Nevro Corp. (NYSE:NVRO) Q3 2023 Earnings Call Transcript

Simran Kaur: This is Simran on for Adam. Thank you guys for taking the questions. I just wanted to start off on a comment that you guys made on the HFX iQ launch. I think you said iQ represented 43% of implants in Q3. We are now over 6 months into the iQ launch. And I think previously, the team had said it would take six to nine-months for the launch to represent 75% to 80% of the mix. So just any further color on how that launch has relative to your expectations. Any learnings that you can share from reps in the field?

Rod MacLeod: Yes. Hi, Simran, this is Rod. Yes. So we are a touch behind the curve where we would have thought that we be at this point. And there have been a couple of things that have impacted the launch, although we still continue to see a trajectory that is going up and to the right. But you know, as we have mentioned before, we did, as Kevin just mentioned, we had a large training class. We had some open territories. And we are making the changes within the sales force to bring them up to speed, get the new folks trained. That probably had a little bit of an impact there. Some of the larger contracts, it took us a little bit longer to get on contract with those, but we had some pretty good successes in Q3 that we should start to see some of the results of that.

And then we also thought that we would be selling iQ internationally with BSI approval. And we are, I think we are not the only ones in saying that we have had experienced some delays out of BSI on that. But that certainly delayed that entering into the mix as well in terms of the iQ launch. But those are some of the bigger areas that have maybe slowed it down a little bit from where we thought we would be. But as I said, we are still continuing to go up that ramp.

Simran Kaur: And just a quick follow-up on the initiatives that you guys have implemented regarding the salesforce. I guess I just want to fully understand, are those initiative completely implemented and digested, or do you still have some open territories here and there, that you kind of need to right size? And then how should we think about the salesforce over the remainder of the year and in 2024 in terms of size and productivity?

Kevin Thornal: Yes, pretty much, thanks for those questions. Pretty much the open territories are 1b2s at this point. We filled most of those, the last couple of quarters. And as I said, they have been in and out of their training courses that have been here. So that is good. The implementation and the enhancement of the comp plan is all done. The reps have the numbers that they are marching towards has finish up the year, as we head into the end of the year. And obviously, we will continue to tweak everything, as we head into 2024, but in large, everything, that was the big initiatives are behind us and absorbed and the team is running hard out in the field.

Operator: The next question is from Robbie Marcus with JPMorgan. Your line is open.

Unidentified Analyst: This is actually [indiscernible] on for Robbie. Just a question on gross margin, it came in a bit softer in the quarter, and I was hoping you could just talk more about your expectations for fourth quarter in light of the HFX ramp and what a reasonable assumption is for margin expansion next year and longer term given all the puts and takes from the legacy pricing, HFX and Costa Rica?