10-Q 1 nvro-20220930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-36715

Nevro Corp.

(Exact name of registrant as specified in its charter)

 

Delaware

 

56-2568057

(State or other jurisdiction of

incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

1800 Bridge Parkway

Redwood City, CA

(Address of principal executive offices)

94065

(Zip Code)

(650) 251-0005

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading Symbol

 

Name of each exchange on which registered

Common Stock, $0.001 par value per share

 

NVRO

 

The New York Stock Exchange

 

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. Yes No

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). Yes No

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.

 

Large accelerated filer

 

Accelerated filer

 

 

 

 

 

Non-accelerated filer

 

Smaller reporting company

 

 

 

 

 

 

 

 

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 October 25, 2022, there were 35,430,089 shares of the registrant’s common stock, par value $0.001 per share, outstanding.

 


 

Nevro Corp.

TABLE OF CONTENTS

 

 

 

Page

 

 

 

PART I—FINANCIAL INFORMATION

 

3

 

 

 

Item 1. Condensed Consolidated Financial Statements (unaudited)

 

3

 

 

 

Condensed Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021

 

3

 

 

 

Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2022 and 2021

 

4

 

 

 

Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2022 and 2021

 

5

 

 

 

Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2022 and 2021

 

6

 

 

 

Notes to Condensed Consolidated Financial Statements

 

7

 

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

21

 

 

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

34

 

 

 

Item 4. Controls and Procedures

 

34

 

 

 

PART II—OTHER INFORMATION

 

34

 

 

 

Item 1. Legal Proceedings

 

34

 

 

 

Item 1A. Risk Factors

 

34

 

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

34

 

 

 

Item 3. Defaults Upon Senior Securities

 

35

 

 

 

Item 4. Mine Safety Disclosures

 

35

 

 

 

Item 5. Other Information

 

35

 

 

 

Item 6. Exhibits

 

36

 

 

 

SIGNATURES

 

38

 

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)

 

 

 

September 30,

 

 

December 31,

 

 

 

2022

 

 

2021

 

Assets

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

$

130,839

 

 

$

34,710

 

Short-term investments

 

 

256,057

 

 

 

327,317

 

Accounts receivable, net of allowance for doubtful accounts of $1,222 and $1,385 at
   September 30, 2022 and December 31, 2021, respectively

 

 

69,572

 

 

 

70,475

 

Inventories

 

 

98,525

 

 

 

93,517

 

Prepaid expenses and other current assets

 

 

11,080

 

 

 

5,185

 

Total current assets

 

 

566,073

 

 

 

531,204

 

Property and equipment, net

 

 

21,173

 

 

 

20,664

 

Operating lease assets

 

 

14,497

 

 

 

17,577

 

Other assets

 

 

3,163

 

 

 

4,493

 

Restricted cash

 

 

606

 

 

 

606

 

Total assets

 

$

605,512

 

 

$

574,544

 

Liabilities and stockholders’ equity

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Accounts payable

 

$

31,839

 

 

$

31,999

 

Accrued liabilities

 

 

43,388

 

 

 

45,517

 

Other current liabilities

 

 

5,071

 

 

 

4,687

 

Total current liabilities

 

 

80,298

 

 

 

82,203

 

Long-term debt

 

 

186,559

 

 

 

151,310

 

Long-term operating lease liabilities

 

 

11,624

 

 

 

15,402

 

Other long-term liabilities

 

 

2,096

 

 

 

22,013

 

Total liabilities

 

 

280,577

 

 

 

270,928

 

Commitments and contingencies (Note 6)

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

Preferred stock, $0.001 par value, 10,000,000 shares authorized at September 30, 2022
   and December 31, 2021;
zero shares issued and outstanding at September 30, 2022
   and December 31, 2021

 

 

 

 

 

 

Common stock, $0.001 par value, 290,000,000 shares authorized at September 30,
   2022 and December 31, 2021;
36,107,515 and 35,709,570 shares issued at
   September 30, 2022 and December 31, 2021, respectively;
35,424,599 and
   
35,026,654 shares outstanding at September 30, 2022 and
   December 31, 2021, respectively

 

 

35

 

 

 

35

 

Additional paid-in capital

 

 

917,946

 

 

 

928,138

 

Accumulated other comprehensive income (loss)

 

 

(5,041

)

 

 

(364

)

Accumulated deficit

 

 

(588,005

)

 

 

(624,193

)

Total stockholders’ equity

 

 

324,935

 

 

 

303,616

 

Total liabilities and stockholders’ equity

 

$

605,512

 

 

$

574,544

 

 

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)

 

 

 

Three Months Ended

 

 

Nine Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Revenue

 

$

100,466

 

 

$

93,205

 

 

$

292,521

 

 

$

284,145

 

Cost of revenue

 

 

31,164

 

 

 

28,575

 

 

 

91,393

 

 

 

87,235

 

Gross profit

 

 

69,302

 

 

 

64,630

 

 

 

201,128

 

 

 

196,910

 

Operating expenses

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

14,030

 

 

 

11,553

 

 

 

39,118

 

 

 

34,956

 

Sales, general and administrative

 

 

78,190

 

 

 

79,521

 

 

 

241,488

 

 

 

226,673

 

Certain litigation charges (credits)

 

 

(105,000

)

 

 

20,000

 

 

 

(105,000

)

 

 

20,000

 

Total operating expenses

 

 

(12,780

)

 

 

111,074

 

 

 

175,606

 

 

 

281,629

 

Income (Loss) from operations

 

 

82,082

 

 

 

(46,444

)

 

 

25,522

 

 

 

(84,719

)

Interest income

 

 

1,128

 

 

 

99

 

 

 

1,553

 

 

 

