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.

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 November ~~3, 2020,~~2, 2021, the registrant had ~~34,259,784~~35,304,469 shares of common stock, $0.001 par value per share, outstanding.

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 ~~“may,” “might,~~“believe,” “will,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” ~~“expects,~~“might”, “plan,” ~~“plans,~~“expect,” ~~“anticipates,~~“predict,” ~~“believes,~~“could,” ~~“estimates,” “predicts,” “potential”~~“potentially” or ~~“continue,”~~ the negative of these terms ~~and other comparable terminology. These forward-looking~~or similar expressions. You should read these statements ~~which are subject~~carefully because they may relate to ~~risks, uncertainties and assumptions about us, may include projections of our~~ future ~~financial performance, our anticipated~~expectations around growth, ~~strategies~~strategy, and anticipated trends in our ~~business. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements about:~~

“forward-looking” information. These statements are only predictions based on our current expectations, estimates, assumptions, and projections about future ~~events. There~~events and are ~~important factors~~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,~~statements. Factors that might cause such a difference include, but are not limited to the following:

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, ~~2019, as updated~~2020, together with any updates in the section entitled “Risk Factors” of our Quarterly ~~Reports~~Report on Form 10-Q for the quarters ended March 31, ~~2020~~2021 and June 30, ~~2020~~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.

	September 30, 2020			December 31, 2019			September 30, 2021			December 31, 2020
				(1)						(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	215,256		$	139,045		$	91,195		$	50,423
Short-term investments		—			56,304			91,759			151,931
Accounts receivable, net		10,711			7,377			29,966			11,689
Inventory		28,868			12,074			38,744			29,859
Prepaid expenses and other current assets		3,033			1,897			4,364			2,398
Total current assets		257,868			216,697			256,028			246,300
Operating lease right-of-use assets		7,841			8,825			11,790			7,568
Property and equipment, net		13,282			4,910			23,085			16,362
Equity method investment								6,408			—
Other assets		1,667			1,506			1,684			1,812
TOTAL ASSETS	$	280,658		$	231,938		$	298,995		$	272,042
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,972		$	2,790		$	3,632		$	1,466
Term notes, current portion		1,650			6,667			2,750			3,300
Accrued liabilities		16,662			13,777			33,017			19,942
Lease liability, current portion		841			774			867			873
Total current liabilities		21,125			24,008			40,266			25,581
Lease liability, noncurrent portion		7,685			8,125			11,939			7,488
Term notes, noncurrent portion		14,801			7,152			14,226			13,319
Related party contract liability, noncurrent portion								12,273			—
TOTAL LIABILITIES		43,611			39,285			78,704			46,388
STOCKHOLDERS’ EQUITY:
Preferred stock		—			—			—			—
Common stock		34			31			35			35
Additional paid-in capital		464,812			370,561			486,014			469,283
Accumulated other comprehensive income		—			35
Accumulated other comprehensive income (loss)								(7	)		9
Accumulated deficit		(227,799	)		(177,974	)		(265,751	)		(243,673	)
TOTAL STOCKHOLDERS’ EQUITY		237,047			192,653			220,291			225,654
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	280,658		$	231,938		$	298,995		$	272,042

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

Condensed Consolidated Statements of Operations and Comprehensive ~~Loss~~Income (Loss)

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019			2021			2020			2021			2020
Revenue:
Product revenue	$	19,590		$	11,333		$	45,073		$	28,615		$	65,155		$	19,590		$	152,963		$	45,073
Cost of revenue:
Cost of product revenue		5,277			4,401			14,520			11,606			10,949			5,277			28,775			14,520
Gross profit		14,313			6,932			30,553			17,009			54,206			14,313			124,188			30,553
Operating expenses:
Research and development		7,891			8,368			27,882			22,778			13,735			7,891			35,827			27,882
Sales and marketing		13,619			8,192			35,236			21,023			28,393			13,619			78,098			35,236
General and administrative		5,610			3,437			17,232			9,684			9,265			5,610			25,117			17,232
Total operating expenses		27,120			19,997			80,350			53,485			51,393			27,120			139,042			80,350
Loss from operations		(12,807	)		(13,065	)		(49,797	)		(36,476	)
Income (loss) from operations														2,813			(12,807	)		(14,854	)		(49,797	)
Share in net loss of equity method investment														(342	)		—			(5,865	)		—
Interest expense		(314	)		(251	)		(897	)		(746	)		(165	)		(314	)		(795	)		(897	)
Change in fair value of warrant liability		—			—			—			(609	)
Other income, net		218			385			942			1,518
Net loss before taxes		(12,903	)		(12,931	)		(49,752	)		(36,313	)
Other income (expense), net														(280	)		218			(369	)		942
Net income (loss) before taxes														2,026			(12,903	)		(21,883	)		(49,752	)
Income tax provision		29			26			73			51			78			29			195			73
Net loss	$	(12,932	)	$	(12,957	)	$	(49,825	)	$	(36,364	)
Net income (loss)													$	1,948		$	(12,932	)	$	(22,078	)	$	(49,825	)
Other comprehensive income (loss):
Unrealized gain/(loss) on available-for-sale securities		—			(18	)		(14	)		57			(17	)		—			(16	)		(14	)
Adjustment for net gain realized and included in other income, net		(21	)		—			(21	)		—			—			(21	)		—			(21	)
Total other comprehensive income (loss)		(21	)		(18	)		(35	)		57			(17	)		(21	)		(16	)		(35	)
Total comprehensive loss	$	(12,953	)	$	(12,975	)	$	(49,860	)	$	(36,307	)
Net loss per share, basic and diluted	$	(0.38	)	$	(0.46	)	$	(1.53	)	$	(1.66	)
Shares used in computing net loss per share, basic and diluted		34,078,726			28,085,821			32,631,715			21,886,396
Total comprehensive income (loss)													$	1,931		$	(12,953	)	$	(22,094	)	$	(49,860	)
Net income (loss) per share
Basic													$	0.06		$	(0.38	)	$	(0.63	)	$	(1.53	)
Diluted													$	0.05		$	(0.38	)	$	(0.63	)	$	(1.53	)
Shares used in computing net income (loss) per share
Basic														35,207,276			34,078,726			35,013,072			32,631,715
Diluted														37,567,176			34,078,726			35,013,072			32,631,715

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

	Convertible Preferred Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'			Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Equity			Shares			Amount		Capital			Income			Deficit			Equity
Balance — December 31, 2019		—	$	—		31,446,787		$	31	$	370,561		$	35		$	(177,974	)	$	192,653
Balance — December 31, 2020																							34,684,337		$	35	$	469,283		$	9		$	(243,673	)	$	225,654
Exercise of stock options		—		—		356,128			1		1,112			—			—			1,113			159,325			—		773			—			—			773
Unrealized gain on available-for-sale securities																							—			—		—			7			—			7
Issuance of common stock under employee stock purchase plan		—		—		24,691			—		842			—			—			842			20,594			—		1,141			—			—			1,141
Unrealized gain on available-for-sale securities		—		—		—			—		—			68			—			68
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		—		—		—			—		1,871			—			—			1,871			—			—		5,394			—			—			5,394
Net loss		—		—		—			—		—			—			(18,775	)		(18,775	)		—			—		—			—			(23,601	)		(23,601	)
Balance — March 31, 2020		—		—		31,827,606			32		374,386			103			(196,749	)		177,772
Balance — March 31, 2021																							34,928,964			35		471,477			16			(267,274	)		204,254
Exercise of stock options		—		—		137,178			—		480			—			—			480			149,101			—		1,085			—			—			1,085
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
Unrealized loss on available-for-sale securities																							—			—		—			(6	)		—			(6	)
Issuance of common stock in connection with vesting of restricted stock units		—		—		41,229			—		—			—			—			—			71,761			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		—		—		(15,456	)		—		(616	)		—			—			(616	)
Unrealized loss on available-for-sale securities		—		—		—			—		—			(82	)		—			(82	)
Taxes withheld on net settled vesting of restricted stock units																							(20,537	)		—		(3,223	)		—			—			(3,223	)
Stock-based compensation		—		—		—			—		2,605			—			—			2,605			—			—		6,662			—			—			6,662
Net loss		—		—		—			—		—			—			(18,118	)		(18,118	)		—			—		—			—			(425	)		(425	)
Balance — June 30, 2020		—		—		33,945,557			34		460,235			21			(214,867	)		245,423
Balance — June 30, 2021																							35,129,289			35		476,001			10			(267,699	)		208,347
Exercise of stock options		—		—		254,523			—		993			—			—			993			122,615			—		691			—			—			691
Unrealized loss on available-for-sale securities																							—			—		—			(17	)		—			(17	)
Issuance of common stock under employee stock purchase plan		—		—		27,921			—		953			—			—			953			16,239			—		1,696			—			—			1,696
Offering cost related to the public offering		—		—		—			—		(14	)		—			—			(14	)
Issuance of common stock in connection with vesting of restricted stock units		—		—		12,775			—		—			—			—			—			26,809			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		—		—		(4,611	)		—		(246	)		—			—			(246	)
Stock-based compensation		—		—		—			—		2,891			—			—			2,891			—			—		7,626			—			—			7,626
Net gain reclassified from accumulated other comprehensive income		—		—		—			—		—			(21	)		—			(21	)
Net loss		—		—		—			—		—			—			(12,932	)		(12,932	)
Balance — September 30, 2020		—	$	—		34,236,165		$	34	$	464,812		$	—		$	(227,799	)	$	237,047
Net income																							—			—		—			—			1,948			1,948
Balance — September 30, 2021																							35,294,952		$	35	$	486,014		$	(7	)	$	(265,751	)	$	220,291

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

Convertible Preferred
Stock

Common Stock

Additional
Paid-In

Accumulated
Other
Comprehensive

Accumulated

Total
Stockholders'
Equity

Shares

Amount

Shares

Amount

Capital

Income

Deficit

(Deficit)

Balance — December 31, 2018

18,670,328

$
152,806

1,824,852

$
2

$
4,275

$
—

$
(126,865
)

$
(122,588
)

Exercise of common stock warrants for cash

—

—

50,331

—

110

—

—

110

Issuance of common stock upon net exercise of warrants

—

—

101,744

—

133

—

—

133

Conversion of preferred stock to common stock upon initial public offering

(18,670,328
)

(152,806
)

18,670,328

18

152,788

—

—

152,806

Conversion of Series A-1 warrants to common stock warrants upon initial public offering

—

—

—

—

789

—

—

789

Issuance of common stock in connection with initial public offering, net of issuance costs of $11.3 million

—

—

6,555,000

7

100,132

—

—

100,139

Issuance of common stock in connection with private placement

—

—

588,235

1

9,999

—

—

10,000

Exercise of stock options

—

—

80,515

—

169

—

—

169

Vesting of early exercised options

—

—

—

—

18

—

—

18

Stock-based compensation

—

—

—

—

412

—

—

412

Settlement of fractional shares resulting from reverse stock split

—

—

(114
)

—

(3
)

—

—

(3
)

Net loss

—

—

—

—

—

—

(12,799
)

(12,799
)

Balance — March 31, 2019

—

—

27,870,891

28

268,822

-

(139,664
)

129,186

Issuance of common stock upon net exercise of warrants

—

—

79,208

—

—

—

—

—

Exercise of stock options

—

—

73,608

—

148

—

—

148

Vesting of early exercised options

—

—

—

—

9

—

—

9

Offering cost related to the initial public offering

—

—

—

—

(215
)

—

—

(215
)

Stock-based compensation

—

—

—

—

818

—

—

818

Unrealized gain on available-for-sale securities

—

—

—

—

—

75

—

75

Net loss

—

—

—

—

—

—

(10,608
)

(10,608
)

Balance — June 30, 2019

—

—

28,023,707

28

269,582

75

(150,272
)

119,413

Exercise of stock options

—

—

232,186

—

706

—

—

706

Stock-based compensation

—

—

—

—

1,106

—

—

1,106

Unrealized loss on available-for-sale securities

—

—

—

—

—

(18
)

—

(18
)

Net loss

—

—

—

—

—

—

(12,957
)

(12,957
)

Balance — September 30, 2019

—

$
—

28,255,893

$
28

$
271,394

$
57

$
(163,229
)

$
108,250

	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
Exercise of stock options		254,523			—		993			—			—			993
Issuance of common stock under employee stock purchase plan		27,921			—		953			—			—			953
Offering cost related to the public offering		—			—		(14	)		—			—			(14	)
Issuance of common stock in connection with vesting of restricted stock units		12,775			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		(4,611	)		—		(246	)		—			—			(246	)
Stock-based compensation		—			—		2,891			—			—			2,891
Net gain reclassified from accumulated other comprehensive income		—			—		—			(21	)		—			(21	)
Net loss		—			—		—			—			(12,932	)		(12,932	)
Balance — September 30, 2020		34,236,165		$	34	$	464,812		$	—		$	(227,799	)	$	237,047

