10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended September 30, 2015

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Transition Period From             to             

Commission File Number: 001-37557

Penumbra, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	05-0605598
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

One Penumbra Place

1351 Harbor Bay Parkway

Alameda, CA 94502

(Address of principal executive offices and zip code)

(510) 748-3200

(Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes: x    No:  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes:  x    No:  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer	o		Accelerated Filer	o
Non-accelerated filer	x	(Do not check if a smaller reporting Company)	Smaller Reporting Company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes:  o  No:  x

As of October 31, 2015, the registrant had 29,889,955 shares of common stock, par value $0.001 per share, outstanding.

Penumbra, Inc.

FORM 10-Q

TABLE OF CONTENTS

		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014	2
	Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) for the three and nine months ended September 30, 2015 and 2014	3
	Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders' Equity (Deficit) for the nine months ended September 30, 2015	4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	34
Item 4.	Controls and Procedures	35
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	36
Item 1A.	Risk Factors	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 6.	Exhibits	38
Signatures

PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands, except share and per share amounts)

	September 30, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	159,098		$	3,290
Marketable investments	—			48,253
Accounts receivable, net of doubtful accounts of $494 and $602	26,055			18,912
Inventories	50,324			33,451
Deferred taxes	7,333			6,280
Prepaid expenses and other current assets	6,267			5,115
Total current assets	249,077			115,301
Property and equipment, net	8,646			5,181
Deferred taxes	1,309			571
Other non-current assets	293			328
Total assets	$	259,325		$	121,381
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current Liabilities:
Accounts payable	$	4,024		$	2,348
Accrued liabilities	24,253			18,475
Total current liabilities	28,277			20,823
Other non-current liabilities	2,458			1,461
Total liabilities	30,735			22,284
Commitments and contingencies (Note 8)
Convertible preferred stock, $0.001 par value per share—none authorized, issued and outstanding at September 30, 2015; 25,000,000 shares authorized, 19,510,410 shares issued and outstanding at December 31, 2014; aggregate liquidation value $149,361 at December 31, 2014	—			111,467
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value per share—5,000,000 shares authorized, none issued and outstanding at September 30, 2015; None authorized, issued and outstanding at December 31, 2014	—			—
Common stock, $0.001 par value per share—300,000,000 shares authorized, 29,882,621 issued and outstanding at September 30, 2015; 40,000,000 shares authorized, 4,736,689 issued and outstanding at December 31, 2014	30			5
Additional paid-in capital	249,230			8,446
Notes receivable from stockholders	(26		)	(117		)
Accumulated other comprehensive loss	(1,536		)	(864		)
Accumulated deficit	(19,108		)	(19,840		)
Total stockholders’ equity (deficit)	228,590			(12,370		)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	259,325		$	121,381

See accompanying notes to the unaudited condensed consolidated financial statements

2

Penumbra, Inc.

Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

(unaudited)

(in thousands, except share and per share amounts)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Revenue	$	50,416		$	32,464		$	131,679		$	90,107
Cost of revenue	16,919			11,667			44,079			31,156
Gross profit	33,497			20,797			87,600			58,951
Operating expenses:
Research and development	4,560			3,897			12,543			11,435
Sales, general and administrative	26,755			16,589			72,698			44,829
Total operating expenses	31,315			20,486			85,241			56,264
Income from operations	2,182			311			2,359			2,687
Interest income (expense), net	17			144			402			183
Other income (expense), net	(115		)	(56		)	(613		)	(148		)
Income before provision for income taxes	2,084			399			2,148			2,722
Provision for income taxes	1,183			227			1,416			893
Net income	901			172			732			1,829
Foreign currency translation adjustments, net of tax	(303		)	(413		)	(892		)	(507		)
Unrealized gains (losses) on available-for-sale securities, net of tax	—			(266		)	220			(92		)
Comprehensive income (loss)	$	598		$	(507	)	$	60		$	1,230
Net income (loss) attributable to common stockholders (Note 16)	$	276		$	(1,192	)	$	175		$	(933	)
Net income (loss) per share attributable to common stockholders —Basic	$	0.04		$	(0.25	)	$	0.03		$	(0.20	)
—Diluted	$	0.03		$	(0.25	)	$	0.02		$	(0.20	)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders —Basic	7,853,730			4,688,045			5,962,031			4,577,725
—Diluted	10,189,248			4,688,045			8,494,651			4,577,725

See accompanying notes to the unaudited condensed consolidated financial statements

3

Penumbra, Inc.

Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(unaudited)

(in thousands, except share amounts)

	Convertible Preferred Stock					Common Stock				Additional Paid-in Capital			Notes Receivable from Stockholders			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares		Amount			Shares		Amount
Balance at December 31, 2014	19,510,410		$	111,467		4,736,689		$	5	$	8,446		$	(117	)	$	(864	)	$	(19,840	)	$	(12,370	)
Conversion of convertible preferred stock into common stock upon closing of IPO	(19,510,410	)	(111,467		)	19,510,410		19		111,448			—			—			—			111,467
Shares issued upon closing of IPO	—		—			4,600,000		5		124,762			—			—			—			124,767
Issuance of common stock	—		—			1,059,172		1		1,058			—			—			—			1,059
Shares held for tax withholdings	—		—			—		—		(2,525		)	—			—			—			(2,525		)
Repurchase of common stock	—		—			(23,650	)	—		(342		)	—			—			—			(342		)
Stock-based compensation	—		—			—		—		5,126			—			—			—			5,126
Excess tax benefit from stock-based compensation	—		—			—		—		1,257			—			—			—			1,257
Forgiven notes receivable from stockholders	—		—			—		—		—			91			—			—			91
Foreign currency translation adjustment, net of tax of $116	—		—			—		—		—			—			(892		)	—			(892		)
Unrealized gain on investments, net of tax of $159	—		—			—		—		—			—			220			—			220
Net income	—		—			—		—		—			—			—			732			732
Balance at September 30, 2015	—		$	—		29,882,621		$	30	$	249,230		$	(26	)	$	(1,536	)	$	(19,108	)	$	228,590

See accompanying notes to the unaudited condensed consolidated financial statements

4

Penumbra, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)

	Nine Months Ended September 30,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	732		$	1,829
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,227			520
Stock-based compensation	5,126			1,074
Excess tax benefit from stock-based compensation	(1,257		)	—
Provision for doubtful accounts	(108		)	172
Inventory write downs	704			1,398
Write off of note receivable	91			—
Provision for sales returns	675			122
Loss on minority investment	—			150
Loss on disposal of property and equipment	12			30
Realized loss on marketable investments	541			—
Provision for product warranty	299			26
Changes in operating assets and liabilities:
Accounts receivable	(7,383		)	(4,971		)
Inventories	(18,012		)	(5,157		)
Prepaid expenses and other current and non-current assets	(1,706		)	(207		)
Accounts payable	1,501			888
Accrued expenses and other non-current liabilities	4,927			3,133
Net cash used in operating activities	(12,631		)	(993		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable investments	(4,069		)	(48,771		)
Proceeds from sales of marketable investments	52,160			12,737
Purchases of property and equipment	(4,507		)	(1,798		)
Net cash provided by (used in) investing activities	43,584			(37,832		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock, net of issuance costs	—			57,212
Proceeds from issuance of common stock issued in initial public offering, net of issuance costs	125,916			—
Proceeds from exercises of stock options	546			923
Excess tax benefit from stock-based compensation	1,257			—
Repurchase of preferred stock	—			(8,311		)
Repayment of credit facility	—			(6,000		)
Repurchase of common stock and stock options	—			(1,022		)
Payment of employee taxes related to vested common and restricted stock	(2,525		)	—
Net cash provided by financing activities	125,194			42,802
Effect of foreign exchange rate changes on cash and cash equivalents	(339		)	80
Net Increase In Cash And Cash Equivalents	155,808			4,057
CASH AND CASH EQUIVALENTS—Beginning of period	3,290			4,131
CASH AND CASH EQUIVALENTS—End of period	$	159,098		$	8,188
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of convertible preferred stock into common stock	$	111,467		$	—
Purchase of property and equipment funded through accounts payable	$	200		$	85
Deferred issuance costs not yet paid	$	1,149		$	—

See accompanying notes to the unaudited condensed consolidated financial statements

5

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Penumbra, Inc. (the “Company”) is a global interventional therapies company that designs, develops, manufactures and markets innovative medical devices. The Company has a broad portfolio of products that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. The conditions that the Company’s products address include, among others, ischemic stroke, hemorrhagic stroke and various peripheral vascular conditions that can be treated through thrombectomy and embolization procedures.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying interim condensed consolidated balance sheet as of September 30, 2015, the interim condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, the interim condensed consolidated statement of preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2015, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The December 31, 2014 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

 The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2015 and results of its operations for the three and nine months ended September 30, 2015 and 2014, and the cash flows for the nine months ended September 30, 2015 and 2014. The interim results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other future annual or interim period.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and notes thereto contained in the Company’s Prospectus dated September 17, 2015 as filed by the Company with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the Company’s Registration Statement on Form S-1 (“Prospectus”) (File No. 333-206412).

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to provisions for doubtful accounts, sales return reserve, warranty reserves, valuation of inventories, useful lives of property and equipment, income taxes, the valuation of equity instruments and contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.

Segments

The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. The Company determines revenue by geographic area, based on the destination to which it ships its products.

6

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Foreign Currency Translation

The Company’s condensed consolidated financial statements are prepared in United States Dollars (USD). Its foreign subsidiaries use their local currency as their functional currency and maintain their records in the local currency. Accordingly, the assets and liabilities of these subsidiaries are translated into USD using the current exchange rates in effect at the balance sheet date and equity accounts are translated into USD using historical rates. Revenues and expenses are translated using the average exchange rates in effect. The resulting foreign currency translation adjustments are recorded in other comprehensive income in the condensed consolidated balance sheets. Transactions denominated in foreign currency are translated at exchange rates at the date of transaction with foreign currency gains (losses) recorded in other income (expense), net in the condensed consolidated statements of operations and other comprehensive income. The Company recognized net foreign currency transaction gains of $0.1 million and $0.1 million during the three months ended September 30, 2015 and 2014, respectively, and $11,000 and $0.2 million during the nine months ended September 30, 2015 and 2014, respectively.

As the Company’s international operations grow, its risks associated with fluctuation in currency rates will become greater, and the Company will continue to reassess its approach to managing this risk. In addition, currency fluctuations or a weakening USD can increase the costs of the Company’s international expansion. To date, the Company has not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on its operating results and cash flows.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketable investments and accounts receivable. The majority of the Company’s cash is held by one financial institution in the United States in excess of federally insured limits. The Company maintained investments in money market funds that were not federally insured during the year ended December 31, 2014 and held cash in foreign banks of approximately $2.3 million and $0.8 million at September 30, 2015 and December 31, 2014, respectively, that was not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents.

All of the Company’s revenue has been derived from sales of its products in the United States and international markets. The Company uses both its own salesforce and independent distributors to sell its products. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising the Company’s customer base. The Company performs ongoing credit evaluations of its customers, including its distributors, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary.

One customer (a distributor) accounted for 11% and 11%, respectively, of the Company’s revenue during the three months ended September 30, 2015 and 2014. The same customer accounted for 11% and 12%, respectively, of the Company’s revenue during the nine months ended September 30, 2015 and 2014. No customer accounted for greater than 10% of the Company’s accounts receivable balance as of September 30, 2015 or December 31, 2014.

Significant Risks and Uncertainties

The Company is subject to risks common to medical device companies including, but not limited to, new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the potential need to obtain additional financing. The Company is dependent on third party suppliers, in some cases single-source suppliers.

There can be no assurance that the Company’s products will continue to be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.

The Company’s products require approval or clearance from the U.S. Food and Drug Administration prior to commencing commercial sales in the United States. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. Approvals or clearances are also required in foreign jurisdictions in which the Company sells its products. If the Company is denied such approvals or clearances or such approvals or clearances are delayed, it may have a material adverse impact on the Company’s results of operations, financial position and liquidity.

7

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.

Cash, Cash Equivalents and Marketable Investments

The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies and corporate debt securities. All highly liquid investments with stated maturities of three months or less from the date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than three months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks.

The Company determines the appropriate classification of its investments in marketable investments at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable investments have been classified and accounted for as available-for-sale. Investments with remaining maturities of more than one year are viewed by the Company as available to support current operations and are classified as current assets under the caption marketable investments in the accompanying condensed consolidated balance sheets. Investments in marketable investments are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss. Any realized gains or losses on the sale of marketable investments are determined on a specific identification method, and such gains and losses are reflected as a component of other income (expense), net.

Impairment of Marketable Investments

After determining the fair value of available-for-sale debt instruments, gains or losses on these securities are recorded to accumulated other comprehensive income (loss) until either the security is sold or the Company determines that the decline in value is other-than-temporary. The primary differentiating factors that the Company considers in classifying impairments as either temporary or other-than-temporary impairments is the intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value, the length of the time and the extent to which the market value of the investment has been less than cost, the financial condition and near-term prospects of the issuer. There were no other-than-temporary impairments for the three or nine months ended September 30, 2015 and 2014. The Company did not have any marketable investments as of September 30, 2015.

Accounts Receivable

Accounts receivable are stated at invoice value less estimated allowances for doubtful accounts. The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. The Company considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic related risks and economic conditions that may affect a customer’s ability to pay. In cases where there are circumstances that may impair a specific customer’s ability to meet its financial obligations, a specific allowance is recorded against amounts due, and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible.

Inventories

Inventories are stated at the lower of cost (determined under the first-in first-out method) or market. Write downs are provided for raw materials, components or finished goods that are determined to be excessive or obsolete. Market value is determined as the lower of replacement cost or net realizable value. The Company regularly reviews inventory quantities in consideration of actual loss experience, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

The estimate of excess quantities is subjective and primarily dependent on the Company’s estimates of future demand for a particular product or components or raw materials used in the manufacturing of such product. If the estimate of future demand is inaccurate based on actual sales, the Company may increase the write down for excess inventory and record a charge to inventory impairment in the accompanying condensed consolidated statements of operations and comprehensive income. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over demand using the same lower of cost or market approach that has been used to value the inventory. The Company also periodically evaluates inventory quantities in consideration of actual loss experience. As a result of these evaluations, the Company recognized total

8

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

write downs of $0.4 million and $0.9 million for the three months ended September 30, 2015 and 2014, respectively, and $0.7 million and $1.4 million for the nine months ended September 30, 2015 and 2014, respectively.

Property and Equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over five years, which is the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life. Upon retirement or sale, the cost and the related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. There was no impairment of long-lived assets during the three or nine months ended September 30, 2015 and 2014.

Convertible Preferred Stock

The Company, prior to the closing of its initial public offering (“IPO”) on September 23, 2015, classified its outstanding convertible preferred stock as temporary equity in the condensed consolidated balance sheet due to the existence of certain change in control events that were not solely within the Company’s control, including liquidation, sale or transfer of the Company, that could trigger the ability of the holders of the convertible preferred stock to call for redemption of shares. Upon the closing of the IPO, all outstanding shares of convertible preferred stock automatically converted into shares of common stock on a one-for-one basis.

Revenue Recognition

Revenue is comprised of product revenue net of returns, discounts, administration fees and sales rebates. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Evidence of an arrangement consists of customer orders and the Company typically considers delivery to have occurred once title and risk of loss has been transferred and the product has been delivered to the customer. The Company typically recognizes revenue when products are delivered to hospital customers or distributors. However, with respect to products that the Company consigns to hospitals, which primarily consist of coils, the Company recognizes revenue at the time hospitals utilize products in a procedure.

Deferred revenue represents amounts that the Company has already invoiced its customers and are ultimately expected to be recognized as revenue, but for which not all revenue recognition criteria have been met. The Company had a deferred revenue balance of $0.8 million and $1.6 million, as of September 30, 2015 and December 31, 2014, respectively.

The Company’s terms and conditions permit product returns and exchanges, and it records returns reserves in the period when revenue is recognized. Estimates are based on actual historical returns over the prior three years and are recorded as reductions in revenue at the time of sale. Upon recognition, the Company reduces revenue and cost of revenue for the estimated return. Return rates can fluctuate over time, but are sufficiently predictable to allow the Company to estimate expected future product returns.

Cost of Revenue

Cost of revenue includes direct and indirect costs associated with the manufacture of the Company’s products. Direct costs include material and labor, while indirect costs include inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense and other labor and overhead costs incurred in the manufacturing of products. Cost of revenue also includes stock-based compensation, warranty replacement costs, cost of revenue related to product return reserves and excess and obsolete inventory write-downs.

9

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Shipping Costs

Shipping and handling costs charged to customers are recorded as revenue. Shipping and handling costs are included in cost of revenue.

Research and Development (R&D) Expenses

R&D costs primarily consist of product development, clinical and regulatory expenses, materials, depreciation and other costs associated with the development of the Company’s products. R&D costs also include related personnel and consultants’ salaries, benefits and related costs, including stock-based compensation. The Company expenses R&D costs as they are incurred.

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites. The Company estimates preclinical and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered.

Advertising Costs

Advertising costs are included in selling, general and administrative expenses and are expensed as incurred. Advertising costs consist primarily of trade show and booth costs, product demonstration, and marketing materials. Advertising costs were $0.1 million and $0.1 million for the three months ended September 30, 2015 and 2014, respectively, and were $0.4 millionand $0.2 million for the nine months ended September 30, 2015 and 2014, respectively.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation in the financial statements based upon fair value. The fair value of restricted stock awards is determined based on the number of units granted and the closing price of the Company’s common stock as of the grant date. The fair value of stock options is determined as of the grant date using the Black-Scholes option pricing model. The Company’s determination of the fair value of stock options is impacted by its common stock price as well as changes in assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected term that options will remain outstanding, expected common stock price volatility over the term of the option awards, risk-free interest rates and expected dividends.

The fair value is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period) on a straight-line basis. Stock-based compensation expense recognized at fair value includes the impact of estimated forfeitures. The Company estimates future forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. To the extent actual forfeiture results differ from the estimates, the difference is recorded as a cumulative adjustment in the period forfeiture estimates are revised. No compensation cost is recorded for options that do not vest.

Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustments as the underlying equity instruments vest. The fair value of these equity instruments are expensed over the service period.

Estimating the fair value of equity-settled awards as of the grant date using valuation models, such as the Black-Scholes option pricing model, is affected by assumptions regarding a number of complex variables. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. For all stock options granted to date, the Company estimated the volatility data based on a study of publicly traded industry peer companies. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. The Company uses the Staff Accounting Bulletin, or SAB, 110, simplified method to calculate the expected term, which is the average of the contractual term and vesting period.

10

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Income Taxes

The Company accounts for income taxes using the asset and liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance to reduce the net deferred tax assets to their estimated realizable value.

The calculation of the Company’s current provision for income taxes involves the use of estimates, assumptions and judgments while taking into account current tax laws, interpretation of current tax laws and possible outcomes of future tax audits. The Company has established reserves to address potential exposures related to tax positions that could be challenged by tax authorities. Although the Company believes its estimates, assumptions and judgments to be reasonable, any changes in tax law or its interpretation of tax laws and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements.

During interim periods, the Company generally utilizes the estimated annual effective tax rate method which involves the use of forecasted information. The discrete method of calculating the estimated effective tax rate, on the other hand, involves the use of actual year-to-date information. For interim periods where the discrete method of calculating the estimated effective tax rate is determined to be a more reliable method than the estimated annual effective tax rate method, the Company will use the more reliable method to estimate its interim period income tax accrual.

The calculation of the Company’s deferred tax asset balance involves the use of estimates, assumptions and judgments while taking into account estimates of the amounts and type of future taxable income. Actual future operating results and the underlying amount and type of income could differ materially from the Company’s estimates, assumptions and judgments thereby impacting the Company’s financial position and results of operations.

The Company follows the guidance relating to accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in the Company’s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company includes interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. The Company has not incurred any interest or penalties related to unrecognized tax benefits in any of the periods presented.

Comprehensive Income

The Company is required to display comprehensive income and its components as part of the Company’s consolidated financial statements. Comprehensive income consists of net income, unrealized gains on available-for-sale investments and the effects of foreign currency translation.

Deferred Offering Costs

Deferred offering costs, which primarily consisted of direct incremental legal and accounting fees were capitalized prior to the closing of the IPO. Upon closing of the IPO, the deferred offering costs were offset against IPO proceeds.

Net Income (Loss) Per Share of Common Stock

The Company, for the periods prior to the closing of the IPO, calculated its basic and diluted net income (loss) per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. Under the two-class method, the Company determined whether it had net income (loss) attributable to common stockholders, which included the results of operations less current period preferred stock non-cumulative dividends. If it was determined that the Company did have net income (loss) attributable to common stockholders during a period, the related undistributed earnings were then allocated between common stock and the preferred stock based on the weighted average number of shares outstanding during the period to determine the numerator for the basic net income (loss) per share attributable to common stockholders. In computing diluted net income attributable to common stockholders, undistributed earnings were re-allocated to reflect the potential impact of dilutive securities to determine the numerator for the diluted net income per share attributable to common stockholders.

The Company’s basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. The diluted net income

11

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, restricted stock and common stock warrants are considered common stock equivalents.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact of this accounting standard.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers—Deferral of the Effective Date to defer the effective date by one year for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The accounting standard is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this accounting standard

3. Initial Public Offering (IPO)

The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised $124.8 million in net proceeds after deducting underwriting discounts and commissions of $9.7 million and other offering expenses of $3.6 million.

Upon the closing of the IPO, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis.

4. Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company classifies its cash equivalents and marketable investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers and internal

12

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

assumptions of the independent pricing services. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The Company did not own any Level 3 financial assets or liabilities as of September 30, 2015 or December 31, 2014.

During the three and nine months ended September 30, 2015 and 2014, the Company did not record impairment charges related to its marketable investments.

The Company did not have any financial assets and liabilities measured at fair value on a recurring or non-recurring basis as of September 30, 2015.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 by level within the fair value hierarchy (in thousands):

	As of December 31, 2014
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	155	$	—	$	—	$	155
Marketable investments:
U.S. Agency securities	—		6,006		—		6,006
U.S. Treasury	4,009		—		—		4,009
Corporate bonds	—		29,619		—		29,619
Mutual funds	8,619		—		—		8,619
Total	$	12,783	$	35,625	$	—	$	48,408

The Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2014.

During the three and nine months ended September 30, 2015 and 2014, the Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3. The Company did not hold any Level 3 assets or liabilities as of September 30, 2015 or December 31, 2014.

5. Balance Sheet Components

Accounts Receivable, Net

The Company’s allowance for doubtful accounts comprised of the following (in thousands):

	Balance At Beginning Of Period		Charged To Costs And Expenses			Deductions			Balance At End Of Period
Allowance for Doubtful Accounts
For the year ended December 31, 2014	$	471	$	150		$	(19	)	$	602
For the nine months ended September 30, 2015	602		(108		)	—			494

13

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets comprised of the following (in thousands):

	September 30, 2015		December 31, 2014
Prepaid expenses	$	5,772	$	3,130
Income tax receivable	318		1,654
Other current assets	177		331
Prepaid expenses and other current assets	$	6,267	$	5,115

Marketable Investments

The Company did not have any marketable investments as of September 30, 2015.

The Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

Marketable Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Agency securities	$	6,012	$	3	$	(9	)	$	6,006
U.S. Treasury	4,011		—		(2		)	$	4,009
Corporate bonds	29,834		4		(219		)	$	29,619
Mutual funds	8,768		—		(149		)	$	8,619
Total	$	48,625	$	7	$	(379	)	$	48,253

During the nine months ended September 30, 2015, the Company sold all of its marketable investments and recorded a realized loss of $0.5 million. For the nine months ended September 30, 2014, gains or losses realized on the sale of investments were insignificant. As of December 31, 2014, there were no securities that had been in a loss position for more than twelve months.

The contractual maturities of the Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

	December 31, 2014
	Fair Value
Due in one year	$	16,442
Due in one to five years	31,811
Total	$	48,253

Inventories

The components of inventories consisted of the following (in thousands):

	September 30, 2015		December 31, 2014
Raw materials	$	9,477	$	5,105
Work in process	1,244		543
Finished goods	39,603		27,803
Inventories	$	50,324	$	33,451

14

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Machinery and equipment	$	8,166		$	5,089
Furniture and fixtures	2,004			519
Leasehold improvements	1,434			379
Software	744			599
Computers	565			153
Construction in progress	341			1,931
Total property and equipment	13,254			8,670
Less: Accumulated depreciation and amortization	(4,608		)	(3,489		)
Property and equipment, net	$	8,646		$	5,181

Depreciation and amortization expense was $0.5 million and $0.2 million for the three months ended September 30, 2015 and 2014, respectively, and was $1.2 million and $0.5 million for the nine months ended September 30, 2015 and 2014, respectively.

