ALAMEDA, Calif., Nov. 2, 2023 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the third quarter ended September 30, 2023.
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:
Adjusted EBITDA. The Company's adjusted EBITDA reflects the exclusion from GAAP net income (loss) of:
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 | Nine Months Ended | |||||||||||||
Net | Diluted | Net (loss) | Diluted | Net | Diluted | Net (loss) | Diluted | |||||||||
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.
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