Nevro Corp.

Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to the NEVRO First Quarter 2024 Earnings Conference Call and Webcast. Today's conference is being recorded. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press the star key followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. At this time, I would like to turn the conference over to Angie McCabe, Vice President, Investor Relations and Corporate Communications. Please go ahead.

Thank you, Audra. Good afternoon and welcome to Nebro's first quarter 2024 earnings conference call. With me today are Kevin Thornall, our CEO and President, and Rod McLeod, our Chief Financial Officer. Before we get started, please note that our earnings release and the supplemental presentation accompanying this call are available on the events and presentation page of the Investors section of our website at Navarro.com. Also, this call is being broadcast live over the internet to all interested parties, and an archived copy of this webcast will be available in the Investors section of our corporate website shortly after the conclusion of this call. I'd like to remind everyone that comments made on today's call may include forward-looking statements within the meaning of federal securities laws. Results could differ materially from those expressed or implied as a result of certain risks and uncertainties. Please refer to NEVRO's SEC filings, including our annual report on Form 10-K for detailed presentations of risks. The forward-looking statements in this call speak only as of today, and the company undertakes no obligation to update or revise any of these statements. In addition, management will refer to adjusted EBITDA, a non-GAAP measure used to help investors understand NEBRA's ongoing business performance. Adjusted EBITDA excludes interest, taxes, non-cash items such as stock-based compensation, depreciation and amortization, litigation-related expenses and credits, changes in the fair market value of warrants, and other adjustments such as gain from extinguishment of debt and restructuring charges. Please refer to the financial tables in our earnings press release issued today for reconciliations of GAAP to non-GAAP financial measures. I will now turn the call over to Kevin. Kevin?

Thanks, Angie. Good afternoon, everyone, and welcome to our first quarter 2024 earnings call. A short time ago, we reported our first quarter results with revenue-adjusted EBITDA exceeding the guidance we provided on our fourth quarter 2023 earnings call in February. We also announced we are taking additional restructuring steps to further advance our strategy and accelerate our path to profitability, reaffirming our full-year 2024 revenue guidance, raising our 2024 adjusted EBITDA guidance to a range of negative 5 million to positive 2 million, and providing our second quarter 2024 guidance. In addition, I'm thrilled to announce that Chris Christofor, O, has been promoted to Chief Operating Officer. On today's call, I'll discuss the progress we are making in advancing our three pillar strategy, including highlights from the first quarter and the additional restructuring actions. Rod will then discuss our first quarter financial results and provide more detail on our guidance for the second quarter and full year of 2024. In the first quarter, we continue to advance our three pillar strategy of commercial execution, market penetration, and profit progress, and this is reflected in our overall results. For the first quarter of this year, and as compared to the year-ago period, worldwide revenue was $101.9 million, an increase of 5.8% on a reported basis and 5.6% on a constant currency basis. This year-over-year growth was largely driven by a product mix shift to our newest generation SES platform, HSX IQ, as well as an increased number of long-term Nevro patients who are now suitable candidates for a replacement device. As a reminder, our devices have rechargeable batteries with a very long functional life. And even in this case, we believe these devices will eventually require replacement. Our earliest patients are now out about 10 years or more. We believe many of our patients will want to continue accessing our unique and successful high-frequency therapy through a newer Nevro device. While this is currently a small part of our SES business, we believe it may play a slightly larger role in our implant volumes over time. U.S. trials were down approximately 5.1% compared with the year-ago period. This was largely in line with our expectations and mainly driven by two factors. First, softness and overall U.S. SES trialing activity in the quarter, and second, the impact of interest among SES customers in attending our SI joint fusion training sessions, which take physicians out of the practice for a day or two. In fact, we added more training sessions in the quarter to accommodate physician demand to learn this procedure. We are conducting additional SI joint training sessions throughout the second quarter and the remainder of the year. From a cadence perspective, and Rod will discuss our guidance in a few minutes, revenue in the first half of this year is