Penumbra, Inc. Reports First Quarter 2022 Financial Results

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May 03, 2022, 16:05 ET

ALAMEDA, Calif., May 3, 2022 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the first quarter ended March 31, 2022.

Revenue of $203.9 million in the first quarter of 2022, an increase of 20.5%, or 21.8% in constant currency¹, compared to the first quarter of 2021.

First Quarter 2022 Financial Results

Total revenue increased to $203.9 million for the first quarter of 2022 compared to $169.2 million for the first quarter of 2021, an increase of 20.5%, or 21.8% on a constant currency basis. The United States represented 71% of total revenue and international represented 29% of total revenue for the first quarter of 2022. Revenue from sales of vascular products grew to $122.8 million for the first quarter of 2022, an increase of 37.7%, or 38.8% on constant currency basis. Revenue from sales of neuro products grew to $81.1 million for the first quarter of 2022, an increase of 1.3%, or 2.9% on a constant currency basis.

Gross profit was $127.4 million, or 62.5% of total revenue for the first quarter of 2022 and was impacted by higher labor and logistics costs as a result of manufacturing transfer activities and higher labor absenteeism due to the Omicron variant at the beginning of the quarter. This compared to $111.3 million, or 65.8% of total revenue, for the first quarter of 2021.

Total operating expenses were $131.5 million, or 64.5% of total revenue, for the first quarter of 2022, including a $1.8 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition. Excluding this charge, total non-GAAP operating expenses¹ were $129.7 million or 63.6% of total revenue, for the first quarter of 2022. This compares to GAAP and non-GAAP operating expenses of $97.9 million, or 57.8% of total revenue, for the first quarter of 2021. R&D expenses were $20.6 million for the first quarter of 2022, compared to $18.1 million for the first quarter of 2021. SG&A expenses were $110.9 million for the first quarter of 2022, compared to $79.8 million for the first quarter of 2021.

Operating loss for the first quarter of 2022 was $4.0 million. Excluding the charge associated with the amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition, non-GAAP operating loss¹ was $2.3 million. This compares to GAAP and non-GAAP operating income of $13.5 million for the first quarter of 2021.

Webcast and Conference Call Information

Penumbra, Inc. will host a conference call to discuss the first quarter 2022 financial results after market close on Tuesday, May 3, 2022 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" 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. The Penumbra logo is a trademark of Penumbra, Inc. For more information, visit www.penumbrainc.com and connect on Twitter and LinkedIn.

¹See "Non-GAAP Financial Measures" for important information about our use of 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) constant currency and b) non-GAAP operating expenses, non-GAAP operating (loss) income, non-GAAP net (loss) income and non-GAAP diluted earnings per share ("EPS").

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 operating (loss) income, non-GAAP net (loss) income and non-GAAP diluted EPS. The adjustments to the GAAP financial measures reflect the exclusion of:

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 associated with share-based compensation arrangements.

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 operating (loss) income, 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 amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition 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; 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, 2021 filed with the SEC on February 22, 2022. 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)

	March 31, 2022	December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$ 68,163	$ 59,379
Marketable investments	172,178	195,496
Accounts receivable, net	143,417	133,940
Inventories	274,349	263,504
Prepaid expenses and other current assets	32,219	29,155
Total current assets	690,326	681,474
Property and equipment, net	60,327	58,856
Operating lease right-of-use assets	176,892	131,955
Finance lease right-of-use assets	35,550	36,276
Intangible assets, net	88,472	90,618
Goodwill	166,232	166,388
Deferred taxes	70,080	65,698
Other non-current assets	13,694	12,985
Total assets	$ 1,301,573	$ 1,244,250
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$ 14,137	$ 13,421
Accrued liabilities	105,533	99,796
Current operating lease liabilities	8,660	8,267
Current finance lease liabilities	1,769	1,713
Total current liabilities	130,099	123,197
Non-current operating lease liabilities	182,438	137,045
Non-current finance lease liabilities	26,122	26,523
Other non-current liabilities	3,612	3,558
Total liabilities	342,271	290,323
Stockholders' equity:
Common stock	38	37
Additional paid-in capital	919,251	910,614
Accumulated other comprehensive loss	(5,972)	(2,630)
Retained earnings	45,985	45,906
Total stockholders' equity	959,302	953,927
Total liabilities and stockholders' equity	$ 1,301,573	$ 1,244,250

Penumbra, Inc.
Condensed Consolidated Statements of Operations
(unaudited)
(in thousands, except share and per share amounts)

