Executive Summary

Q3 revenue and profitability beat company guidance: revenue $96.9M vs guidance $92–$94M and adjusted EBITDA loss $(1.8)M vs guidance $(10)–$(9)M; FY24 revenue guidance reaffirmed ($400–$405M) and adjusted EBITDA guidance raised to $(18)–$(16)M .
Mixed fundamentals: gross margin 66.7% (down vs Q1 but up vs Q2 ex one-time), OpEx fell ~18% YoY on restructuring; U.S. trials fell 15.2% YoY amid competitive pressure and reduced DTC spend earlier in the year .
Strategic/product catalysts: limited U.S. launch of HFX AdaptivAI (AI-driven SCS) with early efficiency and clinical signals; HFX iQ received CE mark with EU launch to start in late 2024/early 2025 - .
Cash and short-term investments increased sequentially to $277.0M; management reiterated long-term gross margin target in the mid-70% as Costa Rica manufacturing scales .

What Went Well and What Went Wrong

What Went Well
- Beat company’s Q3 guidance on revenue and adjusted EBITDA; raised FY24 adjusted EBITDA outlook while reaffirming revenue .
- Early HFX AdaptivAI signals: patients achieved pain relief 41% faster vs prior version; ~40% fewer patient support calls, ~50% shorter call time, and ~20% fewer in-office reprogramming visits vs Omnia; management calls AdaptivAI a “game changer” -.
- Cost actions taking hold: OpEx down to $78.5M vs $95.1M YoY; adjusted EBITDA loss narrowed to $(1.8)M from $(5.8)M; sequential cash rose $3.3M to $277.0M -.
What Went Wrong
- Core demand/trials: U.S. trials fell 15.2% and permanent implants down 9.6% YoY; international revenue declined on Australia media and German reform impacts .
- Gross margin pressure: Q3 GM 66.7% vs 70.2% in Q1; Q4 gross margin expected lower due to accounting variances and lower volumes; 2025 faces volume-driven headwinds .
- Commercial execution/DTC: Management reduced DTC earlier in 2024, later reversed course; expects trial uplift to come only by 2H25 given funnel timing .

Financial Results

Last three quarters (sequential) and YoY reference

Metric	Q1 2024	Q2 2024	Q3 2024
Revenue ($USD Millions)	$101.9	$104.2	$96.9
Gross Margin (%)	70.2%	64.8% (70.5% ex supplier charge)	66.7%
Net Loss per Share ($)	$(0.70)	$(0.53)	$(0.41)
Adjusted EBITDA ($USD Millions)	$(9.6)	$3.0	$(1.8)

YoY comparison (Q3 only)

Metric	Q3 2023	Q3 2024
Revenue ($USD Millions)	$103.9	$96.9
Gross Margin (%)	66.9%	66.7%
Net Loss per Share ($)	$(0.65)	$(0.41)
Adjusted EBITDA ($USD Millions)	$(5.8)	$(1.8)

Q3 revenue mix and KPIs

Metric	Q3 2023	Q3 2024
U.S. Revenue ($USD Millions)	$89.8	$83.9
International Revenue ($USD Millions)	$14.1	$13.0
U.S. Trial Procedures (YoY)	—	down 15.2%
U.S. Permanent Implants (YoY)	—	down 9.6%
Cash, Cash Equivalents & ST Investments ($USD Millions)	—	$277.0

Actuals vs. Q3 company guidance

Metric	Company Guidance (Q3 2024)	Actual (Q3 2024)	Result
Revenue ($USD Millions)	$92–$94	$96.9	Beat
Adjusted EBITDA ($USD Millions)	$(10)–$(9)	$(1.8)	Beat

Segment/other notes: International decline driven by Australia media and Germany healthcare reform, though management saw late-quarter improvement; continued ramp of Costa Rica manufacturing and OpEx savings helped EPS/EBITDA trajectory .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Worldwide Revenue ($USD Millions)	FY2024	$400–$405 (revised on Aug 6)	$400–$405	Maintained
Adjusted EBITDA ($USD Millions)	FY2024	$(20) to $(18)	$(18) to $(16)	Raised
Gross Margin (%)	FY2024	—	~66% (~68% adjusted, excl. supplier charge)	New detail/confirmed
Operating Expenses ($USD Millions)	FY2024	~383	~369.1	Lowered

