Penumbra Inc Q4 2024 Earnings Call Transcript

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

Question: Lawrence Biegelsen - Wells Fargo Securities, LLC - Analyst : Congrats on a strong finish to the year here. Adam, I had one on the guidance and one on Thunder. So I think you did 13.5% or 13.4% adjusted revenue growth in 2024. You're guiding it to 12% to 14% in 2025. Why shouldn't we see an acceleration in '25 given the one-time headwinds in '24, such as the delay in the European launches, some of the sales impact in China and Thunderbolt? So how are you thinking about the guidance this year from a philosophical standpoint and getting back some of those headwinds we saw in '24? And I had one follow up.

Question: Lawrence Biegelsen - Wells Fargo Securities, LLC - Analyst : And Adam, just my follow up is on Thunder. How should we -- it sounds like the follow up is done. How should we think about the timeline for data readout, filing and clearance? And as a follow up, we did see three negative medium and distal vessel trials at ISC a couple of weeks ago. What are the implications for Penumbra?

Question: Robert Marcus - JPMorgan - Analyst : 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, US versus OUS. And how to think about what's driving the guide for 2025. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 18, 2025 / 9:30PM, PEN.N - Q4 2024 Penumbra Inc Earnings Call

Question: Macauley Kilbane - William Blair & Company - Analyst : This is Macauley on for Margaret tonight. So wanted to follow up around the question on guidance and appreciate the comment on US throm, specifically. But just given the 41% VTE growth in the US we saw this quarter, just wondering if you can help parse out what that includes either for vascular versus neuro. And I know that does not include Thunderbolt launch or just any commentary focusing on vascular in particular between PE, DVT and arterial in the US.

Question: Macauley Kilbane - William Blair & Company - Analyst : And then maybe just as a follow up, I wanted to -- or saw there was an update to the RED 72 510(k) status the other day. And Adam, can't help but notice you emphasized the FDA cleared that aspect in your script. So was there any modification made to the catheter there? I guess bigger picture, what should we expect from that pipeline of catheters moving forward?

Question: Macauley Kilbane - William Blair & Company - Analyst : Congrats on the quarter again.

Question: Pito Chickering - Deutsche Bank - Analyst : Looking at the US thrombect guide here of 19% to 20%, end of the year, obviously 27%, how should we think about the seasonality of that growth like comps you had in 2024? Your fourth quarter exit rate was such a high number that we straight line that growth as almost flat sequentially, which we haven't really seen that since you launched and you talked about how strong December was.

Question: Pito Chickering - Deutsche Bank - Analyst : And then sticking with the 27% growth this quarter, is there any color on what the pricing versus volume was in the quarter? And how should we be thinking about 2025 in terms of a US thrombectomy in terms of just pricing versus volume within the guidance range?

Question: William Plovanic - CANACCORD GENUITY - Analyst : Just first up on THUNDER, I just wanted to clarify, one, have you submitted to the FDA? Two, have you had discussions with them yet? And three, are they asking for any additional information including any additional clinical studies? Just trying to figure out where we're in the process. Then I have a follow up.

Question: William Plovanic - CANACCORD GENUITY - Analyst : And then just on R&D, $20 million is really a low point that we haven't seen in almost two years. Is this a new normal in terms of the kind of the R&D spend nominally? And should we use this as a base point going forward and expect most of the leverage off of this in terms of operating margin expansion?

Question: Richard Newitter - Truist Securities - Analyst : Congrats on the performance and solid finish to the year. Maybe, I think Adam, you had mentioned several new product launches and the ebbs and flows of when those hit can dictate quarterly performance. Could you just remind us, you said nine launches in '24, how many are you thinking about in '25? And any direction on where those could be value add and fill the bag where there's an unmet need that you don't have today?

Question: Richard Newitter - Truist Securities - Analyst : But -- and just to be clear though, Thunderbolt is not needed to hit your guidance range. In other words, it's not explicitly --

Question: Richard Newitter - Truist Securities - Analyst : And just one last one on Thunderbolt. Do we expect you to have this presented at a conference, or is this something that we could get press released mid-year? Just how are you thinking about that?

Question: Michael Sarcone - Jefferies - Analyst : Just to start, China was a pretty big headwind in 2024, maybe 300 basis points or 350 basis points. Could you just talk about what kind of assumptions you've got for China baked into 2025 guide? Is it kind of stabilized from here? How are you thinking about that?

Question: Michael Sarcone - Jefferies - Analyst : And maybe just for the follow up, we've seen some M&A activity in the space earlier this year. Just wanted to get your stance on whether or not you're bracing for any change in competitive dynamics or if there's any potential disruption coming down the pike that you may be able to capitalize on. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 18, 2025 / 9:30PM, PEN.N - Q4 2024 Penumbra Inc Earnings Call

Question: Ryan Zimmerman - BTIG - Analyst : I wanted to ask about gross margins for a bit just because doing the math, it does imply a pretty significant step up in '26 in gross margins to hit that 70% exiting '26. Help me understand. I mean is that just a -- go ahead, or Maggie.

Question: Ryan Zimmerman - BTIG - Analyst : But just to be clear, Maggie, that is just a function of product mix. That is not a function of any pricing strategies or anything else that you're contemplating to kind of get you that extra effort in margins in '26.

Question: Ryan Zimmerman - BTIG - Analyst : And then the second question, Adam, I guess I should direct it to you. Is the scale up in sales force? And the amount of additional heads you've hired to grow your thrombectomy business? And so what I want to understand is just where you're at in that process. How you think about that kind of coming into its own and its contributions in either now or early '25? And similarly, that same question, on market access, which is arguably underappreciated in how you're attacking kind of the market with the market access initiatives. But when do you expect the impacts of both of those dynamics to be felt from your efforts? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 18, 2025 / 9:30PM, PEN.N - Q4 2024 Penumbra Inc Earnings Call

Question: Shagun Singh - RBC Capital Markets - Analyst : Just a quick one for me. For your US venous thrombectomy business, 41% year over year growth, how should we think about the durability of that? And given that we've seen that growth rate accelerate sequentially in the past few quarters, I'm just wondering if there is anything else going on. Is it just your commercial team expansion, are you seeing greater acceptance given the benefits you talked about, greater ability to get into the door? Just anything incremental to what you've shared that you may be able to share with us.

Question: Mike Kratky - Leerink Partners - Analyst : So obviously, great acceleration in US thrombectomy growth, 41% US VTE growth. Sorry to bother you with another one on guidance, but without providing specifics, can you help frame where you're expecting your different verticals between VTE, arterial, stroke, and coronary to land relative to that 19% to 20% overall US growth?

Question: Mike Kratky - Leerink Partners - Analyst : And maybe just as one follow up, can you comment on some of the early adoption trends for Lightning Flash and Bolt 7 in Europe following the recent launches?