Penumbra, Inc.

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 2024. 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 31st, 2023, filed 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 discussion of these factors and other risks that may affect our future results or the market price of our stock. Penumbra disclaims any need to update or revise our forward-looking statements as a result of new information, future events, developments, or otherwise. On this call, financial results for revenue and gross margin are presented on a GAAP basis. while operating expenses, operating income, and adjusted EBITDA are presented on a non-GAAP basis. The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. Non-GAAP operating expenses and operating income exclude expenses related to the wind down of our immersive healthcare business in the third quarter of 2024 of $5 million, a one-time expense associated with the acquisition IPR&D of $18.2 million in the third quarter of 2023 and amortization of acquired intangible assets of $2.4 million in the third quarter of 2023. Adjusted EBITDA of $56.7 million for the third quarter of 2024 excludes the wind-down expenses, stock compensation expense, depreciation and amortization, provision for income taxes, and interest income expenses. 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 of 2024. And Jason Mills, our Executive Vice President of Strategy, will discuss our 2024 guidance. With that, I would like to turn the call over to Adam Elsesser.

Thank you, Cecilia. Good afternoon. Thank you for joining Penumbra's third quarter 2024 conference call. In the third quarter, we generated total revenue of $301 million, representing a year-over-year increase of 11.1% on a reported basis and 10.9% on a constant currency basis. Our third quarter results reflect another strong performance by our U.S. thrombectomy business, driven by continued adoption and further market penetration of our current CABT portfolio, Lightning Flash 2.0 and Lightning Bolt 7.0. U.S. thrombectomy grew 21.2% year over year to $162.1 million, with our U.S. VTE franchise delivering revenue growth of 32% year over year and 13% sequentially. The balance of our U.S. thrombectomy franchise continued to perform very well in line with our expectations. In the quarter, we received FDA clearance for two new CAVT products, Lightning Bolt 6X and Lightning Bolt 12, which further enhance and build out an increasingly comprehensive CAVT portfolio. I will provide additional details on these products later in my prepared remarks. In addition, we received CE mark for Lightning Flash 2.0 and Lightning Bolt 7 in mid-September, and are in the early phases of introducing our transformative technology to European markets. The trend of improving profitability continued in the third quarter, with gross margins expanding to 66.5% up 90 basis points over the prior year period, and non-GAAP operating income of $40.3 million, or 13.4% of revenue in the third quarter, up 110 basis points year over year. Behind positive product mix shift and operating efficiencies, we continue to see a path to a gross margin profile of over 70% within the next 18 to 24 months and expect non-GAAP operating margin expansion to outpace gross margin expansion for the foreseeable future. Additionally, backed by strong revenue growth, expanding gross margins, and disciplined operating spend this quarter, we generated $51.3 million in operating cash before you include the impact of our $100 million stock buyback. We are well positioned to continue to increase our profitability and operating cash flow into the future. Within our U.S. peripheral business, the standout of the quarter was Lightning Flash 2.0. Flash 2.0 consistently removes blood clots in VTE patients considerably faster than all older products. Given the speed of the procedure now with Flash 2.0, there is no significant blood loss. This Flash 2.0 technology compares very favorably to other companies' older technology that takes much longer to remove blood clots with enough blood loss to make physicians feel like they need to return blood to the patients. As a result, Flash 2.0's performance continues to command physician interest, and our third quarter results reflect strong adoption of our latest Flash technology in its first full quarter on the market, with September representing our highest month of VTE procedure volumes ever. as we continue to gain VTE market share. The speed of FLASH 2.0 was extremely evident in a PE case this quarter, where a firefighter who was 39 weeks pregnant was treated for a very serious PE with a FLASH 2.0. The speed of the procedure saved the patient and her baby. I had the privilege of watching a video of her and her baby being greeted by a line of firefighters when she was being discharged from the hospital. In addition, we received FDA clearance for Lightning Bolt 12, expanding our portfolio of latest generation CAVT products engineered to address VTE. Lightning Bolt 12 combines our proprietary modulated aspiration technology validated by Lightning Bolt 7 strong clinical outcomes with a catheter size designed to address smaller parts of the venous anatomy. The initial cases have gone very well, and this technology expands the number of VTE patients we can treat with our CAVT technology. While we expect modest initial contributions in the fourth quarter, looking to 2025 and beyond, We view CAVT's demonstrated value proposition and our increasingly comprehensive VTE-focused CAVT catheter portfolio, helping accelerate conversion from other mechanical thrombectomy products, lytics, and medical management. Our U.S. arterial business, led by Lightning Bolt 7, continued to perform well in the third quarter. FDA clearance of Lightning Bolt 6X in September further expands the reach of our advanced CAB technology to smaller arteries, including below-the-knee arterial occlusions, where our legacy catheters are currently used to treat a portion of the patient population. The introduction of Bolt 6X will deliver CABT's benefits, improve procedure efficiency, and a reduction in procedure times to these patients. Similar to Lightning Bolt 12, we expect modest contributions from 6X in the fourth quarter as we commence commercialization. That said, we see a meaningful opportunity for our arterial-focused CAVT portfolio, currently including Bolt 7 and Bolt 6X, to accelerate physician conversion from open surgery or the use of lytics to a computer-assisted endovascular-first approach to treating arterial clotting. Despite significant progress to date, we remain in the early stages of helping the over 800,000 patients annually in the U.S. who suffer from VTE and arterial clot with our proprietary CAVT technology. Turning to the neurovascular business, our team delivered another solid double-digit performance in stroke thrombectomy. As interest wanes in the super large-bore OE8 catheters as aspiration catheters, most of the companies with those products have switched to positioning them as guide catheters. This positions us very well with our market-leading aspiration portfolio, led by REDD72 with our proprietary SENDIT technology and REDD43, as we prepare to bring Thunderbolt and the benefits of our CAVT technology to the neurovascular field. As we previously announced, our Thunder trial recently completed enrollment with follow-up scheduled to be completed by the end of the year. We will provide additional future updates as appropriate, but needless to say, we are excited about the prospect of bringing CAVT and its demonstrated clinical benefits and procedural advantages to the neurovascular field for further solidifying and enhancing our market leading position in the field of stroke thrombectomy. Shifting to our international business, In September, we received CE mark for Lightning Flash 2.0 and Lightning Bolt 7, further expanding the global reach of our latest CAVT technology. Physician interest in the technology in European markets is high. And while we have commenced initial sales, we expect revenue contributions to scale in a measured fashion, given the current reimbursement landscape across the region. That said, over time, we see opportunity for CAVT in international markets supported by the work we're currently doing in reimbursement and clinical evidence generation and backed by strong commercial execution. As we look toward 2025 and beyond, we view a significant opportunity for CAVT to globally transform the way blood clots are addressed and treated. Over the near term, we are focusing on executing a four-pronged strategy that we've previously laid out. Number one, constant innovation to further enhance CAVT's comprehensive value proposition and further expand the patient population with clot burden able to be treated with CAVT therapy safely, effectively, swiftly, and simply. Number two, clinical and health economic data generation via randomized clinical trials, real-world studies, and our market access initiatives to increase awareness, not only of CAVT's outcomes benefits, but also of the economic benefit to hospital systems. Number three, investment in our commercial and market access teams to fully realize CAVT's potential and support sustainable, strong growth in the number of patients able to benefit annually from a computer-assisted interventional approach. And number four, executing our strategy with a disciplined focus on driving operating efficiencies and an improving profitability profile. I'll now turn the call over to Maggie to go over our financial results for the third quarter.

