Earnings Call Transcript - PEN Q1 2024

Operator, Operator

Good afternoon. My name is Ellie, and I will be your conference operator for today. At this time, I would like to welcome everyone to Penumbra's First Quarter 2024 Conference Call. I would like to introduce Ms. Cecilia Furlong, Business Development and Investor Relations for Penumbra. Ms. Furlong, you may now begin your conference.

Cecilia Furlong, Business Development and Investor Relations

Thank you, operator, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the first quarter of 2024. 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 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, 2023, 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. 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, 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 in the first quarter of 2024 and 2023 and $4.8 million of nonrecurring litigation-related expenses, including settlement costs and legal fees associated with wage and hour complaints filed against the company in 2023 in the first quarter of 2024. And adjusted EBITDA excludes such nonrecurring litigation-related expenses and stock compensation expense. Adam Elsesser, Penumbra'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 2024, and Jason Mills, our Executive Vice President of Strategy, will discuss our 2024 guidance. With that, I would like to turn the call over to Adam Elsesser.

Adam Elsesser, Chairman and CEO

Thank you, Cecilia. Good afternoon. Thank you for joining Penumbra's First Quarter 2024 Conference Call. Our total revenues for the first quarter were $278.7 million, a year-over-year increase of 15.4% as reported and 15.2% on a constant currency basis. Our U.S. thrombectomy revenue grew 35.2% compared to the same quarter a year ago to $150.3 million, driven by continued strong market growth and share gain with Lightning Flash and Lightning Bolt. International thrombectomy also exceeded our expectations in the first quarter, growing 10.7% year-over-year against the challenging comparison last year. Overall, we had a strong start to the year and see positive trends in our core markets and our business with our computer-assisted vacuum thrombectomy products in VTE and arterial, and market-leading portfolio in stroke. This reinforces our confidence we can deliver strong growth of 27% to 30% in U.S. thrombectomy and 16% to 20% overall in 2024. In addition to our commitment to strong revenue growth, we are also focused on margin expansion and increasing profitability. We are ahead of schedule to deliver 100 to 150 basis points of gross margin expansion in 2024 and are confident we can increase our gross margins to more than 70% within the next 24 to 30 months. We are also on track to deliver at least 100 to 200 basis points of operating margin expansion this year, inclusive of investments we are making in our U.S. commercial team and market access initiatives, both of which should help us sustain strong growth into the future. Operating income in the first quarter was $19.3 million, representing 6.9% of revenue, increasing 260 basis points over the same period a year ago. Looking forward, we expect our operating margin expansion to outpace gross margin expansion for the foreseeable future. Notwithstanding the strong growth we have seen in U.S. thrombectomy over the past few years, clinically significant clot burden is still one of the most undertreated acute issues in health care today. We are well-positioned to expand access to CAVT, and make the treatment of these patients safer, simpler, and faster, which we strongly believe and are committed to continually prove accrues to the benefit of patients, physicians, and hospital systems. Over the past several quarters, we have delineated our strategy to deliver outsized revenue growth in thrombectomy over the near, medium, and long term through a combination of continued innovation with our CAVT platform, optimizing our commercial team in both the U.S. and international markets and developing robust clinical and health economic evidence on our CAVT products. With this collective work, we are confident we will continue to catalyze adoption of CAVT and drive utilization to the majority of the 1.25 million applicable clot patients in the United States each year across the five vascular beds we address today. We fully launched Lightning Flash 2.0 in late April on the heels of outstanding outcomes from the evaluation cases done in early April. Flash 2.0 is proving in practice what we saw on the bench. The product further optimizes the advantages of CAVT and VTE. We are seeing pent-up demand for Flash 2.0, and coupled with the larger commercial team we've developed over the past two quarters, our U.S. thrombectomy business is in a strong position to continue to catalyze growth for us in these markets in this year and beyond. We're also seeing meaningful progress within our innovation pipeline and are on track to launch three additional CVT products within the next 12 months, at least one of which we expect before the end of 2024. Overall, we are committed to continued innovation to augment the utility and reach of CAVT head to toe. In addition to VTE and arterial, stroke will be the next vascular bed we address with CAVT. Enrollment in our THUNDER study is going very well, and we are very encouraged by outcomes and physician engagement. We now hold nearly 60% market share in the U.S. stroke market and expect to gain more share through 2024, ahead of a Thunderbolt launch, which will further extend our leadership position. We are also seeing more energy and engagement from large health care systems seeking to work with us as the industry leader on ways to further extend interventional stroke care to many more patients within their networks. Our proprietary technology portfolio in stroke, our reputation in the field and our scale gives us the unique ability to do this work with health care systems going forward. I'll now turn the call over to Maggie to go over our financial results for the first quarter of 2024.

