Penumbra (PEN) 24 Feb 212020 Q4 Earnings call transcript

Good afternoon. My name is Chris and I will be your conference operator today. At this time, I would like to welcome everyone to Penumbra, Inc. Q4 and Full-Year 2020 Earnings Call. All lines have been placed on mute to prevent any background noise. there a remarks, session. speakers' the will question-and-answer be After [Operator Instructions]. Thank you. to like introduce would Ms. I Investor Jee for Relations Hamlyn-Harris, Penumbra. Ms. may you Hamlyn-Harris, begin your conference.

www.penumbrainc.com. Thank company for non-GAAP be Investors joining financial tables, discuss thank reconciliation, copy of you can today's XXXX. includes website release and and on for tab to and press quarter release Penumbra's you, call the earnings a A viewed fourth year-end which at under the us our operator, on the all GAAP to

the stated in conference SEC with the our Actual XXXX, for make Harbor December materially by Securities certain During which this financial to results implied is forward-looking to due clinical ended filed XX, regulatory statements XXXX, provisions those Private performance, will our of XX-Q the company referenced and our trials, the of statements status, could course uncertainties, call, the those statements Act scheduled on pursuant XX, risks Safe February Litigation differ trends. quality or regarding commercialization, business XXXX. the including compliance, year to including Reform of and forward-looking from be

events, revise otherwise. today's and limited condition. our comments including, or or to a As not business, a We financial reliance provide certain our the a we Elsesser, these periodic may our stock, Officer, discussion financial complete of discuss business financial undue to, Chairman Adam discuss will and impact our you duty prepared press presented reconciliation operations risks turn against XX that, market the result, approximately is release. on factors On you information, other year; of and our posted new our as XX-K are any will update. Yuen, A Adam XXXX statements our President for anticipate to SEC, like will future statements non-GAAP that run filings provided call Elsesser. I measures Penumbra call, COVID-XX Strategy, minutes. affect financial guidance. for and but we of to our our future basis. result fourth to review the including on a Penumbra's measures Chief a of the price more developments placing encourage with results Financial on CEO, non-GAAP forward-looking results forward-looking GAAP of disclaims the on update would mentioned, caution and in Maggie previously of the or and these With over the the will full of Jason our Mills, Executive quarter then Vice results call this to pandemic

And for you, Jee. good everybody. quarter conference joining and Penumbra's year-end afternoon, Thank you XXXX Thank fourth call.

the and constant revenues of which mid-December. consecutive reduction included quarter Flex the in Xtra of of a $X.X fourth X second quarter record year-over-year for marks Our as XX.X% were in million, total a to the in increase reported Jet revenue Penumbra. due XX.X% recall $XXX.X for currency, also million This

Excluding grew non-GAAP million. $XXX.X revenue one-time to this QX total XX.X% impact,

$XXX.X million, were represented over XXXX. year For full-year which revenues the of our XXXX, full growth annual total X.X%

total in as financials balance the X.X% well our $XXX.X grew as further on annual Excluding recall impact, million. review commentary. Maggie one-time XXXX non-GAAP sheet will the over details to revenue her

quarter, During on three my this topics. focus prepared will remarks I

responsible specific for virtual our our on then of update broad discuss reality. the briefly products. will development of in vascular, of I portfolio will innovation I our First, neuro culture is that developments and you

the faced our impact. early in progress its address the about pandemic international XXXX in and challenges thoughts markets call and China. since Second, we've our including from I'll last the will And all third, made talk I we XXXX on

skilled including really that large as develop to people, and culture of built been that structure innovate has of almost portfolio instrumental purposeful ability and for hard in innovate broad have at by Penumbra us products a it gets team allows years larger. solving highly the led in even a continue matter continuously our has and the to company This and We a Pengineers XX been problems development healthcare, motivated commitment of our who to products. share to

applicable, in real XX% this of patients patients results every help we thrombectomy number thrombectomy portfolio than future be vascular XX% XXX% that our to technology more products the States with still nearly we added quarter Our patients, be is before. can in the neurovascular the over the can can that our current essentially driven of impacting show VR our are alone, of We of by Yet patients, to to help. patients whom ever products. day patients and positively estimate, United of we continue

with fourth quarter. our our start became which first franchise, the Let's for business the time vascular largest in

again once products drove strong Lightning Our vascular. growth in

patients in Lightning incredibly blood both with veins X, pulmonary segments fact, clot is the shortly. now and arteries. used venous from at products in XX Lightning In be in our will XX and to removing proprietary the treat continues now technology successful Lightning which to I arterial sessions discuss embedded and Lightning single

