Penumbra, Inc. Reports Third Quarter 2017 Financial Results

ALAMEDA, Calif., Nov. 7, 2017 /PRNewswire/ -- Penumbra, Inc.(NYSE: PEN), a global healthcare company focused on interventional therapies, today reported financial results for the third quarter ended September 30, 2017.

    --  Revenue of $83.9 million in the third quarter of 2017, an increase of
        24.9%, or 24.1% in constant currency(1), over the third quarter of 2016.

Third Quarter 2017 Financial Results
Total revenue grew to $83.9 million for the third quarter of 2017 compared to $67.2 million for the third quarter of 2016, an increase of 24.9%, or 24.1% on a constant currency basis. The United States represented 66% of total revenue and international represented 34% of total revenue for the third quarter of 2017. Revenue from sales of neuro products grew to $58.7 million for the third quarter of 2017, an increase of 23.4%, or 22.5% on a constant currency basis, from the third quarter of 2016. Revenue from sales of peripheral vascular products grew to $25.2 million for the third quarter of 2017, an increase of 28.4%, or 27.8% on a constant currency basis, from the third quarter of 2016.

Gross profit was $54.8 million, or 65.3% of total revenue, for the third quarter of 2017, compared to $42.9 million, or 63.8% of total revenue, for the third quarter of 2016.

Total operating expenses were $54.1 million, or 64.5% of total revenue, for the third quarter of 2017, compared to $44.2 million, or 65.8% of total revenue, for the third quarter of 2016. R&D expenses were $8.1 million for the third quarter of 2017, compared to $6.5 million for the third quarter of 2016. SG&A expenses were $46.0 million for the third quarter of 2017, compared to $37.7 million for the third quarter of 2016.

Operating income for the third quarter of 2017 was $0.7 million, compared to operating loss of $1.4 million for the third quarter of 2016. Operating income for the third quarter of 2017 benefited from a $1.2 million net refund of previously paid medical device excise tax.

Full Year 2017 Financial Outlook
The Company is increasing its 2017 guidance for total revenue to be in the range of $324 million to $326 million. This new range compares to the previous range of $312 million to $317 million.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2017 financial results after market close on Tuesday, November 7, 2017 at 5:00 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 99307870), 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 two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on interventional therapies. Penumbra designs, develops, manufactures and markets innovative devices and has a broad portfolio of products that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. Penumbra sells its products to hospitals primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark of Penumbra, Inc.

Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses results on constant currency as a non-GAAP financial measure in this press release.

Our 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.

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

Forward-Looking Statements
Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017. 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.



    1 Constant currency results are
     non-GAAP financial measures.
     Please refer to "Non-GAAP
     Financial Measures" herein for
     important information about our
     use of constant currency results
     (including reconciliations to the
     most comparable GAAP measures).


                                                    Penumbra, Inc.

                                        Condensed Consolidated Balance Sheets

                                                     (unaudited)

                                                    (in thousands)


                                                  September 30,               December 31,

                                                           2017                        2016
                                                           ----                        ----

    Assets

    Current assets:

         Cash and cash equivalents                                  $65,621                           $13,236

         Marketable investments                         153,203                              115,517

        Accounts receivable, net                         47,964                               43,335

         Inventories                                     90,529                               73,012

         Prepaid expenses and other
          current assets                                 14,464                               18,727

              Total current assets                      371,781                              263,827

    Property and equipment, net                          28,259                               21,464

    Intangible assets, net                               23,821                                    -

    Goodwill                                              7,449                                    -

    Deferred taxes                                       22,503                               22,476

    Other non-current assets                              5,281                                  487
                                                          -----                                  ---

             Total assets                                          $459,094                          $308,254
                                                                   ========                          ========

    Liabilities and Stockholders'
     Equity

    Current liabilities:

         Accounts payable                                            $5,768                            $4,110

         Accrued liabilities                             45,312                               31,690
                                                         ------                               ------

              Total current liabilities                  51,080                               35,800

    Deferred rent                                         6,065                                5,083

    Other non-current liabilities                        18,117                                  824
                                                         ------                                  ---

              Total liabilities                          75,262                               41,707

    Stockholders' equity:

    Common stock                                             33                                   31

    Additional paid-in capital                          389,682                              273,865

    Accumulated other
     comprehensive income (loss)                          1,204                              (4,688)

    Accumulated deficit                                 (7,087)                             (2,661)
                                                         ------                               ------

         Total stockholders' equity                     383,832                              266,547
                                                        -------                              -------

              Total liabilities and
               stockholders' equity                                $459,094                          $308,254
                                                                   ========                          ========


                                                                              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,

                                          2017                 2016(1)                       2017                          2016(1)
                                          ----                  ------                       ----                           ------

    Revenue                                       $83,911                                           $67,187                          $237,713  $190,212

    Cost of revenue                     29,134                               24,313                                84,298               65,963
                                        ------                               ------                                ------               ------

    Gross profit                        54,777                               42,874                               153,415              124,249
                                        ------                               ------                               -------              -------

    Operating expenses:

    Research and development             8,132                                6,497                                23,260               17,762

    Sales, general and
     administrative                     45,962                               37,740                               132,846              106,685
                                        ------                               ------                               -------              -------

