Nevro Corp. (NYSE:NVRO) Q3 2020 Earnings Conference Call November 5, 2020 4:30 PM ET Company Participants Keith Grossman - Chairman, Chief Executive Officer & President Roderick MacLeod - Chief Financial Officer Conference Call Participants Lawrence Biegelsen - Wells Fargo Securities Robert Marcus - JPMorgan Chase & Co. David Lewis - Morgan Stanley Robert Hopkins - Bank of America Merrill Lynch Danielle Antalffy - SVB Leerink Joanne Wuensch - Citigroup Kaila Krum - Truist Securities Margaret Kaczor - Willia ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36715 Nevro Corp. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 56-2568057 ( ...

Nevro Corp (NYSE:NVRO) Q2 2020 Earnings Conference Call August 5, 2020 4:30 PM ET Company Participants Juliet Cunningham - VP, IR Keith Grossman - Chairman, CEO & President Roderick MacLeod - CFO Conference Call Participants Lawrence Biegelsen - Wells Fargo Securities Robert Marcus - JPMorgan Chase & Co. David Lewis - Morgan Stanley Margaret Kaczor - William Blair & Company Robert Hopkins - Bank of America Merrill Lynch Joanne Wuensch - Citigroup Danielle Antalffy - SVB Leerink Kaila Krum - Truist Securitie ...

[PART I—FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%E2%80%94FINANCIAL%20INFORMATION) This section provides Nevro Corp.'s financial statements, management's discussion, market risk disclosures, and controls and procedures [Item 1. Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements) Nevro Corp.'s unaudited condensed consolidated financial statements for Q2 2020 and year-to-date are presented, detailing balance sheets, operations, cash flows, and notes [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2020, total assets increased to **$753.2 million**, driven by cash and investments, with liabilities and equity also rising Condensed Consolidated Balance Sheets (in thousands) | | June 30, 2020 (in thousands) | December 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $716,937 | $422,052 | | **Total Assets** | $753,172 | $469,645 | | **Total Current Liabilities** | $220,768 | $70,611 | | **Total Liabilities** | $378,744 | $253,293 | | **Total Stockholders' Equity** | $374,428 | $216,352 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q2 2020 revenue decreased to **$56.4 million**, resulting in a **$41.1 million** net loss, with six-month revenue also declining to **$143.9 million** Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric (in thousands) | Q2 2020 | Q2 2019 | Six Months 2020 | Six Months 2019 | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | $56,390 | $93,571 | $143,857 | $175,719 | | **Gross Profit** | $35,250 | $63,943 | $95,797 | $117,152 | | **Loss from Operations** | $(35,361) | $(26,560) | $(58,428) | $(68,814) | | **Net Loss** | $(41,063) | $(28,021) | $(65,951) | $(72,097) | | **Net Loss Per Share** | $(1.21) | $(0.91) | $(2.00) | $(2.36) | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2020, operating cash use improved to **$22.0 million**, investing cash use increased, and financing cash provided surged to **$341.0 million** Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity (in thousands) | Six Months Ended June 30, 2020 | Six Months Ended June 30, 2019 | | :--- | :--- | :--- | | **Net cash used in operating activities** | $(22,004) | $(33,377) | | **Net cash provided by (used in) investing activities** | $(107,626) | $37,222 | | **Net cash provided by financing activities** | $341,005 | $7,695 | | **Net increase (decrease) in cash** | $211,142 | $11,546 | [Notes to Condensed Consolidated Financial Statements](index=7&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, COVID-19 impact, debt instruments, lease accounting, fair value measurements, and updates on legal proceedings, especially with Boston Scientific - The company has a history of net losses, incurring a net loss of **$66.0 million** and using **$22.0 million** in cash from operations in the first six months of 2020[19](index=19&type=chunk) - The COVID-19 pandemic has negatively impacted operations and revenues by decreasing the number of Senza system procedures performed, as many elective surgeries were suspended or canceled[23](index=23&type=chunk)[24](index=24&type=chunk) - In April 2020, the company issued **$189.8 million** in 2.75% convertible senior notes due 2025 and completed a public offering of common stock, raising net proceeds of approximately **$183.6 million** and **$147.1 million**, respectively[19](index=19&type=chunk)[123](index=123&type=chunk) - The company is involved in multiple patent infringement lawsuits with Boston Scientific. A recent Federal Circuit ruling vacated a lower court's judgment of invalidity on some of Nevro's patents, reinstating the claims[107](index=107&type=chunk)[110](index=110&type=chunk)[111](index=111&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting significant Q2 and H1 2020 revenue decline due to COVID-19, withdrawal of 2020 guidance, and strengthened liquidity [Overview and COVID-19 Impact](index=25&type=section&id=Overview%20and%20COVID-19%20Impact) Nevro, a medical device company, experienced negative COVID-19 impact on Senza SCS procedures and revenue, leading to the withdrawal of 2020 annual guidance - The COVID-19 outbreak has negatively impacted operations and revenues by decreasing the number of Senza systems procedures performed, as healthcare organizations prioritized COVID-19 treatment and suspended elective procedures[145](index=145&type=chunk)[146](index=146&type=chunk) - The company has withdrawn its previously announced annual guidance for 2020 due to the continued uncertainties resulting from the COVID-19 pandemic[148](index=148&type=chunk) - In April 2020, the company raised approximately **$183.7 million** from an offering of convertible senior notes due 2025 and **$147.2 million** from a public offering of common stock[143](index=143&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Q2 2020 revenue decreased **40%** to **$56.4 million** due to COVID-19, with gross margin falling to **63%** and operating expenses decreasing Results of Operations - Q2 (in thousands) | Metric (in thousands) | Q2 2020 | Q2 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $56,390 | $93,571 | -40% | | U.S. Revenue | $51,000 | $78,100 | -35% | | International Revenue | $5,400 | $15,500 | -65% | | **Gross Profit** | $35,250 | $63,943 | -45% | | **Gross Margin** | 63% | 68% | -5 p.p. | Results of Operations - Six Months (in thousands) | Metric (in thousands) | Six Months 2020 | Six Months 2019 | % Change | | :--- | :--- | :--- | :--- | | **Revenue** | $143,857 | $175,719 | -18% | | U.S. Revenue | $126,300 | $143,900 | -12% | | International Revenue | $17,500 | $31,800 | -45% | | **Gross Profit** | $95,797 | $117,152 | -18% | | **Gross Margin** | 67% | 67% | 0 p.p. | - The decrease in revenue for both the three and six-month periods was a result of a worldwide decline in procedure volume due to the COVID-19 pandemic[175](index=175&type=chunk)[184](index=184&type=chunk) - Sales, General and Administrative (SG&A) expense decreased by **$15.4 million** (**20%**) in Q2 2020 compared to Q2 2019, primarily due to lower personnel costs, travel, and healthcare professional-related expenses[178](index=178&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2020, Nevro held **$562.3 million** in cash and investments, boosted by **$313.3 million** from April 2020 offerings, ensuring liquidity for 12 months - As of June 30, 2020, the company had cash, cash equivalents, and short-term investments of **$562.3 million**[193](index=193&type=chunk) - In April 2020, the company raised a total of **$313.3 million** in net proceeds from concurrent offerings of common stock and convertible senior notes due 2025[193](index=193&type=chunk) - Net cash used in operating activities for the first six months of 2020 was **$22.0 million**, an improvement from **$33.4 million** in the same period of 2019[198](index=198&type=chunk) - Management expects that current cash reserves will be sufficient to fund operations for at least the next 12 months[193](index=193&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rates, foreign currency exchange, and convertible notes, with interest rate risk on short-term investments considered insignificant - The company's primary market risk exposures are interest rate sensitivity, foreign currency exchange fluctuations, and market risk associated with its convertible senior notes[208](index=208&type=chunk)[211](index=211&type=chunk)[213](index=213&type=chunk) - Exposure to interest rate risk is considered not significant because investments are primarily short-term in duration[210](index=210&type=chunk) - A portion of revenue and operating expenses are denominated in foreign currencies, subjecting the company to transaction gains and losses from exchange rate fluctuations. A hypothetical **10%** change in exchange rates would have an immaterial impact on net loss[211](index=211&type=chunk) [Item 4. Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting - Based on an evaluation as of June 30, 2020, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level[215](index=215&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[216](index=216&type=chunk) [PART II—OTHER INFORMATION](index=37&type=section&id=PART%20II%E2%80%94OTHER%20INFORMATION) This section details ongoing legal proceedings, significant risk factors, and information regarding unregistered sales of equity securities [Item 1. Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) This section details ongoing patent infringement lawsuits with Boston Scientific, a settlement with Stimwave, and a new lawsuit against Nalu Medical - Nevro is engaged in ongoing patent infringement litigation with Boston Scientific. In April 2020, the U.S. Court of Appeals for the Federal Circuit vacated a lower court's judgment of invalidity, reinstating Nevro's asserted system claims[218](index=218&type=chunk)[220](index=220&type=chunk) - Boston Scientific has also filed two lawsuits against Nevro in Delaware, alleging patent infringement, trade secret misappropriation, and tortious interference. These cases have been partially stayed and consolidated, with a trial scheduled for October 2021[221](index=221&type=chunk)[222](index=222&type=chunk) - In February 2020, Nevro and Stimwave Technologies settled a lawsuit, with Stimwave agreeing to a permanent injunction to cease commercialization of all high-frequency spinal cord stimulation systems worldwide[223](index=223&type=chunk) - Nevro filed a new lawsuit for patent infringement against Nalu Medical, Inc. in February 2020[224](index=224&type=chunk) [Item 1A. Risk Factors](index=38&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks including COVID-19 impact, market acceptance of HF10 therapy, intense competition, supply chain reliance, product liability, IP litigation, financial losses, and regulatory oversight - The COVID-19 pandemic has harmed and may continue to harm the business by decreasing the number of Senza system procedures, as elective surgeries are suspended or cancelled[227](index=227&type=chunk) - The company faces significant competition from large, well-established medical device companies like Medtronic, Boston Scientific, and Abbott Laboratories, which have substantially greater resources[240](index=240&type=chunk)[243](index=243&type=chunk) - The company is involved in expensive and time-consuming lawsuits to protect its intellectual property, which could result in the diversion of significant resources and hinder growth[235](index=235&type=chunk) - Dependence on third-party, and in some cases sole-source, suppliers for critical components makes the company vulnerable to supply shortages, price fluctuations, and manufacturing problems[271](index=271&type=chunk)[276](index=276&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=70&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities during the period - There were no unregistered sales of equity securities in the period[399](index=399&type=chunk)

Nevro Corp (NYSE:NVRO) Q1 2020 Earnings Conference Call May 5, 2020 4:30 PM ET Company Participants Juliet Cunningham - Vice President of Investor Relations Keith Grossman - Chairman, CEO & President Andrew Galligan - Chief Financial Officer Conference Call Participants Larry Biegelsen - Wells Fargo Securities Joanne Wuensch - Citigroup Robert Hopkins - Bank of America Merrill Lynch David Lewis - Morgan Stanley David Rescott - SunTrust Robinson Humphrey Robert Marcus - JPMorgan Chase & Co. David Turkaly - J ...

Nevro First Quarter 2020 Earnings Presentation May 5, 2020 1 IIIIIII nevro Forward-Looking Statements In addition to historical information, this press release contains forward-looking statements reflecting the current beliefs and expectations of management made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including the Company's expectations for the return of SCS procedural volumes. These forward-looking statements are based upon information that is curren ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2020 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36715 Nevro Corp. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 56-2568057 (I.R. ...

