Penumbra, Inc. Reports Third Quarter 2023 Financial Results

ALAMEDA, Calif., Nov. 2, 2023 — Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the third quarter ended September 30, 2023.

  • Revenue of $270.9 million in the third quarter of 2023, an increase of 26.8% or 25.9% in constant currency1, compared to the third quarter of 2022.
  • Revenue of $179.1 million from sales of our thrombectomy products in the third quarter of 2023, an increase of 38.0%, compared to the third quarter of 2022.
  • Income from operations of $12.6 million and Non-GAAP income from operations1 of $33.2 million in the third quarter of 2023.
  • Net income of $9.2 million and adjusted EBITDA1 of $51.5 million or adjusted EBITDA margin of 19.0% in the third quarter of 2023.
  • Cash and marketable investments increased $27.8 million in the third quarter of 2023 compared to the second quarter of 2023 driven by an increase in profitability and improvements in working capital.

Third Quarter 2023 Financial Results
Total revenue increased to $270.9 million for the third quarter of 2023 compared to $213.7 million for the third quarter of 2022, an increase of 26.8%, or 25.9% on a constant currency basis. The United States represented 72% of total revenue and international represented 28% of total revenue for the third quarter of 2023. We achieved record revenue from the sales of our global thrombectomy products which grew to $179.1 million in the third quarter of 2023, an increase of 38.0% over the same period a year ago and driven by the sales of our global vascular and neuro thrombectomy products which increased by 56.9% and 10.3%, respectively, in the third quarter of 2023. Revenue from our embolization and other products grew to $91.9 million for the third quarter of 2023, an increase of 9.5% over the same period a year ago.

Gross profit was $177.7 million, or 65.6% of total revenue for the third quarter of 2023, compared to $135.3 million, or 63.3% of total revenue, for the third quarter of 2022. Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies. 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 $165.1 million, or 60.9% of total revenue, for the third quarter of 2023, which included a one-time $18.2 million expense associated with the acquisition of in-process research and development (“IPR&D”) and 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 $129.9 million, or 60.8% of total revenue, for the third quarter of 2022, which included a $2.4 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. Excluding these charges, total non-GAAP operating expenses1 were $144.5 million, or 53.3% of total revenue, for the third quarter of 2023, and $127.5 million, or 59.7% of total revenue, for the third quarter of 2022, respectively. R&D expenses were $21.0 million for the third quarter of 2023, compared to $21.3 million for the third quarter of 2022. SG&A expenses were $125.9 million for the third quarter of 2023, compared to $108.6 million for the third quarter of 2022.

Income from operations was $12.6 million for the third quarter of 2023, compared to income from operations of $5.4 million for the third quarter of 2022. Excluding the one-time expense associated with the acquired IPR&D and the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition, non-GAAP income from operations1 was $33.2 million for the third quarter of 2023. This compares to non-GAAP income from operations of $7.8 million for the third quarter of 2022.

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

Full Year 2023 Financial Outlook
For the fourth quarter of 2023, we expect total company revenue growth to accelerate to 28% to 31% year over year, which correlates to the midpoint of our annual guidance range of $1.05 billion to $1.07 billion for full year 2023.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2023 financial results after market close on Thursday, November 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 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.

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, b) non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share (“EPS”) and c) adjusted EBITDA.

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 from operations, non-GAAP net income, and non-GAAP diluted EPS. The adjustments to the GAAP financial measures reflect the exclusion of:

  • the one-time expense associated with the acquisition of IPR&D in the third quarter of 2023;
  • 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.

Adjusted EBITDA. The Company’s adjusted EBITDA reflects the exclusion from GAAP net income (loss) of:

  • non-cash operating charges such as stock-based compensation and depreciation and amortization; and
  • non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes.

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 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 one-time expense associated with the acquisition of IPR&D in the third quarter of 2023, 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. Further, we consider adjusted EBITDA a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding non-cash operating charges such as stock-based compensation and depreciation and amortization and non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes.

