10q10k10q10k.net

What changed in Penumbra Inc's 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of Penumbra Inc's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+353 added−387 removedSource: 10-K (2025-02-18) vs 10-K (2024-02-22)

Top changes in Penumbra Inc's 2024 10-K

353 paragraphs added · 387 removed · 302 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

99 edited+12 added−22 removed117 unchanged
Biggest changeFailure by manufacturers or by their suppliers to comply with applicable regulatory requirements can result in enforcement action by FDA or state authorities, which may include any of the following sanctions: • warning or untitled letters, fines, injunctions, consent decrees and civil penalties; • customer notifications, voluntary or mandatory recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • delay in processing submissions or applications for new products or modifications to existing products; • withdrawing approvals that have already been granted; and • criminal prosecution.
Biggest changeFailure by manufacturers or by their suppliers to comply with applicable regulatory requirements can result in enforcement action by FDA or state authorities, which may include any of the following sanctions: • warning or untitled letters, fines, injunctions, consent decrees and civil penalties; • customer notifications, voluntary or mandatory recall or seizure of our products; • operating restrictions, partial suspension or total shutdown of production; • delay in processing submissions or applications for new products or modifications to existing products; • withdrawing approvals that have already been granted; and • criminal prosecution. 16 Table of Contents The Medical Device Reporting laws and regulations require us to provide information to FDA when we receive or otherwise become aware of information that reasonably suggests our device may have caused or contributed to a death or serious injury as well as a device malfunction that likely would cause or contribute to death or serious injury if the malfunction were to recur.
We compete with a number of manufacturers and distributors of neuro and vascular medical devices. Our most notable competitors are Boston Scientific, Inari, Medtronic, Stryker, Terumo and several private companies. Most of these competitors are large, well-capitalized companies with longer operating histories and greater resources than we have.
We compete with a number of manufacturers and distributors of neuro and vascular medical devices. Our most notable competitors are Boston Scientific, Inari Medical, Medtronic, Stryker, Terumo and several private companies. Most of these competitors are large, well-capitalized companies with longer operating histories and greater resources than we have.
We estimate there are approximately 800,000 annual PEs outside the U.S. and approximately 350,000 of them are massive or sub-massive, making them eligible for mechanical thrombectomy. • Deep Vein Thrombosis (“DVT”) : DVT occurs when a clot forms in a deep vein, usually in the leg and sometimes in the arm. Approximately 4 million DVTs occur annually worldwide.
We estimate there are approximately 800,000 annual PEs outside the U.S. and approximately 350,000 of them are massive or sub-massive, making them eligible for thrombectomy. • Deep Vein Thrombosis (“DVT”) : DVT occurs when a clot forms in a deep vein, usually in the leg and sometimes in the arm. Approximately 4 million DVTs occur annually worldwide.
We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.
We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and other healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.
If a notice of inspectional observations or deficiencies is received from FDA following an inspection, we would be required to respond in writing, and would be required to undertake corrective and/or preventive or other actions in order to address FDA’s or other regulators’ concerns.
If a notice of inspectional observations or deficiencies is received from FDA following an inspection, we would be required to respond in writing, and would be required to undertake corrective and/or preventive or other actions in order to address FDA’s concerns.
CAT Catheters are available in a wide range of sizes and lengths to address a wide range of vessel sizes and clot locations. • Computer-Assisted Vacuum Thrombectomy (CAVT) Technology combines our CAT Catheters with microprocessor-controlled software algorithms that orchestrate the interaction of our pump and catheters, enabling physicians to focus on optimizing thrombus removal while helping to mitigate blood loss for arterial and venous applications including the treatment of pulmonary embolism. 8 Table of Contents • Indigo Separators are advanced and retracted through the aspiration catheter at the proximal margin of the primary occlusion to facilitate clearing of the thrombus from the catheter tip.
CAT Catheters are available in a wide range of sizes and lengths to address a wide range of vessel sizes and clot locations. • Computer Assisted Vacuum Thrombectomy (CAVT) Technology combines our CAT Catheters with microprocessor-controlled software algorithms that orchestrate the interaction of our pump and catheters, enabling physicians to focus on optimizing thrombus removal while helping to mitigate blood loss for arterial and venous applications including the treatment of pulmonary embolism. • Indigo Separators are advanced and retracted through the aspiration catheter at the proximal margin of the primary occlusion to facilitate clearing of the thrombus from the catheter tip.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, may require a new 510(k) or possibly a PMA. FDA requires each manufacturer to make this determination initially, but the FDA can review any such decision and may disagree with a manufacturer’s determination.
After a device receives 510(k) clearance, any modification that could significantly affect its safety or effectiveness, or that would constitute a major change in its intended use, may require a new 510(k). FDA requires each manufacturer to make this determination initially, but the FDA can review any such decision and may disagree with a manufacturer’s determination.
We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, access and immersive healthcare technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline.
We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization and access technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline.
Outside of the United States, we estimate, based on published sources, that there are approximately 9.7 million ischemic strokes annually and that 1.9 million of these patients are treatable with mechanical thrombectomy. 6 Table of Contents • Acute Coronary Syndrome (“ACS”): ACS includes various conditions associated with sudden, reduced blood flow to the heart.
Outside of the United States, we estimate, based on published sources, that there are approximately 9.7 million ischemic strokes annually and that 1.9 million of these patients are treatable with mechanical thrombectomy. • Acute Coronary Syndrome (“ACS”): ACS includes various conditions associated with sudden, reduced blood flow to the heart.
Information related to the device, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is made public as part of the registration. Ongoing Regulation by FDA Along with the requirement for device clearance or approval by FDA, there are additional obligations and regulations that must be followed.
Information related to the device, patient population, phase of investigation, study sites and investigators, and other aspects of the clinical trial is made public as part of the registration. 15 Table of Contents Ongoing Regulation by FDA Along with the requirement for device clearance or approval by FDA, there are additional obligations and regulations that must be followed.
Our continued success depends on our ability to: • develop innovative, proprietary products that can cost-effectively address significant clinical needs; • continue to innovate and develop scientifically advanced technology; • obtain and maintain regulatory clearances or approvals; • demonstrate safety and efficacy in Penumbra-sponsored and third-party clinical trials and studies; • apply technology across product lines and markets; • attract and retain skilled research and development and sales personnel; and 13 Table of Contents • cost-effectively manufacture and successfully market and sell products.
Our continued success depends on our ability to: • develop innovative, proprietary products that can cost-effectively address significant clinical needs; • continue to innovate and develop scientifically advanced technology; • obtain and maintain regulatory clearances or approvals; • demonstrate safety and efficacy in Penumbra-sponsored and third-party clinical trials and studies; • apply technology across product lines and markets; • attract and retain skilled research and development and sales personnel; and • cost-effectively manufacture and successfully market and sell products.
Our results for the years ended December 31, 2022 and 2021 were impacted by the COVID-19 pandemic, which impacted the performance of certain elective and semi-elective medical procedures, which were deferred to provide resources to fight the pandemic, as well as impacted global supply chains and labor markets, resulting in cost inflation and raw material supply constraints.
Our results for the year ended December 31, 2022 were impacted by the COVID-19 pandemic, which impacted the performance of certain elective and semi-elective medical procedures, which were deferred to provide resources to fight the pandemic, as well as impacted global supply chains and labor markets, resulting in cost inflation and raw material supply constraints.
Most Class I devices are classified as exempt from premarket notification under Section 510(k) of the FD&C Act, and therefore may be commercially distributed without obtaining 510(k) clearance from FDA. Class II devices are subject to 14 Table of Contents both general controls and special controls to provide reasonable assurance of safety and effectiveness.
Most Class I devices are classified as exempt from premarket notification under Section 510(k) of the FD&C Act, and therefore may be commercially distributed without obtaining 510(k) clearance from FDA. Class II devices are subject to both general controls and special controls to provide reasonable assurance of safety and effectiveness.
Also, in these circumstances, there may be significant regulatory fines and penalties. 16 Table of Contents Changes to an approved PMA device, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new PMA application or PMA supplement, as appropriate, before the change can be implemented.
Also, in these circumstances, there may be significant regulatory fines and penalties. Changes to an approved PMA device, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new PMA application or PMA supplement, as appropriate, before the change can be implemented.
We have continued licensing the technology to certain of our products to our existing distribution partner in China pursuant to a series of licensing arrangements entered into in December 2020, February 2022 and September 2023, which permit our partner to manufacture and commercialize such products in China in exchange for fixed payments upon the transfer of the licensed technology and upon the provision of related regulatory support, as well as royalty payments on downstream sales of the licensed products.
We have continued licensing the technology to certain of our products to our existing distribution partner in China pursuant to a series of licensing arrangements entered into in December 2020, February 2022, September 2023 and March 2024, which permit our partner to manufacture and commercialize such products in China in exchange for fixed payments upon the transfer of the distinct licensed technology and upon the provision of related regulatory support, as well as, in certain cases, royalty payments on downstream sales of the licensed products.
In addition, HIPAA and its implementing regulations established uniform standards for certain covered entities, which are healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, governing the conduct of specified electronic healthcare transactions and protecting the security and privacy of protected health information.
In addition, HIPAA and its implementing 18 Table of Contents regulations established uniform standards for certain covered entities, which are healthcare providers, health plans and healthcare clearinghouses, as well as their business associates, governing the conduct of specified electronic healthcare transactions and protecting the security and privacy of protected health information.
We estimate there are approximately 2 million annual PAOs outside the U.S. that are eligible for thrombectomy. • Ischemic Stroke : A stroke occurs when a blood vessel that carries oxygen and nutrients to the brain is either blocked by a clot or bursts (ruptures).
We estimate there are approximately 2.25 million annual ALIs outside the U.S. that are eligible for thrombectomy. • Ischemic Stroke : A stroke occurs when a blood vessel that carries oxygen and nutrients to the brain is either blocked by a clot or bursts (ruptures).
We strive to foster an atmosphere where employees openly share ideas and where people are treated 19 Table of Contents with dignity and respect. Our goal is to provide a productive working environment based on mutual respect and the highest level of ethical and lawful conduct.
We strive to foster an atmosphere where employees openly share ideas and where people are treated with dignity and respect. Our goal is to provide a productive working environment based on mutual respect and the highest level of ethical and lawful conduct.
The offices in Germany support our direct sales operations in Europe as well as distributor relationships in Europe and the Middle East; the offices in Brazil, Australia, Singapore, Japan and Taiwan support our sales and marketing efforts, including through our distribution partners, in Latin America, Australia and Southeast Asia, respectively; and the offices in Italy support the operations of Crossmed S.p.A., our wholly-owned subsidiary in Italy, including supporting our direct sales operations in Italy, San Marino, Vatican City, and Switzerland.
The office in Germany supports our direct sales operations in Europe as well as distributor relationships in Europe and the Middle East; the offices in Brazil, Australia, Singapore, Japan, Hong Kong and Taiwan support our sales and marketing efforts, including through our distribution partners, in Latin America, Australia and Southeast Asia, respectively; and the offices in Italy support the operations of Crossmed S.p.A., our wholly-owned subsidiary in Italy, including supporting our direct sales operations in Italy, San Marino, Vatican City, and Switzerland.
It is estimated that approximately 2.5 million PAOs occur annually and that there are approximately 16 million PAO survivors worldwide. In the U.S., there are approximately 250,000 PAOs per year, which are generally eligible for treatment with mechanical or computer-assisted vacuum thrombectomy, causing approximately 50,000 annual deaths according to the New England Journal of Medicine.
It is estimated that approximately 2.5 million ALIs occur annually and that there are approximately 16 million ALI survivors worldwide. In the U.S., there are approximately 250,000 ALIs per year, which are generally eligible for treatment with mechanical or computer assisted vacuum thrombectomy, causing approximately 50,000 annual deaths according to the New England Journal of Medicine.
Various states have 18 Table of Contents adopted laws similar to the federal civil False Claims Act, and many of these state laws are broader in scope and apply to all payors, and therefore, are not limited to only those claims submitted to the federal government. Federal Civil Monetary Penalties Statute .
Various states have adopted laws similar to the federal civil False Claims Act, and many of these state laws are broader in scope and apply to all payors, and therefore, are not limited to only those claims submitted to the federal government. Federal Civil Monetary Penalties Statute .
Our ability to achieve market acceptance or significant sales volume will depend in large part on the availability of coverage and the level of reimbursement for procedures performed using our products under healthcare payment systems in such markets.
Our ability to achieve market 12 Table of Contents acceptance or significant sales volume will depend in large part on the availability of coverage and the level of reimbursement for procedures performed using our products under healthcare payment systems in such markets.
Failure to address FDA’s concerns may result in the issuance of a warning letter or other enforcement or administrative actions. European Union Our medical devices are regulated in the European Union as medical devices per the European Medical Devices Regulation 2017/745, as amended by Regulation 2023/607 (“EU MDR”).
Failure to address FDA’s concerns may result in the issuance of a warning letter or other enforcement or administrative actions. European Union Our medical devices are regulated in the European Union as medical devices per the European Union Medical Devices Regulation 2017/745, as amended (“EU MDR”).
We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. We generated revenue of $1,058.5 million, $847.1 million and $747.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. We generated revenue of $1,194.6 million, $1,058.5 million and $847.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Human Capital Resources As of December 31, 2023, we had approximately 4,200 employees worldwide. None of our U.S. employees are represented by a collective bargaining agreement. Some of our employees outside of the United States are subject to mandatory, industry-specific collective bargaining agreements or the protections of statutory works councils as required by local law.
Human Capital Resources As of December 31, 2024, we had approximately 4,500 employees worldwide. None of our U.S. employees are represented by a collective bargaining agreement. Some of our employees outside of the United States are subject to mandatory, industry-specific collective bargaining agreements or the protections of statutory works councils as required by local law.
We participate in the Medical Device Single Audit Program (“MDSAP”) which allows for certification and review of compliance to standards and regulations required in the United States, Canada, Brazil, Australia, and Japan by a single auditing organization. We received our first MDSAP certification in 2018 and successfully completed our most recent surveillance audit in 2023.
We participate in the Medical Device Single Audit Program (“MDSAP”) which allows for certification and review of compliance to standards and regulations required in the United States, Canada, Brazil, Australia, and Japan by a single auditing organization. We received our first MDSAP certification in 2018 and successfully completed our most recent recertification audit in 2024.
If FDA issues an approvable or not approvable letter, the applicant has 180 days to respond, after which FDA’s review clock is reset. 15 Table of Contents Clinical Trials Clinical trials are almost always required to support a PMA and are less often required for 510(k) clearance.
If FDA issues an approvable or not approvable letter, the applicant has 180 days to respond, after which FDA’s review clock is reset. Clinical Trials Clinical trials are almost always required to support a PMA and are less often required for 510(k) clearance.
In 2022, we initiated the THUNDER Study, which is an Investigational Device Exemption (“IDE”) designed to evaluate the safety and effectiveness of CAVT technology for neurovascular applications. In 2023, we added to the RED family by launching the RED 43 catheter and RED 72 catheter with SENDit Technology.
In 2022, we initiated the THUNDER Study, which is an Investigational Device Exemption (“IDE”) study designed to evaluate the safety and effectiveness of CAVT technology for neurovascular applications and which completed enrollment in September 2024. In 2023, we added to the RED family by launching the RED 43 catheter and RED 72 catheter with SENDit Technology.
