PENUMBRA INC, 10-Q filed on 11/7/2019
Quarterly Report
v3.19.3
Cover - shares
9 Months Ended
Sep. 30, 2019
Oct. 24, 2019
Cover page.    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2019  
Document Transition Report false  
Entity File Number 001-37557  
Entity Registrant Name Penumbra Inc  
Entity Address, Address Description One Penumbra Place  
Entity Address, City or Town Alameda  
Entity Address, State or Province CA  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 05-0605598  
Entity Address, Postal Zip Code 94502  
City Area Code 510  
Local Phone Number 748-3200  
Title of 12(b) Security Common Stock, Par value $0.001 per share  
Trading Symbol PEN  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Large Accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding   34,914,292
Entity Central Index Key 0001321732  
Current Fiscal Year End Date --12-31  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Amendment Flag false  
v3.19.3
Condensed Consolidated Balance Sheets - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Current assets:    
Cash and cash equivalents $ 111,581 $ 67,850
Marketable investments 82,864 133,039
Accounts receivable, net of doubtful accounts of $2,768 and $2,782 at September 30, 2019 and December 31, 2018, respectively 101,828 81,896
Inventories 140,359 115,741
Prepaid expenses and other current assets 14,702 12,200
Total current assets 451,334 410,726
Property and equipment, net 45,625 35,407
Operating lease right-of-use assets 41,817 0
Intangible assets, net 25,494 27,245
Goodwill 7,452 7,813
Deferred taxes 32,818 32,940
Other non-current assets 9,630 875
Total assets 614,170 515,006
Current liabilities:    
Accounts payable 11,962 8,176
Accrued liabilities 70,163 57,886
Current operating lease liabilities 4,042 0
Total current liabilities 86,167 66,062
Deferred rent 0 7,586
Non-current operating lease liabilities 45,400 0
Other non-current liabilities 15,662 18,943
Total liabilities 147,229 92,591
Commitments and contingencies
Stockholders’ equity:    
Common stock 35 34
Additional paid-in capital 423,474 415,084
Accumulated other comprehensive loss (4,010) (1,942)
Retained earnings 47,833 9,064
Total Penumbra, Inc. stockholders’ equity 467,332 422,240
Non-controlling interest (391) 175
Total stockholders’ equity 466,941 422,415
Total liabilities and stockholders’ equity $ 614,170 $ 515,006
v3.19.3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Statement of Financial Position [Abstract]    
Allowance for doubtful accounts $ 2,768 $ 2,782
v3.19.3
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)
Total
Common Stock
Additional Paid-in Capital
Accumulated Other Comprehensive Income (Loss)
Retained Earnings (Accumulated Deficit)
Total Penumbra, Inc. Stockholders’ Equity
Non-controlling Interest
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Total stockholders’ equity $ 400,408,000 $ 33,000 $ 396,810,000 $ 1,569,000 $ 1,996,000 $ 400,408,000  
Shares, Outstanding   33,685,146          
Total stockholders’ equity 400,408,000 $ 33,000 396,810,000 1,569,000 1,996,000 400,408,000  
Beginning balance (in shares) at Dec. 31, 2017   33,685,146          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Stock Issued During Period, Value, New Issues 5,256,000 $ 0 5,256,000     5,256,000  
Shares issued (in shares)   53,256          
Issuance of common stock (in shares)   232,943          
Issuance of common stock 1,329,000 $ 1,000 1,328,000     1,329,000  
Shares held for tax withholdings (3,530,000)   (3,530,000)     (3,530,000)  
Shares held for tax withholdings (in shares)   38,677          
Stock-based compensation 4,435,000   4,435,000     4,435,000  
Other comprehensive loss 1,068,000     1,068,000   1,068,000  
Net income (loss) attributable to Penumbra, Inc.         5,491,000 5,491,000  
Net loss attributable to non-controlling interest             $ 0
Consolidated net income (loss) 5,491,000            
Ending balance (in shares) at Mar. 31, 2018   33,932,668          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   232,943          
Issuance of common stock 1,329,000 $ 1,000 1,328,000     1,329,000  
Shares Paid for Tax Withholding for Share Based Compensation   (38,677)          
Adjustments Related to Tax Withholding for Share-based Compensation 3,530,000   3,530,000     3,530,000  
Stock-based compensation 4,435,000   4,435,000     4,435,000  
Other Comprehensive Income (Loss), Net of Tax 1,068,000     1,068,000   1,068,000  
Net income (loss) attributable to Penumbra, Inc.         5,491,000 5,491,000  
Net loss attributable to non-controlling interest             0
Net income (loss) 5,491,000            
Shares, Outstanding   33,685,146          
Beginning balance (in shares) at Dec. 31, 2017   33,685,146          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other comprehensive loss (2,468,000)     (2,468,000)      
Net income (loss) attributable to Penumbra, Inc. (58,000)            
Net loss attributable to non-controlling interest (3,496,000)            
Consolidated net income (loss) (3,554,000)            
Ending balance (in shares) at Sep. 30, 2018   34,312,552          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other Comprehensive Income (Loss), Net of Tax (2,468,000)     (2,468,000)      
Net income (loss) attributable to Penumbra, Inc. (58,000)            
Net loss attributable to non-controlling interest (3,496,000)            
Net income (loss) (3,554,000)            
Shares, Outstanding   33,685,146          
Total stockholders’ equity 414,921,000 $ 34,000 404,299,000 2,637,000 7,951,000 414,921,000 0
Shares, Outstanding   33,932,668          
Total stockholders’ equity 414,921,000 $ 34,000 404,299,000 2,637,000 7,951,000 414,921,000 0
Beginning balance (in shares) at Mar. 31, 2018   33,932,668          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   288,750          
Issuance of common stock 1,843,000 $ 0 1,843,000     1,843,000  
Issuance of common stock under employee stock purchase plan (in shares)   39,576          
Issuance of common stock under employee stock purchase plan 3,584,000   3,584,000     3,584,000  
Shares held for tax withholdings (10,315,000)   (10,315,000)     (10,315,000)  
Shares held for tax withholdings (in shares)   81,370          
Stock-based compensation 5,082,000   5,082,000     5,082,000  
Other comprehensive loss (3,298,000)     (3,298,000)   (3,298,000)  
Net income (loss) attributable to Penumbra, Inc.         13,381,000 13,381,000  
Net loss attributable to non-controlling interest             0
Consolidated net income (loss) 13,381,000            
Ending balance (in shares) at Jun. 30, 2018   34,179,624          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   288,750          
Issuance of common stock 1,843,000 $ 0 1,843,000     1,843,000  
Shares Paid for Tax Withholding for Share Based Compensation   (81,370)          
Adjustments Related to Tax Withholding for Share-based Compensation 10,315,000   10,315,000     10,315,000  
Stock-based compensation 5,082,000   5,082,000     5,082,000  
Other Comprehensive Income (Loss), Net of Tax (3,298,000)     (3,298,000)   (3,298,000)  
Net income (loss) attributable to Penumbra, Inc.         13,381,000 13,381,000  
Net loss attributable to non-controlling interest             0
Net income (loss) 13,381,000            
Shares, Outstanding   33,932,668          
Total stockholders’ equity 425,199,000 $ 34,000 404,493,000 (661,000) 21,333,000 425,199,000 0
Shares, Outstanding   34,179,624          
Total stockholders’ equity 425,199,000 $ 34,000 404,493,000 (661,000) 21,333,000 425,199,000 0
Issuance of common stock (in shares)   150,060          
Issuance of common stock 1,123,000 $ 0 1,123,000     1,123,000  
Shares held for tax withholdings (2,176,000)   (2,176,000)     (2,176,000)  
Shares held for tax withholdings (in shares)   17,132          
Stock-based compensation 4,441,000   4,441,000     4,441,000  
Other comprehensive loss (238,000)     (238,000)   (238,000)  
Asset acquisition date fair value of non-controlling interest 3,365,000           3,365,000
Net income (loss) attributable to Penumbra, Inc. (18,930,000)       (18,930,000) (18,930,000)  
Net loss attributable to non-controlling interest (3,496,000)           (3,496,000)
Consolidated net income (loss) (22,426,000)            
Ending balance (in shares) at Sep. 30, 2018   34,312,552          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   150,060          
Issuance of common stock 1,123,000 $ 0 1,123,000     1,123,000  
Shares Paid for Tax Withholding for Share Based Compensation   (17,132)          
Adjustments Related to Tax Withholding for Share-based Compensation 2,176,000   2,176,000     2,176,000  
Stock-based compensation 4,441,000   4,441,000     4,441,000  
Other Comprehensive Income (Loss), Net of Tax (238,000)     (238,000)   (238,000)  
Net income (loss) attributable to Penumbra, Inc. (18,930,000)       (18,930,000) (18,930,000)  
Net loss attributable to non-controlling interest (3,496,000)           (3,496,000)
Net income (loss) (22,426,000)            
Shares, Outstanding   34,179,624          
Total stockholders’ equity 409,288,000 $ 34,000 407,881,000 (899,000) 2,403,000 409,419,000 (131,000)
Shares, Outstanding   34,312,552          
Total stockholders’ equity 409,288,000 $ 34,000 407,881,000 (899,000) 2,403,000 409,419,000 (131,000)
Total stockholders’ equity 422,415,000 $ 34,000 415,084,000 (1,942,000) 9,064,000 422,240,000 175,000
Shares, Outstanding   34,437,339          
Total stockholders’ equity 422,415,000 $ 34,000 415,084,000 (1,942,000) 9,064,000 422,240,000 175,000
Beginning balance (in shares) at Dec. 31, 2018   34,437,339          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   140,598          
Issuance of common stock 1,071,000 $ 0 1,071,000     1,071,000  
Shares held for tax withholdings (2,098,000)   (2,098,000)     (2,098,000)  
Shares held for tax withholdings (in shares)   14,284          
Stock-based compensation 5,457,000   5,457,000     5,457,000  
Other comprehensive loss (636,000)     (636,000)   (636,000)  
Net income (loss) attributable to Penumbra, Inc.         10,698,000 10,698,000  
Net loss attributable to non-controlling interest             (244,000)
Consolidated net income (loss) 10,454,000            
Ending balance (in shares) at Mar. 31, 2019   34,563,653          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   140,598          
Issuance of common stock 1,071,000 $ 0 1,071,000     1,071,000  
Shares Paid for Tax Withholding for Share Based Compensation   (14,284)          
Adjustments Related to Tax Withholding for Share-based Compensation 2,098,000   2,098,000     2,098,000  
Stock-based compensation 5,457,000   5,457,000     5,457,000  
Other Comprehensive Income (Loss), Net of Tax (636,000)     (636,000)   (636,000)  
Net income (loss) attributable to Penumbra, Inc.         10,698,000 10,698,000  
Net loss attributable to non-controlling interest             (244,000)
Net income (loss) 10,454,000            
Shares, Outstanding   34,437,339          
Beginning balance (in shares) at Dec. 31, 2018   34,437,339          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other comprehensive loss (2,068,000)     (2,068,000)      
Net income (loss) attributable to Penumbra, Inc. 38,769,000            
Net loss attributable to non-controlling interest (1,066,000)            
Consolidated net income (loss) 37,703,000            
Ending balance (in shares) at Sep. 30, 2019   34,910,858          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Other Comprehensive Income (Loss), Net of Tax (2,068,000)     (2,068,000)      
Net income (loss) attributable to Penumbra, Inc. 38,769,000            
Net loss attributable to non-controlling interest (1,066,000)            
Net income (loss) 37,703,000            
Shares, Outstanding   34,437,339          
Total stockholders’ equity 436,663,000 $ 34,000 419,514,000 (2,578,000) 19,762,000 436,732,000 (69,000)
Shares, Outstanding   34,563,653          
Total stockholders’ equity 436,663,000 $ 34,000 419,514,000 (2,578,000) 19,762,000 436,732,000 (69,000)
Beginning balance (in shares) at Mar. 31, 2019   34,563,653          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   259,080          
Issuance of common stock 1,195,000 $ 1,000 1,194,000     1,195,000  
Issuance of common stock under employee stock purchase plan (in shares)   46,065          
Issuance of common stock under employee stock purchase plan 4,779,000   4,779,000     4,779,000  
Shares held for tax withholdings (11,281,000)   (11,281,000)     (11,281,000)  
Shares held for tax withholdings (in shares)   82,295          
Stock-based compensation 5,014,000   5,014,000     5,014,000  
Capital contribution from non-controlling interest 500,000           500,000
Other comprehensive loss 1,064,000     1,064,000   1,064,000  
Net income (loss) attributable to Penumbra, Inc.         16,588,000 16,588,000  
Net loss attributable to non-controlling interest             (339,000)
Consolidated net income (loss) 16,249,000            
Ending balance (in shares) at Jun. 30, 2019   34,786,503          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   259,080          
Issuance of common stock 1,195,000 $ 1,000 1,194,000     1,195,000  
Shares Paid for Tax Withholding for Share Based Compensation   (82,295)          
Adjustments Related to Tax Withholding for Share-based Compensation 11,281,000   11,281,000     11,281,000  
Stock-based compensation 5,014,000   5,014,000     5,014,000  
Other Comprehensive Income (Loss), Net of Tax 1,064,000     1,064,000   1,064,000  
Net income (loss) attributable to Penumbra, Inc.         16,588,000 16,588,000  
Net loss attributable to non-controlling interest             (339,000)
Net income (loss) 16,249,000            
Shares, Outstanding   34,563,653          
Total stockholders’ equity 454,183,000 $ 35,000 419,220,000 (1,514,000) 36,350,000 454,091,000 92,000
Shares, Outstanding   34,786,503          
Total stockholders’ equity 454,183,000 $ 35,000 419,220,000 (1,514,000) 36,350,000 454,091,000 92,000
Issuance of common stock (in shares)   142,716          
Issuance of common stock 1,301,000 $ 0 1,301,000     1,301,000  
Shares held for tax withholdings (2,740,000)   (2,740,000)     (2,740,000)  
Shares held for tax withholdings (in shares)   18,361          
Stock-based compensation 5,693,000   5,693,000     5,693,000  
Other comprehensive loss (2,496,000)     (2,496,000)   (2,496,000)  
Net income (loss) attributable to Penumbra, Inc. 11,483,000       11,483,000 11,483,000  
Net loss attributable to non-controlling interest (483,000)           (483,000)
Consolidated net income (loss) 11,000,000            
Ending balance (in shares) at Sep. 30, 2019   34,910,858          
Increase (Decrease) in Stockholders' Equity [Roll Forward]              
Issuance of common stock (in shares)   142,716          
Issuance of common stock 1,301,000 $ 0 1,301,000     1,301,000  
Shares Paid for Tax Withholding for Share Based Compensation   (18,361)          
Adjustments Related to Tax Withholding for Share-based Compensation 2,740,000   2,740,000     2,740,000  
Stock-based compensation 5,693,000   5,693,000     5,693,000  
Other Comprehensive Income (Loss), Net of Tax (2,496,000)     (2,496,000)   (2,496,000)  
Net income (loss) attributable to Penumbra, Inc. 11,483,000       11,483,000 11,483,000  
Net loss attributable to non-controlling interest (483,000)           (483,000)
Net income (loss) 11,000,000            
Shares, Outstanding   34,786,503          
Total stockholders’ equity 466,941,000 $ 35,000 423,474,000 (4,010,000) 47,833,000 467,332,000 (391,000)
Cumulative effect adjustments 0            
Shares, Outstanding   34,910,858          
Total stockholders’ equity $ 466,941,000 $ 35,000 $ 423,474,000 $ (4,010,000) $ 47,833,000 $ 467,332,000 $ (391,000)
v3.19.3
Condensed Consolidated Statements of Operations - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Statement [Abstract]        
Revenue $ 139,502 $ 111,806 $ 402,142 $ 324,145
Cost of revenue 43,504 36,794 128,306 110,324
Gross profit 95,998 75,012 273,836 213,821
Operating expenses:        
Research and development 13,733 9,092 38,862 25,298
Sales, general and administrative 69,289 55,934 198,045 165,209
Acquired in-process research and development 0 30,835 0 30,835
Total operating expenses 83,022 95,861 236,907 221,342
Income (loss) from operations 12,976 (20,849) 36,929 (7,521)
Interest income, net 759 771 2,276 2,240
Other (expense) income, net (772) 170 (819) (460)
Income (loss) before income taxes and equity in losses of unconsolidated investee 12,963 (19,908) 38,386 (5,741)
Provision for (benefit from) income taxes 1,963 1,598 683 (5,288)
Income (loss) before equity in losses of unconsolidated investee 11,000 (21,506) 37,703 (453)
Equity in losses of unconsolidated investee 0 (920) 0 (3,101)
Consolidated net income (loss) 11,000 (22,426) 37,703 (3,554)
Net loss attributable to non-controlling interest (483) (3,496) (1,066) (3,496)
Net income (loss) attributable to Penumbra, Inc. $ 11,483 $ (18,930) $ 38,769 $ (58)
Net (loss) income per share attributable to common stockholders — Basic (in dollars per share) $ 0.33 $ (0.55) $ 1.12 $ 0
Net (loss) income per share attributable to common stockholders — Diluted (in dollars per share) $ 0.32 $ (0.55) $ 1.07 $ 0
Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Basic (in shares) 34,840,370 34,248,484 34,681,846 34,057,216
Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Diluted (in shares) 36,271,394 34,248,484 36,243,222 34,057,216
v3.19.3
Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Statement of Comprehensive Income [Abstract]        
Consolidated net income (loss) $ 11,000 $ (22,426) $ 37,703 $ (3,554)
Other comprehensive loss, net of tax:        
Foreign currency translation adjustments, net of tax (2,606) (353) (2,854) (2,367)
Net change in unrealized gains (losses) on available-for-sale securities, net of tax 110 115 786 (101)
Total other comprehensive loss, net of tax (2,496) (238) (2,068) (2,468)
Consolidated comprehensive income (loss) 8,504 (22,664) 35,635 (6,022)
Net loss attributable to non-controlling interest (483) (3,496) (1,066) (3,496)
Comprehensive income (loss) attributable to Penumbra, Inc. $ 8,987 $ (19,168) $ 36,701 $ (2,526)
v3.19.3
Condensed Consolidated Statements of Cash Flows - USD ($)
$ in Thousands
9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Statement of Cash Flows [Abstract]    
Net income (loss) $ 37,703 $ (3,554)
Adjustments to reconcile consolidated net income to net cash (used in) provided by operating activities:    
Depreciation and amortization 5,790 4,459
Stock-based compensation 16,471 13,551
Loss on non-marketable equity investments 0 3,101
Provision for doubtful accounts 515 833
Inventory write-downs 2,775 1,046
Deferred taxes 101 (6,411)
Acquired in-process research and development 0 30,835
Change in fair value of contingent consideration 31 852
Other 189 (5)
Changes in operating assets and liabilities:    
Accounts receivable (21,520) (23,284)
Inventories (27,860) (15,395)
Prepaid expenses and other current and non-current assets (3,388) 733
Accounts payable 3,323 1,688
Accrued expenses and other non-current liabilities 7,755 12,828
Net cash provided by (used in) operating activities 21,885 21,277
CASH FLOWS FROM INVESTING ACTIVITIES:    
Asset acquisition and acquisition of business (Note 5), net of cash acquired 0 (19,914)
Contributions to non-marketable investments 0 (1,382)
Lease payments made prior to commencement (4,081) 0
Purchases of marketable investments (29,550) (96,969)
Proceeds from sales of marketable investments 2,700 12,131
Proceeds from maturities of marketable investments 78,079 102,687
Purchases of property and equipment (14,125) (6,563)
Other (2,000) 0
Net cash provided by (used in) investing activities 31,023 (10,010)
CASH FLOWS FROM FINANCING ACTIVITIES:    
Proceeds from exercises of stock options 3,566 4,294
Proceeds from issuance of stock under employee stock purchase plan 4,779 3,584
Payment of employee taxes related to vested common and restricted stock (16,119) (16,021)
PaymentsOfAssetAcquisitionandMergerRelatedCostsFinancingActivities (1,183) (4,431)
Proceeds from capital contribution from non-controlling interest 500 0
Proceeds from capital contribution from non-controlling interest 0 (409)
Net cash used in financing activities (8,457) (12,983)
Effect of foreign exchange rate changes on cash and cash equivalents (720) (1,179)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 43,731 (2,895)
CASH AND CASH EQUIVALENTS—Beginning of period 67,850  
CASH AND CASH EQUIVALENTS—End of period 111,581 47,742
NONCASH INVESTING AND FINANCING ACTIVITIES:    
Common shares issued as consideration in connection with a buyout agreement (Notes 9 and 10) 0 5,256
Purchase of property and equipment funded through accounts payable and accrued liabilities 2,925 1,378
Noncash or Part Noncash Acquisition, Value of Liabilities Assumed $ 0 $ 4,500
v3.19.3
Organization and Description of Business
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization and Description of Business
1. Organization and Description of Business
Penumbra, Inc. (the “Company”) is a global healthcare company focused on innovative therapies. The Company designs, develops, manufactures and markets medical devices and has a broad portfolio of products that addresses challenging medical conditions and significant clinical needs.
v3.19.3
Summary of Significant Accounting Policies
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
2. Summary of Significant Accounting Policies
Basis of Presentation and Consolidation
The accompanying condensed consolidated balance sheet as of September 30, 2019, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet as of December 31, 2018 was derived from the audited financial statements as of that date.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2019, the results of its operations for the three and nine months ended September 30, 2019 and 2018, the changes in comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the cash flows for the nine months ended September 30, 2019 and 2018. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other future annual or interim period. Certain changes in presentation were made in the condensed consolidated financial statements for the three and nine months ended September 30, 2018 to conform to the presentation for the three and nine months ended September 30, 2019.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2019, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, other than changes to the Company’s leasing policy described below in connection with the adoption of the guidance under Accounting Standards Codification (“ASC”) 842.
The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiary. The portion of equity not attributable to the Company is considered non-controlling interest and is classified separately in the condensed consolidated financial statements. Any subsequent changes in the Company’s ownership interest while the Company retains its controlling interest in its majority-owned subsidiary will be accounted for as equity transactions. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to marketable investments, provisions for doubtful accounts, the amount of variable consideration included in the transaction price, warranty reserve, valuation of inventories, useful lives of property and equipment, operating lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.
Segments
The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its consolidated operating results for the purpose of allocating resources and evaluating financial performance.
Recently Adopted Accounting Standards
On January 1, 2019, the Company adopted Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), and its associated amendments using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. There was no cumulative-effect adjustment recorded to retained earnings upon adoption. Under the standard, a lessee is required to recognize a lease liability and ROU asset for all leases. The new guidance also modified the classification criteria and requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. Consistent with current guidance, a lessee’s recognition, measurement, and presentation of expenses and cash flows arising from a lease continues to depend primarily on its classification. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January 1, 2019. In addition, the Company elected the following transitional practical expedients: (1) the short-term lease exception and (2) to not separate its non-lease components for its real estate, vehicle and equipment leases. The impact of adoption and additional disclosures required by the ASU have been included in “Significant Accounting Policies - Leases” below and in Note “8. Leases.”
Significant Accounting Policies - Leases
The Company adopted the guidance under ASC 842 on January 1, 2019 using the modified retrospective transition approach. There was no cumulative-effect adjustment recorded to retained earnings upon adoption.
Under ASC 842, the Company determines if an arrangement is a lease at inception. In addition, the Company determines whether leases meet the classification criteria of a finance or operating lease at the lease commencement date considering: (1) whether the lease transfers ownership of the underlying asset to the lessee at the end of the lease term, (2) whether the lease contains a bargain purchase option, (3) whether the lease term is for a major part of the remaining economic life of the underlying asset, (4) whether the present value of the sum of the lease payments and residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of September 30, 2019, the Company's lease population consisted of real estate, equipment and vehicle leases. As of the date of adoption of ASC 842 and September 30, 2019, the Company did not have material finance leases.
Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and non-current operating lease liabilities in our condensed consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The determination of the Company’s incremental borrowing rate requires management judgment including, the development of a synthetic credit rating and cost of debt as the Company currently does not carry any debt. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on the Company’s condensed consolidated balance sheet. For more information about the impact of adoption and disclosures on the Company’s leases, refer to Note “8. Leases.”
Recent Accounting Guidance
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments—Credit Losses. The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. In April 2019, the FASB issued ASU No. 2019-04 which
provides additional clarification and addresses stakeholders’ specific issues about certain aspects of the amendments in the previously issued ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-05 which further amends ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. The standard is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted for all periods beginning after December 15, 2018. The Company is currently evaluating the impact of adopting this standard.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The primary focus of the standard is to improve the effectiveness of the disclosure requirements for fair value measurements. The standard is effective for fiscal years and interim periods beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of the standard and may delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact of adopting this standard.
v3.19.3
Investments and Fair Value of Financial Instruments
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Fair Value of Financial Instruments
3. Investments and Fair Value of Financial Instruments
Marketable Investments
The Company’s marketable investments have been classified and accounted for as available-for-sale. The following table presents the Company’s marketable investments as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Commercial paper $3,478  $ $—  $3,480  
U.S. treasury4,946   —  4,953  
U.S. agency and government sponsored securities5,274  26  —  5,300  
Corporate bonds68,879  256  (4) 69,131  
Total$82,577  $291  $(4) $82,864  

