EX-99.1 2 pen-33120xexhibit991qu.htm EX-99.1

Exhibit 99.1

Penumbra, Inc. Reports First Quarter 2020 Financial Results

ALAMEDA, Calif., May 7, 2020 (PR Newswire) - Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the first quarter ended March 31, 2020.

•Revenue of $137.3 million in the first quarter of 2020, an increase of 6.9%, or 7.6% in constant currency¹, over the first quarter of 2019. Excluding Japan, total revenue in the first quarter of 2020 increased 13.6%, or 14.3% in constant currency¹, over the first quarter of 2019.

First Quarter 2020 Financial Results

Total revenue grew to $137.3 million for the first quarter of 2020 compared to $128.4 million for the first quarter of 2019, an increase of 6.9%, or 7.6% on a constant currency basis. The United States represented 70% of total revenue and international represented 30% of total revenue for the first quarter of 2020. Revenue from sales of vascular products grew to $59.3 million for the first quarter of 2020, an increase of 26.2%, or 26.5% on a constant currency basis. Revenue from sales of neuro products declined to $78.1 million for the first quarter of 2020, a decrease of 4.2%, or 3.3% on a constant currency basis.

Gross profit was $88.0 million, or 64.1% of total revenue, for the first quarter of 2020, compared to $83.9 million, or 65.3% of total revenue, for the first quarter of 2019.

Total operating expenses for the first quarter of 2020 were $87.4 million, or 63.6% of total revenue. This compares to total operating expenses of $72.8 million, or 56.6% of total revenue, for the first quarter of 2019. R&D expenses were $12.9 million for the first quarter of 2020, compared to $11.7 million for the first quarter of 2019. SG&A expenses were $74.5 million for the first quarter of 2020, compared to $61.1 million for the first quarter of 2019.

Operating income for the first quarter of 2020 was $0.6 million, compared to an operating income of $11.2 million for the first quarter of 2019.

As of March 31, 2020, cash, cash equivalents and marketable investments totaled $168.2 million. In addition, on April 24, 2020, the Company entered into a secured credit agreement with JPMorgan Chase Bank, N.A., Bank of America, N.A. and Citibank, N.A., that provides for up to $100 million in available revolving borrowing capacity.

Impact of COVID-19 Pandemic

As noted in the Company's April 6, 2020 press release, the Company began to observe more notable negative impact on business trends in March due to COVID-19. The Company has experienced and believes that the impact of the COVID-19 pandemic on the Company's business differs by geography and procedure type. Due to the uncertain scope and duration of the pandemic, and uncertain timing of global recovery and economic normalization, we cannot, at this time, reliably estimate the future impact on our operations and financial results.

Webcast and Conference Call Information

Penumbra, Inc. will host a conference call to discuss the first quarter 2020 financial results after market close on Thursday, May 7, 2020 at 5:00 PM Eastern Time. The conference call can be accessed live over the phone by dialing (833) 227-5837 for domestic callers or (647) 689-4064 for international callers (conference id: 3899277), or the webcast can be accessed on the “Events” section under the “Investors” tab of the Company’s website at: www.penumbrainc.com. The webcast will be available on the Company’s website for at least two weeks following the completion of the call.

About Penumbra

Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on innovative therapies. Penumbra designs, develops, manufactures and markets novel products and has a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. Penumbra sells its products to hospitals primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark of Penumbra, Inc. For more information, visit www.penumbrainc.com.

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

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Non-GAAP Financial Measures

In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses the following non-GAAP financial measures in this press release: a) non-GAAP net (loss) income and non-GAAP diluted earnings per share (“EPS”) and b) constant currency.

Non-GAAP net (loss) income and non-GAAP diluted EPS. The Company defines non-GAAP net (loss) income as net income attributable to Penumbra, Inc. excluding the effects of the excess tax benefits associated with share-based compensation arrangements. The Company defines non-GAAP diluted EPS as GAAP diluted EPS, excluding the effects of the same item above.

Constant Currency. The Company’s constant currency revenue disclosures estimate the impact of changes in foreign currency rates on the translation of the Company’s current period revenue as compared to the applicable comparable period in the prior year. This impact is derived by taking the current local currency revenue and translating it into U.S. dollars based upon the foreign currency exchange rates used to translate the local currency revenue for the applicable comparable period in the prior year, rather than the actual exchange rates in effect during the current period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business.

Full reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the tables below.

Our management believes the non-GAAP financial measures disclosed in this press release are useful to investors in assessing the operating performance of our business and provide meaningful comparisons to prior periods and thus a more complete understanding of our business than could be obtained absent this disclosure. Specifically, we consider the change in constant currency revenue as a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. We consider non-GAAP net (loss) income and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the one-time effects of the transition tax from the Tax Reform Act and the excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance.

