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Penumbra (PEN) Q2 Earnings Top Estimates, Margins Down
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Penumbra, Inc. (PEN - Free Report) , that went public in Sep 2015, reported second-quarter 2016 earnings per share of 1 cent, widely beating the Zacks Consensus Estimate of a loss of 11 cents per share.
Revenues in Detail
Revenues in the reported quarter surged 53.9% year over year (up 53.2% at constant exchange rate or CER) to $65.1 million, sailing past the Zacks Consensus Estimate of $58 million.
On a geographic basis, revenues in the U.S. (representing 67.1% of total sales) grossed $43.6 million, up 58.2% from the year-ago quarter figure, while International sales (32.9% of total sales) jumped 45.8% year over year (up 43.8% at CER) to $21.4 million.
By product category, revenues from sales of neuro products grew 31.9% (or up 31.1% at CER) to $45.4 million in the second quarter of 2016. Revenues from peripheral vascular product business rose to $19.7 million for the second quarter, an increase of 149.6% (or up 149.3% at CER) year over year.
While neuro sales were driven by strong growth in the ischemic stroke market, sales of Penumbra System which includes ACE, ACE64 and the latest ACE68 also contributed to the growth. Besides, in nuero access and neuro embolization, Penumbra was benefitted from separate competitor recalls and in the quarter.
Penumbra’s gross margin was 63.7% in the reported quarter, reflecting a 6706 basis points (bps) contraction year over year, on account of a 25% drag in gross profit. According to the company, gross margin is expected to remain under pressure in the next few quarters on account of new product launches.
Research and development expenses totaled $6.2 million, up 30.7%, while sales, general and administrative expenses amounted to $35.9 million, up 35.9% year over year. Both the increases were primarily driven by a rise in headcount and related compensation expense.
Loss from operations came in at $0.67 million, a huge slash from the operating income of $24.1 million in the prior-year quarter.
Financial Update
Penumbra exited second-quarter 2016 with cash and cash equivalents of $13.9 million compared with $17.6 million at the end of the first quarter.
Outlook
Penumbra has raised its total revenue outlook for 2016 to a new range of $250–$255 million, a significant increase from the earlier band of $230–$235 million. The current Zacks Consensus Estimate stands at $237 million, far below the expected range.
Our Take
Penumbra’s second-quarter 2016 performance was strong, with the company reporting impressive top-and-the-bottom-line results both beating expectations. In the quarter under review, the company witnessed strong growth across all its geographies and product line. However, escalating costs and expenses put pressure on margin.
Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to the unmet clinical needs across two major markets, viz. neuro and peripheral vascular.
The gradually increasing demand for treatment options in the heart diseases market reflects the high-growth potential in this niche. Attractive growth opportunities exist for Penumbra in the ischemic stroke market as well as in the more established markets like hemorrhagic stroke and peripheral vascular. Accordingly, Penumbra’s strategy to focus on impactful product development across a varied portfolio earns investor confidence in the stock.
Zacks Rank & Stocks to Consider
Penumbra currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instrument sector are IDEXX Laboratories, Inc. (IDXX - Free Report) , Masimo Corporation (MASI - Free Report) and Natus Medical Inc. . All the three stocks sport a Zacks Rank #1 (Strong Buy).
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Penumbra (PEN) Q2 Earnings Top Estimates, Margins Down
Penumbra, Inc. (PEN - Free Report) , that went public in Sep 2015, reported second-quarter 2016 earnings per share of 1 cent, widely beating the Zacks Consensus Estimate of a loss of 11 cents per share.
Revenues in Detail
Revenues in the reported quarter surged 53.9% year over year (up 53.2% at constant exchange rate or CER) to $65.1 million, sailing past the Zacks Consensus Estimate of $58 million.
On a geographic basis, revenues in the U.S. (representing 67.1% of total sales) grossed $43.6 million, up 58.2% from the year-ago quarter figure, while International sales (32.9% of total sales) jumped 45.8% year over year (up 43.8% at CER) to $21.4 million.
By product category, revenues from sales of neuro products grew 31.9% (or up 31.1% at CER) to $45.4 million in the second quarter of 2016. Revenues from peripheral vascular product business rose to $19.7 million for the second quarter, an increase of 149.6% (or up 149.3% at CER) year over year.
While neuro sales were driven by strong growth in the ischemic stroke market, sales of Penumbra System which includes ACE, ACE64 and the latest ACE68 also contributed to the growth. Besides, in nuero access and neuro embolization, Penumbra was benefitted from separate competitor recalls and in the quarter.
PENUMBRA INC Price, Consensus and EPS Surprise
PENUMBRA INC Price, Consensus and EPS Surprise | PENUMBRA INC Quote
Operational Update
Penumbra’s gross margin was 63.7% in the reported quarter, reflecting a 6706 basis points (bps) contraction year over year, on account of a 25% drag in gross profit. According to the company, gross margin is expected to remain under pressure in the next few quarters on account of new product launches.
Research and development expenses totaled $6.2 million, up 30.7%, while sales, general and administrative expenses amounted to $35.9 million, up 35.9% year over year. Both the increases were primarily driven by a rise in headcount and related compensation expense.
Loss from operations came in at $0.67 million, a huge slash from the operating income of $24.1 million in the prior-year quarter.
Financial Update
Penumbra exited second-quarter 2016 with cash and cash equivalents of $13.9 million compared with $17.6 million at the end of the first quarter.
Outlook
Penumbra has raised its total revenue outlook for 2016 to a new range of $250–$255 million, a significant increase from the earlier band of $230–$235 million. The current Zacks Consensus Estimate stands at $237 million, far below the expected range.
Our Take
Penumbra’s second-quarter 2016 performance was strong, with the company reporting impressive top-and-the-bottom-line results both beating expectations. In the quarter under review, the company witnessed strong growth across all its geographies and product line. However, escalating costs and expenses put pressure on margin.
Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to the unmet clinical needs across two major markets, viz. neuro and peripheral vascular.
The gradually increasing demand for treatment options in the heart diseases market reflects the high-growth potential in this niche. Attractive growth opportunities exist for Penumbra in the ischemic stroke market as well as in the more established markets like hemorrhagic stroke and peripheral vascular. Accordingly, Penumbra’s strategy to focus on impactful product development across a varied portfolio earns investor confidence in the stock.
Zacks Rank & Stocks to Consider
Penumbra currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instrument sector are IDEXX Laboratories, Inc. (IDXX - Free Report) , Masimo Corporation (MASI - Free Report) and Natus Medical Inc. . All the three stocks sport a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>