Shockwave Medical Inc. (NASDAQ:SWAV)

Net Operating Profit After Taxes (NOPAT)

The NOPAT exhibits a notable upward trend over the five-year period. Starting with a significant loss of approximately -49.8 million USD in 2019, the losses deepened to -64.1 million USD in 2020. However, by 2021, the loss margin had substantially improved to around -7.1 million USD, followed by a switch to positive territory in 2022 with a profit of 122.1 million USD. The positive trend continued into 2023, reaching 170.5 million USD. This pattern indicates a strong turnaround in operational profitability.

Cost of Capital

The cost of capital remained relatively stable over the observed period, fluctuating narrowly between 12.44% and 13.26%. It started at 13.12% in 2019, peaked slightly at 13.26% in 2020, and demonstrated a gradual decline to 12.44% by 2023, suggesting a modest decrease in the company’s perceived risk or financing costs.

Invested Capital

Invested capital shows a general upward trajectory across the years. After an initial value of approximately 158.7 million USD in 2019, it declined sharply to about 91.3 million USD in 2020. Subsequently, it increased significantly to 174.3 million USD in 2021 and grew steeply thereafter, reaching 318.1 million USD in 2022 and 672.5 million USD in 2023. This substantial growth suggests increased investment activities, reflecting either acquisition of assets or expansion initiatives.

Economic Profit

Economic profit mirrors the NOPAT trend closely but includes the cost of capital effect. The company experienced negative economic profits in the initial years, with losses of roughly -70.6 million USD in 2019 and -76.2 million USD in 2020. The loss decreased to -30.2 million USD in 2021 and turned positive in 2022 at 79.9 million USD, continuing to increase to 86.9 million USD in 2023. This positive shift in economic profit confirms the creation of value exceeding the cost of capital in recent years.

The financial data reveals significant fluctuations in both net income and net operating profit after taxes (NOPAT) for the observed periods.

Net income (loss)

There is a pronounced negative trend in net income from 2019 through 2021, starting with a substantial loss of approximately $51.1 million in 2019, increasing to a loss of $65.7 million in 2020, and then markedly reducing to a loss of $9.1 million in 2021. In 2022, the company achieved a dramatic turnaround with a substantial net income of $216.0 million, which though declining somewhat, remained strong at $147.3 million in 2023.

Net operating profit after taxes (NOPAT)

The NOPAT follows a similar trajectory but shows somewhat less volatility. It starts with a negative value near $49.8 million in 2019 and further decreases to about $64.1 million in 2020. The loss diminishes substantially in 2021 to approximately $7.1 million. From 2022 onward, NOPAT becomes positive, reaching $122.1 million in 2022 and increasing further to $170.5 million in 2023.

Overall, the data indicates an initial period of losses followed by a sharp and significant improvement in profitability starting in 2022. This suggests effective operational and financial adjustments that positively impacted both bottom-line net income and operating profitability after taxes. The considerable net income realized in 2022 diminished somewhat in 2023, but NOPAT increased, indicating improving operational efficiency with respect to tax impacts or non-operating items.

The financial data reveals significant variability in the provision for income taxes over the examined five-year period. Starting with a relatively modest provision of 62 thousand US dollars in 2019, there was a gradual increase to 80 thousand in 2020 followed by a more substantial rise to 301 thousand in 2021. However, in 2022, there was a dramatic shift to a large tax benefit, reflected in a negative provision of -95,168 thousand US dollars, indicating a considerable tax benefit or reversal during that year. This situation appears to have reversed again in 2023, with the provision rising sharply to 27,003 thousand US dollars.

The cash paid for operating taxes also exhibited a rising trend throughout the period, increasing steadily each year. From 390 thousand US dollars in 2019, the amount grew moderately to 453 thousand in 2020 and 847 thousand in 2021. The upward trend accelerated in the last two years, with cash operating taxes reaching 2,898 thousand in 2022 and further increasing to 14,167 thousand in 2023. This suggests rising cash outflows related to tax obligations despite the large tax benefit recorded in the accrual-based provision for income taxes in 2022.

Overall, the pattern highlights a divergence between the accounting treatment of tax provisions and actual cash tax payments in 2022 and 2023. The substantial tax benefit recorded in 2022 was not reflected in reduced cash tax payments, which instead continued to increase. The subsequent rebound in the provision in 2023 to a positive figure exceeding prior years, alongside further increased cash operating taxes, points to potentially complex tax circumstances or adjustments affecting the company's tax position during these years.