Maggie Yuen, Chief Financial Officer

Thank you, Adam. Good afternoon, everyone. Today, I will discuss the financial results for the first quarter of 2024. As a reminder, financial results on this call for revenue and gross margin are on a GAAP basis, while operating expenses, operating income, and adjusted EBITDA are 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. For the first quarter ended March 31, 2024, our total revenues were $278.7 million, an increase of 15.4% reported and 15.2% in constant currency compared to the first quarter of 2023. Our geographic mix of sales for the first quarter 2024 was 75.2% U.S. and 24.8% international. Our U.S. reported growth of 22%, driven by 35.2% growth in our thrombectomy franchise. Our international regions declined a modest 0.7%, reflecting a decline in our overall embolization and access product revenue, offset by growth in thrombectomy products in Europe, APAC, Canada, and Latin America. Moving to revenue by products. Revenue from global thrombectomy business grew to $187.7 million in the first quarter of 2024, an increase of 29.5% reported and 29.3% in constant currency compared to the same period last year. Our U.S. growth of 35.2% and international growth of 10.7% compared to the same period last year reflects strong momentum in CAVT products. Revenue from our embolization and access business was $91 million in the first quarter of 2024, a decline of 5.7% reported and 6% in constant currency, primarily driven by an overall decline in international markets. Turning to gross margin. Gross margin for the first quarter of 2024 was 65% compared to 62.6% for the first quarter of 2023. We delivered a 240 basis point improvement, driven by favorable thrombectomy product mix across all regions and strong productivity, partially offset by material cost increases and investment in direct labor capacity for new product launches and higher demand. We are on track to deliver 100 to 150 basis point gross margin expansion in 2024. Now on to our non-GAAP operating expenses, non-GAAP operating income and margin, and adjusted EBITDA. Total operating expense for the quarter was $161.8 million or 58.1% of revenue compared to $170.7 million or 58.3% of revenue for the same quarter last year. Our research and development expenses for Q1 2024 were $24.6 million compared to $20 million for Q1 2023. SG&A expenses for Q1 2024 were $137.2 million or 49.2% of revenue compared to $120.7 million or 50% of revenue for Q1 2023. With higher seasonality expenditures in the first quarter, we expect continued leverage in our SG&A expenditures as a percentage of revenue. We recorded operating income of $19.3 million or 6.9% of revenue in the first quarter of 2024. The compared to an operating income of $10.4 million or 4.3% of revenue for the same period last year. We expect to continue operating margin improvement of 100 to 200 basis points throughout 2024. We posted adjusted EBITDA of $37.6 million or 13.5% of total revenue compared to 11.4% in the first quarter last year. Turning to cash flow and balance sheet. We ended the first quarter with cash, cash equivalents and marketable security balance of $313.5 million and no debt, an increase of $24.3 million driven by operating profitability and improvements in working capital turns. We expect positive operating cash flow trends to continue in 2024. And now I'd like to turn the call over to Jason to discuss our guidance.

