Good afternoon. My name is Tamika, and I will be your conference operator today. At this time, I would like to welcome everyone to Penumbra, Inc.'s First Quarter 2025 Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. If you'd like to ask a question, please follow the number one on your telephone keypad. Thank you. I would now like to introduce Ms. Cecilia Furlong, business development investor relations for Penumbra, Inc. Ms. Furlong, you may begin your conference.

Thank you, operator, and thank you all for joining us on today's call to discuss Penumbra, Inc.'s earnings release for the first quarter of 2025. A copy of the press release and financial tables, which include a GAAP to non-GAAP reconciliation, can be viewed under the investors tab on our company website, 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, 2024, filed with the SEC. As a result, we caution you against placing undue reliance on these forward-looking statements. We encourage you to review our periodic filings with the SEC, including the 10-K previously mentioned, and a more complete discussion of these factors and other risks that may affect our future results or the market price of our stock. Penumbra, Inc. 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, financial results for revenue and gross margin are presented on a GAAP basis, while operating expenses, operating income, and adjusted EBITDA 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. Non-GAAP operating expenses and operating income exclude amortization of acquired intangible assets of $2.4 million and nonrecurring litigation-related expenses of $4.8 million in the first quarter of 2024, and adjusted EBITDA excludes such nonrecurring litigation-related expenses, stock compensation expense, depreciation and amortization, provision for income taxes, and interest income expenses. Adam Elsesser, Penumbra, Inc.'s chairman and CEO, will provide a business update. Maggie Yuen, our chief financial officer, will then discuss our financial results for the first quarter of 2025, and Jason Mills, our executive vice president of strategy, will discuss our 2025 guidance. With that, I would like to turn over the call to Adam Elsesser.

Thank you, Cecilia. Good afternoon. Thank you for joining Penumbra, Inc.'s first quarter 2025 conference call. In the first quarter, we generated total revenue of $324.1 million, representing underlying year-over-year growth of 16.3% on a reported basis and 16.9% on a constant currency basis. Our first quarter performance reflected continued momentum across our core US thrombectomy business, with the clinical benefits of our differentiated and proprietary CAVT technology helping us further enhance our strong market position. First quarter U.S. Thrombectomy revenue increased 25% year-over-year to $187.9 million, with our USVTE franchise once again leading the business with total year-over-year growth of 42%. Our arterial and stroke businesses also delivered strong growth as those products continue to take share from open surgery and competitive stroke catheters, respectively. Our strong top-line results, coupled with our focus on delivering profitable growth and an expanding profitability profile, resulted in another solid quarter of operating cash flow. In the first quarter, gross margin of 66.6% expanded 160 basis points over the prior year period, while operating income of $40.4 million, or 12.4% of revenue, increased 550 basis points over the year-ago period. We remain on track and are well-positioned to achieve a gross margin profile of over 70% by the end of 2026. I'd like to address the question of proposed or enacted tariffs and the current macro backdrop. We currently manufacture 100% of our products in the United States, in our manufacturing facilities in Alameda and Roseville, California. In addition, approximately three-quarters of our raw materials and components are currently sourced in the United States. We're also engaged in a regular ongoing process of optimizing our supply chain, which includes, among other things, the strategic onshoring of certain materials that are not currently sourced in the United States. In the quarter, sales from the US accounted for 79.2% of total revenue. Regarding China specifically, there was only $5 million included in our original forecast for the balance of the year, which we are now excluding given the current macro environment. Turning to our US peripheral business, in the quarter, we delivered strong sequential expansion from the fourth quarter in the total number of VTE patients treated with our technology. Our strong first quarter results underscore Flash 2.0's durable growth and momentum in VTE, with 2.0's demonstrated value proposition continuing to drive conversions from anticoagulation, lytics, and other mechanical thrombectomy platforms to CABT for both PE and DVT. The recent addition of Lightning Bolt 12 to the portfolio further augments our competitive positioning, with Bolt 12 contributions exceeding expectations in its first full quarter on the market. Our U.S. Arterial business also delivered a solid first quarter, with a combination of continued strong growth in Bolt 7 and ramping ahead of expectations contributions from Bolt 6X, together driving physician conversion from open surgery or the use of lytics to CABT. Continuous and rapid innovation is a key tenant of our strategy and a strong competitive differentiator. Our first priority is continuing to enhance and expand the reach of our proprietary CABT portfolio. We view our forthcoming new products as significant, and we believe they will continue to drive a paradigm shift in how clot is addressed and treated. That said, we will also invest in further innovation across our embolization and access portfolios. In mid-March, we received FDA clearance for Ruby XL, a new larger size diagnostic catheter-compatible peripheral coil. Ruby XL will further augment our existing peripheral anatomies. Ruby XL will be utilized to address conditions such as pelvic congestion, endoleaks, and tip varices, to name a few. FDA clearance of Ruby XL came earlier than we expected, so we have commenced an expedited inventory build to support a market launch in either late Q2 or early Q3, in order to quickly meet the high interest in the product we have seen from physicians to date. As we further expand our product portfolio, we will strategically invest in our commercial team in a measured way to support and enhance focus on the large market opportunities we're addressing, positioning our commercial team for success. We continue to expand and leverage our market access initiatives to increase awareness around CABT's clinical as well as health economic benefits. At the SIR annual scientific meeting in Nashville, at the end of March, two additional retrospective analyses focused on DVT and ALI management with CABT were presented. Relative to anticoagulation and open surgery for the treatment of DVT and ALI respectively, these analyses demonstrated CABT's ability to reduce hospital length of stay, as well as improve the rate of patient discharge to the home setting. A positive for both the patients treated with CABT and for the healthcare systems. The health economic data that are part of these studies is being shared with hospital executives. We are in the early stages of leveraging our market access initiatives to highlight CABT's myriad benefits versus alternative interventional options as well as anticoagulation. We will continue to invest in and grow our body of clinical evidence and build upon our efforts to drive further adoption of our CABT technology and reach the substantial number of patients globally who suffer from clot burden anywhere in the body. Shifting to our neurovascular business, our US stroke thrombectomy franchise delivered another solid quarterly performance, with the clinical and procedural benefits of our market-leading aspiration portfolio supporting volume growth ahead of our expectations and the market. The commercial introduction late in the first quarter of our next-generation Red 72 catheter, nicknamed SilverLabel, was met with significant physician enthusiasm. SilverLabel has seen strong interest, adoption, and utilization to date, with our R&D team's continued focus on technology innovation delivering a meaningful enhancement in trackability. With SilverLabel, we are continuing to move the mechanical aspiration field forward and raise the bar for catheter trackability. While with Thunderbolt, we see an additional meaningful opportunity to address and improve the speed with which clot is extracted in a safe and simple procedure, further expanding our already dominant market leadership position. Regarding our Thunder trial, in the first quarter of 2025, we submitted the clinical data to the FDA for review. We will provide additional future updates as appropriate and remain excited to introduce CABT to the neurovascular field. We entered 2025 with significant momentum across our business that sustained into the first quarter of the year, led by our CAVT portfolio and its strong value proposition. Our focus on continuous innovation, generation of high-quality clinical and health economic data, and strategic investments in our commercial team positions us to deliver durable growth alongside increasing profitability and expand upon our position as the leading global thrombectomy company. I'll now turn the call over to Maggie to go over our financial results for the first quarter of 2025.