The analysis of the financial data reveals significant changes in the company's capital structure and financing activities over the five-year period.

Total reported debt & leases

The total reported debt and leases increased steadily from 22,718 thousand US dollars in 2019 to 60,404 thousand US dollars in 2022, showing a moderate growth trend. However, there is a pronounced spike in 2023, where the value surged to 770,607 thousand US dollars. This sharp increase suggests a substantial rise in leverage or the use of debt financing during the last reported year.

Stockholders’ equity

Stockholders’ equity displayed a consistent upward trend throughout the period. It increased from 192,653 thousand US dollars in 2019 to 668,677 thousand US dollars in 2023. A noteworthy acceleration is evident from 2021 onward, with a particularly large increase between 2021 and 2022. This pattern indicates enhanced retained earnings, capital injections, or overall improved financial strength.

Invested capital

Invested capital fluctuated somewhat in the early years, decreasing notably from 158,673 thousand US dollars in 2019 to 91,274 thousand US dollars in 2020. Subsequently, it rebounded and grew substantially to 672,462 thousand US dollars by 2023. This indicates a significant expansion in the company’s asset base or long-term investments, especially evident from 2021 onwards, aligning with the growth in both equity and reported debt.

The financial data reveals significant developments in the company's economic profit, invested capital, and economic spread ratio over five years.

Economic Profit

The economic profit was negative from 2019 through 2021, showing a reduction in losses from -70,567 thousand US dollars in 2019 to -30,190 thousand US dollars in 2021. This indicates a gradual improvement in profitability. However, starting in 2022, the company achieved positive economic profit, recording 79,950 thousand US dollars, which further increased to 86,858 thousand US dollars in 2023. This turnaround suggests a significant enhancement in operational performance or capital efficiency.

Invested Capital

Invested capital displayed a fluctuating but overall increasing trend. Initially, it decreased sharply from 158,673 thousand US dollars in 2019 to 91,274 thousand US dollars in 2020, potentially indicating capital divestment or asset write-downs. Subsequently, it rose substantially to 174,255 thousand US dollars in 2021 and continued to climb steeply to 318,057 thousand US dollars in 2022, culminating in a pronounced increase to 672,462 thousand US dollars by 2023. This growth implies considerable reinvestment in assets or expansion activities.

Economic Spread Ratio

The economic spread ratio, representing the return over capital cost, was negative in the first three years, decreasing from -44.47% in 2019 to -83.5% in 2020 before improving to -17.33% in 2021. The negative values corroborate periods of economic loss. A notable shift occurred in 2022 when the ratio became positive at 25.14%, signaling returns exceeding capital costs. However, it slightly declined to 12.92% in 2023, indicating some decrease in relative profitability but still maintaining a positive and sustainable margin.

Overall, the data outlines a transition from prolonged negative economic performance toward sustainable profitability with significant increases in capital investment, suggesting strategic growth and improved operational efficiency over the analyzed period.

Revenue Trend

The revenue has shown a consistent and substantial upward trend over the five-year period. Starting from $42,927 thousand in 2019, revenue increased to $67,789 thousand in 2020, followed by a more significant rise to $237,146 thousand in 2021. The growth continued in 2022, reaching $489,733 thousand, and further ascended to $730,230 thousand in 2023. This represents a more than seventeen-fold increase in revenue over the entire period.

Economic Profit Analysis

The economic profit figures show an initial period of negative returns from 2019 through 2021. The losses decreased in magnitude from -$70,567 thousand in 2019 to -$30,190 thousand in 2021, indicating a trend towards improved profitability. From 2022 onwards, the company achieved positive economic profit, with $79,950 thousand in 2022 and $86,858 thousand in 2023, demonstrating a shift to generating economic value beyond its cost of capital.

Economic Profit Margin

The economic profit margin mirrored the pattern observed in economic profit. It was deeply negative in 2019 and 2020, at -164.39% and -112.43%, respectively, reflecting that economic costs far exceeded revenues. In 2021, the margin improved significantly to -12.73%, approaching breakeven. By 2022, the margin turned positive at 16.33%, decreasing slightly to 11.89% in 2023 but still indicating the company’s effective generation of economic profit relative to its revenues.

Overall Insights

The data reveal a company undergoing substantial growth and operational improvements over the analyzed period. Early years were marked by significant economic losses despite rising revenues. However, the acceleration in revenue growth, especially from 2021 onwards, coincided with a transition to positive economic profit and margins. These trends suggest enhanced operational efficiency, improved cost management, or increased pricing power, leading to stronger value creation for stakeholders in recent years.