Shockwave Medical Inc. (NASDAQ:SWAV)

Current provision for income taxes

The current provision for income taxes demonstrates a clear upward trend over the five-year period. Starting from a relatively low base of 62 thousand US dollars in 2019, the provision increased moderately to 80 thousand in 2020 and then more substantially to 301 thousand in 2021. A sharper rise was observed in 2022 with the figure reaching 2,108 thousand US dollars, followed by a significant surge to 12,295 thousand US dollars in 2023. This trajectory suggests increasing taxable income or changes in tax regulations or company operations affecting current tax liabilities.

Deferred tax provision (benefit)

The deferred tax provision (benefit) was not reported in the initial three years (2019 to 2021). In 2022, a substantial benefit of 97,276 thousand US dollars was recognized, indicating a significant deferred tax asset or revaluation. However, this was followed by a reversal in 2023, with a deferred tax provision of 14,708 thousand US dollars recorded. The large negative figure in 2022, transitioning to a positive amount in 2023, implies considerable changes in deferred tax balances, potentially linked to timing differences in income recognition or changes in tax rates or policies.

Provision (benefit) for income taxes

The overall provision (benefit) for income taxes aligns closely with the combined effect of current and deferred tax figures. From modest positive amounts of 62, 80, and 301 thousand US dollars for 2019 through 2021, the figure turns sharply negative in 2022 with a large benefit of 95,168 thousand US dollars. This reflects the significant deferred tax benefit registered in that year. In 2023, the total provision reverses to a substantial expense of 27,003 thousand US dollars, consistent with the reversal of the deferred tax position.

Summary of insights

The data reveals distinct fluctuations in the tax provisions over the period, with relatively low and stable current tax expenses initially, followed by a marked increase in the last two years. The deferred tax provision exhibits no activity until 2022 when a large benefit is recognized, then reverses to a sizeable expense in 2023. Consequently, the total tax provision shifts from minimal positive amounts to a significant income tax benefit in 2022, then to a substantial expense in 2023. These patterns suggest significant tax timing differences or estimates adjustments, possibly driven by changes in accounting standards, tax legislation, or the company's tax planning strategies during the latter years.

Statutory Federal Income Tax Rate

The statutory federal income tax rate remained constant at 21% throughout the entire period from 2019 to 2023, indicating no changes in the applicable federal tax legislation affecting the entity during these years.

Effective Tax Rate

The effective tax rate exhibited significant volatility over the five-year span. In 2019 and 2020, the effective tax rate was -0.58%, indicating a marginally negative tax expense relative to pre-tax income, which may suggest tax benefits or credits exceeding tax liabilities.

In 2021, the effective tax rate declined sharply to -16.22%, signaling a greater net tax benefit or deferred tax asset recognition, possibly due to losses or other temporary differences.

The most pronounced fluctuation occurred in 2022, when the effective tax rate dropped drastically to -375%, indicating substantial negative tax expense relative to pre-tax losses or significant tax credits.

In 2023, the effective tax rate reversed markedly to 73.78%, reflecting a high tax expense relative to income or a one-time tax adjustment. This substantial increase above the statutory rate suggests extraordinary items, tax penalties, or non-deductible expenses influencing the tax charge in that year.

The financial data reveals several notable trends and changes across the observed periods. The net operating loss carryovers increased significantly from 49,862 thousand US dollars in 2019 to a peak of 85,764 thousand US dollars in 2021, before decreasing to 60,636 thousand US dollars in 2023, reflecting fluctuations in operating results and possibly in taxable income.

Fixed and intangible assets showed an initial increase from 450 thousand US dollars in 2019 to 718 thousand in 2020, followed by a decline to 512 thousand in 2021, and then the values for 2022 and 2023 are negative, at -1,105 thousand and -5,624 thousand US dollars respectively, suggesting asset disposals, impairments, or reclassifications.

Accruals and reserves expanded notably over the years, growing from 1,619 thousand US dollars in 2019 to 12,856 thousand US dollars in 2023, indicating a rising provision for liabilities or anticipated expenses.

Stock-based compensation costs escalated sharply, increasing almost elevenfold from 780 thousand US dollars in 2019 to 8,745 thousand US dollars in 2023, underlining a strategy potentially aimed at incentivizing employees or executives via equity-based remuneration.

