pen-20200803
0001321732FALSE00013217322020-08-032020-08-03

__________________________________________________________________________________________________________________________

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________________________________________________________________________________________________

FORM 8-K 
_______________________________________________________________________________________________________________________________

CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

August 3, 2020
Date of Report (Date of earliest event reported) 
_______________________________________________________________________________________________________________________________

Penumbra, Inc.
(Exact name of registrant as specified in its charter)
_______________________________________________________________________________________________________________________________

Delaware001-3755705-0605598
(State or other jurisdiction of incorporation or organization)(Commission File No.)(I.R.S. employer identification number)
One Penumbra Place
Alameda, CA 94502
(Address of principal executive offices, including zip code)
 
(510) 748-3200
(Registrant’s telephone number, including area code) 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading SymbolName of each exchange on which registered
Common Stock, Par value $0.001 per sharePENThe New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

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Item 2.02.Results of Operations and Financial Condition.
 
On August 3, 2020, Penumbra, Inc. issued a press release announcing financial results for the second fiscal quarter ended June 30, 2020. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.

The information furnished on this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, regardless of any general incorporation language in such a filing, except as expressly set forth by specific reference in such a filing.

Item 9.01.Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number Description
 Press release of Penumbra, Inc. dated August 3, 2020.
104Cover Page Interactive Data File (formatted as Inline Extensible Business Reporting Language).




SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 Penumbra, Inc.
   
Date: August 3, 2020By:/s/ Maggie Yuen
  Maggie Yuen
  Chief Financial Officer



Document

Exhibit 99.1
Penumbra, Inc. Reports Second Quarter 2020 Financial Results

ALAMEDA, Calif., August 3, 2020 (PR Newswire) - 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 currency1, 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.
1See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

1


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.
2


Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
June 30, 2020December 31, 2019
Assets
Current assets:
     Cash and cash equivalents$134,381  $72,779  
     Marketable investments143,914  116,610  
     Accounts receivable, net 97,613  105,901  
     Inventories183,442  152,992  
     Prepaid expenses and other current assets16,545  14,852  
          Total current assets575,895  463,134  
Property and equipment, net62,188  51,812  
Operating lease right-of-use assets42,669  43,717  
Finance lease right-of-use assets37,927  39,287  
Intangible assets, net10,645  25,407  
Goodwill7,665  7,656  
Deferred taxes36,474  31,305  
Other non-current assets6,737  2,946  
         Total assets$780,200  $665,901  
Liabilities and Stockholders’ Equity
Current liabilities:
     Accounts payable$14,432  $15,111  
     Accrued liabilities57,718  67,630  
  Current operating lease liabilities4,446  4,142  
  Current finance lease liabilities1,016  4,165  
          Total current liabilities77,612  91,048  
Non-current operating lease liabilities45,925  47,242  
Non-current finance lease liabilities26,202  26,748  
Other non-current liabilities7,300  15,250  
          Total liabilities157,039  180,288  
Stockholders’ equity:
Common stock36  35  
Additional paid-in capital581,066  430,659  
Accumulated other comprehensive loss(2,097) (2,324) 
Retained earnings45,789  57,522  
Total Penumbra, Inc. stockholders’ equity624,794  485,892  
Non-controlling interest(1,633) (279) 
Total stockholders’ equity623,161  485,613  
Total liabilities and stockholders’ equity$780,200  $665,901  

3


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,
2020201920202019
Revenue$105,109  $134,201  $242,438  $262,640  
Cost of revenue40,179  40,273  89,499  84,802  
Gross profit64,930  93,928  152,939  177,838  
Operating expenses:
Research and development 22,725  13,462  35,671  25,129  
Sales, general and administrative 59,854  67,665  134,307  128,756  
Total operating expenses 82,579  81,127  169,978  153,885  
(Loss) income from operations(17,649) 12,801  (17,039) 23,953  
Interest income, net108  784  407  1,517  
Other income (expense), net511  (71) (1,144) (47) 
(Loss) income before income taxes(17,030) 13,514  (17,776) 25,423  
Benefit from income taxes(4,129) (2,735) (5,763) (1,280) 
Consolidated net (loss) income$(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:
Basic35,400,542  34,694,228  35,221,727  34,601,270  
Diluted35,400,542  36,214,321  35,221,727  36,214,362  

4


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 June 30, 2020Three Months Ended June 30, 2019Six Months Ended June 30, 2020Six Months Ended June 30, 2019
Net lossDiluted EPSNet income (loss)Diluted EPSNet lossDiluted EPSNet income (loss)Diluted EPS
GAAP net (loss) income$(11,960) $(0.34) $16,588  $0.46  $(10,535) $(0.30) $27,286  $0.75  
GAAP net (loss) income includes the effect of the following items:
Impairment loss on indefinite-lived intangible asset2,500  0.07  —  —  2,500  0.07  —  —  
Excess tax benefits related to stock compensation awards(1,320) (0.03) (6,745) (0.19) (2,802) (0.08) (8,989) (0.24) 
Non-GAAP net income$(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.
5



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 ImpactConstant Currency Change
 20202019$% $$%
United States
Neuro$38,642  $44,574  $(5,932) (13.3)%$—  $(5,932) (13.3)%
Vascular39,401  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
Neuro20,195  36,973  (16,778) (45.4)%$409  (16,369) (44.3)%
Vascular6,871  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 ImpactConstant Currency Change
 20202019$% $$%
United States
Neuro$83,749  $88,605  $(4,856) (5.5)%$—  $(4,856) (5.5)%
Vascular90,068  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)%
Vascular15,457  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
Source: Penumbra, Inc.
6
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