Good afternoon. My name is Angela, and I will be the conference operator today. At this time, I would like to welcome everyone to Penumbra’s Second Quarter 2022 Conference Call. I would like to introduce Ms. Jee Hamlyn-Harris, Investor Relations for Penumbra. Ms. Hamlyn-Harris, you may begin your conference.

Thank you, operator, and thank you all for joining us on today’s call to discuss Penumbra’s earnings release for the second quarter of 2022. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, can be viewed under the Investors tab on our company website at www.penumbrainc.com. During the course of this conference call, the company will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality compliance and business trends. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those referenced in our 10-K for the year ended December 31, 2021, filed with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our periodic filings with the SEC, including the 10-K previously mentioned, for a more complete discussion of these factors and other risks that may affect our future results or the market price of our stock, including, but not limited to the impact of the COVID-19 pandemic on our business, results of operations and financial conditions. Penumbra disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise. On this call, certain financial measures are presented on a non-GAAP basis. The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. Adam Elsesser, Penumbra’s Chairman and CEO; and Sandra Lesenfants, our President, Interventional, will provide a business update. Maggie Yuen, our Chief Financial Officer, will then discuss our financial results for the second quarter. And Jason Mills, our Executive Vice President of Strategy, will discuss our 2022 guidance. With that, I would like to turn over the call to Adam Elsesser.