Jason Mills, Executive Vice President of Strategy

Thank you, Maggie, and good afternoon, everybody. Strong trends in our U.S. thrombectomy franchise through the first quarter, the recent launch of Lightning Flash 2.0 in the United States, and continued productivity momentum from our expanded U.S. commercial team reinforced our expectation for strong U.S. thrombectomy and total revenue growth of 27% to 30% and 16% to 20%, respectively, for the full year 2024. Consistent with the cadence commentary we provided on our earnings call in February, we expect global revenue growth in the first half of the year to be in the mid-teens range, primarily based on currently forecasted orders from our international distributors and timing of new product launches. We then expect growth to accelerate to the high end of our 16% to 20% guidance range or above in the second half of the year. We continue to expect growth in U.S. thrombectomy to be consistently strong in our guidance range throughout the year, and we now expect growth from our international thrombectomy franchise to be slightly stronger than we conveyed on our last earnings call, mid- to high-single-digit range for full year 2024, compared to flat to modest growth conveyed on our last call. For our embolization and access business for the full year, we expect mid-single-digit growth in the U.S. and flat internationally. That said, we expect year-over-year growth rates for both U.S. and international embolization and access businesses to strengthen throughout the year to the low teens range by the fourth quarter from new product launches and increasing productivity from our larger commercial team. Lastly, we continue to expect strong expansion in both gross margin and operating margin in 2024. We reiterate our guidance for 100 to 150 basis point expansion in gross margin and 100 to 200 basis point expansion in operating margins each quarter on a year-over-year basis, as well as for the full year.

Operator, Operator

Your first question comes from Margaret Kaczor from William Blair.

Margaret Kaczor, Analyst

I wanted to ask about the comments on optimizing the sales team in both the U.S. and internationally. Thrombectomy growth in these markets appears to be improving, perhaps even more than we anticipated. How much of this growth is due to current market dynamics versus what you observed last year? Additionally, what specific metrics are you monitoring concerning these investments? Are you focusing on particular geographies or market access?

Jason Mills, Executive Vice President of Strategy

It's a great series of questions, Margaret. Let me try to break it down and remind everyone that we typically hire in line with our growth rather than ahead of it, which I think people are aware of. Last year, we saw a significant demand for the new CAVT platform, but we didn’t have enough staff and brought them on late in the year, adding more in the first quarter. So this quarter's results aren't really driven by many of the new hires. They are in place now for the second, third, and fourth quarters. The growth in the first quarter is primarily due to the groundwork we laid last year with both Lightning Flash and Lightning Bolt, and the positive response they have received. Many people are experiencing and trying them out. We also mentioned that April is the quarter we begin with Flash 2.0 cases, which are not reflected in the first quarter numbers and will come later.

Margaret Kaczor, Analyst

Okay. Regarding guidance, it was another great quarter. I want to delve a bit deeper, particularly concerning U.S. thrombectomy. You're performing at the high end of the range, which is understandable given the easier comparison in the first quarter. However, you are making commercial investments that should begin to increase. Furthermore, we expect to see some data that could potentially boost growth in the overall market as the year progresses. Why shouldn't we anticipate continued growth there, possibly even at an accelerated pace?

Jason Mills, Executive Vice President of Strategy

Yes, Margaret, it's a great question. As our current guidance obviously reflects already a faster growth as the year progresses. We've taken that into account in this quarter's strong start reinforces our confidence in our business. And our guidance, in particular our U.S. thrombectomy guidance for the full year reflects both that strength and the momentum from our products and our commercial team. So I think we're in pretty good shape as we think about how the year unfolds.

Operator, Operator

The next question comes from Joanne Wuensch from Citi.

Joanne Wuensch, Analyst

Two questions really. OUS sales look like they are improving or expected to improve throughout the year? Could you please sort of remind us why that may be? And then my second question has to do with margins. It sounds like you have a little bit more of an increased focus on gross and operating margins? And can you please outline not just gross margin, but throughout the income statement, what levers do you have to pull to get there?

