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Nevro (NVRO) Q3 Earnings Miss Estimates, Revenues Surpass

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  • NVRO
  • LH
  • WST

Nevro Corp. NVRO reported loss per share of 87 cents for the third quarter of 2021, noticeably wider than the loss of 29 cents reported in the year-ago quarter. Loss per share was also slightly wider than the Zacks Consensus Estimate of a loss of 86 cents.

Revenues in Detail

Nevro registered revenues of $93.2 million in the third quarter, down 14.1% year over year. The figure however surpassed the Zacks Consensus Estimate by 2.1%.

At constant exchange rate (CER), revenues declined 14% year over year. On a sequential basis, third-quarter revenues fell 8.9%.

Quarterly Highlights

In the quarter under review, international revenues were $15.2 million, down 14% year over year on a reported basis and 16% at CER. The international business continued to be adversely impacted by pandemic-led issues, including patient behavior associated with elective procedures and healthcare facility restrictions.

Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. Price, Consensus and EPS Surprise
Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. price-consensus-eps-surprise-chart | Nevro Corp. Quote

U.S. revenues for the quarter totaled $78.1 million, down 14% year over year. Total U.S. permanent implant procedures during the reported quarter fell 14% and trial procedures declined 7%. Despite a decline in revenues, monthly trial and permanent implant procedures improved steadily during the reported quarter.

Margin Trend

In the quarter under review, Nevro’s gross profit fell 15% to $64.6 million. Gross margin contracted 80 basis points (bps) to 69.3%.

Sales, general & administrative expenses rose 16.1% to $79.5 million. Research and development expenses went up 3.9% year over year to $11.6 million. Total operating expenses of $91.1 million increased 14.4% year over year.

Operating loss in the reported quarter totaled $26.4 million, significantly wider than the operating loss of $3.5 million in the year-ago quarter.

Financial Position

Nevro exited the third quarter of 2021 with cash and cash equivalents, and short-term investments of $376.6 million compared with $397.5 million at the end of the second quarter.

Total debt (including short-term debt) at the end of the third quarter of 2021 was $148.8 million compared with $146.4 million at the end of the second quarter.

Guidance

Due to continued pandemic-led uncertainties, Nevro provided its financial outlook for the fourth quarter of 2021 only.

The company projects fourth-quarter 2021 worldwide revenues in the range of $94-$98 million, indicating an 11-14% decrease from the comparable numbers reported in the prior year. This fourth-quarter guidance takes into account revenue contribution from Painful Diabetic Neuropathy (PDN). The Zacks Consensus Estimate for fourth-quarter revenues is pegged at $113.9 million.

Our Take

Nevro exited the third quarter of 2021 with wider-than-expected loss. The year-over-year decline in revenues across U.S. and international businesses is disappointing. A decline in gross profit and contraction of both margins do not bode well for the company either. Although the company posted a narrower year-over-year operating loss, this persistent loss trend is worrisome. Continued pandemic-borne adversities and unpredictability are concerning as well. Escalating operating expenses are an added disadvantage.

On a positive note, monthly trial and permanent implant procedures improved consistently throughout the reported quarter despite COVID-led impact on procedure volumes. The U.S. commercial launch of Nevro's proprietary 10 kHz High Frequency Spinal Cord Stimulation Therapy for PDN, post its FDA approval in late July, raises optimism in the stock.

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 Bio-Rad Laboratories, Inc. BIO, Laboratory Corporation of America Holdings or LabCorp LH and West Pharmaceutical Services, Inc. WST.

Bio-Rad, carrying a Zacks Rank #2 (Buy), reported third-quarter 2021 adjusted earnings per share (EPS) of $3.71, which beat the Zacks Consensus Estimate by 61.3%. Revenues of $747 million outpaced the consensus mark by 11.3%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

LabCorp reported third-quarter 2021 adjusted EPS of $6.82, surpassing the Zacks Consensus Estimate by 42.9%. Revenues of $4.06 billion surpassed the Zacks Consensus Estimate by 13.4%. It currently carries a Zacks Rank #2.

West Pharmaceutical reported third-quarter 2021 adjusted EPS of $2.06, which surpassed the Zacks Consensus Estimate by 13.2%. Revenues of $706.5 million outpaced the Zacks Consensus Estimate by 3.2%. It currently carries a Zacks Rank #2.


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