ShockWave(US:SWAV)2024-02-25 16:00Cash and Investments - Cash, cash equivalents, and short-term investments totaled $990.6 million as of December 31, 2023, primarily in bank deposits, money market funds, U.S. Treasury securities, and commercial paper[523] - Cash and cash equivalents more than doubled to $328.4 million in 2023 from $156.6 million in 2022[546] - Cash, cash equivalents, and restricted cash at the end of 2023 totaled $329.8 million, compared to $158.3 million at the end of 2022[555] - The company had $990.6 million in cash, cash equivalents, and short-term investments as of December 31, 2023[559] - Cash equivalents and short-term investments totaled $814.7 million as of December 31, 2023, with $152.6 million classified as cash equivalents and $662.1 million as short-term investments[626] - The company's cash equivalents and marketable securities as of December 31, 2023, included $43.3 million in money market funds and $575.2 million in U.S. treasury securities[622] Foreign Exchange and Currency Risk - Foreign exchange losses for the year ended December 31, 2023, amounted to $1.8 million, driven by Euro-denominated accounts receivable and the strengthening of the U.S. Dollar[526] - A hypothetical 10% change in exchange rates would result in a $7.6 million change in fair value of foreign currency cash and accounts receivable as of December 31, 2023[526] - Approximately 9% of revenue for the year ended December 31, 2023, was denominated in Euros, compared to 8% in 2022[526] - The company may enter into foreign currency hedging contracts in the future as international operations expand, particularly in Costa Rica[526] - Net foreign currency transaction losses were $1.8 million in 2023, compared to $1.1 million in 2022 and $0.8 million in 2021[597] Revenue and Financial Performance - Revenue for the year ended December 31, 2023, was $730.2 million, recognized when customers obtain control of goods based on contractual or standard shipping terms[538] - Product revenue grew to $730.2 million in 2023, up 49.1% from $489.7 million in 2022[549] - Net income for 2023 was $147.3 million, a decrease of 31.8% compared to $216.0 million in 2022[549] - Gross profit margin improved to 86.9% in 2023 from 86.7% in 2022[549] - Net income for 2023 was $147.3 million, a decrease from $216.0 million in 2022[555] - Net cash provided by operating activities in 2023 was $196.1 million, up from $117.7 million in 2022[555] - Product revenue for 2023 was $730.2 million, a significant increase from $489.7 million in 2022 and $237.1 million in 2021[703] - Coronary product revenue for 2023 was $528.8 million, up from $353.9 million in 2022[703] - United States accounted for $581.5 million of product revenue in 2023, compared to $407.4 million in 2022[704] - Net income for 2023 was $147.28 million, a decrease from $215.99 million in 2022 and a significant improvement from a net loss of $9.14 million in 2021[713] Acquisitions and Business Combinations - The company completed the acquisition of Neovasc Inc. for $121.4 million in 2023, with $61.2 million allocated to developed technology and $31.4 million to in-process research and development[541] - The company spent $94.4 million on business combinations in 2023, compared to none in 2022[555] - The company recorded a preliminary fair value of $9.3 million for the Neovasc contingent consideration related to the acquisition of Neovasc Inc. on April 11, 2023[623] - The company acquired Neovasc for a total purchase price of $121.4 million, including $112.1 million in cash and $9.3 million in contingent consideration[630][631] - The contingent consideration liability for Neovasc includes a potential maximum payment of $47.0 million based on FDA approval milestones[632] - Goodwill from the Neovasc acquisition was $39.6 million, primarily attributed to anticipated synergies and assembled workforce[637] - Intangible assets acquired from Neovasc totaled $95.5 million, including $61.2 million for developed technology and $31.4 million for in-process research and development[637] - Amortization expense for acquired intangible assets was $2.6 million for the year ended December 31, 2023[643] - The company recorded deferred tax liabilities of $11.0 million related to intangible assets from the Neovasc acquisition[638] - Unaudited pro forma net revenue for 2023, assuming the Neovasc acquisition occurred on January 1, 2022, was $731.7 million[640] - Estimated future amortization expense of intangible assets for 2024 is $3.64 million, with a total estimated future amortization expense of $61.46 million through 2028 and thereafter[644] Research and Development - Research and development expenses increased by 78.3% to $145.6 million in 2023 from $81.7 million in 2022[549] - Research and development costs are expensed as incurred, with no significant differences between accrued costs and actual costs since the company's inception[586][588] - Research and development credit carryforwards as of December 31, 2023, were $14.6 million for both federal and California tax purposes[695] Debt and Financing - The revolving credit facility interest rate was 7.3% as of August 29, 2023, with a maturity date of October 19, 2027[525] - Convertible debt, noncurrent portion was $731.9 million in 2023, compared to $0 in 2022[546] - Proceeds from convertible debt financing in 2023 were $730.5 million[555] - The company entered into a Credit Agreement in October 2022, providing a revolving credit facility of $175.0 million, with an interest rate of 7.3% as of August 29, 2023[661][664] - The company issued $750.0 million in aggregate principal amount of 1.0% convertible senior notes due 2028, with an option to purchase an additional $100.0 million[666] - The initial conversion price of the Notes is approximately $289.06 per share, representing a 30% premium over the last reported sale price of $222.35 per share on August 10, 2023[669] - The net carrying amount of the Notes as of December 31, 2023, was $731.9 million, with an effective interest rate of 1.5%[672] - The Company used $96.4 million of the proceeds from the Notes offering to pay for Capped Call Transactions, which