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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
Net Operating Profit after Taxes (NOPAT)
Cash Operating Taxes
Invested Capital
Cost of Capital
Economic Spread Ratio
Economic Profit Margin

Shockwave Medical Inc., economic profit calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net operating profit after taxes (NOPAT)¹	170,498)	122,053)	(7,113)	(64,111)	(49,755)
Cost of capital²	11.53%	12.27%	12.27%	12.28%	12.16%
Invested capital³	672,462)	318,057)	174,255)	91,274)	158,673)

Economic profit⁴	92,960)	83,038)	(28,497)	(75,324)	(69,051)

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 – 11.53% × 672,462 = 92,960

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Item	Description	The company
Economic profit	Economic profit is a measure of corporate performance computed by taking the spread between the return on invested capital and the cost of capital, and multiplying by the invested capital.	Shockwave Medical Inc. economic profit increased from 2021 to 2022 and from 2022 to 2023.

Shockwave Medical Inc., NOPAT calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Net income (loss)	147,278)	215,996)	(9,136)	(65,699)	(51,109)
Deferred income tax expense (benefit)¹	14,708)	(97,276)	—)	—)	—)
Increase (decrease) in allowance for doubtful accounts²	1,469)	360)	(30)	186)	118)
Increase (decrease) in equity equivalents³	16,177)	(96,916)	(30)	186)	118)
Interest expense	6,905)	1,886)	1,096)	1,212)	944)
Interest expense, operating lease liability⁴	2,015)	1,883)	1,503)	584)	620)
Adjusted interest expense	8,920)	3,769)	2,599)	1,796)	1,564)
Tax benefit of interest expense⁵	(1,873)	(791)	(546)	(377)	(328)
Adjusted interest expense, after taxes⁶	7,047)	2,977)	2,053)	1,419)	1,236)
(Gain) loss on marketable securities	(5)	(6)	—)	(21)	—)
Investment income, before taxes	(5)	(6)	—)	(21)	—)
Tax expense (benefit) of investment income⁷	1)	1)	—)	4)	—)
Investment income, after taxes⁸	(4)	(5)	—)	(17)	—)
Net operating profit after taxes (NOPAT)	170,498)	122,053)	(7,113)	(64,111)	(49,755)

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.

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Item	Description	The company
NOPAT	Net operating profit after taxes is income from operations, but after removement of taxes calculated on cash basis that are relevant to operating income.	Shockwave Medical Inc. NOPAT increased from 2021 to 2022 and from 2022 to 2023.

Shockwave Medical Inc., cash operating taxes calculation

US$ in thousands

12 months ended:	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Provision (benefit) for income taxes	27,003)	(95,168)	301)	80)	62)
Less: Deferred income tax expense (benefit)	14,708)	(97,276)	—)	—)	—)
Add: Tax savings from interest expense	1,873)	791)	546)	377)	328)
Less: Tax imposed on investment income	1)	1)	—)	4)	—)
Cash operating taxes	14,167)	2,898)	847)	453)	390)

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).

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Item	Description	The company
Cash operating taxes	Cash operating taxes are estimated by adjusting income tax expense for changes in deferred taxes and tax benefit from the interest deduction.	Shockwave Medical Inc. cash operating taxes increased from 2021 to 2022 and from 2022 to 2023.

Shockwave Medical Inc., invested capital calculation (financing approach)

US$ in thousands

	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019
Debt, current portion	—)	—)	5,500)	3,300)	6,667)
Convertible debt, noncurrent portion	731,863)	—)	—)	—)	—)
Debt, noncurrent portion	—)	24,198)	11,630)	13,319)	7,152)
Operating lease liability¹	38,744)	36,206)	30,059)	8,361)	8,899)
Total reported debt & leases	770,607)	60,404)	47,189)	24,980)	22,718)
Stockholders’ equity	668,677)	511,316)	241,830)	225,654)	192,653)
Net deferred tax (assets) liabilities²	(95,560)	(97,568)	—)	—)	—)
Allowance for doubtful accounts³	2,179)	710)	350)	380)	194)
Equity equivalents⁴	(93,381)	(96,858)	350)	380)	194)
Accumulated other comprehensive (income) loss, net of tax⁵	(293)	867)	202)	(9)	(35)
Adjusted stockholders’ equity	575,003)	415,325)	242,382)	226,025)	192,812)
Construction in progress⁶	(11,016)	(9,765)	(3,544)	(7,800)	(553)
Marketable securities⁷	(662,132)	(147,907)	(111,772)	(151,931)	(56,304)
Invested capital	672,462)	318,057)	174,255)	91,274)	158,673)

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.

