UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                       to                      

Commission File Number: 001-38829

Shockwave Medical, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	27-0494101
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5403 Betsy Ross Drive Santa Clara, California	95054
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 279-4262

Securities registered pursuant to Section 12(b) of the Act:

Title of each class of securities	Trading symbol(s)	Name of each national exchange and principal U.S. market for the securities
Shockwave Medical, Inc., common stock, par value $0.001 per share	SWAV	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No ☒

As of August 4, 2021, the registrant had 35,150,341 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 4.	Controls and Procedures	30
PART II.	OTHER INFORMATION	32
Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	35
Signatures		36

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains statements relating to our expectations, projections, beliefs, and prospects, which are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “might”, “plan,” “expect,” “predict,” “could,” “potentially” or the negative of these terms or similar expressions. You should read these statements carefully because they may relate to future expectations around growth, strategy, and anticipated trends in our business, contain projections of future results of operations or financial condition, or state other “forward-looking” information. These statements are only predictions based on our current expectations, estimates, assumptions, and projections about future events and are applicable only as of the dates of such statements.  These forward-looking statements are subject to certain risks and uncertainties that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that might cause such a difference include, but are not limited to the following:

• the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including due to the pandemic’s impact on our sales, expenses, supply chain, manufacturing, research and development activities, clinical trials, and employees;

• our ability to design, develop, manufacture and market innovative products to treat patients with challenging medical conditions, particularly in peripheral artery disease, coronary artery disease and aortic stenosis;

• our expected future growth, including growth in international sales;

• the size and growth potential of the markets for our products, and our ability to serve those markets;

• the rate and degree of market acceptance of our products;

• coverage and reimbursement for procedures performed using our products;

• the performance of third parties in connection with the development of our products, including third-party suppliers;

• regulatory developments in the United States and foreign countries;

• our ability to obtain and maintain regulatory approval or clearance of our products on expected timelines;

• our plans to research, develop and commercialize our products and any other approved or cleared product;

• our ability to scale our organizational culture of cooperative product development and commercial execution;

• the development, regulatory approval, efficacy and commercialization of competing products;

• the loss of key scientific or management personnel;

• our ability to develop and maintain our corporate infrastructure, including our internal controls;

• our financial performance and capital requirements; and

• our expectations regarding our ability to obtain and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others.

These factors and others are discussed in more detail in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020, together with any updates in the section entitled “Risk Factors” of our Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 and in this Quarterly Report on Form 10-Q. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. There may also be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. We undertake no obligation to update any of these forward-looking statements for any reason, even if new information becomes available in the future, except as may be required by law.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	June 30, 2021			December 31, 2020
				(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	84,268		$	50,423
Short-term investments		90,478			151,931
Accounts receivable, net		24,955			11,689
Inventory		36,149			29,859
Prepaid expenses and other current assets		3,781			2,398
Total current assets		239,631			246,300
Operating lease right-of-use assets		6,825			7,568
Property and equipment, net		21,467			16,362
Equity method investment		6,750			—
Other assets		1,686			1,812
TOTAL ASSETS	$	276,359		$	272,042
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	2,633		$	1,466
Term notes, current portion		4,125			3,300
Accrued liabilities		28,317			19,942
Lease liability, current portion		920			873
Total current liabilities		35,995			25,581
Lease liability, noncurrent portion		6,911			7,488
Term notes, noncurrent portion		12,833			13,319
Related party contract liability, noncurrent portion		12,273			—
TOTAL LIABILITIES		68,012			46,388
STOCKHOLDERS’ EQUITY:
Preferred stock		—			—
Common stock		35			35
Additional paid-in capital		476,001			469,283
Accumulated other comprehensive income		10			9
Accumulated deficit		(267,699	)		(243,673	)
TOTAL STOCKHOLDERS’ EQUITY		208,347			225,654
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	276,359		$	272,042

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1) The consolidated balance sheet as of December 31, 2020 is derived from the audited consolidated financial statements as of that date.

4

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
Revenue:
Product revenue	$	55,908		$	10,286		$	87,808		$	25,483
Cost of revenue:
Cost of product revenue		9,934			3,592			17,826			9,243
Gross profit		45,974			6,694			69,982			16,240
Operating expenses:
Research and development		11,815			8,101			22,092			19,991
Sales and marketing		25,713			11,206			49,705			21,617
General and administrative		8,626			5,398			15,852			11,622
Total operating expenses		46,154			24,705			87,649			53,230
Loss from operations		(180	)		(18,011	)		(17,667	)		(36,990	)
Share in net loss of equity method investment		—			—			(5,523	)		—
Interest expense		(318	)		(306	)		(630	)		(583	)
Other income (expense), net		146			220			(89	)		724
Net loss before taxes		(352	)		(18,097	)		(23,909	)		(36,849	)
Income tax provision		73			21			117			44
Net loss	$	(425	)	$	(18,118	)	$	(24,026	)	$	(36,893	)
Unrealized gain/(loss) on available-for-sale securities		(6	)		(82	)		1			(14	)
Total comprehensive loss	$	(431	)	$	(18,200	)	$	(24,025	)	$	(36,907	)
Net loss per share, basic and diluted	$	(0.01	)	$	(0.56	)	$	(0.69	)	$	(1.16	)
Shares used in computing net loss per share, basic and diluted		35,030,036			32,156,476			34,914,361			31,900,259