Assumptions: Q4 U.S. SCS trial growth rate does not improve from Q3 levels . Management reiterated long-term gross margin goal in mid-70% as Costa Rica scales, but flagged Q4 GM lower than 1H24 and some 2025 headwinds from lower 2024 volumes .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2 2024)	Current Period (Q3 2024)	Trend
AI/Technology (HFX iQ/AdaptivAI)	Q1: HFX iQ mix and access enhancements; platform upgradability emphasized . Q2: limited product commentary amid guidance reset -.	HFX AdaptivAI limited U.S. launch; 41% faster pain relief vs iQ 1.0, ~40% fewer calls, 50% shorter call time, 20% fewer reprogramming visits vs Omnia; full U.S. rollout late Nov; CE mark for HFX iQ in EU - .	Positive product cycle building
Supply chain/manufacturing	Q1: margin tailwind from Costa Rica mix; GM 70.2% . Q2: $6M supplier renegotiation charge; ex-charge GM 70.5% .	Costa Rica expansion continues; long-term GM mid-70% reiterated; Q4 GM below 1H due to accounting variances; volume headwinds into 2025 .	Structural tailwind LT, near-term headwinds
Market/macro (trials, demand)	Q1: U.S. trials -5.1% YoY; SI training impacted physician availability . Q2: U.S. trials -9.5% YoY; AU/Germany issues pressuring OUS -.	U.S. trials -15.2% YoY; permanent implants -9.6% YoY; AU media and German reforms still impacted, some late-quarter improvement .	Deteriorated in Q3
Commercial execution/DTC	Q1: Restructuring to improve profitability -. Q2: Initiated strategic review; cut expenses; revised FY guidance lower -.	DTC spend was reduced earlier; re-accelerated mid-Q3; expect trial improvement by 2H25 due to funnel timing .	Rebuilding funnel
Regulatory/clinical	Q1: PDN sensory function data and PDN Sensory Study update . Q2: reiterated PDN underpenetration .	PDN HbA1c/weight data published; HFX iQ CE mark in EU; Sensory RCT interim readout expected early 2025 - .	Positive
Portfolio diversification (SI joint)	Q1: SI joint ramp and training underway . Q2: highlighted SI biomechanical analysis .	SI integration progressing; capacity in instrument trays achieved; expects more meaningful contribution in 2025 .	Steady ramp
Strategic options	—	Process announced in Q2 to accelerate growth/diversification; ongoing without further update .	Ongoing

Management Commentary

“Our worldwide revenue and adjusted EBITDA came in better than we anticipated… We continue to make improvements in our commercial execution and allocation of marketing resources to address ongoing market challenges and return to top-line growth.” – CEO Kevin Thornal .
“Only HFX AdaptivAI engages with the patient to personalize the delivered SCS therapy… Through AI, the algorithm adjusts programming in real time… HFX AdaptivAI is truly a game changer for patients, physicians and Nevro.” – CEO Kevin Thornal -.
“We continue to expect full year gross margin to be approximately 66%… long-term gross margins in the mid-70s… gross margin in the fourth quarter of 2024 will be lower than what the business delivered in the first half of this year.” – CFO Rod MacLeod .
“We are raising our full year 2024 adjusted EBITDA guidance to a range of negative $18 million to negative $16 million.” – CFO Rod MacLeod .

Q&A Highlights

Trials and DTC: U.S. trials down 15.2% YoY due to competition, market softness, and earlier DTC pullback; DTC re-ramped mid-Q3 with expected trial improvement by 2H25 given 4–6 month funnel from consultation to trial and implant .
HFX AdaptivAI impact: Early data show 41% faster pain relief vs iQ 1.0 and reduced service burden; management plans to develop real-world and potentially investigator-initiated data to publish - .
Profitability levers: Further efficiencies from Costa Rica, continued OpEx focus, and AI-enabled care model expected to decouple growth from 1:1 headcount needs; still some timing shift of expenses into Q4 .
SI Joint (Vyrsa) integration: Building capacity (instrument trays) and training interventionalists; expects more meaningful contribution in 2025 .

Estimates Context

Wall Street consensus (S&P Global) for Q3 2024 EPS and revenue was unavailable via our tool at this time.
As a proxy, actuals materially exceeded company Q3 guidance: revenue $96.9M vs $92–$94M; adjusted EBITDA $(1.8)M vs $(10)–$(9)M loss -.
Implication: Street models likely need higher H2 profitability and lower OpEx assumptions given execution on cost and early product/service efficiencies; revenue trajectory still depends on trial funnel rebuild and competitive dynamics - .

Key Takeaways for Investors

Execution beat: Strong beat vs company Q3 guidance on both revenue and adjusted EBITDA, plus raised FY adjusted EBITDA, underscores the cost discipline and manufacturing transition benefits -.
Demand still soft: U.S. trials remain under pressure; material DTC-driven funnel rebuild pushes volume improvement to 2H25, limiting near-term top-line acceleration .
Product cycle: HFX AdaptivAI and EU CE mark for HFX iQ provide a multi-year innovation catalyst with early evidence of improved outcomes and lower service burden – constructive for margins and salesforce leverage - .
Margins: Near-term GM headwinds (Q4 and potentially into 2025) from accounting variances and lower volumes, but structural mid-70% GM target intact as Costa Rica scales and AI reduces operating burden .
Liquidity: $277M cash and ST investments provide runway to execute commercial and R&D plans while strategic review continues .
2025 setup: Expect OpEx discipline and SI joint ramp to continue; top-line inflection hinges on competitive landscape, DTC conversion, and broader adoption of AdaptivAI/iQ – watch PDN Sensory RCT interim in early 2025 as an additional catalyst .

NEVRO CORP (NVRO)·Q3 2024 Earnings Summary