We are focused on developing strong relationships with specialist physicians and other healthcare providers and devote significant resources to training and educating physicians and other healthcare providers in the use and benefits of our products.
We are focused on developing strong relationships with specialist physicians and other healthcare providers and devote significant resources to training and educating 11 Table of Contents physicians and other healthcare providers in the use and benefits of our products.
The lease for the Salt Lake City warehouse expires in 2027, subject to our option to renew the lease for an additional five years. We also lease office and/or warehouse space in Germany, Italy, Brazil, Australia, Singapore, Japan and Taiwan as of December 31, 2023.
The lease for the Salt Lake City warehouse expires in 2027, subject to our option to renew the lease for an additional five years. We also lease office and/or warehouse space in Germany, Italy, Brazil, Australia, Singapore, Japan, Hong Kong and Taiwan as of December 31, 2024.
In 2023, direct sales accounted for approximately 83% of our revenue, with the balance generated by independent distributors that sell our products outside of the United States and by the arrangements with our partner in China, which include licensing royalty and distribution revenue.
In 2024, direct sales accounted for approximately 87% of our revenue, with the balance generated by independent distributors that sell our products outside of the United States and by the arrangements with our partner in China, which include licensing royalty and distribution revenue.
The federal Anti-Kickback Statute is broad and prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry.
The federal Anti-Kickback Statute is broad and 17 Table of Contents prohibits many arrangements and practices that are lawful in businesses outside of the healthcare industry.
Our website address is www.penumbrainc.com. Information contained in or accessible through our website is not part of this report. The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov. 21 Table of Contents
Information contained in or accessible through our website is not part of this report. The SEC maintains a website that contains the materials we file with the SEC at www.sec.gov. 20 Table of Contents
Product Families Key Product Brands THROMBECTOMY Peripheral Indigo System Lightning Bolt CAT RX Neuro Penumbra System Penumbra RED, JET, ACE, MAX catheters 3D Revascularization Device Penumbra ENGINE and other components and accessories EMBOLIZATION & ACCESS Peripheral Embolization Ruby Coil Ruby LP LANTERN POD (Penumbra Occlusion Device) Packing Coil Packing Coil LP Neuro Embolization Penumbra Coil 400 POD400 PAC400 Penumbra SMART COIL Access Neuron Neuron MAX Select BENCHMARK BMX96 BMX81 DDC PX SLIM SENDit Neurosurgical Tools Artemis Neuro Evacuation Device IMMERSIVE HEALTHCARE Immersive 3D Computer-based Technology Platform Real Immersive System Thrombectomy Products Our thrombectomy products fall into the following broad product families: Peripheral Thrombectomy Products Indigo System The Indigo System was designed for continuous, power aspiration of thrombus in the body, leveraging the success of the Penumbra System in ischemic stroke.
Product Families Key Product Brands THROMBECTOMY Peripheral Indigo System Lightning Bolt CAT RX Neuro Penumbra System Penumbra RED, SENDit, JET, ACE, BMX, and MAX catheters 3D Revascularization Device Penumbra ENGINE and other components and accessories EMBOLIZATION & ACCESS Peripheral Embolization Ruby Coil System Ruby LP LANTERN POD (Penumbra Occlusion Device) Packing Coil Packing Coil LP Neuro Embolization Penumbra Coil 400 POD400 PAC400 Penumbra SMART COIL SwiftPAC Coil Access Neuron Neuron MAX BENCHMARK BMX DDC PX SLIM MIDWAY Neurosurgical Tools Artemis Neuro Evacuation Device Thrombectomy Products Our thrombectomy products fall into the following broad product families: Peripheral Thrombectomy Products Indigo System The Indigo System was designed for continuous, power aspiration of thrombus in the body, leveraging the success of the Penumbra System in ischemic stroke.
FDA may require further information, including clinical data, to make a determination of substantial equivalence.
FDA may require further information, including clinical data, to make a determination of substantial 14 Table of Contents equivalence.
We have also submitted technical documentation supporting all of the device families we intend to CE Mark under MDR to our Notified body and obtained CE Mark approvals for many of our products.
We have also submitted technical documentation supporting all of the device families we intend to CE Mark under EU MDR to our Notified body and obtained CE Mark approvals for the majority of our product families.
We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the thrombectomy market since 2007, access market since 2008, embolization market since 2011, neurosurgical market since 2014, and immersive healthcare market since 2020.
We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the thrombectomy market since 2007, access market since 2008, embolization market since 2011, and neurosurgical market since 2014, and operated in the immersive healthcare market from 2020 until September 2024.
If FDA disagrees with the determination to not seek a new 510(k) clearance, FDA may retroactively require a 510(k) clearance or possibly a PMA. FDA could also require the manufacturer to cease marketing and distribution and/or recall the modified device until 510(k) clearance or a PMA approval is obtained.
If FDA disagrees with the determination to not seek a new 510(k) clearance, FDA may retroactively require a 510(k) clearance or potentially require another pathway, such as a PMA. FDA could also require the manufacturer to cease marketing and distribution and/or recall the modified device until 510(k) clearance is obtained.
We do not have any material licenses to any technology or intellectual property rights. As of December 31, 2023, we owned and/or had rights to 117 issued patents globally, of which 57 were U.S. patents.
We do not have any material licenses to any technology or intellectual property rights. As of December 31, 2024, we owned and/or had rights to 120 issued patents globally, of which 58 were U.S. patents.
In the peripheral vasculature, clots often form in long segments and are more resistant to traditional aspiration techniques.
In the peripheral vasculature, clots often form 8 Table of Contents in long segments and are more resistant to traditional aspiration techniques.
Where possible, we seek second source suppliers or suppliers that have alternate manufacturing sites at which they could manufacture our parts. 11 Table of Contents Sales and Marketing We sell our products directly in the United States, most of Europe, Canada and Australia, subject to required regulatory clearances and approvals.
Where possible, we seek second source suppliers or suppliers that have alternate manufacturing sites at which they could manufacture our parts. Sales and Marketing We sell our products directly in the United States, most of Europe, Canada and Australia, subject to required regulatory clearances and approvals. We have complemented our direct sales organization with distributors in most international markets.
Our sales representatives and sales managers generally have substantial medical device experience and market our products directly to a variety of specialist physicians engaged in the treatment of vascular disorders and healthcare providers who manage patients addressing motor function, cognition and mental well-being, who are the end users of our products and significantly influence buying decisions in hospitals and other healthcare settings relating to medical devices and other healthcare products.
Our sales representatives and sales managers generally have substantial medical device experience and market our products directly to a variety of specialist physicians engaged in the treatment of vascular disorders, who are the end users of our products and significantly influence buying decisions in hospitals and other healthcare settings relating to medical devices.
There are three types of 510(k)s: traditional, special and abbreviated. Special 510(k)s are appropriate for certain technological, design, and labeling changes to a device which necessitates a new 510(k) but where the method(s) to evaluate the change(s) are well-established, and whether the results can be sufficiently reviewed in a summary or risk analysis format.
Special 510(k)s are appropriate for certain technological, design, and labeling changes to a device which necessitates a new 510(k) but where the method(s) to evaluate the change(s) are well-established, and whether the results can be sufficiently reviewed in a summary or risk analysis format. Abbreviated 510(k)s are for devices that conform to a recognized standard.
Employee safety is also supported by an access control system at all facilities and a dedicated 24/7 Security team on the Alameda and Roseville campuses. We require all work-related injuries or illnesses to be reported. This information is reviewed monthly by our Safety Committee for analysis and trending.
Employee safety is also supported by an access control system at all facilities and a dedicated 24/7 Security team on the Alameda and Roseville campuses. We require all work-related injuries or illnesses to be reported.
We also lease approximately 210,000 square feet of office and manufacturing facilities in two buildings in Roseville, California. The leases for these two buildings expire in 2035, subject to our option to renew the leases for an additional five to ten years.
The leases for these nine buildings expire at various times in 2036, subject to our option to renew certain leases for an additional five to fifteen years. We also lease approximately 210,000 square feet of office and manufacturing facilities in two buildings in Roseville, California.
We pride ourselves on our diverse workforce, which we believe has been and will continue to be a major contributor to our growth and innovation, and intend to continue to make diversity and inclusion a cornerstone of our efforts regarding our workforce. • We aim to maintain an “open door” culture, and encourage employees to voice their concerns, questions, suggestions and comments.
We pride ourselves on our engaged workforce, which we believe has been and will continue to be a major contributor to our growth and innovation. • We aim to maintain an “open door” culture, and encourage employees to voice their concerns, questions, suggestions and comments.
We believe that the cost-effectiveness of our products is attractive to our customers. Since our founding in 2004, we have had a strong track record of organic product development and commercial expansion that has established the foundation of our global organization.
Since our founding in 2004, we have had a strong track record of organic product development and commercial expansion that has established the foundation of our global organization.
The principal specialist physicians and other healthcare providers in our target end markets include: • Thrombectomy : Interventional radiologists, interventional neuroradiologists, vascular surgeons, neurosurgeons, interventional cardiologists and interventional neurologists. • Embolization and Access : Neurosurgeons, interventional neuroradiologists, interventional neurologists, interventional radiologists, vascular surgeons and pediatric interventional cardiologists. • Immersive Healthcare: Occupational therapists, physical therapists, nurses, mental health professionals and other healthcare providers.
The principal specialist physicians and other healthcare providers in our target end markets include: • Thrombectomy : Interventional radiologists, interventional neuroradiologists, vascular surgeons, neurosurgeons, interventional cardiologists and interventional neurologists. • Embolization and Access : Neurosurgeons, interventional neuroradiologists, interventional neurologists, interventional radiologists, vascular surgeons and pediatric interventional cardiologists.
FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution.
In addition, FDA prohibits an approved device from being marketed for off-label use. FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant liability, including substantial monetary penalties and criminal prosecution.
ITEM 1. BUSINESS. Overview References herein to “we,” “us,” “our,” the “Company,” and “Penumbra,” refer to Penumbra, Inc. and its consolidated subsidiaries unless expressly indicated or the context requires otherwise. Penumbra is a global healthcare company focused on innovative therapies.
ITEM 1. BUSINESS. Overview References herein to “we,” “us,” “our,” the “Company,” and “Penumbra,” refer to Penumbra, Inc. and its consolidated subsidiaries unless expressly indicated or the context requires otherwise.
This represents an annual increase of 25.0% and 13.3%, respectively. We generated income from operations of $73.6 million and $6.1 million for the years ended December 31, 2023 and 2022, and loss from operations of $7.5 million for the year ended December 31, 2021.
This represents an annual increase of 12.9% and 25.0%, respectively. We generated income from operations of $9.3 million, $73.6 million and $6.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
An additional approximately 50,000 square feet of space in one of the buildings, located at 620 Roseville Parkway, will be added to the lease upon the earlier of completion of certain improvements to the premises, which is not expected to occur in 2024, and June 1, 2025.
An additional approximately 50,000 square feet of space in one of the buildings, located at 620 Roseville Parkway, will be added to the lease upon the completion of certain improvements to the premises, which are expected to commence in 2025.
Abbreviated 510(k)s are for devices that conform to a recognized standard. The special and abbreviated 510(k)s are intended to streamline review, and FDA intends to process special 510(k)s within 30 days of receipt.
The special and abbreviated 510(k)s are intended to streamline review, and FDA intends to process special 510(k)s within 30 days of receipt.
We also seek to protect our proprietary rights through a variety of other methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to our proprietary information.
Included in the registered trademarks is a mark with our company name and logo. We also seek to protect our proprietary rights through a variety of other methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to our proprietary information.
United States FDA’s Premarket Clearance and Approval Requirements Each medical device we seek to commercially distribute in the United States will require either a prior premarket notification (or 510(k)) clearance, unless it is exempt, or a premarket approval (“PMA”) from FDA.
United States FDA’s Premarket Clearance and Approval Requirements Prior to commercially distributing medical devices in the United States, either a prior premarket notification (or 510(k)) clearance, unless it is exempt, or a premarket approval (“PMA”) from FDA is required.
While reliable third-party data is not available for many markets outside the United States, we believe there are substantial additional market opportunities for our thrombectomy, embolization and access, and immersive healthcare products throughout the world.
The Company designs, develops, manufactures and markets novel products, and operates as one operating segment. While reliable third-party data is not available for many markets outside the United States, we believe there are substantial additional market opportunities for our thrombectomy and embolization and access products throughout the world.
Medical devices which pose the greatest risk, such as life-sustaining or life-supporting devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are Class III devices.
Medical devices which pose the greatest risk, such as life-sustaining or life-supporting devices, or devices deemed not substantially equivalent to a previously cleared 510(k) device, are Class III devices. For most Class III devices, a PMA application will be required, subject to certain limited exceptions.
We estimate there are approximately 8 million annual AMIs outside the U.S. eligible for thrombectomy. • Clot associated with Arteriovenous Graft or Fistula : Arteriovenous grafts or fistulas are created for access to dialyze the blood of patients with end-stage renal disease. It is common for clots to form within these access vessels when patients undergo dialysis long-term.
We estimate there are approximately 8 million annual AMIs outside the U.S. that are eligible for mechanical thrombectomy. • Clot associated with Arteriovenous Graft or Fistula : Arteriovenous grafts or fistulas are created for access to dialyze the blood of patients with end-stage renal disease.
FDA has 180 days to review a PMA application, although the review of an application generally occurs over a significantly longer period of time and can take up to several years. During this review period, FDA may request additional information or clarification of the information provided.
Once submitted, FDA has 180 days to review a PMA application, although the review of an application generally occurs over a significantly longer period of time and can take up to several years.
The design of Neuron enables physicians to position the catheter much higher in the anatomy than conventional guide catheters. The BENCHMARK catheter features additional improvements in aortic arch support, ease-of-use, and trackability.
The Neuron delivery catheter is a variable stiffness guide catheter with increased support in the aortic arch, easier access, and trackability into the intracranial vasculature. The design of Neuron enables physicians to position the catheter much higher in the anatomy than conventional guide catheters. The BENCHMARK catheter features additional improvements in aortic arch support, ease-of-use, and trackability.
As of December 31, 2023, we owned and/or had rights to 68 pending patent applications, of which 32 were patent applications pending in the United States.
As of December 31, 2024, we owned and/or had rights to 55 pending patent applications, of which 29 were patent applications 13 Table of Contents pending in the United States.
Embolization and Access Markets The embolization and access markets are comprised of various diseases and conditions throughout the body, such as aneurysm, hemorrhagic stroke, vessel malformations, bleeding, endoleaks, ovarian veins, varicoceles, and hematomas, as well as products that provide access to the diseased area.
It is common for clots to form within these access vessels when patients undergo dialysis long-term. Embolization and Access Markets The embolization and access markets are comprised of various diseases and conditions throughout the body, such as aneurysm, hemorrhagic stroke, vessel malformations, bleeding, endoleaks, ovarian veins, varicoceles, and hematomas, as well as products that provide access to the diseased area.
While the impact of the pandemic has subsided due to the development and widespread availability of vaccines for COVID-19, we will continue to prioritize the health and safety of our employees and to operate under the protocols mandated by local and state authorities.
While the impact of the pandemic has subsided due to the development and widespread availability of vaccines for COVID-19, we will continue to prioritize the health and safety of our employees and to operate under any protocols mandated by local and state authorities. 5 Table of Contents Our Markets We concentrate on improving treatment outcomes for patients with certain forms of vascular disease.