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Item	Description	The company
Invested capital	Capital is an approximation of the economic book value of all cash invested in going-concern business activities.	Shockwave Medical Inc. invested capital increased from 2021 to 2022 and from 2022 to 2023.

Shockwave Medical Inc., cost of capital calculations

Dec 31, 2023

	Capital (fair value)¹	Weights					Cost of capital
Equity²	9,719,059)	9,719,059)	÷	10,488,303)	=	0.93	0.93	×	12.34%	=	11.43%
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					11.53%

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 »

Dec 31, 2022

	Capital (fair value)¹	Weights					Cost of capital
Equity²	6,916,606)	6,916,606)	÷	6,977,010)	=	0.99	0.99	×	12.34%	=	12.23%
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					12.27%

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 »

Dec 31, 2021

	Capital (fair value)¹	Weights					Cost of capital
Equity²	6,260,409)	6,260,409)	÷	6,307,598)	=	0.99	0.99	×	12.34%	=	12.25%
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					12.27%

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 »

Dec 31, 2020

	Capital (fair value)¹	Weights					Cost of capital
Equity²	4,068,239)	4,068,239)	÷	4,093,219)	=	0.99	0.99	×	12.34%	=	12.26%
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					12.28%

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 »

Dec 31, 2019

	Capital (fair value)¹	Weights					Cost of capital
Equity²	921,204)	921,204)	÷	943,922)	=	0.98	0.98	×	12.34%	=	12.04%
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					12.16%

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 »

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	92,960)	83,038)	(28,497)	(75,324)	(69,051)
Invested capital²	672,462)	318,057)	174,255)	91,274)	158,673)
Performance Ratio
Economic spread ratio³	13.82%	26.11%	-16.35%	-82.53%	-43.52%
Benchmarks
Economic Spread Ratio, Competitors⁴
Abbott Laboratories	-1.85%	0.36%	0.80%	-2.46%	-3.78%
Cigna Group	-2.21%	0.83%	-0.16%	2.73%	-0.48%
CVS Health Corp.	0.48%	-3.96%	0.02%	0.46%	-0.32%
Elevance Health Inc.	-0.88%	-0.06%	1.22%	-0.77%	0.06%
Humana Inc.	1.18%	2.40%	2.74%	9.60%	7.74%
Intuitive Surgical Inc.	5.66%	5.37%	20.99%	8.97%	25.65%
Medtronic PLC	-3.68%	-2.45%	-4.04%	-3.17%	-2.08%
UnitedHealth Group Inc.	5.75%	4.79%	4.65%	5.22%	5.24%

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 × 92,960 ÷ 672,462 = 13.82%

⁴ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic spread ratio	The ratio of economic profit to invested capital, also equal to the difference between return on invested capital (ROIC) and cost of capital.	Shockwave Medical Inc. economic spread ratio improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

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	92,960)	83,038)	(28,497)	(75,324)	(69,051)
Revenue	730,230)	489,733)	237,146)	67,789)	42,927)
Performance Ratio
Economic profit margin²	12.73%	16.96%	-12.02%	-111.12%	-160.86%
Benchmarks
Economic Profit Margin, Competitors³
Abbott Laboratories	-2.75%	0.50%	1.16%	-4.30%	-6.90%
Cigna Group	-0.98%	0.39%	-0.09%	1.61%	-0.30%
CVS Health Corp.	0.18%	-1.52%	0.01%	0.23%	-0.18%
Elevance Health Inc.	-0.36%	-0.03%	0.57%	-0.36%	0.03%
Humana Inc.	0.34%	0.76%	1.01%	2.76%	2.27%
Intuitive Surgical Inc.	5.64%	4.64%	16.51%	9.20%	19.01%
Medtronic PLC	-8.31%	-5.38%	-9.69%	-7.81%	-4.94%
UnitedHealth Group Inc.	2.86%	2.45%	2.28%	2.66%	2.56%

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 × 92,960 ÷ 730,230 = 12.73%

³ Click competitor name to see calculations.

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Performance ratio	Description	The company
Economic profit margin	The ratio of economic profit to sales. It is the company profit margin covering income efficiency and asset management. Economic profit margin is not biased in favor of capital-intensive business models, because any added capital is a cost to the economic profit margin.	Shockwave Medical Inc. economic profit margin improved from 2021 to 2022 but then slightly deteriorated from 2022 to 2023.

Shockwave Medical Inc. (NASDAQ:SWAV)

Economic Value Added (EVA)

Economic Profit

Net Operating Profit after Taxes (NOPAT)

Cash Operating Taxes

Invested Capital

Cost of Capital

Economic Spread Ratio

Economic Profit Margin