After posting the worst first half of any year since 1970 (1), the stock market has come roaring back to life in Q3, with technology and risk bets leading the way following Fed Chair Jerome Powell’s signal at the July FOMC meeting of a possible shift in policy bearing. (2)
The Fed believes it is already at the fabled “neutral policy rate” meaning that investors may not have to content with endless hikes in the Fed’s battle against the inflation bogey man. (3)
Stocks are back in style with retail investors, who are bidding up growth plays in a frenzy of speculative fervor.
One of the groups that stands to fare best under these new conditions is the biotechnology space, where the landscape is defined by risky bets on long-term prospects with a potentially huge payoff down the line.
Within that space, right at the crossroads of technology and biotechnology is a sweet spot that has been receiving strong attention from investors over recent weeks – the medical device technology space.
With that in mind, we take a closer look at some of the most interesting stories in the medical device segment of the biotech space this week.
Shockwave Medical Inc. (Nasdaq:SWAV) operates as a medical device company that focuses on developing and commercializing products intended to transform the way calcified cardiovascular disease is treated.
The firm offers M5 catheters for treating above-the-knee peripheral artery disease, C2 catheters for treating coronary artery disease, and S4 catheters or treating below-the-knee peripheral artery disease.
Shockwave Medical Inc. (Nasdaq:SWAV) recently reported financial results for the three months ended June 30, 2022, including recognized revenue of $120.7 million, up 116% from the same period in 2021. The company also shared two-year data from the Disrupt PAD III trial, which found that Shockwave IVL maintains superiority to angioplasty in calcified peripheral disease and preserves future treatment options and received regulatory approval in China to market and sell the Shockwave IVL System with the Shockwave C2 Coronary IVL Catheters and the Shockwave M5 and S4 Peripheral IVL. (4)
“Our results in the second quarter were encouraging once again and demonstrated the strength throughout the entire Shockwave organization. Our teams continue to deliver due to their ability to work effectively together and with our customers to overcome the obstacles that continue to be put in front of us,” said Doug Godshall, President and Chief Executive Officer of Shockwave Medical. “The progress of our business across categories and geographies demonstrates the global impact of IVL as a safe, effective technology to address calcified arterial disease and we look forward to continuing to improve outcomes for patients across the globe.”
The context for this announcement is a bit of a bid, with shares acting well over the past five days, up about 2% in that timeframe. Shares of the stock have powered higher over the past month, rallying roughly 40% in that time on strong overall action. (5)
Shockwave Medical Inc. (Nasdaq:SWAV) managed to rope in revenues totaling $120.7M in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 116%, as compared to year-ago data in comparable terms. In addition, the company has a strong balance sheet, with cash levels exceeding current liabilities ($224.9M against $66.2M). (6)
Electromedical Technologies Inc. (OTC US:EMED) is a pioneer in the development and production of bioelectronic devices designed to relieve chronic, intractable, and acute pain by using frequencies and electro-modulation as a substitute for Opioid prescriptions in the treatment of pain.
The company produces the WellnessPRO-Plus device, a self-administration tool for bioelectronic medical treatment of chronic pain that holds the potential to replace opioid-based treatments, offering hope to millions of people and stalling the epidemic of addiction, overdose, and suicide that has plagued society over the past decade.
Electromedical Technologies Inc. (OTC US:EMED) put out its Q2 highlights this morning, noting that its net sales for the six months ended June 30 jumped over 20% year over year to $447K on improved gross margins, which rose to 80% during the quarter.
“We continue to drive toward scalable growth and new innovations, positioning the Company as an emerging leader in technologies that offer a drug-free path to a pain-free life,” noted Matthew Wolfson, Founder and CEO of Electromedical. “Q2 delivered another quarter of robust growth in net sales. And we made significant progress in board governance and product development.” (7)
According to its release, the company’s business model remained resilient during the quarter ended June 30 despite macro headwinds, including inflation, a slowdown in consumer spending, and continued global supply chain concerns. During the quarter, Electromedical was able to achieve top and bottom-line growth at improved margins, shrinking the Company’s loss from operations by over 50% year over year, moving the Company closer to EBITDA profitability.
