Penumbra, Inc. Reports Third Quarter 2015 Financial Results

ALAMEDA, Calif.,
Nov. 12, 2015 /PRNewswire/ —
Penumbra, Inc.(NYSE: PEN), a global interventional therapies company, today reported financial results for the third quarter ended
September 30, 2015.

Penumbra, Inc. Logo.
  • Revenue of $50.4 million, an increase of 55.3%, or 61.0% in constant currency1, over the third quarter of 2014.
  • The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised approximately $124.8 million in net proceeds.

Third Quarter 2015 Financial Results

Total revenue grew to
$50.4 million for the third quarter of 2015 compared to
$32.5 million for the third quarter of 2014, an increase of 55.3%, or 61.0% on a constant currency basis. The U.S. represented 70.2% of total revenue and international represented 29.8% of total revenue for the third quarter of 2015. Revenue from sales of neuro products grew to
$36.3 million for the third quarter of 2015 compared to
$27.0 million for the same quarter in 2014, an increase of 34.5%, or 40.9% on a constant currency basis. Revenue from sales of peripheral vascular products grew to
$14.1 million for the third quarter of 2015 compared to
$5.5 million for the same quarter in 2014, an increase of 157.6%, or 159.7% on a constant currency basis.

Gross profit was
$33.5 million, or 66.4% of total revenue, for the third quarter of 2015, compared to
$20.8 million, or 64.1% of total revenue, for the third quarter of 2014.

Total operating expenses were
$31.3 million, or 62.1% of total revenue, for the third quarter of 2015, compared to
$20.5 million, or 63.1% of total revenue, for the third quarter of 2014. R&D expenses were
$4.6 million for the third quarter of 2015, compared to
$3.9 million for the third quarter of 2014. The increase was primarily due to increases in headcount and related compensation expense. SG&A expenses were
$26.8 million for the third quarter of 2015, compared to
$16.6 million for the third quarter of 2014. The increase was primarily due to increases in headcount and related compensation expense as well as increases in legal, professional and consulting expenses associated with operating as a public company.

Net income for the third quarter of 2015 was
$0.9 million, compared to
$0.2 million for the third quarter of 2014.

As of
September 30, 2015, cash and cash equivalents totaled
$159.1 million. This reflects the completion of the Company’s IPO, which closed on
September 23, 2015. In the IPO, Penumbra sold 4.6 million shares of common stock and raised
$124.8 million in net proceeds, after deducting underwriting discounts and commissions and offering expenses.

Webcast and Conference Call Information

Penumbra, Inc. will host a conference call to discuss the third quarter 2015 financial results after market close on Thursday, November 12, 2015 at
4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (877) 201-0168 for domestic callers or (647) 788-4901 for international callers (conference id: 67279996), or the webcast can be accessed on the “Investors” section of the Company’s website at: www.penumbrainc.com. The webcast will be available on the Company’s website for two weeks following the completion of the call.

About Penumbra

Penumbra, Inc., headquartered in
Alameda, California is a global interventional therapies company that designs, develops, manufactures and markets innovative medical devices. The company has a broad portfolio of products that address challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. Penumbra sells its products to hospitals primarily through its direct sales organization in the U.S., most of
Europe,
Canada and
Australia, and through distributors in select international markets. Penumbra and the Penumbra logo are trademarks of
Penumbra, Inc.

Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company has disclosed the following non-GAAP financial measures in this press release: constant currency revenue, non-GAAP net income per share (basic and diluted), non-GAAP net income attributable to common stockholders and non-GAAP weighted average shares used to compute non-GAAP net income per share (basic and diluted).

Our 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 net income per share (basic and diluted) and its components, non-GAAP net income attributable to common stockholders and non-GAAP weighted average shares used to compute non-GAAP net income per share (basic and diluted), (1) exclude the effect of allocating net income (loss) between common stock and participating convertible preferred stock under the two-class method to allocate earnings, and (2) reflect the conversion of our outstanding convertible preferred stock upon the closing of our IPO as if such conversion occurred on a one-for-one basis as of the beginning of the applicable period(s).

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 net income per share (basic and diluted), and its components, as useful metrics as they provide an alternative framework for assessing our profitability as compared to periods prior to our IPO.

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; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; and potential adverse regulatory actions. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the
Securities and Exchange Commission, including our prospectus dated
September 17, 2015. 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.

1 Constant currency results are non-GAAP financial measures. Please refer to “Non-GAAP Financial Measures” below for important information about our use of constant currency results and other non-GAAP financial measures (including reconciliations to the most comparable GAAP measures).

Sara Thompson

Head of Investor Relations

Penumbra, Inc.

