Katherine Bock - Senior Director of Corporate Development and Investor Relations Michael DeMane - Chairman and Chief Executive Officer Rami Elghandour - President Andrew Galligan - Vice President of Finance and Chief Financial Officer.

Michael Weinstein - J.P. Morgan David Lewis - Morgan Stanley Danielle Antalffy - Leerink Partners LLC David Turkaly - JMP Securities Joanne Wuensch - BMO Capital Markets.

Good afternoon. My name is Connor, and I’ll be your conference operator today. At this time, I would like to welcome everyone to the Nevro Fourth Quarter and Full-Year 2015 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks there will be a question-and-answer session.

[Operator Instructions] Thank you. Katherine Bock, Senior Director of Corporate Development and Investor Relations, you may begin your conference..

Thank you, Connor. And thank you all for participating in today’s call. Joining me are Michael DeMane, Chairman and Chief Executive Officer; Rami Elghandour, President; and Andrew Galligan, Chief Financial Officer. Earlier today Nevro released financial results for the quarter and year ended December 31, 2015.

A copy of the press release is available on the Company’s website.

Before we begin I’d like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements.

All forward-looking statements, including, without limitation, or examination of historical operating trends and our future financial expectations, which includes full-year 2016 guidance, are based upon our current estimates and various assumptions.

These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements.

For a list and description of the risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission.

Nevro disclaims any intention or obligation except as required by laws to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 29, 2016.

And with that, I’ll turn the call over to Michael..

Thank you, Katie and thanks everyone for dialing in today, good afternoon. As you may recall Nevro released preliminary unaudited fourth quarter and fiscal year 2015 revenue on January 11, of this year. So for today’s call I will start with the review of our final Q4 and audited full-year operating results.

And then take a brief look back on Nevro’s milestone packed 2015. I’ll then cover revenue guidance for 2016 and close my introductory comments with the few words about the planned executive succession announced earlier today. Following my comments Rami will provide some U.S.

launch insights and speak to our year-end target for field headcount and then Andrew will follow with a deeper financial review. Then we’ll open it up to your questions. So lots to cover, let’s go ahead and start. I am pleased to report that our fourth quarter and full-year revenue results both came in on the high end of our pre-announced range.

Worldwide revenue for the fourth quarter was $33.1 million, an increase of 241% as reported and 287% constant currency. U.S. revenue for the quarter, the second full quarter of launch of our HF10 therapy in the United States was $19.8 million.

These fourth results reflect robust, customer adoption and United States launch of our HF10 therapy and solid execution by our field organization. Additionally, fourth quarter international revenue was $13.3 million, which represents a 56% increase on a constant currency basis.

In our view, this international growth rate is significantly above the underlying market growth rate in those markets. So let's now look back at 2015. From a revenue perspective a good year for Nevro with full-year revenue of $69.6 million, an increase of 114% as reported or a 152% constant currency.

Included in those numbers are international revenue of $45.3 million, which represents an increase of 62% constant currency and U.S. revenue of $24.3 million from our midyear launch. Beyond the numbers 2015 was a year of significant progress towards our goal of leadership in the neuromodulation field and in our view has set us up quite well for 2016.

Our long-standing focused on first-in-class clinical evidence was rewarded and validated with the May FDA approval of the Senza System with superiority labeling.

This milestone was followed later in the year with CMS approval of a transitional pass-through payment since the agency determined that HF10 therapy fulfilled its substantial clinical improvement criteria based on the level one SENZA-RCT data.

We saw peer-reviewed publication of the 12 months SENZA-RCT study in July, which was followed by the unveiling of long-term outcome data at NANS, which showed that HF10 pain relief and superiority was sustained at 24 months compared to traditional stimulation of patients with back and leg pain.

But in my view one of the more satisfying achievements in the past year was the validation of our strategy calling for a controlled U.S. market launch of HF10 therapy.

Recall building on our learnings from the past five years in international markets, we set about to systematically and methodically deliver on the promise of HF10 therapy in the clinic and to hire and wire, so to speak to deliver superior outcomes to patients in need as we scale the organization.

It was a thoughtful plan, and the exceptional Nevro organization executed the plan well, driving outcomes and therapy adoption.

