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Penumbra Inc - Quarter Report: 2022 June (Form 10-Q)


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 June 30, 2022
OR 
☐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)
Delaware05-0605598
(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 classTrading SymbolName of each exchange on which registered
Common Stock, Par value $0.001 per sharePENThe 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 July 21, 2022, the registrant had 37,888,366 shares of common stock, par value $0.001 per share, outstanding.


Table of Contents


FORM 10-Q
TABLE OF CONTENTS
 
Page


Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS.
Penumbra, Inc.
Condensed Consolidated Balance Sheets
(unaudited)
(in thousands)
June 30, 2022December 31, 2021
Assets
Current assets:
Cash and cash equivalents$58,234 $59,379 
Marketable investments146,135 195,496 
Accounts receivable, net of allowance for credit losses of $862 and $2,092 at June 30, 2022 and December 31, 2021, respectively
187,389 133,940 
Inventories295,883 263,504 
Prepaid expenses and other current assets30,320 29,155 
Total current assets717,961 681,474 
Property and equipment, net63,458 58,856 
Operating lease right-of-use assets177,423 131,955 
Finance lease right-of-use assets34,743 36,276 
Intangible assets, net86,162 90,618 
Goodwill165,779 166,388 
Deferred taxes68,404 65,698 
Other non-current assets13,970 12,985 
Total assets$1,327,900 $1,244,250 
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable$23,096 $13,421 
Accrued liabilities111,405 99,796 
Current operating lease liabilities9,297 8,267 
Current finance lease liabilities1,806 1,713 
Total current liabilities145,604 123,197 
Non-current operating lease liabilities183,155 137,045 
Non-current finance lease liabilities25,654 26,523 
Other non-current liabilities3,472 3,558 
Total liabilities357,885 290,323 
Commitments and contingencies (Note 10)
Stockholders’ equity:
Common stock38 37 
Additional paid-in capital937,837 910,614 
Accumulated other comprehensive (loss) income(10,158)(2,630)
Retained earnings42,298 45,906 
Total stockholders’ equity970,015 953,927 
Total liabilities and stockholders’ equity$1,327,900 $1,244,250 

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 June 30,Six Months Ended June 30,
2022202120222021
Revenue$208,344 $184,258 $412,239 $353,462 
Cost of revenue74,309 65,572 150,786 123,439 
Gross profit134,035 118,686 261,453 230,023 
Operating expenses:
Research and development 19,559 17,738 40,123 35,814 
Sales, general and administrative 114,615 90,636 225,515 170,434 
Total operating expenses 134,174 108,374 265,638 206,248 
(Loss) income from operations(139)10,312 (4,185)23,775 
Interest (expense) income, net(72)299 (119)779 
Other expense, net(956)(408)(1,967)(1,884)
(Loss) income before income taxes(1,167)10,203 (6,271)22,670 
Provision for (benefit from) income taxes2,520 1,904 (2,663)3,445 
Consolidated net (loss) income$(3,687)$8,299 $(3,608)$19,225 
Net loss attributable to non-controlling interest— (932)— (1,842)
Net (loss) income attributable to Penumbra, Inc.$(3,687)$9,231 $(3,608)$21,067 
Net (loss) income attributable to Penumbra, Inc. per share:
Basic$(0.10)$0.25 $(0.10)$0.58 
Diluted$(0.10)$0.25 $(0.10)$0.56 
Weighted average shares outstanding:
Basic37,767,519 36,523,011 37,707,156 36,489,548 
Diluted37,767,519 37,582,348 37,707,156 37,564,881 

See accompanying notes to the unaudited condensed consolidated financial statements
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Penumbra, Inc.
Condensed Consolidated Statements of Comprehensive (Loss) Income
(unaudited)
(in thousands)
Three Months Ended June 30,Six Months Ended June 30,
2022202120222021
Consolidated net (loss) income$(3,687)$8,299 $(3,608)$19,225 
Other comprehensive (loss) income, net of tax:
Foreign currency translation adjustments, net of tax(3,333)863 (4,201)(1,832)
Net change in unrealized losses on available-for-sale securities, net of tax(853)(109)(3,327)(380)
Total other comprehensive (loss) income, net of tax(4,186)754 (7,528)(2,212)
Consolidated comprehensive (loss) income$(7,873)$9,053 $(11,136)$17,013 
Net loss attributable to non-controlling interest— (932)— (1,842)
Comprehensive (loss) income attributable to Penumbra, Inc.$(7,873)$9,985 $(11,136)$18,855 

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 StockAdditional Paid-in CapitalAccumulated Other Comprehensive (Loss) IncomeRetained Earnings Total Penumbra, Inc. Stockholders’ EquityNon-Controlling InterestTotal Stockholders’ Equity
SharesAmount
Balance at December 31, 202137,578,483 $37 $910,614 $(2,630)$45,906 $953,927 $— $953,927 
Issuance of common stock103,984 1 1,102 — — 1,103 — 1,103 
Shares held for tax withholdings(14,243)— (3,181)— — (3,181)— (3,181)
Stock-based compensation— — 10,716 — — 10,716 — 10,716 
Other comprehensive loss— — — (3,342)— (3,342)— (3,342)
Net income (loss)— — — — 79 79 — 79 
Balance at March 31, 202237,668,224 $38 $919,251 $(5,972)$45,985 $959,302 $— $959,302 
Issuance of common stock158,735 — 3,466 — — 3,466 — 3,466 
Issuance of common stock under employee stock purchase plan66,098 — 7,998 — — 7,998 — 7,998 
Shares held for tax withholdings(12,950)— (1,900)— — (1,900)— (1,900)
Stock-based compensation— — 9,022 — — 9,022 — 9,022 
Other comprehensive loss— — — (4,186)— (4,186)— (4,186)
Net (loss)— — — — (3,687)(3,687)— (3,687)
Balance at June 30, 202237,880,107 $38 $937,837 $(10,158)$42,298 $970,015 $— $970,015 
Common StockAdditional Paid-in CapitalAccumulated Other Comprehensive LossRetained Earnings Total Penumbra, Inc. Stockholders’ EquityNon-Controlling InterestTotal Stockholders’ Equity
SharesAmount
Balance at December 31, 202036,414,732 $36 $598,299 $2,541 $40,622 $641,498 $(3,710)$637,788 
Issuance of common stock79,080 — 666 — — 666 — 666 
Shares held for tax withholdings(11,955)— (3,036)— — (3,036)— (3,036)
Stock-based compensation— — 7,093 — — 7,093 — 7,093 
Other comprehensive loss— — — (2,966)— (2,966)— (2,966)
Net income (loss)— — — — 11,836 11,836 (910)10,926 
Balance at March 31, 202136,481,857 $36 $603,022 $(425)$52,458 $655,091 $(4,620)$650,471 
Issuance of common stock67,547 — 312 — — 312 — 312 
Issuance of common stock under employee stock purchase plan35,221 — 7,354 — — 7,354 — 7,354 
Shares held for tax withholdings(15,023)— (3,952)— — (3,952)— (3,952)
Stock-based compensation— — 10,138 — — 10,138 — 10,138 
Other comprehensive income— — — 754 — 754 — 754 
Net income (loss)— — — — 9,231 9,231 (932)8,299 
Balance at June 30, 202136,569,602 $36 $616,874 $329 $61,689 $678,928 $(5,552)$673,376 
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)
 Six Months Ended June 30,
 20222021
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net (loss) income
$(3,608)$19,225 
Adjustments to reconcile consolidated net (loss) income to net cash used in operating activities:
Depreciation and amortization11,655 7,022 
Stock-based compensation17,679 16,198 
Inventory write-downs1,573 1,951 
Deferred taxes(2,741)2,570 
Other(749)1,309 
Changes in operating assets and liabilities:
Accounts receivable(54,299)(22,898)
Inventories(36,051)(41,543)
Prepaid expenses and other current and non-current assets(2,460)(5,843)
Accounts payable9,024 (689)
Accrued expenses and other non-current liabilities15,658 5,020 
Proceeds from lease incentives230 — 
Net cash used in operating activities(44,089)(17,678)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of marketable investments— (32,939)
Proceeds from sales of marketable investments1,180 2,000 
Proceeds from maturities of marketable investments44,579 67,810 
Purchases of property and equipment(9,388)(7,286)
Other— (150)
Net cash provided by investing activities36,371 29,435 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from exercises of stock options4,568 978 
Proceeds from issuance of stock under employee stock purchase plan7,998 7,354 
Payment of employee taxes related to vested stock(5,081)(6,988)
Payments of finance lease obligations(858)(692)
Other(137)(93)
Net cash provided by financing activities6,490 559 
Effect of foreign exchange rate changes on cash and cash equivalents83 291 
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS(1,145)12,607 
CASH AND CASH EQUIVALENTS—Beginning of period59,379 69,670 
CASH AND CASH EQUIVALENTS—End of period$58,234 $82,277 
NONCASH INVESTING AND FINANCING ACTIVITIES:
Right-of-use assets obtained in exchange for operating lease obligations$51,191 $54,444 
Right-of-use assets obtained in exchange for finance lease obligations$89 $520 
Purchase of property and equipment funded through accounts payable and accrued liabilities$3,059 $2,236 
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid for amounts included in the measurement of operating lease liabilities$8,458 $3,914 
Cash paid for income taxes$2,157 $689 