Thank you, Adam. Good afternoon, everyone. Today, I will discuss the financial results for the first quarter of 2025. Financial results 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 first quarter ended March 31, 2025, our total revenues were $324.1 million, an increase of 16.3% reported and 16.9% in constant currency compared to the first quarter of 2024. Our geographic mix of sales for the first quarter of 2025 was 79.2% US and 20.8% international. Our US region reported growth of 22.5%, driven by 25% growth in our thrombectomy franchise compared to the same period last year. Our international regions decreased 2.5% reported and 0.1% in constant currency, primarily due to a decline in China revenue of $6.7 million compared to the same period last year, partially offset by an increase of $5 million in all other international regions. The sequential growth in our total revenue of 2.7% was primarily driven by an increase in US thrombectomy revenue and an increase in EMEA revenue, offset by a decline in China revenue of $5.4 million compared to the fourth quarter of 2024. Moving to revenue by products, revenue from our global thrombectomy business grew to $226.5 million in the first quarter of 2025, an increase of 20.7% reported and 21.2% in constant currency compared to the same period last year, which was primarily driven by growth in our US thrombectomy business of 25%. Our international thrombectomy business increased by 3.3%, including a decline in China revenue of $4.7 million. Excluding the impact to the China region, our international thrombectomy revenue grew by 18.2% when compared to the same period last year. Given the macroeconomic conditions with China, we expect to continue to have year-over-year headwinds from our China business for the second quarter of 2025. Revenue from our embolization and access business was $97.6 million in the first quarter of 2025, an increase of 7.3% reported and 8.1% in constant currency, primarily driven by an increase in the US. Gross margin for the first quarter of 2025 is 66.6% compared to 65% for the first quarter of 2024, which represents a 160 basis point improvement driven by favorable thrombectomy product mix across our regions and strong productivity improvements. Looking forward into Q2 2025, we will continue to expect higher thrombectomy product mix offset by higher costs, including, as Adam previously mentioned, a one-quarter expediting cost for Ruby XL, resulting in our gross margin in Q2 2025 being similar to or slightly lower than Q1 2025. As we move into the second half of 2025, we expect to see sequential gross margin expansion. Now onto our non-GAAP operating expenses, non-GAAP operating income, and margin and adjusted EBITDA. Total operating expense for the quarter was $175.5 million or 54.2% of revenue compared to $161.8 million or 58.1% of revenue for the same quarter last year. Our research and development expenses for Q1 2025 were $22.1 million or 6.8% of revenue compared to $24.6 million or 8.8% of revenue for Q1 2024, which reflects savings of $4.5 million due to our immersive business wind down, offset by continued investment in product development. SG&A expenses for Q1 2025 were $153.5 million or 47.3% of our revenue for Q1 2025, compared to $137.2 million or 49.2% of revenue for Q1 2024, which is primarily driven by our continued investment in the commercial and market access team, partially offset by our savings due to the wind down of the immersive business. As expected, SG&A in Q1 2025 includes higher seasonality expenditures for payroll taxes and our annual sales meeting. As we continue to invest in the right sales levers, we are pleased to see leverage of our G&A expenditures this quarter. We recorded operating income of $40.4 million or 12.4% of revenue compared to an operating income of $19.3 million or 6.9% of revenue for the same period last year. We posted adjusted EBITDA of $59.6 million or 18.4% of total revenue, compared to $36.3 million or 13.5% in the first quarter last year. Turning to cash flow and balance sheet, we ended the first quarter of 2025 with cash, cash equivalents, and marketable securities balance of $378.8 million and no debt, which is an increase of $38.7 million sequentially driven by strong operating profitability, and includes our initial capital expenditure investment in Costa Rica of $10.7 million, which is not currently scheduled to come online until 2027. We expect positive operating cash flow trends to continue in 2025 and beyond. And now I'd like to turn the call over to Jason to discuss our 2025 guidance.