And with continued confidence in these commercialization plans and market momentum, we are increasing the full-year 2016 total revenue guidance to $155 million to $165 million up $10 million from our January 11 preliminary guidance for the full-year. Now, if I may, I would like to segue into the executive succession announced earlier today.

I couldn't be more pleased with this progression for the Company. Rami Elghandour, who is known to most if not all of you on the call today, will assume the role of President and CEO effective the 1, June.

I will simultaneously assume the role of Executive Chairman of the Board and will remain actively engaged with the Board and Rami on an ongoing basis. Three things I want to emphasize here, first Rami is an exceptional talent, one of the best I've seen in my 35-year career in the med tech.

He has profoundly contributed to what Nevro is today and he has done the key architect and driver of our very successful U.S. launch. He either has been involved in or managed every corner of this organization. All told I’m absolutely confident that he can and will lead the Company to ever greater levels of success.

Two, this was a deliberate process, one in which I work closely with the Board and Rami to assure a seamless transition. In anticipation of this succession Rami took on direct management responsibility for the sales organization and other critical functions such as R&D, clinical and regulatory and human resources last year.

As I expected he has taken those added responsibilities in stride and he clearly has the capacity and capability to go to the next level. Consistent with a deliberate and thoughtful succession, the effective date of leadership change is a full three months away.

And third, it goes without saying, I care deeply about this Company, this incredible organization, this remarkable therapy. I intend to remain actively involved with the Company, the Board and with Rami on a go forward basis.

Rami and I have developed a very synergistic working relationship and we both expect that productive relationship to continue in the new structure. And so with that, let me now pass the call over to Rami..

Thanks Michael. First and foremost I’d like to take a moment to thank Michael DeMane for his outstanding leadership and unyielding commitment to Nevro.

Over the past five years Michael and I have seen Nevro growth from an outsider to a leader within the field of neuromodulation and I very much look forward to his continuing engagement with me and the Company as our journey has just begun. As Michael mentioned 2015 was a year full of measurable progress which has set us up for great success in 2016.

In addition to validating our clinical evidence, we also defended the novelty of our innovation by decisively defeating an IPR patent challenge on our intellectual property. And with a focus on patient outcomes, our U.S. launch established the foundation for the long-term adoption of the therapy in 2016 and beyond.

In my many conversations with physicians adopting HF10 therapy I came to realize that our work as continued something very special. To them we are not simply delivering on the promise of HF10 therapy. We are delivering on the promise of what they hope neuromodulation can mean for their patients.

As a result, physicians are rejuvenated and excited about their ability to help patients in a way that they previously could not and patients are benefiting in a way that is changing their lives.

This feedback reinforces our unique position in the market which has been our ability to translate the power of HF10 therapy from clinical study to everyday clinical practice to a focus on patient outcomes.

Our position is a function of our unique and protected product of course, but it is equally dependent on our commercial strategy and the resulting infrastructure that we built to ensure the consistent application of HF10 therapy.

While we have a clinically superior product, we also recognized the importance of execution in the medical device market and we are well-prepared to continue to execute in 2016 and beyond as evidenced by our increased U.S. guidance. The U.S. launch continues to exceed our expectations as we believe we are both taking share and expanding the market.

Our patient mix is approximately 50% equal back and leg pain, approximately 30% predominant back pain and approximately 15% predominant leg pain. Those mix reflects what we have been able to accomplish namely providing physicians the ability to treat a broader patient population that incorporates back pain patients into their practice.

As we have said in the past our hiring plan is to fill the remaining empty territories in our launch plan and bolster existing territories with additional resources to continue to drive broader adoption of HF10 therapy.

So on the hiring front we ended 2015 with 100 hired and trained reps and our targeting expansion of our field team by a minimum additional 60 hired and trained reps this year. As target number allows us to fill the majority of our remaining empty territories and is consistent with our current guidance.

Additional hiring beyond the 60 will be driven by our adoption and productivity trends so to be clear there is no upward limit on the number of reps we are prepared to hire in 2016.

As we have said, we are building a foundation for peak adoption of HF10 therapy and we will continue to hire the very best talent consistent with our launch plan and growth trajectory. In addition to reflecting our current guidance this hiring target also reflects our latest views on productivity.

