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Nevro Corp (NVRO) Up on Narrower-than-Expected Q2 Loss
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Shares of Nevro Corp (NVRO - Free Report) surged 9.3% in after-hour trading on Aug 8, following the company’s second-quarter 2016 results. The company reported loss of 31 cents per share, much narrower than the Zacks Consensus Estimate of a loss of 46 cents. The company had reported loss of 77 cents in the year-ago quarter.
Revenues surged a massive 385% to $55.4 million, well-ahead of the Zacks Consensus Estimate of $45 million. U.S. revenues were $40.6 million, which gained from the growing adoption of HF10 therapy.
Per Nevro, HF10 therapy now represents approximately 13% share of the worldwide Spinal Cord Stimulation (SCS) market and greater than 10% share of the U.S. market.
International revenues grew 33% at constant currency (cc) to $14.8 million, driven by continued adoption of the Senza system. Europe grew 20% year over year, while Australia surged 63% in the reported quarter.
The strong growth in Australia was primarily driven by product update and increased reimbursement for the HF10 therapy.
Nevro also observed the publication of the 24-month SENZA-RCT results by Neurosurgery, the official Journal of the Congress of Neurological Surgeons during the quarter.
Margin Details
Gross profit was $36.6 million, up from $5.9 million reported in the year-ago quarter. Lower foreign currency volatility positively impacted gross margin, which was 66% in the quarter as compared with 52% reported in the year-ago quarter.
Operating expenses soared 69% year over year to $42.5 million primarily on the back of increased headcount and related personnel costs.
Nevro ended the quarter with 140 hired and trained representatives, which is an increase of 27 reps from the previous quarter count of 113 representatives. Internationally, the company ended the quarter with 57 sales representatives.
As a result, loss from operations was $5.9 million as compared with $19.2 million reported in the year-ago quarter.
During the quarter, Aetna and Humana joined Kaiser and CMS in updating their coverage policies to include HF10 therapy. However, Cigna and certain Blue Cross Blue Shield regional plans designated the high frequency therapy as investigational.
Based on positive clinical evidence for the HF10 therapy Nevro succeeded in ensuring coverage from Blue Cross of Alabama and HCSC. On a combined basis, these plans represent nine states and include two of the top ten commercial payers in the U.S.
Financing Details
Nevro completed public financing of $172.5 million in convertible senior notes during the second quarter. The financing will enable the company to continue investing in evidence based therapies that will drive its product pipeline over the long term.
Guidance
For full-year 2016, Nevro forecasts revenues in the range of $210 million to $220 million, up from the earlier guidance range of $175 million to $185 million.
International revenues are projected to be moderate for the rest of 2016. Management expects third-quarter revenues to decline sequentially.
Productivity is still forecasted in the range of $1.3 million to $1.5 million per sales representative. However, management now anticipates to reach this sales level within 12 to 15 months.
Gross margin is expected at approximately 66% for full-year 2016. Nevro expects operating expenses to increase on a quarterly basis. For the full-year, the figure is expected to be in the range of $180 million to $185 million.
Nevro continues to hire experienced sales representatives to support the rollout of HF10 therapy. The company expects to have a minimum of 160 representatives in the field by the end of 2016.
Zacks Rank & Key Picks
Nevro has a Zacks Rank #3 (Hold).
Better-ranked stocks are Masimo Corp (MASI - Free Report) , Natus Medical and IDEXX Laboratories (IDXX - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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Nevro Corp (NVRO) Up on Narrower-than-Expected Q2 Loss
Shares of Nevro Corp (NVRO - Free Report) surged 9.3% in after-hour trading on Aug 8, following the company’s second-quarter 2016 results. The company reported loss of 31 cents per share, much narrower than the Zacks Consensus Estimate of a loss of 46 cents. The company had reported loss of 77 cents in the year-ago quarter.
Revenues surged a massive 385% to $55.4 million, well-ahead of the Zacks Consensus Estimate of $45 million. U.S. revenues were $40.6 million, which gained from the growing adoption of HF10 therapy.
Per Nevro, HF10 therapy now represents approximately 13% share of the worldwide Spinal Cord Stimulation (SCS) market and greater than 10% share of the U.S. market.
International revenues grew 33% at constant currency (cc) to $14.8 million, driven by continued adoption of the Senza system. Europe grew 20% year over year, while Australia surged 63% in the reported quarter.
The strong growth in Australia was primarily driven by product update and increased reimbursement for the HF10 therapy.
Nevro also observed the publication of the 24-month SENZA-RCT results by Neurosurgery, the official Journal of the Congress of Neurological Surgeons during the quarter.
Margin Details
Gross profit was $36.6 million, up from $5.9 million reported in the year-ago quarter. Lower foreign currency volatility positively impacted gross margin, which was 66% in the quarter as compared with 52% reported in the year-ago quarter.
Operating expenses soared 69% year over year to $42.5 million primarily on the back of increased headcount and related personnel costs.
Nevro ended the quarter with 140 hired and trained representatives, which is an increase of 27 reps from the previous quarter count of 113 representatives. Internationally, the company ended the quarter with 57 sales representatives.
As a result, loss from operations was $5.9 million as compared with $19.2 million reported in the year-ago quarter.
NEVRO CORP Price, Consensus and EPS Surprise
NEVRO CORP Price, Consensus and EPS Surprise | NEVRO CORP Quote
Reimbursement Details
During the quarter, Aetna and Humana joined Kaiser and CMS in updating their coverage policies to include HF10 therapy. However, Cigna and certain Blue Cross Blue Shield regional plans designated the high frequency therapy as investigational.
Based on positive clinical evidence for the HF10 therapy Nevro succeeded in ensuring coverage from Blue Cross of Alabama and HCSC. On a combined basis, these plans represent nine states and include two of the top ten commercial payers in the U.S.
Financing Details
Nevro completed public financing of $172.5 million in convertible senior notes during the second quarter. The financing will enable the company to continue investing in evidence based therapies that will drive its product pipeline over the long term.
Guidance
For full-year 2016, Nevro forecasts revenues in the range of $210 million to $220 million, up from the earlier guidance range of $175 million to $185 million.
International revenues are projected to be moderate for the rest of 2016. Management expects third-quarter revenues to decline sequentially.
Productivity is still forecasted in the range of $1.3 million to $1.5 million per sales representative. However, management now anticipates to reach this sales level within 12 to 15 months.
Gross margin is expected at approximately 66% for full-year 2016. Nevro expects operating expenses to increase on a quarterly basis. For the full-year, the figure is expected to be in the range of $180 million to $185 million.
Nevro continues to hire experienced sales representatives to support the rollout of HF10 therapy. The company expects to have a minimum of 160 representatives in the field by the end of 2016.
Zacks Rank & Key Picks
Nevro has a Zacks Rank #3 (Hold).
Better-ranked stocks are Masimo Corp (MASI - Free Report) , Natus Medical and IDEXX Laboratories (IDXX - Free Report) . All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.Click to get this free report >>