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Shockwave Medical (SWAV) Q3 Earnings Beat, Revenues Rise Y/Y

Shockwave Medical, Inc. SWAV reported third-quarter 2023 earnings per share (EPS) of 92 cents, which beat the Zacks Consensus Estimate of 81 cents by 13.6%. The company reported an EPS of 68 cents in the year-ago quarter.

Revenue Details

Revenues totaled $186 million, up a massive 42% from the prior-year period’s level. The top line also beat the Zacks Consensus Estimate by 0.6%. The growth was primarily driven by an increase in the purchase volume of products, both in the United States and abroad.

Revenues from coronary products grew nearly 50% during the third quarter, while peripheral product sales improved approximately 30%. Coronary franchise sales were driven by the strong adoption of new coronary device C2+ in international markets. The device was launched in the U.S. market during the third quarter.

While U.S. revenues were up 33% year over year, International revenues grew 88%. Internationally, SWAV’s sales were boosted by strong momentum in Germany, the United Kingdom, Italy, Spain and France.

Q3 Highlights

In August, the Centers for Medicare & Medicaid Services (CMS) created new Medicare Severity Diagnosis Related Group (MS-DRG) codes and payments for coronary Intravascular Lithotripsy (IVL) in the hospital inpatient setting.

Per the new codes, new coronary IVL-specific MS-DRGs are associated with higher payments than the MS-DRG payments for other Percutaneous Coronary Intervention procedures. Again, the CMS established a Category I Current Procedural Terminology add-on code for procedures involving coronary earlier this month. Under this new category, physicians will get a 20-30% increase in remuneration for the additional work associated with performing coronary IVL.

In September, SWAV appointed Nick West as the Associate Chief Medical Officer (CMO), who will likely succeed Dr. Dawkins as CMO in mid-2024.

Margins

Gross profit in the reported quarter was $161.5 million, up 42.3% year over year. As a percentage of revenues, the gross margin in the quarter was 87%, up 100 basis points year over year.

Sales and marketing expenses amounted to $56.9 million, up 35.2% from the prior-year quarter’s level. Research and development expenses totaled $39.5 million, up 95.9% on a year-over-year basis.

Operating income totaled $43.6 million compared with the year-ago quarter’s level of $36.8 million.

Financial Position

Shockwave Medical exited the third quarter with cash, cash equivalents and investments of $917.3 million compared with $258.6 million in the previous quarter.

Total assets amounted to $1.47 billion compared with $786.6 million at the end of the second quarter of 2023.

2023 Revenue Outlook

For 2023, Shockwave Medical continues to expect revenues in the band of $725-$730 million. The projected top line implies growth of 48-49% from the prior-year period’s level. The Zacks Consensus Estimate for the same is pegged at $729.8 million.

ShockWave Medical, Inc. Price, Consensus and EPS Surprise

ShockWave Medical, Inc. Price, Consensus and EPS Surprise
ShockWave Medical, Inc. Price, Consensus and EPS Surprise

ShockWave Medical, Inc. price-consensus-eps-surprise-chart | ShockWave Medical, Inc. Quote

Wrapping Up

SWAV ended the third quarter on a positive note, wherein both earnings and revenues beat their respective Zacks Consensus Estimate. The company exhibited significant revenue growth in the same quarter. Strong top-line growth across all categories is also encouraging. The expansion in gross margin buoys optimism as it will likely boost earnings going forward.

Management is optimistic about the continued clinical acceptance and penetration of IVL. Considering the fact that the C2+ device holds a strong demand in the international market, the launch of the same in the United States looks promising. This is due to the technology’s strong results in the quarter under review as well as a higher outlook for 2023 revenues. Moreover, higher pay rates for physicians for IVL procedure is likely to benefit the adoption of SWAV’s products, thereby boosting its top-line growth.

However, an increase in operating expenses is a concern.

Zacks Rank and Other Key Picks

Currently, Shockwave Medical carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, DexCom DXCM and Integer Holdings ITGR.

Abbott, carrying a Zacks Rank #2 at present, reported third-quarter 2023 adjusted EPS of $1.14, which beat the Zacks Consensus Estimate by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Revenues of $10.14 billion outpaced the consensus mark by 3.6%.

Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 6.76%.

DexCom reported third-quarter 2023 adjusted EPS of 50 cents, which beat the Zacks Consensus Estimate by 47.1%. Revenues of $975 million beat the Zacks Consensus Estimate by 4%. The company currently carries a Zacks Rank #2.

DXCM has a long-term estimated growth rate of 33.6%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.43%.

Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27 and revenues of $405 million, which beat their respective Zacks Consensus Estimate by 21% and 8.7%. It currently carries a Zacks Rank #2.

ITGR has a long-term estimated growth rate of 15.8%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.98%.

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