During the fourth indication Lightning quarter, for from the treatment PE. pulmonary an of XX embolism FDA the received or

though patients physician thrombectomy, decision third them communication has been more its adoption making and as extraordinary. quarter XX the and pulmonary artificial surface to PE bring also announced embolism interest edge just since rapid Lightning we PE. help help with in addition, with launch of faster. teams teams, streamline hospitals, cases a From partnership to need to their early conversations and is feedback platform to pulmonary the flow our intelligence and venous response lot there scratching and PERT even is known cutting at in stroke In from AI

in that evaluation to clot their with XX We launch During X the of provide is similar started we March. last improvements month, and providing late very expect to and those offer Lightning on X, Lightning arteries significant gone benefits treating well, full which side. Lightning initial the the we in cases venous physicians think can for to have patients are

patients estimate The have In of coronary that continues ischemic US patients population and product, the US number clot. RX, addition, CAT size help our is the we same more to approximately as coronary more mechanical each who peripheral stroke of had entire year. which business, come. are Taking poised years record also our thrombectomy including we durable quarter, for a eligible embolization, to stock vascular many for for growth

just has technology allowed Now, of us diameter smaller BMXXX, neuro products. quarter, MAX let turn compared slightly to innovative our outer novel But diameter launched to the make a Access guide our the allows our fourth stroke has other to In we me the business. one room in BMXXX our the by Neuron been X.XX to most inside It catheter. to being inner maneuver neurovascular cases, for in has greater very guide This types in catheter all X.XX from going physicians bigger, cases. even catheters used but received of case. inches. well not the

of or others side following the recall Jet some other X tip, our to our X the of standard switched the Flex, On took reperfusion business, this of opportunity whereas stroke physicians try Jet stroke to Xtra ACEXX directly catheters.

some back tip X Following of standard physicians Jet primary using ACEXX catheter. their either or to trialing, that as are reperfusion coming those

cases demand, exchanges fact, an the we based the standard our products, of resolve our as later part tip important rest current the both we when In portfolio, and of many play stroke Jet for recall for to situation this demand in a X in which continue are expect backorder we with on to working catheters. through the role until next month. will These together update year the

of to our remind stroke treat we solutions billions to will our constantly physician growth to But time. disability resultant It In innovation take was successfully dollars. patients. addition, healthcare patients these bring stroke even market huge US more XXXX is get enormous the financial time, puts general, reasons, back future over for a we COVID. we the that burden ourselves better the challenging of We system, harder and in and us that billions will to but even remain growth very due will believe hope stroke this optimistic such motivates the of clearly procedures a of about devastating work some of for our customers. to to primarily cost on year

area, we which area is Let's term. the virtual most over patients now reality the long to or think the in our newest help product move we can VR. VR

platform that are applications VR technology proprietary specifically immersive is REAL creative built that designed medical built applications, a healthcare from deliver for system for as purpose conditions Our up of to ground patients. millions the impact

REAL for vision has Our expanded actually the past year. over

disorders, form opportunity there or serve includes stroke, traumatic rehabilitation is patients patient also the in of cardiac rehabilitation, many who is orthopedic the First, injury, us interacting rehab, not rehab, movement virtually for for tailor clinic, that other their their physical some patients need applications made opportunity with in and but from recovering REAL only occupational are large a conditions. own home. therapist, with brain patients This for while to

build important it we platform, both to some the health and many and And by data, a these REAL we what offer and are we the to and strongly the of evidence applications a to health, that are applications portfolio with but reality benefits the on can chronic also memory with We uncertainties a stress We people. that believe clinical we and believe working broad develop and suffering foremost to remain fully to lot number help rehabilitation among the evidence patients around provided mental truly healthcare, already. VR REAL that loss, dedicated The applications helping recognize great world's anxiety in plan pain, we matters from clinical others. regarding virtual for platform. of is experts for doing of is real mental have platform significant prove

which the on update me let you in Now, business quarter. well performed international our

to First, updates company to I'd share China. related like

in signed partner, we space. the which with largest with it, During a our Hua fourth making MedTech multifaceted Group, neurovascular merged domestic Medtech, China's former the new company agreement we quarter, Genesis believe,