Research and development credits displayed a strong upward trajectory, starting at 2,336 thousand US dollars in 2019 and rising significantly to 20,736 thousand US dollars in 2023, reflecting intensified R&D activities and increased eligible expenses for credits.

Lease liabilities showed a fluctuating yet increasing trend, starting at 2,135 thousand US dollars in 2019, decreasing slightly in 2020 to 2,004 thousand, then rising steadily to reach 9,816 thousand US dollars in 2023, possibly due to new lease commitments or remeasurements under accounting standards for leases.

Capitalized research and development appeared only from 2022 onward, reaching 17,791 thousand US dollars in 2022 and almost doubling to 34,511 thousand US dollars in 2023, indicating a substantial capitalization of development costs over these years.

A convertible note was introduced in 2023, amounting to 22,841 thousand US dollars, representing a new form of financing added in the latest period.

Deferred tax assets increased consistently from 57,202 thousand US dollars in 2019 to 170,233 thousand US dollars in 2023, signaling an accumulation of deductible temporary differences or carryforwards potentially reducing future tax liabilities.

The valuation allowance against deferred tax assets initially deepened significantly from -55,085 thousand US dollars in 2019 to -104,773 thousand in 2021, but then reversed sharply to -13,371 thousand in 2022 and -57,848 thousand in 2023. This volatility could suggest changing assessments of the realizability of these deferred tax assets.

Gross deferred tax assets and liabilities both show increases in magnitudes, with assets growing to 112,385 thousand US dollars by 2023 and liabilities increasing to -16,825 thousand US dollars in the same year. These movements correspond with the previously noted changes in deferred tax balances.

The right-of-use assets, connected with leasing activities, were negative throughout the available data, worsening from -2,117 thousand US dollars in 2019 to -7,592 thousand in 2023, consistent with increasing lease liabilities recognized.

In-process research and development and other related asset lines appeared in the later years with negative values, which might denote impairments or write-offs of such assets in 2023.

Overall, the data reflects a company with growing commitments to R&D as evidenced by rising capitalized development costs and credits, alongside increasing stock-based compensation and lease obligations. The deferred tax accounts reveal active management and reassessment of tax positions. The introduction of convertible notes and shifts in asset valuations indicate ongoing strategic financing and asset management activities.

Deferred Tax Assets

The data for deferred tax assets is only available for the years ending December 31, 2022, and 2023. In this period, deferred tax assets have slightly increased from $97,568 thousand in 2022 to $99,169 thousand in 2023, indicating a modest growth.

Deferred Tax Liabilities

Deferred tax liabilities data is available only for the year ending December 31, 2023, with a value of $3,609 thousand. There is no prior data for comparison, so no trend can be established for this item.

The financial data exhibit significant developments in assets, liabilities, equity, and net income over the five-year period ending in 2023.

Total Assets

Total assets have demonstrated robust growth throughout the period. Reported total assets increased from approximately $232 million in 2019 to over $1.56 billion in 2023. Adjusted total assets follow a similar trajectory, though the adjusted values for 2022 and 2023 are somewhat lower than the reported figures, indicating adjustments that moderately reduce total assets for those years. The notable acceleration in asset growth, especially between 2021 and 2023, reflects substantial expansion.

Total Liabilities

Liabilities also increased significantly, rising from around $39 million in 2019 to nearly $898 million reported in 2023. Adjusted liabilities are marginally lower than reported liabilities in 2023, suggesting some reclassification or exclusion of certain liabilities in adjusted figures. The growth in liabilities is pronounced, particularly in 2023 when liabilities expanded more than sixfold relative to 2022, which may indicate increased financing or obligations taken on concurrent with asset growth.

Stockholders’ Equity

Stockholders’ equity showed steady growth from roughly $193 million in 2019 to $669 million reported in 2023. Adjusted equity is consistently below reported equity from 2022 onwards, notably lower in 2023 by about $95 million. Despite the adjustments, equity has more than doubled since 2019, reflecting overall upward value creation for shareholders. The divergence between reported and adjusted equity in later years possibly arises from deferred tax adjustments or other accounting considerations impacting equity valuation.

