Penumbra, Inc. (NYSE:PEN) Q2 2023 Earnings Call Transcript

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Adam Elsesser: Yes, it’s a great question. Let me try to answer that. The answer is the reorder rates for this product are obviously extraordinarily strong. Without that, you wouldn’t have all of these new customers that otherwise never wanted to ever use our thrombectomy products. That’s being driven by the excitement that people who are using the product today and talking about it. So, the two are linked. There is still room – and this is I think you all know this, having watched, been in this field for a long time. You have multiple physicians and in our particular area, you have multiple subspecialties of physicians up to three different ones in every hospital. So when a hospital gets the product in, it doesn’t mean that in some cases, it does, but not always every single physician and all three subgroups are now starting to use it.

So, there is still room in addition to the new places coming for are significant opportunity over the next period of time to drive additional usage within the hospitals that have already been approved.

Matthew O’Brien: Got it. Thanks.

Adam Elsesser: Thank you.

Jason Mills: Thanks Matt.

Operator: Your next question comes from the line of Pito Chickering with Deutsche Bank. Your line is open.

Pito Chickering: Hi, good afternoon. Nice quarter. You quantified how much the U.S. vascular grew some 50% year-over-year. How much of that grow sequentially from the first quarter? And then you guided to U.S. growth accelerating largely in the third quarter. Again, from a sequential perspective, how much we consider the U.S. vascular market growing from 2Q into 3Q?

Jason Mills: Yes. So we didn’t quantify the sequential growth. What we said was actually, we did – in such that we said U.S. venous in total grew sequentially strong double-digits. And U.S. arterial also grew double-digits. So that’s the vast majority of it. We had another strong quarter in coronary as well. It didn’t grow quite as fast, but on a year-over-year basis, it was double-digits as well.

Pito Chickering: Okay. Great. And then on margins, given margins done nicely for this quarter with the strong revenue growth. Can you provide any updated guidance on how we should think about exit rate for the fourth quarter of this year?

Jason Mills: Yes, I’ll start and then maybe with respect to your latter part of your question. We, indeed, as I said in my prepared remarks, expect to be above 10% pro forma operating margins as we exit this year. And I think importantly, that is not a place we see it stopping. We see continued expansion subsequent to that in 2024 and beyond. Maggie, what would you add to that?

Maggie Yuen: No, I think you sum it up well. I mean, with continuing favorable mix and volume leverage and continue to scale, that’s the trend we’ll continue to see throughout the year.

Pito Chickering: Great. Thanks so much.

Operator: Your next question comes from the line of Shagun Singh with RBC Capital. Your line is open.

Shagun Singh: Great. Thank you so much. I just wanted to ask the 2024 question perhaps in a different way. I’m just trying to figure out what year two looks like versus year one? You have talked about this being a multiyear launch. You’ve talked about at least a 5-year runway. So as we think about year two, and it does also seem that there’s a process to get the product on board. So as you think about year two, do you expect growth to be stronger, similar or below ’23? Just anything that can help us handicap the opportunity better would be helpful?

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