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 June 30, 2022, the condensed consolidated statements of operations, the condensed consolidated statements of comprehensive (loss) income, and the condensed consolidated statements of stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the condensed consolidated statements of cash flows for the six months ended June 30, 2022 and 2021 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, 2021 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 June 30, 2022, the results of its operations for the three and six months ended June 30, 2022 and 2021, the changes in comprehensive income (loss) and stockholders’ equity for the three and six months ended June 30, 2022 and 2021, and the cash flows for the six months ended June 30, 2022 and 2021. The results for the three and six months ended June 30, 2022 are not necessarily indicative of the results that may be expected for the year ending December 31, 2022 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 year ended December 31, 2021, 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 six months ended June 30, 2022, 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, 2021.
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, operating and financing lease right-of-use (“ROU”) assets and liabilities, income taxes, contingent consideration and other contingencies, 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.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)


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 June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022
Securities with net gains or losses in accumulated other comprehensive income (loss)    
Amortized CostGross Unrealized GainsGross Unrealized LossesAllowance
 for
 Credit Loss		Fair Value
Commercial paper $5,998 $— $(23)$— $5,975 
U.S. treasury14,473 — (470)— 14,003 
U.S. agency and government sponsored securities8,502 — (189)— 8,313 
U.S. states and municipalities30,130 — (655)— 29,475 
Corporate bonds90,952 — (2,583)— 88,369 
Total$150,055 $— $(3,920)$— $146,135 
December 31, 2021
Securities with net gains or losses in accumulated other comprehensive income (loss)
Amortized CostGross Unrealized GainsGross Unrealized LossesAllowance
 for
 Credit Loss		Fair Value
Commercial paper $20,286 $— $(10)$— $20,276 
U.S. treasury14,464 — (77)— 14,387 
U.S. agency and government sponsored securities11,553 1 (19)— 11,535 
U.S. states and municipalities39,436 39 (89)— 39,386 
Corporate bonds110,354 49 (491)— 109,912 
Total$196,093 $89 $(686)$— $195,496 
As of June 30, 2022, the total amortized cost basis of the Company’s impaired available-for-sale securities exceeded its fair value by $3.9 million, which was primarily attributable to widening credit spreads and rising interest rates since purchase. The Company reviewed its impaired available-for-sale securities and concluded that the decline in fair value was not related to credit losses and that it is more likely than not that the entire amortized cost of each impaired security will be recoverable before the Company is required to sell them or when the security matures. Accordingly, during the three and six months ended June 30, 2022, no allowance for credit losses was recorded and instead the unrealized losses are reported as a component of accumulated other comprehensive (loss) income.
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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 June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Commercial paper$5,975 $(23)$— $— $5,975 $(23)
U.S. treasury14,003 (470)— — 14,003 (470)
U.S. agency and government sponsored securities8,313 (189)— — 8,313 (189)
U.S. states and municipalities26,953 (577)1,522 (78)28,475 (655)
Corporate bonds81,263 (2,322)7,106 (261)88,369 (2,583)
Total$136,507 $(3,581)$8,628 $(339)$145,135 $(3,920)
December 31, 2021
Less than 12 months12 months or moreTotal
Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Commercial paper$16,977 $(10)$— $— $16,977 $(10)
U.S. treasury14,387 (77)— — 14,387 (77)
U.S. agency and government sponsored securities6,985 (19)— — 6,985 (19)
U.S. states and municipalities21,924 (89)— — 21,924 (89)
Corporate bonds85,513 (491)— — 85,513 (491)
Total$145,786 $(686)$— $— $145,786 $(686)
The following table presents the contractual maturities of the Company’s marketable investments as of June 30, 2022 (in thousands):
June 30, 2022
 Amortized CostFair Value
Due in less than one year$51,834 $51,254 
Due in one to five years98,221 94,881 
Total$150,055 $146,135 
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 June 30, 2022 or December 31, 2021. During the six months ended June 30, 2022 and 2021, 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 June 30, 2022 or December 31, 2021.
The following tables set forth the Company’s financial assets measured at fair value by level within the fair value hierarchy as of June 30, 2022 and December 31, 2021 (in thousands):
 As of June 30, 2022
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Commercial paper$— $4,389 $— $4,389 
Money market funds14,840 — — 14,840 
Marketable investments:
Commercial paper— 5,975 — 5,975 
U.S. treasury14,003 — — 14,003 
U.S. agency and government sponsored securities— 8,313 — 8,313 
U.S. states and municipalities— 29,475 — 29,475 
Corporate bonds— 88,369 — 88,369 
Total$28,843 $136,521 $— $165,364 
 As of December 31, 2021
 Level 1Level 2Level 3Fair Value
Financial Assets
Cash equivalents:
Money market funds$10,509 $— $— $10,509 
Marketable investments:
Commercial paper— 20,276 — 20,276 
U.S. treasury14,387 — — 14,387 
U.S. agency and government sponsored securities— 11,535 — 11,535 
U.S. states and municipalities— 39,386 — 39,386 
Corporate bonds— 109,912 — 109,912 
Total$24,896 $181,109 $— $206,005 