In the U.S., there are approximately 550,000 DVTs per year causing approximately 30,000 annual deaths according to the Centers for Disease Control and Prevention. Proximal DVTs, which are generally eligible for treatment with mechanical or computer-assisted vacuum thrombectomy, represent approximately 64% of such DVTs, or approximately 350,000 U.S. patients.
In the U.S., there are approximately 30,000 annual deaths caused by DVT according to the Centers for Disease Control and Prevention. Approximately 350,000 DVTs are eligible for treatment with mechanical or computer assisted vacuum thrombectomy in the U.S.
Ischemic strokes, caused by the blockage of an artery in the brain, represent approximately 87% of strokes, or approximately 700,000 patients annually, in the United States. Of these cases, we estimate that approximately 200,000 are treatable with mechanical thrombectomy, which involves removal of the clot causing the blockage by mechanical means and restoring blood flow to the blocked vessels.
Of these cases, we estimate that approximately 200,000 are treatable with mechanical thrombectomy, which involves removal of the clot causing the blockage by mechanical means and restoring blood flow to the blocked vessels.
In 2007, our Quality Management System was first audited to the European Union’s Medical Device Directive in support of product CE marking, and we successfully completed our most recent surveillance audit in 2023.
In 2021, our Quality Management System was first audited to the European Union Medical Devices Regulation in support of product CE marking, and we successfully completed our most recent recertification audit in 2024.
To better align with our strategic priorities, beginning with the three months ended December 31, 2023 we began to classify our end markets based on the type of procedure being performed, and therefore divide our markets into thrombectomy, which includes products that treat conditions such as pulmonary embolism, deep vein thrombosis, acute limb ischemia, ischemic stroke and coronary disease, embolization and access, which include products to treat aneurysms and to occlude vessels as well as products to access the vasculature, and immersive healthcare, which includes applications for patients undergoing rehabilitation related to diseases, injuries, or illnesses, as well as applications designed to address mental well-being and cognition. 5 Table of Contents We generated revenue of $677.3 million, $511.1 million and $437.8 million from our thrombectomy product category for the years ended December 31, 2023, 2022 and 2021, respectively.
To better align with our strategic priorities, beginning with the three months ended December 31, 2023 we began to classify our end markets based on the type of procedure being performed, and therefore divide our markets into thrombectomy, which includes products that treat conditions such as pulmonary embolism, deep vein thrombosis, acute limb ischemia, ischemic stroke and coronary disease, and embolization and access, which include products to treat aneurysms and to occlude vessels as well as products to access the vasculature.
We cannot assure you that government or private third-party payors will cover and reimburse the procedures performed using our products in whole or in part in the future, that payment rates will be adequate, or that reimbursement rates will not change in the future. 12 Table of Contents Outside the United States, market acceptance of medical devices depends partly upon the availability of reimbursement within the prevailing healthcare payment system.
We cannot assure you that government or private third-party payors will cover and reimburse the procedures performed using our products in whole or in part in the future, that payment rates will be adequate, or that reimbursement rates will not change in the future.
Our manufacturing facilities are International Organization for Standardization (“ISO”) 13485 compliant. We received ISO 13485:2016 certification of our Alameda facility in 2018 and successfully completed our most recent surveillance audit in 2023. We received ISO 13485:2016 certification of our Roseville facility in 2020 and successfully completed our most recent surveillance audit in 2023.
We received ISO 13485:2016 certification of our Alameda facility in 2018 and successfully completed our most recent recertification audit in 2024. We received ISO 13485:2016 certification of our Roseville facility in 2020 and successfully completed our most recent recertification audit in 2024.
It is our intent to complete the requisite clinical studies and obtain coverage and reimbursement approval in countries where it makes economic sense to do so.
A small number of countries may require us to gather additional clinical data before or after recognizing coverage and reimbursement for our products. It is our intent to complete the requisite clinical studies and obtain coverage and reimbursement approval in countries where it makes economic sense to do so.
Thrombectomy Market The thrombectomy market is comprised of vascular diseases and disorders occurring in vessels throughout the body, including pulmonary embolism, deep vein thrombosis, acute limb ischemia, ischemic stroke, coronary disease and other conditions. Disruption of blood flow to the vasculature can have serious adverse consequences, including death and morbidity, and our solutions address the intervention of these diseases.
Thrombectomy Market The thrombectomy market is comprised of vascular diseases and disorders occurring in vessels throughout the body, including ischemic stroke, venous thromboembolism such as pulmonary embolism, acute limb ischemia, deep vein thrombosis, coronary disease and other conditions.
Penumbra System Reperfusion Catheters include the Penumbra RED family, JET family, ACE family and MAX families of catheters, designed to address a broad range of occlusions.
We believe these design features contribute to improved clinical outcomes and reduced procedure times. Penumbra System Reperfusion Catheters include the Penumbra RED, JET, ACE, BMX, and MAX families of catheters, designed to address a broad range of occlusions.
In May 2017, the EU MDR was published to replace the MDD and came into effect on May 26, 2021. We have updated our quality management system processes to meet the new EU MDR requirements, which were successfully audited most recently in September 2023 by a Notified Body.
We have updated our quality management system processes to meet the EU MDR requirements, which were successfully audited most recently in November 2024 by a Notified Body.
Our pending patent applications may not result in issued patents and we can give no assurance that any patents that have issued or might issue in the future will protect our current or future products or provide us with any competitive advantage. See the section titled “Risk Factors-Risks Related to Our Intellectual Property” in this Form 10-K for additional information.
Some of our pending patent applications pertain to components and methods of use associated with currently commercialized products. Our pending patent applications may not result in issued patents and we can give no assurance that any patents that have issued or might issue in the future will protect our current or future products or provide us with any competitive advantage.
When the treatment for vascular disease is performed from within a vessel, it is referred to as an endovascular procedure. Previously, we classified our end markets according to the anatomic location of the disorder and divided them into neuro, which included neurovascular and neurosurgical, and vascular, which included peripheral vascular and cardiovascular.
Historically, we classified our end markets according to the anatomic location of the disorder and divided them into neuro, which included neurovascular and neurosurgical, and vascular, which included peripheral vascular and cardiovascular.
Such matters are subject to many uncertainties and there can be no assurance that legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition, results of operations or cash flows. 20 Table of Contents Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports available free of charge at our website as soon as reasonably practicable after they have been filed with the SEC.
Such matters are subject to many uncertainties and there can be no assurance that legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on our business, financial condition, results of operations or cash flows.
The Penumbra System is a fully integrated mechanical thrombectomy system consisting of reperfusion catheters and separators, the 3D Revascularization Device, aspiration tubing, and aspiration pump. Penumbra System Reperfusion Catheters are the cornerstone of the Penumbra System and are manufactured using a variety of proprietary processes and materials science innovations for use in revascularization of patients with acute ischemic stroke.
Penumbra System Reperfusion Catheters are the cornerstone of the Penumbra System and are manufactured using a variety of proprietary processes and materials science innovations for use in revascularization of patients with acute ischemic stroke. The Penumbra System Reperfusion Catheters, powered by Penumbra ENGINE or Penumbra Pump MAX, are designed for trackability and to maximize thrombus removal force.
The BENCHMARK also is available pre-packaged with a Select catheter to obviate the need for a neurovascular guide catheter exchange, which may reduce the number of devices needed per procedure and shorten procedure times. The BENCHMARK family includes our BENCHMARK BMX 96 and BMX 81 Access Systems.
The BENCHMARK also is available pre-packaged with a Select catheter to obviate the need for a neurovascular guide catheter exchange, which may reduce the number of devices needed per procedure and shorten procedure times. 10 Table of Contents The BENCHMARK family includes our BENCHMARK BMX Access System, which provides a larger internal diameter without increasing the outer diameter of the delivery catheter, enabling more working room for all neurovascular procedures while maintaining the same size access site as our Neuron MAX.
We have complemented our direct sales organization with distributors in most international markets. We currently sell our products in the United States through our dedicated salesforce.
We currently sell our products in the United States through our dedicated salesforce.
An authorized third party, also called a Notified Body, must approve products for CE marking, other than those which are categorized as class I self-certified.
An authorized third party, also called a Notified Body, must approve products for CE marking, other than those which are categorized as class I self-certified. The CE mark is contingent upon continued compliance to the applicable regulations, harmonized standards and the quality system requirements of the EU MDR and the ISO 13485 standard.

… 53 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

113 edited+20 added−26 removed302 unchanged
Biggest changeIn addition, we are subject to Section 203 of the Delaware General Corporation Law, which may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that could have resulted in a premium over the market price for shares of our common stock.
Biggest changeIn addition, we are subject to Section 203 of the Delaware General Corporation Law, which may have an anti-takeover effect with respect to transactions not approved in advance by our board of directors, including discouraging takeover attempts that could have resulted in a premium over the market price for shares of our common stock. 42 Table of Contents These provisions apply even if a takeover offer may be considered beneficial by some stockholders and could delay or prevent an acquisition that our board of directors determines is not in our and our stockholders’ best interests and could also affect the price that some investors are willing to pay for our common stock.
Even when a provider is the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN generally are free to purchase a certain percentage of such products from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause by the GPO or IDN upon 60 to 90 days’ notice.
Even when a provider is the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN are generally free to purchase a certain percentage of such products from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause by the GPO or IDN upon 60 to 90 days’ notice.
Any such claim could also force use to do one or more of the following: • incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay if a court decides that the product or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay treble damages and the third party’s attorneys’ fees; • pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology; • stop manufacturing, selling, using, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product or technology; • obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all; • redesign our products and technology so they do not infringe or violate the third party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time; 39 Table of Contents • enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others; • find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or • relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable.
Any such claim could also force use to do one or more of the following: • incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay if a court decides that the product or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay treble damages and the third party’s attorneys’ fees; • pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology; • stop manufacturing, selling, using, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product or technology; • obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all; • redesign our products and technology so they do not infringe or violate the third party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time; • enter into cross-licenses with our competitors, which could weaken our overall intellectual property position; • lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others; • find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or • relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable.
Acquisitions may also require us to record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, and incur write-offs and restructuring and other related expenses, any of which could harm our results of operations and financial condition.
Acquisitions may also require us to record goodwill and non-amortizable intangible assets that will be subject to impairment testing on a regular basis and potential periodic impairment charges, incur amortization expenses related to certain intangible assets, or incur write-offs and restructuring and other related expenses, any of which could harm our results of operations and financial condition.
In addition, changes in tax law or declines in our underlying profitability may negatively or positively impact our financial outlook of operations, which could lead to a corresponding charge or benefit to income taxes attributable to adjustments to the valuation allowance recorded against our deferred tax assets (“DTAs”) on our consolidated balance sheets.
In addition, changes in tax law or in our underlying profitability may negatively or positively impact our financial outlook of operations, which could lead to a corresponding charge or benefit to income taxes attributable to adjustments to the valuation allowance recorded against our deferred tax assets (“DTAs”) on our consolidated balance sheets.
Since our initial public offering in September 2015, we have financed our business primarily through our operations and sales of our equity securities. We are unable to predict the extent of any future operating cash flows or whether we will be able to achieve, maintain or grow our profitability in the future.
Since our initial public offering in September 2015, we have financed our business primarily through our operations and sales of our equity securities. We are unable to predict the extent of any future operating cash flows or whether we will be able to maintain or grow our profitability in the future.
The types of situations in which we may become a party to such litigation or proceedings include: • we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or processes do not infringe those third parties’ patents; • we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products; • if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; • if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their product or technology does not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings.
The types of situations in which we may become a party to such litigation or proceedings include: • we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or processes do not infringe those third parties’ patents; • we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products; 36 Table of Contents • if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position; • if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings; • if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their product or technology does not infringe our patents or patents licensed to us, we will need to defend against such proceedings; • we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products; and • if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings.
Our reputation and competitive position may also be harmed by other publicly available information suggesting that our products are not safe. For example, we file adverse event reports under Medical Device Reporting (“MDR”) obligations with the FDA that are publicly available on the FDA’s website.
Our reputation and competitive position may also be harmed by other publicly available information suggesting that our products are not safe. For example, we file adverse event reports under Medical Device Reporting obligations with the FDA that are publicly available on the FDA’s website.
We were involved in one such lawsuit in 2021, which was voluntary dismissed without prejudice in March 2021, and we may be the target of this type of litigation in the future. Any such litigation could result in substantial costs and a diversion of our management’s attention and resources.
We were involved in one such lawsuit in 2021, which was voluntary dismissed without prejudice, and we may be the target of this type of litigation in the future. Any such litigation could result in substantial costs and a diversion of our management’s attention and resources.
Any failure to maintain effective disclosure controls and internal control over financial reporting could have a material and adverse effect on our business and results of operations, and cause a decline in the price of our common stock.
Any failure to maintain effective disclosure controls and procedures and internal control over financial reporting could have a material and adverse effect on our business and results of operations, and cause a decline in the price of our common stock.
In connection with any acquisitions, we could issue additional equity securities or convertible debt or equity-linked securities, which would dilute our stockholders, cause us to incur substantial debt to fund the acquisitions, or assume significant liabilities.
In connection with any acquisitions, we could issue additional equity securities or convertible debt or equity-linked securities, which would dilute our stockholders and could cause us to incur substantial debt to fund the acquisitions or assume significant liabilities.
Our current controls and any new controls that we develop may become inadequate because of changes in our business. Further, weaknesses in our disclosure controls or our internal control over financial reporting may be discovered in the future.
Our current controls and any new controls that we develop may become inadequate because of changes in our business. Further, weaknesses in our disclosure controls and procedures or our internal control over financial reporting may be discovered in the future.
These provisions include: • authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; 44 Table of Contents • requiring supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and second amended and restated bylaws; • eliminating the ability of stockholders to call and bring business before special meetings of stockholders; • prohibiting stockholder action by written consent; • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; • dividing our board of directors into three classes so that only one third of our directors will be up for election in any given year; and • providing that our directors may be removed by our stockholders only for cause.
These provisions include: • authorizing the issuance of “blank check” preferred stock without any need for action by stockholders; • requiring supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and second amended and restated bylaws; • eliminating the ability of stockholders to call and bring business before special meetings of stockholders; • prohibiting stockholder action by written consent; • establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; • dividing our board of directors into three classes so that only one third of our directors will be up for election in any given year; and • providing that our directors may be removed by our stockholders only for cause.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it; • federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government; • HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it; 33 Table of Contents • federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government; • HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
Some of our competitors have: • significantly greater name recognition; 23 Table of Contents • broader or deeper relations with healthcare professionals, customers, group purchasing organizations and third-party payors; • more established distribution networks; • additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage; • greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and • greater financial and human resources for product development, sales and marketing and patent litigation.
Some of our competitors have: • significantly greater name recognition; • broader or deeper relations with healthcare professionals, customers, group purchasing organizations and third-party payors; • more established distribution networks; • additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage; • greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and • greater financial and human resources for product development, sales and marketing and patent litigation.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline. 49 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline. 47 Table of Contents ITEM 1B. UNRESOLVED STAFF COMMENTS. None.
At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize the benefits of the domestic DTAs we maintain as of December 31, 2023, exclusive of our California tax credit DTAs.
At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize the benefits of the domestic DTAs we maintain as of December 31, 2024, exclusive of our California tax credit DTAs.
