Shockwave Medical Inc. (NASDAQ:SWAV)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed a negative trend from 2019 through 2021, starting at -49,755 thousand USD in 2019 and increasing in negativity to -64,111 thousand USD in 2020. However, there was a significant improvement in 2021, where the loss narrowed substantially to -7,113 thousand USD. This positive momentum continued strongly into 2022 and 2023, with NOPAT turning positive to 122,053 thousand USD in 2022 and further increasing to 170,498 thousand USD in 2023.

Cost of Capital

The cost of capital remained relatively stable over the years, fluctuating slightly within a narrow range between 12.48% and 13.3%. It was highest in 2020 at 13.3%, and saw a slight decline in 2023 to 12.48%, indicating a modest reduction in the required rate of return over the period.

Invested Capital

Invested capital displayed considerable variability, beginning at 158,673 thousand USD at the end of 2019, dipping to 91,274 thousand USD in 2020, then rising sharply to 174,255 thousand USD in 2021. This upward trend continued in subsequent years, with invested capital reaching 318,057 thousand USD in 2022 and more than doubling to 672,462 thousand USD by the end of 2023. This signifies substantial capital inflows or reinvestment activities during this interval.

Economic Profit

Economic profit was negative for the first three years, starting at -70,635 thousand USD in 2019 and remaining at similar low levels through 2020 and 2021, although with some improvement to -30,266 thousand USD in 2021. In 2022, the company achieved a positive economic profit of 79,812 thousand USD, which increased further to 86,585 thousand USD in 2023. This transition to positive economic profit coincides with the marked improvement in NOPAT and corresponds with the large increase in invested capital.

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.

Economic Profit

The economic profit demonstrates a significant improvement over the five-year period. Initially, there were substantial negative economic profits, with the lowest point occurring in 2020 at -76,252 US$ thousands. From 2021 onwards, there is a marked recovery, turning positive by 2022 and further increasing in 2023 to 86,585 US$ thousands. This trend indicates improving profitability and value generation.

Invested Capital

The invested capital exhibits a general upward trend, doubling from 158,673 US$ thousands in 2019 to 318,057 US$ thousands in 2022 and then more than doubling again to 672,462 US$ thousands in 2023. There was a notable dip in 2020, decreasing to 91,274 US$ thousands, followed by strong growth. This pattern suggests significant investment and expansion initiatives after 2020.

Economic Spread Ratio

The economic spread ratio shows a substantial fluctuation throughout the period. It started with a negative ratio of -44.52% in 2019, worsening to -83.54% in 2020, reflecting poor returns relative to the cost of capital. From 2021, a recovery is evident with the ratio improving to -17.37%, turning positive to 25.09% in 2022. In 2023, the ratio decreases slightly but remains positive at 12.88%. This signifies enhanced efficiency in capital usage and increasing returns above the cost of capital, albeit with some volatility towards the end of the period.

The financial data reveals significant developments over the five-year period. Revenue has demonstrated a robust upward trajectory, starting at approximately $42.9 million in 2019 and increasing substantially each year, reaching about $730.2 million by 2023. This growth suggests successful market expansion or enhanced sales performance.

Economic profit, which had been consistently negative from 2019 through 2021, improved markedly in 2022, turning positive and continuing to increase in 2023. Specifically, economic profit rose from a loss of around $70.6 million in 2019 to a positive $86.6 million in 2023. This transition from negative to positive economic profit indicates enhanced operational efficiency or improved profitability relative to the cost of capital.

The economic profit margin reflects a similar pattern. Initially, the margin was deeply negative, with values of -164.55% in 2019 and -112.48% in 2020, improving to -12.76% in 2021 before moving into positive territory at 16.3% in 2022 and slightly declining but remaining positive at 11.86% in 2023. This progression highlights a steady improvement in profitability relative to revenue, culminating in positive margins in the last two years. The slight decline in margin from 2022 to 2023, despite continued revenue growth, could point to increased costs or investments impacting profitability percentages.

Overall, the data illustrates a business that initially struggled with economic losses but has successfully turned around its financial performance, achieving both substantial revenue growth and positive economic profit margins in recent years.