Release Date: July 30, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Penumbra Inc (PEN, Financial) reported a year-over-year revenue increase of 14.5% for Q2 2024, reaching $299.4 million.
- U.S. thrombectomy revenue grew by 25% year-over-year to $153.7 million, driven by CABT products in VTE and arterial segments.
- Non-GAAP gross margins expanded to 65.5%, up 170 basis points year-over-year.
- Penumbra Inc (PEN) expects to achieve gross margins over 70% within the next 21 to 27 months.
- The company saw strong performance in its U.S. neurovascular business, with 19% year-over-year growth.
Negative Points
- Global embolization and access revenue declined slightly year-over-year to $95.9 million.
- Penumbra Inc (PEN) reduced its full-year revenue guidance by $60 million at the midpoint due to challenges in China and Europe.
- The company is taking a one-time non-cash accounting charge related to its immersive healthcare business.
- Operating expenses increased to $164.5 million, representing 54.9% of revenue, up from $146.6 million in the same period last year.
- Penumbra Inc (PEN) faces competitive pressures, particularly in the VTE segment, which impacted its performance in the second half of the quarter.
Q & A Highlights
Q: Can you delve a little bit more into the new guidance philosophy and the moving pieces that led to the adjustment in U.S. thrombectomy growth expectations?
A: Adam Elsesser, President, Chairman, and CEO: Over the years, as Penumbra has grown, the complexity of our business has increased, making it necessary to adopt a more conservative guidance approach. This shift ensures we focus on the company's innovation and performance rather than constantly discussing guidance. The adjustment in U.S. thrombectomy growth from 27-30% to 23-25% reflects this new philosophy.
Q: How should we think about the 20% growth in U.S. thrombectomy in the second half of the year in the context of the rest of the market?
A: Adam Elsesser, President, Chairman, and CEO: Our stroke business grew 19% year-over-year, indicating strong performance. In VTE, we grew in the high 20% range, taking market share. The arterial business also performed well above expectations. The feedback on our new products, like Flash 2.0, has been positive, setting us up for continued growth.
Q: Can you provide more details on the competitive dynamics in the venous thrombectomy market and how you plan to address them?
A: Adam Elsesser, President, Chairman, and CEO: We have always competed against top companies in medtech. The competitive tactics in the venous thrombectomy market were unexpected, but we are used to competition. The key is to have the best products, and the feedback on Flash 2.0 has been very positive. We are confident in our ability to continue taking market share.
Q: What drove the stronger-than-expected thrombectomy numbers, and how does this impact the outlook for the embolization and access business?
A: Adam Elsesser, President, Chairman, and CEO: The strong performance in thrombectomy was driven by volume growth and new accounts. Our international growth was also strong, despite some challenges in China and Europe. The embolization and access business saw a decline due to exiting certain markets, but we expect this to improve as we move forward.
Q: Can you provide more details on the expected margin improvements and the impact of the immersive healthcare business decision?
A: Maggie Yuen, Chief Financial Officer: The decision to explore alternatives for the immersive healthcare business will result in over $20 million in savings, contributing to operating margin expansion. We expect gross margin improvements due to product mix and manufacturing efficiencies, aiming for over 70% gross margins in the next 21-27 months.
Q: How should we think about the components of U.S. thrombectomy growth, particularly the contributions from venous and neuro segments?
A: Adam Elsesser, President, Chairman, and CEO: The momentum in VTE with Flash 2.0 is strong, and we expect this to continue. The arterial business with Lightning Bolt is also performing well. The neuro segment has shown strong growth, and we expect this to continue with the upcoming launch of Thunderbolt.
Q: Can you provide an update on the Thunderbolt study and its potential impact?
A: Adam Elsesser, President, Chairman, and CEO: The Thunderbolt study is progressing well, with positive feedback from investigators. We are excited about its potential and expect it to strengthen our position in the neurovascular market.
Q: How do you plan to address the competitive dynamics in the venous thrombectomy market going forward?
A: Adam Elsesser, President, Chairman, and CEO: Our strategy is to focus on having the best products and engaging with customers about their benefits. The feedback on Flash 2.0 has been very positive, and we are confident in our ability to continue taking market share. The key is to educate physicians about the safety and effectiveness of our products.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
