Shockwave Medical Inc. (NASDAQ:SWAV)

Debt Ratios

The company's debt to equity ratio remained consistently low and stable from early 2020 through mid-2023, generally fluctuating between 0.04 and 0.18. However, during the last four reported quarters, there was a marked and rapid increase, peaking at 1.22 in Q3 2023 before slightly declining to 0.97 by Q1 2024. When including operating lease liabilities, this upward trend is even more pronounced with ratios exceeding 1.0 in the final periods, indicating a substantial rise in overall indebtedness relative to equity.

Similar patterns are observed in debt to capital and debt to assets ratios, both with and without operating lease liabilities. Initially, these ratios stayed at modest levels (approximately 0.03 to 0.15) indicating conservative leverage. A dramatic escalation occurs in the last year, especially visible from Q3 2023 onwards, where debt to capital rises sharply above 0.50 and debt to assets approaches nearly 0.50. This represents a shift towards higher leverage and greater reliance on debt financing.

Financial Leverage

Financial leverage ratios followed a gradual ascending trajectory from March 2020 through mid-2023, ranging from about 1.17 to 1.37, suggesting moderate leveraging with incremental increases. A notable surge is observed in the final year, with the ratio doubling to around 2.45 in Q3 2023 and maintaining high levels thereafter. This trend corroborates the increased debt utilization seen in other metrics.

Interest Coverage

Interest coverage ratios started at significantly negative values, indicating persistent operating losses or insufficient EBIT to cover interest expenses through most of 2020 and 2021. From early 2022, the company’s interest coverage turned positive and improved markedly, reaching a peak above 74 in Q3 2022, suggesting strong operational earnings relative to interest costs during this period.

However, after this peak, the interest coverage ratio steadily declined through 2023 and into early 2024, ending at about 21 in Q1 2024. Although remaining positive, the decreasing trend could imply rising interest expenses or declining operating income affecting the company's ability to comfortably service its debt.

Summary of Trends and Implications

Overall, the financial data reveals a period of conservative capital structure with low leverage during the initial years, transitioning into a phase of heightened leverage from mid-2023 onwards. The sharp escalation in various debt ratios signals increased borrowing or reclassification impacting liabilities, notably including operating lease obligations.

Concurrently, the improvement and subsequent decline in interest coverage indicate fluctuations in operational performance relative to financing costs. The recent rising leverage combined with decreasing interest coverage suggests a potential increase in financial risk and warrants close monitoring of debt servicing capacity going forward.

The analysis of the quarterly financial data reveals several meaningful trends in the company's capital structure over the examined periods.

Total Debt

The total debt has shown a generally stable pattern with modest incremental increases from early 2020 through mid-2022, maintaining levels roughly between $16 million and $17 million. Notable deviations occur starting in the fourth quarter of 2022 with a sharp increase to approximately $24 million, followed by a dramatic surge in the first quarter of 2024 to over $730 million. This spike reflects a significant change in the company's financing activities or obligations during this latter period.

Stockholders’ Equity

Stockholders’ equity exhibited consistent growth from $177 million in the first quarter of 2020 to over $751 million by the first quarter of 2024. The increase, though steady in the early years, accelerated notably from late 2021 onwards, with substantial increments in equity values, indicating either retained earnings growth, new equity issuance, or revaluation effects strengthening the company's net assets.

Debt to Equity Ratio

Throughout most of the period from 2020 to mid-2023, the debt to equity ratio remained low and relatively stable, fluctuating between 0.04 and 0.09. This suggests a conservative capital structure with more equity financing than debt. However, the ratio spiked sharply to 1.22 in the third quarter of 2023, reflecting the pronounced increase in debt relative to equity. Subsequent quarters show a slight decline but maintain elevated levels near or just below 1.0, indicating a significant rise in leverage and a shift towards greater debt financing relative to equity capitalization.

In summary, the company maintained a predominantly equity-financed capital structure with controlled debt levels through early 2023. Beginning in late 2022 and accelerating into 2024, there is a discernible change marked by a sharp increase in total debt and corresponding elevated debt to equity ratios. This shift points to either a strategic leveraging decision or financial restructuring that substantially alters the risk and financing profile of the company. The steady rise in stockholders' equity over the period provides a counterbalance but the relative increase in debt warrants attention regarding future financial risk and cost of capital considerations.