Thank you, Maggie, and good afternoon, everyone. Consistent with our guidance philosophy communicated on our last call and notwithstanding our removing revenue from China from our forecast, we are reiterating our total revenue guidance range for the year of 12% to 14% year-over-year growth. For our US thrombectomy business, we are raising our guidance to growth in the range of 20% to 21% year-over-year. Additionally, we reiterate our expectations for gross margin and operating margin expansion for 2025. This concludes our prepared remarks. Operator, we can now open the call to questions.

Thank you. At this time, I would like to remind everyone that in order to ask a question, press star. Your first question comes from the line of Robbie Marcus with JPMorgan.

Oh, great. Congrats on a nice quarter. Thanks for taking the question. Of course. Maybe to start, really nice US thrombectomy growth. You called out the 42% VTE. I was hoping you could give us a little more color maybe on stroke versus peripheral and some of the market trends you're seeing in the two.

Yeah. Well, first of all, thank you for the comment on the VTE business. As you know, that's been the second quarter in a row where we've seen that type of growth; the sort of wave is moving through here. As it relates to the other businesses, you know, we're sort of highlighting we're not going to break out every segment. Obviously, it sort of gets complicated quarter by quarter. But we do believe our stroke business grew significantly above the market based on volume this quarter. As you know, we did launch toward the end of the quarter the new Red 72, which saw a significant interest and early uptick at the end of the quarter. And it's really been a great position for us to be ready for Thunderbolt. Lots and lots of talk out there. Excitement about it, and obviously the two most important parts about those stroke procedures are, one, you have to be able to get the catheter there safely and quickly with this new catheter. I think in that size category, we are without a doubt sort of the market leader on that side and then be able to get it out really quickly I think Thunderbolt will show that benefit. So I think our stroke business is in pretty great shape. On the arterial side, as I said in the prepared remarks, as we were sort of right where we had hoped to be, if not a touch ahead on some of the newer products, how fast they've been up and sort of taken on by physicians.

Great. Maybe just a quick follow-up again down the P&L EPS performance was very nice in the quarter. If I look at it's not just yeah. I mean, you had gross margin upside, you had SG&A improvement. I would say the biggest delta versus the street and the way we were thinking about it was on R&D. So maybe I lump them together here. How are you thinking are you thinking you're more maybe at the top end of the operating margin commentary given the first quarter performance? I know it's tough to raise after just one quarter. And how are you thinking about R&D going forward? Thanks a lot.

Let me address the R&D question, and then Maggie can sort of talk to where we fit in the yearly sort of cadence, if you will. R&D—the specific spend on R&D, as you know, is never sort of a linear spend. There are certain things that happen at certain times in the process, and so it's not been a linear spend. Some of that also reflects the anniversarying of immersive health care. So that's why you, I think, partly see it lower, because we're now sort of into the comparisons without having immersive health care in there. But Maggie can talk to sort of the cadence throughout the rest of the year.

