Shockwave Medical Inc. (NASDAQ:SWAV)

The financial leverage ratios indicate a stable and low leverage position from 2019 through 2022, with ratios close to 1.2–1.4, followed by a marked increase in 2023 to 2.34. This suggests the company significantly increased its use of debt or financial obligations relative to equity in the most recent period.

Looking at the debt to equity ratios, both standard and including operating lease liabilities, the values remained quite stable from 2019 to 2022, around 0.07 to 0.2, indicating conservative leverage levels. However, there is a sharp rise in 2023 to approximately 1.09 for the standard ratio and 1.15 when including operating leases. This represents a substantial change, signaling a higher dependency on debt financing relative to shareholders' equity.

Debt to capital ratios also reflect a similar pattern of stability from 2019–2022, fluctuating slightly around 0.05 to 0.16, then jumping significantly in 2023 to around 0.52 for standard and 0.54 including operating leases. This implies the overall capital structure altered towards more debt compared to total capital base.

The debt to assets ratio remained low and fairly constant between 0.04 and 0.06 from 2019 through 2022, increasing considerably in 2023 to approximately 0.47 to 0.49 when factoring in operating lease liabilities. This denotes that nearly half of the company's assets were financed through debt in the latest period, contrasting with previous years where debt financing was a much smaller proportion of assets.

Interest coverage ratios show a notable improvement trend over the years. From highly negative coverage in 2019 and 2020 (around -53), this ratio improved significantly by 2022 to a positive 65.07, indicating the company's improved ability to cover interest expenses from operating earnings. However, this decreased to 26.24 in 2023, though still positive, suggesting some reduction in the buffer for interest payment ability after the peak.

Fixed charge coverage ratios follow a similar pattern with negative values in 2019 to 2021 (ranging from about -23 to -1), turning positive in 2022 (19.44) and slightly declining in 2023 to 15.51. This suggests an improved capacity to meet fixed financial obligations over time, although the recent year shows some softening compared to the previous one.

Overall, the data indicates a company that maintained low and stable leverage and consistent risk profiles through 2019 to 2022, improving its interest and fixed charge coverage ratios substantially. In 2023, however, there is a marked increase in leverage ratios with a significant rise in debt relative to equity, capital, and assets. Concurrently, while coverage ratios remain positive and strong, they have declined from the prior year's peak, which might signal the beginning of pressure on the company's ability to service increased debt levels.

The financial data reveals significant trends in the company's capital structure over the five-year period ending in 2023.

Total debt

The total debt remained relatively stable from 2019 to 2021, increasing slightly from 13,819 thousand US dollars to 17,130 thousand US dollars. In 2022, there was a more noticeable rise to 24,198 thousand US dollars. However, in 2023, total debt surged dramatically to 731,863 thousand US dollars, indicating a substantial increase in financial leverage or borrowing during that year.

Stockholders’ equity

Stockholders’ equity showed a robust upward trend throughout the period. It increased steadily from 192,653 thousand US dollars in 2019 to 241,830 thousand US dollars in 2021. The growth accelerated in 2022 to 511,316 thousand US dollars and continued in 2023, reaching 668,677 thousand US dollars. This suggests strengthening of the company's net asset base and possibly retained earnings accumulation or capital injections.

Debt to equity ratio

This ratio was stable at 0.07 during the first three years, declining to 0.05 in 2022, reflecting a relatively low leverage position compared to equity. The ratio then increased sharply to 1.09 in 2023, consistent with the large increase in total debt. This shift represents a significant change in the company's financial risk profile, as debt now surpasses equity by a notable margin.

Overall, the data indicates that while the company enhanced its equity base substantially over the years, 2023 marked a turning point with a major increase in debt levels and a corresponding rise in leverage. This change warrants close attention to the implications for financial stability and interest obligations going forward.

Total Debt (including operating lease liability)

The total debt shows a generally increasing trend over the five-year period. It grew modestly from 22,718 thousand US dollars at the end of 2019 to 24,980 thousand in 2020. A more pronounced increase occurred in 2021, with debt nearly doubling to 47,189 thousand. In 2022, the rise continued but at a slower rate, reaching 60,404 thousand. However, the most significant increase happened between 2022 and 2023, where total debt surged dramatically to 770,607 thousand.

