Penumbra, Inc.

today's call to discuss Penumbra's earnings release for the third quarter of 2025. A copy of the press release and financial tables, which includes a gap to non-gap reconciliation, With me on today's call are Adam Elsesser, Chairman and CEO, Shruti Narayan, President, and Maggie Yuen, Chief Financial Officer. Also joining us for the Q&A portion of the call is Jason Mills, EVP, Strategy. 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, 2024, 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 duty 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 gap basis, while operating expenses, operating income, and adjusted EBITDA are presented on a non-gap basis. The corresponding gap measures and a reconciliation of gap to non-gap 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, and adjusted EBITDA excludes wind-down expenses, stock compensation expense, depreciation and amortization, provision for income taxes, and interest income expenses. And with that, I would like to turn the call over to Adam.

Thank you, Cecilia. Good afternoon. Good afternoon. Thank you for joining Penumbra's third quarter 2025 conference call. In the third quarter, we generated total revenue of $354.7 million, representing underlying year-over-year growth of 17.8% on a reported basis and 16.9% on a constant currency basis. Our strong third quarter results reflect broad-based execution against our strategy and significant progress in further enhancing our competitive technological and market positioning across all franchises. Total U.S. revenue was $275 million in the third quarter, an increase of 21.5% compared to the third quarter last of 2024. Total U.S. thrombectomy sales increased 18.5% year over year to $192 million. Our VTE franchise once again led overall corporate growth, delivering 34% year over year growth. U.S. embolization across an access revenue of $83 million increased 29.2% year over year. Growth in our embolization and access business exceeded our expectations, reflecting the benefit of a dedicated peripheral embolization sales team alongside our investment in continuous innovation and new product introductions. Internationally, the work we previously undertook to enhance our long-term market positioning is beginning to play out. We are now operating from a position of portfolio and geographic strength, with our commercial execution in the quarter more than offsetting the China growth comp headwinds we continue to face. Total international revenue of $79.7 million increased 6.6% year over year, or 3% in constant currency. Below the top line, gross margin of 67.8% expanded 130 basis points over the prior year period. and we delivered operating income of $48.8 million, or 13.8% of revenue, with our operating expense in the quarter reflecting the full impact of our embolization sales force build-out. We remain on track and are well-positioned to achieve a gross margin profile of over 70% by the end of 2026 and expect operating margin expansion to outpace gross margin expansion for the foreseeable future as we prioritize delivering profitable growth and an expanding profitability profile. Turning to our US peripheral business, our third quarter thrombectomy performance reflected both the clinical benefit and competitive strength of our CAVT technology alongside enhanced commercial focus from our now peripheral thrombectomy dedicated sales force. We delivered the highest sequential quarterly increase in VTE case volume growth to date in 2025. Our U.S. arterial business also delivered another strong performance with a combination of BOLT7 and BOLT6X supporting further physician conversion from open surgery or the use of lytics to CAVT. Penumbra received FDA clearance during the third quarter for both Lightning Bolt 16 and Lightning Flash 3.0. Lightning Bolt 16 brings proprietary modulated aspiration technology to our 16 French system, and Flash 3.0 improves the fidelity of the algorithm by updating both the hardware and the software. These new products significantly add to the growing portfolio of advanced CAVT devices, opening up a clear path for us to reach the over 800,000 patients in the US who suffer from VTE and arterial clot with our CAVT technology. I also want to remind everyone that the core technology in our CAVT products is protected by a robust patent portfolio. We recently secured a victory from the Court of Appeals for the Federal Circuit, which summarily and unanimously affirmed the Patent and Trademark Appeal Board's IPR decisions in validating several competitive patents challenged by Penumbra. We will continue to vigorously defend all of our patents and IP for our CAVT technology. At the TCT and VIVA conferences, we presented the landmark results from STORM-PE, the prospective multicenter randomized controlled trial evaluating CAVT plus anticoagulation versus anticoagulation alone for the treatment of acute intermediate high-risk PE. Truthy will provide additional detail on the trial and study outcomes in her prepared remarks. But needless to say, taking into account the medical community's reaction to the data, we are highly optimistic that STORM-PE will act as a major catalyst in positively impacting the treatment of PE while significantly increasing the number of patients receiving intervention with CABT. In our U.S. peripheral embolization business, our new EMBO-dedicated 50-plus member sales team delivered strong 21.2% sequential growth in embolization revenue in the quarter. We believe the team's performance this quarter and the enhanced focus across our comprehensive current COIL portfolio represents a new phase of sustainable growth and our U.S. embolization franchise. Shruti will discuss how the integration of this new team is unfolding. Shifting to our neurovascular business, recent market trends in the macro U.S. stroke market showed a slight decline in the third quarter. Notwithstanding that, our stroke thrombectomy portfolio delivered positive growth and share gain. Historically, new innovation has catalyzed the stroke market, and we are optimistic that with the anticipated introduction of Thunderbolt, we will see a similar dynamic play out. In neuroembolization, the recent interest we've seen in utilizing our swift coil for MMA embolization continues to translate into extremely strong above-market procedure growth. further contributing to sustainable growth in the US embolization franchise. Now I'd like to give you an update on Thunderbolt. In October, we submitted thorough responses to all the outstanding questions received from the FDA during the 510 review process. We are now in the stage where we address any final questions or provide any required clarifications to our answers. for obvious reasons, will be prudent in our discussion today about Thunderbolt. However, we remain excited about the prospect of introducing CAVT to the neurovascular field. Overall, based on our third quarter performance and reflecting the trends we've seen in our business and our target markets highlighted previously, we are raising our revenue guidance for the year to $1,375,000,000 to $1,380,000,000. We reiterate 20 to 21% year-over-year growth for 2025 for US thrombectomy. Now I will turn the call over to Shruti, who will discuss a few details on the expansion of our sales team, as well as the STORM PE trial.