Accrued Liabilities

The following table shows the components of accrued liabilities (in thousands):

	September 30, 2015		December 31, 2014
Payroll and employee-related expenses	$	12,850	$	8,221
Sales return reserve	2,839		2,164
Preclinical and clinical trial cost	1,405		2,319
Deferred revenue	784		1,591
Product warranty	618		314
Sales tax payable	412		306
Income tax payable	54		332
Other accrued liabilities	5,291		3,228
Total accrued liabilities	$	24,253	$	18,475

The estimated product warranty accrual was as follows (in thousands):

	September 30, 2015			December 31, 2014
Balance at the beginning of the period	$	314		$	323
Accruals of warranties issued	545			149
Settlements of warranty claims	(241		)	(158		)
Balance at the end of the period	$	618		$	314

6. Credit Facility

In May 2012, the Company entered into a revolving credit facility of $15.0 million with Wells Fargo Bank, National Association. The credit facility was collateralized by the Company’s investment balances. The interest on the credit facility was based on the daily one-month London Inter-Bank Offered Rate, plus 1.75% and was payable monthly. Any outstanding balance on the credit facility was due in full on June 1, 2015. The credit facility contained customary covenants for credit facilities of this type, including limitations on disposition of assets and changes in control. In May 2014, in conjunction with its Series F preferred stock financing, the Company paid the then outstanding balance on the credit facility and terminated the credit facility.

15

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

7. Related Party Transactions

Notes Receivable from Stockholders

In March 2005, options to purchase 250,000 shares of common stock, subject to repurchase by the Company, were exercised in exchange for a full recourse promissory note totaling $21,250. The note bears interest at 2.92% per year, compounded annually.

In July 2011, options to purchase 5,000 shares of common stock were exercised in exchange for a full recourse promissory note totaling $4,600. The note is noninterest bearing and is due in full on December 31, 2016.

As of September 30, 2015 and December 31, 2014, outstanding promissory notes were $25,850 and $0.1 million, respectively.

8. Commitments and Contingencies

Lease Commitments

The Company leases its offices and other equipment under non-cancelable operating leases that expire at various dates in 2029. Rent expense for the three months ended September 30, 2015 and 2014 was $0.9 million and $0.4 million, respectively, and was $2.3 million and $1.3 million, for the nine months ended September 30, 2015 and 2014, respectively.

 Future minimum lease payments under the non-cancelable operating leases as of September 30, 2015 are as follows (in thousands):

	Lease Payments
Three Months Ending December 31, 2015	$	766
Year Ending December 31:
2016	3,149
2017	3,145
2018	3,141
2019	3,223
2020	3,299
Thereafter	32,486
Total future minimum lease payments	$	49,209

Purchase Commitments

The Company had non-cancellable purchase obligations to suppliers for the nine months ended September 30, 2015 of $11.7 million.

Royalty Obligations

In March 2005, the Company entered into a license agreement that requires the Company to make minimum royalty payments to the licensor, on a quarterly basis. As of September 30, 2015 and December 31, 2014, the license agreement requires minimum annual royalty payments of $0.1 million and $0.1 million in equal quarterly installments, respectively. On each January 1, the quarterly calendar year minimum royalty shall be adjusted to equal the prior year’s minimum royalty adjusted by a percentage equal to the percentage change in the “consumer price index for all urban consumers” for the prior calendar year as reported by the U.S. Department of Labor. Unless terminated earlier, the term of the license agreement shall continue until the expiration of the last to expire patent that covers that licensed product or for the period of 15 years following the first commercial sale of such licensed product, whichever is longer. The first commercial sale occurred in June 2007.

 In April 2012, the Company entered into an agreement that requires the Company to pay a 5% royalty on sales of products covered under applicable patents, on a quarterly basis. The first commercial sale occurred in April 2014. Unless terminated earlier, the royalty term for each applicable product shall continue for fifteen years following the first commercial sale of such patented product, or when the applicable patent covering such product has expired, whichever is sooner.

16

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

In April 2015, the Company entered into a royalty agreement that requires the Company to pay a 2% royalty on sales of certain products covered by the agreement, on a quarterly basis. The Company began the first commercial sale of the covered products in July 2015. Unless terminated earlier, the royalty term for each covered product shall continue for twenty years following the first commercial sale of the covered products.

Royalty expense included in cost of sales for the three months ended September 30, 2015 and 2014 was $0.6 million and $0.3 million, respectively, and was $1.4 million and $0.8 million for the nine months ended September 30, 2015 and 2014, respectively.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual or disclosure at September 30, 2015 or December 31, 2014.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made.

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with such indemnifications has been recorded to date.

Litigation

The Company was made aware of potential product liability claimants who allegedly suffered injuries as a result of aneurysm procedures performed in the United States and the United Kingdom in which the Penumbra Coil 400 was used. The Company has not been served with formal complaints; however, the attorney for the purported U.S. claimant has indicated that a civil suit will be brought against the Company shortly. While specific damages have not been asserted, counsel for the purported claimant indicated that he expects that a jury could award $35 million in damages were this matter to go to trial. This amount is substantially in excess of the Company’s insurance coverage. The attorney for the potential claimant in the United Kingdom has not specified any damage amount. As no litigation has been instituted in either of these cases, and therefore neither the Company nor the potential claimants have engaged in discovery, the Company is unable to assess the merits of the claims. The Company expects to vigorously defend any litigation that might be brought, as the Company believes there would be substantial questions regarding causation, liability and damages.

From time to time, the Company is subject to claims and assessments in the ordinary course of business. The Company is not currently a party to any litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

17

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

9. Convertible Preferred Stock

The convertible preferred stock at December 31, 2014 consisted of the following (in thousands, except shares):

Series	Shares Authorized	Shares Issued and Outstanding	Proceeds, Net of Issuance Costs		Aggregate Liquidation Amount
Series A Preferred Stock	1,000,000	1,000,000	$	299	$	554
Series B Preferred Stock	4,287,486	4,005,338	6,536		11,725
Series C Preferred Stock	4,388,715	4,168,218	13,266		22,238
Series D Preferred Stock	3,944,733	3,881,459	19,647		30,976
Series E Preferred Stock	1,973,684	1,909,940	14,507		21,609
Series F Preferred Stock	5,303,031	4,545,455	57,212		62,259
Undesignated	4,102,351	—	—		—
Total preferred stock	25,000,000	19,510,410	$	111,467	$	149,361

Upon the closing of the IPO on September 23, 2015, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis and the related balance was reclassified from temporary equity to common stock and additional paid-in capital.

10. Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding.

11. Warrants

In connection with the sale of Series B preferred stock in 2004, the Company issued warrants to purchase 211,138 shares of common stock at a purchase price of $0.01 per share. The warrants were exercisable upon grant and had a term of 10 years from the date of grant, which expired on December 31, 2014. The value of the warrants was calculated using Black-Scholes option pricing model and was deemed to be immaterial. No warrants were outstanding as of September 30, 2015 or December 31, 2014.

12. Stock Option Plans

2005 Stock Plan

The Company adopted its 2005 Stock Plan (the 2005 Plan) in January 2005. The 2005 Plan was subsequently amended and restated in 2006, 2007, 2008 and 2010. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 5,431,017 and 5,431,017 shares of common stock, respectively, under the 2005 Plan, of which options to purchase 1,767,324 and 2,707,176 shares of common stock were outstanding, and options to purchase 15,662 and 33,081 shares of common stock had been early exercised and were unvested and subject to repurchase, as of September 30, 2015 and December 31, 2014, respectively. Under the 2005 Plan, the board of directors could grant incentive stock options (ISO), nonqualified stock options (NSO), or stock awards to eligible persons, including employees, nonemployees, directors, consultants and other independent advisors who provide services to the Company. Stock purchase rights could also be granted under the Plan. The board of directors had the authority to determine to whom options would be granted, the number of options, the term and the exercise price. ISOs could only be granted to Company employees, which include officers and directors of the Company. NSOs and stock purchase rights could be granted to employees and consultants. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price for an ISO could not be less than 110% of fair market value. Options are exercisable immediately upon the optionee entering into a restricted stock purchase agreement with respect to any unvested options. Options generally vest annually at a rate of 1/4 after the first year and 1/48 per month thereafter. The term of the options is no longer than five years for ISOs, for which the grantee owns greater than 10% of the voting power of all classes of stock and no longer than 10 years for all other options.

18

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

2011 Equity Incentive Plan

The Company adopted its 2011 Equity Incentive Plan (the 2011 Plan) in October 2011. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 145,000 and 145,000 shares of common stock, respectively, under the 2011 Plan, of which options to purchase 145,000 and 145,000 shares of common stock were outstanding at September 30, 2015 and December 31, 2014, respectively. The Company had also granted 505,000 and 505,000 shares of restricted stock under the 2011 Plan, of which 249,125 and 367,126 shares were unvested and subject to forfeiture and 4,667 and 1,667 shares had been forfeited as of September 30, 2015 and December 31, 2014, respectively. Under the 2011 Plan, the board of directors could grant ISOs, NSOs, restricted stock, or restricted stock units (RSU) to eligible persons, including employees, directors and consultants who provide services to the Company. Stock Appreciation Rights (SAR) could also be granted under the 2011 Plan. The board of directors had the authority to determine to whom options would be granted, the number of options, the term and the exercise price. ISOs could only be granted to Company employees, which include officers and directors of the Company. NSOs, SARs, restricted stock and RSUs could be granted to employees and consultants. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price for an ISO could not be less than 110% of fair market value. Stock options granted under the 2011 Plan generally have a contractual life of ten years, and generally vest over a period of four years.

Amended and Restated 2014 Equity Incentive Plan

The Company adopted its 2014 Equity Incentive Plan in May, 2014. This plan was amended and restated as of the business day immediately prior to the date of the Prospectus (as amended and restated, the 2014 Plan). The 2014 Plan replaced the 2011 Plan and the 2005 Plan. No further equity awards may be granted under the 2011 Plan or the 2005 Plan. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 1,857,900 and 48,500 shares of common stock under the 2014 Plan, 1,853,770 and 48,500 of which were outstanding and 4,130 and 1,000 options had been forfeited as of September 30, 2015 and December 31, 2014, respectively. The Company had also granted 673,361 and 0 shares of restricted stock under the 2014 Plan, as of September 30, 2015 and December 31, 2014, respectively, of which 510,146 and 0 shares were unvested and subject to forfeiture as of such dates.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan ESPP became effective on September 17, 2015. Under the ESPP, 600,000 shares of common stock are initially reserved for issuance, with the number of shares reserved for issuance automatically increasing each year pursuant to an “evergreen” provision set forth in the ESPP. All employees of the Company and its designated subsidiaries are eligible to participate in the ESPP. Each offering to the Company’s employees to purchase stock under the ESPP will begin on each May 20 and November 20 and will end on the following November 19 and May 19, respectively, each referred to as offering periods, except that the first offering period under the ESPP began on September 17, 2015 and will end on May 19, 2016. Under the ESPP, each employee may purchase shares by authorizing payroll deductions at a minimum of 1% and up to 15% of his or her eligible compensation for each pay period. Unless the participating employee withdraws from the offering, his or her accumulated payroll deductions will be used to purchase the Company’s common stock on the last business day of the offering period at a price equal to 85% of the fair market value of the common stock on either the first or the last day of the offering period, whichever is lower, provided that no more than 2,000 shares of the Company’s common stock or such other lesser maximum number established by the plan administrator may be purchased by any one employee during each offering period. Under applicable tax rules, an employee may purchase no more than $25,000 worth of common stock, valued at the start of the purchase period, under the ESPP in any calendar year.

19

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Early Exercises

Stock options granted under the 2005 Plan, 2011 Plan and 2014 Plan allow the board of directors to grant awards to provide employee option holders the right to elect to exercise unvested options in exchange for restricted common stock. Unvested shares, which amounted to 15,662 and 33,081 as of September 30, 2015 and December 31, 2014, respectively, were subject to a repurchase right held by the Company at the original issue price in the event the optionees’ employment was terminated either voluntarily or involuntarily. For exercises of employee options, this right lapses according to the vesting schedule designated on the associated option grant. The repurchase terms are considered to be a forfeiture provision. The shares purchased by the employees pursuant to the early exercise of stock options are not deemed to be issued or outstanding for accounting purposes until those shares vest, though they are legally issued and outstanding. In addition, cash received from employees for exercise of unvested options is treated as a refundable deposit shown as a liability on the consolidated balance sheets. As of September 30, 2015 and December 31, 2014, cash received related to unvested shares totaled $0.1 million and $0.1 million, respectively. Amounts recorded are transferred into common stock and additional paid-in-capital as the shares vest.

The following table summarizes the activity of stock options during the nine months ended September 30, 2015:

	Number of Shares		Weighted- Average Exercise Price
Balance, December 31, 2014	2,900,676		$	2.66
Options granted	1,809,400		21.47
Options exercised	(938,456	)	0.95
Options cancelled	(5,526	)	11.14
Balance, September 30, 2015	3,766,094		12.11

The weighted average grant date fair value of the employee stock options granted during the nine months ended September 30, 2015 was $9.69 per share.

The following table summarizes the activity of unvested restricted stock during the nine months ended September 30, 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	367,126		$	7.26
Granted	673,361		14.60
Vested	(278,216	)	11.77
Cancelled/Forfeited	(3,000	)	7.75
Unvested and expected to vest at September 30, 2015	759,271		12.12

As of September 30, 2015, total unrecognized compensation cost was $25.6 million related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 2.2 years.

The following table sets forth the stock-based compensation expense included in the consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of sales	$	141	$	65	$	271	$	189
Research and development	100		23		282		70
Sales, general and administrative	1,269		284		4,573		815
	$	1,510	$	372	$	5,126	$	1,074

20

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

13. Common and Preferred Stock Repurchase

The Company’s board of directors approved the repurchase of 70,612 shares of common stock, 45,000 stock options and 45,611 of preferred stock from shareholders in May 2014 for $13.20 per share for a total purchase price of $2.0 million. For the repurchased shares of common stock and stock options, the Company charged the difference between the purchase and market prices of $0.5 million to expense. For the repurchased preferred shares, the excess between the purchase and the issuance price of $0.5 million was treated as a deemed dividend. In addition, the Company closed a tender offer in July 2014 to repurchase shares of preferred stock from existing shareholders at a purchase price of $13.20 per share. The Company repurchased 584,052 shares of preferred stock for a total purchase price of $7.7 million. The excess between the purchase and the issuance price of $5.8 million was treated as a deemed dividend. The repurchased shares of common and preferred stock were retired and remained as authorized but unissued.

14. Employee Benefit Plans

The Company offers a retirement savings plan under Section 401(k) of the Internal Revenue Code (the IRC) to its eligible U.S. employees whereby they may contribute up to the maximum amount permitted by IRC. Under the plan, the Company in the third quarter of 2015, began 401(k) matching of eligible compensation, subject to a maximum dollar threshold. Contribution expense was not material for the three and nine months ended September 30, 2015.

15. Income Taxes

The Company’s income tax expense (benefit), deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense (benefit).

The Company’s effective tax rate decreased to 56.8% for the three months ended September 30, 2015, compared to 56.9% for the three months ended September 30, 2014. The Company’s effective tax rate increased to 65.9% for the nine months ended September 30, 2015, compared to 32.8% for the nine months ended September 30, 2014. The Company historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Although management believes the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the fiscal three- and nine-month periods ended September 30, 2015, the Company used a discrete effective tax rate method to calculate taxes. The Company determined that since small changes in estimated “ordinary” income for fiscal 2015 would result in significant changes in the estimated annual effective tax rate, the discrete effective tax method would provide a more reliable estimate for the fiscal three- and nine-month periods ended September 30, 2015. It is possible that management may determine the use of the discrete effective tax rate method to be more appropriate than the annual effective tax rate method in future interim periods as well.

21

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

16. Net Income (Loss) per Share of Common Stock attributable to Common Stockholders

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share attributable to common stockholders is as follows (in thousands except share and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss) per share:
Numerator
Net income	$	901		$	172		$	732		$	1,829
Less: Deemed dividend paid to preferred stockholders upon repurchase	—			(6,344		)	—			(6,344		)
Less: Undistributed income attributable to preferred stockholders	(625		)	—			(557		)	—
Add: Undistributed loss attributable to preferred stockholders	—			4,980			—			3,582
Net income (loss) attributable to common stockholders—basic and diluted	$	276		$	(1,192	)	$	175		$	(933	)
Denominator
Weighted average shares used to compute net income (loss) attributable to common stockholders —Basic	7,853,730			4,688,045			5,962,031			4,577,725
Potential dilutive options, as calculated using treasury stock method	1,979,194			—			2,362,685			—
Potential dilutive restricted stock, as calculated using treasury stock method	356,324			—			169,935			—
Weighted average shares used to compute net income (loss) attributable to common stockholders —Diluted	10,189,248			4,688,045			8,494,651			4,577,725
Net income (loss) per share attributable to common stockholders —Basic	$	0.04		$	(0.25	)	$	0.03		$	(0.20	)
—Diluted	$	0.03		$	(0.25	)	$	0.02		$	(0.20	)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income (loss) per share of common stock for the periods presented, because the effect of including them would have been anti-dilutive: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Options to purchase common stock	1,321,250	2,976,992	1,321,250	2,976,992
Restricted stock	6,500	368,793	6,500	368,793
Common stock warrants	—	75,972	—	75,972
Total	1,327,750	3,421,757	1,327,750	3,421,757

22

Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

17. Geographic Areas and Product Sales

The Company’s revenue by geographic area, based on the destination to which the Company ships its products, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
United States	$	35,394	$	22,305	$	89,364	$	59,281
Japan	5,420		3,467		14,030		10,796
Other International	9,602		6,692		28,285		20,030
Total	$	50,416	$	32,464	$	131,679	$	90,107

The following table sets forth revenue by product category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Neuro	$	36,309	$	26,988	$	102,363	$	77,056
Peripheral Vascular	14,107		5,476		29,316		13,051
Total	$	50,416	$	32,464	$	131,679	$	90,107

The Company does not have significant long-lived assets outside the U.S.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2014 included in our prospectus (the “Prospectus”) dated September 17, 2015 as filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, (the “Securities Act”), relating to our Registration Statement on Form S-1 (File No. 333-206412).

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”). In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” included in this Quarterly Report on Form 10-Q and the Prospectus. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

Penumbra is a global interventional therapies company that designs, develops, manufactures and markets innovative medical devices. We have a broad portfolio of products that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. The conditions that our products address include, among others, ischemic stroke, hemorrhagic stroke and various peripheral vascular conditions that can be treated through thrombectomy and embolization procedures.

We are an established company focused on the neuro market, and we recently expanded our business to include the peripheral vascular market. We sell our products to hospitals, primarily through our salesforce, as well as through distributors in select international markets. We focus on developing, manufacturing and marketing products for use by specialist physicians, including interventional neuroradiologists, neurosurgeons, interventional neurologists, interventional radiologists and vascular surgeons. We design our products to provide these specialist physicians with a means to drive improved clinical outcomes through faster and safer procedures.

Since our founding in 2004, we have invested heavily in our product development capabilities in our two key markets: neuro and peripheral vascular. We launched our first neurovascular product in 2007, our first peripheral vascular product in 2013 and our first neurosurgical product in 2014. To date, we have launched 14 product brands, and we expect to continue to develop and build our portfolio of products based on our thrombectomy, embolization and access technologies. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline. Our research and development activities are centered around the development of new products and clinical activities designed to support our regulatory submissions and demonstrate the effectiveness of our products.

We manufacture substantially all of our products at our campus in Alameda, California, and stock inventory of raw materials, components and finished goods at that location. We rely on a single or limited number of suppliers for certain raw materials and components, and we generally have no long-term supply arrangements with our suppliers, as we order on a purchase order basis. We ship all of our products from Alameda to our hospital customers and distributors worldwide pursuant to purchase orders. We typically recognize revenue when products are delivered to our hospital customers or distributors, other than our coils, which we ship to our hospital customers on a consignment basis, and for which we recognize revenue when the hospital customers utilize products in a procedure.

Hospitals purchase our products for use in procedures performed by their specialist physicians, generally seeking reimbursement from third party payors for procedures performed. We believe that the cost-effectiveness of our products is attractive to our hospital customers.

In the nine months ended September 30, 2015 and 2014, 32.1% and 34.2% of our revenue was generated from customers located outside of the United States. Our sales outside of the United States are denominated principally in the euro and Japanese yen. As a result, we have foreign exchange exposure, but do not currently engage in hedging. In the nine months ended September 30, 2015, no single hospital and only one distributor accounted for more than 10% of our sales.

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As of September 30, 2015, we had approximately 1,100 employees worldwide. We sell our products to hospitals primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. In the nine months ended September 30, 2015, we generated revenue of $131.7 million, which represents a 46.1% increase over same period in 2014, and $2.4 million in operating income as compared to an operating income of $2.7 million in the nine months ended September 30, 2014.

Factors Affecting Our Performance

There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth. These factors include:

• The rate at which we grow our salesforce and the speed at which newly hired salespeople become fully effective can impact our revenue growth or our costs incurred in anticipation of such growth.

• Our industry is intensely competitive and, in particular, we compete with a number of large, well-capitalized companies. We must continue to successfully compete in light of our competitors’ existing and future products and their resources to successfully market to the specialist physicians who use our products.

• We must continue to successfully introduce new products that gain acceptance with specialist physicians and successfully transition from existing products to new products, ensuring adequate supply while avoiding excess inventory of older products and resulting inventory write-downs or write-offs. In addition, as we introduce new products, we generally build our inventory of components and finished goods in advance of sales, which may cause quarterly fluctuations in our financial condition.

• Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by specialist physicians and the procedures and treatments those physicians choose to administer for a given condition.

• The specialist physicians who use our products may not perform procedures during certain times of the year, such as those periods when they are at major medical conferences or are away from their practices for other reasons, the timing of which occurs irregularly during the year and from year to year.

In addition, we have experienced and expect to continue to experience meaningful variability in our quarterly revenue and gross profit as a result of a number of factors, including, but not limited to: the number of available selling days, which can be impacted by holidays; the mix of products sold; the geographic mix of where products are sold; the demand for our products and the products of our competitors; the timing of or failure to obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory write-offs and write-downs; costs, benefits and timing of new product introductions; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates. We experience quarters in which we have significant revenue growth sequentially followed by quarters of moderate or no revenue growth. Additionally, we experience quarters in which operating expenses, in particular research and development expenses, fluctuate depending on the stage and timing of product development.

Components of Results of Operations

Revenue. We sell our products directly to hospitals and through distributors for use in procedures performed by specialist physicians to treat patients in two key markets: neuro and peripheral vascular disease. We sell our products through purchase orders, and we do not have long term purchase commitments from our customers. We typically recognize revenue when products are delivered to our hospital customers or distributors. However, with respect to products that we consign to hospitals, which primarily consist of coils, we recognize revenue at the time hospitals utilize products in a procedure. Revenue also includes shipping and handling costs that we charge to customers.

Cost of Revenue. Cost of revenue consists primarily of the cost of raw materials and components, personnel costs, including stock-based compensation, inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense, shipping and handling costs and other labor and overhead costs incurred in the manufacturing of products. We manufacture substantially all of our products in our manufacturing facility at our campus in Alameda, California.

Operating Expenses

Research and Development. Research and development expenses include product development, clinical and regulatory expenses, materials, depreciation and other costs associated with the development of our products. Research and development expenses also include salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants. We expense research and development costs as they are incurred.

We expect to incur additional research and development costs as we continue to innovate and develop new products and engage in ongoing clinical research. These costs will generally increase in absolute terms as we continue to expand our product pipeline and add personnel.

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Sales, General and Administrative. Sales, general and administrative expenses primarily consist of salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants engaged in sales, marketing, finance, legal, compliance, administrative, information technology, medical education and training and human resource activities. Our sales, general and administrative expenses also include commissions, generally based on a percentage of sales, to direct sales representatives and the medical device excise tax, which is approximately 2.3% of U.S. sales.

We expect our sales, general and administrative expenses to continue to increase in absolute terms as we expand our salesforce and operations. Additionally, we expect to incur increased expenses related to headcount, professional service fees, systems and other infrastructure related to operating as a public company.

Income Tax Expense. We are taxed at the rates applicable within each jurisdiction where we sell products. The composite income tax rate, tax provisions, deferred tax assets and deferred tax liabilities will vary according to the jurisdiction in which profits arise. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities, and require us to exercise judgment in determining our income tax provision, our deferred tax assets and liabilities and the potential valuation allowance recorded against our net deferred tax assets. Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not that the future realization of all or some of the deferred tax assets will not be achieved.