	Three Months Ended March 31,
	2022	2021
Revenue	$ 203,895	$ 169,204
Cost of revenue	76,477	57,867
Gross profit	127,418	111,337
Operating expenses:
Research and development	20,564	18,076
Sales, general and administrative	110,900	79,798
Total operating expenses	131,464	97,874
(Loss) income from operations	(4,046)	13,463
Interest (expense) income, net	(47)	480
Other expense, net	(1,011)	(1,476)
(Loss) income before income taxes	(5,104)	12,467
(Benefit from) provision for income taxes	(5,183)	1,541
Consolidated net income	$ 79	$ 10,926
Net loss attributable to non-controlling interest	—	(910)
Net income attributable to Penumbra, Inc.	$ 79	$ 11,836

Net income attributable to Penumbra, Inc. per share:
Basic	$ 0.00	$ 0.32
Diluted	$ 0.00	$ 0.32
Weighted average shares outstanding:
Basic	37,646,122	36,455,712
Diluted	38,708,657	37,533,520

Penumbra, Inc.
Reconciliation of GAAP Operating Expenses and GAAP Operating (Loss) Income to Non-GAAP Operating Expenses and Non-GAAP Operating (Loss) Income¹
(unaudited)
(in thousands)

	Three Months Ended March 31,
	2022	2021
GAAP operating expenses	$ 131,464	$ 97,874
GAAP total operating expenses includes the effect of the following items:
Amortization of finite lived intangible assets acquired	1,785	—
Non-GAAP operating expenses	$ 129,679	$ 97,874

GAAP operating (loss) income from operations	$ (4,046)	$ 13,463
GAAP operating (loss) income from operations includes the effect of the following items:
Amortization of finite lived intangible assets acquired	1,785	—
Non-GAAP operating (loss) income from operations	$ (2,261)	$ 13,463
_____________________
¹See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

Penumbra, Inc.
Reconciliation of GAAP Net Income and GAAP Diluted EPS to Non-GAAP Net (Loss) Income and Non-GAAP Diluted EPS¹
(unaudited)
(in thousands, except share and per share amounts)

	Three Months Ended March 31, 2022		Three Months Ended March 31, 2021
	Net income (loss)	Diluted EPS³	Net income	Diluted EPS
GAAP net income	$ 79	$ 0.00	$ 11,836	$ 0.32
GAAP net income includes the effect of the following items:
Amortization of finite lived intangible assets acquired	1,785	0.05	—	—
Tax effect on the non-GAAP adjustments above²	(416)	(0.01)	—	—
Excess tax benefits related to stock compensation awards	(1,781)	(0.05)	(1,784)	(0.05)
Non-GAAP net (loss) income	$ (333)	$ (0.01)	$ 10,052	$ 0.27

Weighted average shares outstanding used to compute:
GAAP diluted EPS		38,708,657		37,533,520
Non-GAAP diluted EPS		37,646,122		37,533,520

Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth¹
(unaudited)
(in thousands, except for percentages)

	Three Months Ended March 31,		Reported Change		FX Impact	Constant Currency Change
	2022	2021	$	%	$	$	%
United States	$ 144,308	$ 120,070	$ 24,238	20.2 %	$ —	$ 24,238	20.2 %
International	59,587	49,134	10,453	21.3 %	2,220	12,673	25.8 %
Total	$ 203,895	$ 169,204	$ 34,691	20.5 %	$ 2,220	$ 36,911	21.8 %

Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth¹
(unaudited)
(in thousands, except for percentages)

	Three Months Ended March 31,		Reported Change		FX Impact	Constant Currency Change
	2022	2021	$	%	$	$	%
Vascular	$ 122,809	$ 89,165	$ 33,644	37.7 %	$ 984	$ 34,628	38.8 %
Neuro	81,086	80,039	1,047	1.3 %	1,236	2,283	2.9 %
Total	$ 203,895	$ 169,204	$ 34,691	20.5 %	$ 2,220	$ 36,911	21.8 %
________________________
¹See "Non-GAAP Financial Measures" for important information about our use of non-GAAP measures.

²For the three months ended March 31, 2022, management used a combined federal and state tax rate of 23.29% to compute the tax effect of non-GAAP measures.

³For the purposes of calculating Non-GAAP diluted EPS for the three months ended March 31, 2022, non-GAAP diluted weighted average shares outstanding of 37,646,122 was used, as the Company had non-GAAP net loss in the period.