Penumbra, Inc.

Good afternoon. My name is Suzanne and I will be your conference operator today. At this time, I would like to welcome everyone to Penumbra's third quarter 2021 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to redraw your question, press the pound key. Thank you. I would now like to introduce Ms. G. Hamlin-Harris, Investor Relations for Penumbra. Ms. Hamlin-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 third quarter of 2021. A copy of the press release and financial tables, which includes a 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 safe harbor 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, 2020, filed with the NCC. 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 more complete discussion 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 disclaims 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 Yuen, our Chief Financial Officer, will then discuss our financial results for the third 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 to Adam Elsesser.

Thank you, Chi. Good afternoon, everybody. Thank you for joining Penumbra's third quarter 2021 conference call. Our total revenues for the second quarter were $190.1 million. A year-over-year increase of 25.8 percent is reported and 25.6 percent in constant currency and a 3.2 percent sequential increase from the prior quarter. For the third quarter of 2021, we recorded operating income of $8.8 million or 4.6 percent of revenue compared to an operating loss of $20.2 million or 13.3 percent of revenue during the same period last year. Against the backdrop of the spreading Delta variant, particularly in the first part of the quarter, our team executed very well. Our vascular business achieved record results, and our neuro business nearly matched a record quarter as well. Our business was exceptionally strong in the United States, where our latest products in both vascular and neurothrombectomy are experiencing strong adoption. Overall, our business accelerated throughout the quarter, driven by the red series of stroke catheters and continued strength in vascular thrombectomy, while our embolization business also performed well, especially as the fall season progressed. I also want to acknowledge our physician customers and hospital staff. who against challenging circumstances, especially with COVID, worked particularly hard to take care of their patients. As a company, we think we are in the best position we've ever been to help more patients than ever before. As we look forward and the world emerges from this pandemic, the three key dynamics that have defined Penumbra, constant innovation, hiring the best people and execution once again to find our work in the third quarter and give us a lot of confidence that we can deliver strong, durable growth for years to come. As it relates to hiring the best people, we are adding remarkable people to the Penumbra team. In addition to the new engineers, other professionals, and best-in-class salespeople that we added, I would like to call your attention to new senior additions. Fred Havard and Joan Christensen recently joined us with decades of senior medical device experience. Fred will lead international commercial efforts as senior vice president, focused on areas outside of Europe and North America. Joan will lead our efforts in Europe and the Middle East as vice president and head of Europe. Also, Riley Russell, a former senior executive at Sony Interactive Entertainment, working on Sony PlayStation and third-party developers, has joined us as Executive Vice President of Third-Party Partnerships for Immersive Healthcare. And Amir Rubin, the former CEO of Sixth Sense, is leading our research efforts for Immersive Healthcare as Executive Vice President of Research for Immersive Healthcare. Also, we will continue to promote as well as add additional senior members to the team in the quarters ahead. Now let's focus on our products. Starting with our vascular business, we reported growth of 40.3% year over year to $105.5 million in the third quarter. Vascular thrombectomy revenue increased 10% sequentially in the United States with strong performances across venous, PE, arterial, and coronary. We continue to see accelerating growth in new physician customers adopting our thrombectomy products in the third quarter, which we think is a testament to both excellent patient outcomes and the value proposition our proprietary computer-aided lightning thrombectomy system brings to the healthcare system. We are focused on the opportunity to expand the paradigm of single-session therapy to many more patients going forward. As evidenced by strong results in the third quarter, our computer-aided lightning technology is resonating with an increasing number of physicians and is becoming an integral part of the treatment algorithms in PE, venous, and arterial procedures. Indeed, both Lightning 12 and Lightning 7 produced strong growth in the quarter, growing double digits sequentially in the U.S., Like other unique and transformational products we have developed, our lightning platform is the product of our focus on constant innovation dedicated to what's truly important to successful and safe outcomes for patients and the most talented team of engineers and product development professionals in the industry. Moreover, we continue to invest in innovation, clinical studies, and market development initiatives to reach the 90% of patients that can still benefit from this technology each year. In sum, we are just getting started, and our team's work continues. Moving to coronary, we continued seeing an accelerating number of physicians utilize CatRx to treat their patients in the quarter. We have a tremendous opportunity ahead of us with CatRx, having reached only about 10% of the coronary patients we believe we can help the most, those with high thrombus burden. Also, we look forward to the presentation of results of the CHETA study, which will be highlighted during the featured clinical research session at the upcoming TCT conference in Orlando, Florida, in two days, on Friday, November 5th. I will be in attendance, and I hope to see many of you there. Within our vascular embolization business, we matched our record numbers Second quarter results, notwithstanding, Q2 benefited from some catch-up in deferred procedure, while this quarter faced a modest COVID headwind. The uniqueness and breadth of our vascular embolization portfolio continues to resonate with physicians who are finding more reasons to use our products in both chronic and acute settings, including continued strong adoption of Ruby LP, which had another record quarter. Let me now turn to our neuro business in which we recorded growth of 11.5% year over year to $84.7 million in the third quarter. The neuro team has done incredible work alongside our physician customers throughout this pandemic. The initial launch during the quarter of red 72 and red 68 in the United States went extraordinarily well. Paired with red 62, The red series expands upon our US stroke portfolio, which recorded robust 17% sequential growth this quarter. Physicians in the United States have responded very positively to the red series. The extraordinary tractability and clot removal capabilities of the red series, driven by our new red glide coating technology and proprietary catheter architecture, are unrivaled in the field. And the breadth of the Red Series allows physicians to choose the catheter that best matches the patient's vessel size. In sum, the Red Series is designed to give physicians the technology they need to use aspiration as frontline treatment and maximize the ability to achieve first pass success. One of the hallmarks of our neuro business is portfolio breadth, with our stroke access and embolization franchises complementing each other extraordinarily well. Our neuro access business produced another record quarter led by continued adoption of BMX 96 and strong international growth. Our neuro embolization business nearly matched our record Q2 results, notwithstanding the COVID related headwinds to these type of procedures in the third quarter. In sum, We expect momentum to continue in our neuro business as we continue to invest in our team, our innovation engine, and important initiatives to expand access to our neuro products to more patients going forward. Let me now turn to our immersive healthcare business. We hosted an investor day in late September that marked a monumental moment for Penumbra. In addition to announcing the acquisition of Sixth Sense, A leader in virtual reality technology and our longtime partner we outline plans to build a platform to provide immersive therapy. To 10s of millions of patients across a broad range of healthcare settings. The combination of our proprietary hardware tracking technology software and unique content sourced from our own studio. Second party partners as well as a robust group of third party developers. define the real platform and the ecosystem we plan to build as we try to help over 50 million patients in the US alone. The feedback we have received since this event from the healthcare community has been extremely positive. We are dedicated to the important work ahead. Turning to our international markets, China continues to be a strong contributor to our business and we see significant opportunities for additional growth well into the future. In addition, we continue to see good momentum in our Japanese business, where we look forward to introducing our latest stroke and neuro products, our entire vascular product portfolio, and eventually our immersive healthcare platform in the future. Our EMEA, Latin America, and Asia Pacific businesses all showed solid growth year over year, And we think there are many opportunities to expand our presence in each one of these geographies going forward. Overall, notwithstanding the challenges all companies are facing, we are confident that we are set up to help more and more patients with our existing and future products across all of our product categories and geographies. I would now like to turn the call over to Maggie to go over our financial results for the quarter.