Yeah. I think, Adam, you pointed out right, and also pointed out in the prepared remarks, of the estimated roughly $10 million of per quarter saving from the immersive business wind down, about half of them were realized in the R&D line. So proportionally, on a year-over-year basis, that's when you see the improvement. But you can look at it as a relatively baseline going forward with continued investment and also if you compare to last quarter, you'll see this as the trend going forward.

Yeah. Let me just make the obvious point. We called out R&D and how amazing our innovation has been over the many years we've been around. We're not shying away from investing in R&D. I think, you know, we spent some time in the prepared remarks talking about that. We're going to continue to invest where appropriate on products that need to be made to continue to make removing clot better and better on the embolization access side. So there's a robust pipeline. It happened to be a quarter based on a couple of those things that were slightly lower.

Great. Good quarter. Thanks.

Thank you.

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

Hi. It's Lynn calling in for Larry. Thanks for taking the questions. A nice start to the year. First question relates to Thunderbolt. Would you expect a normal FDA review for that product? And can you talk about what are the key metrics you believe physicians will look at to compare versus other catheters, you know, first pass effects, procedure time, etcetera, and I have a follow-up.

Yeah. So the first part of the question is, you know, it's submitted as a 510(k). You know, the clinical data is really what they're looking at. They'd obviously looked at a lot of the all the other aspects of it beforehand. One never does know. Sorry. I don't want to have to predict particularly on that product before; I think I'm going to stay disciplined and not predict, again, the timing of it. But so far, there is certainly nothing that has come up that is surprising. The metrics that were measured about on the submission is obviously the primary and secondary endpoints, sort of how do we do the sort of very typical things, then the other things that you've mentioned, like first pass effect and all are obviously captured and will be a relevant part of the discussion. So obviously, we believe we should be doing well against those expectations. That sort of goes without saying. What I think is different, on top of those, so it's not instead of, is something that really hasn't been discussed before, which is not just procedure time, but the metric of how long does the device when it's engaged in whatever form take to get the clot out? Because that's the different. The catheters have already been on the market. Versions of them, obviously, for many, many years, so we're really now looking at the mechanism of the CAV technology, and that's again, that will be something that will be more of a gut check on physicians. As they start to understand that and see it. But I think obviously, the first phase will be just the traditional metrics that you already outlined.

That's helpful. Thanks. And so my follow-up, you know, we've heard reports of Salesforce disruption since the strikes are in our deal. Just wanted to hear kind of what you're seeing on the ground and how that may be affecting the dynamics in the market. Thank you.

You know, organizations, you know, people move around. Certainly, it's been that way when there's a merger. You know, sometimes that happens, sometimes it doesn't. I can tell you that we're pretty confident that we are taking significant share. You know, we're not because of the merger, but rather because to be honest and not, you know, sort of snotty about it, we just have the better product. And as more and more people talk about it, that word-of-mouth spreads from doctor to doctor. We're seeing people come on board. And I don't think it's because of the merger. I think it's because we have the better product.

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

Hey, good afternoon, guys. Thanks for taking my questions. Just circling back to guidance here. So the only change here you guys had is that you removed $5 million of revenue from China that you had before. You're now not assuming that's being offset with the additional growth from US thrombectomy. Is that what we should be taking away?

Yeah. So that we are definitely taking that out of our expectations because and, again, it's a relatively small amount compared to past years. But that was sort of what we've been talking about for the last few quarters around trying to Jason, do you want to add a comment?

The way I would frame it, Peter, and thank you for the question. Is I think the relative difference between the Q1 results and the Q1 consensus expectations was around $8 or $9 million. The amount we're talking about in China, which is the vast majority of which is in the second quarter, is around $5 million. And so the, you know, the net increase, you know, there is $4 million if you just look at the first quarter performance and what we said about China at this point. So and that is, I'll be that, I obviously is happening. That outperformance mostly. In the United States and in US Thrombectomy.

Okay. Great. And then can you talk about what you're seeing in the, you know, like international markets in thrombectomy outside of China? You know, it looked pretty strong this quarter. Where is that strength coming from? And are you seeing any changes to, reimbursements for your products in any new markets? And should we should we see that growth continuing as these China headwinds fade? Thank you.