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

	Nine Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2021			2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(49,825	)	$	(36,364	)	$	(22,078	)	$	(49,825	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		1,361			854			2,685			1,361
Share in net loss of equity method investment								5,865			—
Stock-based compensation		7,108			2,336			19,049			7,108
Amortization of right-of-use assets		1,105			739			1,184			1,105
Accretion of discount on available-for-sale securities		289			(542	)		1,022			289
Loss on write down of fixed assets		97			90			—			97
Change in fair value of warrant liability		—			609
Amortization of debt issuance costs		478			322			357			478
Changes in operating assets and liabilities:
Accounts receivable		(3,334	)		(2,701	)		(18,277	)		(3,334	)
Inventory		(16,338	)		(4,096	)		(7,982	)		(16,338	)
Prepaid expenses and other current assets		(1,136	)		(1,087	)		(1,966	)		(1,136	)
Other assets		(161	)		(1	)		128			(161	)
Accounts payable		(776	)		884			2,168			(776	)
Accrued and other current liabilities		2,841			4,169			13,011			2,841
Lease liabilities		(494	)		(749	)		(961	)		(494	)
Net cash used in operating activities		(58,785	)		(35,537	)		(5,795	)		(58,785	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of available-for-sale securities		(16,020	)		(106,347	)		(75,566	)		(16,020	)
Proceeds from maturities of available-for-sale securities		72,000			32,300			134,700			72,000
Purchase of property and equipment		(9,846	)		(2,287	)		(9,616	)		(9,846	)
Net cash provided by (used in) investing activities		46,134			(76,334	)
Net cash provided by investing activities								49,518			46,134
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock upon initial public offering, net of issuance costs paid		—			100,547
Proceeds from issuance of common stock in private placement		—			10,000
Payments of offering costs		(179	)		—			—			(179	)
Proceed from issuance of common stock from public offering, net of issuance cost paid		83,368			—			—			83,368
Payments of taxes withheld on net settled vesting of restricted stock units		(862	)		—			(8,337	)		(862	)
Principal payments of term loan		(1,111	)		—			—			(1,111	)
Net proceeds from term loan		3,265			—			—			3,265
Proceeds from stock option exercises		2,586			1,023			2,549			2,586
Proceeds from issuance of common stock under employee stock purchase plan		1,795			—			2,837			1,795
Proceeds from warrant exercises		—			110
Net cash provided by financing activities		88,862			111,680
Net cash provided by (used in) financing activities								(2,951	)		88,862
Net increase in cash, cash equivalents and restricted cash		76,211			(191	)		40,772			76,211
Cash, cash equivalents and restricted cash at beginning of period		140,495			40,093			51,873			140,495
Cash, cash equivalents and restricted cash equivalents at end of period	$	216,706		$	39,902		$	92,645		$	216,706
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Interest paid	$	403		$	420		$	440		$	403
Income tax paid	$	22		$	120		$	114		$	22
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Common stock issued on conversion of convertible preferred stock	$	—		$	152,806
Common stock issued upon net exercise of warrants	$	—		$	133
Common stock warrants issued on conversion of preferred stock warrants and the reclassification of the warrant liability	$	—		$	789
Right-of-use asset obtained in exchange for lease liability	$	121		$	73		$	5,406		$	121
Property and equipment purchases included in accounts payable and accrued liabilities	$	233		$	204		$	2,510		$	233
Equity method investment obtained in exchange for related party contract liability							$	12,273		$	—
Transfer of fixed assets to inventory	$	197		$	—		$	270		$	197

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

Shockwave Medical, Inc. (the “Company”) was incorporated on June 17, 2009. The Company is primarily engaged in the development of Intravascular Lithotripsy (“IVL”) technology for the treatment of calcified plaque in patients with peripheral vascular, coronary vascular and heart valve disease. Built on a balloon catheter platform, the IVL technology uses lithotripsy to disrupt both superficial and deep vascular calcium, while minimizing soft tissue injury, and an integrated angioplasty balloon to dilate blockages at low pressures, restoring blood flow.

In 2016, the Company began commercial and manufacturing operations, and began selling catheters based on the IVL technology. The Company’s headquarters are in Santa Clara, California. The Company is located and operates primarily in the United States and has ~~a subsidiary~~subsidiaries in ~~Germany.~~Germany, the United Kingdom, Japan and France.

The Company has incurred significant losses to date, and ~~has negative cash flows from operations. As~~as of September 30, ~~2020, the Company~~2021, had an accumulated deficit of ~~$227.8~~$265.8 million. ~~Management~~Although the Company had positive net income for the quarter ended September 30, 2021, it had a net loss for the nine months ended September 30, 2021. The Company may continue to incur losses in the future, which may vary significantly from period to period. The Company expects to continue to incur ~~additional~~significant expenses as it (i) expands its marketing efforts to increase adoption of its products, (ii) expands existing relationships with its customers, (iii) obtains regulatory clearances or approvals for its planned or future products, (iv) conducts clinical trials on its existing and planned or future products, and (v) develops new products or adds new features to its existing products. The Company will need to continue to generate significant revenue in order to sustain profitability as it continues to grow its business. Even if it achieves profitability for any period, the Company cannot be sure that it will remain profitable for any substantial ~~losses for the foreseeable future.~~period of time.

As of September 30, ~~2020,~~2021, the Company had cash, ~~and~~ cash equivalents and short-term investments of ~~$215.3~~$183.0 million, which are available to fund future operations. The Company believes that its cash and cash equivalents as of September 30, ~~2020,~~2021, will be sufficient for the Company to continue as a going concern for at least 12 months from the date the unaudited condensed consolidated financial statements are filed with the Securities and Exchange Commission (“SEC”). The Company’s future capital requirements will depend on many factors, including its growth rate, the timing and extent of its spending to support research and development activities, the timing and cost of establishing additional sales and marketing capabilities and the scope, duration and continuing impact of the COVID-19 pandemic.

The Company is subject to continuing risks and uncertainties as a result of the ~~ongoing effects of the COVID-19 pandemic. There are many uncertainties regarding the current~~ COVID-19 pandemic, and ~~the Company~~ is ~~continuing to~~ closely ~~monitor~~monitoring the impact of the pandemic on all aspects of its business, including ~~how it is impacting and how it may continue to impact~~the impacts on its customers, patients that would benefit from procedures utilizing the Company’s products, employees, suppliers, vendors, business partners and distribution channels. Specifically, the Company has recently seen some disruptions in the operations of certain of its third-party suppliers, resulting in increased lead-times, higher component costs and lower allocations for our purchase of some components and, in certain cases, requiring the Company to procure materials from alternate suppliers or incur higher logistical expenses. The ~~capital markets~~Company is continuing to work closely with its manufacturing partners and ~~economies~~suppliers to enable the Company to source key components and maintain appropriate inventory levels to meet customer demand. The Company, however, has not experienced material disruptions in its supply chain to date. Economies worldwide continue to be negatively impacted by the COVID-19 pandemic ~~including U.S.~~ and ~~global economic recessions.~~the Company anticipates these disruptions will continue. As such thethe Company's future results of operations and liquidity ~~may continue to~~could be adversely impacted by a variety of factors related to the COVID-19 pandemic, including those discussed ~~or referred to~~ in the section entitled “~~Risk Factors~~”“Risk Factors” of ~~this Quarterly~~the Company’s Annual Report on Form ~~10-Q.~~

10-K for the year ended December 31, 2020. As of the date of issuance of these condensed consolidated financial statements, the extent to which the COVID-19 pandemic may materially impact the Company's financial condition, liquidity, or results of operations isremains uncertain.Given the ongoing uncertainty of the scope and duration of the COVID-19 pandemic, the Company is currently unable to accurately estimate the scale and duration of the impact on its business, including procedure volumes, clinical activities and product development, and by extension the Company’s financial results.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and applicable rules and regulations of the SEC regarding interim financial reporting.

The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows. The results of operations for the three and nine months ended September 30, ~~2020~~2021 are not necessarily indicative of the results to be expected for the year ending December 31, ~~2020~~2021 or for any other future annual or interim period. The condensed consolidated balance sheet as of December 31, ~~2019~~2020 included herein was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and

related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, filed with the SEC on ~~March 12, 2020.~~

~~Certain amounts in the prior period condensed consolidated financial statements have been reclassified to conform to the current period presentation.~~February 26, 2021.

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. Cash equivalents consist primarily of amounts invested in money market accounts.

Restricted cash as of September 30, ~~2020~~2021 and December 31, ~~2019~~2020 relates to a letter of credit established for the Company’s office lease and is recorded as other assets on the condensed consolidated balance sheets.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

~~Short-term investments have been classified~~Entities which the Company has significant influence over activities of the entity,but does not control, are accounted for under the equity method of accounting in accordance with Topic 323, Investments - Equity Method and Joint Ventures. The Company’s carrying value in the equity method investment is reported as ~~available-for-sale and are carried at estimated fair value based upon quoted market prices or pricing models for similar securities.~~equity method investment on the Company’s consolidated balance sheet. The Company ~~determines~~records its proportionate share of the ~~appropriate classification~~underlying income or loss which is recognized in share in net loss of ~~its investments~~equity method investment. For the three and nine months ended September 30, 2021, the Company’s share in ~~debt securities at~~ the ~~time of purchase. Available-for-sale securities with original maturities beyond three months at~~losses incurred by the ~~date of purchase are classified as current based on their availability for use in current operations.~~

~~Unrealized gains~~equity method investee was $0.3 and ~~losses are excluded from earnings and are reported as a component of comprehensive loss, except for credit-related impairment losses.~~$5.9 million, respectively. The Company ~~periodically evaluates whether declines in fair values of its marketable securities below their book value are other-than-temporary and if they are related~~eliminates any intra-entity profits to ~~deterioration in credit risk. This evaluation consists of several qualitative and quantitative factors regarding~~ the ~~severity and duration~~extent of the ~~unrealized loss as well as~~Company’s beneficial interest.

We assess our equity method investment for impairment when events or circumstances suggest that the ~~Company’s ability and intent to hold~~carrying amount of the ~~marketable security until~~investment may be impaired. We consider all available evidence in assessing whether a forecasted recovery occurs. The Company also assesses whether it has plans to sell the security or it is more likely than not it will be required to sell any marketable securities before recovery of its amortized cost basis. Realized gains and losses and declinesdecline in fair value ~~judged~~is other than temporary. If the decline in fair value is determined to be other than temporary, if any, on marketable securities are included in other income, net. Effective January 1, 2020, any unrealized losses on available-for-sale debt securities that are attributed to credit risk are recorded to earnings throughthe difference between the carrying amount of the investment and estimated fair value is recognized as an ~~allowance for credit losses. The cost of investments sold is based on the specific-identification method. Interest on marketable securities is included in other income, net.~~impairment charge.

The Company’s cash and cash equivalents, restricted cash, short-term investments, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to their short maturities. Management believes that its term notes bear interest at the prevailing market rates for instruments with similar characteristics; accordingly, the carrying value of this instrument approximates its fair value.

The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines the fair value of its financial instruments based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

Level 1 – Inputs are unadjusted, quoted prices in active markets for identical assets or liabilities at the measurement date;

Level 2 – Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities; and

Level 3 – Unobservable inputs that are significant to the measurement of the fair value of the assets or liabilities that are supported by little or no market data.

The Company records product revenue primarily from the sale of its IVL catheters. The Company sells its products to hospitals, primarily through direct sales representatives, as well as through distributors in selected international markets. Additionally, a significant portion of the Company’s revenue is generated through a consignment model under which inventory is maintained at hospitals.

Revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ~~ASC~~Topic 606,Revenue from Contracts with Customers, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation.

The Company records product revenue primarily from the sale of its IVL catheters. The Company sells its products to hospitals, primarily through direct sales representatives, as well as through distributors in selected international markets. Additionally, a portion of the Company’s revenue is generated through a consignment model under which inventory is maintained at hospitals.

Product revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services.

For products sold through direct sales representatives, control is transferred upon delivery to customers. For products sold to distributors internationally and products sold to customers that utilize stocking orders, control is transferred upon shipment or delivery to the customer’s named location, based on the contractual shipping terms. For consignment inventory, control is transferred at the time the IVL catheters are consumed in a procedure. The Company elected to account for shipping and handling activities that occur after the customer has obtained control as a fulfillment activity, and not a separate performance obligation.

~~In the United States, the~~The Company ~~generally provides~~may provide for the use of an IVL generator and connector cable under an agreement to customers at no charge to facilitate use of the IVL catheters. These agreements do not contain contractually enforceable minimum commitments and are generally cancellable by either party with 30 days’ notice.

~~Effective January 1, 2020,~~For arrangements that contain a license of our functional intellectual property with a customer, we consider whether the license grant is distinct from other performance obligations in the arrangement. A license grant of functional intellectual property is generally considered to be capable of being distinct if a customer can benefit from the license on its own or together with other readily available resources. License revenue for licenses of functional intellectual property is recognized at a point in time when the Company ~~adopted ASU No. 2016-13,~~ ~~Financial Instruments-Credit Losses (Topic 326): Measurement~~satisfies its performance obligation of ~~Credit Losses on Financial Instruments~~, which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments. Unrealized losses on available-for-sale debt securities that are attributedtransferring the license to credit risk are recorded through earnings rather than to other comprehensive income. Credit losses relating to available-for-sale debt securities are now recorded through an allowance for credit losses. The adoption of this guidance did not resultthe customer.

