Form 10-Q - Quarterly report [Sections 13 or 15(d)]

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from_____ to _____

Commission File Number: 001-37557

Penumbra, Inc.

(Exact name of registrant as specified in its charter)


Delaware						05-0605598
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

One Penumbra Place

Alameda, CA 94502

(Address of principal executive offices, including zip code)

(510) 748-3200

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, Par value $0.001 per share	PEN	The New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes: ☒ No: ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes: ☒ No: ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes: ☐ No: ☒

As of October 19, 2023, the registrant had 38,596,366 shares of common stock, par value $0.001 per share, outstanding.

Table of Contents

FORM 10-Q

TABLE OF CONTENTS


		Page
PART I. FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets	2
	Condensed Consolidated Statements of Operations	3
	Condensed Consolidated Statements of Comprehensive Income (Loss)	4
	Condensed Consolidated Statements of Stockholders’ Equity	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	33
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 3.	Defaults Upon Senior Securities	35
Item 4.	Mine Safety Disclosure	35
Item 5.	Other Information	35
Item 6.	Exhibits	37

Signatures

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PART I - FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.

Penumbra, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(in thousands)


	September 30, 2023		December 31, 2022
Assets
Current assets:
Cash and cash equivalents	$	100,757	$	69,858
Marketable investments	148,098		118,172
Accounts receivable, net of allowance for credit losses of $3,155 and $862 at September 30, 2023 and December 31, 2022, respectively	206,615		203,384
Inventories	374,245		334,006
Prepaid expenses and other current assets	38,761		30,279

Total current assets	868,476		755,699
Property and equipment, net	65,632		65,015
Operating lease right-of-use assets	184,520		192,636
Finance lease right-of-use assets	31,364		33,323
Intangible assets, net	73,452		81,161
Goodwill	165,954		166,046

Deferred taxes	64,236		64,213
Other non-current assets	14,743		12,793
Total assets	$	1,468,377	$	1,370,886
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	27,996	$	26,679
Accrued liabilities	104,184		106,300
Current operating lease liabilities	10,827		10,033
Current finance lease liabilities	2,071		1,920
Total current liabilities	145,078		144,932

Non-current operating lease liabilities	192,117		198,955
Non-current finance lease liabilities	23,779		24,865
Other non-current liabilities	3,265		3,276
Total liabilities	364,239		372,028
Commitments and contingencies (Note 9)
Stockholders’ equity:
Common stock	38		38
Additional paid-in capital	1,030,700		963,040

Accumulated other comprehensive loss	(7,240)		(8,124)

Retained earnings	80,640		43,904


Total stockholders’ equity	1,104,138		998,858
Total liabilities and stockholders’ equity	$	1,468,377	$	1,370,886

See accompanying notes to the unaudited condensed consolidated financial statements

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Penumbra, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share amounts)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Revenue	$	270,946	$	213,678	$	773,843	$	625,917
Cost of revenue	93,228		78,351		278,192		229,137
Gross profit	177,718		135,327		495,651		396,780
Operating expenses:
Research and development	20,958		21,320		62,481		61,443
Sales, general and administrative	125,920		108,573		376,433		334,088
Acquired in-process research and development	18,215		—		18,215		—
Total operating expenses	165,093		129,893		457,129		395,531
Income from operations	12,625		5,434		38,522		1,249
Interest income (expense), net	1,123		(43)		2,516		(162)
Other (expense) income, net	(444)		(2,356)		454		(4,323)
Income (loss) before income taxes	13,304		3,035		41,492		(3,236)
Provision for income taxes	4,090		5,306		4,756		2,643


Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)










Net income (loss) per share:
Basic	$	0.24	$	(0.06)	$	0.96	$	(0.16)
Diluted	$	0.23	$	(0.06)	$	0.94	$	(0.16)
Weighted average shares outstanding:
Basic	38,462,463		37,918,452		38,324,279		37,778,362
Diluted	39,219,966		37,918,452		39,183,635		37,778,362

See accompanying notes to the unaudited condensed consolidated financial statements

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Penumbra, Inc.

Condensed Consolidated Statements of Comprehensive Income (Loss)

(unaudited)

(in thousands)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net of tax	(2,359)		(2,812)		(1,302)		(7,013)
Net change in unrealized gains (losses) on available-for-sale securities, net of tax	698		(383)		2,186		(3,710)
Total other comprehensive (loss) income, net of tax	(1,661)		(3,195)		884		(10,723)
Comprehensive income (loss)	$	7,553	$	(5,466)	$	37,620	$	(16,602)

See accompanying notes to the unaudited condensed consolidated financial statements

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Penumbra, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2022	38,107,977	$	38	$	963,040	$	(8,124)	$	43,904	$	998,858
Issuance of common stock	134,936	—		2,209		—		—		2,209
Issuance of common stock under employee stock purchase plan	—	—		—		—		—		—

Shares held for tax withholdings	(813)	—		(204)		—		—		(204)
Stock-based compensation	—	—		13,781		—		—		13,781





Other comprehensive income	—	—		—		1,263		—		1,263
Net income	—	—		—		—		8,562		8,562
Balance at March 31, 2023	38,242,100	$	38	$	978,826	$	(6,861)	$	52,466	$	1,024,469


Issuance of common stock	114,930			1,614		—		—		1,614
Issuance of common stock under employee stock purchase plan	51,264			8,385		—		—		8,385

Shares held for tax withholdings	(2,689)			(822)		—		—		(822)
Stock-based compensation	—	—		12,655		—		—		12,655

Other comprehensive income	—	—		—		1,282		—		1,282
Net income	—	—		—		—		18,960		18,960
Balance at June 30, 2023	38,405,605	$	38	$	1,000,658	$	(5,579)	$	71,426	$	1,066,543
Issuance of common stock	95,927			834		—		—		834
Issuance of common stock under employee stock purchase plan	—			—		—		—		—
Issuance of common stock in connection with asset acquisition(1)	71,211			17,227		—		—		17,227
Shares held for tax withholdings	(404)			(123)		—		—		(123)
Stock-based compensation				12,104		—		—		12,104
Capital contribution from non-controlling interest	—	—		—		—		—		—
Other comprehensive loss	—	—		—		(1,661)		—		(1,661)
Net income	—	—		—		—		9,214		9,214
Balance at September 30, 2023	38,572,339	$	38	$	1,030,700	$	(7,240)	$	80,640	$	1,104,138


(1) Refer to Note “5. Asset Acquisition” for more information on the impact of the asset acquisition during the quarter ended September 30, 2023.

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Penumbra, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(unaudited)

(in thousands, except share amounts)


	Common Stock			Additional Paid-in Capital		Accumulated Other Comprehensive Loss		Retained Earnings		Total Stockholders’ Equity
	Shares	Amount
Balance at December 31, 2021	37,578,483	$	37	$	910,614	$	(2,630)	$	45,906	$	953,927
Issuance of common stock	103,984	1		1,102		—		—		1,103

Shares held for tax withholdings	(14,243)	—		(3,181)		—		—		(3,181)
Stock-based compensation	—	—		10,716		—		—		10,716

Other comprehensive loss	—	—		—		(3,342)		—		(3,342)
Net income	—	—		—		—		79		79
Balance at March 31, 2022	37,668,224	$	38	$	919,251	$	(5,972)	$	45,985	$	959,302
Issuance of common stock	158,735	—		3,466		—		—		3,466
Issuance of common stock under employee stock purchase plan	66,098	—		7,998		—		—		7,998

Shares held for tax withholdings	(12,950)	—		(1,900)		—		—		(1,900)
Stock-based compensation	—	—		9,022		—		—		9,022

Other comprehensive loss	—	—		—		(4,186)		—		(4,186)
Net loss	—	—		—		—		(3,687)		(3,687)
Balance at June 30, 2022	37,880,107	$	38	$	937,837	$	(10,158)	$	42,298	$	970,015
Issuance of common stock	99,921	—		1,725						1,725


Shares held for tax withholdings	(11,737)	—		(1,887)		—		—		(1,887)
Stock-based compensation	—	—		9,365		—		—		9,365

Other comprehensive loss	—	—		—		(3,195)		—		(3,195)
Net loss	—	—		—				(2,271)		(2,271)
Balance at September 30, 2022	37,968,291	$	38	$	947,040	$	(13,353)	$	40,027	$	973,752

See accompanying notes to the unaudited condensed consolidated financial statements

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Penumbra, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(in thousands)


	Nine Months Ended September 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$	36,736	$	(5,879)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	20,218		17,880

Stock-based compensation	39,725		27,381



Inventory write-downs	5,250		2,051






Deferred taxes	(35)		2,804
Acquired in-process research and development	18,215		—


Other	2,623		879
Changes in operating assets and liabilities:
Accounts receivable	(6,609)		(57,357)
Inventories	(46,466)		(62,317)
Prepaid expenses and other current and non-current assets	(10,288)		(1,958)
Accounts payable	2,054		13,090
Accrued expenses and other non-current liabilities	(351)		6,165
Proceeds from lease incentives	—		263
Net cash provided by (used in) operating activities	61,072		(56,998)
CASH FLOWS FROM INVESTING ACTIVITIES:
Asset acquisition, net of cash acquired	(988)		—



Purchases of marketable investments	(73,370)		—
Proceeds from sales of marketable investments	—		1,180
Proceeds from maturities of marketable investments	46,070		60,713

Purchases of property and equipment	(11,568)		(15,736)


Other	(500)		—
Net cash (used in) provided by investing activities	(40,356)		46,157
CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from exercises of stock options	4,657		6,293
Proceeds from issuance of stock under employee stock purchase plan	8,385		7,998

Payment of employee taxes related to vested stock	(1,149)		(6,968)
Payments of finance lease obligations	(1,456)		(1,299)


Other	(155)		(137)
Net cash provided by financing activities	10,282		5,887
Effect of foreign exchange rate changes on cash and cash equivalents	(99)		419
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	30,899		(4,535)
CASH AND CASH EQUIVALENTS—Beginning of period	69,858		59,379
CASH AND CASH EQUIVALENTS—End of period	$	100,757	$	54,844
NONCASH INVESTING AND FINANCING ACTIVITIES:
Right-of-use assets obtained in exchange for operating lease obligations	$	1,486	$	51,495
Right-of-use assets obtained in exchange for finance lease obligations	$	531	$	278

Purchase of property and equipment funded through accounts payable and accrued liabilities	$	1,275	$	1,847

Fair value of common stock issued as consideration in connection with an asset acquisition	$	17,227	$	—



SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for amounts included in the measurement of operating lease liabilities	$	14,985	$	13,017
Cash paid for income taxes	$	4,029	$	2,503

See accompanying notes to the unaudited condensed consolidated financial statements

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

1. Organization and Description of Business

Penumbra, Inc. (the “Company”) is a global healthcare company focused on innovative therapies. The Company designs, develops, manufactures and markets novel products and has a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. The Company focuses on developing, manufacturing and marketing novel products for use by specialist physicians and other healthcare providers to drive improved clinical and health outcomes. The Company believes that the cost-effectiveness of our products is attractive to our customers.

2. Summary of Significant Accounting Policies

Basis of Presentation and Consolidation

The accompanying condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the audited financial statements as of that date.

The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2023, the results of its operations for the three and nine months ended September 30, 2023 and 2022, the changes in its comprehensive income (loss) and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and its cash flows for the nine months ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period.

The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2023, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the granting of restricted stock units with performance conditions to senior management during the three months ended March 31, 2023 and the acquisition of In-Process Research and Development (“IPR&D”) in an asset acquisition during the three months ended September 30, 2023. Refer to Note “10. Stockholders’ Equity” for information on the Company’s accounting policy for equity awards with performance conditions and Note “5. Asset Acquisition” for information on the Company’s accounting policy for acquired IPR&D in an asset acquisition. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to marketable investments, allowances for credit losses, the amount of variable consideration included in the transaction price, warranty reserve, valuation of inventories, useful lives of property and equipment, intangibles, operating and financing lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, including the probability of achieving performance targets associated with equity awards with performance conditions, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.

Segments

The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical products, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its consolidated operating results for the purpose of allocating resources and evaluating financial performance.

3. Investments and Fair Value of Financial Instruments

Marketable Investments

The Company’s marketable investments have been classified and accounted for as available-for-sale. The following table presents the Company’s marketable investments as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value
Commercial paper	$	47,842	$	2	$	(13)	$	—	$	47,831
Certificate of deposit	8,190		3		(1)		—		8,192
U.S. treasury	13,079		—		(302)		$	—	12,777
U.S. agency and government sponsored securities	2,999		—		(31)		—		2,968
U.S. states and municipalities	11,615		—		(110)		—		11,505
Corporate bonds	65,686		1		(862)		—		64,825

Total	$	149,411	$	6	$	(1,319)	$	—	$	148,098


	December 31, 2022
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value

U.S. treasury	$	14,482	$	—	$	(478)	$	—	$	14,004
U.S. agency and government sponsored securities	6,999		—		(176)		—		6,823
U.S. states and municipalities	23,460		—		(501)		—		22,959
Corporate bonds	76,731		—		(2,345)		—		74,386

Total	$	121,672	$	—	$	(3,500)	$	—	$	118,172

As of September 30, 2023, the total amortized cost basis of the Company’s available-for-sale securities in an unrealized loss position exceeded its fair value by $1.3 million, which was primarily attributable to widening credit spreads and rising interest rates since purchase. The Company reviewed its available-for-sale securities in an unrealized loss position and concluded that the decline in fair value was not related to credit losses and is recoverable. During the three and nine months ended September 30, 2023, no allowance for credit losses was recorded and instead the unrealized losses are reported as a component of accumulated other comprehensive loss.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The following tables present the gross unrealized losses and the fair value for those marketable investments that were in an unrealized loss position for less than twelve months or for twelve months or more as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Commercial paper	$	39,535	$	(13)	$	—	$	—	$	39,535	$	(13)
Certificate of deposit	2,403		(1)		—		—		2,403		(1)
U.S. treasury	8,454		(132)		4,324		(170)		12,778		(302)
U.S. agency and government sponsored securities	—		—		2,968		(31)		2,968		(31)
U.S. states and municipalities	—		—		7,005		(110)		7,005		(110)
Corporate bonds	21,461		(25)		40,150		(837)		61,611		(862)

Total	$	71,853	$	(171)	$	54,447	$	(1,148)	$	126,300	$	(1,319)


	December 31, 2022
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

U.S. treasury	$	—	$	—	$	14,004	$	(478)	$	14,004	$	(478)
U.S. agency and government sponsored securities	—		—		6,823		(176)		6,823		(176)
U.S. states and municipalities	4,567		(68)		13,772		(433)		18,339		(501)
Corporate bonds	15,327		(101)		59,059		(2,244)		74,386		(2,345)

Total	$	19,894	$	(169)	$	93,658	$	(3,331)	$	113,552	$	(3,500)

The following table presents the contractual maturities of the Company’s marketable investments as of September 30, 2023 (in thousands):


	September 30, 2023
	Amortized Cost		Fair Value
Due in less than one year	$	141,700	$	140,612
Due in one to five years	7,711		7,486
Total	$	149,411	$	148,098

Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 2 - Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company classifies its cash equivalents and marketable investments within Level 1 and Level 2, as it uses quoted market prices or alternative pricing sources and models utilizing market observable inputs.

The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

Marketable investments classified within Level 2 of the fair value hierarchy are valued based on other observable inputs, including broker or dealer quotations or alternative pricing sources. When quoted prices in active markets for identical assets or liabilities are not available, the Company relies on non-binding quotes from its investment managers, which are based on proprietary valuation models of independent pricing services. These models generally use inputs such as observable market data, quoted market prices for similar instruments, historical pricing trends of a security as relative to its peers. To validate the fair value determination provided by its investment managers, the Company reviews the pricing movement in the context of overall market trends and trading information from its investment managers. In addition, the Company assesses the inputs and methods used in determining the fair value in order to determine the classification of securities in the fair value hierarchy.

The Company did not hold any Level 3 marketable investments as of September 30, 2023 or December 31, 2022. During the nine months ended September 30, 2023 and 2022, the Company did not have any transfers between Level 1, Level 2 or Level 3 of the fair value hierarchy. Additionally, the Company did not have any financial assets and liabilities measured at fair value on a non-recurring basis as of September 30, 2023 or December 31, 2022.

