Shockwave Medical received mixed reimbursement news from the Centers for Medicare and Medicaid Services, and SWAV stock tumbled Friday.
The company is a leader in intravascular lithotripsy, a method of cracking hardened calcium in blood vessel walls. It rivals an older procedure called atherectomy that relies on a drill for the same purpose.
Late Thursday, CMS published a reimbursement decision that could hamper usage of intravascular lithotripsy for outpatients beginning in the second half of 2024. But the agency also increased the amount of money doctors receive from these procedures, making them more lucrative than traditional atherectomy.
On today's stock market, SWAV stock dropped 5.1% to close at 269.57.
SWAV Stock: Reimbursement Shift In Flux
Under the current rules, CMS pays an additional $4,700 for outpatients who receive intravascular lithotripsy. But that reimbursement rule will expire after June 30, 2024. Shockwave expects CMS to eventually shift to a higher paying code.
But the agency didn't make that shift in the rule changes proposed for next year, Needham analyst Mike Matson said in a note to clients. Instead, it seems CMS will wait for the June 30, 2024, expiration and include the higher reimbursement code in the 2025 proposal.
"Outpatient coronary intravascular lithotripsy would lose the (additional $4,700 payment) and see lower reimbursement in the second half of 2024, which would probably cause decreased outpatient coronary utilization and sales, though it's difficult to quantify this," he said.
But Matson kept his buy rating and 325 price target on SWAV stock.
He noted physician payments for performing intravascular lithotripsy will increase by 25%-30% beginning Jan. 1, 2024. This makes Shockwave's technology more lucrative for doctors that standard procedures like atherectomy.
Shockwave Remains Below A Key Line
Shockwave shares broke out last month and immediately toppled, undercutting their 50-day moving average on July 7. SWAV stock is now trapped under a ceiling at that line, according to MarketSmith.com.
But Shockwave stock also has a strong Composite Rating of 95, IBD Digital shows. This means SWAV stock ranks in the top 5% of all stocks in terms of fundamental and technical performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