December 31, 2018
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Commercial paper $13,701  $—  $(3) $13,698  
U.S. treasury6,400  —  (22) 6,378  
U.S. agency and government sponsored securities7,699  18  (27) 7,690  
U.S. states and municipalities5,134  —  (12) 5,122  
Corporate bonds100,606  14  (469) 100,151  
Total$133,540  $32  $(533) $133,039  
The following tables present the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than twelve months or for twelve months or more as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. agency and government sponsored securities$1,501  —  $1,275  —  $2,776  —  
Corporate bonds2,418  (2) 6,516  (2) 8,934  (4) 
Total$3,919  $(2) $7,791  $(2) $11,710  $(4) 
December 31, 2018
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Commercial paper$12,208  $(3) $—  $—  $12,208  $(3) 
U.S. treasury—  —  6,378  (22) 6,378  (22) 
U.S. agency and government sponsored securities1,436  (5) 2,759  (22) 4,195  (27) 
U.S. states and municipalities1,529  (5) 3,593  (7) 5,122  (12) 
Corporate bonds58,961  (176) 33,215  (293) 92,176  (469) 
Total$74,134  $(189) $45,945  $(344) $120,079  $(533) 
The following table presents the contractual maturities of the Company’s marketable investments as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019December 31, 2018
 Fair ValueFair Value
Due in less than one year$12,526  $83,391  
Due in one to five years70,338  49,648  
Total$82,864  $133,039  
Fair Value of Financial Instruments
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:
Level 1 - Quoted prices in active markets for identical assets or liabilities.
Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.
The Company classifies its cash equivalents and marketable investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs.
The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.
Financial instruments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, or historical pricing trends of a security relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.
The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of September 30, 2019 and December 31, 2018 (in thousands):
 As of September 30, 2019
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Money market funds$66,722  $—  $—  $66,722  
Marketable investments:
Commercial paper—  3,480  —  3,480  
U.S. treasury4,953  —  —  4,953  
U.S. agency and government sponsored securities—  5,300  —  5,300  
Corporate bonds—  69,131  —  69,131  
Total$71,675  $77,911  $—  $149,586  
Financial Liabilities:
Contingent consideration obligations(1)
$—  $—  $1,238  $1,238  
Total$—  $—  $1,238  $1,238  

(1) More information on the contingent consideration obligations and the changes in fair value are presented below.
 As of December 31, 2018
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Commercial paper$—  $10,967  $—  $10,967  
Money market funds12,087  —  —  12,087  
Marketable investments:
Commercial paper—  13,698  —  13,698  
U.S. treasury6,378  —  —  6,378  
U.S. agency and government sponsored securities—  7,690  —  7,690  
U.S. states and municipalities—  5,122  —  5,122  
Corporate bonds—  100,151  —  100,151  
Total$18,465  $137,628  $—  $156,093  
Financial Liabilities:
Contingent consideration obligations(1)
$—  $—  $2,571  $2,571  
Total$—  $—  $2,571  $2,571  