Thank you, Adam. Good afternoon, everyone. Starting off with an update on our recent commercial expansion initiatives. Based on the significant ramp in physician interest in CAVT we experienced throughout 2023 and 2024, entering 2025, we made the strategic decision to build out an additional peripheral sales team to focus on our embolization business, enabling our existing peripheral sales team to shift exclusive focus to CAVT. Through the first half of 2025, we added over 50 new peripheral embolization sales reps under our existing peripheral sales leadership team. The build-out and integration went extremely well with the new team fitting seamlessly into our organization. This allowed the team to execute the launch of RubyXL while also maintaining our momentum in our established portfolio, achieving strong 21.2% sequential growth in embolization revenue in the third quarter. As we execute the shift in our commercial structure, our existing team helped integrate our new team and supported the transition of embolization case coverage across our accounts. This transition process will taper in the fourth quarter while positioning our teams to enter 2026 fully focused on their respective sales objectives, CAVT and embolization. Turning to Storm PE at the TCT conference early last week, Dr. Rob Lukstein presented the study's primary endpoints alongside key safety data. Additional secondary endpoint data, including key physiological and functional outcomes, was presented by Dr. Rachel Rozovsky at VIVA earlier this week. The trial proved CAVT superior in reducing right heart strain in intermediate high-risk PE patients with a comparable safety profile to the current standard of care. In addition, while not powered to show statistical significance on secondary endpoints, The trial data demonstrated statistical significance in favor of CAVT across multiple secondary endpoints. In addition, the initial trial results were published in circulation on Monday. Storm PE proved CAVT superior to the current standard of care across the primary as well as multiple secondary endpoints showing CAVT patients recovered earlier and have significant long-term improvement in functional outcomes. The trial also highlighted the ability of the field's most advanced technology to deliver faster procedure and device times, reestablishing the baseline and expectations around acceptable case times. With procedurals in the trial requiring minimal prior experience with FLASH ahead of enrolling patients in STORM-PE, the strong results also highlight CAVT's ease of use and exceptional safety profile. The physician feedback across the interventional and non-interventional community has been enthusiastically positive. Since the presentations, we are seeing a shift to CAVT from older mechanical thrombectomy options for PE. We expect to see this continue. We are also working with societies and organizations to disseminate the now published data from STORM-PE to hospitals so they can update their current hospital protocols. Over the next year, this will be one of our top priorities. We are executing at a high level across our peripheral and neuro business units and are well positioned to continue to build off our groundwork to date. As we look toward 2026 and beyond, We remain highly confident in our long-term strategy, grounded in meaningful innovation, data generation, and investment in our team, supporting durable, profitable growth and the ability to treat a significant number of patients with our technologies. I'll now turn the call over to Maggie to go over our financial results for the third quarter of 2025.