With respect to productivity, we will recall we initially guided our expectation of revenue per rep in the range of $1.3 million to $1.5 million in 18 to 24 months. We now expect to get to that same $1.3 million to $1.5 million productivity in 15 to 18 months.

This update supports our belief that there are increased commercial efficiencies in our business model based on the superiority of our therapy coupled with the ability to expand the market by treating back pain.

This combination supports the faster productivity ramp by driving more rapid adoption of HF10 therapy while allowing physicians to significantly grow their practice by treating more patients. This allows our reps to focus on a smaller number of accounts making them more efficient.

We will continue to provide the number of reps hired and trained on a quarterly basis so the first quarter of hiring update will be on our next earnings call. With respect to the transitional pass-through payment we are in the initial stages of educating centers on using the high-frequency code provided by CMS for use of HF10 therapy.

Just last week CMS updated the high-frequency code to further specify in the code language that it is based on the SENZA-RCT study and the results demonstrated that 10,000 hertz paresthesia-free stimulation “provide the substantial clinical improvement in pain management versus the low-frequency spinal cord stimulator”.

This updated language further validates the uniqueness of our therapy. For the January 1 effective date we are now two months into what is a 2 to 3 year evaluation period for a pass-through code, just stay tuned for more updates on this front in the future.

Finally, in terms of expanding our platform to many more patients in need we expect to initiate additional feasibility studies this year. These early feasibility studies are meant to identify a signal serving as the first step in the multi-year road towards a new indication.

They are indicative of our commitment and belief in the platform applicability of HF10 therapy and our commitment to remain a leader in neuromodulation through investment in research and development. As we work towards the successful 2016 we expect to see sustained success in our U.S.

launch along with investment in key R&D and clinical initiatives to bolster our product offering and expand access to HF10 therapy to more patients in need. And with that, I would like to turn the call over to Andrew Galligan, our CFO for the financials and a more detail review of our guidance.

Andrew?.

Thank you, Rami. Revenue for the three months ended December 31, 2015 was $33.1 million, an increase of 241% year-over-year on a reported basis and 287% in constant currency. This increase was primarily due to the launch of HF10 therapy in the United States. U.S. revenue was $19.8 million in the fourth quarter, the second full quarter of our U.S.

commercial launch. International revenue was up 37%, to $13.3 million from $9.7 million during the same period of the prior year. This represents constant currency growth of 56%. Going forward on this call, all revenue growth rates will be stated on a constant currency basis.

Europe has 76% year-over-year growth for the quarter and Australia had growth of 22% compared to the prior year quarter. As mentioned on previous earnings calls due to constraints such as capitation and increasing market share in international markets. We expect our international growth to moderate in the future.

Gross profit for the fourth quarter of 2015 was $20.4 million or 61% gross margin as compared to $6.7 million or 69% gross margin in the same period of the prior year. Gross margins decreased year-over-year partly as a result of costs incurred in association with ramping our operational infrastructure in response to the U.S. product launch.

Additionally, while costs were primarily incurred in U.S. dollars international revenue was negatively impacted by the deprecation of the U.S. dollar, which negatively impacted the overall gross margins for the period. As we continue to grow revenue we expect to expand margins by improving efficiency and further leveraging our manufacturing overhead.

Operating expenses for the fourth quarter of 2015 were $33.5 million an increase of 143% compared to the fourth quarter of 2014. The increase in operating expenses was driven primarily by increased headcount and related personnel costs. Net loss from operations for the period were $13.1 million compared to $7.1 million for the fourth quarter of 2014.

Now turning to the full-year 2015 revenue was $69.6 million which represents a growth of 152% in constant currency. U.S. revenue was $24.3 million. Europe had year-over-year growth of 73% and Australia had growth of 43% year-over-year. With regard to Australia, Nevro participated in a self-reported PWC market survey for the first time in mid-2015.

Let me correct for the periods we did not report and add our numbers to the PWC reports. We show a growth in our market share of IPG units from 26% in 2014 to 33% in 2015.

In terms of total revenue, we grew from 25% of the market in 2014 to 30% in 2015 with our lower installed base and higher trial to implant ratio, we have a lower share of lead and accessory revenue than our competitors leading to a higher IPG share relative to total revenue share.

