Economic Value Added (EVA)
EVA is registered trademark of Stern Stewart.
Economic value added or economic profit is the difference between revenues and costs,where costs include not only expenses, but also cost of capital.
Economic Profit
Shockwave Medical Inc., economic profit calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 NOPAT. See details »
2 Cost of capital. See details »
3 Invested capital. See details »
4 2023 Calculation
Economic profit = NOPAT – Cost of capital × Invested capital
= 170,498 – 14.72% × 672,462 = 71,527
An analysis of the financial performance between 2019 and 2023 reveals a significant transition from value destruction to value creation. The organization moved from negative economic profit during the initial three-year period to a positive state starting in 2022, indicating that the business began generating returns in excess of its cost of capital.
- Net Operating Profit After Taxes (NOPAT)
- A consistent and aggressive recovery in operating profitability is observed. NOPAT evolved from a deficit of US$ 49,755 thousand in 2019 to a substantial profit of US$ 170,498 thousand by 2023. The most critical inflection point occurred between 2021 and 2022, where the organization shifted from a marginal loss of US$ 7,113 thousand to a significant positive return of US$ 122,053 thousand.
- Invested Capital and Cost of Capital
- Invested capital experienced substantial growth, particularly in the latter half of the period. After a decline in 2020, invested capital rose from US$ 91,274 thousand to US$ 672,462 thousand by 2023, representing a rapid expansion of the asset base. Concurrently, the cost of capital remained relatively stable, fluctuating minimally between 15.52% and 15.70% before decreasing to 14.72% in 2023.
- Economic Profit Trends
- Economic profit mirrored the trajectory of NOPAT but was tempered by the increasing capital charge associated with the growing invested capital base. Value destruction peaked in 2020 at negative US$ 78,444 thousand. While economic profit turned positive in 2022 (US$ 72,193 thousand), it remained nearly flat in 2023 (US$ 71,527 thousand) despite the increase in NOPAT. This stagnation in economic profit suggests that the increase in operating income was offset by the cost of financing the expanded invested capital base.
AI Ask an analyst for more
Net Operating Profit after Taxes (NOPAT)
Shockwave Medical Inc., NOPAT calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Elimination of deferred tax expense. See details »
2 Addition of increase (decrease) in allowance for doubtful accounts.
3 Addition of increase (decrease) in equity equivalents to net income (loss).
4 2023 Calculation
Interest expense on capitalized operating leases = Operating lease liability × Discount rate
= 38,744 × 5.20% = 2,015
5 2023 Calculation
Tax benefit of interest expense = Adjusted interest expense × Statutory income tax rate
= 8,920 × 21.00% = 1,873
6 Addition of after taxes interest expense to net income (loss).
7 2023 Calculation
Tax expense (benefit) of investment income = Investment income, before tax × Statutory income tax rate
= 5 × 21.00% = 1
8 Elimination of after taxes investment income.
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 $170.5 million in 2023.
Overall, the data indicates an initial period of losses followed by a sharp and significant improvement in profitability starting in 2022. This suggests effective operational and financial adjustments that positively impacted both bottom-line net income and operating profitability after taxes. The considerable net income realized in 2022 diminished somewhat in 2023, but NOPAT increased, indicating improving operational efficiency with respect to tax impacts or non-operating items.
AI Ask an analyst for more
Cash Operating Taxes
Shockwave Medical Inc., cash operating taxes calculation
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
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.
AI Ask an analyst for more
Invested Capital
Shockwave Medical Inc., invested capital calculation (financing approach)
US$ in thousands
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Addition of capitalized operating leases.
2 Elimination of deferred taxes from assets and liabilities. See details »
3 Addition of allowance for doubtful accounts receivable.
4 Addition of equity equivalents to stockholders’ equity.
5 Removal of accumulated other comprehensive income.
6 Subtraction of construction in progress.
7 Subtraction of marketable securities.
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.