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)

September 30, 2023

December 31, 2022

Assets

Current assets:

Cash and cash equivalents

$ 100,757

$ 69,858

Marketable investments

148,098

118,172

Accounts receivable, net

206,615

203,384

Inventories

374,245

334,006

Prepaid expenses and other current assets

38,761

30,279

Total current assets

868,476

755,699

Property and equipment, net

65,632

65,015

Operating lease right-of-use assets

184,520

192,636

Finance lease right-of-use assets

31,364

33,323

Intangible assets, net

73,452

81,161

Goodwill

165,954

166,046

Deferred taxes

64,236

64,213

Other non-current assets

14,743

12,793

Total assets

$ 1,468,377

$ 1,370,886

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$ 27,996

$ 26,679

Accrued liabilities

104,184

106,300

Current operating lease liabilities

10,827

10,033

Current finance lease liabilities

2,071

1,920

Total current liabilities

145,078

144,932

Non-current operating lease liabilities

192,117

198,955

Non-current finance lease liabilities

23,779

24,865

Other non-current liabilities

3,265

3,276

Total liabilities

364,239

372,028

Stockholders’ equity:

Common stock

38

38

Additional paid-in capital

1,030,700

963,040

Accumulated other comprehensive loss

(7,240)

(8,124)

Retained earnings

80,640

43,904

Total stockholders’ equity

1,104,138

998,858

Total liabilities and stockholders’ equity

$ 1,468,377

$ 1,370,886

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,

2023

2022

2023

2022

Revenue

$ 270,946

$ 213,678

$ 773,843

$ 625,917

Cost of revenue

93,228

78,351

278,192

229,137

Gross profit

177,718

135,327

495,651

396,780

Operating expenses:

Research and development

20,958

21,320

62,481

61,443

Sales, general and administrative

125,920

108,573

376,433

334,088

Acquired in-process research and development

18,215

18,215

Total operating expenses

165,093

129,893

457,129

395,531

Income from operations

12,625

5,434

38,522

1,249

Interest income (expense), net

1,123

(43)

2,516

(162)

Other (expense) income, net

(444)

(2,356)

454

(4,323)

Income (loss) before income taxes

13,304

3,035

41,492

(3,236)

Provision for income taxes

4,090

5,306

4,756

2,643

Net income (loss)

$ 9,214

$ (2,271)

$ 36,736

$ (5,879)

Net income (loss) per share:

Basic

$ 0.24

$ (0.06)

$ 0.96

$ (0.16)

Diluted

$ 0.23

$ (0.06)

$ 0.94

$ (0.16)

Weighted average shares outstanding:

Basic

38,462,463

37,918,452

38,324,279

37,778,362

Diluted

39,219,966

37,918,452

39,183,635

37,778,362

Penumbra, Inc.

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

(unaudited)

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

GAAP operating expenses

$ 165,093

$ 129,893

$ 457,129

$ 395,531

GAAP operating expenses includes the effect of the following items:

Amortization of finite lived intangible assets acquired

2,380

2,380

7,139

5,949

Acquired IPR&D2

18,215

18,215

Non-GAAP operating expenses

$ 144,498

$ 127,513

$ 431,775

$ 389,582

GAAP income from operations

$ 12,625

$ 5,434

$ 38,522

$ 1,249

GAAP income from operations includes the effect of the following items:

Amortization of finite lived intangible assets acquired

2,380

2,380

7,139

5,949

Acquired IPR&D2

18,215

18,215

Non-GAAP income from operations

$ 33,220

$ 7,814

$ 63,876

$ 7,198

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

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

September 30, 2023

Three Months Ended

September 30, 2022

Nine Months Ended
September 30, 2023

Nine Months Ended
September 30, 2022

Net
income

Diluted
EPS

Net (loss)
income

Diluted
EPS

Net
income

Diluted
EPS

Net (loss)
income

Diluted
EPS

GAAP net income (loss)

$ 9,214

$ 0.23

$ (2,271)

$ (0.06)

