__________________________________________________________________________________________________________________________

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

FORM 8-K 
_______________________________________________________________________________________________________________________________

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

November 7, 2019
Date of Report (Date of earliest event reported) 
_______________________________________________________________________________________________________________________________

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

Delaware	001-37557	05-0605598	
(State or other jurisdiction of incorporation or organization)	(Commission File No.)	(I.R.S. employer identification number)	
One Penumbra Place
Alameda, CA 94502
(Address of principal executive offices, including zip code)
 
(510) 748-3200
(Registrant’s telephone number, including area code) 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligations of the registrant under any of the following provisions: 
						
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	
Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered	
Common Stock, Par value $0.001 per share	PEN	The New York Stock Exchange	

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

_______________________________________________________________________________________________________________________________

_______________________________________________________________________________________________________________________________

						
Item 2.02.	Results of Operations and Financial Condition.	
 
On November 7, 2019, Penumbra, Inc. issued a press release announcing financial results for the third fiscal quarter ended September 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
The information furnished on this Current Report on Form 8-K, including the attached exhibit, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.
						
Item 9.01.	Financial Statements and Exhibits.	

Exhibit Number	 	Description	
99.1	 	Press release of Penumbra, Inc. dated November 7, 2019.	

EXHIBIT INDEX
									
Exhibit Number	 	Description	
99.1	 	Press release of Penumbra, Inc. dated November 7, 2019.	

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 	Penumbra, Inc.	
 	 	 	
Date: November 7, 2019	By:	/s/ Sri Kosaraju	
 	 	Sri Kosaraju	
 	 	President and Chief Financial Officer	

Exhibit 99.1

Penumbra, Inc. Reports Third Quarter 2019 Financial Results

ALAMEDA, Calif., November 7, 2019 (PR Newswire) - Penumbra, Inc. (NYSE: PEN), a global healthcare company focused on innovative therapies, today reported financial results for the third quarter ended September 30, 2019.

•Revenue of $139.5 million in the third quarter of 2019, an increase of 24.8%, or 25.5% in constant currency1, over the third quarter of 2018.

Third Quarter 2019 Financial Results
Total revenue grew to $139.5 million for the third quarter of 2019 compared to $111.8 million for the third quarter of 2018, an increase of 24.8%, or 25.5% on a constant currency basis. The United States represented 65% of total revenue and international represented 35% of total revenue for the third quarter of 2019. Revenue from sales of neuro products grew to $83.2 million for the third quarter of 2019, an increase of 11.5%, or 12.4% on a constant currency basis. Revenue from sales of vascular products grew to $56.3 million for the third quarter of 2019, an increase of 51.6%, or 52.0% on a constant currency basis.

Gross profit was $96.0 million, or 68.8% of total revenue, for the third quarter of 2019, compared to $75.0 million, or 67.1% of total revenue, for the third quarter of 2018.

Total operating expenses for the third quarter of 2019 were $83.0 million, or 59.5% of total revenue. This compares to total operating expenses of $95.9 million, or 85.7% of total revenue, for the third quarter of 2018, which included a $30.8 million acquired in-process research and development (“IPR&D”) charge in connection with the acquisition of a controlling interest in MVI Health Inc. Excluding the IPR&D charge, total adjusted operating expenses2 (a non-GAAP measure) were $65.0 million, or 58.2% of total revenue, for the third quarter of 2018. R&D expenses were $13.7 million for the third quarter of 2019, compared to $9.1 million for the third quarter of 2018. SG&A expenses were $69.3 million for the third quarter of 2019, compared to $55.9 million for the third quarter of 2018.

