Great. Good morning. My name's Bill Plovanic. I am one of Canaccord's senior analysts in the medical technology vertical. Welcome to Canaccord's 43rd Annual Global Growth Conference. We're excited to host Nevro with us today, and we have Kevin Thornal, CEO, and Rod MacLeod, CFO. Thank you for joining us. Today's format will be a short 5-10 minute company overview presentation, and it will be followed by a 15-20 minute fireside chat. We'll also be taking live questions from the live audience. With that, Kevin, the podium is yours. Perfect. Thanks, Bill, and thanks for having us here today. I'm starting off with setting the pace for SCS. Wanna tell you what SCS is. Spinal cord stimulation, basically, it's a small little device that has a battery inside of it that's connected to leads that go inside the spinal column, and it interrupts the signals from pain, from leg and back pain to your brain. These are chronically, pain, chronic pain patients, that most of them can't even walk anymore, or they have trouble walking, and after you put in the spinal cord stimulation, oftentimes there's great results for patients to be able to get the feeling in the back and legs again. We have other indications as well that we'll talk about and uses for it that we're really excited about. Forward-looking statements. Really, what's unique about us is that we are the only spinal cord stimulation company that has 10 kHz frequency. We call that high frequency, which is our technology, it's called HFX. High frequency is superior by FDA standards to low frequency, which is what all of our other competitors have, because it's paresthesia pain management, paresthesia-free pain management. What that means is that the low-frequency devices, whenever you turn them on, causes tingling sensation to help relieve the pain. With us, you don't have any of that paresthesia or that tingling in the patients. We've had over 100,000 patients implanted with this device, and the unique part about us as well is we've been collecting data for over 10 years of all 100,000-plus patients. We use that data to be able to help us create artificial intelligent algorithms that can help patients based upon prior patient success. We have three uses for the device. One is failed back surgery, back and leg pain. The second is non-surgical back pain, so these are patients that would never have a open, big, open spinal fusion procedure. Last but not least, our new indication, which is for patients that have painful diabetic neuropathy, and we'll talk about that here in a second. This is all we do. We're a spinal cord stimulation company. We compete against three major giants in healthcare, but they do things like cardio, neurovascular, other things like that, and this is 100% what we do. We go after the indications, and we do real-world clinical trials to be able to help get new indications and reimbursement for the devices. We're sitting right now at a $726 million market cap as a few days ago, right now. Really, the story is we have large, under-penetrated markets. Even with some of the big competitors there, there are plenty of patients that could be implanted with these devices that aren't today because it's still an early and up-and-coming technology, specifically high frequency. If you look at the left-hand slide, that is the current revenue in this space right now. If you look at the right-hand side, this is the potential market that could be if all the patients in those categories were to get spinal cord stimulation. As you can see, it's a very large, almost $18 billion annual market opportunity, and we're only 8% penetrated in the back and leg pain market. The most exciting thing to talk about is. Ooh! The slide went dead here. I don't know if I turned it on or. But it's PDN, which is painful diabetic neuropathy. Painful diabetic neuropathy is, think about patients that have diabetes. Most of the time, it's because they're not compliant with what they've done. These are patients, if you've seen pictures, they have leg ulcers. A lot of times it leads to amputation, and when it leads to amputation, obviously, that does not allow patients to get up and ambulate and walk around, which causes the diabetes to go into a spiraling effect. If you look at the number of. Oop, it keeps going off and on. That's all right. If you look at the number of patients that have diabetes, it's a large number, and then out of those, about 20% will have painful diabetic neuropathy. These are miserable patients, and they're patients that, without any kind of intervention, will have those, those issues. Out of that, it's still a large market, $3.5 billion-$4 billion of opportunity, and we said publicly we'll do about $75 million-$85 million in that market, and we're the market leader. Still a large, under-penetrated market. It's becoming a larger part of our growth story as well. Last quarter, we grew 73%, $11 million-$19 million just in the PDN segment. As I mentioned, we are the leaders in that space, and it's only 2 years after the indication. What we're doing now is educating endocrinologists and podiatrists on this disease state and that spinal cord stimulation can help. We have now 205 million covered lives. If you think about that in the population of the U.S., most of the population is now covered. We are the ones that went out and got that, those not only indications, but the coverage from Medicare as well as some commercial payers, to be able to take care of these patients and have life-saving technology. Oh, well, I'm gonna go with there. Our newest technology is HFX iQ. Obviously, artificial intelligence is everything of the rage right now. We've been working on this for over eight to nine years, building up a database and a large data lake that we can mine to be able to say, "These are the types of algorithms that patients typically do well on." We have all the feedback from the patients, and the great