Results of Operations

The following table sets forth the components of our consolidated statements of operations in dollars and as a percentage of revenue for the periods presented:

	Three Months Ended September 30,										Nine Months Ended September 30,
	2015					2014					2015					2014
	(in thousands, except for percentages)
Revenue	$	50,416		100.0	%	$	32,464		100.0	%	$	131,679		100.0	%	$	90,107		100.0	%
Cost of revenue	16,919			33.6	%	11,667			35.9	%	44,079			33.5	%	31,156			34.6	%
Gross profit	33,497			66.4	%	20,797			64.1	%	87,600			66.5	%	58,951			65.4	%
Operating expenses:
Research and development	4,560			9.0	%	3,897			12.0	%	12,543			9.5	%	11,435			12.7	%
Sales, general and administrative	26,755			53.1	%	16,589			51.1	%	72,698			55.2	%	44,829			49.8	%
Total operating expenses	31,315			62.1	%	20,486			63.1	%	85,241			64.7	%	56,264			62.4	%
Income from operations	2,182			4.3	%	311			1.0	%	2,359			1.8	%	2,687			3.0	%
Interest income (expense), net	17			0.0	%	144			0.4	%	402			0.3	%	183			0.2	%
Other income (expense), net	(115		)	(0.2	)%	(56		)	(0.2	)%	(613		)	(0.5	)%	(148		)	(0.2	)%
Income before provision for income taxes	2,084			4.1	%	399			1.2	%	2,148			1.6	%	2,722			3.0	%
Provision for income taxes	1,183			2.3	%	227			0.7	%	1,416			1.1	%	893			1.0	%
Net income	$	901		1.8	%	$	172		0.5	%	$	732		0.6	%	$	1,829		2.0	%

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Three Months Ended September 30, 2015 Compared to Three Months Ended September 30, 2014

Revenue

	Three Months Ended September 30,				Change
	2015		2014		$		%
	(in thousands, except for percentages)
Neuro	$	36,309	$	26,988	$	9,321	34.5	%
Peripheral Vascular	14,107		5,476		8,631		157.6	%
Total	$	50,416	$	32,464	$	17,952	55.3	%

Revenue increased $18.0 million, or 55.3%, to $50.4 million in the three months ended September 30, 2015, from $32.5 million in the three months ended September 30, 2014. Our revenue growth resulted from increased sales due to expansion of our salesforce headcount by 41.7%, further market penetration of our existing products and sales of new products or products with new indications. Increased sales of Penumbra System products accounted for more than half of the revenue increase in the three months ended September 30, 2015. Additionally, approximately one third of the increase in revenue for the three months ended September 30, 2015 was from increased sales of our Indigo System, primarily due to a new venous indication and the introduction of our larger sizes within our Indigo System, resulting in increase in new procedure volumes.

Revenue from sales in the United States increased $13.1 million, or 58.7%, to $35.4 million in the three months ended September 30, 2015, from $22.3 million in the three months ended September 30, 2014. Revenue from sales in international markets increased $4.9 million, or 47.9%, to $15.0 million in the three months ended September 30, 2015, from $10.2 million in the three months ended September 30, 2014. Revenue from international sales represented 29.8% and 31.3% of our total revenue for the three months ended September 30, 2015 and 2014, respectively.

Revenue from our neuro products increased $9.3 million, or 34.5%, to $36.3 million in the three months ended September 30, 2015, from $27.0 million in the three months ended September 30, 2014. Our neuro product sales experienced strong momentum due to further market penetration and growth in the market following the presentation and publication of MR. CLEAN trial results in the fourth quarter of 2014, and the presentation and publication of additional trial results in the first quarter of 2015, each of which support endovascular treatment of stroke. We believe that these published trial results led to increases in the number of procedures performed by specialist physicians using our products in the three months ended September 30, 2015. Increased sales of Penumbra System products accounted for most of the revenue increase in the three months ended September 30, 2015. Further, while our introduction of Benchmark in the fourth quarter of 2014 was designed as a potential replacement for our Neuron access products, sales of our Neuron access products have increased slightly since Benchmark was introduced. The increase in revenue from our neuro products was partially offset by a 23%, or $2.0 million, period over period decrease in sales of our neuro embolization products. This decrease was due to: (i) reduced demand for our Penumbra Coil 400 product, which demand can fluctuate from period to period due to the number of procedures performed in a given period using our products, as well as (ii) a shift in our focus towards the anticipated launch of our SMART Coil in the fourth quarter of 2015. Prices for our neuro products remained substantially flat during the period.

Revenue from our peripheral vascular products increased $8.6 million, or 157.6%, to $14.1 million in the three months ended September 30, 2015, from $5.5 million in the three months ended September 30, 2014. Our peripheral embolization and peripheral thrombectomy products experienced strong volume growth in the period, primarily due to the focused efforts of our dedicated peripheral vascular salesforce, which was established in the second half of 2014, and further market penetration of our products. Increased sales of Indigo System products accounted approximately for three quarters of the revenue increase in the three months ended September 30, 2015. Prices for our peripheral vascular products remained substantially flat during the period.

Gross Profit and Gross Margin

	Three Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
Cost of revenue	$	16,919		$	11,667		$	5,252	45.0	%
Gross profit	$	33,497		$	20,797		$	12,700	61.1	%
Gross margin %	66.4		%	64.1		%

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Gross profit increased $12.7 million, or 61.1%, to $33.5 million in the three months ended September 30, 2015, from $20.8 million in the three months ended September 30, 2014. The increase in gross profit was primarily due to an increase in revenue from sales of our neuro and peripheral vascular products.

Gross margin increased 2.3 percentage points to 66.4% in the three months ended September 30, 2015, from 64.1% in the three months ended September 30, 2014. The increase in gross margin was primarily due to geographic and product mix.

Research and Development (R&D)

	Three Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
R&D	$	4,560		$	3,897		$	663	17.0	%
R&D as a percentage of revenue	9.0		%	12.0		%

R&D expenses increased by $0.7 million, or 17.0%, to $4.6 million in the three months ended September 30, 2015, from $3.9 million in the three months ended September 30, 2014. The $0.7 million increase in R&D expenses was primarily due to a $0.5 million increase in compensation expense resulting from increased headcount to support continued investment in our products and a $0.1 million increase in travel related expenses, partially offset by $0.2 million reduced R&D spend due to the stage and timing of development activities on our projects.

Sales, General and Administrative (SG&A)

	Three Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
SG&A	$	26,755		$	16,589		$	10,166	61.3	%
SG&A as a percentage of revenue	53.1		%	51.1		%

SG&A expenses increased by $10.2 million, or 61.3%, to $26.8 million in the three months ended September 30, 2015, from $16.6 million in the three months ended September 30, 2014. Our sales and administrative headcount in the three months ended September 30, 2015 increased by 57.4%, which led to a $7.1 million increase in compensation expense. Additionally, SG&A expenses were impacted by a $0.8 million increase in legal, professional and consulting expenses due to our operating as a publicly traded company, a $0.7 million increase due to expanded marketing programs and a $0.6 million increase in travel-related expenses of our salesforce to support our sales activities.

Provision for Income Taxes

	Three Months Ended September 30,				Change
	2015		2014		$		%
	(in thousands, except for percentages)
Provision for income taxes	1,183		227		$	956	nm
Effective tax rate	56.8	%	56.9	%

Our provision for income taxes increased $1.0 million, to $1.2 million in the three months ended September 30, 2015, from $0.2 million in the three months ended September 30, 2014. Our effective tax rate decreased to 56.8% for the three months ended September 30, 2015, compared to 56.9% for the three months ended September 30, 2014. We have historically calculated the provision for income taxes during interim reporting periods by applying anestimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income orloss excluding unusual or infrequently occurring discrete items) for the reporting period. Although management believes the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the three month period ended September 30, 2015, we used a discreteeffective tax rate method to calculate taxes. We determined that since small changes in estimated “ordinary” income for fiscal 2015 would result in significant changes inthe estimated annual effective tax rate, the discreteeffective tax method would provide a more reliable estimate for the three month period ended September 30, 2015. It is possible that management may determine the use of the discrete effective tax rate method to be more appropriate than the annual effective tax rate method in future interim periods as well.

28

Nine Months Ended September 30, 2015 Compared to Nine Months Ended September 30, 2014

Revenue

	Nine Months Ended September 30,				Change
	2015		2014		$		%
	(in thousands, except for percentages)
Neuro	$	102,363	$	77,056	$	25,307	32.8	%
Peripheral Vascular	29,316		13,051		16,265		124.6	%
Total	$	131,679	$	90,107	$	41,572	46.1	%

Revenue increased $41.6 million, or 46.1%, to $131.7 million in the nine months ended September 30, 2015, from $90.1 million in the nine months ended September 30, 2014. Our revenue growth resulted from increased sales due to expansion of our salesforce headcount by 41.7%, further market penetration of our existing products and sales of new products or products with new indications. Increased sales of Penumbra System products accounted for more than half of the revenue increase in the nine months ended September 30, 2015. Additionally, approximately one quarter of the increase in revenue for the nine months ended September 30, 2015 was from increased sales of our Indigo System, primarily due to a new venous indication and the introduction of our larger sizes within our Indigo System, resulting in increase in new procedure volumes.

Revenue from sales in the United States increased $30.1 million, or 50.7%, to $89.4 million in the nine months ended September 30, 2015, from $59.3 million in the nine months ended September 30, 2014. Revenue from sales in international markets increased $11.5 million, or 37.3%, to $42.3 million in the nine months ended September 30, 2015, from $30.8 million in the nine months ended September 30, 2014. Revenue from international sales represented 32.1% and 34.2% of our total revenue for the nine months ended September 30, 2015 and 2014, respectively.

Revenue from our neuro products increased $25.3 million, or 32.8%, to $102.4 million in the nine months ended September 30, 2015, from $77.1 million in the nine months ended September 30, 2014. Our neuro product sales experienced strong momentum due to further market penetration and growth in the market following the presentation and publication of MR. CLEAN trial results in the fourth quarter of 2014, and the presentation and publication of additional trial results in the first quarter of 2015, each of which support endovascular treatment of stroke. We believe that these published trial results led to increases in the number of procedures performed by specialist physicians using our products in the nine months ended September 30, 2015. Increased sales of Penumbra System products accounted for most of the revenue increase in the nine months ended September 30, 2015. Further, while our introduction of Benchmark in the fourth quarter of 2014 was designed as a potential replacement for our Neuron access products, sales of our Neuron access products have increased slightly since Benchmark was introduced. The increase in revenue from our neuro products was partially offset by a 16%, or $3.7 million, period over period decrease in sales of our neuro embolization products. This decrease was due to: (i) reduced demand for our Penumbra Coil 400 product, which demand can fluctuate from period to period due to the number of procedures performed in a given period using our products, as well as (ii) a shift in our focus towards the anticipated launch of our SMART Coil in the fourth quarter of 2015. Prices for our neuro products remained substantially flat during the period.

Revenue from our peripheral vascular products increased $16.3 million, or 124.6%, to $29.3 million in the nine months ended September 30, 2015, from $13.1 million in the nine months ended September 30, 2014. Our peripheral embolization and peripheral thrombectomy products experienced strong volume growth in the period, primarily due to the focused efforts of our dedicated peripheral vascular salesforce, which was established in the second half of 2014, and further market penetration of our products. Increased sales of Indigo System products accounted approximately one half of the revenue increase in the nine months ended September 30, 2015. Prices for our peripheral vascular products remained substantially flat during the period.

Gross Profit and Gross Margin

	Nine Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
Cost of revenue	$	44,079		$	31,156		$	12,923	41.5	%
Gross profit	$	87,600		$	58,951		$	28,649	48.6	%
Gross margin %	66.5		%	65.4		%

Gross profit increased $28.6 million, or 48.6%, to $87.6 million in the nine months ended September 30, 2015, from $59.0 million in the nine months ended September 30, 2014. The increase in gross profit was primarily due to an increase in revenue from sales of our neuro and peripheral vascular products.

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Gross margin increased 1.1 percentage points to 66.5% in the nine months ended September 30, 2015, from 65.4% in the nine months ended September 30, 2014. The increase in gross margin was primarily due to geographic and product mix.

Research and Development (R&D) Expenses

	Nine Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
R&D	$	12,543		$	11,435		$	1,108	9.7	%
R&D as a percentage of revenue	9.5		%	12.7		%

R&D expenses increased by $1.1 million, or 9.7%, to $12.5 million in the nine months ended September 30, 2015, from $11.4 million in the nine months ended September 30, 2014. The $1.1 million increase in R&D expenses was primarily due to a $1.5 million increase in compensation expense resulting from increased headcount to support continued investment in our products, a $0.2 million increase in travel related expenses and a $0.2 million increase in expenses related to demo products, partially offset by $1.1 million reduced R&D spend due to the stage and timing of development activities on our projects.

Sales, General and Administrative (SG&A) Expenses

	Nine Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
SG&A	$	72,698		$	44,829		$	27,869	62.2	%
SG&A as a percentage of revenue	55.2		%	49.8		%

SG&A expenses increased by $27.9 million, or 62.2%, to $72.7 million in the nine months ended September 30, 2015, from $44.8 million in the nine months ended September 30, 2014. Our sales and administrative headcount in the nine months ended September 30, 2015 increased by 57.4%, which led to a $18.5 million increase in compensation expense. Additionally, SG&A expenses were impacted by a $3.2 million increase due to expanded marketing programs, a $2.6 million increase in legal, professional and consulting expenses due to our operating as a publicly traded company and a $1.5 million increase in travel-related expenses of our salesforce to support our sales activities.

Provision for Income Taxes

	Nine Months Ended September 30,						Change
	2015			2014			$		%
	(in thousands, except for percentages)
Provision for income taxes	$	1,416		$	893		$	523	nm
Effective tax rate	65.9		%	32.8		%

Our provision for income taxes increased $0.5 million, to $1.4 million in the nine months ended September 30, 2015, from $0.9 million in the three months ended September 30, 2014. Our effective tax rate increased to 65.9% for the nine months ended September 30, 2015, compared to 32.8% for the nine months ended September 30, 2014. We have historically calculated the provision for income taxes during interim reporting periods by applying anestimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income orloss excluding unusual or infrequently occurring discrete items) for the reporting period. Although management believes the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the nine month period ended September 30, 2015, we used a discreteeffective tax rate method to calculate taxes. We determined that since small changes in estimated “ordinary” income for fiscal 2015 would result in significant changes inthe estimated annual effective tax rate, the discreteeffective tax method would provide a more reliable estimate for the nine month period ended September 30, 2015. It is possible that management may determine the use of the discrete effective tax rate method to be more appropriate than the annual effective tax rate method in future interim periods as well.

Liquidity and Capital Resources

As of September 30, 2015, we had $220.8 million in working capital, which included $159.1 million in cash. Prior to our IPO, we financed our operations primarily through private placements of convertible preferred stock. As discussed above, we closed our IPO on September 23, 2015 and raised $124.8 million in net proceeds.

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In addition to our existing cash and cash equivalents and marketable investment balances, our principal source of liquidity is our accounts receivable. We believe these sources will provide sufficient liquidity for us to meet our liquidity requirements for at least the next 12 months. Our principal liquidity requirements are to fund our operations, including our research and development, and capital expenditures. To facilitate our expansion, we may also lease or purchase additional facilities. We expect to continue to make investments as we launch new products, expand our manufacturing operations and further expand into international markets. We may, however, require or elect to secure additional financing as we continue to execute our business strategy. If we require additional funds, we may seek to raise capital through equity or debt financing, which may not be available on acceptable terms, could result in dilution to our stockholders and could require us to agree to covenants that limit our operating flexibility.

	September 30, 2015		December 31, 2014
	(in thousands)
Cash and cash equivalents	$	159,098	$	3,290
Marketable investments	—		48,253
Accounts receivable, net	26,055		18,912
Accounts payable	4,024		2,348
Accrued liabilities	24,253		18,475
Working capital(1)	220,800		94,478

____________________

(1) Working capital consists of total current assets less total current liabilities.

The following table sets forth, for the periods indicated, our beginning balance of cash and cash equivalents, net cash flows provided by (used in) operating, investing and financing activities and our ending balance of cash and cash equivalents:

	Nine Months Ended September 30,
	2015			2014
	(in thousands)
Cash and cash equivalents at beginning of period	$	3,290		$	4,131
Net cash used in operating activities	(12,631		)	(993		)
Net cash provided by (used in) investing activities	43,584			(37,832		)
Net cash provided by financing activities	125,194			42,802
Cash and cash equivalents at end of period	159,098			8,188

Net Cash Used in Operating Activities

Net cash used in operating activities consists primarily of net income adjusted for certain non-cash items (including depreciation and amortization, inventory write downs, stock-based compensation expense, provision for doubtful accounts, provision for sales returns, loss on minority investment, loss on disposal of property and equipment, provision for product warranty), and the effect of changes in working capital and other activities.

Net cash used in operating activities was $12.6 million during the nine months ended September 30, 2015 and consisted of net income of $0.7 million and non-cash items of $7.3 million offset by net changes in operating assets and liabilities of $20.7 million. The change in operating assets and liabilities include the increase in inventories of $18.0 million to support our revenue growth, an increase in accounts receivable of $7.4 million, an increase in prepaid expenses and other current and non-current assets of $1.7 million, partially offset by an increase in accrued expenses and other non-current liabilities of $4.9 million and accounts payable of $1.5 million, as a result of the growth in our business activities.

Net cash used in operating activities was $1.0 million during the nine months ended September 30, 2014, and consisted of net income of $1.8 million and non-cash items of $3.5 million, partially offset by net changes in operating assets and liabilities of $6.3 million.

Net Cash Provided by (Used in) Investing Activities

Net cash provided by (used in) investing activities relates primarily to divestures or purchases of marketable investments and capital expenditures.

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Net cash provided by investing activities was $43.6 million during the nine months ended September 30, 2015 and consisted of net proceeds from sales of marketable investments of $48.1 million partially offset by capital expenditures of $4.5 million.

Net cash used in investing activities was $37.8 million during the nine months ended September 30, 2014 and consisted of the net purchase of marketable investments of $36.0 million and capital expenditures of $1.8 million.

Net Cash Provided by Financing Activities

Net cash from financing activities primarily relates to capital raising activities through equity or debt financing.

Financing activities in the nine months ended September 30, 2015 provided cash of $125.2 million and consisted of net proceeds from our IPO of $125.9 million, net of issuance costs, excess tax benefit from stock-based compensation of $1.3 million and proceeds from exercises of stock options of $0.5 million, partially offset by payment of employee taxes related to vested common and restricted stock of $2.5 million.

Financing activities in the nine months ended September 30, 2014 provided $42.8 million and consisted of proceeds from the issuance of Series F Preferred Stock of $57.2 million, net of issuance costs and proceeds from exercises of stock options of $0.9 million. These proceeds were offset in part by repurchases of preferred stock, common stock and stock options of $9.3 million and the repayment of amounts outstanding under our credit facility of $6.0 million upon its termination in May 2014.

Indebtedness

In May 2012, we entered into a $15.0 million revolving credit facility with Wells Fargo Bank, National Association. The credit facility was collateralized by our investment balances. The interest on the credit facility was based on the daily one-month London Inter-Bank Offered Rate, plus 1.75% and was payable monthly. The outstanding balance on the credit facility was due in full on June 1, 2015. The credit facility contained customary covenants for credit facilities of this type, including limitations on disposition of assets and changes in control. In May 2014, in conjunction with our Series F Preferred Stock financing, we paid the then outstanding balance on the credit facility and terminated the credit facility.

Contractual Obligations and Commitments

There have been no material changes outside the ordinary course of our business to our contractual obligations during the nine months ended September 30, 2015, as compared to those disclosed in the Prospectus. The following table summarizes our contractual obligations as of December 31, 2014 included in the Prospectus:

	Payments Due by Period
	Total		Less Than One Year		1-3 Years		3-5 Years		More than Five Years
	(in thousands)
Rent obligations(1)	$	35,711	$	2,010	$	4,140	$	4,405	$	25,156
Equipment lease obligations(2)	333		138		192		3		—
Purchase commitments(3)	9,862		6,169		3,693		—		—
Total	$	45,906	$	8,317	$	8,025	$	4,408	$	25,156

____________________

(1) We lease our corporate headquarters and a manufacturing facility at our campus in Alameda, California, pursuant to lease agreements that expire in November 2029. Additionally, we lease offices in Germany, Australia and Brazil. In June 2015, a lease for additional space at our campus in Alameda, California commenced upon our landlord’s substantial completion of tenant improvements. This lease expires in November 2029 and, as of September 30, 2015, represented a contractual obligation of $13.7 million.

(2) We lease equipment and automobiles under operating leases. These leases expire at various dates through 2018.

(3) Purchase commitments consist of contracts with suppliers to purchase raw materials to be used to manufacture products.

The amounts in the table above exclude $0.6 million of income tax liabilities included in current liabilities as we are unable to reasonably estimate the timing of settlement. In addition, the table above does not reflect royalty obligations under a license agreement as amounts due thereunder fluctuate depending on sales levels. See Note 8 to our Condensed Consolidated Financial Statements.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements or any holdings in variable interest entities.

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Critical Accounting Policies and Estimates

We have prepared our financial statements in accordance with U.S. GAAP. Our preparation of these financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures at the date of the financial statements, as well as revenue and expenses recorded during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the Prospectus.

Recently Issued Accounting Standards

For information with respect to recently issued accounting standards and the impact of these standards on our condensed consolidated financial statements, see Note 2 - “Summary of Significant Accounting Policies-Recently Issued Accounting Standards” in the notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates, such as interest rates and foreign exchange rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes and do not believe we are exposed to material market risk with respect to our cash and cash equivalents and/or our marketable investments.

Interest Rate Risk. We had cash and cash equivalents of $159.1 million as of September 30, 2015, which consisted of funds held in general checking and savings accounts. As of September 30, 2015, we did not have any investments subject to fluctuations in interest rates. A hypothetical 100 basis point change in interest rates would not have a material impact on the value of our cash and cash equivalents.

Foreign Exchange Risk Management. We operate in countries other than the United States, and, therefore, we are exposed to foreign currency risks. We bill most sales outside of the United States in local currencies, primarily the euro and Japanese yen. We expect that the percentage of our sales denominated in foreign currencies may increase in the foreseeable future as we continue to expand into international markets. When sales or expenses are not denominated in U.S. dollars, a fluctuation in exchange rates could affect our net income. We do not believe an immediate 10% adverse change in foreign exchange rates would have a material effect on our results of operations. We do not currently hedge our exposure to foreign currency exchange rate fluctuations; however, we may choose to hedge our exposure in the future.

We do not believe that inflation and change in prices had a significant impact on our results of operations for any periods presented on our condensed consolidated financial statements.

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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We have established disclosure controls and procedures that are designed to ensure that the information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures. Based on this review, the principal executive officer and principal financial officer of the Company have concluded that the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) were effective as of September 30, 2015.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended September 30, 2015 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We were made aware of potential product liability claimants who allegedly suffered injuries as a result of aneurysm procedures performed in the United States and the United Kingdom in which the Penumbra Coil 400 was used. We have not been served with formal complaints; however, the attorney for the purported U.S. claimant has indicated that a civil suit will be brought against us shortly. While specific damages have not been asserted, counsel for the purported claimant indicated that he expects that a jury could award $35 million in damages were this matter to go to trial. This amount is substantially in excess of our insurance coverage. The attorney for the potential claimant in the United Kingdom has not specified any damage amount. As no litigation has been instituted in either of these cases, and therefore neither us nor the potential claimants have engaged in discovery, we are unable to assess the merits of the claims. We expect to vigorously defend any litigation that might be brought, as we believe there would be substantial questions regarding causation, liability and damages.

Additionally, from time to time, we are subject to claims and assessments in the ordinary course of business. We are not currently a party to any litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on our business, financial condition, results of operations or cash flows.

ITEM 1A. RISK FACTORS.

There have been no material changes from the risk factors disclosed in our Prospectus dated September 17, 2015 as filed by us with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the Company’s Registration Statement on Form S-1 (File No. 333-206412).

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

(a) Sales of Unregistered Securities

Between July 1, 2015 and September 18, 2015 (the date of the filing of our registration statement on Form S-8, No. 333-207007):

• We granted to our directors, officers, employees and consultants options to purchase an aggregate of 1,321,250 shares of common stock under our equity compensation plans, at exercise prices ranging from $22.04 to $30.00 per share.

• We issued and sold to our directors, officers, employees and consultants an aggregate of 6,500 shares of common stock upon the exercise of options under our equity compensation plans at exercise prices ranging from $1.26 to $3.98 per share, for an aggregate amount of $16,613.

• We granted to our directors, officers and employees an aggregate of 5,000 shares of restricted stock under our equity compensation plans at a fair market value of $22.04 per share, for an aggregate amount of $110,200.

None of the foregoing transactions involved any underwriters, underwriting discounts or commissions, or any public offering. Unless otherwise stated, the sales of the above securities were deemed to be exempt from registration under the Securities Act in reliance upon Section 4(a)(2) of the Securities Act (or Regulation D promulgated thereunder) or Rule 701 promulgated under Section 3(b) of the Securities Act as transactions by an issuer not involving any public offering or pursuant to benefit plans and contracts relating to compensation as provided under Rule 701. The recipients of the securities in each of these transactions represented their intentions to acquire the securities for investment only and not with a view to or for sale in connection with any distribution thereof, and appropriate legends were placed upon the stock certificates issued in these transactions.

