Why Nevro Corp. Is Up Big Today

By Markets Fool.com

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What: Shares of Nevro Corp.(NYSE: NVRO), a medical device company focused on chronic pain,are up 13% as of 11:50 a.m. EDT in response to a strong second-quarter earnings report.

So what:It was a productive quarter for Nevro. Highlights from the period include:

  • Revenue grew to $55.4 million, which was up a huge 385% over the year-ago period. That revenue breakdown was$40.6 million in sales in the U.S. and$14.8 millionin international markets.
  • Gross margin for Nevro jumped to 66% in the second quarter, a strong improvement from the 52% that was reported in the same period a year ago.
  • Operating expenses jumped substantially in the quarter, coming in at $42.5 million, up 69% year over year. The increase was caused primarily by increased head count.
  • Net loss was only$5.9 million, a substantial improvement from the $19.2 millionloss in the same period of the prior year.
  • Nevro raised$172.5 millionin a public offering of convertible notes due in 2021, pushing the company's cash balance at quarter end to nearly $290 million.

For comparison, Wall Street was only projecting revenue of $40.6 million during the quarter and a new loss per share of $0.46, so Nevro blew past its expectations on both fronts.

RamiElghandour, Nevro's CEO, commented on the company's strong quarterly results:

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I am excited by our progress in becoming a leader in Neuromodulation. Our focus on improving patient outcomes continues to guide our research and commercial efforts, and we are well-positioned for sustainable success.

Now what: The huge revenue jump this quarter hints that the company is successfully stealing market share away fromMedtronic, and management believes that the trend will continue into the future. The company has raised its full-year revenue guidance to a range of $210 million to $220 million, which is a strong jump from its prior outlook of only$175 million to $185 million.

Given the strong quarterly numbers and upbeat outlook, it's easy to see why shares are on the move today.

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Brian Feroldi has no position in any stocks mentioned.Like this article? Follow him onTwitter where he goes by the handle@Longtermmindsetor connect with him on LinkedIn to see more articles like this.

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