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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 June 30, 2022 and December 31, 2021 (in thousands):
 June 30, 2022December 31, 2021
Raw materials$75,484 $68,374 
Work in process33,902 18,678 
Finished goods186,497 176,452 
Inventories$295,883 $263,504 
Accrued Liabilities
The following table shows the components of accrued liabilities as of June 30, 2022 and December 31, 2021 (in thousands):
 June 30, 2022December 31, 2021
Payroll and employee-related cost$58,388 $60,015 
Accrued expenses19,900 12,245 
Deferred revenue9,959 5,671 
Other accrued liabilities23,158 21,865 
Total accrued liabilities$111,405 $99,796 
The following table shows the changes in the Company’s estimated product warranty accrual, included in accrued liabilities, for the six months ended June 30, 2022 and twelve months ended December 31, 2021, respectively (in thousands):
 June 30, 2022December 31, 2021
Balance at the beginning of the period$4,310 $2,896 
Accruals of warranties issued1,407 2,973 
Settlements of warranty claims(771)(1,559)
Balance at the end of the period$4,946 $4,310 
5. Business Combinations
Acquisition of Sixense Enterprises Inc.
Transaction Overview
On October 1, 2021 (the “Closing Date”), the Company closed the acquisition of Sixense Enterprises Inc. (“Sixense”) pursuant to the Agreement and Plan of Merger, dated September 17, 2021 (the “Merger Agreement”), among the Company, Sixense, Seychelles Merger Corporation, a wholly owned subsidiary of the Company, and a stockholders’ agent (the “Merger”). Sixense, a privately held company, specializes in enterprise use of virtual reality hardware and software and has been an integral partner on the development of the Company’s REAL Immersive System portfolio. The Merger allows the Company to streamline its efforts and collaborate more closely on its immersive healthcare offerings.
The Company and Sixense formed a joint venture, MVI Health Inc. (“MVI”), in 2017 for the purpose of exploring healthcare applications of virtual reality technology. At the time of MVI’s formation, the Company contributed cash and in-kind services to MVI and Sixense contributed an exclusive license to use its technology for healthcare applications, each for a 50% equity interest in MVI. In 2018, the Company acquired 40% of the outstanding shares of MVI from Sixense and consolidated the financial results of MVI into the accompanying consolidated financial statements, with the amounts attributable to the non-controlling interest classified separately. As of the Closing Date, the Company and Sixense owned a 90% and 10% equity interest in MVI, respectively.
As a result of the Merger, Sixense became a wholly owned subsidiary of the Company and the Company acquired, among other things, the remaining 10% equity interest in MVI held by Sixense.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The Company accounted for the acquired assets and liabilities assumed from Sixense in accordance with ASC 805 and for its change in ownership interest in MVI as an equity transaction in accordance with ASC 810. The carrying amount of the noncontrolling interest was adjusted to zero, and the difference between the acquisition date fair value of the equity interest acquired of $4.2 million and its carrying amount of $(6.2) million was recognized within additional paid in capital.
Fair Value of Consideration Transferred
The following table summarizes the Closing Date fair value of the consideration transferred (in thousands):
Fair value of common stock issued(1)
$174,133 
Fair value of replacement stock options(2)
80,693 
Consideration for settlement of pre-existing liabilities due to Sixense(3)
(3,810)
Total purchase price$251,016 
(1) The fair value of the 661,877 shares of common stock issued as part of consideration transferred was determined based on the acquisition date closing market price of the Company’s common stock of $263.09.
(2) Per ASC 805, the replacement of stock options or other share-based payment awards in conjunction with a business combination represents a modification of share-based payment awards that must be accounted for in accordance with ASC 718. As a result of the Company’s obligation to issue replacement awards, a portion of the fair-value-based measure of replacement awards is included in measuring the purchase consideration transferred in the business combination. To determine the portion of the replacement awards that is part of the purchase consideration, the Company measured the fair value of both the replacement awards and the historical awards as of the Closing Date, in accordance with ASC 718. The fair value of the replacement awards, whether vested or unvested, was included in the purchase consideration to the extent that pre-acquisition services had been rendered. The fair value of replacement stock options assumed for which pre-acquisition services were rendered of $80.7 million was allocated to the purchase consideration and $25.8 million was recognized immediately in the post-combination financial statements during the three months ended December 31, 2021, as pre-acquisition services were not rendered but the vesting of all stock options was accelerated in connection with the Merger.
(3) In the connection with the Merger, the Company effectively settled pre-existing liabilities due to or on behalf of Sixense.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Fair Value of Consideration Transferred
The preliminary allocation of the purchase price was based upon a third party valuation and the Company’s estimates and assumptions are subject to change within the measurement period (generally one year from the Closing Date).
The following table presents the preliminary allocation of the purchase price for Sixense as of June 30, 2022 (in thousands):
Acquisition-Date Fair ValueEstimated Useful Life of Finite-Lived Intangible Assets
Tangible assets acquired and (liabilities) assumed:
Cash and cash equivalents$2,919 
Prepaid expenses and other current and non-current assets2,063 
Deferred tax assets20,678 
Deferred tax liabilities(19,398)
Accrued liabilities and other current liabilities(1,341)
Intangible assets acquired:
Developed technology62,466 8.75 years
In-process research and development20,823 
Net assets acquired88,210 
Fair value of subsidiary stock indirectly acquired through the Merger4,161 
Total net assets acquired92,371 
Goodwill158,645 
Total purchase price$251,016 
Further adjustments may be necessary as additional information related to the fair values of assets acquired and liabilities assumed is assessed during the measurement period, which may be up to one year from the acquisition date. The Company will reflect measurement period adjustments, if any, in the period in which the adjustments are recognized with the corresponding offset to goodwill. Any adjustments required after the measurement period are recorded in the consolidated statement of operations. No measurement period adjustments were recorded during the three and six months ended June 30, 2022.
The intangible assets acquired and the fair value of the privately-held subsidiary stock indirectly acquired are Level 3 fair value measurements for which fair value is derived from valuations using inputs that are unobservable and significant to the overall fair value measurement.
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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 June 30, 2022 and December 31, 2021 (in thousands, except weighted-average amortization period):
As of June 30, 2022Weighted-Average Amortization PeriodGross Carrying AmountAccumulated AmortizationNet
Finite-lived intangible assets:
Developed technology8.8 years$62,466 $(5,353)$57,113 
Customer relationships15.0 years$6,230 $(2,077)$4,153 
Trade secrets and processes20.0 years5,256 (1,183)4,073 
Other5.0 years1,606 (1,606)— 
Total intangible assets subject to amortization9.8 years$75,558 $(10,219)$65,339 
Indefinite-lived intangible assets:
In-process research and development$20,823 $— $20,823 
Total intangible assets$96,381 $(10,219)$86,162 
As of December 31, 2021Weighted-Average
Amortization Period		Gross Carrying AmountAccumulated AmortizationNet
Finite-lived intangible assets:
Developed technology8.8 years$62,466 $(1,784)$60,682 
Customer relationships15.0 years$6,762 $(2,029)$4,733 
Trade secrets and processes20.0 years5,256 (1,051)4,205 
Other5.0 years1,744 (1,569)175 
Total intangible assets subject to amortization9.8 years$76,228 $(6,433)$69,795 
Indefinite-lived intangible assets:
In-process research and development20,823 — 20,823 
Total intangible assets$97,051 $(6,433)$90,618 
The customer relationships and intangible assets classified as “Other” subject to amortization relate to the acquisition of Crossmed S.p.A., the Company’s wholly-owned subsidiary in Italy, during the third quarter of 2017. The gross carrying amount and accumulated amortization of these intangible assets are subject to foreign currency translation effects.
The Company reviews indefinite-lived intangible assets 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 that there were no impairment indicators as of June 30, 2022.
The following table presents the amortization expense recorded related to the Company’s finite-lived intangible assets for the three and six months ended June 30, 2022 and 2021 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Cost of revenue$66 $66 $132 $131 
Sales, general and administrative1,972 212 3,954 425 
Total$2,038 $278 $4,086 $556 
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
7. Goodwill
The following table presents the changes in goodwill during the six months ended June 30, 2022 (in thousands):
Total Company
Balance as of December 31, 2021$166,388 
Foreign currency translation (609)
Balance as of June 30, 2022$165,779 
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 June 30, 2022.
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 was set to mature on April 23, 2021. The Company entered into an amended one-year 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 during the three months ended March 31, 2021, which extended the maturity date from April 23, 2021 to February 21, 2022 and had substantially the same terms and conditions as the prior credit agreement with certain changes including the exclusion of certain one-time charges and expenses incurred during the fiscal quarters ended September 30, 2020 and December 31, 2020 from the calculation of the financial covenants, reductions in interest rate floors applicable to revolving loans and other changes to borrowing mechanics under the Credit Agreement.
In the first quarter of 2022, the Company entered into a further amended one-year 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 amended Credit Agreement extended the maturity date from February 21, 2022 to February 17, 2023 and has substantially the same terms and conditions as the prior credit agreement with certain changes to the reference benchmark interest rates, applicable margins and borrowing mechanics under the Credit Agreement, having the overall effect of lowering the interest rates payable by the Company on amounts borrowed under the Credit Agreement, and a reduction of the commitment fee payable on the average daily unused amount under the Credit Agreement to 0.25% 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 June 30, 2022, the Company was in compliance with these requirements.
As of June 30, 2022 and December 31, 2021, there were no borrowings outstanding under the amended Credit Agreement.
9. Leases
Lease Overview
As of December 31, 2021 and June 30, 2022, the Company’s contracts that contained a lease consisted of real estate, equipment and vehicle leases.
The Company leases real estate for office and warehouse space under non-cancelable operating and finance leases that expire at various dates through 2036, subject to the Company’s option to renew certain leases for an additional five to 15 years. The Company also leases other equipment and vehicles under noncancelable operating and finance leases that expire at various dates through 2026.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
The following table presents the components of the Company’s lease cost, lease term and discount rate during the three and six months ended June 30, 2022 and 2021 (in thousands, except years and percentages):
Three Months EndedSix Months Ended
June 30, 2022June 30, 2021June 30, 2022June 30, 2021
Lease Cost
Operating lease cost$5,034 $1,959 $9,916 $3,879 
Finance lease cost:
Amortization of right-of-use assets
810 760 1,616 1,506 
Interest on lease liabilities361 374 723 745 
Variable lease cost(1)
2,568 1,356 4,931 2,826 
Total lease costs$8,773 $4,449 $17,186 $8,956 
Weighted Average Remaining Lease Term
Operating leases13.8 years12.1 years
Finance leases11.8 years12.9 years
Weighted Average Discount Rate
Operating leases4.61 %5.33 %
Finance leases5.30 %5.34 %
(1) Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease cost primarily relates to common area maintenance charges for the Company’s real estate leases.
During the third quarter of 2021, the Company signed a lease for approximately thirteen years for additional space located at 620 Roseville Parkway, Roseville, California (the “620 Roseville Parkway Lease”). Per the terms of the lease, improvements will be constructed and permanently affixed to the property in two phases. The first phase (“Phase 1”) of the 620 Roseville Parkway Lease commenced once the Phase 1 premises were made ready and available for their intended use, which occurred during the first quarter of 2022. The Company determined that the 620 Roseville Parkway Lease is a non-cancelable operating lease which will expire in 2035. Upon completion of the second phase (“Phase 2”) of improvements, the Phase 2 premises will be added to the 620 Roseville Parkway Lease. Phase 2 is not anticipated to be completed in 2022.
Additionally, during the three and six months ended June 30, 2022, the Company modified existing leases for certain properties that resulted in an increase of right-of-use (“ROU”) assets in exchange for operating leases liabilities.
The following table is a schedule, by years, of maturities of the Company's operating and finance lease liabilities as of June 30, 2022 (in thousands):
Operating Lease PaymentsFinance Lease Payments
2022 (excluding the six months ended June 30, 2022)$9,046 $1,591 
202317,807 3,226 
202417,682 3,242 
202517,527 3,170 
202617,673 2,803 
Thereafter186,197 23,518 
Total undiscounted lease payments
265,932 37,550 
Less imputed interest(73,480)(10,090)
Present value of lease liabilities$192,452 $27,460 


