Penumbra, Inc. Reports Second Quarter 2017 Financial Results

ALAMEDA, Calif., Aug. 8, 2017 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on interventional therapies, today reported financial results for the second quarter ended June 30, 2017.

    --  Revenue of $80.6 million in the second quarter of 2017, an increase of
        23.8%, or 24.6% in constant currency(1), over the second quarter of
        2016.

Second Quarter 2017 Financial Results
Total revenue grew to $80.6 million for the second quarter of 2017 compared to $65.1 million for the second quarter of 2016, an increase of 23.8%, or 24.6% on a constant currency basis. The U.S. represented 66.3% of total revenue and international represented 33.7% of total revenue for the second quarter of 2017. Revenue from sales of neuro products grew to $56.2 million for the second quarter of 2017, an increase of 23.9%, or 24.8% on a constant currency basis. Revenue from sales of peripheral vascular products grew to $24.4 million for the second quarter of 2017, an increase of 23.5%, or 24.1% on a constant currency basis.

Gross profit was $50.9 million, or 63.2% of total revenue, for the second quarter of 2017, compared to $41.5 million, or 63.7% of total revenue, for the second quarter of 2016.

Total operating expenses were $52.3 million, or 64.8% of total revenue, for the second quarter of 2017, compared to $42.1 million, or 64.7% of total revenue, for the second quarter of 2016. R&D expenses were $8.1 million for the second quarter of 2017, compared to $6.3 million for the second quarter of 2016. SG&A expenses were $44.2 million for the second quarter of 2017, compared to $35.9 million for the second quarter of 2016.

Operating loss for the second quarter of 2017 was $1.3 million, compared to operating loss of $0.7 million for the second quarter of 2016.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the second quarter 2017 financial results after market close on Tuesday, August 8, 2017 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 54298832), 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; 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, 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)


                                                    June 30,                December 31,
                                                         2017                        2016
                                                         ----                        ----

    Assets

    Current assets:

         Cash and cash equivalents                                $76,576                           $13,236

         Marketable investments                       142,068                              115,517

         Accounts receivable, net                      48,714                               43,335

         Inventories                                   81,141                               73,012

         Prepaid expenses and other
          current assets                               14,399                               18,727

         Restricted cash                                1,819                                    -
                                                        -----                                  ---

              Total current assets                    364,717                              263,827

    Property and equipment, net                        24,419                               21,464

    Deferred taxes                                     22,496                               22,476

    Other non-current assets                            5,371                                  487
                                                        -----                                  ---

             Total assets                                        $417,003                          $308,254
                                                                 ========                          ========

    Liabilities and Stockholders'
     Equity

    Current liabilities:

         Accounts payable                                          $4,334                            $4,110

         Accrued liabilities                           33,177                               31,690
                                                       ------                               ------

              Total current liabilities                37,511                               35,800

    Deferred rent                                       5,682                                5,083

    Other non-current liabilities                         832                                  824
                                                          ---                                  ---

              Total liabilities                        44,025                               41,707

    Stockholders' equity:

    Common stock                                           33                                   31

    Additional paid-in capital                        384,965                              273,865

    Accumulated other comprehensive
     loss                                             (4,695)                             (4,688)

    Accumulated deficit                               (7,325)                             (2,661)
                                                       ------                               ------

         Total stockholders' equity                   372,978                              266,547
                                                      -------                              -------

              Total liabilities and
               stockholders' equity                              $417,003                          $308,254
                                                                 ========                          ========


                                                                              Penumbra, Inc.

                                                             Condensed Consolidated Statements of Operations

                                                                               (unaudited)

                                                            (in thousands, except share and per share amounts)


                                            Three Months Ended June 30,                                Six Months Ended June 30,

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

    Revenue                                       $80,589                                           $65,106                         $153,802  $123,025

    Cost of revenue                     29,660                               23,636                                55,164              41,650
                                        ------                               ------                                ------              ------

    Gross profit                        50,929                               41,470                                98,638              81,375
                                        ------                               ------                                ------              ------

    Operating expenses:

    Research and development             8,094                                6,264                                15,128              11,265

    Sales, general and
     administrative                     44,163                               35,876                                86,884              68,945
                                        ------                               ------                                ------              ------