The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022 (in thousands):


	As of September 30, 2023
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:


Money market funds	$	35,400	$	—	$	—	$	35,400



Marketable investments:
Commercial paper	—		47,831		—		47,831
Certificate of deposit	—		8,192		—		8,192
U.S. treasury	12,777		—		—		12,777
U.S. agency and government sponsored securities	—		2,968		—		2,968
U.S. states and municipalities	—		11,505		—		11,505
Corporate bonds	—		64,825		—		64,825

Total	$	48,177	$	135,321	$	—	$	183,498


	As of December 31, 2022
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:

Money market funds	$	21,521	$	—	$	—	$	21,521
Marketable investments:

U.S. treasury	14,004		—		—		14,004
U.S. agency and government sponsored securities	—		6,823		—		6,823
U.S. states and municipalities	—		22,959		—		22,959
Corporate bonds	—		74,386		—		74,386


Total	$	35,525	$	104,168	$	—	$	139,693

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

4. Balance Sheet Components

Inventories

The following table shows the components of inventories as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Raw materials	$	110,094	$	90,786
Work in process	43,225		26,793
Finished goods	220,926		216,427
Inventories	$	374,245	$	334,006

Accrued Liabilities

The following table shows the components of accrued liabilities as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Payroll and employee-related cost	$	58,807	$	60,480
Accrued expenses	11,920		10,902


Deferred revenue	8,274		9,158






Other accrued liabilities	25,183		25,760
Total accrued liabilities	$	104,184	$	106,300

The following table shows the changes in the Company’s estimated product warranty accrual, included in accrued liabilities, for the nine months ended September 30, 2023 and twelve months ended December 31, 2022, respectively (in thousands):


	September 30, 2023		December 31, 2022
Balance at the beginning of the period	$	5,370	$	4,310
Accruals of warranties issued	1,473		2,451
Settlements of warranty claims	(1,030)		(1,391)
Balance at the end of the period	$	5,813	$	5,370

5. Asset Acquisition

On September 29, 2023 (the “Closing Date”), the Company acquired an IPR&D asset in an asset acquisition. On the Closing Date, the Company recorded an $18.2 million charge to acquired IPR&D expense in the condensed consolidated statements of operations as the IPR&D asset had no alternative future use.

IPR&D acquired in an asset acquisition is recorded using the cost accumulation model and is immediately expensed if there is no alternative future use at the time of acquisition.

The total consideration transferred was allocated to the non-monetary assets acquired and liabilities assumed using the cost accumulation model based on their relative fair value. The following table summarizes the Closing Date fair value of the consideration transferred (in thousands):


Fair value of common stock consideration(1)	$	17,227
Payment of certain acquiree transaction costs and other liabilities on behalf of acquiree(2)	1,001
Total purchase price	$	18,228

(1)The fair value of the 71,211 shares of common stock issued as part of consideration transferred was determined based on the Closing Date market price of the Company’s common stock of $241.91.

(2)Transaction costs and other pre-existing liabilities paid on behalf of the acquiree as part of the consideration transferred for the IPR&D are presented in the investing activities section of the condensed consolidated statements of cash flows.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

6. Intangible Assets

Acquired Intangible Assets

The following tables present details of the Company’s acquired finite-lived intangible assets as of September 30, 2023 and December 31, 2022 (in thousands, except weighted-average amortization period):


As of September 30, 2023	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(17,259)	$	66,030
Customer relationships	15.0 years	6,303		(2,626)		3,677
Trade secrets and processes	20.0 years	5,256		(1,511)		3,745

Total intangible assets	9.7 years	$	94,848	$	(21,396)	$	73,452


As of December 31, 2022	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(10,113)	$	73,176
Customer relationships	15.0 years	6,383		(2,340)		4,043
Trade secrets and processes	20.0 years	5,256		(1,314)		3,942
Other	5.0 years	1,646		(1,646)		—
Total intangible assets	9.6 years	$	96,574	$	(15,413)	$	81,161

The gross carrying amount and accumulated amortization of the customer relationships are the only intangible assets subject to foreign currency translation effects.

The following table presents the amortization expense recorded related to the Company’s finite-lived intangible assets for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	66	$	66	$	197	$	197

Sales, general and administrative	2,487		2,481		7,461		6,436
Total	$	2,553	$	2,547	$	7,658	$	6,633

7. Goodwill

The following table presents the changes in goodwill during the nine months ended September 30, 2023 (in thousands):


	Total Company
Balance as of December 31, 2022	$	166,046
Foreign currency translation	(92)
Balance as of September 30, 2023	$	165,954

Goodwill Impairment Review

The Company reviews goodwill for impairment annually during the fourth quarter or more frequently if events or circumstances indicate that an impairment loss may have occurred. The Company determined there were no impairment indicators as of September 30, 2023.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

8. Indebtedness

Credit Agreement

On April 24, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent and lender, and Bank of America, N.A. and Citibank, N.A. as lenders. The Credit Agreement is secured and provides for up to $100 million in available revolving borrowing capacity with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity to up to $150 million, and originally matured on April 23, 2021. During the three months ended March 31, 2021 and 2022, the Credit Agreement was amended to extend the maturity date and make other changes to the terms of the Credit Agreement.

In the first quarter of 2023, the Company and JPMorgan Chase Bank, N.A., as administrative agent and lender, and Bank of America, N.A. and Citibank, N.A., as lenders, entered into Amendment No. 3 to the Credit Agreement. Pursuant to the amendment, (i) the maturity date of the Credit Agreement was extended from February 17, 2023 to February 16, 2024, (ii) certain changes were made to the reference benchmark interest rates, applicable margins and borrowing mechanics under the Credit Agreement, which have the overall effect of increasing the interest rates payable by the Company on amounts borrowed under the Credit Agreement, and (iii) the commitment fee payable on the average daily unused amount under the Credit Agreement was increased to 0.35% per annum.

The Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio and to not exceed a maximum leverage ratio. As of September 30, 2023, the Company was in compliance with these requirements.

As of September 30, 2023 and December 31, 2022, there were no borrowings outstanding under the Credit Agreement.

9. Commitments and Contingencies

Royalty Obligations

In March 2005, the Company entered into a license agreement that requires the Company to make minimum royalty payments to the licensor on a quarterly basis. In July 2019, the Company amended the license agreement to extend its term for an additional ten years and to increase the required minimum annual royalty payments by $0.2 million. As of both September 30, 2023 and December 31, 2022, the amended license agreement required minimum quarterly royalty payments of $0.3 million. Unless terminated earlier, the term of the amended license agreement shall expire June 30, 2029.

In April 2012, the Company entered into an agreement that requires the Company to pay, on a quarterly basis, a 5% royalty on sales of products covered under applicable patents. The first commercial sale of covered products occurred in April 2014. Unless terminated earlier, the royalty term for each applicable product shall continue for fifteen years following the first commercial sale of such patented product, or when the applicable patent covering such product has expired, whichever is sooner.

Royalty expense included in cost of revenue for the three months ended September 30, 2023 and 2022 was $0.7 million and $0.7 million, respectively, and for the nine months ended September 30, 2023 and 2022, was $2.0 million and $1.9 million, respectively.

Contingencies

From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Indemnification

The Company enters into standard indemnification arrangements in the ordinary course of business. In many such arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The Company also agrees to indemnify many indemnified parties for product defect and similar claims. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with any of these indemnification requirements has been recorded to date.

Litigation

From time to time, the Company is subject to other claims and assessments in the ordinary course of business. The Company is not currently a party to any such litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

10. Stockholders’ Equity

Common Stock

On September 29, 2023, the Company issued 71,211 shares of common stock as part of the total consideration transferred in connection with an asset acquisition.

Stock-based Compensation

Stock-based compensation expense is associated with restricted stock units (“RSUs”), RSUs with performance conditions (“PSUs”), stock options, and the Company’s Employee Stock Purchase Plan.

Certain RSUs granted to senior management during the three months ended March 31, 2023, will vest subject to the achievement of pre-established financial performance targets for the year ending December 31, 2023, and continued service. The fair value of these PSUs is based on the closing price of the Company's common stock on the date of grant. Stock-based compensation costs associated with these PSUs are recognized over the requisite service period of 4.25 years using graded vesting which results in more accelerated expense recognition compared to traditional time-based vesting over the same vesting period. Similarly, from time to time the Company grants performance-based RSUs to sales employees based on pre-established sales performance targets. Each reporting period, the Company monitors the probability of achieving the performance targets and may adjust periodic stock-based compensation expense based on its determination of the likelihood of achieving these performance targets and the estimated number of shares of common stock that will vest. The actual number of PSUs awarded is based on the actual performance during the performance period compared to the performance targets.

The following table sets forth the stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	1,428	$	1,020	$	3,900	$	2,756
Research and development	2,219		1,385		6,928		4,285
Sales, general and administrative	10,489		7,297		28,897		20,340
Total	$	14,136	$	9,702	$	39,725	$	27,381

As of September 30, 2023, total unrecognized compensation cost related to unvested share-based compensation arrangements, excluding PSUs, was $60.5 million, which is expected to be recognized over a weighted average period of 2.8 years.

As of September 30, 2023, total unrecognized compensation cost related to unvested PSU share-based compensation arrangements was $18.1 million, which is expected to be recognized over a weighted average period of 3.5 years.

The total stock-based compensation cost capitalized in inventory was $1.7 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively.

11. Accumulated Other Comprehensive Income (Loss)

Other comprehensive (loss) income consists of two components: unrealized gains or losses on the Company’s available-for-sale marketable investments and gains or losses from foreign currency translation adjustments. Until realized and reported as a component of consolidated net income (loss), these comprehensive income (loss) items accumulate and are included within

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

accumulated other comprehensive income (loss). Unrealized gains and losses on the Company’s marketable investments are reclassified from accumulated other comprehensive income (loss) into earnings when realized upon sale, and are determined based on specific identification of securities sold. Gains and losses from the translation of assets and liabilities denominated in non-U.S. dollar functional currencies are included in accumulated other comprehensive income (loss).

The following table summarizes the changes in the accumulated balances during the period and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive income (loss) into earnings affect the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive income (loss) (in thousands):


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(2,012)	$	(3,567)	$	(5,579)	$	(3,922)	$	(6,236)	$	(10,158)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	698		—		698		(383)		—		(383)
Foreign currency translation losses	—		(2,359)		(2,359)		—		(2,812)		(2,812)

Net of tax	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)




Net current-year other comprehensive income (loss)	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(3,500)	$	(4,624)	$	(8,124)	$	(595)	$	(2,035)	$	(2,630)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	2,186		—		2,186		(3,710)		—		(3,710)
Foreign currency translation losses	—		(1,302)		(1,302)		—		(7,013)		(7,013)

Net of tax	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)




Net current-year other comprehensive income (loss)	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)

12. Income Taxes

The Company’s income tax expense (benefit), deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgment and estimates are required in determining the consolidated income tax expense (benefit).

During interim periods, the Company generally utilizes the estimated annual effective tax rate (“AETR”) method which involves the use of forecasted information. Under the AETR method, the provision is calculated by applying the estimated AETR for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Jurisdictions with tax assets for which the Company believes a tax benefit cannot be realized are excluded from the computation of its AETR.

In connection with an asset acquisition during the three months ended September 30, 2023, the Company recorded $18.2 million of IPR&D charge, which is not deductible for tax purposes. Refer to Note “5. Asset Acquisition” for more information. According to ASC 740-270-30-8 guidance for significant unusual or infrequently occurring items that are separately reported, the $18.2 million was excluded from the calculation of the Company’s estimated annual effective tax rate.

The Company’s provision for income taxes was $4.1 million and $4.8 million, for the three and nine months ended September 30, 2023, respectively, which was primarily due to tax expenses attributable to its worldwide profits and a discrete tax charge resulting from the non-deductible acquired in-process research and development expense associated with the asset acquisition, offset by excess tax benefits from stock-based compensation attributable to its U.S. jurisdiction. The Company’s

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

provision for income taxes was $5.3 million for the three months ended September 30, 2022, which was primarily due to tax expenses attributable to its worldwide profits, combined with tax deficiencies (shortfalls) expenses from stock-based compensation attributable to its U.S. jurisdiction. The Company’s provision for income taxes was $2.6 million for the nine months ended September 30, 2022, which was primarily due to tax expenses attributable to its foreign profits, combined with tax deficiencies (shortfall) expenses from stock-based compensation attributable to its U.S. jurisdiction.

The Company’s effective tax rate changed to 30.7% for the three months ended September 30, 2023 from 174.8% for the three months ended September 30, 2022, and to 11.5% for the nine months ended September 30, 2023 from (81.7)% for the nine months ended September 30, 2022, which were primarily due to small tax expenses over relatively large worldwide profits for the three and nine months in 2023 comparing to large tax expenses over relatively small worldwide profits for the three months and worldwide losses for the nine months in 2022, respectively.

Significant domestic deferred tax assets (“DTAs”) were generated in recent years, primarily due to excess tax benefits from stock option exercises and vesting of restricted stock units. The Company evaluates all available positive and negative evidence, objective and subjective in nature, in each reporting period to determine if sufficient taxable income will be generated to realize the benefits of its DTAs and, if not, a valuation allowance to reduce the DTAs is recorded.

As of September 30, 2023 and 2022, the Company maintains a valuation allowance against its Federal Research and Development Tax Credit DTAs as the Company could not conclude at the required more-likely-than-not level of certainty, that the benefit of these tax attributes would be realized prior to expiration. The Company intends to continue maintaining this full valuation allowance until there is sufficient evidence to reverse it. However, considering current earnings and anticipated future earnings, as well as the impact of IRC Section 174 requiring qualified research expenditures to be capitalized and amortized over 5 or 15 years, the Company anticipates net operating loss (“NOL”) utilization may be accelerated. As a consequence, the Company believes there is a reasonable possibility that sufficient positive evidence may become available to conclude this valuation allowance may no longer be needed within the next 12 months. Release of the valuation allowance will result in the recognition of Federal Research and Development Tax Credit DTAs and a decrease to income tax expenses for the period in which the release is recorded. The exact timing and amount of the valuation allowance release are highly dependent on the level of taxable income in future years. The Company will continue to closely monitor the need for this valuation allowance in each subsequent reporting period.

As of September 30, 2023 and 2022, the Company maintains a full valuation allowance against its California DTAs as the Company does not expect to generate sufficient future taxable income in California to realize the tax benefit due to the computation of California taxes under the single sales factor and non-conformity of the Section 174 capitalization rule.

The Company maintains that all foreign earnings, with the exception of a portion of the earnings of its German subsidiary, are permanently reinvested outside the United States and therefore deferred taxes attributable to such earnings are not provided for in the Company’s condensed consolidated financial statements as of September 30, 2023.

13. Net Income (Loss) per Share

The Company computed basic net income (loss) per share based on the weighted average number of shares of common stock outstanding during the period. The Company computed diluted net income (loss) per share based on the weighted average number of shares of common stock outstanding plus potentially dilutive common stock equivalents outstanding during the period using the treasury stock method. For the purposes of this calculation, stock options, restricted stock units and stock sold through the Company’s employee stock purchase plan are considered common stock equivalents.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share is as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)



Denominator:
Weighted average shares used to compute net income (loss) attributable to common stockholders:
Basic	38,462,463		37,918,452		38,324,279		37,778,362
Potential dilutive stock-based options and awards	757,503		—		859,356		—

Diluted	39,219,966		37,918,452		39,183,635		37,778,362
Net income (loss) per share:
Basic	$	0.24	$	(0.06)	$	0.96	$	(0.16)
Diluted	$	0.23	$	(0.06)	$	0.94	$	(0.16)

For the three months ended September 30, 2023 and 2022, outstanding stock-based awards of 13 thousand and 1.6 million shares, respectively, and for the nine months ended September 30, 2023 and 2022 outstanding stock-based awards of 11 thousand and 1.9 million shares, respectively, were excluded from the computation of diluted net income (loss) per share because their effect would have been anti-dilutive.

14. Revenues

Revenue Recognition

Revenue is recognized in an amount that reflects the consideration the Company expects to be entitled to in exchange for goods or services. All revenue recognized in the condensed consolidated statements of operations is considered to be revenue from contracts with customers.

The following table presents the Company’s revenues disaggregated by geography, based on the destination to which the Company ships its products, for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	194,816	$	148,819	$	553,467	$	434,583

International	76,130		64,859		220,376		191,334
Total	$	270,946	$	213,678	$	773,843	$	625,917

The following table presents the Company’s revenues disaggregated by product category for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Vascular	$	171,407	$	123,361	$	466,940	$	369,712
Neuro	99,539		90,317		306,903		256,205
Total	$	270,946	$	213,678	$	773,843	$	625,917

China Distribution and Technology Licensing Agreement

In December 2020, the Company entered into a distribution and technology licensing arrangement with its existing distribution partner in China. In addition to modifying the Company’s standard distribution agreement with its partner in China, the Company agreed to license the technology for certain products to its partner in China to permit the manufacturing and commercialization of such products in China as well as provide certain regulatory support. During the three months ended March 31, 2022, the Company further amended the distribution agreement and entered into an additional license agreement,

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

pursuant to which the Company agreed to license the technology for additional products to its partner in China on substantially the same terms as the existing license agreement. Apart from the standard distribution agreement, the Company will receive fixed payments upon transferring its distinct licensed technology and providing related regulatory support and royalty payments on the down-stream sale of the licensed products.

During the three months ended September 30, 2023, the Company and its existing distribution partner in China entered into an additional licensing arrangement, pursuant to which the Company agreed to license the technology for additional products to its partner in China and will receive fixed payments upon transferring its distinct licensed technology and providing related regulatory support and royalty payments on the down-stream sale of the licensed products.

Performance Obligations

Delivery of products - The Company’s contracts with customers, other than the China licensing arrangements described above, typically contain a single performance obligation, delivery of the Company’s products. Satisfaction of that performance obligation occurs when control of the promised goods transfers to the customer, which is generally upon shipment for non-consignment sale agreements and upon utilization for consignment sale agreements.

