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Shockwave Medical's (SWAV) New Buyout to Boost Patient Outcome

Shockwave Medical, Inc. SWAV has announced its entry into a definitive agreement to acquire Neovasc Inc. The transaction is expected to be completed in the first half of 2023, subject to customary closing conditions.

Neovasc is a company focused on the minimally invasive treatment of refractory angina. The buyout will add its Reducer System to Shockwave Medical’s portfolio of products.

The Neovasc Reducer System has been granted Breakthrough Device designation by the FDA, is CE-marked and is currently enrolling patients in the COSIRA-II study. The study is a randomized clinical trial which is being conducted under an Investigation Device Exemption intended to support the FDA approval for patients with coronary obstructive refractory angina.

The latest acquisition is expected to aid Shockwave Medical in significantly expanding its global footprint in the cardiovascular disease treatment space and solidifying its position worldwide.

Rationale Behind the Buyout

Per estimates, in the United States and the European Union (EU) alone, up to 300,000 new patients with obstructive coronary disease who are ineligible for conventional revascularization experience refractory angina each year, despite guideline-directed medical therapy. It is also estimated that up to 500,000 new patients with angina and non-obstructive coronary artery disease are added in the United States and the EU each year.

Per Shockwave Medical’s management, the Reducer will likely be an excellent fit for the company as it is expected to enable it to apply its capabilities to address another large, unmet need within cardiology — refractory angina.

Industry Prospects

Per Shockwave Medical’s estimates, the market for refractory angina is anticipated to be around $5 billion. The company is also optimistic about strengthening its foothold in the market as it believes there will be no distraction to its U.S. sales organization in the near term. Shockwave Medical also expects to refine its commercialization approach and begin the development of international markets in advance of U.S. approval, similar to what it did with its coronary device, C2.

Given the market potential, the buyout seems to have been timed well.

Notable Developments

In November 2022, Shockwave Medical announced that the final 1,373-patient cohort analysis from the Disrupt PAD III Observational Study again demonstrated consistent Intravascular Lithotripsy (IVL) outcomes in complex and challenging lesions across multiple peripheral vessel beds.

The same month, Shockwave Medical reported its third-quarter 2022 results, where it registered a robust uptick in its overall top line. During the reported quarter, it received the FDA’s clearance for the Shockwave IVL System with the Shockwave L6 Peripheral IVL Catheter. The company also received CE marking for the Shockwave C2+ coronary catheter in Europe and was granted reimbursement for the Shockwave C2 Coronary IVL Catheter by the Japanese Ministry of Health, Labour and Welfare.

Preliminary Results

Shockwave Medical has also reported its preliminary results for the fourth quarter and full-year 2022.

For the fourth quarter, it expects its revenues to be between $143 million and $144 million, reflecting an increase of 70-71% year over year. The Zacks Consensus Estimate of $142.2 million lies below the preliminary figure.

Per Shockwave Medical, its full-year revenues are likely to be $489 million-$490 million, reflecting an increase of 106-107% over comparable 2021 figures. The Zacks Consensus Estimate of $486.6 million lies below the preliminary figure.

Price Performance

Shares of Shockwave Medical have gained 32.9% in the past year against the industry’s 13.7% decline and the S&P 500's 13.4% fall.

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Zacks Rank & Key Picks

Currently, Shockwave Medical carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. AMN, Cardinal Health, Inc. CAH and Merit Medical Systems, Inc. MMSI.

AMN Healthcare, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 3.3%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 10.9%.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

AMN Healthcare has gained 5.4% against the industry’s 24% decline in the past year.

Cardinal Health, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11.7%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 3%.

Cardinal Health has gained 46.8% against the industry’s 2.3% decline over the past year.

Merit Medical, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 11%. MMSI’s earnings surpassed estimates in all the trailing four quarters, the average beat being 25.4%.

Merit Medical has gained 25.6% against the industry’s 2.3% decline over the past year.

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