Turning back to our financial results, gross margins were 60% in 2015 compared to 65% in 2014. Operating expenses for 2015 were a $103.9 million, an increase of a 109% compared to 2014. The increase in operating expenses was driven primarily by increased headcount and related personnel costs.

Net loss from operations for the year was $62.4 million compared to $28.3 million for 2014. At the end of the fourth quarter of 2015, we had $193.7 million in cash and cash equivalents and short-term investments. Turning to our outlook, we are increasing our revenue guidance for 2016.

We are updating our worldwide revenue guidance for the fiscal year 2016 to be in the range of $155 million to $165 million, up from our preliminary worldwide revenue guidance which was in the range of $145 million to $155 million.

For gross margins in 2016, we expect to end the year of approximately 65% with progress towards this number during the year. With regard to our operating expenses for 2016, we expect quarterly operating expenses to trend upward to a total of approximately $160 million for the year.

We plan to continue hiring experienced sales representatives to support the rollout of HF10 therapy with a minimum of 160 reps in the field by the end of 2016. The peak quarters for sales force hiring will be in Q2 and Q3 with lower levels of activity in the first and final quarter of the year.

With regard to revenue modeling, we guide to an expected average unit price of between $23,000 and $25,000 and the sales productivity will be between $1.3 million and $1.5 million with a 15 to 18-month period to get to that productivity.

We have improved the rent guidance of productivity from our earlier guidance of 18 to 24 months based on our experience in the market to date. Now back to you, Mike..

Thank you, Andrew. So wrapping this up, I'm very pleased with our position right now. An incredible, truly differentiated therapy, a great plan, and a talented and motivated organization all pulling together to make a difference for patients. I feel very good about the road ahead.

And I am especially pleased with Rami’s succession to CEO in three months. Let me remind everyone that this is a leap-year February 29 doesn’t come along every year. Because of their rarity, leap years are widely believed to be lucky omens. I think the succession announced today fits pretty darn well under that good omen umbrella.

So with that that concludes our prepared remarks. Connor, could you now open the call up for questions..

[Operator Instructions] Your first question comes from the line of Mike Weinstein with J.P. Morgan. Your line is open..

Thank you. And good afternoon guys. First of all, Rami, congratulations, very excited for you. Let me start with a couple questions. First, I wanted to ask on the CMS pass-through payment, and I thought the updated language, which was news to me, was also very encouraging.

Could you just tell us what you know at this point in terms of the range of potential incremental reimbursement per hospital, if you have any additional insight that you can share at this point, and then your sense as of this point in the year, what impact that is having on utilization?.

Rami you want to take that?.

Sure. Michael, thank you. With respect to the CMS transitional pass-through payment we don't have much of an update with respect to that impact. I think Michael said at the J.P.

Morgan Conference that it could be anywhere from zero to couple of thousand dollars and we are just so early in the going here we’re hesitant to comment on any deeper level of specificity.

I think the impact that it's having on the market is just as additional validation of the therapy and of the clinical evidence base you add this to the superiority labeling and the buzz around the market of how the therapy is impacting patient lives and physician practices and it makes for a very compelling case for HF10 therapy..

Rami, where are you guys in the ability to help individual hospitals recognize that - what that dollar amount means to them? Are you at a point where you're able to say to each hospital this is what using Senza can mean incrementally to your bottom line?.

That’s a great question Mike. So I’ll answer in two ways. One, we absolutely have the team in house that is able to help the hospitals in anyway they can manage through this process.

Having said that our ability to help them is depended on proprietary information that the hospital actually has, so it’s a little bit of collaboration if you will to really get the right information help explain to them the formulas and how all of those things kind of play out to move the ball forward.

So let’s just say it's not an overnight discussion. It takes some time, and we’re in the process of doing that, educational process..

Thank you.

Can you just talk a little bit about Europe at this point? You've been talking for quarters now about the expectation that just because of the size of the rechargeable market in Europe, limitations in terms of your offering and your ability to service the whole market, that you would start to see some slowdown in growth, and obviously you haven't seen that to date.

Can you just talk about where you think you are in market share in rechargeable in Europe at this point?.