(1) More information on the contingent consideration obligations and the changes in fair value are presented below.
Contingent Consideration Obligations
As of September 30, 2019 and December 31, 2018, the Company’s contingent consideration liability relates to milestone payments due in connection with the 2017 acquisition of Crossmed S.p.a. (“Crossmed”) and is classified as a Level 3 measurement for which fair value is derived from various inputs, including forecasted revenues during the earn-out milestone periods, revenue volatilities, discount rates, and estimates in the likelihood of achieving revenue-based milestones. The fair value of the contingent consideration liability is remeasured each reporting period. The following table presents quantitative information about certain unobservable inputs used in the Level 3 fair value measurement of the Company’s contingent consideration liability, other than the forecasted revenues during the earn-out milestone period:
Fair Value at September 30, 2019 (in thousands)Valuation MethodUnobservable InputsInput
(range where applicable)
Crossmed:
Revenue-based milestones
$1,238  Monte Carlo SimulationEarn-out period over which revenue-based milestone payments are made2019
Risk-adjusted discount rate15%  
Revenue volatilities for each type of revenue-based milestone5.1% and 18.4%  
The following tables summarize the changes in fair value of the contingent consideration obligation for the nine months ended September 30, 2019 and September 30, 2018 (in thousands):
Fair Value of Contingent Consideration
Balance at December 31, 2018$2,571  
Payments of contingent consideration liabilities(1,296) 
Changes in fair value31  
Foreign currency remeasurement(68) 
Balance at September 30, 2019$1,238  

Fair Value of Contingent Consideration
Balance at December 31, 2017$4,675  
Payments of contingent consideration liabilities(3,017) 
Changes in fair value851  
Foreign currency remeasurement10  
Balance at September 30, 2018$2,519  
During the three and nine months ended September 30, 2019, there were no material changes to the fair value of the contingent consideration obligation. During the three and nine months ended September 30, 2018, the fair value of the contingent consideration obligation increased by $0.1 million and $0.9 million, respectively, which was recorded in sales, general and administrative expense in the condensed consolidated statements of operations. The fair value of the contingent consideration increased as a result of updates to the underlying forecasts based on actual results to date and changes in estimates. For more information related to the payment of the contingent consideration liabilities refer to Note “5. Asset Acquisitions and Business Combinations.”
During the three and nine months ended September 30, 2019 and 2018, the Company did not record impairment charges related to its marketable investments and the Company did not hold any Level 3 marketable investments as of September 30, 2019 or December 31, 2018. During the nine months ended September 30, 2019 and 2018, the Company did not have any transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy. Additionally, the Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2019 or December 31, 2018.
v3.19.3
Balance Sheet Components
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Balance Sheet Components
4. Balance Sheet Components
Inventories
The following table shows the components of inventories as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Raw materials$19,291  $18,829  
Work in process17,999  10,630  
Finished goods103,069  86,282  
Inventories$140,359  $115,741  
Accrued Liabilities
The following table shows the components of accrued liabilities as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Payroll and employee-related cost$37,088  $33,838  
Accrued expenses10,631  4,088  
Sales return provision1,802  2,986  
Product warranty2,196  1,875  
Leasehold improvement expenditures1,862  848  
Contingent consideration & other acquisition-related costs(1)
4,557  4,439  
Other accrued liabilities12,027  9,812  
Total accrued liabilities$70,163  $57,886  

(1) Amount consists of the current portion of contingent liabilities related to (1) the cash milestone payments and working capital adjustment liabilities for the 2017 acquisition of Crossmed and (2) an anti-dilution provision for the 2018 asset acquisition of MVI Health Inc (“MVI”). Refer to Note “5. Asset Acquisitions and Business Combinations” for more information on the acquisition of Crossmed and asset acquisition of MVI.
The following table shows the changes in the Company’s estimated product warranty accrual, included in accrued liabilities, as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Balance at the beginning of the period$1,875  $1,088  
Accruals of warranties issued828  1,336  
Settlements of warranty claims(507) (549) 
Balance at the end of the period$2,196  $1,875  
Other Non-Current Liabilities
The following table shows the components of other non-current liabilities as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Deferred tax liabilities$3,961  $4,171  
Licensing-related cost(1)
10,877  11,506  
Other non-current liabilities824  3,266  
Total other non-current liabilities$15,662  $18,943  

(1) Amount relates to the non-current liability recorded for probable future milestone payments to be made under the licensing agreement described in Note “6. Intangible Assets.” Refer therein for more information.
v3.19.3
Asset Acquisitions & Business Combination
9 Months Ended
Sep. 30, 2019
Business Combinations [Abstract]  
Asset Acquisitions and Business Combinations
5. Asset Acquisitions and Business Combinations
Payments Related to 2017 Crossmed Acquisition
On July 3, 2017, the Company completed its acquisition of Crossmed, a joint stock company organized under the laws of Italy. As of September 30, 2019 and December 31, 2018, the Company’s condensed consolidated balance sheet included $1.2 million and $2.6 million, respectively, in current liabilities primarily related to additional consideration due to the sellers of Crossmed (the “Sellers”) for revenue-based milestone payments, based on net revenue in the years ending December 31, 2018 and 2019, and other working capital and financial debt adjustments. During the nine months ended September 30, 2019, the Company made $1.3 million in milestone payments of which $0.6 million is presented in operating activities and $0.7 million is presented in financing activities in the condensed consolidated statement of cash flows. During the nine months ended September 30, 2018, the Company made $4.4 million in payments to the Sellers which is presented in financing activities in the condensed consolidated statement of cash flows.
Payments Related to 2018 MVI Asset Acquisition
In 2017, the Company and Sixense Enterprises, Inc. (“Sixense”) formed MVI Health Inc. (“MVI”) as a privately-held joint venture for the purpose of exploring healthcare applications of virtual reality technology, with each party holding 50% of the issued and outstanding equity of MVI. On August 31, 2018 (“Transfer Agreement Closing Date”), the Company completed its asset acquisition to obtain a controlling interest of MVI pursuant to a Stock Transfer Agreement (the “Transfer Agreement”) between the Company, MVI and Sixense to obtain a controlling interest of MVI for $20.0 million, excluding the additional $4.5 million of probable future payments relating to an anti-dilution provision in the Transfer Agreement. Following the Transfer Agreement Closing Date, the Company owns a 90% controlling interest in MVI and Sixense retains the remaining 10% minority interest. As of December 31, 2018, the Company’s condensed consolidated balance sheet included $1.5 million and $2.5 million, respectively, in current and non-current liabilities related to the anti-dilution provision in the Transfer Agreement. During the nine months ended September 30, 2019, the Company contributed $0.5 million to MVI related to the anti-dilution provision which is presented in financing activities in the condensed consolidated statement of cash flows. As of September 30, 2019, the Company’s condensed consolidated balance sheet included $3.0 million and $0.5 million, respectively, in current and non-current liabilities related to the anti-dilution provision in the Transfer Agreement.
v3.19.3
Intangible Assets
9 Months Ended
Sep. 30, 2019
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Intangible Assets
6. Intangible Assets
Acquired Intangible Assets
The following tables present details of the Company’s acquired finite-lived and indefinite-lived intangible assets, as of September 30, 2019 and December 31, 2018 (in thousands, except weighted-average amortization period):
As of September 30, 2019Weighted-Average Amortization PeriodGross Carrying AmountAccumulated AmortizationNet
Customer relationships15.0 years$6,508  $(976) $5,532  
Trade secrets and processes20.0 years5,256  (460) 4,796  
Other5.0 years1,678  (755) 923  
Total intangible assets subject to amortization16.3 years$13,442  $(2,191) $11,251  
Intangible assets related to licensed technology14,243  —  14,243  
Total intangible assets$27,685  $(2,191) $25,494  

As of December 31, 2018Weighted-Average
Amortization Period
Gross Carrying AmountAccumulated AmortizationNet
Customer relationships15.0 years$6,823  $(681) $6,142  
Trade secrets and processes20.0 years5,256  (263) 4,993  
Other5.0 years1,759  (528) 1,231  
Total intangible assets subject to amortization16.0 years$13,838  $(1,472) $12,366  
Intangible assets related to licensed technology14,879  —  14,879  
Total intangible assets$28,717  $(1,472) $27,245  
The customer relationships and other intangible assets subject to amortization relate to the acquisition of Crossmed during the third quarter of 2017. The gross carrying amount and accumulated amortization of these intangible assets are subject to foreign currency translation effects. Refer to Note “5. Asset Acquisitions and Business Combinations” for more information. The Company’s $5.3 million trade secrets and processes intangible asset was recognized in connection with a royalty buyout agreement during the first quarter of 2018, which is discussed further in Note “9. Commitments and Contingencies” and Note “10. Stockholders’ Equity.”
The following table presents the amortization expense recorded related to the Company’s finite-lived intangible assets for the three and nine months ended September 30, 2019 and September 30, 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Cost of revenue$66  $66  $197  $197  
Sales, general and administrative196  205  594  631  
Total$262  $271  $791  $828  
Licensed technology
During the third quarter of 2017, the Company entered into an exclusive technology license agreement (the “License Agreement”) that required the Company to pay an upfront payment to the licensor of $2.5 million and future revenue milestone-based payments on sales of products covered by the licensed intellectual property. The Company recorded an intangible asset equal to the total payments made and expected to be made under the License Agreement and a corresponding contingent liability for the probable future milestone payments not yet paid. As of September 30, 2019, the licensed technology is accounted for as an indefinite-lived intangible asset. Upon the commercialization of the underlying product utilizing the licensed technology, the capitalized amount will be amortized over its estimated useful life.
At the end of each reporting period the Company adjusts the contingent liabilities to reflect the amount of future milestone payments that are probable to be paid. Prior to the commercialization of products utilizing the underlying technology, any changes in the contingent liability are recorded as an adjustment between the liability balances and the gross carrying amount of the indefinite-lived intangible asset. During the three months ended September 30, 2019, there were no changes to the contingent liability related to the exclusive technology license agreement. During the nine months ended September 30, 2019, the contingent liability related to the exclusive technology license agreement decreased by $0.6 million. The changes in the contingent liability balance were due to changes in the underlying revenue forecasts used to estimate the probable future milestone payments. As of September 30, 2019, the balance of the contingent liability related to probable future milestone payments under the License Agreement was $11.7 million, of which $0.9 million and $10.9 million were included in accrued liabilities and other non-current liabilities on the condensed consolidated balance sheet, respectively. As of December 31, 2018, the balance of the contingent liability related to probable future milestone payments under the License Agreement was $12.4 million, of which $0.9 million and $11.5 million were included in accrued liabilities and other non-current liabilities on the consolidated balance sheet, respectively.
As of September 30, 2019, the gross carrying amount of the indefinite-lived intangible asset was $14.2 million. During the nine months ended September 30, 2019, the Company noted no events or circumstances that indicate the carrying value of the licensed technology may no longer be recoverable and that an impairment loss may have occurred.
v3.19.3
Goodwill
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill
7. Goodwill
The following table presents the changes in goodwill during the nine months ended September 30, 2019 (in thousands):
Total Company
Balance as of December 31, 2018$7,813  
Foreign currency translation (361) 
Balance as of September 30, 2019$7,452  
Goodwill Impairment Review
The Company reviews goodwill for impairment annually during the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have occurred. During the nine months ended September 30, 2019, there were no events or changes in circumstances which triggered an impairment review.
v3.19.3
Leases
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Leases
8. Leases
Adoption of ASC Topic 842, “Leases”
The Company adopted the guidance under ASC 842 on January 1, 2019 using the modified retrospective transition approach. Therefore the comparative prior year information has not been adjusted and continues to be reported under ASC 840.
The impact of the adoption of ASC 842 on the Company’s condensed consolidated balance sheet as of January 1, 2019 was as follows (in thousands):
December 31, 2018Adjustments due to the adoption of Topic 842January 1, 2019
Assets
    Prepaid expenses and other current assets(1)
$12,200  $(424) $11,776  
          Total current assets410,726  (424) 410,302  
    Operating lease right-of-use assets(1)
—  43,277  43,277  
          Total assets$515,006  $42,853  $557,859  
Liabilities and Stockholders’ Equity
    Current liabilities:
       Accrued liabilities(2)
$57,886  $(132) $57,754  
       Current operating lease liabilities(2)
—  3,608  3,608  
          Total current liabilities66,062  3,476  69,538  
       Deferred rent(2)
7,586  (7,586) —  
       Non-current operating lease liabilities(2)
—  46,963  46,963  
          Total liabilities92,591  42,853  135,444  
             Total liabilities and stockholders’ equity$515,006  $42,853  $557,859  

(1) Upon the adoption of ASC 842, prepaid rent is included in the operating lease right-of-use assets.
(2) Upon the adoption of ASC 842, current and non-current deferred rent is included in the current and non-current operating lease liabilities.
Lease Overview
As of December 31, 2018 and September 30, 2019, the Company’s contracts that contained a lease consisted of real estate, equipment and vehicle leases.
The Company leases real estate for office and warehouse space primarily under noncancelable operating leases that expire at various dates through 2031, subject to the Company’s option to renew certain leases for an additional five to fifteen years. The Company also leases other equipment and vehicles primarily under noncancelable operating leases that expire at various dates through 2024. As of December 31, 2018 and September 30, 2019, the Company did not have material finance leases.
The following table presents the components of the Company’s lease cost, lease term and discount rate during the three and nine months ended September 30, 2019 (in thousands, except years and percentages):
Three Months Ended
September 30, 2019
Nine Months Ended September 30, 2019
Operating lease cost$1,632  $5,085  
Variable lease cost(1)
1,083  2,686  
Total lease costs$2,715  $7,771  
Weighted Average Remaining Lease Term
Operating leases10.0 years
Weighted Average Discount Rate
Operating leases6.2 %
(1) Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease cost primarily relates to common area maintenance charges for its real estate leases as the Company elected not to separate non-lease components from lease components upon adoption of ASC 842.
Prior to January 1, 2019, the Company recorded operating lease rent expense under ASC 840 on a straight-line basis over the noncancelable lease term. Rent expense for the three and nine months ended September 30, 2018 was $1.4 million and $4.3 million, respectively.
During the third quarter of 2019, the Company signed a fifteen year lease for additional space at the Company’s headquarters located at 1310 Harbor Bay Business Park, Alameda, California (the “1310 Harbor Bay Lease”) which has not yet commenced as of September 30, 2019. The 1310 Harbor Bay Lease is expected to commence upon substantial completion of lessor owned improvements in connection with the development of the building which the Company anticipates will be in 2021.
During the third quarter of 2018, the Company signed a fifteen year lease for a manufacturing facility in Roseville, California (the “Roseville Lease”) which has not yet commenced as of September 30, 2019. The Roseville Lease is expected to commence upon substantial completion of lessor owned improvements to the building which the Company anticipates will be within the next twelve months.
The following table is a schedule, by years, of maturities of the Company's lease liabilities as of September 30, 2019 (in thousands):
Lease Payments(1)(2)
Remainder of 2019$1,734  
Year ending December 31, 20206,986  
Year ending December 31, 20216,346  
Year ending December 31, 20226,225  
Year ending December 31, 20236,160  
Year ending December 31, 20246,044  
Thereafter33,791  
Total undiscounted lease payments67,286  
Less imputed interest(17,844) 
Present value of lease liabilities$49,442  

(1) The table above excludes the estimated future minimum lease payment for the Roseville Lease due to uncertainty around when the Roseville Lease will commence and payments will be due. The total estimated lease payments over the fifteen year lease term is approximately $40.9 million. In addition, the Company anticipates to make approximately $14 million in prepaid rental payments to the lessor prior to the lease commencement date of which $4.1 million has been paid and is presented in other non-current assets in the condensed consolidated balance sheet as of September 30, 2019. The table also excludes lease payments that were not fixed at commencement or modification date.

