On today's call, we will refer to both GAAP financial measures and adjusted EBITDA, a non-GAAP financial measure. Please refer to today's press release for a reconciliation of net income to adjusted EBITDA and additional disclosures regarding this non-GAAP financial measure. ShockWave disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 15th, 2024. And with that, I'll turn the call over to Doug.

Doug Godshall: Thanks Debbie. Good afternoon everyone and thank you for taking the time to join us to review ShockWave's results for the fourth quarter and the full year of 2023, which proved to be another banner one for the company. During the year, we launched C2 in Japan, we converted to direct sales forces in Spain, Portugal, Italy, and Canada. We launched two new products, L6 for peripheral vessels and C2+ for the coronaries. We were granted DRG codes specific to coronary IVL in the inpatient hospital setting, which pay on average about $9,000 more than codes for PCIs without IVL. We acquired and integrated Neovasc and the Reducer product, which is the first device that addresses refractory angina and often debilitating condition that impacts a large patient population that has no good treatment options, and we raised $750 million in a convertible debt offering.

We achieved record revenue of $203 million in the fourth quarter, which was 41% -- which was a 41% increase from a year ago and a 9% sequential increase from the third quarter of 2023. Our revenue for the full year of 2023 was $730.2 million, a 49% increase from 2022 revenue. We witnessed excellent performance in all areas of the business with US peripheral and coronary businesses growing 47% and 41%, respectively, and our international IVL business growing 75% compared to 2022. Really stellar performance. The team continues to execute at a high level, and we now have over 1,500 global employees. Our products are approved in 70 countries, and we are pleased that we now have EU MDR certification for M5+, S4, and C2+ catheters and our Generator.

The MDR process was a long journey and required a major effort by the team. Our US coronary business continues to shine, and we have a couple of meaningful reimbursement tailwinds that will support continued adoption. The new hospital inpatient DRGs for coronary went into effect in the fourth quarter of last year and additionally, physicians are now being paid when they use coronary IVL thanks to the CPT code that became effective on January 1st of this year. As we have witnessed in the past, reimbursement takes time to influence customer behavior, but we anticipate that the combination of these new payments will have a positive impact on our US coronary business and will help lower the economic friction that has historically been the biggest constraint on increased utilization of IVL.

We anticipate that physicians will increasingly use C2+ whenever they feel it's clinically appropriate, versus feeling pressured to only use it selectively or after exhausting all other options. We believe an IVL first strategy is optimal for patients and is now even better economically for customers. Also on the coronary topic, we are continuing the launch of C2+, which has 50% more pulses than its predecessor, C2. Isaac will talk a bit more about this later in the call, but early reception from our customers has been very positive. On the US peripheral side, the prior authorization issue appears to have stabilized as our customers are learning how to navigate Aetna's increased scrutiny on peripheral procedures and we have not seen any other payers follow Aetna's practices.

Meanwhile, multiple medical societies have come together to form a working group, and they have been applying pressure on Aetna and hopes of getting them to reconsider their policy. There also has been considerable attention paid to Medicare Advantage recently. At the Federal level, CMS recently announced new rules, which will make it harder to pursue prolonged prior authorization practices. There also has been some predictive recent movement among commercial payers specific to ShockWave, as HUMANA, the second largest Medicare Advantage payer issued a positive coverage decision for IVL for their Medicare Advantage plans effective January 1st, 2024. Staying on the topic of US peripheral reimbursement, we are pleased to see that CMS improved hospital reimbursement by assigning peripheral IVL to new MS DRGs. These new DRGs increased inpatient hospital payment by $4,000 to $10,000 over previous levels.

Most peripheral interventions are performed in an outpatient setting. However, a majority of the hospital base below the knee procedures are for the more severe chronic limb-threatening ischemia or CLTI, which makes them more likely to be performed on an inpatient basis than other procedures. This reimbursement uplift nicely complements the upcoming advances in our below-the-knee product offering that starts later this year. While on the topic of new products, we will be focusing back on peripheral in the second half of this year with two launches. First, we will introduce an upgraded version of L6, which will go from one pulse per second to two. We witnessed a very positive response from our customers when we made this same upgrade going from M5 to M5+.

Shortly after the L6 rollout, we plan to launch the E8 peripheral catheter. E8 has an 8-centimeter long treatment zone, which is twice as long as our current S4 offering and is specifically designed to treat longer diffuse lesions that are common and below the knee cases. We look forward to seeing our customers response to E8. We think they're going to love it. Rounding out our future BTK offering, we anticipate the approval of our JAVELIN peripheral catheter in the latter part of the year and look forward to starting the limited market release of that product prior to an expected full market release in early 2025. That makes three significant new peripheral launches within the next year. And finally, on the operations front. Our facility in Costa Rica has gone from first shovel in the ground in June of 2022 to a validated clean room and C2+ line in December of 2023.