Stockholders’ Equity

Stockholders' equity exhibited a steady upward trajectory throughout the period analyzed. Beginning at 192,653 thousand US dollars at the end of 2019, it increased each year, reaching 225,654 thousand in 2020, 241,830 thousand in 2021, and showing a substantial jump to 511,316 thousand in 2022. This growth continued into 2023, with equity rising further to 668,677 thousand. The pattern indicates consistent strengthening of the company’s net assets over time.

Debt to Equity Ratio (including operating lease liability)

The debt to equity ratio remained relatively low and stable between 2019 and 2020, moving slightly from 0.12 to 0.11. In 2021, the ratio increased to 0.20, indicating a rise in leverage relative to equity. It then returned to 0.12 in 2022, suggesting a temporary reduction in leverage or a proportional increase in equity. However, the ratio experienced a sharp and substantial escalation in 2023, rising to 1.15. This indicates that the company’s total debt now exceeds its equity, reflecting a significant shift in the capital structure toward greater reliance on debt financing.

Overall Insights

The financial data reveals a company that has significantly increased both its debt and equity over the five-year span, with a particularly marked increase in debt in the final year analyzed. While equity growth has been steady and substantial, the disproportionately large surge in total debt in 2023 has considerably altered the leverage position. The spike in the debt to equity ratio in 2023 suggests a strategic or operational shift resulting in greater debt accumulation relative to equity. This change warrants attention regarding the company's financial risk profile and capital management practices going forward.

The analysis of the financial data reflects several notable trends related to the company's debt structure and capital composition over the five-year period ending December 31, 2023.

Total Debt

Total debt exhibited modest growth from US$13.8 million in 2019 to approximately US$24.2 million in 2022, indicating a relatively stable and controlled increase in borrowing over these four years. However, in 2023, total debt experienced a significant surge, rising sharply to US$731.9 million. This dramatic increase suggests a major financing activity or debt issuance in that year.

Total Capital

Total capital showed a steady upward trend between 2019 and 2021, growing from US$206.5 million to nearly US$259 million. There was a marked increase in 2022, more than doubling the prior year’s figure to US$535.5 million. This momentum continued into 2023, reaching US$1.4 billion. The accelerated capital growth, particularly in the last two years, points to substantial equity infusions or other forms of capital raising.

Debt to Capital Ratio

The debt to capital ratio remained relatively stable at approximately 0.07 from 2019 through 2021, then decreased to 0.05 in 2022, indicating a lower reliance on debt financing relative to total capital. In 2023, however, the ratio escalated sharply to 0.52. This change is aligned with the large increase in total debt noted earlier and suggests a significant shift in the company’s capital structure, with a much higher proportion of debt financing.

Overall, the data suggests the company maintained conservative leverage levels with steady capital growth for several years until 2023, when it undertook a substantial increase in debt. This change significantly altered the capital structure, likely reflecting strategic financing decisions to support expansion, acquisition, or other major initiatives. Continuous monitoring of this elevated leverage is advisable to assess potential risks associated with increased debt burden.

Total Debt (including operating lease liability)

The total debt remained relatively stable from 2019 to 2020, increasing slightly from approximately 22.7 million USD to 25.0 million USD. However, it almost doubled by the end of 2021, reaching around 47.2 million USD. The upward trend continued into 2022 with a moderate increase to approximately 60.4 million USD. A significant surge occurred in 2023, as the total debt escalated dramatically to approximately 770.6 million USD, indicating a substantial increase in the company’s borrowing or lease obligations during that year.

Total Capital (including operating lease liability)

Total capital showed an upward trend throughout the period. Starting at around 215.4 million USD in 2019, it increased marginally to 250.6 million USD in 2020 and continued rising to about 289.0 million USD by 2021. A more pronounced increase was observed in 2022, with total capital nearly doubling to approximately 571.7 million USD. The growth continued sharply in 2023, reaching roughly 1.44 billion USD, which is indicative of a significant expansion in the company's capitalization or equity base in that year.