Yeah. So thank you for sort of noticing that and seeing that. Where we have CABT, we are definitely seeing growth. For the same reasons we're seeing it in the US. Obviously, as a ratio of our total revenue, it's a smaller percentage. The US is, you know, now approaching 80% of our revenue. So that's going to provide an outsized amount of growth. Obviously, at a time when our products are made in the US and sold in the US, that's probably not the worst timing for that. But we're CABT are working in countries around the world where they can afford it and pay for it. We're getting some real traction there. I think that will continue. I think we'll add additional countries over the course of time. And we're pretty excited about that. That being said, I think I've said bunch, US will outgrow that, just because of the ability to do the size of that opportunity in the US, the reimbursement, the data that we're now talking about in our market access, all of those things, I think will mean for the next couple of years, the US will drive a lot of this growth. I think the other parts of the world will be great opportunities as they come now, but really probably play a bigger role, you know, in future years.

Yep. Thanks so much.

Thank you.

Your next question is from the line of Margaret Kaczor with William Blair.

Hey, everyone. This is McCauley on for Margaret tonight. Thanks for taking our questions. Understand the priority here is getting Thunderbolts approved before you start to discuss that launch timing, but if we look back to twin flash and bolt, we're first approved similarly having to go through the VAX here for six x and twelve. Just wondering if the market access initiatives has reduced the time around that process at all? And if not, has it at least taken some of the load off of your commercial team so they can focus more on converting positions rather than, again, some of that kind of more burdensome administrative processes.

Yeah. That's a great question. On the vascular side, obviously, I think we sorta have that down. Some of that was hiring an appropriate number of reps, which you know, we have done, that allowed us to have the manpower and the capacity to do that. We were sort of caught a little flat-footed just because this year of new number of new accounts. On the neuro side, as it relates to Thunderbolt, we don't really have that issue. We've been covering all of the neuro accounts pretty comfortably. We can get there. We've been launching products, you know, over and over again for many years. We've never sort of raised the question of VAX. And I think the argument around Thunderbolt will be fairly compelling, in a hospital setting. So I don't think VAX will be the issue. Obviously, we have to go through it. That's always a gating item, but it won't be the thing that, I think, you know, isn't built into our expectations. And I think we just have a better handle on it because we have a lot more history with that whole wide range of accounts.

Great. That makes sense there. And then maybe as a follow-up, just want to ask on the arterial strength. Mentioned the demand and contribution obviously from both seven and six x. So I guess maybe for Jason, wondering if you can at least directionally frame where growth was in the quarter compared to either US Throm or that BT growth. And ultimately, what should we expect for the remainder of the year here?

Yeah. I can start and then Adam can jump in. Our arterial has been a strength of our US business. It remained a strength of our US business in the first quarter, and Adam in his prepared remarks talked to you about why. It is really the products in CABT, Bolt 7 and Bolt 6X, which is, you know, the first full quarter on the market. Both doing very, very well in an underpenetrated patient population still. So we expect to continue to see strong arterial growth within our US thrombectomy franchise.

That's great. Thanks again.

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

Great. Thanks. Good evening. Thanks for taking my questions. Just if I could, as we talk about, you know, Lightning Bolt 6X, you know, and seven, just curious you know, as you look at growth in those products and you look at the volume versus ASPs, I mean, our understanding is as you get 6x, you're also pairing that with SendIt. As we get into BTK, I'm just wondering what type of pricing versus volume benefit are you seeing? And, you know, we're in the early stages of this. I mean, is this something where, you know, 6X with SendIn is gonna be magnitude double or triple of what you're getting per case? Than the standard catheter today, and then I have a follow-up.

Yeah. So first of all, most of our growth this past quarter was volume, not price at all. When you look at 6X, primarily those are cases we weren't doing beforehand. Those are cases that were being done with open surgery because of the size of the artery. So that's you know, obviously, there the price is you know, it's just volume. It's new cases. There's really little difference between 6X and 7. And so there's the it you're not going from, oh, I used to use 7, now I use 6X. It costs a little more. The vast majority of this is obviously volume, and we called that out in the prepared script.

Okay. And then just any update on coronary? You know, is getting the CABT technology in the coronary?

Yeah. It's a good question. You know, coronary has continued to be a great business. Those who use it regularly, obviously, think it's changed their practice dramatically. The question really is is it necessary in the coronary arteries? Clots are very different typically. There are always exceptions. But if you remember way back to the CHEETA study, that happened a number of years ago, at that time for a product to remove the clot was a really short time, a couple of minutes, a little over one minute, minute and a half, I think, if the exact number. So what can we add to that case right now? And even a setup time that adds a minute or two to it might be not as good. So we're going to continue to look at that. There are some exceptions to that in the coronary. We're having something that is effective at getting more chronic or harder clot out. But it really is a general rule, the product we have is doing a really, really good job in the corner. So, obviously, that's continuing to be a great business. It isn't growing anywhere near, you know, all these years later at the same rate the other ones are.

