Nevro (NVRO) Q2 Loss Wider Than Expected, Revenues Down Y/Y

Nevro Corp. NVRO reported second-quarter 2019 loss of 91 cents per share, wider than the Zacks Consensus Estimate of a loss of 89 cents. The company had incurred loss per share of 35 cents in the year-ago quarter.

The Zacks Rank #4 (Sell) company posted revenues of $93.6 million, outpacing the Zacks Consensus Estimate of $88 million. The figure also surpassed the company’s expectations. However, revenues dropped 2.6% year over year.

Quarter Highlights

In the quarter under review, international revenues were $15.5 million, down 4% year over year but up 2% at constant currency (cc).

U.S. revenues for the quarter totaled $78.1 million, reflecting a 2% year-over-year drop. The decline 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 $63.9 million, down 5.6% year over year. Gross margin was 68.3%, down 240 basis points.

Operating expenses rose 18.9% year over year to $90.5 million. Research and development expenses totaled $14.9 million, up 30.8% year over year.

Sales, general and administrative expenses were up 16.8% year over year to $75.6 million.

Guidance

For 2019, Nevro expects worldwide revenues between $368 million and $374 million. The Zacks Consensus Estimate for the same is pegged at $367.9 million, within the projected range.

Summary

Nevro exited the second quarter on a weak note. The company’s domestic and international revenues deteriorated year over year. Loss per share 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, increased R&D expenses reflect focus on innovation. The guidance for 2019 is also promising.

Earnings of MedTech Majors at a Glance

A few top-ranked companies, which posted solid results this earnings season, are Stryker Corporation SYK, Baxter International Inc. BAX and Intuitive Surgical, Inc. ISRG, 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 second-quarter 2019 adjusted earnings per share of $1.98, beating the Zacks Consensus Estimate by 2.6%. Its revenues of $3.65 billion surpassed the consensus estimate by 1.4%.

Baxter delivered second-quarter 2019 adjusted earnings per share of 89 cents, which surpassed the Zacks Consensus Estimate of 81 cents by 9.9%. Its revenues of $2.84 billion outpaced the consensus estimate of $2.79 billion by 1.9%.

Intuitive Surgical reported second-quarter 2019 adjusted earnings per share of $3.25, which beat the Zacks Consensus Estimate of $2.85. Its revenues of $1.1 billion surpassed the Zacks Consensus Estimate of $1.03 billion.

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