Penumbra, Inc. Reports Second Quarter 2020 Financial Results
ALAMEDA, Calif., Aug. 3, 2020 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the second quarter ended June 30, 2020.
-- Revenue of $105.1 million in the second quarter of 2020, a decrease of
21.7%, or 21.3% in constant currency(1), compared to the second quarter
of 2019. US revenue of $78.0 million was slightly less than 10% below
the same period a year ago.
Second Quarter 2020 Financial Results
Total revenue declined to $105.1 million for the second quarter of 2020 compared to $134.2 million for the second quarter of 2019, a decrease of 21.7%, or 21.3% on a constant currency basis. The United States represented 74% of total revenue and international represented 26% of total revenue for the second quarter of 2020. Revenue from sales of vascular products declined to $46.3 million for the second quarter of 2020, a decrease of 12.1%, or 11.9% on a constant currency basis. US vascular revenue declined 5.7% and international vascular revenue declined 36.7% compared to the second quarter of 2019. Revenue from sales of neuro products declined to $58.8 million for the second quarter of 2020, a decrease of 27.8%, or 27.3% on a constant currency basis. US neuro revenue and international neuro revenue declined 13.3% and 45.4%, respectively, compared to the second quarter of 2019.
Gross profit was $64.9 million, or 61.8% of total revenue, for the second quarter of 2020, compared to $93.9 million, or 70.0% of total revenue, for the second quarter of 2019.
Total operating expenses for the second quarter of 2020 were $82.6 million, or 78.6% of total revenue. This compares to total operating expenses of $81.1 million, or 60.5% of total revenue, for the second quarter of 2019. R&D expenses were $22.7 million for the second quarter of 2020, compared to $13.5 million for the second quarter of 2019. SG&A expenses were $59.9 million for the second quarter of 2020, compared to $67.7 million for the second quarter of 2019.
Operating loss for the second quarter of 2020 was $17.6 million, compared to an operating income of $12.8 million for the second quarter of 2019.
As of June 30, 2020, cash, cash equivalents and marketable investments totaled $278.3 million, which includes net cash proceeds of approximately $134.8 million from an underwritten public offering completed in June 2020.
Impact of COVID-19 Pandemic
The Company's business trends continue to be impacted by the global COVID-19 pandemic. 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 still cannot reliably estimate the future impact on our operations and financial results. Further, we think the recent resurgence in the United States and other parts of the world could cause periodic disruption in our revenue until the pandemic is contained.
Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the second quarter 2020 financial results after market close on Monday, August 3, 2020 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (833) 350-1434 for domestic and international callers (conference id: 8138127), 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 and healthcare providers 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.
(1)
See "Non-GAAP Financial Measures" for important information about our use of constant currency and other non-GAAP measures.
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 impairment loss on indefinite-lived intangible asset and 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 items 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 impairment loss on indefinite-lived intangible asset and the excess tax benefits associated with share-based compensation arrangements.
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 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed with the SEC on May 7, 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.
Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
June 30, 2020 December 31, 2019
Assets
Current assets:
Cash and cash equivalents $
134,381 $
72,779
Marketable investments 143,914 116,610
Accounts receivable, net 97,613 105,901
Inventories 183,442 152,992
Prepaid expenses and other current assets 16,545 14,852
Total current assets 575,895 463,134
Property and equipment, net 62,188 51,812
Operating lease right-of-use assets 42,669 43,717
Finance lease right-of-use assets 37,927 39,287
Intangible assets, net 10,645 25,407
Goodwill 7,665 7,656
Deferred taxes 36,474 31,305
Other non-current assets 6,737 2,946
Total assets $
780,200 $
665,901
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $
14,432 $
15,111
Accrued liabilities 57,718 67,630
Current operating lease liabilities 4,446 4,142
Current finance lease liabilities 1,016 4,165
Total current liabilities 77,612 91,048
Non-current operating lease liabilities 45,925 47,242
Non-current finance lease liabilities 26,202 26,748
Other non-current liabilities 7,300 15,250
Total liabilities 157,039 180,288
Stockholders' equity:
Common stock 36 35
Additional paid-in capital 581,066 430,659
Accumulated other comprehensive loss (2,097) (2,324)
Retained earnings 45,789 57,522
Total Penumbra, Inc. stockholders' equity 624,794 485,892
Non-controlling interest (1,633) (279)
Total stockholders' equity 623,161 485,613
Total liabilities and stockholders' equity $
780,200 $
665,901
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,
2020 2019 2020 2019
Revenue $
105,109 $
134,201 $
242,438 $
262,640
Cost of revenue 40,179 40,273 89,499 84,802
Gross profit 64,930 93,928 152,939 177,838
Operating expenses:
Research and development 22,725 13,462 35,671 25,129
Sales, general and administrative 59,854 67,665 134,307 128,756
Total operating expenses 82,579 81,127 169,978 153,885
(Loss) income from operations (17,649) 12,801 (17,039) 23,953
Interest income, net 108 784 407 1,517
Other income (expense), net 511 (71) (1,144) (47)
(Loss) income before income taxes (17,030) 13,514 (17,776) 25,423
Benefit from income taxes (4,129) (2,735) (5,763) (1,280)
Consolidated net (loss) income $
(12,901) $
16,249 $
(12,013) $
26,703
Net loss attributable to non-
controlling interest (941) (339) (1,478) (583)
Net (loss) income attributable to
Penumbra, Inc. $
(11,960) $
16,588 $
(10,535) $
27,286
Net (loss) income attributable to
Penumbra, Inc. per share:
Basic $
(0.34) $
0.48 $
(0.30) $
0.79
Diluted $
(0.34) $
0.46 $
(0.30) $
0.75
Weighted average shares
outstanding:
Basic 35,400,542 34,694,228 35,221,727 34,601,270
Diluted 35,400,542 36,214,321 35,221,727 36,214,362
Penumbra, Inc.