Yeah. And then if I could, just on tariffs, it just sounds like at the end of the day, not really an impact for you given where you manufacture and where you source from. Yeah. It seems that I it's kind of redundant, but given the significant outperformance of the first quarter, you know, the guide is at least on the operating margin basis or operating profitability basis, seems super conservative. And I'm just wondering what is kind of driving that?

Yeah. I think you just said a question. I think you just said it. We're we have recent experience of getting over our skis. It's early in the year, just the first quarter. And we're going to stick to our conservative approach. I think you got it.

Thank you.

Thank you.

Your next question is from the line of Travis Steed with Bank of America.

Hey. Thanks for taking the question. Sure. I wanted to follow-up a little bit bit on Ruby XL, new product maybe markets that we're not at this point. Can you kind of help us understand the product and maybe the market opportunity? Is it something measured in tens of millions or a hundred million plus? Opportunity?

Yeah. You know, let me first describe the product. It's built on our same fundamental platform of all of our peripheral coils, which are generally larger diameter, softer, longer, so that you can just have more control and fill the space that you're filling much faster and much more completely. The softness allows it to have better packing density. So we're taking that platform, having a bigger coil now from a diameter standpoint, length, and so on so that we can do that in areas where you don't typically use coils or if you do, you're using coils that don't have those same properties of being super soft and extra long. It's a little early for us. You know, let's do our first cases first once we get product, and then we'll start to be able to give you a better sense of how broad this will go. If you can indulge just a little time to get our first cases done, I will be happy to try to in future calls, size that market a little more for you.

Great. That's helpful. That's all I had.

Your next question is from the line of Ryan Zimmerman with BTIG.

Hey. Thanks for taking our questions. I guess two for me. You know, you are making these efforts in Costa Rica. Arguably, you're right. You know, you're in the right spot. You're not seeing an impact from tariff dynamics. You've made some investment. Right? Did your plans change at all in terms of your, you know, expansion in Costa Rica, using that as a, you know, stepping stone to a broader international effort. I know this is, you know, everything's in flux, but I'm just curious if kind of the market dynamics have caused you to take a pause and think about that a little more differently.

Yeah. No. It's I'm glad you asked it. So the answer is that project is underway. You know, we signed a contract for the land and the facility is going to be built and all of that stuff. It's a several year process, you know, before it would be online. It would be coming online sometime in 2027. So too early to decide, you know, which way one goes. If we're in a situation where tariffs are back to normal and it's no longer the topic that it is right now, then it would be the obvious next place that we expand will bring some of our products there that might have slightly higher margins being made in the US, and we'll get some significant margin benefit there as well. The pace of being able to expand there is pretty quick. A couple of years till we can be up and running, if you will. If we're not, in a different situation and we're still in a situation where tariffs are governing a lot of our decision making, then we have a facility outside the US that can in effect, supply the rest of the international market without the risk of tariffs for products that we're sending from here. So we have a lot of flexibility by doing that. And to be honest, you know, having manufacturing in more than one general location, albeit our two plants are a couple of hours away, they're still in the same state. Is obviously, I think, prudent for us to do. So either way, we can pivot, and it just gives us a lot of flexibility in a couple of years to decide what to do.

Okay. And then a follow-up. There was a new drug, a approved, a new thrombolytic agent in March, I believe, offers about a single five-second IV bolus as opposed to maybe some of the slower drugs. Like, activation. I'm specifically talking about neurovascular. Right now, Adam, as you're probably aware. I'm just wondering whether you see this impacting thrombectomy demand in the near term as it's rolled out, and physicians maybe are a little more apt to try it in the face of, you know, what could be, you know, some of your technology.

Yeah. I think we're really talking about different patients. You know, there are patients that don't have clot, you know, that have a sort of lacunar strokes way deeper in the brain. Where catheters don't even get to the more the smaller distal catheters. Where a drug like that would be a huge benefit. I have heard nobody, you know, even non-interventional neurologists talking about going backwards and using a drug in its early stages to see if it's better than thrombectomy at this point. I just haven't heard that. It's more logical and more likely that it's for way distal sort of, you know, strokes where catheters don't fit at all. Yeah. Thank you.

Your next question is from the line of Collin Teichmarsh with Morgan Stanley.

Great. Thanks for taking the question, guys. A couple of quick ones from me, and I'll ask them both upfront. Just on arterial, specifically just looking for a bit more clinical color on the early rollout of 6X. The key bits of feedback you received on those BTK cases, you know, and how willing had the docs been to switch treatment methods? And then just secondly on Thunderbolts, obviously, your current data for distal clots thrombectomy is great albeit more dense skew. Is there any kind of technological factor that would enable modulated aspiration to better target distal clots than existing tech today? Thanks a lot.

