UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
(Mark One)
For the quarterly period ended
or
Commission File Number:
(Exact name of registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices)
(Zip Code)
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(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class |
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Trading Symbol |
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Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of August 2, 2024, there were
Nevro Corp.
TABLE OF CONTENTS
2
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements
Nevro Corp.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands, except share and per share data)
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June 30, |
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December 31, |
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2024 |
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2023 |
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Assets |
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Current assets |
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Cash and cash equivalents |
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$ |
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$ |
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Short-term investments |
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Accounts receivable, net of allowance for doubtful accounts of $ |
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Inventories |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease assets |
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Goodwill |
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Intangible assets, net |
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Other assets |
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Restricted cash |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities |
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Accounts payable |
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$ |
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$ |
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Accrued liabilities |
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Short-term debt |
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Contingent liabilities, current portion |
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Other current liabilities |
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Total current liabilities |
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Long-term debt |
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Long-term operating lease liabilities |
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Contingent liabilities, non-current portion |
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Warrant liability |
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Other long-term liabilities |
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Total liabilities |
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Stockholders’ equity |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated other comprehensive income (loss) |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
3
Nevro Corp.
Condensed Consolidated Statements of Operations and Comprehensive Loss
(unaudited)
(in thousands, except share and per share data)
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Revenue |
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$ |
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$ |
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$ |
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$ |
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Cost of revenue (1) |
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Gross profit |
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Operating expenses |
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Research and development |
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Sales, general and administrative |
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Amortization of intangibles |
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— |
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— |
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Change in fair value of contingent consideration |
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— |
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— |
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Total operating expenses |
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Loss from operations |
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Interest income |
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Interest expense |
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Change in fair market value of warrants |
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— |
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— |
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Other income (expense), net |
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( |
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( |
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Loss before income taxes |
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( |
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Provision for income taxes |
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Net loss |
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Other comprehensive income (loss): |
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Changes in foreign currency translation adjustment |
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Changes in unrealized gains on short-term investments, net |
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Net change in other comprehensive income (loss) |
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( |
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Comprehensive loss |
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$ |
( |
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$ |
( |
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$ |
( |
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$ |
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Net loss per common share, basic and diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average number of shares used to compute |
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(1)
The accompanying notes are an integral part of these condensed consolidated financial statements.
4
Nevro Corp.
Condensed Consolidated Statements of Stockholders’ Equity
(unaudited)
(in thousands, except share data)
For the three and six months ended June 30, 2024
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Other Comprehensive |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balances at December 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of common stock upon release of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Shares withheld for tax obligations |
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( |
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— |
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( |
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— |
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— |
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( |
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Stock based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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Balances at March 31, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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Issuance of common stock upon release of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Shares withheld for tax obligations |
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( |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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Stock based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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( |
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( |
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Balances at June 30, 2024 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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For the three and six months ended June 30, 2023
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Additional |
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Accumulated |
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Total |
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Common Stock |
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Paid-In |
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Accumulated |
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Other Comprehensive |
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Stockholders' |
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Shares |
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Amount |
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Capital |
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Deficit |
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Income (Loss) |
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Equity |
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Balances at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Issuance of common stock upon release of restricted stock units |
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( |
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— |
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— |
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— |
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Shares withheld for tax obligations |
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( |
) |
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— |
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( |
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— |
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— |
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( |
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Stock based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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Balances at March 31, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Exercise of common stock options |
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— |
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— |
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— |
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Issuance of common stock upon release of restricted stock units |
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— |
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— |
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— |
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— |
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— |
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Shares withheld for tax obligations |
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( |
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— |
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( |
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— |
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— |
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( |
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Issuance of common stock under employee stock purchase plan |
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— |
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— |
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— |
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Stock based compensation |
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— |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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— |
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( |
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Other comprehensive loss |
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— |
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— |
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— |
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— |
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Balances at June 30, 2023 |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
Nevro Corp.