And ACEXX, Our which distribution, term have XXX a revenue partnership and a for MAX, each ACEXX, product licensing five XMAX, products, and strategic initial D. good Neuron produces collaboration streams, royalties, multi-year distinct Jet for three visibility. we is product fixed

they opportunities We the commitment are Japan. technologies about patients capacity and to Penumbra they to expertise for with China. excited future We're believe have in and Genesis to these patients, partnership be important working as to our in we also bring share excited in

Flex for changes vascular Jet only not long was business, in recall, Xtra in for While current embolization Japan, ultimately, owing in but and, we virtual reimbursement and many XXXX in the X the region, see growth well. stroke the challenging thrombectomy to and as our opportunities over vascular year reality a COVID, us term

XXXX Looking forward, beyond. growth we Japan in solid and in expect

We and continued America, and XXXX, XXXX. solid progress made also in expect Europe, in to growth see Asia-Pacific in Latin

environment working Finally, its team's a around safe The continued and surge in on for to effect production. to small had business. I'd like our employees our on discuss our impact holidays pandemic and maintain focus cases the the a

the and during status, However, up the to able virus production navigate will this be change we variants keep do with time demand. assuming not current we capacity believe our

have quarter trajectory assuming our That on in impact on a current and we not United the results will year. the turn growth full around did financial impact revenue, locations, like minor a major States annual elective for the the this the our have in to international our most our for quarter. impact do deliver in As over of first the which to part and continues, on XXXX. I'll some some will the peers, call Maggie of said the think for cases quarter see impact we it

the begin will Flex financial the X the year XXXX. I afternoon. a then go with full and Good of I impact into of will recall, Adam. Jet Xtra fourth the for discussion results quarter you, voluntary recent Thank

XX, of changes or returns future the exchanges due material any XXXX, We further Jet inventory represent recall of impact rules. impact statement product for have cost financial announcement do points financial in costs refunds of quarter XXXX well was million to as reduction exchanges. required of as impact described. fourth offs on the will to had reduction any sales exclude in and in $X.X from to quarter to increasing a the the results, the in expense voluntary The a December of accounting of to accounted voluntary any estimated returns, following cost represent for in $XX.X expected statement for our product of XXX margin. recall related write approximately X recall due financial These total revenue in This as our charges expect voluntary Xtra sales, recall. impact recall revenue the lingering the of voluntary an figures basis impact as gross as primarily the not With financial million fourth we which non-GAAP to to financial metrics Flex by or the either previously or the see

GAAP measures and are GAAP posted reconciliation As a our provided to from reminder, quarter in release. a figures fourth press non-GAAP

December non-GAAP XX.X% XX reported in our For million, the XX.X% constant ended and of $XXX.X to total of XXXX, XXXX. compared increase quarter currency fourth quarter revenues an the were fourth

of to mix million or and in our and business grew QX US XX% sales fourth from period geographic compared the was the in Our XX.X% last vascular quarter constant same to sequential growth currency to XX.X% the international International. an XXXX, of XX% respectively reported XX.X% of Revenue $XX.X and of compared XXXX. reported quarter in increase year. XX.X% US

X.X% of constant was million total was strong thrombectomy an to growth Jet by performance X.X% Flex growth from vascular through across sequential the XXXX, from impact currency of fourth compared we excluding neuro $XX.X non-GAAP Xtra year Revenue same revenue quarter business ago. decrease of products. million driven for Our year-over-year or of the embolization and December XX. also XX is and Lightning recall. the in in Revenue saw the increase a X reported And X.X% our period $X of

Our on X.X% US a basis. by business sequential declined reported neuro

Asia-Pacific quarter business by These China, XX.X% driven a strong same to and Europe, and were neuro across compared regions. performance international sequentially increased X% reported Our by year the results ago.