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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
Supplemental cash flow information related to leases during the six months ended June 30, 2022 and 2021 are as follows (in thousands):
Six Months Ended
June 30, 2022June 30, 2021
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases$8,458 $3,914 
Financing cash flows from finance leases$858 $692 
Right-of-use assets obtained in exchange for lease obligations:
Operating leases$51,191 $54,444 
Finance leases$89 $520 
10. 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 June 30, 2022 and December 31, 2021, 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 June 30, 2022 and 2021 was $0.6 million and $0.6 million, respectively, and for the six months ended June 30, 2022 and 2021, was $1.2 million and $1.1 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.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
11. Stockholders’ Equity
Equity Incentive Plans
Stock Options
Activity of stock options under the Company’s 2005 Stock Plan, 2011 Equity Incentive Plan and Amended and Restated 2014 Equity Incentive Plan (collectively, the "Plans") during the six months ended June 30, 2022 is set forth below:
Number of SharesWeighted-Average
Exercise Price
Balance at December 31, 20211,141,814 $27.02 
Granted10,120 197.74 
Exercised(187,856)24.32 
Canceled/Forfeited(1,000)22.04 
Balance at June 30, 2022963,078 29.35 
Restricted Stock Units
Activity of unvested restricted stock units under the Plans during the six months ended June 30, 2022 is set forth below: 
Number of SharesWeighted -Average
Grant Date Fair Value
Unvested at December 31, 2021409,482 $210.41 
Granted146,540 187.06 
Released/Vested (74,863)176.49 
Canceled/Forfeited(15,712)223.95 
Unvested at June 30, 2022465,447 208.05 
As of June 30, 2022, 440,842 restricted stock units are expected to vest.
Stock-based Compensation
The following table sets forth the stock-based compensation expense included in the Company’s condensed consolidated statements of operations for the three and six months ended June 30, 2022 and 2021 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Cost of revenue$880 $543 $1,736 $1,341 
Research and development1,514 1,188 2,900 2,250 
Sales, general and administrative6,392 8,072 13,043 12,607 
Total$8,786 $9,803 $17,679 $16,198 
As of June 30, 2022, total unrecognized compensation cost was $76.5 million related to unvested share-based compensation arrangements which is expected to be recognized over a weighted average period of 3.0 years.
The total stock-based compensation cost capitalized in inventory was $2.0 million and $1.8 million as of June 30, 2022 and December 31, 2021, respectively.
12. Accumulated Other Comprehensive (Loss) Income
Other comprehensive (loss) income consists of two components: unrealized gains or losses on the Company’s available-for-sale marketable investments and gains or losses from foreign currency translation adjustments. Until realized and reported as a component of consolidated net (loss) income, these comprehensive (loss) income items accumulate and are included within accumulated other comprehensive (loss) income. Unrealized gains and losses on the Company’s marketable investments are reclassified from accumulated other comprehensive (loss) income into earnings when realized upon sale, and are determined
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
based on specific identification of securities sold. Gains and losses from the translation of assets and liabilities denominated in non-U.S. dollar functional currencies are included in accumulated other comprehensive (loss) income.
The following table summarizes the changes in the accumulated balances during the period and includes information regarding the manner in which the reclassifications out of accumulated other comprehensive (loss) income into earnings affect the Company’s condensed consolidated statements of operations and condensed consolidated statements of comprehensive (loss) income (in thousands):    
Three Months Ended June 30, 2022Three Months Ended June 30, 2021
 Marketable
Investments		 Currency Translation
Adjustments		 Total Marketable
Investments		 Currency Translation
Adjustments		 Total
Balance, beginning of the period$(3,069)$(2,903)$(5,972)$376 $(801)$(425)
Other comprehensive (loss) income before reclassifications:
Unrealized (loss) — marketable investments(853)— (853)(142)— (142)
Foreign currency translation (losses) gains — (3,333)(3,333)— 863 863 
Income tax effect — expense— — — 33 — 33 
Net of tax(853)(3,333)(4,186)(109)863 754 
Net current-year other comprehensive (loss) income(853)(3,333)(4,186)(109)863 754 
Balance, end of the period$(3,922)$(6,236)$(10,158)$267 $62 $329 