Debt to Capital Ratio (including operating lease liability)

The debt to capital ratio exhibited relative stability during the initial years, moving from 0.11 in 2019 to 0.10 in 2020. It increased to 0.16 in 2021 before declining back to 0.11 in 2022, reflecting a balanced capital structure with limited reliance on debt during this period. However, a marked change occurred in 2023 when the ratio jumped sharply to 0.54. This suggests a strategic shift towards greater leverage, where debt constitutes a substantially larger portion of the company’s capital structure compared to earlier years.

Summary of Trends and Insights

Over the five-year period, the company maintained moderate and somewhat stable levels of debt and capital through 2022, with debt generally comprising a minor portion of the total capital. The significant increases in both debt and total capital in 2023 indicate an aggressive capital restructuring or financing activity. The steep rise in debt, in particular, points to an augmented reliance on external financing sources or potentially increased lease obligations. This shift has resulted in a markedly higher debt to capital ratio, demonstrating a higher financial risk profile due to greater leverage. The overall financial trend in 2023 suggests a pivotal year of expansion or capital investment, which may warrant further examination of the company’s strategic objectives and risk management practices.

The analysis of the financial data reveals significant changes in the company's debt and asset structure over the five-year period.

Total Debt

Total debt showed a gradual increase from 13,819 thousand US dollars in 2019 to 24,198 thousand US dollars in 2022. However, there was a substantial surge in 2023, with total debt escalating sharply to 731,863 thousand US dollars. This dramatic rise indicates a major increase in the company's leverage or borrowing activities during the last recorded year.

Total Assets

Total assets consistently expanded every year, starting at 231,938 thousand US dollars in 2019 and reaching 1,566,563 thousand US dollars by the end of 2023. The asset base nearly doubled from 2021 to 2022 and then more than doubled again by 2023, reflecting significant growth in the company's resources and investment.

Debt to Assets Ratio

The debt to assets ratio remained relatively stable and low between 2019 and 2022, fluctuating from 0.06 in 2019 and 2020 to a slight decrease to 0.04 in 2022. This suggests that the company's leverage was well-controlled relative to its asset base during this period. However, in 2023, the ratio increased markedly to 0.47, indicating that nearly half of the company's assets were financed through debt. This sharp increase points to a substantial increase in financial risk or a strategic shift in the firm's capital structure.

The financial data reveals several notable trends in the company's capital structure and asset base over the five-year period ending in 2023.

Total debt (including operating lease liability)

The total debt exhibited a gradual increase from 2019 through 2022, growing from approximately $22.7 million to $60.4 million. However, in 2023, there was a substantial surge in total debt, reaching approximately $770.6 million. This marked increase suggests a significant change in the company's financing approach or capital needs during that year.

Total assets

Total assets expanded steadily each year, starting at around $231.9 million in 2019 and experiencing particularly strong growth from 2021 onwards. By 2023, total assets had more than doubled compared to 2022, culminating in approximately $1.57 billion. This indicates significant investment or growth in asset holdings during the final reporting period.

Debt to assets ratio (including operating lease liability)

The debt-to-assets ratio remained relatively stable and low through 2019 to 2022, fluctuating modestly between 0.09 and 0.14. This stability reflects a conservative leverage position during this interval. However, the ratio increased sharply to 0.49 in 2023, aligning with the substantial rise in total debt, suggesting the company took on much higher leverage relative to its assets in that year.

Overall, the data indicates a period of measured growth followed by significant expansion in both debt and assets in 2023. The sharp increase in leverage in the most recent year may reflect strategic financing decisions aimed at supporting accelerated growth, capital expenditures, or other operational priorities.

The financial data indicates a substantial growth trajectory over the five-year period under review. Total assets have increased markedly, from approximately 232 million US dollars at the end of 2019 to over 1.56 billion US dollars by the end of 2023. This significant asset base expansion suggests considerable investments or acquisitions and reflects an overall expansion in the company's scale of operations.

