{ "docId": "019dd923-622c-750b-8b9a-2a2468219173", "docSlug": "ce565b841c40", "documentTitle": "Nevro Corp. (NVRO)", "authorId": "58_Scorpion_Capital", "authorName": "Kir Kahlon", "documentKindSlug": "activist-deck", "documentKindLabel": "Activist deck", "sourceTypeSlug": "short_seller", "sourceTypeLabel": "Short seller", "presentationDate": "2021-01-07 00:00:00", "orientation": "landscape", "aspectRatio": 1.3333334, "pageNumber": 195, "pageCount": 239, "prevPage": 194, "nextPage": 196, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "Uses expert testimony to frame the company's pricing strategy as a terminal failure.", "elementsJson": [ "headline_text", "bullet_list", "quote_block", "footnote" ], "metadataConfidence": 0.95, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-2a2468219173/195", "deckHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173#slide-195", "components": [ { "bbox": null, "kind": "callout", "text": "With 25% of the physicians driving 70% of the revenue, you see massive price erosion, so although Omnia might be their flagship, what percentage of sales is coming from it?", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f3d-76db-b348-ba61b3eb8c58", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.88, "x": 0.06, "y": 0.57 }, "kind": "list", "text": "He implied that Nevro has no way out and that ASC’s will crush pricing post-Covid", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "325ce3f8-3095-4526-896d-d572a7d4f326", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.08, "w": 0.88, "x": 0.06, "y": 0.27 }, "kind": "list", "text": "He stated that price declines are about to accelerate, worsening the already “massive price erosion,” as ASC’s seek discounts to compensate for the impact from the pandemic. He added that a small percentage of high-volume physicians drive most of the volume and use their leverage to extract discounts.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "c55533fa-4622-41e8-a744-ea0949e20c30", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.88, "x": 0.06, "y": 0.13 }, "kind": "paragraph", "text": "He stated that “the massive price erosion” is about to worsen as Covid-hit surgery centers seek to make up lost revenue by demanding even deeper discounts. He painted a grim picture of dependence on a small number of high-volume, price-seeking ASC’s with little loyalty, and large competitors slashing pricing to offer “deals.” He stated he’s “pessimistic” about the company’s future and can’t see how “Nevro really wins this.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "730554df-352d-4ace-959f-17b5a078a16f", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.18, "w": 0.85, "x": 0.09, "y": 0.37 }, "kind": "quote", "text": "“As a perfect example. Dr. [redacted] does 240 cases a year. Nevro used to price him in the high to upper $20-thousands. He’s now is buying the same product in the upper teens. That’s a huge erosion of price and that’s where the market is. This year, I think it’s going to come down even more because so many of these ASC’s have been kind of done. With 25% of the physicians driving 70% of the revenue, you see massive price erosion, so although Omnia might be their flagship, what percentage of sales is coming from it? 5%? 10% Those are the questions, as an investor I would ask.” - Former Nevro executive", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "0f5ad22c-7678-43f8-a557-c58960b0c68c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.28, "w": 0.85, "x": 0.09, "y": 0.62 }, "kind": "quote", "text": "“The reason I’m pessimistic is, how does Nevro really win this? They don’t have any new technologies. They only have one real platform, and Omnia doesn’t really attract new customers. They have their existing customer base, which is in real trouble with Covid. When you look at the next 18 months, the high-usage implanters, who are where the value is, are going to be looking for deals. Medtronic, Boston Scientific, and Abbott give out those deals— a $5,000 discount on a stimulator is an immense amount of money if you’re doing 75-100 stims a year. So I think there’s going to be some real pricing pressure coming out of Covid. For sure. These guys that own ASC’have payrolls that are a couple of hundred thousand dollars for every couple of weeks because some of them have 20-30 nurses on board. The real importance after Covid s going to be on pricing. The loyalties go away almost immediately.” - Former Nevro executive", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e66004c6-6522-4825-93cc-34217275c3d1", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "\"The reason I’m pessimistic is, how does Nevro really win this? They don’t have any new technologies. They only have one real platform, and Omnia doesn’t really attract new customers.\" — Former Nevro executive", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f3d-76db-b348-bef7d58c679c", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.02, "w": 0.2, "x": 0.06, "y": 0.96 }, "kind": "source-note", "text": "Source: Consultation calls with experts", "attrs": null, "subkind": null, "toolName": null, "toolSlug": null, "confidence": null, "componentId": "dda49ac6-37e3-4630-b40b-44e7b6d5253b", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.88, "x": 0.06, "y": 0.09 }, "kind": "title", "text": "15. Pricing pressure and discounting are a key driver of Nevro’s collapse and doom any return to growth", "attrs": null, "subkind": "action-title", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "52fe12fb-b8e4-46b3-8d3b-38a685a7072e", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.4, "x": 0.06, "y": 0.04 }, "kind": "title", "text": "Scorpion Capital | Nevro (NYSE: NVRO)", "attrs": null, "subkind": "headline", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "255a837e-fc9f-4247-a0c8-ae0c3dd16f10", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "authority-citation", "slug": null, "matchId": "f69457da-7713-4fea-b79e-492621c02f6d", "evidence": "Uses former executive testimony to validate claims", "confidence": 0.9 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }