Penumbra Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Robbie Marcus - JPMorgan - Analyst : Great. Congrats on a nice quarter. Maybe to start, really nice US thrombectomy growth. You called out the 42% VTE. I was hoping you could give us a little more color maybe on stroke versus peripheral and some of the market trends you're seeing in the two different markets.

Question: Robbie Marcus - JPMorgan - Analyst : Great. Maybe just a quick follow-up. Again, down the P&L, EPS performance was very nice in the quarter. If I look, it's not just -- I mean you had gross margin upside, you had SG&A improvement. I would say the biggest delta versus the Street and the way we were thinking about it was on R&D. So maybe I'll lump them together here. How are you thinking -- are you thinking you're more maybe at the top end of the operating margin commentary given the first quarter performance? I know it's tough to raise after just 1 quarter. And how are you thinking about R&D going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, PEN.N - Q1 2025 Penumbra Inc Earnings Call

Question: Lei Huang - Wells Fargo Securities, LLC - Analyst : It's Lei calling in for Larry. A nice start to the year. First question relates to Thunderbolt. Would you expect a normal FDA review for that product? And can you talk about what are the key metrics you believe physicians will look at to compare versus other catheters now first-pass effect, procedure time, et cetera? And I have a follow-up.

Question: Lei Huang - Wells Fargo Securities, LLC - Analyst : That's helpful. And for my follow-up, we've heard reports of sales force disruption since the Stryker-Inari deal. Just wanted to hear kind of what you're seeing on the ground and how that may be affecting the dynamics in the market.

Question: Pito Chickering - Deutsche Bank - Analyst : Just circling back to guidance here. So the only change here you guys had is that you removed $5 million of revenue from China that you had before that you are now not assuming that's being offset with the additional growth from US thrombectomy. Is that what we should be taking away?

Question: Pito Chickering - Deutsche Bank - Analyst : Okay. Great. And then can you talk about what you're seeing in the international markets in thrombectomy outside of China. I know it's pretty strong this quarter. Where is that strength coming from? And are you seeing any changes to reimbursement for your products in any new markets? And should we see that growth continuing as these China headwinds fade?

Question: Macauley Kilbane - William Blair & Company - Analyst : This is Macauley on for Margaret. Understand the priority here is getting Thunderbolt approved before you start to discuss that launch timing. But if we look back to when Flash and Bolt were first approved and similarly having to go through the VACs here for 6x and 12, just wondering if the market access initiatives have reduced the time around that process at all? And if not, has it at least taken some of the load off of your commercial team, so they can focus more on converting physicians rather than, again, some of that kind of more burdensome administrative processes?

Question: Macauley Kilbane - William Blair & Company - Analyst : Great. That makes sense there. And then maybe as a follow-up, I just want to ask on the arterial strength. I mentioned the demand increasing contribution, obviously, from Bolt 7 and 6x. So I guess maybe for Jason, wondering if you can at least directionally frame where growth was in the quarter compared to either US throm or that VTE growth? And ultimately, what should we expect for the remainder of the year here?

Question: William Plovanic - Canaccord Genuity - Analyst : Just if I could, as we talk about Lightning Bolt 6x and 7 kind of going in, just curious, if you look at growth in those products and you look at the volume versus ASPs, I mean, our understanding is as you get 6x, you're also pairing that with SENDit as we get into BTK. Just wondering what type of pricing versus volume benefit are you seeing? And we're in the early stages of this. I mean, is this something where 6x with SENDit is going to be magnitude, double triple of what you're getting per case than the standard catheter today? And then I have a follow-up.

Question: William Plovanic - Canaccord Genuity - Analyst : Okay. And then just any update on coronary, getting the CAVT technology in the coronary?

Question: William Plovanic - Canaccord Genuity - Analyst : Yeah. And then if I could, just on tariffs, it just sounds like at the end of the day, not really an impact for you given where you manufacture and where you source from. Yeah, it just seems -- and it's kind of redundant, but given the significant outperformance of the first quarter, the guide is at least especially on an operating margin basis, our operating profitability basis seems super conservative. And I'm just wondering what is kind of driving that?

Question: Travis Steed - Bank of America - Analyst : Just want to follow up a little bit on Ruby XL, new product, maybe markets that we're not as familiar with. Can you kind of help us understand the product and maybe the market opportunity? Is this something measured in tens of millions or a $100 million-plus opportunity?