Payment terms - The Company’s payment terms vary by the type and location of our customer. The timing between fulfillment of performance obligations and when payment is due is not significant and does not give rise to financing transactions. The Company did not have any contracts with significant financing components as of September 30, 2023.

Product returns - The Company may allow customers to return products purchased at the Company’s discretion. The Company estimates the amount of its product sales that may be returned by its customers and records this estimate as a reduction of revenue in the period in which the related product revenue is recognized. The Company currently estimates product return liabilities using its own historic sales information, trends, industry data, and other relevant data points.

Warranties - The Company offers its standard warranty to all customers and it is not available for sale on a standalone basis. The Company’s standard warranty represents its guarantee that its products function as intended, are free from defects, and comply with agreed-upon specifications and quality standards. This assurance does not constitute a service and is not a separate performance obligation.

Transaction Price

Revenue is recorded at the net sales price, which includes estimates of variable consideration such as product returns utilizing historical return rates, rebates, discounts, and other adjustments to net revenue. To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price. When determining if variable consideration should be constrained, management considers whether there are factors that could result in a significant reversal of revenue and the likelihood of a potential reversal. 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. These estimates are reassessed each reporting period. During the three and nine months ended September 30, 2023, the Company made no material changes in estimates for variable consideration. When the Company performs shipping and handling activities after control of goods is transferred to the customer, they are considered as fulfillment activities, and costs are accrued for when the related revenue is recognized. Taxes collected from customers relating to product sales and remitted to governmental authorities are excluded from revenues.

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Penumbra, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

Contract assets and liabilities

The following information summarizes the Company’s contract assets and liabilities, net as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Contract assets	$	5,694	$	—
Contract liabilities	$	7,802	$	8,783

Contract assets for the periods presented primarily represent the difference between the revenue that was recognized based on the relative standalone selling price of the related performance obligations satisfied and the contractual billing terms in the licensing arrangements.

Contract liabilities represents amounts that the Company has already invoiced and are ultimately expected to be recognized as revenue, but for which not all revenue recognition criteria have been met and is recognized as the associated performance obligations are satisfied. Revenue recognized during the three and nine months ended September 30, 2023 relating to contract liabilities as of June 30, 2023 and December 31, 2022 was $0.1 million and $1.0 million, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the unaudited condensed consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited consolidated financial statements and notes thereto and management’s discussion and analysis of financial condition and results of operations for the year ended December 31, 2022, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 23, 2023.

This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify these statements by forward-looking words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “could,” “should,” “estimate,” or “continue,” and similar expressions or variations, but these words are not the exclusive means for identifying such statements. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results and the timing of certain events to differ materially from future results and timing expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below, and those discussed in the section titled “Risk Factors” in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2022. The forward-looking statements in this Quarterly Report on Form 10-Q represent our views as of the date of this Quarterly Report on Form 10-Q. Except as may be required by law, we assume no obligation to update these forward-looking statements or the reasons that results could differ from these forward-looking statements. You should, therefore, not rely on these forward-looking statements as representing our views as of any date subsequent to the date of this Quarterly Report on Form 10-Q.

Overview

Penumbra is a global healthcare company focused on innovative therapies. 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 outcomes and health. We believe that the cost-effectiveness of our products is attractive to our customers.

Since our founding in 2004, we have invested heavily in our product development capabilities in our major markets: neuro, vascular, and immersive healthcare. We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the neurovascular market since 2007, vascular market since 2013, neurosurgical market since 2014, and immersive healthcare market since 2020, respectively. We continue to expand our portfolio of product offerings, while developing and iterating on our currently available products.

We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization and access and immersive technologies. 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. Our research and development activities are centered around the development of new products and clinical activities designed to support our regulatory submissions and demonstrate the effectiveness of our products.

To address the challenging and significant clinical needs of our key markets, we have developed products that fall into the following broad product families:

Our neuro products fall into four broad product families:

•Neuro thrombectomy - Penumbra System, including Penumbra RED, JET, ACE catheters and the 3D Revascularization Device, Penumbra ENGINE and other components and accessories

•Neuro embolization - Penumbra SMART COIL, Penumbra Coil 400, POD400 and PAC400

•Neuro access - delivery catheters, consisting of Neuron, Neuron MAX Select, BENCHMARK, BMX96, BMX81, DDC, PX SLIM and SENDit

•Neurosurgical - Artemis Neuro Evacuation Device

Our vascular products fall into two broad product families:

•Vascular thrombectomy - INDIGO System designed for continuous or modulated aspiration, computer assisted vacuum thrombectomy, including aspiration catheters, microprocessor-controlled software algorithms that orchestrate the interaction of our pump and catheters, separators, aspiration pump and accessories

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•Peripheral embolization - RUBY Coil System, Ruby LP, LANTERN Delivery Microcatheter and the POD System (POD and POD Packing Coil)

Our immersive healthcare products fall into one broad product family:

•REAL Immersive System - portfolio of products that leverages immersive computer-based technologies to deliver engaging, immersive therapeutics to promote better health, motor function and cognition

We support healthcare providers, hospitals and clinics in more than 100 countries. In the nine months ended September 30, 2023 and 2022, 28.5% and 30.6% of our revenue, respectively, was generated from customers located outside of the United States. Our sales outside of the United States are denominated principally in the euro and Japanese yen, with some sales being denominated in other currencies. As a result, we have foreign exchange exposure but do not currently engage in hedging.

We generated revenue of $773.8 million and $625.9 million for the nine months ended September 30, 2023 and 2022, respectively, an increase of $147.9 million. We generated income from operations of $38.5 million, which includes the $18.2 million acquired in-process research and development (“IPR&D”) charge recorded in connection with an asset acquisition, and $1.2 million for the nine months ended September 30, 2023 and 2022, respectively.

Factors Affecting Our Performance

There are a number of factors that have impacted, and we believe will continue to impact, our results of operations and growth. These factors include:

•The COVID-19 pandemic and measures taken in response thereto, which have negatively affected, and may continue to negatively affect, our revenues and results of operations. For example, as a result of the pandemic and the response thereto, global supply chains have been impacted, and we may experience significant and unpredictable fluctuations in the availability and cost of components and raw materials used in our products.

•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. We must continue to successfully compete in light of our competitors’ existing and future products and their resources to successfully market to the specialist physicians and other healthcare providers who use our products.

•We must continue to successfully introduce new products that gain acceptance with specialist physicians and other healthcare providers and successfully transition from existing products to new products, ensuring adequate supply. 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 a result, our revenue from international sales can be significantly impacted by fluctuations in foreign currency exchange rates.

•The availability and levels of reimbursement within the relevant healthcare payment system for healthcare providers for procedures in which our products are used.

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

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product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates. We may experience quarters in which we have significant revenue growth sequentially followed by quarters of moderate or no revenue growth. Additionally, we may experience quarters in which operating expenses, in particular research and development expenses, fluctuate depending on the stage and timing of product development.

COVID-19 Pandemic

In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which spread throughout the U.S. and the world. In response, governments issued orders restricting certain activities, and while our business falls within the category of healthcare operations, which are essential businesses that have generally been permitted to continue operating during the COVID-19 pandemic, we have experienced, and may continue to experience, disruptions to our operations as a result of the pandemic. For example, at times during the pandemic, hospital resources have been diverted to fight the pandemic, and many government agencies, in conjunction with healthcare systems, have recommended the deferral of elective and semi-elective medical procedures. In addition, the pandemic and the response thereto have impacted global supply chains and labor markets, resulting in cost inflation and raw material supply constraints, as well as an increase in employee turnover rates in certain jurisdictions, which has impacted, and may continue to impact, our business. In order to navigate the pandemic, we made certain changes to how we manufacture, inspect and ship our products to prioritize the health and safety of our employees and to operate under the protocols mandated by our local and state governments.

While the acute phase of the pandemic has subsided due to the development and widespread availability of vaccines for COVID-19,we are unable to reliably predict the full impact that COVID-19 will have on our business due to numerous uncertainties, including the severity and duration of the pandemic, the global resurgences of cases, particularly as new variants of the virus spread, additional actions that may be taken by governmental authorities in response to the pandemic, the impact of the pandemic on the business of our customers, distributors and suppliers, other businesses and worldwide economies in general, our ability to have access to our customers to provide training and case support, and other factors identified in Part I, Item 1A “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022. We will continue to evaluate the nature and extent of the impact of COVID-19 on our business, consolidated results of operations, and financial condition.

Components of Results of Operations

Revenue. We sell our interventional products directly to hospitals and other healthcare providers and through distributors for use in procedures performed by specialist physicians to treat patients in two key markets: neuro and vascular disease. We sell our products through purchase orders, and we do not have long term purchase commitments from our customers. Revenue from product sales is recognized either on the date of shipment or the date of receipt by the customer, but is deferred for certain transactions when control has not yet transferred. With respect to products that we consign to hospitals, which primarily consist of coils, we recognize revenue at the time hospitals utilize products in a procedure. Revenue also includes shipping and handling costs that we charge to customers.

Cost of Revenue. Cost of revenue consists primarily of the cost of raw materials and components, personnel costs, including stock-based compensation, inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense, shipping and handling costs, and other labor and overhead costs incurred in the manufacturing of products. In addition, we record write-downs or write-offs of inventory in the event that a portion of our inventory becomes excess or obsolete.

We manufacture substantially all of our products in our manufacturing facilities in Alameda and Roseville, California.

Operating Expenses

Research and Development (“R&D”). R&D expenses primarily consist of product development, clinical and regulatory expenses, materials, depreciation and other costs associated with the development of our products. R&D expenses also include salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants. We generally expense R&D costs as they are incurred, with the exception of certain costs incurred for the development of computer software for internal use related to our REAL Immersive System offerings. We capitalize certain costs when it is determined that it is probable that the project will be completed and the software will be used to perform the function intended, and the preliminary project stage is completed. Capitalized internal use software development costs are included in property and equipment, net within the condensed consolidated balance sheets.

Sales, General and Administrative (“SG&A”). SG&A expenses primarily consist of salaries, benefits and other related costs, including stock-based compensation, for personnel and consultants engaged in sales, marketing, finance, legal, compliance, administrative, facilities, information technology and human resource activities. Our SG&A expenses also include

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marketing trials, medical education, training, commissions, generally based on sales, to direct sales representatives, amortization of acquired intangible assets and acquisition-related costs.

Provision For (Benefit from) Income Taxes

We are taxed at the rates applicable within each jurisdiction in which we operate. The composite income tax rate, tax provisions, deferred tax assets (“DTAs”) and deferred tax liabilities will vary according to the jurisdiction in which profits arise. Tax laws are complex and subject to different interpretations by management and the respective governmental taxing authorities, and require us to exercise judgment in determining our income tax provision, our deferred tax assets and deferred tax liabilities and the potential valuation allowance recorded against our net DTAs. 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.

Results of Operations

The following table sets forth the components of our condensed consolidated statements of operations in dollars and as a percentage of revenue for the periods presented:


	Three Months Ended September 30,								Nine Months Ended September 30,
	2023				2022				2023				2022
	(in thousands, except for percentages)								(in thousands, except for percentages)
Revenue	$	270,946	100.0	%	$	213,678	100.0	%	$	773,843	100.0	%	$	625,917	100.0	%
Cost of revenue	93,228		34.4		78,351		36.7		278,192		35.9		229,137		36.6
Gross profit	177,718		65.6		135,327		63.3		495,651		64.1		396,780		63.4
Operating expenses:
Research and development	20,958		7.7		21,320		10.0		62,481		8.1		61,443		9.8
Sales, general and administrative	125,920		46.5		108,573		50.8		376,433		48.6		334,088		53.4
Acquired in-process research and development	18,215		6.7		—		—		18,215		2.4		—		—
Total operating expenses	165,093		60.9		129,893		60.8		457,129		59.1		395,531		63.2
Income from operations	12,625		4.7		5,434		2.5		38,522		5.0		1,249		0.2
Interest income (expense), net	1,123		0.4		(43)		0.0		2,516		0.3		(162)		—
Other (expense) income, net	(444)		(0.2)		(2,356)		(1.1)		454		0.1		(4,323)		(0.7)
Income (loss) before income taxes	13,304		4.9		3,035		1.4		41,492		5.4		(3,236)		(0.5)
Provision for income taxes	4,090		1.5		5,306		2.5		4,756		0.6		2,643		0.4


Net income (loss)	$	9,214	3.4	%	$	(2,271)	(1.1)	%	$	36,736	4.7	%	$	(5,879)	(0.9)	%

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

Revenue


	Three Months Ended September 30,				Change
	2023		2022		$		%
	(in thousands, except for percentages)
Vascular	$	171,407	$	123,361	$	48,046	38.9	%
Neuro	99,539		90,317		9,222		10.2	%
Total	$	270,946	$	213,678	$	57,268	26.8	%

Revenue increased $57.3 million, or 26.8%, to $270.9 million in the three months ended September 30, 2023, from $213.7 million in the three months ended September 30, 2022. Overall revenue growth was primarily due to an increase in sales of new and existing products within our vascular and neuro businesses.

Revenue from our vascular products increased $48.0 million, or 38.9%, to $171.4 million in the three months ended September 30, 2023, from $123.4 million in the three months ended September 30, 2022. This increase was driven by a 50.2% increase in sales of our vascular thrombectomy products in the United States and primarily attributable to sales of new products

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and further market penetration of our existing products. Prices for our vascular products remained substantially unchanged during the period.

Revenue from our neuro products increased $9.2 million, or 10.2%, to $99.5 million in the three months ended September 30, 2023, from $90.3 million in the three months ended September 30, 2022. This increase was primarily attributable to sales of new products in United States and Europe and further market penetration of our existing products. The increase in product sales was driven by an increase in sales of our neuro access products and neuro thrombectomy products, which globally increased by 12.9% and 10.3%, respectively, in the three months ended September 30, 2023, partially offset by a decrease in sales of our neuro embolization products, which decreased by 18.8% in the three months ended September 30, 2023. Prices for our neuro products remained substantially unchanged during the period.

Revenue by Geographic Area

The following table presents revenue by geographic area, based on our customers’ shipping destinations, for the three months ended September 30, 2023 and 2022:


	Three Months Ended September 30,								Change
	2023				2022				$		%
	(in thousands, except for percentages)
United States	$	194,816	71.9	%	$	148,819	69.6	%	$	45,997	30.9	%

International	76,130		28.1	%	64,859		30.4	%	11,271		17.4	%
Total	$	270,946	100.0	%	$	213,678	100.0	%	$	57,268	26.8	%

Revenue from product sales in international markets increased $11.3 million, or 17.4%, to $76.1 million in the three months ended September 30, 2023, from $64.9 million in the three months ended September 30, 2022. Revenue from international sales represented 28.1% and 30.4% of our total revenue for the three months ended September 30, 2023 and 2022, respectively.

Gross Margin


	Three Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Cost of revenue	$	93,228		$	78,351		$	14,877	19.0	%
Gross profit	$	177,718		$	135,327		$	42,391	31.3	%
Gross margin %	65.6		%	63.3		%

Gross margin increased by 2.3 percentage points to 65.6% in the three months ended September 30, 2023, from 63.3% in the three months ended September 30, 2022. Gross margin is impacted by product mix, regional mix, 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.

Research and Development (“R&D”)


	Three Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
R&D	$	20,958		$	21,320		$	(362)	(1.7)	%
R&D as a percentage of revenue	7.7		%	10.0		%

R&D expenses decreased by $0.4 million, or 1.7%, to $21.0 million in the three months ended September 30, 2023, from $21.3 million in the three months ended September 30, 2022. The decrease was primarily due to a $1.6 million decrease in product development and testing costs, partially offset by a $1.2 million increase in personnel-related expenses.

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. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.

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Sales, General and Administrative (“SG&A”)


	Three Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
SG&A	$	125,920		$	108,573		$	17,347	16.0	%
SG&A as a percentage of revenue	46.5		%	50.8		%

SG&A expenses increased by $17.3 million, or 16.0%, to $125.9 million in the three months ended September 30, 2023, from $108.6 million in the three months ended September 30, 2022. The increase was primarily due to a $11.0 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth and a $3.0 million increase in costs related to marketing events.

As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments to support the business.

Acquired In-Process Research and Development


	Three Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Acquired in-process research and development	$	18,215		$	—		$	18,215	not meaningful
Acquired in-process research and development as a percentage of revenue	6.7		%	—		%

During the three months ended September 30, 2023, we recorded an $18.2 million acquired IPR&D charge in connection with an asset acquisition.

Provision for income taxes


	Three Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Provision for income taxes	$	4,090		$	5,306		$	(1,216)	(22.9)	%
Effective tax rate	30.7		%	174.8		%

Our provision for income taxes was $4.1 million for the three months ended September 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits and a discrete tax charge resulting from the non-deductible IPR&D charge associated with an asset acquisition (see Note “5. Asset Acquisition” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information), offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction. Our provision for income taxes was $5.3 million for the three months ended September 30, 2022, which was primarily due to tax expenses attributable to our worldwide profits, combined with tax deficiencies (shortfalls) expenses from stock based compensation attributable to our U.S. jurisdiction as a result of stock price fluctuation.