(2) The table above excludes the estimated future minimum lease payment for the 1310 Harbor Bay Lease due to uncertainty around the timing of when the 1310 Harbor Bay Lease will commence and payments will be due. The total estimated lease payments over the fifteen year lease term will be calculated based on the total development costs incurred in connection with the development of the building which will be determined upon substantial completion of the building.
The following table below shows the maturities of the Company’s operating lease liabilities previously disclosed under ASC 840 as of December 31, 2018 (in thousands):
Lease Payments(1)
Year Ending December 31:
2019$6,575  
20206,571  
20215,809  
20225,772  
20235,735  
Thereafter40,194  
Total future minimum lease payments$70,656  

(1) The table above excludes the estimated future minimum lease payment for the Roseville Lease, due to the uncertainty around the timing of when the Roseville Lease will commence and payments will be due.
Supplemental cash flow information related to leases during the nine months ended September 30, 2019 are as follows (in thousands):
Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$5,059  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$1,738  
v3.19.3
Commitments and Contingencies
9 Months Ended
Sep. 30, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
9. Commitments and Contingencies
Royalty Obligations
In March 2005, the Company entered into a license agreement that requires the Company to make minimum royalty payments to the licensor on a quarterly basis. As of December 31, 2018, the license agreement required minimum annual royalty payments of $0.1 million in equal quarterly installments. On each January 1, the quarterly calendar year minimum royalty shall be adjusted to equal the prior year’s minimum royalty adjusted by a percentage equal to the percentage change in the “consumer price index for all urban consumers” for the prior calendar year as reported by the U.S. Department of Labor. Unless terminated earlier, the term of the license agreement shall continue until the expiration of the last to expire patent that covers that licensed product or for the period of fifteen years following the first commercial sale of such licensed product, whichever is longer. The first commercial sale of covered products occurred in June 2007. In July 2019, the Company amended the license agreement to extend the term for an additional ten years. As of September 30, 2019, the amended license agreement required minimum annual royalty payments of $0.3 million in equal quarterly installments through 2027.
In April 2012, the Company entered into an agreement that requires the Company to pay, on a quarterly basis, a 5% royalty on sales of products covered under applicable patents. The first commercial sale of covered products occurred in April 2014. Unless terminated earlier, the royalty term for each applicable product shall continue for fifteen years following the first commercial sale of such patented product, or when the applicable patent covering such product has expired, whichever is sooner.
In November 2013, the Company entered into an agreement that required the Company to pay, on a quarterly basis, a 3% royalty on the first $5.0 million in sales and a 1% royalty on sales thereafter of products covered under applicable patents. The agreement was terminated effective January 1, 2018.
In April 2015, the Company entered into a royalty agreement that required the Company to pay a 2% royalty on sales of certain products covered by the agreement, on a quarterly basis, in exchange for certain trade secrets and processes which were used to develop such covered products. The Company began the first commercial sale of the covered products in July 2015. In the first quarter of 2018, the Company entered into a buyout agreement (the “Buyout Agreement”) in which future royalty payments under the royalty agreement were canceled in exchange for shares of the Company’s common stock with a fair value of $5.3 million. The Company recorded an intangible asset equal to the $5.3 million buyout amount which will be amortized into cost of sales over the period in which the Company receives future economic benefit. After determining that the pattern of future cash flows associated with this intangible asset could not be reliably estimated with a high level of precision, the Company concluded that the intangible asset will be amortized on a straight-line basis over its estimated useful life. For more information refer to Note “10. Stockholders’ Equity.”
Royalty expense included in cost of revenue for the three months ended September 30, 2019 and 2018, was $0.8 million and $0.9 million, respectively, and for the nine months ended September 30, 2019 and 2018, was $3.0 million and $2.4 million, respectively.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Refer to Note “3. Investments and Fair Value of Financial Instruments,” Note “5. Asset Acquisitions and Business Combinations” and Note “6. Intangible Assets” for more information on contingent liabilities recorded on the condensed consolidated balance sheet.
Indemnification
The Company enters into standard indemnification arrangements in the ordinary course of business. In many such arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The Company also agrees to indemnify many indemnified parties for product defect and similar claims. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made.
The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.
The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with any of these indemnification requirements has been recorded to date.
Litigation
From time to time, the Company is subject to other claims and assessments in the ordinary course of business. The Company is not currently a party to any such litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.
v3.19.3
Stockholder's Equity
9 Months Ended
Sep. 30, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stockholder's Equity
10. Stockholders’ Equity
Common Stock
In the first quarter of 2018, the Company issued 53,256 fully vested restricted stock units with a fair value of $5.3 million in connection with the Buyout Agreement, as discussed in Note “9. Commitments and Contingencies.” The Company recorded the $5.3 million fair value of the shares issued to additional paid-in capital on the condensed consolidated balance sheet upon the issuance of the awards, with the associated expense being amortized into cost of sales over the period in which the Company receives future economic benefit from the buyout.
Equity Incentive Plans
Stock Options
Activity of stock options under the Penumbra, Inc. 2005 Stock Plan, the Penumbra, Inc. 2011 Equity Incentive Plan and the Amended and Restated Penumbra, Inc. 2014 Equity Incentive Plan (collectively the “Plans”) during the nine months ended September 30, 2019 is set forth below:
Number of SharesWeighted-Average
Exercise Price
Balance at December 31, 20181,688,881  $18.91  
Exercised(281,561) 12.69  
Canceled/Forfeited(3,273) 21.94  
Balance at September 30, 20191,404,047  20.15  
 
Restricted Stock and Restricted Stock Units
Activity of unvested restricted stock awards and restricted stock units under the Plans during the nine months ended September 30, 2019 is set forth below: 
Number of SharesWeighted -Average
Grant Date Fair Value
Unvested at December 31, 2018451,463  $57.29  
Granted229,896  150.37  
Vested(260,833) 40.05  
Canceled/Forfeited(16,311) 94.00  
Unvested at September 30, 2019404,215  119.87  
As of September 30, 2019, 380,225 restricted stock awards and restricted stock units are expected to vest.
Stock-based Compensation
The following table sets forth the stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Cost of revenue$334  $260  $954  $677  
Research and development805  405  2,006  1,148  
Sales, general and administrative5,102  3,747  13,511  11,726  
Total$6,241  $4,412  $16,471  $13,551  
As of September 30, 2019, total unrecognized compensation cost was $41.0 million related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 3.3 years.
The total stock-based compensation cost capitalized in inventory was $0.6 million and $0.4 million as of September 30, 2019 and December 31, 2018, respectively.
v3.19.3
Accumulated Other Comprehensive Income
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
Accumulated Other Comprehensive Income
11. Accumulated Other Comprehensive Loss
Other comprehensive income (loss) consists of two components: unrealized gains or losses on the Company’s available-for-sale marketable investments and gains or losses from foreign currency translation adjustments. Until realized and reported as a component of net income (loss), these comprehensive income (loss) items accumulate and are included within accumulated other comprehensive loss. Unrealized gains and losses on the Company’s marketable investments are reclassified from accumulated other comprehensive loss into earnings when realized upon sale, and are determined based on specific identification of securities sold. Gains and losses from the translation of assets and liabilities denominated in non-U.S. dollar functional currencies are included in accumulated other comprehensive loss.
The following table summarizes the changes in the accumulated balances during the three and nine months ended September 30, 2019 and September 30, 2018, and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive loss into earnings affect the Company’s condensed consolidated statements of operations and consolidated statements of comprehensive income (loss) (in thousands):
Three Months Ended September 30, 2019Three Months Ended September 30, 2018
 Marketable
Investments
 Currency Translation
Adjustments
 Total Marketable
Investments
 Currency Translation
Adjustments
 Total
Balance at beginning of the period$176  $(1,690) $(1,514) $(451) $(210) $(661) 
Other comprehensive income (loss) before reclassifications:
Unrealized gain — marketable investments110  —  110  151  —  151  
Foreign currency translation losses—  (2,606) (2,606) —  (353) (353) 
Income tax effect — expense—  —  —  (36) —  (36) 
Net of tax110  (2,606) (2,496) 115  (353) (238) 
Amounts reclassified from accumulated other comprehensive income to earnings:
Income tax effect — expenses—  —  —  —  —  —  
Net of tax—  —  —  —  —  —  
Net current-year other comprehensive income (loss)110  (2,606) (2,496) 115  (353) (238) 
Balance at end of the period$286  $(4,296) $(4,010) $(336) $(563) $(899) 

Nine Months Ended September 30, 2019Nine Months Ended September 30, 2018
 Marketable
Investments
 Currency Translation
Adjustments
 Total Marketable
Investments
 Currency Translation
Adjustments
 Total
Balance at beginning of the period$(500) $(1,442) $(1,942) $(235) $1,804  $1,569  
Other comprehensive income (loss) before reclassifications:
Unrealized gain (losses) — marketable investments786  —  786  (102) —  (102) 
Foreign currency translation losses—  (2,854) (2,854) —  (2,145) (2,145) 
Income tax effect — benefit (expense)—  —  —   (222) (221) 
Net of tax786  (2,854) (2,068) (101) (2,367) (2,468) 
Amounts reclassified from accumulated other comprehensive income to earnings:
Income tax effect — expense —  —  —  —  —  —  
Net of tax—  —  —  —  —  —  
Net current-year other comprehensive income (loss)786  (2,854) (2,068) (101) (2,367) (2,468) 
Balance at end of the period$286  $(4,296) $(4,010) $(336) $(563) $(899) 
v3.19.3
Income Taxes
9 Months Ended
Sep. 30, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
12. Income Taxes
The Company’s income tax expense, deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgment and estimates are required in determining the consolidated income tax expense.
During interim periods, the Company generally utilizes the estimated annual effective tax rate method which involves the use of forecasted information. Under this method, the provision is calculated by applying an estimate of the annual effective tax rate for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Jurisdictions with tax assets for which the Company believes a tax benefit cannot be realized are excluded from the computation of its annual effective tax rate.
The Company’s provision for income taxes remained relatively flat which increased to $2.0 million for the three months ended September 30, 2019, compared to $1.6 million for the three months ended September 30, 2018. The Company’s provision for income taxes was $0.7 million for the nine months ended September 30, 2019, compared to $5.3 million of tax
benefit for the nine months ended September 30, 2018. The change in the tax provision was primarily due to a higher tax provision attributable to worldwide profits and lower stock-based compensation excess tax benefits.
The Company’s effective tax rate changed to 15.1% for the three months ended September 30, 2019, compared to (8.0)% for the three months ended September 30, 2018. The change in the effective tax rate was primarily due to the discrete tax charge resulting from the non-deductible acquired in-process research and development expense associated with the MVI asset acquisition recorded in 2018. The Company’s effective tax rate changed to 1.8% for the nine months ended September 30, 2019, compared to 92.1% for the nine months ended September 30, 2018. The change in the effective tax rate was primarily due to the discrete tax charge resulting from the non-deductible acquired in-process research and development expense associated with the MVI asset acquisition recorded in 2018. It was also driven by lower stock-based compensation excess tax benefits and higher worldwide profits diluting the impact of such tax benefits for the nine months ended September 30, 2019, when compared to the nine months ended September 30, 2018.
The 2017 Tax Reform Act significantly revised the U.S. corporate income tax regime. In addition, the Securities and Exchange Commission issued Staff Accounting Bulletin 118 (“SAB 118”), which provided a measurement period, that should not extend beyond one year from the Tax Reform Act enactment date. In the year ended December 31, 2018, the Company completed its accounting for the tax effects of the Tax Reform Act under FASB ASC 740 “Income Taxes” based on authoritative guidance available to date. Going forward, the Company will continue to evaluate further legislative guidance associated with the Tax Reform Act and determine the tax impact on the financial statements, if any.
Significant domestic deferred tax assets (“DTAs”) were generated in recent years, primarily due to excess tax benefits from stock option exercises and vesting of restricted stock. The Company evaluates all available positive and negative evidence, objective and subjective in nature, in each reporting period to determine if sufficient taxable income will be generated to realize the benefits of its DTAs and, if not, a valuation allowance to reduce the DTAs is recorded. As of September 30, 2019 and 2018, the Company maintains a valuation allowance against its Federal Research and Development Tax Credit and California DTAs as the Company could not conclude at the required more-likely-than-not level of certainty, that the benefit of these tax attributes would be realized prior to expiration. As of September 30, 2019, the Company also maintains a valuation allowance against DTAs acquired from MVI which are subject to Separate Return Limitation Year (“SRLY”) rules that limit the utilization of the pre-acquisition tax attributes to offset future taxable income solely generated by MVI.

