Penumbra, Inc. Reports Second Quarter 2023 Financial Results

ALAMEDA, Calif., Aug. 1, 2023 — Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the second quarter ended June 30, 2023.

  • Revenue of $261.5 million in the second quarter of 2023, an increase of 25.5% as reported and in constant currency1 compared to the second quarter of 2022.

Second Quarter 2023 Financial Results
Total revenue increased to $261.5 million for the second quarter of 2023 compared to $208.3 million for the second quarter of 2022, an increase of 25.5% as reported and on a constant currency basis. The United States represented 71% of total revenue and international represented 29% of total revenue for the second quarter of 2023. Revenue from sales of vascular products grew to $152.7 million for the second quarter of 2023, an increase of 23.6%, or 23.7% on a constant currency basis. Revenue from sales of neuro products grew to $108.8 million for the second quarter of 2023, an increase of 28.3%, or 28.1% on a constant currency basis.

Gross profit was $166.9 million, or 63.8% of total revenue for the second quarter of 2023, compared to $134.0 million, or 64.3% of total revenue, for the second quarter of 2022. Gross margin is impacted by product mix, regional mix, start-up costs associated with new product launches, and macroeconomic factors such as inflation headwinds. 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 were $149.0 million, or 57.0% of total revenue, for the second 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 $134.2 million, or 64.4% of total revenue, for the second 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 $146.6 million, or 56.1% of total revenue, for the second quarter of 2023, and $132.4 million, or 63.5% of total revenue, for the second quarter of 2022, respectively. R&D expenses were $21.5 million for the second quarter of 2023, compared to $19.6 million for the second quarter of 2022. SG&A expenses were $127.4 million for the second quarter of 2023, compared to $114.6 million for the second quarter of 2022.

Income from operations was $17.9 million for the second quarter of 2023, compared to a loss from operations of $0.1 million for the second 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 $20.3 million for the second quarter of 2023, compared to non-GAAP income from operations1 of $1.6 million for the second 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 $1.05 billion to $1.07 billion, which represents 24% to 26% growth over 2022 revenue of $847.1 million. We continue to expect growth in our global vascular business to be slightly above this range and growth in our global neuro business to be below this range for the full year 2023.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the second quarter 2023 financial results after market close on Tuesday, August 1, 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 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., 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.

1See “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 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 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 or tax deficiencies 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 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 or tax deficiencies 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: 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)

June 30, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

$ 114,167

$ 69,858

Marketable investments

106,896

118,172

Accounts receivable, net

208,965

203,384

Inventories

358,770

334,006

Prepaid expenses and other current assets

39,078

30,279

Total current assets

827,876

755,699

Property and equipment, net

65,958

65,015

Operating lease right-of-use assets

187,494

192,636

Finance lease right-of-use assets

31,751

33,323

Intangible assets, net

76,116

81,161

Goodwill

166,166

166,046

Deferred taxes

66,671

64,213

Other non-current assets

10,500

12,793

Total assets

$ 1,432,532

$ 1,370,886

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$ 25,819

$ 26,679

Accrued liabilities

105,606

106,300

Current operating lease liabilities

10,715

10,033

Current finance lease liabilities

1,984

1,920

Total current liabilities

144,124

144,932

Non-current operating lease liabilities

194,655

198,955

Non-current finance lease liabilities

23,922

24,865

Other non-current liabilities

3,288

3,276

Total liabilities

365,989

372,028

Stockholders’ equity:

Common stock

38

38

Additional paid-in capital

1,000,658

963,040

Accumulated other comprehensive loss

(5,579)

(8,124)

Retained earnings

71,426

43,904

Total stockholders’ equity

1,066,543

998,858

Total liabilities and stockholders’ equity

$ 1,432,532

$ 1,370,886

Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2023

2022

2023

2022

Revenue

$ 261,499

$ 208,344

$ 502,897

$ 412,239

Cost of revenue

94,638

74,309

184,964

150,786

Gross profit

166,861

134,035

317,933

261,453

Operating expenses:

Research and development

21,537

19,559

41,523

40,123

Sales, general and administrative

127,435

114,615

250,513

225,515

Total operating expenses

148,972

134,174

292,036

265,638

Income (loss) from operations

17,889

(139)

25,897

(4,185)

Interest income (expense), net

839

(72)

1,393

(119)

Other income (expense), net

808

(956)

898

(1,967)

Income (loss) before income taxes

19,536

(1,167)

28,188

(6,271)

