Dive Brief:
- The Centers for Medicare and Medicaid Services is set to propose outpatient reimbursement that will increase sales of Shockwave Medical’s heart disease device, Morgan Stanley analysts wrote in a note to investors.
- Shockwave sells a coronary intravascular lithotripsy (IVL) catheter for opening calcified arteries before stent implantation. The analysts expect CMS to propose improved IVL reimbursement in the coming week, with terms rising around $4,300 for inpatients and $2,400 for outpatients.
- Based on the anticipated reimbursement terms, the analysts think growth expectations for the company are too low and have set their earnings estimate for next year 15% above the average of their peers.
Dive Insight:
The Morgan Stanley analysts cited what happened when Shockwave’s U.S. reimbursement for above-the-knee arteries reached parity with atherectomy as evidence that a coverage expansion for the coronary device will benefit the business. After the earlier reimbursement change, adoption of the above-the-knee procedure accelerated.
“Despite there being clear history of faster adoption on better surgery economics, consensus actually has a sequential slowdown in coronary IVL penetration in 2024 which we don't think makes sense,” the analysts wrote.
The analysts found other evidence to support their argument that Shockwave will outperform revenue expectations in the coming years. Shockwave has 60 open sales rep positions, they noted. The hiring represents “a material expansion” to the sales team and suggests “a more aggressive ramp,” they wrote.
Physician channel checks also persuaded the analysts that “the cap on penetration may be higher than the market expects, with positive feedback on accelerated adoption post CMS reimbursement clarity.”
The Morgan Stanley team expects Shockwave to be the main beneficiary of improved reimbursement in the coming years. Abbott is planning to enter the IVL space, but the analysts think it is unlikely to bring a product to market before 2026. Shockwave’s position in a growing cardiovascular market has reportedly caught the attention of Boston Scientific, which was said to be exploring an acquisition earlier this year.