Thank you, Sruthi. Good afternoon, everyone. Today, I will discuss the financial results for the third quarter of 2025. Financial results on this call for revenue and gross margin are on a GAAP basis, while operating expenses, operating income, and adjusted EBITDA are on a non-GAAP basis. The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in a posted press release. For the third quarter and the September 30th, 2025, our total revenues were $354.7 million, an increase of 17.8% reported and 16.9% in constant currency compared to the third quarter of 2024. Our geographic mix of sales for the third quarter of 2025 was 77.5% U.S. and 22.5% international. our U.S. region reported growth of 21.5%, driven by 18.5% growth in our thrombectomy franchise and 29.2% growth in embolization and excess, driven by our Ruby XL product compared to the same period last year. As we previously shared, due to easing of China's headwind and double-digit growth for the remaining international regions, our international business has returned to growth increasing by 6.6% reported and 3% in constant currency compared to the same period last year. Moving to revenue by product, revenue from our global thrombectomy business grew to $236.4 million in the third quarter of 2025, an increase of 15.8% reported and 15.1% in constant currency compared to the same period last year. The growth was primarily driven by an increased 18.5% increase in our U.S. thrombectomy business. As expected, our international thrombectomy revenue also increased by 5.6% when compared to the same period last year. Revenue from our embolization and access business was $118.3 million in the third quarter of 2025, an increase of 22% reported, and 20.8% in constant currency compared to the same period last year, primarily driven by an increase in US peripheral embolization sales due to the momentum from our successful launch of RubyXL, combined with strategic investment we made in expanding our US embolization team in the first half of the year. Gross margin for the third quarter of 2025 is 67.8% compared to 66.5% for the third quarter of 2024. And consistent with our expectations, we deliver sequential gross margin growth of 180 basis point, driven primarily by favorable regional mix, product mix, and productivity improvements. We are very pleased at how quickly the team stabilized our RubyXL build. of which our RubyXL product has an accretive impact on our gross margin and the sales model supports a more efficient working capital dynamic. In addition, we are on track to achieve our full-year gross margin targets and remain well-positioned to deliver our long-term gross margin profile of 70% by the end of 2026. Now on to our non-GAAP operating expenses, non-GAAP operating income and margin, and adjusted EBITDA. Total operating expense for the quarter was $191.6 million or 54% of revenue compared to $160 million or 53.1% of revenue for the same quarter last year. Our research and development expenses for Q3 2025 were $22.7 million or 6.4% of revenue compared to $22.6 million or 7.5% of revenue for Q3 2024, which reflects savings of $3.6 million due to our immersive business wind down offset by continued investment in product development. SG&A expenses for Q3 2025 were $168.9 million or 47.6% of revenue compared to $137.4 million or 45.6% of revenue for Q3 2024. As we have stated previously, we have made targeted hires in our commercial and market access teams, which will support customer demand and allow us to capitalize on long-term growth drivers. Sequentially, our SG&A expenses increased by $8.9 million, reflecting the full quarter presence of our embolization sales team investment, along with other variable spend. With this bill out now complete, we are positioned to capture sales and operation leverage in future quarters. We recorded operating income of $48.8 million or 13.8% of revenue compared to an operating income of $40.3 million or 13.4% of revenue for the same period last year. We posted adjusted EBITDA of $66.7 million, or 18.8% of total revenue, compared to $56.7 million, or 18.8% in the third quarter last year. Turning to cash flow and balance sheet, we ended the third quarter of 2025 with cash, cash equivalents, and marketable security balance of $470.3 million and no debt, which is an increase of $45.7 million sequentially. This increase includes improving working capital ratios in both receivable and inventory turns and strong profitability. We continue to expect positive operating cash flow trends to continue in 2025 and beyond. Turning to 2025 guidance, as Adam previously stated, We are raising our revenue guidance for the year to $1,375,000,000 to $1,380,000,000. We reiterate 20% to 21% year-over-year growth for 2025 for U.S. thrombectomy. Finally, we maintain our previously stated 2025 growth and operating margin expansion guidance. This concludes our prepared remarks. Operator, you can now open the call to questions.

Thank you, and at this time, I would like to remind everyone in order to ask a question press star and then the number one on your telephone keypad if you would like to withdraw your question press star one a second time and we'll pause for just a moment to compile the Q amp a roster. And our first question comes from the line of Travis speed with Bank of America, your line is open.

Hey, congrats on the good quarter. I'll start with Thunderbolt since it's topical. This sounds like you're a lot closer to approval than you were. I assume nothing surprising with the FDA back and forth, but just, you know, maybe how you're thinking about the product when it hits the market, you know, how much share you can take and how much and when investors will see the data from Thunderbolt. Anything else you can share on the FDA process would be helpful if you could have the product approved by your end or not.

