Penumbra Inc.

10/30/2024 | Press release | Distributed by Public on 10/30/2024 14:12

Penumbra, Inc. Reports Third Quarter 2024 Financial Results

ALAMEDA, Calif., Oct. 30, 2024- Penumbra, Inc. (NYSE: PEN), the world's leading thrombectomy company, today reported financial results for the third quarter ended September 30, 2024.

  • Revenue of $301.0 millionin the third quarter of 2024, an increase of 11.1% or 10.9% in constant currency1, compared to the third quarter of 2023.
  • U.S. thrombectomy revenue of $162.1 millionin the third quarter of 2024 increased 21.2% and 5.4% compared to the third quarter of 2023 and second quarter of 2024, respectively, led by growth in our U.S. VTE franchise, which grew 32% compared to the third quarter of 2023.
  • Income from operations of $35.4 millionand Non-GAAP income from operations1 of $40.3 millionin the third quarter of 2024.
  • Net income of $29.5 millionand adjusted EBITDA1 of $56.7 millionor net income margin of 9.8% and adjusted EBITDA margin of 18.8% in the third quarter of 2024.

Third Quarter 2024 Financial Results
Total revenue increased to $301.0 million for the third quarter of 2024 compared to $270.9 million for the third quarter of 2023, an increase of 11.1%, or 10.9% in constant currency1. The United Statesrepresented 75.2% of total revenue and international represented 24.8% of total revenue for the third quarter of 2024. Revenue from the U.S. increased 16.2% while revenue from our international regions decreased 1.9%, or 2.5% in constant currency1. Revenue from sales of our global thrombectomy products grew to $204.1 million in the third quarter of 2024, an increase of 14.0%, or 13.8% in constant currency1 over the same period a year ago, driven primarily by the sales of our U.S. thrombectomy products which increased by 21.2% over the same period a year ago. Revenue from sales of our global embolization and access products grew to $96.9 million for the third quarter of 2024, an increase of 5.5%, or 5.2% in constant currency1 from the same period a year ago, driven primarily by our U.S. embolization and access products which increased by 5.3% from the same period a year ago.

Gross profit for the third quarter of 2024 was $200.3 million, or 66.5% of total revenue compared to $177.7 million, or 65.6% of total revenue, for the third quarter of 2023. Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies. As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future.

Total operating expenses, including $5.0 million of one-time expenses in connection with the wind down of the Immersive Healthcare business during the third quarter of 2024, were $164.9 million, or 54.8% of total revenue for the third quarter of 2024. This compares to total operating expenses of $165.1 million, or 60.9% of total revenue for the third quarter of 2023, which included a one-time $18.2 millionexpense associated with the acquisition of in-process research and development ("IPR&D") and a $2.4 millionamortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. Excluding the charges noted above, total non-GAAP operating expenses1 were $160.0 million, or 53.1% of total revenue, for the third quarter of 2024, and $144.5 million, or 53.3% of total revenue for the third quarter of 2023. R&D expenses were $25.2 millionfor the third quarter of 2024, compared to $21.0 millionfor the third quarter of 2023. SG&A expenses were $139.7 millionfor the third quarter of 2024, compared to $125.9 millionfor the third quarter of 2023.

Income from operations was $35.4 million for the third quarter of 2024, compared to income from operations of $12.6 million for the third quarter of 2023. Excluding one-time expenses in connection with the wind down of the Immersive Healthcare business, non-GAAP income from operations1 was $40.3 million for the third quarter of 2024. This compares to non-GAAP income from operations of $33.2 million for the third quarter of 2023, which excludes the one-time expense associated with the acquired IPR&D and the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition.

Full Year 2024 Financial Outlook
The Company reiterates guidance for total revenue for 2024 to be in the range of $1,180.0 millionto $1,200.0 million. The Company now expects the U.S. thrombectomy franchise will grow 24% to 25% year-over-year, compared to 23% to 25% previously. Excluding the impact from the Immersive Healthcare impairments, the Company also continues to expect gross margin expansion in the range of 100 to 150 basis points and total non-GAAP operating margin expansion in the range of 100 to 200 basis points in 2024 compared to full year 2023.