Total Debt (including operating lease liability)

Over the observed period, total debt remained relatively stable around $25 million from the first quarter of 2020 through the second quarter of 2021, with a slight increase to nearly $30 million in the third quarter of 2021. Starting in the fourth quarter of 2021, debt levels began rising sharply, spiking notably to approximately $47 million and continuing to fluctuate around this higher range through 2022. The most significant increase occurred in early 2023, with total debt reaching an unprecedented peak exceeding $760 million by the first quarter of 2024. This substantial rise in debt indicates a strategic shift or large financing activity during this period.

Stockholders’ Equity

Stockholders’ equity exhibited a generally upward trend throughout the period. Initially, equity increased from around $178 million in the first quarter of 2020 to roughly $242 million by the end of 2021. This growth continued more aggressively in 2022 and early 2023, with equity reaching over $570 million by mid-2023. Despite a minor dip in the fourth quarter of 2023 to about $601 million, equity rebounded in the first quarter of 2024 to approximately $752 million, reflecting a solid improvement in the company's net asset base over time.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remained low and fairly stable in the early period, staying within the range of 0.10 to 0.20 from 2020 through 2022, indicative of conservative leverage levels. However, a pronounced change occurred starting in 2023, where the ratio jumped sharply to 0.24 in the first quarter and then surged dramatically to 1.27 by the third quarter of 2023. Subsequently, there was a slight decline to 1.03 by the first quarter of 2024, yet the ratio remained significantly higher compared to prior years. This suggests a major shift in capital structure, with the company assuming considerably more debt relative to equity during the last two years analyzed.

Summary

The data reveals a company that maintained modest and stable debt relative to equity through 2020 to early 2022, reflecting cautious financial management during that period. Beginning in late 2021 and accelerating in 2023, there is clear evidence of a strategic increase in debt financing, resulting in a marked rise in leverage. Concurrently, stockholders’ equity grew steadily, albeit not at a pace sufficient to offset the sharp increase in debt, as evidenced by the rising debt to equity ratio. The elevated leverage levels as of 2023 and early 2024 could indicate significant investments, acquisitions, or financing for expansion, increasing financial risk but potentially supporting growth objectives.

Total Debt

The total debt exhibited a gradual increase from March 2020 through June 2022, rising from approximately $16.1 million to around $17.4 million. However, starting from September 2022, a significant spike in total debt is evident, particularly from March 2023 onwards, where debt surged dramatically to nearly $731 million by March 2024. This sharp increase indicates a substantial rise in leverage or borrowing during the most recent periods.

Total Capital

Total capital demonstrated an overall upward trajectory throughout the observed period. Initial levels were about $194 million in March 2020, growing steadily with some fluctuations to $535 million by December 2022. From March 2023, total capital surged noticeably, reaching approximately $1.48 billion by March 2024. This increase suggests significant capital infusion or revaluation aligned with the rising total debt.

Debt to Capital Ratio

The debt to capital ratio remained relatively low and stable from March 2020 to December 2022, fluctuating between approximately 0.04 and 0.08, indicative of moderate leverage. Notably, there was a pronounced increase in this ratio starting in early 2023, peaking near 0.55 in March 2023. Although it slightly decreased thereafter, the ratio remained elevated above 0.49 even by March 2024. This change reflects a shift toward greater reliance on debt financing relative to capital in recent quarters.

Overall Analysis

The data portrays a period of relative financial stability in terms of debt levels and leverage ratios until late 2022, followed by a marked transformation in early 2023. The significant escalation in total debt and capital, alongside the elevated debt to capital ratio, suggests a strategic financial shift which could be attributed to new financing activities, acquisitions, or capital structure adjustments. The sustained higher leverage signals increased financial risk, which may imply heightened obligations and interest expenses going forward.

Total Debt (including operating lease liability)

The total debt level remained relatively stable between March 2020 and June 2021, fluctuating around the $24,900 thousand mark. A notable increase occurred in September 2021, rising to nearly $29,800 thousand, followed by a significant jump in December 2021 to approximately $47,200 thousand. This upward trend continued, reaching a peak of about $776,800 thousand by March 2024, indicating a substantial growth in debt over the period.

