Nevro (NYSE:NVRO) announced that the FDA approved manufacturing operations in Costa Rica for the production of its spinal cord stimulation (SCS) systems.
Redwood City, Californa-based Nevro’s new facility sits in the Coyol Free Trade Zone in Alajuela, Costa Rica. It produces proprietary SCS systems that treat chronic pain, including the HFX product platform.
The facility represents the company’s first global manufacturing operation. Nevro said this ensures greater controls and efficiency while augmenting manufacturing nad supply chain partners.
“We are pleased that the FDA has approved our new global manufacturing operations in Costa Rica,” said D. Keith Grossman, chair, CEO and president of Nevro. “As part of our growth plans moving forward, this manufacturing facility will support our pipeline of future products to ensure that we have the most efficient cost structure and flexible capacity, while maintaining the highest level of quality control as we scale. Thank you to our excellent Costa Rica team for delivering this very meaningful milestone for Nevro.”
Nevro joins a growing list of medical device companies that have based manufacturing in the Central American country since the 1990s — attracted by its political and economic stability, educated workforce and proximity to the United States.
Investing in the Costa Rica plant
Nevro plans to begin shipping product by the end of this month. Next, it expects a gradual ramp-up of production for the balance of the year and throughout 2023.
The company predicts gross margin expansion to expand starting in 2023. It expects an increase over three to five years from the high 60s% to the mid-70s%.
By the end of 2022, Nevro expects its investment in growth initiatives at the facility to total approximately $21 million. That investment includes capital and operation expenses for ensuring greater controls and efficiency in the manufacture of products.
Currently, the company employs around 100 employees at the 41,000-square-foot plant.
“This investment will allow us to continue to accomplish our mission to deliver comprehensive, life-changing solutions that continue to set the standard for enduring patient outcomes in chronic pain treatment,” said Christofer Christoforou, VP of technical operations at Nevro. “The capabilities and operations are fully scalable and will allow us to accommodate additional growth and expansion of our product platform.”