Consideration received in ~~a cumulative effect adjustment as~~advance of the ~~date~~satisfaction of a performance obligation is recognized as a contract liability. NaN license revenues have been recognized for the ~~adoption.~~

In addition, Topic 326 also provides new guidance related to the measurement of expected credit losses on the Company’s allowance for bad debt for accounts receivable, which is estimated upon assessment of various factors including historical collection experience, currentthree and ~~future economic market conditions and a review of the current aging status and financial condition of the Company’s customers. During the~~ nine months ended September 30, 2020, the Company recorded an additional allowance for bad debt in response to an assessment of the evolving credit environment under the COVID-19 pandemic. The Company will continue to update its estimate of credit losses from accounts receivable in future periods in response to the uncertainties caused by the COVID-19 pandemic.

~~As of September 30, 2020, our cash equivalent investments consisted of money market funds with a fair value of $213.3 million, which are valued using level 1 inputs.~~ The following ~~table summarizes~~tables summarize the Company’s financial assets and liabilities measured at fair value on a recurring basis by level within the fair value ~~hierarchy as of December 31, 2019:~~hierarchy:

The ~~Company’s convertible preferred stock warrants were converted into common stock warrants upon the closing of an initial public offering~~following is a summary of the Company’s ~~common stock (“IPO”) in March 2019. The change in the fair value of the warrant liability for the three months ended March 31, 2019 is summarized below (in thousands):~~

The valuation of the Company’s convertible preferred stock warrant liability contains unobservable inputs that reflect the Company’s own assumptions for which there is little, if any, market activity for at the measurement date. Accordingly, the Company’s convertible preferred stock warrant liability is measured at fair value on a recurring basis using unobservable inputs and are classified as Level 3 inputs, and any change in fair value is recognized as change in fair value of warrant liability in the condensed consolidated statements of operations and comprehensive loss.

~~The fair value of the warrants was determined using the Black-Scholes option pricing model and the following assumptions:~~

As of September 30, 2020, our cash equivalent investments consisted of money market funds with a fair value of $213.3 million, with no unrealized gains or losses. The following is a summary of the Company’s cash equivalents and short-term investments as of December 31, 2019:

The Company recognized no material gains or losses on its cash equivalents and short-term investments in the periods presented.

The remaining contractual maturities for available-for-sale securities were as follows:

In May 2018, the Company entered into a lease agreement for office, laboratory, and manufacturing space located at 5403 Betsy Ross Drive in Santa Clara, California, which consists of approximately 35,000 square feet (the “5403 Lease”). The term of the 5403 Lease commenced in September 2018 and ends in August 2022. In connection with the 5403 Lease, the Company maintains a letter of credit for the benefit of the landlord in the amount of $0.5 million, which is secured by restricted cash recorded as other assets on the consolidated balance sheets. In connection with the 5403 Lease, the Company has an operating lease right-of-use asset of $0.7 million as of September 30, 2021 and an aggregate lease liability of $0.8 million on its consolidated balance sheet. The remaining lease term is eleven months.

In December 2019, the Company entered into a lease agreement (i) for additional office, laboratory and manufacturing space located at 5353 Betsy Ross Drive in Santa Clara, California, which consists of approximately 50,200 square feet (the “5353 Lease”); and (ii) to modify the terms of the 5403 Lease. The 5403 Lease will continue in its existing terms (and with no changes to its terms, including its base rent) until its expiration on August 31, 2022, at which point the leased space under the 5403 Lease will become subject to the terms of the 5353 Lease. The initial term of the 5353 Lease began in December 2019 and was initially for 96 months.

The base rent of the first floor of the premises for the 5353 Betsy Ross building shall be abated for the first 19 months, and the base rent for the second floor of the 5353 Betsy Ross building shall be abated for the first four months. The landlord provided the Company with a tenant improvement allowance of up to $1.8 million for both 5403 and 5353 Betsy Ross buildings. In connection with the 5353 Lease, the Company provided an initial security deposit of $1.0 million in the form of a letter of credit, which is secured by restricted cash recorded as other assets on the consolidated balance sheets. While this amount will increase to $1.5 million on September 1, 2022 when the office, laboratory and manufacturing space of the 5403 Lease is included under the terms of the 5353 Lease, the letter of credit will be reduced annually from and after September 1, 2022 until the expiration of the 5353 Lease.

In September 2021, the Company amended the 5353 Lease (the “Amended Lease”), which extended the initial lease terms for both 5403 and 5353 Betsy Ross buildings by approximately 48.5 months to December 31, 2031. The Company accounted for this amendment as a lease modification for the lease of the 5353 Building. As of September 30, 2021, the lease of the 5403 Betsy Ross building under the modified terms has not yet commenced. The Amended Lease also contains an expansion option, which can be exercised after June 1, 2023, to lease an adjacent building consisting of approximately 35,000 square feet.

In connection with the lease of the 5353 Betsy Ross building, the Company has recorded an operating lease right-of-use asset of $10.9 million as of September 30, 2021 and an aggregate lease liability of $11.9 million on its consolidated balance sheet. The remaining lease term is ten years and three months.

Additionally, in September 2021, the Company entered into a ten-year lease for additional office space located at 3003 Bunker Hill Lane in Santa Clara, California which consists of approximately 81,000 square feet (the “3003 Lease”). The base rent for the premises of the 3003 Bunker Hill building shall be abated for the first six months. The landlord provided the Company with a tenant

In February 2018, the Company entered into a Loan and Security Agreement with Silicon Valley Bank (the “Loan and Security Agreement”). The terms of the Loan and Security Agreement included a term loan of $15.0 million and a revolving line of credit of $2.0 million. The term loan was available in two tranches, of which the first tranche of $10.0 million was funded in June 2018 and the second tranche of $5.0 million was funded in December 2018.

The term loan accrued interest at a floating per annum rate equal to the greater of (a) the Wall Street Journal prime rate minus 1.75% and (b) 2.75%. There was a final payment equal to 6.75% of the original aggregate principal amount, or $1.0 million, of the term loan advances, which was being accrued over the expected term of the loan using the effective-interest method.

In connection with the execution of the Loan and Security Agreement, the Company issued warrants to Silicon Valley Bank to purchase 34,440 shares of the Company’s common stock. Upon issuance, the fair value of the warrants of $0.1 million was recorded as a debt issuance cost. The debt issuance cost was being amortized to interest expense, net over the expected repayment period of the loan.

In February 2020, the Company entered into a First Amendment to its Loan and Security Agreement (the “Amended Credit Facility”) to, among other things, refinance its existing term loan, which is accounted for as a modification of the Loan and Security Agreement. Under the Amended Credit Facility, the existing revolving line of credit of $2.0 million was terminated and the termination fee of less than $0.1 million was waived. The Amended Credit Facility provides the Company with a supplemental term loan in the amount of $16.5 million. After repayment of the outstanding amount of the term loan, the Company received net proceeds of $3.3 million, which reflects an additional $4.3 million in principal as of the date of the modification less the final balloon payment fee of $1.0 million. The principal amount outstanding under the supplemental term loan accrues interest at a floating per annum rate equal to the greater of (a) the Prime Rate minus 1.25% and (b) 3.5%. The interest rate was 3.5% as of September 30, ~~2020.~~2021.

The supplemental term loan matures on December 1, 2023. The Amended Credit Facility provides an interest-only payment period ~~which will end on (a)~~through June 30, 2021, if the Company’s revenue for the trailing 12-month period ended June 30, 2021 is not at least 75% of the Company’s projections; (b) December 31, 2021, if the Company achieves the financial performance target referred to in clause (a), but does not obtain premarket approval of the Company’s C2catheters from the FDA by such date and/or the Company’s trailing 12-month revenue for the period ending December 31, 2021 is not at least 75% of the Company’s projections; or (c) June 30, 2022, if the Company achieves the milestones referred to in clauses (a) and (b).2022.

The additional final payment for the Amended Credit Facility is $1.6 million, which will be accrued over the term of the supplemental term loan using an effective interest rate that reflects the revised cash flows of the modified term loan.

The supplemental term loan is secured by all of the Company’s assets, excluding intellectual property and certain other assets. The loan contains customary affirmative and restrictive covenants, including with respect to the Company’s ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to its holders, make investments, merge or consolidate with any other person or engage in transactions with the Company’s affiliates, but does not include any financial covenants.

~~Long-term~~Current and noncurrent debt and net discount or premium balances are as follows:

Future minimum payments of principal and estimated payments of interest on the Company’s outstanding variable rate borrowings as of September 30, ~~2020~~2021 are as follows:

Stock-based compensation of $239,000 and $45,000 was capitalized into inventory for the three months ended September 30, 2021 and 2020, respectively. Stock-based compensation of $633,000 and $259,000 was capitalized into inventory for the ~~three and~~ nine months ended September 30, 2021 and 2020, respectively. Stock-based compensation capitalized into inventory is recognized as cost of product revenue when the related product is sold.

The Company estimates the grant-date fair value of the Company’s option awards using the Black-Scholes option pricing model. During the nine months ended September 30, 2020, the Company granted no new options. The assumptions for the Black-Scholes model for the nine months ended September 30, 2019 were as follows:

On June 17, 2009, the Company adopted the 2009 Equity Incentive Plan (the “2009 Plan”) under which the Board had the authority to issue stock options to employees, directors and consultants.

In February 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”), which became effective in connection with the ~~IPO.~~initial public offering (the “IPO”). As a result, effective as of March 6, 2019, the Company may not grant any additional awards under the 2009 Plan. The 2009 Plan will continue to govern outstanding equity awards granted thereunder. The Company initially reserved 2,000,430 shares of common stock for the issuance of a variety of awards under the 2019 Plan, including stock options, stock appreciation rights, awards of restricted stock and awards of restricted stock units. In addition, the number of shares of common stock reserved for issuance under the 2019 Plan will automatically increase on the first day of January~~commencing~~ for a period of up to ten years, which commenced on January 1, 2020, ~~and ending on January 1, 2028,~~ in an amount equal to ~~three percent~~3% of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or a lesser number of shares determined by the Company’s Board of Directors. As of September 30, ~~2020,~~2021, there were ~~2,685,328~~3,745,216 shares available for issuance under the 2019 Plan.

Shares
Available
for Grant

Number
of Shares

Weighted-
Average
Exercise
Price Per
Share

Weighted-
Average
Remaining
Term

Aggregate
Intrinsic
Value

(in years)

(in thousands)

Balance, December 31, 2019

1,704,244

3,315,001

$
5.08

7.28

$
128,774

Awards authorized

943,345

—

Options exercised

—

(747,829
)

3.46

Options forfeited

37,739

(37,739
)

4.41

Balance, September 30, 2020

2,685,328

2,529,433

$
5.57

6.96

$
177,632

Vested and exercisable, September 30, 2020

1,620,762

$
4.36

6.56

$
115,785

Vested and expected to vest, September 30, 2020

2,529,433

$
5.57

6.96

$
177,632

	Shares Available for Grant		Number of Shares			Weighted- Average Exercise Price Per Share		Weighted- Average Remaining Term		Aggregate Intrinsic Value
								(in years)		(in thousands)
Balance, December 31, 2020		2,689,624		2,087,202		$	5.92		6.77	$	204,137
Awards authorized		1,040,530		—
Options exercised		—		(431,041	)		5.91
Options forfeited		15,062		(15,062	)		9.33
Balance, September 30, 2021		3,745,216		1,641,099		$	5.88		5.98	$	328,212
Vested and exercisable, September 30, 2021				1,339,978		$	4.88		5.72	$	269,338
Vested and expected to vest, September 30, 2021				1,641,099		$	5.88		5.98	$	328,212

Restricted stock units (“RSUs”) are share awards that entitle the holder to receive freely tradable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line annual vesting, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date.

In February 2019, the Company adopted the 2019 Employee Stock Purchase Plan (“ESPP”), which became effective ~~as of~~in connection with the IPO on March 6, 2019. The Company initially reserved 300,650 shares of common stock for purchase under the ESPP. ~~In addition, the number of shares of common stock reserved for issuance~~Each offering under the ESPP ~~will automatically increase on the first day of January commencing on January 1, 2020 and ending January 1, 2028, in an amount equal~~ to one percent of the total number of shares of the Company’s capital stock outstanding on the last day of the preceding year, or such lesser number of shares as determined by the Company’s Board of Directors. At September 30, 2020, a total of 562,486 shares were available for issuance under the ESPP.

~~Each offering period during which participating~~Company employees ~~may~~to purchase stock under the ESPP begins on each September 1 and March 1 and ends on the following February 28 or 29 and August ~~30,~~31, respectively. ~~The first offering period began on September 1, 2019 and ended on February 29, 2020.~~ On each purchase date, which falls on the last date of each offering period, ESPP participants will purchase shares of common stock at a price per share equal to 85% of the lesser of (1) the fair market value per share of the common stock on the offering date or (2) the fair market value of the common stock on the purchase date. The occurrence and duration of offering periods under the ESPP are subject to the determinations of the Company’s Compensation Committee, ~~of the Company’s Board of Directors,~~ in its sole discretion.

