Document and Entity Information Document

3 Months Ended

Mar. 31, 2017

Apr. 14, 2017

Document and Entity Information [Abstract]

Entity Registrant Name

Penumbra Inc

Entity Central Index Key

0001321732

Current Fiscal Year End Date

--12-31

Entity Filer Category

Large Accelerated Filer

Document Type

10-Q

Document Period End Date

Mar. 31, 2017

Document Fiscal Year Focus

2017

Document Fiscal Period Focus

Q1

Amendment Flag

false

Entity Common Stock, Shares Outstanding

33,627,160

Condensed Consolidated Balance Sheets (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Current assets:

Cash and cash equivalents

$ 109,383

$ 13,236

Marketable investments

122,256

115,517

Accounts receivable, net of doubtful accounts of $829 and $684 at March 31, 2017 and December 31, 2016, respectively

45,278

43,335

Inventories

79,187

73,012

Prepaid expenses and other current assets

14,554

18,727

Restricted cash

1,704

Total current assets

372,362

263,827

Property and equipment, net

22,905

21,464

Deferred taxes

22,486

22,476

Other non-current assets

612

487

Total assets

418,365

308,254

Current liabilities:

Accounts payable

4,973

4,110

Accrued liabilities

33,591

31,690

Total current liabilities

38,564

35,800

Deferred Rent Credit, Noncurrent

5,501

5,083

Other non-current liabilities

828

824

Total liabilities

44,893

41,707

Commitments and contingencies

Stockholders’ equity:

Common stock

33

31

Additional paid-in capital

383,132

273,865

Accumulated other comprehensive loss

(3,926)

(4,688)

Accumulated deficit

(5,767)

(2,661)

Total stockholders’ equity

373,472

266,547

Total liabilities and stockholders’ equity

$ 418,365

$ 308,254

Condensed Consolidated Balance Sheets (Parenthetical) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Dec. 31, 2015

Statement of Financial Position [Abstract]

Allowance for doubtful accounts

$ 829

$ 684

$ 589

Condensed Consolidated Statements of Operations and Comprehensive (Loss) Income (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Income Statement [Abstract]

Revenue

$ 73,213

$ 57,919

Cost of revenue

25,504

18,014

Gross profit

47,709

39,905

Operating expenses:

Research and development

7,034

5,001

Sales, general and administrative

42,721

33,069

Total operating expenses

49,755

38,070

(Loss) Income from operations

(2,046)

1,835

Interest income, net

644

510

Other expense, net

(349)

(224)

(Loss) Income before provision for (benefit from) income taxes

(1,751)

2,121

Provision for (benefit from) income taxes

1,355

(170)

Net (loss) income

(3,106)

2,291

Foreign currency translation adjustments, net of tax

692

1,048

Unrealized gains on available-for-sale securities, net of tax

70

281

Comprehensive (loss) income

(2,344)

3,620

Net income attributable to common stockholders

$ (3,106)

$ 2,291

Net (loss) income per share attributable to common stockholders — Basic (in dollars per share)

$ (0.10)

$ 0.08

Net (loss) income per share attributable to common stockholders — Diluted (in dollars per share)

$ (0.10)

$ 0.07

Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Basic (in shares)

31,611,841

29,990,006

Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Diluted (in shares)

31,611,841

33,023,495

Condensed Consolidated Statements of Cash Flows (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income

$ (3,106)

$ 2,291

Adjustments to reconcile net (loss) income to net cash provided by (used in) operating activities:

Depreciation and amortization

700

538

Amortization of premium on marketable investments

299

189

Stock-based compensation

4,012

3,015

Provision for doubtful accounts

145

11

Inventory write downs

256

317

Loss on disposal of property and equipment

0

11

Realized (gain) loss on marketable investments

(31)

0

Deferred taxes

(1)

1,329

Changes in operating assets and liabilities:

Accounts receivable

(1,880)

(1,343)

Inventories

(6,057)

(9,083)

Prepaid expenses and other current and non-current assets

2,248

(4,759)

Accounts payable

889

1,350

Accrued expenses and other non-current liabilities

4,766

4,060

Net cash provided by (used in) operating activities

2,194

(2,074)

CASH FLOWS FROM INVESTING ACTIVITIES:

Purchase of marketable investments

(44,777)

(9,531)

Proceeds from sales of marketable investments

22,975

500

Proceeds from maturities of marketable investments

15,020

11,750

Purchases of property and equipment

(3,194)

(1,115)

Increase (Decrease) in Restricted Cash

(1,686)

0

Net cash (used in) provided by investing activities

(11,662)

1,604

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Issuance of Common Stock

106,563

0

Proceeds from exercises of stock options

1,050

129

Payment of employee taxes related to vested restricted stock

(2,089)

(1,642)

Net cash provided by (used in) financing activities

105,524

(1,513)

Effect of foreign exchange rate changes on cash and cash equivalents

91

42

Net Increase (Decrease) In Cash And Cash Equivalents

96,147

(1,941)

CASH AND CASH EQUIVALENTS—Beginning of period

13,236

19,547

CASH AND CASH EQUIVALENTS—End of period

109,383

17,606

NONCASH INVESTING AND FINANCING ACTIVITIES:

Purchase of property and equipment funded through accounts payable and accrued liabilities

339

334

Deferred issuance costs not yet paid

$ 295

$ 0

Organization and Description of Business

Penumbra, Inc. (the “Company”) is a global healthcare company focused on interventional therapies. The Company designs, develops, manufactures and markets innovative devices and has a broad portfolio of products that addresses challenging medical conditions and significant clinical needs across two major markets, neuro and peripheral vascular. The conditions that the Company’s products address include, among others, ischemic stroke, hemorrhagic stroke and various peripheral vascular conditions that can be treated through thrombectomy and embolization procedures.

Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated balance sheet as of March 31, 2017, the condensed consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2017 and 2016, and the condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 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 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, 2016 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 March 31, 2017, the results of its operations for the three months ended March 31, 2017 and 2016, and the cash flows for the three months ended March 31, 2017 and 2016. The results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or for any other future annual or interim period. Certain changes in presentation were made in the condensed consolidated financial statements for the three months ended March 31, 2016, to conform to the presentation for the three months ended March 31, 2017.

The Company elected to early adopt Accounting Standards Update (“ASU”) 2016-09 in the fourth quarter of 2016 which requires the Company to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The impact of adoption was the creation of deferred tax assets in the balance sheet and recognition of excess tax benefits in our provision for (benefit from) income taxes rather than paid-in capital for all periods in fiscal year 2016. The Company's adoption of ASU 2016-09 resulted in the recognition of excess tax benefits in the Company's benefit from income taxes rather than paid-in capital of $1.5 million for the three months ended March 31, 2016. In addition, the Company elected to apply the presentation requirements for cash flows related to excess tax benefits retrospectively to all periods presented.

Adoption of the new standard resulted in adjustments to our 2016 unaudited selected financial data previously reported in our Quarterly Report on Form 10-Q as follows:



	March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Balance Sheet Data:
Additional Paid-in-Capital	$	255,499		$	253,988
Accumulated deficit	$	(16,695	)	$	(15,184	)
Total stockholder' equity	$	238,048		$	238,048

	Three Months Ended March 31, 2016
(In thousands, except percentage and per share amounts)	As Reported			As Adjusted
Condensed Consolidated Statements of Operations Data:
Provision for (benefit from) income taxes	$	1,341		$	(170	)
Net income	$	780		$	2,291
Net income per share —Basic	$	0.03		$	0.08
—Diluted	$	0.02		$	0.07
Weighted average shares used to compute net income (loss) per share attributable to common stockholders —Basic	29,990,006			29,990,006
—Diluted	32,486,516			33,023,495

	Three Months Ended March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Statement of Cash Flow Data:
Net cash (used in) operating activities	$	(3,584	)	$	(2,074	)
Net cash (used in) financing activities	$	(3	)	$	(1,513	)

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, 2016 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 three months ended March 31, 2017, 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, 2016.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

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, sales return reserve, warranty reserves, valuation of inventories, useful lives of property and equipment, income taxes, and 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 medical devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. The Company determines revenue by geographic area, based on the destination to which it ships its products.