Thank you, Jee. Good afternoon. Thank you for joining Penumbra’s second quarter 2022 conference call. Our total revenues for the second quarter were $208.3 million, a year-over-year increase of 13.1% as reported and 15.3% in constant currency. Global vascular revenue grew 22.7% and global neuro revenue increased 1.5% compared to the same quarter a year ago. We expanded gross margins 180 basis points sequentially to 64.3%. We recorded non-GAAP operating income of $1.6 million or 0.8% of revenue in the second quarter. Looking forward, we expect to increase our revenue in the second half of the year and accelerate growth in 2023 with 4 significant catalysts: 3 major product launches and the presentation of significant clinical data. Sandra will also speak about these catalysts in a few minutes. Equally important in this economic climate, we expect to continue to expand gross margins with 70% plus as the goal within a few years, and we plan to increase operating profitability through discipline and operational improvements, notwithstanding the prevailing downturn in the macro economy. These catalysts, which include both neuro and vascular, as well as our work on gross margins and operating profitability, will, I believe, make the next 12 to 18 months one of the most robust eras ever for Penumbra. Turning back to the second quarter, I am proud of how our team executed, notwithstanding a very difficult operating environment, primarily in the United States. U.S. growth of 10.2% year-over-year was lower than we had anticipated and lower than we expect in future periods. The specific challenges most evident in our sector over the past few months included persistent staffing shortages, which challenged our hospital partners' workflows, contract supply issues, which we think have receded, but are still watching in certain geographies around the world, and supply chain challenges which our team continues to address with success and resolve, but not without significant effort. These challenges were and still are evident, but we are getting better at addressing them. And we expect to further mitigate their impact in the second half of the year, during which we think growth in our U.S. business will accelerate. Our international business grew 20% year-over-year and is starting to reach scale. However, foreign currency fluctuations impacted our second quarter results and we expect FX to weigh on reported revenue in the second half of 2022 as well. All of that said, the combination of our U.S. and international businesses and the 2 large areas neuro and vascular in which we participate give us a broad-based product portfolio and geographic platform to succeed in virtually any macroeconomic environment. Turning to our vascular business, we reported growth of 22.7% year-over-year to $123.5 million in the second quarter. We grew our vascular thrombectomy revenue of 30.3% year-over-year and our vascular embolization revenue of 11.8% year-over-year. Our U.S. vascular growth was driven primarily by increased utilization within existing accounts, who already believe in thrombectomy, but were early in the phases of trying our technology. This is in contrast to sales stocking in new accounts that primarily used lytics. In fact, based on our analysis, we believe we won competitively in both venous and arterial thrombectomy during Q2. While some of the macro factors that I discussed earlier clearly had an impact on our Q2 vascular growth in the U.S., we have seen a strong resurgence in the trends in our vascular thrombectomy business over the past month. Our current technology in venous and arterial disease, Lightning 12 and Lightning 7, represents a new treatment paradigm in both of these vascular anatomies, in which we have started to eliminate the typical trade-offs in performing mechanical thrombectomy. Looking forward, we believe our 2 new vascular products, Lightning Flash and Lightning Bolt, will take us to another level of technology leadership in both markets. Lightning Flash introduces a new advanced catheter and incorporates a next-generation Lightning algorithm that utilizes an extremely novel way to selectively control aspiration, which we think will increase the amount of clot we aspirate, further reduce the time it takes to do the procedure, and further optimize blood loss mitigation, while also reducing the risk of vessel lumen damage. Just as potentially important as Lightning Flash could be in the venous market, we are equally excited about the potential for Lightning Bolt in the arterial anatomy. Lightning Bolt is designed with an extremely sophisticated algorithm. The technology incorporates both dual pressure sensors inherent in our current Lightning algorithm that helps mitigate blood loss, as well as the clot extraction technology inherent and fundamental for ischemic stroke, which I will discuss in a few minutes. Moreover, our team, along with key opinion leaders, are advancing significant clinical work and building proof that our proprietary innovations improve outcomes, reduce complications, and are advancing the field overall. We expect much more discussion of important clinical work at medical meetings going forward, as many physicians collect and present their experiences using our technology versus the competition. For example, at the recent VTE Summit in San Diego, independent data was presented on 85 DVT patients treated with current thrombectomy systems, including Lightning 12, which comparatively produce superior results. We look forward to the data and other independent datasets being presented, published and discussed going forward. Further, we expect presentation of the first 60 patients enrolled in our STRIDE PE trial at the PERT Symposium in October, which we think will highlight our position in the PE market. On the arterial side, we expect to finish enrollment in our STRIDE study by year-end, with acute results expected to be presented next spring, which we believe will increase awareness and adoption of Lightning 7 and acute limb ischemia. In addition, Sandra will discuss 2 new randomized clinical trials that we plan to conduct in vascular thrombectomy in the near-term as well. In coronary, CAT RX continued to strong growth trajectory in the U.S., as did our vascular embolization business even though we did see an impact to the latter from the macro dynamics during the quarter. We also initiated a successful launch of both Lightning 12 and Lightning 7 in the European market. Moreover, the introduction of our original Indigo thrombectomy products into China was successful, and we expect strong growth going forward. We also are working toward an introduction of our vascular thrombectomy product into the Japanese market. Turning to our neurovascular business, our revenue grew to $84.8 million in the second quarter of 1.5% on a year-over-year basis, and 4.6% sequentially. Our U.S. stroke business grew strong double digits again year-over-year, while our neuro embolization and international stroke business offset this growth. We are excited to announce FDA approval of our IDE for the THUNDER trial, effectively starting the Thunderbolt era in stroke therapy. The excitement among the neurovascular community about this technology and this trial is palpable. We expect enrollment to be brisk and believe Thunderbolt could be launched in the United States in the second half of 2023. We have said it before and physicians who have now seen the Thunderbolt agree. This technology could completely change the paradigm in ischemic stroke treatment by both improving patient outcomes, as well as potentially allowing neuro physicians to treat more ischemic stroke patients safely, efficaciously and expediently. Since the Thunderbolt trial is underway, this is an appropriate time to spend a few minutes explaining what Thunderbolt is and how it works. Thunderbolt is a microprocessor-controlled advanced software algorithm integrated into the tubing that sits between the engine pump and the RED catheter. It does not go into the patient’s body directly. Thunderbolt orchestrates modulating aspiration, which is proprietary to this technology. Two valves are integrated into Thunderbolt. One valve directly connects the RED catheter of choice, 62, 68 or 72, to our engine pump. The second valve connects the RED catheter to a non-pressurized saline bag. The Thunderbolt algorithms orchestrate the opening and closing of each valve up to 12 times per second once clot engagement is detected. This modulated aspiration disrupts the friction between the clot and the tip of the catheter. Eliminating this friction, we believe will allow the RED catheters to ingest the clot the vast majority of the time. This compares to the current practice with aspiration, where ingestion occurs a small percentage of the time, even with large bore catheters that are much more challenging to track to the clot. Because of this, we expect Thunderbolt to change another existing paradigm in interventional stroke. We believe it will allow doctors to use smaller catheters while getting the unique benefits of modulating aspiration faster and more complete clot removal. This could have the added benefit of increasing the number of treatable patients by allowing for the routine treatment of more distal occlusions. In our U.S. stroke business, Thunderbolt is the clear priority. That said, we also expect to launch an additional RED catheter in the second half of the year, which we believe will be a very important addition to our market-leading portfolio. We also expect to launch the RED catheter family into the European market during Q3, which will help us revitalize our European neuro business. I’ll now turn the call over to Sandra Lesenfants, President of our Interventional business, to give her perspective on our new product pipeline and clinical trial strategy.

