Shockwave Medical, Inc. SWAV reported fourth-quarter 2023 earnings per share (EPS) of $1.16, which beat the Zacks Consensus Estimate of 92 cents by 26.1%. The company reported an EPS of $3.71 in the year-ago quarter.
Revenue Details
Revenues totaled $203 million, up a massive 40.9% from the prior-year period's level. The top line also beat the Zacks Consensus Estimate by 1.5%. The growth was primarily driven by an increase in the purchase volume of products, both in the United States and abroad.
U.S. revenues from coronary products grew nearly 40% during the fourth quarter, while peripheral product sales improved approximately 19%. Coronary franchise sales were driven by the strong adoption of the new coronary device C2+ in international markets. International IVL revenues grew 67% year over year during the fourth quarter.
While U.S. revenues were up 34% year over year, International revenues grew 74%. Internationally, SWAV's sales were boosted by strong momentum in Germany, the United Kingdom, Italy, Spain and France.
Q4 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. These reimbursement orders became effective from Oct 1, 2023, which is likely to have boosted revenues during the fourth quarter. The trend is likely to continue in 2024.
Per the codes, new coronary IVL-specific MS-DRGs are associated with higher payments than those for other Percutaneous Coronary Intervention procedures. Again, the CMS established a Category I Current Procedural Terminology add-on code for procedures involving coronary, effective Jan 1, 2024. Under this new category, physicians will get a 20-30% increase in remuneration for the additional work associated with performing coronary IVL.
During the reported quarter, the company initiated a full commercial launch of its latest Shockwave C2+ Coronary IVL catheter. This new product should bring additional revenues for SWAV in the upcoming quarters.
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
Margins
Gross profit in the reported quarter was $177.7 million, up 40.4% 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 $67.2 million, up 54.7% from the prior-year quarter's level. Research and development expenses totaled $42.3 million, up 78.4% on a year-over-year basis.
Operating income totaled $43.3 million, up 2% year over year.
Full-year Results
Shockwave Medical recorded total revenues of $730.2 million in 2023, up 49% year over year. EPS for the year was $3.85, compared to $5.70 in the prior-year quarter.
Financial Position
Shockwave Medical exited the fourth quarter with cash, cash equivalents and investments of $990.6 million compared with $917.3 million in the third quarter.
Total assets amounted to $1.57 billion compared with $1.47 billion at the end of the third quarter of 2023.
2024 Revenue Outlook
For 2024, Shockwave Medical expects revenues in the band of $910-$930 million. The projected top line implies growth of 25-27% from the prior-year period's level. The Zacks Consensus Estimate for the same is pegged at $915.95 million.
Wrapping Up
SWAV ended the fourth 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 2024 revenues. Moreover, higher pay rates for physicians for IVL procedures are 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 Stocks to Consider
Currently, Shockwave Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Universal Health Services UHS, Integer Holdings Corporation ITGR and Cardinal Health CAH.
Universal Health Services, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 4.4% for 2024. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 5.47%. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
UHS' shares have risen 11.9% in the past year compared with the industry's 17.3% growth.
Integer Holdings, presently carrying a Zacks Rank of 2, has an estimated long-term growth rate of 15.8%. ITGR's earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings' shares have rallied 44.3% in the past year compared with the industry's 4.6% growth.
Cardinal Health, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 15.3%. CAH's earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 15.64%.
Cardinal Health's shares have risen 32.2% in the past year compared with the industry's growth of 9.4%.
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