AI Ask an analyst for more
Cost of Capital
Shockwave Medical Inc., cost of capital calculations
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 9,719,059) | 9,719,059) | ÷ | 10,488,303) | = | 0.93 | 0.93 | × | 15.78% | = | 14.62% | ||
| Convertible and long-term debt, current and noncurrent3 | 730,500) | 730,500) | ÷ | 10,488,303) | = | 0.07 | 0.07 | × | 1.50% × (1 – 21.00%) | = | 0.08% | ||
| Operating lease liability4 | 38,744) | 38,744) | ÷ | 10,488,303) | = | 0.00 | 0.00 | × | 5.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 10,488,303) | 1.00 | 14.72% | ||||||||||
Based on: 10-K (reporting date: 2023-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible and long-term debt, current and noncurrent. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 6,916,606) | 6,916,606) | ÷ | 6,977,010) | = | 0.99 | 0.99 | × | 15.78% | = | 15.64% | ||
| Convertible and long-term debt, current and noncurrent3 | 24,198) | 24,198) | ÷ | 6,977,010) | = | 0.00 | 0.00 | × | 5.30% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 36,206) | 36,206) | ÷ | 6,977,010) | = | 0.01 | 0.01 | × | 5.20% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 6,977,010) | 1.00 | 15.68% | ||||||||||
Based on: 10-K (reporting date: 2022-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible and long-term debt, current and noncurrent. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 6,260,409) | 6,260,409) | ÷ | 6,307,598) | = | 0.99 | 0.99 | × | 15.78% | = | 15.66% | ||
| Convertible and long-term debt, current and noncurrent3 | 17,130) | 17,130) | ÷ | 6,307,598) | = | 0.00 | 0.00 | × | 3.50% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 30,059) | 30,059) | ÷ | 6,307,598) | = | 0.00 | 0.00 | × | 5.00% × (1 – 21.00%) | = | 0.02% | ||
| Total: | 6,307,598) | 1.00 | 15.69% | ||||||||||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible and long-term debt, current and noncurrent. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 4,068,239) | 4,068,239) | ÷ | 4,093,219) | = | 0.99 | 0.99 | × | 15.78% | = | 15.68% | ||
| Convertible and long-term debt, current and noncurrent3 | 16,619) | 16,619) | ÷ | 4,093,219) | = | 0.00 | 0.00 | × | 3.50% × (1 – 21.00%) | = | 0.01% | ||
| Operating lease liability4 | 8,361) | 8,361) | ÷ | 4,093,219) | = | 0.00 | 0.00 | × | 6.98% × (1 – 21.00%) | = | 0.01% | ||
| Total: | 4,093,219) | 1.00 | 15.70% | ||||||||||
Based on: 10-K (reporting date: 2020-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible and long-term debt, current and noncurrent. See details »
4 Operating lease liability. See details »
| Capital (fair value)1 | Weights | Cost of capital | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Equity2 | 921,204) | 921,204) | ÷ | 943,922) | = | 0.98 | 0.98 | × | 15.78% | = | 15.40% | ||
| Convertible and long-term debt, current and noncurrent3 | 13,819) | 13,819) | ÷ | 943,922) | = | 0.01 | 0.01 | × | 5.87% × (1 – 21.00%) | = | 0.07% | ||
| Operating lease liability4 | 8,899) | 8,899) | ÷ | 943,922) | = | 0.01 | 0.01 | × | 6.97% × (1 – 21.00%) | = | 0.05% | ||
| Total: | 943,922) | 1.00 | 15.52% | ||||||||||
Based on: 10-K (reporting date: 2019-12-31).
1 US$ in thousands
2 Equity. See details »
3 Convertible and long-term debt, current and noncurrent. See details »
4 Operating lease liability. See details »
Economic Spread Ratio
Shockwave Medical Inc., economic spread ratio calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 71,527) | 72,193) | (34,445) | (78,444) | (74,377) | |
| Invested capital2 | 672,462) | 318,057) | 174,255) | 91,274) | 158,673) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 10.64% | 22.70% | -19.77% | -85.94% | -46.87% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -4.65% | -2.40% | -1.92% | — | — | |
| Elevance Health Inc. | -0.85% | 0.18% | 1.50% | — | — | |
| Intuitive Surgical Inc. | -2.99% | -3.27% | 12.34% | — | — | |
| Medtronic PLC | -6.29% | -5.04% | -6.68% | — | — | |
| UnitedHealth Group Inc. | 5.07% | 4.11% | 3.96% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 Invested capital. See details »
3 2023 Calculation
Economic spread ratio = 100 × Economic profit ÷ Invested capital
= 100 × 71,527 ÷ 672,462 = 10.64%
4 Click competitor name to see calculations.
The financial performance from 2019 to 2023 demonstrates a transition from value destruction to value creation, characterized by a pivot into positive economic profit and a corresponding shift in the economic spread ratio.
