On February 25, 2020 Nevro Corp. (NYSE: NVRO), a global medical device company that is providing innovative, evidence-based solutions for the treatment of chronic pain, reported its financial results for the fourth quarter and full year ended December 31, 2019 (Press release, Nevro, FEB 25, 2020, View Source [SID1234554759]).
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Fourth Quarter 2019
Worldwide revenue for the fourth quarter 2019 was $114.4 million, a 6% increase compared to $107.9 million in the prior year period. U.S. revenue was $97.9 million, a 7% increase compared to $91.6 million in the prior year period. Year-over-year U.S. trial growth was 17% and permanent implant growth was 20% during the fourth quarter of 2019. International revenue was $16.5 million, a 1% increase as-reported, or 3% on a constant currency basis, compared to $16.3 million in the prior year period.
"Beginning in the second quarter, we started driving quite a few changes to our commercial strategies and execution, and we quickly saw patient trials and permanent implants return to growth," said D. Keith Grossman, Chairman, CEO and President of Nevro. "More recently, we launched Senza Omnia commercially in the U.S., which allowed us to engage more constructively with our customers and offer them the only SCS platform that can provide the unique advantages of HF10 as well as the full range of SCS frequencies. Just last month, we presented encouraging three-month data from our Senza-PDN study, which was the largest SCS RCT conducted to date. I am pleased with the progress we made in 2019 and am excited by the momentum we are building in the market and the opportunity ahead of us in 2020."
Gross profit for the fourth quarter of 2019 was $81.3 million, a 7% increase compared to $76.2 million in the prior year period. Gross margin was 71.0% in the fourth quarter of 2019 compared to 70.5% in the prior year period.
Operating expenses for the fourth quarter of 2019 were $92.9 million, a 10% increase compared to $84.8 million in the prior year period. The year-over-year increase in operating expenses was primarily driven by U.S. sales and marketing personnel costs, including $2 million in structural changes in the commercial organization, and approximately $3 million in costs related to the Company’s ongoing clinical trials. Legal expenses associated with patent litigation were $1.7 million for the fourth quarter of 2019, which was consistent with the prior year period.
Net loss from operations for the fourth quarter of 2019 was $11.7 million, a 36% increase compared to a loss of $8.6 million in the prior year period. Adjusted EBITDA for the fourth quarter of 2019 was $1.5 million, a 57% decrease compared to $3.5 million in the prior year period. Adjusted EBITDA excludes certain litigation expenses, interest, taxes and non-cash items such as stock-based compensation and depreciation and amortization. Please see financial tables for GAAP to Non-GAAP reconciliations.
Cash, cash equivalents and short-term investments totaled $237.8 million as of December 31, 2019. Net cash increased during the fourth quarter of 2019 by $5.0 million and decreased by $26.7 million for the full year 2019.
Full Year 2019
Worldwide revenue for the full year 2019 was $390.3 million, a 1% increase compared to $387.3 million in the prior year period. U.S. revenue for the full year 2019 was $326.0 million, a 1% increase compared to $321.8 million in the prior year period. International revenue was $64.3 million, a 2% decrease as-reported, or a 4% increase on a constant currency basis, compared to $65.5 million in the prior year period. Please see financial statements for additional full year 2019 results and GAAP to Non-GAAP reconciliations.
2020 Financial Guidance
Nevro reiterated its full year 2020 worldwide revenue to be in the range of $435 to $440 million. In addition, the Company provided additional full year 2020 guidance as follows: Gross margin is expected to be in the range of 69% to 70% and operating expenses are expected to be approximately $355 million, including litigation expenses. To assist investors in understanding Nevro’s underlying business trends, the Company is also introducing adjusted EBITDA guidance of positive $3.0 to $10.0 million for the full year 2020, which compares to a loss of $40.3 million in 2019. Adjusted EBITDA excludes certain litigation expenses, interest, taxes and non-cash items such as stock-based compensation and depreciation and amortization. Please see financial tables for GAAP to Non-GAAP reconciliations.
Webcast and Conference Call Information
Management will host a conference call today beginning at 1:30 p.m. PT / 4:30 p.m. ET. Investors interested in listening to the conference call may do so by dialing (833) 286-5807 in the U.S. or (647) 689-4452 internationally, using Conference ID: 1864387. In addition, a live webcast will be available on the "Investors" section of the Company’s website at www.nevro.com, as well as an archived recording.