8-K: Nevro Reports Fourth-Quarter and Full-Year 2024 Financial Results Amidst Acquisition Agreement with Globus Medical

Nevro Corp. announced its fourth-quarter and full-year 2024 financial results, highlighting a decrease in revenue but exceeding adjusted EBITDA expectations, while also noting the pending acquisition by Globus Medical.

Summary

• Nevro Corp. reported a decrease in worldwide revenue for the fourth quarter of 2024, totaling $105.5 million, a 9.1% decrease compared to $116.2 million in the fourth quarter of 2023.
• U.S. revenue for the fourth quarter was $91.4 million, a 9.9% decrease from $101.5 million in the prior year period, with U.S. permanent implant procedures down by 7.0% and trial procedures down by 14.2%.
• International revenue decreased by 3.8% to $14.1 million.
• Gross profit for the fourth quarter was $65.9 million, with a gross margin of 62.5%, compared to $81.5 million and 70.1% respectively in the fourth quarter of 2023.
• The net loss from operations for the fourth quarter of 2024 was $51.4 million, which includes a $38.2 million goodwill impairment charge.
• Adjusted EBITDA for the fourth quarter was negative $5.2 million, compared to a positive $8.4 million in the fourth quarter of 2023.
• Full-year 2024 worldwide revenue was $408.5 million, a 3.9% decrease compared to $425.2 million for full-year 2023.
• The full-year 2024 adjusted EBITDA was negative $13.6 million compared with negative $17.7 million in 2023.
• As of December 31, 2024, Nevro's cash, cash equivalents, and short-term investments totaled $292.5 million.
• Nevro and Globus Medical announced a definitive agreement on February 6, 2025, for Globus Medical to acquire all shares of Nevro in an all-cash transaction valued at approximately $250 million, or $5.85 per share.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While the financial results show a decline in revenue and increased net losses, the acquisition by Globus Medical and exceeding adjusted EBITDA expectations provide a balanced outlook. The lack of 2025 guidance adds uncertainty.

Positives

• Adjusted EBITDA for the full-year 2024 came in ahead of revised expectations.
• Nevro's balance sheet remains strong, reflecting ongoing focus on working capital management and the benefits from the 2024 restructurings.
• The company launched HFX iQ with HFX AdaptivAI and the HFX iQ SCS system in select European countries.
• Globus Medical's acquisition of Nevro is expected to provide the resources to achieve Nevro's full potential.

Negatives

• Worldwide revenue for the fourth quarter of 2024 decreased by 9.1% to $105.5 million.
• U.S. revenue in the fourth quarter of 2024 decreased by 9.9% to $91.4 million.
• U.S. permanent implant procedures decreased by 7.0% compared with the fourth quarter of 2023.
• U.S. trial procedures decreased approximately 14.2% compared with the fourth quarter of 2023.
• Gross margin decreased from 70.1% in Q4 2023 to 62.5% in Q4 2024.
• Adjusted EBITDA for the fourth quarter of 2024 was negative $5.2 million compared with positive $8.4 million in the fourth quarter of 2023.
• Net loss from operations for full-year 2024 was $126.2 million compared with $99.3 million for full-year 2023.

Risks

• The acquisition by Globus Medical is subject to shareholder and regulatory approval, and other customary closing conditions.
• The company's forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
• The announcement or pendency of the merger could affect Nevro's ability to retain and hire key personnel, or its operating results and business generally.

Future Outlook

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 in connection with reporting its fourth-quarter and full-year 2024 financial results.

Management Comments

• 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, said Kevin Thornal, Nevro's president and CEO.
• Importantly, we look forward to joining forces with Globus Medical to achieve our full potential and working together to free patients from the burden of chronic pain.

Industry Context

The medical device industry is seeing increased consolidation, as evidenced by Globus Medical's acquisition of Nevro, which may be driven by a desire to expand product portfolios and market reach in the competitive chronic pain treatment market.

Comparison to Industry Standards

• Comparing Nevro's performance to competitors like Medtronic and Boston Scientific, who also operate in the spinal cord stimulation market, reveals a mixed picture.
• While Nevro's revenue decline contrasts with the growth reported by some larger players, the adjusted EBITDA exceeding expectations suggests effective cost management.
• The acquisition by Globus Medical, a company known for its musculoskeletal solutions, could position the combined entity to better compete in the broader pain management landscape.

Stakeholder Impact

• Shareholders will vote on the proposed acquisition by Globus Medical.
• Employees face uncertainty during the acquisition process, but may benefit from the combined company's resources.
• Patients may benefit from the combined company's expanded product offerings and focus on chronic pain treatment.

Next Steps

• The acquisition of Nevro by Globus Medical is expected to close in the second quarter of 2025, pending shareholder and regulatory approvals.
• Nevro stockholders are urged to read the definitive proxy statement and other relevant materials carefully and in their entirety when they become available because they will contain important information about Nevro and the proposed transaction.

Key Dates