Nevro (NVRO) Q1 Loss Wider Than Expected, Revenues Down Y/Y

Nevro Corp. NVRO reported first-quarter 2019 loss of $1.45 per share, wider than the Zacks Consensus Estimate of a loss of 66 cents. The company incurred a loss per share of 59 cents in the year-ago quarter.

 

The Zacks Rank #5 (Strong Sell) company posted revenues of $82.1 million, missing the Zacks Consensus Estimate by 6.1%. Revenues dropped 6.3% year over year.

 

Quarter Highlights

 

In the quarter under review, international revenues were $16.3 million, down 4% year over year but up 4% at constant currency (cc).

 

U.S. revenues for the quarter totaled $65.8 million, reflecting a 7% year-over-year drop. The decrease was due to the company’s decision to diminish the impact of high volume product orders in the quarter.

Nevro Corp. Price, Consensus and EPS Surprise

 

Nevro Corp. Price, Consensus and EPS Surprise

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

Margins

 

Gross profit totaled $53.2 million, down 14.2% year over year. Gross margin was 64.8%, down 590 basis points.

 

Operating expenses rose 22.6% year over year to $95.5 million. Research and development expenses totaled $14.1 million, up 27.5% year over year.

 

Sales, general and administrative expenses were up 22.1% year over year to $81.3 million.

 

Guidance

 

Nevro expects second-quarter 2019 worldwide revenue in the $87-$89 million range. The Zacks Consensus Estimate stands at $99.6 million, much above the projected range.

 

Gross margin is expected in the high 60% range.

 

Summary

 

Nevro exited the first quarter on a weak note. The company’s domestic and international revenues fell year over year. Loss per share also widened on a year-over-year basis. Significant contraction in gross margin raises concern. Surge in operating expenses adds to the woes.

 

On the bright side, increase in R&D expenses reflects focus on innovation.

 

Earnings of MedTech Majors at a Glance

 

Some better-ranked stocks which reported solid results this earning season are Stryker Corporation SYK, DENTSPLY SIRONA XRAY and CONMED Corporation CNMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

 

Stryker delivered first-quarter 2019 adjusted earnings per share of $1.88, beating the Zacks Consensus Estimate by 2.2%. Revenues of $3.52 billion were in line with the consensus estimate.

 

DENTSPLY reported adjusted earnings per share of 49 cents in the first quarter of 2019, beating the Zacks Consensus Estimate of 38 cents. Revenues of $946.2 million surpassed the Zacks Consensus Estimate of $917.1 million.

 

CONMED posted first-quarter 2019 adjusted earnings per share of 57 cents, which beat the Zacks Consensus Estimate of 54 cents. Revenues were $218.4 million, surpassing the consensus estimate of $213 million.

 

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