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Nevro (NVRO) Q2 Earnings Beat Estimates, FY22 View Revised

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Nevro Corp. (NVRO - Free Report) reported loss per share of 71 cents for the second quarter of 2022, wider than the loss of 62 cents reported in the year-ago quarter. Loss per share was narrower than the Zacks Consensus Estimate of a loss of 81 cents.

Revenues in Detail

Nevro registered revenues of $104.2 million in the second quarter, up 1.8% year over year on a reported basis. The figure, however, missed the Zacks Consensus Estimate by 0.4%.

At constant exchange rate (CER), revenues were up 4% year over year.

Worldwide revenues include approximately $11 million of Painful Diabetic Neuropathy (PDN) revenues.

Quarterly Highlights

In the quarter under review, international revenues were $15.2 million, down 12% year over year on a reported basis and 3% at CER. International revenues, especially in the UK and Australia, continued to be impacted by COVID-related issues throughout the quarter.

U.S. revenues for the quarter totaled $89 million, up 5% year over year. Total U.S. permanent implant procedures increased 8%, while U.S. trial procedures increased 14%.

U.S. PDN trial procedures grew by 45% sequentially.

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 rose 3.9% to $72.7 million. Gross margin expanded 140 basis points (bps) to 69.8%.

Sales, general & administrative expenses rose 13.7% to $83.9 million. Research and development expenses went up 5.8% year over year to $12.6 million. Total operating expenses of $96.5 million increased 12.6% year over year.

Operating loss in the reported quarter totaled $23.8 million compared with total operating loss of $15.8 million in the year-ago quarter.

Financial Position

Nevro exited second-quarter 2022 with cash and cash equivalents, and short-term investments of $310.8 million compared with $323.6 million at the end of first quarter. Long-term debt at the end of second-quarter 2022 was $186.3 million compared with $185.9 million at the end of first quarter.

As of Jun 30, 2022, 290,000,000 shares were authorized, 36,063,723 shares issued and 35,380,807 shares were outstanding.

Guidance

Nevro issued its financial outlook for the third quarter of 2022 and revised the same for the full year.

The company projects third-quarter 2022 worldwide revenues in the range of $97 million-$101 million, reflecting growth of 4-8% over the prior-year period.

The third-quarter outlook assumes that economic recovery will continue to steadily improve in the quarter.

Nevro now expects its full-year 2022 worldwide revenues to be in the range of $400 million-$410 million (reflecting growth of 3-6% from the comparable reported figure of 2021), lowered from the earlier projections of $415-$430 million (reflecting a 7-11% increase from the 2021 reported figure). The Zacks Consensus Estimate for the same is pegged at $423.2 million.

Full-year revenue growth at CER is likely to be 7-12% over comparable 2021 figures, wider than the previous growth projection of 8-12%.

Full-year 2022 worldwide revenue guidance includes approximately $42 million-$45 million of PDN revenues, up from the previous projection of $27-$32 million.

Our Take

Nevro exited the second quarter of 2022 with better-than-expected earnings. Improvement in overall top line and robust domestic revenues are impressive. Uptick in total U.S. permanent implant procedures and U.S. trial procedures are promising. Sequential improvement in U.S. PDN trial procedures is encouraging. The company, during the quarter, announced more positive payer coverage updates for treatment of PDN from Several Blue Cross Blue Shield Insurers, which raises our optimism.

Positive 24-month data reflecting significant and durable benefits of Nevro's HFX 10 kHz Therapy in PDN patients and newly released clinical data demonstrating substantial improvement in overall health-related quality of life in patients with PDN treated with Nevro HFX 10 kHz Therapy are also encouraging. Expansion of the gross margin also bodes well.

On the flip side, lower-than-expected revenues and dismal bottom-line performances are concerning. Lower international revenues are discouraging as well. Sustained operating loss incurred by Nevro also raises our apprehension.

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 Quest Diagnostics Incorporated (DGX - Free Report) , Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, and Alkermes plc (ALKS - Free Report) .

Quest Diagnostics, carrying a Zacks Rank #2 (Buy), reported second-quarter 2022 adjusted EPS of $2.36, which beat the Zacks Consensus Estimate by 9.8%. Revenues of $2.45 billion outpaced the consensus mark by 7.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Quest Diagnostics has an earnings yield of 6.9% compared with the industry’s 3.8%. DGX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, the average being 12.1%.

BD, having a Zacks Rank #2, reported third-quarter fiscal 2022 adjusted EPS of $2.66, which beat the Zacks Consensus Estimate by 6.8%. Revenues of $4.64 billion outpaced the consensus mark by 4%.

BD has an estimated long-term growth rate of 6.6%. BDX’s earnings surpassed estimates in all the trailing four quarters, the average being 11.9%.

Alkermes reported second-quarter 2022 adjusted EPS of 6 cents, which surpassed the Zacks Consensus Estimate by 50%. Second-quarter revenues of $276.2 million outpaced the Zacks Consensus Estimate by 1.1%. It currently has a Zacks Rank #2.

Alkermes has an estimated long-term growth rate of 24.9%. ALKS’s earnings surpassed estimates in all the trailing four quarters, the average being 325.5%.