Jason Mills, Executive Vice President of Strategy

Yes, it's Jason. I'll address the first question and then Maggie and Adam can handle the second one, if that's alright. The international sales pattern generally increases as the year progresses. For instance, our newest red stroke products are launching in Europe, which should enhance that pattern. Additionally, in the latter half of the year, we anticipate the introduction of the new CAVT portfolio in Europe. Furthermore, we have good visibility into the timing of international orders globally. That’s why our comprehensive guidance reflects this revenue trend for the entire year. Maggie?

Maggie Yuen, Chief Financial Officer

Yes. And in terms of our operating margin focus, I mean, in addition to the product mix improvement that you see in gross margin on the operating side, a lot of the G&A infrastructure investment that we made in the last couple of years will continue to see scalability, and frankly, across all SG&A areas.

Operator, Operator

Our next question comes from Bill Plovanic from Canaccord Genuity Fund.

William Plovanic, Analyst

So, just on the U.S. thrombectomy market, it seems we get a lot of questions on this, obviously, a big driver for you. I was wondering if you could help just parse out how much of that growth is VTE versus arterial. And then how much of this is ASP versus just pure volume-driven? Because my understanding is you have been getting an ASP boost over the last year. I'm just trying to understand just a little more granularity, if we could.

Jason Mills, Executive Vice President of Strategy

Yes, that's an excellent question. Let me provide some clarity on that. Our CAVT products were the primary contributors to our growth, with Flash gaining market share and encouraging new adoption. Bolt also performed well in the arterial segment. Additionally, our stroke business showed robust growth within the guidance range we've provided, and we expect this momentum to continue. If I look back, last year we experienced a mix of price and volume, but now we're moving past that. We launched Flash at the start of 2023, so most of this growth is coming from new business, and price doesn't significantly influence the growth figure. It's primarily driven by business expansion as the market grows, along with increased adoption and market share gains.

William Plovanic, Analyst

Great. And if I could, just on the litigation expense, $4.8 million, you backed it out. Just kind of curious what that was. Is it onetime in nature? Or is that going to occur for a couple more quarters? I don't know if it's ongoing litigation. Just any help for us to understand and how we should be thinking about that.

Jason Mills, Executive Vice President of Strategy

Sure. It's a great question. As you know, we manufacture all of our products here in California. California, like every state has wage and hour laws. California has an additional aspect of a private attorney general action, which sometimes can make those complicated. We believe very strongly that we have run and follow the rules. There were some technical violations and we settled those claims pretty quickly for a scale. This is a one-time settlement; this captures it all, and we can move on to making our products and doing the things that matter the most.

Operator, Operator

Next question comes from Robbie Marcus from JPMorgan.

Robert Marcus, Analyst

Maybe just to start, really good growth in thrombectomy in the quarter. Access and Embo was weaker. Maybe you could just talk to the trends you're seeing? How much is stocking, destocking versus underlying trends? And how to think about some of the nuances between the different products there moving forward?

Adam Elsesser, Chairman and CEO

Yes. Robbie, it's Adam. I appreciate very much the question. Obviously, as you know, we broke out the numbers differently so people could sort of accurately view what I think everyone agrees is what's driving our growth and what's valuing the business. Obviously, you know that in the U.S., we have market-leading products in both peripheral embolization and neuroaxis. And that business is something we're particularly proud of. But we've said, obviously, that what's driving our growth is going to be the thrombectomy. That's where our focus is going to be moving forward. In addition, on the call in Q4, we specifically called out that we would be leaving certain markets with our embolization and access business in international markets where they weren't financially viable for us as product reimbursements changed and moved down over time. So we sort of said that going forward. That's what happened. We also are particularly proud of the way the thrombectomy business has gone. And remember, in Jason's prepared remarks just today, we did say that we'll expect to see growth in our U.S. embolization and access business as the year progresses and we move with our new larger commercial teams on the thrombectomy side. We'll have the scale and the capacity to focus on multiple things as well as some new launches. We just had one with Midway, which is a neuro access tool at the beginning of this quarter. So the business is strong. It's just not going to be the thing that drives the growth in an outsized way like our thrombectomy business will.

