ALAMEDA, Calif., Nov. 7,
2019 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a
global healthcare company focused on innovative
therapies, today reported financial results for the third
quarter ended September 30, 2019.
- Revenue of $139.5 million
in the third quarter of 2019, an increase of 24.8%, or 25.5% in
constant currency1, over the third quarter of
2018.
Third Quarter 2019 Financial Results
Total revenue
grew to $139.5 million for the
third quarter of 2019 compared to $111.8 million for the third quarter of
2018, an increase of 24.8%, or 25.5% on a constant currency basis.
The United States represented 65%
of total revenue and international represented 35% of total revenue
for the third quarter of 2019. Revenue from sales of neuro products
grew to $83.2 million for the third
quarter of 2019, an increase of 11.5%, or 12.4% on a constant
currency basis. Revenue from sales of vascular products grew to
$56.3 million for the third
quarter of 2019, an increase of 51.6%, or 52.0% on a constant
currency basis.
Gross profit was $96.0 million, or 68.8% of total revenue,
for the third quarter of 2019, compared to $75.0 million, or 67.1% of total revenue,
for the third quarter of 2018.
Total operating expenses for the third quarter of 2019 were
$83.0 million, or 59.5% of total
revenue. This compares to total operating expenses of $95.9 million, or 85.7% of total revenue, for the
third quarter of 2018, which included a $30.8 million acquired in-process research and
development ("IPR&D") charge in connection with the acquisition
of a controlling interest in MVI Health Inc. Excluding the
IPR&D charge, total adjusted operating expenses2 (a
non-GAAP measure) were $65.0 million,
or 58.2% of total revenue, for the third quarter of 2018. R&D
expenses were $13.7 million for the
third quarter of 2019, compared to $9.1
million for the third quarter of 2018. SG&A expenses
were $69.3 million for the third
quarter of 2019, compared to $55.9 million for the third quarter of
2018.
Operating income for the third quarter of 2019 was $13.0 million. This compares to an operating
loss of $20.8 million for the
third quarter of 2018, including the IPR&D charge. Excluding
the IPR&D charge, adjusted operating income2 (a
non-GAAP measure) was $10.0 million for the third quarter of
2018.
Webcast and Conference Call Information
Penumbra, Inc.
will host a conference call to discuss the third quarter 2019
financial results after market close on Thursday, November 7,
2019 at 4:30 PM Eastern Time. The
conference call can be accessed live over the phone by dialing
(833) 227-5837 for domestic callers or (647) 689-4064 for
international callers (conference id: 4746448), 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) adjusted
operating expenses and adjusted operating income and b)
non-GAAP net income and non-GAAP diluted earnings per share ("EPS")
and b) constant currency.
Adjusted operating expenses and adjusted operating
income. The Company defines adjusted operating expenses as
total operating expenses, excluding the IPR&D charge in
connection with the MVI Health Inc. asset acquisition. Adjusted
operating income is defined as operating income (loss), excluding
the same IPR&D charge.
Adjusted net income (loss) and adjusted diluted
EPS. The Company defines adjusted net income (loss) as net
income (loss), excluding a) the IPR&D charge in connection with
the MVI Health Inc. asset acquisition in the third quarter of 2018,
b) the one-time effect of the transition tax from the Tax Cuts and
Jobs Act of 2017 (the "Tax Reform Act") in the first quarter of
2018, and c) the effects of the excess tax benefits associated with
share-based compensation arrangements, net of any related valuation
allowance. The Company defines adjusted 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 adjusted operating expenses, adjusted operating income,
adjusted net income (loss), and adjusted diluted EPS useful metrics
as they provide an alternative framework for assessing how our
underlying business performed. These metrics exclude the effects of
the IPR&D charge in connection with the MVI Health Inc. asset
acquisition, and, in the case of adjusted net income (loss) and
adjusted diluted EPS, the one-time effect of the transition tax
from the Tax Reform Act, as well as the effects of 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.
2See "Non-GAAP Financial Measures" below for important
information about our use of non-GAAP measures and further
information about our adjusted operating expenses and adjusted
operating income measures.
|
Penumbra,
Inc.