That's great. Thanks, Travis. A lot of nuances to that question, so let me try to cover as much as possible. Let's maybe start with the process. give a little additional color and then we can talk about a point in time of what happens subsequently. I know there's been a lot of comments and thoughts around the timing of the process. I want to maybe level set the process and the timing because there's some, I think some maybe misunderstanding. Thunderbolt is a brand new product. It doesn't, it's not already approved. It doesn't, it's not just seeking a new indication. So I know in the past there's been comparables to products that have been already on the market that have a history that have, you know, safety information that, you know, obviously the FDA sees and collects and all they're looking for is a new indication. That's a different, time period usually, and those can be shorter. For products that are brand new, those processes, at least in our experience with the neuro division, sometimes take a while. For example, this is not fundamentally different timing than our original Red 72 silver label, which was an update on an existing product, but it was a new product with some new materials and so on. And it takes a while because the FDA, and I applaud them for this, are incredibly thorough. So there's nothing about this process and timing, but we're feeling at least better. hopeful and optimistic. Needless to say, you know, without sharing competitive information about what does a launch look like, and obviously we don't want to do that, we obviously are ready to launch this product and are excited about it when that time comes that we can do that. So we'll stay optimistic and, again, Got to have a little prudence until we have a clearance letter from giving you more sort of detail on that.

Okay? Makes a lot of sense. And maybe a follow-up on the storm PE secondaries, now that those are out earlier this week and you've had a chance to talk to doctors. Curious how you're thinking about kind of the impact to the market and acceleration of the market and the potential to kind of take share given your safety profile on the device.

Yeah, there's a couple of interesting and exciting things that have happened. One, you know, the reaction to the data within the medical community has been really just incredibly positive. I think, you know, folks who were at either TCT or VIVA both saw that, they felt it. The safety, you know, the endpoints, the primary endpoint, and of course, the secondary endpoints are really, really positive and strong and will have a big impact on non-interventionalists as well. But in addition, the safety profile of the product was really striking. And I think that's led to a number of interventionalists who have not traditionally used our product call and want to start doing cases and have done cases in the last really week since last Sunday with our product really for the first time and multiple cases. So That momentum is exciting as the field moves from the older technology that sort of got the field started to sort of the more modern CAVT technology. And as it relates to the non-interventional community and sort of what that reaction is, which is really core to building this market and growing it, Shruti maybe can give you some additional comments. She's had a number of conversations with people and can share her perspective.

Yeah, thanks, Adam. So yeah, on the non-interventional, you know, community, for example, specific conversations with like pulmonologists, hematologists, they're all now very happy that there's validation that right heart recovery then leads to, you know, leads to the sort of six minute walk test progress that we saw in the functional outcomes. And so they're now doing the work to start updating protocols within their institutions and start to see more and more patients get access to care. That was a comment Dr. Rachel Rosovsky made on the podium right at the end of the presentation. And now different physicians in the non-interventional community are looking at their own hospital protocols to make those updates. Just since the release of Rachel's presentation on Monday, I've had conversations myself with physicians that have had the same reaction. So I think it's really positive for the field and hopefully is going to open up access to care for a lot more patients.

That's great.

Thanks a lot. Thank you. And our next question comes from the line of Robbie Marcus with JP Morgan. Your line is open.

Oh, great. Congratulations on a nice quarter. Thanks for taking the questions. I wanted to touch on margins here. I'll stray away from the revenue questions. And reiterating gross margin and operating margin guide, just wondering how you're thinking about the ability to drive margins. Is Thunderbolt going to be a big component to get those moving higher versus... you know, where you were thinking originally and how should we be thinking about the impact of tariffs and how that impacted full year 25 margins?

Thanks. Let me start briefly and then Maggie can address most of those. All of our CAVT products have, you know, very, very strong margins. So all of them, whether it's just, you know, Thunderbolt or any of the other areas that we've just spent a lot of time talking about have the ability as that mix changes. The other thing is with our newest coil that we launched, that's also a creative. So I think we're feeling pretty good, but Maggie can maybe go through some of the more specifics.

Yeah. Yeah. Thanks. With the remaining factors. Yeah. This quarter, you see favorable, especially on a regional mix standpoint, since we have seen a lot of U.S. growth, but continued product mix and also the recovery from the operation teams to stabilize our Ruby XL yield improvement and productivity. and going into Q4, we'll continue to see this trend. I think we'll continue to see sequential improvement from product mix, regional mix, and productivity improvement, and also some volume leverage. I think what we have seen in this quarter already reflected some tariff impact. We do not have material impact on tariff, although still a little bit, but we the number and trend that we've seen has already reflecting absorbing those headwinds.