Yes, so as you know while we have great visibility for the moment in Australia we have very, very poor visibility in Europe. There are no good sources of information.

We have been saying for a long time that we think we are about 30% of the market and we’re very reticent to change that number without having a better view of what the overall market size is there. That said, I continue to be cautious about the prospects for European growth.

I think Europe has a lot of ongoing issues at the moment and I’m continually surprised that they're doing as well as they are doing and it speaks to I think the power of the therapy that in various hospitals and various doctors are finding corners of budget to actually contribute towards this.

And it just – it speaks to the power of the therapy, it’s just – we can’t know how long that will continue..

Okay. Two more questions from me and then I will let others jump in. So one, the hiring plans on the rep front for the U.S. for 2016 is obviously much more aggressive than you were thinking at the time you initially launched the product.

Can you talk about the ability, or the, say, the supply, the attractive candidates to fill those positions and how that looks today? And then second, is there anything new on the patent or legal front that we should be aware of? Thanks..

Rami you want to take the first one..

So thanks for that, Mike. What I think obviously with our continued success here we are able to increasingly continue our hiring and focus on the very best talent.

Having said that obviously I'll kind of state the obvious when you're playing with a green field here and every territory in the country is open, it's easy as you encounter great rep to put them in a spot.

Now that we’ve filled a large number of our territories, it does become more and more challenging to when you encounter a great rep to also find the right territory and the right spot for them. So I think we’re striking that balance pretty well. We continue to focus on finding the very best talent.

Continue to place them and we feel very good about our hiring plan this year..

Thanks Rami. And Mike to the second part of your question, we have nothing to report on the IP front..

Okay. Thank you guys..

Thank you..

Thanks Mike..

Your next question comes from the line of David Lewis with Morgan Stanley. Your line is open..

Good afternoon..

Hey David..

I would just join Mike in my congratulations to the entire team, and specifically Rami. But just a few quick questions. I guess first for Rami, thinking about the rollout and specific conditions, I wonder if you can give us a sense of how these physicians are converting.

Are you seeing broader adoption in physicians who are doing 5% and 15% of their cases, or are we seeing the greater preponderance of these physicians sort of moving to 30%, 50%, 80% sort of share conversion? Our diligence suggests you're being still specific about which positions you're targeting.

I'm wondering if that's leading to higher share conversion than maybe we expect..

It’s a great question. David and look we’re seeing conversion ratios across the board. We’ve talked about it in the past. Probably the single biggest positive surprise out of the launch is the number of physicians who converted fully in that first quarter and continue to have a few more in the second quarter as well.

So obviously have those at the top end of the range, you have enough physicians that are converting in significant chunks if you will if you want to call that 30%, 50% plus conversion very quickly. And then you certainly have some at the lower end of the range as well.

So I couldn't really break it down to you by percentages obviously other information, but not something that we would share, but overall we feel like the conversion is pretty robust due to the targeting and the superiority of the therapy. And I think that's laid an incredible foundation for us here heading into 2016..

Okay. And just a couple quick ones. Another one just on the broader market, in terms of competitive response, you launched now for a few quarters, we've seen primary sale launches from certain competitors in Europe. We've seen Burst, obviously, therapy in the U.S., at least from a data perspective.

Can you just give us any sense of the broader competitive impact that's come from the incumbents and what impact, if any, it's had on the business?.

Sure. So right now and I think we’ve said this in the past and we still feel that way, we haven’t really felt the brunt of the competitive response.

And I think we’ve been able to uniquely position ourselves in the market on A) the back of the data, but, B) the follow-through in that we really are delivering on the promise of the therapy and I shared in my prepared remarks a comment that really has been made by several physicians about what that’s really meant for them.

So at this point obviously the competition will only intensify as we continue to be successful, what we feel good about executing our game plan and continuing to find success with that game plan on a go forward basis independent of the competitive reaction..

Okay. And Andrew last question. Sounds like gross margins will be more back half-loaded than front half loaded. I did notice your inventories have stepped up 50% the last two quarters.

So is that the principal dynamic here in the first half of the year that you're just seeing, so it's dramatic expansion in the inventories that’s going to weigh on GMs, until we sort of maybe get to a more measured pace in the back half of the year?.