(b) Use of Proceeds from Public Offering of Common Stock

The Registration Statement on Form S-1 (File No. 333-206412) and the Registration Statement on Form S-1 (File No. 333-207000) filed pursuant to Rule 462(b) relating thereto, each relating to the initial public offering (“IPO”) of shares of our common stock, became effective on September 17, 2015. The Registration Statements registered the offer and sale of 4,600,000 shares of our common stock (including 600,000 shares of our common stock subject to the underwriters’ option to purchase additional shares). On September, 23, 2015, we completed the sale of all 4,600,000 of the shares of our common stock registered thereunder at an initial public offering price of $30.00 per share for an aggregate offering price of $138,000,000. The underwriters of the offering were J.P. Morgan Securities LLC, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Canaccord Genuity Inc. Following the sale of the shares in connection with the closing of the IPO, the offering terminated.

We received net proceeds of $124.8 million from our IPO, after deducting underwriting discounts and commissions of $9.7 million and net offering expenses incurred by us of $3.6 million. No payments for such expenses were made directly or indirectly to (i) any of our officers or directors or their associates, (ii) any persons owning 10% or more of any class of our equity securities, or (iii) any of our affiliates.

We maintain the funds received from our IPO in a savings account, pending their use. We intend to use the net proceeds from our IPO for product development, including research and development and clinical trials, expansion of our salesforce and for working capital and general corporate purposes. From time to time, we may consider the acquisition of complementary technologies or businesses, though we have no agreements or understandings with respect to any such acquisitions at this time. There has been no material change in the planned use of proceeds from our IPO from that described in the prospectus dated September 17, 2015 filed with the SEC pursuant to Rule 424(b)(4).

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ITEM 6. EXHIBITS.

Exhibit Number	Description	Form	File No.	Exhibit(s)	Filing Date
3.1	Restated Certificate of Incorporation of Penumbra, Inc.	8-K	001-37557	3.3	September 29, 2015
3.2	Amended and Restated Bylaws of Penumbra, Inc.	8-K	001-37557	3.3	September 29, 2015
4.1	Specimen Common Stock Certificate	S-1/A	333-206412	4.1	September 8, 2015
10.1*+	Amended and restated 2014 Equity Incentive Plan - Stock Option Agreement of Penumbra, Inc.
10.2*+	Amended and restated 2014 Equity Incentive Plan - Restricted Stock Agreement of Penumbra, Inc.
31.1*	Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
31.2*	Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
32.1**	Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.
101*	The following materials from the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2015 formatted in Extensible Business Reporting Language (XBRL) includes: (i) Condensed Consolidated Balance Sheets as of September 30, 2015 and December 31, 2014, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September, 2015 and 2014, (iii) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2015 and 2014, and (v) Notes to Condensed Consolidated Financial Statements.

+ Indicates a management contract or compensatory plan or arrangement.

* Filed herewith.

** Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		PENUMBRA, INC.
Date: November 12, 2015
	By:	/s/ Sri Kosaraju
		Sri Kosaraju
		Chief Financial Officer and Head of Strategy
		(Principal Financial and Accounting Officer and Duly Authorized Officer)

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EX-10.1

PENUMBRA, INC.

AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

RESTRICTED STOCK AGREEMENT

Unless otherwise defined herein, the terms defined in the Amended and Restated 2014 Equity Incentive Plan (the “Plan”) shall have the same defined meanings in this Restricted Stock Agreement (this “Agreement”).

I.NOTICE OF GRANT OF RESTRICTED STOCK

Name:

Address:

The undersigned Participant has been granted a Restricted Stock Award, subject to the terms and conditions of the Plan and this Agreement, as follows:

Date of Grant:

Vesting Commencement Date:

Total Number of Shares of:

Restricted Stock:

Vesting Schedule:

[Subject to any accelerated vesting provisions in the Plan, twenty-five percent (25%) of the Shares of Restricted Stock shall vest on each of the one (1) year, two (2) year, three (3) year and four (4) year anniversaries of the Vesting Commencement Date, subject to Participant continuing to be a Service Provider through each such date.]

Notwithstanding the foregoing, in the event of a Change in Control, and subject to Participant continuing to be a Service Provider through the date of such Change in Control, the Participant will fully vest in all of the Shares of Restricted Stock granted under this Agreement.

Any of the Shares of Restricted Stock granted under this Agreement which have not yet vested as of a given time are referred to herein as “Unvested Shares of Restricted Stock.” The Shares which have vested shall be delivered to Participant in accordance with the terms of this Agreement (see Section 2 of Part II of this Agreement).

II.AGREEMENT

1.Grant of Restricted Stock. The Company hereby grants to the person named in the Notice of Grant of Restricted Stock in Part I of this Agreement (“Participant”) under the Plan for

services performed and to be performed by Participant for the Company and as a separate incentive in connection with his or her services and not in lieu of any salary or other compensation for his or her services, the number of Shares set forth in the Notice of Grant of Restricted Stock, subject to all of the terms and conditions in this Agreement and the Plan, which is incorporated herein by reference. Subject to Section 20(c) of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Agreement, the terms and conditions of the Plan shall prevail.

2.Book-Entry Registration of the Shares; Delivery of Shares.

(a)The Company may at its election either (i) after the Date of Grant, issue a certificate representing the Shares of Restricted Stock subject to this Agreement and place a legend on and stop transfer notice describing the restrictions on and forfeitability of such Shares of Restricted Stock, in which case the Company may retain such certificates unless and until the Shares of Restricted Stock represented by such certificate have vested and may cancel such certificate if and to the extent that any Unvested Shares of Restricted Stock are forfeited or otherwise required to be transferred back to the Company, or (ii) not issue any certificate representing Shares of Restricted Stock subject to this Agreement and instead document Participant’s interest in Shares of Restricted Stock by registering the Shares of Restricted Stock with the Company’s transfer agent (or another custodian selected by the Company) in book entry form in Participant’s name with the applicable restrictions noted in the book-entry system, in which case no certificate(s) representing all or a part of the Shares will be issued unless and until the Shares become vested pursuant to the Vesting Schedule set forth in Part I of this Agreement.

(b)If and when a Vesting Date occurs with respect to Unvested Shares of Restricted Stock or any Unvested Shares of Restricted Stock otherwise become vested in accordance with the Vesting Schedule or otherwise pursuant to this Agreement, provided the Unvested Shares of Restricted Stock have not been forfeited pursuant to Section 8, the Company or the Administrator will take all steps necessary to accomplish the transfer of vested Shares to Participant. The Company will determine the form of delivery (e.g., electronic entry evidencing such shares) and may deliver such Shares on Participant’s behalf electronically to the Company’s designated stock plan administrator or such other broker-dealer as the Company may choose at its sole discretion, within reason. The Company may provide a reasonable delay in the issuance or delivery of vested Shares as it determines appropriate to address tax withholding (to the extent applicable) and other administrative matters.

3.Lock-Up Period. Participant hereby agrees that Participant shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Participant (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred and eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act of 1933, as amended (or such other period as may be requested by the Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).

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Participant agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Participant shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act of 1933, as amended. The obligations described in this Section 3 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred and eighty (180) day (or other) period. Participant agrees that any transferee of the Restricted Stock Award or Shares acquired pursuant to the Restricted Stock Award shall be bound by this Section 3.

4.Non-Transferability of Restricted Stock. This Restricted Stock Award may not be transferred in any manner otherwise than by will or by the laws of descent or distribution. The terms of the Plan and this Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Participant.

5.Tax Consequences. Participant has reviewed with Participant’s own tax advisors the federal, state, local and foreign tax consequences of this investment and the transactions contemplated by this Agreement. Participant is relying solely on such advisors and not on any statements or representations of the Company or any of its agents. Participant understands that Participant (and not the Company) shall be responsible for Participant’s own tax liability that may arise as a result of the transactions contemplated by this Agreement. Participant understands that Section 83 of the Internal Revenue Code of 1986, as amended (the “Code”), taxes as ordinary income the difference between the purchase price, if any, for the Shares and the Fair Market Value of the Shares as of each vesting date. Participant understands that Participant may elect to be taxed at the time the Shares are granted rather than when such Shares vest by filing an election under Section 83(b) of the Code (an “83(b) Election”) with the IRS within thirty (30) days from the date of grant of the Restricted Stock Award. The form for making this election is attached as Exhibit A hereto.

PARTICIPANT ACKNOWLEDGES THAT IT IS PARTICIPANT’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY THE 83(b) ELECTION, EVEN IF PARTICIPANT REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON PARTICIPANT’S BEHALF.

6.Tax Withholding. Pursuant to such procedures as the Administrator may specify from time to time, the Company shall withhold the minimum amount required to be withheld for the payment of income, employment and other taxes which the Company determines must be withheld (the “Withholding Taxes”) with respect to the filing of an 83(b) Election, or, if an 83(b) Election is not filed or not timely filed, upon each vesting date, by, in the Administrator’s discretion: (i) withholding otherwise deliverable Shares having a Fair Market Value equal to the amount of such Withholding Taxes, (ii) withholding the amount of such Withholding Taxes from Participant’s paycheck(s), (iii) requiring Participant to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of all Withholding Taxes, or (iv) a

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combination of the foregoing. The Company shall not retain fractional Shares to satisfy any portion of the Withholding Taxes. Accordingly, if any withholding is done through the withholding of Shares, Participant shall pay to the Company an amount in cash sufficient to satisfy the remaining Withholding Taxes due and payable as a result of the Company not retaining fractional Shares. Should the Company be unable to procure such cash amounts from Participant, Participant agrees and acknowledges that Participant is giving the Company permission to withhold from Participant’s paycheck(s) an amount equal to the remaining Withholding Taxes due and payable as a result of the Company not retaining fractional Shares. Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time they are due.

7.No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF THE SHARES OF RESTRICTED STOCK PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS RESTRICTED STOCK AWARD OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

8.Forfeiture Upon Termination as a Service Provider. Notwithstanding any contrary provision of this Agreement or the Notice of Grant of Restricted Stock, if Participant terminates service as a Service Provider for any or no reason prior to vesting, the then Unvested Shares of Restricted Stock awarded by this Agreement will thereupon be forfeited and automatically transferred to and reacquired by the Company at no cost to the Company upon the date of such termination and Participant will have no further rights thereunder.

9.Restriction on Transfer. Except for any transfer of the Shares to the Company or its assignees contemplated by this Agreement, none of the Shares or any beneficial interest therein shall be transferred, encumbered or otherwise disposed of in any way until such Shares shall have vested in accordance with the provisions of this Agreement, other than by will or the laws of descent and distribution. Any distribution or delivery to be made to Participant under this Agreement shall, if Participant is then deceased, be made to Participant’s designated beneficiary, or if no beneficiary survives Participant, to the administrator or executor of Participant’s estate. Any such transferee must furnish the Company with (a) written notice of his or her status as transferee, and (b) evidence satisfactory to the Company to establish the validity of the transfer and compliance with any laws or regulations pertaining to said transfer.

10.Right as a Stockholder. Subject to the terms hereof, Participant shall have all the rights of a shareholder with respect to such Shares that have not been forfeited during the Period of Restriction, including without limitation, the right to vote the Shares and receive any cash dividends declared thereon.

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11.Adjustments upon Certain Corporate Events. In the event of any merger, reorganization, consolidation, recapitalization, separation, liquidation, stock dividend, split-up, share combination, or other change in the corporate structure of the Company affecting the Common Stock, the Shares shall be increased, reduced or otherwise changed, and by virtue of any such change Participant shall in his or her capacity as owner of the Unvested Shares of Restricted Stock that have been awarded to him or her be entitled to new or additional or different shares of stock, cash or securities (other than rights or warrants to purchase securities); such new or additional or different shares, cash or securities shall thereupon be considered to be “Unvested Shares of Restricted Stock” and shall be subject to all of the conditions and restrictions which were applicable to the Unvested Shares of Restricted Stock pursuant to this Agreement. If Participant receives rights or warrants with respect to any Unvested Shares of Restricted Stock, such rights or warrants may be held or exercised by Participant, provided that until such exercise any such rights or warrants and after such exercise any shares or other securities acquired by the exercise of such rights or warrants shall be considered to be Unvested Shares of Restricted Stock and shall be subject to all of the conditions and restrictions which were applicable to the Unvested Shares of Restricted Stock pursuant to this Agreement. The Administrator in its absolute discretion at any time may accelerate the vesting of all or any portion of such new or additional shares of stock, cash or securities, rights or warrants to purchase securities or shares or other securities acquired by the exercise of such rights or warrants.

12.Address for Notices. Any notice to be given to the Company under the terms of this Agreement will be addressed to the Company at 1 Penumbra Place, 1351 Harbor Bay Parkway, Alameda, CA 94502, or at such other address as the Company may hereafter designate in writing.

13.Electronic Delivery. The Company may, in its sole discretion, decide to deliver any documents related to the Shares of Restricted Stock awarded under the Plan or future Restricted Stock that may be awarded under the Plan by electronic means or request Participant’s consent to participate in the Plan by electronic means. Participant hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through any on-line or electronic system established and maintained by the Company or another third party designated by the Company.

14.No Waiver. Either party’s failure to enforce any provision or provisions of this Agreement shall not in any way be construed as a waiver of any such provision or provisions, nor prevent that party from thereafter enforcing each and every other provision of this Agreement. The rights granted both parties herein are cumulative and shall not constitute a waiver of either party’s right to assert all other legal remedies available to it under the circumstances.

15.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns. The rights and obligations of Participant under this Agreement may only be assigned with the prior written consent of the Company.

16.Interpretation. The Administrator will have the power to interpret the Plan and this Agreement and to adopt such rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret or revoke any such rules (including, but not limited to, the determination of whether or not any Shares of Restricted Stock have vested). All actions taken and all

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interpretations and determinations made by the Administrator in good faith will be final and binding upon Participant, the Company and all other interested persons. Neither the Administrator nor any person acting on behalf of the Administrator will be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or this Agreement.

17.Additional Documents. Participant agrees upon request to execute any further documents or instruments necessary or desirable to carry out the purposes or intent of this Agreement.

18.Governing Law; Severability. This Agreement is governed by the internal substantive laws, but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Agreement shall continue in full force and effect.

19.Entire Agreement. The Plan is incorporated herein by reference. The Plan and this Agreement (including the exhibits referenced herein) constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.

[SIGNATURE PAGE FOLLOWS]

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Participant acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Agreement subject to all of the terms and provisions thereof. Participant has reviewed the Plan and this Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Agreement and fully understands all provisions of this Agreement. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Agreement. Participant further agrees to notify the Company upon any change in the residence address indicated below.

PARTICIPANTPENUMBRA, INC.

Signature        By

Print Name        Print Name

            Title

Residence Address

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EXHIBIT A

ELECTION UNDER SECTION 83(b)OF THE INTERNAL REVENUE CODE OF 1986

The undersigned taxpayer hereby elects, pursuant to Section 83(b) of the Internal Revenue Code of 1986, as amended, to include in taxpayer’s gross income or alternative minimum taxable income, as the case may be, for the current taxable year the amount of any compensation taxable to taxpayer in connection with taxpayer’s receipt of the property described below.

1. The name, address, taxpayer identification number and taxable year of the undersigned are as follows:

NAME:	SPOUSE:
ADDRESS:
TAXPAYER IDENTIFICATION NO.:	TAXABLE YEAR:

2. The property with respect to which the election is made is described as follows: __________ shares (the “Shares”) of the Common Stock of Penumbra, Inc. (the “Company”).

3. The date on which the property was transferred is:___________________ ,______.

4. The property is subject to the following restrictions:

The Shares may not be transferred and are subject to forfeiture under the terms of an agreement between the taxpayer and the Company. These restrictions lapse upon the satisfaction of certain conditions contained in such agreement.

5. The Fair Market Value at the time of transfer, determined without regard to any restriction other than a restriction which by its terms shall never lapse, of such property is: $_________________.

6. The amount (if any) paid for such property is: $_________________.

The undersigned has submitted a copy of this statement to the person for whom the services were performed in connection with the undersigned’s receipt of the above-described property. The transferee of such property is the person performing the services in connection with the transfer of said property.

The undersigned understands that the foregoing election may not be revoked except with the consent of the Commissioner.

Dated: ______________________, _____
	Taxpayer
The undersigned spouse of taxpayer joins in this election.
Dated: ______________________, _____
	Spouse of Taxpayer

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EX-10.2

PENUMBRA, INC.

AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

STOCK OPTION AGREEMENT

Unless otherwise defined herein, the terms defined in the Amended and Restated 2014 Equity Incentive Plan (the “Plan”) shall have the same defined meanings in this Stock Option Agreement (this “Option Agreement”).

I.NOTICE OF STOCK OPTION GRANT

Name:

Address:

The undersigned Participant has been granted an Option to purchase Common Stock of the Company, subject to the terms and conditions of the Plan and this Option Agreement, as follows:

Date of Grant:
Vesting Commencement Date:
Exercise Price per Share:	$
Total Number of Shares Granted:
Total Exercise Price:	$
Type of Option:	_____ Incentive Stock Option
	_____ Nonstatutory Stock Option
Term/Expiration Date:

Vesting Schedule: This Option shall be exercisable, in whole or in part, according to the following vesting schedule:

[Twenty-five percent (25%) of the Shares subject to this Option shall vest on the one (1) year anniversary of the Vesting Commencement Date, and one forty-eighth (1/48^th) of the Shares subject to this Option shall vest each month thereafter on the same day of the month as the Vesting Commencement Date (and if there is no corresponding day, on the last day of the month), subject to Participant continuing to be a Service Provider through each such date.]

Notwithstanding the foregoing, in the event of a Change in Control, and subject to Participant continuing to be a Service Provider through the date of such Change in Control, Participant will fully

vest in and have the right to exercise all of the Shares subject to this Option. The Administrator will notify Participant in writing or electronically that this Option will be exercisable for a period of time determined by the Administrator in its sole discretion, and, to the extent the Administrator determines, terminate upon or immediately prior to the effectiveness of the Change in Control.

Termination Period:

This Option shall be exercisable for three (3) months after Participant ceases to be a Service Provider, unless Participant ceases to be a Service Provider as a result of such Participant’s death or Disability, in which case this Option shall be exercisable for six (6) months after Participant ceases to be a Service Provider. Notwithstanding the foregoing sentence, in no event may this Option be exercised after the Term/Expiration Date as provided above and this Option may be subject to earlier termination as provided in Section 15 of the Plan.

II.AGREEMENT

1.Grant of Option. The Administrator of the Company hereby grants to the Participant named in the Notice of Stock Option Grant in Part I of this Agreement (“Participant”), an option (“Option”) to purchase the number of Shares set forth in the Notice of Stock Option Grant, at the exercise price per Share set forth in the Notice of Stock Option Grant (the “Exercise Price”), and subject to the terms and conditions of the Plan, which is incorporated herein by reference. Subject to Section 20 of the Plan, in the event of a conflict between the terms and conditions of the Plan and this Option Agreement, the terms and conditions of the Plan shall prevail.

If designated in the Notice of Stock Option Grant as an Incentive Stock Option (“ISO”), this Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. Nevertheless, to the extent that it exceeds the $100,000 rule of Code Section 422(d), this Option shall be treated as a Nonstatutory Stock Option (“NSO”). Further, if for any reason this Option (or portion thereof) shall not qualify as an ISO, such as due to the stockholders of the Company not approving the Plan within twelve (12) months after the date the Plan is adopted by the Board, then, to the extent of such nonqualification, such Option (or portion thereof) shall be regarded as a NSO granted under the Plan. In no event shall the Administrator, the Company or any Parent or Subsidiary or any of their respective employees or directors have any liability to Participant (or any other person) due to the failure of this Option to qualify for any reason as an ISO.

2.Exercise of Option.

(a)Right to Exercise. This Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice of Stock Option Grant and with the applicable provisions of the Plan and this Option Agreement.

(b)Method of Exercise. This Option shall be exercisable by delivery of an exercise notice in the form attached hereto as Exhibit A (the “Exercise Notice”) or in a manner and pursuant to such procedures as the Administrator may determine, which shall state the election to exercise this Option, the number of Shares with respect to which this Option is being exercised (the “Exercised Shares”), and such other representations and agreements as may be required by the Company. The

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Exercise Notice shall be accompanied by payment of the aggregate Exercise Price as to all Exercised Shares, together with any applicable tax withholding. This Option shall be deemed to be exercised upon receipt by the Company of such fully executed Exercise Notice accompanied by the aggregate Exercise Price, together with any applicable tax withholding.

No Shares shall be issued pursuant to the exercise of an Option unless such issuance and such exercise comply with Applicable Laws. Assuming such compliance, for income tax purposes the Shares shall be considered transferred to Participant on the date on which this Option is exercised with respect to such Shares.

3.Lock-Up Period. Participant hereby agrees that Participant shall not offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend, or otherwise transfer or dispose of, directly or indirectly, any Common Stock (or other securities) of the Company or enter into any swap, hedging or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of any Common Stock (or other securities) of the Company held by Participant (other than those included in the registration) for a period specified by the representative of the underwriters of Common Stock (or other securities) of the Company not to exceed one hundred and eighty (180) days following the effective date of any registration statement of the Company filed under the Securities Act (or such other period as may be requested by the Company or the underwriters to accommodate regulatory restrictions on (i) the publication or other distribution of research reports and (ii) analyst recommendations and opinions, including, but not limited to, the restrictions contained in NASD Rule 2711(f)(4) or NYSE Rule 472(f)(4), or any successor provisions or amendments thereto).

Participant agrees to execute and deliver such other agreements as may be reasonably requested by the Company or the underwriters which are consistent with the foregoing or which are necessary to give further effect thereto. In addition, if requested by the Company or the representative of the underwriters of Common Stock (or other securities) of the Company, Participant shall provide, within ten (10) days of such request, such information as may be required by the Company or such representative in connection with the completion of any public offering of the Company’s securities pursuant to a registration statement filed under the Securities Act. The obligations described in this Section 3 shall not apply to a registration relating solely to employee benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated in the future, or a registration relating solely to a Commission Rule 145 transaction on Form S-4 or similar forms that may be promulgated in the future. The Company may impose stop-transfer instructions with respect to the shares of Common Stock (or other securities) subject to the foregoing restriction until the end of said one hundred and eighty (180) day (or other) period. Participant agrees that any transferee of this Option or shares acquired pursuant to this Option shall be bound by this Section 3.

4.Method of Payment. Payment of the aggregate Exercise Price shall be by any of the following, or a combination thereof, at the election of Participant:

(a)cash;

(b)check;

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(c)consideration received by the Company under a formal cashless exercise program adopted by the Company in connection with the Plan; or

(d)surrender of other Shares which (i) shall be valued at its Fair Market Value on the date of exercise, and (ii) must be owned free and clear of any liens, claims, encumbrances or security interests, if accepting such Shares, in the sole discretion of the Administrator, shall not result in any adverse accounting consequences to the Company.

5.Restrictions on Exercise. This Option may not be exercised if the issuance of such Shares upon such exercise or the method of payment of consideration for such shares would constitute a violation of any Applicable Law.

6.Non-Transferability of Option. This Option may not be transferred in any manner otherwise than by will or by the laws of descent or distribution and may be exercised during the lifetime of Participant only by Participant. The terms of the Plan and this Option Agreement shall be binding upon the executors, administrators, heirs, successors and assigns of Participant.

7.Term of Option. This Option may be exercised only within the term set out in the Notice of Stock Option Grant, and may be exercised during such term only in accordance with the Plan and the terms of this Option Agreement.

8.Tax Obligations.

(e)Tax Withholding. Participant agrees to make appropriate arrangements with the Company (or the Parent or Subsidiary employing or retaining Participant) for the satisfaction of all Federal, state, local and foreign income and employment tax withholding requirements applicable to the Option exercise. Participant acknowledges and agrees that the Company may refuse to honor the exercise and refuse to deliver the Shares if such withholding amounts are not delivered at the time of exercise.

(f)Notice of Disqualifying Disposition of ISO Shares. If the Option granted to Participant herein is an ISO, and if Participant sells or otherwise disposes of any of the Shares acquired pursuant to the ISO on or before the later of (i) the date two (2) years after the Date of Grant, or (ii) the date one (1) year after the date of exercise, Participant shall immediately notify the Company in writing of such disposition. Participant agrees that Participant may be subject to income tax withholding by the Company on the compensation income recognized by Participant.

(g)Code Section 409A. Notwithstanding any provision of the Plan or this Option Agreement to the contrary, this Option is intended to be exempt from Code Section 409A; provided, that the Company does not guarantee to Participant any particular tax treatment of the Option. In no event whatsoever shall the Company be liable for any additional tax, interest or penalties that may be imposed on Participant by Code Section 409A or any damages for failing to comply with Code Section 409A.

9.Entire Agreement; Governing Law. The Plan is incorporated herein by reference. The Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject

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matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant. This Option Agreement is governed by the internal substantive laws but not the choice of law rules of California.