The fair value of the ESPP shares is estimated using the Black-Scholes option pricing model. The Company recorded $333,000 and $890,000 of stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2021, respectively. The Company recorded $118,000 and $516,000 of stock-based compensation expense related to the ESPP for the three and nine months ended September 30, 2020, respectively. ~~The Company recorded $64,000 of stock-based compensation expense related to the ESPP for the three and nine months ended~~At September 30, ~~2019, respectively.~~ 2021, a total of 872,496 shares were available for issuance under the ESPP.

The components of basic and diluted net income (loss) per share are as follows (in thousands, except share and per share amounts):

The following outstanding potentially dilutive common stock equivalents have been excluded from the calculation of diluted net ~~loss~~income (loss) per share for the periods presented due to their anti-dilutive effect:

The following table represents the Company’s product revenue based on product line:

Coronary product revenue encompasses sales of the Company’s C² catheters. Peripheral product revenue encompasses sales of the Company’s M⁵ and ~~Geographic Information~~S⁴ IVL catheters. Other product revenue encompasses sales of the Company’s generators and related accessories.

The following table represents the Company’s product revenue based on the location to which the product is shipped:

On March 19, 2021, the Company entered into the Joint Venture Deed (or “JV Agreement”) with Genesis MedTech International Private Limited (“Genesis”) to establish a long-term strategic partnership to develop, manufacture and commercialize certain of the Company’s interventional products in the People’s Republic of China, excluding the Special Administrative Regions of Hong Kong and Macau (“PRC”). Under the JV Agreement, Genesis Shockwave Private Ltd. (the “JV”) was formed under the laws of Singapore to serve as a joint venture of Genesis and the Company for the purpose of establishing and managing such a strategic partnership.

On the same date, Genesis and the Company entered into a Share Subscription Agreement pursuant to which, among other things, the JV issued (i) 54,900 ordinary shares which represents 55% of total equity of the JV, to Genesis in exchange for a cash contribution of $15.0 million, of which 50% was paid upon signing and the remaining 50% will be due within one year of signing, and (ii) 45,000 ordinary shares which represents 45% of total equity, to the Company as consideration for the Shockwave License Agreement (or “License Agreement”). Under the License Agreement, the Company has agreed to contribute to the JV an exclusive license under certain of the Company’s intellectual property rights to develop, manufacture, distribute and commercialize certain products in the PRC and is entitled to receive royalties on the sales of the licensed products in the PRC. Further, the Company entered into a Distribution Agreement, pursuant to which the Company has agreed to sell certain Company-manufactured products to the JV and/or a to-be formed PRC subsidiary of the JV for commercialization and distribution in the PRC.

The Company has accounted for its investment in the JV under the equity method of accounting. As of September 30, 2021, the carrying value of the Company’s investment in the JV was $6.4 million. The Company’s share of losses generated by the JV for the three and nine months ended September 30, 2021 was $0.3 and $5.9 million, respectively, which was recorded in share in net loss of equity method investment. The JV has not generated any revenues to date.

Upon execution of the License Agreement, on March 19, 2021, the Company received a 45% equity stake in the JV. The Company determined that the JV met the definition of a customer under Topic 606, and that the promised goods and services of the contribution of the license of intellectual property and associated manufacturing technology transfer to the JV were considered to be a single performance obligation. The transaction price of $12.3 million was estimated by reference to the cash value of the shares which were issued at the formation of the JV.

As of September 30, ~~2020~~2021, the contribution of the license of intellectual property and ~~2019,~~associated manufacturing technology transfer to the ~~Company’s long-lived assets were all held in~~JV has not yet been completed. The Company maintains a related party contract liability, noncurrent, of $12.3 million for the ~~United States with~~outstanding performance obligation. The Company will satisfy the ~~exception~~outstanding performance obligation upon the completion of ~~certain equipment on loan~~training provided by the Company to ~~customers held internationally, which was not material as of each period end.~~the JV, and successful regulatory approval from the PRC National Medical Products Administration.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

You should read the following discussion and analysis of our financial condition and results of operations together with our condensed financial statements and related notes included in this Quarterly Report on Form 10-Q and our audited consolidated financial statements and related notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~ 2020. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report on Form 10-Q, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. As a result of many important factors, including those set forth under “~~Special~~“Special Note Regarding Forward-Looking ~~Statements~~”Statements”, in the “Risk Factors” section of ~~our~~this Quarterly Report on Form 10-Q ~~for the quarter ended March 31, 2020,~~ and in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, ~~2019,~~2020, and our Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2021 and June 30, 2021, our actual results could differ materially from the results described in, or implied, by those forward-looking ~~statements.~~statements.

We are a medical device company focused on developing and commercializing products intended to transform the way calcified cardiovascular disease is treated. We aim to establish a new standard of care for medical device treatment of atherosclerotic cardiovascular disease through our differentiated and proprietary local delivery of sonic pressure waves for the treatment of calcified plaque, which we refer to as intravascular lithotripsy (“IVL”). Our IVL system (our “IVL System”), which leverages our IVL technology (our “IVL Technology”), is a minimally invasive, easy-to-use, and safe way to significantly improve patient outcomes. ~~Our Shockwave M5 IVL catheter (“M5 catheter”) was CE-Marked~~We are currently selling the following products in ~~April 2018 and cleared by~~a number of countries around the ~~U.S. Food and Drug Administration (“FDA”) in July 2018 for use in our IVL System~~world where we have applicable regulatory approvals:

Products for the ~~treatment~~Treatment of ~~peripheral artery disease~~Peripheral Artery Disease (“PAD”)~~. Our Shockwave C2 IVL catheter (“C2 catheter”), which we are currently marketing in select locations outside of the United States, was CE-Marked in June~~:

Product for the ~~treatment~~Treatment of ~~coronary artery disease~~Coronary Artery Disease (“CAD”). In August 2019, we received Breakthrough Device designation from the FDA for our C2 catheters using our IVL System for the treatment of CAD. The second version of our Shockwave S4 IVL catheter (“S4 catheter”), for the treatment of below the knee PAD, was cleared by the FDA in August 2019, and accepted by our EU notified body in May 2020.:

We also have ongoing clinical programs across several products and indications, which, if successful, will allow us to expand commercialization of our products into new geographies and indications. Importantly, in October 2020, we ~~have completed enrollment in clinical trials~~announced the results of our ~~C2 catheter intended to support a~~DISRUPT CAD III global study. The data from DISRUPT CAD III supported our pre-market application (“PMA”) in the United States for our C² catheters, and a Shonin submission in Japan for ~~the treatment of CAD.~~our C² catheters. In ~~October 2018,~~addition, we received staged IDE approval for our DISRUPT CAD III global study. We began enrollment in the DISRUPT CAD III global study in 2019 and completed enrollment in March 2020. This study is designed to support U.S. PMA approval for our C2 catheters. We have submitted CAD III data to the FDA to support PMA approval, with subsequent U.S. launch of our C2 catheter planned for the first half of 2021, subject to FDA approval. We began enrollment in the DISRUPT CAD IV Japan study in 2019 and completed enrollment in April 2020. ~~We anticipate submitting~~In March of 2021, we submitted CAD III and CAD IV data to support Shonin approval, with subsequent Japan launch planned for the first half of 2022, subject to applicable regulatory approvals.

The first two indications we are targeting with our IVL System are PAD, the narrowing or blockage of vessels that carry blood from the heart to the extremities, and CAD, the narrowing or blockage of the arteries that supply blood to the heart. In the future, we see significant opportunity in the potential treatment of aortic stenosis, a condition where the heart’s aortic valve becomes increasingly calcified with age, causing it to narrow and obstruct blood flow from the heart.

We have adapted the use of lithotripsy to the cardiovascular field with the aim of creating what we believe can become the safest, most effective means of addressing the growing challenge of cardiovascular calcification. Lithotripsy has been used to successfully treat kidney stones (deposits of hardened calcium) for over 30 years. By integrating lithotripsy into a device that resembles a standard balloon catheter, physicians can prepare, deliver, and treat calcified lesions using a familiar form factor, without disruption to their standard procedural workflow. Our differentiated IVL System works by delivering shockwaves through the entire depth of the artery wall, modifying calcium in the medial layer of the artery, not just at the superficial most intimal layer. The

shockwaves crack this calcium and enable the stenotic artery to expand at low pressures, thereby minimizing complications inherent to traditional balloon dilations, such as dissections or tears. Preparing the vessel with IVL facilitates optimal outcomes with other therapies, including stents and drug-eluting technologies. Using IVL also avoids complications associated with atherectomy devices such as dissection, perforation, and embolism. When followed by an anti-proliferative therapy such as a drug-coated balloons or drug-eluting stents,, the micro-fractures may enable better drug penetration into the arterial wall and improve drug uptake, thereby improving the effectiveness of the combination treatment.

We market our products to hospitals whose interventional cardiologists, vascular surgeons and interventional radiologists treat patients with PAD and CAD. We have dedicated meaningful resources to establish a direct sales capability in the United States, Germany, Austria and Switzerland, which we have complemented with distributors actively selling our products in ~~47 countries.~~over 50 countries in North and South America, Europe, the Middle East, Asia, Africa and Australia/New Zealand. We are actively expanding our international field presence through new distributors, as well as additional sales and clinical ~~personnel and~~personnel. In addition, we are adding new U.S. sales territories.

For the three months ended September 30, ~~2020~~2021 and ~~2019,~~2020, we generated product revenue of ~~$19.6~~$65.2 million and ~~$11.3~~$19.6 million, respectively, and ~~a loss~~income from operations of ~~$12.8~~$2.8 million and ~~$13.1~~a loss of operations of $12.8 million, respectively. For the three months ended September 30, 2021 and 2020, 19% and ~~2019,~~ 43% ~~and 45%~~, respectively, of our product revenue was generated from customers located outside of the United States.

For the nine months ended September 30, ~~2020~~2021 and ~~2019,~~2020, we generated product revenue of ~~$45.1~~$153.0 million and ~~$28.6~~$45.1 million, respectively, and a loss from operations of ~~$49.8~~$14.9 million and ~~$36.5~~$49.8 million, respectively. For the nine months ended September 30, 2021 and 2020, 24% and ~~2019,~~ 46% ~~and 47%~~, respectively, of our product revenue was generated from customers located outside of the United States.

Since inception, we have incurred significant net losses. Although we had positive net income for the quarter ended September 30, 2021, we had a net loss for the nine months ended September 30, 2021. We may continue to incur losses in the future, which may vary significantly from period to period. We expect to continue to incur significant expenses as we (i) expand our marketing efforts to increase adoption of our products, (ii) expand existing relationships with our customers, (iii) obtain regulatory clearances or approvals for our planned or future products, (iv) conduct clinical trials on our existing and planned or future products, and (v) develop new products or add new features to our existing products. We will need to continue to generate significant revenue in order to sustain profitability as we continue to grow our business. Even if we achieve profitability for any period, we cannot be sure that we will remain profitable for any substantial period of time.

To date, our principal sources of liquidity have been the net proceeds we received through the sale of our common stock in our public offerings, private sales of equity securities and payments received from customers using our products. As of September 30, 2021, we had $183.0 million in cash, cash equivalents and short-term investments and an accumulated deficit of $265.8 million.

The global COVID-19 pandemic presents significant risks to us and has had, and continues to have, far reaching impacts on our business, operations, and financial results and condition, directly and indirectly, including, without limitation, impacts on: the health of our management and employees; our manufacturing, distribution, marketing and sales operations; our research and development activities, including clinical activities; and customer and patient behaviors.

Access to many hospitals and other customer sites ~~continues to~~may be or may periodically be, depending on the current COVID-19 infection rates in the applicable location, restricted to essential personnel, which negatively impacts our ability to promote the use of our products with physicians. Additionally, many hospitals and other therapeutic centers have in the past suspended, and may suspend or continue to suspend in the future, many elective procedures, resulting in a reduced volume of procedures using our products. Our customer behavior is impacted by the prevalence of COVID-19 and changes in the infection rates in the locations where our customers are located.

Quarantines, shelter-in-place and similar government orders have also impacted and may continue to impact, our third-party manufacturers and suppliers, and could in turn adversely impact the availability or cost of materials, which could disrupt our supply chain.

In addition, we have recently seen some disruptions in the operations of certain of our third-party suppliers, resulting in increased lead-times, higher component costs and lower allocations for our purchase of some components and, in certain cases, requiring us to procure materials from alternate suppliers or incur higher logistical expenses. We are continuing to work closely with our manufacturing partners and suppliers to enable us to source key components and maintain appropriate inventory levels to meet customer demand. We, however, have not experienced material disruptions in our supply chain to date.

We have taken a variety of steps to address the impact of the COVID-19 pandemic, while attempting to minimize business disruption. Essential staff in manufacturing and limited support functions ~~have~~ continued to work from our Santa Clara headquarters following appropriate hygiene and social distancing protocols. To reduce the risk to our other employees and their families from potential exposure to COVID-19, until recently all other staff in our Santa Clara headquarters ~~have been~~were required to work from home. Certain of these other employees had begun to return to our headquarters full or part-time during the second quarter of 2021, although we continue to review the impact of the delta variant of COVID-19 on employee safety. We ~~have restricted~~continue to limit non-essential travel to protect the health and safety of our employees and customers.