Good afternoon. It is a pleasure to join my first Penumbra earnings call. I have spent most of my career in the interventional space and was drawn to join Penumbra because of its unique culture of innovation and its commitment to put patients first. Penumbra’s strong culture of innovation and built-in comprehensive product portfolio has stood the test of time and proven successful in multiple markets over the past 18 years. I believe the new product launches and supporting clinical data will start another transformative period in Penumbra’s history. I am excited about both developments because the number of patients we can help across our core interventional markets represent one of the largest, most underpenetrated opportunities I have seen in my career. I have spent many years leading some of the largest and fastest-growing businesses in the interventional medical device field. I can say without equivocation that the culture of innovation at Penumbra is truly at a completely different level. The innovation culture here is unique, continuous and, most importantly, impactful. Adam already outlined the 3 specific technologies that we believe can be truly paradigm-changing to their respective fields: Thunderbolt for ischemic stroke; Lightning Flash for venous thromboembolism; and Lightning Bolt for peripheral arterial disease. Thunderbolt, Lightning Flash and Lightning Bolt, in addition to Lightning 12 and Lightning 7, are all proprietary systems. The development of these transformational technologies has been years in the making, and they are protected by a strong intellectual property portfolio. The common denominator across all these products is the microprocessor-controlled advanced software algorithms that integrate into the system, orchestrating the action of our pump and our catheters. The algorithms inherent in Lightning Flash, Lightning Bolt and Thunderbolt are customized to each catheter family, which we develop based on the optimal solution for each specific anatomy: arterial, venous or neuro. We have a clear strategic plan to accelerate the paradigm change in mechanical thrombectomy from traditional lytics or surgery to proprietary, simple and versatile technologies. We expect this product will help physicians treat significantly more patients safely, effectively and less invasively in the months and years ahead. Further, generating new scientific evidence will be critical to achieve our objectives. On that front, I’m happy to say that we are also embarking on the most robust era of clinical evidence generation in our company’s history. In addition to the STRIDE trial for Thunderbolt in ischemic stroke, which Adam mentioned, we have 5 additional trials currently enrolling or recently completed in stroke, arterial, PE, DVT, and embolization. In addition, we are nearing completion of trial designs for 2 randomized controlled trials, one in PE and the other in coronary, which we expect to commence within the next few quarters. We will give you more details on these two important randomized studies in the near future. Combined, our pipeline of breakthrough technologies and unmatched clinical portfolio sets us up exceptionally well to treat many more patients within our target market, expand our leadership positions in each of these markets, and to deliver strong growth for years in the future. I will now turn the call back to Adam.

Thank you, Sandra. Before I turn the call over to Maggie, I’d like to give an update on our immersive healthcare business. The idea of using immersive computing or virtual reality for healthcare is continuing to gain momentum with healthcare professionals and validates our decision to invest in this business. We’ve seen an uptick in interest and use of our recently launched REAL y-Series for rehabilitation using our updated hardware and myriad new experiences that we unveiled at our Investor Day last year. In addition, a significant event took place this quarter to further the interest and momentum regarding the use of virtual reality for healthcare. The Veterans Administration hosted a multi-day summit on the use of virtual reality to help our veterans. I had the honor of joining a keynote panel with senior members of the VA to discuss this important work. I was extremely impressed with their overall knowledge and understanding, as well as their willingness to validate and bring this technology to help not only veterans, but the huge number of other patients that can benefit as well. Even with that confidence in the long-term benefit and likely success of our immersive healthcare platform, obviously, the macroeconomic environment has changed recently. Because of that, we are focusing our efforts on the most immediate use cases, which has allowed us to recalibrate our quarterly spending rate in immersive healthcare to realign with our discipline to increase the profitability of the company. Over the next 12 months, we expect to trim over $10 million in operating expenses from our business while we maintain investments that we think will drive progress towards scaling this business over the long-term. I’ll now turn the call over to Maggie to go over our financial results for the quarter.