    Total operating expenses            52,257                               42,140                               102,012              80,210
                                        ------                               ------                               -------              ------

    (Loss) Income from operations      (1,328)                               (670)                              (3,374)              1,165

    Interest income, net                   624                                  559                                 1,268               1,069

    Other expense, net                   (372)                               (272)                                (721)              (496)
                                          ----                                 ----                                  ----                ----

    (Loss) Income before income
     taxes                             (1,076)                               (383)                              (2,827)              1,738

    Provision for (Benefit from)
     income taxes                          482                              (3,396)                                1,837             (3,566)
                                           ---                               ------                                 -----              ------

    Net (loss) income                            $(1,558)                                           $3,013                         $(4,664)   $5,304
                                                  =======                                            ======                          =======    ======

    Net (loss) income per share                   $(0.05)                                            $0.10                          $(0.14)    $0.18

    -Basic


    -Diluted                                      $(0.05)                                            $0.09                          $(0.14)    $0.16
                                                   ======                                             =====                           ======     =====

    Weighted average shares used to
     compute net (loss) income per
     share                          33,219,487                           30,210,322                            32,420,105          30,100,162

     -Basic


    -Diluted                        33,219,487                           33,308,193                            32,420,105          33,137,364
                                    ==========                           ==========                            ==========          ==========

    _____________________________

    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
     six months ended June 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 on February
     28, 2017 for detailed adoption information.


                                                                                                            Penumbra, Inc.

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

                                                                                                              (unaudited)

                                                                                                            (in thousands)


                            Three Months Ended June 30,                          Reported Change                      FX Impact                  Constant Currency
                                                                                                                                            Change


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

    United States                   $53,420                                    $43,692                                       $9,728                       22.3%                 $    -                  $9,728         22.3%

    International        27,169                         21,414                                      $5,755                              26.9%                       531                 $6,286             29.4%
                         ------                         ------                                                                                                     ---

    Total                           $80,589                                    $65,106                                      $15,483                       23.8%                   $531                  $16,014         24.6%
                                    =======                                    =======                                      =======                                               ====                  =======


                                                                                                  Penumbra, Inc.

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

                                                                                                    (unaudited)

                                                                                                  (in thousands)


                          Three Months Ended June 30,                      Reported Change                    FX Impact                Constant Currency
                                                                                                                                            Change


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

    Neuro                           $56,203                                    $45,362                                      $10,841                       23.9%                   $421                  $11,262         24.8%

    Peripheral Vascular  24,386                         19,744                                      $4,642                              23.5%                       110                 $4,752             24.1%
                         ------                         ------                                                                                                     ---                 ------

    Total                           $80,589                                    $65,106                                      $15,483                       23.8%                   $531                  $16,014         24.6%
                                    =======                                    =======                                      =======                                               ====                  =======


                                                                                                  Penumbra, Inc.

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

                                                                                                    (unaudited)

                                                                                                  (in thousands)


                           Six Months Ended June 30,                       Reported Change                    FX Impact                Constant Currency
                                                                                                                                            Change


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

    United States                  $101,907                                    $83,104                                      $18,803                       22.6%                 $    -                 $18,803         22.6%

    International        51,895                         39,921                                     $11,974                              30.0%                       877                $12,851             32.2%
                         ------                         ------                                                                                                     ---

    Total                          $153,802                                   $123,025                                      $30,777                       25.0%                   $877                  $31,654         25.7%
                                   ========                                   ========                                      =======                                               ====                  =======


                                                                                                  Penumbra, Inc.

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

                                                                                                    (unaudited)

                                                                                                  (in thousands)


                           Six Months Ended June 30,                       Reported Change                    FX Impact                Constant Currency
                                                                                                                                            Change


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

    Neuro               106,452                         86,646                                     $19,806                              22.9%                              $664                $20,470           23.6%

    Peripheral Vascular  47,350                         36,379                                     $10,971                              30.2%                       213                $11,184             30.7%
                         ------                         ------                                                                                                     ---

    Total                          $153,802                                   $123,025                                      $30,777                       25.0%                   $877                  $31,654         25.7%
                                   ========                                   ========                                      =======                                               ====                  =======

    (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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