NEVRO CORP (NVRO)·Q4 2024 Earnings Summary

Executive Summary

• Q4 2024 revenue was $105.5 million, down 9.1% year-over-year (Q4 2023: $116.2 million) with gross margin compressing to 62.5% (from 70.1%) and adjusted EBITDA turning to –$5.2 million (from +$8.4 million), reflecting lower U.S. trial and implant activity and a goodwill impairment in the quarter .
• Sequentially, revenue improved from $96.9 million in Q3 2024 to $105.5 million in Q4 2024, though profitability worsened (Q3 adjusted EBITDA –$1.8 million vs. Q4 –$5.2 million) amid mix and one-off items .
• Management did not issue 2025 guidance and did not hold a Q4 earnings call due to the pending all-cash acquisition by Globus Medical at $5.85 per share (~$250 million), targeting close in Q2 2025—an overriding stock catalyst .
• Full-year 2024 adjusted EBITDA came in ahead of revised expectations; cash, cash equivalents and short-term investments rose to $292.5 million at year-end, +$15.5 million vs. Q3, highlighting strong working capital management and restructuring benefits .
• Wall Street consensus (S&P Global) estimates were unavailable via our tool for Q4 2024; therefore, beat/miss analysis vs consensus cannot be provided.

What Went Well and What Went Wrong

What Went Well

• Balance sheet strength with year-end cash, cash equivalents and short-term investments of $292.5 million (+$15.5 million QoQ); management emphasized working capital discipline and restructuring benefits .
• Advancement of AI-enabled portfolio: full market release of HFX iQ with HFX AdaptivAI in November 2024 and CE Mark approval with initial EU launch in early 2025, positioning the platform for responsive, personalized pain relief .
• CEO tone on technology impact: “HFX AdaptivAI is truly a game changer…raising the bar on what is considered adequate pain relief,” citing early data showing patients achieve pain relief 41% faster vs prior version and fewer support calls and reprogramming visits .

What Went Wrong

• Q4 revenue declined 9.1% YoY to $105.5 million; U.S. revenue fell 9.9% YoY to $91.4 million with U.S. trial procedures down ~14.2% and permanent implants down 7.0% YoY, underscoring continued market and competitive pressures .
• Gross margin fell to 62.5% (from 70.1% in Q4 2023); gross profit declined to $65.9 million (from $81.5 million) as mix and transition/inventory effects weighed on margins .
• Operating expenses rose to $117.3 million (from $93.3 million), including a $38.2 million goodwill impairment; adjusted EBITDA deteriorated to –$5.2 million (from +$8.4 million), sharpening investor focus on near-term profitability .

Financial Results

Segment revenue breakdown:

Key KPIs and balance sheet:

Guidance Changes

Note: Final FY 2024 actuals reported on March 4 were revenue $408.5 million and adjusted EBITDA –$13.6 million, above the raised EBITDA guidance range .

Earnings Call Themes & Trends

Management Commentary

• “We are pleased that adjusted EBITDA for the full-year 2024 came in ahead of our revised expectations and that our balance sheet remains strong, reflecting our ongoing focus on working capital management and the benefits from our 2024 restructurings.” — Kevin Thornal, CEO .
• “HFX AdaptivAI is truly a game changer for patients, physicians and Nevro…patients are achieving pain relief 41% faster…with reductions in calls and in-office reprogramming.” — Kevin Thornal (Q3 call) .
• “Given the pending acquisition of Nevro by Globus Medical, Nevro is not issuing full-year 2025 guidance, nor is the company holding an earnings conference call and webcast.” — Company statement .

Q&A Highlights

• SCS market softness and DTC: Management acknowledged U.S. trial declines and plans to ramp DTC to improve trial conversion, expecting benefits in 2H 2025 given 4–6 month patient funnel dynamics .
• Profitability and R&D spend: Focus on projects with ROI; clinical spend phasing; leveraging AI to lower service burden while sustaining innovation .
• Commercial execution: Territory expansions via promoting associate reps; aim to go deeper with customers while leveraging SI joint to open competitive accounts .
• Margins and manufacturing: Long-term gross margin target mid-70% via Costa Rica; near-term headwinds from prior inventory variance accounting .
• SI joint integration: Training and scaling ongoing; expected to contribute more meaningfully in 2025 .

Estimates Context

• S&P Global Wall Street consensus estimates for Q4 2024 were unavailable via our tool (missing mapping), so beat/miss vs consensus cannot be assessed at this time.
• Management noted full-year 2024 adjusted EBITDA was better than revised guidance, while Q4 profitability was pressured by impairment and mix effects .

Key Takeaways for Investors

• The pending sale to Globus Medical at $5.85 per share is the dominant near-term catalyst, with closing targeted in Q2 2025, superseding standalone 2025 guidance and call cadence .
• Q4 showed sequential revenue improvement but significant YoY compression in gross margin and profitability; U.S. trials and implants declined YoY, underscoring continued market/competitive pressure .
• AI-enabled HFX iQ/AdaptivAI is gaining traction, with early data indicating faster pain relief and lower support burden, and CE Mark plus initial EU launch broadening the platform’s reach .
• Cash and investments rose to $292.5 million (+$15.5 million QoQ), reflecting solid working capital discipline and restructuring benefits—providing liquidity through the transition .
• SI joint portfolio continues to build clinical validation and physician training; contribution expected to improve in 2025, though Q4 core SCS metrics remain soft .
• With S&P consensus unavailable, traders should anchor on the reported YoY declines and margin compression alongside the M&A event path; watch for integration/closing milestones and regulatory approvals .
• Near- to medium-term thesis shifts from standalone margin expansion toward transaction close certainty and potential strategic fit under Globus Medical; any delays or competing bids could add volatility .