The Company also noted that it was able to shore up its balance sheet during the quarter by working with one of its most significant stakeholders to reduce debt carried by the Company by more than $600k in a debt-to-equity conversion involving restricted shares. In addition, the Company added strong talent and experience to its Board of Directors with the addition of Lee Benson, a proven leader with an established track record of profound success in the engineering space.
Electromedical Technologies Inc. (OTC US:EMED) CEO Wolfson added, “We have reduced dilution risk, shored up the balance sheet, and added proven leadership talent to our board, building governance and strategic value into the core of the Company as we move toward scaling the business. We have a number of updates in the works related to R&D achievements and further investments in driving expanding sales. I look forward to providing additional updates soon.” (7)
iRhythm Technologies Inc. (Nasdaq:IRTC) engages in the development of monitoring and diagnostic solutions for detection of cardiac arrhythmias.
IRTC offers Zio XT, is a wearable patch-based biosensor, which continuously records and stores ECG data from every patient heartbeat for up to 14 consecutive days, and Zio AT, which provides ECG data but also provides physicians with actionable notifications during the wear period.
iRhythm Technologies Inc. (Nasdaq:IRTC) recently reported financial results for the three months ended June 30, 2022, including revenue of $102.1 million, a 25.6% increase compared to second quarter 2021, gross margin of 68.8%, a 0.8 percentage point improvement compared to second quarter 2021, and cash and short-term investments of $204.5 million at June 30, 2022.
“We made steady progress in the second quarter, out-performing revenue expectations and delivering another quarter of record registrations in our core U.S. business, fueled by an all-time high number of new accounts doing business with us,” said iRhythm CEO and President, Quentin Blackford. “New account openings were up 22% quarter-over-quarter and revenue volumes increased 10% sequentially, underscoring our solid performance amidst a difficult market environment. With business highlights regarding reimbursement and our Zio Watch clearance already announced in July, we are pleased with the way that the second half of 2022 has begun.” (8)
The chart shows 6% piled on for shareholders of the name during the trailing month. Moreover, the name has registered increased average transaction volume recently, which is particularly important with the stock trading on a float that is tight at just 29.6M shares. (9)
iRhythm Technologies Inc. (Nasdaq:IRTC) has a significant war chest ($204.5M) of cash on the books, which compares with about $70.4M in total current liabilities. IRTC is pulling in trailing 12-month revenues of $361.7M. In addition, the company is seeing major top-line growth, with y/y quarterly revenues growing at 25.6%. (10)
Other core players in the Medical Device space Include Medtronic PLC (NYSE:MDT), Zynex Inc. (Nasdaq:ZYXI), electroCore Inc. (Nasdaq:ECOR), Novocure Ltd. (Nasdaq:NVCR), Tivic Health Systems Inc. (Nasdaq:TIVC), Zimmer Biomet Holdings Inc. (NYSE:ZBH), and Intuitive Surgical Inc. (Nasdaq:ISRG).
References:
- https://www.cbsnews.com/news/stock-market-down-worst-since-1970/
- https://www.bloomberg.com/news/articles/2022-07-25/morgan-stanley-jpmorgan-disagree-on-fed-policy-pause-outlook?sref=8OqHAIMJ
- https://www.ft.com/content/9289b1c7-9cdb-41c9-9c0d-3d9226fed03d
- https://finance.yahoo.com/news/shockwave-medical-reports-second-quarter-200500524.html
- https://www.tradingview.com/chart/?symbol=SWAV
- https://www.marketwatch.com/investing/stock/swav?mod=search_symbol
- https://www.otcmarkets.com/stock/EMED/news
- https://finance.yahoo.com/news/irhythm-technologies-announces-second-quarter-200500187.html
- https://www.tradingview.com/chart/?symbol=IRTC
- https://www.marketwatch.com/investing/stock/irtc?mod=search_symbol