Recent Accounting Guidance

Recently Adopted Accounting Standards

In July 2015, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure most inventory at the lower of cost and net realizable value, thereby simplifying the current guidance under which an entity must measure inventory at the lower of cost or market. In January 2017, the Company adopted the standard on a prospective basis and the adoption did not have a material impact on its financial position.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which further clarifies the implementation guidance on principal versus agent considerations contained in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers—Identifying Performance Obligations and Licensing, which further clarifies the implementation guidance relating to identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers—Narrow-Scope improvements and Practical Expedients, which further clarifies the implementation on narrow scope improvements and practical expedients. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606—Revenue from Contracts with Customers, which makes minor corrections or minor improvements to the Codification related to ASU No. 2014-09 that are not expected to have a significant effect on the Company’s current accounting practice. These standards will be effective for the Company in the first quarter of 2018 pursuant to ASU No. 2015-14, Revenue from Contracts with Customers-Deferral of the Effective Date, issued by the FASB in August 2015. The Company is currently evaluating the financial statement impact of adopting these new standards as well as the transition method for implementation. The Company will be impacted by the new standard regarding the timing of its fulfillment of delivery criterion.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the existing accounting standards for leases. Under the new guidance, a lessee will be required to recognize a lease liability and right-of-use asset for all leases with terms in excess of twelve months. The new guidance also modifies the classification criteria and accounting for sales-type and direct financing leases, 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 will continue to depend primarily on its classification. The accounting standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and must be applied using a modified retrospective approach. Early adoption is permitted. While the Company is continuing to assess all potential impacts of the standard, it expects that most of its lease commitments will be subject to the updated standard and recognized as lease liabilities and right-of-use assets upon adoption.

In June 2016, the 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. The Company will recognize an allowance for credit losses on available-for-sale securities rather than deductions in amortized cost. 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 November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force. The standard requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling the total beginning and end of period amounts shown on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the adoption of ASU 2016-18 to have a material impact on its consolidated financial statements.

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.

Marketable investments 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, 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 Company did not own any Level 3 financial assets or liabilities as of March 31, 2017 or December 31, 2016.

During the three months ended March 31, 2017 and 2016, the Company did not record impairment charges related to its marketable investments, and the Company did not have any transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy.

The Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of March 31, 2017 or December 31, 2016.

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy (in thousands):



	As of March 31, 2017
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Commercial Paper	$	—	$	21,769	$	—	$	21,769
Money market funds	55,608		—		—		55,608
U.S. States and Municipalities	—		5,000		—		5,000
Corporate bonds	—		4,000		—		4,000
Marketable investments:
Commercial paper	—		13,610		—		13,610
U.S. Treasury	9,003				—		9,003
U.S. agency securities	—		6,837		—		6,837
U.S. states and municipalities	—		12,678		—		12,678
Corporate bonds	—		78,926		—		78,926
Non-U.S. government debt securities	—		1,202		—		1,202
Total	$	64,611	$	144,022	$	—	$	208,633



	As of December 31, 2016
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	873	$	—	$	—	$	873
Marketable investments:
Commercial paper	—		4,238		—		4,238
U.S. Treasury	4,996		—		—		4,996
U.S. agency securities	—		8,794		—		8,794
U.S. states and municipalities	—		27,355		—		27,355
Corporate bonds	—		68,925		—		68,925
Non-U.S. government debt securities	—		1,209		—		1,209
Total	$	5,869	$	110,521	$	—	$	116,390

Balance Sheet Components

Cash and Cash Equivalents

The majority of the Company’s cash is held by one financial institution in the United States in an amount that exceeds federally insured limits. The Company maintained investments that were not federally insured in the form of money market funds during the periods presented. The Company also held cash in foreign banks of approximately $3.5 million and $2.1 million at March 31, 2017 and December 31, 2016, respectively, which was not federally insured. The Company has not experienced any losses on its deposits of cash and cash equivalents.

Restricted Cash

The Company had restricted cash of $1.7 million at March 31, 2017 and no restricted cash at December 31, 2016. The restricted cash is held in one of the Company’s foreign banks and has a temporary restriction pending final incorporation of an international subsidiary. The Company anticipates the restriction to be lifted before the end of the year.

Accounts Receivable, Net

The Company’s allowance for doubtful accounts comprised of the following (in thousands):



Allowance for Doubtful Accounts	March 31, 2017		December 31, 2016
Balance at the beginning of the period	$	684	$	589
Charged to costs and expenses	145		216
Deductions	—		(121		)
Balance at the end of the period	$	829	$	684

One customer (a distributor) accounted for 10% and 11% of the Company’s revenue during the three months ended March 31, 2017 and 2016, respectively. No customer accounted for greater than 10% of the Company’s accounts receivable balance as of March 31, 2017 or December 31, 2016.

Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets as of March 31, 2017 and December 31, 2016 were comprised of the following (in thousands):



	March 31, 2017		December 31, 2016
Prepaid Tax	$	1,887	$	4,656
Prepaid expenses	4,871		4,573
Income tax receivable	4,587		4,536
Other current assets	3,209		4,962
Prepaid expenses and other current assets	$	14,554	$	18,727

Marketable Investments

The Company’s marketable investments as of March 31, 2017 and December 31, 2016 were as follows (in thousands):



	March 31, 2017
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	13,610	$	1	$	(1	)	$	13,610
U.S. Treasury	9,002		4		(3		)	9,003
U.S. agency securities	6,847		—		(10		)	6,837
U.S. states and municipalities	12,687		2		(11		)	12,678
Corporate bonds	79,004		30		(108		)	78,926
Non-U.S. government debt securities	1,202		—					1,202
Total	$	122,352	$	37	$	(133	)	$	122,256



	December 31, 2016
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	4,237	$	1	$	—		$	4,238
U.S. Treasury	4,996		—		—			4,996
U.S. agency securities	8,803		3		(12		)	8,794
U.S. states and municipalities	27,429		1		(75		)	27,355
Corporate bonds	69,009		36		(120		)	68,925
Non-U.S. government debt securities	1,209		—		—			1,209
Total	$	115,683	$	41	$	(207	)	$	115,517

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 as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017
	Fair Value		Gross Unrealized Losses
Commercial paper	$	7,977	$	(1	)
US Treasury	4,994		(3		)
US Agency securities	4,892		(10		)
U.S. States and Municipalities	9,947		(11		)
Corporate bonds	43,741		(108		)
Total	$	71,551	$	(133	)



	December 31, 2016
	Fair Value		Gross Unrealized Losses
U.S. agency securities	$	3,291	$	(12	)
U.S. states and municipalities	22,286		(75		)
Corporate bonds	29,748		(120		)
Total	$	55,325	$	(207	)

As of March 31, 2017 and December 31, 2016, there were no securities that had been in a loss position for more than twelve months.

The contractual maturities of the Company’s marketable investments as of March 31, 2017 and December 31, 2016 were as follows (in thousands):



	March 31, 2017		December 31, 2016
	Fair Value
Due in one year	$	105,348	$	71,051
Due in one to five years	16,908		44,466
Total	$	122,256	$	115,517

Inventories

Inventories are stated at the lower of cost (determined under the first-in first-out method) or market. Inventory quantities are reviewed in consideration of actual loss experience, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

The components of inventories as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands):



	March 31, 2017		December 31, 2016
Raw materials	$	9,910	$	11,367
Work in process	4,420		3,663
Finished goods	64,857		57,982
Inventories	$	79,187	$	73,012

Property and Equipment, Net

Property and equipment, net as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands):



	March 31, 2017			December 31, 2016
Machinery and equipment	$	10,457		$	9,734
Furniture and fixtures	4,598			4,246
Leasehold improvements	10,291			10,207
Software	1,641			1,221
Computers	1,118			884
Construction in progress	2,453			2,193
Total property and equipment	30,558			28,485
Less: Accumulated depreciation and amortization	(7,653		)	(7,021		)
Property and equipment, net	$	22,905		$	21,464

Depreciation and amortization expense was $0.7 million and $0.5 million for the three months ended March 31, 2017 and 2016, respectively.