Yeah. So a couple of good questions. Let's start on arterial and sort of how that's going. Look. Arterio's, you know, we're competing against open surgery. And so if you can get the clot out, in a matter of a minute or two of device time or three minutes, compared to open surgery, you're going to win over those physicians. And it's the predictability of it. With modulated aspiration 6X, it's just that much more predictable. It happens. It's fast. You're going to start to have that word and we saw that happen. There's a lot of discussion about it, a lot of excitement about it. And I think over, you know, again, these things happen in waves. You know, you don't just get everyone at once. You know, this it's not like that where you have you know, a giant seminal clinical trial or you have you know, a reimbursement or a guideline change. This is word-of-mouth. What do I do now? Is someone else doing? Should I try it? I did. Oh, wow. That's good. And word-of-mouth builds. And it comes in waves, and we've seen that obviously in the VT front where we've had two quarters of this sort of wave. And we're onboarding folks for the next round of conversions, and that's an exciting moment. The same thing on the arterial side, where it's happening because the product just works, and it works in smaller vessels. It works in the larger ones with seven. And I think we'll see that. As it relates to sort of Thunderbolt, going more distal, you know, Thunderbolt right now is paired with in a trial, with our 72 or 68 and our 62. So 62 certainly can go a little more distal when you really go into the places where you're not on label, which is the m3, you know, you're on label in m2, where you can use our current technology. When you're going into places where you're not on label, which some of those distal trials that you'd stentreever showed, it's a different story. And the 43 has done a really good job. Clock tens, as you get smaller and smaller to sometimes, you know, many times be a little less challenging to get out if you can just get the catheter there. So we'll we'll wait and see. We haven't made any final decisions on how small you can use thunder but how small of a catheter you can use thunderbolt with and is there a benefit as you go for smaller and smaller? But we'll let you know.

Great. Thanks, Adam.

Your next question is from the line of Richard Newitter with Truist.

Thanks for taking the questions. Congrats on the quarter. Maybe just the first one on US stroke. I know you guys have been at or close to 20% growth for US neurothrombectomy last few quarters. I know you have a tougher comp year over year this quarter, but is it fair to assume that you were in that ballpark? Or maybe you could benchmark us to what the market rate is that you're at.

So, you know, it's a couple of times, Richard, you know, everyone wants to know this specific numbers, and we're just going to go down this really tough path, of course, of, you know, number by number, quarter by quarter, and it's not going to be helpful. You know, we obviously called out VTE because of just the, you know, sort of the prominence of that growth and the effect that it had. And the sizes of that market. Stroke, as I've said, we did really well. We clearly grew above the market. The market, as you know, has been growing at a small clip, but it's been, you know, not the same kind of growth that we've seen on the arterial side or venous side. And it was clear just from our own data looking at places that are doing cases that used to not be doing cases, you know, we didn't really lose anybody, and we saw a significant group of new physicians sort of convert over. So I think we're doing pretty well on the stroke side.

Okay. I guess if you can share what maybe a rough estimate of the US market is, and then I'll just provide my follow-up now. You know, I'm not asking whether or not it's in guidance. I'm guessing the answer is no, but you've got a number of new launches that are coming. So, you know, one Q has all been volume growth. Shouldn't should there be an opportunity for price as a tailwind or incremental driver in the second half of these new products? And if you could share whether or not you're factoring any of that into guidance. Thanks.

Yeah. Well, so the big thing that we've talked about, obviously, Thunderbolt isn't in the guidance until we get approved, then we'll obviously add it. We've said that before. Thunderbolt's the product that probably has, you know, the most obvious price for us. It's actually ironically, if you look at the vast majority of what people are doing, whether they're using centrivers and, you know, expensive guide catheters and all that kind of stuff, we are actually not going to be more expensive on a per-case basis, but for us, we'll get a price better fit for the use of Thunderbolt. So that's true. The larger question about raising price, you know, some maybe you weren't asking this, but I wanted to clarify just in case you were, you know, in response to this moment in time, lots of companies we compete with are raising their prices. And that's how they're seeing their growth. They're just saying my product now costs x and that is their growth. It's not volume growth. It's not market growth. In fact, in some of the cases, it's a decline, but covered over by raising prices. That's not something that's something that hospitals are all talking about right now. I've been brought into some of those conversations, and it's, you know, everyone's hearing about it. We have not done that, and it provides us, because we have lots of growth coming from volume, you know, new cases. And that really does in times when things are tough, you know, not doing that is a big deal. And people remember that in a positive way for a long time. So I just wanted to make sure that was clear that we're not increasing our price.

