What happened
Shares of Shockwave Medical (NASDAQ: SWAV) were up 10.69% early Tuesday afternoon after the Centers for Medicare and Medicaid Services (CMS) unveiled a proposed rule that detailed new payment codes for coronary intravascular lithotripsy (IVL), which is performed by a system that Shockwave manufactures. Shockwave’s IVL uses sonic pressure waves to break up hardened plaque in arteries.
So what
Not only do the proposed new codes mean more money for Shockwave — an estimated $4,000 to $5,000 more per procedure — but it also shows that the CMS is recognizing the value of the IVL. This will go a long way toward getting more physicians to use the system.
Shockwave has estimated the procedure’s total addressable market could be worth $8.5 billion a year. The stock is up more than 21% so far this year.
Now what
The news out of the CMS wasn’t the only news that affected Shockwave recently. On Monday, the company announced it was completing its $75 million purchase of specialty medical-device company Neovasc.
Neovasc Reducer System has been approved in Europe to treat refractory angina, a chronic type of chest pain when the coronary arteries deliver an inadequate supply of blood to the heart muscle. Shockwave says this market is worth $5 billion a year.
Shockwave’s financials have improved dramatically in the past year. Last year, it reported revenue of $489.7 million, up 107%, and net income of $216 million, compared to a loss of $9.1 million in 2021. Yearly earnings per share (EPS) in 2022 were $5.70, compared to an EPS loss of $0.26 in 2021. The company said it expects a rise of 35% to 39% this year in revenue, landing between $660 million to $680 million.
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Jim Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Shockwave Medical. The Motley Fool has a disclosure policy.
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