To the extent that such disruptions occur, our customers and partners may lose confidence in our solutions and we may lose business or brand reputation, resulting in a material and adverse effect on our business, financial condition, results of operations or cash flows.
To the extent that such disruptions occur, our customers and partners may lose confidence in our company and we may lose business or brand reputation, resulting in a material and adverse effect on our business, financial condition, results of operations or cash flows.
If the information we rely upon to run our businesses were to be found to be inaccurate or unreliable, if we fail to maintain or protect our information technology systems and data integrity effectively, if we fail to develop and implement new or upgraded systems to meet our business needs in a timely manner, or if we fail to anticipate, plan for or manage significant disruptions to these systems, our competitive position could be harmed, we could have operational disruptions, we could lose existing customers, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, specialist physicians and other health-care providers, have regulatory sanctions or penalties imposed or other legal problems, incur increased operating and administrative expenses, lose revenues as a result of a data privacy breach or theft of intellectual property or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
If the information we rely upon to run our businesses were to be found to be inaccurate or unreliable, if we fail to maintain or protect our information technology systems and data integrity effectively, if we fail to develop and implement new or upgraded systems to meet our business needs in a timely manner, or if we fail to anticipate, plan for or manage significant disruptions to these systems, our competitive position could be harmed, we could have operational disruptions, we could lose existing customers, have difficulty preventing, detecting, and controlling fraud, have disputes with customers, specialist 30 Table of Contents physicians and other healthcare providers, have regulatory sanctions or penalties imposed or other legal problems, incur increased operating and administrative expenses, lose revenues as a result of a data privacy breach or theft of intellectual property or suffer other adverse consequences, any of which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. Risks Related to Our Intellectual Property We rely on a variety of intellectual property rights, and if we are unable to maintain or protect our intellectual property, our business and results of operations will be harmed.
FDA has also requested that companies enter into consent decrees or permanent injunctions under which specified promotional conduct is changed or curtailed. 34 Table of Contents Risks Related to Our Intellectual Property We rely on a variety of intellectual property rights, and if we are unable to maintain or protect our intellectual property, our business and results of operations will be harmed.
In addition, others may independently discover or develop our trade secrets and proprietary information, and the existence of our own trade secrets affords no protection against such independent discovery. 41 Table of Contents We may also employ individuals who were previously or concurrently employed at research institutions and/or other medical device companies, including our competitors or potential competitors.
In addition, others may independently discover or develop our trade secrets and proprietary information, and the existence of our own trade secrets affords no protection against such independent discovery. We may also employ individuals who were previously or concurrently employed at research institutions and/or other medical device companies, including our competitors or potential competitors.
As of December 31, 2023, approximately 7,700,000 shares of common stock that are either subject to outstanding options or other equity awards or reserved for future issuance under our equity incentive plans have been registered on Form S-8 registration statements and may be freely sold in the public market upon issuance, except for shares held by affiliates who have certain restrictions on their ability to sell.
As of December 31, 2024, approximately 7,400,000 shares of common stock that are either subject to outstanding options or other equity awards or reserved for future issuance under our equity incentive plans have been registered on Form S-8 registration statements and may be freely sold in the public market upon issuance, except for shares held by affiliates who have certain restrictions on their ability to sell.
For example, during 2022 the U.S. dollar strengthened relative to many local currencies in the non-U.S. markets where we do business, which adversely affected our U.S. dollar reported revenue. 31 Table of Contents We have experienced rapid growth in recent periods, and if we fail to manage our growth effectively, our business and results of operations may suffer.
For example, during 2022 the U.S. dollar strengthened relative to many local currencies in the non-U.S. markets where we do business, which adversely affected our U.S. dollar reported revenue. We have experienced rapid growth in recent periods, and if we fail to manage our growth effectively, our business and results of operations may suffer.
Environmental Protection Agency has proposed regulations aimed at reducing hazardous air pollutants, including emissions of ethylene oxide, and any future regulatory action that requires sterilization facilities to modify their sterilization processes to limit the use of ethylene oxide could impact the supply of sterilization services as well as the cost for such services.
Environmental Protection Agency has proposed regulations aimed at reducing hazardous air pollutants, including emissions of ethylene oxide, and any future regulatory action that requires sterilization facilities to modify their sterilization 24 Table of Contents processes to limit the use of ethylene oxide could impact the supply of sterilization services as well as the cost for such services.
For example, certain unique macroeconomic and geopolitical factors, including those as a result of the COVID-19 pandemic, the Russian invasion of Ukraine or conditions in the Middle East as a result of the Israel-Hamas conflict, may cause instability and volatility in the global financial markets and disruptions within the healthcare industry that may negatively impact our business.
For example, certain unique macroeconomic and geopolitical factors, including those as a result of the Russian invasion of Ukraine or conditions in the Middle East as a result of the Israel-Hamas conflict, may cause instability and volatility in the global financial markets and disruptions within the healthcare industry that may negatively impact our business.
However, it is possible that some of our foreign or domestic DTAs could ultimately expire 45 Table of Contents unused, or future DTAs could be created, due to vesting or settlement of stock awards or other book to tax differences, for which we will not have sufficient taxable income in the future to fully utilize.
However, it is possible that some of our foreign or domestic DTAs could ultimately expire unused, or future DTAs could be created, due to vesting or settlement of stock awards or other book to tax differences, for which we will not have sufficient taxable income in the future to fully utilize.
The circumstances giving rise to recalls are, 27 Table of Contents however, unpredictable, and any recalls of existing or future products could materially adversely affect our business, results of operations, financial condition or cash flows. The medical device industry has historically been subject to extensive litigation over product liability claims.
The circumstances giving rise to recalls are, however, unpredictable, and any recalls of existing or future products could materially adversely affect our business, results of operations, financial condition or cash flows. The medical device industry has historically been subject to extensive litigation over product liability claims.
Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting requirements as part of a consent 36 Table of Contents decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.
Outside of the United States, patents we own or license may become subject to patent opposition or similar proceedings, which may result in loss of scope of some claims or the entire patent. In addition, such proceedings are very complex and expensive, and may divert our management’s attention from our core business.
Outside of the 35 Table of Contents United States, patents we own or license may become subject to patent opposition or similar proceedings, which may result in loss of scope of some claims or the entire patent. In addition, such proceedings are very complex and expensive, and may divert our management’s attention from our core business.
Acceptance of our products depends 25 Table of Contents on educating the medical community as to the distinctive characteristics, perceived benefits, safety, clinical efficacy and cost-effectiveness of our products compared to products of our competitors or treatments that do not use our products, and on training specialist physicians and other healthcare providers in the proper application and use of our products.
Acceptance of our products depends on educating the medical community as to the distinctive characteristics, perceived benefits, safety, clinical efficacy and cost-effectiveness of our products compared to products of our competitors or treatments that do not use our products, and on training specialist physicians and other healthcare providers in the proper application and use of our products.
These broad market and industry factors may harm the market price of our common stock, regardless of our operating performance, and could cause you to lose all or part of your investment in our common stock since you might be unable to sell your shares at or above the price you paid for such shares.
These broad market and industry factors may harm the market price of our common stock, regardless of our operating performance, and could cause you to lose all or part of 40 Table of Contents your investment in our common stock since you might be unable to sell your shares at or above the price you paid for such shares.
For example, in December 2020, we entered into an agreement to license the technology for certain of our products to our existing distribution partner in China to permit our partner to manufacture and commercialize such products in China, in exchange for fixed payments upon the transfer of the licensed technology and upon the provision of related regulatory support, as well as royalty payments on downstream sales of the licensed products, which we expanded to include additional products in February 2022 and September 2023.
For example, in December 2020, we entered into an agreement to license the technology for certain of our products to our existing distribution partner in China to permit our partner to manufacture and commercialize such products in China, in exchange for fixed payments upon the transfer of distinct the licensed technology and upon the provision of related regulatory support, as well as, in certain cases, royalty payments on downstream sales of the licensed products, which we expanded to include additional products in February 2022, September 2023 and March 2024.
Such events could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business partners.
Such events could result in the disruption of business processes, network degradation and system downtime, along with the potential that a third party will exploit our critical assets such as intellectual property, proprietary business information and data related to our customers, suppliers and business 45 Table of Contents partners.
We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
We are also continuing to improve our internal control over financial reporting. In order to maintain and improve the effectiveness of our disclosure controls and procedures and internal control over financial reporting, we have 46 Table of Contents expended, and anticipate that we will continue to expend, significant resources, including accounting-related costs and significant management oversight.
In December 2020, we agreed to license the technology for certain of our products to our existing distribution partner in China to permit our partner to manufacture and commercialize such products in China, in exchange for fixed payments upon the transfer of the licensed technology and upon the provision of related regulatory support, as well as royalty payments on downstream sales of the licensed products, which we expanded to include additional products in February 2022 and September 2023.
In December 2020, we agreed to license the technology for certain of our products to our existing distribution partner in China to permit our partner to manufacture and commercialize such products in China, in exchange for fixed payments upon the transfer of the distinct licensed technology and upon the provision of related regulatory support, as well as, in certain cases, royalty payments on downstream sales of the licensed products, which we expanded to include additional products in February 2022, September 2023 and March 2024.
Convincing such specialist physicians and other healthcare providers to use new products and to dedicate the 24 Table of Contents time and energy necessary for adequate education in the use of our products is challenging, especially in new markets where treatments or therapies using our products are not established.
Convincing such specialist physicians and other healthcare providers to use new products and to dedicate the time and energy necessary for adequate education in the use of our products is challenging, especially in new markets where treatments or therapies using our products are not established.
If current or future distributors or our partner in China do not perform adequately, or if we lose a significant distributor or our partner in China, we may not be able to maintain existing levels of international revenue or realize expected long term international revenue growth.
If current or future distributors or our partner in China do not perform adequately, or if we lose a significant distributor or our partner in China, we may not be able to maintain existing levels of international revenue or realize expected 28 Table of Contents long term international revenue growth.
We were involved in one such lawsuit in 2021, which was voluntary dismissed without prejudice in March 2021, and we may be the target of this type of litigation in the future. This litigation could result in substantial costs and a diversion of our management’s attention and resources.
We were involved in one such lawsuit in 2021, which was voluntarily dismissed without prejudice, and we may be the target of this type of litigation in the future. This litigation could result in substantial costs and a diversion of our management’s attention and resources.
FDA may require testing and surveillance programs to monitor the effects of cleared or approved products that have been commercialized and can prevent or limit further marketing of a product based on the results of these post-marketing programs.
FDA may require testing 31 Table of Contents and surveillance programs to monitor the effects of cleared or approved products that have been commercialized and can prevent or limit further marketing of a product based on the results of these post-marketing programs.
In addition, periodic maintenance fees on our owned and in-licensed patents are due to be paid to governmental patent agencies over the lifetime of the patents. Future maintenance fees will also need to be paid on other patents 40 Table of Contents that may be issued to us.
In addition, periodic maintenance fees on our owned and in-licensed patents are due to be paid to governmental patent agencies over the lifetime of the patents. Future maintenance fees will also need to be paid on other patents that may be issued to us.
In the event that specialist physicians or other healthcare providers perceive that our products are complex relative to alternative products or established treatments that do not use our 33 Table of Contents products, we may have difficulty gaining or increasing adoption of our products.
In the event that specialist physicians or other healthcare providers perceive that our products are complex relative to alternative products or established treatments that do not use our products, we may have difficulty gaining or increasing adoption of our products.
If we are unable to manufacture our products in high volumes at commercially reasonable costs, it could materially affect our ability to adequately increase production of our products and fulfill customer orders on a timely basis, which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
If we are unable to manufacture our products in high volumes at commercially reasonable costs, it could materially affect our ability to fulfill customer orders on a timely basis, which could have a material adverse effect on our business, results of operations, financial condition or cash flows.
We may not receive necessary foreign regulatory approvals or clearances or otherwise comply with foreign regulations. For the years ended December 31, 2023, 2022 and 2021, sales outside the United States accounted for approximately 28.5%, 30.2%, and 29.4%, respectively, of our total sales, and we expect sales in non-U.S. markets to continue to represent a significant portion of our revenue.
We may not receive necessary foreign regulatory approvals or clearances or otherwise comply with foreign regulations. For the years ended December 31, 2024, 2023 and 2022, sales outside the United States accounted for approximately 24.5%, 28.5%, and 30.2%, respectively, of our total sales, and we expect sales in non-U.S. markets to continue to represent a significant portion of our revenue.
We may not be able to obtain additional 510(k) clearances or PMAs for new products or for modifications to, or additional indications for, our existing products in a timely manner, or at all. There can be no 34 Table of Contents assurance that FDA will agree with our decisions not to seek clearances for particular device modifications.
We may not be able to obtain additional 510(k) clearances or PMAs for new products or for modifications to, or additional indications for, our existing products in a timely manner, or at all. There can be no assurance that FDA will agree with our decisions not to seek clearances for particular device modifications.
Any debt financing obtained by us in the future could involve restrictive covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
Any debt financing obtained by us in the future could involve restrictive 39 Table of Contents covenants relating to our capital raising activities and other financial and operational matters, which may make it more difficult for us to obtain additional capital and to pursue business opportunities, including potential acquisitions.
This revenue and related operations will continue to be subject to the risks and challenges associated with international operations, including: • reliance on distributors; • varying coverage and reimbursement policies, processes and procedures; 29 Table of Contents • difficulties in staffing and managing international operations from which sales are conducted; • difficulties in penetrating markets in which our competitors’ products or alternative procedures that do not use our products are more established; • reduced protection for intellectual property rights in some countries; • export licensing requirements or restrictions, trade regulations and foreign tax laws; • fluctuating foreign currency exchange rates; • foreign certification, regulatory requirements and legal requirements; • lengthy payment cycles and difficulty in collecting accounts receivable; • customs clearance and shipping delays; • reliance on third-party logistics providers who warehouse and distribute finished products to our international customers; • pricing pressure in international markets; • political and economic instability; • preference for locally produced products; • higher incidence of corruption or unethical business practices; and • events resulting in negative impacts to, or uncertainty regarding, global trade, such as the reversal or renegotiation of international trade agreements and partnerships or the imposition of tariffs.
This revenue and related operations will continue to be subject to the risks and challenges associated with international operations, including: • reliance on distributors; • varying coverage and reimbursement policies, processes and procedures; • pricing impacts due to national and regional tenders, including value-based procurement practices and government-imposed payback provisions; • difficulties in staffing and managing international operations from which sales are conducted; • difficulties in penetrating markets in which our competitors’ products or alternative procedures that do not use our products are more established; • reduced protection for intellectual property rights in some countries; • export licensing requirements or restrictions, trade regulations and foreign tax laws; • fluctuating foreign currency exchange rates; • foreign certification, regulatory requirements and legal requirements; • lengthy payment cycles and difficulty in collecting accounts receivable; • customs clearance and shipping delays; • reliance on third-party logistics providers who warehouse and distribute finished products to our international customers; • pricing pressure in international markets; • political and economic instability; 27 Table of Contents • preference for locally produced products; • higher incidence of corruption or unethical business practices; and • events resulting in negative impacts to, or uncertainty regarding, global trade, such as the reversal or renegotiation of international trade agreements and partnerships or the imposition of tariffs.
For interim reporting purposes, we are required to exclude the excess tax benefits and deficiencies from the annual estimated tax rate and not to forecast the potential impact to 42 Table of Contents our rate. As a result, we could experience an effective tax rate significantly different from previous periods or from our expectations.