Provision for (benefit from) income taxes

576

2,520

666

(2,663)

Net income (loss)

$ 18,960

$ (3,687)

$ 27,522

$ (3,608)

Net income (loss) per share:

Basic

$ 0.49

$ (0.10)

$ 0.72

$ (0.10)

Diluted

$ 0.48

$ (0.10)

$ 0.70

$ (0.10)

Weighted average shares outstanding:

Basic

38,320,999

37,767,519

38,254,042

37,707,156

Diluted

39,201,155

37,767,519

39,151,412

37,707,156

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 June 30,

Six Months Ended June 30,

2023

2022

2023

2022

GAAP operating expenses

$ 148,972

$ 134,174

$ 292,036

$ 265,638

GAAP operating expenses includes the effect of the following item:

Amortization of finite lived intangible assets acquired

2,380

1,785

4,759

3,569

Non-GAAP operating expenses

$ 146,592

$ 132,389

$ 287,277

$ 262,069

GAAP income (loss) from operations

$ 17,889

$ (139)

$ 25,897

$ (4,185)

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

Amortization of finite lived intangible assets acquired

2,380

1,785

4,759

3,569

Non-GAAP income (loss) from operations

$ 20,269

$ 1,646

$ 30,656

$ (616)

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

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

June 30, 2023

Three Months Ended

June 30, 2022

Six Months Ended

June 30, 2023

Six Months Ended

June 30, 2022

Net

income

Diluted

EPS

Net (loss)

income

Diluted

EPS

Net

income

Diluted

EPS

Net (loss)

income

Diluted

EPS

GAAP net income (loss)

$ 18,960

$ 0.48

$ (3,687)

$ (0.10)

$ 27,522

$ 0.70

$ (3,608)

$ (0.10)

GAAP net income (loss) includes the effect of the

following items:

Amortization of finite lived intangible assets acquired

2,380

0.06

1,785

0.05

4,759

0.13

3,569

0.10

Tax effect on the non-GAAP adjustment above2

(558)

(0.01)

(416)

(0.01)

(1,116)

(0.03)

(832)

(0.02)

(Excess tax benefits) tax deficiencies related to stock

compensation awards

(3,945)

(0.10)

2,725

0.07

(5,385)

(0.14)

944

0.02

Non-GAAP net income

$ 16,837

$ 0.43

$ 407

$ 0.01

$ 25,780

$ 0.66

$ 73

$ 0.00

Weighted average shares outstanding used to compute:

GAAP diluted EPS

39,201,155

37,767,519

39,151,412

37,707,156

Non-GAAP diluted EPS3

39,201,155

38,686,507

39,151,412

38,722,453

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

2For the three and six months ended June 30, 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 adjustments.

3For the purposes of calculating Non-GAAP diluted EPS for the three and six months ended June 30, 2022, non-GAAP diluted weighted average shares outstanding of 38,686,507 and 38,722,453 respectively were used, as the Company had non-GAAP net income 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 June 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

United States

$ 186,772

$ 141,456

$ 45,316

32.0 %

$ –

$ 45,316

32.0 %

International

74,727

66,888

7,839

11.7 %

(84)

7,755

11.6 %

Total

$ 261,499

$ 208,344

$ 53,155

25.5 %

$ (84)

$ 53,071

25.5 %

Six Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

United States

$ 358,651

$ 285,764

$ 72,887

25.5 %

$ –

$ 72,887

25.5 %

International

144,246

126,475

17,771

14.1 %

2,418

20,189

16.0 %

Total

$ 502,897

$ 412,239

$ 90,658

22.0 %

$ 2,418

$ 93,076

22.6 %

Penumbra, Inc.

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

(unaudited)

(in thousands, except for percentages)

Three Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

Vascular

$ 152,684

$ 123,543

$ 29,141

23.6 %

$ 111

$ 29,252

23.7 %

Neuro

108,815

84,801

24,014

28.3 %

(195)

23,819

28.1 %

Total

$ 261,499

$ 208,344

$ 53,155

25.5 %

$ (84)

$ 53,071

25.5 %

Six Months Ended June 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

Vascular

$ 295,533

$ 246,352

$ 49,181

20.0 %

$ 1,118

$ 50,299

20.4 %

Neuro

207,364

165,887

41,477

25.0 %

1,300

42,777

25.8 %

Total

$ 502,897

$ 412,239

$ 90,658

22.0 %

$ 2,418

$ 93,076

22.6 %

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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