Robert Marcus, Analyst

Great. Maybe just one extra. As we think about now U.S. thrombectomy and OUS thrombectomy, which, like I said, had really good quarters, how do we think about some of the underlying trends in neuro versus peripheral? And is there any way to size the two?

Adam Elsesser, Chairman and CEO

You're talking about within the various vascular beds in thrombectomy. Yes, obviously, if you look at our U.S. numbers, the bigger growth came from VTE on the venous side with Flash. Obviously, now with launch of 2.0, that will continue as the market grows and we catalyze adoption and, of course, take share with that. The arterial side is continuing to also do well. And stroke did really, really well. We were pleasantly surprised. I think I answered another question earlier just now that our stroke growth was sort of within our range that we put out there, which is pretty significant now having multiple quarters where the stroke business has continued to grow. Some of that is market, a lot of that still share. And I think that will continue as a nice setup as people get more and more excited about Thunderbolt.

Operator, Operator

Next question comes from Larry Biegelsen from Wells Fargo.

Larry Biegelsen, Analyst

So Adam, you're counting on international sales of peripheral devices to drive growth next year. And the issue has been, internationally, reimbursement. So what proof points can you provide that give us confidence that the reimbursement will be in place next year to drive that revenue?

Adam Elsesser, Chairman and CEO

I appreciate the question. To clarify, we are not relying on international sales to drive our growth. Our U.S. thrombectomy business is the key factor for our growth, and I have mentioned this repeatedly. This will be the main contributor to our growth not only this year but for many years as we promote its adoption. The discussions we are having and the responses we are receiving from physicians and the broader context are very encouraging. While international sales do contribute, they are not the focus of our growth strategy moving forward. It is important to note that growth in international markets may not be as rapid due to varying reimbursement timelines across different countries and systems. Certain markets will have established reimbursement, allowing us to engage on the private side, while public reimbursement may take longer. We have taken all of these factors into account as we plan for the future, but I believe we will experience substantial growth driven by our U.S. thrombectomy business for many years to come.

Larry Biegelsen, Analyst

Okay. That's helpful. Just for my follow-up, Adam, on Thunder, the comments you made on enrollment and encouraging outcomes, I think you said. What's the latest on when you expect to complete enrollment? Is clinicaltrials.gov accurate, which says, I think, primary endpoint completion? I think, last time I looked, March 2025.

Adam Elsesser, Chairman and CEO

Well, Larry, I think you know that I've learned my lesson to be too predictive particularly on this trial. So we'll leave the current status as it is. Needless to say, we're obviously excited about it. It's progressing. We've seen a lot of engagement, discussion, and excitement about it. So I think we'll leave the exact timing as it is for now.

Operator, Operator

Our next question comes from Matthew O'Brien from Piper Sandler.

Matthew O'Brien, Analyst

The stock is trading slightly down in the aftermarket. It seems that many investors are concerned that our guidance for the remainder of the year might be at risk due to tougher comparisons. However, the thrombectomy business appears to be gaining momentum on a two-year basis, and the performance of our embo and access segments in the U.S. also looks strong. With the combination of new customer acquisition and deeper engagement with existing accounts, along with our expanded sales force—which will take some time to have an effect—can you provide insight into what factors you believe will drive acceleration in the last three quarters of the year, especially as comparisons in the U.S. business become more challenging?

