{ "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": 197, "pageCount": 239, "prevPage": 196, "nextPage": 198, "slideType": "expose_contradiction", "function": "expose_contradiction", "density": "overcrowded", "nDataPoints": 4, "notes": "The slide uses highlighted quotes from an ex-executive to frame the company's pricing strategy as a 'stupid move' that destroyed value.", "elementsJson": [ "headline_text", "paragraph", "bullet_list", "quote_block", "footnote" ], "metadataConfidence": 1, "imagePath": null, "slideHref": "/slides/019dd923-622c-750b-8b9a-2a2468219173/197", "deckHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173", "deckJsonHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173.json", "deckAnchorHref": "/decks/019dd923-622c-750b-8b9a-2a2468219173#slide-197", "components": [ { "bbox": null, "kind": "callout", "text": "The ex-executive described the price conditioning as ruinous: “a stupid move”; “one of the dumbest moves you could ever make.”", "attrs": null, "subkind": null, "toolName": "Visual emphasis", "toolSlug": "visual-emphasis", "confidence": null, "componentId": "019dd953-3f3d-76db-b347-b4e66fe2a3db", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.03, "w": 0.88, "x": 0.06, "y": 0.71 }, "kind": "list", "text": "Nevro then jumped off the cliff and now has an “ongoing problem” of a downward price spiral.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "8a903491-df66-40b3-9716-32c9e1d51ab3", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.05, "w": 0.88, "x": 0.06, "y": 0.32 }, "kind": "list", "text": "Until 2018/2019, Nevro never engaged in channel stuffing – “bulk orders” – given its dependence on an extremely small number of large accounts and the risk of destroying its ASP.", "attrs": null, "subkind": "bullet", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "9e4a3a46-9d02-48d4-a896-24276bad4a80", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.12, "w": 0.88, "x": 0.06, "y": 0.13 }, "kind": "paragraph", "text": "Second, the former executive stated that Nevro has an “ongoing problem” kicked off by channel stuffing in 2018/2019, which has conditioned accounts to expect ongoing concessions and led to a price-cutting spiral. Our research suggests the new CEO has reinforced the behavior by doubled-down on discounts. The ex-executive described the price conditioning as ruinous: “a stupid move”; “one of the dumbest moves you could ever make.”", "attrs": null, "subkind": "paragraph", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "e277c755-18c1-4a23-86da-2a3dc2847b51", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.25, "w": 0.83, "x": 0.11, "y": 0.39 }, "kind": "quote", "text": "“We would never allow bulk orders, ever, under any circumstance, given the sensitivity of the pricing. The one thing that I really want you to take away from this conversation are the high-volume implanters. That’s really the nuts and bolts of the spinal cord stimulation business. For example, the highest volume doctor in Wisconsin is [name redacted] and he does over 200 stims a year. The closest guy next to him probably does 30. You can put a similar state-by-state tapestry together. These high-volume stim users own their ASC’s. I can say, “I’m closing out the quarter and my average sale price to you is $27,000, but if you order 25 for next quarter, I’ll knock it down to $22,000-$23,000.” Rami was trying to save his job. And everybody looks like they win off for one or two quarters. But the problem is that now you eroded your ASP and you’re not making it up with new customers, and your existing customers are at capacity at 100 stim’s a year.” – Nevro ex-executive", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "449ed698-7e9f-41e8-9526-cea5e3290dc6", "frameworkName": null, "frameworkSlug": null }, { "bbox": { "h": 0.15, "w": 0.83, "x": 0.11, "y": 0.76 }, "kind": "quote", "text": "“The ongoing problem that Nevro has is that once doctors start paying $2,3,4 thousand dollars less per device they say “Well, I don’t want to go back to the high price” and of course an Abbott will match that price because it’s new business for them. It was a stupid move. Fundamentally, it was one of the dumbest moves you could ever make. The reps were dumb enough to go along with it and ultimately, all it does is it drives pricing down.” – Nevro ex-executive", "attrs": null, "subkind": "testimonial", "toolName": null, "toolSlug": null, "confidence": null, "componentId": "6f37f8de-d6a2-40c7-ad86-b39f7c734883", "frameworkName": null, "frameworkSlug": null }, { "bbox": null, "kind": "quote", "text": "“We would never allow bulk orders, ever, under any circumstance, given the sensitivity of the pricing... I’m closing out the quarter and my average sale price to you is $27,000, but if you order 25 for next quarter, I’ll knock it down to $22,000-$23,000.” — Nevro ex-executive; “The ongoing problem that Nevro has is that once doctors start paying $2,3,4 thousand dollars less per device they say ‘Well, I don’t want to go back to the high price’ and of course an Abbott will match that price because it’s new business for them. It was a stupid move. Fundamentally, it was one of the dumbest moves you could ever make.” — Nevro ex-executive", "attrs": null, "subkind": null, "toolName": "Authority citation", "toolSlug": "authority-citation", "confidence": null, "componentId": "019dd953-3f3d-76db-b347-b999d0067148", "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": "477a2034-ca8c-4ca9-8283-7d22629155b3", "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": "289cdd71-6994-4368-b9fb-ee91346227bb", "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": "e32b3a09-6610-4420-8d8c-30f066609956", "frameworkName": null, "frameworkSlug": null } ], "metrics": [], "tools": [], "frameworks": [ { "name": "antagonist-introduction", "slug": null, "matchId": "eb123428-7f62-4cb7-a723-2a6f2693b4f6", "evidence": "The slide frames the company's management and pricing strategy as the 'villain' causing its own collapse.", "confidence": 0.8 } ], "arcBeats": [], "loops": [], "imagePathAlt": null, "thumbSrc": null, "thumbSrcAlt": null, "locked": true }