Market Overview - The global SCS market in 2019 was estimated at approximately $2.5 billion, with the United States comprising about 80% of this market[170]. - Worldwide revenue increased from $23.5 million for the year ended December 31, 2013, to $390.3 million for the year ended December 31, 2019, driven primarily by sales of Senza products in the U.S.[187]. - The company does not expect to continue historic rates of revenue growth in the U.S. or worldwide due to various market pressures and reimbursement constraints[187]. Competition and Market Challenges - The company faces competition from established players with strong relationships in the market, which may hinder its ability to gain market share[162]. - The company faces significant competition from established players like Medtronic, Boston Scientific, and Abbott Laboratories, which have launched new products and systems in the neuromodulation market[175]. - The competitive landscape includes emerging companies that may develop more effective or less expensive products, posing a risk to the company's market position[176]. - The company’s ability to secure effective patent protection is critical, as failure to do so may allow competitors to market similar products without incurring significant development costs[167]. - The company anticipates that competitors may conduct clinical trials that could yield results comparable to or better than its own pivotal U.S. trial[172]. Product Development and Clinical Trials - The company is conducting clinical trials for the Senza device to explore HF10 therapy for chronic pain indications, including chronic upper limb and neck pain, painful neuropathies, and non-surgical refractory back pain[224]. - Clinical trials are necessary for PMA applications and may require large subject enrollments, which can be challenging to maintain[224]. - The company may need to conduct additional clinical studies to support new product approvals, which can be time-consuming and costly[224]. Financial Performance and Risks - The company incurred net losses of $103.7 million, $49.2 million, and $36.7 million for the years ended December 31, 2019, 2018, and 2017, respectively, with an accumulated deficit of $409.8 million as of December 31, 2019[178]. - The gross profit from Senza products is currently insufficient to cover operating expenses, necessitating a reduction in per-unit manufacturing costs to achieve profitability[179]. - The company may face substantial costs related to patent litigation, which could impact financial performance and operational focus[259]. - Quarterly revenue and operating results may fluctuate significantly, influenced by various factors including commercialization costs and market acceptance of products[259]. Regulatory Compliance and Legal Risks - The company is subject to extensive FDA regulations, and failure to maintain FDA approval could significantly impact its ability to market and sell Senza[190][192]. - The company is involved in ongoing litigation to protect its intellectual property, which could divert resources and impact growth[165]. - The company is involved in ongoing litigation with Boston Scientific regarding patent infringement, which could divert resources and impact commercialization efforts[233]. - Regulatory compliance failures could lead to severe consequences, including product recalls and loss of regulatory approvals, adversely affecting the company's business[273]. Intellectual Property and Patent Issues - The company may need to enter cross-license agreements with competitors, potentially compromising the value of its intellectual property[174]. - Competitors like Medtronic, Boston Scientific, and Abbott Laboratories have substantial patent portfolios that may hinder the company's ability to market its products[234]. - The company may incur significant legal expenses and damages if found infringing on third-party intellectual property rights, which could strain financial resources[241]. - The company faces challenges in protecting its intellectual property rights globally, as patent laws and enforcement vary significantly across jurisdictions[247]. Supply Chain and Manufacturing - The company is dependent on third-party suppliers, some of which are sole-source, making it vulnerable to supply shortages and price fluctuations[205]. - The company must improve manufacturing efficiency and reduce costs to achieve profitability, which is dependent on increased sales volume[179]. - The company has experienced inventory write-downs due to products not meeting requirements, which could adversely affect earnings and cash flows[262]. International Operations and Currency Risks - As of December 31, 2019, the company sells Senza directly in 10 countries and through distributors in 7 additional countries, exposing it to international operating risks[198]. - The company faces risks in foreign jurisdictions, including difficulties in enforcing intellectual property rights and pricing pressures[200]. - The company faces risks associated with currency fluctuations, particularly with revenues and expenses denominated in Euros, British Pounds, and Australian Dollars, which could materially impact reported results[266]. Management and Human Resources - Retaining key executives and recruiting new employees is critical for the company's future success, as turnover could adversely affect operations and financial results[228]. - The company must manage anticipated growth effectively to avoid adverse effects on its development and commercialization goals[215]. Future Outlook and Funding - Future funding may be necessary to support commercialization and R&D efforts, with potential challenges in raising funds on favorable terms[255]. - The company anticipates substantial cash expenditures for commercialization efforts, including the growth of its sales force and regulatory approvals for its HF10 therapy[254]. Stock and Investor Relations - The company is subject to significant volatility in its stock price, which may affect the value of its convertible notes and overall market perception[313]. - The company does not currently intend to pay dividends on its common stock for the foreseeable future, relying on stock price appreciation for shareholder returns[337].

