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 – 14.73% × 672,462 = 71,442
The financial trajectory from 2019 to 2023 demonstrates a clear transition from value destruction to consistent economic value creation. This period is characterized by a pivot from operational losses toward substantial profitability, occurring alongside a rapid expansion of the invested capital base.
- Net Operating Profit After Taxes (NOPAT)
- A strong upward trend is evident in NOPAT, which evolved from negative values of -49.8 million in 2019 and -64.1 million in 2020 to a positive 170.5 million by 2023. The most significant inflection point occurred between 2021 and 2022, where the organization moved from a marginal loss of -7.1 million to a substantial operating profit of 122.1 million.
- Invested Capital
- Invested capital experienced an aggressive growth phase following a contraction in 2020. After reaching a low of 91.3 million in 2020, the capital base expanded to 174.3 million in 2021 and 318.1 million in 2022, before surging to 672.5 million in 2023. This suggests a period of significant strategic scaling and resource deployment.
- Cost of Capital
- The cost of capital remained remarkably stable for the majority of the period, fluctuating minimally between 15.53% and 15.72% from 2019 through 2022. A moderate decrease to 14.73% was observed in 2023, indicating a slight reduction in the weighted average cost of funding or a shift in the risk profile.
- Economic Profit
- Economic profit transitioned from negative territory—reaching a peak deficit of -78.5 million in 2020—to positive value creation starting in 2022. While economic profit rose sharply to 72.2 million in 2022, it remained relatively flat at 71.4 million in 2023. This stability in economic profit, despite the massive increase in invested capital during 2023, suggests that the returns on the newly deployed capital are closely aligned with the company's cost of capital.
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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.
An analysis of the financial performance from 2019 to 2023 reveals a significant transition from operational losses to sustained profitability. The period is characterized by a distinct turnaround in both bottom-line results and core operating profitability, moving from a period of value erosion to value creation.
- Net Operating Profit After Taxes (NOPAT) Trajectory
- NOPAT exhibited a downward movement in 2020, reaching its lowest point at -64,111 thousand US$. A consistent recovery followed, with losses narrowing significantly in 2021 before shifting to a positive 122,053 thousand US$ in 2022. This growth trend persisted into 2023, with NOPAT increasing further to 170,498 thousand US$, indicating a steady improvement in operational efficiency and the company's capacity to generate profit from its core business activities.
- Comparative Analysis of Net Income and NOPAT
- While both metrics followed a similar recovery path through 2022, a divergence is observed in 2023. NOPAT continued its upward trajectory, increasing by approximately 39% between 2022 and 2023. In contrast, net income declined from 215,996 thousand US$ in 2022 to 147,278 thousand US$ in 2023. This discrepancy suggests that while the core operating performance improved, non-operating expenses, interest, or tax adjustments negatively impacted the final net income.
- Profitability Pivot Point
- The window between 2021 and 2022 represents a critical inflection point for the organization. The transition from a negative NOPAT of -7,113 thousand US$ to a positive 122,053 thousand US$ marks the shift toward positive economic value added. The subsequent increase in NOPAT in 2023 confirms that the company has moved beyond a breakeven state and is actively expanding its operating profit margins.
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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).
An analysis of the tax expenditures between 2019 and 2023 reveals a significant divergence between accounting tax provisions and actual cash tax outflows, with the latter exhibiting a consistent and accelerating growth trajectory.
- Cash Operating Taxes Trend
- Cash operating taxes have demonstrated continuous year-over-year growth throughout the five-year period. Starting at 390 thousand US dollars in 2019, the outflows increased moderately through 2021 before experiencing a sharp escalation. The most substantial increase occurred between 2022 and 2023, where cash operating taxes rose from 2,898 thousand US dollars to 14,167 thousand US dollars, representing a growth of approximately 388% in a single fiscal year.
- Comparison of Provision and Cash Outflows
- A marked volatility is observed in the provision for income taxes compared to the stability of cash operating taxes. While cash outflows grew steadily, the provision for income taxes fluctuated significantly, notably recording a substantial tax benefit of 95,168 thousand US dollars in 2022. This discrepancy suggests that non-cash tax adjustments, such as deferred tax assets or valuation allowances, heavily influenced the reported accounting tax expense, whereas the actual cash burden increased regardless of these accounting entries.
- Impact on Economic Value Added (EVA)
- From the perspective of Economic Value Added, the consistent rise in cash operating taxes indicates a growing cash requirement to sustain operations. The rapid acceleration of these outflows in 2023 suggests a transition toward a higher tax burden, which directly reduces the Net Operating Profit After Taxes (NOPAT) used in EVA calculations, thereby placing greater pressure on the company to generate higher operating returns to maintain positive economic value.
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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 capital structure of the entity exhibits a period of moderate growth followed by a substantial expansion in total funding and invested capital between 2019 and 2023.
- Invested Capital Trajectory
- Invested capital demonstrated initial volatility, declining from US$ 158,673 thousand in 2019 to US$ 91,274 thousand in 2020. Following this dip, a consistent and accelerating upward trend is observed, with capital increasing to US$ 174,255 thousand in 2021 and US$ 318,057 thousand in 2022, eventually reaching US$ 672,462 thousand by December 31, 2023.
- Debt and Lease Obligations
- Total reported debt and leases remained relatively stable and low from 2019 through 2022, moving from US$ 22,718 thousand to US$ 60,404 thousand. A sharp divergence occurred in 2023, where debt obligations surged to US$ 770,607 thousand, indicating a significant increase in financial leverage during the final year of the analyzed period.
