Nevro Reports Fourth Quarter and Full Year 2019 Financial Re

|Feb 25|magazine29 min read

REDWOOD CITY, Calif., Feb. 25, 2020 /PRNewswire/ -- Nevro Corp. (NYSE: NVRO), a global medical device company that is providing innovative, evidence-based solutions for the treatment of chronic pain, today announced its financial results for the fourth quarter and full year ended December 31, 2019. 

Fourth Quarter 2019
Worldwide revenue for the fourth quarter 2019 was $114.4 million, a 6% increase compared to $107.9 million in the prior year period.  U.S. revenue was $97.9 million, a 7% increase compared to $91.6 million in the prior year period.  Year-over-year U.S. trial growth was 17% and permanent implant growth was 20% during the fourth quarter of 2019.  International revenue was $16.5 million, a 1% increase as-reported, or 3% on a constant currency basis, compared to $16.3 million in the prior year period.  

"Beginning in the second quarter, we started driving quite a few changes to our commercial strategies and execution, and we quickly saw patient trials and permanent implants return to growth," said D. Keith Grossman, Chairman, CEO and President of Nevro.  "More recently, we launched Senza Omnia commercially in the U.S., which allowed us to engage more constructively with our customers and offer them the only SCS platform that can provide the unique advantages of HF10 as well as the full range of SCS frequencies.  Just last month, we presented encouraging three-month data from our Senza-PDN study, which was the largest SCS RCT conducted to date.  I am pleased with the progress we made in 2019 and am excited by the momentum we are building in the market and the opportunity ahead of us in 2020."

Gross profit for the fourth quarter of 2019 was $81.3 million, a 7% increase compared to $76.2 million in the prior year period. Gross margin was 71.0% in the fourth quarter of 2019 compared to 70.5% in the prior year period.

Operating expenses for the fourth quarter of 2019 were $92.9 million, a 10% increase compared to $84.8 million in the prior year period.  The year-over-year increase in operating expenses was primarily driven by U.S. sales and marketing personnel costs, including $2 million in structural changes in the commercial organization, and approximately $3 million in costs related to the Company's ongoing clinical trials.  Legal expenses associated with patent litigation were $1.7 million for the fourth quarter of 2019, which was consistent with the prior year period.

Net loss from operations for the fourth quarter of 2019 was $11.7 million, a 36% increase compared to a loss of $8.6 million in the prior year period.  Adjusted EBITDA for the fourth quarter of 2019 was $1.5 million, a 57% decrease compared to $3.5 million in the prior year period.  Adjusted EBITDA excludes certain litigation expenses, interest, taxes and non-cash items such as stock-based compensation and depreciation and amortization.  Please see financial tables for GAAP to Non-GAAP reconciliations.

Cash, cash equivalents and short-term investments totaled $237.8 million as of December 31, 2019.  Net cash increased during the fourth quarter of 2019 by $5.0 million and decreased by $26.7 million for the full year 2019.

Full Year 2019
Worldwide revenue for the full year 2019 was $390.3 million, a 1% increase compared to $387.3 million in the prior year period. U.S. revenue for the full year 2019 was $326.0 million, a 1% increase compared to $321.8 million in the prior year period.  International revenue was $64.3 million, a 2% decrease as-reported, or a 4% increase on a constant currency basis, compared to $65.5 million in the prior year period.  Please see financial statements for additional full year 2019 results and GAAP to Non-GAAP reconciliations.

2020 Financial Guidance
Nevro reiterated its full year 2020 worldwide revenue to be in the range of $435 to $440 million.  In addition, the Company provided additional full year 2020 guidance as follows:  Gross margin is expected to be in the range of 69% to 70% and operating expenses are expected to be approximately $355 million, including litigation expenses.  To assist investors in understanding Nevro's underlying business trends, the Company is also introducing adjusted EBITDA guidance of positive $3.0 to $10.0 million for the full year 2020, which compares to a loss of $40.3 million in 2019.  Adjusted EBITDA excludes certain litigation expenses, interest, taxes and non-cash items such as stock-based compensation and depreciation and amortization.  Please see financial tables for GAAP to Non-GAAP reconciliations.

Webcast and Conference Call Information
Management will host a conference call today beginning at 1:30 p.m. PT / 4:30 p.m. ET.  Investors interested in listening to the conference call may do so by dialing (833) 286-5807 in the U.S. or (647) 689-4452 internationally, using Conference ID: 1864387.  In addition, a live webcast will be available on the "Investors" section of the Company's website at www.nevro.com, as well as an archived recording.

About Nevro
Headquartered in Redwood City, California, Nevro is a global medical device company focused on providing innovative products that improve the quality of life of patients suffering from debilitating chronic pain.  Nevro has developed and commercialized the Senza spinal cord stimulation (SCS) system, an evidence-based, non-pharmacologic neuromodulation platform for the treatment of chronic pain. HF10 therapy has demonstrated the ability to reduce or eliminate opioids in ≥65% of patients across six peer-reviewed clinical studies.  The Senza® System, Senza II™ System, and the Senza® Omnia™ System are the only SCS systems that deliver Nevro's proprietary HF10® therapy. Senza, Senza II, Senza Omnia, HF10, Nevro and the Nevro logo are trademarks of Nevro Corp.  