Six Months Ended June 30, 2022Six Months Ended June 30, 2021
Marketable
Investments		Currency Translation
Adjustments		TotalMarketable
Investments		Currency Translation
Adjustments		Total
Balance at beginning of the period$(595)$(2,035)$(2,630)$647 $1,894 $2,541 
Other comprehensive (loss) income before reclassifications:
Unrealized (loss) gain — marketable investments(3,327)— (3,327)(495)— (495)
Foreign currency translation gains (losses)— (4,201)(4,201)— (1,832)(1,832)
Income tax effect — expense— — — 115 — 115 
Net of tax(3,327)(4,201)(7,528)(380)(1,832)(2,212)
Net current-year other comprehensive (loss) income(3,327)(4,201)(7,528)(380)(1,832)(2,212)
Balance at end of the period(3,922)(6,236)(10,158)267 62 329 

13. 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.
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.
The Company’s provision for income taxes for the three months ended June 30, 2022 was $2.5 million, which was primarily due to tax deficiencies (shortfalls) expenses from stock-based compensation attributable to its U.S. jurisdiction as a result of stock price fluctuation, offset by tax benefits attributable to its worldwide losses. The Company’s provision for income taxes for the three months ended June 30, 2021 was $1.9 million, which was primarily due to tax expenses attributable to its worldwide profits, offset by excess tax benefits from stock-based compensation attributable to its U.S. jurisdiction.

The Company’s benefit from income taxes for the six months ended June 30, 2022 was $2.7 million, which was primarily due to tax benefits attributable to its worldwide losses, offset by tax deficiencies (shortfalls) expenses from stock-based
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
compensation attributable to its U.S. jurisdiction as a result of stock price fluctuation. The Company’s provision for income taxes for the six months ended June 30, 2021 was $3.4 million, which was primarily due to tax expenses attributable to its worldwide profits, offset by excess tax benefits from stock-based compensation attributable to its U.S. jurisdiction.

The Company’s effective tax rate was (215.9)% for the three months ended June 30, 2022, compared to 18.7% for the three months ended June 30, 2021. The Company’s change in effective tax rate was primarily attributable to large tax expenses over relatively small worldwide losses for the three months ended June 30, 2022, when compared to small tax expenses over relatively large worldwide profits for the three months ended June 30, 2021. The Company’s effective tax rate was 42.5% for the six months ended June 30, 2022, compared to 15.2% for the six months ended June 30, 2021. The Company’s change in effective tax rate was primarily attributable to large tax benefits over relatively small worldwide losses for the six months ended June 30, 2022, when compared to small tax expenses over relatively large worldwide profits for the six months ended June 30, 2021.
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 June 30, 2022 and 2021, the Company maintains a valuation allowance against its Federal Research and Development Tax Credit and California 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 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 are not provided for in the Company’s condensed consolidated financial statements as of June 30, 2022.
14. Net Income Attributable to Penumbra, Inc. Per Share
The Company computed basic net (loss) income attributable to Penumbra, Inc. per share based on the weighted average number of shares of common stock outstanding during the period. The Company computed diluted net (loss) income attributable to Penumbra, Inc. 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.
A reconciliation of the numerator and denominator used in the calculation of the basic and diluted net (loss) income attributable to Penumbra, Inc. per share is as follows (in thousands, except share and per share amounts):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Numerator:
Net (loss) income attributable to Penumbra, Inc.$(3,687)$9,231 $(3,608)$21,067 
Denominator:
Weighted average shares used to compute net (loss) income attributable to common stockholders:
Basic37,767,519 36,523,011 37,707,156 36,489,548 
Potential dilutive stock-based options and awards— 1,059,337 — 1,075,333 
Diluted37,767,519 37,582,348 37,707,156 37,564,881 
Net (loss) income attributable to Penumbra, Inc. per share:
Basic$(0.10)$0.25 $(0.10)$0.58 
Diluted$(0.10)$0.25 $(0.10)$0.56 
For the three months ended June 30, 2022 and 2021, outstanding stock-based awards of 1,766 thousand and 28 thousand shares, respectively, and for the six months ended June 30, 2022 and 2021, outstanding stock-based awards of 1,878 thousand and 37 thousand shares, respectively, were excluded from the computation of diluted net (loss) income attributable to Penumbra, Inc. per share because their effect would have been anti-dilutive.
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
15. 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 six months ended June 30, 2022 and 2021 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
United States$141,456 $128,402 $285,764 $248,472 
International66,888 55,856 126,475 104,990 
Total$208,344 $184,258 $412,239 $353,462 
The following table presents the Company’s revenues disaggregated by product category for the three and six months ended June 30, 2022 and 2021 (in thousands):
 Three Months Ended June 30,Six Months Ended June 30,
 2022202120222021
Vascular$123,543 $100,684 $246,352 $189,849 
Neuro84,801 83,574 165,887 163,613 
Total$208,344 $184,258 $412,239 $353,462 
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 Chinese partner, the Company agreed to license the technology for certain products to its Chinese partner 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, pursuant to which the Company agreed to license the technology for additional products to its Chinese partner 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.
Performance Obligations
Delivery of products - The Company’s contracts with customers 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 June 30, 2022.
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,
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Penumbra, Inc.
Notes to Condensed Consolidated Financial Statements
(unaudited)
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 six months ended June 30, 2022, 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.
Contract liabilities, net
The following information summarizes the Company’s contract assets and liabilities, net as of June 30, 2022 and December 31, 2021 (in thousands):
June 30, 2022December 31, 2021
Contract liabilities, net$9,646 $5,671 
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. 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 arrangements. Revenue recognized during the three and six months ended June 30, 2022 relating to contract liabilities as of March 31, 2022 and December 31, 2021 was $7.5 million and $5.7 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, 2021, included in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”) on February 22, 2022.
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, 2021. 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 other healthcare providers to drive improved clinical and health outcomes. We believe that the cost-effectiveness of our products is attractive to our customers.
Since our founding in 2004, we have had a strong track record of organic product development and commercial expansion that has established the foundation of our global organization. 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.
We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, access and immersive healthcare technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline. 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 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, DDC and PX SLIM
•Neurosurgical - Artemis Neuro Evacuation Device
Our vascular products fall into two broad product families:
•Vascular thrombectomy - INDIGO System designed for mechanical thrombectomy, including aspiration catheters, separators, aspiration pump and accessories and Lightning, our next-generation aspiration system for peripheral thrombectomy
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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 six months ended June 30, 2022 and 2021, 30.7% and 29.7% 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 $412.2 million and $353.5 million for the six months ended June 30, 2022 and 2021, respectively, an increase of $58.8 million. We generated an operating loss of $4.2 million and operating income of $23.8 million for the six months ended June 30, 2022 and 2021, respectively.
COVID-19 Pandemic
In March 2020, the World Health Organization declared the outbreak of COVID-19 as a pandemic, which continues to spread throughout the U.S. and the world. In response, governments have issued orders restricting certain activities, and while our business falls within the category of healthcare operations, which are essential businesses permitted to continue operating during the COVID-19 pandemic, we have experienced, and expect to continue to experience, disruptions to our operations as a result of the pandemic. For example, 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 during the pandemic. Some of Penumbra’s medical devices are used in certain procedures that the United States Centers for Medicare & Medicaid Services (“CMS”) has indicated are “high-acuity” procedures that should not be postponed during the pandemic in its March 18, 2020 recommendations, while other Penumbra devices are used in elective procedures that physicians may consider postponing. Many of the procedures in which our vascular products are used are elective in nature, whereas procedures in which our neuro products are used, such as stroke, tend to be more emergent in nature.
The impact of COVID-19 on our business remains fluid, and we continue to actively monitor the dynamic situation. We will continue to undertake the following specific actions and strategic priorities to navigate the pandemic:
•We have made 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 we are committed to continue to meet demand for our essential devices, we have implemented social distancing and other measures to protect the health and safety of our employees, which have reduced, and may continue to reduce, our manufacturing capacity.
•We further strengthened our liquidity position by entering into a Credit Agreement (the “Credit Agreement”) on April 24, 2020, 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. This revolving line of credit provides access to capital beyond the $204.4 million in cash, cash equivalents and marketable investments on our balance sheet as of June 30, 2022, and we believe this will allow us to both navigate the current environment and emerge in a strong liquidity position after the pandemic. During the three months ended March 31, 2021, we entered into an amended one-year 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 amended Credit Agreement extended the maturity date from April 23, 2021 to February 21, 2022 and had substantially the same terms and conditions as the prior credit agreement with certain changes including the exclusion of certain one-time charges and expenses incurred during the fiscal quarters ended September 30, 2020 and December 31, 2020 from the calculation of the financial covenants, reductions in interest rate floors applicable to revolving loans and other changes to borrowing mechanics under the Credit Agreement. In the first quarter of 2022, we entered into a further amended one-year 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 amended Credit Agreement extended the maturity date from February 21, 2022 to February 17, 2023 and has substantially the same terms and conditions as the prior credit agreement with certain changes to the reference benchmark interest rates, applicable margins and borrowing mechanics under the Credit Agreement, having the overall effect of lowering the interest rates payable by the Company on amounts borrowed under the Credit Agreement, and a reduction of the commitment fee payable on the average daily unused amount under the Credit Agreement to 0.25% per annum. As of June 30, 2022, the Company was
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in compliance with the requirements in the amended Credit Agreement. As of June 30, 2022, there were no borrowings outstanding under the Credit Agreement.
•We will continue to prioritize investments in our production capacity and flexibility, commercial channels, preparation for new product launches, and new product developments to help patients.
While we began to see positive trends in certain areas of our business in May 2020, we remain mindful of the negative impacts on business trends we experienced in April 2020 due to the COVID-19 pandemic. The general impact of COVID-19 on our business has been negative and we are unable to reliably predict the full impact that the COVID-19 pandemic 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 year ended December 31, 2021. 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.
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 we expect will continue to negatively affect, our revenues and results of operations. Due to these impacts and measures, we may experience significant and unpredictable fluctuations in demand for certain of our products as hospital customers re-prioritize the treatment of patients and distributors adjust their operations to support the current demand level.
•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 other healthcare providers and the procedures and treatments those physicians and other healthcare providers 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 impact of COVID-19, 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
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obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory write-offs due to obsolescence; costs, benefits and timing of new product introductions; costs, benefits and timing of the acquisition and integration of businesses and product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates. Additionally, certain unique macroeconomic and geopolitical factors, including those as a result of the Russian invasion of Ukraine, may cause instability and volatility in the global financial markets and disruptions within the healthcare industry that may negatively impact our business. 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.
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 marketing trials, medical education, training, commissions, generally based on sales, to direct sales representatives, amortization of acquired intangible assets and acquisition-related costs.
(Benefit from) Provision For 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.
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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 June 30,Six Months Ended June 30,
 2022202120222021
 (in thousands, except for percentages)(in thousands, except for percentages)
Revenue$208,344 100.0 %$184,258 100.0 %$412,239 100.0 %$353,462 100.0 %
Cost of revenue74,309 35.7 65,572 35.6 150,786 36.6 123,439 34.9 
Gross profit134,035 64.3 118,686 64.4 261,453 63.4 230,023 65.1 
Operating expenses:
Research and development19,559 9.4 17,738 9.6 40,123 9.7 35,814 10.1 
Sales, general and administrative114,615 55.0 90,636 49.2 225,515 54.7 170,434 48.2 
Total operating expenses134,174 64.4 108,374 58.8 265,638 64.4 206,248 58.4 
(Loss) income from operations(139)(0.1)10,312 5.6 (4,185)(1.0)23,775 6.7 
Interest (expense) income, net(72)0.0 299 0.2 (119)— 779 0.2 
Other expense, net(956)(0.5)(408)(0.2)(1,967)(0.5)(1,884)(0.5)
(Loss) income before income taxes(1,167)(0.6)10,203 5.5 (6,271)(1.5)22,670 6.4 
Provision for (benefit from) income taxes2,520 1.2 1,904 1.0 (2,663)(0.6)3,445 1.0 
Consolidated net (loss) income$(3,687)(1.8)%$8,299 4.5 %$(3,608)(0.9)%$19,225 5.4 %
Net loss attributable to non-controlling interest— — (932)(0.5)— — (1,842)(0.5)
Net (loss) income attributable to Penumbra, Inc.$(3,687)(1.8)%$9,231 5.0 %$(3,608)(0.9)%$21,067 6.0 %

