Penumbra, Inc. Reports Third Quarter 2017 Financial Results

ALAMEDA, Calif., Nov. 7, 2017 — Penumbra, Inc.(NYSE: PEN), a global healthcare company focused on interventional therapies, today reported financial results for the third quarter ended September 30, 2017.

  • Revenue of $83.9 million in the third quarter of 2017, an increase of 24.9%, or 24.1% in constant currency1, over the third quarter of 2016.

Penumbra, Inc. Logo (PRNewsFoto/Penumbra, Inc.)

Third Quarter 2017 Financial Results
Total revenue grew to $83.9 million for the third quarter of 2017 compared to $67.2 million for the third quarter of 2016, an increase of 24.9%, or 24.1% on a constant currency basis. The United States represented 66% of total revenue and international represented 34% of total revenue for the third quarter of 2017. Revenue from sales of neuro products grew to $58.7 million for the third quarter of 2017, an increase of 23.4%, or 22.5% on a constant currency basis, from the third quarter of 2016. Revenue from sales of peripheral vascular products grew to $25.2 million for the third quarter of 2017, an increase of 28.4%, or 27.8% on a constant currency basis, from the third quarter of 2016.

Gross profit was $54.8 million, or 65.3% of total revenue, for the third quarter of 2017, compared to $42.9 million, or 63.8% of total revenue, for the third quarter of 2016.

Total operating expenses were $54.1 million, or 64.5% of total revenue, for the third quarter of 2017, compared to $44.2 million, or 65.8% of total revenue, for the third quarter of 2016. R&D expenses were $8.1 million for the third quarter of 2017, compared to $6.5 million for the third quarter of 2016. SG&A expenses were $46.0 million for the third quarter of 2017, compared to $37.7 million for the third quarter of 2016.

Operating income for the third quarter of 2017 was $0.7 million, compared to operating loss of $1.4 million for the third quarter of 2016. Operating income for the third quarter of 2017 benefited from a $1.2 million net refund of previously paid medical device excise tax.

Full Year 2017 Financial Outlook
The Company is increasing its 2017 guidance for total revenue to be in the range of $324 million to $326 million. This new range compares to the previous range of $312 million to $317 million.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2017 financial results after market close on Tuesday, November 7, 2017 at 5:00 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 99307870), 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 two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on interventional therapies. Penumbra designs, develops, manufactures and markets innovative devices and has a broad portfolio of products that addresses 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 United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark 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 uses results on constant currency as a non-GAAP financial measure in this press release.

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.

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.

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 potential impact of any future 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, 2016 filed with the SEC on February 28, 2017. 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” herein for important information about our use of constant currency results (including reconciliations to the most comparable GAAP measures).

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

September 30,

2017

December 31,

2016

Assets

Current assets:

Cash and cash equivalents

$

65,621

$

13,236

Marketable investments

153,203

115,517

Accounts receivable, net

47,964

43,335

Inventories

90,529

73,012

Prepaid expenses and other current assets

14,464

18,727

Total current assets

371,781

263,827

Property and equipment, net

28,259

21,464

Intangible assets, net

23,821

Goodwill

7,449

Deferred taxes

22,503

22,476

Other non-current assets

5,281

487

Total assets

$

459,094

$

308,254

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

5,768

$

4,110

Accrued liabilities

45,312

31,690

Total current liabilities

51,080

35,800

Deferred rent

6,065

5,083

Other non-current liabilities

18,117

824

Total liabilities

75,262

41,707

Stockholders’ equity:

Common stock

33

31

Additional paid-in capital

389,682

273,865

Accumulated other comprehensive income (loss)

1,204

(4,688)

Accumulated deficit

(7,087)

(2,661)

Total stockholders’ equity

383,832

266,547

Total liabilities and stockholders’ equity

$

459,094

$

308,254

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,

2017

2016(1)

2017

2016(1)

Revenue

$

83,911

$

67,187

$

237,713

$

190,212

Cost of revenue

29,134

24,313

84,298

65,963

Gross profit

54,777

42,874

153,415

124,249

Operating expenses:

Research and development

8,132

6,497

23,260

17,762

Sales, general and administrative

45,962

37,740

132,846

106,685

Total operating expenses

54,094

44,237

156,106

124,447

Income (loss) from operations

683

(1,363)

(2,691)

(198)

Interest income, net

658

631

1,926

1,700

Other expense, net

(647)

(360)

(1,368)

(856)

Income (loss) before income taxes

694

(1,092)

(2,133)

646

Provision for (benefit from) income taxes

456

(12,998)

2,293

(16,564)

Net income (loss)

$

238

$

11,906

$

(4,426)

$

17,210

Net income (loss) per share

-Basic

$

0.01

$

0.39

$

(0.14)

$

0.57

-Diluted

$

0.01

$

0.35

$

(0.14)

$

0.52

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

-Basic

33,446,841

30,604,384

32,766,135

30,269,463

-Diluted

35,664,272

33,755,383

32,766,135

33,367,618

1 We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. Our condensed consolidated statement of operations for the three and nine months ended September 30, 2016 was adjusted to include the impact of ASU 2016-09 adoption. See Notes 2 and 15 in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017 for detailed adoption information.

Penumbra, Inc.

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

(unaudited)

(in thousands)

Three Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2017

2016

$

%

$

$

%

United States

$

55,652

$

44,380

$

11,272

25.4

%

$

$

11,272

25.4

%

International

28,259

22,807

5,452

23.9

%

(555)

4,897

21.5

%

Total

$

83,911

$

67,187

$

16,724

24.9

%

$

(555)

$

16,169

24.1

%

Penumbra, Inc.

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

(unaudited)

(in thousands)

Three Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2017

2016

$

%

$

$

%

Neuro

$

58,670

$

47,534

$

11,136

23.4

%

$

(424)

$

10,712

22.5

%

Peripheral Vascular

25,241

19,653

5,588

28.4

%

(131)

5,457

27.8

%

Total

$

83,911

$

67,187

$

16,724

24.9

%

$

(555)

$

16,169

24.1

%

Penumbra, Inc.

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

(unaudited)

(in thousands)

Nine Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2017

2016

$

%

$

$

%

United States

$

157,559

$

127,484

$

30,075

23.6

%

$

$

30,075

23.6

%

International

80,154

62,728

17,426

27.8

%

315

17,741

28.3

%

Total

$

237,713

$

190,212

$

47,501

25.0

%

$

315

$

47,816

25.1

%

Penumbra, Inc.

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

(unaudited)

(in thousands)

Nine Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2017

2016

$

%

$

$

%

Neuro

$

165,122

$

134,180

$

30,942

23.1

%

$

235

$

31,177

23.2

%

Peripheral Vascular

72,591

56,032

16,559

29.6

%

80

16,639

29.7

%

Total

$

237,713

$

190,212

$

47,501

25.0

%

$

315

$

47,816

25.1

%

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

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

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SOURCE Penumbra, Inc.

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