Q3 2024 Earnings Summary
- Penumbra's neurothrombectomy business reported high double-digit growth in the third quarter, indicating strong performance and potential for continued expansion in this segment.
- New product launches like Flash 2.0, Lightning Bolt 7, and Lightning Bolt 6X are performing exceptionally well, leading to significant market share gains, especially in the VTE and PE markets, due to their superior speed and safety profiles over competitors' products. ,
- Reduction of international headwinds expected in 2025, such as prior issues in China and delays in European markets, suggests that Penumbra may experience stronger growth in 2025 compared to 2024, supported by new product launches and market expansion.
- International revenue decline due to reduction in China revenue: The company reported that their international revenues decreased by 1.9% reported and 2.5% in constant currency, primarily due to a reduction in China revenue of $13.6 million. This decline offset growth in other international regions and indicates that headwinds in China are impacting the company's international performance.
- Changes in the THUNDER trial design potentially indicating issues or delays: An analyst noted that the sample size and safety endpoints in the THUNDER trial have changed, questioning whether the FDA agreed to these changes. While the executive confirmed FDA agreement, such modifications might suggest potential issues or delays in the trial, which could impact the timeline for Thunderbolt's commercialization .
- Maintained overall revenue guidance despite raising U.S. thrombectomy guidance: Despite raising the lower end of the U.S. thrombectomy growth guidance to 24% to 25% from 23% to 25% , the company maintained its total revenue guidance range for 2024 at $1.18 billion to $1.2 billion . This could imply that other segments are underperforming or facing challenges, offsetting the growth in U.S. thrombectomy.
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Margin Expansion
Q: Can you sustain margin expansion going forward?
A: Adam Elsesser stated that gross margins can rise above 70%, driven by efficiencies and product shifts toward their CAVT platform. Operating margins are expected to outpace gross margins, showcasing a profitable business that can invest in innovation while maintaining profitability. -
Guidance and Revenue Outlook
Q: Any changes to revenue guidance or other segments?
A: The company raised U.S. thrombectomy guidance but maintained overall revenue guidance. There are no changes to other segments, and the Street is modeling appropriately. -
China and International Sales
Q: How do you view China's recovery and international trends?
A: Adam Elsesser noted that China remains a future upside as it recovers, potentially in the back half of 2025 or beyond. He mentioned significantly fewer international headwinds in 2025 compared to 2024, with positive contributions expected from new product launches like Flash 2.0 and Lightning Bolt 7 in Europe. -
THUNDER Trial and Thunderbolt
Q: What's the update on the THUNDER trial and Thunderbolt?
A: The THUNDER trial has completed patient enrollment with FDA-approved changes to the sample size and endpoints. Follow-up is expected to complete by the end of the year, after which they'll submit and plan for commercialization of Thunderbolt. Pricing for Thunderbolt will likely carry a premium, aligning with reimbursement structures. -
VTE Market Share and Flash 2.0
Q: Where does your VTE share stand, especially in PE and DVT?
A: There has been a significant share shift toward Penumbra in VTE, particularly in PE. Their Flash 2.0 product has made procedures faster with no significant blood loss, enhancing their position in the market. -
New Product Launches Impact
Q: How will new products affect growth and margins?
A: Launching products like Bolt 6X and Bolt 12, which received FDA clearance, will continue to drive growth. These CAVT products have a different price point, contributing to margin expansion. They aim to bring CAVT technology to all vascular beds, enhancing their market reach. -
Competitive Dynamics
Q: Will competitor data impact your thrombectomy business?
A: Adam Elsesser believes the competitor's PEERLESS data will not negatively affect Penumbra. Flash 2.0 addresses issues highlighted in that data, like procedure duration and bleeding rates, and is commanding attention in the field. -
SG&A Leverage
Q: How will you balance growth investments with SG&A leverage?
A: The company plans to invest significantly in innovation and growth drivers while maintaining a profitable business. They can achieve both objectives without compromising profitability. -
Reimbursement in Europe
Q: Are there reimbursement challenges in Europe for new products?
A: They aim to secure appropriate reimbursement for advanced products like Flash and Bolt, which have higher costs due to added technology. Opportunities exist to achieve this through various means, including data generation.
Research analysts covering Penumbra.