For interim reporting purposes, we are required to exclude the excess tax benefits and deficiencies from the annual estimated tax rate and not to forecast the potential impact to our rate. As a result, we could experience an effective tax rate significantly different from previous periods or from our expectations.
If they succeed in registering or developing common law rights in such trademarks, and if we are not successful in challenging such third-party rights, we may not be able to use these trademarks to market our products in those countries where such third parties have registered such trademarks or obtained such common law rights.
If they succeed in registering or developing common law rights in such trademarks, and if we are not successful in 38 Table of Contents challenging such third-party rights, we may not be able to use these trademarks to market our products in those countries where such third parties have registered such trademarks or obtained such common law rights.
Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in financial statements that may not accurately reflect the results of our business and operations.
Any failure to develop or maintain effective disclosure controls and procedures, or any difficulties encountered in their implementation or improvement, could cause us to fail to meet our reporting obligations and may result in financial statements that may not accurately reflect the results of our business and operations.
A significant decline in our sales of any of these product families could also negatively impact our financial condition and our ability to conduct product development activities, and therefore negatively impact our business prospects.
A 23 Table of Contents significant decline in our sales of any of these product families could also negatively impact our financial condition and our ability to conduct product development activities, and therefore negatively impact our business prospects.
In addition, we may indemnify our customers and distributors against claims relating to the infringement of intellectual property rights of third parties related to our products. Third parties may assert infringement claims against our customers or distributors.
In addition, we may indemnify our customers and distributors against claims relating to the infringement of intellectual property rights of third parties related to our products. Third parties may assert infringement claims against our customers or 37 Table of Contents distributors.
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of medical device company stocks; • changes in operating performance and stock market valuations of other medical device companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; and • general economic conditions and slow or negative growth of our markets. 43 Table of Contents In addition, in the past, following periods of volatility in the overall market and the market price of a particular company’s securities, securities class action litigation has often been instituted against these companies.
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of medical device company stocks; • changes in operating performance and stock market valuations of other medical device companies generally, or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our results of operations or fluctuations in our results of operations; • actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally; • litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations or principles; • any significant change in our management; and • general economic conditions and slow or negative growth of our markets.
In addition, the federal MDR regulations require us to provide information to FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or has malfunctioned, and if the malfunction were to recur, it would be likely to cause or contribute to a death or serious injury.
In addition, the U.S. federal Medical Device Reporting regulations require us to provide information to FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or has malfunctioned, and if the malfunction were to recur, it would be likely to cause or contribute to a death or serious injury.
In 2023, we 32 Table of Contents completed implementation of a new enterprise resource planning (“ERP”) software system implementation which replaced certain existing business, operational, and financial processes and systems.
In 2023, we completed implementation of a new enterprise resource planning (“ERP”) software system implementation which replaced certain existing business, operational, and financial processes and systems.
To successfully market and sell our products internationally, we must address a number of unique challenges applicable to international markets. For the years ended December 31, 2023, 2022 and 2021, we derived 28.5%, 30.2% and 29.4%, respectively, of our revenue from international sales.
To successfully market and sell our products internationally, we must address a number of unique challenges applicable to international markets. For the years ended December 31, 2024, 2023 and 2022, we derived 24.5%, 28.5% and 30.2%, respectively, of our revenue from international sales.
For example, devices cleared under section 510(k) cannot be marketed for any intended use that is outside of FDA’s substantial equivalence determination for such devices. Physicians nevertheless may use our products on their patients in a manner that is inconsistent with the intended use cleared by FDA.
For example, devices cleared under section 510(k) cannot be marketed for any intended use that is outside of FDA’s substantial equivalence determination for such devices. Physicians nevertheless may use our products in the practice of medicine in a manner that is inconsistent with the intended use cleared by FDA.
Approximately 28.5%, 30.2%, and 29.4% of our revenue for the years ended December 31, 2023, 2022 and 2021, respectively, were derived from sales in non-U.S. markets, and we expect sales in non-U.S. markets to continue to represent a significant portion of our revenue.
Approximately 24.5%, 28.5%, and 30.2% of our revenue for the years ended December 31, 2024, 2023 and 2022, respectively, were derived from sales in non-U.S. markets, and we expect sales in non-U.S. markets to continue to represent a significant portion of our revenue.
We own 43 trademarks, related to our company name, logo, products and technology, that are registered with the USPTO as well as 214 trademarks registered outside of the United States as of December 31, 2023. Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be infringing on other marks or names.
We own 45 trademarks, related to our company name, logo, products and technology, that are registered with the USPTO as well as 225 trademarks registered outside of the United States as of December 31, 2024. Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be infringing on other marks or names.
Numerous third-party patents exist in the fields relating to our products, and it is difficult for 38 Table of Contents industry participants, including us, to identify all third-party patent rights relevant to our products and technologies.
Numerous third-party patents exist in the fields relating to our products, and it is difficult for industry participants, including us, to identify all third-party patent rights relevant to our products and technologies.
As of December 31, 2023, our directors, executive officers and holders of 5% or more of our outstanding stock beneficially owned approximately 54.1% of our outstanding stock in the aggregate. If one or more of them were to sell a substantial portion of the shares they hold, it could cause our stock price to decline.
As of December 31, 2024, our directors, executive officers and holders of 5% or more of our outstanding stock beneficially owned approximately 39.4% of our outstanding stock in the aggregate. If one or more of them were to sell a substantial portion of the shares they hold, it could cause our stock price to decline.
We received our first MDSAP certification in 2018 and successfully completed our most recent surveillance audit in 2023. Some of our suppliers are subject to the same or similar scrutiny.
We received our first MDSAP certification in 2018 and successfully completed our most recent recertification audit in 2024. Some of our suppliers are subject to the same or similar scrutiny.
In addition, at certain times we may need to rely on third party consultants, which may cost more than employees and may create operating inefficiencies and difficulties.
In addition, at certain times we may need to rely on third party consultants, which may cost more than employees and may create operating inefficiencies and 29 Table of Contents difficulties.
If we are unable to detect or prevent a security breach or cyber-attack or other disruption from occurring, then we could incur losses or damage to our data, or inappropriate disclosure of our confidential information or that of others; and we could sustain damage to our reputation and customer and employee relationships, suffer disruptions to our business and incur increased operating costs including costs to mitigate any damage caused and protect against future damage, and be exposed to additional regulatory scrutiny or penalties and to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
If we are unable to detect or prevent a security breach, cyberattack or other disruption from occurring, or if we are impacted by a security breach, cyberattack or other disruption suffered by a third party whose systems we utilize, then we could incur losses or damage to our data, or be subject to inappropriate disclosure of our confidential information or that of others; and we could sustain damage to our reputation and customer and employee relationships, suffer disruptions to our business and incur increased operating costs including costs to mitigate any damage caused and protect against future damage, and be exposed to additional regulatory scrutiny or penalties and to civil litigation and possible financial liability, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.
In addition, the United States federal government has imposed tariffs on goods imported from China and certain other countries, which has resulted in retaliatory tariffs by China and other countries.
In addition, the United States federal government has imposed and/or threatened tariffs on goods imported from China, Mexico, Canada and certain other countries, which has resulted in retaliatory tariffs imposed and/or threatened by China and other countries.
While we continue to work to improve our capacity and flexibility in connection with the sterilization of our products, any regulations that limit the use of ethylene oxide at, or any temporary or permanent closures of, sterilization facilities, including the facilities we currently use, could, due to the limited number of sterilization facilities and the time required to approve and license, and gain regulatory approval for us to use, a sterilization facility, impact our ability to obtain sterilization services on a timely basis, which could materially adversely affect our results of operations. 26 Table of Contents We cannot be certain that we will be able to manufacture our products in high volumes at commercially reasonable costs.
While we continue to work to improve our capacity and flexibility in connection with the sterilization of our products, any regulations that limit the use of ethylene oxide at, or any temporary or permanent closures of, sterilization facilities, including the facilities we currently use, could, due to the limited number of sterilization facilities and the time required to approve and license, and gain regulatory approval for us to use, a sterilization facility, impact our ability to obtain sterilization services on a timely basis or at commercially reasonable costs, which could materially adversely affect our results of operations.
Any failure to implement and maintain effective internal control over financial reporting also could adversely affect the results of management evaluations and independent registered 48 Table of Contents public accounting firm audits of our internal control over financial reporting that we include in our periodic reports that are filed with the SEC.
In addition, any failure to implement and maintain effective internal control over financial reporting could adversely affect the results of management evaluations and independent registered public accounting firm audits of our internal control over financial reporting and related opinions that we include in our periodic reports that are filed with the SEC.
Any modifications to an FDA cleared device that would significantly affect its safety or effectiveness or that would constitute a major change in its intended use may require a new 510(k) clearance or possibly a PMA.
Any modifications to an FDA cleared device that would significantly affect its safety or effectiveness or that would constitute a major change in its intended use may require a new 510(k) clearance or potentially another pathway, such as a PMA.
These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.
Sales of a substantial number of shares of our common stock could occur at any time. These sales, or the perception in the market that the holders of a large number of shares of common stock intend to sell shares, could reduce the market price of our common stock.
As an international company, we are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of statutory tax rates in the various jurisdictions in which we operate.
Fluctuations in our effective tax rate and changes to tax laws may adversely affect us. As an international company, we are subject to taxation in numerous countries, states and other jurisdictions. Our effective tax rate is derived from a combination of statutory tax rates in the various jurisdictions in which we operate.
We rely on information technology, telephone networks and systems, including the internet, to process and transmit sensitive electronic information and to manage or support a variety of business processes and activities, including sales, billing, marketing, procurement and supply chain, manufacturing, and distribution.
We rely on information technology, networks and systems, including technology, networks and systems managed by third parties, to process and transmit sensitive electronic information and to manage or support a variety of business processes and activities, including sales, billing, marketing, procurement and supply chain, manufacturing, and distribution.
In addition, our information technology may be susceptible to damage, disruptions or shutdowns due to power outages, user errors, implementation of new operational systems or software or upgrades to existing systems and software, or catastrophes or other unforeseen events.
In addition, our information technology, as well as technology systems of third parties that we utilize, may be susceptible to damage, disruptions or shutdowns due to power outages, user errors, implementation of new operational systems or software or upgrades to existing systems and software, or catastrophes or other unforeseen events.
In addition, limited trading volume of our stock may contribute to its future volatility. Price declines in our common stock could result from general market and economic conditions, some of which are beyond our control, and a variety of other factors, including any of the risk factors described in this Form 10-K or those that we have not anticipated.
Price declines in our common stock could result from general market and economic conditions, some of which are beyond our control, and a variety of other factors, including any of the risk factors described in this Form 10-K or those that we have not anticipated.
As of December 31, 2023, our executive officers, directors and holders of 5% or more of our outstanding stock and their affiliates beneficially owned approximately 54.1% of our voting stock in the aggregate.
As of December 31, 2024, our executive officers, directors and holders of 5% or more of our outstanding stock and their affiliates beneficially owned approximately 39.4% of our voting stock in the aggregate.
In addition, the geographic location of our Alameda, California headquarters and Alameda and Roseville, California production facilities, as well as the facilities of certain of our key suppliers and service providers, subject them to earthquake and wildfire 46 Table of Contents risks.
For example, the geographic location of our Alameda, California headquarters and Alameda and Roseville, California production facilities, as well as the facilities of certain of our key suppliers and service providers, subject them to earthquake and wildfire risks.
We have established a direct sales capability in the United States, most of Europe, Canada and Australia, which we have complemented with distributors in certain other international markets. Sales to distributors represented 16.7%, 18.7% and 16.6% of our revenue in 2023, 2022 and 2021, respectively.
We rely on our distributors to market and sell our products in certain international markets. We have established a direct sales capability in the United States, most of Europe, Canada and Australia, which we have complemented with distributors in certain other international markets. Sales to distributors represented 13.2%, 16.7% and 18.7% of our revenue in 2024, 2023 and 2022, respectively.
Moreover, tax authorities in jurisdictions in which we do business could disagree with tax positions that we take, including, for example, our inter-company pricing policies, or could assert that we owe more taxes than we currently pay due to the level and nature of our activities in such jurisdictions. 30 Table of Contents We rely on our distributors to market and sell our products in certain international markets.
Moreover, tax authorities in jurisdictions in which we do business could disagree with tax positions that we take, including, for example, our inter-company pricing policies, or could assert that we owe more taxes than we currently pay due to the level and nature of our activities in such jurisdictions.
Events beyond our control, such as the COVID-19 pandemic, can impact global supply chains, resulting in an increase in the cost of certain raw materials and components used in our products.
Events beyond our control, such as pandemics, war or geopolitical instability, can impact global supply chains, resulting in an increase in the cost of certain raw materials and components used in our products.
The inability to perform our research, development and certain of our manufacturing activities, combined with our limited inventory of raw materials and components and manufactured products, may cause specialist physicians or other healthcare providers to discontinue using our products or harm our reputation, and we may be unable to reestablish relationships with those specialist physicians or other healthcare providers in the future. .Furthermore, other parties in our supply chain are similarly vulnerable to natural disasters or other sudden, unforeseen, and severe adverse events.
The inability to perform our research, development and certain of our manufacturing activities, combined with our limited inventory of raw materials and components and manufactured products, may cause specialist physicians or other healthcare providers to discontinue using our products or harm our reputation, and we may be unable to reestablish relationships with those specialist physicians or other healthcare providers in the future.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.
Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock, and we could become subject to investigations by the SEC or other regulatory authorities, which could require additional financial and management resources.
Any such successful attacks could result in the theft of intellectual property or other misappropriation of assets, data breach, or otherwise compromise our confidential or proprietary information and disrupt our operations. Cyber-attacks are becoming more sophisticated and frequent, and our systems could be the target of malware and other cyber-attacks.
Any such successful attacks could result in the theft of intellectual property or other misappropriation of assets, data breach, or otherwise compromise our confidential or proprietary information and disrupt our operations.

… 79 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+0 added−1 removed7 unchanged
Biggest changeThe Company employs strategic partnerships with third-party entities to leverage resources and technologies for operational support, optimization, and heightened security. Collaboration with third parties forms a critical part of the Company’s risk management strategy, facilitating effective management and mitigation of risks through partnerships, and ensuring adherence to applicable regulatory and industry standards.
Biggest changeCollaboration with third parties forms a critical part of the Company’s risk management strategy, facilitating effective management and mitigation of risks through partnerships, and ensuring adherence to applicable regulatory and industry standards. The Company incorporates supplier qualification processes and conducts thorough security and privacy risk assessments for third parties and lifecycle management.
The Company has implemented protocols to protect against cyber threats and ensure the containment and security of sensitive business data, including ongoing security reviews of critical systems, continuous monitoring of event data, and employee training programs, which processes are aligned with the Company’s overall business and operational goals and strategies.
The Company has implemented cyber defense capabilities and protocols to protect against cyber threats and ensure the containment and security of sensitive business data, including ongoing security reviews of critical systems, continuous monitoring of event data, and employee training programs, which processes are aligned with the Company’s overall business and operational goals and strategies.
In addition, the Company maintains insurance to help protect against risks associated with cybersecurity threats. The Company does not believe that any risks from cybersecurity threats have materially affected, or are reasonably likely to materially affect, the Company, including the Company’s business strategy, results of operations, or financial condition.
The Company does not believe that any risks from cybersecurity threats have materially affected, or are reasonably likely to materially affect, the Company, including the Company’s business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.
