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Nevro's (NVRO) Q4 Earnings in Line, Revenues Beat Estimates

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Nevro Corp.’s (NVRO - Free Report) reported loss per share of 86 cents for the fourth quarter of 2021, wider than the loss of 21 cents reported in the year-ago quarter. Loss per share was in line with the Zacks Consensus Estimate.

Full-year loss per share was $3.77, wider than the year-ago period’s loss of $2.47.

Revenues in Detail

Nevro registered revenues of $102.8 million in the fourth quarter, down 6.4% year over year. The figure surpassed the Zacks Consensus Estimate by 0.3%.

Worldwide revenues include approximately $4 million of Painful Diabetic Neuropathy (“PDN”) revenues.

Full-year revenues were $386.9 million, reflecting a 6.9% improvement from the year-ago period.

Quarterly Highlights

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

U.S. revenues for the quarter totaled $88.4 million, down 7% year over year. Total U.S. permanent implant procedures decreased 5%, while trial procedures increased 3%. Trial and permanent implant volumes were impacted by pandemic-related issues, particularly in the second half of December as the Omicron variant began to spread widely.

Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. Price, Consensus and EPS Surprise

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

Margin Trend

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

Sales, general & administrative expenses rose 23.2% to $82.6 million. Research and development expenses went up 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 with the total operating loss of $0.9 million in the year-ago quarter.

Financial Position

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

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

Guidance

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

The company projects first-quarter 2022 worldwide revenues in the range of $85-$87 million. The 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 strongly impacted by Omicron and other COVID-related issues, as well as the typical seasonal decrease from the fourth quarter to the first quarter.

Nevro expects its full-year 2022 worldwide revenues to be in the range of $415-$430 million, reflecting a 7-11% increase from the 2021 reported figure. The Zacks Consensus Estimate for the same is pegged at $429.9 million.

Full-year 2022 worldwide revenue guidance also includes approximately $25-$30 million of PDN revenues.

Our Take

Nevro exited the fourth quarter of 2021 with in-line loss per share and better-than-expected revenues. The company recently received FDA approval of 10 kHz high frequency spinal cord stimulation therapy for non-surgical refractory back pain, which raises our optimism. Positive 12-month follow-up results from the SENZA-NSRBP Randomized Controlled Trial and SENZA-PDN Randomized Controlled Trial are also encouraging. Recent favorable UnitedHealthcare coverage decision for high-frequency 10 kHz therapy for the treatment of PDN is also promising.

On the flip side, dismal top- and bottom-line performances are concerning. Lower worldwide revenues due to soft domestic and international performances are discouraging. Contraction of the gross margin also does not bode well.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader medical space that have announced quarterly results are AMN Healthcare Services, Inc. (AMN - Free Report) , GlaxoSmithKline plc (GSK - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .

AMN Healthcare, flaunting a Zacks Rank #1 (Strong Buy), reported fourth-quarter 2021 adjusted EPS of $2.95, which beat the Zacks Consensus Estimate by 14.3%. Revenues of $1.36 billion outpaced the consensus mark by 0.5%. You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has an estimated long-term growth rate of 16.2%. AMN’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 20%.

GlaxoSmithKline, carrying a Zacks Rank #2 (Buy), reported fourth-quarter 2021 adjusted earnings of 69 cents per American depositary share, which beat the Zacks Consensus Estimate by 9.5%. Revenues of $13 billion outpaced the consensus mark by 3%.

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

Henry Schein reported fourth-quarter 2021 adjusted EPS of $1.07, which surpassed the Zacks Consensus Estimate by 18.9%. Fourth-quarter revenues of $3.33 billion outpaced the Zacks Consensus Estimate by 4.7%. It currently has a Zacks Rank #1.

Henry Schein has an estimated long-term growth rate of 11.8%. HSIC’s earnings surpassed estimates in the trailing four quarters, the average surprise being 25.5%.