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2024 financial results after market close on Wednesday, October 30, 2024 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (888) 596-4144 for domestic and international callers (conference id: 5872954), or the webcast can be accessed on the "Events and Presentations" section under the "Investors" tab of the Company's website at: www.penumbrainc.com. The webcast will be available on the Company's website for at least two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., the world's leading thrombectomy company, is focused on developing the most innovative technologies for challenging medical conditions such as ischemic stroke, venous thromboembolism such as pulmonary embolism, and acute limb ischemia. Our broad portfolio, which includes computer assisted vacuum thrombectomy (CAVT), centers on removing blood clots from head-to-toe with speed, safety and simplicity. By pioneering these innovations, we support healthcare providers, hospitals and clinics in more than 100 countries, working to improve patient outcomes and quality of life. For more information, visit www.penumbrainc.com and connect on Instagram, LinkedIn, and X.

Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company uses the following non-GAAP financial measures in this press release: a) constant currency, b) non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share ("EPS") and c) adjusted EBITDA.

Constant Currency. The Company's constant currency revenue disclosures estimate the impact of changes in foreign currency rates on the translation of the Company's current period revenue as compared to the applicable comparable period in the prior year. This impact is derived by taking the current local currency revenue and translating it into U.S. dollars based upon the foreign currency exchange rates used to translate the local currency revenue for the applicable comparable period in the prior year, rather than the actual exchange rates in effect during the current period. It does not include any other effect of changes in foreign currency rates on the Company's results or business.

Non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted EPS. The adjustments to the GAAP financial measures reflect the exclusion of:

  • the effect of the amortization of finite lived intangible assets acquired in connection with the Sixense acquisition over their estimated useful lives;
  • the one-time expense associated with the acquisition of IPR&D in the third quarter of 2023;
  • the excess tax benefits associated with share-based compensation arrangements;
  • non-recurring litigation related expenses;
  • non-cash long-lived asset impairment related to the impairment of our Immersive Healthcare asset group; and
  • one-time expenses in connection with the wind down of the Immersive Healthcare business.

Adjusted EBITDA. The Company's adjusted EBITDA reflects the exclusion from GAAP net income (loss) of:

  • non-cash operating charges such as stock-based compensation, depreciation and amortization, and impairment charges;
  • non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes;
  • non-recurring litigation related expenses; and
  • one-time expenses in connection with the wind down of the Immersive Healthcare business.

Full reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the tables below.

Our management believes the non-GAAP financial measures disclosed in this press release are useful to investors in assessing the operating performance of our business and provide meaningful comparisons to prior periods and thus a more complete understanding of our business than could be obtained absent this disclosure. Specifically, we consider the change in constant currency revenue as a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. We consider non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding non-cash long-lived asset impairment related to the impairment of our Immersive Healthcare asset group, the one-time expense associated with the acquisition of IPR&D in the third quarter of 2023, the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition, the excess tax benefits associated with share-based compensation arrangements, expenses related to certain litigation matters that we have determined are not a normal or recurring part of our business, including settlement costs and legal fees, and one-time expenses in connection with the wind down of the Immersive Healthcare business. Further, we consider adjusted EBITDA a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding non-cash operating charges such as stock-based compensation, depreciation and amortization, and impairment charges, non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes, non-recurring litigation related expenses, and one-time expenses in connection with the wind down of the Immersive Healthcare business.

The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements
Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory or other assets; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and the potential impact of any acquisitions, mergers, dispositions, joint ventures or investments we may make. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2023filed with the SEC on February 22, 2024. There may 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. Any forward-looking statements are based on our current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)

September 30, 2024

December 31, 2023

Assets

Current assets:

