Penumbra, Inc. Reports Second Quarter 2019 Financial Results

August 6, 2019

ALAMEDA, Calif., Aug. 6, 2019 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the second quarter ended June 30, 2019.

  • Revenue of $134.2 million in the second quarter of 2019, an increase of 22.4%, or 23.8% in constant currency1, over the second quarter of 2018.

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

Second Quarter 2019 Financial Results
Total revenue grew to $134.2 million for the second quarter of 2019 compared to $109.6 million for the second quarter of 2018, an increase of 22.4%, or 23.8% on a constant currency basis. The United States represented 64% of total revenue and international represented 36% of total revenue for the second quarter of 2019. Revenue from sales of neuro products grew to $81.5 million for the second quarter of 2019, an increase of 9.9%, or 11.5% on a constant currency basis. Revenue from sales of vascular products grew to $52.7 million for the second quarter of 2019, an increase of 48.6%, or 49.5% on a constant currency basis.

Gross profit was $93.9 million, or 70.0% of total revenue, for the second quarter of 2019, compared to $72.3 million, or 65.9% of total revenue, for the second quarter of 2018.

Total operating expenses for the second quarter of 2019 were $81.1 million, or 60.5% of total revenue. This compares to total operating expenses of $63.0 million, or 57.4% of total revenue, for the second quarter of 2018. R&D expenses were $13.5 million for the second quarter of 2019, compared to $8.2 million for the second quarter of 2018. SG&A expenses were $67.7 million for the second quarter of 2019, compared to $54.8 million for the second quarter of 2018.

Operating income for the second quarter of 2019 was $12.8 million, compared to operating income of $9.3 million for the second quarter of 2018.

Full Year 2019 Financial Outlook
The Company is increasing its 2019 guidance for total revenue to be in the range of $535 million to $540 million. This new range compares to the previous range of $525 million to $535 million.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the second quarter 2019 financial results after market close on Tuesday, August 6, 2019 at 4:30 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: 9790865), 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 innovative products and has a broad portfolio that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and 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. For more information, visit www.penumbrainc.com.

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 income and non-GAAP diluted earnings per share ("EPS") and b) constant currency.

Non-GAAP net income and non-GAAP diluted EPS. The Company defines non-GAAP net income as net income attributable to Penumbra, Inc. excluding a) the income tax effects from the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act") and b) 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 items 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 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: 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, 2018 filed with the SEC on February 26, 2019. 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.

1See "Non-GAAP Financial Measures" for important information about our use of constant currency and other non-GAAP measures.

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)




June 30, 2019


December 31, 2018

Assets





Current assets:





     Cash and cash equivalents


$

77,261


$

67,850

     Marketable investments


109,996


133,039

Accounts receivable, net


99,011


81,896

     Inventories


132,735


115,741

     Prepaid expenses and other current assets


15,601


12,200

          Total current assets


434,604


410,726

Property and equipment, net


37,940


35,407

Operating lease right-of-use assets


42,476


Intangible assets, net


26,031


27,245

Goodwill


7,765


7,813

Deferred taxes


34,661


32,940

Other non-current assets


1,632


875

         Total assets


$

585,109


$

515,006

Liabilities and Stockholders' Equity





Current liabilities:





     Accounts payable


$

8,743


$

8,176

     Accrued liabilities


57,276


57,886

Current operating lease liabilities


3,742


          Total current liabilities


69,761


66,062

Deferred rent



7,586

Non-current operating lease liabilities


46,146


Other non-current liabilities


15,019


18,943

          Total liabilities


130,926


92,591

Stockholders' equity:





Common stock


35


34

Additional paid-in capital


419,220


415,084

Accumulated other comprehensive loss


(1,514)


(1,942)

Retained earnings


36,350


9,064

Total Penumbra, Inc. stockholders' equity


454,091


422,240

Non-controlling interest


92


175

Total stockholders' equity


454,183


422,415

Total liabilities and stockholders' equity


$

585,109


$

515,006






 

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,



2019


2018


2019


2018

Revenue


$

134,201


$

109,638


$

262,640


$

212,339

Cost of revenue


40,273


37,386


84,802


73,530

Gross profit


93,928


72,252


177,838


138,809

Operating expenses:









Research and development


13,462


8,193


25,129


16,206

Sales, general and administrative


67,665


54,776


128,756


109,275

Total operating expenses


81,127


62,969


153,885


125,481

Income from operations


12,801


9,283


23,953


13,328

Interest income, net


784


720


1,517


1,469

Other expense, net


(71)


(340)


(47)


(630)

Income before income taxes and equity in losses of unconsolidated investee


13,514


9,663


25,423


14,167

Benefit from income taxes


(2,735)


(4,948)


(1,280)


(6,886)

Income before equity in losses of unconsolidated investee


16,249


14,611


26,703


21,053

Equity in losses of unconsolidated investee



(1,230)



(2,181)

Consolidated net income


$

16,249


$

13,381


$

26,703


$

18,872

Net loss attributable to non-controlling interest


(339)



(583)


Net income attributable to Penumbra, Inc.


