Nevro (NYSE:NVRO) recently announced that its board is exploring strategic options as it faces increased competition in the spinal cord stimulation space.
In Nevro’s Aug. 6 earnings release call, CEO Kevin Thornal said the company over the next several months will more aggressively explore broader options alongside the company’s present stand-alone path.
“These opportunities may include, but are not limited to, partnerships, mergers or even a sale of the company,” Thornal said. “We have not set a timetable for the conclusion of this process, and we can’t say for certain that this process will result and are entering into or completing any transaction at all, or that any transaction we identify will be a better option than our current stand-alone strategy. In the meantime, we remain laser-focused on executing our initiatives.”
The news came at the same time that Nevro reported a loss of $19.6 million, or 53¢ per share, off $104.2 million in revenue for the quarter that ended June 30, 2024. The company lost $24.6 million, or 69¢ per share, off $108.7 million in revenue during the same quarter a year ago.
“Our second-quarter 2024 results were primarily driven by ongoing softness in the U.S. spinal cord stimulation (SCS) market and competitive pressures,” Thornal said. “Our recent in-depth market analysis shows that newer treatment therapies have emerged earlier in the care continuum ahead of SCS therapy. We believe these therapies are, in some cases, delaying patients in getting SCS therapy, which is towards the end of the care continuum, but we believe many patients will ultimately continue their journey to treat the often-multiple causes of their pain through SCS therapy.”
Nevro lowered its full-year revenue guidance to $400–405 million, from the previous $435–445 million range.
NVRO shares are down more than 37% to $5.46 apiece over the past five days.
Truist analysts began the headline of their report with the words, “Stage 5: Acceptance,” when it came to the news of Nevro exploring strategic options. Truist has a Hold rating on NVRO shares.
William Blair meanwhile maintained its Market Perform rating. Said Brandon Vazquez and Justin Lin at William Blair: “In our view, there is value in this business (namely a strong product brand with robust clinical backing in a large TAM), though updates in the past couple of years (new competition, tepid market growth, lack of profitability) might complicate strategic options/valuation for the business. “