- Stockholders' Equity Trends
- Equity maintained a steady growth pattern, rising from US$ 192,653 thousand in 2019 to US$ 241,830 thousand in 2021. A notable escalation occurred between 2021 and 2022, with equity more than doubling to US$ 511,316 thousand, before further increasing to US$ 668,677 thousand in 2023.
The overall trend indicates a fundamental shift in the financing mix. While growth was primarily driven by equity through 2022, the 2023 expansion of the invested capital base was heavily influenced by a massive increase in reported debt and leases.
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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 | × | 15.79% | = | 14.63% | ||
| 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 | 14.73% | ||||||||||
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 | × | 15.79% | = | 15.65% | ||
| 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 | 15.69% | ||||||||||
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 | × | 15.79% | = | 15.67% | ||
| 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 | 15.70% | ||||||||||
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 | × | 15.79% | = | 15.69% | ||
| 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 | 15.72% | ||||||||||
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 | × | 15.79% | = | 15.41% | ||
| 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 | 15.53% | ||||||||||
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 | 71,442) | 72,150) | (34,469) | (78,456) | (74,398) | |
| Invested capital2 | 672,462) | 318,057) | 174,255) | 91,274) | 158,673) | |
| Performance Ratio | ||||||
| Economic spread ratio3 | 10.62% | 22.68% | -19.78% | -85.96% | -46.89% | |
| Benchmarks | ||||||
| Economic Spread Ratio, Competitors4 | ||||||
| Abbott Laboratories | -4.67% | -2.43% | -1.95% | — | — | |
| Elevance Health Inc. | -0.90% | 0.14% | 1.46% | — | — | |
| Intuitive Surgical Inc. | -2.92% | -3.21% | 12.41% | — | — | |
| Medtronic PLC | -6.31% | -5.06% | -6.71% | — | — | |
| UnitedHealth Group Inc. | 5.02% | 4.06% | 3.91% | — | — | |
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 × 71,442 ÷ 672,462 = 10.62%
4 Click competitor name to see calculations.
The financial trajectory between 2019 and 2023 demonstrates a transition from consistent value destruction to sustainable value creation. The period is characterized by an initial phase of negative economic returns followed by a significant turnaround starting in 2021, coinciding with a substantial expansion of the capital base.
- Economic Profit Trends
- Economic profit remained negative from 2019 through 2021, reaching a trough of negative 78.46 million US dollars in 2020. A recovery began in 2021, with losses narrowing to 34.47 million US dollars, before pivoting to a positive position in 2022 at 72.15 million US dollars. This positive trend stabilized in 2023, with economic profit ending the period at 71.44 million US dollars.
- Invested Capital Expansion
- Invested capital exhibited significant growth, particularly in the latter half of the analyzed period. After a decrease to 91.27 million US dollars in 2020, capital increased aggressively each subsequent year, reaching 174.26 million US dollars in 2021, 318.06 million US dollars in 2022, and peaking at 672.46 million US dollars by December 31, 2023. This represents a substantial increase in the resources deployed to generate returns.
- Economic Spread Ratio Analysis
- The economic spread ratio mirrors the volatility of the economic profit while reflecting the impact of the growing capital base. The ratio reached its lowest point in 2020 at negative 85.96%, indicating a severe gap between the return on invested capital and the cost of capital. A sharp correction occurred in 2021, leading to a peak positive spread of 22.68% in 2022. However, despite the maintenance of positive economic profit in 2023, the spread ratio declined to 10.62%. This compression is attributable to the rapid expansion of invested capital, which outpaced the growth in economic profit, thereby reducing the relative spread.
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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 | 71,442) | 72,150) | (34,469) | (78,456) | (74,398) | |
| Revenue | 730,230) | 489,733) | 237,146) | 67,789) | 42,927) | |
| Performance Ratio | ||||||
| Economic profit margin2 | 9.78% | 14.73% | -14.53% | -115.74% | -173.31% | |
| Benchmarks | ||||||
| Economic Profit Margin, Competitors3 | ||||||
| Abbott Laboratories | -6.94% | -3.41% | -2.81% | — | — | |
| Elevance Health Inc. | -0.37% | 0.06% | 0.68% | — | — | |
| Intuitive Surgical Inc. | -2.92% | -2.77% | 9.76% | — | — | |
| Medtronic PLC | -14.24% | -11.11% | -16.09% | — | — | |
| UnitedHealth Group Inc. | 2.50% | 2.08% | 1.92% | — | — | |
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 × 71,442 ÷ 730,230 = 9.78%
3 Click competitor name to see calculations.
The financial trajectory from 2019 to 2023 is characterized by a transition from significant economic value destruction to the generation of positive economic profit. This shift coincides with an aggressive expansion in revenue, indicating that the scale of operations eventually surpassed the cost of capital.
- Revenue Growth Trends
- A consistent and accelerating upward trend in revenue is observed, increasing from 42,927 thousand USD in 2019 to 730,230 thousand USD by 2023. The most substantial growth occurred between 2020 and 2022, where revenue expanded rapidly to support the transition toward profitability.
- Economic Profit Evolution
- Economic profit remained negative during the first three years of the period, with losses peaking at 78,456 thousand USD in 2020. A pivotal reversal occurred in 2022, when economic profit shifted to a positive 72,150 thousand USD, and remained relatively stable at 71,442 thousand USD in 2023.
- Economic Profit Margin Dynamics
- The economic profit margin exhibited a sharp recovery, moving from -173.31% in 2019 to a peak of 14.73% in 2022. Although a slight contraction to 9.78% occurred in 2023, the overall trend demonstrates a successful transition from deep negative margins to a state of sustainable value creation relative to the revenue base.
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