Your next question is from the line of Matthew O'Brien with Piper Sandler.

Hello?

Hello. We got you now.

You got me now? Okay. It's weird I wasn't on mute. So the peripheral number again, Adam, super strong. Can you just talk a little bit about what you're seeing in the marketplace in terms of the growth of that product? On the PE side of things. Sorry. Flash two point specifically, but PE side, DVT side of things, are you seeing an inflection anywhere specifically? I don't know if it's on one side or the other. And, you know, are you starting to see that penetration and conversion away from Lytics maybe accelerating? And then I do have a follow-up.

Yeah. I mean, just to give some sort of context, we obviously had a larger percentage of the market in DVT and in PE when we a couple, you know, two quarters ago. So by definition, a bigger percentage of this growth is coming in PE. But we're still seeing it in DVT as well. And, again, it really is it's not coming from Lytics as much, albeit, you know, there's always going to be somebody here and there, but the vast majority is really coming from other people you know, other mechanical products. And again, not to sort of be flippant or smart, but CABT is just better. You're using a computer to actuate the valve. It works a lot faster. We've, you know, sort of shared what that looks like. And as more and more people understand that, they hear it, they hear their friends, they go to meetings, they're talking about it. It brings people in. SIR had, you know, dozens and dozens of folks who haven't ever used our product come up to us and want to engage in a conversation where in the past, that wasn't something they wanted to do. And we're seeing that across the board. Again, it's a better product, and we're not going to rest on our laurels. I talked about that in the prepared remarks. Innovation is going to continue with a priority focus on these CABT products so that we stay ahead. And we continue to make getting clot out more and more routine with these patients. So that's what happens, and these things happen in waves. You know, they're not linear. I gotta repeat, you know, that over and over again. That's not code for anything other than that. Just the process. There's a process that happens when people talk to each other and then convert. It's a great moment. It's a lot of fun to have people who for many, many years, have been skeptical now be approaching us and be the ones primarily calling us versus us calling them. It's a testament to the extraordinary R&D work and frankly, you know, the patience and, frankly, dedication that our commercial team has to their customers.

Got it. Okay. Appreciate that. And then question for Maggie and sure Jason's gonna shut this down. But just that gross margin improvement in the quarter was was again kind of eye-popping. You know, peripheral is doing really well. I'm assuming those have some really good gross margins to them. We potentially get to 70% gross margins, you know, a little bit earlier than kind of end of next year. I know it's still a long way to go, but could we start touching that that kind of number, you know, even late this year or maybe Q2 of next year? Thank you.

Yeah. No. Thanks for the question. It's a little premature to talk about it, but I think everything is on the right track. I mean, you can look at our projection on this year's sequential improvement similar to last year. So it's the similar phasing of how our improvement in product mix have an impact on our gross margin. But at the same time, I also pointed out that in the second quarter, due to some accelerating investment in Ruby XL, we tried to optimize our manufacturing process. Our margin may be a little bit flat in the second quarter compared to the first quarter, but it's just timing on the investment and we are still on the right track. Thank you.

Your final question comes from the line of David Rescott with Baird.

I be heard?

Hello? Your line is open.

Can you hear me?

Yes. We can. Hi, David.

Oh, hey. Great. Thanks for taking the questions and congrats on the the quarter here. Adam, I think last quarter, you talked more about a you know, an invested focus on some of the, embolization business in in the US. I'm wondering if you could maybe expand on kind of what your thoughts are there and and where you think the benefit could be and and and if that's something that can help you get back to maybe more stable embolization growth? And if so, what do you kind of peg that? Normalized market growth at?

Yeah. Thanks, David. It's a really good question. On we we've talked about it a couple times. The investment is in two areas. One, obviously, in our on the innovation side, we've been working on new embolization technologies. Ruby XL is, you know, one of them. That is there to solve a unique and pretty significant issue. And if the product works, once we get into the clinic with it the way we anticipate and expect, I think it will be a pretty helpful and significant product and certainly add to the growth. The other area that we're investing in is I've talked about making sure the commercial team has the capacity to focus. You know, we have a lot of products. And a vascular rep who's selling a suite now of embolization tools with yet another one to launch and then a suite of CABT tools sometimes, there are different customer bases. That's a lot to do, and we need those teams to focus. So we'll give you more information about that probably in upcoming quarters of what that really means at a specific level. But those are the two areas that the MBO team, you know, the MBO group can focus if you will. That the thrombectomy can be on focus. And that to me is critical because otherwise, you're just running around, and you're not able to do it all.

Thank you. This concludes the Q&A portion of today's conference call. I will now turn today's call over to Cecilia Furlong for closing remarks.

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

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