The Company maintains that all foreign earnings, with the exception of a portion of the earnings of its German subsidiary, are permanently reinvested outside the United States and therefore deferred taxes attributable to such are not provided for in the Company’s financial statements as of September 30, 2019. The Company will repatriate foreign earnings only to the extent doing so will not result in any material U.S. tax consequences. Thus, deferred taxes on any potential future repatriation of a portion of the earnings of its German subsidiary were not reflected in the Company’s financial statements as of September 30, 2019.
v3.19.3
Net Income per Share
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Net Income per Share
13. Net Income (Loss) Attributable to Penumbra, Inc. Per Share
The Company’s basic net income (loss) attributable to Penumbra, Inc. per share is calculated by dividing the net income (loss) attributable to Penumbra, Inc. by the weighted average number of shares of common stock outstanding for the period. The diluted net income per share is computed by giving effect to all potential dilutive common stock equivalents outstanding for the period. For purposes of this calculation, options to purchase common stock, restricted stock, restricted stock units and stock sold through the Company’s employee stock purchase plan are considered common stock equivalents.
A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands, except share and per share amounts):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Numerator:
Net income (loss) attributable to Penumbra, Inc.$11,483  $(18,930) $38,769  $(58) 
Denominator:
Weighted average shares used to compute net income:
Basic34,840,370  34,248,484  34,681,846  34,057,216  
Effect of dilutive securities from stock-based benefit plans, as calculated using treasury stock method1,431,024  —  1,561,376  —  
Diluted36,271,394  34,248,484  36,243,222  34,057,216  
Net income (loss) attributable to Penumbra, Inc. per share from: 
Basic$0.33  $(0.55) $1.12  $—  
Diluted$0.32  $(0.55) $1.07  $—  
Outstanding common stock equivalents of 65 thousand and 2.3 million shares for the three months ended September 30, 2019 and 2018, respectively, and 76 thousand and 2.3 million shares for the nine months ended September 30, 2019 and 2018, respectively, were excluded from the computation of diluted net income attributable to Penumbra, Inc. per share because their effect would have been anti-dilutive.
v3.19.3
Revenues
9 Months Ended
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]  
Revenues
14. Revenues
Revenue Recognition
Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. All revenue recognized in the income statement is considered to be revenue from contracts with customers.
The following table presents the Company’s revenues disaggregated by geography, based on the destination to which the Company ships its products, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
United States$90,272  $72,991  $259,157  $210,070  
Japan11,214  10,131  32,967  31,427  
Other International38,016  28,684  110,018  82,648  
Total$139,502  $111,806  $402,142  $324,145  
The following table presents the Company’s revenues disaggregated by product category, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Neuro$83,247  $74,689  $246,265  $220,318  
Vascular56,255  37,117  155,877  103,827  
Total$139,502  $111,806  $402,142  $324,145  
Performance Obligations
Delivery of products - The Company’s contracts with customers typically contain a single performance obligation, delivery of Penumbra products. Satisfaction of that performance obligation occurs when control of the promised goods transfers to the customer, which is generally upon shipment for non-consignment sale agreements and upon utilization for consignment sale agreements.
Payment terms - The Company’s payment terms vary by the type and location of our customer. The timing between fulfillment of performance obligations and when payment is due is not significant and does not give rise to financing transactions. The Company did not have any contracts with significant financing components as of September 30, 2019.
Product returns - The Company may allow customers to return products purchased at the Company’s discretion. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period the related product revenue is recognized. The Company currently estimates product return liabilities using its own historic sales information, trends, industry data, and other relevant data points.
Warranties - The Company offers its standard warranty to all customers and it is not available for sale on a standalone basis. The Company’s standard warranty represents its guarantee that its products function as intended, are free from defects, and comply with agreed-upon specifications and quality standards. This assurance does not constitute a service and is not a separate performance obligation.
Transaction Price
Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns utilizing historical return rates, rebates, discounts, and other adjustments to net revenue. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price. When determining if variable consideration should be constrained, management considers whether there are factors that could result in a significant reversal of revenue and the likelihood of a potential reversal. Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are reassessed each reporting period as required. During the three and nine months ended September 30, 2019, the Company made no changes in estimates for variable consideration. When the Company performs shipping and handling activities after control of goods is transferred to the customer, they are considered as fulfillment activities, and costs are accrued for when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.
v3.19.3
Summary of Significant Accounting Policies (Policies)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation and Consolidation
The accompanying condensed consolidated balance sheet as of September 30, 2019, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2019 and 2018 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet as of December 31, 2018 was derived from the audited financial statements as of that date.
The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2019, the results of its operations for the three and nine months ended September 30, 2019 and 2018, the changes in comprehensive income and stockholders’ equity for the three and nine months ended September 30, 2019 and 2018, and the cash flows for the nine months ended September 30, 2019 and 2018. The results for the three and nine months ended September 30, 2019 are not necessarily indicative of the results that may be expected for the year ending December 31, 2019 or for any other future annual or interim period. Certain changes in presentation were made in the condensed consolidated financial statements for the three and nine months ended September 30, 2018 to conform to the presentation for the three and nine months ended September 30, 2019.
The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2018, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2019, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2018, other than changes to the Company’s leasing policy described below in connection with the adoption of the guidance under Accounting Standards Codification (“ASC”) 842.
Consolidation The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and its majority-owned subsidiary. The portion of equity not attributable to the Company is considered non-controlling interest and is classified separately in the condensed consolidated financial statements. Any subsequent changes in the Company’s ownership interest while the Company retains its controlling interest in its majority-owned subsidiary will be accounted for as equity transactions. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates Use of EstimatesThe preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to marketable investments, provisions for doubtful accounts, the amount of variable consideration included in the transaction price, warranty reserve, valuation of inventories, useful lives of property and equipment, operating lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.
Recent Accounting Guidance
Recent Accounting Guidance
Recently Issued Accounting Standards
In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13, Financial Instruments—Credit Losses. The standard changes how entities will measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. In April 2019, the FASB issued ASU No. 2019-04 which
provides additional clarification and addresses stakeholders’ specific issues about certain aspects of the amendments in the previously issued ASU No. 2016-13. In May 2019, the FASB issued ASU No. 2019-05 which further amends ASU No. 2016-13 by providing an option to irrevocably elect the fair value option for certain financial assets previously measured at amortized cost basis. The standard is effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption is permitted for all periods beginning after December 15, 2018. The Company is currently evaluating the impact of adopting this standard.
In August 2018, the FASB issued ASU 2018-13, Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. The primary focus of the standard is to improve the effectiveness of the disclosure requirements for fair value measurements. The standard is effective for fiscal years and interim periods beginning after December 15, 2019. An entity is permitted to early adopt the removed or modified disclosures upon the issuance of the standard and may delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the impact of adopting this standard.
Leases Leases
The Company adopted the guidance under ASC 842 on January 1, 2019 using the modified retrospective transition approach. There was no cumulative-effect adjustment recorded to retained earnings upon adoption.
Under ASC 842, the Company determines if an arrangement is a lease at inception. In addition, the Company determines whether leases meet the classification criteria of a finance or operating lease at the lease commencement date considering: (1) whether the lease transfers ownership of the underlying asset to the lessee at the end of the lease term, (2) whether the lease contains a bargain purchase option, (3) whether the lease term is for a major part of the remaining economic life of the underlying asset, (4) whether the present value of the sum of the lease payments and residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term. As of September 30, 2019, the Company's lease population consisted of real estate, equipment and vehicle leases. As of the date of adoption of ASC 842 and September 30, 2019, the Company did not have material finance leases.
Operating leases are included in operating lease right-of-use assets, current operating lease liabilities, and non-current operating lease liabilities in our condensed consolidated balance sheet. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The determination of the Company’s incremental borrowing rate requires management judgment including, the development of a synthetic credit rating and cost of debt as the Company currently does not carry any debt. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements entered into after the adoption of ASC 842 that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on the Company’s condensed consolidated balance sheet. For more information about the impact of adoption and disclosures on the Company’s leases, refer to Note “8. Leases.”
Segments Segments The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its consolidated operating results for the purpose of allocating resources and evaluating financial performance.
Recently Adopted Accounting Standards
Recently Adopted Accounting Standards
On January 1, 2019, the Company adopted Accounting Standard Update (“ASU”) No. 2016-02, Leases (Topic 842), and its associated amendments using the modified retrospective transition approach by applying the new standard to all leases existing at the date of initial application and not restating comparative periods. There was no cumulative-effect adjustment recorded to retained earnings upon adoption. Under the standard, a lessee is required to recognize a lease liability and ROU asset for all leases. The new guidance also modified the classification criteria and requires additional disclosures to enable users of financial statements to understand the amount, timing, and uncertainty of cash flows arising from leases. Consistent with current guidance, a lessee’s recognition, measurement, and presentation of expenses and cash flows arising from a lease continues to depend primarily on its classification. The Company elected the package of practical expedients permitted under the transition guidance, which allowed the Company to carryforward its historical lease classification, its assessment on whether a contract was or contains a lease, and its initial direct costs for any leases that existed prior to January 1, 2019. In addition, the Company elected the following transitional practical expedients: (1) the short-term lease exception and (2) to not separate its non-lease components for its real estate, vehicle and equipment leases. The impact of adoption and additional disclosures required by the ASU have been included in “Significant Accounting Policies - Leases” below and in Note “8. Leases.”
v3.19.3
Summary of Significant Accounting Policies (Tables)
9 Months Ended
Sep. 30, 2019
Accounting Policies [Abstract]  
Schedule of New Accounting Pronouncements and Changes in Accounting Principles
The impact of the adoption of ASC 842 on the Company’s condensed consolidated balance sheet as of January 1, 2019 was as follows (in thousands):
December 31, 2018Adjustments due to the adoption of Topic 842January 1, 2019
Assets
    Prepaid expenses and other current assets(1)
$12,200  $(424) $11,776  
          Total current assets410,726  (424) 410,302  
    Operating lease right-of-use assets(1)
—  43,277  43,277  
          Total assets$515,006  $42,853  $557,859  
Liabilities and Stockholders’ Equity
    Current liabilities:
       Accrued liabilities(2)
$57,886  $(132) $57,754  
       Current operating lease liabilities(2)
—  3,608  3,608  
          Total current liabilities66,062  3,476  69,538  
       Deferred rent(2)
7,586  (7,586) —  
       Non-current operating lease liabilities(2)
—  46,963  46,963  
          Total liabilities92,591  42,853  135,444  
             Total liabilities and stockholders’ equity$515,006  $42,853  $557,859  

(1) Upon the adoption of ASC 842, prepaid rent is included in the operating lease right-of-use assets.
(2) Upon the adoption of ASC 842, current and non-current deferred rent is included in the current and non-current operating lease liabilities.
v3.19.3
Investments and Fair Value of Financial Instruments (Tables)
9 Months Ended
Sep. 30, 2019
Fair Value Disclosures [Abstract]  
Schedule of Marketable Investments
Marketable Investments
The Company’s marketable investments have been classified and accounted for as available-for-sale. The following table presents the Company’s marketable investments as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Commercial paper $3,478  $ $—  $3,480  
U.S. treasury4,946   —  4,953  
U.S. agency and government sponsored securities5,274  26  —  5,300  
Corporate bonds68,879  256  (4) 69,131  
Total$82,577  $291  $(4) $82,864  

December 31, 2018
Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
Commercial paper $13,701  $—  $(3) $13,698  
U.S. treasury6,400  —  (22) 6,378  
U.S. agency and government sponsored securities7,699  18  (27) 7,690  
U.S. states and municipalities5,134  —  (12) 5,122  
Corporate bonds100,606  14  (469) 100,151  
Total$133,540  $32  $(533) $133,039  
Schedule of the Fair Value of Marketable Investments in an Unrealized Loss Position for Less than Twelve Months
The following tables present the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than twelve months or for twelve months or more as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. agency and government sponsored securities$1,501  —  $1,275  —  $2,776  —  
Corporate bonds2,418  (2) 6,516  (2) 8,934  (4) 
Total$3,919  $(2) $7,791  $(2) $11,710  $(4) 
December 31, 2018
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Commercial paper$12,208  $(3) $—  $—  $12,208  $(3) 
U.S. treasury—  —  6,378  (22) 6,378  (22) 
U.S. agency and government sponsored securities1,436  (5) 2,759  (22) 4,195  (27) 
U.S. states and municipalities1,529  (5) 3,593  (7) 5,122  (12) 
Corporate bonds58,961  (176) 33,215  (293) 92,176  (469) 
Total$74,134  $(189) $45,945  $(344) $120,079  $(533) 
Schedule of Contractual Maturities of Marketable Investments
The following table presents the contractual maturities of the Company’s marketable investments as of September 30, 2019 and December 31, 2018 (in thousands):
September 30, 2019December 31, 2018
 Fair ValueFair Value
Due in less than one year$12,526  $83,391  
Due in one to five years70,338  49,648  
Total$82,864  $133,039  
Schedule of Fair Value of Assets and Liabilities
The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of September 30, 2019 and December 31, 2018 (in thousands):
 As of September 30, 2019
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Money market funds$66,722  $—  $—  $66,722  
Marketable investments:
Commercial paper—  3,480  —  3,480  
U.S. treasury4,953  —  —  4,953  
U.S. agency and government sponsored securities—  5,300  —  5,300  
Corporate bonds—  69,131  —  69,131  
Total$71,675  $77,911  $—  $149,586  
Financial Liabilities:
Contingent consideration obligations(1)
$—  $—  $1,238  $1,238  
Total$—  $—  $1,238  $1,238  

(1) More information on the contingent consideration obligations and the changes in fair value are presented below.
 As of December 31, 2018
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Commercial paper$—  $10,967  $—  $10,967  
Money market funds12,087  —  —  12,087  
Marketable investments:
Commercial paper—  13,698  —  13,698  
U.S. treasury6,378  —  —  6,378  
U.S. agency and government sponsored securities—  7,690  —  7,690  
U.S. states and municipalities—  5,122  —  5,122  
Corporate bonds—  100,151  —  100,151  
Total$18,465  $137,628  $—  $156,093  
Financial Liabilities:
Contingent consideration obligations(1)
$—  $—  $2,571  $2,571  
Total$—  $—  $2,571  $2,571  