Total Capital (including operating lease liability)

Total capital initially experienced slight fluctuations from March 2020 to June 2021, ranging between approximately $229,000 thousand and $270,000 thousand. Starting from September 2021, capital showed a steady upward trajectory, accelerating after December 2022 and peaking at around $1,528,556 thousand by March 2024. This reflects significant capital infusion or asset growth over the analyzed period.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio remained relatively low and stable around 0.10 to 0.16 between March 2020 and December 2022, indicating moderate leverage. However, beginning in March 2023, the ratio surged sharply to 0.20, then dropped to 0.09 in June 2023 before dramatically increasing again, reaching above 0.50 from September 2023 through March 2024. This pattern reflects a substantial increase in leverage during the final periods, suggesting a shift toward greater reliance on debt financing relative to total capital.

Summary

Across the examined timeframe, debt and capital both increased markedly, with capital growing substantially faster in the latter periods. While the company maintained a conservative debt to capital ratio for several years, a notable inflection occurred starting in early 2023, culminating in significantly higher leverage ratios by early 2024. Such shifts may imply strategic changes in financing approach or capital structure, possibly to support expansion initiatives or other significant investments.

Total Debt

The total debt remained relatively stable from March 2020 through June 2022, fluctuating modestly between approximately $16 million and $17.4 million. A notable spike occurred in December 2022, with total debt rising sharply to over $104 million. Despite a brief return to lower levels in the following quarter, the debt increased dramatically again, reaching a peak of approximately $732 million by the end of the first quarter in 2024. This represents a substantial increase in financial leverage over the recent reporting periods.

Total Assets

Total assets exhibited consistent growth over the entire timeframe, rising from about $220.7 million in March 2020 to nearly $1.64 billion by March 2024. The increases were generally steady until late 2022, when asset values surged significantly, in parallel with the rise in debt levels. This upward trend in assets indicates expansion or significant investment into the company’s resource base in recent years.

Debt to Assets Ratio

The debt to assets ratio was initially low and stable, ranging between 0.04 and 0.07 from March 2020 until mid-2022, reflecting a conservative capital structure with low leverage. Starting in late 2022, the ratio increased sharply, reaching 0.13, before peaking near 0.50 by early 2024. This substantial increase denotes a marked shift towards higher financial leverage, indicating the company has taken on considerably more debt relative to its assets during this period.

Summary of Financial Position Trends

Overall, the company has demonstrated significant growth in total assets over the period, which is generally positive and indicative of expansion. However, the marked increase in total debt and the corresponding rise in the debt to assets ratio in the latest periods indicate a strategic move toward higher borrowing. This shift could imply increased financial risk but may also reflect investment or capital expenditures intended to support growth. Close monitoring of debt levels relative to asset growth and the company’s ability to service this debt is advisable going forward.

Total Debt

The total debt, including operating lease liability, remained relatively stable from March 2020 to June 2021, fluctuating slightly around the 24,900 thousand USD mark. However, a noticeable increase began in September 2021, with debt reaching 29,782 thousand USD and sharply rising to 47,189 thousand USD by December 2021. Throughout 2022, the debt continued to increase with some fluctuations, ending the year at 60,404 thousand USD.

In 2023, the debt level surged dramatically, peaking at 764,853 thousand USD in December 2023 and slightly increasing to 776,799 thousand USD by March 2024. This indicates a significant accumulation of debt in the most recent periods.

Total Assets

Total assets showed a consistent upward trend over the entire period. Starting at 220,738 thousand USD in March 2020, assets increased steadily with some acceleration observed from mid-2021 onwards. By December 2022, assets had risen substantially to 646,089 thousand USD and continued to expand rapidly through 2023, peaking at 1,473,959 thousand USD in December 2023 and reaching 1,643,747 thousand USD by March 2024.

This growth in total assets demonstrates a significant expansion of the company's asset base, especially pronounced in the last year.

Debt to Assets Ratio

The debt to assets ratio remained relatively low and stable early in the period, ranging from 0.09 to 0.11 between March 2020 and June 2022, indicating a conservative leverage position relative to assets.

There was a small uptick to 0.18 in March 2023, followed by a sharp increase reaching 0.52 in December 2023. The ratio slightly decreased to 0.49 by March 2024 but remained elevated. This reflects a notable rise in leverage, consistent with the substantial increase in total debt relative to the total assets during the recent period.

Summary Insights

The data shows a period of stable and low leverage until mid-2021, followed by a phase of increasing indebtedness and asset growth. The rapid expansion in total assets over the last few quarters coincides with a marked increase in total debt, resulting in the debt to assets ratio climbing above 0.5. This suggests aggressive financing or investment activities funded via significant debt accumulation, indicating a shift in the company's financial strategy or capital structure during the most recent year.

