Carrying over my post from the SWAV board.
• Revenue of $180.2M (49% YOY) beats by $6.42M.
• Gross margins unchanged at 86%
• Total operating expenses for the second quarter of 2023 were $123.3 million, a 66% increase from $74.4 million in the second quarter of 2022. The increase was primarily driven by sales force expansion, higher headcount to support the growth of the business, and acquisition-related expenses associated with the acquisition of Neovasc.
• Net income for the second quarter of 2023 was $28.9 million, compared to net income of $25.6 million in the same period of 2022. Basic and diluted net income per share for the period was $0.79 and $0.76, respectively.
• Cash, cash equivalents and short-term investments totaled $258.6 million as of June 30, 2023.
• 2023 Financial Guidance raised: Shockwave Medical projects revenue for the full year 2023 to range from $725 million to $730 million, vs. consensus of $716.10M, which represents 48% to 49% growth over the Company’s prior year revenue.
Shockwave Medical, Inc. (NASDAQ:NASDAQ:SWAV) Q2 2023 Earnings Conference Call August 7, 2023 4:30 PM ETCompany ParticipantsDebbie Kaster - Vice President, Investor RelationsDoug Godshall -…
SWAV is releasing the new coronary C2+ in December that responds to doctors requesting more power, more pulse for long artery calcifications. SWAV plans 2 new products every year going forward.
Quick background refresh: ShockWave Medical, Inc. (Nasdaq: SWAV), a medical device company, engages in developing and commercializing intravascular lithotripsy technology to treat calcified plaque in patients with peripheral vascular, coronary vascular, and heart valve diseases worldwide. The procedural training uptake has little friction because IVL is pretty much a replacement for balloon angioplasty. Similarly, US CMS and other governments are recognizing this technology as a funded insurance procedure and device. In Q4 2022, 2023-year revenue growth forecast was conservative at below 40%, which was a significant slowdown from over 70% in 2022 and +100% in 2021. The stock sagged somewhat Q1 but then took off on acquisition rumors by Boston Scientific and some other companies. Fortunately, IMO, this did not happen and the stock has fallen back recently to the ~$250/share.
My Take on the ER call: Today’s Q2 ER reflects a 49% CAGR so I think we should have steady +45% growth going forward 2023-25. I wanted to see the revenues reaccelerate and stabilize after a mediocre Q4/Q1 and it has. The VP says that Q3 is expected as a modest seasonal quarter (especially Europe) with a seasonal tailwind hitting Q4. Additional expected catalysts for 2023 Q4 mentioned were Japan sales (approval December), Germany sales (in-patient reimbursement October), and direct sales force replacing distributors in Canada, Germany, and Italy. This will incur the sales expansion cost but by experience should realize a greater net profit gain. Cross selling the peripheral devices will also be enhanced. Other 2023 costs are increasing to expand the Costa Rica manufacturing 3x and expand the US innovation center. These costs are all signs of healthy growth but will nick the bottom line. International sales are less than 25% revenue but are growing at +70%. The stated top 3 international growth countries for 2024 are 1) Japan, 2) Germany, 3) China.
I started buying at MF recommendation spring 2020 at $29/share and more in 2021/22/23. Currently I am a bit overloaded pushing 20% of my portfolio and may lighten/rebalance. Other recommended health MF technology stocks the last 5 years have all experienced long painful downward slides; NARI, GH, and NVCR come to mind. SWAV is the winner by leaps and bounds. I think it is still worth a good look at the current price.
My 2023 Forecast: 2023 revenue 740M versus today’s SWAV forecast $725M. So, IMO their new year-end 2023 forecast is soft. I hope they are sandbagging like in the past ERs.
My QOQ forecast:
Q1 12% actual (my forecast was 12%)
Q2 12% actual (my forecast was 7%)
Q3 5% my forecast (CEO said Q3 seasonal but slowest previous quarter growth was 9% in Q4)
Q4 12% my forecast
SWAV has three primary products:
C2 catheters for treating coronary artery disease; The C2, representing an IVL catheter intended for the treatment of coronary artery disease [CAD] was CE-Marked in June 2018. It is currently being sold in US and Europe. The CAD III and PAD III IVL studies have shown superior efficacy and safety results above current standard practices.
- M5 catheters for treating above-the-knee peripheral artery disease; The M5, representing an IVL catheter with five sonic wave emitters, intended for the treatment of peripheral artery disease [PAD] above the knee in the US and internationally. It was CE-Marked in April 2018 and approved by the US FDA in July 2018
- S4 catheters for treating below-the-knee peripheral artery disease. It serves interventional cardiologists, vascular surgeons, and interventional radiologists through sales representatives and sales managers, and distributors. The S4 is intended for the treatment of PAD below the knee. ShockWave has acquired US 510[k] clearance and a CE Mark.
SWAV is my highest conviction stock and largest holding at ~20%. With new forecast now at 49% YOY growth, 40 P/E, 15 P/S, and stable 86% margins, net income now positive; I see the current price as a strong buy.