Question: Ryan Zimmerman - BTIG - Analyst : I guess two for me. You are making these efforts in Costa Rica. Arguably, you're in the right spot. You're not seeing an impact from tariff dynamics. You've made some investment rate. Did your plans change at all in terms of your expansion into Costa Rica, using that as a stepping stone to a broader international effort? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, PEN.N - Q1 2025 Penumbra Inc Earnings Call I know this is -- everything is in flux, but I'm just curious if kind of the market dynamics have caused you to take a pause and think about that a little more differently?

Question: Ryan Zimmerman - BTIG - Analyst : Okay. And then the follow-up, there was a new drug approved, a new thrombolytic agent in March, I believe, offers about a single 5-second IV bolus as opposed to maybe some of the slower drugs like Activase. I'm specifically talking about neurovascular, right now, Adam, as you're probably aware. I'm just wondering whether you see this impacting thrombectomy demand in the near term as it's rolled out, and physicians maybe are a little more apt to try it in the face of what could be some of your technology?

Question: Kallum Titchmarsh - Morgan Stanley - Analyst : A couple of quick ones from me, and I'll ask them both upfront. Just on Ontario, specifically just looking for a bit more clinical color on the early rollout of 6x. The feedback you received on those BPK cases and how willing have the docs been to switch up treatment methods. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, PEN.N - Q1 2025 Penumbra Inc Earnings Call And then just secondly on Thunderbolt. Obviously, your current data for distal clot thrombectomy has been great, albeit more than skewed. Is there any kind of technological factor that would enable modulated aspirations to better target distal clots than existing tech today?

Question: Richard Newitter - Truist Securities - Analyst : Congrats on the quarter. Maybe just the first one on US stroke. I know you guys have been at or close to 20% growth for US neurothrombectomy in the last few quarters. I know you have a tougher comp year over year this quarter, but is it fair to assume that you are in that ballpark? Or maybe you could benchmark us to what the market rate is that you referenced.

Question: Richard Newitter - Truist Securities - Analyst : Okay. I guess if you can share what maybe a rough estimate of the US market is, and then I'll just provide my follow-up now. I'm not asking whether or not it's in guidance. I'm guessing the answer is, no, but you've got a number of new launches that are coming. So 1Q has all been volume growth. Should there be an opportunity for price as a tailwind or incremental driver in the second half from these new products? And if you care to share whether or not you're factoring any of that into guidance.

Question: Matthew O'Brien - Piper Sandler - Analyst : So the peripheral number, again, Adam, super strong. Can you just talk a little bit about what you're seeing in the marketplace in terms of the growth of that product on the PE side of things -- sorry, Flash 2.0 specifically, but PE side, DVT side of things, are you seeing an inflection anywhere specifically? I don't know if it's on one side or the other? And are you starting to see that penetration conversion away from lytics maybe accelerating? And then I do have a follow-up.

Question: Matthew O'Brien - Piper Sandler - Analyst : Got it. Okay. Appreciate that. And then a question for Maggie, and I'm sure Jason is going to shut this down. But just that gross margin improvement in the quarter was again kind of eye-popping. Peripheral is doing really well. I'm assuming those have some really good gross margins to them. Can we potentially get to 70% gross margins a little bit earlier than the kind of end of next year? I know it's still a long way to go. But I mean, can we start touching that kind of number even late this year or maybe Q2 of next year?

Question: David Rescott - Robert W. Baird & Co., Inc. - Analyst : Adam, I think last quarter, you talked more about invested focus on some of the embolization businesses in the US. I'm wondering if you could maybe expand on kind of what your thoughts are there? And where you think the benefit could be? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, PEN.N - Q1 2025 Penumbra Inc Earnings Call And if that's something that can help you get back to maybe more stable embolization growth? And if so, what are you kind of paying back normalized market growth at?

Question: David Rescott - Robert W. Baird & Co., Inc. - Analyst : Okay. Great. Maybe on the medium kind of vessel segment and the stroke side, I think we're maybe three or four months past that data. Wondering if you have any updated thoughts on what that market could be or could be post the data we saw in some of the checks that we've had while not a positive for the total thrombectomy market seems to suggest that maybe the aspiration market could see a benefit from what those trials read out to be. So curious on any updated thoughts on that and whether or not maybe Thunderbolt could play a role in that market.