Nevro(US:NVRO)2022-05-07 18:03Financial Data and Key Metrics Changes - In Q1 2022, worldwide revenue was $87.8 million, a 1% decrease year-over-year, but flat on a constant currency basis compared to $88.6 million in the prior year [35] - U.S. revenue decreased by 2% to $73.2 million compared to $74.7 million in the prior year, but increased by 11% compared to $65.8 million in Q1 2019 [36] - International revenue was $14.6 million, a 5% increase year-over-year, but a 10% decrease compared to Q1 2019 [37] - Gross profit decreased by 5% to $59.1 million, with gross margin dropping to 67.3% from 70.3% in the prior year [38] - Net loss from operations was $32.8 million, compared to a loss of $22.5 million in the prior year [40] - Cash and short-term investments totaled $323.6 million, a decrease of $38.4 million during Q1 2022 [41] Business Line Data and Key Metrics Changes - Total U.S. permanent implant procedures increased by 2% year-over-year and 14% compared to Q1 2019, while trial procedures increased by 10% year-over-year and 13% compared to Q1 2019 [11] - PDN trials grew 47% sequentially compared to Q4 2021, representing approximately 11% of total U.S. trial volume [12][13] - PDN contributed approximately $6 million in revenue, representing 7% of total permanent implant procedures worldwide [35] Market Data and Key Metrics Changes - The addressable U.S. PDN population coverage increased to approximately 43% from 25% at the end of 2021 due to positive decisions from UnitedHealthcare and Medicare [20] - The NSRBP market is estimated to have approximately 0.5 million patients annually in the U.S. who are not candidates for surgery [25] Company Strategy and Development Direction - The company is focused on expanding its PDN referral territories and hiring additional sales representatives, aiming to have 45 to 50 PDN reps by the end of Q2 [14] - The strategy includes enhancing patient and physician education to drive adoption of SCS therapy for PDN and NSRBP [27][28] - The company plans to leverage its peer-reviewed data and FDA approvals to broaden commercial payer coverage for NSRBP [28] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about a durable recovery in the market, with expectations for solid revenue growth in the second half of the year [9][31] - The company anticipates a steady recovery in the SCS market, with guidance for Q2 2022 revenue of approximately $103 million to $106 million [45] - Management highlighted the importance of ongoing investments in PDN and NSRBP as key growth drivers [49] Other Important Information - The company adopted a new accounting standard that increased long-term debt by $34.3 million but is expected to lower interest expenses by approximately $2.3 million per quarter [42][43] - The company is preparing for the launch of a new product platform by the end of the year and has made significant investments in manufacturing capacity in Costa Rica [32] Q&A Session Summary Question: Clarification on full-year revenue guidance and PDN outlook - Management indicated that the slight trimming of core SCS outlook is due to conservatism stemming from the unpredictable COVID environment [54] Question: Trends in U.S. trial procedure mix and drivers for PDN trials - Management noted that PDN trials are expected to continue growing due to increased awareness among referring doctors and effective outreach initiatives [56] Question: Competitive positioning in the PDN segment - Management expressed confidence in their competitive position, citing superior clinical outcomes and the potential for market growth with multiple participants [60] Question: Guidance assumptions regarding reimbursement coverage - Management stated that guidance is not contingent on increases in access or coverage policies, but they will continue to work with payers [63] Question: Confidence in second-half growth and market recovery - Management emphasized that confidence is based on trial activity, market research, and internal models indicating pent-up demand [73] Question: Future spending and breakeven point - Management anticipates breakeven on adjusted EBITDA at approximately $110 million in quarterly sales, with a focus on managing expenses while investing in growth [75] Question: Update on international market performance - Management reported encouraging recovery in Australia and Germany, while the U.K. market remains challenging [84]