10.No Guarantee of Continued Service. PARTICIPANT ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO THE VESTING SCHEDULE HEREOF IS EARNED ONLY BY CONTINUING AS A SERVICE PROVIDER AT THE WILL OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) AND NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES HEREUNDER. PARTICIPANT FURTHER ACKNOWLEDGES AND AGREES THAT THIS AGREEMENT, THE TRANSACTIONS CONTEMPLATED HEREUNDER AND THE VESTING SCHEDULE SET FORTH HEREIN DO NOT CONSTITUTE AN EXPRESS OR IMPLIED PROMISE OF CONTINUED ENGAGEMENT AS A SERVICE PROVIDER FOR THE VESTING PERIOD, FOR ANY PERIOD, OR AT ALL, AND SHALL NOT INTERFERE IN ANY WAY WITH PARTICIPANT’S RIGHT OR THE RIGHT OF THE COMPANY (OR THE PARENT OR SUBSIDIARY EMPLOYING OR RETAINING PARTICIPANT) TO TERMINATE PARTICIPANT’S RELATIONSHIP AS A SERVICE PROVIDER AT ANY TIME, WITH OR WITHOUT CAUSE.

[SIGNATURE PAGE FOLLOWS]

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Participant acknowledges receipt of a copy of the Plan and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts this Option subject to all of the terms and provisions thereof. Participant has reviewed the Plan and this Option in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Option and fully understands all provisions of this Option. Participant hereby agrees to accept as binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan or this Option. Participant further agrees to notify the Company upon any change in the residence address indicated below.

PARTICIPANT	PENUMBRA, INC.
Signature	By
Print Name	Print Name
	Title
Residence Address

EXHIBIT A

AMENDED AND RESTATED 2014 EQUITY INCENTIVE PLAN

EXERCISE NOTICE

Penumbra, Inc.

1 Penumbra Place

1351 Harbor Bay Parkway

Alameda, CA 94502

Attention: Treasurer

1.Exercise of Option. Effective as of today, ________________, ____, the undersigned (“Participant”) hereby elects to exercise Participant’s option (the “Option”) to purchase ________________ shares of the Common Stock (the “Shares”) of Penumbra, Inc. (the “Company”) under and pursuant to the Amended and Restated 2014 Equity Incentive Plan (the “Plan”) and the Stock Option Agreement dated ______________, _____ (the “Option Agreement”).

2.Delivery of Payment. Participant herewith delivers to the Company the full purchase price of the Shares, as set forth in the Option Agreement, and any and all withholding taxes due in connection with the exercise of the Option.

3.Representations of Participant. Participant acknowledges that Participant has received, read and understood the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.

4.Rights as Stockholder. Until the issuance of the Shares (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Common Stock subject to an Award, notwithstanding the exercise of the Option. The Shares shall be issued to Participant as soon as practicable after the Option is exercised in accordance with the Option Agreement. No adjustment shall be made for a dividend or other right for which the record date is prior to the date of issuance except as provided in Section 15 of the Plan.

5.Tax Consultation. Participant understands that Participant may suffer adverse tax consequences as a result of Participant’s purchase or disposition of the Shares. Participant represents that Participant has consulted with any tax consultants Participant deems advisable in connection with the purchase or disposition of the Shares and that Participant is not relying on the Company for any tax advice.

6.Successors and Assigns. The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this Exercise Notice shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer

herein set forth, this Exercise Notice shall be binding upon Participant and his or her heirs, executors, administrators, successors and assigns.

7.Interpretation. Any dispute regarding the interpretation of this Exercise Notice shall be submitted by Participant or by the Company forthwith to the Administrator, which shall review such dispute at its next regular meeting. The resolution of such a dispute by the Administrator shall be final and binding on all parties.

8.Governing Law; Severability. This Exercise Notice is governed by the internal substantive laws, but not the choice of law rules, of California. In the event that any provision hereof becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable or void, this Exercise Notice shall continue in full force and effect.

9.Entire Agreement. The Plan and Option Agreement are incorporated herein by reference. This Exercise Notice, the Plan and the Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and Participant with respect to the subject matter hereof, and may not be modified adversely to the Participant’s interest except by means of a writing signed by the Company and Participant.

Submitted by:	Accepted by:
PARTICIPANT	PENUMBRA, INC.
Signature	By
Print Name	Print Name
Address:	Title
	Date Received

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EX-31.1

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Adam Elsesser, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Penumbra, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) (Omitted pursuant to Exchange Act Rule 13a-14);

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

/s/ Adam Elsesser

Adam Elsesser

Chairman, Chief Executive Officer and President

EX-31.2

Exhibit 31.2

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Sri Kosaraju, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q of Penumbra, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) (Omitted pursuant to Exchange Act Rule 13a-14);

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 12, 2015

/s/ Sri Kosaraju

Sri Kosaraju

Chief Financial Officer and Head of Strategy

EX-32.1

Exhibit 32.1

PENUMBRA, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Penumbra, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2015, as filed with the Securities and Exchange Commission (the “Report”), Adam Elsesser, Chairman, Chief Executive Officer and President of the Company, and Sri Kosaraju, Chief Financial Officer and Head of Strategy of the Company, respectively, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

• The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

• The information in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 12, 2015

/s/ Adam Elsesser

Adam Elsesser

Chairman, Chief Executive Officer and President

/s/ Sri Kosaraju

Sri Kosaraju

Chief Financial Officer and Head of Strategy

XML

Balance Sheet Components - Accounts Receivable, Net (Details) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Allowance for Doubtful Accounts Receivable [Roll Forward]
Balance at beginning of period	$ 602	$ 471	$ 471
Charged to costs and expenses	(108)	$ 172	150
Deductions	0		(19)
Balance at end of period	$ 494		$ 602

XML

Warrants (Details)	12 Months Ended
	Dec. 31, 2004 $ / shares shares
Equity [Abstract]
Number of shares of common stock called by warrants | shares	211,138
Purchase price of common stock (in dollars per share)	$ 0.01
Term of warrants	10 years

XML

Related Party Transactions (Details) - USD ($)	1 Months Ended		9 Months Ended
	Jul. 31, 2011	Mar. 31, 2005	Sep. 30, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Options exercised (shares)			938,456
Promissory notes receivable			$ 26,000	$ 117,000
Stockholders
Related Party Transaction [Line Items]
Promissory notes receivable			$ 25,850	$ 100,000
Stockholders | March 2005 Transaction
Related Party Transaction [Line Items]
Options exercised (shares)		250,000
Interest rate on promissory notes		2.92%
Promissory notes receivable		$ 21,250
Stockholders | July 2011 Transaction
Related Party Transaction [Line Items]
Options exercised (shares)	5,000
Promissory notes receivable	$ 4,600

XML

Stock Option Plans - Stock Plans (Details) - USD ($)	9 Months Ended
	Sep. 30, 2015	Sep. 17, 2015	Dec. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of options outstanding (shares)	3,766,094		2,900,676
Number of options unvested and subject to repurchase (shares)	15,662		33,081
Liability relating to cash received from employees for exercise of unvested options	$ 100,000		$ 100,000
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of awards outstanding (shares)	759,271		367,126
Employee Stock Purchase Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for future issuance (shares)		600,000
Minimum percent of eligible compensation per pay period to be used to purchase shares under plan	1.00%
Maximum percent of eligible compensation per pay period to be used to purchase shares under plan	15.00%
Purchase price of common stock, percent of fair market value	85.00%
Maximum number of shares that may be purchased by any one employee	2,000
Maximum value of shares that may be purchased by any one employee	$ 25,000
2005 Stock Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted since inception of plan (shares)	5,431,017		5,431,017
Number of options outstanding (shares)	1,767,324		2,707,176
Number of options unvested and subject to repurchase (shares)	15,662		33,081
2005 Stock Plan | Stock Options | Vesting, First Year
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rate	25.00%
2005 Stock Plan | Stock Options | Vesting, After First Year, Monthly Vesting Rate
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Award vesting rate	2.08%
2005 Stock Plan | Incentive Stock Options (ISO)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Minimum voting rights for determination of exercise price, percent	10.00%
Minimum exercise price, percent over fair market value	110.00%
2005 Stock Plan | Incentive Stock Options (ISO) | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award	5 years
2005 Stock Plan | Other Options | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award	10 years
2011 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted since inception of plan (shares)	145,000		145,000
Number of options outstanding (shares)	145,000		145,000
2011 Equity Incentive Plan | Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Term of award	10 years
Award vesting period	4 years
2011 Equity Incentive Plan | Incentive Stock Options (ISO)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Minimum voting rights for determination of exercise price, percent	10.00%
Minimum exercise price, percent over fair market value	110.00%
2011 Equity Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted since inception of plan (shares)	505,000		505,000
Number of awards outstanding (shares)	249,125		367,126
Awards forfeited since inception of plan (shares)	4,667		1,667
2014 Equity Incentive Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted since inception of plan (shares)	1,857,900		48,500
Number of options outstanding (shares)	1,853,770		48,500
Options forfeited since inception of plan (shares)	4,130		1,000
2014 Equity Incentive Plan | Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Awards granted since inception of plan (shares)	673,361		0
Number of awards outstanding (shares)	510,146		0

XML

Balance Sheet Components - Product Warranty (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 314	$ 323
Accruals of warranties issued	545	149
Settlements of warranty claims	(241)	(158)
Balance at the end of the period	$ 618	$ 314

XML

Organization and Description of Business (Details)	9 Months Ended
	Sep. 30, 2015 market
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Number of major markets	2

XML

Stock Option Plans - Restricted Stock Activity (Details) - Restricted Stock	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Number of shares
Unvested beginning balance (shares) | shares	367,126
Granted (shares) | shares	673,361
Vested (shares) | shares	(278,216)
Cancelled/Forfeited (shares) | shares	(3,000)
Unvested and expected to vest ending balance (shares) | shares	759,271
Weighted Average Grant Date Fair Value
Unvested beginning balance (in dollars per share)	$ 7.26
Granted (in dollars per share)	14.60
Vested (in dollars per share)	11.77
Cancelled/Forfeited (in dollars per share)	7.75
Unvested and expected to vest ending balance (in dollars per share)	$ 12.12

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Basis of Presentation

The accompanying interim condensed consolidated balance sheet as of September 30, 2015, the interim condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, the interim condensed consolidated statement of preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2015, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The December 31, 2014 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

 The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2015 and results of its operations for the three and nine months ended September 30, 2015 and 2014, and the cash flows for the nine months ended September 30, 2015 and 2014. The interim results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other future annual or interim period.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and notes thereto contained in the Company’s Prospectus dated September 17, 2015 as filed by the Company with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the Company’s Registration Statement on Form S-1 (“Prospectus”) (File No. 333-206412).

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to provisions for doubtful accounts, sales return reserve, warranty reserves, valuation of inventories, useful lives of property and equipment, income taxes, the valuation of equity instruments and contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.

Segments

Segments

The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. The Company determines revenue by geographic area, based on the destination to which it ships its products.

Foreign Currency Translation

Foreign Currency Translation

The Company’s condensed consolidated financial statements are prepared in United States Dollars (USD). Its foreign subsidiaries use their local currency as their functional currency and maintain their records in the local currency. Accordingly, the assets and liabilities of these subsidiaries are translated into USD using the current exchange rates in effect at the balance sheet date and equity accounts are translated into USD using historical rates. Revenues and expenses are translated using the average exchange rates in effect. The resulting foreign currency translation adjustments are recorded in other comprehensive income in the condensed consolidated balance sheets. Transactions denominated in foreign currency are translated at exchange rates at the date of transaction with foreign currency gains (losses) recorded in other income (expense), net in the condensed consolidated statements of operations and other comprehensive income. The Company recognized net foreign currency transaction gains of $0.1 million and $0.1 million during the three months ended September 30, 2015 and 2014, respectively, and $11,000 and $0.2 million during the nine months ended September 30, 2015 and 2014, respectively.

As the Company’s international operations grow, its risks associated with fluctuation in currency rates will become greater, and the Company will continue to reassess its approach to managing this risk. In addition, currency fluctuations or a weakening USD can increase the costs of the Company’s international expansion. To date, the Company has not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on its operating results and cash flows.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketable investments and accounts receivable. The majority of the Company’s cash is held by one financial institution in the United States in excess of federally insured limits. The Company maintained investments in money market funds that were not federally insured during the year ended December 31, 2014 and held cash in foreign banks of approximately $2.3 million and $0.8 million at September 30, 2015 and December 31, 2014, respectively, that was not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents.

All of the Company’s revenue has been derived from sales of its products in the United States and international markets. The Company uses both its own salesforce and independent distributors to sell its products. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising the Company’s customer base. The Company performs ongoing credit evaluations of its customers, including its distributors, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary.

Significant Risks and Uncertainties

Significant Risks and Uncertainties

The Company is subject to risks common to medical device companies including, but not limited to, new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the potential need to obtain additional financing. The Company is dependent on third party suppliers, in some cases single-source suppliers.

There can be no assurance that the Company’s products will continue to be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.

The Company’s products require approval or clearance from the U.S. Food and Drug Administration prior to commencing commercial sales in the United States. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. Approvals or clearances are also required in foreign jurisdictions in which the Company sells its products. If the Company is denied such approvals or clearances or such approvals or clearances are delayed, it may have a material adverse impact on the Company’s results of operations, financial position and liquidity.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.

Cash and Cash Equivalents

The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies and corporate debt securities. All highly liquid investments with stated maturities of three months or less from the date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than three months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks.

Marketable Investments

The Company determines the appropriate classification of its investments in marketable investments at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable investments have been classified and accounted for as available-for-sale. Investments with remaining maturities of more than one year are viewed by the Company as available to support current operations and are classified as current assets under the caption marketable investments in the accompanying condensed consolidated balance sheets. Investments in marketable investments are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss. Any realized gains or losses on the sale of marketable investments are determined on a specific identification method, and such gains and losses are reflected as a component of other income (expense), net.

Impairment of Marketable Investments

After determining the fair value of available-for-sale debt instruments, gains or losses on these securities are recorded to accumulated other comprehensive income (loss) until either the security is sold or the Company determines that the decline in value is other-than-temporary. The primary differentiating factors that the Company considers in classifying impairments as either temporary or other-than-temporary impairments is the intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value, the length of the time and the extent to which the market value of the investment has been less than cost, the financial condition and near-term prospects of the issuer.

Accounts Receivable

Accounts Receivable

Accounts receivable are stated at invoice value less estimated allowances for doubtful accounts. The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. The Company considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic related risks and economic conditions that may affect a customer’s ability to pay. In cases where there are circumstances that may impair a specific customer’s ability to meet its financial obligations, a specific allowance is recorded against amounts due, and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible.

Inventories

Inventories

Inventories are stated at the lower of cost (determined under the first-in first-out method) or market. Write downs are provided for raw materials, components or finished goods that are determined to be excessive or obsolete. Market value is determined as the lower of replacement cost or net realizable value. The Company regularly reviews inventory quantities in consideration of actual loss experience, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

The estimate of excess quantities is subjective and primarily dependent on the Company’s estimates of future demand for a particular product or components or raw materials used in the manufacturing of such product. If the estimate of future demand is inaccurate based on actual sales, the Company may increase the write down for excess inventory and record a charge to inventory impairment in the accompanying condensed consolidated statements of operations and comprehensive income. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over demand using the same lower of cost or market approach that has been used to value the inventory. The Company also periodically evaluates inventory quantities in consideration of actual loss experience.

Property and Equipment, Net

Property and Equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over five years, which is the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life. Upon retirement or sale, the cost and the related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-Lived Assets

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset.

Convertible Preferred Stock

Convertible Preferred Stock

The Company, prior to the closing of its initial public offering (“IPO”) on September 23, 2015, classified its outstanding convertible preferred stock as temporary equity in the condensed consolidated balance sheet due to the existence of certain change in control events that were not solely within the Company’s control, including liquidation, sale or transfer of the Company, that could trigger the ability of the holders of the convertible preferred stock to call for redemption of shares. Upon the closing of the IPO, all outstanding shares of convertible preferred stock automatically converted into shares of common stock on a one-for-one basis.

Revenue Recognition

Revenue Recognition

Revenue is comprised of product revenue net of returns, discounts, administration fees and sales rebates. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Evidence of an arrangement consists of customer orders and the Company typically considers delivery to have occurred once title and risk of loss has been transferred and the product has been delivered to the customer. The Company typically recognizes revenue when products are delivered to hospital customers or distributors. However, with respect to products that the Company consigns to hospitals, which primarily consist of coils, the Company recognizes revenue at the time hospitals utilize products in a procedure.

Deferred revenue represents amounts that the Company has already invoiced its customers and are ultimately expected to be recognized as revenue, but for which not all revenue recognition criteria have been met. The Company had a deferred revenue balance of $0.8 million and $1.6 million, as of September 30, 2015 and December 31, 2014, respectively.

The Company’s terms and conditions permit product returns and exchanges, and it records returns reserves in the period when revenue is recognized. Estimates are based on actual historical returns over the prior three years and are recorded as reductions in revenue at the time of sale. Upon recognition, the Company reduces revenue and cost of revenue for the estimated return. Return rates can fluctuate over time, but are sufficiently predictable to allow the Company to estimate expected future product returns.

Cost of Revenue

Cost of Revenue

Cost of revenue includes direct and indirect costs associated with the manufacture of the Company’s products. Direct costs include material and labor, while indirect costs include inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense and other labor and overhead costs incurred in the manufacturing of products. Cost of revenue also includes stock-based compensation, warranty replacement costs, cost of revenue related to product return reserves and excess and obsolete inventory write-downs.

Shipping Costs

Shipping Costs

Shipping and handling costs charged to customers are recorded as revenue. Shipping and handling costs are included in cost of revenue.

Research and Development (R&D) Expenses

Research and Development (R&D) Expenses

R&D costs primarily consist of product development, clinical and regulatory expenses, materials, depreciation and other costs associated with the development of the Company’s products. R&D costs also include related personnel and consultants’ salaries, benefits and related costs, including stock-based compensation. The Company expenses R&D costs as they are incurred.

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites. The Company estimates preclinical and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered.

Advertising Costs

Advertising Costs

Advertising costs are included in selling, general and administrative expenses and are expensed as incurred. Advertising costs consist primarily of trade show and booth costs, product demonstration, and marketing materials.

Stock-based Compensation

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation in the financial statements based upon fair value. The fair value of restricted stock awards is determined based on the number of units granted and the closing price of the Company’s common stock as of the grant date. The fair value of stock options is determined as of the grant date using the Black-Scholes option pricing model. The Company’s determination of the fair value of stock options is impacted by its common stock price as well as changes in assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected term that options will remain outstanding, expected common stock price volatility over the term of the option awards, risk-free interest rates and expected dividends.

The fair value is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period) on a straight-line basis. Stock-based compensation expense recognized at fair value includes the impact of estimated forfeitures. The Company estimates future forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. To the extent actual forfeiture results differ from the estimates, the difference is recorded as a cumulative adjustment in the period forfeiture estimates are revised. No compensation cost is recorded for options that do not vest.

Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustments as the underlying equity instruments vest. The fair value of these equity instruments are expensed over the service period.

Estimating the fair value of equity-settled awards as of the grant date using valuation models, such as the Black-Scholes option pricing model, is affected by assumptions regarding a number of complex variables. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. For all stock options granted to date, the Company estimated the volatility data based on a study of publicly traded industry peer companies. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. The Company uses the Staff Accounting Bulletin, or SAB, 110, simplified method to calculate the expected term, which is the average of the contractual term and vesting period.

Income Taxes

Income Taxes

The Company accounts for income taxes using the asset and liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance to reduce the net deferred tax assets to their estimated realizable value.

The calculation of the Company’s current provision for income taxes involves the use of estimates, assumptions and judgments while taking into account current tax laws, interpretation of current tax laws and possible outcomes of future tax audits. The Company has established reserves to address potential exposures related to tax positions that could be challenged by tax authorities. Although the Company believes its estimates, assumptions and judgments to be reasonable, any changes in tax law or its interpretation of tax laws and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements.

During interim periods, the Company generally utilizes the estimated annual effective tax rate method which involves the use of forecasted information. The discrete method of calculating the estimated effective tax rate, on the other hand, involves the use of actual year-to-date information. For interim periods where the discrete method of calculating the estimated effective tax rate is determined to be a more reliable method than the estimated annual effective tax rate method, the Company will use the more reliable method to estimate its interim period income tax accrual.

The calculation of the Company’s deferred tax asset balance involves the use of estimates, assumptions and judgments while taking into account estimates of the amounts and type of future taxable income. Actual future operating results and the underlying amount and type of income could differ materially from the Company’s estimates, assumptions and judgments thereby impacting the Company’s financial position and results of operations.

The Company follows the guidance relating to accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in the Company’s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company includes interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. The Company has not incurred any interest or penalties related to unrecognized tax benefits in any of the periods presented.

Comprehensive Income

Comprehensive Income

The Company is required to display comprehensive income and its components as part of the Company’s consolidated financial statements. Comprehensive income consists of net income, unrealized gains on available-for-sale investments and the effects of foreign currency translation.

Deferred Offering Costs

Deferred Offering Costs

Deferred offering costs, which primarily consisted of direct incremental legal and accounting fees were capitalized prior to the closing of the IPO. Upon closing of the IPO, the deferred offering costs were offset against IPO proceeds.

Net Income (Loss) Per Shae of Common Stock

Net Income (Loss) Per Share of Common Stock

The Company, for the periods prior to the closing of the IPO, calculated its basic and diluted net income (loss) per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. Under the two-class method, the Company determined whether it had net income (loss) attributable to common stockholders, which included the results of operations less current period preferred stock non-cumulative dividends. If it was determined that the Company did have net income (loss) attributable to common stockholders during a period, the related undistributed earnings were then allocated between common stock and the preferred stock based on the weighted average number of shares outstanding during the period to determine the numerator for the basic net income (loss) per share attributable to common stockholders. In computing diluted net income attributable to common stockholders, undistributed earnings were re-allocated to reflect the potential impact of dilutive securities to determine the numerator for the diluted net income per share attributable to common stockholders.

The Company’s basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. The diluted net income per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, restricted stock and common stock warrants are considered common stock equivalents.

Recently Issued Accounting Standards

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact of this accounting standard.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers—Deferral of the Effective Date to defer the effective date by one year for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The accounting standard is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this accounting standard

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Commitments and Contingencies - Royalty Obligations (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Cost of Sales
Other Commitments [Line Items]
Royalty expense	$ 0.6	$ 0.3	$ 1.4	$ 0.8
Royalty Agreement, March 2005
Other Commitments [Line Items]
Minimum annual royalty payments	$ 0.1		$ 0.1		$ 0.1
Term of royalty agreement			15 years
Royalty Agreement, April 2012
Other Commitments [Line Items]
Royalty as a percent of sales			5.00%
Term of royalty agreement			15 years
Royalty Agreement, April 2015
Other Commitments [Line Items]
Royalty as a percent of sales			2.00%
Term of royalty agreement			20 years

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Balance Sheet Components - Contractual Maturities of Marketable Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Due in one year		$ 16,442
Due in one to five years		31,811
Total	$ 0	$ 48,253

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Initial Public Offering (IPO) (Details) $ / shares in Units, $ in Thousands		9 Months Ended
	Sep. 23, 2015 USD ($) $ / shares shares	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)
Class of Stock [Line Items]
Proceeds from issuance of common stock issued in initial public offering, net of issuance costs		$ 125,916	$ 0
Preferred stock conversion to common stock, number of shares | shares	19,510,410
Preferred stock conversion to common stock, conversion ratio	1
Initial Public Offering
Class of Stock [Line Items]
Shares issued, shares | shares	4,600,000.0
Shares issued, price per share (in dollars per share) | $ / shares	$ 30.00
Proceeds from issuance of common stock issued in initial public offering, net of issuance costs	$ 124,800
Payments for underwriting discounts and commissions	9,700
Payments for other offering expenses	$ 3,600

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Convertible Preferred Stock (Details) $ in Thousands	Sep. 23, 2015 shares	Sep. 30, 2015 USD ($) shares	Dec. 31, 2014 USD ($) shares
Temporary Equity [Line Items]
Shares authorized		0	25,000,000
Shares issued		0	19,510,410
Shares outstanding		0	19,510,410
Proceeds net of issuance costs | $		$ 0	$ 111,467
Aggregate liquidation amount | $			$ 149,361
Preferred stock conversion to common stock, number of shares	19,510,410
Preferred stock conversion to common stock, conversion ratio	1
Series A Preferred Stock
Temporary Equity [Line Items]
Shares authorized			1,000,000
Shares issued			1,000,000
Shares outstanding			1,000,000
Proceeds net of issuance costs | $			$ 299
Aggregate liquidation amount | $			$ 554
Series B Preferred Stock
Temporary Equity [Line Items]
Shares authorized			4,287,486
Shares issued			4,005,338
Shares outstanding			4,005,338
Proceeds net of issuance costs | $			$ 6,536
Aggregate liquidation amount | $			$ 11,725
Series C Preferred Stock
Temporary Equity [Line Items]
Shares authorized			4,388,715
Shares issued			4,168,218
Shares outstanding			4,168,218
Proceeds net of issuance costs | $			$ 13,266
Aggregate liquidation amount | $			$ 22,238
Series D Preferred Stock
Temporary Equity [Line Items]
Shares authorized			3,944,733
Shares issued			3,881,459
Shares outstanding			3,881,459
Proceeds net of issuance costs | $			$ 19,647
Aggregate liquidation amount | $			$ 30,976
Series E Preferred Stock
Temporary Equity [Line Items]
Shares authorized			1,973,684
Shares issued			1,909,940
Shares outstanding			1,909,940
Proceeds net of issuance costs | $			$ 14,507
Aggregate liquidation amount | $			$ 21,609
Series F Preferred Stock
Temporary Equity [Line Items]
Shares authorized			5,303,031
Shares issued			4,545,455
Shares outstanding			4,545,455
Proceeds net of issuance costs | $			$ 57,212
Aggregate liquidation amount | $			$ 62,259
Undesignated
Temporary Equity [Line Items]
Shares authorized			4,102,351
Shares issued			0
Shares outstanding			0
Proceeds net of issuance costs | $			$ 0
Aggregate liquidation amount | $			$ 0

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Net Income (Loss) per Share of Common Stock attributable to Common Stockholders - Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Numerator
Net income	$ 901	$ 172	$ 732	$ 1,829
Less: Deemed dividend paid to preferred stockholders upon repurchase	0	(6,344)	0	(6,344)
Undistributed (income) loss attributable to preferred stockholders, basic	(625)	4,980	(557)	3,582
Undistributed (income) loss attributable to preferred stockholders, diluted	(625)	4,980	(557)	3,582
Net income (loss) attributable to common stockholders—basic	276	(1,192)	175	(933)
Net income (loss) attributable to common stockholders—diluted	$ 276	$ (1,192)	$ 175	$ (933)
Denominator
Weighted average shares used to compute net income (loss) per share attributable to common stockholders — Basic	7,853,730	4,688,045	5,962,031	4,577,725
Weighted average shares used to compute net income (loss) per share attributable to common stockholders — Diluted	10,189,248	4,688,045	8,494,651	4,577,725
Net income (loss) per share attributable to common stockholders — Basic (in dollars per share)	$ 0.04	$ (0.25)	$ 0.03	$ (0.20)
Net income (loss) per share attributable to common stockholders — Diluted (in dollars per share)	$ 0.03	$ (0.25)	$ 0.02	$ (0.20)
Stock Options
Denominator
Potential dilutive share-based payment awards, as calculated using treasury stock method	1,979,194	0	2,362,685	0
Restricted Stock
Denominator
Potential dilutive restricted stock, as calculated using treasury stock method	356,324	0	169,935	0

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Credit Facility (Details) - Revolving credit facility - Wells Fargo Bank, National Association	1 Months Ended
	May. 31, 2012 USD ($)
Line of Credit Facility [Line Items]
Maximum borrowing capacity	$ 15,000,000.0
One-month London Inter-Bank Offered Rate
Line of Credit Facility [Line Items]
Basis spread on variable rate	1.75%

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2015

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying interim condensed consolidated balance sheet as of September 30, 2015, the interim condensed consolidated statements of operations for the three and nine months ended September 30, 2015 and 2014, the interim condensed consolidated statement of preferred stock and stockholders’ equity (deficit) for the nine months ended September 30, 2015, and the interim condensed consolidated statements of cash flows for the nine months ended September 30, 2015 and 2014 are unaudited. The unaudited interim condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The December 31, 2014 condensed consolidated balance sheet was derived from the audited financial statements as of that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.