Great. Maybe just a quick follow-up. If I zoom in on thrombectomy, US and OUS, but I guess more specifically US here, it's been decelerating throughout the year. I imagine a lot of that has been pressure in the stroke market offset by really strong venous growth market growth and penumbra growth how do you think about if you know is it fair to assume that it'll continue to um downward trend or do you think there might be a stabilization in stroke as we move down to 26 with with um venous you know offsetting that and returning it more towards accelerating growth thanks a lot yeah yeah robin thank you and um

Thanks for, you know, in the body of your question, sort of highlighting and pointing out the dynamic in the market. You're exactly accurate. Obviously, BTE has led to growth sort of quarter after quarter and some of that market growth, obviously some significant share gain. I think arterial has also been very, very strong. Stroke over the last couple of quarters has definitely been the drag. Now withstanding, we've held our own and used that opportunity to continue growing. So we're not negative there. We're not seeing a decline in our business. It's just not growing at the same rate, obviously. Over the course of the many, many years we've been in the stroke market. We have seen this. This happens. This is not new. And you've known that from watching us for many, many years. It comes in waves. It doesn't happen always linearly. So there's nothing at this moment to be particularly concerned about. I do think having... New technology, you know, that's very, very novel, not sort of similar to others, is usually been a pretty significant catalyst. And so that certainly could help. But even without that, you know, the market typically sort of. ebbs and flows a bit, and we would expect that to turn around. The fourth quarter is usually, you know, a growth quarter traditionally in terms of the volume that grows. But overall, I'm optimistic about the future. It just comes in these waves.

Great. Thanks a lot, Adam.

Thank you.

And our next question comes from the line of Larry Beagleson with Wells Fargo. Your line is open.

Good afternoon. Thanks for taking the question. Congrats on the nice quarter here, Adam. Hey, Adam, I wanted to ask about embo access, which was in the U.S., which was extremely strong in Q3. And in fact, you know, worldwide embo access grew faster than worldwide thrombectomy. So was there anything you would characterize as one time in Q3 that You know, how much of the strength was Ruby XL versus Swift, which you called out? And going forward, should we expect Emboaxis to now outpace thrombectomy? And I had one follow-up.

Yeah, it's a great question. We're really, to answer the immediate question, there was nothing one time about this quarter. The two things that were really stood out in the U.S., which was what was driving that, well, two things around the peripheral part of the business. One, we have a dedicated team for the first time in a while. So their focus is on that. Obviously, over the last few years, our focus with our peripheral team had been split between our coils and our thrombectomy, making it pretty hard to do both well. So I think that bodes well for our future that The integration, as Shruti said, was really seamless. And I'll be honest, I was incredibly impressed with every member of that team and the leadership of the sales team for getting to allow that to happen that way. It's not easy. It's not a normal process to be that seamless, and it really was. So I think we're in really good shape. I think what this shows is that there's a huge market and appetite for our very distinctive products that are different than others on the market. And I think that will continue. And I said that in my prepared remarks. As it relates to the neuro side, So I'm really, you know, fascinating to watch that the growth continues to happen there. The number of cases that people are doing in general for MMA embolization has increased notably and more and more people are. moving to our product because of the safety profile of it compared to more traditional means of treatment. So I think we're pretty optimistic about this business. And I think together with the thrombectomy, they both become equal drivers of growth. You know, obviously, you're going to see, you know, the time, you know, a quarters, you know, the quarter that you launch your product have, you know, slightly bigger growth on a sequential basis. But overall, I think going forward, we're not going to be looking at that business as dragging down our growth. I think both EMBO and thrombectomy will be an important part of our growth in 26 and beyond.

That's helpful. Adam, one quick one on the guidance. It does look like the guidance implies a deceleration in Q4. So my question is why? And the guidance for the year 15 to 16 percent for 2025 is about a 4 percent headwind from China. So I guess on a reported basis at 15 to 16 percent, is there any reason why growth would slow next year? Thanks for taking the question.

Yeah, look, I think we've been pretty clear about learning our lessons on guidance, not getting ahead of ourselves. I do not. We're obviously not going to give guidance. sort of backdoor guidance, if you will, for 2026. I'm not going to do that. We'll give our guidance on the fourth quarter call. But obviously, if you listen carefully, and you did, to what we've just said about our business and where we stand, we feel particularly good about where we stand, not just this quarter, but for a while to come, well into next year and the years beyond. Thank you, Adam. Thank you.

And our next question comes from the line of Joanne Winch with Citibank. Your line is open.

Thank you so much for taking the question. I want to dig a little bit into international sales, please. It seems, based on your commentary, that China headwinds are waning. At what stage are they done? And if we adjusted for said headwinds, what would OULS growth have been this quarter? Thank you.

