Penumbra, Inc. Reports First Quarter 2023 Financial Results

ALAMEDA, Calif., May 2, 2023 — Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the first quarter ended March 31, 2023.

  • Revenue of $241.4 million in the first quarter of 2023, an increase of 18.4%, or 19.7% in constant currency1, compared to the first quarter of 2022.

First Quarter 2023 Financial Results
Total revenue increased to $241.4 million for the first quarter of 2023 compared to $203.9 million for the first quarter of 2022, an increase of 18.4%, or 19.7% on a constant currency basis. The United States represented 71% of total revenue and international represented 29% of total revenue for the first quarter of 2023. Revenue from sales of vascular products grew to $142.8 million for the first quarter of 2023, an increase of 16.3%, or 17.2% on a constant currency basis. US vascular revenue increased 23.0% compared to the first quarter of 2022. Revenue from sales of neuro products grew to $98.5 million for the first quarter of 2023, an increase of 21.5%, or 23.4% on a constant currency basis.

Gross profit was $151.1 million, or 62.6% of total revenue for the first quarter of 2023, compared to $127.4 million, or 62.5% of total revenue, for the first quarter of 2022. Gross margin is impacted by product mix, regional mix and start up costs associated with new product launches. As such, with favorable product mix, improvement in productivity, and 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 were $143.1 million, or 59.3% of total revenue, for the first quarter of 2023, including a $2.4 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. This compares to total operating expenses of $131.5 million, or 64.5% of total revenue, for the first quarter of 2022, including a $1.8 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. Excluding this charge, total non-GAAP operating expenses1 were $140.7 million, or 58.3% of total revenue, for the first quarter of 2023, and $129.7 million, or 63.6% of total revenue, for the first quarter of 2022, respectively. R&D expenses were $20.0 million for the first quarter of 2023, compared to $20.6 million for the first quarter of 2022. SG&A expenses were $123.1 million for the first quarter of 2023, compared to $110.9 million for the first quarter of 2022.

Income from operations was $8.0 million for the first quarter of 2023, compared to a loss from operations of $4.0 million for the first quarter of 2022. Excluding the charge associated with the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition, non-GAAP income from operations1 was $10.4 million for the first quarter of 2023, compared to a non-GAAP loss from operations1 of $2.3 million for the first quarter of 2022.

Updated Full Year 2023 Financial Outlook
The Company is increasing its guidance for 2023 total revenue to be in the range of $1.04 billion to $1.06 billion, which represents 23% to 25% growth over 2022 revenue of $847.1 million. Relative to our total revenue guidance range of 23-25% growth, we expect growth in our vascular business to be slightly above this range and growth in our neuro business to be below this range.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the first quarter 2023 financial results after market close on Tuesday, May 2, 2023 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (888) 330-2443 for domestic and international callers (conference id: 4604622), 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 supports healthcare providers, hospitals and clinics in more than 100 countries. For more information, visit www.penumbrainc.com and connect on Twitter and LinkedIn.

1 See “Non-GAAP Financial Measures” for important information about our use of 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) constant currency and b) non-GAAP operating expenses, non-GAAP income (loss) from operations, non-GAAP net income (loss) and non-GAAP diluted earnings per share (“EPS”).

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 (loss) from operations, non-GAAP net income (loss) 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; and
  • the excess tax benefits associated with share-based compensation arrangements.

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 (loss) from operations, non-GAAP net income (loss) and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition and the excess tax benefits associated with share-based compensation arrangements.

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; 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, 2022 filed with the SEC on February 23, 2023. 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, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

$ 94,688

$ 69,858

Marketable investments

104,409

118,172

Accounts receivable, net

207,364

203,384

Inventories

344,042

334,006

Prepaid expenses and other current assets

35,987

30,279

Total current assets

786,490

755,699

Property and equipment, net

65,224

65,015

Operating lease right-of-use assets

189,839

192,636

Finance lease right-of-use assets

32,569

33,323

Intangible assets, net

78,669

81,161

Goodwill

166,161

166,046

Deferred taxes

65,173

64,213

Other non-current assets

11,173

12,793

Total assets

$ 1,395,298

$ 1,370,886

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$ 28,199

$ 26,679

Accrued liabilities

105,869

106,300

Current operating lease liabilities

10,303

10,033

Current finance lease liabilities

1,957

1,920

Total current liabilities

146,328

144,932

Non-current operating lease liabilities

196,837

198,955

Non-current finance lease liabilities

24,423

24,865

Other non-current liabilities

3,241

3,276

Total liabilities

370,829

372,028

Stockholders’ equity:

