Penumbra, Inc.

Harris, you may begin your conference.

Thank you, Operator, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the second quarter of 2021. A copy of the press release and financial tables, which include the gap to non-gap reconciliation, can be viewed under the Investors tab on our company website at www.penumbrainc.com. During the course of this conference call, the company will make forward-looking statements pursuant to the same public provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality, compliance, and business trends. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties. including those referenced in our 10-K for the year ended December 31, 2025 with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our periodic filings with the SEC, including the 10-K previously mentioned, for a more complete review of these factors and other risks that may affect our future results or the market price of our stock, including but not limited to the impact of the COVID-19 pandemic on our business, results of operations, and financial conditions. Penumbra displays any duty to update or revise our forward-looking statements as a result of new information, future events, developments, or otherwise. On this call, certain financial measures are presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP financial measures is provided in our posted press release. We anticipate the prepared comments on today's call will run approximately 18 minutes. Adam Elsesser, Penumbra's Chairman and CEO, will provide a business update Maggie Ewen, our Chief Financial Officer, will then discuss our financial results for the second quarter. And Jason Mills, our Executive Vice President of Strategy, will discuss our updated 2021 guidance. With that, I would like to turn over the call for Adam Elsasser.

Thank you, Chief, and welcome back from your maternity leave. Good afternoon, everybody. Thank you for joining Penumbra's second quarter 2021 conference call. Our total revenues for the second quarter were $184.3 million, a year-over-year increase of 75.3% as reported and 72.7% in constant currency, and a 9% sequential increase from the prior quarter. For the second quarter of 2021, we recorded operating income of $10.3 million, or 6% of revenue, compared to an operating loss of $18 million during the same period last year. Both our vascular and neuro businesses performed well in the quarter, driven by the breadth and robustness of our product portfolios, diligent work by our outstanding sales teams, as well as an uptick in elective procedures likely caused both by the fact that COVID vaccination rate of elective cases. We obviously are paying close attention to the current news about the spread of the Delta variant. However, we are not seeing a negative impact on our overall business and believe any future impact will not be different than any of our peers in this industry. Overall, notwithstanding the news, we are optimistic about our ability to help more and more patients and continue to see a lot of opportunities in our target markets to drive strong, durable growth over the coming years. And we continue to see a strong symbiosis between our thrombectomy and embolization franchises in both neuro and vascular, through which purposeful innovation in one area augments our presence in both. We also are adding great new people to the Penumbra team, both in our commercial organization as well as in our senior leadership team. Starting first with our vascular business, we've reported growth of 117.6% year over year to $100.7 million in the second quarter. We are doing important work in four large areas of patient need. Arterial, venous, coronary, and embolization. Our growth is a function of strong adoption of our products in each of these areas as more physicians begin to learn the benefits of our advanced therapies to treat their patients. The recent launch of Lightning 7 targeting the arterial anatomy has gone extremely well, following on the success we are having with Lightning 12 for the venous anatomy since its launch last year. We saw strong growth in both existing and new physician customers using our catheters for arterial thrombectomy, in large part due to the early success of Lightning 7. In total, there is still a huge opportunity to expand our presence in both arterial and venous going forward. The Lightning technology, which is now a critical component to both arterial and venous, is being very well received by physicians, an increasing number of whom are adopting single-session therapy owing to the benefits that accrue in patient outcomes, as well as lower costs to the healthcare system. As many of you know, we are running clinical trials in PE, the venous and arterial vasculature with lightning, to further learn and help educate our customers on its benefit. We still have a lot of work in front of us, to bring lightning to all the patients who could benefit. We estimate approximately 90% of applicable patients who have venous arterial clot are still not being treated with single-session therapy. We continue to invest in therapy development initiatives and clinical evidence to expand the reach of these important products. Staying in the vascular franchise, both our coronary thrombectomy and peripheral embolization franchises also had record quarters in Q2. With CatRx, we are growing our presence within the coronary thrombectomy market, and we continue to invest in important clinical work to expand the use of this unique product. For instance, new data was presented at ACC 2021 in May, highlighting the safety and efficacy of CatRx in patients with high thrombus burden in the coronaries. helping us increase momentum with cataracts in both academic and high-volume institutions. On the embolization side, we saw an increase in elective procedures during the second quarter as COVID-19 vaccinations increased in the U.S. during the spring and likely enabled hospitals to ramp up procedure volumes. Given the current state of vaccinations and the spread of new variants of the virus, it is possible that this increase in elective cases normalizes a bit in the third quarter. That said, we expect growth trends to continue in this business, not just in the United States, but within international markets as well over the long term. In sum, all four of our vascular franchises are contributing to strong growth in our vascular business. guided by portfolio breadth and purposeful innovation. We continue to see many attractive opportunities for continued growth and investment in our people, products, clinical studies, and markets going forward. Let me turn to our neuro business, which also performed well in the second quarter. We reported neuro revenue of $83.6 million worldwide, up 42% year over year. I am so proud of our neuro team for the great work they've done in recent quarters in the face of the product recall and competitive market dynamics. But now we can look forward to a very exciting future for our stroke access, embolization and neurosurgical franchises. The early cases with our new red 62 distal stroke catheter have gone very well. Being able to more easily track a robust catheter into the distal anatomy is being well received by our physician customers. As we continue to expand REDD62's presence over the coming months, we are excited to also introduce REDD68 catheter, which recently received FDA clearance, and the third catheter in the REDD series for which we expect clearance later this quarter. We look forward to having all three of these new products for our physician customers to treat their stroke patients. Further, the