A new Medicare rule could sweeten reimbursement for Shockwave Medical's systems, according to a report Tuesday that sent SWAV stock soaring.
The Centers for Medicare and Medicaid Services unveiled a proposed rule that outlines three high-paying codes for coronary intravascular lithotripsy. Shockwave makes systems that perform that process — "cracking" hardened calcium in the arteries.
The timing is ideal for Shockwave, Needham analyst Mike Matson said in a report to clients. The company has a new technology add-on payment for inpatient use of its systems. But that ends on Sept. 30, about the same time the newer codes could go into effect.
"On an apples-to-apples basis, we estimate that the new (codes) will pay about $4,000-$5,000 more than the prior (codes) plus the new technology add-on payment," Matson said. "We think this is a positive for Shockwave and, more importantly, supports the view that CMS sees the value in IVL."
On the stock market today, SWAV stock surged 10.6% to close at 251.05. Earlier, shares hit their highest point since early December.
SWAV Stock: Replacing Older Technology
Shockwave hopes intravascular lithotripsy will replace older technology known as atherectomy. Atherectomy uses a small drill to remove small, built-up plaque.
In the proposed reimbursement change, CMS notes "it is creating the higher paying codes because 'it clinically requires greater resources to perform coronary intravascular lithotripsy,' " Matson said. He boosted his price target on SWAV stock to 283 from 240. He has a buy rating on shares.
"We think that this is a positive for Shockwave and, more importantly, supports the view that CMS sees the value in IVL and that Shockwave continues to execute a solid reimbursement strategy," he said.
The news sent SWAV stock above its 200-day moving average for the first time in five months, according to MarketSmith.com. Shares have a strong IBD Digital Relative Strength Rating of 95, which means they trade in the top 5% of all stocks in terms of 12-month performance.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
