Although it pared its second-quarter losses on strong revenue growth, Nevro Corp. (NYSE:NVRO) missed the consensus earnings forecast yesterday due to increased labor costs and a legal battle with spinal cord stimulation rival Boston Scientific (NYSE:BSX).
Redwood City, Calif.-based Nevro posted losses of -$10.7 million, or -35¢ per share, on sales of $96.1 million for the three months ended June 30, cutting losses by -7.6% on sales growth of 23.2% compared with Q2 2017. Analysts were looking for losses of -31¢ on sales of $95.3 million.
Nevro said its operating expenses rose on “increased headcount and related personnel costs, as well as legal expenses associated with intellectual property litigations.”
Those litigations with Boston Scientific came to a close this week, after a federal judge in California found that six claims in three of the Nevro patents are eligible but also that Boston’s SCS devices don’t infringe those claims (Boston doesn’t have a competing high-frequency SCS device on the U.S. market). The judge also found that Boston’s use of the Spectra WaveWriter device in its Accelerate study doesn’t infringe because it falls under the clinical trial safe harbor even after the patients have completed the study and that Spectra WaveWriter in commercial use doesn’t infringe because it does not operated at high frequencies.
That led the companies to file a joint statement proposing the dismissal of the case without prejudice, “on the basis of Boston Scientific’s representations to the court that it has no plans to launch a high frequency product in the U.S.”
Yesterday Nevro cut its sales outlook for the rest of the year, saying it now expects to post sales of $385 to $390 million, compared with $400 million to $410 million previously.
NVRO sales closed up 2.0% at $59.55 apiece yesterday.