    Total operating expenses            54,094                               44,237                               156,106              124,447
                                        ------                               ------                               -------              -------

    Income (loss) from operations          683                              (1,363)                              (2,691)               (198)

    Interest income, net                   658                                  631                                 1,926                1,700

    Other expense, net                   (647)                               (360)                              (1,368)               (856)
                                          ----                                 ----                                ------                 ----

    Income (loss) before income
     taxes                                 694                              (1,092)                              (2,133)                 646

    Provision for (benefit from)
     income taxes                          456                             (12,998)                                2,293             (16,564)
                                           ---                              -------                                 -----              -------

    Net income (loss)                                $238                                           $11,906                          $(4,426)  $17,210
                                                     ====                                           =======                           =======   =======

    Net income (loss) per share                     $0.01                                             $0.39                           $(0.14)    $0.57

    -Basic


    -Diluted                                        $0.01                                             $0.35                           $(0.14)    $0.52
                                                    =====                                             =====                            ======     =====

    Weighted average shares used to
     compute net income (loss) per
     share                          33,446,841                           30,604,384                            32,766,135           30,269,463

     -Basic


    -Diluted                        35,664,272                           33,755,383                            32,766,135           33,367,618
                                    ==========                           ==========                            ==========           ==========



    1 We elected to early adopt ASU 2016-09
     in the fourth quarter of 2016. Our
     condensed consolidated statement of
     operations for the three and nine
     months ended September 30, 2016 was
     adjusted to include the impact of ASU
     2016-09 adoption. See Notes 2 and 15
     in the notes to our consolidated
     financial statements in our Annual
     Report on Form 10-K for the year ended
     December 31, 2016 filed with the SEC


                                                                                                                      Penumbra, Inc.

                                                                              Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth(1)

                                                                                                                       (unaudited)

                                                                                                                      (in thousands)


                           Three Months Ended September 30,                           Reported Change                        FX Impact                Constant Currency Change
                                                                                                                   ---------

                            2017                           2016                         $                %                            $                          $              %
                            ----                           ----                       ---               ---                         ---                        ---             ---

    United States                    $55,652                                       $44,380                                        $11,272                         25.4%                $       -        $11,272  25.4%

    International         28,259                           22,807                               5,452                                23.9%                        (555)            4,897         21.5%
                          ------                           ------                                                                                                 ----

    Total                            $83,911                                       $67,187                                        $16,724                         24.9%                   $(555)        $16,169  24.1%
                                     =======                                       =======                                        =======                                                  =====         =======


                                                                                                          Penumbra, Inc.

                                                                  Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth(1)

                                                                                                           (unaudited)

                                                                                                          (in thousands)


                        Three Months Ended September 30,                       Reported Change                      FX Impact             Constant Currency Change
                                                                                                                   ---------

                            2017                           2016                         $                %                            $                          $              %
                            ----                           ----                       ---               ---                         ---                        ---             ---

    Neuro                            $58,670                                       $47,534                                        $11,136                         23.4%                   $(424)        $10,712  22.5%

    Peripheral Vascular   25,241                           19,653                               5,588                                28.4%                        (131)            5,457         27.8%
                          ------                           ------                                                                                                 ----             -----

    Total                            $83,911                                       $67,187                                        $16,724                         24.9%                   $(555)        $16,169  24.1%
                                     =======                                       =======                                        =======                                                  =====         =======


                                                                                                          Penumbra, Inc.

                                                                  Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth(1)

                                                                                                           (unaudited)

                                                                                                          (in thousands)


                         Nine Months Ended September 30,                       Reported Change                      FX Impact             Constant Currency Change
                                                                                                                   ---------

                            2017                           2016                         $                %                            $                          $              %
                            ----                           ----                       ---               ---                         ---                        ---             ---

    United States                   $157,559                                      $127,484                                        $30,075                         23.6%                $       -        $30,075  23.6%

    International         80,154                           62,728                              17,426                                27.8%                          315            17,741         28.3%
                          ------                           ------                                                                                                  ---

    Total                           $237,713                                      $190,212                                        $47,501                         25.0%                     $315         $47,816  25.1%
                                    ========                                      ========                                        =======                                                   ====         =======


                                                                                                          Penumbra, Inc.

                                                                  Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth(1)

                                                                                                           (unaudited)

                                                                                                          (in thousands)


                         Nine Months Ended September 30,                       Reported Change                      FX Impact             Constant Currency Change
                                                                                                                   ---------

                            2017                           2016                         $                %                            $                          $              %
                            ----                           ----                       ---               ---                         ---                        ---             ---

    Neuro                           $165,122                                      $134,180                                        $30,942                         23.1%                     $235         $31,177  23.2%

    Peripheral Vascular   72,591                           56,032                              16,559                                29.6%                           80            16,639         29.7%
                          ------                           ------                                                                                                  ---

    Total                           $237,713                                      $190,212                                        $47,501                         25.0%                     $315         $47,816  25.1%
                                    ========                                      ========                                        =======                                                   ====         =======


    (1)See "Non-GAAP Financial
     Measures" above for
     important information about
     our use of this non-GAAP
     measure and further
     information about our
     calculation of constant
     currency results.

Investor Relations
Penumbra, Inc.
510-995-2461
investors@penumbrainc.com

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