Our effective tax rate changed to 30.7% for the three months ended September 30, 2023 from 174.8% for the three months ended September 30, 2022, primarily due to small tax expenses over relatively large worldwide profits for the three months in 2023 comparing to large tax expenses over relatively small worldwide profits for the three months in 2022.

Prospectively, our effective tax rate will likely be driven by (1) permanent differences in taxable income for tax and financial reporting purposes, (2) tax expense or benefit attributable to our worldwide financial result, and (3) discrete tax adjustments such as excess tax benefits or deficiencies related to stock-based compensation. Our income tax provision is subject to volatility as the amount of excess tax benefits or deficiencies can fluctuate from period to period based on the price of our stock, the volume of share-based grants settled or vested, and the fair value assigned to equity awards under U.S. GAAP.

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sufficient evidence to reverse it. However, considering current earnings and anticipated future earnings, as well as the impact of IRC Section 174 requiring qualified research expenditures to be capitalized and amortized over 5 or 15 years, we anticipate net operating loss (“NOL”) utilization may be accelerated. As a consequence, we believe there is a reasonable possibility that sufficient positive evidence may become available to conclude this valuation allowance may no longer be needed within the next 12 months. Release of the valuation allowance will result in the recognition of Federal Research and Development Tax Credit DTAs and a decrease to income tax expenses for the period in which the release is recorded. The exact timing and amount of the valuation allowance release are highly dependent on the level of taxable income in future years. We will continue to closely monitor the need for this valuation allowance in each subsequent reporting period.

Nine Months Ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

Revenue


	Nine Months Ended September 30,				Change
	2023		2022		$		%
	(in thousands, except for percentages)
Vascular	$	466,940	$	369,712	$	97,228	26.3	%
Neuro	306,903		256,205		50,698		19.8	%
Total	$	773,843	$	625,917	$	147,926	23.6	%

Revenue increased $147.9 million, or 23.6%, to $773.8 million in the nine months ended September 30, 2023, from $625.9 million in the nine months ended September 30, 2022. Overall revenue growth was primarily due to an increase in sales of new and existing products within our vascular and neuro businesses.

Revenue from our vascular products increased $97.2 million, or 26.3%, to $466.9 million in the nine months ended September 30, 2023, from $369.7 million in the nine months ended September 30, 2022. This increase in revenue from our vascular products was primarily attributable to increased revenue in the United States and was driven by sales of our vascular thrombectomy products and peripheral embolization products, which globally increased by 34.6% and 12.2%, respectively, in the nine months ended September 30, 2023. These increases were primarily due to higher sales volume in the United States as a result of sales of new products and further market penetration of our existing products. Prices for our vascular products remained substantially unchanged during the period.

Revenue from our neuro products increased $50.7 million, or 19.8%, to $306.9 million in the nine months ended September 30, 2023, from $256.2 million in the nine months ended September 30, 2022. This increase in revenue from our neuro products was primarily attributable to increased revenue in the United States and Europe, sales of new products, and further market penetration of our existing products. This increase was driven by an increase in sales of our neuro access products and neuro thrombectomy products, which globally increased by 24.9% and 20.1%, respectively, in the nine months ended September 30, 2023, partially offset by a decrease in sales of our neuro embolization products of 16.2% in the nine months ended September 30, 2023. Prices for our neuro products remained substantially unchanged during the period.

Revenue by Geographic Area

The following table presents revenue by geographic area, based on our customer’s shipping destination, for the nine months ended September 30, 2023 and 2022:


	Nine Months Ended September 30,								Change
	2023				2022				$		%
	(in thousands, except for percentages)
United States	$	553,467	71.5	%	$	434,583	69.4	%	$	118,884	27.4	%

International	220,376		28.5	%	191,334		30.6	%	29,042		15.2	%
Total	$	773,843	100.0	%	$	625,917	100.0	%	$	147,926	23.6	%

Revenue from sales in international markets increased $29.0 million, or 15.2%, to $220.4 million in the nine months ended September 30, 2023, from $191.3 million in the nine months ended September 30, 2022. Revenue from international sales represented 28.5% and 30.6% of our total revenue for the nine months ended September 30, 2023 and 2022, respectively.

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Gross Margin


	Nine Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Cost of revenue	$	278,192		$	229,137		$	49,055	21.4	%
Gross profit	$	495,651		$	396,780		$	98,871	24.9	%
Gross margin %	64.1		%	63.4		%

Gross margin increased by 0.7 percentage point to 64.1% in the nine months ended September 30, 2023, from 63.4% in the nine months ended September 30, 2022. Gross margin is impacted by product mix, regional mix, start-up costs associated with new product launches, 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.

Research and Development (“R&D”)


	Nine Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
R&D	$	62,481		$	61,443		$	1,038	1.7	%
R&D as a percentage of revenue	8.1		%	9.8		%

R&D expenses increased by $1.0 million, or 1.7%, to $62.5 million in the nine months ended September 30, 2023, from $61.4 million in the nine months ended September 30, 2022. The increase was primarily due to a $3.8 million increase in personnel-related expenses, partially offset by a $3.1 million decrease in product development and testing costs.

Sales, General and Administrative (SG&A)


	Nine Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
SG&A	$	376,433		$	334,088		$	42,345	12.7	%
SG&A as a percentage of revenue	48.6		%	53.4		%

SG&A expenses increased by $42.3 million, or 12.7%, to $376.4 million in the nine months ended September 30, 2023, from $334.1 million in the nine months ended September 30, 2022. The increase was primarily due to a $30.7 million increase in personnel-related expense driven by an increase in headcount and related expenses to support our growth and a $4.9 million increase in costs related to marketing events.

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Acquired In-Process Research and Development


	Nine Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Acquired in-process research and development	$	18,215		$	—		$	18,215	not meaningful
Acquired in-process research and development as a percentage of revenue	2.4		%	—		%

During the nine months ended September 30, 2023, we recorded an $18.2 million acquired IPR&D charge in connection with an asset acquisition.

Provision for income taxes


	Nine Months Ended September 30,						Change
	2023			2022			$		%
	(in thousands, except for percentages)
Provision for income taxes	$	4,756		$	2,643		$	2,113	79.9	%

Effective tax rate	11.5		%	(81.7)		%

Our provision for income taxes was $4.8 million for the nine months ended September 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits and a discrete tax charge resulting from the non-deductible IPR&D charge associated with an asset acquisition (see Note “5. Asset Acquisition” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information), offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction. Our benefit from income taxes was $2.6 million for the nine months ended September 30, 2022, which was primarily due to tax expenses attributable to our foreign profits, combined with tax deficiencies (shortfalls) expenses from stock-based compensation attributable to our U.S. jurisdiction as a result of stock price fluctuation.

The effective tax rate changed to 11.5% for the nine months ended September 30, 2023 from (81.7)% for the nine months ended September 30, 2022, primarily due to small tax expenses over relatively large worldwide profits for the nine months in 2023 comparing to large tax expenses over relatively small worldwide losses for the nine months in 2022.

Prospectively, our effective tax rate will likely be driven by (1) permanent differences in taxable income for tax and financial reporting purposes, (2) tax expense or benefit attributable to our worldwide financial results, and (3) discrete tax adjustments such as excess tax benefits or deficiencies related to stock-based compensation. Our income tax provision can be volatile as the amount of excess tax benefits or deficiencies can fluctuate from period to period due to the price of our stock, the volume of share-based grants exercised or vested, and the fair value assigned to equity awards under U.S. GAAP. In addition, changes in tax law or our interpretation thereof, and changes to our valuation allowance could result in fluctuations in our effective tax rate.

As of September 30, 2023 and 2022, we maintain a valuation allowance against our Federal Research and Development Tax Credit DTAs as we could not conclude at the required more-likely-than-not level of certainty, that the benefit of these tax attributes would be realized prior to expiration. We intend to continue maintaining this full valuation allowance until there is sufficient evidence to reverse it. However, considering current earnings and anticipated future earnings, as well as the impact of IRC Section 174 requiring qualified research expenditures to be capitalized and amortized over 5 or 15 years, we anticipate net operating loss (“NOL”) utilization may be accelerated. As a consequence, we believe there is a reasonable possibility that sufficient positive evidence may become available to conclude this valuation allowance may no longer be needed within the next 12 months. Release of the valuation allowance will result in the recognition of Federal Research and Development Tax Credit DTAs and a decrease to income tax expenses for the period in which the release is recorded. The exact timing and amount of the valuation allowance release are highly dependent on the level of taxable income in future years. We will continue to closely monitor the need for this valuation allowance in each subsequent reporting period.

Liquidity and Capital Resources

As of September 30, 2023, we had $723.4 million in working capital, which included $100.8 million in cash and cash equivalents and $148.1 million in marketable investments. As of September 30, 2023, we held approximately 16.9% of our cash and cash equivalents in foreign entities.

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In addition to our existing cash and cash equivalents and marketable investment balances, our principal source of liquidity is our accounts receivable. In order to further strengthen our liquidity position and financial flexibility, on April 24, 2020 we entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent and lender, and Bank of America, N.A. and Citibank, N.A. as lenders. The Credit Agreement is secured and provides for up to $100 million in available revolving borrowing capacity with an option, subject to certain conditions, for us to increase the aggregate borrowing capacity to up to $150 million. The Credit Agreement originally matured on April 23, 2021 and was subsequently amended during the three months ended March 31, 2021, 2022 and 2023 to extend the maturity date and make other changes to the terms of the Credit Agreement. The Credit Agreement currently matures on February 16, 2024. See Note “8. Indebtedness” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

We believe these sources of liquidity will be sufficient to meet our liquidity requirements for at least the next 12 months. Our principal liquidity requirements are to fund our operations, expand manufacturing operations which includes, but is not limited to, maintaining sufficient levels of inventory to meet the anticipated demand of our customers, fund research and development activities and fund our capital expenditures. We may also lease or purchase additional facilities to facilitate our growth. 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. If we require or elect to raise additional funds, we may do so through equity or debt financing, which may not be available on favorable terms, could result in dilution to our stockholders, could result in changes to our capital structure, and could require us to agree to covenants that limit our operating flexibility.

The following table summarizes our cash and cash equivalents, marketable investments and selected working capital data as of September 30, 2023 and December 31, 2022:


	September 30, 2023		December 31, 2022
	(in thousands)
Cash and cash equivalents	$	100,757	$	69,858
Marketable investments	148,098		118,172
Accounts receivable, net	206,615		203,384
Accounts payable	27,996		26,679
Accrued liabilities	104,184		106,300
Working capital(1)	723,398		610,767

(1) Working capital consists of total current assets less total current liabilities.

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:


	Nine Months Ended September 30,
	2023		2022
	(in thousands)
Cash and cash equivalents and restricted cash at beginning of period	$	69,858	$	59,379
Net cash provided by (used in) operating activities	61,072		(56,998)
Net cash (used in) provided by investing activities	(40,356)		46,157
Net cash provided by financing activities	10,282		5,887
Cash and cash equivalents and restricted cash at end of period	100,757		54,844

Net Cash Provided By (Used In) Operating Activities

Net cash provided by (used in) operating activities consists primarily of consolidated net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, acquired in-process research and development, inventory write-downs, and changes in deferred tax balances), and the effect of changes in working capital and other activities.

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Net cash provided by operating activities was $61.1 million during the nine months ended September 30, 2023 and consisted of consolidated net income of $36.7 million and non-cash items of $86.0 million, offset by net changes in operating assets and liabilities of $61.7 million. The change in operating assets and liabilities primarily relates to an increase in inventories of $46.5 million to support our growth, an increase in accounts receivable of $6.6 million due to timing of invoicing and collections, and an increase in prepaid expenses and other current and non-current assets of $10.3 million. This was partially offset by an increase in accounts payable of $2.1 million due to timing of payments.

Net cash used in operating activities was $57.0 million during the nine months ended September 30, 2022 and consisted of consolidated net loss of $5.9 million and non-cash items of $51.0 million, offset by net changes in operating assets and liabilities of $102.1 million. The change in operating assets and liabilities includes an increase in inventories of $62.3 million to support our growth, an increase in accounts receivable of $57.4 million due to timing of receipt of payment, and an increase in prepaid expenses and other current and non-current assets of $2.0 million. This was partially offset by an increase in accounts payable of $13.1 million, an increase in accrued expenses and other non-current liabilities of $6.2 million, and proceeds of $0.3 million received related to lease incentives from operating leases.

Net Cash (Used In) Provided By Investing Activities

Net cash (used in) provided by investing activities relates primarily to purchases of marketable investments, net of proceeds from maturities and sales, capital expenditures and payments in connection with asset acquisitions.

Net cash used in investing activities was $40.4 million during the nine months ended September 30, 2023 and primarily consisted of $27.3 million in purchases of marketable investments, net of proceeds from maturities, capital expenditures of $11.6 million and $1.0 million in payments in connection with an asset acquisition.

Net cash provided by investing activities was $46.2 million during the nine months ended September 30, 2022 and primarily consisted of proceeds from maturities and sales of marketable investments of $61.9 million, partially offset by capital expenditures of $15.7 million.

Net Cash Provided By Financing Activities

Net cash provided by financing activities primarily relates to payments of employee taxes related to vested restricted stock units, payments towards the reduction of our finance lease obligations, and proceeds from exercises of stock options and issuance of common stock under our employee stock purchase plan.

Net cash provided by financing activities was $10.3 million during the nine months ended September 30, 2023 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $8.4 million and proceeds from exercises of stock options of $4.7 million, partially offset by $1.5 million in payments towards finance leases and $1.1 million of payments of employee taxes related to vested restricted stock units.

Net cash provided by financing activities was $5.9 million during the nine months ended September 30, 2022 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $8.0 million and proceeds from exercises of stock options of $6.3 million. This was partially offset by $7.0 million of payments of employee taxes related to vested restricted stock units and $1.3 million in payments towards finance leases.

Contractual Obligations and Commitments

There have been no other material changes to our contractual obligations and commitments as of September 30, 2023 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

Critical Accounting Policies and Estimates

We have prepared our financial statements in accordance with U.S. GAAP. Our preparation of these financial statements requires us to make estimates, assumptions, and judgments that affect the reported amounts of assets, liabilities, expenses, and related disclosures at the date of the financial statements, as well as revenue and expenses recorded during the reporting periods. We evaluate our estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could therefore differ materially from these estimates under different assumptions or conditions.

There have been no material changes to our critical accounting policies from those described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in our Annual Report on Form 10-K for the year ended December 31, 2022.

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Recently Issued Accounting Standards

No recently issued accounting standards are expected to impact the Company.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

We are exposed to various market risks, which may result in potential losses arising from adverse changes in market rates, such as interest rates and foreign exchange rates. We do not enter into derivatives or other financial instruments for trading or speculative purposes and do not believe we are exposed to material market risk with respect to our cash and cash equivalents or our marketable investments.

Interest Rate Risk. We had cash and cash equivalents of $100.8 million as of September 30, 2023, which consisted of funds held in money market funds, general checking and savings accounts. In addition, we had marketable investments of $148.1 million, which consisted primarily of corporate bonds, certificate of deposit, U.S. agency and government sponsored securities, and U.S. states and municipalities. Our investment policy is focused on the preservation of capital and supporting our liquidity needs. Under the policy, we invest in highly rated securities, while limiting the amount of credit exposure to any one issuer other than the U.S. government. We do not invest in financial instruments for trading or speculative purposes, nor do we use leveraged financial instruments. We utilize external investment managers who adhere to the guidelines of our investment policy. The revolving loans under the Credit Agreement bear interest at: (1) the adjusted EURIBOR rate, plus an applicable rate, for euro currency revolving borrowing; or (2) an alternate base rate, daily simple SOFR, or adjusted term SOFR rate, as applicable, plus an applicable rate, for revolving borrowing in U.S. dollars. As of September 30, 2023, there were no borrowings outstanding under the Credit Agreement. A hypothetical 100 basis point change in interest rates would not have a material impact on the value of our cash and cash equivalents or marketable investments.

Foreign Exchange Risk Management. We operate in countries other than the United States, and, therefore, we are exposed to foreign currency risks. We bill most sales outside of the United States in local currencies, primarily euro and Japanese yen, with some sales being denominated in other currencies. We 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. 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.

While our gross margin for the nine months ended September 30, 2023 was primarily impacted by product mix, regional mix, start-up costs associated with new product launches, 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.

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ITEM 4. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

An evaluation as of September 30, 2023 was carried out under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our “disclosure controls and procedures,” which are defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as controls and other procedures of a company that are designed to ensure that the information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) were effective at September 30, 2023.

Changes in Internal Control Over Financial Reporting

There was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the quarterly period ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met and, as set forth above, our principal executive officer and principal financial officer have concluded, based on their evaluation as of the end of the period covered by this report, that our disclosure controls and procedures were effective to provide reasonable assurance that the objectives of our disclosure control system were met.

