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Nevro (NVRO) Q3 Loss Narrower Than Expected, Revenues Up Y/Y

Zacks Equity Research

Nevro Corp. NVRO reported third-quarter 2019 loss of 58 cents per share, narrower than the Zacks Consensus Estimate of a loss of 85 cents. The company had incurred a loss of 37 cents in the year-ago quarter.

The Zacks Rank #3 (Hold) company posted revenues of $100.2 million, which surpassed the Zacks Consensus Estimate by 6.2%. The figure also rose 4.7% year over year.

Quarter Highlights

In the quarter under review, international revenues were $16 million, flat year over year but up 5% at constant currency.

U.S. revenues for the quarter totaled $100.2 million, up 5% year over year. The upside was primarily driven by Spinal Cord Stimulation (SCS) procedure growth.

Nevro Corp. Price, Consensus and EPS Surprise

 

Nevro Corp. Price, Consensus and EPS Surprise

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

 

Additionally, U.S. patient trials and permanent implants each grew 18% on a year-over-year basis. The company also launched the Senza Omnia SCS System commercially in the United States.

Margins

Gross profit totaled $69.9 million, up 4% year over year. Gross margin was 69.8%, down 50 basis points.

Operating expenses rose 12.3% year over year to $85.9 million. Research and development expenses totaled $13 million, up 4.3% year over year.

Sales, general and administrative expenses were up 13.9% year over year to $72.9 million.

Guidance

Nevro raised its revenue guidance for 2019.

The company now expects revenues in the range of $368-$374 million compared with the previous expectation of $383-$386 million. The Zacks Consensus Estimate for the same is pegged at $375.7 million, above the projected range.

Gross margin is expected in the range of 68-70% as a percentage of revenues.

Summary

Nevro exited the second quarter on a strong note. The company’s domestic and international revenues surged on a year-over-year basis. Also, demand for implants drove the solid quarterly show. The commercial launch of the Senza Omnia SCS System buoys optimism. A raised guidance for 2019 holds promise.

On the flip side, increased operating expenses raise concern. Gross margin contracted in the quarter.

Earnings of Other MedTech Majors at a Glance

Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences EW, Thermo Fisher Scientific Inc TMO and ResMed Inc RMD. Each stock carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted earnings per share (EPS) of $1.41, which outpaced the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher delivered third-quarter 2019 adjusted EPS of $2.94, which surpassed the consensus mark by 2.1%. Revenues of $6.27 billion outpaced the same by 1.3%.

ResMed reported fiscal first-quarter 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues were $681.1 million, which surpassed the Zacks Consensus Estimate by 3.6%.

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