The Company also actively engages with key vendors, industry participants, and intelligence and law enforcement communities as part of its continuing efforts to evaluate and enhance the effectiveness of its information security policies and procedures. In 2023, the Company initiated efforts to streamline existing processes, enhance technological capabilities, and improve user experience and security.
The Company also actively engages with key vendors, industry participants, and intelligence and law enforcement communities as part of its continuing efforts to evaluate and enhance the effectiveness of its information security policies and procedures. The Company employs strategic partnerships with third-party entities to leverage resources and technologies for operational support, optimization, and heightened security.
The Company incorporates supplier qualification processes and conducts thorough security and privacy risk assessments for third parties and lifecycle management. Overall, the Company believes it has established a robust framework for confidentiality, integrity, and availability of information, adhering to relevant security standards, practices, and compliance requirements.
Overall, the Company believes it has established a robust framework for confidentiality, integrity, and availability of information, adhering to relevant security standards, practices, and compliance requirements. In addition, the Company maintains insurance to help protect against risks associated with cybersecurity threats.
Removed
However, despite our efforts, we cannot eliminate all risks from cybersecurity threats, or provide assurances that we have not experienced an undetected cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

5 edited+0 added−0 removed2 unchanged
Biggest changeAn additional approximately 50,000 square feet of space in one of the buildings, located at 620 Roseville Parkway, will be added to the lease upon the earlier of completion of certain improvements to the premises, which is not expected to occur in 2024, and June 1, 2025.
Biggest changeAn additional approximately 50,000 square feet of space in one of the buildings, located at 620 Roseville Parkway, will be added to the lease upon the completion of certain improvements to the premises, which are expected to commence in 2025.
ITEM 2. PROPERTIES. We maintain approximately 610,000 square feet of office, research and development, manufacturing and administrative facilities in nine buildings at our campus in Alameda, California as of December 31, 2023. The leases for these nine buildings expire at various times in 2036, subject to our option to renew certain leases for an additional five to fifteen years.
ITEM 2. PROPERTIES. We maintain approximately 610,000 square feet of office, research and development, manufacturing and administrative facilities in nine buildings at our campus in Alameda, California as of December 31, 2024. The leases for these nine buildings expire at various times in 2036, subject to our option to renew certain leases for an additional five to fifteen years.
The offices in Germany support our direct sales operations in Europe as well as distributor relationships in Europe and the Middle East; the offices in Brazil, Australia, Singapore, Japan and Taiwan support our sales and marketing efforts, including through our distribution partners, in Latin America, Australia and Southeast Asia, respectively; and the offices in Italy support the operations of Crossmed S.p.A., our wholly-owned subsidiary in Italy, including supporting our direct sales operations in Italy, San Marino, Vatican City, and Switzerland.
The office in Germany supports our direct sales operations in Europe as well as distributor relationships in Europe and the Middle East; the offices in Brazil, Australia, Singapore, Japan, Hong Kong and Taiwan support our sales and marketing efforts, including through our distribution partners, in Latin America, Australia and Southeast Asia, respectively; and the offices in Italy support the operations of Crossmed S.p.A., our wholly-owned subsidiary in Italy, including supporting our direct sales operations in Italy, San Marino, Vatican City, and Switzerland.
In addition, we lease approximately 70,000 square feet of warehouse space in Livermore, California, and approximately 100,000 square feet of warehouse space in Salt Lake City, Utah. The leases for the Livermore warehouse spaces expire at 50 Table of Contents various times in 2025 to 2028.
In addition, we lease approximately 70,000 square feet of warehouse space in Livermore, California, and approximately 100,000 square feet of warehouse space in Salt Lake City, Utah. The leases for the Livermore warehouse spaces expire at various times in 2025 to 2028.
The lease for the Salt Lake City warehouse expires in 2027, subject to our option to renew the lease for an additional five years. We also lease office and/or warehouse space in Germany, Italy, Brazil, Australia, Singapore, Japan and Taiwan as of December 31, 2023.
The lease for the Salt Lake City warehouse expires in 2027, subject to our option to renew the lease for an additional five years. 48 Table of Contents We also lease office and/or warehouse space in Germany, Italy, Brazil, Australia, Singapore, Japan, Hong Kong and Taiwan as of December 31, 2024.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed3 unchanged
Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. $100 investment in stock or index Ticker 12/31/2018 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 Penumbra PEN $ 100.00 $ 134.43 $ 143.21 $ 235.12 $ 182.05 $ 205.84 NYSE Composite NYA 100.00 122.32 127.70 150.90 133.50 148.17 S&P 500 Healthcare Equipment Index XHE 100.00 122.31 162.56 167.50 128.41 120.41 Dividend Policy We have never declared or paid cash dividends on our capital stock.
Biggest changeThis graph shall not be deemed “soliciting material” or be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any of our filings under the Securities Act or the Exchange Act, whether made before or after the date hereof and irrespective of any general incorporation language in any such filing. $100 investment in stock or index Ticker 12/31/2019 12/31/2020 12/31/2021 12/30/2022 12/29/2023 12/31/2024 Penumbra PEN $ 100.00 $ 106.53 $ 174.91 $ 135.42 $ 153.13 $ 144.57 NYSE Composite NYA 100.00 104.40 123.37 109.14 121.13 137.26 S&P 500 Healthcare Equipment Index XHE 100.00 132.91 136.96 104.99 98.45 103.45 Dividend Policy We have never declared or paid cash dividends on our capital stock and do not anticipate paying any cash dividends in the foreseeable future.
Any future determination related to dividend policy will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. 53 Table of Contents Issuer Purchases of Equity Securities None.
Any future determination related to dividend policy will be made at the discretion of our board of directors, subject to applicable laws, and will depend on a number of factors, including our financial condition, results of operations, capital requirements, contractual restrictions, general business conditions and other factors that our board of directors may deem relevant. 51 Table of Contents Issuer Purchases of Equity Securities None.
The figures represented below assume an investment of $100 in our common stock on December 31, 2018 and in the S&P Healthcare Equipment and NYSE Composite and the reinvestment of dividends into shares of common stock for the years ended December 31, 2019, 2020, 2021, 2022 and 2023.
The figures represented below assume an investment of $100 in our common stock on December 31, 2019 and in the S&P Healthcare Equipment Index and NYSE Composite and the reinvestment of dividends into shares of common stock for the years ended December 31, 2020, 2021, 2022, 2023 and 2024.
As of February 8, 2024, there were 32 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
As of February 4, 2025, there were 22 holders of record of our common stock. The actual number of stockholders is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street name by brokers and other nominees.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return on our common stock with the total return for (i) the S&P Healthcare Equipment and (ii) the NYSE Composite for the period from December 31, 2018 through December 29, 2023.
Performance Graph The following graph illustrates a comparison of the total cumulative stockholder return on our common stock with the total return for (i) the S&P Healthcare Equipment Index and (ii) the NYSE Composite for the period from December 31, 2019 through December 31, 2024.
Recent Sales of Unregistered Securities None. 54 Table of Contents
Recent Sales of Unregistered Securities None. 52 Table of Contents
Removed
We currently intend to retain all available funds for use in the operation and expansion of our business, and do not anticipate paying any cash dividends in the foreseeable future.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+19 added−35 removed64 unchanged
Biggest changeA valuation allowance is established when it is more likely than not that the future realization of all or some of the DTAs will not be achieved. 61 Table of Contents Results of Operations The following table sets forth the components of our consolidated statements of operations in U.S. dollars and as a percentage of revenue for the periods presented: Year Ended December 31, 2023 2022 2021 (in thousands, except for percentages) Revenue $ 1,058,522 100.0 % $ 847,133 100.0 % $ 747,590 100.0 % Cost of revenue 375,879 35.5 % 311,926 36.8 % 272,208 36.4 % Gross profit 682,643 64.5 % 535,207 63.2 % 475,382 63.6 % Operating expenses: Research and development 84,423 8.0 % 79,407 9.4 % 104,552 14.0 % Sales, general and administrative 506,454 47.8 % 449,718 53.1 % 378,331 50.6 % Acquired in-process research and development 18,215 1.7 % — — % — — % Total operating expenses 609,092 57.5 % 529,125 62.5 % 482,883 64.6 % Income (loss) from operations 73,551 6.9 % 6,082 0.7 % (7,501) (1.0) % Interest and other income (expense), net 6,099 1.6 % (2,190) (0.3) % (3,001) (0.4) % Income (loss) before income taxes 79,650 7.5 % 3,892 0.5 % (10,502) (1.4) % (Benefit from) provision for income taxes (11,304) (1.1) % 5,894 0.7 % (13,125) (1.8) % Consolidated net income (loss) $ 90,954 8.6 % $ (2,002) (0.2) % $ 2,623 0.4 % Net loss attributable to non-controlling interest — — % — — % (2,661) (0.4) % Net income (loss) attributable to Penumbra, Inc. $ 90,954 8.6 % $ (2,002) (0.2) % $ 5,284 0.7 % 62 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Certain changes in presentation were made in the Company’s revenues disaggregated by product categories for the year ended December 31, 2022 to conform to the presentation for the year ended December 31, 2023.
Biggest changeResults of Operations The following table sets forth the components of our consolidated statements of operations in U.S. dollars and as a percentage of revenue for the periods presented: Year Ended December 31, 2024 2023 2022 (in thousands, except for percentages) Revenue $ 1,194,615 100.0 % $ 1,058,522 100.0 % $ 847,133 100.0 % Cost of revenue 439,620 36.8 % 375,879 35.5 % 311,926 36.8 % Gross profit 754,995 63.2 % 682,643 64.5 % 535,207 63.2 % Operating expenses: Research and development 94,783 7.9 % 84,423 8.0 % 79,407 9.4 % Sales, general and administrative 573,988 48.0 % 506,454 47.8 % 449,718 53.1 % Acquired in-process research and development — — % 18,215 1.7 % — — % Impairment charge 76,945 6.5 % — — % — — % Total operating expenses 745,716 62.4 % 609,092 57.5 % 529,125 62.5 % Income from operations 9,279 0.8 % 73,551 6.9 % 6,082 0.7 % Interest and other income (expense), net 11,590 0.9 % 6,099 0.6 % (2,190) (0.3) % Income before income taxes 20,869 1.7 % 79,650 7.5 % 3,892 0.5 % Provision for (benefit from) income taxes 6,857 0.5 % (11,304) (1.1) % 5,894 0.7 % Net income (loss) $ 14,012 1.2 % $ 90,954 8.6 % $ (2,002) (0.2) % 59 Table of Contents Year Ended December 31, 2024 Compared to Year Ended December 31, 2023 Revenue Year Ended December 31, Change 2024 2023 $ % (in thousands, except for percentages) Thrombectomy $ 815,475 $ 677,343 $ 138,132 20.4 % Embolization and Access 379,140 381,179 (2,039) (0.5) % Total $ 1,194,615 $ 1,058,522 $ 136,093 12.9 % Revenue increased $136.1 million, or 12.9%, to $1,194.6 million in 2024, from $1,058.5 million in 2023.
We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.
We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and other healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.
In 56 Table of Contents addition, as we introduce new products and expand our production capacity, we anticipate additional personnel will be hired and trained to build our inventory of components and finished goods in advance of sales, which may cause quarterly fluctuations in our operating results and financial condition. • Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by specialist physicians and the procedures and treatments those physicians choose to administer for a given condition. • The specialist physicians who use our interventional products may not perform procedures during certain times of the year, such as those periods when they are at major medical conferences or are away from their practices for other reasons, the timing of which occurs irregularly during the year and from year to year. • Most of our sales outside of the United States are denominated in the local currency of the country in which we sell our products.
In addition, as we introduce new products and expand our production capacity, we anticipate additional personnel will be hired and trained to build our inventory of components and finished goods in advance of sales, which may cause quarterly fluctuations in our operating results and financial condition. • Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by specialist physicians and the procedures and treatments those physicians choose to administer for a given condition. • The specialist physicians who use our interventional products may not perform procedures during certain times of the year, such as those periods when they are at major medical conferences or are away from their practices for other reasons, the timing of which occurs irregularly during the year and from year to year. • Most of our sales outside of the United States are denominated in the local currency of the country in which we sell our products.
As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results. For information with respect to legal proceedings, see Note “11.
As additional information becomes available, we reassess the potential liability related to our pending claims and litigation and may revise our estimates. Any revision of our estimates of potential liability could have a material impact on our financial position and operating results. For information with respect to legal proceedings, see Note “10.
Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. During the year ended December 31, 2023, we made no material changes in estimates for variable consideration.
Variable consideration is included in revenue only to the extent that it is probable that a significant reversal of the revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. During the year ended December 31, 2024, we made no material changes in estimates for variable consideration.
We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, access and immersive healthcare technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline.
We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, and access technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline.
In the fourth quarter of 2023 and 2022, we performed qualitative assessments for goodwill impairment and determined there were no indicators of impairment. Refer to Note “8. Goodwill” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.
In the fourth quarter of 2024 and 2023, we performed qualitative assessments for goodwill impairment and determined there were no indicators of impairment. Refer to Note “8. Goodwill” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.
For more information on these royalty obligations, refer to Note “11. Commitments and Contingencies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K. Recently Issued Accounting Standards For information with respect to recently issued accounting standards and the impact of these standards on our consolidated financial statements, refer to Note “2.
For more information on these royalty obligations, refer to Note “10. Commitments and Contingencies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K. Recently Issued Accounting Standards For information with respect to recently issued accounting standards and the impact of these standards on our consolidated financial statements, refer to Note “2.
In addition, we have experienced and expect to continue to experience meaningful variability in our quarterly revenue, gross profit and gross margin percentage as a result of a number of factors, including, but not limited to: the number of available selling days, which can be impacted by holidays; the mix of products sold; the geographic mix of where products are sold; the demand for our products and the products of our competitors; the timing of or failure to obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory write-offs due to obsolescence; costs, benefits and timing of new product introductions; costs, benefits and timing of the acquisition and integration of businesses and product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates.
In addition, we have experienced and expect to continue to experience meaningful variability in our quarterly revenue, gross profit and gross margin percentage as a result of a number of factors, including, but not limited to: the number of available selling days, which can be impacted by holidays; the mix of products sold; the geographic mix of where products are sold; the demand for our products and the products of our competitors; the timing of or failure to obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory or other asset write-offs or write-downs; costs, benefits and timing of new product introductions; costs, benefits and timing of the acquisition and integration of businesses and product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates.
Commitments and Contingencies”, and Note “15. Income Taxes”, respectively. The Company is also subject to certain royalty obligations under a license agreement with amounts due thereunder fluctuating depending on sales levels. Royalty expense included in cost of sales for the years ended December 31, 2023, 2022 and 2021 was $2.6 million, $2.5 million and $2.3 million, respectively.
Commitments and Contingencies”, and Note “15. Income Taxes”, respectively. The Company is also subject to certain royalty obligations under a license agreement with amounts due thereunder fluctuating depending on sales levels. Royalty expense included in cost of sales for the years ended December 31, 2024, 2023 and 2022 was $2.6 million, $2.6 million and $2.5 million, respectively.
These factors include: • The rate at which we grow our salesforce and the speed at which newly hired salespeople become fully effective can impact our revenue growth or our costs incurred in anticipation of such growth. • Our industry is intensely competitive and, in particular, we compete with a number of large, well-capitalized companies.