Thank you, Adam. Good afternoon, everyone. Today, I will discuss the financial results for the second quarter of 2022. Consistent with previous quarter’s financial results, on this call for revenue and gross margin are on a GAAP basis, while operating expenses and operating income are on a non-GAAP basis. The corresponding GAAP measures and our reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. For the second quarter ended June 30, 2022, our total revenues were $208.3 million, an increase of 13.1% reported and 15.3% in constant currency compared to the second quarter of 2021. Our geographic mix of sales in the quarter were 67.9% U.S., and 32.1% international. In the United States, we reported growth of 10.2%. And in our international regions, we increased revenue 19.8% as reported and 27.2% in constant currency. Moving to revenue by franchise, revenue from our vascular business grew to $123.5 million in the second quarter of 2022, an increase of 22.7% reported and 24.5% in constant currency compared to the same period last year. We saw double-digit growth across U.S., EMEA, Asia and Latin America regions. Revenue from our neuro business was $84.8 million in the second quarter of 2022, an increase of 1.5% reported and 4.3% in constant currency compared to the same period a year ago. Sequentially, revenue from our neuro business grew by 4.6% reported and 5.8% in constant currency driven by stronger growth in neuro thrombectomy across international regions. Moving to gross margin and operating expenses. Gross margin in the second quarter was relatively flat at 64.3% compared to 64.4% in the same quarter last year and continues to improve sequentially from 62.5% last quarter. Our investment in capacity, labor force and productivity efforts in the last 18 months have begun to pay off in terms of driving margin expansion, as well as enabling us to navigate through some macro labor shortages, installation and supply chain headwinds. Looking forward to the balance of this year, we expect to see continued productivity improvements to offset heightened inflation and supply chain pressures. We have several programs in place to continue to drive gross margin improvements in the future. Now on to our non-GAAP operating expenses, excluding the quarter’s amortization of acquired intangible assets of $1.8 million. Total operating expense for the quarter was $132.4 million, or 64% of revenue compared to $108.4 million or 59% of revenue for the same quarter last year. Our research and development expenses for Q2 2022 were $19.6 million, compared to $17.7 million for Q2 2021. SG&A expenses for Q2 2022 were $112.8 million or 54.2% of revenue, compared to $90.6 million for Q2 2021 and $109.1 million compared to last quarter. We made additional investment in commercial channels and temporary resources to support our ERP system migration in the second quarter. We recorded operating income of $1.6 million or 0.8% of revenue in the second quarter of 2022, excluding the amortization of acquired intangible assets, compared to an operating income of $10.3 million for the same period last year. For the back half of 2022, we will be more disciplined in our discretionary spending. Together with over $10 million reduction in immersive healthcare operating expenses in the next 12 months, we expect continued operating margin expansion in sequential quarters. We ended the second quarter with cash, cash equivalents and marketable security balance of $204.4 million. Although we experienced some receivable collection delay related to the migration of our new ERP system during the quarter, our team has made great progress to recent back to normal collection cycles. And now, I’d like to turn the call over to Jason to discuss our guidance.

Thank you, Maggie, and good afternoon, everyone. Foreign currency translations impacted our reported revenue in the second quarter and first half of 2022 by $4 million and $6 million, respectively. For the full year 2022, we anticipate the FX impact to be approximately $10 million to $15 million. We are maintaining our guidance of $860 million to $875 million. But due to these FX headwinds, we are more comfortable with expectations at the lower end of this range. That said, on a constant currency basis, we continue to expect our revenue growth to be 15% to 17% compared to 2021. Looking into 2023, Lightning Flash, Lightning Bolt, and Thunderbolt represent 3 paradigm-changing technologies in arterial, venous and neuro thrombectomy, respectively. These products, coupled with multiple international growth opportunities and a strong clinical evidence pipeline, underlie our confidence in future growth. Consequently, we reiterate our belief that we can accelerate our revenue growth in 2023 both on a reported and constant currency basis. I will now turn the call back to Adam for closing remarks.

Thank you, Jason, Maggie, Sandra, and Jee. I’d like to conclude this quarter’s earnings call by acknowledging the world-class work that the Penumbra team did this quarter in very challenging circumstances. I am so proud to work with this team. They have shown time and time again their talent and perseverance by pulling together to tackle whatever comes our way. I also want to quickly summarize how our team at Penumbra runs the business. We’re developing products that can help a significant number of patients, many of whom are not getting the most advanced treatment today. Our technology has always been unique and transformational. But at this moment, we have 4 significant catalysts coming: 3 products plus supporting clinical data that will allow us to help more and more patients for many years to come. This, coupled with our disciplined planning and execution, gives us confidence that we will deliver strong double-digit growth, increase gross margins materially, and significantly expand operating profitability, all while investing proportionately to the large opportunities in front of us. Thank you. We’ll now take questions.

Your first question comes from Robbie Marcus with JPMorgan. Your line is open.

Hi, this is actually Lilly on for Robbie, today. Thanks so much for taking the question.

Hi, Lilly.