Operating income for the third quarter of 2019 was $13.0 million. This compares to an operating loss of $20.8 million for the third quarter of 2018, including the IPR&D charge. Excluding the IPR&D charge, adjusted operating income2 (a non-GAAP measure) was $10.0 million for the third quarter of 2018.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2019 financial results after market close on Thursday, November 7, 2019 at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing (833) 227-5837 for domestic callers or (647) 689-4064 for international callers (conference id: 4746448), or the webcast can be accessed on the “Events” section under the “Investors” tab of the Company’s website at: www.penumbrainc.com. The webcast will be available on the Company’s website for at least two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on innovative therapies. Penumbra designs, develops, manufactures and markets innovative products and has a broad portfolio that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and vascular. Penumbra sells its products to hospitals primarily through its direct sales organization in the United States, most of Europe, Canada and Australia, and through distributors in select international markets. The Penumbra logo is a trademark of Penumbra, Inc. For more information, visit www.penumbrainc.com.

1See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

2See “Non-GAAP Financial Measures” below for important information about our use of non-GAAP measures and further information about our adjusted operating expenses and adjusted operating income measures.

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Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses the following non-GAAP financial measures in this press release: a) adjusted operating expenses and adjusted operating income and b) non-GAAP net income and non-GAAP diluted earnings per share (“EPS”) and b) constant currency.

Adjusted operating expenses and adjusted operating income. The Company defines adjusted operating expenses as total operating expenses, excluding the IPR&D charge in connection with the MVI Health Inc. asset acquisition. Adjusted operating income is defined as operating income (loss), excluding the same IPR&D charge.

Adjusted net income (loss) and adjusted diluted EPS. The Company defines adjusted net income (loss) as net income (loss), excluding a) the IPR&D charge in connection with the MVI Health Inc. asset acquisition in the third quarter of 2018, b) the one-time effect of the transition tax from the Tax Cuts and Jobs Act of 2017 (the “Tax Reform Act”) in the first quarter of 2018, and c) the effects of the excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance. The Company defines adjusted diluted EPS as GAAP diluted EPS, excluding the effects of the same items above.

Constant Currency. The Company’s constant currency revenue disclosures estimate the impact of changes in foreign currency rates on the translation of the Company’s current period revenue as compared to the applicable comparable period in the prior year. This impact is derived by taking the current local currency revenue and translating it into U.S. dollars based upon the foreign currency exchange rates used to translate the local currency revenue for the applicable comparable period in the prior year, rather than the actual exchange rates in effect during the current period. It does not include any other effect of changes in foreign currency rates on the Company’s results or business.

Full reconciliation of these non-GAAP measures to the most comparable GAAP measures is set forth in the tables below.

Our management believes the non-GAAP financial measures disclosed in this press release are useful to investors in assessing the operating performance of our business and provide meaningful comparisons to prior periods and thus a more complete understanding of our business than could be obtained absent this disclosure. Specifically, we consider the change in constant currency revenue as a useful metric as it provides an alternative framework for assessing how our underlying business performed excluding the effect of foreign currency rate fluctuations. We consider adjusted operating expenses, adjusted operating income, adjusted net income (loss), and adjusted diluted EPS useful metrics as they provide an alternative framework for assessing how our underlying business performed. These metrics exclude the effects of the IPR&D charge in connection with the MVI Health Inc. asset acquisition, and, in the case of adjusted net income (loss) and adjusted diluted EPS, the one-time effect of the transition tax from the Tax Reform Act, as well as the effects of excess tax benefits associated with share-based compensation arrangements, net of any related valuation allowance.

The non-GAAP financial measures included in this press release may be different from, and therefore may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures included in this press release, and not to rely on any single financial measure to evaluate our business.

Forward-Looking Statements
Except for historical information, certain statements in this press release are forward-looking in nature and are subject to risks, uncertainties and assumptions about us. Our business and operations are subject to a variety of risks and uncertainties and, consequently, actual results may differ materially from those projected by any forward-looking statements. Factors that could cause actual results to differ from those projected include, but are not limited to: failure to sustain or grow profitability or generate positive cash flows; failure to effectively introduce and market new products; delays in product introductions; significant competition; inability to further penetrate our current customer base, expand our user base and increase the frequency of use of our products by our customers; inability to achieve or maintain satisfactory pricing and margins; manufacturing difficulties; permanent write-downs or write-offs of our inventory; product defects or failures; unfavorable outcomes in clinical trials; inability to maintain our culture as we grow; fluctuations in foreign currency exchange rates; potential adverse regulatory actions; and potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments we may make. These risks and uncertainties, as well as others, are discussed in greater detail in our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2018 filed with the SEC on February 26, 2019. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Any forward-looking statements are based on our current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