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PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

For information with respect to Legal Proceedings, see Note “9. Commitments and Contingencies” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

On April 7, 2023, a former contractor who had been retained by the Company through a third party staffing agency filed a putative class action lawsuit as well as a Private Attorney General Act (“PAGA”) representative action complaint against the Company in the Superior Court of the State of California for the County of Alameda, on behalf of the contractor and similarly situated Company contractors and employees in California, alleging various claims pursuant to the California Labor Code related to wages, overtime, meal and rest breaks, reimbursement of business expenses, wage statements and records, and other similar allegations. Additionally, on April 10, 2023, a current employee of the Company filed a PAGA representative action complaint against the Company in the Superior Court of the State of California for the County of Alameda, on behalf of the employee and similarly situated Company employees in California, alleging similar claims. The complaints seek payment of various alleged unpaid wages, penalties, interest and attorneys’ fees in unspecified amounts. The Company believes the claims lack merit, and intends to defend itself vigorously. Given the early stage of these proceedings, it is not yet possible to reliably determine any potential liability that could result from these matters. Accordingly, the Company has not accrued any amount for potential losses associated with these matters.

ITEM 1A. RISK FACTORS.

There have been no material changes to our risk factors reported in, or new risk factors identified since the filing of, our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on February 23, 2023.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

As partial consideration for an acquisition, which closed on September 29, 2023, the Company issued 71,211 shares of its common stock representing purchase consideration calculated by using the closing price of the Company’s common stock on September 29, 2023. See Note “5. Asset Acquisition” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

The issuance of shares of common stock by the Company in connection with the acquisition was deemed to be exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities Act”), in reliance on Section 4(a)(2) of the Securities Act, on the basis that, among other factors: (1) such issuance did not involve a public offering of securities; (2) no underwriter was involved with the issuance, and no commissions were paid; (3) all purchasers of the securities had access to information about the Company necessary to make an informed investment decision; (4) all purchasers are able to bear the economic risk of their investment and are aware that the securities were not registered under the Securities Act and cannot be re-offered or re-sold unless they are registered or are qualified for sale pursuant to an exemption from registration; and (5) appropriate legends were placed upon the book-entry positions representing the shares.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURE.

None.

ITEM 5. OTHER INFORMATION.

Rule 10b5-1 Trading Plans

During the quarterly period ended September 30, 2023, certain of our directors and officers adopted or terminated trading plans, each of which was or is, as applicable, intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act (the “Rule 10b5-1 Trading Arrangements”). Each Rule 10b5-1 Trading Arrangement was entered into or terminated, as applicable, during an open trading window under our Securities Trading Policy. The following table presents the material terms of each Rule 10b5-1 Trading Arrangement adopted or terminated by our officers and directors during the three

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months ended September 30, 2023, other than terms with respect to the price at which the individual executing the Rule 10b5-1 Trading Arrangement is authorized to trade:

Name and Title of Officer or Director

Plan Action

Plan Action Date

Plan Duration

Total Securities to be Sold

Lambert Shiu, Chief Accounting Officer

Adoption

8/31/2023

11/30/2023 -5/10/2024

9,204

Thomas Wilder, Director

Adoption

8/14/2023

11/13/2023 - 8/30/2024

840

Thomas Wilder, Director

Termination(1)

8/14/2023

8/7/2023 - 1/12/2024

680

(1)As of the termination date of his Rule 10b5-1 Trading Arrangement, Mr. Wilder had sold 340 shares of common stock

under the terms thereof.

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ITEM 6. EXHIBITS.

Exhibit Number

Description

Form

File No.

Exhibit(s)

Filing Date

31.1

Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

31.2

Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.

32.1*

Certification of Principal Executive Officer and Principal Financial Officer Required Under Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, and 18 U.S.C. §1350.

101

The following materials from the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Condensed Consolidated Balance Sheets as of September 30, 2023 and December 31, 2022, (ii) Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2023 and 2022, (ii) Condensed Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2023 and 2022, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and nine months ended September 30, 2023 and 2022, (iv) Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2023 and 2022, and (v) Notes to Condensed Consolidated Financial Statements.

104

Cover Page Interactive Data File (formatted as iXBRL with applicable taxonomy extension information contained in Exhibit 101).

* Furnished herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


		PENUMBRA, INC.
Date: November 2, 2023
	By:	/s/ Maggie Yuen
		Maggie Yuen
		Chief Financial Officer
		(Principal Financial Officer)

Exhibit 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Adam Elsesser, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Penumbra, Inc.;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 2, 2023


/s/ Adam Elsesser
Adam Elsesser
Chairman, Chief Executive Officer and President

Exhibit 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14(a) AND 15d-14(a) OF THE SECURITIES EXCHANGE ACT, AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Maggie Yuen, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Penumbra, Inc.;

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 2, 2023


/s/ Maggie Yuen
Maggie Yuen
Chief Financial Officer

Exhibit 32.1

PENUMBRA, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Penumbra, Inc. (the “Company”) on Form 10-Q for the fiscal quarter ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), Adam Elsesser, Chairman, Chief Executive Officer and President of the Company, and Maggie Yuen, Chief Financial Officer of the Company, respectively, do each hereby certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

•The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

•The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods presented.

Date: November 2, 2023


/s/ Adam Elsesser
Adam Elsesser
Chairman, Chief Executive Officer and President

/s/ Maggie Yuen
Maggie Yuen
Chief Financial Officer

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Oct. 19, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2023
Document Transition Report	false
Entity File Number	001-37557
Entity Registrant Name	Penumbra, Inc
Entity Address, Address Description	One Penumbra Place
Entity Address, City or Town	Alameda
Entity Address, State or Province	CA
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	05-0605598
Entity Address, Postal Zip Code	94502
City Area Code	510
Local Phone Number	748-3200
Title of 12(b) Security	Common Stock, Par value $0.001 per share
Trading Symbol	PEN
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		38,596,366
Entity Central Index Key	0001321732
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 100,757	$ 69,858
Marketable investments	148,098	118,172
Accounts receivable, net of allowance for credit losses of $3,155 and $862 at September 30, 2023 and December 31, 2022, respectively	206,615	203,384
Inventories	374,245	334,006
Prepaid expenses and other current assets	38,761	30,279
Total current assets	868,476	755,699
Property and equipment, net	65,632	65,015
Operating lease right-of-use assets	184,520	192,636
Finance lease right-of-use assets	31,364	33,323
Intangible assets, net	73,452	81,161
Goodwill	165,954	166,046
Deferred taxes	64,236	64,213
Other non-current assets	14,743	12,793
Total assets	1,468,377	1,370,886
Current liabilities:
Accounts payable	27,996	26,679
Accrued liabilities	104,184	106,300
Current operating lease liabilities	10,827	10,033
Current finance lease liabilities	2,071	1,920
Total current liabilities	145,078	144,932
Non-current operating lease liabilities	192,117	198,955
Non-current finance lease liabilities	23,779	24,865
Other non-current liabilities	3,265	3,276
Total liabilities	364,239	372,028
Commitments and contingencies
Stockholders’ equity:
Common stock	38	38
Additional paid-in capital	1,030,700	963,040
Accumulated other comprehensive loss	(7,240)	(8,124)
Retained earnings	80,640	43,904
Total Penumbra, Inc. stockholders’ equity	1,104,138	998,858
Total liabilities and stockholders’ equity	$ 1,468,377	$ 1,370,886

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Statement of Financial Position [Abstract]
Allowance for credit losses	$ 3,155	$ 862

Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Statement [Abstract]
Revenue	$ 270,946	$ 213,678	$ 773,843	$ 625,917
Cost of revenue	93,228	78,351	278,192	229,137
Gross profit	177,718	135,327	495,651	396,780
Operating expenses:
Research and development	20,958	21,320	62,481	61,443
Sales, general and administrative	125,920	108,573	376,433	334,088
Acquired in-process research and development	18,215	0	18,215	0
Total operating expenses	165,093	129,893	457,129	395,531
Income from operations	12,625	5,434	38,522	1,249
Interest income (expense), net	1,123	(43)	2,516	(162)
Other (expense) income, net	(444)	(2,356)	454	(4,323)
Income (loss) before income taxes	13,304	3,035	41,492	(3,236)
Provision for income taxes	4,090	5,306	4,756	2,643
Net income (loss)	$ 9,214	$ (2,271)	$ 36,736	$ (5,879)
Net income (loss) per share:
Basic (in dollars per share)	$ 0.24	$ (0.06)	$ 0.96	$ (0.16)
Diluted (in dollars per share)	$ 0.23	$ (0.06)	$ 0.94	$ (0.16)
Weighted average shares outstanding:
Basic (in shares)	38,462,463	37,918,452	38,324,279	37,778,362
Diluted (in shares)	39,219,966	37,918,452	39,183,635	37,778,362

Condensed Consolidated Statements of Comprehensive (Loss) Income - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 9,214	$ (2,271)	$ 36,736	$ (5,879)
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net of tax	(2,359)	(2,812)	(1,302)	(7,013)
Net change in unrealized gains (losses) on available-for-sale securities, net of tax	698	(383)	2,186	(3,710)
Total other comprehensive (loss) income, net of tax	(1,661)	(3,195)	884	(10,723)
Comprehensive income (loss)	$ 7,553	$ (5,466)	$ 37,620	$ (16,602)

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)
$ in Thousands

Total

Common Stock

Additional Paid-in Capital

Accumulated Other Comprehensive Income (Loss)

Retained Earnings (Accumulated Deficit)

Beginning balance (in shares) at Dec. 31, 2021

37,578,483

Beginning balance at Dec. 31, 2021

$ 953,927

$ 37

$ 910,614

$ (2,630)

$ 45,906

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

103,984

Issuance of common stock

1,103

$ 1

1,102

Shares held for tax withholdings (in shares)

(14,243)

Shares held for tax withholdings

(3,181)

Stock-based compensation

10,716

Other comprehensive income (loss)

(3,342)

Net income (loss)

Ending balance (in shares) at Mar. 31, 2022

37,668,224

Ending balance at Mar. 31, 2022

959,302

$ 38

919,251

(5,972)

45,985

Beginning balance (in shares) at Dec. 31, 2021

37,578,483

Beginning balance at Dec. 31, 2021

953,927

$ 37

910,614

(2,630)

45,906

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Other comprehensive income (loss)

(10,723)

Net income (loss)

(5,879)

Ending balance (in shares) at Sep. 30, 2022

37,968,291

Ending balance at Sep. 30, 2022

973,752

$ 38

947,040

(13,353)

40,027

Beginning balance (in shares) at Mar. 31, 2022

37,668,224

Beginning balance at Mar. 31, 2022

959,302

$ 38

919,251

(5,972)

45,985

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

158,735

Issuance of common stock

3,466

Issuance of common stock under employee stock purchase plan (in shares)

66,098

Issuance of common stock under employee stock purchase plan

7,998

Shares held for tax withholdings (in shares)

(12,950)

Shares held for tax withholdings

(1,900)

Stock-based compensation

9,022

Other comprehensive income (loss)

(4,186)

Net income (loss)

(3,687)

Ending balance (in shares) at Jun. 30, 2022

37,880,107

Ending balance at Jun. 30, 2022

970,015

$ 38

937,837

(10,158)

42,298

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

99,921

Issuance of common stock

1,725

Shares held for tax withholdings (in shares)

(11,737)

Shares held for tax withholdings

(1,887)

Stock-based compensation

9,365

Other comprehensive income (loss)

(3,195)

Net income (loss)

(2,271)

Ending balance (in shares) at Sep. 30, 2022

37,968,291

Ending balance at Sep. 30, 2022

973,752

$ 38

947,040

(13,353)

40,027

Beginning balance (in shares) at Dec. 31, 2022

38,107,977

Beginning balance at Dec. 31, 2022

998,858

$ 38

963,040

(8,124)

43,904

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

134,936

Issuance of common stock

2,209

Shares held for tax withholdings (in shares)

(813)

Shares held for tax withholdings

(204)

Stock-based compensation

13,781

Other comprehensive income (loss)

1,263

Net income (loss)

8,562

Ending balance (in shares) at Mar. 31, 2023

38,242,100

Ending balance at Mar. 31, 2023

1,024,469

$ 38

978,826

(6,861)

52,466

Beginning balance (in shares) at Dec. 31, 2022

38,107,977

Beginning balance at Dec. 31, 2022

998,858

$ 38

963,040

(8,124)

43,904

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Other comprehensive income (loss)

884

Net income (loss)

36,736

Ending balance (in shares) at Sep. 30, 2023

38,572,339

Ending balance at Sep. 30, 2023

1,104,138

$ 38

1,030,700

(7,240)

80,640

Beginning balance (in shares) at Mar. 31, 2023

38,242,100

Beginning balance at Mar. 31, 2023

1,024,469

$ 38

978,826

(6,861)

52,466

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

114,930

Issuance of common stock

1,614

Issuance of common stock under employee stock purchase plan (in shares)

51,264

Issuance of common stock under employee stock purchase plan

8,385

Shares held for tax withholdings (in shares)

(2,689)

Shares held for tax withholdings

(822)

Stock-based compensation

12,655

Other comprehensive income (loss)

1,282

Net income (loss)

18,960

Ending balance (in shares) at Jun. 30, 2023

38,405,605

Ending balance at Jun. 30, 2023

1,066,543

$ 38

1,000,658

(5,579)

71,426

Increase (Decrease) in Stockholders' Equity [Roll Forward]

Issuance of common stock (in shares)

95,927

Issuance of common stock

834

Issuance of common stock in connection with asset acquisition (in shares)

^[1]

71,211

Issuance of common stock in connection with asset acquisition

^[1]

17,227

Shares held for tax withholdings (in shares)

(404)

Shares held for tax withholdings

(123)

Stock-based compensation

12,104

Other comprehensive income (loss)

(1,661)

Net income (loss)

9,214

Ending balance (in shares) at Sep. 30, 2023

38,572,339

Ending balance at Sep. 30, 2023

$ 1,104,138

$ 38

$ 1,030,700

$ (7,240)

$ 80,640

[1]	(1) Refer to Note “5. Asset Acquisition” for more information on the impact of the asset acquisition during the quarter ended September 30, 2023.

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$ 36,736	$ (5,879)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	20,218	17,880
Stock-based compensation	39,725	27,381
Inventory write-downs	5,250	2,051
Deferred taxes	(35)	2,804
Acquired in-process research and development	18,215	0
Other	2,623	879
Changes in operating assets and liabilities:
Accounts receivable	(6,609)	(57,357)
Inventories	(46,466)	(62,317)
Prepaid expenses and other current and non-current assets	(10,288)	(1,958)
Accounts payable	2,054	13,090
Accrued expenses and other non-current liabilities	(351)	6,165
Proceeds from lease incentives	0	263
Net cash provided by (used in) operating activities	61,072	(56,998)
CASH FLOWS FROM INVESTING ACTIVITIES:
Asset acquisition, net of cash acquired	(988)	0
Purchases of marketable investments	(73,370)	0
Proceeds from sales of marketable investments	0	1,180
Proceeds from maturities of marketable investments	46,070	60,713
Purchases of property and equipment	(11,568)	(15,736)
Other	(500)	0
Net cash provided by (used in) investing activities	(40,356)	46,157
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options	4,657	6,293
Proceeds from issuance of stock under employee stock purchase plan	8,385	7,998
Payment of employee taxes related to vested stock	(1,149)	(6,968)
Payments of finance lease obligations	(1,456)	(1,299)
Other	(155)	(137)
Net cash provided by financing activities	10,282	5,887
Effect of foreign exchange rate changes on cash and cash equivalents	(99)	419
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	30,899	(4,535)
CASH AND CASH EQUIVALENTS—Beginning of period	69,858	59,379
CASH AND CASH EQUIVALENTS—End of period	100,757	54,844
NONCASH INVESTING AND FINANCING ACTIVITIES:
Right-of-use assets obtained in exchange for lease obligations	1,486	51,495
Right-of-use assets obtained in exchange for finance lease obligations	531	278
Purchase of property and equipment funded through accounts payable and accrued liabilities	1,275	1,847
Fair value of common stock issued as consideration in connection with an acquisition	17,227	0
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for amounts included in the measurement of operating lease liabilities	14,985	13,017
Cash paid for income taxes	$ 4,029	$ 2,503

Organization and Description of Business	9 Months Ended
Organization and Description of Business	Sep. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Description of Business	1. Organization and Description of Business Penumbra, Inc. (the “Company”) is a global healthcare company focused on innovative therapies. The Company designs, develops, manufactures and markets novel products and has a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. The Company focuses on developing, manufacturing and marketing novel products for use by specialist physicians and other healthcare providers to drive improved clinical and health outcomes. The Company believes that the cost-effectiveness of our products is attractive to our customers.

Summary of Significant Accounting Policies	9 Months Ended
Summary of Significant Accounting Policies	Sep. 30, 2023
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	2. Summary of Significant Accounting Policies Basis of Presentation and Consolidation The accompanying condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2023, the results of its operations for the three and nine months ended September 30, 2023 and 2022, the changes in its comprehensive income (loss) and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and its cash flows for the nine months ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2023, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the granting of restricted stock units with performance conditions to senior management during the three months ended March 31, 2023 and the acquisition of In-Process Research and Development (“IPR&D”) in an asset acquisition during the three months ended September 30, 2023. Refer to Note “10. Stockholders’ Equity” for information on the Company’s accounting policy for equity awards with performance conditions and Note “5. Asset Acquisition” for information on the Company’s accounting policy for acquired IPR&D in an asset acquisition. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to marketable investments, allowances for credit losses, the amount of variable consideration included in the transaction price, warranty reserve, valuation of inventories, useful lives of property and equipment, intangibles, operating and financing lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, including the probability of achieving performance targets associated with equity awards with performance conditions, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates. Segments The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical products, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its consolidated operating results for the purpose of allocating resources and evaluating financial performance.