Stockholders’ equity has also shown a consistent upward trend, growing from around 193 million US dollars at the end of 2019 to roughly 669 million US dollars in 2023. The equity growth, although substantial, has not kept pace proportionally with the asset growth, which has implications for the company's financing structure.

The financial leverage ratio, which measures the proportion of assets financed through debt relative to equity, demonstrates some variability. Between 2019 and 2020, the ratio remained relatively stable at close to 1.2, indicating a balanced use of debt and equity. In 2021, the ratio increased to 1.43, reflecting a higher reliance on debt financing. The ratio decreased slightly in 2022 to 1.26, suggesting a transient reduction in leverage. However, by 2023, financial leverage escalated sharply to 2.34, indicating a significant increase in debt relative to equity. This sharp rise may signal increased financial risk as the company leverages more debt to finance its asset growth.

In summary, the data reflect rapid growth in asset accumulation and equity, with a notable shift toward greater leverage in the most recent year. This evolving capital structure warrants careful monitoring to manage associated financial risks while supporting continued expansion.

The financial data shows significant changes in the company's earnings before interest and tax (EBIT), interest expense, and interest coverage ratio over the five-year period from 2019 to 2023.

Earnings before interest and tax (EBIT)

The EBIT figures reveal a notable trajectory. In 2019 and 2020, the company experienced substantial operating losses, with EBIT recorded at -50,103 thousand US dollars and further deteriorating to -64,407 thousand US dollars respectively. However, a marked improvement starts in 2021, where the loss narrowed significantly to -7,739 thousand US dollars. This negative trend reversed in 2022 with EBIT turning positive and reaching 122,714 thousand US dollars, and continued to rise in 2023 to 181,186 thousand US dollars. This trend suggests a strong recovery and growing operational profitability in the last two years.

Interest Expense

Interest expenses have demonstrated a gradual increase over the analyzed period. Starting at 944 thousand US dollars in 2019, interest expense rose steadily each year, reaching 1,212 thousand US dollars in 2020 and 1,096 thousand US dollars in 2021. A more pronounced increase occurred in 2022 and 2023, with interest expenses rising to 1,886 thousand US dollars and 6,905 thousand US dollars respectively. This acceleration may indicate increased debt levels or higher interest rates impacting the company’s financial costs in recent years.

Interest Coverage Ratio

The interest coverage ratio, which measures the company’s ability to meet interest payments from EBIT, reflected extreme volatility. In 2019 and 2020, the ratio was deeply negative (-53.08 and -53.14), reflecting high operating losses compared to modest interest expenses. In 2021, the ratio improved significantly to -7.06, although it still indicated insufficient EBIT to cover interest expenses. A dramatic turnaround was observed in 2022, with the ratio rising to 65.07, demonstrating strong EBIT relative to interest costs and indicating comfortable coverage. In 2023, though the ratio declined to 26.24, it remains at a healthy level, signaling sustained ability to meet interest obligations despite increased interest expenses.

Earnings before fixed charges and tax

The earnings before fixed charges and tax exhibited a negative trend from 2019 through 2021, starting at -48,903 thousand US dollars in 2019 and worsening to -62,199 thousand US dollars in 2020. A significant turnaround occurred in 2022, with earnings shifting to a positive 127,381 thousand US dollars and further increasing to 186,296 thousand US dollars in 2023. This pattern suggests a considerable improvement in operational profitability starting in 2022.

Fixed charges

Fixed charges showed a consistent upward trajectory over the five-year period, beginning at 2,144 thousand US dollars in 2019 and rising steadily each year to reach 12,015 thousand US dollars in 2023. This trend indicates increasing financial obligations related to fixed costs such as interest expenses or lease payments.

Fixed charge coverage ratio

The fixed charge coverage ratio followed a marked improvement pattern consistent with the change in earnings. Initially, the ratio was substantially negative, with values of -22.81 in 2019 and -18.19 in 2020, reflecting inadequate earnings to cover fixed charges. In 2021, the ratio approached near breakeven at -1.22, then shifted to positive territory with 19.44 in 2022 and remained robust at 15.51 in 2023. These values indicate a strong ability to cover fixed charges from earnings in the last two years.