Adam Elsesser, Chairman and CEO

Yes. I really appreciate that question. Just so we can sort of level set. We addressed a lot of guidance a lot more comprehensively, both on this call and in the Q4 call, where we laid out the very specifics. As you know, we said we had a lot of visibility with our international distributor orders and partners around the timing of their orders. And that's the main difference in those rates, together with the work that we already know and see on how our U.S. thrombectomy business is going to grow. We have a lot more predictability around those rates, and they're not dramatically changing those rates throughout the year. We've said that now twice. So it really came down the change in overall company rate was based on something we talked about last quarter's call, and it turned out to be exactly what we said. And again, the focus on what is happening in the U.S. should be the best confident guide because the rest of that is relatively secure through what we have obtained from our distributor partners for the rest of the year.

Matthew O'Brien, Analyst

Okay. Appreciate that. And then, Adam, you mentioned these new products that are coming in CAVT and at least one by the end of this year. Is that a product that's going to be potentially going into a different part of the anatomy than we're accustomed to with Penumbra? Or any kind of just general thoughts on what we should expect from that one specifically.

Adam Elsesser, Chairman and CEO

Well, as we get closer and we're at this stage of the field, I'm not going to give more specifics for competitive reasons. But, God, I can't wait to tell you. So please be patient. It's going to be an awful lot of fun.

Operator, Operator

The next question comes from Mike Sarcone from Jefferies.

Michael Sarcone, Analyst

Just to start, can you provide any insight into the market growth you observe in the U.S. VTE market for the quarter?

Adam Elsesser, Chairman and CEO

It's historically challenging to accurately determine market growth, such as new patients, except by analyzing centers where we've maintained complete business and observing their growth. This has been consistent, as we've experienced ongoing growth for several years. This growth persists, particularly in VTE, where we've observed some excellent progress this quarter. This includes market share gains, even prior to Flash 2.0. We'll wait until next quarter to assess the impact of that, but I believe it will be a mix of significant share shifts and important initiatives that drive adoption or market growth.

Michael Sarcone, Analyst

And just a follow-up. You've been talking a lot about market access efforts. And I think you previously mentioned working with some of your hospital customers to kind of get data and work hand-in-hand with them to elucidate the benefit of CAVT in different vascular beds. Do you think you can give us any update on how those efforts are progressing?

Adam Elsesser, Chairman and CEO

I'm not going to discuss specific systems and work we’re doing yet for obvious reasons. I want to complete the work first and then we can discuss it more openly. However, I will say that I'm really optimistic. There is a strong understanding in the hospital community regarding what I believe is a critical issue: the clinically significant clot burden, which remains one of the most undertreated acute problems in health care. They recognize the consequences of not treating it, the associated costs, and importantly, the negative impact on patients from inaction. This understanding fosters positive conversations and enables us to begin the work we’re undertaking. Therefore, I feel more optimistic this quarter. I've been personally involved in many of these discussions, and I am extremely hopeful.

Operator, Operator

The next question comes from Richard Newitter from Truist.

Unknown Analyst, Analyst

It's Sam on for Rich. First one on U.S. thrombec demand, apologies if I missed this, but I think before you had said you expect 27% to 30% within that range within U.S. thrombectomy for the year. Can we still think about that holding through 2Q through 4Q, just kind of plug in those numbers and I guess the 29% growth for this year in U.S. thrombectomy?

Jason Mills, Executive Vice President of Strategy

Yes. Thanks for the question. This is Jason. So we said last quarter, we reiterated on this call that we expect growth in U.S. thrombectomy to be within that range. Obviously, the first quarter, we were slightly above that range. It was a strong quarter. But our guidance still reflects that range each quarter for the remainder of the year and for the year. So that's where we're going to stick for now.

Unknown Analyst, Analyst

Okay. And then a similar sort of question on margin, a little over 200 basis points operating margin expansion in 1Q. Just kind of curious what you'd like to see in terms of trends in the business to get confident in increasing that 100 to 200 basis point range for the year?