(1) More information on the contingent consideration obligations and the changes in fair value are presented below.
Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] The following table presents quantitative information about certain unobservable inputs used in the Level 3 fair value measurement of the Company’s contingent consideration liability, other than the forecasted revenues during the earn-out milestone period:
Fair Value at September 30, 2019 (in thousands)Valuation MethodUnobservable InputsInput
(range where applicable)
Crossmed:
Revenue-based milestones
$1,238  Monte Carlo SimulationEarn-out period over which revenue-based milestone payments are made2019
Risk-adjusted discount rate15%  
Revenue volatilities for each type of revenue-based milestone5.1% and 18.4%  
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation [Table Text Block]
The following tables summarize the changes in fair value of the contingent consideration obligation for the nine months ended September 30, 2019 and September 30, 2018 (in thousands):
Fair Value of Contingent Consideration
Balance at December 31, 2018$2,571  
Payments of contingent consideration liabilities(1,296) 
Changes in fair value31  
Foreign currency remeasurement(68) 
Balance at September 30, 2019$1,238  

Fair Value of Contingent Consideration
Balance at December 31, 2017$4,675  
Payments of contingent consideration liabilities(3,017) 
Changes in fair value851  
Foreign currency remeasurement10  
Balance at September 30, 2018$2,519  
v3.19.3
Balance Sheet Components Balance Sheet Components (Tables)
9 Months Ended
Sep. 30, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Schedule of Inventories
The following table shows the components of inventories as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Raw materials$19,291  $18,829  
Work in process17,999  10,630  
Finished goods103,069  86,282  
Inventories$140,359  $115,741  
Schedule of Accrued Liabilities
The following table shows the components of accrued liabilities as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Payroll and employee-related cost$37,088  $33,838  
Accrued expenses10,631  4,088  
Sales return provision1,802  2,986  
Product warranty2,196  1,875  
Leasehold improvement expenditures1,862  848  
Contingent consideration & other acquisition-related costs(1)
4,557  4,439  
Other accrued liabilities12,027  9,812  
Total accrued liabilities$70,163  $57,886  

(1) Amount consists of the current portion of contingent liabilities related to (1) the cash milestone payments and working capital adjustment liabilities for the 2017 acquisition of Crossmed and (2) an anti-dilution provision for the 2018 asset acquisition of MVI Health Inc (“MVI”). Refer to Note “5. Asset Acquisitions and Business Combinations” for more information on the acquisition of Crossmed and asset acquisition of MVI.
Schedule of Estimated Product Warranty Accrual
The following table shows the changes in the Company’s estimated product warranty accrual, included in accrued liabilities, as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Balance at the beginning of the period$1,875  $1,088  
Accruals of warranties issued828  1,336  
Settlements of warranty claims(507) (549) 
Balance at the end of the period$2,196  $1,875  
Schedule of Other Non-Current Liabilities
The following table shows the components of other non-current liabilities as of September 30, 2019 and December 31, 2018 (in thousands):
 September 30, 2019December 31, 2018
Deferred tax liabilities$3,961  $4,171  
Licensing-related cost(1)
10,877  11,506  
Other non-current liabilities824  3,266  
Total other non-current liabilities$15,662  $18,943  

(1) Amount relates to the non-current liability recorded for probable future milestone payments to be made under the licensing agreement described in Note “6. Intangible Assets.” Refer therein for more information.
v3.19.3
Intangible Assets Intangible Assets (Tables)
9 Months Ended
Sep. 30, 2019
Intangible Assets, Net (Excluding Goodwill) [Abstract]  
Schedule of indefinite-lived intangible assets
The following tables present details of the Company’s acquired finite-lived and indefinite-lived intangible assets, as of September 30, 2019 and December 31, 2018 (in thousands, except weighted-average amortization period):
As of September 30, 2019Weighted-Average Amortization PeriodGross Carrying AmountAccumulated AmortizationNet
Customer relationships15.0 years$6,508  $(976) $5,532  
Trade secrets and processes20.0 years5,256  (460) 4,796  
Other5.0 years1,678  (755) 923  
Total intangible assets subject to amortization16.3 years$13,442  $(2,191) $11,251  
Intangible assets related to licensed technology14,243  —  14,243  
Total intangible assets$27,685  $(2,191) $25,494  

As of December 31, 2018Weighted-Average
Amortization Period
Gross Carrying AmountAccumulated AmortizationNet
Customer relationships15.0 years$6,823  $(681) $6,142  
Trade secrets and processes20.0 years5,256  (263) 4,993  
Other5.0 years1,759  (528) 1,231  
Total intangible assets subject to amortization16.0 years$13,838  $(1,472) $12,366  
Intangible assets related to licensed technology14,879  —  14,879  
Total intangible assets$28,717  $(1,472) $27,245  
Finite-lived Intangible Assets Amortization Expense
The following table presents the amortization expense recorded related to the Company’s finite-lived intangible assets for the three and nine months ended September 30, 2019 and September 30, 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Cost of revenue$66  $66  $197  $197  
Sales, general and administrative196  205  594  631  
Total$262  $271  $791  $828  
v3.19.3
Goodwill Goodwill (Tables)
9 Months Ended
Sep. 30, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Schedule of goodwill
The following table presents the changes in goodwill during the nine months ended September 30, 2019 (in thousands):
Total Company
Balance as of December 31, 2018$7,813  
Foreign currency translation (361) 
Balance as of September 30, 2019$7,452  
v3.19.3
Leases (Tables)
9 Months Ended
Sep. 30, 2019
Leases [Abstract]  
Schedule of New Accounting Pronouncements and Changes in Accounting Principles
The impact of the adoption of ASC 842 on the Company’s condensed consolidated balance sheet as of January 1, 2019 was as follows (in thousands):
December 31, 2018Adjustments due to the adoption of Topic 842January 1, 2019
Assets
    Prepaid expenses and other current assets(1)
$12,200  $(424) $11,776  
          Total current assets410,726  (424) 410,302  
    Operating lease right-of-use assets(1)
—  43,277  43,277  
          Total assets$515,006  $42,853  $557,859  
Liabilities and Stockholders’ Equity
    Current liabilities:
       Accrued liabilities(2)
$57,886  $(132) $57,754  
       Current operating lease liabilities(2)
—  3,608  3,608  
          Total current liabilities66,062  3,476  69,538  
       Deferred rent(2)
7,586  (7,586) —  
       Non-current operating lease liabilities(2)
—  46,963  46,963  
          Total liabilities92,591  42,853  135,444  
             Total liabilities and stockholders’ equity$515,006  $42,853  $557,859  

(1) Upon the adoption of ASC 842, prepaid rent is included in the operating lease right-of-use assets.
(2) Upon the adoption of ASC 842, current and non-current deferred rent is included in the current and non-current operating lease liabilities.
Lease, Cost
The following table presents the components of the Company’s lease cost, lease term and discount rate during the three and nine months ended September 30, 2019 (in thousands, except years and percentages):
Three Months Ended
September 30, 2019
Nine Months Ended September 30, 2019
Operating lease cost$1,632  $5,085  
Variable lease cost(1)
1,083  2,686  
Total lease costs$2,715  $7,771  
Weighted Average Remaining Lease Term
Operating leases10.0 years
Weighted Average Discount Rate
Operating leases6.2 %
Lessee, Operating Lease, Liability, Maturity
The following table is a schedule, by years, of maturities of the Company's lease liabilities as of September 30, 2019 (in thousands):
Lease Payments(1)(2)
Remainder of 2019$1,734  
Year ending December 31, 20206,986  
Year ending December 31, 20216,346  
Year ending December 31, 20226,225  
Year ending December 31, 20236,160  
Year ending December 31, 20246,044  
Thereafter33,791  
Total undiscounted lease payments67,286  
Less imputed interest(17,844) 
Present value of lease liabilities$49,442  

(1) The table above excludes the estimated future minimum lease payment for the Roseville Lease due to uncertainty around when the Roseville Lease will commence and payments will be due. The total estimated lease payments over the fifteen year lease term is approximately $40.9 million. In addition, the Company anticipates to make approximately $14 million in prepaid rental payments to the lessor prior to the lease commencement date of which $4.1 million has been paid and is presented in other non-current assets in the condensed consolidated balance sheet as of September 30, 2019. The table also excludes lease payments that were not fixed at commencement or modification date.

(2) The table above excludes the estimated future minimum lease payment for the 1310 Harbor Bay Lease due to uncertainty around the timing of when the 1310 Harbor Bay Lease will commence and payments will be due. The total estimated lease payments over the fifteen year lease term will be calculated based on the total development costs incurred in connection with the development of the building which will be determined upon substantial completion of the building.
Schedule of Future Minimum Rental Payments for Operating Leases
The following table below shows the maturities of the Company’s operating lease liabilities previously disclosed under ASC 840 as of December 31, 2018 (in thousands):
Lease Payments(1)
Year Ending December 31:
2019$6,575  
20206,571  
20215,809  
20225,772  
20235,735  
Thereafter40,194  
Total future minimum lease payments$70,656  

(1) The table above excludes the estimated future minimum lease payment for the Roseville Lease, due to the uncertainty around the timing of when the Roseville Lease will commence and payments will be due.
Schedule of Cash Flow, Supplemental Disclosures
Supplemental cash flow information related to leases during the nine months ended September 30, 2019 are as follows (in thousands):
Nine Months Ended September 30, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$5,059  
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$1,738  
v3.19.3
Stockholder's Equity (Tables)
9 Months Ended
Sep. 30, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Summary of Stock Option Activity
Activity of stock options under the Penumbra, Inc. 2005 Stock Plan, the Penumbra, Inc. 2011 Equity Incentive Plan and the Amended and Restated Penumbra, Inc. 2014 Equity Incentive Plan (collectively the “Plans”) during the nine months ended September 30, 2019 is set forth below:
Number of SharesWeighted-Average
Exercise Price
Balance at December 31, 20181,688,881  $18.91  
Exercised(281,561) 12.69  
Canceled/Forfeited(3,273) 21.94  
Balance at September 30, 20191,404,047  20.15  
Summary of Unvested Restricted Stock and Restricted Stock Unit Activity
Activity of unvested restricted stock awards and restricted stock units under the Plans during the nine months ended September 30, 2019 is set forth below: 
Number of SharesWeighted -Average
Grant Date Fair Value
Unvested at December 31, 2018451,463  $57.29  
Granted229,896  150.37  
Vested(260,833) 40.05  
Canceled/Forfeited(16,311) 94.00  
Unvested at September 30, 2019404,215  119.87  
Schedule of Stock-based Compensation Expense
The following table sets forth the stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Cost of revenue$334  $260  $954  $677  
Research and development805  405  2,006  1,148  
Sales, general and administrative5,102  3,747  13,511  11,726  
Total$6,241  $4,412  $16,471  $13,551  
v3.19.3
Accumulated Other Comprehensive Income AOCI (Tables)
9 Months Ended
Sep. 30, 2019
Equity [Abstract]  
Schedule of Accumulated Other Comprehensive Income (Loss)
The following table summarizes the changes in the accumulated balances during the three and nine months ended September 30, 2019 and September 30, 2018, and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive loss into earnings affect the Company’s condensed consolidated statements of operations and consolidated statements of comprehensive income (loss) (in thousands):
Three Months Ended September 30, 2019Three Months Ended September 30, 2018
 Marketable
Investments
 Currency Translation
Adjustments
 Total Marketable
Investments
 Currency Translation
Adjustments
 Total
Balance at beginning of the period$176  $(1,690) $(1,514) $(451) $(210) $(661) 
Other comprehensive income (loss) before reclassifications:
Unrealized gain — marketable investments110  —  110  151  —  151  
Foreign currency translation losses—  (2,606) (2,606) —  (353) (353) 
Income tax effect — expense—  —  —  (36) —  (36) 
Net of tax110  (2,606) (2,496) 115  (353) (238) 
Amounts reclassified from accumulated other comprehensive income to earnings:
Income tax effect — expenses—  —  —  —  —  —  
Net of tax—  —  —  —  —  —  
Net current-year other comprehensive income (loss)110  (2,606) (2,496) 115  (353) (238) 
Balance at end of the period$286  $(4,296) $(4,010) $(336) $(563) $(899) 

