Penumbra, Inc. Reports First Quarter 2020 Financial Results

ALAMEDA, Calif., May 7, 2020 — Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the first quarter ended March 31, 2020.

  • Revenue of $137.3 million in the first quarter of 2020, an increase of 6.9%, or 7.6% in constant currency1, over the first quarter of 2019. Excluding Japan, total revenue in the first quarter of 2020 increased 13.6%, or 14.3% in constant currency1, over the first quarter of 2019.

First Quarter 2020 Financial Results

Total revenue grew to $137.3 million for the first quarter of 2020 compared to $128.4 million for the first quarter of 2019, an increase of 6.9%, or 7.6% on a constant currency basis. The United States represented 70% of total revenue and international represented 30% of total revenue for the first quarter of 2020. Revenue from sales of vascular products grew to $59.3 million for the first quarter of 2020, an increase of 26.2%, or 26.5% on a constant currency basis. Revenue from sales of neuro products declined to $78.1 million for the first quarter of 2020, a decrease of 4.2%, or 3.3% on a constant currency basis.

Gross profit was $88.0 million, or 64.1% of total revenue, for the first quarter of 2020, compared to $83.9 million, or 65.3% of total revenue, for the first quarter of 2019.

Total operating expenses for the first quarter of 2020 were $87.4 million, or 63.6% of total revenue. This compares to total operating expenses of $72.8 million, or 56.6% of total revenue, for the first quarter of 2019. R&D expenses were $12.9 million for the first quarter of 2020, compared to $11.7 million for the first quarter of 2019. SG&A expenses were $74.5 million for the first quarter of 2020, compared to $61.1 million for the first quarter of 2019.

Operating income for the first quarter of 2020 was $0.6 million, compared to an operating income of $11.2 million for the first quarter of 2019.

As of March 31, 2020, cash, cash equivalents and marketable investments totaled $168.2 million. In addition, on April 24, 2020, the Company entered into a secured credit agreement with JPMorgan Chase Bank, N.A., Bank of America, N.A. and Citibank, N.A., that provides for up to $100 million in available revolving borrowing capacity.

Impact of COVID-19 Pandemic

As noted in the Company’s April 6, 2020 press release, the Company began to observe more notable negative impact on business trends in March due to COVID-19. The Company has experienced and believes that the impact of the COVID-19 pandemic on the Company’s business differs by geography and procedure type. Due to the uncertain scope and duration of the pandemic, and uncertain timing of global recovery and economic normalization, we cannot, at this time, reliably estimate the future impact on our operations and financial results.

Webcast and Conference Call Information

Penumbra, Inc. will host a conference call to discuss the first quarter 2020 financial results after market close on Thursday, May 7, 2020 at 5:00 PM Eastern Time. The conference call can be accessed live over the phone by dialing (833) 227-5837 for domestic callers or (647) 689-4064 for international callers (conference id: 3899277), or the webcast can be accessed on the “Events” 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., headquartered in Alameda, California, is a global healthcare company focused on innovative therapies. Penumbra designs, develops, manufactures and markets novel products and has a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. Penumbra sells its products to hospitals primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark of Penumbra, Inc. For more information, visit www.penumbrainc.com.

1

See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

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) non-GAAP net (loss) income and non-GAAP diluted earnings per share (“EPS”) and b) constant currency.

Non-GAAP net (loss) income and non-GAAP diluted EPS. The Company defines non-GAAP net (loss) income as net income attributable to Penumbra, Inc. excluding the effects of the excess tax benefits associated with share-based compensation arrangements. The Company defines non-GAAP diluted EPS as GAAP diluted EPS, excluding the effects of the same item above.

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.

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 (loss) income and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the one-time effects of the transition tax from the Tax Reform Act and the excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance.

