Nevro's (NVRO) SCS Therapy Gets Positive Coverage Update
Nevro Corp. NVRO recently announced that Carelon Healthcare will be publishing a new interventional pain management policy that expands spinal cord stimulation (SCS) coverage for painful diabetic neuropathy (PDN). The policy is expected to go into effect on Apr 14, 2024.
Carelon Healthcare is a healthcare services company that aims to deliver whole-person care with connected healthcare solutions for better outcomes and experiences.
The latest positive coverage update is expected to strengthen Nevro’s foothold in the SCS therapy business.
Significance of the Coverage Update
Per Nevro, the policy represents an increase in PDN patient coverage by nearly 43 million additional lives. Payers that utilize Carelon Healthcare include Anthem Blue Cross and various Managed Medicaid plans, among others.
Nevro’s management believes that Carelon Healthcare's coverage policy expansion will likely aid PDN patients as it will broaden access to its 10 kHz Therapy. Per the company, the 10 kHz Therapy is currently the only high-frequency parasthesia-free SCS system approved by the FDA to treat PDN.
Industry Prospects
Per a report by Market Data Forecast, the global SCS market was estimated to be $2207 million in 2023 and is anticipated to reach $3334 million by 2028 at a CAGR of 8.6%. Factors like the rising cases of chronic and neuropathic pain and the growing adoption of SCS therapy are likely to drive the market.
Given the market potential, the latest positive coverage update is expected to significantly boost Nevro’s business.
Recent Development
This month, Nevro announced preliminary revenues for the fourth quarter and full-year 2023. Per the preliminary report, fourth-quarter 2023 worldwide revenues are estimated to be $116 million, reflecting an increase of 1.9% and 1% year over year on a reported basis and at constant exchange rate (CER), respectively.
The company’s 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.
Price Performance
Shares of the company have lost 52.2% in the past year compared with the industry’s 0.7% decline. The S&P 500 has witnessed 21.3% growth in the said time frame.
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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, presently carrying a Zacks Rank #2 (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 (Strong Buy) stocks here.
DaVita’s shares have gained 31.2% compared with the industry’s 7.7% rise in the past year.
Merit Medical, carrying a Zacks Rank of 2 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 11.8% compared with the industry’s 9.6% rise in the past year.
Integer Holdings, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.9%.
Integer Holdings’ shares have rallied 39% against the industry’s 0.7% decline in the past year.
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