Condensed Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
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Six Months Ended |
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June 30, |
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2024 |
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2023 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities |
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Depreciation and amortization |
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Amortization of operating lease assets |
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Stock-based compensation expense |
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Amortization of intangibles |
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— |
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Amortization of premium (accretion of discount) on short-term investments |
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( |
) |
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( |
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Provision for doubtful accounts |
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Write-down of inventory |
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Amortization of debt issuance costs |
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Non-cash interest expense |
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— |
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Change in fair value of warrants |
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( |
) |
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— |
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Change in fair value of contingent consideration |
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— |
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Unrealized (gains) losses on foreign currency transactions |
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( |
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Changes in operating assets and liabilities |
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Accounts receivable |
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Inventories |
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( |
) |
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( |
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Prepaid expenses and other current assets |
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( |
) |
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( |
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Other assets |
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( |
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Accounts payable |
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Accrued liabilities |
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( |
) |
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( |
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Other long-term liabilities |
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( |
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( |
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Net cash provided by (used in) operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchases of short-term investments |
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( |
) |
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( |
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Proceeds from maturity of short-term investments |
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Payment for acquisition of business, net of cash acquired |
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( |
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— |
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Purchases of property and equipment |
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( |
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( |
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Net cash provided by (used in) investing activities |
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( |
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Cash flows from financing activities |
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Convertible notes debt issuance costs |
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( |
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— |
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Minimum tax withholding paid on behalf of employees for net share settlement |
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( |
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( |
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Payment of contingent consideration established in purchase accounting |
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( |
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— |
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Proceeds from issuance of common stock to employees |
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Net cash provided by (used in) financing activities |
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( |
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Effect of exchange rate changes on cash and cash equivalents |
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( |
) |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
) |
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( |
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Cash, cash equivalents and restricted cash |
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Cash, cash equivalents and restricted cash at beginning of period |
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Cash, cash equivalents and restricted cash at end of period |
|
$ |
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$ |
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Significant non-cash transactions |
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Purchases of property and equipment in accounts payable |
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$ |
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$ |
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Remeasurement of operating lease right-of-use assets for lease modification |
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$ |
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$ |
— |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
Nevro Corp.
Notes to Condensed Consolidated Financial Statements
(unaudited)
1. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying interim condensed consolidated financial statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023, and the related interim information contained within the notes to the financial statements, are unaudited. The unaudited interim condensed consolidated financial statements (the condensed consolidated financial statements) have been prepared in accordance with generally accepted accounting principles in the United States (U.S. GAAP) for interim financial information and on the same basis as the audited financial statements included on the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the Annual Report) filed with the Securities and Exchange Commission (SEC) on February 23, 2024. The condensed consolidated financial statements are prepared in U.S. dollars and include the Company’s accounts and those of its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. In the opinion of management, the accompanying unaudited interim condensed consolidated financial statements contain all adjustments (consisting of normal recurring adjustments) necessary to state fairly the Company’s financial position as of June 30, 2024, the results of its operations for the three and six months ended June 30, 2024 and 2023 and the consolidated statements of cash flows for the six months ended June 30, 2024 and 2023. All such adjustments are of a normal and recurring nature. The interim financial data as of June 30, 2024 is not necessarily indicative of the results to be expected for the year ending December 31, 2024, or for any future period.
The consolidated balance sheet as of December 31, 2023 was derived from the audited financials as of that date. The accompanying condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2023 included in the Annual Report.
Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes. Estimates are based on historical experience, where applicable, and other assumptions believed to be reasonable by management. Actual results may differ from those estimates under different assumptions or conditions.
Foreign Currency Translation
Unrealized foreign exchange gains and losses from the remeasurement of assets and liabilities denominated in currencies other than the functional currency of the reporting entity are recorded in other income (expense), net. Additionally, realized gains and losses resulting from transactions denominated in currencies other than the local currency are recorded in other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Net unrealized foreign currency gain (loss) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
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$ |
( |
) |
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Net realized foreign currency gain (loss) |
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( |
) |
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( |
) |
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( |
) |
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( |
) |
New Accounting Pronouncements Not Yet Adopted
In December 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-09 (Topic 740): Income Taxes: Improvements to Income Tax Disclosures which expands the existing rules on income tax disclosures. This update requires entities to disclose specific categories in the tax rate reconciliation, provide additional information for reconciling items that meet a quantitative threshold and disclose additional information about income taxes paid on an annual basis. The new disclosure requirements are effective for fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-09.
