Penumbra, Inc. Reports Second Quarter 2020 Financial Results
Penumbra, Inc. (NYSE: PEN) reported a 21.7% decline in revenues to $105.1 million for Q2 2020 compared to Q2 2019. US revenue reached $78.0 million, down approximately 10% year-over-year. The company's gross profit was $64.9 million, reflecting a margin decrease to 61.8%. Total operating expenses rose to $82.6 million, leading to an operating loss of $17.6 million. The COVID-19 pandemic continues to impact business operations, and the company cannot reliably estimate future effects.
- Cash, cash equivalents, and marketable investments total $278.3 million.
- Completed a public offering, netting approximately $134.8 million in June 2020.
- Revenue decreased 21.7% year-over-year.
- US vascular revenue declined 5.7%, while international vascular revenue dropped 36.7%.
- Neuro product revenue fell 27.8%, with US and international declines of 13.3% and 45.4%, respectively.
- Operating loss of $17.6 million compared to an operating income of $12.8 million in Q2 2019.
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 of21.7% , or21.3% in constant currency1, compared to the second quarter of 2019. US revenue of$78 .0 million was slightly less than10% below the same period a year ago.
Second Quarter 2020 Financial Results
Total revenue declined to
Gross profit was
Total operating expenses for the second quarter of 2020 were
Operating loss for the second quarter of 2020 was
As of June 30, 2020, cash, cash equivalents and marketable investments totaled
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 EPS1 | ||||||||||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Six Months Ended June | Six Months Ended June | |||||||||||||||||||||||||||||
Net loss | Diluted | Net | Diluted | Net loss | Diluted | Net | Diluted | |||||||||||||||||||||||||
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 | ||||||||||||||||||||||||||||||||
Impairment loss on indefinite-lived | 2,500 | 0.07 | — | — | 2,500 | 0.07 | — | — | ||||||||||||||||||||||||
Excess tax benefits related to stock | (1,320) | (0.03) | (6,745) | (0.19) | (2,802) | (0.08) | (8,989) | (0.24) | ||||||||||||||||||||||||
Non-GAAP net income | $ | (10,780) | $ | (0.30) | $ | 9,843 | $ | 0.27 | $ | (10,837) | $ | (0.31) | $ | 18,297 | $ | 0.51 | ||||||||||||||||
1See "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 Change2 | ||||||||||||||||||||||||||
(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 Change2 | ||||||||||||||||||||||||||
(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) | % | ||||||||||||
2See "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
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