 The unaudited interim condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2015 and results of its operations for the three and nine months ended September 30, 2015 and 2014, and the cash flows for the nine months ended September 30, 2015 and 2014. The interim results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015 or for any other future annual or interim period.

The information included in this quarterly report on Form 10-Q should be read in conjunction with the financial statements and notes thereto contained in the Company’s Prospectus dated September 17, 2015 as filed by the Company with the SEC pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended, relating to the Company’s Registration Statement on Form S-1 (“Prospectus”) (File No. 333-206412).

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to provisions for doubtful accounts, sales return reserve, warranty reserves, valuation of inventories, useful lives of property and equipment, income taxes, the valuation of equity instruments and contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.

Segments

The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. The Company determines revenue by geographic area, based on the destination to which it ships its products.

Foreign Currency Translation

The Company’s condensed consolidated financial statements are prepared in United States Dollars (USD). Its foreign subsidiaries use their local currency as their functional currency and maintain their records in the local currency. Accordingly, the assets and liabilities of these subsidiaries are translated into USD using the current exchange rates in effect at the balance sheet date and equity accounts are translated into USD using historical rates. Revenues and expenses are translated using the average exchange rates in effect. The resulting foreign currency translation adjustments are recorded in other comprehensive income in the condensed consolidated balance sheets. Transactions denominated in foreign currency are translated at exchange rates at the date of transaction with foreign currency gains (losses) recorded in other income (expense), net in the condensed consolidated statements of operations and other comprehensive income. The Company recognized net foreign currency transaction gains of $0.1 million and $0.1 million during the three months ended September 30, 2015 and 2014, respectively, and $11,000 and $0.2 million during the nine months ended September 30, 2015 and 2014, respectively.

As the Company’s international operations grow, its risks associated with fluctuation in currency rates will become greater, and the Company will continue to reassess its approach to managing this risk. In addition, currency fluctuations or a weakening USD can increase the costs of the Company’s international expansion. To date, the Company has not entered into any foreign currency hedging contracts, since exchange rate fluctuations have not had a material impact on its operating results and cash flows.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents, marketable investments and accounts receivable. The majority of the Company’s cash is held by one financial institution in the United States in excess of federally insured limits. The Company maintained investments in money market funds that were not federally insured during the year ended December 31, 2014 and held cash in foreign banks of approximately $2.3 million and $0.8 million at September 30, 2015 and December 31, 2014, respectively, that was not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents.

All of the Company’s revenue has been derived from sales of its products in the United States and international markets. The Company uses both its own salesforce and independent distributors to sell its products. Concentrations of credit risk with respect to accounts receivable are limited due to the large number of entities comprising the Company’s customer base. The Company performs ongoing credit evaluations of its customers, including its distributors, does not require collateral, and maintains allowances for potential credit losses on customer accounts when deemed necessary.

One customer (a distributor) accounted for 11% and 11%, respectively, of the Company’s revenue during the three months ended September 30, 2015 and 2014. The same customer accounted for 11% and 12%, respectively, of the Company’s revenue during the nine months ended September 30, 2015 and 2014. No customer accounted for greater than 10% of the Company’s accounts receivable balance as of September 30, 2015 or December 31, 2014.

Significant Risks and Uncertainties

The Company is subject to risks common to medical device companies including, but not limited to, new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, product liability, uncertainty of market acceptance of products and the potential need to obtain additional financing. The Company is dependent on third party suppliers, in some cases single-source suppliers.

There can be no assurance that the Company’s products will continue to be accepted in the marketplace, nor can there be any assurance that any future products can be developed or manufactured at an acceptable cost and with appropriate performance characteristics, or that such products will be successfully marketed, if at all.

The Company’s products require approval or clearance from the U.S. Food and Drug Administration prior to commencing commercial sales in the United States. There can be no assurance that the Company’s products will receive all of the required approvals or clearances. Approvals or clearances are also required in foreign jurisdictions in which the Company sells its products. If the Company is denied such approvals or clearances or such approvals or clearances are delayed, it may have a material adverse impact on the Company’s results of operations, financial position and liquidity.

Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities, approximate fair value due to their relatively short maturities.

Cash, Cash Equivalents and Marketable Investments

The Company invests its cash primarily in money market funds and in highly liquid debt instruments of U.S. federal and municipal governments and their agencies and corporate debt securities. All highly liquid investments with stated maturities of three months or less from the date of purchase are classified as cash equivalents; all highly liquid investments with stated maturities of greater than three months are classified as marketable investments. The majority of the Company’s cash and investments are held in U.S. banks.

The Company determines the appropriate classification of its investments in marketable investments at the time of purchase and re-evaluates such designation at each balance sheet date. The Company’s marketable investments have been classified and accounted for as available-for-sale. Investments with remaining maturities of more than one year are viewed by the Company as available to support current operations and are classified as current assets under the caption marketable investments in the accompanying condensed consolidated balance sheets. Investments in marketable investments are carried at fair value, with the unrealized gains and losses reported as a component of accumulated other comprehensive loss. Any realized gains or losses on the sale of marketable investments are determined on a specific identification method, and such gains and losses are reflected as a component of other income (expense), net.

Impairment of Marketable Investments

After determining the fair value of available-for-sale debt instruments, gains or losses on these securities are recorded to accumulated other comprehensive income (loss) until either the security is sold or the Company determines that the decline in value is other-than-temporary. The primary differentiating factors that the Company considers in classifying impairments as either temporary or other-than-temporary impairments is the intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in market value, the length of the time and the extent to which the market value of the investment has been less than cost, the financial condition and near-term prospects of the issuer. There were no other-than-temporary impairments for the three or nine months ended September 30, 2015 and 2014. The Company did not have any marketable investments as of September 30, 2015.

Accounts Receivable

Accounts receivable are stated at invoice value less estimated allowances for doubtful accounts. The Company continually monitors customer payments and maintains a reserve for estimated losses resulting from its customers’ inability to make required payments. The Company considers factors such as historical experience, credit quality, age of the accounts receivable balances, geographic related risks and economic conditions that may affect a customer’s ability to pay. In cases where there are circumstances that may impair a specific customer’s ability to meet its financial obligations, a specific allowance is recorded against amounts due, and thereby reduces the net recognized receivable to the amount reasonably believed to be collectible.

Inventories

Inventories are stated at the lower of cost (determined under the first-in first-out method) or market. Write downs are provided for raw materials, components or finished goods that are determined to be excessive or obsolete. Market value is determined as the lower of replacement cost or net realizable value. The Company regularly reviews inventory quantities in consideration of actual loss experience, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

The estimate of excess quantities is subjective and primarily dependent on the Company’s estimates of future demand for a particular product or components or raw materials used in the manufacturing of such product. If the estimate of future demand is inaccurate based on actual sales, the Company may increase the write down for excess inventory and record a charge to inventory impairment in the accompanying condensed consolidated statements of operations and comprehensive income. The Company periodically evaluates the carrying value of inventory on hand for potential excess amounts over demand using the same lower of cost or market approach that has been used to value the inventory. The Company also periodically evaluates inventory quantities in consideration of actual loss experience. As a result of these evaluations, the Company recognized total write downs of $0.4 million and $0.9 million for the three months ended September 30, 2015 and 2014, respectively, and $0.7 million and $1.4 million for the nine months ended September 30, 2015 and 2014, respectively.

Property and Equipment, net

Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over five years, which is the estimated useful lives of the assets. Leasehold improvements are amortized using the straight-line method over the shorter of the lease term or estimated useful life. Upon retirement or sale, the cost and the related accumulated depreciation are removed from the condensed consolidated balance sheet and the resulting gain or loss is reflected in operations. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value. If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. There was no impairment of long-lived assets during the three or nine months ended September 30, 2015 and 2014.

Convertible Preferred Stock

The Company, prior to the closing of its initial public offering (“IPO”) on September 23, 2015, classified its outstanding convertible preferred stock as temporary equity in the condensed consolidated balance sheet due to the existence of certain change in control events that were not solely within the Company’s control, including liquidation, sale or transfer of the Company, that could trigger the ability of the holders of the convertible preferred stock to call for redemption of shares. Upon the closing of the IPO, all outstanding shares of convertible preferred stock automatically converted into shares of common stock on a one-for-one basis.

Revenue Recognition

Revenue is comprised of product revenue net of returns, discounts, administration fees and sales rebates. The Company recognizes revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Evidence of an arrangement consists of customer orders and the Company typically considers delivery to have occurred once title and risk of loss has been transferred and the product has been delivered to the customer. The Company typically recognizes revenue when products are delivered to hospital customers or distributors. However, with respect to products that the Company consigns to hospitals, which primarily consist of coils, the Company recognizes revenue at the time hospitals utilize products in a procedure.

Deferred revenue represents amounts that the Company has already invoiced its customers and are ultimately expected to be recognized as revenue, but for which not all revenue recognition criteria have been met. The Company had a deferred revenue balance of $0.8 million and $1.6 million, as of September 30, 2015 and December 31, 2014, respectively.

The Company’s terms and conditions permit product returns and exchanges, and it records returns reserves in the period when revenue is recognized. Estimates are based on actual historical returns over the prior three years and are recorded as reductions in revenue at the time of sale. Upon recognition, the Company reduces revenue and cost of revenue for the estimated return. Return rates can fluctuate over time, but are sufficiently predictable to allow the Company to estimate expected future product returns.

Cost of Revenue

Cost of revenue includes direct and indirect costs associated with the manufacture of the Company’s products. Direct costs include material and labor, while indirect costs include inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense and other labor and overhead costs incurred in the manufacturing of products. Cost of revenue also includes stock-based compensation, warranty replacement costs, cost of revenue related to product return reserves and excess and obsolete inventory write-downs.

Shipping Costs

Shipping and handling costs charged to customers are recorded as revenue. Shipping and handling costs are included in cost of revenue.

Research and Development (R&D) Expenses

R&D costs primarily consist of product development, clinical and regulatory expenses, materials, depreciation and other costs associated with the development of the Company’s products. R&D costs also include related personnel and consultants’ salaries, benefits and related costs, including stock-based compensation. The Company expenses R&D costs as they are incurred.

The Company’s clinical trial accruals are based on estimates of patient enrollment and related costs at clinical investigator sites. The Company estimates preclinical and clinical trial expenses based on the services performed pursuant to contracts with research institutions and clinical research organizations that conduct and manage preclinical studies and clinical trials on its behalf. In accruing service fees, the Company estimates the time period over which services will be performed and the level of patient enrollment and activity expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company will adjust the accrual accordingly. Payments made to third parties under these arrangements in advance of the receipt of the related services are recorded as prepaid expenses until the services are rendered.

Advertising Costs

Advertising costs are included in selling, general and administrative expenses and are expensed as incurred. Advertising costs consist primarily of trade show and booth costs, product demonstration, and marketing materials. Advertising costs were $0.1 million and $0.1 million for the three months ended September 30, 2015 and 2014, respectively, and were $0.4 millionand $0.2 million for the nine months ended September 30, 2015 and 2014, respectively.

Stock-Based Compensation

The Company recognizes the cost of stock-based compensation in the financial statements based upon fair value. The fair value of restricted stock awards is determined based on the number of units granted and the closing price of the Company’s common stock as of the grant date. The fair value of stock options is determined as of the grant date using the Black-Scholes option pricing model. The Company’s determination of the fair value of stock options is impacted by its common stock price as well as changes in assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, expected term that options will remain outstanding, expected common stock price volatility over the term of the option awards, risk-free interest rates and expected dividends.

The fair value is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period) on a straight-line basis. Stock-based compensation expense recognized at fair value includes the impact of estimated forfeitures. The Company estimates future forfeitures at the date of grant and revises the estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. To the extent actual forfeiture results differ from the estimates, the difference is recorded as a cumulative adjustment in the period forfeiture estimates are revised. No compensation cost is recorded for options that do not vest.

Equity instruments issued to non-employees are recorded at their fair value on the measurement date and are subject to periodic adjustments as the underlying equity instruments vest. The fair value of these equity instruments are expensed over the service period.

Estimating the fair value of equity-settled awards as of the grant date using valuation models, such as the Black-Scholes option pricing model, is affected by assumptions regarding a number of complex variables. Changes in the assumptions can materially affect the fair value and ultimately how much stock-based compensation expense is recognized. These inputs are subjective and generally require significant analysis and judgment to develop. For all stock options granted to date, the Company estimated the volatility data based on a study of publicly traded industry peer companies. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size and financial leverage of potential comparable companies. The risk-free interest rate is based on the yield available on U.S. Treasury zero-coupon issues similar in duration to the expected term of the equity-settled award. The Company uses the Staff Accounting Bulletin, or SAB, 110, simplified method to calculate the expected term, which is the average of the contractual term and vesting period.

Income Taxes

The Company accounts for income taxes using the asset and liability method, whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities, and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance to reduce the net deferred tax assets to their estimated realizable value.

The calculation of the Company’s current provision for income taxes involves the use of estimates, assumptions and judgments while taking into account current tax laws, interpretation of current tax laws and possible outcomes of future tax audits. The Company has established reserves to address potential exposures related to tax positions that could be challenged by tax authorities. Although the Company believes its estimates, assumptions and judgments to be reasonable, any changes in tax law or its interpretation of tax laws and the resolutions of potential tax audits could significantly impact the amounts provided for income taxes in the Company’s consolidated financial statements.

During interim periods, the Company generally utilizes the estimated annual effective tax rate method which involves the use of forecasted information. The discrete method of calculating the estimated effective tax rate, on the other hand, involves the use of actual year-to-date information. For interim periods where the discrete method of calculating the estimated effective tax rate is determined to be a more reliable method than the estimated annual effective tax rate method, the Company will use the more reliable method to estimate its interim period income tax accrual.

The calculation of the Company’s deferred tax asset balance involves the use of estimates, assumptions and judgments while taking into account estimates of the amounts and type of future taxable income. Actual future operating results and the underlying amount and type of income could differ materially from the Company’s estimates, assumptions and judgments thereby impacting the Company’s financial position and results of operations.

The Company follows the guidance relating to accounting for uncertainty in income taxes, which prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of uncertain tax positions taken or expected to be taken in the Company’s income tax return, and also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition.

The Company includes interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. The Company has not incurred any interest or penalties related to unrecognized tax benefits in any of the periods presented.

Comprehensive Income

The Company is required to display comprehensive income and its components as part of the Company’s consolidated financial statements. Comprehensive income consists of net income, unrealized gains on available-for-sale investments and the effects of foreign currency translation.

Deferred Offering Costs

Deferred offering costs, which primarily consisted of direct incremental legal and accounting fees were capitalized prior to the closing of the IPO. Upon closing of the IPO, the deferred offering costs were offset against IPO proceeds.

Net Income (Loss) Per Share of Common Stock

The Company, for the periods prior to the closing of the IPO, calculated its basic and diluted net income (loss) per share attributable to common stockholders in conformity with the two-class method required for companies with participating securities. Under the two-class method, the Company determined whether it had net income (loss) attributable to common stockholders, which included the results of operations less current period preferred stock non-cumulative dividends. If it was determined that the Company did have net income (loss) attributable to common stockholders during a period, the related undistributed earnings were then allocated between common stock and the preferred stock based on the weighted average number of shares outstanding during the period to determine the numerator for the basic net income (loss) per share attributable to common stockholders. In computing diluted net income attributable to common stockholders, undistributed earnings were re-allocated to reflect the potential impact of dilutive securities to determine the numerator for the diluted net income per share attributable to common stockholders.

The Company’s basic net income (loss) per share attributable to common stockholders is calculated by dividing the net income (loss) by the weighted average number of shares of common stock outstanding for the period. The diluted net income per share attributable to common stockholders is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, restricted stock and common stock warrants are considered common stock equivalents.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company is currently evaluating the impact of this accounting standard.

In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers—Deferral of the Effective Date to defer the effective date by one year for annual reporting periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period.

In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. The accounting standard is effective prospectively for annual periods beginning after December 15, 2016, and interim periods therein. Early adoption is permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of this accounting standard

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Net Income (Loss) per Share of Common Stock attributable to Common Stockholders - Antidilutive Securities (Details) - shares	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	1,327,750	3,421,757	1,327,750	3,421,757
Options to purchase common stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	1,321,250	2,976,992	1,321,250	2,976,992
Restricted Stock
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	6,500	368,793	6,500	368,793
Common stock warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from the computation of earnings per share	0	75,972	0	75,972

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Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 9,477	$ 5,105
Work in process	1,244	543
Finished goods	39,603	27,803
Inventories	$ 50,324	$ 33,451

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Convertible Preferred Stock (Tables)

9 Months Ended

Sep. 30, 2015

Temporary Equity Disclosure [Abstract]

Schedule of Convertible Preferred Stock

The convertible preferred stock at December 31, 2014 consisted of the following (in thousands, except shares):

Series	Shares Authorized	Shares Issued and Outstanding	Proceeds, Net of Issuance Costs		Aggregate Liquidation Amount
Series A Preferred Stock	1,000,000	1,000,000	$	299	$	554
Series B Preferred Stock	4,287,486	4,005,338	6,536		11,725
Series C Preferred Stock	4,388,715	4,168,218	13,266		22,238
Series D Preferred Stock	3,944,733	3,881,459	19,647		30,976
Series E Preferred Stock	1,973,684	1,909,940	14,507		21,609
Series F Preferred Stock	5,303,031	4,545,455	57,212		62,259
Undesignated	4,102,351	—	—		—
Total preferred stock	25,000,000	19,510,410	$	111,467	$	149,361

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Minimum Lease Payments under Operating Leases

 Future minimum lease payments under the non-cancelable operating leases as of September 30, 2015 are as follows (in thousands):

	Lease Payments
Three Months Ending December 31, 2015	$	766
Year Ending December 31:
2016	3,149
2017	3,145
2018	3,141
2019	3,223
2020	3,299
Thereafter	32,486
Total future minimum lease payments	$	49,209

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Stock Option Plans - Stock Option Activity (Details)	9 Months Ended
	Sep. 30, 2015 $ / shares shares
Number of Shares
Beginning balance (shares) | shares	2,900,676
Options granted (shares) | shares	1,809,400
Options exercised (shares) | shares	(938,456)
Options cancelled (shares) | shares	(5,526)
Ending balance (shares) | shares	3,766,094
Weighted Average Exercise Price
Beginning balance (in dollars per share)	$ 2.66
Options granted (in dollars per share)	21.47
Options exercised (in dollars per share)	0.95
Options cancelled (in dollars per share)	11.14
Ending balance (in dollars per share)	12.11
Weighted average grant date fair value of employee stock options granted (in dollars per share)	$ 9.69

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Balance Sheet Components - Property and Equipment, Net (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 13,254		$ 13,254		$ 8,670
Less: Accumulated depreciation and amortization	(4,608)		(4,608)		(3,489)
Property and equipment, net	8,646		8,646		5,181
Depreciation and amortization expense	500	$ 200	1,227	$ 520
Machinery and equipment
Property, Plant and Equipment [Line Items]
Total property and equipment	8,166		8,166		5,089
Furniture and fixtures
Property, Plant and Equipment [Line Items]
Total property and equipment	2,004		2,004		519
Leasehold improvements
Property, Plant and Equipment [Line Items]
Total property and equipment	1,434		1,434		379
Software
Property, Plant and Equipment [Line Items]
Total property and equipment	744		744		599
Computers
Property, Plant and Equipment [Line Items]
Total property and equipment	565		565		153
Construction in progress
Property, Plant and Equipment [Line Items]
Total property and equipment	$ 341		$ 341		$ 1,931

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Stock Option Plans (Tables)

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Option Activity

The following table summarizes the activity of stock options during the nine months ended September 30, 2015:

	Number of Shares		Weighted- Average Exercise Price
Balance, December 31, 2014	2,900,676		$	2.66
Options granted	1,809,400		21.47
Options exercised	(938,456	)	0.95
Options cancelled	(5,526	)	11.14
Balance, September 30, 2015	3,766,094		12.11

Summary of Unvested Restricted Stock Activity

The following table summarizes the activity of unvested restricted stock during the nine months ended September 30, 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	367,126		$	7.26
Granted	673,361		14.60
Vested	(278,216	)	11.77
Cancelled/Forfeited	(3,000	)	7.75
Unvested and expected to vest at September 30, 2015	759,271		12.12

Schedule of Stock-based Compensation Expense

The following table sets forth the stock-based compensation expense included in the consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of sales	$	141	$	65	$	271	$	189
Research and development	100		23		282		70
Sales, general and administrative	1,269		284		4,573		815
	$	1,510	$	372	$	5,126	$	1,074

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Net Income (Loss) per Share of Common Stock attributable to Common Stockholders (Tables)

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Reconciliation of the Numerator and Denominator used in the Calculation of the Basic and Diluted Earnings per Share

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share attributable to common stockholders is as follows (in thousands except share and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss) per share:
Numerator
Net income	$	901		$	172		$	732		$	1,829
Less: Deemed dividend paid to preferred stockholders upon repurchase	—			(6,344		)	—			(6,344		)
Less: Undistributed income attributable to preferred stockholders	(625		)	—			(557		)	—
Add: Undistributed loss attributable to preferred stockholders	—			4,980			—			3,582
Net income (loss) attributable to common stockholders—basic and diluted	$	276		$	(1,192	)	$	175		$	(933	)
Denominator
Weighted average shares used to compute net income (loss) attributable to common stockholders —Basic	7,853,730			4,688,045			5,962,031			4,577,725
Potential dilutive options, as calculated using treasury stock method	1,979,194			—			2,362,685			—
Potential dilutive restricted stock, as calculated using treasury stock method	356,324			—			169,935			—
Weighted average shares used to compute net income (loss) attributable to common stockholders —Diluted	10,189,248			4,688,045			8,494,651			4,577,725
Net income (loss) per share attributable to common stockholders —Basic	$	0.04		$	(0.25	)	$	0.03		$	(0.20	)
—Diluted	$	0.03		$	(0.25	)	$	0.02		$	(0.20	)

Schedule of Antidilutive Securities Excluded from Computation of Earnings per Share

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income (loss) per share of common stock for the periods presented, because the effect of including them would have been anti-dilutive: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Options to purchase common stock	1,321,250	2,976,992	1,321,250	2,976,992
Restricted stock	6,500	368,793	6,500	368,793
Common stock warrants	—	75,972	—	75,972
Total	1,327,750	3,421,757	1,327,750	3,421,757

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Organization and Description of Business

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Description of Business

Organization and Description of Business

Penumbra, Inc. (the “Company”) is a global interventional therapies company that designs, develops, manufactures and markets innovative medical devices. The Company has a broad portfolio of products that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. The conditions that the Company’s products address include, among others, ischemic stroke, hemorrhagic stroke and various peripheral vascular conditions that can be treated through thrombectomy and embolization procedures.