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 current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including the Company's expectations for its worldwide revenue, gross margin and adjusted EBITDA for the full year 2020, as well as its expectations for growth in patient trials and permanent implants.  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 attract and retain qualified personnel; 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 25, 2020, 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 fourth quarter and full year ended December 31, 2019 are not necessarily indicative of our operating results for any future periods.

Investor Relations:
Juliet Cunningham
Vice President, Investor Relations
+1 650-433-3247
[email protected]

Nevro Corp.

Consolidated Statements of Operations and Comprehensive Loss

(in thousands, except share and per share data)




Three Months Ended



Year Ended




December 31,



December 31,




2019



2018



2019



2018




(unaudited)










Revenue


$

114,374



$

107,944



$

390,255



$

387,289


Cost of revenue



33,116




31,790




121,905




113,965


Gross profit



81,258




76,154




268,350




273,324


Operating expenses:

















Research and development



16,933




13,480




59,017




48,459


Sales, general and administrative



76,006




71,277




305,812




266,608


Total operating expenses



92,939




84,757




364,829




315,067


Loss from operations



(11,681)




(8,603)




(96,479)




(41,743)


Other income (expense):

















Interest income (expense), net



(1,399)




(1,194)




(4,911)




(5,530)


Other income (expense), net



(181)




(319)




(697)




(1,164)


Loss before income taxes



(13,261)




(10,116)




(102,087)




(48,437)


Provision for (benefit from) income taxes



481




(509)




1,599




768


Net loss



(13,742)




(9,607)




(103,686)




(49,205)


Changes in foreign currency translation adjustment



350




(141)




449




(37)


Changes in gains (losses) on short-term investments



(125)




11




315




202


Net change in other comprehensive loss



225




(130)




764




165


Comprehensive Loss


$

(13,517)



$

(9,737)



$

(102,922)



$

(49,040)


Net loss per share, basic and diluted


$

(0.44)



$

(0.32)



$

(3.37)



$

(1.64)


Weighted average shares used to compute net loss per share, basic and diluted



31,233,416




30,214,454




30,803,872




30,051,961


 

Nevro Corp.

Consolidated Balance Sheets

(in thousands, except share and per share data)




December 31,



December 31,




2019



2018











Assets









Current assets









Cash and cash equivalents


$

65,373



$

51,266


Short-term investments



172,429




213,281


Accounts receivable, net



82,833




80,656


Inventories, net



91,579




92,035


Prepaid expenses and other current assets



9,838




6,621


Total current assets



422,052




443,859


Property and equipment, net



11,766




12,801


Operating lease assets



21,533





Other assets



13,338




5,850


Restricted cash



956




606


Total assets


$

469,645



$

463,116


Liabilities and stockholders' equity









Current liabilities









Accounts payable


$

16,048



$

23,505


Accrued liabilities and other



54,563




38,909


Total current liabilities



70,611




62,414


Long-term debt



160,300




152,394


Long-term operating lease liabilities



20,445





Other long-term liabilities



1,937




2,825


Total liabilities



253,293




217,633


Stockholders' equity









Common stock, $0.001 par value, 290,000,000 shares authorized, 31,544,361 and 30,263,536 shares issued and outstanding at December 31, 2019 and 2018, respectively



32




30


Additional paid-in capital



626,401




552,612


Accumulated other comprehensive loss



(313)




(1,077)


Accumulated deficit



(409,768)




(306,082)


Total stockholders' equity



216,352




245,483


Total liabilities and stockholders' equity


$

469,645



$

463,116


 

Nevro Corp.

GAAP to Adjusted EBIDTA 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



Year Ended




December 31,



December 31,




2019



2018



2019



2018




(unaudited)





GAAP Net loss


$

(13,742)



$

(9,607)



$

(103,686)



$

(49,205)


Non-GAAP Adjustments:

















Interest (income) expense, net



1,399




1,194




4,911




5,530


Provision for income taxes



481




(509)




1,599




768


Depreciation and amortization



1,298




1,082




4,726




4,050


Stock-based compensation expense



10,377




9,619




41,697




36,637


Litigation related expenses



1,701




1,711




10,432




20,219


Adjusted EBIDTA


$

1,514



$

3,490



$

(40,321)



$

17,999


 

Reconciliation of guidance:



Year Ended




December 31, 2020




     (Low Case)



(High Case)











GAAP Net Loss


$

(62,200)



$

(55,200)


Non-GAAP Adjustments



65,200




65,200


Adjusted EBIDTA


$

3,000



$

10,000


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.

EBIDTA 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 Adjusted EBIDTA, 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 associated with certain legal matters which management considers not related to the underlying operating performance of the business.

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.

 

Cision View original content to download multimedia:http://www.prnewswire.com/news-releases/nevro-reports-fourth-quarter-and-full-year-2019-financial-results-301011018.html

SOURCE Nevro Corp.