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Penumbra (PEN) Q4 Earnings Beat Estimates, Margins Expand

Zacks Equity Research
·4 mins read

Penumbra, Inc.’s PEN fourth-quarter 2019 adjusted earnings per share (EPS) of 22 cents surged 69.2% year over year. The adjustments exclude certain one-time asset-acquisition expenses and excess tax benefits related to stock-compensation awards. The reported figure also surpassed the Zacks Consensus Estimate by 22.2%.

On a GAAP basis, EPS came in at 27 cents, marking a 50% improvement from the year-ago figure.

Full-year adjusted EPS came in at $1.38, representing a surge from the year-ago adjusted figure of 18 cents. Also, the reported figure beat the Zacks Consensus Estimate by 55.1%.

Penumbra, Inc. Price, Consensus and EPS Surprise


Penumbra, Inc. Price, Consensus and EPS Surprise
Penumbra, Inc. Price, Consensus and EPS Surprise

Penumbra, Inc. price-consensus-eps-surprise-chart | Penumbra, Inc. Quote

Revenues in the fourth quarter were up 20.3% year over year (up 20.8% at constant exchange rate or CER) to $145.3 million, outpacing the Zacks Consensus Estimate by 2.6%.

Revenues for 2019 summed $547.4 million, up 23% on a reported basis (up 24.2% at CER). In addition, the revenue figure exceeded the Zacks Consensus Estimate by a margin of 0.7%.

On a geographic basis, quarterly revenues in the United States (representing 66% of total sales) grossed $96.1 million, up 19.1% from the year-ago quarter (same at CER). Meanwhile, international sales (34% of total sales) advanced 22.5% year over year (up 24.1% at CER) to $49.2 million.

Going by product category, revenues from neuro products grew 15.4% (up 16.1% at CER) to $85.4 million in the reported quarter. Revenues from peripheral vascular product business rose to $59.8 million during the October-December period, reflecting a jump of 27.9% (up 28.1% at CER) year on year.

Operational Update

Penumbra’s fourth-quarter gross profit improved 24.7% to $98.1 million. Gross margin was 67.6%, reflecting a 239-basis point (bps) expansion year over year.

Research and development expenses totaled $12.9 million, flaring up 18.3% year over year, while sales, general and administrative expenses amounted to $74.7 million, up 22.1% from the year-ago period. Total operating profit in the December-end quarter came in at $10.6 million, surging 58.6% year over year. Adjusted operating margin expanded 176 bps to 7.3%.

Financial Update

Penumbra exited 2019 with cash and cash equivalents of $72.8 million as compared with the $67.9 million recorded at the end of 2018.

Our Take

Penumbra exited fourth-quarter 2019 with better-than-expected results. The year-over-year comparison of earnings was favorable. Moreover, the company witnessed stellar growth across all geographies and product lines. It is focused on product innovation through research and investment. We are upbeat about the continued momentum of its peripheral embolization products. Sales of the company's Penumbra System for ischemic stroke boosted its neuro growth. Expansions of both margins also buoys optimism. However, the company incurred rising operating expenses during the reported period.

Zacks Ranks & Earnings of Other MedTech Majors at a Glance

Penumbra carries a Zacks Rank #3 (Hold).

Some better-ranked stocks, which reported solid results this earnings season, are Stryker Corporation SYK, Accuray Incorporated ARAY and AmerisourceBergen ABC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stryker delivered fourth-quarter 2019 adjusted EPS of $2.49, outpacing the Zacks Consensus Estimate by 1.2%. Revenues of $4.13 billion surpassed the consensus mark by 0.7%. The company carries a Zacks Rank #2 (Buy), at present.

Accuray reported third-quarter fiscal 2020 adjusted EPS of a penny comparing favorably with the Zacks Consensus Estimate of a loss of 7 cents. Net revenues of $98.8 million outpaced the Zacks Consensus Estimate by 0.3%. The company sports a Zacks Rank of 1, currently.

AmerisourceBergen reported first-quarter fiscal 2020 adjusted EPS of $1.76, which beat the Zacks Consensus Estimate of $1.67 by 5.4%. The company, currently carrying a Zacks Rank #2, has an expected long-term earnings growth rate of 7.4%.

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