishment of debt | 3,934 | — | 3,934 | — | ||||||||||||
Income (loss) before income taxes | (15,559) | (18,836) | (97,859) | 4,264 | ||||||||||||
Provision for (benefit from) income taxes | (6,578) | 356 | (5,646) | 1,263 | ||||||||||||
Net income (loss) | (8,981) | (19,192) | (92,213) | 3,001 | ||||||||||||
Changes in foreign currency | 1,087 | 1,626 | 1,164 | (1,667) | ||||||||||||
Changes in gains (losses) on short- | 821 | 321 | 1,687 | (1,063) | ||||||||||||
Net change in other comprehensive loss | 1,908 | 1,947 | 2,851 | (2,730) | ||||||||||||
Comprehensive income (loss) | $ | (7,073) | $ | (17,245) | $ | (89,362) | $ | 271 | ||||||||
Net income (loss) per common share | ||||||||||||||||
Basic | $ | (0.25) | $ | (0.54) | $ | (2.56) | $ | 0.08 | ||||||||
Diluted | $ | (0.25) | $ | (0.54) | $ | (2.56) | $ | 0.08 | ||||||||
Weighted average shares used to | ||||||||||||||||
Basic | 36,277,243 | 35,474,998 | 35,981,431 | 35,317,644 | ||||||||||||
Diluted | 36,277,243 | 35,474,998 | 35,981,431 | 35,525,255 | ||||||||||||
Nevro Corp. | ||||||||
December 31, | December 31, | |||||||
2023 | 2022 | |||||||
Assets | ||||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 104,217 | $ | 120,373 | ||||
Short-term investments | 218,506 | 254,012 | ||||||
Accounts receivable, net | 79,377 | 78,930 | ||||||
Inventories, net | 118,676 | 99,638 | ||||||
Prepaid expenses and other current assets | 10,145 | 9,984 | ||||||
Total current assets | 530,921 | 562,937 | ||||||
Property and equipment, net | 24,568 | 22,271 | ||||||
Operating lease assets | 8,944 | 13,430 | ||||||
Goodwill | 38,164 | — | ||||||
Intangible assets, net | 27,354 | — | ||||||
Other assets | 5,156 | 3,164 | ||||||
Restricted cash | 606 | 606 | ||||||
Total assets | $ | 635,713 | $ | 602,408 | ||||
Liabilities and stockholders' equity | ||||||||
Current liabilities | ||||||||
Accounts payable | $ | 22,520 | $ | 26,849 | ||||
Contingent liabilities, current portion | 9,836 | — | ||||||
Accrued liabilities and other | 51,019 | 52,363 | ||||||
Total current liabilities | 83,375 | 79,212 | ||||||
Long-term debt | 211,471 | 186,867 | ||||||
Long-term operating lease liabilities | 4,634 | 10,296 | ||||||
Contingent liabilities, non-current portion | 12,257 | — | ||||||
Warrant liability | 28,739 | — | ||||||
Other long-term liabilities | 2,092 | 2,157 | ||||||
Total liabilities | 342,568 | 278,532 | ||||||
Stockholders' equity | ||||||||
Common stock, 37,044,390 and 36,203,423 shares issued at December 31, 2023 and 2022, respectively; 36,361,474 and 35,520,507 shares outstanding at December 31, 2023 and 2022, respectively | 36 | 35 | ||||||
Additional paid-in capital | 992,762 | 934,132 | ||||||
Accumulated other comprehensive loss | (243) | (3,094) | ||||||
Accumulated deficit | (699,410) | (607,197) | ||||||
Total stockholders' equity | 293,145 | 323,876 | ||||||
Total liabilities and stockholders' equity | $ | 635,713 | $ | 602,408 | ||||
Nevro Corp. | ||||||||||||||||
The following table presents a reconciliation of GAAP net loss, as prepared in accordance with | ||||||||||||||||
Reconciliation of actual results: | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
December 31, | December 31, | |||||||||||||||
2023 | 2022 | 2023 | 2022 | |||||||||||||
(unaudited) | ||||||||||||||||
GAAP Net income (loss) | $ | (8,981) | $ | (19,192) | $ | (92,213) | $ | 3,001 | ||||||||
Non-GAAP Adjustments: | ||||||||||||||||
Interest (income) expense, net | (781) | (855) | (6,152) | 2,411 | ||||||||||||
Provision for income taxes | (6,578) | 356 | (5,646) | 1,263 | ||||||||||||
Depreciation and amortization | 1,869 | 1,563 | 6,885 | 6,343 | ||||||||||||
Stock-based compensation expense and other equity | 15,533 | 14,806 | 58,782 | 56,798 | ||||||||||||
Certain litigation charges (credits) | — | — | — | (105,000) | ||||||||||||
Amortization of intangibles | 246 | — | 246 | — | ||||||||||||
Change in fair market value of warrants | 8,051 | — | 8,051 | — | ||||||||||||
Gain on extinguishment of debt | (3,934) | — | (3,934) | — | ||||||||||||
Litigation related expenses | 2,941 | 1,176 | 15,913 | 10,689 | ||||||||||||
Restructuring charges | — | 705 | 373 | 705 | ||||||||||||
Adjusted EBITDA | $ | 8,366 | $ | (1,441) | $ | (17,695) | $ | (23,790) | ||||||||
Reconciliation of guidance: | ||||||||||||||||
Three Months Ended | Year Ended | |||||||||||||||
March 31, 2024 | December 31, 2024 | |||||||||||||||
(Low Case) | (High Case) | (Low Case) | (High Case) | |||||||||||||
GAAP Net Loss | $ | (41,000) | $ | (40,000) | $ | (107,000) | $ | (101,000) | ||||||||
Non-GAAP Adjustments | 25,000 | 25,000 | 93,000 | 93,000 | ||||||||||||
Adjusted EBITDA | $ | (16,000) | $ | (15,000) | $ | (14,000) | $ | (8,000) | ||||||||
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. In the period ended December 31, 2023, the Company additionally excluded one-time equity-related charges of
$1.9 million - Certain litigation charges (credits) – The Company excludes certain non-recurring litigation charges (credits) associated with patent litigation legal judgement and settlement, which management considers not related to the underlying operating performance of the business.
- Amortization of intangibles – The Company excludes amortization of intangibles from the acquisition of businesses.
- Change in fair market value of warrants – The Company excludes the changes in the fair value of its warrant liability.
- Gain from extinguishment of debt – The Company excludes gains and losses from extinguishment of early debt repayment.
- 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
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, change in fair value of warrants, and litigation-related expenses.
Amounts may not add due to rounding.
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SOURCE Nevro Corp.
FAQ
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