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: the impact of the COVID-19 pandemic on our business, results of operations and financial condition; 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 (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 26, 2020. 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)

March 31, 2020

December 31, 2019

Assets

Current assets:

Cash and cash equivalents

$

72,456

$

72,779

Marketable investments

95,766

116,610

Accounts receivable, net

103,963

105,901

Inventories

166,152

152,992

Prepaid expenses and other current assets

15,403

14,852

Total current assets

453,740

463,134

Property and equipment, net

58,698

51,812

Operating lease right-of-use assets

43,168

43717

Finance lease right-of-use assets

39,287

39,924

Intangible assets, net

25,024

25,407

Goodwill

7,509

7,656

Deferred taxes

32,945

31,305

Other non-current assets

3,869

2,946

Total assets

$

664,240

$

665,901

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

15,843

$

15,111

Accrued liabilities

65,335

67,630

Current operating lease liabilities

4,435

4,142

Current finance lease liabilities

2,461

4,165

Total current liabilities

88,074

91,048

Non-current operating lease liabilities

46,416

47,242

Non-current finance lease liabilities

26,483

26,748

Other non-current liabilities

15,150

15,250

Total liabilities

176,123

180,288

Stockholders’ equity:

Common stock

35

35

Additional paid-in capital

435,724

430,659

Accumulated other comprehensive loss

(4,575)

(2,324)

Retained earnings

57,749

57,522

Total Penumbra, Inc. stockholders’ equity

488,933

485,892

Non-controlling interest

(816)

(279)

Total stockholders’ equity

488,117

485,613

Total liabilities and stockholders’ equity

$

664,240

$

665,901

Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended March 31,

2020

2019

Revenue

$

137,329

$

128,439

Cost of revenue

49,320

44,529

Gross profit

88,009

83,910

Operating expenses:

Research and development

12,946

11,667

Sales, general and administrative

74,453

61,091

Total operating expenses

87,399

72,758

Income from operations

610

11,152

Interest income, net

299

733

Other (expense) income, net

(1,655)

24

(Loss) income before income taxes

(746)

11,909

(Benefit from) provision for income taxes

(1,634)

1,455

Consolidated net income

$

888

$

10,454

Net loss attributable to non-controlling interest

(537)

(244)

Net income attributable to Penumbra, Inc.

$

1,425

$

10,698

Net income attributable to Penumbra, Inc. per share:

Basic

$

0.04

$

0.31

Diluted

$

0.04

$

0.30

Weighted average shares outstanding:

Basic

35,042,912

34,507,279

Diluted

36,362,726

36,213,164

Penumbra, Inc.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net (Loss) Income and Non-GAAP Diluted EPS1

(unaudited)

(in thousands, except per share amounts)

Three Months Ended March 31, 2020

Three Months Ended March 31, 2019

Net Income (Loss)

Diluted EPS

Net Income

Diluted EPS

GAAP net income

$

1,425

$

0.04

$

10,698

$

0.30

GAAP net income includes the effect of the following items:

Excess tax benefits related to stock compensation awards

(1,482)

(0.04)

(2,244)

(0.07)

Non-GAAP net (loss) income

$

(57)

$

0.00

$

8,454

$

0.23

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth2

(unaudited)

(in thousands)

Three Months Ended March 31,

Reported Change

FX Impact

Constant Currency Change

2020

2019

$

%

$

$

%

United States

$

95,774

$

82,511

$

13,263

16.1

%

$

$

13,263

16.1

%

International

41,555

45,928

(4,373)

(9.5)

%

855

(3,518)

(7.7)

%

Total

$

137,329

$

128,439

$

8,890

6.9

%

$

855

$

9,745

7.6

%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth2

(unaudited)

(in thousands)

Three Months Ended March 31,

Reported Change

FX Impact

Constant Currency Change

2020

2019

$

%

$

$

%

Neuro

$

78,076

$

81,471

$

(3,395)

(4.2)

%

$

707

$

(2,688)

(3.3)

%

Vascular

59,253

46,968

12,285

26.2

%

148

12,433

26.5

%

Total

$

137,329

$

128,439

$

8,890

6.9

%

$

855

$

9,745

7.6

%

1See “Non-GAAP Financial Measures” above for important information about our use of non-GAAP measures and further information about our non-GAAP net (loss) income and non-GAAP diluted EPS measures.

2See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

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

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SOURCE Penumbra, Inc.

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