First – hey. Is there any way that you can quantify the magnitude of the contrast shortage in the quarter? And how are you thinking about this and other challenges like staffing, China impacting your growth over the rest of the year?

Yes. It’s a great question. I wish there was an easy way to quantify contrast and the impact. There really isn’t. I would say that there was a lot more kind of discussion about it earlier in the quarter. I really haven’t. As I said in my prepared remarks, we haven’t really seen it as much as an issue right now. The persistent staffing issues really have been the bigger impact we think, if we were to pick what was driving the challenges and some of the headwinds. That being said, and I said it in my prepared remarks, the last month, the first month of this quarter, the last 30 days has shown that we’ve seen a pretty strong resurgence. So whether hospitals are dealing with their staffing issues or finding a way to operate within this environment on a more long-term basis. I think it’s a combination of those. We have a lot of optimism for what we’ve seen in the first month so far.

Yeah, Lilly, and just to add a little bit of that. As Adam said, quantitative specificity is very difficult. We tried to ascertain that, it was certainly a number of million dollars we think, but it’s hard to quantify much further than that, just to try to put a finer point on it.

Got it. That’s really helpful. Thank you. And just as a follow-up, did the U.S. peripheral business grow sequentially? And how are you thinking about that segment in the back half of the year? Thanks so much.

Sorry. Just so I heard your question correctly. Did you ask about U.S. or international?

U.S. peripheral.

Yeah. So our U.S. business in the first half of the year grew about 15%. Certainly, we saw, as Adam mentioned, staffing shortages, the macroeconomic challenges impacted our U.S. business in the second quarter more than it did in the first. We expect acceleration in that business in the back half of the year, we think it’ll step up in the third and even step up more in the fourth quarter. And then if you look at the second outgrowth on a year-over-year basis in the U.S., we think it will be similar, actually, to the first half, which, as I mentioned, was in the mid-teens.

Great. Thank you.

Thanks.

Thank you.

Your next question comes from the line of Larry Biegelsen with Wells Fargo. Your line is open.

Hi, this is Lei calling into Larry. Thanks for taking my questions. Adam…

Hi, Lei.

Hi, how are you?

Well, thank you.

Good. Adam, you talked about – you mentioned a rebound in the vascular thrombectomy business in the past month. Can you just give a little more color on how that trended through Q2, did worsen from April to June, and there was a big rebound in July. And also any commentary on that trend line in neuro? And I have a follow-up.

Yeah, let’s start with the peripheral thrombectomy business. What I was alluding to is really in the last month to this – the month of July, we saw the strong resurgence probably start a little bit into the end of June as well. Some of that, I think, is the hospitals are getting more organized around the staffing issues. And, I think, they’ve been working really hard to do that. Some of it might be a competitive share. As I alluded to, we’re seeing a lot more conversation doctors are bringing up about some of that issue, particularly in the DVT side. I think that’s a bigger topic that we’re going to be talking about in addressing going forward. But, I think, the combination of those things are seeing that acceleration. On the neuro side, I will tell you the excitement around Thunderbolt as more and more folks see it, there’s a large presentation at SNIS with a demonstration from a physician, who’s part of the trial. We had a lot of conversation about that, folks throughout the week coming up and talking about it. So, I think, there’s a real excitement around that. And, of course, the RED catheters are part of that success right now.

Yeah. And just to add to that, Lei. The underlying fundamentals of our peripheral thrombectomy business, and we look at them very carefully, they’re actually quite healthy and have been through the second quarter. We just saw continued improvement of an already strong fundamental base in July. Generally speaking, we expect to see that continue here in the second half of the year.

Great, thanks. And then as far as gross margin, can you talk about what we should expect for potential improvement in the second half? And any comments around key drivers to get to the 70% plus gross margin in the next few years? Thank you.

Yeah, thanks for the question. Yeah, we’re very excited to see all the momentum in productivity improvement, especially in our Roseville site, and the manufacturing transfer efforts. So a lot of the productivities we see in this quarter are driven by those productivity initiatives. Sequentially, there’s still some low hanging fruits and a lot of other initiatives that we’re working on. We will continue to see improvement and continue to navigate through the foreign exchange, inflation and supply chain pressures. In the longer term, we certainly continue driving improvement, and new product launches will drive favorable mix, and a lot of the other bigger programs we have in place will get us in the right path to what’s the 70% plus gross margin target.

Thanks, Lei.

Your next question comes from the line of Bill Plovanic with Canaccord. Your line is open.

Hi. It’s John on for Bill tonight. Thanks for taking my questions.

Hi, John.