thing is, with your app, a patient can go in and every day answer four questions about how they're doing, how much pain medication are they taking, how much are they ambulating, and based upon those answers, over time, it gets to learn exactly what makes you feel better, and the algorithm adapts over time to your personalized care. You think about personalized care and AI and large data, we're the only ones in the market that have this for spinal cord stimulation. We're also scaling towards profitability, so one of the things that we did over the last few years is launch a new manufacturing facility down in Costa Rica. We're gonna take margins from the high 60s to the mid-70s, which will drive us towards profitability. We can scale this manufacturing facility as well to also take on new products that we're developing for the future. With that, we've got a really good path towards profitability. We're a growing market, low penetration. We have new indications that we can go out and sell to, and we just gave guidance that we'll be $410 million-$415 million revenue for this year. With that, we'll turn it over to Bill for questions. Excellent. I'm impressed you were able to keep going in the presentation-... without the presentation, so at least, we know you know your business. Thank you. I think, you know, we'll every, every call always starts off with guidance, so we'll start off with guidance here. You lowered the fiscal '23 recently on the recent call, and it was well below what we're all looking for, right? You gave us two reasons, the sales org change and, and the nonlinear recovery in spinal cord stim, and perhaps maybe we saw some other players in the market a little weak. Talk about the balance of these two weightings on the guidance reduction. How, how are you thinking about it? Is this... You know, the question always comes down, are they just being super conservative 'cause they don't know? Or, you know, what's, what's really going on? Yeah, hit those 2 things. Number 1 is, you know, we were expecting 1 of our competitors to also grow in the quarter. We grew 4% last quarter, but they actually declined 4%, so that was a 8-point swing difference than what we were thinking, that gave us a little conservatism to say, "Is this just seasonality? Is the market recovering?" And just for everybody's sake, after COVID, this is a highly physician preference and elective procedure, and it takes time for patients to get through the funnel, 'cause they have to fail conservative treatment first before they're eligible to get reimbursement for this device. Oftentimes that can take 8 months to 1 year for patients to go through that, that cycle. That was number 1. The second is, when I, when I got to the organization, you know, I've been blessed to be at two large organizations, where one already had a world-class sales organization, and the other one, we built it from scratch, knowing what we took from the first one, and we were not a world-class sales organization. So I brought in somebody else, a 17-year veteran named Greg Siller from Stryker as well. That's where Rod and I sort of got our, our career starts as well, and we are gonna build a world-class sales organization. Already built it mainly through Q2, but a little bit still into Q3 that we'll need to do. Really, the conservatism comes from giving time for us to have the realignment come together, and then also the conservatism around the market recovery and seasonality in Q3. Summer months, people are on vacation and often don't wanna... Right ... an elective procedure. So, you know, as you think of the sales organization, I think the comments of most of it in Q2, a few are. When do you have, like, all the leadership and field sales force fully changed in place? Yeah. 'Cause usually it's what? 6-9 months after that before you really start seeing that productivity. That's right, that's why we lowered the guidance for the rest of the year, those 2 reasons, we project by January of next year we'll be off to the races with all the sales territories. Now, don't forget, we still have pretty good market share in this space, and we've gained that over the last 8-9 years, and we still have great territories that are doing unbelievable. It just was not consistent across... There's really a handful of things that when you say sales, we didn't say reorganization, we said realignment. Number 1 is A-plus talent at every position, using organizations like Gallup to ensure that we only hire the best of the best. The 2nd is filling open territories with speed. You can't have an open territory in this market, because a physician will use somebody else the next day if there's no one, no one there to take care of that surgical procedure. The, the really the biggest change that we made, though, is aligning the teams in each territory to work together as a team. They were reporting up into different managers that were back in the home office. I'll just tell you, people in the home office, we don't know anything that's going on in the street. The people closest to the customer are the ones that know the most. Now we've realigned those territories, so we have groups of people in, say, a city like Dallas, that are now marching for the same quota. They get bonused if the whole team wins and hits their quota. Hmm ... that wasn't part of their compensation plan. They were all doing separate things, for us, it's pretty simple, but it wasn't what was going on at Nevro prior to that. Those are the key things. When, when did you, remind me, when do you start? end of April. 