Yahoo Finance Why Is Nevro (NVRO) Down 8.8% Since Last Earnings Report?
It has been about a month since the last earnings report for Nevro (NVRO). Shares have lost about 8.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Nevro due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Nevro's Q1 Earnings and Sales Top Estimates, Margins Up
Nevro reported a loss per share of 70 cents in the first quarter of 2024 compared with the year-ago quarter’s loss of 98 cents. The metric beat the Zacks Consensus Estimate by 31.37%.
Revenues in Detail
Nevro registered worldwide revenues of $101.9 million in the first quarter, up 5.8% year over year on a reported basis and 5.6% on a constant-currency basis. The year-over-year growth was largely driven by a product mix shift to Nevro’s latest generation SCS platform, HFX iQ, as well as an increased number of long-term Nevro patients who are now suitable candidates for replacement devices. The figure topped the Zacks Consensus Estimate by 3.56%.
Full-Years Results
Nevro recorded worldwide total revenues of $425.2 million in 2023, up 5.0% year over year. Adjusted loss per share for 2023 was $2.56 against the earnings per share of 8 cents year over year.
Quarterly Highlights
In the quarter under review, international revenues were $14.9 million, up 6.1% year over year on a reported basis and up 4.7% at constant exchange rate (CER).
U.S. revenues for the quarter totaled $87 million, up 5.7% year over year. The year-over-year increase was primarily due to the rising adoption of HFX iQ and a higher number of patients who returned to replace their legacy Nevro SCS implant with an updated Nevro device.
Total U.S. permanent implant procedures were flat, while U.S. trial procedures decreased 5.1%. The year-over-year decrease in U.S. trials was primarily driven by softness in U.S. SCS trialing activity in the first quarter of 2024, which led to lower trial procedures they performed in the quarter.
Nevro is focusing on efforts to drive increased adoption of HFX iQ, which brings a multitude of benefits to the patient and physician. HFX iQ represented 58% of Nevro’s total permanent implants in the first quarter, a 5% increase from the fourth quarter of 2023.
In February, Nevro announced the FDA 510(k) clearance for Nevro1 without the need to include the NevroFix group.
In January 2024, Nevro implemented restructuring, including laying off 5% of its workforce, a vast majority of which affected internally focused employees and non-customer-facing personnel in the field.
Margin Trend
In the quarter under review, Nevro’s gross profit rose 10.7% year over year to $71.5 million. The gross margin increased 310 basis points to 70.2%. The year-over-year improvement in gross margin was driven primarily by a shift to higher-margin products sourced out of the company's Costa Rica manufacturing facility.
Sales, general & administrative expenses increased 2.5% to $88.3 million. Research and development expenses remained almost flat at $14.8 million. Operating expenses for the first quarter of 2024 include a $5.5 million charge related to the company's restructuring that was announced in January 2024, as well as items related to the November 2023 acquisition of Vyrsa.
The total operating loss in the reported quarter was $35.8 million ($26.1 million excluding restructuring and Vyrsa-related acquisition charges) compared with $36.3 million in the year-ago quarter.
Financial Position
Nevro exited the first quarter of 2024 with cash and cash equivalents and short-term investments of $281.5 million compared with $322.7 million at the end of the fourth quarter. Long-term debt at the end of first-quarter 2024 was $214.8 million compared with $211.5 million at the fourth-quarter end.
Guidance
Nevro has provided its financial outlook for full-year and second-quarter 2024.
For the second quarter of 2024, Nevro expects its worldwide revenues in the range of $106 million-$108 million, reflecting growth of 2-4% year over year on a reported basis. The Zacks Consensus Estimate is pegged at $111.9 million.
The company expects its 2024 worldwide revenues in the range of $435 million-$445 million, reflecting growth of 2.3-4.6% from the comparable figure of 2023 both on a reported basis and at CER. The Zacks Consensus Estimate is pegged at $442.2 million.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates revision.
VGM Scores
Currently, Nevro has a subpar Growth Score of D, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Nevro has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
Nevro belongs to the Zacks Medical - Instruments industry. Another stock from the same industry, Integer (ITGR), has gained 6.8% over the past month. More than a month has passed since the company reported results for the quarter ended March 2024.
Integer reported revenues of $414.81 million in the last reported quarter, representing a year-over-year change of +9.5%. EPS of $1.14 for the same period compares with $0.87 a year ago.
Integer is expected to post earnings of $1.24 per share for the current quarter, representing a year-over-year change of +8.8%. Over the last 30 days, the Zacks Consensus Estimate has changed +0%.
Integer has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of B.
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