Nevro (NVRO) Q4 Earnings In Line, Revenue Beats Estimates

Nevro Corp.‘s NVRO reported a loss per share of 86 cents for the fourth quarter of 2021, higher than the loss of 21 cents recorded in the year-ago quarter. The loss per share was in line with the Zacks consensus estimate.

The full-year loss per share was $3.77, higher than the loss of $2.47 in the period a year ago.

Income in detail

Nevro reported fourth-quarter revenue of $102.8 million, down 6.4% year-over-year. The figure topped Zacks’ consensus estimate by 0.3%.

Global revenue includes approximately $4 million in revenue related to painful diabetic neuropathy (“PDN”).

Full-year revenue was $386.9 million, reflecting a 6.9% improvement over the same period last year.

Quarterly Highlights

In the quarter under review, international revenue was $14.3 million, down 5% year-over-year on a reported basis and 4% at constant currency or CER. This decline results from the continued impacts of COVID-related issues, including both patient behavior regarding elective procedures and healthcare facility restrictions.

US revenue for the quarter totaled $88.4 million, down 7% year-over-year. The total number of permanent implant procedures in the United States decreased by 5%, while trial procedures increased by 3%. Trial and permanent implant volumes were impacted by pandemic-related issues, particularly in the second half of December when the Omicron variant began to become widely available.

Nevro Corp. Price, Consensus, and EPS Surprise

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

Margin trend

In the quarter under review, Nevro’s gross profit fell 11.4% to $69.1 million. Gross margin contracted by 383 basis points (bps) to 67.3%.

Selling, general and administrative expenses increased 23.2% to $82.6 million. Research and development expenses increased 7.4% year over year to $12.7 million. Total operating expenses of $95.3 million increased 20.8% year over year.

Operating loss in the reported quarter totaled $26.2 million, compared to a total operating loss of $0.9 million in the prior year quarter.

Financial situation

Nevro ended 2021 with cash and cash equivalents and short-term investments of $362 million compared to $587.9 million at the end of 2020. Total debt (including short-term debt term) at the end of 2021 was $151.3 million versus $310.5. million at the end of 2020.

As of December 31, 2021, 290,000,000 shares were authorized, 35,709,570 shares issued and 35,026,654 shares were outstanding.

Advice

Nevro has released its financial outlook for the first quarter and full year 2022.

The company forecasts first-quarter 2022 global revenue in the range of $85 million to $87 million. Zacks’ consensus estimate for the same is pegged at $92.6 million.

The first quarter outlook assumes that the first quarter of 2022 will be heavily impacted by Omicron and other COVID-related issues, as well as the typical seasonal decline of the fourth quarter in the first quarter.

Nevro expects its global revenue for the year 2022 to be between $415 million and $430 million, which represents a 7-11% increase from the figure published in 2021. Zacks consensus estimate for the same is set at $429.9 million.

The global revenue forecast for 2022 also includes approximately $25-30 million in PDN revenue.

Our opinion

Nevro ended the fourth quarter of 2021 with an online loss per share and better than expected revenue. The company recently received FDA approval for 10 kHz high-frequency spinal cord stimulation therapy for non-surgical refractory back pain, which adds to our optimism. The positive 12-month follow-up results of the SENZA-NSRBP randomized controlled trial and the SENZA-PDN randomized controlled trial are also encouraging. UnitedHealthcare’s recent favorable coverage decision for 10 kHz high-frequency therapy for the treatment of PDN is also promising.

On the other hand, the dismal performance of the top and bottom are concerning. The decline in global revenues due to weak domestic and international performance is disheartening. The contraction in the gross margin does not bode well either.

Zacks Ranking and Key Picks

Nevro currently carries a Zacks Rank #3 (Hold).

Some top-ranked stocks in the broader medical field that have announced quarterly results are AMN Healthcare Services, Inc. AMN, GlaxoSmithKline plc GSK and Henry Schein, Inc. HSIC.

AMN Healthcare, posting a Zacks No. 1 ranking (Strong Buy), reported Q4 2021 Adjusted EPS of $2.95, which beat the Zacks consensus estimate by 14.3%. Revenue of $1.36 billion exceeded the consensus mark by 0.5%. You can see the full list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings have exceeded estimates for the past four quarters, with the average surprise being 20%.

GlaxoSmithKline, carrying a Zacks Rank #2 (Buy), reported fourth quarter 2021 adjusted earnings of 69 cents per U.S. Depositary Share, which beat the Zacks consensus estimate of 9.5%. Revenue of $13 billion exceeded the consensus mark of 3%.

GlaxoSmithKline has an estimated long-term growth rate of 6.8%. GSK’s earnings beat estimates in three of the last four quarters, with the average surprise being 20.5%.

Henry Schein reported Q4 2021 Adjusted EPS of $1.07, which beat Zacks’ consensus estimate by 18.9%. Fourth-quarter revenue of $3.33 billion beat Zacks’ consensus estimate by 4.7%. He currently has a No. 1 Zacks rank.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings have exceeded estimates for the past four quarters, with the average surprise being 25.5%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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