24th That's a lot of changes pretty fast You know, I've been taught by some pretty good CEOs that have been legends in, in healthcare. Whenever you know you need to make a decision, you make it now, because you're just delaying the inevitable. You're getting off to delaying the start of any kind of recovery or any kind of change or adaptations that you need to have in the business. Then with this realignment, your words- Yeah. Is that, you know, do you feel comfortable that that was the biggest changes, and are there any incremental you'll need to make, or is it kind of we're set and ready to go at this point? We're set and ready to go. Salesforce optimization is always continuous. If you're not hitting quota, you're gone. It's only winners that get to stay at organizations that pay the kind of money we pay for salesforce, our salesforce, to go out there and win and take market share. Okay. Switching to the guidance on EBITDA, you know, you're, you're looking for a loss of $25 million-$28 million for the year, $8 million-$10 million for Q3. That implies positive in Q4. What are the levers that are helping you getting there? 'Cause that's a pretty big change. Yeah. One, one is just the scale of the business. You know, in, in years past, we've said when we get to about $110 million on a quarterly revenue rate, we're at about breakeven, maybe slightly positive adjusted EBITDA. With, with inflation, with merit increases, with, with some of those things that have gone on, on a, you know, more macro basis, that number's a little higher than that now. You know, if you're, if you're, if you're looking at our, at our fourth quarter, there's a couple things going on. One is we do expect to start to see some of the benefits of the Costa Rica manufacturing site coming in. We'll start to see product being sourced from Costa Rica flowing through cost of sales in a meaningful way in the fourth quarter. We will also see our IQ product starting to get to a meaningful part of our mix in the fourth quarter. With any new product in the med device space, you generally expect to get a little bit of a bump from a pricing standpoint. From a margin perspective, we will get a little bit of benefit from, from price, we'll get a little bit of benefit from cost, and that's, that's really kind of a, you know, the lion's share of what's helping to drive a little bit of leverage. We continue to manage our expenses tightly. In our business, Q1 almost always is one of our largest operating expense quarters, just with some sales meetings and one of our largest shows of the year. As, as we go throughout the year, we don't necessarily see a lot of, a lot of growth there. Gotcha. Let's, let's shift over to technology and just the spinal cord stim market. I'm gonna put a pin in the PDN for now. Let's talk about the core SCS. First of all, you've been at some good organizations. You left and came here. What about the technology drew you to Nevro? Then second of all, I mean, everybody wants to understand: when is SCS gonna start basing and growing? Like, I've been watching this market, I think you mentioned the complexity, you know, it's elective, but even the kind of the complexity for the patient to go through the process, I think is pretty high. We're all wondering, does this market come back? What's gonna be the catalyst to get it to come back? Yeah. I'll take your, your last one first. Just from the market recovery standpoint, we did have one large company report double-digit growth in Q2. We showed growth, one showed decline, and we have the fourth that'll announce sometimes towards probably four or five weeks from now, a large player. We'll know a little bit more about the market when they, when they report. I was, I was gonna think... Yeah, I'm sorry. The one that reported growth, from my understanding, launched a rechargeable product- Correct. ... which they had never been in that segment of the market, so they probably were able to just, because of that, stock a bunch and get a bunch of customers that they'd never touched before that wanted that, right? Don't know, maybe. You know, you know more information than I do about that, probably, but from talking to them. There was a lot of reasons for that as well. I think they, they had patients that were ready for a non-rechargeable, so basically a, a battery that would die after a year or two, and those patients were likely waiting for the new technology. Why install something that's gonna last for 10 years if it's the older technology, if you can wait a quarter to get the newer technology? Is probably part of it, at least what we think, and then they also probably enjoyed a price increase, just like we do on, on iQ. We'll see what the market totally does when, when the last, are, are going to report here in a few weeks. The core market right now is quarter by quarter. Mm. It ebbs and flows. Like, Q1 was a really good. All four of us actually grew in Q4 of last year and Q1, so the trend was looking great until that's what gave me pause, when I saw one not grow for the first time in the last six months. So we'll see what it looks like for this year. Doctors want to do this procedure. Referring physicians still have the patient. It's not like pain and back and leg pain went away. It's those referral networks between the people that see the patients to refer them over to the spinal cord stimulating implanters that was broken during COVID, right? You can't do lunch and learns, you couldn't do education events and those kind of things. That's what helps referring physicians go, "Ooh, I do have 5 patients that would be a, a great candidate for that." It's our job as industry to go back and make sure that now we can do all the live meetings to make sure that we can do the education. Going back to why I joined Nevro, there's 2 reasons. Number 1 is we do have highly differentiated technology with high frequency that's patent-protected. Someone tried to infringe on that, we won $200 million from them because they infringed on our patent, that was nice to know that we have, you know, a differentiated technology. The 2nd is the clinical studies that we have. I mean, we're the only company in spinal cord stimulation that's done multiple real-world clinical trials and that randomized