Condensed
Consolidated Balance Sheets
(unaudited)
(in
thousands)
|
|
|
|
September 30,
2019
|
|
December 31,
2018
|
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
111,581
|
|
$
|
67,850
|
|
Marketable
investments
|
|
82,864
|
|
133,039
|
|
Accounts receivable,
net
|
|
101,828
|
|
81,896
|
|
Inventories
|
|
140,359
|
|
115,741
|
|
Prepaid expenses and other
current assets
|
|
14,702
|
|
12,200
|
|
Total current assets
|
|
451,334
|
|
410,726
|
|
Property and
equipment, net
|
|
45,625
|
|
35,407
|
|
Operating lease
right-of-use assets
|
|
41,817
|
|
—
|
|
Intangible assets,
net
|
|
25,494
|
|
27,245
|
|
Goodwill
|
|
7,452
|
|
7,813
|
|
Deferred
taxes
|
|
32,818
|
|
32,940
|
|
Other non-current
assets
|
|
9,630
|
|
875
|
|
Total assets
|
|
$
|
614,170
|
|
$
|
515,006
|
|
Liabilities and
Stockholders' Equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable
|
|
$
|
11,962
|
|
$
|
8,176
|
|
Accrued
liabilities
|
|
70,163
|
|
57,886
|
|
Current operating
lease liabilities
|
|
4,042
|
|
—
|
|
Total current liabilities
|
|
86,167
|
|
66,062
|
|
Deferred
rent
|
|
—
|
|
7,586
|
|
Non-current operating
lease liabilities
|
|
45,400
|
|
—
|
|
Other non-current
liabilities
|
|
15,662
|
|
18,943
|
|
Total liabilities
|
|
147,229
|
|
92,591
|
|
Stockholders'
equity:
|
|
|
|
|
|
Common
stock
|
|
35
|
|
34
|
|
Additional paid-in
capital
|
|
423,474
|
|
415,084
|
|
Accumulated other
comprehensive loss
|
|
(4,010)
|
|
(1,942)
|
|
Retained
earnings
|
|
47,833
|
|
9,064
|
|
Total Penumbra, Inc.
stockholders' equity
|
|
467,332
|
|
422,240
|
|
Non-controlling
interest
|
|
(391)
|
|
175
|
|
Total stockholders'
equity
|
|
466,941
|
|
422,415
|
|
Total liabilities and
stockholders' equity
|
|
$
|
614,170
|
|
$
|
515,006
|
|
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,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
Revenue
|
|
$
|
139,502
|
|
$
|
111,806
|
|
$
|
402,142
|
|
$
|
324,145
|
|
Cost of
revenue
|
|
43,504
|
|
36,794
|
|
128,306
|
|
110,324
|
|
Gross
profit
|
|
95,998
|
|
75,012
|
|
273,836
|
|
213,821
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
Research and
development
|
|
13,733
|
|
9,092
|
|
38,862
|
|
25,298
|
|
Sales, general and
administrative
|
|
69,289
|
|
55,934
|
|
198,045
|
|
165,209
|
|
Acquired in-process
research and development
|
|
—
|
|
30,835
|
|
—
|
|
30,835
|
|
Total operating
expenses
|
|
83,022
|
|
95,861
|
|
236,907
|
|
221,342
|
|
Income (loss) from
operations
|
|
12,976
|
|
(20,849)
|
|
36,929
|
|
(7,521)
|
|
Interest income,
net
|
|
759
|
|
771
|
|
2,276
|
|
2,240
|
|
Other (expense)
income, net
|
|
(772)
|
|
170
|
|
(819)
|
|
(460)
|
|
Income (loss) before
income taxes and equity in losses of unconsolidated
investee
|
|
12,963
|
|
(19,908)
|
|
38,386
|
|
(5,741)
|
|
Provision for
(benefit from) income taxes
|
|
1,963
|
|
1,598
|
|
683
|
|
(5,288)
|
|
Income (loss) before
equity in losses of unconsolidated investee
|
|
11,000
|
|
(21,506)
|
|
37,703
|
|
(453)
|
|
Equity in losses of
unconsolidated investee
|
|
—
|
|
(920)
|
|
—
|
|
(3,101)
|
|
Consolidated net
income (loss)
|
|
$
|
11,000
|
|
$
|
(22,426)
|
|
$
|
37,703
|
|
$
|
(3,554)
|
|
Net loss attributable
to non-controlling interest
|
|
(483)
|
|
(3,496)
|
|
(1,066)
|
|
(3,496)
|
|
Net income (loss)
attributable to Penumbra, Inc.
