Nevro's (NVRO) Preliminary Q4 Revenues Boosted by PDN Sales
Nevro Corp. NVRO recently announced preliminary revenues for the fourth quarter and full-year 2023. However, the preliminary results drove down the company’s shares by 0.1% in the after-hours trading session.
The company is scheduled to release fourth-quarter results in February.
Per the preliminary report, fourth-quarter 2023 worldwide revenues are estimated to be $116 million, reflecting an increase of 1.9% year over year on a reported basis. The Zacks Consensus Estimate of $109.4 million lies below the preliminary figure.
At constant exchange rate (CER), fourth-quarter worldwide revenues are estimated to reflect an uptick of 1% year over year.
The company’s Painful Diabetic Neuropathy (PDN) revenues represented approximately $22.4 million in revenues (up 29%) and 20% of worldwide permanent implant procedures in the fourth quarter of 2023.
The U.S. revenues in the to-be-reported quarter are expected to be $101.5 million, reflecting growth of 1.7% from the prior-year period. U.S. trial procedures in the fourth quarter decreased approximately 1% year over year. In the fourth quarter, the U.S. PDN trial procedures represented approximately 24% of the total U.S. trial volume.
International revenues in the fourth quarter are expected to be $14.5 million, reflecting an increase of 2.8% on a reported basis year over year. At CER, it decreased 1% compared with the prior-year period.
Per management, the preliminary fourth-quarter 2023 revenues exceeded its expectations. The results also reflect that its commercial realignment and execution are delivering stronger and more consistent growth. This raises our optimism about the stock.
Full-Year Prelim Results
Per Nevro, its full-year worldwide revenues are likely to be $425 million, reflecting an increase of 4.6% over comparable 2022 figures on a reported basis. The Zacks Consensus Estimate of $418.4 million lies below the preliminary figure.
At CER, worldwide revenues are estimated to reflect an uptick of 4.5% over comparable 2022 reported figures.
Full-year 2023 PDN sales are estimated to be $77.9 million, reflecting an increase of 62.3% over comparable 2022 figures.
The full-year U.S. revenues are expected to be $366.5 million, reflecting growth of 5.3% over comparable 2022 reported figures.
International revenues for the full year are expected to be $58.5 million, reflecting an increase of 0.5% over comparable 2022 reported figures. At CER, it was flat compared with the comparable 2022 figures.
Restructuring
Nevro announced a restructuring of its operations, including laying off approximately 5% of its total number of employees. This is expected to be substantially completed by the end of the first quarter of 2024.
Per management, the restructuring will likely support its strategy and allow the company to focus its investments to position it for long-term growth and profitability.
Nevro expects the restructuring to have a $14 million to $15 million positive impact on its full-year 2024 adjusted EBITDA, which will likely be partially offset by normal operating expense increases, including inflation, merit increases and other acquisition-related expenses. The company will provide more details on the restructuring during its fourth-quarter 2023 earnings call in February.
2024 Guidance
Nevro expects to share 2024 guidance on its fourth-quarter earnings conference call in February.
A Brief Q4 Analysis
Nevro acquired Vyrsa Technologies (Vyrsa) in November 2023. Nevro’s management believes that Vyrsa's comprehensive product suite will likely allow physicians to personalize therapy to specific patient needs. Vyrsa's implants are also expected to provide optimal stability and enhance the opportunity for the sacroiliac joint (SI Joint) to fuse, providing relief to patients suffering from chronic SI joint pain. This looks promising for the stock.
Over the past few months, Nevro has been presenting favorable study results about its high-frequency 10 KHz spinal cord stimulation therapy. Per management, these robust data are critical and set Nevro apart from its competition as its technology demonstrates durable pain relief and significant improvements without paresthesia. This is likely to aid the company in improving its market share, thus driving up the revenues in the fourth quarter.
The robust adoption of the company’s products is also likely to have driven the fourth-quarter revenues.
The company’s preliminary projection of robust improvement in revenues on the back of strength in its business lifts our confidence in the stock.
Price Performance
Shares of the company have gained 11.9% between Oct 1 and Dec 31, 2023, compared with the industry’s 10.2% rise and the S&P 500’s 10.9% growth.
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Zacks Rank & Key Picks
Currently, Nevro carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. DVA, Merit Medical Systems, Inc. MMSI and Integer Holdings Corporation ITGR.
DaVita, sporting a Zacks Rank #1 (Strong Buy), has an estimated long-term growth rate of 17.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 36.6%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita has gained 10.8% compared with the industry’s 11.9% rise between Oct 1 and Dec 31, 2023.
Merit Medical, carrying a Zacks Rank of 2 (Buy) at present, has an estimated long-term growth rate of 11.5%. MMSI’s earnings surpassed estimates in each of the trailing four quarters, with the average being 14.4%.
Merit Medical has gained 10.1% compared with the industry’s 2.1% rise between Oct 1 and Dec 31, 2023.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings has gained 26.3% compared with the industry’s 10.2% rise between Oct 1 and Dec 31, 2023.
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