559

 

Interest expense

 

 

(1,608

)

 

 

(3,688

)

 

 

(4,819

)

 

 

(15,939

)

Other income (expense), net

 

 

391

 

 

 

30

 

 

 

844

 

 

 

(515

)

Income (Loss) before income taxes

 

 

81,993

 

 

 

(50,003

)

 

 

23,100

 

 

 

(100,614

)

Provision for income taxes

 

 

485

 

 

 

72

 

 

 

907

 

 

 

612

 

Net income (loss)

 

 

81,508

 

 

 

(50,075

)

 

 

22,193

 

 

 

(101,226

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

Changes in foreign currency translation adjustment

 

 

(1,690

)

 

 

(401

)

 

 

(3,293

)

 

 

(651

)

Changes in unrealized gains on short-term investments, net

 

 

(102

)

 

 

(8

)

 

 

(1,384

)

 

 

(127

)

Net change in other comprehensive loss

 

 

(1,792

)

 

 

(409

)

 

 

(4,677

)

 

 

(778

)

Comprehensive income (loss)

 

$

79,716

 

 

$

(50,484

)

 

$

17,516

 

 

$

(102,004

)

Net income (loss) per common share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.30

 

 

$

(1.44

)

 

$

0.63

 

 

$

(2.91

)

Diluted

 

$

2.22

 

 

$

(1.44

)

 

$

0.63

 

 

$

(2.91

)

Weighted average number of shares used to compute
   net income (loss) per share

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

35,402,086

 

 

 

34,878,443

 

 

 

35,265,193

 

 

 

34,774,423

 

Diluted

 

 

37,338,945

 

 

 

34,878,443

 

 

 

35,501,609

 

 

 

34,774,423

 

 

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 nine months ended September 30, 2022

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Other Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balances at December 31, 2021

 

 

35,026,654

 

 

$

35

 

 

$

928,138

 

 

$

(624,193

)

 

$

(364

)

 

$

303,616

 

Adjustments from adoption of ASU 2020-06

 

 

 

 

 

 

 

 

(48,340

)

 

 

13,995

 

 

 

 

 

 

(34,345

)

Exercise of common stock options

 

 

10,642

 

 

 

 

 

 

545

 

 

 

 

 

 

 

 

 

545

 

Issuance of common stock upon release of restricted stock units

 

 

263,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for tax obligations

 

 

(107,257

)

 

 

 

 

 

(7,298

)

 

 

 

 

 

 

 

 

(7,298

)

Stock based compensation

 

 

 

 

 

 

 

 

13,406

 

 

 

 

 

 

 

 

 

13,406

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(34,325

)

 

 

 

 

 

(34,325

)

Change in other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,213

)

 

 

(1,213

)

Balances at March 31, 2022

 

 

35,193,451

 

 

 

35

 

 

 

886,451

 

 

 

(644,523

)

 

 

(1,577

)

 

 

240,386

 

Exercise of common stock options

 

 

5,100

 

 

 

 

 

 

230

 

 

 

 

 

 

 

 

 

230

 

Issuance of common stock upon release of restricted stock units

 

 

109,742

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for tax obligations

 

 

(12,323

)

 

 

 

 

 

(759

)

 

 

 

 

 

 

 

 

(759

)

Issuance of common stock under employee stock purchase plan

 

 

84,837

 

 

 

 

 

 

3,414

 

 

 

 

 

 

 

 

 

3,414

 

Stock based compensation

 

 

 

 

 

 

 

 

13,376

 

 

 

 

 

 

 

 

 

13,376

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(24,990

)

 

 

 

 

 

(24,990

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,672

)

 

 

(1,672

)

Balances at June 30, 2022

 

 

35,380,807

 

 

 

35

 

 

 

902,712

 

 

 

(669,513

)

 

 

(3,249

)

 

 

229,985

 

Exercise of common stock options

 

 

8,749

 

 

 

 

 

 

366

 

 

 

 

 

 

 

 

 

366

 

Issuance of common stock upon release of restricted stock units

 

 

42,038

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for tax obligations

 

 

(6,995

)

 

 

 

 

 

(329

)

 

 

 

 

 

 

 

 

(329

)

Stock based compensation

 

 

 

 

 

 

 

 

15,197

 

 

 

 

 

 

 

 

 

15,197

 

Net income

 

 

 

 

 

 

 

 

 

 

 

81,508

 

 

 

 

 

 

81,508

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,792

)

 

 

(1,792

)

Balances at September 30, 2022

 

 

35,424,599

 

 

$

35

 

 

$

917,946

 

 

$

(588,005

)

 

$

(5,041

)

 

$

324,935

 

 

For the three and nine months ended September 30, 2021

 

 

 

 

 

 

 

 

Additional

 

 

 

 

 

Accumulated

 

 

Total

 

 

 

Common Stock

 

 

Paid-In

 

 

Accumulated

 

 

Other Comprehensive

 

 

Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Equity

 

Balances at December 31, 2020

 

 

34,583,064

 

 

$

35

 

 

$

880,660

 

 

$

(492,833

)

 

$

598

 

 

$

388,460

 

Exercise of common stock options

 

 

28,152

 

 

 

 

 

 

1,331

 

 

 

 

 

 

 

 

 

1,331

 

Issuance of common stock upon release of restricted stock units

 

 

99,389

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares withheld for tax obligations

 

 

(17,886

)

 

 

 

 

 

(2,801

)

 

 

 

 

 

 

 

 

(2,801

)

Stock based compensation

 

 

 

 

 

 

 

 

9,235

 

 

 

 

 

 

 

 

 

9,235

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

(29,561

)

 

 

 

 

 

(29,561

)

Change in other comprehensive loss