Three Months Ended June 30, 2022 Compared to the Three Months Ended June 30, 2021
Revenue
 Three Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
Vascular$123,543 $100,684 $22,859 22.7 %
Neuro84,801 83,574 1,227 1.5 %
Total$208,344 $184,258 $24,086 13.1 %
Revenue increased $24.1 million, or 13.1%, to $208.3 million in the three months ended June 30, 2022, from $184.3 million in the three months ended June 30, 2021. Overall revenue growth is primarily due to an increase in sales of new and existing products within our vascular and neuro businesses.
Revenue from our vascular products increased $22.9 million, or 22.7%, to $123.5 million in the three months ended June 30, 2022, from $100.7 million in the three months ended June 30, 2021. This increase was primarily attributable to increased revenue in China and the United States, sales of new products and further market penetration of our existing products. The increase in product sales was driven by sales of our vascular thrombectomy products and peripheral embolization products, which globally increased by 30.3% and 11.8%, respectively in the three months ended June 30, 2022. Prices for our vascular products remained substantially unchanged during the period.
Revenue from our neuro products increased $1.2 million, or 1.5%, to $84.8 million in the three months ended June 30, 2022, from $83.6 million in the three months ended June 30, 2021. This increase in revenue was primarily attributable to sales of new products. The increase in sales of new products was driven by an increase in sales of our neuro access products, which globally increased by 14.1%, partially offset by a decrease in sales of our neuro embolization products and neuro thrombectomy products, which decreased by 22.9% and 0.6%, respectively in the three months ended June 30, 2022. Prices for our neuro products remained substantially unchanged during the period.
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Revenue by Geographic Area
The following table presents revenue by geographic area, based on our customers’ shipping destinations, for the three months ended June 30, 2022 and 2021:
 Three Months Ended June 30,Change
20222021$%
 (in thousands, except for percentages)
United States$141,456 67.9 %$128,402 69.7 %$13,054 10.2 %
International66,888 32.1 %55,856 30.3 %11,032 19.8 %
Total$208,344 100.0 %$184,258 100.0 %$24,086 13.1 %
Revenue from product sales in international markets increased $11.0 million, or 19.8%, to $66.9 million in the three months ended June 30, 2022, from $55.9 million in the three months ended June 30, 2021. Revenue from international sales represented 32.1% and 30.3% of our total revenue for the three months ended June 30, 2022 and 2021, respectively.
Gross Margin
 Three Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
Cost of revenue$74,309 $65,572 $8,737 13.3 %
Gross profit$134,035 $118,686 $15,349 12.9 %
Gross margin %64.3 %64.4 %
Gross margin remained relatively flat, decreasing by 0.1 percentage points to 64.3% in the three months ended June 30, 2022, from 64.4% in the three months ended June 30, 2021. Gross margin is impacted by our ability to scale production capacity to support our expanding portfolio of products, which enabled us to navigate through some macroeconomic factors such as labor shortage, inflation and supply chain headwinds in the three months ended June 30, 2022, as well as our continued investments in COVID-19 related safety measures. We may see continued productivity improvements to offset higher inflation and supply chain pressures resulting in expansion of our gross margin in the future.
Research and Development (“R&D”)
 Three Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
R&D$19,559 $17,738 $1,821 10.3 %
R&D as a percentage of revenue9.4 %9.6 %
R&D expenses increased by $1.8 million, or 10.3%, to $19.6 million in the three months ended June 30, 2022, from $17.7 million in the three months ended June 30, 2021. The increase was primarily due to a $3.8 million increase in personnel-related expenses driven by an increase in headcount and a $0.6 million increase in infrastructure costs to support our growth, partially offset by a $2.6 million decrease in product development and testing costs.
We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we are anticipating future payments related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
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Sales, General and Administrative (“SG&A”)
 Three Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
SG&A$114,615 $90,636 $23,979 26.5 %
SG&A as a percentage of revenue55.0 %49.2 %
SG&A expenses increased by $24.0 million, or 26.5%, to $114.6 million in the three months ended June 30, 2022, from $90.6 million in the three months ended June 30, 2021. The increase was primarily due to a $8.7 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $4.6 million increase in infrastructure costs, a $3.1 million increase in travel and other in-person related expenses, a $2.5 million increase in information technology expenses and other professional services primarily associated with our Enterprise Resource Planning (“ERP”) system implementation, a $2.5 million increase in costs related to marketing events, and a $1.8 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition.
As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments in infrastructure to support the business.
Provision for Income Taxes
 Three Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
Provision for income taxes
$2,520 $1,904 $616 32.4 %
Effective tax rate(215.9)%18.7 %
Our provision for income taxes was $2.5 million for the three months ended June 30, 2022, which was primarily due to tax deficiencies (shortfalls) expenses from stock-based compensation attributable to our U.S. jurisdiction as a result of stock price fluctuation, offset by tax benefits attributable to our worldwide losses. Our provision for income taxes was $1.9 million for the three months ended June 30, 2021, which was primarily due to tax expenses attributable to our worldwide profits, offset by excess tax benefit from stock-based compensation attributable to our U.S. jurisdiction. The effective tax rate was (215.9)% for the three months ended June 30, 2022, compared to 18.7% for the three months ended June 30, 2021. Our change in effective tax rate was primarily attributable to large tax expenses over relatively small worldwide losses for the three months ended June 30, 2022, when compared to small tax expenses over relatively large worldwide profits for the three months ended June 30, 2021.