on track with our expectations. This combined with several factors such as one, our continued focus on growing our SES business by selling our superior therapy to competitive physicians. Two, growing the market through our expanded indications such as PDN, which continue to show solid growth in the quarter. Three, beginning to realize early results as our SI joint business gains traction in the second half of this year. And four, leveraging our SI joint business to sell more SES devices into competitive accounts. It gives us confidence that we can achieve our full year revenue guidance of $435 million to $445 million. We also reported a net loss from operations of approximately $35.8 million and adjusted EBITDA of negative $9.6 million. As it relates to the first pillar of our strategy, commercial execution, in the first quarter, sales reps who joined Nevro in the second half of last year continued to ramp up on the business, and we commenced the limited market release of our SI joint products. We also continued to focus on educating our customers on the benefits of our superior SES therapy. We are driving the increased adoption of HFXIQ, our newest generation SCS system that brings a multitude of benefits to the patient and physician. HFXIQ represented 58% of our total permanent implants in the first quarter, a 5% increase from the fourth quarter of 2023. To broaden access to this therapy for more patients, in mid-April, we launched a solution for nearly half of the patients who do not have a compatible iPhone, including those with an alternative smartphone device. As we've previously communicated, our real-world data shows that our HFX IQ system, in combination with the cell phone app, helps patients get back to pain relief faster than those who use a traditional remote by allowing the patients to have more input on and control over their therapy. We expect continued HFX IQ adoption as we educate the market on the benefits of this therapy. We also continue to advance our second strategic pillar of market penetration, where our focus is on expanding into new indications, developing and launching enhancements to our HFX IQ system, executing on our robust R&D pipeline, and, as appropriate, targeting additive acquisitions to drive profitable growth. In the first quarter, we focused on integrating our newly acquired SI joint fusion business and, as I just mentioned, commenced the limited market release of our SI joint products and prepared for the broader release of our SI joint products to the market throughout the remainder of this year. By expanding our product portfolio to include solutions for SI joint pain, we are now engaging with physicians who have not previously utilized our products to now offer treatment options for patients with different chronic pain conditions. Notably, We believe that 15 to 30% of low back pain is caused by SI joint dysfunction. In the U.S., approximately 1.9 million patients receive an SI joint diagnosis annually, representing a $2 billion market opportunity. Through this expansion in therapeutic options for pain patients, we are now able to address more patient needs and leverage our SI joint solutions into business at competitive SES accounts where we previously did not have access. During the quarter, we conducted several SI joint fusion training sessions for physicians and our sales reps with a primary focus on NEVRO-1, a standalone device with integrated transfixing technology that has proven to immediately transfix the SI joint to allow the opportunity for long-term fusion. Year-to-date, more than 220 physicians participated in our SI joint training sessions. Many of them are current customers who took the time to learn a new SI joint fusion procedure so they can utilize our innovative products to treat their patients suffering from chronic pain. Early feedback from physicians who attended our training sessions has been very positive, and they believe Nevro-1 is an excellent treatment option for patients suffering for SI joint pain. We continue to see significant physician interest and demand for training on our SI joint products, particularly Nevro-1. As we roll out our SI joint products across the market, many of the physicians that we trained are identifying patients in their practice who suffer from mechanical back pain that could benefit from an SI joint fusion procedure. Importantly, we continue to train our sales force and are leveraging our commercial team to drive adoption and growth. Also, as adoption of our SI joint products increases, we will gain greater access to physicians who might be interested in using our SES products to treat their patients. as many physicians who perform SI joint fusion procedures also implant SCS devices. We are also thrilled that in February, the Food and Drug Administration granted 510 clearance for NEVRO 1 without the need to include the NEVRO fixed group. This marks the first regulatory clearance since we acquired Versa late last year. NEVRO-1 as a standalone device represents a significant advancement in SI joint fusion, and we believe it is the most efficient, effective, and safest SI joint fusion implant currently