Cash and cash equivalents

$ 280,476

$ 167,486

Marketable investments

10,548

121,701

Accounts receivable, net

176,051

201,768

Inventories

393,413

388,023

Prepaid expenses and other current assets

31,265

36,424

Total current assets

891,753

915,402

Property and equipment, net

59,919

72,691

Operating lease right-of-use assets

180,923

188,756

Finance lease right-of-use assets

28,888

31,092

Intangible assets, net

6,920

71,056

Goodwill

166,355

166,270

Deferred taxes

105,851

85,158

Other non-current assets

38,514

25,880

Total assets

$ 1,479,123

$ 1,556,305

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable

$ 33,151

$ 27,155

Accrued liabilities

105,550

110,555

Current operating lease liabilities

12,068

11,203

Current finance lease liabilities

2,416

2,231

Total current liabilities

153,185

151,144

Non-current operating lease liabilities

189,960

197,229

Non-current finance lease liabilities

22,245

23,680

Other non-current liabilities

9,453

5,308

Total liabilities

374,843

377,361

Stockholders' equity:

Common stock

38

39

Additional paid-in capital

1,079,193

1,047,198

Accumulated other comprehensive loss

(963)

(3,151)

Retained earnings

26,012

134,858

Total stockholders' equity

1,104,280

1,178,944

Total liabilities and stockholders' equity

$ 1,479,123

$ 1,556,305

Penumbra, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

Revenue

$ 301,039

$ 270,946

$ 879,097

$ 773,843

Cost of revenue

100,733

93,228

334,823

278,192

Gross profit

200,306

177,718

544,274

495,651

Operating expenses:

Research and development

25,205

20,958

74,773

62,481

Sales, general and administrative

139,737

125,920

426,052

376,433

Acquired in-process research and development

-

18,215

-

18,215

Impairment charge

-

-

76,945

-

Total operating expenses

164,942

165,093

577,770

457,129

Income (loss) from operations

35,364

12,625

(33,496)

38,522

Interest and other income, net

4,414

679

10,026

2,970

Income (loss) before income taxes

39,778

13,304

(23,470)

41,492

Provision for (benefit from) income taxes

10,251

4,090

(3,799)

4,756

Net income (loss)

$ 29,527

$ 9,214

$ (19,671)

$ 36,736

Net income (loss) per share:

Basic

$ 0.76

$ 0.24

$ (0.51)

$ 0.96

Diluted

$ 0.75

$ 0.23

$ (0.51)

$ 0.94

Weighted average shares outstanding:

Basic

38,610,805

38,462,463

38,706,809

38,324,279

Diluted

39,178,227

39,219,966

38,706,809

39,183,635

Penumbra, Inc.
Reconciliation of GAAP Operating Expenses and GAAP Income (Loss) from Operations to Non-GAAP Operating Expenses and
Non-GAAP Income from Operations1
(unaudited)
(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

GAAP operating expenses

$ 164,942

$ 165,093

$ 577,770

$ 457,129

GAAP operating expenses includes the effect of the following
items:

Impairment charge2

-

-

76,945

-

Non-recurring litigation related expenses

-

-

4,823

-

Amortization of finite lived intangible assets acquired

-

2,380

4,759

7,139

Wind down expenses3

4,971

-

4,971

-

Acquired IPR&D4

-

18,215

-

18,215

Non-GAAP operating expenses

$ 159,971

$ 144,498

$ 486,272

$ 431,775

GAAP income (loss) from operations

$ 35,364

$ 12,625

$ (33,496)

$ 38,522

GAAP income (loss) from operations includes the effect of the
following items:

Impairment charge2

-

-

76,945

-

Non-recurring litigation related expenses

-

-

4,823

-

Amortization of finite lived intangible assets acquired

-

2,380

4,759

7,139

Wind down expenses3

4,971

-

4,971

-

Acquired IPR&D4

-

18,215

-

18,215

Non-GAAP income from operations

$ 40,335

$ 33,220

$ 58,002

$ 63,876

______________________

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

2Represents charges associated with the impairment of the Immersive Healthcare asset group during the three months ended June 30, 2024.

3Represents one-time expenses that include severance and other costs related to the wind down of the Immersive Healthcare business during the three and nine months ended September 30, 2024.

4Represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

Penumbra, Inc.
Reconciliation of GAAP Net Income (Loss) and GAAP Diluted EPS to Non-GAAP Net Income and Non-GAAP Diluted EPS1
(unaudited)
(in thousands, except share and per share amounts)

Three Months Ended
September 30, 2024

Three Months Ended
September 30, 2023

Nine Months Ended
September 30, 2024

Nine Months Ended
September 30, 2023

Net
income

Diluted
EPS

Net
income

Diluted
EPS

Net (loss)
income

Diluted
EPS

Net
income

Diluted
EPS

GAAP net income (loss)

$ 29,527

$ 0.75

$ 9,214

$ 0.23

$ (19,671)

$ (0.51)

$ 36,736

$ 0.94

GAAP net income (loss) includes the effect of the
following items:

Impairment charge2

-

-

-

-

76,945

1.96

-

-

Non-recurring litigation related expenses

-

-

-

-

4,823

0.12

-

-

Amortization of finite lived intangible assets
acquired

-

-

2,380

0.07

4,759

0.12

7,139

0.18

Wind down expenses3

4,971

0.13

-

-

4,971

0.13

-

-

Acquired IPR&D4

-

-

18,215

0.46

-

-

18,215

0.46

Tax effects on the non-GAAP adjustments above5

(1,198)

(0.03)

(558)

(0.01)

(22,051)

(0.56)

(1,673)

(0.04)

Excess tax benefits related to stock compensation
awards

(85)

-

(2,987)

(0.08)

(491)

(0.01)

(8,372)

(0.21)

Non-GAAP net income

$ 33,215

$ 0.85

$ 26,264

$ 0.67

$ 49,285

$ 1.25

$ 52,045

$ 1.33

GAAP diluted EPS

$ 0.75

$ 0.23

$ (0.51)

$ 0.94

Non-GAAP diluted EPS6

$ 0.85

$ 0.67

$ 1.25

$ 1.33

Weighted average shares outstanding used to compute:

GAAP diluted EPS

39,178,227

39,219,966

38,706,809

39,183,635

Non-GAAP diluted EPS6

39,178,227

39,219,966

39,334,133

39,183,635

______________________

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

2Represents charges associated with the impairment of the Immersive Healthcare asset group during the three months ended June 30, 2024.

3Represents one-time expenses that include severance and other costs related to the wind down of the Immersive Healthcare business during the three and nine months ended September 30, 2024.

4Represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

5For the three and nine months ended September 30, 2024 and 2023, management used a combined federal and state tax rate of 24.10% and 23.44%, respectively, to compute the tax effect of non-GAAP adjustments.

6For the purposes of calculating Non-GAAP diluted EPS for the nine months ended September 30, 2024, non-GAAP diluted weighted average shares outstanding of 39,334,133 was used, as the Company had non-GAAP net income in the period.

Penumbra, Inc.
Reconciliation of GAAP Net Income (Loss) and GAAP Net Income (Loss) Margin to Adjusted EBITDA and Adjusted EBITDA
Margin1
(unaudited)
(in thousands, except for percentages)

Three Months Ended September 30,

Nine Months Ended September 30,

2024

2023

2024

2023

GAAP net income (loss)

$ 29,527

$ 9,214

$ (19,671)

$ 36,736

Adjustments to GAAP net (loss) income:

Depreciation and amortization expense

4,148

6,933

19,314

20,218

Interest income, net

(3,129)

(1,123)

(9,333)

(2,516)

Provision for (benefit from) income taxes

10,251

4,090

(3,799)

4,756

Stock-based compensation expense

10,940

14,136

34,069

39,725

Impairment charge2

-

-

76,945

-

Non-recurring litigation related expenses

-

-

4,823

-

Wind down expenses3

4,971

-

4,971

-

Acquired IPR&D4

-

18,215

-

18,215

Adjusted EBITDA

$ 56,708

$ 51,465

$ 107,319

$ 117,134

Revenue

$ 301,039

$ 270,946

$ 879,097

$ 773,843

Adjusted EBITDA

$ 56,708

$ 51,465

$ 107,319

$ 117,134

GAAP net income (loss) margin

9.8 %

3.4 %

(2.2) %

4.7 %

Adjusted EBITDA margin

18.8 %

19.0 %

12.2 %

15.1 %

______________________

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

2Represents charges associated with the impairment of the Immersive Healthcare asset group during the three months ended June 30, 2024.