Investments and Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Investments and Fair Value of Financial Instruments

3. Investments and Fair Value of Financial Instruments

Marketable Investments


	September 30, 2023
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value
Commercial paper	$	47,842	$	2	$	(13)	$	—	$	47,831
Certificate of deposit	8,190		3		(1)		—		8,192
U.S. treasury	13,079		—		(302)		$	—	12,777
U.S. agency and government sponsored securities	2,999		—		(31)		—		2,968
U.S. states and municipalities	11,615		—		(110)		—		11,505
Corporate bonds	65,686		1		(862)		—		64,825

Total	$	149,411	$	6	$	(1,319)	$	—	$	148,098


	December 31, 2022
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value

U.S. treasury	$	14,482	$	—	$	(478)	$	—	$	14,004
U.S. agency and government sponsored securities	6,999		—		(176)		—		6,823
U.S. states and municipalities	23,460		—		(501)		—		22,959
Corporate bonds	76,731		—		(2,345)		—		74,386

Total	$	121,672	$	—	$	(3,500)	$	—	$	118,172


	September 30, 2023
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Commercial paper	$	39,535	$	(13)	$	—	$	—	$	39,535	$	(13)
Certificate of deposit	2,403		(1)		—		—		2,403		(1)
U.S. treasury	8,454		(132)		4,324		(170)		12,778		(302)
U.S. agency and government sponsored securities	—		—		2,968		(31)		2,968		(31)
U.S. states and municipalities	—		—		7,005		(110)		7,005		(110)
Corporate bonds	21,461		(25)		40,150		(837)		61,611		(862)

Total	$	71,853	$	(171)	$	54,447	$	(1,148)	$	126,300	$	(1,319)


	December 31, 2022
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

U.S. treasury	$	—	$	—	$	14,004	$	(478)	$	14,004	$	(478)
U.S. agency and government sponsored securities	—		—		6,823		(176)		6,823		(176)
U.S. states and municipalities	4,567		(68)		13,772		(433)		18,339		(501)
Corporate bonds	15,327		(101)		59,059		(2,244)		74,386		(2,345)

Total	$	19,894	$	(169)	$	93,658	$	(3,331)	$	113,552	$	(3,500)

The following table presents the contractual maturities of the Company’s marketable investments as of September 30, 2023 (in thousands):


	September 30, 2023
	Amortized Cost		Fair Value
Due in less than one year	$	141,700	$	140,612
Due in one to five years	7,711		7,486
Total	$	149,411	$	148,098

Fair Value of Financial Instruments

Level 1 - Quoted prices in active markets for identical assets or liabilities.

Level 3 - Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The categorization of a financial instrument within the valuation hierarchy is based on the lowest level of input that is significant to the fair value measurement.

The Company determined the fair value of its Level 1 financial instruments, which are traded in active markets, using quoted market prices for identical instruments.

The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022 (in thousands):


	As of September 30, 2023
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:


Money market funds	$	35,400	$	—	$	—	$	35,400



Marketable investments:
Commercial paper	—		47,831		—		47,831
Certificate of deposit	—		8,192		—		8,192
U.S. treasury	12,777		—		—		12,777
U.S. agency and government sponsored securities	—		2,968		—		2,968
U.S. states and municipalities	—		11,505		—		11,505
Corporate bonds	—		64,825		—		64,825

Total	$	48,177	$	135,321	$	—	$	183,498


	As of December 31, 2022
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:

Money market funds	$	21,521	$	—	$	—	$	21,521
Marketable investments:

U.S. treasury	14,004		—		—		14,004
U.S. agency and government sponsored securities	—		6,823		—		6,823
U.S. states and municipalities	—		22,959		—		22,959
Corporate bonds	—		74,386		—		74,386


Total	$	35,525	$	104,168	$	—	$	139,693

Balance Sheet Components

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Balance Sheet Components

4. Balance Sheet Components

Inventories

The following table shows the components of inventories as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Raw materials	$	110,094	$	90,786
Work in process	43,225		26,793
Finished goods	220,926		216,427
Inventories	$	374,245	$	334,006

Accrued Liabilities

The following table shows the components of accrued liabilities as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Payroll and employee-related cost	$	58,807	$	60,480
Accrued expenses	11,920		10,902


Deferred revenue	8,274		9,158






Other accrued liabilities	25,183		25,760
Total accrued liabilities	$	104,184	$	106,300


	September 30, 2023		December 31, 2022
Balance at the beginning of the period	$	5,370	$	4,310
Accruals of warranties issued	1,473		2,451
Settlements of warranty claims	(1,030)		(1,391)
Balance at the end of the period	$	5,813	$	5,370

Asset Acquisition

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Asset Acquisition

5. Asset Acquisition

IPR&D acquired in an asset acquisition is recorded using the cost accumulation model and is immediately expensed if there is no alternative future use at the time of acquisition.


Fair value of common stock consideration(1)	$	17,227
Payment of certain acquiree transaction costs and other liabilities on behalf of acquiree(2)	1,001
Total purchase price	$	18,228

(1)The fair value of the 71,211 shares of common stock issued as part of consideration transferred was determined based on the Closing Date market price of the Company’s common stock of $241.91.

Intangible Assets

9 Months Ended

Sep. 30, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Intangible Assets

6. Intangible Assets

Acquired Intangible Assets


As of September 30, 2023	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(17,259)	$	66,030
Customer relationships	15.0 years	6,303		(2,626)		3,677
Trade secrets and processes	20.0 years	5,256		(1,511)		3,745

Total intangible assets	9.7 years	$	94,848	$	(21,396)	$	73,452


As of December 31, 2022	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(10,113)	$	73,176
Customer relationships	15.0 years	6,383		(2,340)		4,043
Trade secrets and processes	20.0 years	5,256		(1,314)		3,942
Other	5.0 years	1,646		(1,646)		—
Total intangible assets	9.6 years	$	96,574	$	(15,413)	$	81,161

The gross carrying amount and accumulated amortization of the customer relationships are the only intangible assets subject to foreign currency translation effects.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	66	$	66	$	197	$	197

Sales, general and administrative	2,487		2,481		7,461		6,436
Total	$	2,553	$	2,547	$	7,658	$	6,633

Goodwill

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill

7. Goodwill

The following table presents the changes in goodwill during the nine months ended September 30, 2023 (in thousands):


	Total Company
Balance as of December 31, 2022	$	166,046
Foreign currency translation	(92)
Balance as of September 30, 2023	$	165,954

Goodwill Impairment Review

Indebtedness	9 Months Ended
Indebtedness	Sep. 30, 2023
Debt Disclosure [Abstract]
Indebtedness	8. Indebtedness Credit Agreement On April 24, 2020, the Company entered into a Credit Agreement (the “Credit Agreement”) with JPMorgan Chase Bank, N.A., as administrative agent and lender, and Bank of America, N.A. and Citibank, N.A. as lenders. The Credit Agreement is secured and provides for up to $100 million in available revolving borrowing capacity with an option, subject to certain conditions, for the Company to increase the aggregate borrowing capacity to up to $150 million, and originally matured on April 23, 2021. During the three months ended March 31, 2021 and 2022, the Credit Agreement was amended to extend the maturity date and make other changes to the terms of the Credit Agreement. In the first quarter of 2023, the Company and JPMorgan Chase Bank, N.A., as administrative agent and lender, and Bank of America, N.A. and Citibank, N.A., as lenders, entered into Amendment No. 3 to the Credit Agreement. Pursuant to the amendment, (i) the maturity date of the Credit Agreement was extended from February 17, 2023 to February 16, 2024, (ii) certain changes were made to the reference benchmark interest rates, applicable margins and borrowing mechanics under the Credit Agreement, which have the overall effect of increasing the interest rates payable by the Company on amounts borrowed under the Credit Agreement, and (iii) the commitment fee payable on the average daily unused amount under the Credit Agreement was increased to 0.35% per annum. The Credit Agreement requires the Company to maintain a minimum fixed charge coverage ratio and to not exceed a maximum leverage ratio. As of September 30, 2023, the Company was in compliance with these requirements. As of September 30, 2023 and December 31, 2022, there were no borrowings outstanding under the Credit Agreement.

Commitments and Contingencies	9 Months Ended
Commitments and Contingencies	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	9. Commitments and Contingencies Royalty Obligations In March 2005, the Company entered into a license agreement that requires the Company to make minimum royalty payments to the licensor on a quarterly basis. In July 2019, the Company amended the license agreement to extend its term for an additional ten years and to increase the required minimum annual royalty payments by $0.2 million. As of both September 30, 2023 and December 31, 2022, the amended license agreement required minimum quarterly royalty payments of $0.3 million. Unless terminated earlier, the term of the amended license agreement shall expire June 30, 2029. In April 2012, the Company entered into an agreement that requires the Company to pay, on a quarterly basis, a 5% royalty on sales of products covered under applicable patents. The first commercial sale of covered products occurred in April 2014. Unless terminated earlier, the royalty term for each applicable product shall continue for fifteen years following the first commercial sale of such patented product, or when the applicable patent covering such product has expired, whichever is sooner. Royalty expense included in cost of revenue for the three months ended September 30, 2023 and 2022 was $0.7 million and $0.7 million, respectively, and for the nine months ended September 30, 2023 and 2022, was $2.0 million and $1.9 million, respectively. Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. Indemnification The Company enters into standard indemnification arrangements in the ordinary course of business. In many such arrangements, the Company agrees to indemnify, hold harmless, and reimburse the indemnified parties for losses suffered or incurred by the indemnified parties in connection with any trade secret, copyright, patent or other intellectual property infringement claim by any third-party with respect to the Company’s technology. The Company also agrees to indemnify many indemnified parties for product defect and similar claims. The term of these indemnification agreements is generally perpetual. The maximum potential amount of future payments the Company could be required to make under these agreements is not determinable because it involves claims that may be made against the Company in the future, but have not yet been made. The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual. The Company has not incurred costs to defend lawsuits or settle claims related to these indemnification agreements. No liability associated with any of these indemnification requirements has been recorded to date. Litigation From time to time, the Company is subject to other claims and assessments in the ordinary course of business. The Company is not currently a party to any such litigation matter that, individually or in the aggregate, is expected to have a material adverse effect on the Company’s business, financial condition, results of operations or cash flows.

Stockholder's Equity

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stockholder's Equity

10. Stockholders’ Equity

Common Stock

On September 29, 2023, the Company issued 71,211 shares of common stock as part of the total consideration transferred in connection with an asset acquisition.

Stock-based Compensation


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	1,428	$	1,020	$	3,900	$	2,756
Research and development	2,219		1,385		6,928		4,285
Sales, general and administrative	10,489		7,297		28,897		20,340
Total	$	14,136	$	9,702	$	39,725	$	27,381

The total stock-based compensation cost capitalized in inventory was $1.7 million and $2.2 million as of September 30, 2023 and December 31, 2022, respectively.

Accumulated Other Comprehensive Income (Loss)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

11. Accumulated Other Comprehensive Income (Loss)


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(2,012)	$	(3,567)	$	(5,579)	$	(3,922)	$	(6,236)	$	(10,158)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	698		—		698		(383)		—		(383)
Foreign currency translation losses	—		(2,359)		(2,359)		—		(2,812)		(2,812)

Net of tax	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)




Net current-year other comprehensive income (loss)	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(3,500)	$	(4,624)	$	(8,124)	$	(595)	$	(2,035)	$	(2,630)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	2,186		—		2,186		(3,710)		—		(3,710)
Foreign currency translation losses	—		(1,302)		(1,302)		—		(7,013)		(7,013)

Net of tax	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)




Net current-year other comprehensive income (loss)	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)

Income Taxes	9 Months Ended
Income Taxes	Sep. 30, 2023
Income Tax Disclosure [Abstract]
Income Taxes	12. Income Taxes The Company’s income tax expense (benefit), deferred tax assets and liabilities, and reserves for unrecognized tax benefits reflect management’s best assessment of estimated current and future taxes to be paid. The Company is subject to income taxes in both the United States and foreign jurisdictions. Significant judgment and estimates are required in determining the consolidated income tax expense (benefit). During interim periods, the Company generally utilizes the estimated annual effective tax rate (“AETR”) method which involves the use of forecasted information. Under the AETR method, the provision is calculated by applying the estimated AETR for the full fiscal year to “ordinary” income or loss (pretax income or loss excluding unusual or infrequently occurring discrete items) for the reporting period. Jurisdictions with tax assets for which the Company believes a tax benefit cannot be realized are excluded from the computation of its AETR. In connection with an asset acquisition during the three months ended September 30, 2023, the Company recorded $18.2 million of IPR&D charge, which is not deductible for tax purposes. Refer to Note “5. Asset Acquisition” for more information. According to ASC 740-270-30-8 guidance for significant unusual or infrequently occurring items that are separately reported, the $18.2 million was excluded from the calculation of the Company’s estimated annual effective tax rate. The Company’s provision for income taxes was $4.1 million and $4.8 million, for the three and nine months ended September 30, 2023, respectively, which was primarily due to tax expenses attributable to its worldwide profits and a discrete tax charge resulting from the non-deductible acquired in-process research and development expense associated with the asset acquisition, offset by excess tax benefits from stock-based compensation attributable to its U.S. jurisdiction. The Company’s provision for income taxes was $5.3 million for the three months ended September 30, 2022, which was primarily due to tax expenses attributable to its worldwide profits, combined with tax deficiencies (shortfalls) expenses from stock-based compensation attributable to its U.S. jurisdiction. The Company’s provision for income taxes was $2.6 million for the nine months ended September 30, 2022, which was primarily due to tax expenses attributable to its foreign profits, combined with tax deficiencies (shortfall) expenses from stock-based compensation attributable to its U.S. jurisdiction. The Company’s effective tax rate changed to 30.7% for the three months ended September 30, 2023 from 174.8% for the three months ended September 30, 2022, and to 11.5% for the nine months ended September 30, 2023 from (81.7)% for the nine months ended September 30, 2022, which were primarily due to small tax expenses over relatively large worldwide profits for the three and nine months in 2023 comparing to large tax expenses over relatively small worldwide profits for the three months and worldwide losses for the nine months in 2022, respectively. Significant domestic deferred tax assets (“DTAs”) were generated in recent years, primarily due to excess tax benefits from stock option exercises and vesting of restricted stock units. The Company evaluates all available positive and negative evidence, objective and subjective in nature, in each reporting period to determine if sufficient taxable income will be generated to realize the benefits of its DTAs and, if not, a valuation allowance to reduce the DTAs is recorded. As of September 30, 2023 and 2022, the Company maintains a valuation allowance against its Federal Research and Development Tax Credit DTAs as the Company could not conclude at the required more-likely-than-not level of certainty, that the benefit of these tax attributes would be realized prior to expiration. The Company intends to continue maintaining this full valuation allowance until there is sufficient evidence to reverse it. However, considering current earnings and anticipated future earnings, as well as the impact of IRC Section 174 requiring qualified research expenditures to be capitalized and amortized over 5 or 15 years, the Company anticipates net operating loss (“NOL”) utilization may be accelerated. As a consequence, the Company believes there is a reasonable possibility that sufficient positive evidence may become available to conclude this valuation allowance may no longer be needed within the next 12 months. Release of the valuation allowance will result in the recognition of Federal Research and Development Tax Credit DTAs and a decrease to income tax expenses for the period in which the release is recorded. The exact timing and amount of the valuation allowance release are highly dependent on the level of taxable income in future years. The Company will continue to closely monitor the need for this valuation allowance in each subsequent reporting period. As of September 30, 2023 and 2022, the Company maintains a full valuation allowance against its California DTAs as the Company does not expect to generate sufficient future taxable income in California to realize the tax benefit due to the computation of California taxes under the single sales factor and non-conformity of the Section 174 capitalization rule. The Company maintains that all foreign earnings, with the exception of a portion of the earnings of its German subsidiary, are permanently reinvested outside the United States and therefore deferred taxes attributable to such earnings are not provided for in the Company’s condensed consolidated financial statements as of September 30, 2023.