Accrued Liabilities

The following table shows the components of accrued liabilities as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017		December 31, 2016
Payroll and employee-related cost	$	19,223	$	16,956
Sales return reserve	2,940		2,753
Preclinical and clinical trial cost	1,877		2,054
Deferred revenue	357		344
Product warranty	1,087		1,254
Sales tax and VAT payable	548		733
Income tax payable	354		174
Other accrued liabilities	7,205		7,422
Total accrued liabilities	$	33,591	$	31,690

The estimated product warranty accrual as of March 31, 2017 and December 31, 2016 was as follows (in thousands):



	March 31, 2017			December 31, 2016
Balance at the beginning of the period	$	1,254		$	713
Accruals of warranties issued	39			1,176
Settlements of warranty claims	(206		)	(635		)
Balance at the end of the period	$	1,087		$	1,254

Commitments and Contingencies

Lease Commitments

The Company leases its offices under non-cancelable operating leases that expire at various dates from 2029 to 2031. Rent expense for non-cancelable operating leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Rent expense for the three months ended March 31, 2017 and 2016 was $1.4 million and $1.1 million, respectively. In addition, the Company's lease commitments also require it to make additional payments during the lease term for taxes, insurance and other operating expenses. The Company leases its other equipment under non-cancelable operating leases that expire at various dates through 2021.

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 both March 31, 2017 and December 31, 2016, 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 will 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 will continue until the expiration of the last to expire patent that covers that licensed product or 2022, whichever is longer.

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. Unless the agreement is terminated earlier, the royalty term for each applicable product will continue until the expirations of the applicable patent covering such product or 2029, whichever is longer.

In November 2013, the Company entered into an agreement that requires the Company to pay, on a quarterly basis, a 3% royalty on the first $5 million in sales and a 1% royalty on sales thereafter of products covered under applicable patents. Unless the agreement is terminated earlier, the royalty for each covered product shall continue until 2030.

In April 2015, the Company entered into a royalty agreement that requires the Company to pay, on a quarterly basis, a 2% royalty on sales of certain products covered by the agreement. Unless the royalty agreement is terminated earlier, the royalty term for each covered product shall continue until 2035.

Royalty expense included in cost of sales for the three months ended March 31, 2017 and 2016 was $0.8 million and $0.7 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.

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 purchasers 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

The Company was contacted in 2015 by the attorney for a potential product liability claimant who allegedly suffered injuries as a result of an aneurysm procedure in which the Penumbra Coil 400 was used. On February 19, 2016, a complaint for damages was filed on behalf of this claimant against Penumbra and the hospital involved in the procedure (Montgomery v. Penumbra, Inc., et al., Case No. 16-2-04050-1 SEA, Superior Court of the State of Washington, King County). The suit alleges liability primarily under the Washington Product Liability Act and seeks both compensatory and punitive damages without a specific damages claim. Counsel for the claimant previously indicated that he expects that a jury could award $35 million in damages were this matter to go to trial. This amount is substantially in excess of the Company’s insurance coverage. The hospital defendant had requested indemnification from the Company but was dismissed from the case in July 2016. The case is in the discovery phase, and the Company is unable to assess the merits of the plaintiff’s case. The Company intends to vigorously defend the litigation, as the Company believes there will be substantial questions regarding causation, liability and damages.

From time to time, the Company is subject to claims and assessments in the ordinary course of business. The Company is not currently a party to any 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.

Stockholder's Equity

Common Stock

In March 2017, the Company issued and sold an aggregate of 1,495,000 shares of common stock at a public offering price of $76.00 per share, less the underwriters’ discounts and commissions, pursuant to an underwritten public offering. The Company received approximately $106.3 million in net cash proceeds after deducting underwriting discounts and commissions of $6.8 million and other offering expenses of $0.5 million.

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 three months ended March 31, 2017 is set forth below:



	Number of Shares		Weighted- Average Exercise Price
Balance at December 31, 2016	2,876,955		$	14.63
Options exercised	(383,457	)	2.73
Options canceled	(969	)	10.56
Balance at March 31, 2017	2,492,529		16.47

Restricted Stock and Restricted Stock Units

The following table summarizes the activity of unvested restricted stock and restricted stock units under the Plans during the three months ended March 31, 2017 is set forth below:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2016	1,002,944		$	29.44
Granted	58,660		76.47
Vested	(115,685	)	15.63
Canceled/Forfeited	(18,125	)	41.31
Unvested and expected to vest at March 31, 2017	927,794		25.84

Stock-based Compensation

The following table sets forth the stock-based compensation expense included in the Company's condensed consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Cost of sales	$	309	$	9
Research and development	253		258
Sales, general and administrative	3,450		2,748
Total	$	4,012	$	3,015

As of March 31, 2017, total unrecognized compensation cost was $34.6 million related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 2.7 years.

The total stock-based compensation cost capitalized in inventory was $0.4 million and $0.4 million as of March 31, 2017 and December 31, 2016, respectively.

Accumulated Other Comprehensive (Loss) Income

Other comprehensive income 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, these comprehensive income items accumulate and are included within accumulated other comprehensive (loss) income. Unrealized gains and losses on the Company’s marketable investments are reclassified from accumulated other comprehensive (loss) income 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) income.

The following table summarizes the changes in the accumulated balances during the three months ended March 31, 2017 and 2016, and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive (loss) income into earnings affect the Company’s condensed consolidated statements of operations and comprehensive (loss) income (in thousands):



	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Marketable Investments			Currency Translation Adjustments			Total			Marketable Investments			Currency Translation Adjustments			Total
Balance at beginning of the period	$	(105	)	$	(4,583	)	$	(4,688	)	$	(163	)	$	(1,952	)	$	(2,115	)
Other comprehensive income before reclassifications:
Unrealized gains —marketable investments	101			—			101			441			—			441
Foreign currency translation gains	—			692			692			—			1,043			1,043
Income tax effect—benefit (expense)	—			—			—			(160		)	5			(155		)
Net of tax	101			692			793			281			1,048			1,329
Amounts reclassified from accumulated other comprehensive income to earnings:
Realized losses (gains)—marketable investments	(31		)	—			(31		)	—			—			—
Income tax effect—(expense) benefit	—			—			—			—			—			—
Net of tax	(31		)	—			(31		)	—			—			—
Net current-year other comprehensive income	70			692			762			281			1,048			1,329
Balance at end of the period	$	(35	)	$	(3,891	)	$	(3,926	)	$	118		$	(904	)	$	(786	)

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. The Company’s effective tax rate decreased to (77.4%) for the three months ended March 31, 2017, compared to (8.0%) for the three months ended March 31, 2016, which includes the retroactive adoption of ASU 2016-09. The decrease in rate was primarily attributable to recording a partial valuation allowance against the deferred tax assets (“DTAs”) as of March 31, 2017 and the year-to-date tax impact from recognizing the deferred tax assets associated with intra-entity asset transfers.