Maggie Yuen, Chief Financial Officer

Yes. No, thank you. Obviously, with a good start of the year, we are very happy with our margin performance. At Q1, we typically see some normal material price increase and some investment in new product launch productivity. So for the remainder of the year, we will continue to see productivity improvements and improvement in product mix will continue. So we're pretty confident that we'll continue to see this margin trend expansion.

Jason Mills, Executive Vice President of Strategy

Yes. And I'll just add on to that. We said when we gave the initial guidance for 2024 on the February call, and we reiterated again this quarter that given the cadence of expenses that we traditionally see, we expected that operating margin expansion would be sort of in that 100 to 200 basis point range on a year-over-year basis for each quarter, which would obviously translate into that expansion for the full year. So it's important to understand sort of the cadence of our operating margins through the year.

Adam Elsesser, Chairman and CEO

All right. Are we still there?

Operator, Operator

Our next question comes from David Rescott from Baird.

David Rescott, Analyst

I wanted to ask, Adam, I heard you mention that Flash 2.0 kind of optimized on some of the advantages of Flash 1.0. So wondering if you can give us a better understanding maybe about what's different in the system? And I heard some of the comments around pent-up demand for the system already. So just curious on what's baked into maybe that implied Q2 guide versus the full year, relative to those kind of demand comments and if and what and where, maybe Flash 2.0 could open up new opportunities for the company?

Adam Elsesser, Chairman and CEO

Yes. Well, let me sort of first describe what we're seeing and hearing a lot of, which is obviously, Flash 1.0 did an extraordinary job. It took a great deal of clot out very quickly. What Flash 2.0 does, which is simply a change in algorithm and update in the algorithm, it didn't change the catheter or the catheter size. The 2.0 removes even more clot, even faster, without having to go to a bigger or less appropriate sized catheter. And I think the field is rallying around that. They're seeing the benefit of it. And as you know, word-of-mouth spreads pretty quick in this field. So we're seeing a lot of interest from folks who might not have wanted to try it in PE. They might have used Flash 1.0 in DVT. And that level of sort of interest is what I was alluding to. I think everyone continues to look to optimize the treatment for these patients. That's the key. You want to do the three things that matter the most, and we've said it before, but it's safety, speed, and simplicity. And Flash 2.0 really checks those boxes, and that's the reaction that everyone is feeling right now.

David Rescott, Analyst

Okay. Great. And then maybe on Thunderbolt and the THUNDER trial. I heard the comments and trying to think maybe a little bit longer term, I believe with the product you had been able to leverage some price already, and you discussed that in the past around helping that gain share. When I think about Thunderbolt, I guess, longer term and the opportunity that's out in the front still, do you still think that there's an ability to maybe command some type of price premium for a premium-priced product longer term when that comes to market?

Adam Elsesser, Chairman and CEO

Yes. I think if you step back and think about stroke, it's not a lot different from clot in the other parts of the body where the prices of products have risen as technology has developed and become more sophisticated. Right now, in stroke, people use a series of things. They might use aspiration and a stentriever. They might do this and that. So by the time you're done, we are not going to be more expensive than what a lot of people are already doing. They're just going to be using 100% of the Penumbra products because you don't need all of those ancillary tools when you have one simple system like Thunderbolt. And that's what we saw already. That's not me hoping and guessing that's what we spent the better part of the year with our CAVT portfolio in the rest of the body, particularly the most sort of closest example would be Lightning Bolt in the arterial system. The technologies are very, very similar, different sized catheters. And we've seen, obviously, an extraordinary increase in the usage of that product. I think we'll see something similar with stroke. I think we'll be starting at a little bit different spot than we did with our older technology in the arterial side, which I think ultimately it plays to our benefit because we're starting with a pretty significant dominant position with a lot of competitors. So I think Thunderbolt just helps us going forward.

Operator, Operator

The next question comes from Mike Matson from Needham and Company.

Michael Matson, Analyst

I wanted to ask about Lightning Flash 2.0 and how you've integrated software into the CAVT products. Does this allow for quicker iterations on the product? For instance, can we expect to see versions 3.0, 4.0, and so on within a year as you enhance the software?

