Nevro (NVRO) 6 Aug 24 2024 Q2 Earnings call transcript

Nevro Corporation, a leading player in the neuromodulation industry, recently held its second quarter 2024 earnings call, shedding light on the company's financial performance and strategic direction. The call, led by Vice President of Investor Relations and Corporate Communications, Angie McCabe, provided valuable insights into the company's challenges, opportunities, and outlook for the future.

Key Financial Highlights

Nevro reported a decrease in worldwide revenue of 4.3% on a reported basis and U.S. revenue of 2.4% for the second quarter of 2024 compared to the same period last year. This decline was attributed to a 9.5% decrease in U.S. spinal cord stimulation (SCS) trial procedures. However, the company managed to achieve a positive adjusted EBITDA of $3 million in the second quarter, a significant improvement from a loss in the previous year. Nevro also ended the quarter with over $270 million in cash and investments on its balance sheet.

Strategic Initiatives and Market Challenges

Nevro's CEO and President, Kevin Thornal, discussed the company's strategic initiatives to address the challenges of softness in the SCS market. These efforts include diversifying the business beyond SCS and improving commercial execution. The company has acquired a sacroiliac joint fusion (SI joint) business and implemented a strategic pillar to expand into adjacent markets. Thornal acknowledged the increased competition in the SCS market and the impact of newer treatment options on delaying SCS therapy. However, he remains optimistic about Nevro's long-term prospects, citing the company's best-in-class therapy and the potential for growth in pain management markets.

Financial Guidance and Future Outlook

Roderick MacLeod, Nevro's Chief Financial Officer, provided a detailed financial update, including a revised full-year 2024 revenue guidance of approximately $400 million to $405 million, a decrease from the previous guidance. This revision is due to the impact of market headwinds and the company's efforts to optimize its sales territories. MacLeod also outlined cost-saving measures, including restructuring efforts and the transition to in-house manufacturing in Costa Rica, which is expected to contribute to improved profitability.

Competitive Landscape and Diversification

Nevro's earnings call highlighted the competitive dynamics in the neuromodulation market, with two large competitors launching new products and new entrants like Saluda and Biotronik. The company is focusing on its R&D pipeline, particularly its next-generation SCS therapy, to differentiate itself and drive growth. Nevro is also diversifying its business beyond SCS, with the acquisition of a SI joint fusion business and a focus on expanding into adjacent markets.

Investor Questions and Analyst Insights

The call featured a Q&A session with analysts, who sought clarification on Nevro's strategic review, full-year guidance, and competitive dynamics. Kevin Thornal and Roderick MacLeod provided insights into the company's plans for growth, including the launch of new products and the expansion of its sales force. The call also touched on the impact of pricing on Nevro's financial performance and the company's efforts to maintain a premium position in the market.

Conclusion

Nevro Corporation's Q2 2024 earnings call underscored the company's resilience in the face of market challenges and its strategic initiatives to diversify and grow beyond SCS. The company's focus on innovation, cost savings, and operational efficiency, along with its strong financial position, positions it well for the future. Nevro's outlook for the remainder of 2024 and beyond is cautiously optimistic, with a focus on executing its strategic plan and driving long-term profitable growth.