Shockwave Medical, Inc. exceeded expectations by reporting an earnings per share (EPS) of $1.16 for the fourth quarter of 2023, surpassing the Zacks Consensus Estimate of 92 cents by 26.1%. This figure also marked significant growth compared to the EPS of $3.71 reported in the year-ago quarter.

Robust Revenue Performance

The company posted a staggering 40.9% increase in revenues, reaching $203 million in the fourth quarter compared to the prior year. This tremendous growth was primarily fueled by a surge in product purchases, both domestically and internationally.

The U.S. witnessed a substantial 40% growth in coronary product revenues, while peripheral product sales also saw a noteworthy uptick of approximately 19%. Internationally, revenues from Shockwave’s Intravascular Lithotripsy (IVL) soared by 67% during the same period, indicating the company’s strong global traction.

A Glimpse at the Quarter’s Highlights

In August, the Centers for Medicare & Medicaid Services (CMS) introduced new Medicare Severity Diagnosis Related Group (MS-DRG) codes and payments for coronary IVL procedures, effective from October 1, 2023. The subsequent impact on revenues was significant and is expected to persist into 2024. These new codes are associated with higher payments and have been well-received in boosting physician remuneration for coronary IVL procedures.

Shockwave Medical also initiated a full commercial launch of its latest Shockwave C2+ Coronary IVL catheter, signifying a potential source of increased revenue in the coming quarters.

Revenue Outlook for 2024

For 2024, Shockwave Medical is anticipating revenues in the range of $910-$930 million, reflecting a growth of 25-27% from the previous year. The Zacks Consensus Estimate stands at $915.95 million, underscoring the company’s optimistic forecast.

Financial Position and Prospects

Exiting the fourth quarter, Shockwave Medical held cash, cash equivalents, and investments totaling $990.6 million, implying a healthy financial position. The company’s total assets amounted to $1.57 billion, signaling a robust balance sheet to support its operations and growth initiatives.

Despite concerns regarding escalating operating expenses, the company’s positive performance, revenue growth, and expansion in gross margin point toward a promising future. The management’s bullish outlook for the continued acceptance and penetration of IVL, particularly with the strong demand for the C2+ device in the international market, bodes well for the company’s prospects. Additionally, the higher pay rates for physicians conducting IVL procedures are expected to further drive the adoption of Shockwave’s products and contribute to sustained revenue growth.

However, investors should remain vigilant in monitoring the company’s operational costs as an area of potential risk.

Zacks Rank and Market Comparisons

Shockwave Medical currently holds a Zacks Rank #3 (Hold). Favorable alternatives within the medical industry include Universal Health Services (UHS), Integer Holdings Corporation (ITGR), and Cardinal Health (CAH). Universal Health Services boasts a Zacks Rank #2 (Buy) and has demonstrated resilient earnings performance as well as a promising stock growth trajectory.

Integer Holdings Corporation and Cardinal Health, both carrying a Zacks Rank of 2, have also exhibited robust earnings and stock price growth, positioning them as noteworthy contenders in the medical instruments and hospital industry sectors, respectively. Their impressive financial performance supports their potential as solid investment options.