$

16,588


$

13,381


$

27,286


$

18,872










Net income attributable to Penumbra, Inc. per share:









Basic


$

0.48


$

0.39


$

0.79


$

0.56

Diluted


$

0.46


$

0.37


$

0.75


$

0.52

Weighted average shares outstanding:









Basic


34,694,228


34,072,223


34,601,270


33,959,997

Diluted


36,214,321


36,116,254


36,214,362


36,030,304

 

Penumbra, Inc.

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

(unaudited)

(in thousands, except per share amounts)




Three Months Ended
June 30, 2019


Three Months Ended
June 30, 2018


Six Months Ended
June 30, 2019


Six Months Ended
June 30, 2018



Net income


Diluted
EPS


Net income


Diluted
EPS


Net income


Diluted
EPS


Net income


Diluted
EPS

GAAP net income


$

16,588


$

0.46


$

13,381


$

0.37


$

27,286


$

0.75


$

18,872


$

0.52

GAAP net income includes the effect of the following items:

















Effect of the transition tax under the Tax Reform Act2








88


Excess tax benefits related to stock compensation awards


(6,745)


(0.19)


(8,090)


(0.22)


(8,989)


(0.24)


(11,454)


(0.31)

Non-GAAP net income


$

9,843


$

0.27


$

5,291


$

0.15


$

18,297


$

0.51


$

7,506


$

0.21


















________________________

1See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures and further information about our non-GAAP net income and non-GAAP diluted EPS measures.


2On December 22, 2017, the Tax Reform Act was enacted into law. This new tax law, among other changes, reduces the Company's U.S. federal statutory corporate income tax rate from 34% to 21% effective January 1, 2018. In the six months ended June 30, 2018, the Company recorded a provisional tax charge for the one-time transition tax on the undistributed earnings of its foreign subsidiaries.

 

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth3

(unaudited)

(in thousands)












Three Months Ended June 30,


Reported Change


 FX Impact


Constant Currency Change



2019


2018


$


%


$


$


%

United States


$

86,374


$

71,279


$

15,095


21.2

%


$


$

15,095


21.2

%

International


47,827


38,359


9,468


24.7

%


1,482


10,950


28.5

%

Total


$

134,201


$

109,638


$

24,563


22.4

%


$

1,482


$

26,045


23.8

%










Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth3

(unaudited)

(in thousands)












Three Months Ended June 30,


Reported Change


 FX Impact


Constant Currency Change



2019


2018


$


%


$


$


%

Neuro


$

81,547


$

74,196


$

7,351


9.9

%


$

1,162


$

8,513


11.5

%

Vascular


52,654


35,442


17,212


48.6

%


320


17,532


49.5

%

Total


$

134,201


$

109,638


$

24,563


22.4

%


$

1,482


$

26,045


23.8

%










Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth3

(unaudited)

(in thousands)












Six Months Ended June 30,


Reported Change


 FX Impact


Constant Currency Change



2019


2018


$


%


$


$


%

United States


$

168,885


$

137,080


$

31,805


23.2

%


$


$

31,805


23.2

%

International


93,755


75,259


18,496


24.6

%


3,748


22,244


29.6

%

Total


$

262,640


$

212,339


$

50,301


23.7

%


$

3,748


$

54,049


25.5

%










Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth3

(unaudited)

(in thousands)












Six Months Ended June 30,


Reported Change


 FX Impact


Constant Currency Change



2019


2018


$


%


$


$


%

Neuro


$

163,018


$

145,624


$

17,394


11.9

%


$

2,922


$

20,316


14.0

%

Peripheral


99,622


66,715


32,907


49.3

%


826


33,733


50.6

%

Total


$

262,640


$

212,339


$

50,301


23.7

%


$

3,748


$

54,049


25.5

%

_________________________

3See "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
investors@penumbrainc.com

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SOURCE Penumbra, Inc.

IR Contact

investors@penumbrainc.com

Penumbra, Inc. Headquarters One Penumbra Place
Alameda, CA 94502
USA