Six Months Ended June 30, 2022 Compared to the Six Months Ended June 30, 2021
Revenue
 Six Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
Vascular$246,352 $189,849 $56,503 29.8 %
Neuro165,887 163,613 2,274 1.4 %
Total$412,239 $353,462 $58,777 16.6 %
Revenue increased $58.8 million, or 16.6%, to $412.2 million in the six months ended June 30, 2022, from $353.5 million in the six months ended June 30, 2021. Overall revenue growth is primarily due to an increase in sales of new and existing products within our vascular and neuro businesses.
Revenue from our vascular products increased $56.5 million, or 29.8%, to $246.4 million in the six months ended June 30, 2022, from $189.8 million in the six months ended June 30, 2021. This increase was driven by sales of our vascular thrombectomy products and peripheral embolization products, which globally increased by 36.5% and 19.5%, respectively, in the six months ended June 30, 2022. These increases were primarily due to higher sales volume 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.
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Revenue from our neuro products increased $2.3 million, or 1.4%, to $165.9 million in the six months ended June 30, 2022, from $163.6 million in the six months ended June 30, 2021. This increase in revenue from our neuro products was primarily attributable to increased revenue in China and the United States, sales of new products, and further market penetration of our existing products. This increase was driven by an increase in sales of our neuro access products which globally increased by 7.6%, partially offset by a decrease in sales of our neuro embolization and neuro thrombectomy products of 15.0% and 0.9%, respectively, in the six months ended June 30, 2022. Prices for our neuro products remained substantially unchanged during the period.
Revenue by Geographic Area
The following table presents revenue by geographic area, based on our customer’s shipping destination, for the six months ended June 30, 2022 and 2021:
 Six Months Ended June 30,Change
20222021$%
 (in thousands, except for percentages)
United States$285,764 69.3 %$248,472 70.3 %$37,292 15.0 %
International126,475 30.7 %104,990 29.7 %21,485 20.5 %
Total$412,239 100.0 %$353,462 100.0 %$58,777 16.6 %
Revenue from sales in international markets increased $21.5 million, or 20.5%, to $126.5 million in the six months ended June 30, 2022, from $105.0 million in the six months ended June 30, 2021. Revenue from international sales represented 30.7% and 29.7% of our total revenue for the six months ended June 30, 2022 and 2021, respectively.
Gross Margin
 Six Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
Cost of revenue$150,786 $123,439 $27,347 22.2 %
Gross profit$261,453 $230,023 $31,430 13.7 %
Gross margin %63.4 %65.1 %
Gross margin decreased 1.7 percentage points to 63.4% in the six months ended June 30, 2022, from 65.1% in the six months ended June 30, 2021, primarily due to higher labor and logistics costs as a result of manufacturing transfer activities and higher labor absenteeism due to the Omicron variant during the three months ended March 31, 2022. Gross margin is impacted by our ability to scale production capacity to support our expanding portfolio of products as well as our continued investments in COVID-19 related safety measures. We may see continued productivity improvements to offset higher inflation and supply chain pressures resulting in expansion of our gross margin in the future.
Research and Development (“R&D”)
 Six Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
R&D$40,123 $35,814 $4,309 12.0 %
R&D as a percentage of revenue9.7 %10.1 %
R&D expenses increased by $4.3 million, or 12.0%, to $40.1 million in the six months ended June 30, 2022, from $35.8 million in the six months ended June 30, 2021. The increase was primarily due to a $8.0 million increase in personnel-related expenses driven by an increase in headcount and a $1.3 million increase in infrastructure costs to support our growth, partially offset by a $5.4 million decrease in product development and testing costs.
We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we are anticipating future payments related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
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Sales, General and Administrative (SG&A)
 Six Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
SG&A$225,515 $170,434 $55,081 32.3 %
SG&A as a percentage of revenue
54.7 %48.2 %
SG&A expenses increased by $55.1 million, or 32.3%, to $225.5 million in the six months ended June 30, 2022, from $170.4 million in the six months ended June 30, 2021. The increase was primarily due to a $23.3 million increase in personnel-related expense driven by an increase in headcount and related expenses to support our growth, a $7.9 million increase in travel and other in-person expenses, a $7.7 million increase in infrastructure costs, a $6.9 million increase in cost related to marketing events, a $4.2 million increase in information technology expenses and other professional services primarily associated with our ERP system implementation, and a $3.5 million amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition.
As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments in infrastructure to support the business.
(Benefit from) Provision For Income Taxes
 Six Months Ended June 30,Change
 20222021$%
 (in thousands, except for percentages)
(Benefit from) provision for income taxes$(2,663)$3,445 $(6,108)(177.3)%
Effective tax rate42.5 %15.2 %
Our benefit from income taxes was $2.7 million for the six months ended June 30, 2022, which was primarily due to tax benefits attributable to our worldwide losses, offset by tax deficiencies (shortfalls) expenses from stock-based compensation attributable to our U.S. jurisdiction as a result of stock price fluctuation. Our provision for income taxes was $3.4 million for the six months ended June 30, 2021, which was primarily due to tax expenses attributable to our worldwide profits, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction. The effective tax rate was 42.5% for the six months ended June 30, 2022, compared to 15.2% for the six months ended June 30, 2021. Our change in effective tax rate was primarily attributable to large tax benefits over relatively small worldwide losses for the six months ended June 30, 2022, when compared to small tax expenses over relatively large worldwide profits for the six months ended June 30, 2021.