Reconciliation of GAAP Net (Loss) Income and Diluted EPS to Non-GAAP Net Income and Non-GAAP Diluted EPS(1)
(unaudited)
(in thousands, except per share amounts)
Three Months Ended Three Months Ended Six Months Ended June Six Months Ended June
June 30, 2020 June 30, 2019 30, 2020 30, 2019
Net loss Diluted
Net Diluted Net loss Diluted
Net Diluted
EPS income EPS EPS income EPS
(loss) (loss)
GAAP net (loss) income $
(11,960) $
(0.34) $
16,588 $
0.46 $
(10,535) $
(0.30) $
27,286 $
0.75
GAAP net (loss) income includes the
effect of
the following items:
Impairment loss on indefinite-lived 2,500 0.07 2,500 0.07
intangible asset
Excess tax benefits related to stock (1,320) (0.03) (6,745) (0.19) (2,802) (0.08) (8,989) (0.24)
compensation awards
Non-GAAP net income $
(10,780) $
(0.30) $
9,843 $
0.27 $
(10,837) $
(0.31) $
18,297 $
0.51
(1)See "Non-GAAP Financial
Measures" for important
information about our use of
non-GAAP measures and
further information about
our non-GAAP net income and
non-GAAP diluted EPS
measures.
Penumbra, Inc.
Reconciliation of Revenue Change by Geographic Regions and Product Categories to Constant Currency Revenue Change(2)
(unaudited)
(in thousands)
Three Months Ended June 30, Reported Change FX Impact Constant Currency Change
2020 2019
$ %
$
$ %
United States
Neuro $
38,642 $
44,574 $
(5,932) (13.3)
$ $
(5,932) (13.3)
% %
Vascular 39,401 41,800 (2,399) (5.7) (2,399) (5.7)
% %
Total United States $
78,043 $
86,374 $
(8,331) (9.6)
$ $
(8,331) (9.6)
% %
International
Neuro 20,195 36,973 (16,778) (45.4) $
409 (16,369) (44.3)
% %
Vascular 6,871 10,854 (3,983) (36.7) 113 (3,870) (35.7)
% %
Total International $
27,066 $
47,827 $
(20,761) (43.4) $
522 $
(20,239) (42.3)
% %
Total $
105,109 $
134,201 $
(29,092) (21.7) $
522 $
(28,570) (21.3)
% %
Penumbra, Inc.
Reconciliation of Revenue Change by Geographic Regions and Product Categories to Constant Currency Revenue Change(2)
(unaudited)
(in thousands)
Six Months Ended June 30, Reported Change FX Impact Constant Currency Change
2020 2019
$ %
$
$ %
United States
Neuro $
83,749 $
88,605 $
(4,856) (5.5)
$ $
(4,856) (5.5)
% %
Vascular 90,068 80,280 9,788 12.2 9,788 12.2
% %
Total United States $
173,817 $
168,885 $
4,932 2.9
$ $
4,932 2.9
% %
International
Neuro $
53,164 $
74,413 $
(21,249) (28.6) $
1,099 $
(20,150) (27.1)
% %
Vascular 15,457 19,342 (3,885) (20.1) 256 (3,629) (18.8)
% %
Total International $
68,621 $
93,755 $
(25,134) (26.8) $
1,355 $
(23,779) (25.4)
% %
Total $
242,438 $
262,640 $
(20,202) (7.7) $
1,355 $
(18,847) (7.2)
% %
(2)See "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
View original content to download multimedia:http://www.prnewswire.com/news-releases/penumbra-inc-reports-second-quarter-2020-financial-results-301104906.html
SOURCE Penumbra, Inc.