|
|
$
|
11,483
|
|
$
|
(18,930)
|
|
$
|
38,769
|
|
$
|
(58)
|
|
|
|
|
|
|
|
|
|
|
Net income (loss)
attributable to Penumbra, Inc. per share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.33
|
|
$
|
(0.55)
|
|
$
|
1.12
|
|
$
|
—
|
|
Diluted
|
|
$
|
0.32
|
|
$
|
(0.55)
|
|
$
|
1.07
|
|
$
|
—
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
34,840,370
|
|
34,248,484
|
|
34,681,846
|
|
34,057,216
|
|
Diluted
|
|
36,271,394
|
|
34,248,484
|
|
36,243,222
|
|
34,057,216
|
|
Penumbra,
Inc.
Reconciliation of
GAAP Operating Expenses and Operating Income (Loss) to Adjusted
Operating Expenses and Adjusted Operating
Income1
(unaudited)
(in
thousands)
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP operating
expenses
|
|
$
|
83,022
|
|
$
|
95,861
|
|
$
|
236,907
|
|
$
|
221,342
|
|
GAAP total operating
expenses and operating income (loss) from operations includes the
effect of the following items:
|
|
|
|
|
|
|
|
|
|
Acquired IPR&D in
connection with an asset acquisition2
|
|
—
|
|
30,835
|
|
—
|
|
30,835
|
|
Adjusted operating
expenses
|
|
$
|
83,022
|
|
$
|
65,026
|
|
$
|
236,907
|
|
$
|
190,507
|
|
|
|
|
|
|
|
|
|
|
GAAP operating income
(loss)
|
|
$
|
12,976
|
|
$
|
(20,849)
|
|
$
|
36,929
|
|
$
|
(7,521)
|
|
Adjusted operating
income
|
|
$
|
12,976
|
|
$
|
9,986
|
|
$
|
36,929
|
|
$
|
23,314
|
|
|
Penumbra,
Inc.
Reconciliation of GAAP Net Income (Loss) and Diluted
EPS to Adjusted Net Income and Adjusted Diluted
EPS1
(unaudited)
(in thousands,
except share and per share amounts)
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
GAAP net income
(loss) attributable to Penumbra, Inc.
|
|
$
|
11,483
|
|
$
|
(18,930)
|
|
$
|
38,769
|
|
$
|
(58)
|
|
GAAP net income (loss)
includes the effect of the following items:
|
|
|
|
|
|
|
|
|
|
Acquired IPR&D in
connection with an asset acquisition2
|
|
—
|
|
27,393
|
|
—
|
|
27,393
|
|
Effect of the
transition tax under the Tax Reform Act3
|
|
—
|
|
—
|
|
—
|
|
88
|
|
Excess tax benefits
related to stock compensation awards4
|
|
(2,285)
|
|
(2,156)
|
|
(11,274)
|
|
(13,610)
|
|
Adjusted net
income
|
|
$
|
9,198
|
|
$
|
6,307
|
|
$
|
27,495
|
|
$
|
13,813
|
|
|
|
|
|
|
|
|
|
|
GAAP diluted
EPS
|
|
$
|
0.32
|
|
$
|
(0.55)
|
|
$
|
1.07
|
|
$
|
—
|
|
Adjusted diluted
EPS
|
|
$
|
0.25
|
|
$
|
0.17
|
|
$
|
0.76
|
|
$
|
0.38
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding used to compute:
|
|
|
|
|
|
|
|
|
|
Adjusted diluted
EPS
|
|
36,271,394
|
|
36,125,198
|
|
36,243,222
|
|
36,064,996
|
|
|
|
|
|
|
|
|
|
|
|
1See
"Non-GAAP Financial Measures" above for important information about
our use of non-GAAP measures and further information about our
non-GAAP operating expenses, non-GAAP operating income, non-GAAP
net income and non-GAAP diluted EPS measures.