510 995 2455

investors@penumbrainc.com

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

September 30,

December 31,

2015

2014

Assets

Current assets:

Cash and cash equivalents

$ 159,098

$ 3,290

Marketable investments

48,253

Accounts receivable, net of doubtful accounts of $494 and $602

26,055

18,912

Inventories

50,324

33,451

Deferred taxes

7,333

6,280

Prepaid expenses and other current assets

6,267

5,115

Total current assets

249,077

115,301

Property and Equipment, net

8,646

5,181

Deferred taxes

1,309

571

Other non-current assets

293

328

Total assets

$ 259,325

$ 121,381

Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Current Liabilities:

Accounts payable

$ 4,024

$ 2,348

Accrued liabilities

24,253

18,475

Total current liabilities

28,277

20,823

Other non-current liabilities

2,458

1,461

Total liabilities

30,735

22,284

Convertible preferred stock

111,467

Stockholders’ Equity (Deficit):

Common stock

30

5

Additional paid-in capital

249,230

8,446

Notes receivable from stockholders

(26)

(117)

Accumulated other comprehensive loss

(1,536)

(864)

Accumulated deficit

(19,108)

(19,840)

Total stockholders’ equity (deficit)

228,590

(12,370)

Total liabilities, convertible preferred stock and stockholders’ equity (deficit)

$ 259,325

$ 121,381

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,

2015

2014

2015

2014

Revenue

$ 50,416

$ 32,464

$ 131,679

$ 90,107

Cost of revenue

16,919

11,667

44,079

31,156

Gross profit

33,497

20,797

87,600

58,951

Operating expenses:

Research and development

4,560

3,897

12,543

11,435

Sales, general and administrative

26,755

16,589

72,698

44,829

Total operating expenses

31,315

20,486

85,241

56,264

Income from operations

2,182

311

2,359

2,687

Interest income (expense), net

17

144

402

183

Other income (expense), net

(115)

(56)

(613)

(148)

Income before provision for income taxes

2,084

399

2,148

2,722

Provision for income taxes

1,183

227

1,416

893

Net income

$ 901

$ 172

$ 732

$ 1,829

Net income (loss) attributable to common stockholders

$ 276

$ (1,192)

$ 175

$ (933)

Net income (loss) per share attributable to common stockholders
—Basic

$ 0.04

$ (0.25)

$ 0.03

$ (0.20)

—Diluted

$ 0.03

$ (0.25)

$ 0.02

$ (0.20)

Weighted average shares used to compute net income (loss) per share
attributable to common stockholders
—Basic

7,853,730

4,688,045

5,962,031

4,577,725

—Diluted

10,189,248

4,688,045

8,494,651

4,577,725

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth1

(unaudited)

(in thousands)

Three Months Ended September 30,

Change

FX Impact

Constant Currency Change

2015

2014

$

%

$

$

%

United States

$ 35,394

$ 22,305

$ 13,089

58.7%

$ –

$ 13,089

58.7%

International

15,022

10,159

4,863

47.9%

1,844

6,707

66.0%

Total

$ 50,416

$ 32,464

$ 17,952

55.3%

$ 1,844

$ 19,796

61.0%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth1

(unaudited)

(in thousands)

Three Months Ended September 30,

Change

FX Impact

Constant Currency Change

2015

2014

$

%

$

$

%

Neuro

$ 36,309

$ 26,988

$ 9,321

34.5%

$ 1,729

$ 11,050

40.9%

Peripheral Vascular

14,107

5,476

8,631

157.6%

115

8,746

159.7%

Total

$ 50,416

$ 32,464

$ 17,952

55.3%

$ 1,844

$ 19,796

61.0%

1 See “Non-GAAP Financial Measures” above for important information about our use of non-GAAP measures and further information about our calculation of constant currency results.

Penumbra, Inc.

Reconciliation of Net Income (Loss) Attributable to Common Stockholders to Non-GAAP Net Income Attributable to Common Stockholders2

(unaudited)

(in thousands, except per share amounts)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Net income (loss) attributable to common stockholders3

$ 276

$ (1,192)

$ 175

$ (933)

Add: Deemed dividend paid to preferred stockholders upon redemption

6,344

6,344

Undistributed income (loss) attributable to preferred stockholders

625

557

Less: Undistributed loss attributable to preferred stockholders

(4,980)

(3,582)

Net income attributable to common stockholders—Non-GAAP

$ 901

$ 172

$ 732

$ 1,829

Basic net income per share—Non-GAAP

$ 0.04

$ 0.01

$ 0.03

$ 0.08

Diluted net income per share—Non-GAAP

$ 0.03

$ 0.01

$ 0.03

$ 0.07

Penumbra, Inc.

Reconciliation of Weighted Average Shares Used to Compute Basic Net Income (Loss) per Share to
Weighted Average Shares Used to Compute Basic and Diluted Non-GAAP Net Income per Share2

(unaudited)

Three Months Ended September 30,

Nine Months Ended September 30,

2015

2014

2015

2014

Weighted average shares used to compute basic net income (loss) per share

7,853,730

4,688,045

5,962,031

4,577,725

Less: Conversion of preferred shares on a weighted average basis upon closing of IPO

(1,696,557)

(571,734)

Add: Conversion of preferred shares on a one-for-one basis at the beginning of the period

19,510,410

19,510,410

19,510,410

19,510,410

Weighted average shares used to compute non-GAAP net income per share—Basic

25,667,583

24,198,455

24,900,707

24,088,135

Potential dilutive options

1,979,194

2,075,046

2,362,685

2,127,880

Potential dilutive restricted stock

356,324

115,402

169,935

82,322

Potential dilutive common warrants

75,896

76,856

Weighted average shares used to compute non-GAAP net income per share—Diluted

28,003,101

26,464,799

27,433,327

26,375,193

2See “Non-GAAP Financial Measures” above for important information about our use of non-GAAP measures and further information about our calculation of non-GAAP net income per share and its components.

3We calculate GAAP net income (loss) attributable to common stockholders under the two-class method required for companies with participating securities.

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SOURCE
Penumbra, Inc.