Net Income (Loss) per Share

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Net Income (Loss) per Share

13. Net Income (Loss) per Share

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share is as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)



Denominator:
Weighted average shares used to compute net income (loss) attributable to common stockholders:
Basic	38,462,463		37,918,452		38,324,279		37,778,362
Potential dilutive stock-based options and awards	757,503		—		859,356		—

Diluted	39,219,966		37,918,452		39,183,635		37,778,362
Net income (loss) per share:
Basic	$	0.24	$	(0.06)	$	0.96	$	(0.16)
Diluted	$	0.23	$	(0.06)	$	0.94	$	(0.16)

Revenues

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenues

14. Revenues

Revenue Recognition


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	194,816	$	148,819	$	553,467	$	434,583

International	76,130		64,859		220,376		191,334
Total	$	270,946	$	213,678	$	773,843	$	625,917

The following table presents the Company’s revenues disaggregated by product category for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Vascular	$	171,407	$	123,361	$	466,940	$	369,712
Neuro	99,539		90,317		306,903		256,205
Total	$	270,946	$	213,678	$	773,843	$	625,917

China Distribution and Technology Licensing Agreement

Performance Obligations

Transaction Price

Contract assets and liabilities

The following information summarizes the Company’s contract assets and liabilities, net as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Contract assets	$	5,694	$	—
Contract liabilities	$	7,802	$	8,783

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net income (loss)	$ 9,214	$ 18,960	$ 8,562	$ (2,271)	$ (3,687)	$ 79	$ 36,736	$ (5,879)

Insider Trading Arrangements

3 Months Ended

9 Months Ended

Sep. 30, 2023

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

Rule 10b5-1 Trading Plans

months ended September 30, 2023, other than terms with respect to the price at which the individual executing the Rule 10b5-1 Trading Arrangement is authorized to trade:

Name and Title of Officer or Director

Plan Action

Plan Action Date

Plan Duration

Total Securities to be Sold

Lambert Shiu, Chief Accounting Officer

Adoption

8/31/2023

11/30/2023 -5/10/2024

9,204

Thomas Wilder, Director

Adoption

8/14/2023

11/13/2023 - 8/30/2024

840

Thomas Wilder, Director

Termination(1)

8/14/2023

8/7/2023 - 1/12/2024

680

(1)As of the termination date of his Rule 10b5-1 Trading Arrangement, Mr. Wilder had sold 340 shares of common stock

under the terms thereof.

Rule 10b5-1 Arrangement Adopted

true

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Lambert Shiu [Member]

Trading Arrangements, by Individual

Name

Lambert Shiu

Title

Chief Accounting Officer

Adoption Date

8/31/2023

Arrangement Duration

162 days

Aggregate Available

9,204

Thomas Wilder [Member]

Trading Arrangements, by Individual

Name

Thomas Wilder

Title

Director

Aggregate Available

680

Adoption Plan [Member] | Thomas Wilder [Member]

Trading Arrangements, by Individual

Adoption Date

8/14/2023

Arrangement Duration

291 days

Aggregate Available

840

Termination Plan [Member] | Thomas Wilder [Member]

Trading Arrangements, by Individual

Termination Date

8/14/2023

Arrangement Duration

158 days

Summary of Significant Accounting Policies (Policies)	9 Months Ended
Summary of Significant Accounting Policies (Policies)	Sep. 30, 2023
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation and Consolidation The accompanying condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2023, the results of its operations for the three and nine months ended September 30, 2023 and 2022, the changes in its comprehensive income (loss) and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and its cash flows for the nine months ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2023, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the granting of restricted stock units with performance conditions to senior management during the three months ended March 31, 2023 and the acquisition of In-Process Research and Development (“IPR&D”) in an asset acquisition during the three months ended September 30, 2023. Refer to Note “10. Stockholders’ Equity” for information on the Company’s accounting policy for equity awards with performance conditions and Note “5. Asset Acquisition” for information on the Company’s accounting policy for acquired IPR&D in an asset acquisition.
Consolidation	The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Use of Estimates	Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and equity accounts; disclosure of contingent assets and liabilities at the date of the financial statements; and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates, including those related to marketable investments, allowances for credit losses, the amount of variable consideration included in the transaction price, warranty reserve, valuation of inventories, useful lives of property and equipment, intangibles, operating and financing lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, including the probability of achieving performance targets associated with equity awards with performance conditions, among others. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other data. Actual results could differ from those estimates.
Segments	Segments The Company determined its operating segment on the same basis that it uses to evaluate its performance internally. The Company has one business activity: the design, development, manufacturing and marketing of innovative medical products, and operates as one operating segment. The Company’s chief operating decision-maker, its Chief Executive Officer, reviews its consolidated operating results for the purpose of allocating resources and evaluating financial performance.
Marketable Investments	Marketable InvestmentsThe Company’s marketable investments have been classified and accounted for as available-for-sale.
Performance Shares	The fair value of these PSUs is based on the closing price of the Company's common stock on the date of grant. Stock-based compensation costs associated with these PSUs are recognized over the requisite service period of 4.25 years using graded vesting which results in more accelerated expense recognition compared to traditional time-based vesting over the same vesting period. Similarly, from time to time the Company grants performance-based RSUs to sales employees based on pre-established sales performance targets. Each reporting period, the Company monitors the probability of achieving the performance targets and may adjust periodic stock-based compensation expense based on its determination of the likelihood of achieving these performance targets and the estimated number of shares of common stock that will vest. The actual number of PSUs awarded is based on the actual performance during the performance period compared to the performance targets.

Business Combinations and Asset Acquisitions (Policies)	9 Months Ended
Business Combinations and Asset Acquisitions (Policies)	Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract]
In Process Research and Development, Policy	IPR&D acquired in an asset acquisition is recorded using the cost accumulation model and is immediately expensed if there is no alternative future use at the time of acquisition.

Compensation Related Costs, Share Based Payments (Policies)	9 Months Ended
	Sep. 30, 2023
Share-Based Payment Arrangement [Abstract]
Basis of Presentation	Basis of Presentation and Consolidation The accompanying condensed consolidated balance sheet as of September 30, 2023, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive income (loss), and the condensed consolidated statements of stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and the condensed consolidated statements of cash flows for the nine months ended September 30, 2023 and 2022 are unaudited. The unaudited condensed consolidated financial statements included herein have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and the applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The condensed consolidated balance sheet data as of December 31, 2022 was derived from the audited financial statements as of that date. The unaudited condensed consolidated financial statements have been prepared on the same basis as the audited consolidated financial statements and, in the opinion of management, reflect all adjustments of a normal recurring nature considered necessary to state fairly the Company’s financial position as of September 30, 2023, the results of its operations for the three and nine months ended September 30, 2023 and 2022, the changes in its comprehensive income (loss) and stockholders’ equity for the three and nine months ended September 30, 2023 and 2022, and its cash flows for the nine months ended September 30, 2023 and 2022. The results for the three and nine months ended September 30, 2023 are not necessarily indicative of the results that may be expected for the year ending December 31, 2023 or for any other future annual or interim period. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended December 31, 2022, included in the Company’s Annual Report on Form 10-K. There have been no changes to the Company’s significant accounting policies during the nine months ended September 30, 2023, as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022, except for the granting of restricted stock units with performance conditions to senior management during the three months ended March 31, 2023 and the acquisition of In-Process Research and Development (“IPR&D”) in an asset acquisition during the three months ended September 30, 2023. Refer to Note “10. Stockholders’ Equity” for information on the Company’s accounting policy for equity awards with performance conditions and Note “5. Asset Acquisition” for information on the Company’s accounting policy for acquired IPR&D in an asset acquisition.

Investments and Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

Schedule of Marketable Investments

The following table presents the Company’s marketable investments as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value
Commercial paper	$	47,842	$	2	$	(13)	$	—	$	47,831
Certificate of deposit	8,190		3		(1)		—		8,192
U.S. treasury	13,079		—		(302)		$	—	12,777
U.S. agency and government sponsored securities	2,999		—		(31)		—		2,968
U.S. states and municipalities	11,615		—		(110)		—		11,505
Corporate bonds	65,686		1		(862)		—		64,825

Total	$	149,411	$	6	$	(1,319)	$	—	$	148,098


	December 31, 2022
			Securities with net gains or losses in accumulated other comprehensive income (loss)
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Allowance for Credit Loss		Fair Value

U.S. treasury	$	14,482	$	—	$	(478)	$	—	$	14,004
U.S. agency and government sponsored securities	6,999		—		(176)		—		6,823
U.S. states and municipalities	23,460		—		(501)		—		22,959
Corporate bonds	76,731		—		(2,345)		—		74,386

Total	$	121,672	$	—	$	(3,500)	$	—	$	118,172

Debt Securities, Available-for-sale, Unrealized Loss Position, Fair Value


	September 30, 2023
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
Commercial paper	$	39,535	$	(13)	$	—	$	—	$	39,535	$	(13)
Certificate of deposit	2,403		(1)		—		—		2,403		(1)
U.S. treasury	8,454		(132)		4,324		(170)		12,778		(302)
U.S. agency and government sponsored securities	—		—		2,968		(31)		2,968		(31)
U.S. states and municipalities	—		—		7,005		(110)		7,005		(110)
Corporate bonds	21,461		(25)		40,150		(837)		61,611		(862)

Total	$	71,853	$	(171)	$	54,447	$	(1,148)	$	126,300	$	(1,319)


	December 31, 2022
	Less than 12 months				12 months or more				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses

U.S. treasury	$	—	$	—	$	14,004	$	(478)	$	14,004	$	(478)
U.S. agency and government sponsored securities	—		—		6,823		(176)		6,823		(176)
U.S. states and municipalities	4,567		(68)		13,772		(433)		18,339		(501)
Corporate bonds	15,327		(101)		59,059		(2,244)		74,386		(2,345)

Total	$	19,894	$	(169)	$	93,658	$	(3,331)	$	113,552	$	(3,500)

Schedule of Contractual Maturities of Marketable Investments

The following table presents the contractual maturities of the Company’s marketable investments as of September 30, 2023 (in thousands):


	September 30, 2023
	Amortized Cost		Fair Value
Due in less than one year	$	141,700	$	140,612
Due in one to five years	7,711		7,486
Total	$	149,411	$	148,098

Schedule of Fair Value of Assets and Liabilities

The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of September 30, 2023 and December 31, 2022 (in thousands):


	As of September 30, 2023
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:


Money market funds	$	35,400	$	—	$	—	$	35,400



Marketable investments:
Commercial paper	—		47,831		—		47,831
Certificate of deposit	—		8,192		—		8,192
U.S. treasury	12,777		—		—		12,777
U.S. agency and government sponsored securities	—		2,968		—		2,968
U.S. states and municipalities	—		11,505		—		11,505
Corporate bonds	—		64,825		—		64,825

Total	$	48,177	$	135,321	$	—	$	183,498


	As of December 31, 2022
	Level 1		Level 2		Level 3		Fair Value
Financial Assets
Cash equivalents:

Money market funds	$	21,521	$	—	$	—	$	21,521
Marketable investments:

U.S. treasury	14,004		—		—		14,004
U.S. agency and government sponsored securities	—		6,823		—		6,823
U.S. states and municipalities	—		22,959		—		22,959
Corporate bonds	—		74,386		—		74,386


Total	$	35,525	$	104,168	$	—	$	139,693

Balance Sheet Components Balance Sheet Components (Tables)

9 Months Ended

Sep. 30, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Inventories

The following table shows the components of inventories as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Raw materials	$	110,094	$	90,786
Work in process	43,225		26,793
Finished goods	220,926		216,427
Inventories	$	374,245	$	334,006

Schedule of Accrued Liabilities

The following table shows the components of accrued liabilities as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Payroll and employee-related cost	$	58,807	$	60,480
Accrued expenses	11,920		10,902


Deferred revenue	8,274		9,158






Other accrued liabilities	25,183		25,760
Total accrued liabilities	$	104,184	$	106,300

Schedule of Estimated Product Warranty Accrual


	September 30, 2023		December 31, 2022
Balance at the beginning of the period	$	5,370	$	4,310
Accruals of warranties issued	1,473		2,451
Settlements of warranty claims	(1,030)		(1,391)
Balance at the end of the period	$	5,813	$	5,370

Asset Acquisition (Tables)

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

Asset Acquisition

The following table summarizes the Closing Date fair value of the consideration transferred (in thousands):


Fair value of common stock consideration(1)	$	17,227
Payment of certain acquiree transaction costs and other liabilities on behalf of acquiree(2)	1,001
Total purchase price	$	18,228

(1)The fair value of the 71,211 shares of common stock issued as part of consideration transferred was determined based on the Closing Date market price of the Company’s common stock of $241.91.

Intangible Assets Intangible Assets (Tables)

9 Months Ended

Sep. 30, 2023

Intangible Assets, Net (Excluding Goodwill) [Abstract]

Schedule of Finite-lived Intangible Assets


As of September 30, 2023	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(17,259)	$	66,030
Customer relationships	15.0 years	6,303		(2,626)		3,677
Trade secrets and processes	20.0 years	5,256		(1,511)		3,745

Total intangible assets	9.7 years	$	94,848	$	(21,396)	$	73,452


As of December 31, 2022	Weighted-Average Amortization Period	Gross Carrying Amount		Accumulated Amortization		Net
Finite-lived intangible assets:
Developed technology	8.8 years	$	83,289	$	(10,113)	$	73,176
Customer relationships	15.0 years	6,383		(2,340)		4,043
Trade secrets and processes	20.0 years	5,256		(1,314)		3,942
Other	5.0 years	1,646		(1,646)		—
Total intangible assets	9.6 years	$	96,574	$	(15,413)	$	81,161

Finite-lived Intangible Assets Amortization Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	66	$	66	$	197	$	197

Sales, general and administrative	2,487		2,481		7,461		6,436
Total	$	2,553	$	2,547	$	7,658	$	6,633

Goodwill (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Goodwill

The following table presents the changes in goodwill during the nine months ended September 30, 2023 (in thousands):


	Total Company
Balance as of December 31, 2022	$	166,046
Foreign currency translation	(92)
Balance as of September 30, 2023	$	165,954

Stockholder's Equity (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Schedule of Stock-based Compensation Expense


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	1,428	$	1,020	$	3,900	$	2,756
Research and development	2,219		1,385		6,928		4,285
Sales, general and administrative	10,489		7,297		28,897		20,340
Total	$	14,136	$	9,702	$	39,725	$	27,381

Accumulated Other Comprehensive Income (Loss) (Tables)

9 Months Ended

Sep. 30, 2023

Equity [Abstract]

Schedule of Accumulated Other Comprehensive Income (Loss)


	Three Months Ended September 30, 2023						Three Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(2,012)	$	(3,567)	$	(5,579)	$	(3,922)	$	(6,236)	$	(10,158)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	698		—		698		(383)		—		(383)
Foreign currency translation losses	—		(2,359)		(2,359)		—		(2,812)		(2,812)

Net of tax	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)




Net current-year other comprehensive income (loss)	698		(2,359)		(1,661)		(383)		(2,812)		(3,195)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)


	Nine Months Ended September 30, 2023						Nine Months Ended September 30, 2022
	Marketable Investments		Currency Translation Adjustments		Total		Marketable Investments		Currency Translation Adjustments		Total
Balance, beginning of the period	$	(3,500)	$	(4,624)	$	(8,124)	$	(595)	$	(2,035)	$	(2,630)
Other comprehensive income (loss) before reclassifications:
Unrealized gains (losses) — marketable investments	2,186		—		2,186		(3,710)		—		(3,710)
Foreign currency translation losses	—		(1,302)		(1,302)		—		(7,013)		(7,013)

Net of tax	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)




Net current-year other comprehensive income (loss)	2,186		(1,302)		884		(3,710)		(7,013)		(10,723)
Balance, end of the period	$	(1,314)	$	(5,926)	$	(7,240)	$	(4,305)	$	(9,048)	$	(13,353)

Net Income (Loss) per Share (Tables)

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

Reconciliation of the Numerator and Denominator used in the Calculation of the Basic and Diluted Earnings per Share

A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net income (loss) per share is as follows (in thousands, except share and per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net income (loss)	$	9,214	$	(2,271)	$	36,736	$	(5,879)



Denominator:
Weighted average shares used to compute net income (loss) attributable to common stockholders:
Basic	38,462,463		37,918,452		38,324,279		37,778,362
Potential dilutive stock-based options and awards	757,503		—		859,356		—

Diluted	39,219,966		37,918,452		39,183,635		37,778,362
Net income (loss) per share:
Basic	$	0.24	$	(0.06)	$	0.96	$	(0.16)
Diluted	$	0.23	$	(0.06)	$	0.94	$	(0.16)

Revenues Revenues (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
United States	$	194,816	$	148,819	$	553,467	$	434,583

International	76,130		64,859		220,376		191,334
Total	$	270,946	$	213,678	$	773,843	$	625,917

The following table presents the Company’s revenues disaggregated by product category for the three and nine months ended September 30, 2023 and 2022 (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Vascular	$	171,407	$	123,361	$	466,940	$	369,712
Neuro	99,539		90,317		306,903		256,205
Total	$	270,946	$	213,678	$	773,843	$	625,917

Summary of Contract Assets and Liabilities

The following information summarizes the Company’s contract assets and liabilities, net as of September 30, 2023 and December 31, 2022 (in thousands):


	September 30, 2023		December 31, 2022
Contract assets	$	5,694	$	—
Contract liabilities	$	7,802	$	8,783

Summary of Significant Accounting Policies - Additional Disclosures (Details)	9 Months Ended
	Sep. 30, 2023 segment activity
Accounting Policies [Abstract]
Number of business activities \| activity	1
Number of operating segments \| segment	1