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Geographic Areas and Product Sales (Tables)

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Revenue by Geographic Area

The Company’s revenue by geographic area, based on the destination to which the Company ships its products, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
United States	$	35,394	$	22,305	$	89,364	$	59,281
Japan	5,420		3,467		14,030		10,796
Other International	9,602		6,692		28,285		20,030
Total	$	50,416	$	32,464	$	131,679	$	90,107

Revenue by Product Category

The following table sets forth revenue by product category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Neuro	$	36,309	$	26,988	$	102,363	$	77,056
Peripheral Vascular	14,107		5,476		29,316		13,051
Total	$	50,416	$	32,464	$	131,679	$	90,107

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Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Prepaid expenses	$ 5,772	$ 3,130
Income tax receivable	318	1,654
Other current assets	177	331
Prepaid expenses and other current assets	$ 6,267	$ 5,115

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Common Stock (Details)	9 Months Ended
	Sep. 30, 2015 vote
Equity [Abstract]
Common stock, number of votes per share	1

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 159,098	$ 3,290
Marketable investments	0	48,253
Accounts receivable, net of doubtful accounts of $494 and $602	26,055	18,912
Inventories	50,324	33,451
Deferred taxes	7,333	6,280
Prepaid expenses and other current assets	6,267	5,115
Total current assets	249,077	115,301
Property and equipment, net	8,646	5,181
Deferred taxes	1,309	571
Other non-current assets	293	328
Total assets	259,325	121,381
Current Liabilities:
Accounts payable	4,024	2,348
Accrued liabilities	24,253	18,475
Total current liabilities	28,277	20,823
Other non-current liabilities	2,458	1,461
Total liabilities	$ 30,735	$ 22,284
Commitments and contingencies
Convertible preferred stock, $0.001 par value per share—none authorized, issued and outstanding at September 30, 2015; 25,000,000 shares authorized, 19,510,410 shares issued and outstanding at December 31, 2014; aggregate liquidation value $149,361 at December 31, 2014	$ 0	$ 111,467
Stockholders’ Equity (Deficit):
Preferred stock, $0.001 par value per share—5,000,000 shares authorized, none issued and outstanding at September 30, 2015; None authorized, issued and outstanding at December 31, 2014	0	0
Common stock, $0.001 par value per share—300,000,000 shares authorized, 29,882,621 issued and outstanding at September 30, 2015; 40,000,000 shares authorized, 4,736,689 issued and outstanding at December 31, 2014	30	5
Additional paid-in capital	249,230	8,446
Notes receivable from stockholders	(26)	(117)
Accumulated other comprehensive loss	(1,536)	(864)
Accumulated deficit	(19,108)	(19,840)
Total stockholders’ equity (deficit)	228,590	(12,370)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$ 259,325	$ 121,381

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Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Payroll and employee-related expenses	$ 12,850	$ 8,221
Sales return reserve	2,839	2,164
Preclinical and clinical trial cost	1,405	2,319
Deferred revenue	784	1,591
Product warranty	618	314
Sales tax payable	412	306
Income tax payable	54	332
Other accrued liabilities	5,291	3,228
Total accrued liabilities	$ 24,253	$ 18,475

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Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited) (Parenthetical) $ in Thousands	9 Months Ended
	Sep. 30, 2015 USD ($)
Statement of Stockholders' Equity [Abstract]
Foreign currency translation adjustment, tax	$ 116
Unrealized gain on investments, tax	$ 159

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Common and Preferred Stock Repurchase (Details) - USD ($)	1 Months Ended		2 Months Ended	9 Months Ended
	Jul. 31, 2014	May. 31, 2014	Jun. 30, 2014	Sep. 30, 2015
Class of Stock [Line Items]
Share repurchase program, price per share (in dollars per share)		$ 13.20
Value of shares authorized to be repurchased		$ 2,000,000.0
Value of shares repurchased and retired				$ 342,000
Stock Options
Class of Stock [Line Items]
Number of shares authorized to be repurchased		45,000
Common Stock
Class of Stock [Line Items]
Number of shares authorized to be repurchased		70,612
Shares repurchased and retired				23,650
Common Stock | Stock Options
Class of Stock [Line Items]
Excess between the purchase and issuance price			$ 500,000
Preferred Stock
Class of Stock [Line Items]
Number of shares authorized to be repurchased		45,611
Share repurchase program, price per share (in dollars per share)	$ 13.20
Excess between the purchase and issuance price	$ 5,800,000		$ 500,000
Shares repurchased and retired	584,052
Value of shares repurchased and retired	$ 7,700,000

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Summary of Significant Accounting Policies - Concentration of Credit Risk (Details) $ in Millions	3 Months Ended		9 Months Ended
	Sep. 30, 2015 USD ($)	Sep. 30, 2014	Sep. 30, 2015 USD ($) financial_instituion	Sep. 30, 2014	Dec. 31, 2014 USD ($)
Customer Concentration Risk | Revenue | One Major Customer [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	11.00%	11.00%	11.00%	12.00%
United States
Concentration Risk [Line Items]
Number of financial institutions holding cash in excess of federally insured limits			1
Foreign Countries
Concentration Risk [Line Items]
Cash that is not federally insured | $	$ 2.3		$ 2.3		$ 0.8

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Income Taxes

9 Months Ended

Sep. 30, 2015

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company’s income tax expense (benefit), deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management's best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgments and estimates are required in determining the consolidated income tax expense (benefit).

The Company’s effective tax rate decreased to 56.8% for the three months ended September 30, 2015, compared to 56.9% for the three months ended September 30, 2014. The Company’s effective tax rate increased to 65.9% for the nine months ended September 30, 2015, compared to 32.8% for the nine months ended September 30, 2014. The Company historically calculated the provision for income taxes during interim reporting periods by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Although management believes the use of the annual effective tax rate method to be appropriate for prior interim reporting periods, for the fiscal three- and nine-month periods ended September 30, 2015, the Company used a discrete effective tax rate method to calculate taxes. The Company determined that since small changes in estimated “ordinary” income for fiscal 2015 would result in significant changes in the estimated annual effective tax rate, the discrete effective tax method would provide a more reliable estimate for the fiscal three- and nine-month periods ended September 30, 2015. It is possible that management may determine the use of the discrete effective tax rate method to be more appropriate than the annual effective tax rate method in future interim periods as well.

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Summary of Significant Accounting Policies - Property and Equipment, Net (Details)	9 Months Ended
	Sep. 30, 2015
Property and equipment excluding leasehold improvements
Property, Plant and Equipment [Line Items]
Useful life of property and equipment	5 years

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Geographic Areas and Product Sales

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

Geographic Areas and Product Sales

Geographic Areas and Product Sales

The Company’s revenue by geographic area, based on the destination to which the Company ships its products, was as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
United States	$	35,394	$	22,305	$	89,364	$	59,281
Japan	5,420		3,467		14,030		10,796
Other International	9,602		6,692		28,285		20,030
Total	$	50,416	$	32,464	$	131,679	$	90,107

The following table sets forth revenue by product category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Neuro	$	36,309	$	26,988	$	102,363	$	77,056
Peripheral Vascular	14,107		5,476		29,316		13,051
Total	$	50,416	$	32,464	$	131,679	$	90,107

The Company does not have significant long-lived assets outside the U.S.

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Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 732	$ 1,829
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization	1,227	520
Stock-based compensation	5,126	1,074
Excess tax benefit from stock-based compensation	(1,257)	0
Provision for doubtful accounts	(108)	172
Inventory write downs	704	1,398
Write off of note receivable	91	0
Provision for sales returns	675	122
Loss on minority investment	0	150
Loss on disposal of property and equipment	12	30
Realized loss on marketable investments	541	0
Provision for product warranty	299	26
Changes in operating assets and liabilities:
Accounts receivable	(7,383)	(4,971)
Inventories	(18,012)	(5,157)
Prepaid expenses and other current and non-current assets	(1,706)	(207)
Accounts payable	1,501	888
Accrued expenses and other non-current liabilities	4,927	3,133
Net cash used in operating activities	(12,631)	(993)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of marketable investments	(4,069)	(48,771)
Proceeds from sales of marketable investments	52,160	12,737
Purchases of property and equipment	(4,507)	(1,798)
Net cash provided by (used in) investing activities	43,584	(37,832)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of preferred stock, net of issuance costs	0	57,212
Proceeds from issuance of common stock issued in initial public offering, net of issuance costs	125,916	0
Proceeds from exercises of stock options	546	923
Excess tax benefit from stock-based compensation	1,257	0
Repurchase of preferred stock	0	(8,311)
Repayment of credit facility	0	(6,000)
Repurchase of common stock and stock options	0	(1,022)
Payment of employee taxes related to vested common and restricted stock	(2,525)	0
Net cash provided by financing activities	125,194	42,802
Effect of foreign exchange rate changes on cash and cash equivalents	(339)	80
Net Increase In Cash And Cash Equivalents	155,808	4,057
CASH AND CASH EQUIVALENTS—Beginning of period	3,290	4,131
CASH AND CASH EQUIVALENTS—End of period	159,098	8,188
NONCASH INVESTING AND FINANCING ACTIVITIES:
Conversion of convertible preferred stock into common stock	111,467	0
Purchase of property and equipment funded through accounts payable	200	85
Deferred issuance costs not yet paid	$ 1,149	$ 0

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Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 494	$ 602
Convertible preferred stock, par value (in dollars per share)		$ 0.001
Convertible preferred stock, shares authorized	0	25,000,000
Convertible preferred stock, shares issued	0	19,510,410
Convertible preferred stock, shares outstanding	0	19,510,410
Convertible preferred stock, aggregate liquidation amount		$ 149,361
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, shares authorized	5,000,000	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized	300,000,000	40,000,000
Common stock, shares issued	29,882,621	4,736,689
Common stock, shares outstanding	29,882,621	4,736,689

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Common Stock

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Initial Public Offering, Common Stock, Warrants, and Common and Preferred Stock Repurchase

Initial Public Offering (IPO)

The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised $124.8 million in net proceeds after deducting underwriting discounts and commissions of $9.7 million and other offering expenses of $3.6 million.

Upon the closing of the IPO, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis.

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding.

Warrants

In connection with the sale of Series B preferred stock in 2004, the Company issued warrants to purchase 211,138 shares of common stock at a purchase price of $0.01 per share. The warrants were exercisable upon grant and had a term of 10 years from the date of grant, which expired on December 31, 2014. The value of the warrants was calculated using Black-Scholes option pricing model and was deemed to be immaterial. No warrants were outstanding as of September 30, 2015 or December 31, 2014.

Common and Preferred Stock Repurchase

The Company’s board of directors approved the repurchase of 70,612 shares of common stock, 45,000 stock options and 45,611 of preferred stock from shareholders in May 2014 for $13.20 per share for a total purchase price of $2.0 million. For the repurchased shares of common stock and stock options, the Company charged the difference between the purchase and market prices of $0.5 million to expense. For the repurchased preferred shares, the excess between the purchase and the issuance price of $0.5 million was treated as a deemed dividend. In addition, the Company closed a tender offer in July 2014 to repurchase shares of preferred stock from existing shareholders at a purchase price of $13.20 per share. The Company repurchased 584,052 shares of preferred stock for a total purchase price of $7.7 million. The excess between the purchase and the issuance price of $5.8 million was treated as a deemed dividend. The repurchased shares of common and preferred stock were retired and remained as authorized but unissued.

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Document and Entity Information Document - shares	9 Months Ended
	Sep. 30, 2015	Oct. 31, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	Penumbra Inc
Entity Central Index Key	0001321732
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q3
Amendment Flag	false
Entity Common Stock, Shares Outstanding		29,889,955

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Warrants

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Initial Public Offering, Common Stock, Warrants, and Common and Preferred Stock Repurchase

Initial Public Offering (IPO)

The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised $124.8 million in net proceeds after deducting underwriting discounts and commissions of $9.7 million and other offering expenses of $3.6 million.

Upon the closing of the IPO, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis.

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding.

Warrants

In connection with the sale of Series B preferred stock in 2004, the Company issued warrants to purchase 211,138 shares of common stock at a purchase price of $0.01 per share. The warrants were exercisable upon grant and had a term of 10 years from the date of grant, which expired on December 31, 2014. The value of the warrants was calculated using Black-Scholes option pricing model and was deemed to be immaterial. No warrants were outstanding as of September 30, 2015 or December 31, 2014.

Common and Preferred Stock Repurchase

The Company’s board of directors approved the repurchase of 70,612 shares of common stock, 45,000 stock options and 45,611 of preferred stock from shareholders in May 2014 for $13.20 per share for a total purchase price of $2.0 million. For the repurchased shares of common stock and stock options, the Company charged the difference between the purchase and market prices of $0.5 million to expense. For the repurchased preferred shares, the excess between the purchase and the issuance price of $0.5 million was treated as a deemed dividend. In addition, the Company closed a tender offer in July 2014 to repurchase shares of preferred stock from existing shareholders at a purchase price of $13.20 per share. The Company repurchased 584,052 shares of preferred stock for a total purchase price of $7.7 million. The excess between the purchase and the issuance price of $5.8 million was treated as a deemed dividend. The repurchased shares of common and preferred stock were retired and remained as authorized but unissued.

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Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Revenue	$ 50,416	$ 32,464	$ 131,679	$ 90,107
Cost of revenue	16,919	11,667	44,079	31,156
Gross profit	33,497	20,797	87,600	58,951
Operating expenses:
Research and development	4,560	3,897	12,543	11,435
Sales, general and administrative	26,755	16,589	72,698	44,829
Total operating expenses	31,315	20,486	85,241	56,264
Income from operations	2,182	311	2,359	2,687
Interest income (expense), net	17	144	402	183
Other income (expense), net	(115)	(56)	(613)	(148)
Income before provision for income taxes	2,084	399	2,148	2,722
Provision for income taxes	1,183	227	1,416	893
Net income	901	172	732	1,829
Foreign currency translation adjustments, net of tax	(303)	(413)	(892)	(507)
Unrealized gains (losses) on available-for-sale securities, net of tax	0	(266)	220	(92)
Comprehensive income (loss)	598	(507)	60	1,230
Net income (loss) attributable to common stockholders	$ 276	$ (1,192)	$ 175	$ (933)
Net income (loss) per share attributable to common stockholders — Basic (in dollars per share)	$ 0.04	$ (0.25)	$ 0.03	$ (0.20)
Net income (loss) per share attributable to common stockholders — Diluted (in dollars per share)	$ 0.03	$ (0.25)	$ 0.02	$ (0.20)
Weighted average shares used to compute net income (loss) per share attributable to common stockholders — Basic	7,853,730	4,688,045	5,962,031	4,577,725
Weighted average shares used to compute net income (loss) per share attributable to common stockholders — Diluted	10,189,248	4,688,045	8,494,651	4,577,725

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Balance Sheet Components

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

Balance Sheet Components

Accounts Receivable, Net

The Company’s allowance for doubtful accounts comprised of the following (in thousands):

	Balance At Beginning Of Period		Charged To Costs And Expenses			Deductions			Balance At End Of Period
Allowance for Doubtful Accounts
For the year ended December 31, 2014	$	471	$	150		$	(19	)	$	602
For the nine months ended September 30, 2015	602		(108		)	—			494

Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets comprised of the following (in thousands):

	September 30, 2015		December 31, 2014
Prepaid expenses	$	5,772	$	3,130
Income tax receivable	318		1,654
Other current assets	177		331
Prepaid expenses and other current assets	$	6,267	$	5,115

Marketable Investments

The Company did not have any marketable investments as of September 30, 2015.

The Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

Marketable Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Agency securities	$	6,012	$	3	$	(9	)	$	6,006
U.S. Treasury	4,011		—		(2		)	$	4,009
Corporate bonds	29,834		4		(219		)	$	29,619
Mutual funds	8,768		—		(149		)	$	8,619
Total	$	48,625	$	7	$	(379	)	$	48,253

During the nine months ended September 30, 2015, the Company sold all of its marketable investments and recorded a realized loss of $0.5 million. For the nine months ended September 30, 2014, gains or losses realized on the sale of investments were insignificant. As of December 31, 2014, there were no securities that had been in a loss position for more than twelve months.

The contractual maturities of the Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

	December 31, 2014
	Fair Value
Due in one year	$	16,442
Due in one to five years	31,811
Total	$	48,253

Inventories

The components of inventories consisted of the following (in thousands):

	September 30, 2015		December 31, 2014
Raw materials	$	9,477	$	5,105
Work in process	1,244		543
Finished goods	39,603		27,803
Inventories	$	50,324	$	33,451

Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Machinery and equipment	$	8,166		$	5,089
Furniture and fixtures	2,004			519
Leasehold improvements	1,434			379
Software	744			599
Computers	565			153
Construction in progress	341			1,931
Total property and equipment	13,254			8,670
Less: Accumulated depreciation and amortization	(4,608		)	(3,489		)
Property and equipment, net	$	8,646		$	5,181

Depreciation and amortization expense was $0.5 million and $0.2 million for the three months ended September 30, 2015 and 2014, respectively, and was $1.2 million and $0.5 million for the nine months ended September 30, 2015 and 2014, respectively.

Accrued Liabilities

The following table shows the components of accrued liabilities (in thousands):

	September 30, 2015		December 31, 2014
Payroll and employee-related expenses	$	12,850	$	8,221
Sales return reserve	2,839		2,164
Preclinical and clinical trial cost	1,405		2,319
Deferred revenue	784		1,591
Product warranty	618		314
Sales tax payable	412		306
Income tax payable	54		332
Other accrued liabilities	5,291		3,228
Total accrued liabilities	$	24,253	$	18,475

The estimated product warranty accrual was as follows (in thousands):

	September 30, 2015			December 31, 2014
Balance at the beginning of the period	$	314		$	323
Accruals of warranties issued	545			149
Settlements of warranty claims	(241		)	(158		)
Balance at the end of the period	$	618		$	314

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Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company classifies its cash equivalents and marketable investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers and internal assumptions of the independent pricing services. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The Company did not own any Level 3 financial assets or liabilities as of September 30, 2015 or December 31, 2014.

During the three and nine months ended September 30, 2015 and 2014, the Company did not record impairment charges related to its marketable investments.

The Company did not have any financial assets and liabilities measured at fair value on a recurring or non-recurring basis as of September 30, 2015.

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 by level within the fair value hierarchy (in thousands):

	As of December 31, 2014
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	155	$	—	$	—	$	155
Marketable investments:
U.S. Agency securities	—		6,006		—		6,006
U.S. Treasury	4,009		—		—		4,009
Corporate bonds	—		29,619		—		29,619
Mutual funds	8,619		—		—		8,619
Total	$	12,783	$	35,625	$	—	$	48,408

The Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2014.

During the three and nine months ended September 30, 2015 and 2014, the Company did not have any transfers of financial assets measured at fair value on a recurring basis to or from Level 1, Level 2 or Level 3. The Company did not hold any Level 3 assets or liabilities as of September 30, 2015 or December 31, 2014.

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Net Income (Loss) per Share of Common Stock attributable to Common Stockholders

9 Months Ended

Sep. 30, 2015

Earnings Per Share [Abstract]

Net Income (Loss) per Share of Common Stock attributable to Common Stockholders

Net Income (Loss) per Share of Common Stock attributable to Common Stockholders

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share attributable to common stockholders is as follows (in thousands except share and per share amounts):

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Net income (loss) per share:
Numerator
Net income	$	901		$	172		$	732		$	1,829
Less: Deemed dividend paid to preferred stockholders upon repurchase	—			(6,344		)	—			(6,344		)
Less: Undistributed income attributable to preferred stockholders	(625		)	—			(557		)	—
Add: Undistributed loss attributable to preferred stockholders	—			4,980			—			3,582
Net income (loss) attributable to common stockholders—basic and diluted	$	276		$	(1,192	)	$	175		$	(933	)
Denominator
Weighted average shares used to compute net income (loss) attributable to common stockholders —Basic	7,853,730			4,688,045			5,962,031			4,577,725
Potential dilutive options, as calculated using treasury stock method	1,979,194			—			2,362,685			—
Potential dilutive restricted stock, as calculated using treasury stock method	356,324			—			169,935			—
Weighted average shares used to compute net income (loss) attributable to common stockholders —Diluted	10,189,248			4,688,045			8,494,651			4,577,725
Net income (loss) per share attributable to common stockholders —Basic	$	0.04		$	(0.25	)	$	0.03		$	(0.20	)
—Diluted	$	0.03		$	(0.25	)	$	0.02		$	(0.20	)

The following outstanding shares of potentially dilutive securities were excluded from the computation of diluted net income (loss) per share of common stock for the periods presented, because the effect of including them would have been anti-dilutive: 

	Three Months Ended September 30,		Nine Months Ended September 30,
	2015	2014	2015	2014
Options to purchase common stock	1,321,250	2,976,992	1,321,250	2,976,992
Restricted stock	6,500	368,793	6,500	368,793
Common stock warrants	—	75,972	—	75,972
Total	1,327,750	3,421,757	1,327,750	3,421,757

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Stock Option Plans

9 Months Ended

Sep. 30, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock Option Plans

Stock Option Plans

2005 Stock Plan

The Company adopted its 2005 Stock Plan (the 2005 Plan) in January 2005. The 2005 Plan was subsequently amended and restated in 2006, 2007, 2008 and 2010. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 5,431,017 and 5,431,017 shares of common stock, respectively, under the 2005 Plan, of which options to purchase 1,767,324 and 2,707,176 shares of common stock were outstanding, and options to purchase 15,662 and 33,081 shares of common stock had been early exercised and were unvested and subject to repurchase, as of September 30, 2015 and December 31, 2014, respectively. Under the 2005 Plan, the board of directors could grant incentive stock options (ISO), nonqualified stock options (NSO), or stock awards to eligible persons, including employees, nonemployees, directors, consultants and other independent advisors who provide services to the Company. Stock purchase rights could also be granted under the Plan. The board of directors had the authority to determine to whom options would be granted, the number of options, the term and the exercise price. ISOs could only be granted to Company employees, which include officers and directors of the Company. NSOs and stock purchase rights could be granted to employees and consultants. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price for an ISO could not be less than 110% of fair market value. Options are exercisable immediately upon the optionee entering into a restricted stock purchase agreement with respect to any unvested options. Options generally vest annually at a rate of 1/4 after the first year and 1/48 per month thereafter. The term of the options is no longer than five years for ISOs, for which the grantee owns greater than 10% of the voting power of all classes of stock and no longer than 10 years for all other options.

2011 Equity Incentive Plan

The Company adopted its 2011 Equity Incentive Plan (the 2011 Plan) in October 2011. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 145,000 and 145,000 shares of common stock, respectively, under the 2011 Plan, of which options to purchase 145,000 and 145,000 shares of common stock were outstanding at September 30, 2015 and December 31, 2014, respectively. The Company had also granted 505,000 and 505,000 shares of restricted stock under the 2011 Plan, of which 249,125 and 367,126 shares were unvested and subject to forfeiture and 4,667 and 1,667 shares had been forfeited as of September 30, 2015 and December 31, 2014, respectively. Under the 2011 Plan, the board of directors could grant ISOs, NSOs, restricted stock, or restricted stock units (RSU) to eligible persons, including employees, directors and consultants who provide services to the Company. Stock Appreciation Rights (SAR) could also be granted under the 2011 Plan. The board of directors had the authority to determine to whom options would be granted, the number of options, the term and the exercise price. ISOs could only be granted to Company employees, which include officers and directors of the Company. NSOs, SARs, restricted stock and RSUs could be granted to employees and consultants. For individuals holding more than 10% of the voting rights of all classes of stock, the exercise price for an ISO could not be less than 110% of fair market value. Stock options granted under the 2011 Plan generally have a contractual life of ten years, and generally vest over a period of four years.

Amended and Restated 2014 Equity Incentive Plan

The Company adopted its 2014 Equity Incentive Plan in May, 2014. This plan was amended and restated as of the business day immediately prior to the date of the Prospectus (as amended and restated, the 2014 Plan). The 2014 Plan replaced the 2011 Plan and the 2005 Plan. No further equity awards may be granted under the 2011 Plan or the 2005 Plan. As of September 30, 2015 and December 31, 2014, the Company had granted options to purchase 1,857,900 and 48,500 shares of common stock under the 2014 Plan, 1,853,770 and 48,500 of which were outstanding and 4,130 and 1,000 options had been forfeited as of September 30, 2015 and December 31, 2014, respectively. The Company had also granted 673,361 and 0 shares of restricted stock under the 2014 Plan, as of September 30, 2015 and December 31, 2014, respectively, of which 510,146 and 0 shares were unvested and subject to forfeiture as of such dates.

