Penumbra, Inc. (PEN) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with market share gains, particularly in the VTE market. The product development and business updates are optimistic, especially with Thunderbolt's potential. The sales force split and new products are expected to drive growth, and the company is on track for a 70% margin by 2026. However, cautious guidance for the thrombectomy market and lack of specific timelines for Thunderbolt's FDA review temper the positivity. Overall, the sentiment is positive, with a likely stock price increase between 2% to 8%.
Key Financial Performance
Total Revenue $339.5 million, representing a year-over-year growth of 13.4% on a reported basis and 12.7% on a constant currency basis. The growth was driven by strong execution by the commercial team, continuous innovation, and increased adoption of novel technologies.
U.S. Thrombectomy Revenue $188.5 million, a year-over-year increase of 22.6%. This growth was led by 42% year-over-year growth in the U.S. VTE franchise, supported by the clinical benefits of Flash 2.0 and Bolt 12, which drove market penetration and competitive conversions.
Gross Margin 66%, compared to 54.4% in Q2 2024. The increase was due to the absence of a one-time $33.4 million Immersive Healthcare inventory write-off in 2024. Excluding the write-off, the gross margin slightly increased year-over-year.
International Revenue Decreased by 3.2% reported and 5.8% in constant currency year-over-year, primarily due to a decline in China revenue. However, excluding China, international thrombectomy revenue grew by 14.4%.
Embolization and Access Business Revenue $109.2 million, a year-over-year increase of 13.9% reported and 12.8% in constant currency. This growth was primarily driven by the launch of the new XL product.
Operating Income $40.8 million or 12% of revenue, compared to an operating loss of $1.6 million in Q2 2024. The improvement was due to the absence of the one-time $33.4 million Immersive Healthcare inventory write-off and increased operating profit.
Adjusted EBITDA $61.4 million or 18.1% of total revenue, compared to $13 million or 4.3% in Q2 2024. The increase was driven by strong operating profitability.
Cash, Cash Equivalents, and Marketable Securities $424.6 million, an increase of $45.7 million sequentially, driven by strong operating profitability.
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Operating Highlights
Launch of RUBY XL: RUBY XL is a larger, softer, and longer coil that allows Penumbra to participate in 20% of the market previously untapped. Early performance indicates strong interest and ramping benefits expected in the latter half of the year.
Introduction of RED 72 SILVER LABEL: Enhanced trackability of this product has generated strong physician interest and adoption in the neurovascular segment.
Thunderbolt: Currently under FDA review, with high anticipation for its introduction to the neurovascular field.
U.S. Thrombectomy Business Growth: Revenue increased by 22.6% year-over-year, driven by strong adoption of the CAVT portfolio, including Flash 2.0 and Bolt 12.
International Market Performance: International revenue decreased by 3.2% due to challenges in China, but other regions showed growth. Headwinds in China are expected to ease in the second half of 2025.
Gross Margin Improvement: Gross margin reached 66%, with a target of over 70% by the end of 2026. Sequential margin expansion is expected in the second half of 2025.
Expansion of Sales Force: Added over 50 embolization sales reps and 40 vascular clinical specialists to focus on thrombectomy and embolization growth.
Clinical Trials and Data Generation: Completed enrollment in STORM-PE trial for acute intermediate high-risk PE and launched STRIDE II study to demonstrate benefits of latest CAVT technology.
Focus on Long-Term Growth: Investments in innovation, clinical studies, and market access initiatives to enhance competitive positioning and address unmet needs in thrombectomy and embolization.
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Risk or Challenges
Regulatory Risks: The company is in an active process with the FDA regarding the Thunderbolt product, which could delay its introduction to the neurovascular field.
Geopolitical and Market Risks: Revenue from international regions decreased, particularly in China, due to unspecified headwinds. Although the company expects these headwinds to ease, they currently impact growth.
Operational Risks: The company has made significant investments in separate thrombectomy and embolization sales teams, which could lead to variability in product mix and operational inefficiencies during the ramp-up phase.
Product Launch Risks: The launch of new products like RUBY XL and Thunderbolt involves risks related to market adoption, inventory management, and competitive positioning.
Economic Risks: The company faces potential variability in gross margins due to product mix and international market dynamics, which could impact profitability.
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Guidance & Outlook
Revenue Guidance: The company has increased its total revenue guidance for 2025 to a range of $1.355 billion to $1.370 billion, representing 13% to 15% year-over-year growth.
U.S. Thrombectomy Growth: Guidance for U.S. thrombectomy growth remains at 20% to 21% compared to 2024 levels.
Gross Margin Target: The company expects to achieve a gross margin profile of over 70% by the end of 2026, with sequential margin expansion anticipated in the second half of 2025 due to favorable product mix and productivity improvements.
Operating Margin Expansion: Operating margin expansion is expected to outpace gross margin expansion for the foreseeable future as the company prioritizes delivering profitable growth.
International Revenue Growth: Headwinds in China are expected to ease in the second half of 2025, leading to a return to growth across all international regions.
