EX-99.1 2 pen-63019xexhibit991.htm Document

Exhibit 99.1
image1.jpg
Penumbra, Inc. Reports Second Quarter 2019 Financial Results

ALAMEDA, Calif., August 6, 2019 (PR Newswire) - 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.

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

1

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.
2

Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
June 30, 2019December 31, 2018
Assets
Current assets:
     Cash and cash equivalents$77,261 $67,850 
     Marketable investments109,996 133,039 
Accounts receivable, net 99,011 81,896 
     Inventories132,735 115,741 
     Prepaid expenses and other current assets15,601 12,200 
          Total current assets434,604 410,726 
Property and equipment, net37,940 35,407 
Operating lease right-of-use assets42,476 — 
Intangible assets, net26,031 27,245 
Goodwill7,765 7,813 
Deferred taxes34,661 32,940 
Other non-current assets1,632 875 
         Total assets$585,109 $515,006 
Liabilities and Stockholders’ Equity
Current liabilities:
     Accounts payable$8,743 $8,176 
     Accrued liabilities57,276 57,886 
Current operating lease liabilities3,742 — 
          Total current liabilities69,761 66,062 
Deferred rent— 7,586 
Non-current operating lease liabilities46,146 — 
Other non-current liabilities15,019 18,943 
          Total liabilities130,926 92,591 
Stockholders’ equity:
Common stock35 34 
Additional paid-in capital419,220 415,084 
Accumulated other comprehensive loss (1,514)(1,942)
Retained earnings36,350 9,064 
Total Penumbra, Inc. stockholders’ equity454,091 422,240 
Non-controlling interest92 175 
Total stockholders’ equity454,183 422,415 
Total liabilities and stockholders’ equity$585,109 $515,006 

3

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 revenue40,273 37,386 84,802 73,530 
Gross profit93,928 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 operations12,801 9,283 23,953 13,328 
Interest income, net784 720 1,517 1,469 
Other expense, net(71)(340)(47)(630)
Income before income taxes and equity in losses of unconsolidated investee13,514 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 investee16,249 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:
Basic34,694,228 34,072,223 34,601,270 33,959,997 
Diluted36,214,321 36,116,254 36,214,362 36,030,304 

4

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, 2019Three Months Ended June 30, 2018Six Months Ended June 30, 2019Six 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.



5

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 %
International47,827 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 ImpactConstant Currency Change
 2019 2018 $% $$%
Neuro$81,547 $74,196 $7,351 9.9 %$1,162 $8,513 11.5 %
Vascular52,654 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 %
International93,755 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 ImpactConstant Currency Change
 2019 2018 $% $$%
Neuro$163,018 $145,624 $17,394 11.9 %$2,922 $20,316 14.0 %
Peripheral99,622 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
Source: Penumbra, Inc.


6