Overall, the financial data reveals a transition from moderate leverage and steady asset growth to substantial expansion supported by much higher levels of debt, which may imply increased financial risk or a strategic phase of growth requiring external financing.

The analysis of the quarterly financial data reveals several notable trends in the company's financial position over the observed periods.

Total assets

The total assets display a general upward trajectory from March 31, 2020, through March 31, 2024. The value increases from approximately $220.7 million to over $1.64 billion, signaling substantial growth in asset base. The most significant acceleration in asset accumulation appears between December 31, 2022, and March 31, 2024, where total assets more than double within approximately one year, highlighting potentially aggressive investment or acquisition activity during this period.

Stockholders’ equity

Stockholders’ equity also exhibits a rising trend, growing from around $177.8 million at the start of the observed timeline to approximately $751.8 million by March 31, 2024. This increase generally parallels the growth in total assets but at a comparatively steadier pace. A notable substantial rise occurs in the last few quarters, especially between December 31, 2022, and June 30, 2023, reflecting an infusion of equity capital or retained earnings strengthening the equity base. However, the quarters ending September 30, 2023, and December 31, 2023, reveal a minor decline, followed by a recovery up to March 31, 2024.

Financial leverage

Financial leverage, calculated as the ratio between total assets and stockholders’ equity, fluctuates within a moderate range from 1.17 to 1.43 during the initial periods until December 31, 2021. Subsequently, leverage ratios tend to stabilize around 1.26 to 1.37 until June 30, 2023, suggesting a conservative use of debt relative to equity. Notably, from September 30, 2023, leverage substantially increases to 2.45, slightly declining afterwards but remaining significantly elevated, about 2.19 by March 31, 2024. This sharp rise indicates increased reliance on debt or liabilities compared to equity, which may reflect strategic financial structuring to support rapid asset growth or operational expansion.

In summary, the company demonstrates strong asset growth with a consistent increase in equity, supporting its expanding financial base. The recent years, especially towards the end of the period analyzed, mark a shift toward higher leverage, potentially indicating more aggressive financing strategies. Monitoring this trend is advisable to assess the implications for financial risk and long-term solvency.

Earnings before interest and tax (EBIT)

The EBIT values reveal a significant positive trend over the observed period. Initially, EBIT was negative and relatively stable around -18,000 to -12,500 thousand USD in 2020, indicating operating losses. However, from 2021 onwards, there was a marked shift towards positive EBIT, beginning with a nearly neutral figure at mid-2021, progressing to strong positive earnings by late 2021. The positive momentum continued throughout 2022 and 2023, with the EBIT consistently increasing, peaking at 58,410 thousand USD in Q3 2023 before a slight decline in Q4 2023 and early 2024, though it remained at a high level (~52,900 thousand USD). This trend suggests improving operational efficiency and growing profitability over the four-year span.

Interest expense

The interest expense remained relatively consistent and low from 2020 through early 2022, generally fluctuating between approximately 277 and 316 thousand USD each quarter. Starting late 2022, interest expense increased significantly, reaching a peak of around 2,950 thousand USD by early 2024. This substantial rise in interest expense might reflect increased debt levels, refinancing activities, or changes in interest rates. The pattern indicates a growing financial cost burden which contrasts with the improving EBIT performance.

Interest coverage ratio

The interest coverage ratio exhibits a dramatic improvement over the period analyzed. Initially, the ratio was highly negative in 2020 and early 2021, reflecting EBIT losses and insufficient earnings to cover interest expenses, with values below -50. This situation improved gradually throughout 2021, moving towards zero and turning positive by early 2022. From this point forward, the ratio rose sharply, peaking above 74 in Q3 2022, indicating that the company’s EBIT was more than sufficient to cover interest charges by a large margin. Although the coverage ratio slightly declined after the peak, it remained comfortably above 20 through early 2024, pointing to sustained strong earnings relative to interest obligations despite increasing interest expenses.

Summary

Overall, the data reflect a significant turnaround in operational profitability, shifting from losses to strong positive EBIT over the period. Despite rising interest expenses toward the latter periods, the company maintained excellent interest coverage ratios, indicating robust ability to service debt. However, the upward trend in interest expense warrants attention for potential impacts on future financial flexibility. The combined trends highlight positive financial health improvements, with caution advised concerning financial leverage.