Clinical Trials and Product Launches: The company plans to present results from the STORM-PE trial at a major medical conference in the fall of 2025. Additionally, the STRIDE II clinical study has been launched to demonstrate the benefits of the latest generation CAVT technology.
Neurovascular Business: The company is actively working with the FDA on the Thunderbolt product and expects to provide updates soon. The neurovascular portfolio will continue to see investments in innovation, spanning aspiration, access, and embolization.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Why is the STORM-PE study important and what impact could it have if positive?
A:The STORM-PE study is the first randomized study comparing anticoagulation and mechanical thrombectomy to anticoagulation alone, addressing a key question in the field. Its design and size reflect confidence in the product and the expertise of the steering committee. If positive, it could have a significant impact on the treatment of PE.
Q:What is the update on the FDA review time for Thunderbolt and management's enthusiasm for the product?
A:Management did not provide a specific timeline for the FDA review, emphasizing that the process is thorough and as expected. They reiterated their strong enthusiasm for Thunderbolt, describing it as an amazing product with a huge potential impact.
Q:Why is now the right time for the sales force split, and what is the expected impact on margins?
A:The sales force split is necessary due to the success and growth in the thrombectomy business, allowing for better focus on specific areas. The Ruby XL product is accretive to margins, and the company remains on track for a 70% margin by the end of 2026. The split is expected to enhance both thrombectomy and embolization business growth.
Q:Why does the U.S. thrombectomy business guide imply a deceleration in the second half of the year?
A:Management raised the overall guide but is being cautious not to get ahead of themselves despite their enthusiasm. The stroke market has slowed slightly, which may contribute to the implied deceleration.
Q:What is the impact of the additional sales force buildup on margins?
A:The investment in the commercial team has no impact on gross margins. The mix of thrombectomy and Ruby XL products supports the 70% margin profile, and the company continues to see margin expansion in Q3 and Q4.
Q:What is the state of the U.S. thrombectomy market growth rates and Penumbra's performance?
A:The VTE market is growing around 20%, while Penumbra's VTE growth is over 40%, indicating market share gains. The neuro market growth has been soft, but Penumbra continues to grow above the market due to product positioning and preparation for Thunderbolt.
Q:What is the rationale behind splitting the sales organization, and how does it compare to previous initiatives?
A:The split allows for better focus on thrombectomy and embolization businesses. Most of the hiring and training is complete, and the teams are operational. This initiative is expected to enhance focus and growth, building on previous efforts to expand the sales organization.
Q:Is there any anticipated slowdown or trend in the U.S. thrombectomy business?
A:The stroke market has shown slower growth, but Penumbra continues to take share. The coronary business is mature and not growing at high levels. Management is cautious but optimistic about continued growth.
Q:What drove the upside in international and embolization access markets, and what is the contribution from China?
A:The upside is due to the launch of new products like Flash 2.0 and Bolt, as well as efforts to set up the international business for success. China contributed a small, non-material order, primarily in thrombectomy and access products, not embolization.
Q:What is the expected impact of the STORM-PE study on the market if the data is positive?
A:If positive, the STORM-PE study could significantly influence the treatment of PE, as it compares anticoagulation alone to anticoagulation with mechanical thrombectomy. This could lead to increased adoption of thrombectomy in a market with low penetration.
Q:What is the potential for reaccelerating growth in the neurovascular thrombectomy market?
A:Efforts to refocus the neuro community on thrombectomy and the potential launch of Thunderbolt could help reaccelerate growth. Thunderbolt's ease of use and faster procedures may democratize treatment and increase adoption.
Q:What is the outlook for the embolization business with the new sales force and products?
A:The new sales force and products like RUBY XL and SwiftPAC are expected to drive growth in the embolization business. Management is optimistic about the potential for this segment to become a more significant part of the business.
Q:What is the status of the Thunderbolt FDA review and the expected impact of the product?
A:The Thunderbolt FDA review is ongoing, with no specific timeline provided. Management is optimistic about the product's potential to improve clot removal times and enhance treatment outcomes.
Q:What is the potential impact of the STORM-PE study on the treatment of PE?
A:The STORM-PE study could validate the use of mechanical thrombectomy in PE treatment, potentially increasing its adoption and benefiting a large patient population.
Q:Review of Unclear Management Responses
A:Management avoided providing a direct answer regarding the timeline for Thunderbolt FDA clearance, stating only that the process is as expected. They also did not quantify the impact of the additional sales force buildup on operating margins or provide specific market share figures for the U.S. thrombectomy business. Additionally, they refrained from detailing the expected outcomes or metrics for success in the Thunderbolt trial.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
China
Co Research
Elsesser
Flash Bolt
Immersive Healthcare
Inc Research
LLC Research
Maggie
RUBY XL
Research Division
STORM PE
STRIDE II
XL product
adoption utilization
anticoagulation
aspiration
coil
conversion
day
embolization access
embolization sale
generation
hire
inventory
investment
launch XL
onetime write
portfolio
specialist
technology quality
thrombectomy embolization
treatment
write onetime
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