- Economic Profit Trends
- Economic profit remained negative between 2019 and 2021, reaching a low of -78.4 million USD in 2020. A significant reversal occurred in 2022, with economic profit ascending to 72.2 million USD, and maintaining a similar level of 71.5 million USD in 2023. This shift indicates that the entity began generating returns in excess of its cost of capital starting in 2022.
- Invested Capital Expansion
- Invested capital exhibited a notable decline from 158.7 million USD in 2019 to 91.3 million USD in 2020. This was followed by a period of rapid expansion, with capital increasing to 174.3 million USD in 2021, 318.1 million USD in 2022, and reaching 672.5 million USD by December 31, 2023. The surge in the final year represents more than a two-fold increase in the capital base over a twelve-month period.
- Economic Spread Ratio Analysis
- The economic spread ratio followed a U-shaped recovery, moving from a nadir of -85.94% in 2020 to a peak of 22.70% in 2022. Although the ratio remained positive in 2023, it compressed to 10.64%. This decline, occurring despite relatively stable economic profit, is driven by the massive increase in invested capital, suggesting that the rate of capital deployment outpaced the growth of economic value added during the final period.
AI Ask an analyst for more
Economic Profit Margin
Shockwave Medical Inc., economic profit margin calculation, comparison to benchmarks
| Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||
|---|---|---|---|---|---|---|
| Selected Financial Data (US$ in thousands) | ||||||
| Economic profit1 | 71,527) | 72,193) | (34,445) | (78,444) | (74,377) | |
| Revenue | 730,230) | 489,733) | 237,146) | 67,789) | 42,927) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 9.80% | 14.74% | -14.52% | -115.72% | -173.26% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -6.91% | -3.38% | -2.77% | — | — | |
| Elevance Health Inc. | -0.35% | 0.08% | 0.70% | — | — | |
| Intuitive Surgical Inc. | -2.98% | -2.82% | 9.71% | — | — | |
| Medtronic PLC | -14.19% | -11.06% | -16.04% | — | — | |
| UnitedHealth Group Inc. | 2.52% | 2.10% | 1.94% | — | — | |
Based on: 10-K (reporting date: 2023-12-31), 10-K (reporting date: 2022-12-31), 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31).
1 Economic profit. See details »
2 2023 Calculation
Economic profit margin = 100 × Economic profit ÷ Revenue
= 100 × 71,527 ÷ 730,230 = 9.80%
3 Click competitor name to see calculations.
The financial trajectory from 2019 to 2023 indicates a significant transition from substantial value destruction to consistent value creation. This shift is characterized by aggressive revenue scaling and a subsequent pivot into positive economic profitability.
- Revenue Expansion
- Revenue exhibited exponential growth over the five-year period, increasing from 42,927 thousand USD in 2019 to 730,230 thousand USD by 2023. This rapid escalation provided the necessary scale to offset the costs of capital that previously drove negative economic profits.
- Economic Profit Transition
- Economic profit remained negative from 2019 through 2021, reaching a trough of -78,444 thousand USD in 2020. A critical inflection point was reached in 2022, as the company achieved a positive economic profit of 72,193 thousand USD, which remained largely stable at 71,527 thousand USD in 2023.
- Economic Profit Margin Dynamics
- The economic profit margin showed a dramatic recovery, climbing from -173.26% in 2019 to a peak of 14.74% in 2022. This trend underscores a rapid improvement in operational efficiency relative to the cost of capital. However, a contraction is observed in 2023, with the margin declining to 9.80%, suggesting that while the company continues to generate economic value, the rate of profit growth has not kept pace with the accelerated growth in revenue.
AI Ask an analyst for more