We are continuing to monitor the impact of the COVID-19 pandemic on our employees and customers and on the markets in which we operate, and will take further actions that we consider prudent to address the COVID-19 pandemic, while ensuring that we can support our customers and continue to develop our products.

The ultimate extent of the impact of the COVID-19 pandemic on us remains highly uncertain and will depend on future developments and factors that continue to evolve, including the ability of various regions to effectively manage COVID-19, ~~and~~ the extent of the continuing resurgence of ~~COVID-19.~~COVID-19, the efficacy and extent of distribution of vaccines, and the impact of mutations of COVID-19, and the ability of various economies and supply-chains to recover from the COVID-19 pandemic. Most of these developments and factors are outside of our control and could exist for an extended period of time even after the pandemic might end.

We sell our products to hospitals, primarily through direct sales representatives, as well as through distributors in ~~select~~selected international markets. For products sold through direct sales representatives, control is transferred upon delivery to customers. For products sold to distributors internationally and products sold to customers that utilize stocking orders, control is transferred upon shipment or delivery to the customer’s named location, based on the contractual shipping terms. Additionally, a ~~significant~~ portion of our revenue is generated through a consignment model under which inventory is maintained at hospitals. For consignment inventory, control is transferred at the time the catheters are consumed in a procedure.

The COVID-19 pandemic reduced sales of our IVL catheters during the second quarter of 2020 as compared to our sales in the first quarter of 2020. We saw an increase in sales volume in the third quarter of 2020 as opposed to the second quarter of 2020. However, we are continuing to monitor the impact of COVID-19 on our product sales and on elective procedures using our products in the U.S. and international markets where our products are sold, particularly given the resurgence of COVID-19 during the fourth quarter of 2020.

Cost of product revenue consists primarily of costs of components for use in our products, the materials and labor that are used to produce our products, the manufacturing overhead that directly supports production and the depreciation relating to the equipment used in our IVL System to the extent that we loan generators to our hospital customers without charge to facilitate the use of our IVL catheters in their procedures. We depreciate equipment over a three-year period. We expect cost of product revenue to increase in absolute terms as our revenue grows.

Our gross margin has been and will continue to be affected by a variety of ~~factors;~~factors, primarily production volumes, the cost of direct materials, product mix, geographic mix, discounting practices, manufacturing costs, product yields, headcount and ~~cost-reduction~~cost-

reduction strategies. We expect our gross margin percentage to increase over the long term to the extent we are successful in increasing our sales volume and are therefore able to leverage our fixed costs. We intend to use our design, engineering and manufacturing capabilities to further advance and improve the efficiency of our manufacturing processes, which, if successful, we believe will reduce costs and enable us to increase our gross margin percentage. While we expect gross margin percentage to increase over the long term, it will likely fluctuate from quarter to quarter as we continue to introduce new products and adopt new manufacturing processes and technologies. ~~The impact of the COVID-19 pandemic on our sales and procedures using our products in the fourth quarter of 2020 remains uncertain.~~

Research and development (“R&D”) expenses consist of applicable personnel, consulting, materials, and clinical trial expenses. R&D expenses include:

R&D costs are expensed as incurred. In the future, we expect R&D expenses to increase in absolute dollars as we continue to develop new products, enhance existing products and technologies, and perform activities related to obtaining additional regulatory approvals.

Sales and marketing expenses consist of personnel-related expenses, including salaries, benefits, sales commissions, travel, and stock-based compensation. Other sales and marketing expenses consist of marketing and promotional activities, including trade shows and market research. We expect to continue to grow our sales force and increase marketing efforts as we continue commercializing products based on our IVL Technology. As a result, we expect sales and marketing expenses to increase in absolute dollars over the long term. We expect certain costs will increase in the fourth quarter of 2020 as compared to the third quarter of 2020, such as travel and related expenses, to the extent sales personnel are able to visit customer hospitals. However, we are continuing to monitor the impact of COVID-19 on our sales and on elective procedures utilizing our products, and such impact in the fourth quarter of 2020 remains uncertain.

General and administrative expenses consist of personnel-related expenses, including salaries, benefits, bonus, travel, and stock-based compensation. Other general and administrative expenses consist of professional services fees, including legal, audit and tax fees, insurance costs, outside consultant fees and employee recruiting and training costs. ~~In addition,~~Moreover, we expect to incur additional expenses associated

with operating as a public company, including legal, accounting, insurance, exchange listing and SEC compliance and investor relations. As ~~we continue to grow,~~a result, we expect general and administrative expenses to increase in absolute dollars in future periods.

Comparison of the Three Months Ended September 30, ~~2020~~2021 and ~~2019~~2020

The following table shows our results of operations for the three months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

	Three Months Ended September 30,										Three Months Ended September 30,
	2020			2019			Change $			Change %	2021			2020			Change $			Change %
	(in thousands, except percentages)										(in thousands, except percentages)
Revenue:
Product revenue	$	19,590		$	11,333		$	8,257		73%	$	65,155		$	19,590		$	45,565		233%
Cost of revenue:
Cost of product revenue		5,277			4,401			876		20%		10,949			5,277			5,672		107%
Gross profit		14,313			6,932			7,381		106%		54,206			14,313			39,893		279%
Operating expenses:
Research and development		7,891			8,368			(477	)	(6)%		13,735			7,891			5,844		74%
Sales and marketing		13,619			8,192			5,427		66%		28,393			13,619			14,774		108%
General and administrative		5,610			3,437			2,173		63%		9,265			5,610			3,655		65%
Total operating expenses		27,120			19,997			7,123		36%		51,393			27,120			24,273		90%
Loss from operations		(12,807	)		(13,065	)		258		(2)%
Income (loss) from operations												2,813			(12,807	)		15,620		122%
Share in net loss of equity method investment												(342	)		—			(342	)	(100)%
Interest expense		(314	)		(251	)		(63	)	25%		(165	)		(314	)		149		(47)%
Other income, net		218			385			(167	)	(43)%
Net loss before taxes		(12,903	)		(12,931	)		28		(0)%
Other income (expense), net												(280	)		218			(498	)	(228)%
Net income (loss) before taxes												2,026			(12,903	)		14,929		116%
Income tax provision		29			26			3		12%		78			29			49		169%
Net loss	$	(12,932	)	$	(12,957	)	$	25		(0)%
Net income (loss)											$	1,948		$	(12,932	)	$	14,880		115%

Product revenue increased by ~~$8.3~~$45.6 million, or ~~73%~~233%, from ~~$11.3 million during the three months ended September 30, 2019 to~~ $19.6 million during the three months ended September 30, ~~2020.~~ 2020 to $65.2 million during the three months ended September 30, 2021.

The ~~change~~following table represents our product revenue based on product line:

Coronary product revenue increased by $40.2 million, or 575%, from $7.0 million for the three months ended September 30, 2020 to $47.2 million for the three months ended September 30, 2021. In February 2021, we received U.S. FDA approval for our C² catheters. The increase in coronary product revenue was primarily due to ~~an increase~~the commencement of sales in the ~~number~~United States, increased adoption of our products internationally, and continued recovery from the pandemic impact in the prior year. All coronary product revenue was from international customers ~~and~~for three months ended September 30, 2020.

Peripheral product revenue increased by $5.4 million, or 44%, from $12.3 million for the three months ended September 30, 2020 to $17.7 million for the three months ended September 30, 2021. The change was due to an increase in purchase volume of our ~~products both~~M⁵ and S⁴ IVL catheters within the United States and ~~internationally.~~ internationally driven by increased adoption of our products and recovery from the pandemic impact in the prior year.

We sold to a greater number of customers in the United States and to a greater number of distributors internationally for the three months ended September 30, ~~2020~~2021 as compared to the three months ended September 30, ~~2019.~~

other countries in the three months ended September 30, 2021 compared to $11.1 million within the United States and $8.5 million for all other countries in the three months ended September 30, ~~2020 compared to $6.2 million within the United States and $5.1 million for all other countries in the three months ended September 30, 2019.~~2020.

Cost of product revenue increased by ~~$0.9~~$5.7 million, or ~~20%~~107%, from ~~$4.4 million during the three months ended September 30, 2019 to~~ $5.3 million during the three months ended September 30, ~~2020.~~2020 to $10.9 million during the three months ended September 30, 2021. Gross margin percentage improved to 83.2% for the three months ended September 30, 2021, compared to 73.1% for the three months ended September 30, ~~2020, compared to 61.2% for the three months ended September 30, 2019.~~ 2020. This change in gross margin percentage was primarily due to higher average selling price and lower fixed costs per unit from increased ~~in production~~sales volume of our IVL catheters and ~~increased manufacturing efficiencies.~~efficiencies from improvements to operations and production.

The following table summarizes our R&D expenses incurred during the periods presented:

R&D expenses ~~decreased~~increased by ~~$0.5~~$5.8 million, or 6%74%, from ~~$8.4 million during the three months ended September 30, 2019 to~~ $7.9 million during the three months ended September 30, ~~2020.~~2020 to $13.7 million during the three months ended September 30, 2021. The change was primarily due to a ~~$1.6 million decrease in clinical-related costs due to the lifecycle of current clinical trials. This was partially offset by a $0.9~~$3.7 million increase in compensation and personnel-related costs due to an increase in ~~head count~~headcount, a $0.9 million increase in facilities and other allocated costs, a $0.7 million increase in outside consultants, a $0.6 million increase in materials and supplies, and a $0.1 million increase in other research and development costs. This was partially offset by a decrease in clinical-related costs of $0.1 million due to ~~support~~ completion of patient enrollment for the majority of clinical ~~trials during the three months ended September 30, 2020.~~trials.

Sales and marketing expenses increased by ~~$5.4~~$14.8 million, or ~~66%~~108%, from ~~$8.2 million during the three months ended September 30, 2019 to~~ $13.6 million during the three months ended September 30, ~~2020.~~2020 to $28.4 million during the three months ended September 30, 2021. The change was primarily due to a ~~$5.0~~$10.1 million increase in compensation and personnel-related costs, ~~which includes~~resulting from increased headcount and commissions driven by increased sales of our products. There was also a ~~$1.9~~$1.3 million increase in ~~commission expense, as~~travel related costs, a ~~result of increased headcount~~$1.0 million increase in marketing and ~~revenue~~promotional costs, a $0.8 million increase in ~~the third quarter of 2020.~~facilities and other allocated costs, a $0.6 million increase in professional services and consulting costs, a $0.6 million increase in materials and supplies, a $0.2 million increase in general corporate costs, and a $0.2 million increase in recruiting and training costs.

General and administrative expenses increased by ~~$2.2~~$3.7 million, or ~~63%~~65%, from ~~$3.4 million during the three months ended September 30, 2019 to~~ $5.6 million during the three months ended September 30, ~~2020.~~2020 to $9.3 million during the three months ended September 30, 2021. The change was primarily due to a ~~$1.4~~$2.2 million increase in compensation and personnel-related costs, ~~and~~ a ~~$0.5~~$0.7 million increase in general corporate costs, a $0.3 million increase in professional services and consulting ~~cost.~~costs, a $0.3 million increase in facilities and other allocated costs, a $0.1 million increase in recruiting and training costs, and a $0.1 million increase in travel related costs.

Other income (expense), net decreased by $0.5 million, or 228%, from $0.2 million in other income, net during the three months ended September 30, 2021 to $0.3 million in other expense, net during the three months ended September 30, 2021. The decrease in

other income was primarily due to a decrease in interest income attributable to the decreased interest rate environment in the comparable period and the timing of the maturities of marketable securities. Also included in other income (expense), net are the net impact of foreign exchange gains and losses.

The increase in share in net loss of equity method investment of $0.3 million for the three months ended September 30, 2021 was due to our 45% ownership in the JV which was acquired in March 2021.