Our margin ago, XX.X% non-GAAP in XX.X% and QX XX.X% improved was sequentially from compared in quarter a gross year XXXX. the to

increased cost in product demand driven improvement gross leverage is mix. gradual by Our favorable and margin with fixed

overhead and product continue in to made labor measures, to demand. and trade-offs direct safety COVID-XX employee on safety related ensure in have spending and invest to We efficiency support

$XX.X price Total operating expect million product of quarter for same XX.X% to we the a forward, to Looking revenue revenue continue non-GAAP it and ago. level, gross at of XX.X% margin quarter with slightly but or was performance expense compared current mix. fluctuate or year the could million for $XX.X

million research $XX.X million QX $XX.X and to continue development for for development XXXX. to Our compared for expenses million to in product were were we for invest QX $XX.X as expenses SG&A XXXX million XXXX programs. XXXX compared QX QX $XX.X

such we increase had $XX.X same spend full-year income headcount performance. million to in We Our due last million related increased for the expense and compensation in activities as will now to slower operating spending non-GAAP GAAP quarter and continue have in primarily the year. period of travel compared of while $XX.X our income operating conferences. to I summarize

was currency the For from full-year Revenue were year increase XXXX. for to XXXX, total reported million, XX.X% million, XX.X% of the represent full-year and million, business Revenue our in constant and $XXX.X an year our $XXX.X from XXXX constant was our X.X% reported which revenue currency. XXXX business currency. XX.X% full-year for and in for of compared X.X% in an vascular increase the year $XXX.X constant decline reported full neuro XX% a of

of for revenues Our compared revenue XX.X% the had profit XXXX. of operating loss was We year to operating a comparable for million year the income to $XX.X XXXX. million full-year $XX.X of for of gross for XX% compared

flow guidance. quarter, stocking We and we our property And equipment to sheet. to by $XX Jason in $XX cash call primarily balance to $XXX Turning to reclassified balance and XXXX, increased discuss REAL balance In go-to-market over and XXXX from I'd turn stocking launches the changes the equivalents in debt. now, sheets million growth the system to with the million of our and demand. REAL and of million securities no of ended and was and like cash marketable investment fourth due in our finished on in to consisted model. year inventory material $XX consignment, to In which raw goods and million inventory product new million, support in $XX cash

we and everybody. Thank target markets large, to good remains We are strong you, The bring with in Maggie, entered afternoon, to products our to and are unique culture. XXXX momentum dedication paramount physicians we business. patients our our the

of million, over $XXX XXXX $XXX full-year of to the growth revenue which in revenue to XX% $XXX.X full-year represents XXXX We for guidance are range XX% introducing million million.

QX anticipate the trends, sequentially two quarter increasing first then this than year. revenue consider We our with guidance. highlight factors in to revenue be lower record to of results, Regarding we quarters the subsequent throughout the

January impact other US elective in First, the procedures to resurgence we cases and geographies. the saw in in from an COVID

expect factor a We our this results. quarter minor be in to first

into past, well our dynamics said, current after account optimistic near-term of stroke to represents recall our to other takes the call in Adam Xtra guidance product the of markets, paradigm as products, about guidance now with the relevant new portfolio our Second, our launches, intervention. views our timing for new thrombectomy our in will products in of a Jet setting business pipeline mid I to Overall, on guidance consistent XXXX turn are back December X as That new we approach remarks. our inputs. current in closing neuro the usher the potential revenue including of our stroke Flex. and

Thank the you, to incredible to challenging products by to so available many first our during Penumbra in end our ensure I'd time work remarks of team the help to acknowledging patients prepared Jason. like this were need. continue

sometimes dedication entire at the patients. to of teams I Your customers their proud I all in would circumstances and work the to you. is for have their finally, work done And thank with extraordinary. our know to over like extremely they everyone physician Penumbra am past challenging And year, treat

continue better questions. like you. Operator, to innovating much heroic motivates the make to and to we'd this call go now, Your so please And us and year. meant products, Thank better work to us ahead. has open to

[Operator Instructions].

Our from Plovanic Canaccord. is Bill with first question

Considering back XXXX one-time below guidance. guidance the And if and the just is trying XXXX The to understand fourth some on quarter quarter puts annualized. understand neuro you back you – charges, us intakes. I'm that you your some to expect question that's I on I'm just out what business. put do the annual just the lower the the go growth cadence it. just color a first gave trying maybe is But of than to would expect trying all comments significantly? together it and understand, a little and seems and we this not – and what to just

I'll Adam and then Jason. add can is on. This start

account the in in as an seen has the January we As we we and business in dynamics we're thrombectomy into neuro bit mentioned, just did associated see the are the impact progresses. said as of expect prepared our group taking peer also about And a COVID. increases even with recall. confident as business. see year And we our we optimistic said, and I've very the Then Adam? to remarks, sequential