7
In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures which expands disclosure requirements to require entities to disclose significant segment expenses that are regularly provided to or easily computed from information regularly provided to the chief operating decision maker. This update also requires all annual disclosures currently required by Topic 280 to be disclosed in interim periods. The new disclosure requirements are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company is currently evaluating the impact of adopting ASU 2023-07.
2. Revenue
The following table presents revenue by geography, based on the billing address of the customer (in thousands):
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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United States |
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$ |
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$ |
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$ |
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$ |
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International |
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Total revenue |
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$ |
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$ |
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$ |
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$ |
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The United States is the only country that accounts for 10% or more of the revenue during the periods presented:
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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United States |
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% |
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% |
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% |
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% |
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There were
3. Lease Accounting
The Company has operating leases for office space, a manufacturing facility, warehouse, research and development facilities and equipment. Leases with terms of 12 months or less are not recorded on the balance sheet, as the related lease expenses are recognized on a straight-line basis over the lease term. The Company accounts for lease components (such as fixed payments) separately from non-lease components (such as common area expenses).
In April 2024, the Company entered into an amendment to its office space located in Redwood City, California, which reduced the total office space to approximately
The weighted average lease terms and discounts rates are as follows:
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June 30, 2024 |
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December 31, 2023 |
Operating Lease Term and Discount Rate |
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Weighted-average remaining lease term |
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Weighted-average discount rate |
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As of June 30, 2024, the maturity of lease liabilities are as follows (in thousands):
8
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Operating Leases |
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2024, remaining months |
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$ |
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2025 |
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2026 |
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2027 |
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2028 |
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Thereafter |
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Total lease payments |
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Less: Interest |
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( |
) |
Present value of lease liabilities |
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$ |
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Lease payments in 2025 are net of a tenant improvement allowance of $
Supplemental lease cost information are as follows (in thousands):
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Operating lease cost |
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$ |
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$ |
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$ |
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$ |
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Supplemental balance sheet information are as follows (in thousands):
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June 30, 2024 |
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December 31, 2023 |
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Operating Leases: |
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Operating lease assets |
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$ |
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$ |
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$ |
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$ |
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Long term operating lease liabilities |
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Total operating lease liabilities |
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$ |
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$ |
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Supplemental cash flow information are as follows (in thousands):
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Three Months Ended |
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Six Months Ended |
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June 30, |
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June 30, |
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2024 |
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2023 |
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2024 |
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2023 |
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Cash paid for amounts included in the measurement of lease liabilities: |
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Operating cash flow from operating leases |
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$ |
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$ |
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$ |
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$ |
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See Note 6 for further details of the Company’s lease commitments.
4. Fair Value Measurements
Cash Equivalents and Short-Term Investments
The Company’s money market funds are classified within Level 1 of the fair value hierarchy and are valued based on quoted prices in active markets for identical securities. The Company’s short-term investments are comprised of agency bonds, commercial paper, corporate notes and treasury bonds. All short-term investments have been classified within Level 1 or Level 2 of the fair value hierarchy because of the sufficient observable inputs for revaluation. The Company’s Level 2 investments are valued using third-party pricing sources. The pricing services utilize industry-standard valuation models, including both income and market-based approaches, for which all significant inputs are observable, either directly or indirectly, to estimate fair value. These inputs include reported trades of and broker/dealer quotes on the same or similar investments, issuer credit spreads, benchmark investments, prepayment/default
9
projections based on historical data and other observable inputs.
Balance as of June 30, 2024 |
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Level 1 |
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Level 2 |
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Level 3 |
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Total |
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Assets: |
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Money market funds (i) |
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$ |
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$ |
— |
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$ |
— |
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$ |
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Agency bonds (ii) |
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— |
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— |
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Treasury bonds (ii) |
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— |
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— |
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Total assets |
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$ |
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$ |
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$ |
— |
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