The following table shows our results of operations for the nine months ended September 30, ~~2020~~2021 and ~~2019:~~2020:

	Nine Months Ended September 30,										Nine Months Ended September 30,
	2020			2019			Change $			Change %	2021			2020			Change $			Change %
	(in thousands, except percentages)										(in thousands, except percentages)
Revenue:
Product revenue	$	45,073		$	28,615		$	16,458		58%	$	152,963		$	45,073		$	107,890		239%
Cost of revenue:
Cost of product revenue		14,520			11,606			2,914		25%		28,775			14,520			14,255		98%
Gross profit		30,553			17,009			13,544		80%		124,188			30,553			93,635		306%
Operating expenses:
Research and development		27,882			22,778			5,104		22%		35,827			27,882			7,945		28%
Sales and marketing		35,236			21,023			14,213		68%		78,098			35,236			42,862		122%
General and administrative		17,232			9,684			7,548		78%		25,117			17,232			7,885		46%
Total operating expenses		80,350			53,485			26,865		50%		139,042			80,350			58,692		73%
Loss from operations		(49,797	)		(36,476	)		(13,321	)	37%		(14,854	)		(49,797	)		34,943		(70)%
Share in net loss of equity method investment												(5,865	)		—			(5,865	)	(100)%
Interest expense		(897	)		(746	)		(151	)	20%		(795	)		(897	)		102		(11)%
Change in fair value of warrant liability		—			(609	)		609		(100)%
Other income, net		942			1,518			(576	)	(38)%
Other income (expense), net												(369	)		942			(1,311	)	(139)%
Net loss before taxes		(49,752	)		(36,313	)		(13,439	)	37%		(21,883	)		(49,752	)		27,869		(56)%
Income tax provision		73			51			22		43%		195			73			122		167%
Net loss	$	(49,825	)	$	(36,364	)	$	(13,461	)	37%	$	(22,078	)	$	(49,825	)	$	27,747		(56)%

Product revenue increased by ~~$16.5~~$107.9 million, or ~~58%~~239%, from ~~$28.6 million during the nine months ended September 30, 2019 to~~ $45.1 million during the nine months ended September 30, ~~2020.~~ 2020 to $153.0 million during the nine months ended September 30, 2021.

The ~~change~~following table represents our product revenue based on product line:

Coronary product revenue increased by $82.8 million, or 505%, from $16.4 million for the nine months ended September 30, 2020 to $99.2 million for the nine months ended September 30, 2021. In February 2021, we received U.S. FDA approval for our C² catheters. The increase in coronary product revenue was primarily due to ~~an increase~~the commencement of sales in the ~~number~~United States, increased adoption of our products internationally, and continued recovery from the pandemic impact in the prior year. All coronary product revenue was from international customers ~~and~~for nine months ended September 30, 2020.

Peripheral product revenue increased by $24.7 million, or 89%, from $27.9 million for the nine months ended September 30, 2020 to $52.7 million for the nine months ended September 30, 2021. The change was due to an increase in purchase volume of our ~~products both~~M⁵ and S⁴ IVL catheters within the United States and internationally driven by increased adoption of our products and recovery from the pandemic impact in the prior year.

Other product revenue increased by $0.4 million, or 52%, from $0.7 million for the nine months ended September 30, 2020 to $1.1 million for the nine months ended September 30, 2021. The change was due to an increase in the purchase volume of our IVL generators and other accessories within the United States and internationally.

We sold to a greater number of customers in the United States and to a greater number of distributors internationally for the nine months ended September 30, ~~2020~~2021 as compared to the nine months ended September 30, ~~2019.~~

~~Product revenue consisted primarily of the sale of our IVL catheters.~~2020. Product revenue, classified by the major geographic areas in which our products are shipped, was $116.7 million within the United States and $36.3 million for all other countries in the nine months ended September 30, 2021 compared to $24.5 million within the United States and $20.6 million for all other countries in the nine months ended September 30, ~~2020 compared to $15.1 million within the United States and $13.5 million for all other countries in the nine months ended September 30, 2019.~~2020.

Cost of product revenue increased by ~~$2.9~~$14.3 million, or ~~25%~~98% from ~~$11.6 million during the nine months ended September 30, 2019 to~~ $14.5 million during the nine months ended September 30, ~~2020.~~2020 to $28.8 million during the nine months ended September 30, 2021. The increase was primarily due to growth in sales volume. Gross margin percentage improved to 81.2% for the nine months ended September 30, 2021, compared to 67.8% for the nine months ended September 30, ~~2020, compared to 59.4% for the nine months ended September 30, 2019.~~ 2020. This change in gross margin percentage was primarily due to higher average selling price and lower fixed costs per unit from increased sales volume of our IVL catheters and efficiencies from improvements to operations and production.

The following table summarizes our R&D expenses incurred during the periods presented:

R&D expenses increased by ~~$5.1~~$7.9 million, or ~~22%~~28%, from ~~$22.8 million during the nine months ended September 30, 2019 to~~ $27.9 million during the nine months ended September 30, ~~2020.~~2020 to $35.8 million during the nine months ended September 30, 2021. The change was primarily due to a ~~$3.3~~$8.4 million increase in compensation and personnel-related costs due to an increase in headcount, ~~to support clinical trials.~~ ~~Clinical-related~~ ~~costs during the nine months ended~~ ~~September 30, 2020,~~ ~~were primarily related to the CAD III, CAD IV and PAD III clinical trials.~~ ~~There was also~~ a ~~$1.0 million increase in software license expense related to R&D, a $0.3 million increase in material and supplies, and~~ ~~a $0.3 million increase in other allocated costs due to increased rent and building expenditures.~~

Sales and marketing expenses increased by $14.2 million, or 68%, from $21.0 million during the nine months ended September 30, 2019 to $35.2 million during the nine months ended September 30, 2020. The change was primarily due to a $12.2 million increase in compensation and personnel-related costs, which included a $3.7 million increase in commission expense, as a result of increased headcount ~~and increased sales of our products. There was also a $0.7~~$1.8 million increase in facilities and other allocated costs due to increased rent and building expenditures, a ~~$0.4~~$0.8 million increase in outside ~~professional cost,~~ consulting costs, and a ~~$0.4~~$0.3 million increase in ~~general corporate expense,~~materials and supplies. This was partially offset by a ~~$0.3~~$2.4 million decrease in clinical-related costs due to completion of patient enrollment for the majority of clinical trials, and a $0.9 million decrease in other research and development costs due to software license costs in the prior year not incurred in the current year.

Sales and marketing expenses increased by $42.9 million, or 122%, from $35.2 million during the nine months ended September 30, 2020 to $78.1 million during the nine months ended September 30, 2021. The change was primarily due to a $31.8 million increase in compensation and personnel-related costs, as a result of increased headcount and commissions driven by increased sales of our products. There was also a $3.8 million increase in marketing and promotional expenses to support the commercialization of our products, a $2.8 million increase in travel related costs, a $1.7 million increase in facilities and other allocated costs due to increased rent and building expenditures, a $1.2 million increase in materials and supplies, a $0.7 million increase in professional services and consulting costs, a $0.7 million increase in general corporate costs, and a $0.2 million increase in recruitment and training ~~expense.~~costs.

General and administrative expenses increased by ~~$7.5~~$7.9 million, or ~~78%~~46%, from ~~$9.7 million during the nine months ended September 30, 2019 to~~ $17.2 million during the nine months ended September 30, ~~2020.~~2020 to $25.1 million during the nine months ended September 30, 2021. The change was primarily due to a ~~$3.6~~$5.8 million increase in compensation and personnel-related costs driven by an increase in headcount, a $1.1 million increase general corporate ~~expense (includes tax and license fees,~~costs which includes supplies, software, ~~and bad debt expense)~~etc., a ~~$2.3 million increase in professional services and consulting cost, a $0.4~~$0.5 million increase in other allocated costs due to increased rent and building expenditures, ~~and~~ a ~~$0.2~~$0.3 million increase in recruitment and training ~~expense. These increases were partially offset by~~costs, a $0.1 million ~~decrease~~increase in professional services and consulting costs, and a $0.1 million increase in travel related ~~expense.~~costs.

Other income (expense), net decreased by $1.3 million, or 139%, from $0.9 million in other income, net during the nine months ended September 30, 2021 to $0.4 million in other expense, net during the nine months ended September 30, 2021. The decrease in other income was primarily due to a decrease in interest income attributable to the decreased interest rate environment in the comparable period and the timing of the maturities of marketable securities. Also included in other income (expense), net are the net impact of foreign exchange gains and losses.

The increase in share in net loss of equity method investment of $5.9 million for the nine months ended September 30, 2021 was due to our 45% ownership in the JV which was acquired in March 2021.

To date, our principal sources of liquidity have been the net proceeds we received through the sales of our common stock in our public offerings, private sales of our equity securities, payments received from customers ~~purchasing~~using our products and to a lesser extent proceeds from our debt financings. On March 11, 2019, ~~we completed our initial public offering, including the underwriters’ full exercise of their over-allotment option, selling 6,555,000 shares of our common stock at $17.00 per share. Upon~~upon completion of our ~~initial public offering,~~IPO, we received net proceeds of $99.9 million, after deducting underwriting discounts and commissions and offering expenses. Concurrent with the ~~initial public offering,~~IPO, we ~~issued 588,235 shares of common stock in~~completed a private placement for net proceeds of $10.0 ~~million (the “Private Placement”).~~million. On November 15, 2019, we completed a follow-on offering of 2,854,048 shares of our common stock, including 372,267 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares at a public offering price of $36.25 per share. Upon completion of our follow-on offering, we receivedfor net proceeds of $96.7 million, after deducting underwriting discounts and commissions and offering expenses. On June 19, 2020, we completed an offering of 1,955,000 shares of our common stock, including 255,000 shares sold pursuant to the underwriters’ exercise of their option to purchase additional shares at a public offering price of $45.75 per share. Upon completion of the June 2020 offering, we receivedfor net proceeds of $83.4 million, after deducting underwriting discounts and commissions and offering expenses.

On February 11, 2020, we entered into the Amended Credit Facility to the Loan and Security Agreement to refinance our existing term loan, which iswas accounted for as a modification. The Amended Credit Facility provided us with a supplemental term loan in the amount of $16.5 million. We received net proceeds of $3.3 million, which reflects an additional $4.3 million in principal as of the date of the modification less the final balloon payment fee of $1.0 million.

We believe that our cash and cash equivalents as of September 30, 2020 will be sufficient to fund our operations for at least the next 12 months from the date of this filing. As of September 30, 2020, we had $215.3 million in cash and cash equivalents and an accumulated deficit of $227.8 million.

We have a number of ongoing clinical trials and expect to continue to make substantial investments in these trials and in additional clinical trials that are designed to provide clinical evidence of the safety and efficacy of our products. ~~Although we may limit our hiring in response to the COVID-19 pandemic, we~~We intend to continue to make significant investments in our sales and marketing organization by increasing the number of U.S. sales ~~representatives. We also intend to continue~~representatives and expanding our international marketing programs to help facilitate further adoption among existing hospital accounts and physicians as well as broaden awareness of our products to new hospitals. We also expect to continue to make investments in R&D, regulatory affairs, and clinical studies to develop future generations of products based on our IVL Technology, support regulatory submissions, and demonstrate the clinical efficacy of our products. Moreover, we expect to continue to incur expenses associated with operating as a public company, including legal, accounting, insurance, exchange listing and SEC compliance, investor relations and other expenses. Because of these and other factors, although we ~~expect to continue to~~had positive net income for the quarter ended September 30, 2021, we had a net loss for the nine-months ended September 30, 2021 and we may incur ~~substantial~~ net losses and have negative cash flows from operations in the future.

As of September 30, 2021, we had cash, cash equivalents and short-term investments of $183.0 million, which are available to fund future operations. We believe that our cash and cash equivalents as of September 30, 2021, will be sufficient to meet our capital requirements and fund our operations for at least the ~~foreseeable future.~~next 12 months.

During the nine months ended September 30, 2021, cash used in operating activities was $5.8 million, attributable to a net loss of $22.1 million, non-cash charges of $30.2 million, partially offset by a net change in our net operating assets and liabilities of $13.9 million. Non-cash charges primarily consisted of $19.0 million in stock-based compensation, $5.9 million in share in net loss of equity method investment, $2.7 million in depreciation and amortization, $1.2 million in amortization of right-of-use assets, $1.0 million in accretion of discount on available-for-sale securities, and $0.4 million in amortization of debt issuance costs. The change in our net operating assets and liabilities was primarily due to a $18.3 million increase in accounts receivable due to an increase in sales, a $8.0 million increase in inventory driven by an increase in work in progress inventory, a $2.0 million increase in prepaid expenses and other current assets, and a $1.0 million decrease in lease liability. These changes were partially offset by a $13.0 million increase in accrued and other current liabilities resulting from expansion in our operating activities and accrued employee compensation driven by increased headcount, a $2.2 million increase in accounts payable due to the timing of vendor billings and payments, and a decrease in other assets of $0.1 million.

During the nine months ended September 30, 2020, cash used in operating activities was $58.8 million, attributable to a net loss of $49.8 million and a net change in our net operating assets and liabilities of $19.4 million, partially offset by non-cash charges of $10.4 million. Non-cash charges primarily consisted of $7.1 million in stock-based compensation, $1.4 million in depreciation and amortization, $1.1 million in amortization of right-of-use assets, $0.5 million in amortization of debt issuance costs, $0.3 million in accretion of discount on available-for-sale securities, and $0.1 million in loss on write down of fixed assets. The change in our net operating assets and liabilities was primarily due to a $16.3 million increase in inventory, a $3.3 million increase in accounts

receivable due to an increase in sales, a $1.1 million increase in prepaid expenses and other current assets, a $0.2 million increase in other assets, a $0.8 million decrease in accounts payable and a $0.5 million decrease in lease liability. These changes were partially offset by a $2.8 million increase in accrued and other current liabilities resulting primarily from expansion in our operating activities and accrued professional services fees.