Common stock

38

38

Additional paid-in capital

978,826

963,040

Accumulated other comprehensive loss

(6,861)

(8,124)

Retained earnings

52,466

43,904

Total stockholders’ equity

1,024,469

998,858

Total liabilities and stockholders’ equity

$ 1,395,298

$ 1,370,886

Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended March 31,

2023

2022

Revenue

$ 241,398

$ 203,895

Cost of revenue

90,326

76,477

Gross profit

151,072

127,418

Operating expenses:

Research and development

19,986

20,564

Sales, general and administrative

123,078

110,900

Total operating expenses

143,064

131,464

Income (loss) from operations

8,008

(4,046)

Interest income (expense), net

554

(47)

Other income (expense), net

90

(1,011)

Income (loss) before income taxes

8,652

(5,104)

Provision for (benefit from) income taxes

90

(5,183)

Net income

$ 8,562

$ 79

Net income per share:

Basic

$ 0.22

$ 0.00

Diluted

$ 0.22

$ 0.00

Weighted average shares outstanding:

Basic

38,186,342

37,646,122

Diluted

39,075,388

38,708,657

Penumbra, Inc.

Reconciliation of GAAP Operating Expenses and GAAP Income (Loss) from Operations to Non-GAAP Operating Expenses and
Non-GAAP Income (Loss) from Operations1

(unaudited)

(in thousands)

Three Months Ended March 31,

2023

2022

GAAP operating expenses

$ 143,064

$ 131,464

GAAP operating expenses includes the effect of the following item:

Amortization of finite lived intangible assets acquired

2,380

1,785

Non-GAAP operating expenses

$ 140,684

$ 129,679

GAAP income (loss) from operations

$ 8,008

$ (4,046)

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

Amortization of finite lived intangible assets acquired

2,380

1,785

Non-GAAP income (loss) from operations

$ 10,388

$ (2,261)

________________________

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

Penumbra, Inc.

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

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended

March 31, 2023

Three Months Ended

March 31, 2022

Net income

Diluted EPS

Net income (loss)

Diluted EPS

GAAP net income

$ 8,562

$ 0.22

$ 79

$ 0.00

GAAP net income includes the effect of the following items:

Amortization of finite lived intangible assets acquired

2,380

0.06

1,785

0.05

Tax effect on the non-GAAP adjustment above2

(558)

(0.01)

(416)

(0.01)

Excess tax benefits related to stock compensation awards

(1,440)

(0.04)

(1,781)

(0.05)

Non-GAAP net income (loss)

$ 8,944

$ 0.23

$ (333)

$ (0.01)

Weighted average shares outstanding used to compute:

GAAP diluted EPS

39,075,388

38,708,657

Non-GAAP diluted EPS3

39,075,388

37,646,122

________________________

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

2For the three months ended March 31, 2023 and 2022, management used a combined federal and state tax rate of 23.44% and 23.29%, respectively, to compute the tax effect of non-GAAP measures.

3For the purposes of calculating Non-GAAP diluted EPS for the three months ended March 31, 2022, non-GAAP diluted weighted average shares outstanding of 37,646,122 was used, as the Company had a non-GAAP net loss in the period.

Penumbra, Inc.

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

(unaudited)

(in thousands, except for percentages)

Three Months Ended March 31,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

United States

$ 171,879

$ 144,308

$ 27,571

19.1 %

$ –

$ 27,571

19.1 %

International

69,519

59,587

9,932

16.7 %

2,605

12,537

21.0 %

Total

$ 241,398

$ 203,895

$ 37,503

18.4 %

$ 2,605

$ 40,108

19.7 %

Penumbra, Inc.

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

(unaudited)

(in thousands, except for percentages)

Three Months Ended March 31,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

Vascular

$ 142,849

$ 122,809

$ 20,040

16.3 %

$ 1,112

$ 21,152

17.2 %

Neuro

98,549

81,086

17,463

21.5 %

1,493

18,956

23.4 %

Total

$ 241,398

$ 203,895

$ 37,503

18.4 %

$ 2,605

$ 40,108

19.7 %

________________________

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

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

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SOURCE Penumbra, Inc.

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