$ 36,736

$ 0.94

$ (5,879)

$ (0.16)

GAAP net income (loss) includes the effect of the following items:

Amortization of finite lived intangible assets acquired

2,380

0.07

2,380

0.06

7,139

0.18

5,949

0.16

Acquired IPR&D2

18,215

0.46

18,215

0.46

Tax effect on the non-GAAP adjustment above3

(558)

(0.01)

(554)

(0.01)

(1,673)

(0.04)

(1,386)

(0.04)

(Excess tax benefits) tax deficiencies related to stock compensation awards

(2,987)

(0.08)

722

0.02

(8,372)

(0.21)

1,666

0.05

Non-GAAP net income

$ 26,264

$ 0.67

$ 277

$ 0.01

$ 52,045

$ 1.33

$ 350

$ 0.01

Weighted average shares outstanding used to compute:

GAAP diluted EPS

39,219,966

37,918,452

39,183,635

37,778,362

Non-GAAP diluted EPS4

39,219,966

38,762,786

39,183,635

38,743,727

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

3For the three and nine months ended September 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. There was no effect on the provision for (benefit from) income taxes related to the acquired IPR&D.

4For the purposes of calculating Non-GAAP diluted EPS for the three and nine months ended September 30, 2022, non-GAAP diluted weighted average shares outstanding of 38,762,786 and 38,743,727, respectively were used, as the Company had non-GAAP net income in the period.

Penumbra, Inc.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin1

(unaudited)

(in thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

GAAP net income (loss)

$ 9,214

$ (2,271)

$ 36,736

$ (5,879)

Adjustments to GAAP net income (loss):

Depreciation and amortization expense

6,933

6,225

20,218

17,880

Interest (income) expense, net

(1,123)

43

(2,516)

162

Provision for income taxes

4,090

5,306

4,756

2,643

Stock-based compensation expense

14,136

9,702

39,725

27,381

Acquired IPR&D2

18,215

18,215

Adjusted EBITDA

$ 51,465

$ 19,005

$ 117,134

$ 42,187

Revenue

$ 270,946

$ 213,678

$ 773,843

$ 625,917

Adjusted EBITDA

$ 51,465

$ 19,005

$ 117,134

$ 42,187

Adjusted EBITDA margin

19.0 %

8.9 %

15.1 %

6.7 %

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

Penumbra, Inc.

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

(unaudited)

(in thousands, except for percentages)

Three Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

United States

$ 194,816

$ 148,819

$ 45,997

30.9 %

$ –

$ 45,997

30.9 %

International

76,130

64,859

11,271

17.4 %

(2,013)

9,258

14.3 %

Total

$ 270,946

$ 213,678

$ 57,268

26.8 %

$ (2,013)

$ 55,255

25.9 %

Nine Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

United States

$ 553,467

$ 434,583

$ 118,884

27.4 %

$ –

$ 118,884

27.4 %

International

220,376

191,334

29,042

15.2 %

40

29,082

15.2 %

Total

$ 773,843

$ 625,917

$ 147,926

23.6 %

$ 40

$ 147,966

23.6 %

Penumbra, Inc.

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

(unaudited)

(in thousands, except for percentages)

Three Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

Vascular

$ 171,407

$ 123,361

$ 48,046

38.9 %

$ (500)

$ 47,546

38.5 %

Neuro

99,539

90,317

9,222

10.2 %

(1,513)

7,709

8.5 %

Total

$ 270,946

$ 213,678

$ 57,268

26.8 %

$ (2,013)

$ 55,255

25.9 %

Nine Months Ended September 30,

Reported Change

FX Impact

Constant Currency Change

2023

2022

$

%

$

$

%

Vascular

$ 466,940

$ 369,712

$ 97,228

26.3 %

$ 458

$ 97,686

26.4 %

Neuro

306,903

256,205

50,698

19.8 %

(418)

50,280

19.6 %

Total

$ 773,843

$ 625,917

$ 147,926

23.6 %

$ 40

$ 147,966

23.6 %

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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