Shockwave Medical, Inc.

Good afternoon and welcome to Shockwave's fourth quarter and full year 2023 earnings conference call. At this time, all participants are in a listen-only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes. I would now like to turn the call over to Debbie Castor, Vice President of Investor Relations at Shockwave, for a few introductory comments.

Thank you all for participating in today's call. Joining me today from Shockwave Medical are Doug Gottschall, President and Chief Executive Officer, Isaac Zacharias, President and Chief Commercial Officer, and Renee Gaeta, Chief Financial Officer. Earlier today, Shockwave released financial results for the quarter and year end of December 31st, 2023. A copy of the press release is available on Shockwave's website. Before we begin, I would like to remind you that management will make statements during this call that include forward-looking statements within the meaning of federal securities laws which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call other than statements of historical fact are forward looking statements. All forward looking statements including without limitation statements relating to our sales and operating trends, business and hiring prospects, financial and revenue expectations, clinical trials, reimbursement proposals, and future product development and approvals are based upon our current estimates and various assumptions. These statements involve material risks and uncertainties, including the impact of global business, political and macroeconomic conditions that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For list and description of the risks and uncertainties associated with our business, please refer to the risk factor section of our annual report on Form 10-K on file with the SEC and available on EDGAR. And in our other reports filed periodically with the SEC. On today's call, we will refer to both GAAP financial measures and adjusted EBITDA, a non-GAAP financial measure. Please refer to today's press release for reconciliation of net income to adjusted EBITDA and additional disclosures regarding this non-GAAP financial measure. Stock wave disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 15, 2024. And with that, I'll turn the call over to Doug.

Thanks, Debbie. Good afternoon, everyone, and thank you for taking the time to join us to review Shockwave's results for the fourth quarter and the full year of 2023, which proved to be another banner one for the company. During the year, we launched C2 in Japan. We converted to direct sales forces in Spain, Portugal, Italy, and Canada. We launched two new products, L6 for peripheral vessels and C2 Plus for the coronaries. We were granted DRG codes specific to coronary IVL in the inpatient hospital setting, which pay on average about $9,000 more than codes for PCIs without IVL. We acquired and integrated Neovasc and the reducer product, which is the first device that addresses refractory angina, an often debilitating condition that impacts a large patient population that has no good treatment options. And we raised $750 million in a convertible debt offering. We achieved record revenue of $203 million in the fourth quarter, which was a 41% increase from a year ago, and a 9% sequential increase from the third quarter of 2023. Our revenue for the full year of 2023 was $730.2 million, a 49% increase from 2022 revenue. We witnessed excellent performance in all areas of the business, with U.S. peripheral and coronary businesses growing 47% and 41% respectively. and our international IVL business growing 75% compared to 2022. Really stellar performance. The team continues to execute at a high level, and we now have over 1,500 global employees. Our products are approved in 70 countries, and we are pleased that we now have EU MDR certification for M5+, S4, and C2-plus catheters and our generator. The MDR process was a long journey and required a major effort by the team. Our U.S. coronary business continues to shine, and we have a couple of meaningful reimbursement tailwinds that will support continued adoption. The new hospital inpatient DRGs for coronary went into effect in the fourth quarter of last year, and additionally, physicians are now being paid when they use coronary IVL, thanks to the CPT code that became effective on January 1st of this year. As we have witnessed in the past, reimbursement takes time to influence customer behavior, but we anticipate that the combination of these new payments will have a positive impact on our U.S. coronary business and will help lower the economic friction that has historically been the biggest constraint on increased utilization of IVL. We anticipate that physicians will increasingly use C2+, whenever they feel it is clinically appropriate, versus feeling pressured to only use it selectively or after exhausting all other options. We believe an IVL-first strategy is optimal for patients and is now even better economically for customers. Also on the coronary topic, we are continuing the launch of C2+, which has 50% more pulses than its predecessor, C2. Isaac will talk a bit more about this later in the call, but early reception from our customers has been very positive. On the US peripheral side, the prior authorization issue appears to have stabilized as our customers are learning how to navigate Aetna's increased scrutiny on peripheral procedures, and we have not seen any other payers follow Aetna's practices. Meanwhile, multiple medical societies have come together to form a working group, and they have been applying pressure on Aetna in hopes of getting them to reconsider their policy. There also has been considerable attention paid to Medicare Advantage recently. At the federal level, CMS recently announced new rules which will make it harder to pursue prolonged prior authorization practices. There also has been some productive recent movement among commercial payers specific to Shockwave, as Humana, the second largest Medicare Advantage payer, issued a positive coverage decision for IVL for their Medicare Advantage plans effective January 1, 2024. Staying on the topic of U.S. peripheral reimbursement, we were pleased to see that CMS improved hospital reimbursement by assigning peripheral IVL to new MS DRGs. These new DRGs increase inpatient hospital payment by $4,000 to $10,000 over previous levels. Most peripheral interventions are performed in an outpatient setting. However, a majority of the hospital-based below-the-knee procedures are for the more severe chronic limb-threatening ischemia, or CLTI, which makes them more likely to be performed on an inpatient basis than other procedures. This reimbursement uplift nicely complements the upcoming advances in our below-the-knee product offering that starts later this year. While on the topic of new products, we will be focusing back on peripheral in the second half of this year with two launches. First, we will introduce an upgraded version of L6, which will go from one pulse per second to two. We witnessed a very positive response from our customers when we made this same upgrade going from M5 to M5+. Shortly after the L6 rollout, we plan to launch the E8 peripheral catheter. E8 has an 8-centimeter-long treatment zone, which is twice as long as our current S4 offering, and is specifically designed to treat longer, diffuse lesions that are common in below-the-knee cases. We look forward to seeing our customers' response to E8. We think they're going to love it. Rounding out our future BTK offering, we anticipate the approval of our Javelin peripheral catheter in the latter part of the year and look forward to starting the limited market release of that product prior to an expected full market release in early 2025. That makes three significant new peripheral launches within the next year. And finally, on the operations front, our facility in Costa Rica has gone from first shovel in the ground in June of 2022 to a validated clean room and C2 Plus line in December of 2023. Amazing progress, frankly. We'll be hosting regulatory audits starting this month and anticipate shipping finished product into inventory in the third quarter of this year. 2023 was a great year for Shockwave, and we are even more excited about what lies ahead in 2024. We expect revenue between $910 to $930 million for the full year of 2024, representing growth of 25% to 27% over 2023. Before I turn the call over to Isaac to provide more color on the commercial front, I want to take a minute to thank our outgoing CFO, Dan Puckett, for the tremendous job he has done in his eight years at Shockwave. During his time here, he was instrumental in our growth from a small pre-revenue private company to a public company with over $700 million in revenue. Dan is not only a fantastic CFO, but he is a joy to work with. He's been the biggest cheerleader for all of us, always supportive and inspiring to everyone around him, and he will be sorely missed. We wish Dan well in his retirement and are pleased to introduce our new CFO, Renee Gaeta, who is jumping right in today and will present the financials a bit later in the call. And if she gets anything wrong, it's all Dan's fault. With that, I'll turn the call over to Isaac.