Yeah, thanks. I think pretty much by next year, early next year, a lot of our headwind will be very minimal. We do have some China revenue a little bit this year, but I will look at it as a headwind for next year. In terms of our rest of the international region growth, We mentioned that other than outside of China, the rest of the international regions are growing in double digits. I think in the prior quarters, sometimes we have highlighted that thrombectomy part of the OUS a lot of time grow in the mid-teens. So that has been kind of our trend throughout this year and still a lot of growth momentum next year.

Thank you. Thank you.

And our next question comes from the line of Vijay Kumar with Evercore. Your line is open.

Hi, guys. Thanks for taking my question, and congrats on a nice spring here. Adam, maybe my first one for you on the Storm PE. I think in the past, you alluded to Storm PE as having the potential to change clinical practice. I'm curious, now that we've seen the primary and secondary endpoints, Is this enough to change practice? Should we start seeing an acceleration in procedures, adoption, or are there any sort of hurdles, if you will, on the adoption of thrombectomy in treating PE cases?

Yeah, look, I can only tell you what we have heard in the last week or so. Lots and lots of conversations. I will tell you that a number of non-interventionalists, and I think Shruti alluded to two pulmonologists that she's had personal conversations with, and a number of other non-interventionalists have indicated to us that they would be leading the effort in their particular hospitals to change the protocols based on this data. So I think the reaction the positive reaction to this data has been uniform just across interventionalists, non-interventionalists. So now the work starts to get protocols and hospitals changed. And, you know, usually, as we've said, you heard members of our steering committee say, you know, guidelines sort of lag behind practice sometimes. So I think you'll see the behavior and the protocols and hospitals change and guidelines will follow that effort. But, you know, it's been really heartening to see the excitement around this and not just with interventionalists, but with non-interventionalists, knowing that they now have a very strong alternative for when they know their patients need something more significant. So I think it's a good day for the field and a good moment in time. And We're very optimistic about that.

Understood. Then maybe one P&L question. Growth margins up 180 basis points, Q&Q. With the SG&A, growth was quite striking, up 25%. Was there any timing benefit or timing impact, if you will, on SG&A OPEX, or is this Is this a number being proactive as you look at the pipeline? Some people come to fruition.

Yeah, no, thanks for your question on the operating expense side. Most of the increases that you see is pretty much all from the investment of our team and the commercial team structure. We have pretty much completed the investment or the build out by the end of this quarter or last quarter. So going forward, we'll start to see more leverage and it will be investment level will be lower than what you have seen in earlier in the year.

Understood. Thank you. Thank you.

And our next question comes from the line of Brandon Vasquez with William Blair. Your line is open.

Hey, everyone. Thanks for taking the question. I wanted to stay on this storm PE train of thought for a minute, but I'll ask this question slightly different. But it sounds like there could be kind of an initial benefit from the current interventionalists performing more mechanical thrombectomy. But one of the other tertiary benefits that might come is really that like smaller hospitals that aren't using any thrombectomy at all today might start performing these procedures. We saw in the data that it was a very low learning curve, a lot of naive users in this trial. So the question that I'll kind of frame here is like, one, talk to us a little bit about the timelines and your expectations of kind of turning on some of these accounts, how difficult or easy that might be. And then two, once your foot is in the door with PE treatment, are there other venous opportunities now that you've placed the lightning in these smaller hospitals that you could start to go after as well?

Yeah, there's a lot to your question. So, you know, on a respectful time, I'll try to give you a fairly, you know, complete but brief answer. There's so many layers of opportunity here. There's practices that are Not treating everyone, which is the most of them who now will hopefully start to change their internal protocols. There are hospitals that don't really do intervention for PE that, as you alluded to, that might now take it on. sometimes that could also have a benefit because once you're doing PE, you really are sort of related to its cousin of DVT treatments. Some of those places are using our technology for arterial, for example, which is a little bit of a different dynamic. So there's some overlap. All in all, what it does is really put a spotlight on the newest technology, which is CAVT, the speed of those cases, the safety profile of those cases. In the past, as you know, we've talked about and presented really robust data on the health economics of that, which justifies doing this. You know, it's a procedure that is clearly validated, not only clinically, but also economically. So I think it just really opens the door for a lot of people. I personally had the experience at TCT of talking to a cardiologist who runs a very well-known national practice called but their group doesn't typically do PE. It's covered by another specialty in their hospital. And after hearing the data, they were particularly excited about getting in there, helping their colleagues, you know, opening up the coverage capacity pretty dramatically. So, and that was, you know, just one of many, many conversations. So, It takes some time, you know, can't all happen in one quarter, but it puts us in a really good spot for 2026. Okay.