As look guidance the at quarter of XXXX the think the try carefully company at – think we out, as as accurate I Jason's But course, pretty fair a beyond. first looking strong you we when guidance year, think know, the to numbers as growth. for growth is Bill, and That about of you said, be point represents obviously we beginning and, send I the pretty represent I going forward, a and obvious. But are possible. strong

a that. on Just follow-up

we year maybe could we some this you've what platform last at least the color kind I bit in and little area. commentary wondering of the neurovascular, neuro the I terms some in just if if should benefits timing not think remarks, be about. associated get a that that and, more granularity, on Jet on may features talked was new a X just to In the replace think now of prepared the this, of

I'm not, this break with this call on new going question, to news.

matter and our what news. trackable, continue catheters product trying we've of them in better update about as is out, lines out new to the There clot catheters and make And The with try we on on to change. that bring technology not a talked part wait you beyond reperfusion the located. But we we're and where calling prepare all able but we're as are to our all can from we're more possible fast said cases, impact no of separate we And to in The that which it all stroke, as that. for to separate paradigm not then particularly, two But do technology. an make the things. the shift, paradigm the on the and this get clot more yet we describing clot as it out, the where We'll update this that technology. and is new think with generalities to want just to clot is is call. of what go not about all can. I'll that new soon to goal pretty I'm with excited The this So, thrombectomy see.

from with Marcus J.P. is question Robbie Morgan. next Our

for Lightning. This very on is I to off side business well thrombectomy Obviously, want to actually headwinds. continue with peripheral a Robbie. Allen the question of with on start even the quick COVID-XX do

a X look you like we Lightning into you, can and area that think more didn't in broader a presence given area presence strong kind Or already? big a XX moving like an we is Lightning that impact for modest was the already a you're being should of the in at that of an of kind as strong Lightning franchise? the we not XX as So, benefit as have think to into given It's it of you of that has very as that when growth have an arterial, business? moving

look I really think way in it at is we total the just numbers.

arterial look and for or arterial are are – patients venous numbers those US the patients side. on treated intervention the at is through who compared treated or PE past. And on gone little that's in being clot intervened being or to who are the lot XXX,XXX that And through numbers a there over more venous arterial have patients for than a you being – surgery. There clot XXX,XXX are these intervened side, that on with surgically we've If PE. are are there

and impact is bigger extreme. patients opportunity on is the the pretty those So, just

in or many order cases, You're, all, make a intervening a doing leg limb. in this can sure or save not to you

impact of that significant positive And on the on but, think so, business, those in course, run, by long the have we patients. a will definition,

we're on open The how X, our uptick with customers people because, Lightning that, now, again, Right to fast an having converted treating doctors our do many success of as convert use the The they say system. we've are XX% question. the for cases, for is, people XX%, a in that's large which not – many of what barrier don't as barrier have is to our CATX, an even great catheter So, to current many X other patients. heard these want technology. F

And offering with smaller now French technology, size, to diameter. so, we're enough, the a a inner maximize smaller all just but of benefits novel X, almost and slightly our a bigger new It's catheter. using the that's

almost the on and think those auditorial forefront single-session CATX have discussion the will add the single lot don't tried I So, try are that inner lytic which then signals in that help doctors of bring blood session. and for folks case of multiple-day the And in the it's But discussion COVID the versus who allows again, size treatment have Lightning, in our about around that. have you beds to medical And of it a ICU you these of and because of which you're loss diameter. all not treatment over sort yet a the is to things worry clot. we with to system

them go stay might some were we'll certain CATX. physicians in Will success the with real some – So, CATX down using Maybe a I think have some size? to of who it. cases, of I but back think with

America. question from with Bank Bob next is Our Hopkins of

things. couple A of

this I at the meat a said previously had launch that be wanted of you XXXX. little bit going little analyst definitely that into more the year? might more kind that getting would had And some on bone. sometime system still new of also to to you with confirm previously point to either weeds I year a You was event put said that happen a bit sort on stroke maybe an still case. or the REAL some day Is this think just in guys

