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Penumbra's (PEN) Q3 Earnings & Revenues Surpass Estimates

Zacks Equity Research

Penumbra, Inc.’s PEN third-quarter 2019 adjusted earnings per share (EPS) of 25 cents improved 47.1% year over year. The adjustments exclude certain one-time excess tax benefits related to stock compensation awards. The figure also surpassed the Zacks Consensus Estimate by 38.9%.

On a GAAP basis, EPS came in at 32 cents, as against the year-ago loss of 55 cents.

Revenues in the quarter rose 24.8% year over year (up 25.5% at constant exchange rate or CER) to $139.5 million, exceeding the Zacks Consensus Estimate by 4.5%.

On a geographic basis, third-quarter revenues in the United States (representing 65% of total sales) grossed $90.3 million, up 23.7% from the year-ago quarter (same at CER). Meanwhile, international sales (35% of total sales) advanced 26.8% year over year (up 29% at CER) to $49.2 million.

Going by product category, revenues from neuro products grew 11.5% (up 12.4% at CER) to $83.2 million in the quarter under review. Revenues from peripheral vascular product business rose to $56.3 million in the quarter, reflecting a surge of 51.6% (up 52% at CER) year over year.


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


Operational Update

Penumbra’s third-quarter gross profit rose 23.5%. Gross margin was 68.9%, reflecting a 172-basis point (bps) expansion year over year.

Research and development expenses totaled $13.7 million, up 51% year over year, while sales, general and administrative expenses amounted to $69.2 million, flaring up 23.9%. Adjusted operating profit (excluding the impact of acquired in-process research and development or IPR&D charge in connection with the acquisition of a controlling interest in MVI Health) in the reported quarter came in at $12.9 million, up 29.9% year over year. Adjusted operating margin expanded 37 bps to 9.3%.

Financial Update

Penumbra exited the third quarter of 2019 with cash and cash equivalents of $111.6 million as compared with the $77.3 million recorded at the end of second-quarter 2019.

Our Take

Penumbra exited third-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. The company 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 quarter.

Zacks Ranks & Earnings of Other MedTech Majors at a Glance

Penumbra carries a Zacks Rank #3 (Hold).

Some better-ranked companies, which posted solid results this earnings season, are Edwards Lifesciences EW, Thermo Fisher Scientific TMO and ResMed RMD, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Edwards Lifesciences delivered third-quarter 2019 adjusted EPS of $1.41, outpacing the Zacks Consensus Estimate by 15.6%. Net sales of $1.09 billion surpassed the Zacks Consensus Estimate by 5.5%.

Thermo Fisher recorded third-quarter 2019 adjusted EPS of $2.94, which surpassed the Zacks Consensus Estimate by 2.1%. Revenues of $6.27 billion outpaced the consensus estimate by 1.3%.

ResMed reported first-quarter fiscal 2020 adjusted EPS of 93 cents, which beat the Zacks Consensus Estimate of 87 cents by 6.9%. Revenues came in at $681.1 million, exceeding the Zacks Consensus Estimate by 3.6%.


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