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, 2017
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))	
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 o
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, 2017 , Penumbra, Inc. issued a press release announcing financial results for the third fiscal quarter ended September 30, 2017 . 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, 2017.	

EXHIBIT INDEX

			
Exhibit Number	 	Description	
99.1	 	Press release of Penumbra, Inc. dated November 7, 2017.	

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, 2017	By:	/s/ Sri Kosaraju	
 	 	Sri Kosaraju	
 	 	Chief Financial Officer and Head of Strategy	

Exhibit 99.1

Penumbra, Inc. Reports Third Quarter 2017 Financial Results

ALAMEDA, Calif., November 7, 2017 (PR Newswire) - Penumbra, Inc. (NYSE: PEN) , a global healthcare company focused on interventional therapies, today reported financial results for the third quarter ended September 30, 2017 .

•	Revenue of $83.9 million in the third quarter of 2017 , an increase of 24.9% , or 24.1% in constant currency 1 , over the third quarter of 2016.	

Third Quarter 2017 Financial Results
Total revenue grew to $83.9 million for the third quarter of 2017 compared to $67.2 million for the third quarter of 2016 , an increase of 24.9% , or 24.1% on a constant currency basis. The United States represented 66% of total revenue and international represented 34% of total revenue for the third quarter of 2017 . Revenue from sales of neuro products grew to $58.7 million for the third quarter of 2017 , an increase of 23.4% , or 22.5% on a constant currency basis, from the third quarter of 2016 . Revenue from sales of peripheral vascular products grew to $25.2 million for the third quarter of 2017 , an increase of 28.4% , or 27.8% on a constant currency basis, from the third quarter of 2016 .

Gross profit was $54.8 million , or 65.3% of total revenue, for the third quarter of 2017 , compared to $42.9 million , or 63.8% of total revenue, for the third quarter of 2016 .

Total operating expenses were $54.1 million , or 64.5% of total revenue, for the third quarter of 2017 , compared to $44.2 million , or 65.8% of total revenue, for the third quarter of 2016 . R&D expenses were $8.1 million for the third quarter of 2017 , compared to $6.5 million for the third quarter of 2016 . SG&A expenses were $46.0 million for the third quarter of 2017 , compared to $37.7 million for the third quarter of 2016 .

Operating income for the third quarter of 2017 was $0.7 million , compared to operating loss of $1.4 million for the third quarter of 2016 . Operating income for the third quarter of 2017 benefited from a $1.2 million net refund of previously paid medical device excise tax.

Full Year 2017 Financial Outlook
The Company is increasing its 2017 guidance for total revenue to be in the range of $324 million to $326 million. This new range compares to the previous range of $312 million to $317 million.

Webcast and Conference Call Information
Penumbra, Inc. will host a conference call to discuss the third quarter 2017 financial results after market close on Tuesday, November 7, 2017 at 5:00 PM Eastern Time. The conference call can be accessed live over the phone by dialing (866) 393-4306 for domestic callers or (734) 385-2616 for international callers (conference id: 99307870 ), 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 two weeks following the completion of the call.

About Penumbra
Penumbra, Inc., headquartered in Alameda, California, is a global healthcare company focused on interventional therapies. Penumbra 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. 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.

	

1 C onstant currency results are non-GAAP financial measures. Please refer to “Non-GAAP Financial Measures” herein for important information about our use of constant currency results (including reconciliations to the most comparable GAAP measures).
1

Non-GAAP Financial Measures
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), the Company uses results on constant currency as a non-GAAP financial measure in this press release.

Our 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.

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, 2016 filed with the SEC on February 28, 2017. There may be additional risks of which we are not presently aware or that we currently believe are immaterial which could have an adverse impact on our business. Any forward-looking statements are based on our current expectations, estimates and assumptions regarding future events and are applicable only as of the dates of such statements. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change.

2

Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)

									
 	 	September 30,
2017	 	December 31,
2016	
Assets	 	 	 	 	
Current assets:	 	 	 	 	
     Cash and cash equivalents	 	$	65,621		 	$	13,236		
     Marketable investments	 	153,203		 	115,517		
Accounts receivable, net	 	47,964		 	43,335		
     Inventories	 	90,529		 	73,012		
     Prepaid expenses and other current assets	 	14,464		 	18,727		
          Total current assets	 	371,781		 	263,827		
Property and equipment, net	 	28,259		 	21,464		
Intangible assets, net	 	23,821		 	—		
Goodwill	 	7,449		 	—		
Deferred taxes	 	22,503		 	22,476		
Other non-current assets	 	5,281		 	487		
         Total assets	 	$	459,094		 	$	308,254		
Liabilities and Stockholders’ Equity	 	 	 	 	
Current liabilities:	 	 	 	 	
     Accounts payable	 	$	5,768		 	$	4,110		
     Accrued liabilities	 	45,312		 	31,690		
          Total current liabilities	 	51,080		 	35,800		
Deferred rent	 	6,065		 	5,083		
Other non-current liabilities	 	18,117		 	824		
          Total liabilities	 	75,262		 	41,707		
Stockholders’ equity:	 	 	 	 	
Common stock	 	33		 	31		
Additional paid-in capital	 	389,682		 	273,865		
Accumulated other comprehensive income (loss)	 	1,204		 	(4,688	)	
Accumulated deficit	 	(7,087	)	 	(2,661	)	
     Total stockholders’ equity	 	383,832		 	266,547		
          Total liabilities and stockholders’ equity	 	$	459,094		 	$	308,254		

