Yahoo Finance Nevro's (NVRO) Q1 Earnings and Sales Beat Estimates, Margins Up
Nevro Corp. NVRO reported a loss per share of 70 cents in the first quarter of 2024 compared with the year-ago quarter’s loss of 98 cents. The metric beat the Zacks Consensus Estimate by 31.37%.
Revenues in Detail
Nevro registered worldwide revenues of $101.9 million in the first quarter, up 5.8% year over year on a reported basis and 5.6% on a constant-currency basis. The year-over-year growth was largely driven by a product mix shift to Nevro’s latest generation SCS platform, HFX iQ, as well as an increased number of long-term Nevro patients who are now suitable candidates for replacement devices. The figure topped the Zacks Consensus Estimate by 3.56%.
Quarterly Highlights
In the quarter under review, international revenues were $14.9 million, up 6.1% year over year on a reported basis and up 4.7% at constant exchange rate (CER).
U.S. revenues for the quarter totaled $87 million, up 5.7% year over year. The year-over-year increase was primarily due to the rising adoption of HFX iQ and a higher number of patients who returned to replace their legacy Nevro SCS implant with an updated Nevro device.
Total U.S. permanent implant procedures were flat, while U.S. trial procedures decreased 5.1%. The year-over-year decrease in U.S. trials was primarily driven by softness in U.S. SCS trialing activity in the first quarter of 2024, which led to lower trial procedures they performed in the quarter.
Nevro is focusing on efforts to drive increased adoption of HFX iQ, which brings a multitude of benefits to the patient and physician. HFX iQ represented 58% of Nevro’s total permanent implants in the first quarter, a 5% increase from the fourth quarter of 2023.
In February, Nevro announced the FDA 510(k) clearance for Nevro1 without the need to include the NevroFix group.
In January 2024, Nevro implemented restructuring, including laying off 5% of its workforce, a vast majority of which affected internally focused employees and non-customer-facing personnel in the field.
Margin Trend
In the quarter under review, Nevro’s gross profit rose 10.7% year over year to $71.5 million. The gross margin increased 310 basis points to 70.2%. The year-over-year improvement in gross margin was driven primarily by a shift to higher-margin products sourced out of the company's Costa Rica manufacturing facility.
Sales, general & administrative expenses increased 2.5% to $88.3 million. Research and development expenses remained almost flat at $14.8 million. Operating expenses for the first quarter of 2024 include a $5.5 million charge related to the company's restructuring that was announced in January 2024, as well as items related to the November 2023 acquisition of Vyrsa.
The total operating loss in the reported quarter was $35.8 million ($26.1 million excluding restructuring and Vyrsa-related acquisition charges) compared with $36.3 million in the year-ago quarter.
Financial Position
Nevro exited the first quarter of 2024 with cash and cash equivalents and short-term investments of $281.5 million compared with $322.7 million at the end of the fourth quarter. Long-term debt at the end of first-quarter 2024 was $214.8 million compared with $211.5 million at the fourth-quarter end.
Guidance
Nevro has provided its financial outlook for full-year and second-quarter 2024.
For the second quarter of 2024, Nevro expects its worldwide revenues in the range of $106 million-$108 million, reflecting growth of 2-4% year over year on a reported basis. The Zacks Consensus Estimate is pegged at $111.9 million.
The company expects its 2024 worldwide revenues in the range of $435 million-$445 million, reflecting growth of 2.3-4.6% from the comparable figure of 2023 both on a reported basis and at CER. The Zacks Consensus Estimate is pegged at $442.2 million.
Our Take
Nevro exited the first quarter of 2024 with better-than-expected results and an improvement in revenues, which surpassed the Zacks Consensus Estimate. The company’s robust domestic revenues were also impressive. An uptick was observed in total U.S. permanent implant procedures, while the U.S. trial procedures declined 5.1%. The strong uptake of its new-generation SCS platform, HFX iQ, was also encouraging. The addition of the newly acquired SI Joint Fusion business is likely to bring additional revenues in the second half of 2024. However, softness in the U.S. SCS testing activity is a worrying sign.
The gross margin improved for the company, which was driven by a shift to higher-margin products sourced out of its Costa Rica manufacturing facility. However, loss at the operating level persisted for the company.
The company’s restructuring initiative looks promising as it is likely to support its long-term growth and profitability. Nevro is planning additional restructuring activities later this year.
Nevro Corp. Price, Consensus and EPS Surprise
Nevro Corp. price-consensus-eps-surprise-chart | Nevro Corp. Quote
Zacks Rank and Key Picks
Nevro currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Align Technology, Inc. ALGN, Ecolab ECL and Boston Scientific Corporation BSX.
Align Technology, carrying a Zacks Rank of 2 (Buy), reported first-quarter 2024 adjusted EPS of $2.14, beating the Zacks Consensus Estimate by 8.1%. Revenues of $997.4 million outpaced the consensus mark by 2.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Align Technology has a long-term estimated growth rate of 6.9%. ALGN’s earnings surpassed estimates in three of the trailing four quarters and missed once, the average surprise being 5.9%.
Ecolab, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.3%. ECL’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 1.7%.
Ecolab’s shares have rallied 33.8% against the industry’s 9.3% decline in the past year.
Boston Scientific reported first-quarter 2024 adjusted EPS of 56 cents, beating the Zacks Consensus Estimate by 9.8%. Revenues of $3.86 billion surpassed the Zacks Consensus Estimate by 4.9%. It currently carries a Zacks Rank #2.
Boston Scientific has a long-term estimated growth rate of 12.5%. BSX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 7.5%.
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