available on the market. As a healthcare company with a vision to free patients from the burden of chronic pain, we remain focused on increasing awareness of SCS as a treatment therapy for painful diabetic neuropathy, or PDN, and other indications. At just under 1%, the PDN market remains significantly under-penetrated, and we are working to develop this market with our innovative technology and superior clinical data. Diabetes is a major global public health concern and continues to grow in prevalence. It can lead to a variety of complications, including nerve damage, reduced circulation, diabetic ulcers, and limb loss. In the first quarter, 24-month data from our CINZA PDN-RCT demonstrate improvement in sensory function that could lower the risk of diabetes-related ulcerations and traumatic amputations for patients suffering from severe side effects in diabetes was published in the Journal of Diabetes Science and Technology. We continue to be a leader in developing superior clinical data showing the efficacy of our best-in-class 10 kilohertz technology. As we've discussed on prior earning calls, our PDN clinical sensory study is designed to more objectively prove the sensory improvements that we observed in our initial randomized controlled trial, or RCT, and to obtain an SES indication beyond just pain. We're pleased to share that enrollment in this study now stands at 143 patients ahead of our plan. As a result of this robust enrollment and the strong outcomes demonstrated in our CINSA RCT, we are pausing enrollment in the PDN Sensory Study to allow for an interim primary endpoint analysis of all subjects who are randomized from this existing cohort. While the results of the analysis may indicate restarting enrollment in the future, our goal is to bring trial results to publication as soon as possible for the benefit of patients and review for inclusion in therapeutic guidelines. The third pillar of our strategy is profit progress. We remain focused on executing key initiatives to become more efficient, scaling our Costa Rica manufacturing facility and maintaining disciplined expense management to expand margin and achieve profitable growth. We made good progress on this front in the first quarter as demonstrated by adjusted EBITDA coming in ahead of our expectations. We are taking additional restructuring steps to make Nevro a stronger, healthier, and nimbler company so that we can advance our three pillar strategy and accelerate our path to profitability. We are laser focused on managing our expenses and aligning our cost structure with our business and have identified areas and key initiatives that we believe will drive growth and profitability. We continue to invest in our R&D pipeline to develop and commercialize innovative treatment therapies for patients suffering from chronic pain. Rod will discuss our full year guidance in more detail, but as a result of our first quarter performance, additional restructuring steps, and outlook for the remainder of this year, we are raising our adjusted EBITDA guidance to a range of negative 5 million to positive 2 million. As part of these steps, I'm thrilled to announce that Chris Cristoforo has been promoted to the newly created role of Chief Operating Officer. In addition to his current responsibilities leading our manufacturing processes and research, development, and innovation efforts, as well as spearheading the integration of Versa into our operations, Chris will now have oversight of clinical and regulatory affairs and quality assurance. Chris has been with Nevro for eight years, and during this time, he has proven to be a valuable member of our team. His strong leadership skills, technological experience, and deep knowledge of the med tech industry make him the right choice to serve in this role. We continue to transition more of our manufacturing to our Costa Rica facility, and as we sell down inventory that is produced by our second source supplier and manufacture more in Costa Rica, we expect to see increased margin expansion over time. We will also leverage our Costa Rica facility, which is supported by best-in-class manufacturing experts and technology as we grow our business through new products we develop as well as tuck-in acquisitions. In summary, over the past year since I joined Nevro as CEO, we've made significant progress in advancing our three-pillar strategy to further position our company for the opportunities ahead of us. We're excited about our future as we have multiple growth drivers in the SES market, including through expanded indications as well as the SI joint fusion market. We entered the fast-growing SI joint fusion market through our acquisition of Versa and are focused on ramping up that business. We will continue to differentiate ourselves through our unique 10 kHz technology that produces superior outcomes. And we will continue to capitalize on meaningful leverage opportunities to drive long-term profitability, generate positive cash flow, and deliver shareholder value. I will now turn the call over to Rod for a discussion of our first quarter financial results in 2024 second quarter and full year guidance.