During the nine months ended September 30, ~~2019,~~2021, cash ~~used in operating~~provided by investing activities was ~~$35.5~~$49.5 million, attributable to ~~a net loss~~proceeds from maturities of ~~$36.4 million and a net change in our net operating assets and liabilities~~available-for-sale investments of ~~$3.5~~$134.7 million, partially offset by ~~non-cash charges~~purchase of ~~$4.4~~available-for-sale investments of $75.6 million and purchases of property and equipment of $9.6 million. Non-cash charges primarily consisted of $2.3 million in stock-based compensation, $0.9 million in depreciation and amortization, $0.7 million in amortization of right-of-use assets, $0.6 million in change in fair value of warrant liability, $0.3 million in amortization of debt issuance costs and $0.1 million in loss on write down of fixed assets, partially offset by $0.5 million in accretion of discount on available-for-sale securities. The change in our net operating assets and liabilities was primarily due to a $4.1 million increase in inventory and $2.7 million increase in accounts receivable due to an increase in sales, a $1.1 million increase in prepaid expenses and other current assets and a $0.7 million decrease in lease liabilities. These changes were partially offset by a $5.1 million increase in accrued and other current liabilities and accounts payable resulting primarily from expansion in our operating activities and accrued professional services fees.

During the nine months ended September 30, 2020, cash provided by investing activities was $46.1 million, attributable to proceeds from maturities of available-for-sale investments of $72.0 million, partially offset by purchase of available-for-sale investments of $16.0 million and ~~purchase~~purchases of property and equipment of $9.9 million.

During the nine months ended September 30, ~~2019,~~2021, cash used in ~~investing~~financing activities was ~~$76.3~~$3.0 million, attributable to ~~the purchase~~$8.3 million of ~~available-for-sale securities~~payment of ~~$106.3 million and purchase~~taxes withheld on net settled vesting of ~~property and equipment of $2.3 million,~~restricted stock units, partially offset by proceeds of $2.5 million from ~~maturities~~stock option exercises and proceeds of ~~available-for-sale investments~~$2.8 million from issuance of ~~$32.3 million.~~

During the nine months ended September 30, 2020, cash provided by financing activities was $88.9 million, attributable to net proceeds of $83.4 million from the public offering of our common stock, a $3.3 million from borrowings under new credit facility entered on February 11, 2020, proceeds of $2.6 million from stock option exercises and proceeds of $1.8 million from issuance of shares under our employee stock purchase plan, partially offset by principal payment on our term loan of $1.1 million, a $0.9 million payment of taxes withheld on net settled vesting of restricted stock units and payment of offering costs of $0.2 million.

Our debt, principal and interest commitments consist of our debt obligations under the Amended Credit Facility. As of September 30, 2021, we had debt, principal, and interest commitments of $19.0 million.

We have engaged a contract manufacturer to produce and supply us with certain products. We have fixed commitments of approximately $7.1 million within the next twelve months.

Our operating lease commitments mostly consist of our lease obligations for our Santa Clara headquarter office spaces. During the nine months ended September 30, ~~2019, cash provided by financing activities was $111.7~~2021, we entered into a lease amendment and executed a lease for an additional facility. Our total operating lease commitments as of September 30, 2021 are approximately $57.0 million, ~~attributable~~of which $3.1 million is expected to ~~net proceeds of $100.5 million from~~be paid within the ~~IPO, net proceeds of $10.0 million from the Private Placement of our common stock and proceeds of $1.1 million from stock option exercises and $0.1 million from warrant exercises.~~next twelve months.

~~Except as noted below,~~There were no other material changes during the ~~nine~~three months ended September 30, ~~2020, there have been no material changes~~2021 to our contractual obligations as compared to those disclosed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, ~~2019.~~2020.

In February 2020, we amended our existing term loan. Under the amendment, we received net proceeds of $3.3 million, which reflects an additional $4.3 million in principal as of the date of the modification less the final balloon payment fee of $1.0 million. The principal amount outstanding of $16.5 million under the amended term loan accrues interest at a floating per annum rate equal to the greater of (i) the Prime Rate minus 1.25% and (ii) 3.5%. The interest rate was 3.5% as of September 30, 2020. The amended term loan matures on December 1, 2023. The amended term loan provides an interest-only payment period which will end on (a) June 30, 2021, if our revenue for the trailing 12-month period ended June 30, 2021 is not at least 75% of our projections; (b) December 31, 2021, if we achieve the financial performance target referred to in clause (a), but do not obtain premarket approval of our C2 catheters from the FDA by such date and/or our trailing 12-month revenue for the period ending December 31, 2021 is not at least 75% of our projections; or (c) June 30, 2022, if we achieve the milestones referred to in clauses (a) and (b). The additional final payment for the amended loan is $1.6 million.

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined in the rules and regulations of the SEC.

Management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). The preparation of these consolidated financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

InWith the exception of the accounting of equity method investments and license revenue as described below, herein, there have been no significant changes in our critical accounting policies and assumptions associated with the greatest potential impact on our consolidated financial statements as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, ~~2019, we disclosed our critical accounting policies and the assumptions and estimates associated with the greatest potential impact on our consolidated financial statements~~2020 in the section titled “~~Management’s~~“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” ~~During~~

Entities which we have significant influence over activities of the entity, but does not control, are accounted for under the equity method of accounting in accordance with Topic 323, Investments - Equity Method and Joint Ventures. On March 19, 2021, we entered into the Joint Venture Deed (or “JV Agreement”) with Genesis MedTech International Private Limited (“Genesis”) to establish a long-term strategic partnership to develop, manufacture and commercialize certain of our interventional products in the People’s Republic of China, excluding the Special Administrative Regions of Hong Kong and Macau (“PRC”). Under the JV Agreement, Genesis Shockwave Private Ltd. (the “JV”) was formed under the laws of Singapore to serve as a joint venture with Genesis for the purpose of establishing and managing such a strategic partnership.

Our carrying value in the equity method investment is reported as equity method investment on our consolidated balance sheet. We record our proportionate share of the underlying income or loss which is recognized in share in net loss of equity method investment. For the three and nine months ended September 30, ~~2020, as a result~~2021, our share in the losses incurred by the equity method investee was $0.3 and $5.9 million, respectively. We eliminate any intra-entity profits to the extent of our beneficial interest.

We assess our equity method investment for impairment when events or circumstances suggest that the carrying amount of the ~~COVID-19 pandemic, we believe that~~investment may be impaired. We consider all available evidenced in assessing whether a decline in fair value is other than temporary. If the ~~assumptions and estimates associated with credit losses of accounts receivable and net realizable~~decline in fair value ~~of inventory associated with product shelf life and potential expiration may also have a material impact to our consolidated financial statements in future periods.~~

~~We are exposed to credit losses through our receivables from customers. Our expected loss allowance methodology for receivables~~ is developed using our historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of our customers. Specific allowance amounts are established to record the appropriate allowance for customers that have an identified risk of default. General allowance amounts are established based upon our assessment of expected credit losses for our receivables by aging category. Balances are written off when they are ultimately determined to be ~~uncollectible. We~~other than temporary, the difference between the carrying amount of the investment and estimated fair value is recognized as an impairment charge.

For arrangements that contain a license of our functional intellectual property with a customer, we consider whether the license grant is distinct from other performance obligations in the arrangement. A license grant of functional intellectual property is generally considered to be capable of being distinct if a customer can benefit from the ~~current and expected future economic and market conditions surrounding~~license on its own or together with other readily available resources. License revenue for licenses of functional intellectual property is recognized at a point in time when we satisfy our performance obligation of transferring the ~~COVID-19 pandemic, however, no additional reserve was required~~license to the customer.

In connection with the formation of the JV on March 19, 2021, we received a 45% equity stake in the JV in exchange for the ~~three months ended September 30, 2020.~~contribution of intellectual property. We ~~will continue~~determined that the JV met the definition of a customer under Topic 606, and that the promised goods and services of the contribution of the license of intellectual property and associated manufacturing technology transfer to ~~monitor~~ the ~~impact~~JV were considered to be a single performance obligation. The transaction price of ~~COVID-19 pandemic and we may need~~$12.3 million was estimated by reference to ~~make further adjustments to this estimate in future periods.~~

~~Inventories are valued~~the cash value of the shares which were issued at the ~~lower~~formation of ~~cost, computed on a first-in, first-out basis, or net realizable value. We produce our IVL catheters at our facilities in Santa Clara, California. At~~ the time of manufacture, our IVL catheters generally have a two-year shelf life prior to expiration. We maintain finished goods inventory at our facilities in California, with our sales representatives, with our third-party logistics provider in the Netherlands, and on consignment at hospital locations. Each reporting period, we update provisions for excess and obsolete inventory based on our estimates of forecast demand and, where applicable, product expiration. JV.

As of September 30, ~~2020,~~2021, the ~~substantial majority~~contribution of ~~our finished goods inventory had expiration dates in second half~~the license of ~~2021 or later.~~intellectual property and associated manufacturing technology transfer to the JV has not yet been completed. We ~~considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic, however, no additional reserve was required~~recorded a related party contract liability, noncurrent, of $12.3 million for the ~~three months ended September 30, 2020. We will continue to monitor the impact of COVID-19 pandemic and we may need to make further adjustments to this estimate in future periods.~~outstanding performance obligation.

Our cash, ~~and~~ cash equivalents and short-term investments as of September 30, ~~2020~~2021 consisted of ~~$215.3~~$183.0 million in bank deposits, ~~and~~ money market ~~funds.~~funds and available-for-sale securities. Such interest-earning instruments carry a degree of interest rate risk. The goals of our investment policy are liquidity and capital preservation; we do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate exposure. We believe that we do not have any material exposure to changes in the fair value of these assets as a result of changes in interest rates due to the short-term nature of our cash and cash equivalents.

As of September 30, ~~2020,~~2021, we had $16.5 million inof principal amount of variable rate debt ~~outstanding. In February 2020, we refinanced our existing term loan by means of a supplemental term loan in the amount of $16.5 million.~~outstanding with an interest-only payment period through June 30, 2022. The supplemental term loan requires monthly repayments of principal starting as early as June 2021, subject to a contingent deferral if we meet certain milestones, discussed further in Note 6 to Item 1- Financial Statements, above. The supplemental term loandebt matures on December 1, 2023 and accrues interest at a

floating per annum rate equal to the greater of the Prime Rate minus 1.25% and 3.5%. The interest rate on the term loan was 3.5% as of September 30, ~~2020.~~2021.

As we expand internationally, our results of operations and cash flows may become increasingly subject to fluctuations due to changes in foreign currency exchange rates. Our revenue is denominated primarily in U.S. dollars and Euros. For the nine months ended September 30, 2021 and 2020, approximately 14% and ~~2019, approximately~~ 27% ~~and 28%~~ of our product revenue, respectively, was denominated in Euros. Our expenses are generally denominated in the currencies in which our operations are located, which is primarily in the United States. A 10% change in exchange rates could result in a change in fair value of ~~$0.5~~$1.5 million and ~~$1.2~~$0.6 million in foreign currency cash and accounts receivable as of September 30, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. As our operations in countries outside of the United States grow, our results of operations and cash flows may be subject to fluctuations due to changes in foreign currency

exchange rates, which could harm our business in the future. To date, we have not entered into any material foreign currency hedging contracts, although we may do so in the future.

Our management, with the participation and supervision of our Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls is also based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

Petitions for inter partes review (“IPR”) of U.S. Pat. Nos. 9,642,673, 8,956,371 and 8,728,091 (the “IPR Patents”), which are three of our issued U.S. patents that relate to our current IVL Technology, were filed in December 2018 at the USPTO’s Patent Trial and Appeal Board (the “PTAB”) by Cardiovascular Systems, Inc., one of our competitors. The PTAB instituted IPR proceedings for all three patents. The PTAB held oral hearings on April 15-16, 2020. On July 8, 2020, the PTAB ruled that one claim in U.S. Pat No. 8,956,371 (the “‘371 patent”) is valid, and ruled that all other claims in the ‘371 patent are invalid and that all claims of U.S. Pat No. 8,728,091 are ~~invalid, and on~~invalid. On July 20, 2020, the PTAB ruled that all claims of U.S. Pat. No. 9,642,673 are invalid.

On August 27, 2020, further briefing by the parties was requested by the PTAB judge in the ‘371 patent proceeding to assess whether recent guidance from the USPTO relating to “applicant admitted prior art” impacted the PTAB decision in the ‘371 patent proceeding. In addition, the PTAB judge reset the time for commencement of an appeal in the ‘371 patent proceeding pending the entry of a final decision after the requested briefing. On October 13, 2020, we submitted the last of the requested briefing, and the PTAB decision is pending. Subject to the final PTAB decision regarding the ‘371 patent proceeding, we anticipate appealing this ruling to the U.S. Court of Appeals for the Federal Circuit. In the meantime, we have appealed the rulings in the other two IPR ~~proceedings.~~proceedings and the briefing of these two cases is completed. The parties are awaiting the scheduling of the hearings before the Federal Circuit. All claims of the IPR Patents remain valid and enforceable until such appeals have been exhausted. Upon the conclusion of such appeals, if we are unsuccessful in whole or in part, the IPR proceedings could result in the loss or narrowing in scope of the IPR Patents, which could limit our ability to stop others from using or commercializing products and technology similar or identical to ours. For more information regarding the risks presented by such proceedings, please see the section of our Annual Report on Form 10-K for the year ended December 31, ~~2019, titled~~2020, entitled “Risk Factors—Risks Related to Our Intellectual Property.”