Net Income (Loss)

The net income figures indicate a transition from losses to profitability. The company reported losses each year from 2019 to 2021, with the magnitude of losses decreasing substantially by 2021. In 2022, net income turned positive, with reported net income reaching approximately $216 million. Adjusted net income for the same year is lower at nearly $119 million, suggesting substantial positive adjustments increasing reported profitability. In 2023, adjusted net income exceeds reported net income ($162 million vs. $147 million), highlighting beneficial adjustments in profit recognition. The shift from losses to sizable profits over these years highlights operational improvements or significant non-operational income items affecting adjusted figures.

Overall, the data reveal strong growth in the company's financial position, marked by accelerated asset and liability expansion, increased equity, and a clear turnaround in profitability. The adjusted figures provide a more conservative yet still positive view, underscoring the impact of accounting adjustments on reported results. The rapid increase in liabilities warrants monitoring to assess sustainability and financial risk associated with the company's growth strategy.

Net Profit Margin

The reported net profit margin demonstrated a significant improvement from a large negative value of -119.06% in 2019 to a positive 44.1% in 2022, before declining to 20.17% in 2023. The adjusted net profit margin displayed a similar trend, increasing sharply from -119.06% in 2019 to 24.24% in 2022 and slightly improving to 22.18% in 2023. This indicates a substantial recovery in profitability after 2019, with both reported and adjusted data reflecting reduced losses and eventual positive margins, although a slight contraction in reported margins was observed in the last reported year.

Total Asset Turnover

Both reported and adjusted total asset turnover ratios increased significantly from 0.19 in 2019 to peaks in 2022, with the reported ratio reaching 0.76 and the adjusted ratio surpassing this at 0.89. However, in 2023, both measures declined to 0.47 and 0.50 respectively. This pattern indicates improved efficiency in asset utilization up to 2022, followed by a decrease in turnover efficiency in the subsequent year, though the adjusted turnover remained consistently higher than the reported values in the latter years.

Financial Leverage

Financial leverage showed a gradual increase from just above 1.2 in 2019-2020 to 1.43 in 2021. A slight dip occurred in 2022 for reported leverage (1.26) and adjusted leverage (1.33), before a sharp increase in 2023 to 2.34 (reported) and 2.56 (adjusted). This trend suggests a rising reliance on debt or other financial obligations over time, particularly in the most recent year, with adjusted figures consistently indicating slightly higher leverage than reported figures.

Return on Equity (ROE)

ROE followed a pattern similar to net profit margins, with significant negative returns in 2019 and 2020 (-26.53% and -29.11%), improving markedly near break-even in 2021 (-3.78%), then turning strongly positive in 2022 (42.24% reported, 28.69% adjusted). In 2023, ROE declined to 22.03% reported but increased further in the adjusted measure to 28.26%. The divergence between reported and adjusted ROE in 2023 suggests that adjustments mitigated some negative factors impacting equity returns.

Return on Assets (ROA)

ROA trends mirrored ROE, with deeply negative returns in early years (-22.04% in 2019, -24.15% in 2020), improvement near zero in 2021 (-2.64%), and significant positive returns in 2022 (33.43% reported, 21.64% adjusted). However, 2023 saw a decline in reported ROA to 9.4%, while adjusted ROA slightly improved to 11.04%. This indicates improving asset profitability over time with some volatility in the most recent period and adjusted figures showing a more conservative but stable performance.

The financial data reveals significant fluctuations in both reported and adjusted net income over the five-year period. Initially, in 2019 and 2020, the company experienced substantial net losses, with values of approximately -51.1 million USD and -65.7 million USD, respectively. A marked reduction in net loss occurred in 2021, where the loss decreased to around -9.1 million USD. Notably, the year 2022 marked a turnaround with a reported net income of approximately 216.0 million USD, followed by a slight decline to 147.3 million USD in 2023. The adjusted net income shows a similar trajectory, though the value in 2023 actually increased to approximately 162.0 million USD despite the decline in reported net income.

Examining the net profit margins provides additional insight into profitability trends. The reported net profit margin was deeply negative in 2019 (-119.06%) and 2020 (-96.92%), indicating high losses relative to revenue. By 2021, the margin improved significantly, nearing breakeven at -3.85%. The company then achieved positive margins in 2022 (44.1%), although this dropped to 20.17% in 2023, signaling a decrease in profitability. The adjusted net profit margin shares a comparable pattern, yet with a lower margin in 2022 (24.24%) that rose slightly to 22.18% in 2023, suggesting adjustments had an impact on the reported figures and marginally improved the apparent profitability in the latest year.

