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Penumbra (PEN) Q2 Earnings & Revenues Top Estimates, View Up

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Penumbra, Inc. (PEN - Free Report) reported second-quarter 2018 adjusted earnings per share (EPS) of 15 cents against adjusted loss of 5 cents in the year-ago quarter. Moreover, the bottom line was well above the Zacks Consensus Estimate of earnings of 3 cents per share.

Total revenues in the reported quarter surged 36% year over year (up 33.8% at constant exchange rate or CER) to $109.6 million, exceeding the Zacks Consensus Estimate by 7.2%.

Geographically, second-quarter revenues in the United States (representing 65% of total sales) grossed $71.3 million, up 33.4% from a year ago. Meanwhile, international sales (35% of total sales) improved 41.2% year over year (up 34.4% at CER) to $38.4 million.

Penumbra, Inc. Price, Consensus and EPS Surprise

 

Per the product category, revenues from neuro products grew 32% (up 29.4% at CER) to $74.2 million in the quarter under review. Revenues from peripheral vascular product business rose to $35.4 million in the second quarter, reflecting an increase of 45.3% (up 43.9% at CER) year over year.

Operational Update

Penumbra’s second-quarter gross margin was 65.9%, representing a 270-basis point (bps) expansion year over year. Further, gross profit climbed 42%.

Research and development expenses totaled $8.2 million, almost flat year over year while sales, general and administrative expenses amounted to $54.8 million, up 24%. Operating profit in the reported quarter came in at $9.3 million versus operating loss of $1.3 million in the prior-year quarter.

Financial Update

Penumbra exited the second quarter of 2018 with cash and cash equivalents of $59.7 million compared with $52.8 million at the end of the first quarter of 2018.

Outlook

Penumbra has raised its guidance for 2018 revenues. The company now expects total revenues in the range of $420-$425 million compared with the earlier-provided projection of $410-$415 million. The Zacks Consensus Estimate of $418.1 million is below the guided range.

Our Take

Penumbra exited second-quarter 2018 with better-than-expected results. The year-over-year comparison of earnings was favorable as well. Moreover, the company witnessed strong growth across all geographies as well as product lines. The company is focusing on product innovation through research and development. On the flip side, escalating costs and expenses are weighing on the bottom line.

Penumbra is an active player in the fast-growing interventional therapies space. In fact, the company’s products primarily cater to unmet clinical needs across the two major markets of neuro and peripheral vascular.

Zacks Rank & Key Picks

Penumbra has a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical sector which reported solid results this earnings season are Intuitive Surgical (ISRG - Free Report) , Chemed Corporation (CHE - Free Report) and Align Technology, Inc. (ALGN - Free Report) . While Intuitive Surgical sports a Zacks Rank #1 (Strong Buy), Chemed and Align Technology carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical reported second-quarter 2018 adjusted EPS of $2.76, which beat the Zacks Consensus Estimate of $2.48. Revenues totaled $909.3 million, also surpassing the consensus estimate of $870 million.

Chemed reported second-quarter 2018 adjusted EPS of $2.81, which trumped the Zacks Consensus Estimate of $2.68. Revenues of $441.8 million edged past the Zacks Consensus Estimate of $432.3 million.

Align Technology posted second-quarter 2018 adjusted EPS of $1.30, steering past the Zacks Consensus Estimate of $1.09. Revenues came in at $490.3 million, beating the consensus estimate of $462.9 million.

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