Nevro Reports Third Quarter 2018 Financial Results

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Nov 05, 2018, 16:10 ET

REDWOOD CITY, Calif., Nov. 5, 2018 /PRNewswire/ -- Nevro Corp. (NYSE: NVRO), a global medical device company that is providing innovative evidence-based solutions for the treatment of chronic pain, today reported financial results for the three and nine months ended September 30, 2018.

Third Quarter Financial Results

Revenue for the three months ended September 30, 2018 was $95.6 million versus $82.3 million during the same period of the prior year, representing 16% growth as reported. U.S. revenue for the three months ended September 30, 2018 was $79.6 million, representing 20% growth. International revenue was $16.0 million, representing growth of 4% in constant currency. The increase in revenue was primarily attributable to the continued adoption of the Senza system.

Gross profit for the three months ended September 30, 2018 was $67.2 million, representing a 70% gross margin, up from $57.9 million, representing a 70% gross margin, in the same period of the prior year.

Operating expenses for the three months ended September 30, 2018 were $76.5 million compared to $62.4 million in the same period of the prior year, representing an increase of 23%. The increase in operating expenses was driven primarily by increased headcount and related personnel costs, as we continue to development our U.S. sales force, as well as an increase in development expenses.

Net loss from operations for the third quarter of 2018 was $9.2 million compared to $4.4 million for the same period of the prior year.

Revenue Guidance for Full Year 2018

Nevro expects worldwide revenue to be at the low end of its previously stated range of $385.0 million to $390.0 million for 2018.

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 for U.S. callers, or (647) 689-4452 for international callers (Conference ID: 3989464), or from the webcast on the "Investors" section of the Company's website at www.nevro.com/investors. Following the call, a replay will be available on the Investor Events and Presentations webpage of the Company's website.

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. The Senza® System and Senza II™ System are the only SCS systems that deliver Nevro's proprietary HF10® therapy. Senza, Senza II, HF10, Nevro and the Nevro logo are trademarks of Nevro Corp.

Forward-Looking Statements

In addition to historical information, this press release contains forward-looking statements with respect to our business, capital resources, revenue projections, strategic initiatives and growth, 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 continuing adoption of, and interest in, Senza in the U.S. and international markets and our expectations for worldwide revenue for the full year 2018. 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; 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 22, 2018 and our Quarterly Report on Form 10-Q that we expect to file on November 5, 2018, as well as any reports that we may file with the SEC 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. Our results for the quarter ended September 30, 2018 are not necessarily indicative of our operating results for any future periods.

Investor Relations Contact:
Nevro Investor Relations
(415) 937-5402
[email protected]

Nevro Corp.
Consolidated Statements of Operations and Comprehensive Loss
(in thousands, except share and per share data)

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2018		2017		2018		2017
	(unaudited)				(unaudited)
Revenue	$	95,630	$	82,256	$	279,345	$	228,711
Cost of revenue		28,382		24,316		82,175		70,530
Gross profit		67,248		57,940		197,170		158,181
Operating expenses:
Research and development		12,478		9,381		34,979		27,617
Sales, general and administrative		64,007		52,977		195,331		157,971
Total operating expenses		76,485		62,358		230,310		185,588
Loss from operations		(9,237)		(4,418)		(33,140)		(27,407)
Other income (expense):
Interest income (expense), net		(1,347)		(1,689)		(4,336)		(5,122)
Other income (expense), net		(130)		251		(845)		1,198
Loss before income taxes		(10,714)		(5,856)		(38,321)		(31,331)
Provision for income taxes		551		374		1,277		1,016
Net loss		(11,265)		(6,230)		(39,598)		(32,347)
Changes in foreign currency translation adjustment		(155)		165		104		(41)
Changes in unrealized gains on short-term investments		269		13		191		107
Net change in other comprehensive loss		114		178		295		66
Comprehensive Loss	$	(11,151)	$	(6,052)	$	(39,303)	$	(32,281)
Net loss per share, basic and diluted	$	(0.37)	$	(0.21)	$	(1.32)	$	(1.10)
Weighted average shares used to compute net loss per share, basic and diluted		30,123,188		29,513,842		29,997,201		29,342,883

Nevro Corp.
Consolidated Balance Sheets
(in thousands, except share and per share data)

	September 30,		December 31,
	2018		2017
	(unaudited)
Assets
Current assets
Cash and cash equivalents	$	21,377	$	42,845
Short-term investments		236,615		226,467
Accounts receivable, net		73,993		67,287
Inventories, net		93,606		98,119
Prepaid expenses and other current assets		7,226		6,463
Total current assets		432,817		441,181
Property and equipment, net		13,312		8,819
Other assets		4,315		3,250
Restricted cash		606		806
Total assets	$	451,050	$	454,056
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	20,173	$	18,492
Accrued liabilities and other		33,622		39,512
Total current liabilities		53,795		58,004
Long-term debt		150,508		145,019
Other long-term liabilities		2,445		1,861
Total liabilities		206,748		204,884
Stockholders' equity
Common stock, $0.001 par value, 290,000,000 shares authorized, 30,150,577 and 29,737,561 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively		30		30
Additional paid-in capital		541,695		508,228
Accumulated other comprehensive loss		(948)		(1,242)
Accumulated deficit		(296,475)		(257,844)
Total stockholders' equity		244,302		249,172
Total liabilities and stockholders' equity	$	451,050	$	454,056