|
|
|
2On August
31, 2018, the Company acquired a controlling interest in MVI Health
Inc. which was accounted for as an asset acquisition. In connection
with the transaction, the Company recorded a $30.8 million
IPR&D charge during the three and nine months ended September
30, 2018, in the consolidated statements of operations related to
the acquired technology under development from MVI Health Inc. Of
the total IPR&D charge, $27.4 million was attributable to the
net loss of Penumbra, Inc. There was no effect on the provision for
(benefit from) income taxes related to the IPR&D charge for the
three and nine months ended September 30, 2018,
respectively.
|
|
|
3On
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. During the nine months ended September
30, 2018, the Company recorded a provisional tax charge for the
one-time transition tax on the undistributed earnings of its
foreign subsidiaries.
|
|
|
4In
accordance with Accounting Standards Update No. 2016-09,
Improvements to Employee Share-Based Payment Accounting, all excess
tax benefits related to share-based compensation be recognized as
an income tax benefit, instead of in stockholders'
equity.
|
|
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
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
United
States
|
|
$
|
90,272
|
|
$
|
72,991
|
|
$
|
17,281
|
|
23.7
|
%
|
|
$
|
—
|
|
$
|
17,281
|
|
23.7
|
%
|
|
International
|
|
49,230
|
|
38,815
|
|
10,415
|
|
26.8
|
%
|
|
860
|
|
11,275
|
|
29.0
|
%
|
|
Total
|
|
$
|
139,502
|
|
$
|
111,806
|
|
$
|
27,696
|
|
24.8
|
%
|
|
$
|
860
|
|
$
|
28,556
|
|
25.5
|
%
|
|
|
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
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
Neuro
|
|
$
|
83,247
|
|
$
|
74,689
|
|
$
|
8,558
|
|
11.5
|
%
|
|
$
|
704
|
|
$
|
9,262
|
|
12.4
|
%
|
|
Vascular
|
|
56,255
|
|
37,117
|
|
19,138
|
|
51.6
|
%
|
|
156
|
|
19,294
|
|
52.0
|
%
|
|
Total
|
|
$
|
139,502
|
|
$
|
111,806
|
|
$
|
27,696
|
|
24.8
|
%
|
|
$
|
860
|
|
$
|
28,556
|
|
25.5
|
%
|
|
|
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
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
United
States
|
|
$
|
259,157
|
|
$
|
210,070
|
|
$
|
49,087
|
|
23.4
|
%
|
|
$
|
—
|
|
$
|
49,087
|
|
23.4
|
%
|
|
International
|
|
142,985
|
|
114,075
|
|
28,910
|
|
25.3
|
%
|
|
4,608
|
|
33,518
|
|
29.4
|
%
|
|
Total
|
|
$
|
402,142
|
|
$
|
324,145
|
|
$
|
77,997
|
|
24.1
|
%
|
|
$
|
4,608
|
|
$
|
82,605
|
|
25.5
|
%
|
|
|
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
|
|
|
2019
|
|
2018
|
|
$
|
|
%
|
|
$
|
|
$
|
|
%
|
|
Neuro
|
|
$
|
246,265
|
|
$
|
220,318
|
|
$
|
25,947
|
|
11.8
|
%
|
|
$
|
3,624
|
|
$
|
29,571
|
|
13.4
|
%
|
|
Peripheral
|
|
155,877
|
|
103,827
|
|
52,050
|
|
50.1
|
%
|
|
984
|
|
53,034
|
|
51.1
|
%
|
|
Total
|
|
$
|
402,142
|
|
$
|
324,145
|
|
$
|
77,997
|
|
24.1
|
%
|
|
$
|
4,608
|
|
$
|
82,605
|
|
25.5
|
%
|
|
|
|
|
|
|
|
|
|
|
|
1See
"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.