That is certainly one of the trends there and as we’ve said I think previously I mean part of what we’ve done to mitigate the risks of a large ramp is that we’ve preloaded our ramp to give us a more robust and supply chain. Because the worst thing we can do is actually start supplying doctors and not turn up one day without any product.

So we’ve taken it with – used our balance sheet to assure supply. But that does mean that the inventory is already in place, so that weighs on margins for a period..

Okay. Good problem to have. Thank you very much..

Thanks..

Thanks David..

Your next question comes from the line of Danielle Antalffy with Leerink Partners. Your line is open..

Hey, good afternoon guys. Thanks so much for taking the question and congratulations to everyone, especially Rami. And, Mike, we will miss you, but Rami, excited to work with you in your new role. I just wanted to follow-up on the rep hire question. So 160 or more by the end of this year, I think on average industry somewhere in the 250 to 300 range.

Just wondering how you think about, given your thoughts on higher rep productivity, how we should be thinking about longer-term what the right number is here to be at scale from a rep perspective and participate in all corners of the market in the U.S.?.

Thanks, Danielle. So as we’ve said I think that question is hard to answer. I mean unless we know to what degree we are really going to grow the market.

Obviously, we’re pretty encouraged by both our ability to take share and grow the market at this point, but from here on out once our territories are filled it’s going to be very much demand driven and that demand won’t be linear from the perspective of just being driven by share, but also by market expansion.

So I think what we’ve said in the past and we don't really have any information that would have us change that, is that we could see ourselves on the top end being at the lower end of our competitor, so in that mid-to-high 200s potentially over the long-term.

But we’ll obviously continue to do the right thing, find the best talent and scale the business according to the demand that we’re seeing in the marketplace..

Okay. That is helpful. And then just wondering on the pre-back surgery patient population, so it is already on – or can be used on label, but not currently reimbursed.

Are you guys in a position at this point to provide any color on the strategy to pursue that patient population, even from a higher level and how big that patient population could be?.

So Danielle first, I mean it’s a great question, but first let me just correct some of the terminology a little bit. We’re being very explicit that these are patients for which spine surgery would not be indicated and would not be successful. So the term we use is non-surgical refractory low back pain..

Got it..

And that is very distinct in that, what we don't want is our therapy utilized on patients for whom surgery is the right option. That would be bad for the system, bad for the Company, bad for the therapy.

So with that clarity, just maybe reiterate, those patients right now are on label, so there is not a – we don't have to get a label expansion from a regulatory sense in order to access those patients. And the commercial payers, I mean like all commercial payers, it's kind of some have no problem, some challenge a little bit.

But in general, I would say we have access to those patients and I think it's really going to be a matter of two things. One, making sure that the customer base really gets comfortable with this therapy and the power of this therapy and I think that is underway right now.

The second part of it is where we started and that is to make sure that there is clarity and understanding on the part of the physician or neurosurgeons, so that they appropriately triage the patients and bring in patients that, in fact are appropriately indicated for this..

All right. Thanks so much..

Thanks, Danielle..

Your next question comes from the line of Dave Turkaly with JMP Securities. Your line is open..

Thanks, and congratulations, Rami. Hey, how are you? Hey, thank you for the additional color on the – in the implants today, as well. I guess Rami, off the bat, I'd love to get your thoughts here from, if I heard you right, about the mix, the 50-30-15 back and leg back and then predominant leg.

How does that compare to what you expected? You mentioned market expansion, 30% predominant back seems like you're seeing it may be even more rapidly than some of us had anticipated.

But how does that compare versus what you thought, and I guess looking ahead, should we expect that to continue?.

Thanks, Turk. So what we’re seeing here to us represents our view of the composition of the market. So in all the research that we’ve done leading up to the launch going back a couple of years here, our view is that the leg pain population comprised somewhere at 20% plus or minus 5% of the market.

And in terms of when I say the market not the actual patients being implanted with the spinal cord stimulations, but the patients present them to an interventional pain specialist or neurosurgeon and the remaining patients overwhelmingly have some component of back pain equal – either equal back or leg or predominant back.

So I think what we’re seeing is what we expected which is we’re treating a percentage of patients that seem to represent the existing leg pain driven SCS market and a significant component of market expansion by treating patients with a significant component of that pain..

