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Nevro (NVRO) Q4 Loss Wider Than Expected, Revenues Beat

Zacks

Nevro Corp.’s NVRO fourth-quarter 2018 adjusted loss per share was 32 cents, wider than the Zacks Consensus Estimate of a loss of 17 cents. Notably, the year-ago quarter’s loss per share was 15 cents.

For 2019, Nevro expects revenues of $400-$410 million. The mid-point of $405 million of the guided range lies slightly below the Zacks Consensus Estimate of $405.8 million. Following the earnings announcement, shares of this Zacks Rank #4 (Sell) company fell 7.5% to close at $43.85 on Mar 13.

Fourth-quarter revenues totaled $107.9 million, edging past the Zacks Consensus Estimate of $107 million. Revenues improved 10.2% year over year.

2018 at a Glance


Full-year revenues totaled $387.3 million, up 18.6% from 2017.

2018 adjusted loss per share was $1.64 compared with a loss of $1.25 of 2017.

Nevro Corp. Price, Consensus and EPS Surprise

Nevro Corp. Price, Consensus and EPS Surprise | Nevro Corp. Quote

Quarter Highlights

In the quarter under review, international revenues were $16.3, up 1% at constant currency (cc). Per management, results were driven by robust demand for the company’s flagship H10 therapy.

U.S. revenues for the quarter totaled $91.6 million, reflecting a 13% year-over-year increase on continued Senza system adoption.

Additionally, the company launched Senza II, a smaller-footprint, advanced battery system, and received FDA approval for Conditional Full Body MRI.

At the 21st Annual Meeting of the North American Neuromodulation Society, Nevro presented positive clinical trial results.

Margins

In the fourth quarter, gross profit totaled $76.2 million, up 9.6% year over year. As a percentage of revenues, gross margin in the quarter was 70.5%, down 50 basis points (bps).

Research and development expenses totaled $13.5 million, up 35.6% year over year.

Sales, general and administrative totaled $71.3 million, up 15.4%.

Total operating expenses in the quarter were $84.8 million, up 18.2%.

Operating loss of $8.6 million was significantly wider than the year-ago loss of $2.2 million.

Our Take

Nevro exited the fourth quarter on a tepid note. Loss per share widened on a year-over-year basis along with the issuance of a downbeat guidance for 2019. In fact, management expects growth in U.S. revenues to be partially offset by declines in international revenues. Contraction in gross margin adds to the woes.

On the bright side, surge in domestic and international revenues is promising. The company continues to gain from flagship platforms like H10 and Senza.

Earnings of MedTech Majors at a Glance

Some better-ranked MedTech stocks that delivered solid quarterly results are Varian Medical Systems VAR, Stryker Corporation SYK and CONMED Corporation CNMD. Notably, each of these stocks carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Varian reported first-quarter fiscal 2019 adjusted earnings per share of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million.

Stryker delivered fourth-quarter 2018 adjusted earnings per share of $2.18, beating the Zacks Consensus Estimate by 1.4%. Revenues of $3.80 billion were well ahead of the Zacks Consensus Estimate of $3.73 billion.

CONMED delivered fourth-quarter 2018 adjusted earnings per share of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million outshined the Zacks Consensus Estimate of $229.2 million.

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