So, stroke let's start the side. on

will that come don't Again, our decision every regulatory out. fairly are We catheters confident. control we

more wait regulatory definitive on will timing dates give more shift, front. clarity little new and I of specific as of confidence We on the the around a update again, get sort and paradigm

person, this to want are until I new So, said, on certainty. That being I don't the look models. and at reality. experience REAL in definitely was so people virtual specific it share helpful side, would it, The timing the the of give that, frames call will and that if have be technology, on as we see impactful time that we more can you that done so

pretty in just be as we a us that near no more But tell, that's half, in excited a lot do so way that have a the little time there's and if it. to that, out. If the we'll So, term can possible will we we're can what of then sort we we'll share give about follow-up question we that. first a to we virtually the bit, little find sharing as wait have approach because, to you have in-person can and

gave, in push front from lines, XXXX? what is push guidance this a Adam, contribution the this technology. that big it color more in way product those year? Along Maybe going the is a making how little to implicit to launch you be of kind ask we year Are you what do bit on you have a might maybe on a this big from that Just REAL? expect

it's the that the XXXX this future lay a revenue there's from that, and the for work groundwork is we're really it's Rather, revenue we a which do growth. of in year on want to a this contribution year of think to will become huge a that lot base lot product. not But good counting that I revenue question. guidance a I thoughts think, and products. this model clearer where product. sort has remain when excited. both to we gotten the most of revolves But our in number we But just we pretty our the go-to-market possibility our huge when future interventional of clearer around again, evolved a and about even help talk the of people on explain have

real on the one Just quick one last guidance.

a piece XX% XX% I'm growing you're of for sense to neuro that in grow the guidance? contributes how breakdown you much of guidance, get that implicit do you to just will forecasting. that think XX% neuro and neuro have overall growth much over rough how the On a trying to

the Jason. a fair It's really question. question. Thanks It's for

have you you But we're break that this in the don't so we've And do out well contributing look in not products about both both. to and as we're portfolios the level call. talked on current know, that As as going we said, that we products current total, the been for of if really neuro and about are and our both the optimistic new at new the that guidance businesses vascular the here. to having detail, in

not you give to contribute the businesses, for over for I'm growth So, two in any that we're can confident both both ranges time. but going to

Larry is next Fargo. Wells Our with question from Biegelsen

It's in devices for a little color made anything FLEX give rate? or a Can recall quantify coming Larry. comment question. a competing bit the to about you the Lei there to can and, You've taking versus little talk about for calling my PEN more physicians more you to Is and PEN. moving Thanks XTRA other specifically, capture back devices that?

still, process. and think, bit a had It remains I been fluid of a

this quantifying it's think I challenging at changing. stage it because is So,

our hold in we think and them Flex compare I that time, Xtra catheters Flex just Jet tip dominant its to ACEXX And because X X at They And were well. not things when well. really ACEXX market we X great instinct the the were, really to our products standard up around, market. catheters. the tip many did and the of standard they other had – One Jet Jet of X tractability Jet away make just the launched some they market, on and perform when good really, you take less Xtra

for huge people independently heartening of see this nature is really done to them testing to and certainly data it the make and – and support coming sure and think have to the surprised our out, team us physicians that back try well many they're so to to amounts I use clinical their great new not that catheters of our has things are many using so, but of been And have products.

pretty I in spot. So, think we're a good

on order on way went resolve tip, a that X As a I which JET standard back out will called in shortly we here. small such

We okay. said, keep can't I I us. year. catheters new come being to later everyone to on and laurels, doing our think and out So, rest some going knows think we're wait never innovating this we're That

on revenue another you If XXXX, billion-plus have I in $X about what just reaching can Adam. talked question,

point and Given what to you recall, get at this pandemic the of the confidence gives the to that? kind

And the of in we've all and the really particularly quarters, reaction series, couple the the growth confidence innings success the which of our is the but Lightning comes of from the earliest to that. businesses, last had

It's is we've called coming, and that track. right in add us baseline constant that the the call on and today even gives we about talked that years on of have that think from products what our out of sort other couple what innovation You a I today's of we're some improving and that away. confidence

people that so the many or really how You're the the and well it's almost same physicians right? now size part, unusual, you doing CATX power. from exactly albeit you're on our and of what product, see solved. it away inner – the Let's without we long a understood Lightning the X of But answer any to remarks that performing the I sort doctors have that's question, as as prepared tell, wanted that our solve the the wanted of are goes. going bigger. slightly is But went taking can some think, diameter in issues so I answers, smaller, of products

