Penumbra Inc. ((PEN)) has held its Q1 earnings call. Read on for the main highlights of the call.
Penumbra Inc. recently held its earnings call, revealing a generally positive sentiment with strong financial performance. The company showed significant growth in its U.S. thrombectomy business and improved gross margins. However, there are some concerns regarding challenges in international markets, particularly in China, and flat gross margin expectations for the second quarter.
Strong Revenue Growth
Penumbra, Inc. reported impressive total revenue of $324.1 million, marking a year-over-year growth of 16.3% on a reported basis and 16.9% on a constant currency basis. This robust growth underscores the company’s strong market position and effective business strategies.
U.S. Thrombectomy Business Performance
The U.S. thrombectomy business was a standout performer, with revenue increasing by 25% year-over-year to $187.9 million. The U.S. VTE franchise was particularly noteworthy, achieving a remarkable 42% growth, highlighting the company’s leadership in this sector.
Gross Margin Improvement
Penumbra achieved a gross margin of 66.6%, representing a 160 basis point increase over the prior year period. This improvement reflects the company’s operational efficiency and ability to manage costs effectively.
Introduction of New Products
The company received FDA clearance for Ruby XL, a new larger size diagnostic catheter-compatible peripheral coil, earlier than anticipated. Plans are in place for a market launch in late Q2 or early Q3, which could further boost revenue streams.
Positive Cash Flow and No Debt
Penumbra ended the first quarter with a strong cash and marketable securities balance of $378.8 million and no debt. This financial health indicates strong operating profitability and provides flexibility for future investments.
Raised Guidance for U.S. Thrombectomy Growth
The company raised its guidance for the U.S. thrombectomy business, now expecting a growth range of 20% to 21% year-over-year. This upward revision reflects confidence in continued strong performance in this segment.
Decline in International Revenue
International revenue saw a decline, decreasing by 2.5% reported and 0.1% in constant currency. This was primarily due to a significant drop in China revenue by $6.7 million, highlighting challenges in international markets.
China Revenue Exclusion
Given the current macroeconomic environment, Penumbra has excluded China revenue from its forecast. This decision underscores the uncertainties and challenges faced in this key market.
Flat Gross Margin Projection for Q2
Due to expediting costs for Ruby XL, the company expects the gross margin for Q2 2025 to be similar to or slightly lower than Q1 2025. This projection reflects the short-term impact of strategic investments in new product launches.
Forward-Looking Guidance
Penumbra maintained its total revenue growth guidance for 2025 at 12% to 14% year-over-year, despite removing $5 million in expected revenue from China due to macroeconomic conditions. The company anticipates achieving a gross margin profile of over 70% by the end of 2026, indicating a positive long-term outlook.
In summary, Penumbra Inc.’s earnings call highlighted strong financial performance and growth prospects, particularly in the U.S. thrombectomy business. While challenges remain in international markets, the company’s strategic initiatives and financial health position it well for future success.