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 expenses or benefits related to stock-based compensation. Our income tax provision can be volatile as the amount of excess tax expenses or benefits 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.
Liquidity and Capital Resources
As of June 30, 2022, we had $572.4 million in working capital, which included $58.2 million in cash and cash equivalents and $146.1 million in marketable investments. As of June 30, 2022, we held approximately 26.0% 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 during the COVID-19 pandemic, 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, and was set to mature on April 23, 2021. During the three months ended March 31, 2021, we entered into an amended one-year 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 amended Credit Agreement extended the maturity date from April 23, 2021 to February 21, 2022 and had substantially the same terms and conditions as the prior credit agreement with certain changes including the exclusion of certain one-time charges and expenses incurred during the fiscal quarters ended September 30, 2020 and December 31, 2020 from the calculation of the financial covenants, reductions in interest rate floors applicable to revolving loans and other changes to borrowing mechanics under the Credit Agreement. In the first quarter of 2022, the Company entered into a further amended one-year 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 amended Credit Agreement extended the maturity date from February 21, 2022 to February 17, 2023 and has substantially the same terms and conditions as the prior credit agreement with certain changes to the reference benchmark interest rates, applicable margins and borrowing mechanics under the Credit Agreement, having the overall effect of lowering the interest rates payable by the Company on amounts borrowed under the Credit Agreement, and a reduction of the commitment fee payable on the average daily unused amount under the Credit Agreement to 0.25% per annum. 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 our 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.
While we have strengthened our liquidity position, we cannot reliably estimate the extent to which the COVID-19 pandemic may impact our cash flow from operations in the third quarter and beyond.
The following table summarizes our cash and cash equivalents, marketable investments and selected working capital data as of June 30, 2022 and December 31, 2021:
 June 30, 2022December 31, 2021
 (in thousands)
Cash and cash equivalents$58,234 $59,379 
Marketable investments146,135 195,496 
Accounts receivable, net187,389 133,940 
Accounts payable23,096 13,421 
Accrued liabilities111,405 99,796 
Working capital(1)
572,357 558,277 
(1)Working capital consists of total current assets less total current liabilities.
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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:
 Six Months Ended June 30,
 20222021
 (in thousands)
Cash and cash equivalents and restricted cash at beginning of period$59,379 $69,670 
Net cash used in operating activities(44,089)(17,678)
Net cash provided by investing activities36,371 29,435 
Net cash provided by financing activities6,490 559 
Cash and cash equivalents and restricted cash at end of period58,234 82,277 
Net Cash Used In Operating Activities
Net cash used in operating activities consists primarily of consolidated net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, inventory write-downs, and changes in deferred tax balances), and the effect of changes in working capital and other activities.
Net cash used in operating activities was $44.1 million during the six months ended June 30, 2022 and consisted of consolidated net loss of $3.6 million and non-cash items of $27.4 million, offset by net changes in operating assets and liabilities of $67.9 million. The change in operating assets and liabilities includes an increase in accounts receivable of $54.3 million due to timing of receipt of payment, an increase in inventories of $36.1 million to support our growth, and an increase in prepaid expenses and other current and non-current assets of $2.5 million. This was partially offset by an increase in accrued expenses and other non-current liabilities of $15.7 million, an increase in accounts payable of $9.0 million, and proceeds of $0.2 million received related to lease incentives from operating leases.
Net cash used in operating activities was $17.7 million during the six months ended June 30, 2021 and consisted of consolidated net income of $19.2 million and non-cash items of $29.1 million, offset by net changes in operating assets and liabilities of $66.0 million. The change in operating assets and liabilities includes an increase in inventories of $41.5 million to support our growth, an increase in accounts receivable of $22.9 million, and an increase in prepaid expenses and other current and non-current assets of $5.8 million. This was partially offset by an increase in accrued expenses and other non-current liabilities of $5.0 million.
Net Cash Provided By Investing Activities
Net cash provided by investing activities relates primarily to proceeds from maturities of marketable investments, net of purchases, and capital expenditures.
Net cash provided by investing activities was $36.4 million during the six months ended June 30, 2022 and primarily consisted of proceeds from maturities and sales of marketable investments of $45.8 million, partially offset by capital expenditures of $9.4 million.
Net cash provided by investing activities was $29.4 million during the six months ended June 30, 2021 and primarily consisted of proceeds from maturities and sales of marketable investments, net purchases, of $36.9 million, partially offset by capital expenditures of $7.3 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.
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Net cash provided by financing activities was $6.5 million during the six months ended June 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 $4.6 million. This was partially offset by $5.1 million of payments of employee taxes related to vested restricted stock units and $0.9 million in payments towards finance leases.
Net cash provided by financing activities was $0.6 million during the six months ended June 30, 2021 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $7.4 million and proceeds from exercises of stock options of $1.0 million. This was partially offset by $7.0 million of payments of employee taxes related to vested restricted stock and restricted stock units and $0.7 million in payments towards finance leases.
Contractual Obligations and Commitments
During the six months ended June 30, 2022, the Company entered into new leases and modified existing leases for certain properties. See Note “9. Leases” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information regarding our future lease obligations.
There have been no other material changes to our contractual obligations and commitments as of June 30, 2022 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.
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, 2021.
Recently Issued Accounting Standards
For information with respect to recently issued accounting standards and the impact of these standards on our condensed consolidated financial statements, see Note “2. Summary of Significant Accounting Policies” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
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 and/or our marketable investments.
Interest Rate Risk. We had cash and cash equivalents of $58.2 million as of June 30, 2022, which consisted of funds held in money market funds, commercial paper, and general checking and savings accounts. In addition, we had marketable investments of $146.1 million, which consisted primarily of commercial paper, corporate bonds, 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 our 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 June 30, 2022, 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
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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 attributable to Penumbra, Inc. 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 six months ended June 30, 2022 was primarily impacted by higher labor and logistics costs as a result of manufacturing transfer activities and higher labor absenteeism due to the Omicron variant during the three months ended March 31, 2022, 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 June 30, 2022 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 June 30, 2022.
Changes in Internal Control Over Financial Reporting
During the quarterly period ended June 30, 2022, we began a multi-stage implementation of a new Enterprise Resource Planning (“ERP”) system, which will replace our existing core financial systems. The ERP system is designed to accurately maintain the Company’s financial records, enhance the flow of financial information, improve data management, and provide timely information to our management team. Accordingly, we continue to rely upon a combination of our existing and new ERP systems for financial statement reporting purposes. Except for the implementation of the new ERP system and related controls, there was no change in our internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) that occurred during the quarterly period ended June 30, 2022 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 “10. Commitments and Contingencies” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.

ITEM 1A. RISK FACTORS.
There have been no material changes to our risk factors reported in, or new factors identified since the filing of, our Annual Report on Form 10-K for the year ended December 31, 2021, which was filed with the SEC on February 22, 2022.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.

ITEM 4. MINE SAFETY DISCLOSURE.
None.

ITEM 5. OTHER INFORMATION.
None.

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ITEM 6. EXHIBITS.
Exhibit NumberDescriptionFormFile No.Exhibit(s)Filing Date
Certification of Principal Executive Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
Certification of Principal Financial Officer Required Under Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as amended.
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 June 30, 2022 formatted in Inline Extensible Business Reporting Language (iXBRL) includes: (i) Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021, (ii) Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2022 and 2021, (ii) Condensed Consolidated Statements of Comprehensive (Loss) Income for the three and six months ended June 30, 2022 and 2021, (iii) Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 30, 2022 and 2021, (iv) Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2022 and 2021, 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).
* Filed herewith.    
** 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: August 4, 2022 
 By: /s/ Maggie Yuen
 Maggie Yuen
 Chief Financial Officer
(Principal Financial Officer)

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