Investments and Fair Value of Financial Instruments - Gains and Losses of Marketable Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 149,411	$ 121,672
Gross Unrealized Gains	6	0
Gross Unrealized Losses	(1,319)	(3,500)
Allowance for Credit Loss	0	0
Fair Value	148,098	118,172
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	47,842
Gross Unrealized Gains	2
Gross Unrealized Losses	(13)
Allowance for Credit Loss	0
Fair Value	47,831
Certificate of deposit
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	8,190
Gross Unrealized Gains	3
Gross Unrealized Losses	(1)
Allowance for Credit Loss	0
Fair Value	8,192
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	13,079	14,482
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(302)	(478)
Allowance for Credit Loss	0	0
Fair Value	12,777	14,004
U.S. agency and government sponsored securities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	2,999	6,999
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(31)	(176)
Allowance for Credit Loss	0	0
Fair Value	2,968	6,823
U.S. states and municipalities
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	11,615	23,460
Gross Unrealized Gains	0	0
Gross Unrealized Losses	(110)	(501)
Allowance for Credit Loss	0	0
Fair Value	11,505	22,959
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	65,686	76,731
Gross Unrealized Gains	1	0
Gross Unrealized Losses	(862)	(2,345)
Allowance for Credit Loss	0	0
Fair Value	$ 64,825	$ 74,386

Investments and Fair Value of Financial Instruments - Narrative (Details) - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Fair Value Disclosures [Abstract]
Gross Unrealized Losses	$ (1,319,000)	$ (1,319,000)	$ (3,500,000)
Allowance for credit loss	$ 0	$ 0

Investments and Fair Value of Financial Instruments - Marketable Securities in an Unrealized Loss Position (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	$ 71,853	$ 19,894
Less than 12 months: Gross Unrealized Losses	(171)	(169)
12 Months of more: Fair Value	54,447	93,658
12 months or more: Gross Unrealized Losses	(1,148)	(3,331)
Total: Fair Value	126,300	113,552
Total: Gross Unrealized Losses	(1,319)	(3,500)
Commercial paper
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	39,535
Less than 12 months: Gross Unrealized Losses	(13)
12 Months of more: Fair Value	0
12 months or more: Gross Unrealized Losses	0
Total: Fair Value	39,535
Total: Gross Unrealized Losses	(13)
Certificate of deposit
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	2,403
Less than 12 months: Gross Unrealized Losses	(1)
12 Months of more: Fair Value	0
12 months or more: Gross Unrealized Losses	0
Total: Fair Value	2,403
Total: Gross Unrealized Losses	(1)
U.S. treasury
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	8,454	0
Less than 12 months: Gross Unrealized Losses	(132)	0
12 Months of more: Fair Value	4,324	14,004
12 months or more: Gross Unrealized Losses	(170)	(478)
Total: Fair Value	12,778	14,004
Total: Gross Unrealized Losses	(302)	(478)
U.S. agency and government sponsored securities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	0	0
Less than 12 months: Gross Unrealized Losses	0	0
12 Months of more: Fair Value	2,968	6,823
12 months or more: Gross Unrealized Losses	(31)	(176)
Total: Fair Value	2,968	6,823
Total: Gross Unrealized Losses	(31)	(176)
U.S. states and municipalities
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	0	4,567
Less than 12 months: Gross Unrealized Losses	0	(68)
12 Months of more: Fair Value	7,005	13,772
12 months or more: Gross Unrealized Losses	(110)	(433)
Total: Fair Value	7,005	18,339
Total: Gross Unrealized Losses	(110)	(501)
Corporate bonds
Debt Securities, Available-for-sale [Line Items]
Less than 12 months: Fair Value	21,461	15,327
Less than 12 months: Gross Unrealized Losses	(25)	(101)
12 Months of more: Fair Value	40,150	59,059
12 months or more: Gross Unrealized Losses	(837)	(2,244)
Total: Fair Value	61,611	74,386
Total: Gross Unrealized Losses	$ (862)	$ (2,345)

Investments and Fair Value of Financial Instruments - Contractual Maturities of Marketable Investments (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Amortized Cost
Due in less than one year	$ 141,700
Due in one to five years	7,711
Total	149,411	$ 121,672
Fair Value
Due in less than one year	140,612
Due in one to five years	7,486
Total	$ 148,098	$ 118,172

Investments and Fair Value of Financial Instruments - Financial Assets and Liabilities Measured at Fair Value (Details) - Recurring - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Financial Assets
Assets, Fair Value Disclosure	$ 183,498	$ 139,693
Commercial paper
Financial Assets
Marketable investments	47,831
Certificate of deposit
Financial Assets
Marketable investments	8,192
U.S. treasury
Financial Assets
Marketable investments	12,777	14,004
U.S. agency and government sponsored securities
Financial Assets
Marketable investments	2,968	6,823
U.S. states and municipalities
Financial Assets
Marketable investments	11,505	22,959
Corporate bonds
Financial Assets
Marketable investments	64,825	74,386
Money market funds
Financial Assets
Cash equivalents	35,400	21,521
Level 1
Financial Assets
Assets, Fair Value Disclosure	48,177	35,525
Level 1 \| Commercial paper
Financial Assets
Marketable investments	0
Level 1 \| Certificate of deposit
Financial Assets
Marketable investments	0
Level 1 \| U.S. treasury
Financial Assets
Marketable investments	12,777	14,004
Level 1 \| U.S. agency and government sponsored securities
Financial Assets
Marketable investments	0	0
Level 1 \| U.S. states and municipalities
Financial Assets
Marketable investments	0	0
Level 1 \| Corporate bonds
Financial Assets
Marketable investments	0	0
Level 1 \| Money market funds
Financial Assets
Cash equivalents	35,400	21,521
Level 2
Financial Assets
Assets, Fair Value Disclosure	135,321	104,168
Level 2 \| Commercial paper
Financial Assets
Marketable investments	47,831
Level 2 \| Certificate of deposit
Financial Assets
Marketable investments	8,192
Level 2 \| U.S. treasury
Financial Assets
Marketable investments	0	0
Level 2 \| U.S. agency and government sponsored securities
Financial Assets
Marketable investments	2,968	6,823
Level 2 \| U.S. states and municipalities
Financial Assets
Marketable investments	11,505	22,959
Level 2 \| Corporate bonds
Financial Assets
Marketable investments	64,825	74,386
Level 2 \| Money market funds
Financial Assets
Cash equivalents	0	0
Level 3
Financial Assets
Assets, Fair Value Disclosure	0	0
Level 3 \| Commercial paper
Financial Assets
Marketable investments	0
Level 3 \| Certificate of deposit
Financial Assets
Marketable investments	0
Level 3 \| U.S. treasury
Financial Assets
Marketable investments	0	0
Level 3 \| U.S. agency and government sponsored securities
Financial Assets
Marketable investments	0	0
Level 3 \| U.S. states and municipalities
Financial Assets
Marketable investments	0	0
Level 3 \| Corporate bonds
Financial Assets
Marketable investments	0	0
Level 3 \| Money market funds
Financial Assets
Cash equivalents	$ 0	$ 0

Balance Sheet Components - Inventories (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Raw materials	$ 110,094	$ 90,786
Work in process	43,225	26,793
Finished goods	220,926	216,427
Inventories	$ 374,245	$ 334,006

Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Payroll and employee-related cost	$ 58,807	$ 60,480
Accrued expenses	11,920	10,902
Deferred revenue	8,274	9,158
Other accrued liabilities	25,183	25,760
Total accrued liabilities	$ 104,184	$ 106,300

Balance Sheet Components - Product Warranty (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Product Warranty, Increase (Decrease) [Roll Forward]
Balance at the beginning of the period	$ 5,370	$ 4,310
Accruals of warranties issued	1,473	2,451
Settlements of warranty claims	(1,030)	(1,391)
Balance at the end of the period	$ 5,813	$ 5,370

Asset Acquisition - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 29, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Business Combination and Asset Acquisition [Abstract]
Acquired in-process research and development	$ 18,200	$ 18,215	$ 0	$ 18,215	$ 0

Asset Acquisition - Consideration Transferred (Details) $ / shares in Units, $ in Thousands	Sep. 29, 2023 USD ($) $ / shares shares
Business Combination and Asset Acquisition [Abstract]
Fair value of common stock consideration	$ 17,227
Payment of certain acquiree transaction costs and other liabilities on behalf of acquiree(2)	1,001
Total purchase price	$ 18,228
Issuance of common stock in connection with asset acquisition (in shares) \| shares	71,211
Common stock, stated value per share (in dollars per share) \| $ / shares	$ 241.91

Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period			9 years 8 months 12 days		9 years 7 months 6 days
Finite lived intangible assets: gross carrying amount	$ 94,848		$ 94,848		$ 96,574
Accumulated amortization	(21,396)		(21,396)		(15,413)
Finite lived intangible assets: net	73,452		73,452		81,161
Intangible assets, net	73,452		73,452		$ 81,161
Total amortization of finite lived intangible assets	2,553	$ 2,547	$ 7,658	$ 6,633
Developed technology
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period			8 years 9 months 18 days		8 years 9 months 18 days
Finite lived intangible assets: gross carrying amount	83,289		$ 83,289		$ 83,289
Accumulated amortization	(17,259)		(17,259)		(10,113)
Finite lived intangible assets: net	66,030		$ 66,030		$ 73,176
Customer relationships
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period			15 years		15 years
Finite lived intangible assets: gross carrying amount	6,303		$ 6,303		$ 6,383
Accumulated amortization	(2,626)		(2,626)		(2,340)
Finite lived intangible assets: net	3,677		$ 3,677		$ 4,043
Trade secrets and processes
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period			20 years		20 years
Finite lived intangible assets: gross carrying amount	5,256		$ 5,256		$ 5,256
Accumulated amortization	(1,511)		(1,511)		(1,314)
Finite lived intangible assets: net	3,745		3,745		$ 3,942
Other
Finite-Lived Intangible Assets [Line Items]
Weighted-Average Amortization Period					5 years
Finite lived intangible assets: gross carrying amount					$ 1,646
Accumulated amortization					(1,646)
Finite lived intangible assets: net					$ 0
Cost of revenue
Finite-Lived Intangible Assets [Line Items]
Total amortization of finite lived intangible assets	66	66	197	197
Sales, general and administrative
Finite-Lived Intangible Assets [Line Items]
Total amortization of finite lived intangible assets	$ 2,487	$ 2,481	$ 7,461	$ 6,436

Goodwill (Details)	9 Months Ended
Goodwill (Details)	Sep. 30, 2023 USD ($)
Goodwill [Roll Forward]
Goodwill	$ 166,046,000
Foreign currency translation and other adjustments	(92,000)
Goodwill	165,954,000
Goodwill impairment	$ 0

Indebtedness (Details) - Revolving Credit Facility - USD ($)	9 Months Ended
	Sep. 30, 2023	Dec. 31, 2022	Apr. 24, 2020
Line of Credit Facility [Line Items]
Borrowing capacity			$ 100,000,000
Line of credit, increase limit			$ 150,000,000
Borrowings outstanding	$ 0	$ 0
Bank Of America And Citibank \| Line of Credit
Line of Credit Facility [Line Items]
Line of credit facility, unused capacity, commitment fee percentage	0.35%

Commitments and Contingencies - Royalty Obligations (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended		9 Months Ended
	Jul. 31, 2019	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Cost of revenue
Other Commitments [Line Items]
Royalty expense		$ 0.7	$ 0.7	$ 2.0	$ 1.9
Royalty Agreement, March 2005
Other Commitments [Line Items]
Extended term of agreement	10 years
Increase in minimum annual royalty payments	$ 0.2
Minimum quarterly royalty payments		$ 0.3		$ 0.3
Royalty Agreement, April 2012
Other Commitments [Line Items]
Royalty as a percent of sales				5.00%
Term of agreement				15 years

Stockholder's Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended	9 Months Ended
	Sep. 29, 2023	Sep. 30, 2023	Sep. 30, 2022	Jun. 30, 2023	Sep. 30, 2023	Sep. 30, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Issuance of common stock in connection with asset acquisition (in shares)	71,211
Stock-based compensation expense		$ 14,136	$ 9,702		$ 39,725	$ 27,381
Share-based compensation expense, capitalized in inventory				$ 2,200	1,700
NonPerformanceShares [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Unrecognized compensation cost related to unvested share-based compensation arrangements		60,500			$ 60,500
Unrecognized compensation cost, expected recognition period (in years)					2 years 9 months 18 days
Performance Shares
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Award requisite service period					4 years 3 months
Unrecognized compensation cost related to unvested share-based compensation arrangements		18,100			$ 18,100
Unrecognized compensation cost, expected recognition period (in years)					3 years 6 months
Cost of revenue
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense		1,428	1,020		$ 3,900	2,756
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense		2,219	1,385		6,928	4,285
Sales, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense		$ 10,489	$ 7,297		$ 28,897	$ 20,340

Accumulated Other Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	$ 1,066,543	$ 1,024,469	$ 998,858	$ 970,015	$ 959,302	$ 953,927	$ 998,858	$ 953,927
Other comprehensive income (loss) before reclassifications:
Total other comprehensive (loss) income, net of tax	(1,661)	1,282	1,263	(3,195)	(4,186)	(3,342)	884	(10,723)
Ending balance	1,104,138	1,066,543	1,024,469	973,752	970,015	959,302	1,104,138	973,752
Marketable Investments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(2,012)		(3,500)	(3,922)		(595)	(3,500)	(595)
Other comprehensive income (loss) before reclassifications:
Other comprehensive income before reclassifications	698			(383)			2,186	(3,710)
Foreign currency translation losses	0			0			0	0
Net of tax	698			(383)			2,186	(3,710)
Total other comprehensive (loss) income, net of tax	698			(383)			2,186	(3,710)
Ending balance	(1,314)	(2,012)		(4,305)	(3,922)		(1,314)	(4,305)
Currency Translation Adjustments
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(3,567)		(4,624)	(6,236)		(2,035)	(4,624)	(2,035)
Other comprehensive income (loss) before reclassifications:
Other comprehensive income before reclassifications	0			0			0	0
Foreign currency translation losses	(2,359)			(2,812)			(1,302)	(7,013)
Net of tax	(2,359)			(2,812)			(1,302)	(7,013)
Total other comprehensive (loss) income, net of tax	(2,359)			(2,812)			(1,302)	(7,013)
Ending balance	(5,926)	(3,567)		(9,048)	(6,236)		(5,926)	(9,048)
Total
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward]
Beginning balance	(5,579)	(6,861)	(8,124)	(10,158)	(5,972)	(2,630)	(8,124)	(2,630)
Other comprehensive income (loss) before reclassifications:
Other comprehensive income before reclassifications	698			(383)			2,186	(3,710)
Foreign currency translation losses	(2,359)			(2,812)			(1,302)	(7,013)
Net of tax	(1,661)			(3,195)			884	(10,723)
Total other comprehensive (loss) income, net of tax	(1,661)	1,282	1,263	(3,195)	(4,186)	(3,342)	884	(10,723)
Ending balance	$ (7,240)	$ (5,579)	$ (6,861)	$ (13,353)	$ (10,158)	$ (5,972)	$ (7,240)	$ (13,353)

Income Taxes Income Taxes (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended
	Sep. 29, 2023	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Acquired in-process research and development	$ 18,200	$ 18,215	$ 0	$ 18,215	$ 0
Provision for income taxes		$ 4,090	$ 5,306	$ 4,756	$ 2,643
Effective tax rate		30.70%	174.80%	11.50%	(81.70%)

Net Income (Loss) per Share - Basic and Diluted Earnings per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended						9 Months Ended
	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2022	Jun. 30, 2022	Mar. 31, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net income (loss)	$ 9,214	$ 18,960	$ 8,562	$ (2,271)	$ (3,687)	$ 79	$ 36,736	$ (5,879)
Weighted average shares used to compute net income (loss) attributable to common stockholders:
Basic (in shares)	38,462,463			37,918,452			38,324,279	37,778,362
Potential dilutive stock-based options and awards (in shares)	757,503			0			859,356	0
Diluted (in shares)	39,219,966			37,918,452			39,183,635	37,778,362
Net income (loss) per share:
Basic (in dollars per share)	$ 0.24			$ (0.06)			$ 0.96	$ (0.16)
Diluted (in dollars per share)	$ 0.23			$ (0.06)			$ 0.94	$ (0.16)

Net Income (Loss) per Share - Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Earnings Per Share [Abstract]
Antidilutive securities excluded from the computation of earnings per share (in shares)	13	1,600	11	1,900

Revenues - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 270,946	$ 213,678	$ 773,843	$ 625,917
United States
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	194,816	148,819	553,467	434,583
International
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	76,130	64,859	220,376	191,334
Neuro
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	171,407	123,361	466,940	369,712
Vascular
Disaggregation of Revenue [Line Items]
Revenue from contract with customer	$ 99,539	$ 90,317	$ 306,903	$ 256,205

Revenues - Summary of Contract Assets and Liabilities (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Contract assets	$ 5,694	$ 5,694	$ 0
Contract liabilities	7,802	7,802	$ 8,783
Revenue recognized relating to contract liabilities	$ 100	$ 1,000