As of March 31, 2017, the Company determined there were significant DTAs that needed to be assessed if the DTAs were more likely than not to be realized. Significant DTAs were created in the year ended December 31, 2016 and three month ended March 31, 2017, driven by stock option exercises and vesting of restricted stock and the excess tax benefits resulting from the application of ASU 2016-09. The Company assessed its ability to realize the net DTAs by evaluating all available positive and negative evidence, including (1) cumulative results of operations in recent years, (2) sources of recent pre-tax losses, (3) estimates of future taxable income, and (4) the length of NOLs carryforward periods. The Company would be in a 3-year cumulative taxable income position, had it not been for the impact of a $74.9 million excess tax deduction of stock based compensation under ASU 2016-09. Additionally, the Company considered the length of NOL carryforward periods and an objectively verifiable estimate of future income based on operating results from the Company’s recent history, as well as an estimate of future income that incorporates the Company's forecasted operating results for fiscal 2017. The Company believes that the recent period operating losses are attributable to operating expenses incurred to invest in the future growth of the business. Due to the significant amount of additional stock based compensation excess tax deduction generated, the Company determined that the negative evidence outweighed the positive evidence and that it is not more-likely-than-not that sufficient taxable income will be generated to realize all of the DTAs as of March 31, 2017. As such, a partial valuation allowance was recorded against the Company’s domestic DTAs as of March 31, 2017 in the amount of $9.8 million, which was approximately the same amount as the stock based compensation excess tax benefits created during the three months ended March 31, 2017. The Company will continue to closely monitor the need for an additional valuation allowance against its domestic DTAs that are generated in each subsequent reporting period which can be impacted by actual operating results compared to the Company's forecast.

Consistent with prior periods, the Company maintained a full valuation allowance against its California and Canada DTAs as of March 31, 2017.

Net (Loss) Income per Share of Common Stock attributable to Common Stockholders

Net (loss) Income per Share of Common Stock attributable to Common Stockholders

Net (Loss) Income per Share

The Company’s basic net income per share is calculated by dividing the net income by the weighted average number of shares of common stock outstanding for the period. The diluted net (loss) 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 and common stock warrants are considered common stock equivalents.

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net (loss) income per share for the three months ended March 31, 2017 and 2016 is as follows (in thousands, except share and per share amounts):



	Three Months Ended March 31,
	2017			2016
Net (loss) income per share:
Numerator
Net (loss) income—basic and diluted	$	(3,106	)	$	2,291
Denominator
Weighted average shares used to compute net (loss) income —Basic	31,611,841			29,990,006
Potential dilutive stock-based awards, as calculated using treasury stock method	—			3,033,489
Weighted average shares used to compute net income —Diluted	31,611,841			33,023,495
Net (loss) income per share —Basic	$	(0.10	)	$	0.08
—Diluted	$	(0.10	)	$	0.07

For the three months ended March 31, 2017 and 2016, outstanding stock-based awards of 3.5 million and 12,500 shares, respectively, were excluded from the computation of diluted net income per share because their effect would have been anti-dilutive.

Geographic Areas and Product Sales

The Company’s revenue by geographic area, based on the destination to which the Company ships its products, for the three months ended March 31, 2017 and 2016 was as follows (in thousands):



	Three Months Ended March 31,
	2017		2016
United States	$	48,487	$	39,412
Japan	7,642		6,161
Other International	17,084		12,346
Total	$	73,213	$	57,919

The following table sets forth revenue by product category, for the three months ended March 31, 2017 and 2016 was as follows (in thousands):



	Three Months Ended March 31,
	2017		2016
Neuro	$	50,249	$	41,284
Peripheral Vascular	22,964		16,635
Total	$	73,213	$	57,919

The Company does not have significant long-lived assets outside the United States.

Summary of Significant Accounting Policies (Policies)

Basis of Presentation and Consolidation

The accompanying condensed consolidated balance sheet as of March 31, 2017, the condensed consolidated statements of operations and comprehensive (loss) income for the three months ended March 31, 2017 and 2016, and the condensed consolidated statements of cash flows for the three months ended March 31, 2017 and 2016 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 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, 2016 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 March 31, 2017, the results of its operations for the three months ended March 31, 2017 and 2016, and the cash flows for the three months ended March 31, 2017 and 2016. The results for the three months ended March 31, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017 or for any other future annual or interim period. Certain changes in presentation were made in the condensed consolidated financial statements for the three months ended March 31, 2016, to conform to the presentation for the three months ended March 31, 2017.

The Company elected to early adopt Accounting Standards Update (“ASU”) 2016-09 in the fourth quarter of 2016 which requires the Company to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The impact of adoption was the creation of deferred tax assets in the balance sheet and recognition of excess tax benefits in our provision for (benefit from) income taxes rather than paid-in capital for all periods in fiscal year 2016. The Company's adoption of ASU 2016-09 resulted in the recognition of excess tax benefits in the Company's benefit from income taxes rather than paid-in capital of $1.5 million for the three months ended March 31, 2016. In addition, the Company elected to apply the presentation requirements for cash flows related to excess tax benefits retrospectively to all periods presented.

Adoption of the new standard resulted in adjustments to our 2016 unaudited selected financial data previously reported in our Quarterly Report on Form 10-Q as follows:



	March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Balance Sheet Data:
Additional Paid-in-Capital	$	255,499		$	253,988
Accumulated deficit	$	(16,695	)	$	(15,184	)
Total stockholder' equity	$	238,048		$	238,048

	Three Months Ended March 31, 2016
(In thousands, except percentage and per share amounts)	As Reported			As Adjusted
Condensed Consolidated Statements of Operations Data:
Provision for (benefit from) income taxes	$	1,341		$	(170	)
Net income	$	780		$	2,291
Net income per share —Basic	$	0.03		$	0.08
—Diluted	$	0.02		$	0.07
Weighted average shares used to compute net income (loss) per share attributable to common stockholders —Basic	29,990,006			29,990,006
—Diluted	32,486,516			33,023,495

	Three Months Ended March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Statement of Cash Flow Data:
Net cash (used in) operating activities	$	(3,584	)	$	(2,074	)
Net cash (used in) financing activities	$	(3	)	$	(1,513	)

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, 2016 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 three months ended March 31, 2017, 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, 2016.

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.

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, sales return reserve, warranty reserves, valuation of inventories, useful lives of property and equipment, income taxes, and 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 medical devices, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its operating results for the purpose of allocating resources and evaluating financial performance. The Company determines revenue by geographic area, based on the destination to which it ships its products.

Recently Issued Accounting Standards

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which outlines a comprehensive new revenue recognition model designed to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers—Principal versus Agent Considerations (Reporting Revenue Gross versus Net), which further clarifies the implementation guidance on principal versus agent considerations contained in ASU 2014-09. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers—Identifying Performance Obligations and Licensing, which further clarifies the implementation guidance relating to identifying performance obligations and the licensing implementation guidance. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers—Narrow-Scope improvements and Practical Expedients, which further clarifies the implementation on narrow scope improvements and practical expedients. In December 2016, the FASB issued ASU 2016-20, Technical Corrections and Improvements to Topic 606—Revenue from Contracts with Customers, which makes minor corrections or minor improvements to the Codification related to ASU No. 2014-09 that are not expected to have a significant effect on the Company’s current accounting practice. These standards will be effective for the Company in the first quarter of 2018 pursuant to ASU No. 2015-14, Revenue from Contracts with Customers-Deferral of the Effective Date, issued by the FASB in August 2015. The Company is currently evaluating the financial statement impact of adopting these new standards as well as the transition method for implementation. The Company will be impacted by the new standard regarding the timing of its fulfillment of delivery criterion.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which amends the existing accounting standards for leases. Under the new guidance, a lessee will be required to recognize a lease liability and right-of-use asset for all leases with terms in excess of twelve months. The new guidance also modifies the classification criteria and accounting for sales-type and direct financing leases, 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 will continue to depend primarily on its classification. The accounting standard is effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years, and must be applied using a modified retrospective approach. Early adoption is permitted. While the Company is continuing to assess all potential impacts of the standard, it expects that most of its lease commitments will be subject to the updated standard and recognized as lease liabilities and right-of-use assets upon adoption.

In June 2016, the 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. The Company will recognize an allowance for credit losses on available-for-sale securities rather than deductions in amortized cost. 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 November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows: Restricted Cash, a consensus of the FASB Emerging Issues Task Force. The standard requires companies to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling the total beginning and end of period amounts shown on the statement of cash flows. The standard is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company does not expect the adoption of ASU 2016-18 to have a material impact on its consolidated financial statements.

