Form 8-K - Current report

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_______________________________________________________________________________________________________________________________

FORM 8-K

_______________________________________________________________________________________________________________________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

November 2, 2023

Date of Report (Date of earliest event reported)

_______________________________________________________________________________________________________________________________

Penumbra, Inc.

(Exact name of registrant as specified in its charter)

_______________________________________________________________________________________________________________________________


Delaware	001-37557	05-0605598
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. employer identification number)

One Penumbra Place

Alameda, CA 94502

(Address of principal executive offices, including zip code)

(510) 748-3200

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions:


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par value $0.001 per share	PEN	The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Item 2.02.			Results of Operations and Financial Condition.

On November 2, 2023, Penumbra, Inc. issued a press release announcing financial results for the third fiscal quarter ended September 30, 2023. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished on this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing, except as expressly set forth by specific reference in such a filing.


Item 9.01.			Financial Statements and Exhibits.

(d) Exhibits.


Exhibit Number						Description
99.1						Press release of Penumbra, Inc. dated November 2, 2023.
104						Cover Page Interactive Data File (formatted as Inline Extensible Business Reporting Language).

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 2, 2023	By:	/s/ Maggie Yuen
		Maggie Yuen
		Chief Financial Officer

Exhibit 99.1

Penumbra, Inc. Reports Third Quarter 2023 Financial Results

ALAMEDA, Calif., Nov. 2, 2023 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the third quarter ended September 30, 2023.

•Revenue of $270.9 million in the third quarter of 2023, an increase of 26.8% or 25.9% in constant currency1, compared to the third quarter of 2022.

•Revenue of $179.1 million from sales of our thrombectomy products in the third quarter of 2023, an increase of 38.0%, compared to the third quarter of 2022.

•Income from operations of $12.6 million and Non-GAAP income from operations1 of $33.2 million in the third quarter of 2023.

•Net income of $9.2 million and adjusted EBITDA1 of $51.5 million or adjusted EBITDA margin of 19.0% in the third quarter of 2023.

•Cash and marketable investments increased $27.8 million in the third quarter of 2023 compared to the second quarter of 2023 driven by an increase in profitability and improvements in working capital.

Third Quarter 2023 Financial Results

Total revenue increased to $270.9 million for the third quarter of 2023 compared to $213.7 million for the third quarter of 2022, an increase of 26.8%, or 25.9% on a constant currency basis. The United States represented 72% of total revenue and international represented 28% of total revenue for the third quarter of 2023. We achieved record revenue from the sales of our global thrombectomy products which grew to $179.1 million in the third quarter of 2023, an increase of 38.0% over the same period a year ago and driven by the sales of our global vascular and neuro thrombectomy products which increased by 56.9% and 10.3%, respectively, in the third quarter of 2023. Revenue from our embolization and other products grew to $91.9 million for the third quarter of 2023, an increase of 9.5% over the same period a year ago.

Gross profit was $177.7 million, or 65.6% of total revenue for the third quarter of 2023, compared to $135.3 million, or 63.3% of total revenue, for the third quarter of 2022. Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies. As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future.

Total operating expenses were $165.1 million, or 60.9% of total revenue, for the third quarter of 2023, which included a one-time $18.2 million expense associated with the acquisition of in-process research and development (“IPR&D”) and a $2.4 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. This compares to total operating expenses of $129.9 million, or 60.8% of total revenue, for the third quarter of 2022, which included a $2.4 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. Excluding these charges, total non-GAAP operating expenses1 were $144.5 million, or 53.3% of total revenue, for the third quarter of 2023, and $127.5 million, or 59.7% of total revenue, for the third quarter of 2022, respectively. R&D expenses were $21.0 million for the third quarter of 2023, compared to $21.3 million for the third quarter of 2022. SG&A expenses were $125.9 million for the third quarter of 2023, compared to $108.6 million for the third quarter of 2022.

