Penumbra's Q3 2025 Earnings Call: Contradictions on Thunderbolt FDA Timeline, Sales Force Split, and Market Share Growth

Business Commentary:

* Revenue Growth and Market Expansion: - Penumbra Inc. reported total revenue of $354.7 million for Q3 2025, reflecting 17.8% year-over-year growth on a reported basis and 16.9% on a constant currency basis. - The growth was driven by strong execution across strategies and significant progress in market positioning across all franchises, particularly in the U.S. thrombectomy and embolization segments.

• U.S. Thrombectomy and Embolization Growth:
• Total U.S. revenue increased by 21.5% to $275 million, with a 18.5% rise in thrombectomy sales and a 29.2% increase in embolization and access revenue.

• This was primarily due to the success of the new product introductions and dedicated peripheral embolization sales team, leading to sequential growth in embolization revenue.

• International Revenue and Strategic Initiatives:

• Total international revenue of $79.7 million increased 6.6% year-over-year or 3% in constant currency, reflecting a strategic enhancement in long-term market positioning.

• The growth was supported by a stabilization in China comp headwinds and double-digit growth in other international regions.

• Financial Performance and Margin Improvement:

• The company achieved a gross margin of 67.8%, expanding 130 basis points over the prior year period, and operating income of $48.8 million or 13.8% of revenue.
• Margin improvements were driven by favorable regional and product mix, operational efficiencies, and the impact of a dedicated peripheral embolization sales force.

Contradiction Point 1

Thunderbolt FDA Process and Timeline

It involves the timeline and expectations surrounding the FDA review for the Thunderbolt product, which could impact its launch and market impact, affecting revenue projections and market expectations.

Could you outline Thunderbolt product's timeline and its post-launch impact? How will the FDA approval process impact the launch timeline? - Travis Steed (BofA Securities)

2025Q3: The Thunderbolt process is thorough due to its new product status, not an indication expansion. FDA reviews can take time. There's optimism about the product's future, though prudence is maintained until clearance is received. - Adam Elsesser(CEO)

What is the significance of the STORM-PE study and its potential impact on patient treatment? Are there any updates on the Thunderbolt FDA review timeline? - Lawrence H. Biegelsen (Wells Fargo)

2025Q2: Adam remains excited about Thunderbolt, emphasizing its potential positive impact. - Adam Elsesser(CEO)

Contradiction Point 2

Sales Force Split and Impact on Margins

It involves the impact of splitting the sales force into separate teams for thrombectomy and embolization on margins, which affects the company's financial outlook.

What impact will STORM-PE's secondary results have on market growth and market share expansion? - Travis Steed (BofA Securities)

2025Q1: Thunderbolt's FDA review is as a 510(k), focusing on primary and secondary endpoints, first pass effect, and procedure time. The FDA is examining the effectiveness of modulated aspiration. - Adam Elsesser(CEO)

How will the additional sales force affect gross and operating margins, and can you quantify the impact? - Robert Justin Marcus (JPMorgan)

2025Q3: The sales force split allows for heightened focus in thrombectomy and embolization. The RUBY XL has accretive margins, driving long-term profitability. The split is due to the extensive scope of products and the need for focused sales efforts. - Adam Elsesser(CEO)

Contradiction Point 3

Market Share and Thrombectomy Growth Dynamics

It involves differing perspectives on the drivers of thrombectomy growth and market share, which are critical for understanding Penumbra's competitive positioning and growth strategy.

How do market share and new accounts contribute to thrombectomy growth? - Pito Chickering (Deutsche Bank AG)

2025Q2: The investment in the commercial team does not impact gross margins. The product mix variability may cause some month-to-month margin fluctuations. However, the long-term margin expansion remains on track with the guidance. - Maggie S. Yuen(CFO)

Can you provide more insight into U.S. thrombectomy growth trends in stroke versus peripheral markets? - Robbie Marcus (JPMorgan)

2025Q3: Market share is growing, with a shift from older CAVT technology. The focus is on increasing patient access and market penetration. - Adam Elsesser(CEO)

Contradiction Point 4

Impact of STORM-PE on Market Growth and Share Acceleration

It reflects varying expectations on the impact of STORM-PE on market growth and share acceleration, which could influence strategic planning and market positioning.

How will STORM-PE secondary results affect market growth and share acceleration? - Travis Steed (BofA Securities)

2025Q1: U.S. thrombectomy grew with CAVT technology, particularly in the VTE franchise. The stroke business grew significantly above the market, driven by new product launches like RED 72. The arterial business saw strong growth with Bolt 7 and 6X. - Adam Elsesser(CEO)

Will 2025 acceleration be offset by 2024's one-time headwinds from European launch delays and China sales impacts? What is Thunderbolt's timeline? - Larry Biegelsen (Wells Fargo Securities)

2025Q3: The reaction to STORM-PE data has been very positive, with a focus on CAVT safety. Non-interventionalists are updating hospital protocols, opening more access to care. - Adam Elsesser(CEO)

Contradiction Point 5

Thunderbolt Product Timeline and FDA Process

It involves differing perspectives on the timeline and regulatory process for the Thunderbolt product, which could impact revenue forecasts and market expectations.

What is the timeline for the Thunderbolt product and its post-launch impact, and how will the FDA process affect this timeline? - Travis Steed (BofA Securities)

2024Q4: We've got more patients out there who need care. It's getting the hospitals to really understand how to use the technology. It's a more and more complex process. - Adam Elsesser(CEO)

Have you submitted Thunderbolt to the FDA? What is the status of clinical studies for Thunderbolt? - William Plovanic (Canaccord)

2025Q3: We don't have a specific timeline. The FDA is thorough, as it should be. It's not an indication expansion, so there's a lot to review. - Adam Elsesser(CEO)