Summary of Significant Accounting Policies (Tables)

Schedule of New Accounting Pronouncements and Changes in Accounting Principles

Adoption of the new standard resulted in adjustments to our 2016 unaudited selected financial data previously reported in our Quarterly Report on Form 10-Q as follows:



	March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Balance Sheet Data:
Additional Paid-in-Capital	$	255,499		$	253,988
Accumulated deficit	$	(16,695	)	$	(15,184	)
Total stockholder' equity	$	238,048		$	238,048

	Three Months Ended March 31, 2016
(In thousands, except percentage and per share amounts)	As Reported			As Adjusted
Condensed Consolidated Statements of Operations Data:
Provision for (benefit from) income taxes	$	1,341		$	(170	)
Net income	$	780		$	2,291
Net income per share —Basic	$	0.03		$	0.08
—Diluted	$	0.02		$	0.07
Weighted average shares used to compute net income (loss) per share attributable to common stockholders —Basic	29,990,006			29,990,006
—Diluted	32,486,516			33,023,495

	Three Months Ended March 31, 2016
(In thousands)	As Reported			As Adjusted
Condensed Consolidated Statement of Cash Flow Data:
Net cash (used in) operating activities	$	(3,584	)	$	(2,074	)
Net cash (used in) financing activities	$	(3	)	$	(1,513	)

Fair Value of Financial Instruments (Tables)

Schedule of Fair Value of Assets and Liabilities

The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy (in thousands):



	As of March 31, 2017
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Commercial Paper	$	—	$	21,769	$	—	$	21,769
Money market funds	55,608		—		—		55,608
U.S. States and Municipalities	—		5,000		—		5,000
Corporate bonds	—		4,000		—		4,000
Marketable investments:
Commercial paper	—		13,610		—		13,610
U.S. Treasury	9,003				—		9,003
U.S. agency securities	—		6,837		—		6,837
U.S. states and municipalities	—		12,678		—		12,678
Corporate bonds	—		78,926		—		78,926
Non-U.S. government debt securities	—		1,202		—		1,202
Total	$	64,611	$	144,022	$	—	$	208,633



	As of December 31, 2016
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:
Money market funds	$	873	$	—	$	—	$	873
Marketable investments:
Commercial paper	—		4,238		—		4,238
U.S. Treasury	4,996		—		—		4,996
U.S. agency securities	—		8,794		—		8,794
U.S. states and municipalities	—		27,355		—		27,355
Corporate bonds	—		68,925		—		68,925
Non-U.S. government debt securities	—		1,209		—		1,209
Total	$	5,869	$	110,521	$	—	$	116,390

Balance Sheet Components (Tables)

Schedule of Allowance for Doubtful Accounts

The Company’s allowance for doubtful accounts comprised of the following (in thousands):



Allowance for Doubtful Accounts	March 31, 2017		December 31, 2016
Balance at the beginning of the period	$	684	$	589
Charged to costs and expenses	145		216
Deductions	—		(121		)
Balance at the end of the period	$	829	$	684

Schedule of Prepaid Expenses and Other Current Assets

The Company’s prepaid expenses and other current assets as of March 31, 2017 and December 31, 2016 were comprised of the following (in thousands):



	March 31, 2017		December 31, 2016
Prepaid Tax	$	1,887	$	4,656
Prepaid expenses	4,871		4,573
Income tax receivable	4,587		4,536
Other current assets	3,209		4,962
Prepaid expenses and other current assets	$	14,554	$	18,727

Schedule of Marketable Investments

The Company’s marketable investments as of March 31, 2017 and December 31, 2016 were as follows (in thousands):



	March 31, 2017
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	13,610	$	1	$	(1	)	$	13,610
U.S. Treasury	9,002		4		(3		)	9,003
U.S. agency securities	6,847		—		(10		)	6,837
U.S. states and municipalities	12,687		2		(11		)	12,678
Corporate bonds	79,004		30		(108		)	78,926
Non-U.S. government debt securities	1,202		—					1,202
Total	$	122,352	$	37	$	(133	)	$	122,256



	December 31, 2016
	Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Commercial paper	$	4,237	$	1	$	—		$	4,238
U.S. Treasury	4,996		—		—			4,996
U.S. agency securities	8,803		3		(12		)	8,794
U.S. states and municipalities	27,429		1		(75		)	27,355
Corporate bonds	69,009		36		(120		)	68,925
Non-U.S. government debt securities	1,209		—		—			1,209
Total	$	115,683	$	41	$	(207	)	$	115,517

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 as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017
	Fair Value		Gross Unrealized Losses
Commercial paper	$	7,977	$	(1	)
US Treasury	4,994		(3		)
US Agency securities	4,892		(10		)
U.S. States and Municipalities	9,947		(11		)
Corporate bonds	43,741		(108		)
Total	$	71,551	$	(133	)



	December 31, 2016
	Fair Value		Gross Unrealized Losses
U.S. agency securities	$	3,291	$	(12	)
U.S. states and municipalities	22,286		(75		)
Corporate bonds	29,748		(120		)
Total	$	55,325	$	(207	)

Schedule of Contractual Maturities of Marketable Investments

The contractual maturities of the Company’s marketable investments as of March 31, 2017 and December 31, 2016 were as follows (in thousands):



	March 31, 2017		December 31, 2016
	Fair Value
Due in one year	$	105,348	$	71,051
Due in one to five years	16,908		44,466
Total	$	122,256	$	115,517

Schedule of Inventories

The components of inventories as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands):



	March 31, 2017		December 31, 2016
Raw materials	$	9,910	$	11,367
Work in process	4,420		3,663
Finished goods	64,857		57,982
Inventories	$	79,187	$	73,012

Schedule of Property and Equipment, Net

Property and equipment, net as of March 31, 2017 and December 31, 2016 consisted of the following (in thousands):



	March 31, 2017			December 31, 2016
Machinery and equipment	$	10,457		$	9,734
Furniture and fixtures	4,598			4,246
Leasehold improvements	10,291			10,207
Software	1,641			1,221
Computers	1,118			884
Construction in progress	2,453			2,193
Total property and equipment	30,558			28,485
Less: Accumulated depreciation and amortization	(7,653		)	(7,021		)
Property and equipment, net	$	22,905		$	21,464

Schedule of Accrued Liabilities

The following table shows the components of accrued liabilities as of March 31, 2017 and December 31, 2016 (in thousands):



	March 31, 2017		December 31, 2016
Payroll and employee-related cost	$	19,223	$	16,956
Sales return reserve	2,940		2,753
Preclinical and clinical trial cost	1,877		2,054
Deferred revenue	357		344
Product warranty	1,087		1,254
Sales tax and VAT payable	548		733
Income tax payable	354		174
Other accrued liabilities	7,205		7,422
Total accrued liabilities	$	33,591	$	31,690

Schedule of Estimated Product Warranty Accrual

The estimated product warranty accrual as of March 31, 2017 and December 31, 2016 was as follows (in thousands):



	March 31, 2017			December 31, 2016
Balance at the beginning of the period	$	1,254		$	713
Accruals of warranties issued	39			1,176
Settlements of warranty claims	(206		)	(635		)
Balance at the end of the period	$	1,087		$	1,254

Stockholder's Equity (Tables)

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 three months ended March 31, 2017 is set forth below:



	Number of Shares		Weighted- Average Exercise Price
Balance at December 31, 2016	2,876,955		$	14.63
Options exercised	(383,457	)	2.73
Options canceled	(969	)	10.56
Balance at March 31, 2017	2,492,529		16.47

Summary of Unvested Restricted Stock and Restricted Stock Unit Activity

The following table summarizes the activity of unvested restricted stock and restricted stock units under the Plans during the three months ended March 31, 2017 is set forth below:



