I completely agree with you on this company and appreciate the post. I don’t usually invest in medical device companies as there are many pitfall however SWAV has been an exception. I have been in SWAV since it was in the 40’s. A motley fool article (free) brought my attention to this company back in March. At that time I researched it further by come of my colleagues that work in cardiology to see if their products were being adopted and indeed they were. I remain invested and I follow their earnings reports, FDA approvals, supportive medical studies and international expansion. They guide conservatively to date. They really got hit with a Covid quarter and since then their results have been impressive. SWAV does have a breakthrough technology which is a device that helps open up calcified coronary and peripheral arteries through lithotripsy. Lithotripsy has been used to break up kidney stones for many years. Shockwave used this technology and adopted it for calcified blood vessels. Here is a link to the doctor who founded shockwave and developed the technology:
https://biodesign.stanford.edu/our-impact/technologies/shock…
This is a summary of their q1 2021 earnings report which is impressive:
Recent Highlights
Recognized revenue of $31.9 million for the first quarter of 2021, representing an increase of 110% from the same period in 2020
Received Pre-Market Approval for use of IVL in severely calcified coronary artery disease from the U.S.
Food and Drug Administration, and subsequently launched our Shockwave C2 device in the U.S.
Announced formation of a joint venture with Genesis MedTech Group, an established entity whose management team has a solid track record of commercializing medical devices in mainland China
Submitted Shonin application to PMDA for commercial approval of IVL for coronary use in Japan
CMS proposed new technology add on codes, or NTAP, for inpatient coronary procedures where IVL is used
CEO: “This quarter has been a highly productive one for Shockwave and I could not be more impressed by the achievements of our team and the support of our customers,” said Doug Godshall, President and Chief Executive Officer of Shockwave Medical. “With the recent FDA approval of our Shockwave C2 device, followed by the proposed NTAP payment by CMS only eight weeks after approval, we are well positioned to continue to expand our reach in helping to treat patients with severely calcified arterial disease.”
First Quarter 2021 Financial Results:
Revenue for the first quarter ended March 31, 2021 was $31.9 million, a 110% increase from $15.2 million in the same period of 2020. The growth was primarily driven by the launch of the coronary product, Shockwave C2, in the U.S. in February and increased adoption of Shockwave products.
Gross profit for the first quarter of 2021 was $24.0 million compared to $9.5 million for the first quarter of 2020. Gross margin for the first quarter of 2021 was 75%, as compared to 63% in the first quarter of 2020. Contributors to gross margin expansion included the launch of Shockwave C2 in the US, which has a higher selling price, and continued improvements in manufacturing productivity and process efficiencies.
Total operating expenses for the first quarter of 2021 were $41.5 million, a 45% increase from $28.5 million in the first quarter of 2020. The increase was primarily driven by salesforce expansion in the U.S. and higher headcount to support the growth of the business.
Net loss for the first quarter of 2021 was $23.6 million, compared to a net loss of $18.8 million in the same period of 2020. Net loss per share for the period was $0.68.
Cash, cash equivalents and short-term investments totaled $177.4 million as of March 31, 2021.
2021 Financial Guidance
Shockwave Medical projects revenue for the full year 2021 to range from $195 million to $205 million, which would represent 188% to 202% growth over the company’s prior year revenue.
**CMS is centers for medicare and medicaid services
**NTAP is New technology add on Payments (eg insurance reimbursements)
** PCI - Percutaneous coronary intervention ( previously known as angioplasty with stent)
Insurance reimbursement appears to be very favorable which is very important especially for new technology. Hospital administrators are both looking at the patients health as well as the financial bottom line at the hospital (or perhaps that is reversed)
*In the proposed rule, CMS specified that the maximum amount of NTAP for a procedure involving coronary IVL is an additional $3,666 to the hospital’s DRG. This was encouraging news and it was impressive to see this proposal in less than three months after C2 was approved by the FDA.
*While the actual reimbursement amount paid for IVL will vary from hospital to hospital and case to case, the important takeaway for our customers is that the use of IVL will likely result in additional payment for inpatient procedures, which should meaningfully reduce any anxiety about our price. This is a positive development, not just for Shockwave, but for patients, physicians and hospitals as well. The proposed rule is now open for public comment and is expected to be finalized and in effect by October 1, 2021. Obviously, to support our accelerating growth, we have had to ramp up our investment in people, facilities and processes.
Shockwave has their product in 56 countries. The adoption of their product speaks volumes as doctors are cautious to adopt new procedures or technologies unless the study data is robust and the new technology truly does make a significant difference in patient care.
The company has a good management team however they are not founder led. The CEO, Doug Godshall, previously took a different medical device to profitability and then they sold out to Medtronic. Shockwave may be on a similar trajectory (profitability then sale of the company) however I will continue to stay invested in the company unless something changes.
They are further expanding into the international market, have new FDA approvals, and good insurance reimbursement. Revenues growing significantly per year/quarter. Covid hit them one quarter then they bounced back.
It looks like currently they don’t have any significant competition (however I have not researched this thoroughly enough) and they have patents. That will probably change however they seem to be the first mover at this time.
The generous insurance reimbursements will make hospital administrators more willing to support adoption of SWAV products.
In terms of their numbers the revenue growth, as you posted, is impressive and based on the earnings call the CEO sounded very upbeat.
Clearly I am long on SWAV. If anyone has a bear case please respond.