Yes. So I just – you had a really good O-U.S. quarter. And I just wanted to dive a little bit more into that. Is this really from the launch of the Lightning 7 and 12 in Europe? And how should we think about O-U.S. contribution in the second half of the year towards the overall revenue targets?

Yeah, thanks for the question, John. It’s a great question. The growth and contribution was broad-based in the quarter from our international business. Certainly, the Lightning launches in Europe and EMEA broadly contributed to that. We’re looking forward to the RED launches this quarter in that same region. We also saw broad-based growth across Asia-Pacific, including China, and look forward to continued growth there as well as Japan, obviously. We mentioned where we could have our vascular thrombectomy product there may be earlier than we thought. So things internationally look like they’re on a solid trajectory.

Great. Thanks for that. And just – on the call itself, obviously, you’ve highlighted a lot of macro environment challenges and FX. What’s your comfort level around hitting that $1 billion in sales target for 2023 still? Do you think you could still hit it with what anything that’s going on now?

Yes.

Great. Thank you.

Thanks, John.

Thank you.

The next question comes from the line of Pito Chickering with Deutsche Bank. Your line is open.

Hey, good afternoon, guys. Thanks for taking my questions. A few follow-up questions for you on the revenues. Did you see a difference in demand between urban hospitals versus sort of smaller hospitals as it relates to staffing? Can you also provide color on how vascular and neuro growth grew in the U.S. versus international?

Yeah, so start with the first one, Pito, welcome to the call. We didn’t see a discernible difference. I think what we’ve heard from customers, be it small institutions or larger academic institutions, they’re both dealing with the same macroeconomic headwinds, be it nursing or tech staffing issues or otherwise. And the same was true when contrast was more of an issue earlier in the quarter, generally speaking. With respect to your second question on U.S. versus international, we’re obviously not giving granularity to the breakout between our business as U.S. and international. But I think the important salient point is the underlying fundamentals in our thrombectomy businesses, both neuro frankly and peripheral vascular are very strong. Neuro thrombectomy growth is obviously slower right now. The momentum with Thunderbolt, we’re really excited about it.

Okay, fair enough. And a follow-up for you on the gross margins, specifically on the interventional side. I guess, how different are they versus your pure-play competitor? And any color specifically on what we’re seeing on inflationary pressures, again, within the interventional side when you include immersive health and how should we think about the inflationary pressures offset with the efficiencies from the Roseville manufacturing facility coming online?

Yeah, thanks for the question. I think in terms of the margin of thrombectomy, I mean relatively, I think the biggest difference competitive-wise is just on the price element. In general, within our business, thrombectomies have a higher margin than our embolization business. But then going forward, we do see continued productivity improvement that we have been working on in the last 12 to 18 months to offset the foreseeable macro headwinds that we expect in the second half.

Great. Thanks so much.

Thank you.

Thanks, Pito.

Your next question comes from the line of David Rescott with Truist Securities. Your line is open.

Hey, guys, thanks for taking the questions. First, on the U.S. peripheral thrombectomy business, obviously, the past several years had success kind of building that market up from the ground, and especially, good success in the quarter with the headwinds in that segment. Just wondering, if now or at some point in the future we can think about maybe getting some more granularity around the individual segments within that business as it relates to arterial or coronary PE DVT, as far as how they’ve been progressing relative to each other, as well as relative to the rest of the overall market?

Yeah, it’s a good question. I’ll start. Jason can add to the answer. As it relates to arterial versus the larger venous, there’s some way to sort of describe that, I think, it’s premature to start breaking that up just given the way we’re thinking about and running those businesses as we try to go out and build all of them at the same time. I think that that will be more helpful as the business matures. Eventually, though, as it relates to DVT and PE, it’s going to be hard because the products will be the same. And it becomes a lot harder to know that answer. It would be different if we had different products, obviously. But we’ll give you the kind of color commentary we can around the success we’re having. I alluded to that on this call, particularly as it relates to some of the competitive success. So we’ll continue to do that as best we can.

Yeah, David, just to add to that. If you look at the segments of the market, or the patient populations inherent in each one of those spaces, and you go back to what we said in the prepared remarks about the technologies we’re bringing to bear that are specific for each one of those anatomies. And you couple that last thing, the relatively low penetration where we are in penetrating or helping the patients within those markets. That’s why we said on the call that we think we’re about to enter the most robust era in Penumbra’s history. As we – with the microprocessor-controlled algorithms that are inherent in each of these technologies. And we announced a Lightning Flash for venous thromboembolism, for example, allows us to deliver the most advanced therapy the industry has ever seen in thrombectomy in venous thromboembolism. Same can be said for Lightning Bolt in arterial, CAT RX and coronary. So we feel really good about that and supporting it with clinical evidence, true clinical evidence, we feel very good about where we’re going.