These factors include: • The rate at which we grow our salesforce and the speed at which newly hired salespeople become fully effective can impact our revenue growth or our costs incurred in anticipation of such growth. 54 Table of Contents • Our industry is intensely competitive and, in particular, we compete with a number of large, well-capitalized companies.
DTAs are reduced to their estimated realizable value by a valuation 58 Table of Contents allowance when it is more likely than not that the future realization of all or some of the DTAs will not be achieved. Valuation allowances related to DTAs can be affected by changes to tax laws, statutory tax rates, and projections of future taxable income.
DTAs are reduced to their estimated realizable value by a valuation allowance when it is more likely than not that the future realization of all or some of the DTAs will not be achieved. Valuation allowances related to DTAs can be affected by changes to tax laws, statutory tax rates, and projections of future taxable income.
If an entity determines that as a result of the qualitative assessment that it is more likely 59 Table of Contents than not (i.e. greater than 50% likelihood) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required. Otherwise, no further testing is required.
If an entity determines that as a result of the qualitative assessment that it is more likely than not (i.e. greater than 50% likelihood) that the fair value of a reporting unit is less than its carrying amount, then the quantitative test is required. Otherwise, no further testing is required.
Net Cash Provided By Financing Activities Net cash provided by financing activities primarily relates to proceeds from exercises of stock options and issuances of common stock under our employee stock purchase plan, partially offset by payments of employee taxes related to vested restricted stock units and payments towards the reduction of our finance lease obligations.
Net Cash (Used In) Provided By Financing Activities Net cash (used in) provided by financing activities primarily relates to repurchases of our common stock, payments towards the reduction of our finance lease obligations and payments of employee taxes related to vested restricted stock units, partially offset by proceeds from issuances of common stock under our employee stock purchase plan and exercises of stock options.
As of December 31, 2023, we do not maintain valuation allowance against any of our foreign DTAs as we believe, at the required more-likely-than-not level of certainty, that our foreign subsidiaries will generate sufficient future taxable income to realize the benefit of their DTAs in full.
We do not maintain valuation allowance against any of our foreign DTAs as we believe, at the required more-likely-than-not level of certainty, that our foreign subsidiaries will generate sufficient future taxable income to realize the benefit of their DTAs in full.
A discussion of our results of operations for the year ended December 31, 2022 as compared to the year ended December 31, 2021 is included in Part II, Item 7.
A discussion of our results of operations for the year ended December 31, 2023 as compared to the year ended December 31, 2022 is included in Part II, Item 7.
Our contractual obligations consist primarily of: non-cancelable operating and finance leases and purchase commitments. Information regarding our obligations relating to lease arrangements and purchase commitments, as well as amounts recorded for uncertain tax positions, are provided in Part II, Item 8, “Financial Statements and Supplementary Data”of this Form 10-K in Note “10. Leases”, Note “11.
Our contractual obligations consist primarily of: non-cancelable operating and finance leases and purchase commitments. Information regarding our obligations relating to lease arrangements and purchase commitments, as well as amounts recorded for uncertain tax positions, are provided in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K in Note “9. Leases”, Note “10.
We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. We generated revenue of $1,058.5 million, $847.1 million and $747.6 million for the years ended December 31, 2023, 2022 and 2021, respectively.
We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. We generated revenue of $1,194.6 million, $1,058.5 million and $847.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K. 68 Table of Contents
Summary of Significant Accounting Policies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K. 65 Table of Contents
Refer to Note “18. Revenues” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information and disclosures on our revenue. Certain arrangements with customers contain multiple performance obligations. For these contracts, each promise is evaluated to determine if it is a performance obligation.
Refer to Note “19. Revenues” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information and disclosures on our revenue. 55 Table of Contents Certain arrangements with customers contain multiple performance obligations. For these contracts, each promise is evaluated to determine if it is a performance obligation.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2022, filed with the SEC on February 23, 2023, and is incorporated by reference into this Form 10-K.
"Management's Discussion and Analysis of Financial Condition and Results of Operations" of our Annual Report on Form 10-K for the year ended December 31, 2023, filed with the SEC on February 22, 2024, and is incorporated by reference into this Form 10-K.
We expect to continue to make investments as we launch new products, expand our manufacturing operations and information technology infrastructures and further expand into international markets. We may, however, require or elect to secure additional financing as we continue to execute our business strategy.
We expect to continue to make investments as we launch new products, expand our manufacturing operations and information technology infrastructures and 62 Table of Contents further expand into international markets. We may, however, require or elect to secure additional financing as we continue to execute our business strategy.
This was partially offset by $15.8 million of payments of employee taxes related to vested restricted stock units and payments related to finance lease obligations of $1.5 million. 67 Table of Contents Contractual Obligations and Commitments In the normal course of business, the Company enters into contracts and commitments that obligate us to make payments in the future.
This was partially offset by $8.0 million of payments of employee taxes related to vested restricted stock units and payments related to finance lease obligations of $1.8 million. 64 Table of Contents Contractual Obligations and Commitments In the normal course of business, the Company enters into contracts and commitments that obligate us to make payments in the future.
R&D expenses also include salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants. We expense R&D costs as they are incurred. Sales, General and Administrative (“SG&A”) .
R&D expenses also include salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants. We expense R&D costs as they are incurred. 58 Table of Contents Sales, General and Administrative (“SG&A”) .
We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the thrombectomy market since 2007, access market since 2008, embolization market since 2011, neurosurgical market since 2014, and immersive healthcare market since 2020.
We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the thrombectomy market since 2007, access market since 2008, embolization market since 2011, and neurosurgical market since 2014, and operated in the immersive healthcare market from 2020 until September 2024.
The preparation of our consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the applicable periods.
GAAP requires management to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the applicable periods.
This increase was driven by sales of our U.S. vascular thrombectomy products, which increased by 45.2% in the year ended December 31, 2023. This increase in our global thrombectomy products was primarily attributable to higher sales volume in the United States as a result of sales of new products and further market penetration of our existing products.
This increase in our global thrombectomy products was primarily attributable to higher sales volume in the United States as a result of sales of new products and further market penetration of our existing products. Sales of our U.S. thrombectomy products increased by 26.8% in the year ended December 31, 2024.
As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones.
We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones.
Net Cash (Used In) Provided By Investing Activities Net cash (used in) provided by investing activities relates primarily to purchases of marketable investments and capital expenditures, partially offset by proceeds from maturities and sales of marketable investments.
Net Cash Provided By (Used In) Investing Activities Net cash provided by (used in) investing activities relates primarily to proceeds from maturities of marketable investments, partially offset by purchases of marketable and non-marketable investments, capital expenditures, and payments in connection with asset acquisitions.
This represents an annual increase of 25.0% and of 13.3%, respectively. We generated income from operations of $73.6 million and $6.1 million for the years ended December 31, 2023 and 2022, respectively, and a loss from operations of $7.5 million for the year ended December 31, 2021.
This represents an annual increase of 12.9% and of 25.0%, respectively. We generated income from operations of $9.3 million, $73.6 million and $6.1 million for the years ended December 31, 2024, 2023 and 2022, respectively.
Revenue from international sales represented 28.5% and 30.2% of our total revenue in 2023 and 2022, respectively.
Revenue from international sales represented 24.5% and 28.5% of our total revenue in 2024 and 2023, respectively.
Prices for our thrombectomy products remained substantially unchanged during the period. Revenue from our global embolization and access products increased $45.2 million, or 13.4%, to $381.2 million in the year ended December 31, 2023, from $336.0 million in the year ended December 31, 2022. Prices for our embolization and access products remained substantially unchanged during the period.
Prices for our thrombectomy products remained substantially unchanged during the period. Revenue from our global embolization and access products decreased $2.0 million, or 0.5%, to $379.1 million in the year ended December 31, 2024, from $381.2 million in the year ended December 31, 2023.
Revenue Recognition Revenue is primarily comprised of product revenue net of returns, discounts, administration fees and sales rebates. We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
We recognize revenue when control of the promised goods or services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for those goods or services.
(Benefit from) Provision for Income Taxes Year Ended December 31, Change 2023 2022 $ % (in thousands, except for percentages) (Benefit from) provision for income taxes $ (11,304) $ 5,894 $ (17,198) (291.8) % Effective tax rate (14.2) % 151.4 % Our benefit from income taxes was $11.3 million in 2023, which was primarily due to income taxes imposed on our worldwide profits, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction and tax benefits from releasing the valuation allowance against federal research and development credit DTAs net of ASC 740-10 reserve and recording a partial release of our California DTAs.
Our benefit from income taxes was $11.3 million in 2023, which was primarily due to income taxes imposed on our worldwide profits, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction and tax benefits from releasing the valuation allowance against federal research and development credit DTAs net of ASC 740-10 reserve and recording a partial release of our California DTAs.
The increase was primarily due to a $38.4 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth and a $8.1 million increase in costs related to marketing events.
The increase was primarily due to a $34.3 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $10.0 million increase in costs related to marketing events, and a $9.8 million increase in other professional services.
The following table sets forth, for the periods indicated, our beginning balance of cash and cash equivalents, net cash flows provided by (used in) operating, investing and financing activities and our ending balance of cash and cash equivalents: Year Ended December 31, 2023 2022 2021 (in thousands) Cash and cash equivalents at beginning of year $ 69,858 $ 59,379 $ 69,670 Net cash provided by (used in) operating activities 97,333 (55,661) 9,502 Net cash (used in) provided by investing activities (16,076) 54,790 (21,735) Net cash provided by financing activities 16,203 11,622 836 Cash and cash equivalents at end of year 167,486 69,858 59,379 Net Cash Provided By (Used In) Operating Activities Net cash provided by (used in) operating activities consists primarily of net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, inventory write-offs and write-downs, changes in deferred tax balances, acquired in-process research and development expensed in connection with an asset acquisition, and the effect of changes in working capital and other activities). 66 Table of Contents Net cash provided by operating activities was $97.3 million in 2023 and consisted of net income of $91.0 million and net changes in operating assets and liabilities of $79.1 million offset by non-cash items of $85.5 million.
The following table sets forth, for the periods indicated, our beginning balance of cash and cash equivalents, net cash flows provided by (used in) operating, investing and financing activities and our ending balance of cash and cash equivalents: Year Ended December 31, 2024 2023 2022 (in thousands) Cash and cash equivalents at beginning of year $ 167,486 $ 69,858 $ 59,379 Net cash provided by (used in) operating activities 168,481 97,333 (55,661) Net cash provided by (used in) investing activities 77,624 (16,076) 54,790 Net cash (used in) provided by financing activities (87,006) 16,203 11,622 Cash and cash equivalents at end of year 324,404 167,486 69,858 Net Cash Provided By (Used In) Operating Activities Net cash provided by (used in) operating activities consists primarily of net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, acquired in-process research and development, impairment charges, inventory write-offs and write-downs, changes in deferred tax balances, and the effect of changes in working capital and other activities).
We include interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. As of December 31, 2023, our net DTA balance on a consolidated basis was $84.1 million, after reduction of a valuation allowance of $24.0 million.
We include interest and penalties related to unrecognized tax benefits within income tax expense in the accompanying consolidated statements of operations. As of December 31, 2024, our net DTA balance on a consolidated basis was $99.7 million, after reduction of a valuation allowance of $26.6 million. In 2024, we used up all federal net operating loss (“NOL”) carryforwards.
The following table summarizes our cash and cash equivalents, marketable investments and selected working capital data as of December 31, 2023 and December 31, 2022: Year Ended December 31, 2023 2022 (in thousands) Cash and cash equivalents $ 167,486 $ 69,858 Marketable investments 121,701 118,172 Accounts receivable, net 201,768 203,384 Accounts payable 27,155 26,679 Accrued liabilities 110,555 106,300 Working capital (1) 764,258 610,767 (1) Working capital consists of total current assets less total current liabilities.
The following table summarizes our cash and cash equivalents, marketable investments and selected working capital data as of December 31, 2024 and December 31, 2023: Year Ended December 31, 2024 2023 (in thousands) Cash and cash equivalents $ 324,404 $ 167,486 Marketable investments 15,727 121,701 Accounts receivable, net 167,668 201,768 Accounts payable 31,326 27,155 Accrued liabilities 112,429 110,555 Working capital (1) 792,780 764,258 (1) Working capital consists of total current assets less total current liabilities.
We measured our current DTA balances against estimates of future income based on objectively verifiable operating results from our recent history, and concluded that sufficient future taxable income will be generated to realize the benefits of our federal DTAs prior to expiration, including our federal research and development tax credit DTAs.
As of December 31, 2024, we measured our current DTA balances against estimates of future income based on objectively verifiable operating results from our recent history, and concluded that sufficient future taxable income will be generated to realize the benefits of our federal DTAs prior to expiration, including our federal research and development tax credit DTAs. 56 Table of Contents We continue to maintain a valuation allowance against our California tax credit DTAs until new evidence becomes available to justify realization of the asset.
The increase in overall revenue was primarily due to an increase in sales of our new and existing thrombectomy and embolization and access products. Revenue from our global thrombectomy products increased $166.2 million, or 32.5%, to $677.3 million in 2023, from $511.1 million in 2022.
Overall revenue growth was primarily due to an increase in sales of our new and existing thrombectomy products. Revenue from our global thrombectomy products increased $138.1 million, or 20.4%, to $815.5 million in 2024, from $677.3 million in 2023.
Sales, General and Administrative (“SG&A”) Year Ended December 31, Change 2023 2022 $ % (in thousands, except for percentages) SG&A $ 506,454 $ 449,718 $ 56,736 12.6 % SG&A as a percentage of revenue 47.8 % 53.1 % SG&A expenses increased by $56.7 million, or 12.6%, to $506.5 million in 2023, from $449.7 million in 2022.
Sales, General and Administrative (“SG&A”) Year Ended December 31, Change 2024 2023 $ % (in thousands, except for percentages) SG&A $ 573,988 $ 506,454 $ 67,534 13.3 % SG&A as a percentage of revenue 48.0 % 47.8 % SG&A expenses increased by $67.5 million, or 13.3%, to $574.0 million in 2024, from $506.5 million in 2023.
Net cash provided by operating activities was $9.5 million in 2021 and consisted of net income of $2.6 million and non-cash items of $73.6 million offset by net changes in operating assets and liabilities of $66.7 million.
Net cash provided by operating activities was $168.5 million in 2024 and consisted of net income of $14.0 million and non-cash items of $178.2 million offset by net changes in operating assets and liabilities of $23.8 million.
Accounting for acquisitions of IPR&D requires the Company to make certain judgements to determine if the transaction should be accounted for as an asset acquisition or a business combination, as well as assess if the IPR&D project has alternative future use in research and development activities.
Accounting for acquisitions of IPR&D requires the Company to make certain judgements to determine if the transaction should be accounted for as an asset acquisition or a business combination, as well as assess if the IPR&D project has alternative future use in research and development activities. 57 Table of Contents Finite-lived intangible assets are amortized over the estimated economic useful lives of the assets, which is the period during which expected cash flows support the fair value of such intangible assets.
If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase. Refer to Notes “5. Business Combinations,” “6. Asset Acquisition” and “7.
If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase. Refer to Notes “6. Asset Acquisition” and “7. Intangible Assets” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.
