EX-99 2 pen-93019xexhibit991.htm EXHIBIT 99.1

Exhibit 99.1

Penumbra, Inc. Reports Third Quarter 2019 Financial Results

ALAMEDA, Calif., November 7, 2019 (PR Newswire) - 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.

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.

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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.

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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

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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

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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.

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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}

_{Source: Penumbra, Inc.}

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