Okay, thanks. I guess just as it relates to the spend in this year and spending over the next 2 or 3 next couple of years. How are you thinking about? I know in the past, you’ve talked about kind of focusing on growth as opposed to or relative to margin expansion. But when you think about the spend over the next several years, I mean, where do you think that the largest amount of the greatest dollar per spend is coming from as it relates to either Thunderbolt or having the opportunity, just expanding the neurovascular and peripheral businesses? Just would love to get a sense on the longer-term outlook of the spend. Thank you.

Okay. I’ll start on that. Thanks for the question. I think, on the overall operating expense standpoint, I think especially looking back to the last 12 months, we have had pretty balanced investment across all product developments, sales force, international, and then also overall infrastructure. So, I think, we’re at a pretty good level now to start scaling the opportunities and even be a little bit more disciplined in some of the discretionary spending. But, as Adam mentioned earlier, even with some of the cost savings area, if we’re not going to at the cost of the pipeline development.

Thank you.

Your next question comes from the line of Mike Matson with Needham & Company. Please go ahead.

Yeah, thanks for taking my questions.

Hey, Mike.

Hi. I want to ask about Lightning Flash and Bolt. Having both of those products available. It sounds like they have some different kind of capabilities. And then, I guess, you have kind of older original Lightning as well. So how are they going to be priced kind of at different levels? Is it going to have a tiered offering or something? And where do you see the Flash versus Bolt, getting used to targeting different types of procedures or something?

Yeah, it’s a great question. As I said in the prepared remarks, Lightning Bolt is primarily designed for use on the arterial side. And Lightning Flash is primarily on the venous side. And so that’s sort of the fundamental difference stage. The arteries and veins, as you know, are extremely different, they operate differently, you have to treat them differently. They’re different sizes as well. That being said, the next question around price and all that, let’s get the products cleared through the FDA and out there, and then we’ll address questions around how we price it and how we think about it. I will tell you, though, having been part of the almost 20-year journey now in stroke, and watching sort of the arc of innovation happen in stroke, and all the things we used to do as a field and even as a company to try to get caught out until where we’re now about to be with Thunderbolt. It brings the same sort of type of feeling around in the peripheral side too, that we can really sort of get to the point where we’re not doing the kind of things that we kind of almost had to do to get the clot out before and bring long-term, sort of, risk to the vessel walls and things. So this technology across all of these has a lot of meaning to people here. It is the kind of thing we do where we really sort of finish the arc of innovation that we’ve started in trying to get clot out of the body. So there’s a lot of passion, a lot of extraordinary work put into these. And we’ll deal with price when we get about in the market, but exciting times. Thanks for the question, Mike.

Yeah. And then just a follow-up on the REAL system. So you’re just given the – you’re trying to focus that on, you said, immediate use cases? Can you maybe talk about what those are? And then, what is your current pricing scheme? And I’m not asking for dollar amounts, but I think in the past you’ve talked about kind of a rental model, but it seems like we’re recently talked about more of like a set capital sale model maybe any color that would be helpful. Thanks.

Yeah, it’s a great question. There’ll be a time in place to talk about the models. I’ve been clear that we’ll do our best to update people on the models as we do our work to try to figure out the right way to do this for the field. What I think we need to focus on right now is what is – where can we be helpful, where do people need this product? And I got to just – if you can indulge me for one moment. I mentioned the meeting that the VA hosted. It was an extraordinary event. I was proud to have been invited and really blown away that the Veterans Administration was doing this. They had an awful lot of people there, both in-person and virtually. They talked about and they had a number of other vendors and so on, it was a pretty broad meeting. But being able to share and talk about how to not only figure out what applications, because they kind of already know that to some degree. But how do you implement this? What’s the workflow look like inside a healthcare system? And, obviously, VA is the largest healthcare system in the U.S. I got to tell you, then listening to a panel after our panel of veterans and having the veterans share their personal experiences, having used VR and what did that do for them, and how that opened up the beginning of not only therapy with VR with therapy and other ways. There is a huge opportunity, of course, to help everyone but if we can help our veterans, we’ve done some good work together. I think it motivated us to be efficient in how we focus and focus our spend in a way so we can be really, really helpful to these people. So that’s the most important thing right now. We’re pretty committed to that. Thank you.