Overall, the data indicates a substantial recovery from profound losses to strong profitability between 2019 and 2022, followed by some variability in 2023. The divergence between reported and adjusted net income and margins in the last two years suggests that deferred income tax adjustments played a role in the financial outcomes. The improvement in adjusted net profit margin in 2023 alongside a decline in the reported figure may warrant further exploration to understand the underlying tax impacts and operational factors affecting earnings quality.

The financial data reveal several significant trends regarding the assets and asset turnover ratios over a five-year period.

Total Assets

There is a remarkable and consistent increase in the reported total assets from 231,938 thousand US dollars at the end of 2019 to 1,566,563 thousand US dollars by the end of 2023. This represents nearly a sevenfold increase over the five-year span. Adjusted total assets follow a similar upward trajectory, though with slightly lower values from 2022 onwards. The adjusted figures were slightly less than the reported totals by approximately 15% to 18% in the last two years, suggesting adjustments related to deferred income tax or other financial reclassifications impacting the asset base.

Total Asset Turnover

The reported total asset turnover displays an increasing pattern from 0.19 in 2019 to a peak of 0.76 in 2022, indicating improving efficiency in utilizing assets to generate revenue. However, there is a noticeable decline in 2023 to 0.47. The adjusted total asset turnover shows a similar trend but with a higher peak of 0.89 in 2022 and a subsequent decrease to 0.50 in 2023. The adjusted turnover ratios consistently exceed the reported figures from 2021 onwards, which implies that adjustments made to the asset base enhance the apparent efficiency of asset utilization.

Insights and Interpretation

The strong asset growth, particularly evident in 2022 and 2023, could indicate significant investments or acquisitions. The increase in asset turnover ratios up to 2022 suggests improving operational performance and better management of asset utilization. The subsequent decline in turnover in 2023, despite further asset growth, may flag challenges in converting the expanded asset base into proportional revenue increases. The adjustments to total assets and turnover imply that accounting for deferred income taxes or other financial factors materially affects the assessment of asset efficiency.

The financial data reveals significant growth in both reported and adjusted total assets over the five-year period. Reported total assets increased steadily from 231,938 thousand US dollars in 2019 to 1,566,563 thousand US dollars in 2023, indicating rapid expansion. Adjusted total assets show a similar growth pattern, though the adjusted figures for 2022 and 2023 are notably lower than the reported amounts, suggesting material adjustments affecting asset values during those years.

Stockholders’ equity followed an upward trend as well, with reported figures rising from 192,653 thousand US dollars in 2019 to 668,677 thousand US dollars in 2023. The adjusted stockholders’ equity similarly increased but remained consistently below the reported figures for the years 2022 and 2023, mirroring the differences observed in total assets. This indicates that the adjustments notably impacted equity valuation during the most recent periods.

Financial leverage ratios demonstrate varying dynamics across the period. The reported financial leverage was relatively stable from 2019 through 2020 at approximately 1.2 to 1.21, increased to 1.43 in 2021, then decreased slightly to 1.26 in 2022, before rising sharply to 2.34 in 2023. Adjusted financial leverage follows a comparable pattern but shows a higher ratio in 2022 and 2023, reaching 2.56 in the final year. The elevated leverage ratios in 2023 imply greater reliance on debt or other liabilities relative to equity, particularly when considering the adjustments.

Overall, the trends suggest substantial growth in asset base and equity, with increased financial leverage, especially when adjustments are considered. The divergence between reported and adjusted figures in the later years points to the significance of deferred income tax or other adjustments on the financial position, signaling a more leveraged and complex capital structure in the most recent year.

Net Income (Loss) Trends

From 2019 through 2021, both reported and adjusted net income figures exhibit negative values, indicating consistent net losses during this period. The magnitude of losses decreased substantially in 2021 compared to prior years. A significant positive shift occurred in 2022 when reported net income turned sharply positive, reaching approximately 216 million USD. However, the adjusted net income for the same year, while also positive, was significantly lower at around 119 million USD, suggesting the presence of adjustments that improve the raw reported figure. In 2023, reported net income declined from the previous year but remained positive at about 147 million USD. Adjusted net income increased further, surpassing the reported figure to reach approximately 162 million USD. These movements highlight a recovery from losses to sustained profitability, with the adjusted figures generally reflecting a more conservative profit estimate than the reported numbers.

