Dive Brief:
- Nevro acquired Vyrsa Technologies, a company that makes a minimally invasive treatment for chronic sacroiliac joint pain, the companies announced on Thursday.
- Nevro agreed to pay $40 million upfront and an additional $35 million in milestone payments. It values the SI joint market at more than $2 billion and expects it to grow by double digits over the next several years.
- The purchase could help spark investor interest in Nevro, J.P. Morgan analyst Robbie Marcus wrote in a research note. “Ultimately, we think the main priority for investors will continue to be the outlook for [spinal cord stimulation] and Nevro’s ability to either hold or return to capturing share, a challenge that will take both time and improved execution to address.”
Dive Insight:
Vyrsa, which is based in King of Prussia, Pennsylvania, makes a system for fusion of the SI joint to alleviate chronic low back pain. It also makes an allograft implant for SI joint fusion.
Nevro did not share details on Vyrsa’s revenue, but it expects the acquisition to be accretive to revenue next year.
Marcus estimated Vyrsa’s revenues at roughly $7 million in 2023, adding that the company could grow to nearly $20 million next year with a smooth integration. He wrote that the company’s comprehensive portfolio and posterior approach differentiate it from competitors. One of them is SI-Bone, which had nearly $140 million in revenue in 2023 and holds about 70% market share, William Blair analysts wrote in a research note.
“Our initial knowledge in the SI joint market suggests there could be some market development efforts required to tap into the full multibillion-dollar opportunity, but the addition of another company like Nevro to the field would likely only increase awareness of SI joint pain and drive demand for innovative solutions,” they wrote.
Nevro also announced it had closed a six-year, $200 million term loan credit facility. It will use the proceeds to refinance the majority of its 2025 convertible notes and for working capital. CFO Rod MacLeod said the refinancing would push the debt maturity out to 2029.
In the most recent quarter, Nevro reported revenue of $103.9 million and a net loss of $23.5 million.
The company recently named Kevin Thornal as its new CEO and faces increased competition in the spinal cord stimulation market from Abbott and Medtronic.