3

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,	
 	 	2017	 	2016 (1)	 	2017	 	2016 (1)	
Revenue	 	$	83,911		 	$	67,187		 	$	237,713		 	$	190,212		
Cost of revenue	 	29,134		 	24,313		 	84,298		 	65,963		
Gross profit	 	54,777		 	42,874		 	153,415		 	124,249		
Operating expenses:	 	 	 	 	 	 	 	 	
Research and development	 	8,132		 	6,497		 	23,260		 	17,762		
Sales, general and administrative	 	45,962		 	37,740		 	132,846		 	106,685		
Total operating expenses	 	54,094		 	44,237		 	156,106		 	124,447		
Income (loss) from operations	 	683		 	(1,363	)	 	(2,691	)	 	(198	)	
Interest income, net	 	658		 	631		 	1,926		 	1,700		
Other expense, net	 	(647	)	 	(360	)	 	(1,368	)	 	(856	)	
Income (loss) before income taxes	 	694		 	(1,092	)	 	(2,133	)	 	646		
Provision for (benefit from) income taxes	 	456		 	(12,998	)	 	2,293		 	(16,564	)	
Net income (loss)	 	$	238		 	$	11,906		 	$	(4,426	)	 	$	17,210		
Net income (loss) per share
—Basic	 	$	0.01		 	$	0.39		 	$	(0.14	)	 	$	0.57		
—Diluted	 	$	0.01		 	$	0.35		 	$	(0.14	)	 	$	0.52		
Weighted average shares used to compute net income (loss) per share
 —Basic	 	33,446,841		 	30,604,384		 	32,766,135		 	30,269,463		
—Diluted	 	35,664,272		 	33,755,383		 	32,766,135		 	33,367,618		

	
 	
1 We elected to early adopt ASU 2016-09 in the fourth quarter of 2016. Our condensed consolidated statement of operations for the three and nine months ended September 30, 2016 was adjusted to include the impact of ASU 2016-09 adoption. See Notes 2 and 15 in the notes to our consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2016 filed with the SEC on February 28, 2017 for detailed adoption information.

4

Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth 1  
(unaudited)
(in thousands)

																											
 	 	Three Months Ended September 30,	 	Reported Change	 	 FX Impact	 	Constant Currency Change	
 	 	2017	 	2016	 	$	 	%	 	 $	 	$	 	%	
United States	 	$	55,652		 	$	44,380		 	$	11,272		 	25.4	%	 	$	—		 	$	11,272		 	25.4	%	
International	 	28,259		 	22,807		 	5,452		 	23.9	%	 	(555	)	 	4,897		 	21.5	%	
Total	 	$	83,911		 	$	67,187		 	$	16,724		 	24.9	%	 	$	(555	)	 	$	16,169		 	24.1	%	
Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth 1  
(unaudited)
(in thousands)

																											
 	 	Three Months Ended September 30,	 	Reported Change	 	 FX Impact	 	Constant Currency Change	
 	 	2017	 	2016	 	$	 	%	 	 $	 	$	 	%	
Neuro	 	$	58,670		 	$	47,534		 	$	11,136		 	23.4	%	 	$	(424	)	 	$	10,712		 	22.5	%	
Peripheral Vascular	 	25,241		 	19,653		 	5,588		 	28.4	%	 	(131	)	 	5,457		 	27.8	%	
Total	 	$	83,911		 	$	67,187		 	$	16,724		 	24.9	%	 	$	(555	)	 	$	16,169		 	24.1	%	
Penumbra, Inc.
Reconciliation of Revenue Growth by Geographic Regions to Constant Currency Revenue Growth 1  
(unaudited)
(in thousands)

																											
 	 	Nine Months Ended September 30,	 	Reported Change	 	 FX Impact	 	Constant Currency Change	
 	 	2017	 	2016	 	$	 	%	 	 $	 	$	 	%	
United States	 	$	157,559		 	$	127,484		 	$	30,075		 	23.6	%	 	$	—		 	$	30,075		 	23.6	%	
International	 	80,154		 	62,728		 	17,426		 	27.8	%	 	315		 	17,741		 	28.3	%	
Total	 	$	237,713		 	$	190,212		 	$	47,501		 	25.0	%	 	$	315		 	$	47,816		 	25.1	%	
Penumbra, Inc.
Reconciliation of Revenue Growth by Product Categories to Constant Currency Revenue Growth 1  
(unaudited)
(in thousands)

																											
 	 	Nine Months Ended September 30,	 	Reported Change	 	 FX Impact	 	Constant Currency Change	
 	 	2017	 	2016	 	$	 	%	 	 $	 	$	 	%	
Neuro	 	$	165,122		 	$	134,180		 	$	30,942		 	23.1	%	 	$	235		 	$	31,177		 	23.2	%	
Peripheral Vascular	 	72,591		 	56,032		 	16,559		 	29.6	%	 	80		 	16,639		 	29.7	%	
Total	 	$	237,713		 	$	190,212		 	$	47,501		 	25.0	%	 	$	315		 	$	47,816		 	25.1	%	
1 See “Non-GAAP Financial Measures” above for important information about our use of this non-GAAP measure and further information about our calculation of constant currency results.

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

5