Thank you. That's helpful and great to know some of these - the back side, which could be a really sizeable opportunity, is already - you're doing well there.

And as a follow-up, realizing it is still very early in your launch and we know it is a concentrated market in terms of procedures, but I was wondering if you could share any thoughts when an account says no or maybe initially not interested. What do they point to or what do they bring up? Thanks a lot..

Sure Turk. So obviously given our highly targeted approach, it’s a scenario that we haven’t run into too often.

But generally speaking, it’s a function of some sort of existing relationship et cetera with one of our competitors, right, and those things can go fairly deep with respect to research involvements and teaching involvements and things of that nature that can become gets a plan to unwind.

I think additionally obviously there is a lot going on in the market these days there is a lot of accelerated work on behalf of the competition in terms of marketing either existing or future products, and that could take some education to really help differentiate our product from those sorts of upcoming initiatives from the competition.

Principally because, as we’ve said in the past not everyone goes to these big society meetings and necessarily has been privy to the data and the presentations, a lot of this market really happens on the ground day-to-day on a rep-by-rep levels.

So I would point to those two things, but again I think overwhelming it is not really an overwhelmingly common occurrence..

Good to hear. Thanks a lot..

Thanks, Turk..

Your next question comes from the line of Joanne Wuensch with BMO. Your line is open..

Good evening and congratulations to both of you..

Thanks..

A couple of quick questions.

The - do you feel that commenting on the quarterly revenue gate as we go through 2016, particularly now that you've raised guidance?.

Yes, no plans to give quarterly guidance if I understand that to be your question, we’re going to stick annual guidance..

Okay.

But you feel the three numbers accurately reflect seasonality?.

We are sticking to annual - as you know, we’ve always said declared that we would do full-year guidance and we are going to stick with that right now..

Okay. That's fine. Just making sure..

Yes..

Second question has to do as we think about research and development staying relatively high throughout the next 12 to 18 months, I know you're in the early stages of Senza for back and leg pain.

Can you comment on when we may see approvals and/or clinical data for other applications?.

Sure, Joanne. So as I said those things are multiyear type processes I think if you recall we initiated a study on upper limb and neck pain that's ongoing that would probably be the first thing to report unlikely to have data this year maybe late this year or early next year at the earliest.

Beyond that obviously all of these feasibility studies that will start this year are going to take sometime to make progress on them and report data, so there are longer-range initiatives it takes time obviously in this market to give us the right way on feasibility pilot and then ultimately pivotal studies but we will be sure to let you know once we have something to look for..

Okay. And then my final question, the OUS international numbers continue to be quite strong. You seem to be somewhat surprised that they continue to be quite strong. Why do you think that is, and when do we have to worry about sort of waking up one morning and it not being particularly strong? Thanks..

Okay. So I mean we kind of nibbled around this I think for a few quarters now. And I think it gets to number one, the fact that we are expanding the market. That clearly is going on.

And we’ve always known that Joanne, I mean when we’ve talked one-on-one in the past, we’ve talked about the fact that we know that we typically go into accounts, they tend to be market expanding first cases and then from there we expand the size of that practice and then we also start to do get share as well.

It's hard to quantify that as to exactly what the breakdown is all though we do track that in the United States and have shared kind of the pain distributions to give you a flavor for what's going on. Now, you're right, we have flagged for several quarters now that we expect to see that attenuate – that growth attenuated.

And the reason for that is what Andrew said and that is some of these markets are inherently capitated, and it does require a certain amount of resourcefulness on the part of our customers to clear out the capitation and scrounge and get some money to basically allow the market to expand.

So that’s the infrastructure or the inherent limitations that we’re fearful of that we’ve highlighted as a risk in order to be transparent with investors. But we’re very, very pleased with what we’re seeing so far. We just don't know how long it goes..

Terrific. Thank you so much. End of Q&A.

There are no further questions at this time. I will turn the call back over to Michael DeMane for closing remarks..

Thank you, Connor and thank you once again for joining the call today everyone. We appreciate your continued interest in Nevro and look forward to our next progress update. Have a good day..

This concludes today's conference call. You may now disconnect..