Nine Months Ended September 30, 2019Nine Months Ended September 30, 2018
 Marketable
Investments
 Currency Translation
Adjustments
 Total Marketable
Investments
 Currency Translation
Adjustments
 Total
Balance at beginning of the period$(500) $(1,442) $(1,942) $(235) $1,804  $1,569  
Other comprehensive income (loss) before reclassifications:
Unrealized gain (losses) — marketable investments786  —  786  (102) —  (102) 
Foreign currency translation losses—  (2,854) (2,854) —  (2,145) (2,145) 
Income tax effect — benefit (expense)—  —  —   (222) (221) 
Net of tax786  (2,854) (2,068) (101) (2,367) (2,468) 
Amounts reclassified from accumulated other comprehensive income to earnings:
Income tax effect — expense —  —  —  —  —  —  
Net of tax—  —  —  —  —  —  
Net current-year other comprehensive income (loss)786  (2,854) (2,068) (101) (2,367) (2,468) 
Balance at end of the period$286  $(4,296) $(4,010) $(336) $(563) $(899) 
v3.19.3
Net Income per Share Net Income Per Share (Tables)
9 Months Ended
Sep. 30, 2019
Earnings Per Share [Abstract]  
Reconciliation of the Numerator and Denominator used in the Calculation of the Basic and Diluted Earnings per Share
A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income per share for the three and nine months ended September 30, 2019 and 2018 is as follows (in thousands, except share and per share amounts):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Numerator:
Net income (loss) attributable to Penumbra, Inc.$11,483  $(18,930) $38,769  $(58) 
Denominator:
Weighted average shares used to compute net income:
Basic34,840,370  34,248,484  34,681,846  34,057,216  
Effect of dilutive securities from stock-based benefit plans, as calculated using treasury stock method1,431,024  —  1,561,376  —  
Diluted36,271,394  34,248,484  36,243,222  34,057,216  
Net income (loss) attributable to Penumbra, Inc. per share from: 
Basic$0.33  $(0.55) $1.12  $—  
Diluted$0.32  $(0.55) $1.07  $—  
v3.19.3
Revenues Revenues (Tables)
9 Months Ended
Sep. 30, 2019
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenue
The following table presents the Company’s revenues disaggregated by geography, based on the destination to which the Company ships its products, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
United States$90,272  $72,991  $259,157  $210,070  
Japan11,214  10,131  32,967  31,427  
Other International38,016  28,684  110,018  82,648  
Total$139,502  $111,806  $402,142  $324,145  
The following table presents the Company’s revenues disaggregated by product category, for the three and nine months ended September 30, 2019 and 2018 (in thousands):
 Three Months Ended September 30,Nine Months Ended September 30,
 2019201820192018
Neuro$83,247  $74,689  $246,265  $220,318  
Vascular56,255  37,117  155,877  103,827  
Total$139,502  $111,806  $402,142  $324,145  
v3.19.3
Summary of Significant Accounting Policies - Additional Disclosures (Details)
9 Months Ended
Sep. 30, 2019
USD ($)
activity
segment
Apr. 01, 2018
USD ($)
Jan. 01, 2018
USD ($)
Accounting Policies [Abstract]      
Number of business activities | activity 1    
Number of Operating Segments | segment 1    
Cumulative effect adjustments | $ $ 0 $ 1,000 $ 464,000
v3.19.3
Investments and Fair Value of Financial Instruments - Gains and Losses of Marketable Investments (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost $ 82,577,000   $ 82,577,000   $ 133,540,000
Gross Unrealized Gains 291,000   291,000   32,000
Gross Unrealized Losses (4,000)   (4,000)   (533,000)
Fair Value 82,864,000   82,864,000   133,039,000
Commercial paper          
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost 3,478,000   3,478,000   13,701,000
Gross Unrealized Gains 2,000   2,000   0
Gross Unrealized Losses 0   0   (3,000)
Fair Value 3,480,000   3,480,000   13,698,000
U.S. treasury          
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost 4,946,000   4,946,000   6,400,000
Gross Unrealized Gains 7,000   7,000   0
Gross Unrealized Losses 0   0   (22,000)
Fair Value 4,953,000   4,953,000   6,378,000
U.S. agency and government sponsored securities          
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost 5,274,000   5,274,000   7,699,000
Gross Unrealized Gains 26,000   26,000   18,000
Gross Unrealized Losses 0   0   (27,000)
Fair Value 5,300,000   5,300,000   7,690,000
U.S. states and municipalities          
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost         5,134,000
Gross Unrealized Gains         0
Gross Unrealized Losses         (12,000)
Fair Value         5,122,000
Corporate bonds          
Debt Securities, Available-for-sale [Line Items]          
Amortized Cost 68,879,000   68,879,000   100,606,000
Gross Unrealized Gains 256,000   256,000   14,000
Gross Unrealized Losses (4,000)   (4,000)   (469,000)
Fair Value 69,131,000   69,131,000   $ 100,151,000
Fair Value of Contingent Consideration | Sales, general and administrative          
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]          
Changes in fair value $ 0 $ 100,000 $ 31,000 $ 851,000  
v3.19.3
Investments and Fair Value of Financial Instruments - Marketable Securities in an Unrealized Loss Position (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value $ 3,919 $ 74,134
Less than 12 months: Gross Unrealized Losses (2) (189)
12 Months of more: Fair Value 7,791 45,945
12 months or more: Gross Unrealized Losses (2) (344)
Total: Fair Value 11,710 120,079
Total: Gross Unrealized Losses (4) (533)
Commercial paper    
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value   12,208
Less than 12 months: Gross Unrealized Losses   (3)
12 Months of more: Fair Value   0
12 months or more: Gross Unrealized Losses   0
Total: Fair Value   12,208
Total: Gross Unrealized Losses   (3)
U.S. treasury    
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value   0
Less than 12 months: Gross Unrealized Losses   0
12 Months of more: Fair Value   6,378
12 months or more: Gross Unrealized Losses   (22)
Total: Fair Value   6,378
Total: Gross Unrealized Losses   (22)
U.S. agency and government sponsored securities    
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value 1,501 1,436
Less than 12 months: Gross Unrealized Losses 0 (5)
12 Months of more: Fair Value 1,275 2,759
12 months or more: Gross Unrealized Losses 0 (22)
Total: Fair Value 2,776 4,195
Total: Gross Unrealized Losses 0 (27)
U.S. states and municipalities    
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value   1,529
Less than 12 months: Gross Unrealized Losses   (5)
12 Months of more: Fair Value   3,593
12 months or more: Gross Unrealized Losses   (7)
Total: Fair Value   5,122
Total: Gross Unrealized Losses   (12)
Corporate bonds    
Debt Securities, Available-for-sale [Line Items]    
Less than 12 months: Fair Value 2,418 58,961
Less than 12 months: Gross Unrealized Losses (2) (176)
12 Months of more: Fair Value 6,516 33,215
12 months or more: Gross Unrealized Losses (2) (293)
Total: Fair Value 8,934 92,176
Total: Gross Unrealized Losses $ (4) $ (469)
v3.19.3
Investments and Fair Value of Financial Instruments - Contractual Maturities of Marketable Investments (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Due in less than one year $ 12,526 $ 83,391
Due in one to five years 70,338 49,648
Total $ 82,864 $ 133,039
v3.19.3
Investments and Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value (Details) - Recurring - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Financial Assets    
Total $ 149,586 $ 156,093
Financial liabilities 1,238 2,571
Commercial paper    
Financial Assets    
Marketable investments 3,480 13,698
U.S. treasury    
Financial Assets    
Marketable investments 4,953 6,378
U.S. agency and government sponsored securities    
Financial Assets    
Marketable investments 5,300 7,690
U.S. states and municipalities    
Financial Assets    
Marketable investments   5,122
Corporate bonds    
Financial Assets    
Marketable investments 69,131 100,151
Commercial paper    
Financial Assets    
Cash equivalents   10,967
Money market funds    
Financial Assets    
Cash equivalents 66,722 12,087
Level 1    
Financial Assets    
Total 71,675 18,465
Financial liabilities 0 0
Level 1 | Commercial paper    
Financial Assets    
Marketable investments 0 0
Level 1 | U.S. treasury    
Financial Assets    
Marketable investments 4,953 6,378
Level 1 | U.S. agency and government sponsored securities    
Financial Assets    
Marketable investments 0 0
Level 1 | U.S. states and municipalities    
Financial Assets    
Marketable investments   0
Level 1 | Corporate bonds    
Financial Assets    
Marketable investments 0 0
Level 1 | Commercial paper    
Financial Assets    
Cash equivalents   0
Level 1 | Money market funds    
Financial Assets    
Cash equivalents 66,722 12,087
Level 2    
Financial Assets    
Total 77,911 137,628
Financial liabilities 0 0
Level 2 | Commercial paper    
Financial Assets    
Marketable investments 3,480 13,698
Level 2 | U.S. treasury    
Financial Assets    
Marketable investments 0 0
Level 2 | U.S. agency and government sponsored securities    
Financial Assets    
Marketable investments 5,300 7,690
Level 2 | U.S. states and municipalities    
Financial Assets    
Marketable investments   5,122
Level 2 | Corporate bonds    
Financial Assets    
Marketable investments 69,131 100,151
Level 2 | Commercial paper    
Financial Assets    
Cash equivalents   10,967
Level 2 | Money market funds    
Financial Assets    
Cash equivalents 0 0
Level 3    
Financial Assets    
Total 0 0
Financial liabilities 1,238 2,571
Level 3 | Commercial paper    
Financial Assets    
Marketable investments 0 0
Level 3 | U.S. treasury    
Financial Assets    
Marketable investments 0 0
Level 3 | U.S. agency and government sponsored securities    
Financial Assets    
Marketable investments 0 0
Level 3 | U.S. states and municipalities    
Financial Assets    
Marketable investments   0
Level 3 | Corporate bonds    
Financial Assets    
Marketable investments 0 0
Level 3 | Commercial paper    
Financial Assets    
Cash equivalents   0
Level 3 | Money market funds    
Financial Assets    
Cash equivalents 0 0
Contingent Consideration Liability    
Financial Assets    
Financial liabilities 1,238 2,571
Contingent Consideration Liability | Level 1    
Financial Assets    
Financial liabilities 0 0
Contingent Consideration Liability | Level 2    
Financial Assets    
Financial liabilities 0 0
Contingent Consideration Liability | Level 3    
Financial Assets    
Financial liabilities $ 1,238 $ 2,571
v3.19.3
Investments and Fair Value of Financial Instruments - Quantitative Information On Unobservable Inputs (Details) - Monte Carlo Simulation - Level 3
9 Months Ended
Sep. 30, 2019
Fair Value Measurement Inputs and Valuation Techniques [Line Items]  
Fair Value Inputs, Risk-Adjusted Discount Rate 15.00%
Minimum  
Fair Value Measurement Inputs and Valuation Techniques [Line Items]  
Fair Value Input, Revenue Volatility 5.10%
Maximum  
Fair Value Measurement Inputs and Valuation Techniques [Line Items]  
Fair Value Input, Revenue Volatility 18.40%
v3.19.3
Investments and Fair Value of Financial Instruments - Contingent Consideration (Details) - Fair Value of Contingent Consideration - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Payments of contingent consideration liabilities     $ (1,296,000) $ (3,017,000)
Monte Carlo Simulation | Level 3        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Beginning balance     2,571,000 4,675,000
Ending balance $ 1,238,000 $ 2,519,000 1,238,000 2,519,000
Sales, general and administrative        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Changes in fair value $ 0 $ 100,000 31,000 851,000
Other Expense [Member]        
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]        
Foreign currency remeasurement     $ (68,000) $ 10,000
v3.19.3
Balance Sheet Components - Inventories (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Raw materials $ 19,291 $ 18,829
Work in process 17,999 10,630
Finished goods 103,069 86,282
Inventories $ 140,359 $ 115,741
v3.19.3
Balance Sheet Components - Accrued Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]      
Payroll and employee-related cost $ 37,088   $ 33,838
Accrued expenses 10,631   4,088
Sales return provision 1,802   2,986
Product warranty 2,196   1,875
Leasehold improvement expenditures 1,862   848
Contingent consideration & other acquisition-related costs(1) 4,557   4,439
Other accrued liabilities 12,027   9,812
Total accrued liabilities $ 70,163 $ 57,754 $ 57,886
v3.19.3
Balance Sheet Components - Product Warranty (Details) - USD ($)
$ in Thousands
9 Months Ended 12 Months Ended
Sep. 30, 2019
Dec. 31, 2018
Product Warranty, Increase (Decrease) [Roll Forward]    
Balance at the beginning of the period $ 1,875 $ 1,088
Accruals of warranties issued 828 1,336
Settlements of warranty claims (507) (549)
Balance at the end of the period $ 2,196 $ 1,875
v3.19.3
Balance Sheet Components - Other Non-Current Liabilities (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Dec. 31, 2018
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Deferred tax liabilities $ 3,961 $ 4,171
Licensing-related cost, Noncurrent 10,877 11,506
Other Accrued Liabilities, Noncurrent 824 3,266
Total other non-current liabilities $ 15,662 $ 18,943
v3.19.3
Asset Acquisitions & Business Combination - Narrative (Details) - Fair Value of Contingent Consideration - USD ($)
$ in Millions
9 Months Ended
Sep. 30, 2018
Sep. 30, 2019
Dec. 31, 2018
Business Acquisition [Line Items]      
Payment of acquisition-related obligations $ 4.4    
Current Liabilities      
Business Acquisition [Line Items]      
Contingent consideration for milestone payments   $ 1.2 $ 2.6
v3.19.3
Asset Acquisitions & Business Combination - Consideration Transferred (Details) - USD ($)
$ in Thousands
9 Months Ended
Aug. 31, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Business Acquisition [Line Items]        
Change in fair value of contingent consideration   $ 31 $ 852  
MVI Health Inc. [Member]        
Business Acquisition [Line Items]        
Payments made pursuant to anti-dilution provision   500    
Payment for asset acquisition $ 20,000      
Anti-dilution protection at Transfer Agreement date $ 4,500      
Contingent liability, non-current   500   $ 2,500
Contingent liability accrual, current   3,000   1,500
Asset acquisition, ownership percentage 90.00%      
Remaining equity interest 10.00%      
MVI Health Inc. [Member]        
Business Acquisition [Line Items]        
Equity method ownership percentage 50.00%      
Fair Value of Contingent Consideration        
Business Acquisition [Line Items]        
Change in fair value of contingent consideration   1,300    
Payment for contingent consideration, operating activities   600    
Payment for contingent consideration, financing activities   700    
Payment of acquisition-related obligations     $ 4,400  
Fair Value of Contingent Consideration | Current Liabilities        
Business Acquisition [Line Items]        
Contingent consideration   $ 1,200   $ 2,600
v3.19.3
Intangible Assets - Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2017
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Mar. 31, 2018
Finite-Lived Intangible Assets [Line Items]              
Weighted-Average Amortization Period       16 years 3 months 18 days   16 years  
Finite lived intangible assets: gross carrying amount $ 13,442     $ 13,442   $ 13,838  
Accumulated amortization (2,191)     (2,191)   (1,472)  
Finite lived intangible assets: net 11,251     11,251   12,366  
Indefinite-lived intangible assets 14,243     14,243   14,879  
Impairment of Intangible Assets, Indefinite-lived (Excluding Goodwill)       0      
