Penumbra (PEN) Q3 Earnings Top Estimates, Margins Increase
Penumbra, Inc. PEN reported third-quarter 2023 adjusted earnings per share (“EPS”) of 67 cents, which beat the Zacks Consensus Estimate of 46 cents by a huge 45.7%. The company had recorded an adjusted income of 1 cent per share in the year-ago period.
GAAP EPS was 23 cents against a loss per share of 6 cents in the prior-year quarter.
Revenues in Detail
Penumbra registered revenues of $270.9 million in the reported quarter, up 26.8% year over year on a reported basis and 25.9% at a constant exchange rate or CER. The figure also surpassed the Zacks Consensus Estimate by 1.9%.
Quarter in Details
The company reports under two geographical segments — United States and International — as well as under two product categories — Vascular and Neuro.
PEN recorded revenues of $194.8 million (72% of total revenues) in the United States, up 30.9% on a reported basis as well as at CER year over year.
Sales improved 17.4% to $76.1 million in the International segment. Excluding foreign currency impact, the unit’s sales were up 14.3% year over year.
The company registered revenues of $171.4 million from sales of vascular products, up 38.9% reportedly and 38.5% at CER from the prior-year level. There was 50.2% year-over-year growth in U.S. vascular thrombectomy.
Penumbra, Inc. Price, Consensus and EPS Surprise
Penumbra, Inc. price-consensus-eps-surprise-chart | Penumbra, Inc. Quote
Sales of neuro products totaled $99.5 million, up 10.2% on a reported basis and 8.5% at CER. This business reported strong contributions from new products in the United States and Europe.
Margin Trend
In the reported quarter, Penumbra’s gross profit improved 31.3% to $177.7 million. Gross margin expanded 226 basis points to 65.6% despite an 18.9% rise in the cost of revenues.
Selling, general and administrative expenses rose 15.9% to $125.9 million. Research and development expenses totaled $20.9 million, down 1.7% year over year. Total operating expenses came in at $146.9 million, up 13.1% year over year.
Adjusted operating margin of 11.4% marked an 884-basis point expansion from the prior-year quarter’s figure.
Financial Update
Penumbra exited third-quarter 2023 with cash and cash equivalents and marketable investments of $240.9 million compared with the second-quarter record of $114.2 million.
2023 Guidance
For the fourth quarter of 2023, the company projects total company revenue growth to accelerate to 28% to 31% year over year. This correlates to the midpoint of the 2023 annual guidance range of $1.05-$1.07 billion, implying a 24-26% improvement from 2022. The Zacks Consensus Estimate for fourth-quarter and full-year 2023 revenues is pegged at $290.2 million and $1.06 billion, respectively.
Our Take
Penumbra exited the third quarter of 2023 with encouraging results, wherein both revenues and earnings beat estimates.
The company’s vascular and neuro product categories showed encouraging growth trends. Its robust estimate for 2023 revenues reflects continued demand for its products. Strong uptake following the launch of Lightning Flash, Lightning Bolt 7 and RED 72 with SENDit technology accelerated top-line growth.
Moreover, Penumbra’s ability to improve margins and EPS amid ongoing inflationary pressures and supply-chain headwinds buoy optimism.
Zacks Rank and Stocks to Consider
Currently, Penumbra carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories ABT, Inari Medical NARI and Integer Holdings Corporation ITGR.
Abbott, carrying a Zacks Rank of 2 (Buy), reported third-quarter 2023 adjusted EPS of $1.14, beating the Zacks Consensus Estimate by 3.6%. Revenues of $10.14 billion outpaced the consensus mark by 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 6.8%.
Inari Medical, carrying a Zacks Rank #2, reported third-quarter 2023 adjusted EPS of 4 cents, beating the Zacks Consensus Estimate by a staggering 128.6%. Revenues of $119 million outpaced the consensus estimate by 2.3%.
Inari Medical has an estimated earnings growth rate of 725% for the next year. Inari Medical’s earnings surpassed estimates in all the trailing four quarters, the average being 66.8%.
Integer Holdings reported third-quarter 2023 adjusted EPS of $1.27, beating the Zacks Consensus Estimate by 20.9%. Revenues of $404.7 million surpassed the Zacks Consensus Estimate by 8.7%. It currently carries a Zacks Rank #2.
Integer Holdings has a long-term estimated growth rate of 15.8%. ITGR’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 11.9%.
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