Penumbra, Inc. Reports First Quarter 2019 Financial Results
ALAMEDA, Calif., May 7, 2019 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the first quarter ended March 31, 2019.
-- Revenue of $128.4 million in the first quarter of 2019, an increase of
25.1%, or 27.2% in constant currency(1), over the first quarter of 2018.
First Quarter 2019 Financial Results
Total revenue grew to $128.4 million for the first quarter of 2019 compared to $102.7 million for the first quarter of 2018, an increase of 25.1%, or 27.2% on a constant currency basis. The United States represented 64% of total revenue and international represented 36% of total revenue for the first quarter of 2019. Revenue from sales of neuro products grew to $81.5 million for the first quarter of 2019, an increase of 14.1%, or 16.5% on a constant currency basis. Revenue from sales of vascular products grew to $47.0 million for the first quarter of 2019, an increase of 50.2%, or 51.8% on a constant currency basis.
Gross profit was $83.9 million, or 65.3% of total revenue, for the first quarter of 2019, compared to $66.6 million, or 64.8% of total revenue, for the first quarter of 2018.
Total operating expenses for the first quarter of 2019 were $72.8 million, or 56.6% of total revenue. This compares to total operating expenses of $62.5 million, or 60.9% of total revenue, for the first quarter of 2018. R&D expenses were $11.7 million for the first quarter of 2019, compared to $8.0 million for the first quarter of 2018. SG&A expenses were $61.1 million for the first quarter of 2019, compared to $54.5 million for the first quarter of 2018.
Operating income for the first quarter of 2019 was $11.2 million, compared to operating income of $4.0 million for the first quarter of 2018.
Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the first quarter 2019 financial results after market close on Tuesday, May 7, 2019 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: 6096838), 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 innovative products and has a broad portfolio that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and 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. For more information, visit www.penumbrainc.com.
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 income and non-GAAP diluted earnings per share ("EPS") and b) constant currency.
Non-GAAP net income and non-GAAP diluted EPS. The Company defines non-GAAP net income as net income attributable to Penumbra, Inc. excluding a) the income tax effects from the Tax Cuts and Jobs Act of 2017 (the "Tax Reform Act") and b) the effects of the excess tax benefits associated with share-based compensation arrangements. The Company defines non-GAAP diluted EPS as GAAP diluted EPS, excluding the effects of the same 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 income and non-GAAP diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed excluding the one-time effects of the transition tax from the Tax Reform Act and the excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance.
The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.
Forward-Looking Statements
Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: 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, 2018 filed with the SEC on February 26, 2019. 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)See "Non-GAAP Financial Measures" for important information about our use of constant currency and other non-GAAP measures.
Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
March 31, 2019 December 31,
2018
Assets
Current assets:
Cash and cash equivalents $
95,606 $
67,850
Marketable investments 99,241 133,039
Accounts receivable, net 94,679 81,896
Inventories 121,691 115,741
Prepaid expenses and other current assets 11,869 12,200
Total current assets 423,086 410,726
Property and equipment, net 35,380 35,407
Operating lease right-of-use assets 42,376
Intangible assets, net 26,813 27,245
Goodwill 7,659 7,813
Deferred taxes 31,862 32,940
Other non-current assets 1,613 875
Total assets $
568,789 $
515,006
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $
7,692 $
8,176
Accrued liabilities 58,032 57,886
Current operating lease liabilities 3,688
Total current liabilities 69,412 66,062
Deferred rent 7,586
Non-current operating lease liabilities 46,070
Other non-current liabilities 16,644 18,943
Total liabilities 132,126 92,591
Stockholders' equity:
Common stock 34 34
Additional paid-in capital 419,514 415,084
Accumulated other comprehensive loss (2,578) (1,942)
Retained earnings 19,762 9,064
Total Penumbra, Inc. stockholders' equity 436,732 422,240
Non-controlling interest (69) 175
Total stockholders' equity 436,663 422,415
Total liabilities and stockholders' equity $
568,789 $
515,006
Penumbra, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)
Three Months Ended March 31,
2019 2018
Revenue $
128,439 $
102,701
Cost of revenue 44,529 36,144
Gross profit 83,910 66,557
Operating expenses:
Research and development 11,667 8,013
Sales, general and administrative 61,091 54,499
Total operating expenses 72,758 62,512
Income from operations 11,152 4,045
Interest income, net 733 749
Other income (expense), net 24 (290)
Income before income taxes and
equity in losses of unconsolidated
investee 11,909 4,504
Provision for (benefit from) income
taxes 1,455 (1,938)
Income before equity in losses of
unconsolidated investee 10,454 6,442
Equity in losses of unconsolidated
investee (951)
Consolidated net income $
10,454 $
5,491
Net loss attributable to non-
controlling interest (244)
Net income attributable to
Penumbra, Inc. $
10,698 $
5,491
Net income attributable to
Penumbra, Inc. per share:
Basic $
0.31 $
0.16
Diluted $
0.30 $
0.15
Weighted average shares
outstanding:
Basic 34,507,279 33,846,142
Diluted 36,213,164 35,917,051
Penumbra, Inc.
Reconciliation of GAAP Net Income and Diluted EPS to Non-GAAP Net Income and Non-GAAP Diluted EPS1
(unaudited)
(in thousands, except per share amounts)
Three Months Ended March Three Months Ended March
31, 2019 31, 2018
Net income Diluted EPS Net income Diluted
EPS
GAAP net income $
10,698 $
0.30 $
5,491 $
0.15
GAAP net income includes the effect of
the following items:
Effect of the transition tax under the
Tax Reform Act(2) 88
Excess tax benefits related to stock
compensation awards (2,244) (0.07) (3,364) (0.09)
Non-GAAP net income $
8,454 $
0.23 $
2,215 $
0.06
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.
2 On December 22,
2017, the Tax
Reform Act was
enacted into
law. This new
tax law, among
other changes,
reduces the
Company's U.S.
federal
statutory
corporate
income tax
rate from 34%
to 21%
effective
January 1,
2018. During
the three
months ended
March 31,
2018, the
Company
recorded a
provisional
tax charge for
the one-time
transition tax
on the
undistributed
earnings of
its foreign
subsidiaries.
Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth3
(unaudited)
(in thousands)
Three Months Ended March 31, Reported Change FX Impact Constant Currency Change
2019 2018
$ %
$
$ %
United States $
82,511 $
65,801 $
16,710 25.4
$ $
16,710 25.4
% %
International 45,928 36,900 9,028 24.5 2,214 11,242 30.5
% %
Total $
128,439 $
102,701 $
25,738 25.1 $
2,214 $
27,952 27.2
% %
Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth3
(unaudited)
(in thousands)
Three Months Ended March 31, Reported Change FX Impact Constant Currency Change
2019 2018
$ %
$
$ %
Neuro $
81,471 $
71,433 $
10,038 14.1 $
1,714 $
11,752 16.5
% %
Vascular 46,968 31,268 15,700 50.2 500 16,200 51.8
% %
Total $
128,439 $
102,701 $
25,738 25.1 $
2,214 $
27,952 27.2
% %
See "Non-
GAAP
Financial
Measures"
for
important
information
about our
use of
constant
currency
and other
non-GAAP
3 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-first-quarter-2019-financial-results-300845369.html
SOURCE Penumbra, Inc.