Employee Stock Purchase Plan

The Employee Stock Purchase Plan ESPP became effective on September 17, 2015. Under the ESPP, 600,000 shares of common stock are initially reserved for issuance, with the number of shares reserved for issuance automatically increasing each year pursuant to an “evergreen” provision set forth in the ESPP. All employees of the Company and its designated subsidiaries are eligible to participate in the ESPP. Each offering to the Company’s employees to purchase stock under the ESPP will begin on each May 20 and November 20 and will end on the following November 19 and May 19, respectively, each referred to as offering periods, except that the first offering period under the ESPP began on September 17, 2015 and will end on May 19, 2016. Under the ESPP, each employee may purchase shares by authorizing payroll deductions at a minimum of 1% and up to 15% of his or her eligible compensation for each pay period. Unless the participating employee withdraws from the offering, his or her accumulated payroll deductions will be used to purchase the Company’s common stock on the last business day of the offering period at a price equal to 85% of the fair market value of the common stock on either the first or the last day of the offering period, whichever is lower, provided that no more than 2,000 shares of the Company’s common stock or such other lesser maximum number established by the plan administrator may be purchased by any one employee during each offering period. Under applicable tax rules, an employee may purchase no more than $25,000 worth of common stock, valued at the start of the purchase period, under the ESPP in any calendar year.

Early Exercises

Stock options granted under the 2005 Plan, 2011 Plan and 2014 Plan allow the board of directors to grant awards to provide employee option holders the right to elect to exercise unvested options in exchange for restricted common stock. Unvested shares, which amounted to 15,662 and 33,081 as of September 30, 2015 and December 31, 2014, respectively, were subject to a repurchase right held by the Company at the original issue price in the event the optionees’ employment was terminated either voluntarily or involuntarily. For exercises of employee options, this right lapses according to the vesting schedule designated on the associated option grant. The repurchase terms are considered to be a forfeiture provision. The shares purchased by the employees pursuant to the early exercise of stock options are not deemed to be issued or outstanding for accounting purposes until those shares vest, though they are legally issued and outstanding. In addition, cash received from employees for exercise of unvested options is treated as a refundable deposit shown as a liability on the consolidated balance sheets. As of September 30, 2015 and December 31, 2014, cash received related to unvested shares totaled $0.1 million and $0.1 million, respectively. Amounts recorded are transferred into common stock and additional paid-in-capital as the shares vest.

The following table summarizes the activity of stock options during the nine months ended September 30, 2015:

	Number of Shares		Weighted- Average Exercise Price
Balance, December 31, 2014	2,900,676		$	2.66
Options granted	1,809,400		21.47
Options exercised	(938,456	)	0.95
Options cancelled	(5,526	)	11.14
Balance, September 30, 2015	3,766,094		12.11

The weighted average grant date fair value of the employee stock options granted during the nine months ended September 30, 2015 was $9.69 per share.

The following table summarizes the activity of unvested restricted stock during the nine months ended September 30, 2015:

	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2014	367,126		$	7.26
Granted	673,361		14.60
Vested	(278,216	)	11.77
Cancelled/Forfeited	(3,000	)	7.75
Unvested and expected to vest at September 30, 2015	759,271		12.12

As of September 30, 2015, total unrecognized compensation cost was $25.6 million related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 2.2 years.

The following table sets forth the stock-based compensation expense included in the consolidated statements of operations (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2015		2014		2015		2014
Cost of sales	$	141	$	65	$	271	$	189
Research and development	100		23		282		70
Sales, general and administrative	1,269		284		4,573		815
	$	1,510	$	372	$	5,126	$	1,074

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2015

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Lease Commitments

The Company leases its offices and other equipment under non-cancelable operating leases that expire at various dates in 2029. Rent expense for the three months ended September 30, 2015 and 2014 was $0.9 million and $0.4 million, respectively, and was $2.3 million and $1.3 million, for the nine months ended September 30, 2015 and 2014, respectively.

 Future minimum lease payments under the non-cancelable operating leases as of September 30, 2015 are as follows (in thousands):

	Lease Payments
Three Months Ending December 31, 2015	$	766
Year Ending December 31:
2016	3,149
2017	3,145
2018	3,141
2019	3,223
2020	3,299
Thereafter	32,486
Total future minimum lease payments	$	49,209

Purchase Commitments

The Company had non-cancellable purchase obligations to suppliers for the nine months ended September 30, 2015 of $11.7 million.

Royalty Obligations

In March 2005, the Company entered into a license agreement that requires the Company to make minimum royalty payments to the licensor, on a quarterly basis. As of September 30, 2015 and December 31, 2014, the license agreement requires minimum annual royalty payments of $0.1 million and $0.1 million in equal quarterly installments, respectively. On each January 1, the quarterly calendar year minimum royalty shall be adjusted to equal the prior year’s minimum royalty adjusted by a percentage equal to the percentage change in the “consumer price index for all urban consumers” for the prior calendar year as reported by the U.S. Department of Labor. Unless terminated earlier, the term of the license agreement shall continue until the expiration of the last to expire patent that covers that licensed product or for the period of 15 years following the first commercial sale of such licensed product, whichever is longer. The first commercial sale occurred in June 2007.

 In April 2012, the Company entered into an agreement that requires the Company to pay a 5% royalty on sales of products covered under applicable patents, on a quarterly basis. The first commercial sale occurred in April 2014. Unless terminated earlier, the royalty term for each applicable product shall continue for fifteen years following the first commercial sale of such patented product, or when the applicable patent covering such product has expired, whichever is sooner.

In April 2015, the Company entered into a royalty agreement that requires the Company to pay a 2% royalty on sales of certain products covered by the agreement, on a quarterly basis. The Company began the first commercial sale of the covered products in July 2015. Unless terminated earlier, the royalty term for each covered product shall continue for twenty years following the first commercial sale of the covered products.

Royalty expense included in cost of sales for the three months ended September 30, 2015 and 2014 was $0.6 million and $0.3 million, respectively, and was $1.4 million and $0.8 million for the nine months ended September 30, 2015 and 2014, respectively.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual or disclosure at September 30, 2015 or December 31, 2014.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless, and agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party, in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made.

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with such indemnifications has been recorded to date.

Litigation

The Company was made aware of potential product liability claimants who allegedly suffered injuries as a result of aneurysm procedures performed in the United States and the United Kingdom in which the Penumbra Coil 400 was used. The Company has not been served with formal complaints; however, the attorney for the purported U.S. claimant has indicated that a civil suit will be brought against the Company shortly. While specific damages have not been asserted, counsel for the purported claimant indicated that he expects that a jury could award $35 million in damages were this matter to go to trial. This amount is substantially in excess of the Company’s insurance coverage. The attorney for the potential claimant in the United Kingdom has not specified any damage amount. As no litigation has been instituted in either of these cases, and therefore neither the Company nor the potential claimants have engaged in discovery, the Company is unable to assess the merits of the claims. The Company expects to vigorously defend any litigation that might be brought, as the Company believes there would be substantial questions regarding causation, liability and damages.

From time to time, the Company is subject to claims and assessments in the ordinary course of business. The Company is not currently a party to any litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

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Income Taxes (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Tax Disclosure [Abstract]
Effective tax rate	56.80%	56.90%	65.90%	32.80%

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Credit Facility

9 Months Ended

Sep. 30, 2015

Debt Disclosure [Abstract]

Credit Facility

Credit Facility

In May 2012, the Company entered into a revolving credit facility of $15.0 million with Wells Fargo Bank, National Association. The credit facility was collateralized by the Company’s investment balances. The interest on the credit facility was based on the daily one-month London Inter-Bank Offered Rate, plus 1.75% and was payable monthly. Any outstanding balance on the credit facility was due in full on June 1, 2015. The credit facility contained customary covenants for credit facilities of this type, including limitations on disposition of assets and changes in control. In May 2014, in conjunction with its Series F preferred stock financing, the Company paid the then outstanding balance on the credit facility and terminated the credit facility.

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Related Party Transactions

9 Months Ended

Sep. 30, 2015

Related Party Transactions [Abstract]

Related Party Transactions

Related Party Transactions

Notes Receivable from Stockholders

In March 2005, options to purchase 250,000 shares of common stock, subject to repurchase by the Company, were exercised in exchange for a full recourse promissory note totaling $21,250. The note bears interest at 2.92% per year, compounded annually.

In July 2011, options to purchase 5,000 shares of common stock were exercised in exchange for a full recourse promissory note totaling $4,600. The note is noninterest bearing and is due in full on December 31, 2016.

As of September 30, 2015 and December 31, 2014, outstanding promissory notes were $25,850 and $0.1 million, respectively.

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Convertible Preferred Stock

9 Months Ended

Sep. 30, 2015

Temporary Equity Disclosure [Abstract]

Convertible Preferred Stock

Convertible Preferred Stock

The convertible preferred stock at December 31, 2014 consisted of the following (in thousands, except shares):

Series	Shares Authorized	Shares Issued and Outstanding	Proceeds, Net of Issuance Costs		Aggregate Liquidation Amount
Series A Preferred Stock	1,000,000	1,000,000	$	299	$	554
Series B Preferred Stock	4,287,486	4,005,338	6,536		11,725
Series C Preferred Stock	4,388,715	4,168,218	13,266		22,238
Series D Preferred Stock	3,944,733	3,881,459	19,647		30,976
Series E Preferred Stock	1,973,684	1,909,940	14,507		21,609
Series F Preferred Stock	5,303,031	4,545,455	57,212		62,259
Undesignated	4,102,351	—	—		—
Total preferred stock	25,000,000	19,510,410	$	111,467	$	149,361

Upon the closing of the IPO on September 23, 2015, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis and the related balance was reclassified from temporary equity to common stock and additional paid-in capital.

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Geographic Areas and Product Sales - Revenue by Product Category (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenue from External Customer [Line Items]
Revenue	$ 50,416	$ 32,464	$ 131,679	$ 90,107
Neuro
Revenue from External Customer [Line Items]
Revenue	36,309	26,988	102,363	77,056
Peripheral Vascular
Revenue from External Customer [Line Items]
Revenue	$ 14,107	$ 5,476	$ 29,316	$ 13,051

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Geographic Areas and Product Sales - Revenue by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 50,416	$ 32,464	$ 131,679	$ 90,107
United States
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	35,394	22,305	89,364	59,281
Japan
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	5,420	3,467	14,030	10,796
Other International
Revenues from External Customers and Long-Lived Assets [Line Items]
Revenue	$ 9,602	$ 6,692	$ 28,285	$ 20,030

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Summary of Significant Accounting Policies - Additional Disclosures (Details)		3 Months Ended		9 Months Ended
	Sep. 23, 2015	Sep. 30, 2015 USD ($)	Sep. 30, 2014 USD ($)	Sep. 30, 2015 USD ($) segment activity	Sep. 30, 2014 USD ($)	Dec. 31, 2014 USD ($)
Accounting Policies [Abstract]
Number of business activities | activity				1
Number of operating segments | segment				1
Foreign currency transaction gains		$ 100,000	$ 100,000	$ 11,000	$ 200,000
Other-than-temporary impairments for marketable investments		0	0	0	0
Inventory write downs		400,000	900,000	704,000	1,398,000
Impairment of long-lived assets		0	0	0	0
Preferred stock conversion to common stock, conversion ratio	1
Deferred revenue		800,000		800,000		$ 1,600,000
Advertising expense		$ 100,000	$ 100,000	$ 400,000	$ 200,000

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Commitments and Contingencies - Litigation (Details) $ in Millions	9 Months Ended
	Sep. 30, 2015 USD ($)
Damages from Product
Loss Contingencies [Line Items]
Damages sought, value	$ 35

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Employee Benefit Plans

9 Months Ended

Sep. 30, 2015

Compensation and Retirement Disclosure [Abstract]

Employee Benefit Plans

Employee Benefit Plans

The Company offers a retirement savings plan under Section 401(k) of the Internal Revenue Code (the IRC) to its eligible U.S. employees whereby they may contribute up to the maximum amount permitted by IRC. Under the plan, the Company in the third quarter of 2015, began 401(k) matching of eligible compensation, subject to a maximum dollar threshold. Contribution expense was not material for the three and nine months ended September 30, 2015.

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Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2015

Fair Value Disclosures [Abstract]

Schedule of Fair Value of Assets and Liabilities

The following table sets forth the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2014 by level within the fair value hierarchy (in thousands):

	As of December 31, 2014
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	155	$	—	$	—	$	155
Marketable investments:
U.S. Agency securities	—		6,006		—		6,006
U.S. Treasury	4,009		—		—		4,009
Corporate bonds	—		29,619		—		29,619
Mutual funds	8,619		—		—		8,619
Total	$	12,783	$	35,625	$	—	$	48,408

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Commitments and Contingencies - Lease and Purchase Commitments (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 900	$ 400	$ 2,300	$ 1,300
Future minimum lease payments under non-cancelable operating leases
Three Months Ending December 31, 2015	766		766
2016	3,149		3,149
2017	3,145		3,145
2018	3,141		3,141
2019	3,223		3,223
2020	3,299		3,299
Thereafter	32,486		32,486
Total future minimum lease payments	49,209		49,209
Purchase obligations	$ 11,700		$ 11,700

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Balance Sheet Components - Gains and Losses of Marketable Investments (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Schedule of Available-for-sale Securities [Line Items]
Cost		$ 48,625
Gross unrealized gains		7
Gross unrealized losses		(379)
Fair value	$ 0	48,253
Realized loss on sale of marketable investments	$ 500
U.S. Agency securities
Schedule of Available-for-sale Securities [Line Items]
Cost		6,012
Gross unrealized gains		3
Gross unrealized losses		(9)
Fair value		6,006
U.S. Treasury
Schedule of Available-for-sale Securities [Line Items]
Cost		4,011
Gross unrealized gains		0
Gross unrealized losses		(2)
Fair value		4,009
Corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Cost		29,834
Gross unrealized gains		4
Gross unrealized losses		(219)
Fair value		29,619
Mutual funds
Schedule of Available-for-sale Securities [Line Items]
Cost		8,768
Gross unrealized gains		0
Gross unrealized losses		(149)
Fair value		$ 8,619

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Condensed Consolidated Statement of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (Unaudited) - 9 months ended Sep. 30, 2015 - USD ($) $ in Thousands	Total	Convertible Preferred Stock	Common Stock	Additional Paid-in Capital	Notes Receivable from Stockholders	Accumulated Other Comprehensive Loss	Accumulated Deficit
Beginning balance at Dec. 31, 2014	$ 111,467	$ 111,467
Beginning balance, shares at Dec. 31, 2014	19,510,410	19,510,410
Increase (Decrease) in Temporary Equity [Roll Forward]
Conversion of convertible preferred stock into common stock upon closing of IPO		$ (111,467)
Conversion of convertible preferred stock into common stock upon closing of IPO, shares		(19,510,410)
Ending balance at Sep. 30, 2015	$ 0	$ 0
Ending balance, shares at Sep. 30, 2015	0	0
Beginning balance at Dec. 31, 2014	$ (12,370)		$ 5	$ 8,446	$ (117)	$ (864)	$ (19,840)
Beginning balance, shares at Dec. 31, 2014			4,736,689
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Conversion of convertible preferred stock into common stock upon closing of IPO	111,467		$ 19	111,448
Conversion of convertible preferred stock into common stock upon closing of IPO, shares			19,510,410
Shares issued upon closing of IPO	124,767		$ 5	124,762
Shares issued upon closing of IPO, shares			4,600,000
Issuance of common stock, shares	1,059		$ 1	1,058
Issuance of common stock, shares			1,059,172
Shares held for tax withholdings	(2,525)			(2,525)
Repurchase of common stock	(342)			(342)
Repurchase of common stock, shares			(23,650)
Stock-based compensation	5,126			5,126
Excess tax benefit from stock-based compensation	1,257			1,257
Forgiven notes receivable from stockholders	91				91
Foreign currency translation adjustment, net of tax of $116	(892)					(892)
Unrealized gain on investments, net of tax of $159	220					220
Net income	732						732
Ending balance at Sep. 30, 2015	$ 228,590		$ 30	$ 249,230	$ (26)	$ (1,536)	$ (19,108)
Ending balance, shares at Sep. 30, 2015			29,882,621

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Initial Public Offering (IPO)

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Initial Public Offering, Common Stock, Warrants, and Common and Preferred Stock Repurchase

Initial Public Offering (IPO)

The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised $124.8 million in net proceeds after deducting underwriting discounts and commissions of $9.7 million and other offering expenses of $3.6 million.

Upon the closing of the IPO, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis.

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding.

Warrants

In connection with the sale of Series B preferred stock in 2004, the Company issued warrants to purchase 211,138 shares of common stock at a purchase price of $0.01 per share. The warrants were exercisable upon grant and had a term of 10 years from the date of grant, which expired on December 31, 2014. The value of the warrants was calculated using Black-Scholes option pricing model and was deemed to be immaterial. No warrants were outstanding as of September 30, 2015 or December 31, 2014.

Common and Preferred Stock Repurchase

The Company’s board of directors approved the repurchase of 70,612 shares of common stock, 45,000 stock options and 45,611 of preferred stock from shareholders in May 2014 for $13.20 per share for a total purchase price of $2.0 million. For the repurchased shares of common stock and stock options, the Company charged the difference between the purchase and market prices of $0.5 million to expense. For the repurchased preferred shares, the excess between the purchase and the issuance price of $0.5 million was treated as a deemed dividend. In addition, the Company closed a tender offer in July 2014 to repurchase shares of preferred stock from existing shareholders at a purchase price of $13.20 per share. The Company repurchased 584,052 shares of preferred stock for a total purchase price of $7.7 million. The excess between the purchase and the issuance price of $5.8 million was treated as a deemed dividend. The repurchased shares of common and preferred stock were retired and remained as authorized but unissued.

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Stock Option Plans - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Unrecognized compensation cost related to unvested share-based compensation arrangements	$ 25,600		$ 25,600
Unrecognized compensation cost, expected recognition period			2 years 2 months
Stock-based compensation expense	1,510	$ 372	$ 5,126	$ 1,074
Cost of sales
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	141	65	271	189
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	100	23	282	70
Sales, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 1,269	$ 284	$ 4,573	$ 815

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Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Allowance for Doubtful Accounts

The Company’s allowance for doubtful accounts comprised of the following (in thousands):

	Balance At Beginning Of Period		Charged To Costs And Expenses			Deductions			Balance At End Of Period
Allowance for Doubtful Accounts
For the year ended December 31, 2014	$	471	$	150		$	(19	)	$	602
For the nine months ended September 30, 2015	602		(108		)	—			494

Schedule of Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets comprised of the following (in thousands):

	September 30, 2015		December 31, 2014
Prepaid expenses	$	5,772	$	3,130
Income tax receivable	318		1,654
Other current assets	177		331
Prepaid expenses and other current assets	$	6,267	$	5,115

Schedule of Marketable Investments

The Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

Marketable Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
U.S. Agency securities	$	6,012	$	3	$	(9	)	$	6,006
U.S. Treasury	4,011		—		(2		)	$	4,009
Corporate bonds	29,834		4		(219		)	$	29,619
Mutual funds	8,768		—		(149		)	$	8,619
Total	$	48,625	$	7	$	(379	)	$	48,253

Schedule of Contractual Maturities of Marketable Investments

The contractual maturities of the Company’s marketable investments as of December 31, 2014 were as follows (in thousands):

	December 31, 2014
	Fair Value
Due in one year	$	16,442
Due in one to five years	31,811
Total	$	48,253

Schedule of Inventories

The components of inventories consisted of the following (in thousands):

	September 30, 2015		December 31, 2014
Raw materials	$	9,477	$	5,105
Work in process	1,244		543
Finished goods	39,603		27,803
Inventories	$	50,324	$	33,451

Schedule of Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

	September 30, 2015			December 31, 2014
Machinery and equipment	$	8,166		$	5,089
Furniture and fixtures	2,004			519
Leasehold improvements	1,434			379
Software	744			599
Computers	565			153
Construction in progress	341			1,931
Total property and equipment	13,254			8,670
Less: Accumulated depreciation and amortization	(4,608		)	(3,489		)
Property and equipment, net	$	8,646		$	5,181

Schedule of Accrued Liabilities

The following table shows the components of accrued liabilities (in thousands):

	September 30, 2015		December 31, 2014
Payroll and employee-related expenses	$	12,850	$	8,221
Sales return reserve	2,839		2,164
Preclinical and clinical trial cost	1,405		2,319
Deferred revenue	784		1,591
Product warranty	618		314
Sales tax payable	412		306
Income tax payable	54		332
Other accrued liabilities	5,291		3,228
Total accrued liabilities	$	24,253	$	18,475

Schedule of Estimated Product Warranty Accrual

The estimated product warranty accrual was as follows (in thousands):

	September 30, 2015			December 31, 2014
Balance at the beginning of the period	$	314		$	323
Accruals of warranties issued	545			149
Settlements of warranty claims	(241		)	(158		)
Balance at the end of the period	$	618		$	314

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Fair Value of Financial Instruments (Details) - Recurring $ in Thousands	Dec. 31, 2014 USD ($)
Financial Assets
Total	$ 48,408
U.S. Agency securities
Financial Assets
Marketable investments	6,006
U.S. Treasury
Financial Assets
Marketable investments	4,009
Corporate bonds
Financial Assets
Marketable investments	29,619
Mutual funds
Financial Assets
Marketable investments	8,619
Money market funds
Financial Assets
Money market funds	155
Level 1
Financial Assets
Total	12,783
Level 1 | U.S. Agency securities
Financial Assets
Marketable investments	0
Level 1 | U.S. Treasury
Financial Assets
Marketable investments	4,009
Level 1 | Corporate bonds
Financial Assets
Marketable investments	0
Level 1 | Mutual funds
Financial Assets
Marketable investments	8,619
Level 1 | Money market funds
Financial Assets
Money market funds	155
Level 2
Financial Assets
Total	35,625
Level 2 | U.S. Agency securities
Financial Assets
Marketable investments	6,006
Level 2 | U.S. Treasury
Financial Assets
Marketable investments	0
Level 2 | Corporate bonds
Financial Assets
Marketable investments	29,619
Level 2 | Mutual funds
Financial Assets
Marketable investments	0
Level 2 | Money market funds
Financial Assets
Money market funds	0
Level 3
Financial Assets
Total	0
Level 3 | U.S. Agency securities
Financial Assets
Marketable investments	0
Level 3 | U.S. Treasury
Financial Assets
Marketable investments	0
Level 3 | Corporate bonds
Financial Assets
Marketable investments	0
Level 3 | Mutual funds
Financial Assets
Marketable investments	0
Level 3 | Money market funds
Financial Assets
Money market funds	$ 0

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Common and Preferred Stock Repurchase

9 Months Ended

Sep. 30, 2015

Equity [Abstract]

Initial Public Offering, Common Stock, Warrants, and Common and Preferred Stock Repurchase

Initial Public Offering (IPO)

The Company closed its IPO on September 23, 2015, in which it sold 4.6 million shares of common stock at an offering price of $30.00 per share and raised $124.8 million in net proceeds after deducting underwriting discounts and commissions of $9.7 million and other offering expenses of $3.6 million.

Upon the closing of the IPO, all outstanding shares of convertible preferred stock were automatically converted into 19,510,410 shares of common stock on a one-for-one basis.

Common Stock

Each share of common stock is entitled to one vote. The holders of common stock are also entitled to receive dividends whenever funds are legally available and when declared by the board of directors, subject to the prior rights of holders of all classes of stock outstanding.

Warrants

In connection with the sale of Series B preferred stock in 2004, the Company issued warrants to purchase 211,138 shares of common stock at a purchase price of $0.01 per share. The warrants were exercisable upon grant and had a term of 10 years from the date of grant, which expired on December 31, 2014. The value of the warrants was calculated using Black-Scholes option pricing model and was deemed to be immaterial. No warrants were outstanding as of September 30, 2015 or December 31, 2014.

Common and Preferred Stock Repurchase

The Company’s board of directors approved the repurchase of 70,612 shares of common stock, 45,000 stock options and 45,611 of preferred stock from shareholders in May 2014 for $13.20 per share for a total purchase price of $2.0 million. For the repurchased shares of common stock and stock options, the Company charged the difference between the purchase and market prices of $0.5 million to expense. For the repurchased preferred shares, the excess between the purchase and the issuance price of $0.5 million was treated as a deemed dividend. In addition, the Company closed a tender offer in July 2014 to repurchase shares of preferred stock from existing shareholders at a purchase price of $13.20 per share. The Company repurchased 584,052 shares of preferred stock for a total purchase price of $7.7 million. The excess between the purchase and the issuance price of $5.8 million was treated as a deemed dividend. The repurchased shares of common and preferred stock were retired and remained as authorized but unissued.