Revenue by Geographic Area The following table presents revenue by geographic area, based on our customers’ shipping destinations: Year Ended December 31, Change 2023 2022 $ % (in thousands, except for percentages) United States $ 757,151 71.5 % $ 591,715 69.8 % $ 165,436 28.0 % International 301,371 28.5 % 255,418 30.2 % 45,953 18.0 % Total $ 1,058,522 100.0 % $ 847,133 100.0 % $ 211,389 25.0 % Revenue from sales in international markets increased $46.0 million, or 18.0%, to $301.4 million in 2023, from $255.4 million in 2022.
Revenue by Geographic Area The following table presents revenue by geographic area, based on our customers’ shipping destinations: Year Ended December 31, Change 2024 2023 $ % (in thousands, except for percentages) United States $ 902,067 75.5 % $ 757,151 71.5 % $ 144,916 19.1 % International 292,548 24.5 % 301,371 28.5 % (8,823) (2.9) % Total $ 1,194,615 100.0 % $ 1,058,522 100.0 % $ 136,093 12.9 % Revenue from sales in international markets decreased $8.8 million, or 2.9%, to $292.5 million in 2024, from $301.4 million in 2023.
Indebtedness” to our consolidated financial statements in Part II, Item 8 in this Form 10-K for more information. We believe our current sources of liquidity will be sufficient to meet our liquidity requirements for at least the next 12 months.
We believe our current sources of liquidity will be sufficient to meet our liquidity requirements for at least the next 12 months.
Acquired In-Process Research and Development Year Ended December 31, Change 2023 2022 $ % (in thousands, except for percentages) Acquired in-process research and development $ 18,215 $ — $ 18,215 100 % Acquired in-process research and development as a percentage of revenue 1.7 % — % During the year ended December 31, 2023, we recorded an $18.2 million acquired in-process research and development assets (“IPR&D”) charge in connection with an asset acquisition.
Acquired In-Process Research and Development Year Ended December 31, Change 2024 2023 $ % (in thousands, except for percentages) Acquired in-process research and development $ — $ 18,215 $ (18,215) (100.0) % Acquired in-process research and development as a percentage of revenue — % 1.7 % There were no acquired IPR&D charges during the year ended December 31, 2024.
We believe that the cost-effectiveness of our products is attractive to our customers. Since our founding in 2004, we have had a strong track record of organic product development and commercial expansion that has established the foundation of our global organization.
Since our founding in 2004, we have invested heavily in our product development and commercial expansion that has established the foundation of our global organization.
Finite-lived intangible assets are amortized over the estimated economic useful lives of the assets, which is the period during which expected cash flows support the fair value of such intangible assets. We review finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
We review finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
Overview References herein to “we,” “us,” “our,” the “Company,” and “Penumbra,” refer to Penumbra, Inc. and its consolidated subsidiaries unless expressly indicated or the context requires otherwise. Penumbra is a global healthcare company focused on innovative therapies.
Overview References herein to “we,” “us,” “our,” the “Company,” and “Penumbra,” refer to Penumbra, Inc. and its consolidated subsidiaries unless expressly indicated or the context requires otherwise. Penumbra, the world’s leading thrombectomy company, is focused on developing the most innovative technologies for challenging medical conditions such as ischemic stroke, venous thromboembolism such as pulmonary embolism, and acute limb ischemia.
Net cash used in investing activities was $21.7 million in 2021 and primarily consisted of capital expenditures of $21.2 million and purchases of marketable investments, net of proceeds from maturities and sales, of $3.1 million. This was partially offset by $2.9 million cash acquired in connection with the Sixense acquisition.
Net cash provided by investing activities was $77.6 million in 2024 and primarily consisted of proceeds from maturities of marketable investments, net of purchases, of $107.7 million, partially offset by capital expenditures of $21.2 million and non-marketable investments of $10.0 million.
The change in operating assets and liabilities includes an increase in inventories of $51.6 million to support our revenue growth, an increase in accounts receivable of $21.3 million, an increase in prepaid expenses and other current and non-current assets of $13.0 million, and a decrease in accounts payable of $1.6 million.
The change in operating assets and liabilities includes an increase in inventories of $65.7 million to support our revenue growth, a decrease in accounts receivable of $26.6 million due to timing of invoicing and collections, an increase in accrued expenses and other non-current liabilities of $14.1 million primarily as a result of the growth in our business activities, and an increase in accounts 63 Table of Contents payable of $4.2 million.
We believe the following critical accounting policies involve significant areas where management applies judgments and estimates in the preparation of our consolidated financial statements. Leases We determine if an arrangement is a lease at inception.
We believe the following critical accounting policies involve significant areas where management applies judgments and estimates in the preparation of our consolidated financial statements. Revenue Recognition Revenue is primarily comprised of product revenue net of returns, discounts, administration fees and sales rebates.
Liquidity and Capital Resources As of December 31, 2023, we had $764.3 million in working capital, which included $167.5 million in cash and cash equivalents and $121.7 million in marketable investments.
Liquidity and Capital Resources As of December 31, 2024, we had $792.8 million in working capital, which included $324.4 million in cash and cash equivalents and $15.7 million in marketable investments. As of December 31, 2024, we held approximately 7.9% of our cash and cash equivalents in foreign entities.
The increase was primarily due to a $6.4 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, partially offset by a $2.7 million decrease in product development and testing costs. We have continued to make investments, and plan to continue to make investments, in the development of our products.
The increase was primarily due to a $3.3 million increase in product development and testing costs, $2.6 million in one-time expenses in connection with the wind down of the Immersive Healthcare business, and a $1.8 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth.
We are currently evaluating the potential global tax implications of this new tax regime. Goodwill Goodwill represents the excess of the purchase price of an acquired business or assets over the fair value of the identifiable assets acquired and liabilities assumed.
We acknowledge potential uncertainties in global implementation of Pillar Two, and will continue to monitor future tax legislation to determine their impact accordingly. Goodwill Goodwill represents the excess of the purchase price of an acquired business or assets over the fair value of the identifiable assets acquired and liabilities assumed.
Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized.
Deferred tax assets and liabilities are determined using the enacted tax rates in effect for the years in which those tax assets are expected to be realized. A valuation allowance is established when it is more likely than not that the future realization of all or some of the DTAs will not be achieved.
As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future. 63 Table of Contents Research and Development (“R&D”) Year Ended December 31, Change 2023 2022 $ % (in thousands, except for percentages) R&D $ 84,423 $ 79,407 $ 5,016 6.3 % R&D as a percentage of revenue 8.0 % 9.4 % R&D expenses increased by $5.0 million or 6.3%, to $84.4 million in 2023, from $79.4 million in 2022.
Research and Development (“R&D”) Year Ended December 31, Change 2024 2023 $ % (in thousands, except for percentages) R&D $ 94,783 $ 84,423 $ 10,360 12.3 % R&D as a percentage of revenue 7.9 % 8.0 % R&D expenses increased by $10.4 million or 12.3%, to $94.8 million in 2024, from $84.4 million in 2023.
The state NOL carryforwards have various carryover periods and will begin to expire as early as 2035. As of December 31, 2023, we had federal research and development tax credits of $27.1 million which are generally carried forward for 20 years and will begin to expire in 2037.
As of December 31, 2024, we had federal research and development tax credits of $2.0 million which are carried forward for 20 years and will expire in 2044. We had California state research and development tax credits of $32.6 million that may be carried forward indefinitely.
If such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value. If an asset is considered impaired, the asset will be written down to the determined fair value based on discounted cash flows.
Impairment of Long-Lived Assets We review long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. When such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value.
For example, during the quarter ended September 30, 2023, we incurred a $18.2 million charge related to acquired in process research and development (“IPR&D”) as a result of an asset acquisition. Critical Accounting Policies and Use of Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
Critical Accounting Policies and Use of Estimates Our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). The preparation of our consolidated financial statements in conformity with U.S.
In December 2021, the Organizational for Economic Co-operation and Development (“OECD”) released guidance on the new global minimum tax regime known as Pillar Two. While various countries have adopted or in the process of passing legislation to adopt it, the United States has not yet conformed to Pillar Two as of December 31, 2023.
In December 2021, the Organizational for Economic Co-operation and Development (“OECD”) released guidance on the new global minimum tax regime known as Pillar Two. Subsequently, safe harbor provisions were introduced to temporarily alleviate administrative compliance burden of multinational enterprises.
Lease agreements with a noncancelable term of less than 12 months are not recorded on our consolidated balance sheet. For more information about our leases, refer to Note “10. Leases” to our consolidated financial statements in Part II, Item 8 of this Form 10-K.
Refer to Note “4. Exit of Immersive Healthcare Business” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.
Net cash provided by financing activities was $0.8 million in 2021 and primarily consisted of proceeds from the issuance of stock under our employee stock purchase plan of $13.7 million and proceeds from exercises of stock options of $4.7 million.
This was partially offset by proceeds from the issuance of common stock under our employee stock purchase plan of $15.3 million and proceeds from exercises of stock options of $1.9 million.
We had approximately $21.8 million and $63.2 million of federal and state net operating loss (“NOL”) carryforwards, respectively, available to offset future taxable income as of December 31, 2023. The federal NOL has an indefinite carryforward period but is limited to offset 80% of taxable income in the year utilized.
We still had approximately $44.6 million of state net operating loss (“NOL”) carryforwards available to offset future taxable income as of December 31, 2024. The state NOL carryforwards have different carryover periods and will begin to expire as early as 2036.
We design, develop, manufacture and market novel products and have a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. Our team focuses on developing, manufacturing and marketing novel products for use by specialist physicians and healthcare providers to drive improved clinical and health outcomes.
Our broad portfolio, which includes computer assisted vacuum thrombectomy (CAVT), centers on removing blood clots from head-to-toe with speed, safety, and simplicity. Our team focuses on developing, manufacturing and marketing novel products for use by specialist physicians and healthcare providers to drive improved clinical and health outcomes. We believe that the cost-effectiveness of our products is attractive to our customers.
Intangible Assets” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information. 60 Table of Contents Loss Contingencies We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business.
Refer to Note “4. Exit of Immersive Healthcare Business” for more details. There was no impairment of long-lived assets during the years ended December 31, 2023, or 2022. Loss Contingencies We are subject to certain legal proceedings, as well as demands, claims and threatened litigation that arise in the normal course of our business.
Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies.
Gross margin is impacted by product mix, regional mix, 60 Table of Contents and production initiatives to support demand and create future efficiencies. As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future.
This was partially offset by $8.0 million of payments of employee taxes related to vested restricted stock units and payments related to finance lease obligations of $1.8 million.
Net cash used in financing activities was $87.0 million in 2024 and primarily consisted of repurchases of common stock of $100.4 million, including legal and financial advisor fees, payments towards finance leases obligations of $2.3 million, and payments of employee taxes related to vested restricted stock units of $1.5 million.
This was partially offset by an increase in accrued expenses and other non-current liabilities of $17.1 million primarily as a result of the growth in our business activities and proceeds of $3.7 million received related to lease incentives from operating leases.
This was partially offset by an increase in prepaid expenses and other current and non-current assets of $2.9 million. Net cash provided by operating activities was $97.3 million in 2023 and consisted of net income of $91.0 million and net changes in operating assets and liabilities of $79.1 million offset by non-cash items of $85.5 million.
Removed
In addition, we determine whether leases meet the classification criteria of a finance or operating lease at the lease commencement date considering: (1) whether the lease transfers ownership of the underlying asset to the lessee at the end of the lease term, (2) whether the lease contains a bargain purchase option, (3) whether the lease term is for a major part of the remaining economic life of the underlying asset, (4) whether the present value of the sum of the lease payments and residual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset, and (5) whether the underlying asset is of such a specialized nature that it is expected to have no alternative use to the lessor at the end of the lease term.
Added
During the year ended December 31, 2024, we made the strategic decision to wind down and exit our Immersive Healthcare business, and as a result we incurred $115.3 million in impairment and other charges in connection with this decision. Refer to Note “4.
Removed
As of December 31, 2023, our lease population consisted of operating and finance real estate, equipment and vehicle leases. Operating leases are included in operating lease right-of-use (“ROU”) assets, current operating lease liabilities, and non-current operating lease liabilities in our consolidated balance sheet.
Added
Exit of Immersive Healthcare Business” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more details. During the year ended December 31, 2024, we permanently ceased sales of our Immersive Healthcare products and related commercial operations.
Removed
Finance leases are included in finance lease right-of-use 57 Table of Contents assets, current finance lease liabilities, and non-current finance lease liabilities in our consolidated balance sheet. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.
Added
While various countries have adopted or are in the process of passing legislation to adopt it, the United States issued an executive order announcing opposition to adopt these rules in January 2025. We have evaluated the tax impact in relevant countries and concluded that there is no impact to our tax provision for the year ended December 31, 2024.
Removed
Lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate which requires our management’s judgement as the rate implicit in the lease is generally not readily determinable.
Added
If an asset is considered impaired, the asset is written down to fair value, which is determined based either on discounted cash flows or appraised value, depending on the nature of the asset. Our impairment tests require the use of assumptions and estimates, such as industry economic factors and the profitability of future business strategies.
Removed
The determination of our incremental borrowing rate requires management judgment including the development of a synthetic credit rating and cost of debt as we currently does not carry any debt. The lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives.
Added
To estimate undiscounted future cash flows of long-lived assets, we may apply a probability-weighted approach that incorporates different assumptions and potential outcomes related to the underlying long-lived assets. The evaluation is performed at the lowest level for which separately identifiable cash flows exist.

… 44 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

4 edited+0 added−0 removed5 unchanged
Biggest changeWe expect that the percentage of our sales denominated in foreign currencies may increase in the foreseeable future as we continue to expand into international markets. When sales or expenses are not denominated in U.S. dollars, a fluctuation in exchange rates could affect our net income.
Biggest changeWhen sales or expenses are not denominated in U.S. dollars, a fluctuation in exchange rates could affect our net income. We do not believe our net income would be materially impacted by an immediate 10% adverse change in foreign exchange rates.
We had cash and cash equivalents of $167.5 million as of December 31, 2023, which consisted of funds held in money market funds, general checking and savings accounts. In addition, we had marketable investments of $121.7 million, which consisted primarily of commercial paper, corporate bonds, certificates of deposit, U.S. treasury securities, and U.S. states and municipalities.
We had cash and cash equivalents of $324.4 million as of December 31, 2024, which consisted of funds held in commercial paper, money market funds, U.S. treasury securities, and general checking and savings accounts. In addition, we had marketable investments of $15.7 million, which consisted primarily of U.S. treasury securities.
While our gross margin for the year ended December 31, 2023 was primarily impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies, changes in prices did not have a significant impact on our results of operations for any periods presented on our consolidated financial statements. 69 Table of Contents
While our gross margin for the year ended December 31, 2024 was primarily impacted by a $7.3 million reduction in revenue resulting from the Italian government’s payback provision, a one-time $33.4 million inventory impairment charge to cost of revenue in connection with the impairment of our Immersive Healthcare asset group, product mix, regional mix, and production initiatives to support demand and create future efficiencies, changes in prices did not have a significant impact on our results of operations for any periods presented on our consolidated financial statements. 66 Table of Contents
We do not believe our net income would be materially impacted by an immediate 10% adverse change in foreign exchange rates. We do not currently hedge our exposure to foreign currency exchange rate fluctuations; however, we may choose to hedge our exposure in the future.
We do not currently hedge our exposure to foreign currency exchange rate fluctuations; however, we may choose to hedge our exposure in the future.

Other PEN 10-K year-over-year comparisons