	Number of Shares		Weighted Average Grant Date Fair Value
Unvested at December 31, 2016	1,002,944		$	29.44
Granted	58,660		76.47
Vested	(115,685	)	15.63
Canceled/Forfeited	(18,125	)	41.31
Unvested and expected to vest at March 31, 2017	927,794		25.84

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 and comprehensive (loss) income for the three months ended March 31, 2017 and 2016 (in thousands):



	Three Months Ended March 31,
	2017		2016
Cost of sales	$	309	$	9
Research and development	253		258
Sales, general and administrative	3,450		2,748
Total	$	4,012	$	3,015

Accumulated Other Comprehensive (Loss) Income (Tables)

Schedule of Accumulated Other Comprehensive Income (Loss)

The following table summarizes the changes in the accumulated balances during the three months ended March 31, 2017 and 2016, and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive (loss) income into earnings affect the Company’s condensed consolidated statements of operations and comprehensive (loss) income (in thousands):



	Three Months Ended March 31, 2017									Three Months Ended March 31, 2016
	Marketable Investments			Currency Translation Adjustments			Total			Marketable Investments			Currency Translation Adjustments			Total
Balance at beginning of the period	$	(105	)	$	(4,583	)	$	(4,688	)	$	(163	)	$	(1,952	)	$	(2,115	)
Other comprehensive income before reclassifications:
Unrealized gains —marketable investments	101			—			101			441			—			441
Foreign currency translation gains	—			692			692			—			1,043			1,043
Income tax effect—benefit (expense)	—			—			—			(160		)	5			(155		)
Net of tax	101			692			793			281			1,048			1,329
Amounts reclassified from accumulated other comprehensive income to earnings:
Realized losses (gains)—marketable investments	(31		)	—			(31		)	—			—			—
Income tax effect—(expense) benefit	—			—			—			—			—			—
Net of tax	(31		)	—			(31		)	—			—			—
Net current-year other comprehensive income	70			692			762			281			1,048			1,329
Balance at end of the period	$	(35	)	$	(3,891	)	$	(3,926	)	$	118		$	(904	)	$	(786	)

Net (Loss) Income per Share of Common Stock attributable to Common Stockholders (Tables)

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 (loss) income per share for the three months ended March 31, 2017 and 2016 is as follows (in thousands, except share and per share amounts):



	Three Months Ended March 31,
	2017			2016
Net (loss) income per share:
Numerator
Net (loss) income—basic and diluted	$	(3,106	)	$	2,291
Denominator
Weighted average shares used to compute net (loss) income —Basic	31,611,841			29,990,006
Potential dilutive stock-based awards, as calculated using treasury stock method	—			3,033,489
Weighted average shares used to compute net income —Diluted	31,611,841			33,023,495
Net (loss) income per share —Basic	$	(0.10	)	$	0.08
—Diluted	$	(0.10	)	$	0.07

Geographic Areas and Product Sales (Tables)

Revenue by Geographic Area

The Company’s revenue by geographic area, based on the destination to which the Company ships its products, for the three months ended March 31, 2017 and 2016 was as follows (in thousands):



	Three Months Ended March 31,
	2017		2016
United States	$	48,487	$	39,412
Japan	7,642		6,161
Other International	17,084		12,346
Total	$	73,213	$	57,919

Revenue by Product Category

The following table sets forth revenue by product category, for the three months ended March 31, 2017 and 2016 was as follows (in thousands):



	Three Months Ended March 31,
	2017		2016
Neuro	$	50,249	$	41,284
Peripheral Vascular	22,964		16,635
Total	$	73,213	$	57,919

Organization and Description of Business (Details)

3 Months Ended

Mar. 31, 2017

market

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Number of major markets

2

Summary of Significant Accounting Policies - Additional Disclosures (Details)

3 Months Ended

Mar. 31, 2017

segment

activity

Accounting Policies [Abstract]

Number of business activities

1

Number of operating segments

1

Summary of Significant Accounting Policies - New Accounting Pronouncements (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Condensed Consolidated Balance Sheet Data:

Additional paid-in capital

$ 383,132

$ 273,865

Accumulated deficit

(5,767)

(2,661)

Total stockholder' equity

373,472

266,547

Condensed Consolidated Statements of Operations Data:

Provision for (benefit from) income taxes

1,355

(170)

Net (loss) income

(3,106)

2,291

Net income per share

Basic (in dollars per share)

$ (0.10)

$ 0.08

Diluted (in dollars per share)

$ (0.10)

$ 0.07

Weighted average shares used to compute net income (loss) per share attributable to common shareholders

Basic (in shares)

31,611,841

29,990,006

Diluted (in shares)

31,611,841

33,023,495

Condensed Consolidated Statement of Cash Flow Data:

Net cash (used in) operating activities

2,194

(2,074)

Net cash (used in) financing activities

105,524

(1,513)

Accounting Standards Update 2016-09

Condensed Consolidated Balance Sheet Data:

Additional paid-in capital

253,988

Accumulated deficit

(15,184)

Total stockholder' equity

238,048

Condensed Consolidated Statements of Operations Data:

Provision for (benefit from) income taxes

(170)

Net (loss) income

2,291

Net income per share

Basic (in dollars per share)

$ 0.08

Diluted (in dollars per share)

$ 0.07

Weighted average shares used to compute net income (loss) per share attributable to common shareholders

Basic (in shares)

29,990,006

Diluted (in shares)

33,023,495

Condensed Consolidated Statement of Cash Flow Data:

Net cash (used in) operating activities

(2,074)

Net cash (used in) financing activities

(1,513)

As Reported

Condensed Consolidated Balance Sheet Data:

Additional paid-in capital

255,499

Accumulated deficit

(16,695)

Total stockholder' equity

238,048

Condensed Consolidated Statements of Operations Data:

Provision for (benefit from) income taxes

1,341

Net (loss) income

780

Net income per share

Basic (in dollars per share)

$ 0.03

Diluted (in dollars per share)

$ 0.02

Weighted average shares used to compute net income (loss) per share attributable to common shareholders

Basic (in shares)

29,990,006

Diluted (in shares)

32,486,516

Condensed Consolidated Statement of Cash Flow Data:

Net cash (used in) operating activities

(3,584)

Net cash (used in) financing activities

$ (3)

Fair Value of Financial Instruments (Details) (Recurring, USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Financial Assets