3Represents one-time expenses that include severance and other costs related to the wind down of the Immersive Healthcare business during the three and nine months ended September 30, 2024.

4Represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth1
(unaudited)
(in thousands, except for percentages)

Three Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

United States

$ 226,326

$ 194,816

$ 31,510

16.2 %

$ -

$ 31,510

16.2 %

International

74,713

76,130

(1,417)

(1.9) %

(487)

(1,904)

(2.5) %

Total

$ 301,039

$ 270,946

$ 30,093

11.1 %

$ (487)

$ 29,606

10.9 %

Nine Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

United States

$ 654,150

$ 553,467

$ 100,683

18.2 %

$ -

$ 100,683

18.2 %

International

224,947

220,376

4,571

2.1 %

(595)

3,976

1.8 %

Total

$ 879,097

$ 773,843

$ 105,254

13.6 %

$ (595)

$ 104,659

13.5 %

Penumbra, Inc.
Reconciliation of Revenue Change by Product Categories to Constant Currency Revenue Growth1
(unaudited)
(in thousands, except for percentages)

Three Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

Thrombectomy

$ 204,141

$ 179,080

$ 25,061

14.0 %

$ (259)

$ 24,802

13.8 %

Embolization and Access

96,898

91,866

5,032

5.5 %

(228)

4,804

5.2 %

Total

$ 301,039

$ 270,946

$ 30,093

11.1 %

$ (487)

$ 29,606

10.9 %

Nine Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

Thrombectomy

$ 595,346

$ 486,563

$ 108,783

22.4 %

$ (226)

$ 108,557

22.3 %

Embolization and Access

283,751

287,280

(3,529)

(1.2) %

(369)

(3,898)

(1.4) %

Total

$ 879,097

$ 773,843

$ 105,254

13.6 %

$ (595)

$ 104,659

13.5 %

Penumbra, Inc.
Reconciliation of Revenue Change by Product Categories and Geographic Regions to Constant Currency Revenue Growth1
(unaudited)
(in thousands, except for percentages)

Three Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

Thrombectomy

United States

$ 162,051

$ 133,754

$ 28,297

21.2 %

$ -

$ 28,297

21.2 %

International

42,090

45,326

(3,236)

(7.1) %

(259)

(3,495)

(7.7) %

Total Thrombectomy

204,141

179,080

25,061

14.0 %

(259)

24,802

13.8 %

Embolization and Access

United States

64,275

61,062

3,213

5.3 %

3,213

5.3 %

International

32,623

30,804

1,819

5.9 %

(228)

1,591

5.2 %

Total Embolization and Access

96,898

91,866

5,032

5.5 %

(228)

4,804

5.2 %

Total

$ 301,039

$ 270,946

$ 30,093

11.1 %

$ (487)

$ 29,606

10.9 %

Nine Months Ended
September 30,

Reported Change

FX Impact

Constant Currency Change

2024

2023

$

%

$

$

%

Thrombectomy

United States

$ 466,064

$ 367,994

$ 98,070

26.6 %

$ -

$ 98,070

26.6 %

International

129,282

118,569

10,713

9.0 %

(226)

10,487

8.8 %

Total Thrombectomy

595,346

486,563

108,783

22.4 %

(226)

108,557

22.3 %

Embolization and Access

United States

188,086

185,473

2,613

1.4 %

2,613

1.4 %

International

95,665

101,807

(6,142)

(6.0) %

(369)

(6,511)

(6.4) %

Total Embolization and Access

283,751

287,280

(3,529)

(1.2) %

(369)

(3,898)

(1.4) %

Total

$ 879,097

$ 773,843

$ 105,254

13.6 %

$ (595)

$ 104,659

13.5 %

______________________

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

Investor Relations
Penumbra, Inc.
510-995-2461
[email protected]

View original content to download multimedia:https://www.prnewswire.com/news-releases/penumbra-inc-reports-third-quarter-2024-financial-results-302292024.html

SOURCE Penumbra, Inc.