And a separate follow-up question here. Forgive me if you guys had kind of gone over these details already before, but this is the first I'm hearing a little bit more of lightning flash 3.0. Can you just spend a minute talking about timings for when that goes into a broader launch, how important it is, where do you think we'll see the benefits of this 3.0 over 2.0? Thanks guys.

Yeah, so with 3.0 as Adam alluded to on the prepared remarks, it is really a hardware and a software update. And what it does is it really improves the fidelity. And so what that means is these cases, as you saw from Storm PE, 25-minute device times and really the fastest on the market right now. But Flash 3.0 is going to make it even faster, even better in terms of overall safety profile, blood mitigation, all the things that our physicians have now sort of come to expect. And so this really moves that even further forward by improving those case times even more.

And our next question comes from the line of Bill Plavonic with Canaccord. Your line is open.

Yeah, great. Thanks. Good evening. Thanks for taking my questions. The first is going to be, you know, I understand on the guidance you want to be conservative, but the high end of that guidance is up 2% sequentially. You did up 4.8 and 5.1 in the last year and the year before. And I'm just trying to, is there anything specific that you're concerned about that you're only guiding up to and not the five that would be in line with the past two years?

You know, Not something sort of I look at in all the various ways you look at it. I look at what we beat by and what we raised by. And I think that's a pretty solid guide up. We're obviously not going to want to get ahead of ourselves. And there's so much positive work to do over the next period of time. You know, let's give us a chance to get started. Let's get going. We're only a week into Storm PE. And I think we'll feel pretty comfortable. We got a couple of products to launch in peripheral and neurostrong. You know, bear with us. We'll be good. Yeah.

All right. And then just to follow up again on the FDA, I truly appreciate the update, a lot of detail today. My question is, is the FDA requiring any additional testing and or clinical data from you, or is this a purely back and forth at this point?

Yeah. So, again, I want to remain prudent. I was pretty clear about that. What I said in my prepared remarks is we have already answered very thoroughly all the questions that we had received at that point. So that has already been done. They are now in the phase where they can obviously ask for clarifications or additional questions, but So I can't tell you what that's going to be yet. But we've been through, you know, obviously for a period of time here, very, very thorough questions like any new product that they review in the neuro division. So totally appropriate and not totally unexpected.

And is the shutdown impacting their responses or are they continuing to work through?

As I can't speak to that on a sort of daily basis, but as of now, we have not experienced any sense of delay because of the shutdown. But obviously, that's a process that's in, you know, real time and continues. I can't speak to that, you know, what might happen, you know, end of this week or next week or what have you.

Okay, great. Thanks for taking my question.

Of course.

And our next question comes from the line of Michael Sarcone with Jefferies. Your line is open.

Good afternoon, and thanks for taking in the questions. There's been a lot of focus on store PE and pulmonary embolism. Your USVTE business continues to grow at a healthy clip. Maybe you can give us kind of the latest and greatest on trends on the DVT side of the business and how you're thinking about growth there.

Absolutely. Thanks. That's a great question. So on the DVT side, what we're again seeing is just a positive response to, you know, flash. 2.0, we have commented on the VTE segment as a whole growing consistently the past several quarters, and that trend is expected to continue. And you're just going to see physicians, as they hear about storm results, start adopting the technology on PE. And if they haven't yet used us on DVT, you're going to see that dynamic play out. So I think it just sets us up really well here for the future. Hopefully that answers the question.

That does. That's really helpful. And just, you know, one quick follow-up there. In the past, you've talked about, you know, DBT being a little bit different in that you're focused more on the health economic side and working in collaboration with some hospital accounts. I guess, you know, do you still have a focus there, and are you going to continue to execute on that kind of health economic data on the DBT side?

Absolutely. We're starting to see those results get presented at different conferences, just some of the market access data sets, working with the Vizient and the Premier databases. So the physician community is starting to hear about that. We also have our hospital engagement team that is actively having conversations with different folks within the hospitals to discuss you know, communicate that information. And what you'll also see is, again, the, you know, benefit of storm PE, you know, applies to the overall sort of VTE segment. So you're just going to see more excitement within the hospital to treat these patients. You know, the level one evidence that's now available will help on the DVT side as well.

Great. Thank you.

And our next question comes from the line of Peter Chickering with Deutsche Bank. Your line is open.

Hey, guys. Good afternoon. Thanks for taking my questions. If you follow Peter on US, throw it back to me. Can you talk about market share versus market growth in the quarter? And can you quantify how many new accounts you added this quarter and how you see that in the fourth quarter post the storm trial?