Total

$ 208,633

$ 116,390

Commercial paper

Financial Assets

Marketable investments

13,610

4,238

U.S. Treasury

Financial Assets

Marketable investments

9,003

4,996

U.S. agency securities

Financial Assets

Marketable investments

6,837

8,794

U.S. states and municipalities

Financial Assets

Marketable investments

12,678

27,355

Corporate bonds

Financial Assets

Marketable investments

78,926

68,925

Non-U.S. government debt securities

Financial Assets

Marketable investments

1,202

1,209

Commercial Paper

Financial Assets

Cash equivalents

21,769

Money market funds

Financial Assets

Cash equivalents

55,608

873

U.S. agency securities

Financial Assets

Cash equivalents

5,000

Corporate bonds

Financial Assets

Cash equivalents

4,000

Level 1

Financial Assets

Total

64,611

5,869

Level 1 |
Commercial paper

Financial Assets

Marketable investments

0

Level 1 |
U.S. Treasury

Financial Assets

Marketable investments

9,003

4,996

Level 1 |
U.S. agency securities

Financial Assets

Marketable investments

0

Level 1 |
U.S. states and municipalities

Financial Assets

Marketable investments

0

Level 1 |
Corporate bonds

Financial Assets

Marketable investments

0

Level 1 |
Non-U.S. government debt securities

Financial Assets

Marketable investments

0

Level 1 |
Commercial Paper

Financial Assets

Cash equivalents

0

Level 1 |
Money market funds

Financial Assets

Cash equivalents

55,608

873

Level 1 |
U.S. agency securities

Financial Assets

Cash equivalents

0

Level 1 |
Corporate bonds

Financial Assets

Cash equivalents

0

Level 2

Financial Assets

Total

144,022

110,521

Level 2 |
Commercial paper

Financial Assets

Marketable investments

13,610

4,238

Level 2 |
U.S. Treasury

Financial Assets

Marketable investments

0

Level 2 |
U.S. agency securities

Financial Assets

Marketable investments

6,837

8,794

Level 2 |
U.S. states and municipalities

Financial Assets

Marketable investments

12,678

27,355

Level 2 |
Corporate bonds

Financial Assets

Marketable investments

78,926

68,925

Level 2 |
Non-U.S. government debt securities

Financial Assets

Marketable investments

1,202

1,209

Level 2 |
Commercial Paper

Financial Assets

Cash equivalents

21,769

Level 2 |
Money market funds

Financial Assets

Cash equivalents

0

Level 2 |
U.S. agency securities

Financial Assets

Cash equivalents

5,000

Level 2 |
Corporate bonds

Financial Assets

Cash equivalents

4,000

Level 3

Financial Assets

Total

0

Level 3 |
Commercial paper

Financial Assets

Marketable investments

0

Level 3 |
U.S. Treasury

Financial Assets

Marketable investments

0

Level 3 |
U.S. agency securities

Financial Assets

Marketable investments

0

Level 3 |
U.S. states and municipalities

Financial Assets

Marketable investments

0

Level 3 |
Corporate bonds

Financial Assets

Marketable investments

0

Level 3 |
Non-U.S. government debt securities

Financial Assets

Marketable investments

0

Level 3 |
Commercial Paper

Financial Assets

Cash equivalents

0

Level 3 |
Money market funds

Financial Assets

Cash equivalents

0

Level 3 |
U.S. agency securities

Financial Assets

Cash equivalents

0

Level 3 |
Corporate bonds

Financial Assets

Cash equivalents

$ 0

Balance Sheet Components - Cash and Cash Equivalents Narrative (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Mar. 31, 2017

United States

financial_instituion

Concentration Risk [Line Items]

Number of financial institutions holding cash in excess of federally insured limits

1

Cash, uninsured amount

$ 3.5

$ 2.1

Balance Sheet Components - Restricted Cash Narrative (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Restricted cash

$ 1,704

Balance Sheet Components - Accounts Receivable, Net (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Allowance for Doubtful Accounts Receivable [Roll Forward]

Balance at Beginning of Period

$ 684

$ 589

Charged to Costs and Expenses

145

11

216

Deductions

0

(121)

Balance at End of Period

$ 829

$ 684

Balance Sheet Components - Accounts Receivable Narrative (Details) (Customer Concentration Risk)

3 Months Ended

12 Months Ended

3 Months Ended

Mar. 31, 2017

Accounts Receivable

customer

Dec. 31, 2016

Accounts Receivable

customer

Mar. 31, 2017

One Major Customer

Revenue

customer

Mar. 31, 2016

One Major Customer

Revenue

customer

Concentration Risk [Line Items]

Concentration risk, number of customers that accounted for greater than a specified benchmark

0

1

Concentration risk, percentage

10.00%

11.00%

Balance Sheet Components - Prepaid Expenses and Other Current Assets (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Prepaid Tax

$ 1,887

$ 4,656

Prepaid expenses

4,871

4,573

Income tax receivable

4,587

4,536

Other current assets

3,209

4,962

Prepaid expenses and other current assets

$ 14,554

$ 18,727

Balance Sheet Components - Gains and Losses of Marketable Investments (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Schedule of Available-for-sale Securities [Line Items]

Cost

$ 122,352

$ 115,683

Gross Unrealized Gains

37

41

Gross Unrealized Losses

(133)

(207)

Fair Value

122,256

115,517

Commercial paper

Schedule of Available-for-sale Securities [Line Items]

Cost

13,610

4,237

Gross Unrealized Gains

1

Gross Unrealized Losses

(1)

0

Fair Value

13,610

4,238

U.S. Treasury

Schedule of Available-for-sale Securities [Line Items]

Cost

9,002

4,996

Gross Unrealized Gains

4

0

Gross Unrealized Losses

(3)

0

Fair Value

9,003

4,996

U.S. agency securities

Schedule of Available-for-sale Securities [Line Items]

Cost

6,847

8,803

Gross Unrealized Gains

0

3

Gross Unrealized Losses

(10)

(12)

Fair Value

6,837

8,794

U.S. states and municipalities

Schedule of Available-for-sale Securities [Line Items]

Cost

12,687

27,429

Gross Unrealized Gains

2

1

Gross Unrealized Losses

(11)

(75)

Fair Value

12,678

27,355

Corporate bonds

Schedule of Available-for-sale Securities [Line Items]

Cost

79,004

69,009

Gross Unrealized Gains

30

36

Gross Unrealized Losses

(108)

(120)

Fair Value

78,926

68,925

Non-U.S. government debt securities

Schedule of Available-for-sale Securities [Line Items]

Cost

1,202

1,209

Gross Unrealized Gains

0

Gross Unrealized Losses

0

Fair Value

$ 1,202

$ 1,209

Balance Sheet Components - Marketable Securities in an Unrealized Loss Position (Details) (USD $)

Mar. 31, 2017

Dec. 31, 2016

Schedule of Available-for-sale Securities [Line Items]

Fair Value

$ 71,551,000

$ 55,325,000

Gross Unrealized Losses, less than 12 months

(133,000)

(207,000)

Gross Unrealized Losses, greater than 12 months

0

Commercial paper

Schedule of Available-for-sale Securities [Line Items]

Fair Value

7,977,000

Gross Unrealized Losses, less than 12 months

(1,000)

U.S. agency securities

Schedule of Available-for-sale Securities [Line Items]

Fair Value

4,892,000

3,291,000

Gross Unrealized Losses, less than 12 months

(10,000)

(12,000)

U.S. states and municipalities

Schedule of Available-for-sale Securities [Line Items]

Fair Value

9,947,000

22,286,000

Gross Unrealized Losses, less than 12 months

(11,000)

(75,000)

Corporate bonds

Schedule of Available-for-sale Securities [Line Items]

Fair Value

43,741,000

29,748,000

Gross Unrealized Losses, less than 12 months

$ (108,000)

$ (120,000)

Balance Sheet Components - Contractual Maturities of Marketable Investments (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Due in one year

$ 105,348

$ 71,051

Due in one to five years

16,908

44,466

Total

$ 122,256

$ 115,517

Balance Sheet Components - Inventories (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Raw materials

$ 9,910

$ 11,367

Work in process

4,420

3,663

Finished goods

64,857

57,982

Inventories

$ 79,187

$ 73,012

Balance Sheet Components - Property and Equipment, Net (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Property, Plant and Equipment [Line Items]

Total property and equipment

$ 30,558

$ 28,485

Less: Accumulated depreciation and amortization

(7,653)

(7,021)

Property and equipment, net

22,905

21,464

Depreciation and amortization expense

700

538

Machinery and equipment

Property, Plant and Equipment [Line Items]

Total property and equipment

10,457

9,734

Furniture and fixtures

Property, Plant and Equipment [Line Items]

Total property and equipment

4,598

4,246

Leasehold improvements

Property, Plant and Equipment [Line Items]

Total property and equipment

10,291

10,207

Software

Property, Plant and Equipment [Line Items]

Total property and equipment

1,641

1,221

Computers

Property, Plant and Equipment [Line Items]

Total property and equipment

1,118

884

Construction in progress

Property, Plant and Equipment [Line Items]

Total property and equipment

$ 2,453

$ 2,193

Balance Sheet Components - Accrued Liabilities (Details) (USD $)

In Thousands, unless otherwise specified

Mar. 31, 2017

Dec. 31, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Payroll and employee-related cost

$ 19,223

$ 16,956

Sales return reserve

2,940

2,753

Preclinical and clinical trial cost

1,877

2,054

Deferred revenue

357

344

Product warranty

1,087

1,254

Sales tax and VAT payable

548

733

Income tax payable

354

174

Other accrued liabilities

7,205

7,422

Total accrued liabilities

$ 33,591

$ 31,690

Balance Sheet Components - Product Warranty (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 31, 2017