Revenue and Growth - The company reported total revenue of $387.3 million for the year ended December 31, 2018, up from $326.7 million in 2017, indicating a growth of approximately 18.5% year-over-year[125]. - U.S. sales revenue for Q3 2019 was $84.2 million, a 6.5% increase compared to $79.6 million in Q3 2018[124]. - Revenue increased to $100.2 million for the three months ended September 30, 2019, up 5% from $95.6 million in the same period of 2018[153]. - U.S. revenue for the same period was $84.2 million, a 6% increase from $79.6 million in 2018, driven by growth in SCS procedures[153]. - Revenue for the nine months ended September 30, 2019, decreased to $275.9 million, down 1% from $279.3 million in 2018[162]. Expenses and Financial Performance - Total operating expenses for the three months ended September 30, 2019, were $85.9 million, representing 86% of revenue, up from 80% in 2018[156]. - R&D expenses increased to $13.0 million, a 4% rise from $12.5 million in 2018, primarily due to higher personnel and clinical expenses[156]. - SG&A expenses rose to $72.9 million, a 14% increase from $64.0 million in 2018, mainly due to increased personnel costs[157]. - Total operating expenses for the nine months were $271.9 million, representing 99% of revenue, up from 82% in 2018[164]. - SG&A expenses increased to $229.8 million for the nine months ended September 30, 2019, up 18% from $195.3 million in the same period of 2018, primarily due to increased personnel costs[165]. - Gross profit rose to $69.9 million, a 4% increase from $67.2 million in 2018, with a steady gross margin of 70%[155]. - Gross margin decreased to 68% for the nine months ended September 30, 2019, down from 71% in 2018, impacted by inventory write-downs and reduced average selling prices[163]. Investments and Development - The company plans to continue investments in the development of the Senza product platform and HF10 therapy, alongside ongoing R&D programs and clinical trials[171]. - The company has made significant investments in building its U.S. commercial infrastructure and sales force, which is critical for achieving expected growth rates[133]. Market and Competition - The global spinal cord stimulation (SCS) market is estimated to be approximately $2.4 billion, with the company aiming to expand its market share by treating both back and leg pain without paresthesia[122]. - The company faces significant competition in the neuromodulation market from established players like Medtronic, Boston Scientific, and Abbott Laboratories[173]. - The company experienced a slowdown in revenue growth in international markets, with expectations of minimal growth due to reimbursement constraints and market pressures[135]. Financial Position and Cash Flow - The company has accumulated a deficit of $396.0 million as of September 30, 2019, primarily due to investments in product development and commercialization efforts[125]. - Net cash used in operating activities was $36.8 million for the nine months ended September 30, 2019, compared to $10.7 million in the same period of 2018, driven by net losses of $89.9 million[175]. - Cash and cash equivalents, along with short-term investments, totaled $232.8 million as of September 30, 2019, expected to fund operations for at least the next 12 months[170]. - Cash provided by financing activities was $10.7 million for the nine months ended September 30, 2019, primarily from the issuance of common stock to employees[177]. Supply Chain and Inventory - The company relies on third-party suppliers for all components of its products, which poses risks related to supply chain management and inventory obsolescence[126]. - The company has recorded an excess raw materials charge of $3.6 million for the nine months ended September 30, 2019, due to inventory management challenges[131]. - Cost of revenue for the nine months increased to $88.8 million, an 8% rise from $82.2 million in 2018, largely due to inventory write-downs[163]. Financing and Debt - The company may seek additional funding through equity or debt financings to support commercialization and R&D activities[172]. - The company issued $172.5 million in aggregate principal amount of 1.75% convertible senior notes due 2021[190]. - The fair value of the convertible senior notes is influenced by interest rate risk and market risk due to the convertible feature[190]. - The fair value generally increases as the common stock price increases and decreases as the common stock price declines[190]. - Changes in interest and market value affect the fair value of the convertible senior notes but do not impact financial position, cash flows, or results of operations[190]. - The convertible senior notes are carried at face value less unamortized discount on the balance sheet[190]. - Fair value is presented for required disclosure purposes only[190].

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number: 001-36715 Nevro Corp. (Exact name of registrant as specified in its charter) (State or other jurisdiction of incorporation or organization) Delaware 56-2568057 (I.R.S ...