Income from operations was $12.6 million for the third quarter of 2023, compared to income from operations of $5.4 million for the third quarter of 2022. Excluding the one-time expense associated with the acquired IPR&D and the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition, non-GAAP income from operations1 was $33.2 million for the third quarter of 2023. This compares to non-GAAP income from operations of $7.8 million for the third quarter of 2022.

Updated Full Year 2023 Financial Outlook

For the fourth quarter of 2023, we expect total company revenue growth to accelerate to 28% to 31% year over year, which correlates to the midpoint of our annual guidance range of $1.05 billion to $1.07 billion for full year 2023.

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

Webcast and Conference Call Information

Penumbra, Inc. will host a conference call to discuss the third quarter 2023 financial results after market close on Thursday, November 2, 2023 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (888) 330-2443 for domestic and international callers (conference id: 4604622), or the webcast can be accessed on the “Events and Presentations” 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 supports healthcare providers, hospitals and clinics in more than 100 countries. For more information, visit www.penumbrainc.com and connect on Twitter and LinkedIn.

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) constant currency, b) non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted earnings per share (“EPS”) and c) adjusted EBITDA.

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.

Non-GAAP operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted EPS. The adjustments to the GAAP financial measures reflect the exclusion of:

•the one-time expense associated with the acquisition of IPR&D in the third quarter of 2023;

•the effect of the amortization of finite lived intangible assets acquired in connection with the Sixense acquisition over their estimated useful lives; and

•the excess tax benefits or tax deficiencies associated with share-based compensation arrangements.

Adjusted EBITDA. The Company's adjusted EBITDA reflects the exclusion from GAAP net income (loss) of:

•non-cash operating charges such as stock-based compensation and depreciation and amortization; and

•non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes.

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 operating expenses, non-GAAP income from operations, non-GAAP net income, and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the one-time expense associated with the acquisition of IPR&D in the third quarter of 2023, the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition and the excess tax benefits or tax deficiencies associated with share-based compensation arrangements. Further, we consider adjusted EBITDA a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding non-cash operating charges such as stock-based compensation and depreciation and amortization and non-operating items such as the one-time expense associated with the acquisition of IPR&D, interest income, interest expense, and provision for (benefit from) income taxes.

The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives

to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements

Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and the potential impact of any acquisitions, mergers, dispositions, joint ventures or investments we may make. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission ("SEC"), including our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 23, 2023. 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.

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	100,757	$	69,858
Marketable investments	148,098		118,172
Accounts receivable, net	206,615		203,384
Inventories	374,245		334,006
Prepaid expenses and other current assets	38,761		30,279

Total current assets	868,476		755,699
Property and equipment, net	65,632		65,015
Operating lease right-of-use assets	184,520		192,636
Finance lease right-of-use assets	31,364		33,323
Intangible assets, net	73,452		81,161
Goodwill	165,954		166,046

Deferred taxes	64,236		64,213
Other non-current assets	14,743		12,793
Total assets	$	1,468,377	$	1,370,886
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	27,996	$	26,679
Accrued liabilities	104,184		106,300
Current operating lease liabilities	10,827		10,033
Current finance lease liabilities	2,071		1,920
Total current liabilities	145,078		144,932

Non-current operating lease liabilities	192,117		198,955
Non-current finance lease liabilities	23,779		24,865
Other non-current liabilities	3,265		3,276
Total liabilities	364,239		372,028
Stockholders’ equity:
Common stock	38		38
Additional paid-in capital	1,030,700		963,040

Accumulated other comprehensive loss	(7,240)		(8,124)
Retained earnings	80,640		43,904


Total stockholders’ equity	1,104,138		998,858
Total liabilities and stockholders’ equity	$	1,468,377	$	1,370,886

Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	270,946	$	213,678	$	773,843	$	625,917
Cost of revenue	93,228		78,351		278,192		229,137
Gross profit	177,718		135,327		495,651		396,780
Operating expenses:
Research and development	20,958		21,320		62,481		61,443
Sales, general and administrative	125,920		108,573		376,433		334,088
Acquired in-process research and development	18,215		—		18,215		—
Total operating expenses	165,093		129,893		457,129		395,531
Income from operations	12,625		5,434		38,522		1,249
Interest income (expense), net	1,123		(43)		2,516		(162)
Other (expense) income, net	(444)		(2,356)		454		(4,323)
Income (loss) before income taxes	13,304		3,035		41,492		(3,236)
Provision for income taxes	4,090		5,306		4,756		2,643


Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)



Net income (loss) per share:
Basic	$	0.24	$	(0.06)	$	0.96	$	(0.16)
Diluted	$	0.23	$	(0.06)	$	0.94	$	(0.16)
Weighted average shares outstanding:
Basic	38,462,463		37,918,452		38,324,279		37,778,362
Diluted	39,219,966		37,918,452		39,183,635		37,778,362

Penumbra, Inc.

Reconciliation of GAAP Operating Expenses and GAAP Income from Operations to Non-GAAP Operating Expenses and Non-GAAP Income from Operations1

(unaudited)

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
GAAP operating expenses	$	165,093	$	129,893	$	457,129	$	395,531
GAAP operating expenses includes the effect of the following items:
Amortization of finite lived intangible assets acquired	2,380		2,380		7,139		5,949
Acquired IPR&D2	18,215		—		18,215		—
Non-GAAP operating expenses	$	144,498	$	127,513	$	431,775	$	389,582

GAAP income from operations	$	12,625	$	5,434	$	38,522	$	1,249
GAAP income from operations includes the effect of the following items:
Amortization of finite lived intangible assets acquired	2,380		2,380		7,139		5,949
Acquired IPR&D2	18,215		—		18,215		—
Non-GAAP income from operations	$	33,220	$	7,814	$	63,876	$	7,198

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

Penumbra, Inc.

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

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended September 30, 2023				Three Months Ended September 30, 2022				Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Net income		Diluted EPS		Net (loss) income		Diluted EPS		Net income		Diluted EPS		Net (loss) income		Diluted EPS
GAAP net income (loss)	$	9,214	$	0.23	$	(2,271)	$	(0.06)	$	36,736	$	0.94	$	(5,879)	$	(0.16)
GAAP net income (loss) includes the effect of the following items:
Amortization of finite lived intangible assets acquired	2,380		0.07		2,380		0.06		7,139		0.18		5,949		0.16
Acquired IPR&D2	18,215		0.46		—		—		18,215		0.46		—		—

Tax effect on the non-GAAP adjustment above3	(558)		(0.01)		(554)		(0.01)		(1,673)		(0.04)		(1,386)		(0.04)
(Excess tax benefits) tax deficiencies related to stock compensation awards	(2,987)		(0.08)		722		0.02		(8,372)		(0.21)		1,666		0.05

Non-GAAP net income	$	26,264	$	0.67	$	277	$	0.01	$	52,045	$	1.33	$	350	$	0.01




Weighted average shares outstanding used to compute:
GAAP diluted EPS	39,219,966				37,918,452				39,183,635				37,778,362
Non-GAAP diluted EPS4	39,219,966				38,762,786				39,183,635				38,743,727

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

3For the three and nine months ended September 30, 2023 and 2022, management used a combined federal and state tax rate of 23.44% and 23.29%, respectively, to compute the tax effect of non-GAAP adjustments. There was no effect on the provision for (benefit from) income taxes related to the acquired IPR&D.

4For the purposes of calculating Non-GAAP diluted EPS for the three and nine months ended September 30, 2022, non-GAAP diluted weighted average shares outstanding of 38,762,786 and 38,743,727, respectively were used, as the Company had non-GAAP net income in the period.

Penumbra, Inc.