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Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
															
		September 30, 2019		December 31, 2018	
Assets					
Current assets:					
     Cash and cash equivalents		$	111,581 	 		$	67,850 	 	
     Marketable investments		82,864 	 		133,039 	 	
Accounts receivable, net		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 	 		— 	 	
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 	 	
Liabilities and Stockholders’ Equity					
Current liabilities:					
     Accounts payable		$	11,962 	 		$	8,176 	 	
     Accrued liabilities		70,163 	 		57,886 	 	
Current operating lease liabilities		4,042 	 		— 	 	
          Total current liabilities		86,167 	 		66,062 	 	
Deferred rent		— 	 		7,586 	 	
Non-current operating lease liabilities		45,400 	 		— 	 	
Other non-current liabilities		15,662 	 		18,943 	 	
          Total liabilities		147,229 	 		92,591 	 	
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 	 	

	

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

		Three Months Ended September 30, 	 		Nine Months Ended September 30, 	 	
		2019		2018		2019		2018	
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		— 	 		30,835 	 		— 	 		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		— 	 		(920)	 		— 	 		(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 income (loss) attributable to Penumbra, Inc. per share:									
Basic		$	0.33 	 		$	(0.55)	 		$	1.12 	 		$	— 	 	
Diluted		$	0.32 	 		$	(0.55)	 		$	1.07 	 		$	— 	 	
Weighted average shares outstanding:									
Basic		34,840,370 	 		34,248,484 	 		34,681,846 	 		34,057,216 	 	
Diluted		36,271,394 	 		34,248,484 	 		36,243,222 	 		34,057,216 	 	

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

		Three Months Ended September 30, 	 		Nine Months Ended September 30, 	 	
		2019		2018		2019		2018	
GAAP operating expenses		$	83,022 	 			$	95,861 	 		$	236,907 	 			$	221,342 	 	
GAAP total operating expenses and operating income (loss) from operations includes the effect of the following items:									
Acquired IPR&D in connection with an asset acquisition2		— 	 			30,835 	 		— 	 			30,835 	 	
Adjusted operating expenses		$	83,022 	 			$	65,026 	 		$	236,907 	 			$	190,507 	 	
															
GAAP operating income (loss)		$	12,976 	 			$	(20,849)	 		$	36,929 	 			$	(7,521)	 	
Adjusted operating income		$	12,976 	 			$	9,986 	 		$	36,929 	 			$	23,314 	 	

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

		Three Months Ended September 30,		Nine Months Ended September 30,	
		2019		2018		2019		2018	
GAAP net income (loss) attributable to Penumbra, Inc.		$	11,483 	 		$	(18,930)	 		$	38,769 	 		$	(58)	 	
GAAP net income (loss) includes the effect of the following items:									
Acquired IPR&D in connection with an asset acquisition2		— 	 		27,393 	 		— 	 		27,393 	 	
Effect of the transition tax under the Tax Reform Act3		— 	 		— 	 		— 	 		88 	 	
Excess tax benefits related to stock compensation awards4		(2,285)	 		(2,156)	 		(11,274)	 		(13,610)	 	
Adjusted net income		$	9,198 	 		$	6,307 	 		$	27,495 	 		$	13,813 	 	
									
GAAP diluted EPS		$	0.32 	 		$	(0.55)	 		$	1.07 	 		$	— 	 	
Adjusted diluted EPS		$	0.25 	 		$	0.17 	 		$	0.76 	 		$	0.38 	 	
									
Weighted average shares outstanding used to compute:									
	