From time to time, we may become involved in various legal proceedings that arise in the ordinary course of our business. We have received, and may from time to time receive, letters from third parties alleging patent infringement, violation of employment practices or trademark infringement, and we may in the future participate in litigation to defend ourselves. We cannot predict the results of any such disputes, and despite the potential outcomes, the existence thereof may have an adverse material impact on us due to diversion of management time and attention as well as the financial costs related to resolving such disputes.

~~There~~The following risk factors supplement and, to the extent inconsistent, supersede the risk factors disclosed in Part I, Item 1A. “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Annual Report”), filed with the Securities and Exchange Commission on February 26, 2021.

We depend upon third-party suppliers, including single source component suppliers, making us vulnerable to supply problems and price fluctuations.

We rely on third-party suppliers, including some single source suppliers for certain components of our products, to provide us with a portion of our demand for one of our products as well as components used in the manufacturing of our products. In some cases, we purchase supplies through purchase orders and do not have long-term supply agreements with, or guaranteed commitments from, our component suppliers, including single source suppliers. Many of our suppliers and contract manufacturers are not obligated to perform services or supply products for any specific period, in any specific quantity or at any specific price, except as may be provided in a particular purchase order. We depend on our suppliers to provide us and our customers with materials or products in a timely manner that meet our and their quality, quantity and cost requirements. These suppliers may encounter problems during manufacturing for a variety of reasons, including as a result of the ongoing COVID-19 pandemic, any of which could delay or impede their ability to meet our demand. These suppliers may cease producing the products or components we purchase from them or otherwise decide to cease doing business with us. Further, we maintain limited volumes of inventory from most of our suppliers and contract manufacturers. If we inaccurately forecast demand for finished goods, we may be unable to meet customer demand which could harm our competitive position and reputation. In addition, if we fail to effectively manage our relationships with our suppliers and contract manufacturers, we may be required to change suppliers or contract manufacturers. While we believe alternate suppliers exist for all materials, components and services necessary to manufacture our products, establishing additional or replacement suppliers for any of these materials, components or services, if required, could be time-consuming, expensive and may result in interruptions in our operations and product delivery. Even if we are able to find replacement suppliers, we will be required to verify that the new supplier maintains facilities, procedures and operations that comply with our quality expectations and applicable regulatory requirements. Any of these events could require that we obtain a new regulatory authority approval before we implement the change, which could result in further delay or which may not be obtained at all. If our third-party suppliers fail to deliver the required commercial quantities of materials on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost, volumes and quality on a timely basis, the continued commercialization of our products, the supply of our products to customers and the development of any future products will

be delayed, limited or prevented, which could have material adverse effect on our business, financial condition and results of operations.

For example, the COVID-19 pandemic has disrupted the operations of certain of our third-party suppliers, resulting in increased lead-times for our purchases of some components and, in certain cases, requiring us to procure materials from alternate suppliers or incur higher logistics expenses. We have worked closely with our manufacturing partners and suppliers to enable us to source key components and maintain appropriate inventory levels to meet customer demand and have not experienced disruptions in our supply chain to date. However, there is no assurance that we will not experience more significant disruptions in our supply chain in the future, particularly if the operations of our contract manufacturing partners or any of our critical single source component providers are more severely impacted by the pandemic and associated containment measures. Any supply interruption from our suppliers or failure to obtain additional suppliers for products or any of the components used in our products would limit our ability to manufacture our products and could have a material adverse effect on our business, financial condition and results of operations.

Other than the foregoing, there have been no material changes from the risk factors disclosed in Part I, Item ~~IA – Risk Factors contained in our~~1A. “Risk Factors” of the 2020 Annual Report, ~~on Form 10-K for~~as updated by the ~~year ended December 31, 2019 (the “2019 Annual Report”) and~~risk factors discussed in Part II, ~~Item 1A –~~“Item 1A. Risk ~~Factors contained~~Factors” in our Quarterly Report on Form 10-Q for the fiscal quarter ended ~~March 31, 2020 (the “Q120~~June 30, 2021 (“Q2 2021 Quarterly Report”). The risk factors described in ~~those sections,~~our 2020 Annual Report, as updated by our Q2 2021 Quarterly Report and supplemented by the foregoing risk factors as well as other information set forth in this Quarterly Report on Form 10-Q, could materially adversely affect our business, financial condition, results of operations and prospects, and should be carefully considered. The risks and uncertainties that we face, however, are not limited to those described herein, in the ~~2019~~2020 Annual Report and in the ~~Q120~~Q2 2021 Quarterly Report. Additional risks and uncertainties not presently known to us or that we currently believe to be immaterial may also adversely affect our business and the trading price of our securities, particularly in light of the fast-changing nature of the COVID-19 pandemic, containment measures and the related impacts to economic and operating conditions.

The registration statement on Form S-1 (File No. 333-229590) and the registration statement on Form S-1 (File No. 333-230110) filed pursuant to Rule 462(b) relating thereto, each relating to our IPO, became effective on March 6, 2019. The registration statements registered the offer and sale of 6,555,000 shares of our common stock (including 855,000 shares of our common stock subject to the underwriters’ over-allotment option). On March 11, 2019, we completed the sale of all 6,555,000 of the shares of our common stock registered thereunder at an initial public offering price of $17.00 per share for an aggregate offering price of approximately $111.4 million. The underwriters of the offering were Morgan Stanley & Co. LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated. Following the sale of the shares in connection with the closing of our IPO, the offering terminated. We received net proceeds of approximately $99.9 million after deducting underwriting discount and commissions of $7.1 million and offering costs of $4.4 million. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.

~~There has been no material change in the actual or planned use of the proceeds from our IPO from that described in the prospectuses dated March 6, 2019, filed with the SEC pursuant to Rule 424(b)(4).~~

Furnish the exhibits required by Item 601 of Regulation S-K (§ 229.601 of this chapter).

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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)

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

		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~~Income (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	1922
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	2833
Item 4.	Controls and Procedures	2934
PART II.	OTHER INFORMATION	3035
Item 1.	Legal Proceedings	3035
Item 1A.	Risk Factors	3035
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3036
Item 3.	Defaults Upon Senior Securities	3136
Item 4.	Mine Safety Disclosures	3136
Item 5.	Other Information	3136
Item 6.	Exhibits	3237
Signatures		3339

	September 30, 2021
	Level 1		Level 2		Level 3		Total
	(in thousands)
Assets:
U.S. Treasury securities	$	65,235	$	—	$	—	$	65,235
Money market funds		67,705		—		—		67,705
Commercial paper		—		21,385		—		21,385
Corporate bonds		—		5,139		—		5,139
Total assets	$	132,940	$	26,524	$	—	$	159,464

Balance at December 31, 2018	$	313
Change in fair value of warrant liability		609
Net exercise of warrants		(133	)
Conversion of Series A preferred stock warrants to common stock warrants upon the closing of the IPO		(789	)
Balance at March 31, 2019	$	—

	December 31, 2019								December 31, 2020
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
	(in thousands)								(in thousands)
Assets:
U.S. Treasury securities	$	43,245	$	—	$	—	$	43,245	$	126,363	$	—	$	—	$	126,363
Money market funds		29,386		—		—		29,386		35,053		—		—		35,053
Reverse repurchase agreements		—		10,000		—		10,000
Commercial paper		—		6,958		—		6,958		—		31,968		—		31,968
Corporate bonds		—		8,096		—		8,096
Total assets	$	72,631	$	25,054	$	—	$	97,685	$	161,416	$	31,968	$	—	$	193,384

	September 30, 2021
	Amortized Cost Basis		Unrealized Gains		Unrealized Losses			Fair Value
	(in thousands)
U.S. Treasury securities	$	65,242	$	2	$	(9	)	$	65,235
Money market funds		67,705		—		—			67,705
Commercial paper		21,385		—		—		$	21,385
Corporate bonds		5,139		—		—			5,139
Total	$	159,471	$	2	$	(9	)	$	159,464
Reported as:
Cash equivalents								$	67,705
Short-term investments									91,759
Total								$	159,464

	~~March 31,~~ ~~2019~~
~~Expected term (in years)~~		~~5.3~~
~~Expected volatility~~	~~43.9%~~
~~Risk-free interest rate~~	~~2.5%~~
~~Expected dividend yield~~	0%

	September 30,
	2021
	Fair Value

One year or less	$	134,384
Greater than one year and less than two years		25,080
Total	$	159,464

	September 30,		December 31,
	2020		2019
	(in thousands)
Raw material	$	5,030	$	2,501
Work in progress		4,425		1,364
Finished goods		17,601		6,642
Consigned inventory		1,812		1,567
Total inventory	$	28,868	$	12,074

Year ending December 31,	(in thousands)
2021 (remainder)	$	602
2022		2,128
2023		1,535
2024		1,552
2025		1,600
2026		1,643
Thereafter		8,787
Total minimum lease payments	$	17,847
Less: imputed interest and adjustments		(5,041	)
Total lease liability	$	12,806

Year ending December 31:	(in thousands)			(in thousands)
2020 (remainder)	$	146
2021		3,861
2021 (remainder)					146
2022		6,961			6,045
2023		8,294			12,779
Total future payments		19,262			18,970
Less amounts representing interest		(1,194	)		(902	)
Less final payment		(1,568	)		(1,568	)
Total principal amount of term note payments	$	16,500		$	16,500

		~~Nine Months Ended~~ ~~September 30,~~
		~~2019~~
~~Expected term (in years)~~		~~6.08~~
~~Expected volatility~~		~~42.4% - 42.9%~~
~~Risk-free interest rate~~		~~2.4% - 2.6%~~
~~Expected dividend yield~~		0%

	Number of Shares			Weighted- Average Grant Date Fair Value Per Share		Number of Shares			Weighted- Average Grant Date Fair Value Per Share
Balance, December 31, 2019		280,904		$	38.12
Balance, December 31, 2020							859,577		$	48.50
RSUs granted		601,183			44.69		557,355			137.41
RSUs vested		(54,004	)		37.83		(205,807	)		42.98
RSUs forfeited		(29,375	)		41.36		(47,266	)		75.16
Balance, September 30, 2020		798,708		$	42.96
Balance, September 30, 2021							1,163,859		$	90.97

	September 30, 2021
Balance sheet:	(in thousands)
Current assets	$	14,991
Current liabilities		(757	)
Net assets	$	14,234

	Three Months Ended September 30,		Nine Months Ended September 30,
	2021		2021
	(in thousands)
Revenues	$	—	$	—
Loss from operations		758		13,033
Net loss	$	758	$	13,033

Exhibit Number	Description	Form	File No.	Exhibit(s)	Filing Date
10.1	Office Lease (Net), dated as of September 27, 2021, between Bunker Hill Lane Property, LLC, a Delaware limited liability company, as Landlord, and Shockwave Medical, Inc., a Delaware Corporation, as Tenant, for 3003 Bunker Hill Lane, Santa Clara, California.	8-K	001-38829	10.1	September 28, 2021
10.2	First Amendment to Office Lease (Net), dated as of September 27, 2021, by and between Betsy Ross Property, LLC, a Delaware limited liability company, and Shockwave Medical, Inc., a Delaware corporation, relating to 5353 Betsy Ross Drive, and 5403 Betsy Ross Drive, Santa Clara, California.	8-K	001-38829	10.2	September 28, 2021
31.1*	Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS*	Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline Taxonomy Extension Presentation Linkbase Document

~~Exhibit~~ ~~Number~~104	~~Description~~	The cover page from the Company’s Quarterly Report on Form	~~File No.~~	~~Exhibit(s)~~	~~Filing Date~~
~~10.1*†~~	~~Amended~~ 10-Q for the quarter ended September 30, 2021 has been formatted in Inline XBRL and ~~Restated Non-Employee Director Compensation Policy~~	~~S-1/A~~	~~333-229590~~	~~10.11~~	~~February 25, 2019~~
31.1*	~~Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
31.2*	~~Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.~~
32.1*	~~Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
32.2*	~~Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.~~
~~101.INS~~	~~XBRL Instance Document~~
~~101.SCH~~	~~XBRL Taxonomy Extension Schema Document~~
~~101.CAL~~	~~XBRL Taxonomy Extension Calculation Linkbase Document~~
~~101.DEF~~	~~XBRL Taxonomy Extension Definition Linkbase Document~~
~~101.LAB~~	~~XBRL Taxonomy Extension Label Linkbase Document~~
~~101.PRE~~	~~XBRL Taxonomy Extension Presentation Linkbase Document~~contained in Exhibit 101

	Shockwave Medical, Inc.

Date: November ~~10, 2020~~8, 2021	By:	/s/ Douglas Godshall
		Douglas Godshall
		President and Chief Executive Officer

Date: November ~~10, 2020~~8, 2021	By:	/s/ Dan Puckett
		Dan Puckett
		Chief Financial Officer