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

5

Shockwave Medical, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Income			Deficit			Equity
Balance — December 31, 2020		34,684,337		$	35	$	469,283		$	9		$	(243,673	)	$	225,654
Exercise of stock options		159,325			—		773			—			—			773
Unrealized gain on available-for-    sale securities		—			—		—			7			—			7
Issuance of common stock under    employee stock purchase plan		20,594			—		1,141			—			—			1,141
Issuance of common stock in connection    with vesting of restricted stock units		107,237			—		—			—			—			—
Taxes withheld on net settled vesting    of restricted stock units		(42,529	)		—		(5,114	)		—			—			(5,114	)
Stock-based compensation		—			—		5,394			—			—			5,394
Net loss		—			—		—			—			(23,601	)		(23,601	)
Balance — March 31, 2021		34,928,964			35		471,477			16			(267,274	)		204,254
Exercise of stock options		149,101			—		1,085			—			—			1,085
Unrealized loss on available-for-    sale securities		—			—		—			(6	)		—			(6	)
Issuance of common stock in connection    with vesting of restricted stock units		71,761			—		—			—			—			—
Taxes withheld on net settled vesting    of restricted stock units		(20,537	)		—		(3,223	)		—			—			(3,223	)
Stock-based compensation		—			—		6,662			—			—			6,662
Net loss		—			—		—			—			(425	)		(425	)
Balance — June 30, 2021		35,129,289		$	35	$	476,001		$	10		$	(267,699	)	$	208,347

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

Shockwave Medical, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

	Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares			Amount		Capital			Income			Deficit			Equity
Balance — December 31, 2019		31,446,787		$	31	$	370,561		$	35		$	(177,974	)	$	192,653
Exercise of stock options		356,128			1		1,112			—			—			1,113
Issuance of common stock under    employee stock purchase plan		24,691			—		842			—			—			842
Unrealized gain on available-for-    sale securities		—			—		—			68			—			68
Stock-based compensation		—			—		1,871			—			—			1,871
Net loss		—			—		—			—			(18,775	)		(18,775	)
Balance — March 31, 2020		31,827,606			32		374,386			103			(196,749	)		177,772
Exercise of stock options		137,178			—		480			—			—			480
Issuance of common stock in connection with public offering, net of issuance costs of $6.1 million		1,955,000			2		83,380			—			—			83,382
Issuance of common stock in connection with vesting of restricted stock units		41,229			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		(15,456	)		—		(616	)		—			—			(616	)
Unrealized loss on available-for- sale securities		—			—		—			(82	)		—			(82	)
Stock-based compensation		—			—		2,605			—			—			2,605
Net loss		—			—		—			—			(18,118	)		(18,118	)
Balance — June 30, 2020		33,945,557		$	34	$	460,235		$	21		$	(214,867	)	$	245,423

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

7

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)  

	Six Months Ended June 30,
	2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(24,026	)	$	(36,893	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,597			877
Share in net loss of equity method investment		5,523			—
Stock-based compensation		11,662			4,262
Amortization of right-of-use assets		791			734
Accretion of discount on available-for-sale securities		397			201
Amortization of debt issuance costs		339			313
Changes in operating assets and liabilities:
Accounts receivable		(13,266	)		1,012
Inventory		(5,676	)		(10,965	)
Prepaid expenses and other current assets		(1,383	)		(1,220	)
Other assets		126			(116	)
Accounts payable		1,270			(282	)
Accrued and other current liabilities		8,107			(41	)
Lease liabilities		(578	)		(237	)
Net cash used in operating activities		(15,117	)		(42,355	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale securities		(27,243	)		(16,020	)
Proceeds from maturities of available-for-sale securities		88,300			59,000
Purchase of property and equipment		(6,757	)		(8,952	)
Net cash provided by investing activities		54,300			34,028
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of offering costs		—			(179	)
Proceed from issuance of common stock from public offering, net of issuance cost paid		—			83,784
Principal payments of term loan		—			(1,111	)
Net proceeds from term loan		—			3,265
Payments of taxes withheld on net settled vesting of restricted stock units		(8,337	)		(616	)
Proceeds from stock option exercises		1,858			1,593
Proceeds from issuance of common stock under employee stock purchase plan		1,141			842
Net cash provided by (used in) financing activities		(5,338	)		87,578
Net increase in cash, cash equivalents and restricted cash		33,845			79,251
Cash, cash equivalents and restricted cash at beginning of period		51,873			140,495
Cash, cash equivalents and restricted cash equivalents at end of period	$	85,718		$	219,746
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	292