Stockholders’ Equity Movements

Stockholders' equity shows a steady upward trajectory across all years. Reported equity increased progressively from roughly 193 million USD in 2019 to approximately 669 million USD in 2023. Adjusted stockholders’ equity follows a similar pattern but at consistently lower levels starting in 2022, with a notable divergence where adjusted figures for 2022 and 2023 are approximately 413 million USD and 573 million USD, respectively, compared to higher reported amounts. This divergence suggests the adjustments reduce the equity base in these years, possibly to account for deferred taxes or other balance sheet reconciliations. Overall, the steady increase illustrates a strengthening capital base despite fluctuating profitability.

Return on Equity (ROE) Analysis

Reported ROE figures correlate with the income trends, showing negative returns in 2019 through 2021 (-26.53% to -3.78%). There is a marked improvement in 2022 with reported ROE soaring to 42.24%, reflecting the strong reported profitability that year. However, this figure decreases to 22.03% in 2023, still positive but indicating reduced returns relative to the prior year's peak. Adjusted ROE mirrors these changes but remains lower than the reported ROE from 2022 onward (28.69% in 2022 and 28.26% in 2023), indicating a more tempered yet consistently positive return when adjustments are considered. The negative ROE during loss-making years and the subsequent recovery further illustrate the company’s transition from deficit to profitability, while the gap between reported and adjusted ROE suggests conservative adjustments impacting perceived efficiency in generating shareholder returns.

Overall Observations

The financial data reveals a clear recovery path from sustained net losses and negative returns to profitability and positive shareholder equity growth. Adjustments applied to financials reduce both net income and equity values in recent years, tempering the reported gains but portraying a more cautious financial position. The improvements in ROE suggest enhanced operational performance, though the disparity between reported and adjusted metrics indicates the importance of considering tax and other adjustments for a comprehensive understanding of financial health. The company’s equity growth alongside increasing profitability points to strengthened financial stability and improved shareholder value over the analyzed periods.

The data exhibits significant variations in income, asset values, and profitability ratios over the examined five-year period.

Net Income (Loss)

The reported net income starts from a loss of $51.1 million in 2019, which further deepens to a loss of $65.7 million in 2020. In 2021, the loss significantly decreases to $9.1 million, indicating an improving trend. By 2022, the company reports a substantial reported net income of $216.0 million, reflecting a strong turnaround. However, in 2023, this reported net income decreases to $147.3 million. The adjusted net income follows a similar pattern but shows slightly different values in 2022 and 2023, with $118.7 million and $162.0 million respectively, suggesting that adjustments have a considerable impact especially in the later years.

Total Assets

The reported total assets show a steady and sharp increase over the period from about $232.0 million in 2019 to $1.57 billion in 2023. Adjusted total assets also increase consistently but at a somewhat lower magnitude, rising from around $232.0 million in 2019 to approximately $1.47 billion in 2023. The difference between reported and adjusted assets becomes more pronounced in the later years, likely reflecting changes in accounting treatments or asset revaluation adjustments.

Return on Assets (ROA)

Reported ROA mirrors the net income trend, starting with negative values of -22.04% in 2019 and -24.15% in 2020, then improving dramatically in 2021 to a mild negative of -2.64%. A sharp turnaround occurs in 2022, with ROA increasing to 33.43%, before declining to 9.4% in 2023. Adjusted ROA follows a similar pattern but with lower peaks and higher troughs, moving from -22.04% and -24.15% in 2019-2020 to -2.64% in 2021, then rising to 21.64% in 2022, and finally reaching 11.04% in 2023. The adjusted figures suggest a more moderated but still positive recovery in asset profitability.

Overall, the company demonstrates a marked recovery from significant net losses and negative returns on assets in the initial years towards positive and substantial profitability and asset growth in the later years. The adjustments made to net income and assets notably moderate these figures, implying potential accounting considerations that affect the reported financial health. The peak profitability in 2022 across both reported and adjusted data indicates a particularly strong year, followed by a partial retrenchment in 2023. Asset growth has been robust throughout, supporting the improving income trends and ROA results.