Penumbra, Inc. Announces $200 Million Share Repurchase Authorization

Rhea-AI Summary

Penumbra, Inc. (NYSE: PEN), a leading thrombectomy company, has announced a $200 million share repurchase authorization approved by its Board of Directors on August 5, 2024. The authorization, valid until July 31, 2025, allows Penumbra to repurchase its common stock through various methods. As part of this initiative, Penumbra has entered into a $100 million accelerated share repurchase agreement (ASR) with JPMorgan Chase Bank on August 12, 2024.

Under the ASR, Penumbra will make an initial payment of $100 million and receive approximately 474,000 shares of its common stock on August 13, 2024. The final number of shares repurchased will be determined based on the average daily volume-weighted average prices during the ASR term. The ASR is expected to be completed in the third quarter of 2024, funded by Penumbra's cash on hand.

Positive

• Authorization of $200 million share repurchase program
• $100 million accelerated share repurchase agreement initiated
• Potential to enhance shareholder value through stock buybacks
• Company has sufficient cash on hand to fund the repurchase program

Negative

• Reduction in cash reserves due to share repurchase program
• Potential opportunity cost of not investing the funds in business growth or R&D

Financial Analyst

Penumbra's $200 million share repurchase authorization, including a $100 million accelerated share repurchase (ASR), signals confidence in the company's financial position and future prospects. This move is likely to be viewed positively by investors for several reasons:

• It demonstrates management's belief that the stock is undervalued
• It can potentially boost earnings per share by reducing the number of outstanding shares
• It provides a way to return value to shareholders without committing to regular dividends

The initial delivery of 474,000 shares under the ASR represents about 0.7% of Penumbra's outstanding shares, based on recent data. This relatively small percentage suggests a measured approach to capital allocation, balancing shareholder returns with maintaining financial flexibility for potential growth opportunities.

Market Research Analyst

This share repurchase program could have several market implications:

• It may create a price floor for the stock, potentially reducing volatility
• It could increase demand for Penumbra shares, possibly driving up the stock price in the short term
• The move might be interpreted as a lack of high-return investment opportunities, which could raise questions about future growth prospects

Interestingly, the repurchase authorization expires on July 31, 2025, giving Penumbra flexibility to time its buybacks strategically. This extended timeline suggests the company is taking a long-term view and may adjust its repurchase strategy based on market conditions and business performance over the next year.

Corporate Strategy Expert

Penumbra's decision to implement a share repurchase program, particularly with an accelerated component, reveals key strategic considerations:

• It suggests management believes the company has sufficient cash flow to fund both operations and shareholder returns
• The move may indicate a lack of immediate, large-scale acquisition targets or major capital expenditure plans
• By using cash on hand for the ASR, Penumbra maintains its debt profile, preserving financial flexibility

The $200 million authorization represents a significant commitment, likely reflecting management's confidence in Penumbra's market position as "the world's leading thrombectomy company." However, investors should monitor how this capital allocation decision impacts the company's ability to invest in R&D and pursue growth opportunities in the competitive medical device market.

To Include $100 Million Accelerated Share Repurchase

ALAMEDA, Calif., Aug. 13, 2024 /PRNewswire/ -- Penumbra, Inc. (NYSE: PEN), the world's leading thrombectomy company, today announced that its Board of Directors approved on August 5, 2024 a share repurchase authorization in the amount of up to $200 million, allowing Penumbra to repurchase its common stock from time to time at such prices as it deems appropriate through open market purchases, block transactions, privately negotiated transactions, including accelerated share repurchase transactions, or otherwise. The repurchase authorization expires on July 31, 2025.

Under this authorization, Penumbra entered into an accelerated share repurchase agreement ("ASR") with JPMorgan Chase Bank, National Association (the "Dealer") on August 12, 2024 to repurchase $100 million of Penumbra's common stock.

Under the ASR, Penumbra will make an initial payment of $100 million to the Dealer and will receive an initial delivery of approximately 474,000 shares of Penumbra's common stock on August 13, 2024. The final number of shares to be repurchased will be based on the average of the daily volume-weighted average prices of Penumbra's common stock during the term of the ASR, less a discount and subject to adjustments pursuant to the terms of the ASR. The final settlement of the ASR is expected to be completed in the third quarter of 2024. Penumbra is funding the share repurchase under the ASR with cash on hand.

Cautionary Statement Concerning 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. These statements are neither promises nor guarantees but involve a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Forward-looking statements in this communication include, but are not limited to, statements about Penumbra's share repurchase program, the transactions under the ASR, and the expected completion date of the ASR. 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 Penumbra's current customer base, expand Penumbra's user base and increase the frequency of use of Penumbra's products by its customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of Penumbra's inventory or other assets; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain its culture as Penumbra grows; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and the potential impact of any acquisitions, mergers, dispositions, joint ventures or investments Penumbra may make; and other factors and other risks, including those that Penumbra has described in its filings with the Securities and Exchange Commission, including but not limited to its Annual Reports on Form 10-K, Current Reports on Form 8-K and our Quarterly Reports on Form 10-Q. There may be additional risks of which Penumbra is not presently aware or that it currently believe are immaterial which could have an adverse impact on its business. Any forward-looking statements are based on Penumbra's current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. Penumbra makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change. Penumbra undertakes no obligation to update the information contained in this press release except as required by law.

About Penumbra 
Penumbra, Inc., the world's leading thrombectomy company, is focused on developing the most innovative technologies for challenging medical conditions such as ischemic stroke, venous thromboembolism such as pulmonary embolism, and acute limb ischemia. Our broad portfolio, which includes computer assisted vacuum thrombectomy (CAVT), centers on removing blood clots from head-to-toe with speed, safety and simplicity. By pioneering these innovations, we support healthcare providers, hospitals and clinics in more than 100 countries, working to improve patient outcomes and quality of life. For more information, visit www.penumbrainc.com and connect on Instagram, LinkedIn and X.

Investor Relations
Penumbra, Inc.
investors@penumbrainc.com

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SOURCE Penumbra, Inc.

FAQ

What is the total amount of Penumbra's (PEN) share repurchase authorization?

Penumbra (PEN) has authorized a total of $200 million for share repurchases.

When does Penumbra's (PEN) share repurchase authorization expire?

Penumbra's (PEN) share repurchase authorization expires on July 31, 2025.

How much is Penumbra (PEN) spending on the accelerated share repurchase (ASR)?

Penumbra (PEN) is spending $100 million on the accelerated share repurchase (ASR) agreement.

When is the final settlement of Penumbra's (PEN) accelerated share repurchase expected?

The final settlement of Penumbra's (PEN) accelerated share repurchase is expected to be completed in the third quarter of 2024.