Total intangible assets, gross 27,685     27,685   28,717  
Total intangible assets, net 25,494     25,494   27,245  
Total amortization of finite lived intangible assets 262 $ 271   791 $ 828    
Acquisition of intangible assets from a licensing agreement     $ 2,500        
Licensing-related cost, Noncurrent 10,877     $ 10,877   $ 11,506  
Customer relationships              
Finite-Lived Intangible Assets [Line Items]              
Weighted-Average Amortization Period       15 years   15 years  
Finite lived intangible assets: gross carrying amount 6,508     $ 6,508   $ 6,823  
Accumulated amortization (976)     (976)   (681)  
Finite lived intangible assets: net 5,532     $ 5,532   $ 6,142  
Trade secrets and processes              
Finite-Lived Intangible Assets [Line Items]              
Weighted-Average Amortization Period       20 years   20 years  
Finite lived intangible assets: gross carrying amount 5,256     $ 5,256   $ 5,256 $ 5,300
Accumulated amortization (460)     (460)   (263)  
Finite lived intangible assets: net 4,796     $ 4,796   $ 4,993  
Other Intangible Assets              
Finite-Lived Intangible Assets [Line Items]              
Weighted-Average Amortization Period       5 years   5 years  
Finite lived intangible assets: gross carrying amount 1,678     $ 1,678   $ 1,759  
Accumulated amortization (755)     (755)   (528)  
Finite lived intangible assets: net 923     923   1,231  
Technology Licensing Agreement              
Finite-Lived Intangible Assets [Line Items]              
Indefinite-lived intangible assets 14,243     14,243   14,879  
Loss Contingency Accrual, Period Increase (Decrease) 0     (600)      
Contingent Liability Accrual 11,700     11,700   12,400  
Cost of revenue              
Finite-Lived Intangible Assets [Line Items]              
Total amortization of finite lived intangible assets 66 66   197 197    
Sales, general and administrative              
Finite-Lived Intangible Assets [Line Items]              
Total amortization of finite lived intangible assets 196 $ 205   594 $ 631    
Accrued Liabilities | Technology Licensing Agreement              
Finite-Lived Intangible Assets [Line Items]              
Contingent liability accrual, current 900     900   900  
Noncurrent Liabilities | Technology Licensing Agreement              
Finite-Lived Intangible Assets [Line Items]              
Contingent liability, non-current $ 10,900     $ 10,900   $ 11,500  
v3.19.3
Goodwill (Details) - USD ($)
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2019
Goodwill [Roll Forward]    
Goodwill   $ 7,813,000
Foreign currency translation   (361,000)
Goodwill $ 7,452,000 $ 7,452,000
Impairment loss $ 0  
v3.19.3
Leases - Schedule of Impact on Balance Sheet (Details) - USD ($)
$ in Thousands
Sep. 30, 2019
Jan. 01, 2019
Dec. 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Prepaid expenses and other current assets $ 14,702 $ 11,776 $ 12,200
Total current assets 451,334 410,302 410,726
Operating lease right-of-use assets 41,817 43,277 0
Total assets 614,170 557,859 515,006
Accrued liabilities 70,163 57,754 57,886
Current operating lease liabilities 4,042 3,608 0
Total current liabilities 86,167 69,538 66,062
Deferred rent 0   7,586
Non-current operating lease liabilities 45,400 46,963 0
Total liabilities 147,229 135,444 92,591
Total liabilities and stockholders’ equity $ 614,170 557,859 $ 515,006
Accounting Standards Update 2016-02      
New Accounting Pronouncements or Change in Accounting Principle [Line Items]      
Prepaid expenses and other current assets   (424)  
Total current assets   (424)  
Operating lease right-of-use assets   43,277  
Total assets   42,853  
Accrued liabilities   (132)  
Current operating lease liabilities   3,608  
Total current liabilities   3,476  
Deferred rent   (7,586)  
Non-current operating lease liabilities   46,963  
Total liabilities   42,853  
Total liabilities and stockholders’ equity   $ 42,853  
v3.19.3
Leases - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Lessee, Lease, Description [Line Items]        
Rent expense $ 1,400   $ 4,300  
Operating cash flows from operating leases   $ 5,059    
Operating lease, future minimum payments       $ 70,656
Lease payments made prior to commencement   4,081 $ 0  
Roseville Lease        
Lessee, Lease, Description [Line Items]        
Prepaid rental payments   14,000    
Lease payments made prior to commencement   4,100    
Future minimum payments due   $ 40,900    
Operating lease term, lease not yet commenced 15 years 15 years 15 years  
1310 Harbor Bay Lease        
Lessee, Lease, Description [Line Items]        
Operating lease term, lease not yet commenced 15 years   15 years  
Minimum        
Lessee, Lease, Description [Line Items]        
Operating lease, renewal term   5 years    
Maximum        
Lessee, Lease, Description [Line Items]        
Operating lease, renewal term   15 years    
v3.19.3
Leases - Summary of Lease Cost (Details)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
USD ($)
Sep. 30, 2019
USD ($)
Leases [Abstract]    
Operating lease cost $ 1,632 $ 5,085
Variable lease cost(1) 1,083 2,686
Total lease costs $ 2,715 $ 7,771
Weighted Average Remaining Lease Term 10 years 10 years
Weighted Average Discount Rate 6.20% 6.20%
v3.19.3
Leases - Schedule of Maturity of Lease Liabilities (Details)
$ in Thousands
Sep. 30, 2019
USD ($)
Leases [Abstract]  
Remainder of 2019 $ 1,734
2020 6,986
2021 6,346
2022 6,225
2023 6,160
2024 6,044
Thereafter 33,791
Total undiscounted lease payments 67,286
Less imputed interest (17,844)
Present value of lease liabilities $ 49,442
v3.19.3
Leases - Schedule of Leases Payments Under Previous Guidance (Details)
$ in Thousands
Dec. 31, 2018
USD ($)
Leases [Abstract]  
2019 $ 6,575
2020 6,571
2021 5,809
2022 5,772
2023 5,735
Thereafter 40,194
Total future minimum lease payments $ 70,656
v3.19.3
Leases - Supplemental Cash Flow Information (Details)
$ in Thousands
9 Months Ended
Sep. 30, 2019
USD ($)
Leases [Abstract]  
Operating cash flows from operating leases $ 5,059
Right-of-use assets obtained in exchange for operating lease obligations $ 1,738
v3.19.3
Commitments and Contingencies - Royalty Obligations (Details) - USD ($)
1 Months Ended 3 Months Ended 9 Months Ended
Jul. 31, 2019
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Mar. 31, 2018
Other Commitments [Line Items]              
Finite lived intangible assets: gross carrying amount   $ 13,442,000   $ 13,442,000   $ 13,838,000  
Cost of revenue              
Other Commitments [Line Items]              
Royalty expense   800,000 $ 900,000 3,000,000.0 $ 2,400,000    
Royalty Agreement, March 2005              
Other Commitments [Line Items]              
Minimum annual royalty payments   300,000   $ 300,000   100,000  
Term of agreement       15 years      
Extended term of agreement 10 years            
Royalty Agreement, April 2012              
Other Commitments [Line Items]              
Term of agreement       15 years      
Royalty as a percent of sales       5.00%      
Royalty Agreement, November 2013, Less than $5 Million in Sales              
Other Commitments [Line Items]              
Royalty as a percent of sales       3.00%      
Royalty Agreement, November 2013, Greater than $5 Million in Sales              
Other Commitments [Line Items]              
Royalty as a percent of sales       1.00%      
Royalty threshold       $ 5,000,000.0      
Royalty Agreement, April 2015              
Other Commitments [Line Items]              
Royalty as a percent of sales       2.00%      
Trade secrets and processes              
Other Commitments [Line Items]              
Finite lived intangible assets: gross carrying amount   $ 5,256,000   $ 5,256,000   $ 5,256,000 $ 5,300,000
v3.19.3
Stockholder's Equity - Common Stock (Details)
3 Months Ended
Mar. 31, 2018
shares
Restricted Stock Units (RSUs)  
Subsidiary, Sale of Stock [Line Items]  
Granted (in shares) 53,256
v3.19.3
Stockholder's Equity - Stock Option Activity (Details)
9 Months Ended
Sep. 30, 2019
$ / shares
shares
Number of Shares  
Beginning balance (in shares) | shares 1,688,881
Options exercised (in shares) | shares (281,561)
Options cancelled (in shares) | shares (3,273)
Ending balance (in shares) | shares 1,404,047
Weighted-Average Exercise Price  
Beginning balance (in dollars per share) | $ / shares $ 18.91
Options exercised (in dollars per share) | $ / shares 12.69
Options cancelled (in dollars per share) | $ / shares 21.94
Ending balance (in dollars per share) | $ / shares $ 20.15
v3.19.3
Stockholder's Equity - Restricted Stock and Restricted Stock Units Activity (Details) - Restricted stock and restricted stock units
9 Months Ended
Sep. 30, 2019
$ / shares
shares
Number of Shares  
Unvested beginning balance (in shares) 451,463
Granted (in shares) 229,896
Vested (in shares) (260,833)
Canceled/Forfeited (in shares) (16,311)
Unvested and expected to vest ending balance (in shares) 404,215
Weighted -Average Grant Date Fair Value  
Unvested beginning balance (in dollars per share) | $ / shares $ 57.29
Granted (in dollars per share) | $ / shares 150.37
Vested (in dollars per share) | $ / shares 40.05
Canceled/Forfeited (in dollars per share) | $ / shares 94.00
Unvested and expected to vest ending balance (in dollars per share) | $ / shares $ 119.87
Restricted stock and RSUs expected to vest (shares) 380,225
v3.19.3
Stockholder's Equity - Stock-based Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Dec. 31, 2018
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]          
Stock-based compensation expense $ 6,241 $ 4,412 $ 16,471 $ 13,551  
Unrecognized compensation cost related to unvested share-based compensation arrangements 41,000   $ 41,000    
Unrecognized compensation cost, expected recognition period     3 years 3 months 18 days    
Share-based compensation expense, capitalized in inventory     $ 600   $ 400
Cost of revenue          
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]          
Stock-based compensation expense 334 260 954 677  
Research and development          
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]          
Stock-based compensation expense 805 405 2,006 1,148  
Sales, general and administrative          
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]          
Stock-based compensation expense $ 5,102 $ 3,747 $ 13,511 $ 11,726  
v3.19.3
Accumulated Other Comprehensive Income AOCI (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Jun. 30, 2019
Mar. 31, 2019
Sep. 30, 2018
Jun. 30, 2018
Mar. 31, 2018
Sep. 30, 2019
Sep. 30, 2018
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]                
Beginning balance     $ 422,240       $ 422,240  
Amounts reclassified from accumulated other comprehensive income to earnings:                
Total other comprehensive (loss) income, net of tax $ (2,496) $ 1,064 (636) $ (238) $ (3,298) $ 1,068 (2,068) $ (2,468)
Ending balance 467,332           467,332  
Marketable Investments                
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]                
Beginning balance 176   (500) (451)   (235) (500) (235)
Other comprehensive income (loss) before reclassifications:                
Other comprehensive income before reclassifications 110     151     786 (102)
Income tax effect — expense 0     (36)     0 1
Net of tax 110     115     786 (101)
Amounts reclassified from accumulated other comprehensive income to earnings:                
Income tax effect — expenses 0     0     0 0
Net of tax 0     0     0 0
Total other comprehensive (loss) income, net of tax 110     115     786 (101)
Ending balance 286 176   (336) (451)   286 (336)
Currency Translation Adjustments                
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]                
Beginning balance (1,690)   (1,442) (210)   1,804 (1,442) 1,804
Other comprehensive income (loss) before reclassifications:                
Other comprehensive income before reclassifications (2,606)     (353)     (2,854) (2,145)
Income tax effect — expense 0     0     0 (222)
Net of tax (2,606)     (353)     (2,854) (2,367)
Amounts reclassified from accumulated other comprehensive income to earnings:                
Income tax effect — expenses 0     0     0 0
Net of tax 0     0     0 0
Total other comprehensive (loss) income, net of tax (2,606)     (353)     (2,854) (2,367)
Ending balance (4,296) (1,690)   (563) (210)   (4,296) (563)
Total                
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]                
Beginning balance (1,514)   (1,942) (661)   1,569 (1,942) 1,569
Other comprehensive income (loss) before reclassifications:                
Income tax effect — expense 0     (36)     0 (221)
Net of tax (2,496)     (238)     (2,068) (2,468)
Amounts reclassified from accumulated other comprehensive income to earnings:                
Income tax effect — expenses 0     0     0 0
Net of tax 0     0     0 0
Total other comprehensive (loss) income, net of tax (2,496) 1,064 $ (636) (238) (3,298) $ 1,068 (2,068) (2,468)
Ending balance $ (4,010) $ (1,514)   $ (899) $ (661)   $ (4,010) $ (899)
v3.19.3
Income Taxes Income Taxes (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Income Tax Contingency [Line Items]        
Benefit from income taxes $ (1,963) $ (1,598) $ (683) $ 5,288
Effective tax rate 15.10% (8.00%) 1.80% 92.10%
v3.19.3
Net Income per Share - Basic and Diluted Earnings per Share (Details) - USD ($)
$ / shares in Units, $ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Numerator:        
Net income (loss) attributable to Penumbra, Inc. $ 11,483 $ (18,930) $ 38,769 $ (58)
Denominator:        
Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Basic (in shares) 34,840,370 34,248,484 34,681,846 34,057,216
Potential dilutive shares (in shares) 1,431,024 0 1,561,376 0
Weighted average shares used to compute net income attributable to common stockholders —Diluted (in shares) 36,271,394 34,248,484 36,243,222 34,057,216
Net (loss) income per share attributable to common stockholders — Basic (in dollars per share) $ 0.33 $ (0.55) $ 1.12 $ 0
Net (loss) income per share attributable to common stockholders — Diluted (in dollars per share) $ 0.32 $ (0.55) $ 1.07 $ 0
v3.19.3
Net Income per Share - Antidilutive Securities (Details) - shares
shares in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Antidilutive securities excluded from the computation of earnings per share (in shares) 65 2,300 76 2,300
v3.19.3
Revenues - Disaggregation of Revenue (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 30, 2019
Sep. 30, 2018
Sep. 30, 2019
Sep. 30, 2018
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer $ 139,502 $ 111,806    
Revenue 139,502 111,806 $ 402,142 $ 324,145
United States        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer 90,272 72,991    
Revenue     259,157 210,070
Japan        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer 11,214 10,131    
Revenue     32,967 31,427
Other International        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer 38,016 28,684    
Revenue     110,018 82,648
Neuro        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer 83,247 74,689    
Revenue     246,265 220,318
Vascular        
Disaggregation of Revenue [Line Items]        
Revenue from contract with customer $ 56,255 $ 37,117    
Revenue     $ 155,877 $ 103,827
v3.19.3
Label Element Value
Retained Earnings [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ 464,000
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption 1,000
Parent [Member]  
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption 464,000
Cumulative Effect of New Accounting Principle in Period of Adoption us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption $ 1,000