Penumbra Inc Q4 FY2024 earnings call

• U.S. thrombectomy business led growth, with Q4 2024 U.S. thrombectomy sales up 27.3% y-o-y to $180.6 million. Full year 2024 U.S. thrombectomy revenue was $646.7 million, a 26.8% increase vs 2023.
• Launched 9 new products in 2024, including CAVT products like Flash 2.0, Lightning Bolt 6X with track and Lightning Bolt 12. Expanded CAVT's footprint internationally.
• Gross margin in Q4 2024 was 67.4%, expanding 170 basis points y-o-y. Operating income was $48.6 million, 15.1% of revenue, up 200 basis points y-o-y. Aim to achieve gross margin over 70% by end of 2026.
• Exited Immersive Healthcare, invested in clinical and health economic data, and continued innovation. Commenced commercial rollout of Lightning Bolt 12 and saw strong VTE procedure volumes in December 2024.

In the fourth quarter of 2024, global thrombectomy business revenue was $222.7 million, an increase of 16.8% adjusted and 16.9% in constant currency compared to the same period in 2023. The embolization and access business had revenue of $98.6 million in Q4 2024, an increase of 5% adjusted and 5.1% in constant currency. For the full year 2024, global thrombectomy revenue was $818.1 million, up 20.8% adjusted and in constant currency, while embolization and access revenue was $382.3 million, flat 0.3% adjusted and 0.2% in constant currency. Geographic mix for Q4 2024 was 77.2% U.S. and 22.8% international; full year 2024 was 75.1% U.S. and 24.9% international.

• 2025 total revenue guidance: $1.340 billion to $1.360 billion, representing 12%-14% year-over-year growth vs 2024 GAAP total revenue.
• U.S. thrombectomy business expects growth in the range of 19%-20% y-o-y.
• Gross margin to expand at least 100 basis points in 2025 to over 67% full year. Operating margin expected to expand to 13%-14% of total revenue in 2025.
• On track to achieve gross margin over 70% by end of 2026.

• Uncertainties around forward-looking statements due to factors like regulatory status, quality, compliance, and business trends.
• Risks referenced in the 10-K for the year ended December 31, 2024, scheduled to be filed with the SEC on February 18, 2025, which may affect future results or stock price.

Q: Congrats on a strong finish to the year here. Adam, I had one on the guidance and one on Thunder. Why shouldn't we see an acceleration in '25 given the onetime headwinds in '24 such as the delay in the European launches, some of the sales impact in China and Thunderbolt?

A: Yes, Larry, thanks for the question. And I think it's appropriate one. I think we tried to be pretty clear in giving that guidance that this was sort of in line with the philosophy that we talked about in the second quarter of not getting ahead of ourselves. So obviously, there are a number of things that we don't yet totally control, Thunderbolt being your follow-up question, one of them. So we're not going to put that into the guidance until we have more information around that. So you're correct to acknowledge that we had a lot of headwinds last year that we got through and that we don't have most of them this year and we're going to, in our minds, guide appropriately so we don't get in the same trouble we got in last year.

Q: I'll echo congratulations on a good quarter. I wanted to ask on the rest of the business, embolization and access, what you're seeing there? If I'm doing my math right, it implies flat to minus 5% sales growth in 2025. So just wanted to get a sense of what you're seeing there, U.S. versus OUS and how to think about what's driving the guide for 2025?

A: Yes. So when you look at our embolization and access business, we're -- we have an incredibly strong business in both those segments. We're really the market leader in the vascular side on coils and access on the neuro side. And that is an incredibly important part of our business. We're very proud of it. I think you heard in my prepared remarks, that were not done innovating in those areas. And I think that will be something that we'll watch and focus on as the year progresses. And also, as we've gotten bigger and our interest in CAVT has expanded so dramatically, we need to make sure we have the ability to focus and I use that term very particularly. So I think there are a lot of opportunities, particularly in the U.S. in the short term to continue to see that grow. By definition, last year, we did a little bit of retrenching, we specifically said in markets where we weren't successful and we're going to sort of go into the areas and double down on areas where we can be more successful internationally as well. There's a lot of demand. And with the ability to particularly for non-U.S. markets but U.S. markets, if appropriate, as we expand our manufacturing facility into Costa Rica, there's an opportunity to have a cost basis that is also more appropriate for some of these markets as well.