clinical trials, and that's what helps get indication, and it's also what helps get reimbursement. We're putting the money in the things that we say is important. Then last but not least, we have a unbelievable board, a supportive board, and one of the reasons they came after me was, one, my commercial experience, but also, my M&A experience, both at the previous two organizations. We believe that we have a great opportunity to not only add more products into the bag from our R&D standpoint, that we already have a pipeline of products in, in the works, and number two, go out and add some, some products that's right into our wheelhouse and call point, also. We're actively seeking. We won't do anything stupid, but we have a good balance sheet and an opportunity to, to leverage that massive sales force that we have into the call point. That's where we're really gonna get a lot of leverage in our P&L as well for the future. We, we've got about 2, 3 minutes left. Just as you talk about new products, and again, we'll come back to PDN in a second, is... Yeah. Is it going to continue to be pain, do you think? You know, if you, if you had to rank what you're looking at, and if you're willing to share that- Yeah. Is it, you know, PNS? Is it pain? Is it other indications with the current SCS? You know, what kind of or is it just something totally different? How should we think about it? Yeah, we're definitely leveraging our sales force and the call points that they already go to today. They, they call on pain management physicians, they call on ortho and neuro spine surgeons, so it'll be something in that space. Because we have 500 people out in the field, we need to leverage those people and drop something in the bag. That was sort of the secret of the last two organizations, right? You get leverage out of your P&L, your reps have more things to talk about, and then you also get to go into competitive SCS accounts and go try to convert them over to our core SCS technology as well. Call point will for sure be where we are today. The thing that we're looking at, and we're looking at both of these, is the... What, what other what other procedure do these physicians do? It's either going to be leveraging our expertise in neuromodulation and stay close to home in the technology that we know, or it's gonna be something like a mechanical back pain that those physicians are already doing that spinal cord stimulation can't address because it's, you know, obviously neuropathic pain that we're solving, but a lot of patients also have mechanical pain that you need to adjust with some other technology that, that's out there. Gotcha. Okay, let's talk about PDN. What are you seeing in the market today? I think we've been surprised maybe by you had two competitors come in, and, and them actually getting share without data was surprising. What are you seeing in the market today, and you know, how do, how do you think of this in 12, 24 months, and outside of the guidance, but, you know, where are we kind of in market development, growth, competitive landscape? Yeah, we're, we're not even... If you take a baseball analogy, we're just doing batting practice right now. We're not even in the innings of the real game yet. It's early days of PDN. These patients are the most debilitating, and they've never had an answer for painful diabetic neuropathy. It's one of the hardest things that an endocrinologist or podiatrist has to deal with, and now they feel like, "Holy cow, there's an answer for some of my worst patients." I think we're in early innings on, on that. We also just talked about our earnings call, that call, that we're enrolling patients in our new Sensory Study. The question is always: Well, you've already got the indication and showed that it's over 90% of the patients get over 50% pain relief, lowering A1C and lowering body weight. Like, drugs don't even do that, and we're able to do that because of you're relieving pain, and people can get up and walk, and once you can walk and ambulate, you get better as a diabetic patient. We're on early stages of showing the clinical studies. We need one more RCT to be able to get into things like the ADA guidelines. That's the secret to success, is getting on guidelines in these societies that actually follow guidelines. Oncologists and endocrinologists, these are people that if their societies say, "This is the best pathway and algorithm for patients," that's the home run, and that's still in our future, which is really exciting. We're gonna enroll about 200 patients, and we're about 20-25 right now. Gotcha. We have one from the audience. Thanks to you both. Kevin, you, you guys had a significant presence at ADA. Yeah. What did you learn about the awareness of what you guys are doing in that, that particular market? Yeah, awareness is still very low right now, and that's our job, to educate, right? You always think that, oh, a big clinical trial comes out, every doctor just saw that. They don't. They have so much information flying into them, so it's our job to go educate. We have said we have a sales force that's specifically for PDN. It's 50-70, depending upon when, when we hire it up, and their job is to go educate endocrinologists and podiatrists about this life-saving technology. We're still really early. Like I said, it's still batting practice right now, but it's our job to be able to do that. We did have a large stage presence at ADA, and we had one of the world's leading endocrinologists, Dr. Klonoff, as well as one of our implanting physicians, Dr. Erika Petersen, on the main stage to be able to educate. It's still. Like I said, this is the second year we've been there. This is a growing part of our business that we're excited about. It's unbelievable medicine for patients. Great. I think with that, we're over time, so thank you so much. Appreciate it. Yeah. Thanks, Bill, for having us. No. Thanks, everyone.