Yeah. Just to add too. This is Jason. The guidance information both quantitative guidance that we’ve given for this year and to some extent, qualitative guidance that we’ve given for 2023, just as a reminder, is really our interventional business alone. I just wanted to make sure that that was clear. The financial model, the business model for immersive healthcare, as we’ll talk about more in the future, is and can be a very good lucrative model for the company. It is different than other prototypical medical device models, to be sure. But nonetheless, opportunistic in terms of the opportunity, not only from a top-line perspective but margins and profitability over the longer term. I just wanted to add to that. Thanks.

Thank you.

Your next question comes from Brandon Vazquez with William Blair. Your line is open.

Hi, everyone. Thanks for taking my question. I wanted to ask...

Hi, Brandon.

Hi, guys. On the vascular business, you talked a little bit about staffing shortages and how that kind of impacted the quarter. It’s kind of a curious comment to me, because it seemed like through COVID, one of the great things about the vascular business was that you guys were kind of a solution to the problem, right? There was overwhelmed hospitals. And you guys could come in there with Lightning, or it used to be Indigo, and get patients out of there quicker and safer than previously. I thought that might be a trend that could continue with less staff. They may still need to rely on someone like you. Is there something I’m missing there and maybe talk about why that dynamic wouldn’t have played out in Q2 and why staffing shortages had a more acute impact this quarter?

Yeah, absolutely. That’s a great question. Thanks for giving us a chance to clarify that. The staffing shortages that we’re dealing with, frankly, the others in the field of not only into vascular med tech, but in broader spaces in med tech are really procedural staffing shortages. If you don’t have the staff to do the procedure or to do as many procedures as you would otherwise like to, you can’t do them. I think what you’re referring to is certainly there was an honesty on the healthcare system and our healthcare professionals at large during COVID to keep these patients out of the ICU, and certainly that helped the thrombectomy business, generally speaking, because we can keep patients out of the ICU, and at least reduce their time there at the very least. I think there are 2 different challenges that you’re talking about, not similar.

Okay. And then, as you do start to – and correct me if I’m wrong, but my understanding on the prepared remarks was that there was a little bit less new account openings in the quarter on the vascular side. But it did rebound as you exited the quarter, starting in Q3. Can you talk about how long does it take some of these new accounts to ramp and in part asking, does the little pocket of less account openings or lower account openings create kind of a pocket of growth in the next one or two quarters as you get back on the offensive, open new accounts and ramp those up?

Yeah. It’s a great question. I just wanted to add something that I think the broader answer from Adam. But just as a reminder, the first quarter, I believe we commented on this, was the strongest quarter that we’ve had since we launched a Lightning 12 in new account ads in the United States. So there’s somewhat of a bit of consolidating those. But just to point that out, Adam, maybe you can continue that answer.

Yeah. I think the point of account openings and all was that what we did this quarter was driven by usage of our product, not stocking of new accounts. And that was really the most important point. We paid a lot of attention to customers, as I said, there was some interest among a number of them who were just starting out with our product that already were using mechanical thrombectomy to trials, and that required obviously attention as they sort of moved to this sort of the next thing that works. So I want to be clear about exactly my words, around new accounts versus stocking.

Yeah. That’s generally the philosophy, Brandon, of the company. So the new account openings in the first quarter, for example, was utilization as well. And just to be clear, just about our common practice.

Great. Thanks very much.

Thanks.

Your next question comes from the line of Pito Chickering with Deutsche Bank.

Hey, guys. Thanks for taking a quick follow-up here. What percent of your stroke respiration today is RED versus JET and ACE? And as the reordering from doctors has been different using RED than it was previously? And so what market share do you guys think you have at this point today versus a year ago?

There’s a bunch of questions in there. So I’ll start. I would – I don’t have a percentage in my head of RED versus the other. In the U.S., I think the majority, the vast majority, I can’t give you an exact number, but it’s certainly the vast majority of current usages is switched to the RED series. We’re seeing a broad range between 62, 68 and 72; there’s a lot of people like them all, depending on preference, and so on. So that’s – most of that switch of our current customers. I think we’ve seen a rebound, certainly, as our numbers indicate and share. And I think we’re continuing to see that as I very clearly said coming out SNIS. In the month of July, continuing on a lot of excitement, because of Thunderbolt and of course, Thunderbolt connects to RED catheters and so on. So, I think we’re in a pretty good spot right now. And I can’t wait to start talking about and showing you guys, Thunderbolt in action.

Great. Thanks so much.

Thanks.

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

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

This concludes today’s conference call. You may now disconnect.