Lightning. adding In with fact, capacity

our listen where we those give hit So, iterate that things and fast confidence I we can We target. that think the as possible, of as are kinds customers. us innovate the to

to thing his all add only sort of the that. that, in I the of backdrop And to mentioned market is Adam prepared as remarks, would

stroke, those in product we've even more XX% positive virtual in the our helped, over confidence thrombectomy, I side, XX% we've of from market about already optimism. the reality. of The peripheral then patients, front standpoint backdrop market but and segments in one us on patients we talked in the got are really positive, each and in focused on whole is So, of the that

excited. which So that about backdrop provides a we're

is question Ryan BTIG. from with next Our Zimmerman

want I to ask one. Adam, just

maybe beyond to ran you needs it you're some the Adam, different upon But What you with build we X I in issues were when not from a database? the is of ischemic debut And that So, trying it for, ask Flex. on in maybe you're saw later solving but X what stroke? what point feel I'll way. from to ask what it, paradigm some and design thunder that it just reports this the do is Jet on just talking that of what This beyond the shift want X with into this you're in the Flex to Jet first agency? challenges you one, Jet MAUDE at like about, improvement Xtra maybe to steal you're year going debut Xtra

you I things that. are it's I really that think the think sure unrelated. two understand I make And important

So, And the paradigm and company were different trackable to all that catheters big as all possible big track making paradigm Xtra think current as necessary design Flex instructions that trying longer think the as is therefore, if make is you to Jet race where them to, really possible. a the well again, now make much as that suck to fast job followed. bigger, make saying you good paradigm, as X way possible. no paradigm might because about the catheters the about becomes is out and That challenge, that clot catheters as removing bigger which every as as we're is change a of, clot did

now, of catheters. this sort the deal of – to trying to the the really other really ACEXX X new we're with should unrelated how product I do underlying I Xtra or considerations, success as all of patients with patients, a make have have and clot of create can success possible fast that great broader. don't the trying the everybody. some ability is in we're quickly. have product to Other as the cases physicians, certain do is technology It's not remove or for or to out So, say, What the Flex democratize issue, Right is design challenges new that which success. any Jet or kind

sort point. the And of so, that's

That's So, is possible. make to continue technology is until catheters we'll And the as catheters, it's fast you do track as there. When to unrelated new update Jet that today's possible as sort out our key big to paradigm. of as well and X. our

color to Just I I in think, and but earlier know we'll change alluded a get on Bob's this business question, to a follow-up Maggie, or strategy REAL. don't not, if related to

out in And laid you. REAL? on of XXXX business so, contrasting comments day, what those you what analyst Thank the with maybe from we take strategy that can terms to mean in at

share we'll we soon as of can. the that one That's things as

said, Maggie about As our strategy. really go-to-market it's

evolving being our I And for different. platform that's they And and entire done able One part we've of of our of was more done, think ever now get the positive get stroke, is we go-to-market more the lots the really large as figure we're catheter, had can idea to at no sucking feedback, at. adjust. get in deep I the of When things out a in lot vascular pretty on before. field, that interesting that things it we've to model no brain is of We're should is more into powerful. and very and taking about more – stroke out the think done, looked and one a a strength ambitions a started REAL something learn our be REAL, a they and better and experience, work, evolve the way. and sitting do out haven't constantly up way been the or clot, things catheter, strong whether we're go, healthcare and and and we thrombectomy so And were

next Our is question Blair. with Kaczor William from Margaret

on Brandon is This for Margaret.

any ask COVID have question was despite a side? elective actually it higher Is year can very in kind a in mix First, can on just the vascular I way been vascular you because quantify to of a how vascular strong for I there ask impactful might XXXX? procedures. And

to vascular as for into through accelerate continue Lightning momentum is a X vascular backlog in XXXX? patients as with Lightning trying funnel, even there's potentially, back understand, the I'm you you're move come and to there the we XX, and some So, potential patients seeing

