Potential Turnaround Ahead for Nevro: Q2 Earnings, Guidance Lag Wall Street Estimates

Pain management company Nevro Corp NVRO reported Q2 FY23 revenue of $108.8 million, up 4% Y/Y, missing the management guidance of $110 million-$112 million and consensus of $109.33 million.

Painful Diabetic Neuropathy (PDN) indication sales of approximately $19.0 million grew 73%.

Q2 U.S. permanent implant procedures increased by 8%, while U.S. trial procedures increased by 4%, 

U.S. PDN trial procedures represented approximately 23% of total U.S. trial volume and grew approximately 64% Y/Y.

Adjusted EBITDA was a loss of $3.1 million, compared to a loss of $4.5 million a year ago and the guidance of a loss of $4 million to $5 million.

Guidance: Nevro expects Q3 revenues of approximately $95 million-$97 million, down 4%-6% Y/Y, below the consensus of $109.25 million.

The company sees FY23 sales of approximately $410 million-$415 million, compared to previous guidance of $445 million-$455 million and the consensus of $437.26 million.

JMP Securities analysts David Turkaly and Daniel Stauder cut the price target for NVRO from $75 to $40 with a Market Outperform rating.

The analysts note that the management lowered its 2H23 expectations, given the re-alignment of sales infrastructure. 

William Blair analysts Brandon Vazquez and Justin Lin express optimism about the new management team's emphasis on commercial operations. However, they maintain a Market Perform rating, citing ongoing uncertainty regarding the timing and sustainability of core market acceleration.

The analysts suggest that the appointment of a new CEO, the refocused commercial efforts, the escalating launch of HFX iQ, and sustained progress in PDN position the company as a promising prospect for investors who are watching for potential signs of revitalization in the coming year.

Price Action: NVRO shares are down 18.90% at $20.01 on the last check Wednesday.