Yeah. Obviously, you know, we have – there's comparative – information out there with other companies. So obviously a huge chunk of this is all before Storm obviously came out, but a huge chunk of that was market share. And I think that that's known. It's not just number of new accounts isn't really the complete way to look at it, because obviously there are number of different physicians within each account. Some use one product, another uses another. So there's mix between that. So that's not a good measure. But when we look at The people who were using something and switched to us, that has continued all year long, obviously, you know, at the end of last year and all the way through this year. And really what was surprising was, I guess not surprising, but the pleasant to see is just in the last week, because of the data and the safety profile as, as one of the cited reasons for their switch, we saw people who have moved from older technology to newer and, and all signs are that that will continue. So I think it's a combination, you know, going forward of continued share shift to, from older type of, you know, technology to, to the newer CABT and, and, what will play out, I think, over the next year or so is the increase in the number of patients treated. And I think they're tied. DVT and PE play into each other that way. And I think you're going to see some growth over the next two, three years.

Okay. If I sit back and look at market growth, how many PERT teams do you think were created this year And I think just from a hospital look post-storm trials, there seemed to be a lot of excitement last week at TCT about starting more PERT programs.

Thank you. Yeah, I think, look, there's two different groups of PERT teams. There's the formal PERT teams that are also members of the PERT consortium, and then there are lots and lots of sort of local PERT teams that haven't joined the PERT consortium. Some of the time, smaller hospitals are just newer in the process. What I was very pleased to see is at the beginning of TCT, the PERT consortium announced a pretty significant effort over the next couple of years to dramatically increase the number of members of their consortium, as well as really help get sort of with the most current technology and and the idea that these people can be helped in a different way so i think there's a lot of energy ready um to go um and coming out of uh the the tct meeting and also at viva that was really clear that people are going to have either informal programs which is a cross-functional group of people caring about these patients differently or formalize them and be part of the PERT consortium. Either way, I think we're seeing a huge change in energy and focus around pulmonary embolism patients.

Great. Thanks so much.

Thank you.

And our final question comes from the line of Ryan Zimmerman with BTIG. Your line is on.

Thanks for squeezing me in. I appreciate that very much. So I'll ask the two questions up front. We haven't talked much about the interim update on Strike PE out of TCT, and I'm wondering if you can kind of give us your high-level thoughts, Adam, on that. You know, we look at the data, good kind of RVLV changes, but I think, you know, certainly there's some, you know, other aspects to it that may have stuck out or been on people's minds. I'm curious to kind of get your high-level thoughts. And then the other question is just directed at Shruti, which is embolization and access. You talked about it. These markets typically don't grow at the kind of rates that you're seeing. And so, you know, is it just the products themselves? Is it higher use of MMA? I'm just curious if you could kind of talk specifically about what is going to drive this durably for the time being.

Yeah. Yeah. Great questions. So on the first one there with Stripe PE, Just like you commented on, I mean, there's obviously STORM-PE is kind of the highlight right now, but STRIKE-PE certainly confirms the longer-term benefit of CAVT. As you may recall, that study goes out to one year and looks at functional outcomes longer term. How do these patients do out to one year? And so it just adds to the overall body of evidence. At VIVA, there was a specific subset presented on just the use of the flash product in these patients and their follow-up out to one-year treatment. At TCT, there was a data set around the high-risk PE patients and just showing that CAVT can have a real benefit in that patient group. So overall, I think it's just a growing body of evidence in PE. And so I think what you'll start to see is that these teams and PE teams across the board are just going to have more of a focus around treating more patients with CAVT. On your second question, as it relates to the embolization products and that category as a whole, the team now is in place to focus 100% on our embolization products. And while we are market leading, we do not yet have 100% of the market. So I think there's still opportunity to continue to grow that. Our physicians love the way the coils perform. And so the focus just allows our patients our team to be able to go and, you know, make sure that the coils are available to everyone. On top of that, you see MMAs are a sort of a newer procedure overall. And as Adam alluded to, there are some of the more traditional options like embolics that have been available, but the coils, the way they perform, our coils specifically have really been our physicians have been really been responding well to that. So I think you're seeing here a combination of what we have with the peripheral embolization focus, as well as the growing number of procedures in the MMA category.

Thank you.

And that concludes the question and answer portion of today's conference call. Ms. Furlong, I will turn the call back over to you.

Thank you, Operator. On behalf of our management team, thank you all again for joining us today and for your interest in Penumbra. We look forward to updating you on our fourth quarter call.

And ladies and gentlemen, this concludes today's call and we thank you for your participation. You may now disconnect.