Jason Mills, Executive Vice President of Strategy

Yes, it's a great question. The premise is accurate. Obviously, with software that there's the possibility of faster iterations than hardware catheters, and all the testing is very thorough, but it's a slightly different thing. That being said, can we continue to improve this? Probably, we're weeks into the launch, and it's going really well. So we haven't yet identified weaknesses that we have to fix. And I think that's a high-class problem for us to have or to improve. But over the course of the sheer volume of work we're going to do over the next year, I'm sure we will continue to make changes and improve. Obviously, the products that I alluded to, the three new CAVT products are not another version of the same ones. So there are newer products that cover different things than just improving Lightning Flash to 3.0. But yes, conceptually, that's possible.

Adam Elsesser, Chairman and CEO

Yes. Our philosophy has always been that the commercial team should not lead the selling. We want our products to generate demand, and we need sufficient staff to support them. I believe we have assembled the best commercial team, and we have been very proud of them for many years. Last year was particularly busy with the simultaneous launch of Flash and Bolt, as well as our leading-edge peripheral embolization technology and the new customers we acquired. We needed more personnel to handle the workload, and now those individuals are on board. We successfully hired some exceptional talent. I believe we currently have an optimized team size. In the future, could we expand? Certainly, it's a possibility, but it is not something we plan to do soon as we move through this year. I am confident that we have the right team to achieve the growth we aim for and to serve the patients and physicians we need to support this year.

Operator, Operator

Our next question comes from Shagun Singh from RBC Capital.

Shagun Singh Chadha, Analyst

So Adam, you're targeting 16% to 20% growth here in '24 versus your initial directional outlook of plus 20%. I was just wondering, is there a pathway for you to return to that plus 20% growth? And what could potentially be the drivers of it? Is it Flash 2.0? Is it the new product that you alluded to that we could see this year? And then really, the question is how should we think about growth longer term for Penumbra? Is there a plus 20% base case on the horizon? And then just as a follow-up, on Q2. Just wondering if there's any color you can provide prior to today's call? Consensus was looking at 302 for sales and $0.61 for EPS. Any color would be great.

Adam Elsesser, Chairman and CEO

Yes. Let me start on the first part. We've always looked, sort of, our philosophy around guidance is pretty straightforward. We look and take into account all the information we have at the time we give our guidance, and that has been our approach for some time. So I'm not going to sort of deviate from that and sort of guess what could happen here or there. Obviously, we are extremely happy with where the business is. We feel an awful lot of excitement and momentum around the products that we've added to this field, and we're very proud of it. I think we'll leave the guessing of guidance for a future time beyond what we've said. That also being said, and this is not meant as a comment around guidance, it's meant around a comment of the work we have ahead. I also said in the prepared remarks that there's 1.25 million people in the U.S. alone who have clot in their body that we should consider doing something about and are potentially now more able to do something about than we've ever been in the past. And obviously, that lays out the work we have to do, and that will obviously impact our future thoughts around how the business will grow. But it's premature to do that, and we're going to focus on what we're doing right now.

Jason Mills, Executive Vice President of Strategy

Yes. Regarding your second question, we have reiterated the revenue growth expectations for the rest of the year. We mentioned the same on our initial guidance call in February. For the first half of the year, we anticipate growth in the mid-teens range. Today, we reported a growth of just over 15%. In the second half of the year, we expect to reach the upper end of that range or higher, largely due to the visibility we have with international growth. Additionally, we've discussed our U.S. thrombectomy business and our commercial team, including products like Flash 2.0. We aim to provide comprehensive information in my prepared remarks to help you with your models. I'm open to any follow-up questions if you need more details.

Operator, Operator

There are no further questions at this time. Ms. Furlong, I turn the call back over to you.

Cecilia Furlong, Business Development and Investor Relations

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