Reconciliation of GAAP Net Income (Loss) to Adjusted EBITDA and Adjusted EBITDA Margin1

(unaudited)

(in thousands)


	Three Months Ended September 30,						Nine Months Ended September 30,
	2023			2022			2023			2022
GAAP net income (loss)	$	9,214		$	(2,271)		$	36,736		$	(5,879)
Adjustments to GAAP net income (loss):
Depreciation and amortization expense	6,933			6,225			20,218			17,880
Interest (income) expense, net	(1,123)			43			(2,516)			162
Provision for income taxes	4,090			5,306			4,756			2,643

Stock-based compensation expense	14,136			9,702			39,725			27,381
Acquired IPR&D2	18,215			—			18,215			—
Adjusted EBITDA	$	51,465		$	19,005		$	117,134		$	42,187

Revenue	$	270,946		$	213,678		$	773,843		$	625,917
Adjusted EBITDA	$	51,465		$	19,005		$	117,134		$	42,187
Adjusted EBITDA margin	19.0		%	8.9		%	15.1		%	6.7		%

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

2This represents a one-time $18.2 million expense associated with the acquisition of IPR&D during the three and nine months ended September 30, 2023.

Penumbra, Inc.

Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth1

(unaudited)

(in thousands, except for percentages)


	Three Months Ended September 30,				Reported Change				FX Impact		Constant Currency Change
	2023		2022		$		%		$		$		%
United States	$	194,816	$	148,819	$	45,997	30.9	%	$	—	$	45,997	30.9	%
International	76,130		64,859		11,271		17.4	%	(2,013)		9,258		14.3	%
Total	$	270,946	$	213,678	$	57,268	26.8	%	$	(2,013)	$	55,255	25.9	%


	Nine Months Ended September 30,				Reported Change				FX Impact		Constant Currency Change
	2023		2022		$		%		$		$		%
United States	$	553,467	$	434,583	$	118,884	27.4	%	$	—	$	118,884	27.4	%
International	220,376		191,334		29,042		15.2	%	40		29,082		15.2	%
Total	$	773,843	$	625,917	$	147,926	23.6	%	$	40	$	147,966	23.6	%

Penumbra, Inc.

Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth1

(unaudited)

(in thousands, except for percentages)


	Three Months Ended September 30,				Reported Change				FX Impact		Constant Currency Change
	2023		2022		$		%		$		$		%
Vascular	$	171,407	$	123,361	$	48,046	38.9	%	$	(500)	$	47,546	38.5	%
Neuro	99,539		90,317		9,222		10.2	%	(1,513)		7,709		8.5	%
Total	$	270,946	$	213,678	$	57,268	26.8	%	$	(2,013)	$	55,255	25.9	%


	Nine Months Ended September 30,				Reported Change				FX Impact		Constant Currency Change
	2023		2022		$		%		$		$		%
Vascular	$	466,940	$	369,712	$	97,228	26.3	%	$	458	$	97,686	26.4	%
Neuro	306,903		256,205		50,698		19.8	%	(418)		50,280		19.6	%
Total	$	773,843	$	625,917	$	147,926	23.6	%	$	40	$	147,966	23.6	%

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

Investor Relations

Penumbra, Inc.

510-995-2461

investors@penumbrainc.com

Source: Penumbra, Inc.

Cover	Nov. 02, 2023
Cover [Abstract]
Document Type	8-K
Document Period End Date	Nov. 02, 2023
Entity Registrant Name	Penumbra, Inc.
Entity Central Index Key	0001321732
Amendment Flag	false
Entity Incorporation, State or Country Code	DE
Entity File Number	001-37557
Entity Tax Identification Number	05-0605598
Entity Address, Address Line One	One Penumbra Place
Entity Address, City or Town	Alameda
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94502
City Area Code	510
Local Phone Number	748-3200
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common Stock, Par value $0.001 per share
Trading Symbol	PEN
Security Exchange Name	NYSE
Entity Emerging Growth Company	false