Yes. two There are to that. really parts

of more are have seeing and is, that yet time that saw of healthcare frame to The the were the clots trying you in because first sort if weren't patients, April-May was up. enough part catch we when phenomenon, COVID? We it of new a and certainly professionals aware it will,

already the to �� one of seeing management up pretty technology. that, sessions lot think and period. take COVID I single patients being that's require and any treating we're benefits of our or don't COVID. that of out was alluded that COVID, the that patients sort in a quickly, I of moment quantifiable said That massively of than I more said, patients a COVID. numbers of the I sessions, came of wrong. is of I to mean plays different a think recovery sort one benefit speed But because lot longer numbers, was of word these think of it that for, and has realized today, the looking of people directly gotten a into large as I And COVID so of medical don't I multiple needed byproducts to about days

that is think opening technology our I physicians' technology. the to move think toward that, to helpful of it brought. minds the I that of use then, around we've I ease been think, here a you physicians that has for many stay certainly so And Lightning, And to And phenomenon in while. add sort is

I the think that will of people continue they mind top of single-session think because to many sort it's as treatment. of idea about

on And I In that line I was one, terms I premium margins she correctly, heard had a of we if can that or XXXX, XXXX. correctly? the on to as to some can with levels? two, half start die to presumably margins, well efficiencies broadly see approaching XX through and Maggie then pre-COVID start think of the we as in bit, manufacturing back maybe flat of maybe gross the expecting gross premium and curious, in we a move somewhat hear you're Lightning little margin past a did as just slight I remain gross X said Lightning move XXXX off expansion COVID,

the manufacturing to that likely quickly we level not overnight. structure. current cost slight level. and Lightning return will pre-COVID manufacturing until our until not to margin out XXXX, of that the XXXX At Yeah, a forward. and environment I trend of gross are changes. switch is did for the to is margin we're stay gross the mention pandemic assume margin completely see to We if result to probably at as accretive can going of something going least It that, did and environment see We end similar not the – impact gross continue

[Operator Instructions].

is Our next from with question Citi. Joanne Wuensch

Matt is for Henriksson Joanne. This in

talked stroke. But But at lot XXXX with out. legislation obviously do to of Our states XXXX that new about quiet protocols? accelerate adding new will how And that help products new a We've you stroke especially paradigm was and look kind with with protocol, process? year. is first related coming question a the new are this shift, that

the around are COVID, lots the unfortunately of other way doing kind to the legislation me on Let nice I hospital, state legislatures busy is those be link question really to very the Unfortunately, have The It'd state visibility I de-linked. don't them. versus energy of I don't tied. before to in part, think of are did first. things. right that needed question I they're the get sort one two last treated the answer think patients

There's There's But As XXXX you physician in been will with moving society. the community some crises. these little short vaccinated that. kind to campaign their the And hands the a full run healthcare it back Ahead and get to from before go what able some are movement workers obviously community, as and anxious get we to sensing do the I do some is to get drove of work, have closer build lot make into their they're updates I fast. Get normalcy is to their expect work are drive being and the the of go we're We in treated. hasn't the into the to of of know, having so progress. that already, patients is it in Stroke a but been that some think legislature into states, that term back that incredibly sure XXXX, people this practice by out state

really realistic first obviously or know everyone that I my motivated to remarks of do and I thing growth. We now, too to want portfolio I and that again, might But that optimistic. take broad a that cautiously this, this be dynamic work saw to prepared doesn't become to I though. a next we innovating I'm said such we questions areas. isn't we do priority. we company going a XXXX obviously, there. remain going our is little I taken quarter this incredibly on that treat to think, the And a But stroke it continue do story grow are stay part on standpoint, be I not we're that. important, will should – knows keep and significant a single like treating again, also the have that it. the how too From committed driving products of because a much, that is We're different this to it will to So, longer, when just But It we've the the drive during that's not in it's drive this this happen. lot think necessary in cover continue. of is but there think We people going think quarter, evidence growth. people. I to lot The lot will their and cost much both think ends. not have health, financially, but this, that these that of so at to is will of you're

the in quarter. of Just XX% And it we toward should the looking noticed quarter absolute revenue we going rate at of look kind third the there the to strategy spending? looking this something at fourth how the quarter is then the revenue? the kind we're was of, Is XXXX? drop-off fourth behind between of more XX% of percentage Or What's R&D the forward? spending and and where back kind XX% both first, the a line,

I'll take that.

talk we of expenditure. that to we in our if one-time $XX First XX non-GAAP expenditures a all, call, remember, Lightning you last R&D related quarter a about earnings of million reported as

to a our forward, be going spending So, the as forward. going of going likely is percent trend revenue QX

time. I Hamlyn-Harris, There over the no questions at this to further call turn you. are Ms. back

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