Thank you, Adam. Good afternoon, everyone. Today, I will discuss the financial results for the third quarter of 2024. Financial results on this call for revenue and gross margin are on a gap basis, while operating expenses and operating income are on a non-gap basis. The corresponding gap measures are and our reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. For the third quarter ended September 30th, 2024, our total revenues were $301 million, an increase of 11.1% reported and 10.9% in constant currency compared to the third quarter of 2023. Our geographic mix of sales for the third quarter 2024 was 75.2% U.S., and 24.8% international. Our US region reported growth of 16.2%, driven by 21.2% growth in our thrombectomy franchise. Our international regions decreased by 1.9% reported and 2.5% in constant currency, primarily due to a reduction in China revenue of $13.6 million, which was offset by an increase of $12.2 million in all other international regions. The sequential growth in our total revenues of 0.5% was primarily driven by an increase in our US thrombectomy revenue of $8.3 million, relatively flat revenue in Europe, and offset by a decline in China revenue of $9.4 million. Moving to revenue byproducts. Revenue from global thrombectomy business grew to $204.1 million in the third quarter of 2024, an increase of 14% reported and 13.8% in constant currency compared to the same period last year. Our US growth of 21.2% is driven primarily by continuous adoption of CAVT. Our international business declined by 7.1%, primarily driven by a decrease in China revenue, which was offset by an increase in all other international regions as compared to the same period last year. Revenue from embolization and excess business was $96.9 million in the third quarter of 2024, an increase of 5.5% reported and 5.2% in constant currency. which is in line without expectations and primarily driven by an increase in the U.S. Gross margin for the third quarter of 2024 is 66.5% compared to 65.6% for the third quarter of 2023. We delivered 90 basis point improvements driven by favorable thrombectomy product mix across all regions and strong productivity improvements. Additionally, Sequentially, we had a 100 basis point improvement in our gross margin, excluding the one-time $33 million immersive healthcare inventory write-off in the second quarter of 2024, which reflects higher thrombectomy product mix and favorable distributor mix. Our manufacturing team will focus on ramping up our volume while driving our productivity and efficiency for our new product launches in the fourth quarter. Now onto our non-GAAP operating expenses, non-GAAP operating income and margin, and adjusted EBITDA. Total operating expense for the quarter was $160 million or 53.1% of revenue compared to $144.5 million or 53.3% of revenue for the same quarter last year. Our research and development expenses for Q3 2024 were $22.6 million compared to $21 million for Q3 2023. SG&A expenses for Q3 2024 were $137.4 million, or 45.6% of revenue, compared to $123.5 million, or 45.6% of revenue, for the third quarter of 2023. We recorded operating income of $40.3 million or 13.4% of revenue in the third quarter of 2024 compared to an operating income of $33.2 million or 12.3% of revenue for the same period last year. We wound down the immersive healthcare business in the later half of the quarter. resulting in GAAP operating expense savings of approximately $6 million. We expect to create GAAP operating expense savings of approximately $40 million a year moving forward. With the full quarter of immersive savings, we expect to continue our sequential margin expansion into Q4 2024. We posted adjusted EBITDA of $56.7 million, or 18.8% of total revenue, compared to $51.5 million, or 19% in the third quarter last year. Turning to cash flow and balance sheet. We ended the third quarter with cash, cash equivalents and marketable security balance of $291 million and no debt, which is a decrease of $48.7 million sequentially due to the stock repurchase of $100 million during Q3 2024. Excluding the stock repurchase, our operating cash increased by $51.3 million, driven by operation profitability and improvement in working capital management. We continue to expect positive operating cash flow trends for the rest of 2024 and beyond. And now I'd like to turn the call over to Jason to discuss our guidance.