The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: the impact of the COVID-19 pandemic on our business, results of operations and financial condition; failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; and potential adverse regulatory actions. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2019 filed with the SEC on February 26, 2020. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Any forward-looking statements are based on our current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

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Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)

						March 31, 2020						December 31, 2019
Assets
Current assets:
Cash and cash equivalents						$	72,456					$	72,779
Marketable investments						95,766						116,610
Accounts receivable, net						103,963						105,901
Inventories						166,152						152,992
Prepaid expenses and other current assets						15,403						14,852
Total current assets						453,740						463,134
Property and equipment, net						58,698						51,812
Operating lease right-of-use assets						43,168						43717
Finance lease right-of-use assets						39,287						39,924
Intangible assets, net						25,024						25,407
Goodwill						7,509						7,656
Deferred taxes						32,945						31,305
Other non-current assets						3,869						2,946
Total assets						$	664,240					$	665,901
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable						$	15,843					$	15,111
Accrued liabilities						65,335						67,630
Current operating lease liabilities						4,435						4,142
Current finance lease liabilities						2,461						4,165
Total current liabilities						88,074						91,048
Non-current operating lease liabilities						46,416						47,242
Non-current finance lease liabilities						26,483						26,748
Other non-current liabilities						15,150						15,250
Total liabilities						176,123						180,288
Stockholders’ equity:
Common stock						35						35
Additional paid-in capital						435,724						430,659
Accumulated other comprehensive loss						(4,575)						(2,324)
Retained earnings						57,749						57,522
Total Penumbra, Inc. stockholders’ equity						488,933						485,892
Non-controlling interest						(816)						(279)
Total stockholders’ equity						488,117						485,613
Total liabilities and stockholders’ equity						$	664,240					$	665,901

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Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)

						Three Months Ended March 31,
						2020						2019
Revenue						$	137,329					$	128,439
Cost of revenue						49,320						44,529
Gross profit						88,009						83,910
Operating expenses:
Research and development						12,946						11,667
Sales, general and administrative						74,453						61,091
Total operating expenses						87,399						72,758
Income from operations						610						11,152
Interest income, net						299						733
Other (expense) income, net						(1,655)						24
(Loss) income before income taxes						(746)						11,909
(Benefit from) provision for income taxes						(1,634)						1,455
Consolidated net income						$	888					$	10,454
Net loss attributable to non-controlling interest						(537)						(244)
Net income attributable to Penumbra, Inc.						$	1,425					$	10,698
Net income attributable to Penumbra, Inc. per share:
Basic						$	0.04					$	0.31
Diluted						$	0.04					$	0.30
Weighted average shares outstanding:
Basic						35,042,912						34,507,279
Diluted						36,362,726						36,213,164

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Penumbra, Inc.

Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net (Loss) Income and Non-GAAP Diluted EPS¹

(unaudited)

(in thousands, except per share amounts)

						Three Months Ended March 31, 2020																		Three Months Ended March 31, 2019
						Net Income (Loss)						Diluted EPS						Net Income						Diluted EPS
GAAP net income						$	1,425					$	0.04					$	10,698					$	0.30
GAAP net income includes the effect of the following items:
Excess tax benefits related to stock compensation awards						(1,482)						(0.04)						(2,244)						(0.07)
Non-GAAP net (loss) income						$	(57)					$	0.00					$	8,454					$	0.23

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth²

(unaudited)

(in thousands)

						Three Months Ended March 31,																		Reported Change																		FX Impact						Constant Currency Change
						2020						2019						$						%						$						$						%
United States						$	95,774					$	82,511					$	13,263					16.1		%				$	—					$	13,263					16.1		%
International						41,555						45,928						(4,373)						(9.5)		%				855						(3,518)						(7.7)		%
Total						$	137,329					$	128,439					$	8,890					6.9		%				$	855					$	9,745					7.6		%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth²

(unaudited)

(in thousands)

						Three Months Ended March 31,																		Reported Change																		FX Impact						Constant Currency Change
						2020						2019						$						%						$						$						%
Neuro						$	78,076					$	81,471					$	(3,395)					(4.2)		%				$	707					$	(2,688)					(3.3)		%
Vascular						59,253						46,968						12,285						26.2		%				148						12,433						26.5		%
Total						$	137,329					$	128,439					$	8,890					6.9		%				$	855					$	9,745					7.6		%

¹See “Non-GAAP Financial Measures” above for important information about our use of non-GAAP measures and further information about our non-GAAP net (loss) income and non-GAAP diluted EPS measures.

²See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

Investor Relations

Penumbra, Inc.

510-995-2461

_{investors@penumbrainc.com}

_{Source: Penumbra, Inc.}

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