Amazing progress, frankly. We'll be hosting regulatory audits starting this month and anticipate shipping finished product into inventory in the third quarter of this year. 2023 was a great year for ShockWave, and we are even more excited about what lies ahead in 2024. We expect revenue between $910 million to $930 million for the full year of 2024, representing growth of 25% to 27% over 2023. Before I turn the call over to Isaac to provide more color on the commercial front, I want to take a minute to thank our outgoing CFO, Dan Puckett, for the tremendous job he has done in his eight years at ShockWave. During his time here, he was instrumental in our growth from a small pre-revenue private company to a public company with over $700 million in revenue.

Dan is not only a fantastic CFO, but he is a joy to work with. He's been the biggest cheerleader for all of us, always supportive and inspiring to everyone around him and he will be sorely missed. We wish Dan well in his retirement and are pleased to introduce our new CFO, Renee Gaeta, who is jumping right in today, and we'll present the financials a bit later in the call. And if he gets anything wrong, it's all Dan's fault. With that, I'll turn the call over to Isaac.

Isaac Zacharias: Thank you, Doug. Our record results in both the fourth quarter and the full year of 2023 reflect outstanding contributions from our businesses and teams around the globe. Q4 2023 was strong for our US coronary business. Revenue grew 40% compared to Q4 of 2022, 11% sequentially from Q3 of 2023, and 15% sequentially on an average daily sales basis. The C2+ launch is proceeding well. We launched over 1,000 accounts and the product has been very well-received. What is particularly appreciated is the utility of more pulses and longer diffuse lesions, eccentric lesions and calcified nodules. We expect continued momentum in the coronary business as our sales team focuses on the C2+ launch and on communicating both the favorable reimbursement changes and additional physician fees for using coronary IVL.

Revenue from our US peripheral business in Q4 2023 was up 19% from a year ago, flat sequentially compared to Q3 and up 3% sequentially on an average daily sales basis. As Doug mentioned, we are seeing a stabilization of the prior authorization dynamic as providers are getting better at navigating the additional steps required for some patients. We continue to expect modest growth in the US peripheral business in the first half of 2024 as we maintained a strong focus on the US coronary business. We did anticipate accelerated US peripheral growth in the second half of 2024 with the L6 and E8 product launches. Turning to our international business. We had another record quarter of IVL sales as revenue was up 67% from a year ago, and 14% sequentially compared to Q3.

We are now direct in all five major European markets, Germany, the UK, Spain, Italy, and France. Sales in Germany doubled during 2023 due to the improved coronary reimbursement. We are starting to see increased usage in some of the smaller German accounts, which can now afford IVL. Germany is the largest market in Europe, and we think there is tremendous upside for coronary penetration from the current level of just over 2%. We had our first full quarter of direct sales in Italy and are very pleased with the execution by that team. It feels good to see such strong and seamless execution from the direct selling teams in Europe. We continue to drive penetration with the focus of the ShockWave's sales team and the support of our marketing and physician education programs.

In Japan, we completed our first year of coronary sales. We exceeded our goals for the number of accounts launched, the penetration in the launched accounts and revenue. We have initiated efforts to develop clinical data that will support using IVL in conjunction with atherectomy and drug-coated balloons. We are working closely with [Indiscernible], the Interventional Cardiology Society in Japan to ensure that IVL is available and appropriately used throughout Japan. In China, we are still experiencing the impact of the ongoing anticorruption campaign, which is slowing ideal adoption at new centers. On the positive side, adoption within centers that had IVL on the pricing list before the anticorruption campaign started is growing nicely. That said, we expect very little revenue from China in the first half of 2024.

Finally, the European Reducer team posted a very nice quarter. The teams in Germany and France are being rebuilt and along with the established UK team continued to generate revenue while testing different market development strategies and sales models. We are very pleased with the integration of Neovasc and are starting 2024 with strong teams in place to both accelerate enrollment in the CR2 trial and build the international reducer business. With that, I will turn the call to Renee to review the financials.

Renee Gaeta: Thank you, Isaac and good afternoon everyone. I am thrilled to have joined the ShockWave team and look forward to working with all of you. ShockWave Medical's revenue for the fourth quarter ended December 31st, 2023, was $203 million. a 41% increase from $144 million in the fourth quarter of 2022. US revenue was $158.1 million in the fourth quarter of 2023, an increase of 34% from $118.3 million in the fourth quarter of 2022. Coronary products contributed $115.2 million to US revenue in the fourth quarter of 2023, an increase of 40% from $82.1 million in the fourth quarter of 2022. US revenue from our peripheral products was $42.8 million in the fourth quarter of 2023, an increase of 19% from $36 million in the fourth quarter of 2022.