Dec. 31, 2016

Product Warranty, Increase (Decrease) [Roll Forward]

Balance at the beginning of the period

$ 1,254

$ 713

Accruals of warranties issued

39

1,176

Settlements of warranty claims

(206)

(635)

Balance at the end of the period

$ 1,087

$ 1,254

Commitments and Contingencies - Lease and Purchase Commitments (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Commitments and Contingencies Disclosure [Abstract]

Rent expense

$ 1.4

$ 1.1

Commitments and Contingencies - Royalty Obligations (Details) (USD $)

3 Months Ended

Mar. 31, 2017

Cost of Sales

Mar. 31, 2016

Cost of Sales

Mar. 31, 2017

Royalty Agreement, March 2005

Dec. 31, 2016

Royalty Agreement, March 2005

Mar. 31, 2017

Royalty Agreement, April 2012

Mar. 31, 2017

Royalty Agreement, November 2013, Less than $5 Million in Sales

Mar. 31, 2017

Royalty Agreement, November 2013, Greater than $5 Million in Sales

Mar. 31, 2017

Royalty Agreement, April 2015

Other Commitments [Line Items]

Minimum annual royalty payments

$ 100,000

Royalty as a percent of sales

5.00%

3.00%

1.00%

2.00%

Royalty threshold

5,000,000

Royalty expense

$ 800,000

$ 700,000

Commitments and Contingencies - Litigation (Details) (Damages from Product, USD $)

In Millions, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Damages from Product

Loss Contingencies [Line Items]

Damages sought, value

$ 35

Stockholder's Equity - Common Stock (Details) (Underwritten Public Offering, USD $)

In Millions, except Share data, unless otherwise specified

1 Months Ended

Mar. 31, 2017

Underwritten Public Offering

Subsidiary, Sale of Stock [Line Items]

Number of shares issued and sold (in shares)

1,495,000

Public offering price (in USD per share)

$ 76.00

Net cash proceeds from shares issued and sold

$ 106.3

Underwriting discounts and commissions

6.8

Other offering expenses

$ 0.5

Stockholder's Equity - Stock Option Activity (Details) (USD $)

3 Months Ended

Mar. 31, 2017

Number of Shares

Beginning balance (in shares)

2,876,955

Options exercised (in shares)

(383,457)

Options cancelled (in shares)

(969)

Ending balance (in shares)

2,492,529

Weighted- Average Exercise Price

Beginning balance (in dollars per share)

$ 14.63

Options exercised (in dollars per share)

$ 2.73

Options cancelled (in dollars per share)

$ 10.56

Ending balance (in dollars per share)

$ 16.47

Stockholder's Equity - Restricted Stock and Restricted Stock Units Activity (Details) (Restricted stock and restricted stock units, USD $)

3 Months Ended

Mar. 31, 2017

Restricted stock and restricted stock units

Number of Shares

Unvested beginning balance (in shares)

1,002,944

Granted (in shares)

58,660

Vested (in shares)

(115,685)

Canceled/Forfeited (in shares)

(18,125)

Unvested and expected to vest ending balance (in shares)

927,794

Weighted Average Grant Date Fair Value

Unvested beginning balance (in dollars per share)

$ 29.44

Granted (in dollars per share)

$ 76.47

Vested (in dollars per share)

$ 15.63

Canceled/Forfeited (in dollars per share)

$ 41.31

Unvested and expected to vest ending balance (in dollars per share)

$ 25.84

Stockholder's Equity - Stock-based Compensation Expense (Details) (USD $)

3 Months Ended

12 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Stock-based compensation expense

$ 4,012,000

$ 3,015,000

Unrecognized compensation cost related to unvested share-based compensation arrangements

34,600,000

Unrecognized compensation cost, expected recognition period

2 years 8 months 12 days

Share-based compensation expense, capitalized in inventory

400,000

Cost of sales

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Stock-based compensation expense

309,000

9,000

Research and development

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Stock-based compensation expense

253,000

258,000

Sales, general and administrative

Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]

Stock-based compensation expense

$ 3,450,000

$ 2,748,000

Accumulated Other Comprehensive (Loss) Income (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Mar. 31, 2017

Marketable Investments

Mar. 31, 2016

Marketable Investments

Mar. 31, 2017

Currency Translation Adjustments

Mar. 31, 2016

Currency Translation Adjustments

Mar. 31, 2017

Total

Dec. 31, 2016

Total

Mar. 31, 2016

Total

Dec. 31, 2015

Total

AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]

Beginning balance

$ 266,547

$ (105)

$ (163)

$ (4,583)

$ (1,952)

$ (3,926)

$ (4,688)

$ (786)

$ (2,115)

Other comprehensive income before reclassifications:

Other comprehensive income before reclassifications

101

441

692

1,043

Income tax effect—benefit (expense)

0

(155)

0

(160)

0

5

Net of tax

793

1,329

101

281

692

1,048

Amounts reclassified from accumulated other comprehensive income to earnings:

Realized losses (gains)—marketable investments

(31)

0

(31)

0

Income tax effect—(expense) benefit

0

Net of tax

(31)

0

(31)

0

Net current-year other comprehensive income

762

1,329

70

281

692

1,048

Ending balance

$ 373,472

$ (35)

$ 118

$ (3,891)

$ (904)

$ (3,926)

$ (4,688)

$ (786)

$ (2,115)

Income Taxes (Details) (USD $)

In Millions, unless otherwise specified

3 Months Ended

12 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Dec. 31, 2016

Income Tax Disclosure [Abstract]

Effective tax rate

(77.40%)

(8.00%)

Cumulative income period

3 years

Excess tax deduction

$ 1.5

$ 74.9

Deferred tax assets, valuation allowance

$ 9.8

Net (Loss) Income per Share of Common Stock attributable to Common Stockholders - Basic and Diluted Earnings per Share (Details) (USD $)

In Thousands, except Share data, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Numerator

Net (loss) income

$ (3,106)

$ 2,291

Less: Undistributed income attributable to preferred stockholders-diluted

0

Net (loss) income attributable to common stockholders-basic

(3,106)

2,291

Net (loss) income attributable to common stockholders-diluted

$ (3,106)

$ 2,291

Denominator

Weighted average shares used to compute net (loss) income per share attributable to common stockholders — Basic (in shares)

31,611,841

29,990,006

Weighted average shares used to compute net income attributable to common stockholders —Diluted (in shares)

31,611,841

33,023,495

Net (loss) income per share attributable to common stockholders — Basic (in dollars per share)

$ (0.10)

$ 0.08

Net (loss) income per share attributable to common stockholders — Diluted (in dollars per share)

$ (0.10)

$ 0.07

Options and ESPP Shares

Denominator

Potential dilutive shares(in shares)

0

3,033,489

Net (Loss) Income per Share of Common Stock attributable to Common Stockholders - Antidilutive Securities (Details)

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]

Antidilutive securities excluded from the computation of earnings per share (in shares)

3,500,000

12,500

Geographic Areas and Product Sales - Revenue by Geographic Area (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenue

$ 73,213

$ 57,919

United States

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenue

48,487

39,412

Japan

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenue

7,642

6,161

Other International

Revenues from External Customers and Long-Lived Assets [Line Items]

Revenue

$ 17,084

$ 12,346

Geographic Areas and Product Sales - Revenue by Product Category (Details) (USD $)

In Thousands, unless otherwise specified

3 Months Ended

Mar. 31, 2017

Mar. 31, 2016

Revenue from External Customer [Line Items]

Revenue

$ 73,213

$ 57,919

Neuro

Revenue from External Customer [Line Items]

Revenue

50,249

41,284

Peripheral Vascular

Revenue from External Customer [Line Items]

Revenue

$ 22,964

$ 16,635