Adjusted diluted EPS		36,271,394 	 		36,125,198 	 		36,243,222 	 		36,064,996 	 	

	
1See “Non-GAAP Financial Measures” above for important information about our use of non-GAAP measures and further information about our non-GAAP operating expenses, non-GAAP operating income, non-GAAP net income and non-GAAP diluted EPS measures.
2On August 31, 2018, the Company acquired a controlling interest in MVI Health Inc. which was accounted for as an asset acquisition. In connection with the transaction, the Company recorded a $30.8 million IPR&D charge during the three and nine months ended September 30, 2018, in the consolidated statements of operations related to the acquired technology under development from MVI Health Inc. Of the total IPR&D charge, $27.4 million was attributable to the net loss of Penumbra, Inc. There was no effect on the provision for (benefit from) income taxes related to the IPR&D charge for the three and nine months ended September 30, 2018, respectively.
3On December 22, 2017, the Tax Reform Act was enacted into law. This new tax law, among other changes, reduces the Company’s U.S. federal statutory corporate income tax rate from 34% to 21% effective January 1, 2018. During the nine months ended September 30, 2018, the Company recorded a provisional tax charge for the one-time transition tax on the undistributed earnings of its foreign subsidiaries.
4In accordance with Accounting Standards Update No. 2016-09, Improvements to Employee Share-Based Payment Accounting, all excess tax benefits related to share-based compensation be recognized as an income tax benefit, instead of in stockholders’ equity.

5

Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth1
(unaudited)
(in thousands)
																																													
		Three Months Ended September 30,		Reported Change		 FX Impact		Constant Currency Change	
		2019		2018		$		%		 $		$		%	
United States		$	90,272 	 		$	72,991 	 		$	17,281 	 		23.7 	%		$	— 	 		$	17,281 	 		23.7 	%	
International		49,230 	 		38,815 	 		10,415 	 		26.8 	%		860 	 		11,275 	 		29.0 	%	
Total		$	139,502 	 		$	111,806 	 		$	27,696 	 		24.8 	%		$	860 	 		$	28,556 	 		25.5 	%	

Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth1
(unaudited)
(in thousands)
																																													
		Three Months Ended September 30,		Reported Change		 FX Impact		Constant Currency Change	
 		2019		2018		$		%		 $		$		%	
Neuro		$	83,247 	 		$	74,689 	 		$	8,558 	 		11.5 	%		$	704 	 		$	9,262 	 		12.4 	%	
Vascular		56,255 	 		37,117 	 		19,138 	 		51.6 	%		156 	 		19,294 	 		52.0 	%	
Total		$	139,502 	 		$	111,806 	 		$	27,696 	 		24.8 	%		$	860 	 		$	28,556 	 		25.5 	%	

Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth1
(unaudited)
(in thousands)
																																													
		Nine Months Ended September 30,		Reported Change		 FX Impact		Constant Currency Change	
		2019		2018		$		%		 $		$		%	
United States		$	259,157 	 		$	210,070 	 		$	49,087 	 		23.4 	%		$	— 	 		$	49,087 	 		23.4 	%	
International		142,985 	 		114,075 	 		28,910 	 		25.3 	%		4,608 	 		33,518 	 		29.4 	%	
Total		$	402,142 	 		$	324,145 	 		$	77,997 	 		24.1 	%		$	4,608 	 		$	82,605 	 		25.5 	%	

Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth1
(unaudited)
(in thousands)
																																													
		Nine Months Ended September 30,		Reported Change		 FX Impact		Constant Currency Change	
 		2019		2018		$		%		 $		$		%	
Neuro		$	246,265 	 		$	220,318 	 		$	25,947 	 		11.8 	%		$	3,624 	 		$	29,571 	 		13.4 	%	
Peripheral		155,877 	 		103,827 	 		52,050 	 		50.1 	%		984 	 		53,034 	 		51.1 	%	
Total		$	402,142 	 		$	324,145 	 		$	77,997 	 		24.1 	%		$	4,608 	 		$	82,605 	 		25.5 	%	

	
1See “Non-GAAP Financial Measures” for important information about our use of constant currency and other non-GAAP measures.

Investor Relations
Penumbra, Inc.
510-995-2461
investors@penumbrainc.com
Source: Penumbra, Inc.

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