were recorded as a reduction to additional paid-in capital[673][674] - The company's convertible debt issuance costs are treated as a debt discount and amortized into interest expense over the term of the instruments[617] Stock-Based Compensation - Stock-based compensation expense increased to $73.2 million in 2023 from $44.9 million in 2022[555] - Total stock-based compensation for the year ended December 31, 2023, was $73.2 million, with $56.5 million related to vested RSUs[675][682] - As of December 31, 2023, there were 3,516,750 shares of common stock available for issuance under the 2019 Equity Incentive Plan[677] - The total grant date fair value of options vested was $0.1 million for the year ended December 31, 2023[678] - The Company recorded $3.3 million of stock-based compensation expense related to the ESPP for the year ended December 31, 2023[688] - The company uses the Black-Scholes option-pricing model to measure the fair value of stock options for share-based compensation[589] Taxes - The total income before taxes for the year ended December 31, 2023, was $120.8 million, with domestic income contributing $119.9 million[690] - Total current tax provision for 2023 was $12.3 million, compared to $2.1 million in 2022 and $301 thousand in 2021[691] - Total deferred tax (benefit) provision for 2023 was $14.7 million, compared to a benefit of $97.3 million in 2022[691] - Total net deferred tax assets as of December 31, 2023, were $95.6 million, slightly down from $97.6 million in 2022[691] - Valuation allowance increased by $44.5 million in 2023, primarily due to the acquisition of Neovasc[693] - Net operating loss (NOL) carryforwards as of December 31, 2023, were $103.1 million for federal, $45.6 million for California, and $126.6 million for foreign entities[694] Assets and Liabilities - Total assets increased to $1,566.6 million in 2023 from $646.1 million in 2022, representing a 142.5% growth[546] - Total current assets surged to $1,225.3 million in 2023, a 167.0% increase from $459.3 million in 2022[546] - Total stockholders' equity grew to $668.7 million in 2023, up 30.8% from $511.3 million in 2022[546] - Accounts receivable increased by $41.5 million in 2023, compared to $33.3 million in 2022[555] - The company's allowance for doubtful accounts increased to $2.179 million in 2023, up from $710 thousand in 2022, reflecting higher credit risk assessments[575] - Total inventory increased from $75.11 million in 2022 to $107.59 million in 2023, with finished goods accounting for $65.42 million[646] - Property and equipment, net increased from $48.15 million in 2022 to $68.92 million in 2023, with depreciation and amortization expense of $7.7 million for 2023[647] - Total accrued liabilities increased from $55.38 million in 2022 to $91.70 million in 2023, with employee compensation being the largest component at $49.71 million[649] - The company's long-lived assets in Costa Rica and Japan represent 32% and 15% of its consolidated net property, plant, and equipment, respectively[605] Fair Value Measurements - The fair value of the company's convertible debt as of December 31, 2023, was $730.5 million, classified as Level 2 in the fair value hierarchy[625] - The company's total financial assets measured at fair value on a recurring basis as of December 31, 2023, were $814.7 million, with $727.8 million in Level 1 and $86.9 million in Level 2[622] - The company's total financial liabilities measured at fair value on a recurring basis as of December 31, 2023, were $739.8 million, with $730.5 million in Level 2 and $9.3 million in Level 3[622] - The company's contingent consideration liabilities related to business combinations were recorded at $9.3 million as of December 31, 2023[623] Leases and Operating Costs - Operating lease costs are recognized on a straight-line basis over the lease term, with variable non-lease components expensed as incurred[592][593] - Operating lease cost for 2023 was $5.11 million, with total lease cost amounting to $6.35 million[654] Earnings Per Share - Basic net income per share decreased to $4.01 in 2023 from $6.02 in 2022[549] - Basic net income per share for 2023 was $4.01, down from $6.02 in 2022, while diluted net income per share was $3.85, down from $5.70 in 2022[713] - Weighted average number of common shares outstanding - diluted increased to 38,206,269 in 2023 from 37,881,590 in 2022[713] - Total potential shares excluded from diluted net income per share calculation were 439,135 in 2023, compared to 23,659 in 2022 and 2,691,696 in 2021[713] - The company's convertible debt has no impact on diluted net income per common share unless the average price of the common stock exceeds the conversion price[712] Other Financial Metrics - The company recognized $5.3 million in expenses for its defined contribution retirement savings plan in 2023, up from $3.7 million in 2022[595] - The company recognized $5,000 in realized gains on cash equivalents and short-term investments for the year ended December 31, 2023[628] - The company's loss from equity method investments was $1.9 million in 2023, down from $2.5 million in 2022 and $6.3 million in 2021[708] - The company did not incur any goodwill impairment losses during the year ended December 31, 2023[611] - The company did not incur any impairment losses on indefinite-lived intangible assets during the year ended December 31, 2023[613] - The company did not incur any impairment losses on amortizable intangible assets during the year ended December 31, 2023[614] - The company capitalizes internal-use software implementation costs and amortizes them over the estimated service term[607] - No license revenues were recognized for the years ended December 31, 2023, 2022, and 2021[585] - Inventory is valued at the lower of standard cost or net realizable value, with provisions for slow-moving or obsolete inventory recorded as needed[576] - The company completed the first phase of a new manufacturing facility in Costa Rica and is constructing the second phase as of December 31, 2023[648] - No single customer accounted for more than 10% of the company's revenue in 2023, 2022, or 2021[572]