The growth in US revenue during the quarter was driven primarily by increased utilization at existing accounts, supported by our continued sales force expansion. International revenue was $44.8 million in the fourth quarter of 2023, representing a 74% increase from $25.7 million in the fourth quarter of 2022. Coronary products contributed $37.7 million to international revenue in the fourth quarter of 2023, an 83% increase from $20.6 million in the fourth quarter of 2022. International revenue from our peripheral products was $5.3 million in the fourth quarter of 2023, an increase of 19% from $4.5 million in the fourth quarter of 2022. Our Reducer product contributed $1.8 million to international revenue in the fourth quarter of 2023. The increase in international revenue over the prior year period was driven by a continued geographic expansion, particularly in Japan, the increased productivity of our direct selling teams in Europe and the momentum from our C2+ launch.

Looking at product lines, our peripheral products, ShockWave M5, ShockWave M5+, ShockWave S4, and ShockWave L6 accounted for $48.1 million of total revenue in the fourth quarter of 2023 compared to $40.5 million in the fourth quarter of 2022, a 19% increase. Our coronary products, ShockWave C2 and ShockWave C2+ accounted for $152.9 million of total revenue in the fourth quarter of 2023 compared to $102.7 million in the fourth quarter of 2022, representing a 49% increase. Revenue from our Reducer product accounted for $1.8 million of total revenue in the fourth quarter of 2023. Gross profit for the fourth quarter of 2023 was $177.7 million compared to $126.5 million in the fourth quarter of 2022. Gross margin was 88% for the fourth quarter of 2023, consistent with gross margin of 88% for the fourth quarter of 2022.

Total operating expenses for the fourth quarter of 2023 were $134.4 million, a 60% increase from $84.1 million in the fourth quarter of 2022. Sales and marketing expenses for the fourth quarter of 2023 were $67.2 million compared to $43.4 million in the fourth quarter of 2022. The increase was primarily driven by sales force expansion. R&D expenses in the fourth quarter of 2023 were $42.3 million compared to $23.7 million in the fourth quarter of 2022. The increase was primarily driven by headcount growth, higher clinical-related expenses, including Reducer and the facility expansion to support R&D. General and administrative expenses for the fourth quarter of 2023 were $24.9 million compared to $17 million in the fourth quarter of 2022. The increase was primarily driven by higher headcount to support the growth of the business.

Operating margin was 21% for the fourth quarter of 2023. Net income in the fourth quarter of 2023 was $44.3 million compared to net income of $140.9 million in the fourth quarter of 2022. In the fourth quarter of 2022, we released a valuation allowance, which resulted in a tax benefit of $99 million in that quarter. Basic net income per share for the period was $1.20, diluted net income per share for the period was $1.16. Adjusted EBITDA was $68.2 million for the fourth quarter of 2023, a 20% increase compared to adjusted EBITDA of $56.6 million in the fourth quarter of 2022. Finally, I'd like to briefly recap some highlights from our full year 2023 results. Total revenue for the full year 2023 was $730.2 million, an increase of 49% compared to full year 2022 revenue of $489.7 million.

US revenue for the full year 2023 was $581.5 million, representing a 43% increase over 2022 revenue of $407.4 million. International revenue was $148.7 million for the full year of 2023, compared to $82.3 million in 2022, representing an 81% increase. Gross margin for the full year 2023 was 87%, consistent with 87% for the full year 2022. Total operating expenses were $475.7 million in 2023, an increase of 58% compared to operating expenses of $300.6 million in 2022. Operating margin was 22% for the full year 2023. Total net income for the full year 2023 was $147.3 million compared to $216 million for the full year 2022. Net income in 2022 included the $99 million tax benefit from the aforementioned release of our valuation allowance. Basic net income per share was $4.01 for the full year 2023.

Diluted net income per share was $3.85 for the full year 2023. Adjusted EBITDA was $242.7 million for the full year 2023, a 40% increase from adjusted EBITDA of $173.9 million for the full year 2022. Looking forward to 2024, we expect to continue to make significant investments to support and sustain our growth and anticipate full year 2024 operating margin expansion of up to 100 basis points from the full year 2023. Similar to the pattern we saw in 2023, we do expect a step-down in Q1 operating margin from the prior Q4, reflecting compensation and benefits costs, which reset at the beginning of the year as well as the timing and increased costs related to our global sales meeting held in March. We ended the fourth quarter of 2023 with $990.6 million in cash, cash equivalents, and short-term investments.

At this point, I'd like to turn the call back over to Doug for closing comments.

Doug Godshall: Thank you, Rene and thank you all for joining us today. 2023 was another great year at ShockWave. The team continues to execute at the highest level as we achieve our mission to help treat underserved patient populations around the globe with our innovative solutions, and we're excited to continue this work in 2024. With that, I'd like to open the call to questions.

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