My name is Bill Plovanic. I'm one of the senior med tech analysts here with Canaccord Genuity. Up with us next, we have Penumbra, and Adam Elsesser, the Founder, CEO, Chairman, and Jason Mills, the EVP of Strategy. We're gonna start off with a short presentation, then move to a Fireside Chat. With that, Adam?
Thanks, Bill. I appreciate it. I'm gonna be relatively quick here, so we can get on with some questions. I'm glad to be here at the Canaccord conference this year. There's our Safe Harbor Disclosures. Our business has evolved over the years, we've been in business now 20 years to really two business units at this point. Our thrombectomy business, which is really what started the company, around the idea of removing blood clot from the brain for stroke and expanded to the rest of the body, and then our embolization and access business. Our embolization covers both vascular, where it's very successful and sort of market-leading coil, and neuro as well.
And then Access, which is primarily a Neuro business, where we have products that really are the starting point of most cases and have been very successful for us. I wanna focus on thrombectomy for a second. This is the area that we're gonna hear a lot more about, and we have a lot of opportunity, but work ahead for us. This just lays out the various areas of the body where we're removing blood clots and the potential patients. And these are not sort of the pie-in-the-sky potential patients, those numbers are higher. These are parts of the body where our current technology goes and can remove these clots.
So you can see on the slide, there's 150 somewhat thousand pulmonary embolisms that we think we can reach. This is in the U.S. Over 350,000 DVTs, 250,000+ arterial patients. Stroke patients are estimated around 200, some have that number higher, and then coronary's a little shy of 300,000. When you add it all up, it's over 1 million patients in the U.S. alone. Obviously, adding the rest of the world, it's an awful lot of people. Blood clots in the body are really one of those things that... One of the biggest acute medical conditions that hasn't yet been sort of fully resolved or solved, and we think we're on our way.
CAVT, or computer-assisted vacuum thrombectomy, is really the technology that launched last year, in a big way, that we believe will open up this opportunity. It does what other technologies that we or others have not fully been able to do, which is remove the blood clot really quickly, with a real appropriate safety profile. So that at this point, this is better than the other modalities, whether it's thrombolysis, or whether it's open surgery for arterial, or other therapies that people are using. So Lightning Flash 2.0, which just launched in late September, is really starting to set the standard of removing the clot really quickly. We're excited to see the success of that, and we'll continue that going forward.
Lightning Bolt 7 on arterial continues to have significant growth, as we anniversary the launch of that last year. And then, of course, Thunderbolt is our product for stroke that's in a clinical trial, and we're getting pretty excited to see that get to the point that it's at, and get ready to introduce Thunderbolt to the market, as well. I'll end by just showing a quick image. This was a Lightning Flash case we did early on in the launch, and it happened within a very, very short period of time. I think it was about 10 minutes, maybe 11 minutes. You can see how much clot was taken out on both sides of the lung.
Did it very quickly, with a very, sort of clinically appropriate amount of blood loss, and the patient ended up doing great. So with that, I want to thank for the quick introduction, and I'll open up to questions with Bill.
Perfect. So Adam, Jason, thank you so much for joining us today, and thanks for the audience for being here. We'll start it out with the news this morning.
Yes.
$200 million share buyback. $200 million buyback, with $100 million already done. So any color behind that, or anything you'd like to share regarding that?
Yeah, I think it should be pretty self-explanatory. That being said, obviously we have. We're doing quite well. We have a significant, you know, cash resources. It seemed like the right thing to do. It is the right thing to do, to bring some value to our shareholders, given where our price is right now. And given the pace that we expect to continue, it just seems like a pretty logical thing to do.
Excellent. Good news to wake up to this morning for investors-
Mm-hmm
... That's for sure. So let's dive into Q2 guidance, work through some of the moving pieces here, and this is a broad question: Do you think you've adequately lowered guidance so that we're a full reset to work off of from here? I mean, and just historically, a lot of times companies... By nature, you're optimistic. You have to be. And sometimes as you run into some challenges, it takes one or two times before you finally get the final reset of numbers, and then we can work off of from there. That's why I asked the question.
Yeah, look, we have spent-- It was my error. You know, last year we got ahead of ourselves. We were in the middle of the most significant launch, or launches in the company's history. It wasn't easy to sort of put your hands around the timing of conversions and so on. And so we got a little ahead of ourselves, and then we spent the better part of a year talking about guidance, which is appropriate, given what we said, and not the substance of the business.
And since our earnings call, I've been incredibly pleased that we've spent 95% of the time talking about the substance of the products, their performance, how we're gonna go after this, both in the short term, as we convert people to Flash 2.0 and Lightning Bolt 7, as well as the long term as we look at the market development issues that we're doing. So, I'm pretty happy about where we are, and pretty confident, not only in this year but, particularly as we go into 2025 and 2026.
I'm gonna keep asking about guidance, even though I know we wanna get to product. So do you think that the second half of 2024's it will be the longer-term low point in terms of year-over-year growth? Because we're looking at, I think, Street's high single digits for both quarters or-
Yeah
... you know, maybe touching 10%. And where do we go longer term? Is this a 15% grower? How do we think about just the business? How do you think about it? I mean, I think, and we'll come back to just the CAV technology in general, but.
Yeah, look, we, I, I'm without a doubt not gonna say, make the same mistake I made last year, this year, by quantifying what our growth rate's gonna be, at this stage of the year. That being said, we gave a fair amount of qualitative commentary around what is different about 2025 and beyond, and we won't have some of the international headwinds, whether it's-
Mm
... China or the countries we exited with embolization and access, to compare against. We will have a slightly delayed launch for Flash and Bolt in Europe, which actually helps 2025 versus this year. So when you take out those headwinds for this year, which are important, 'cause you wanna get your business in its strongest position to go forward, not just on revenue growth, but on operating margin as well, I think we're in really, really good shape. And again, the work we're doing, that we think will start to pay dividends in 2025, 2026, 2027, will put us in a really different spot. So, you know, without quantifying it, I am very optimistic.
And you may get to this later, but the other thing that's really important that you have asked about in the past is CAVT and the new products that are coming. And we've said fairly consistently and updated the timing for the new products that are coming consistently, given the same time frame, three additional CAVT products, I think we said the last time-
Yep
... last quarter, 9 months. So obviously, that should augment, help 2025, where it's not going to contribute much in 2024, 20... and beyond 2025.
As we look at the U.S. thrombectomy business, and that's where, you know, I think some of the change was, and you framed it as a guidance philosophy and being more conservative. How much was this really a philosophy change versus perhaps not seeing the growth or continued year-over-year pricing you had anticipated? And as I think of the VTE market just going forward, what are the barriers to penetration? So the question really spans, as I look at you and your competitors, it seems like maybe there's a slight deceleration in the market itself.
Yeah.
You know, are we hitting a point that we need something else to get another inflection point? It's kinda like the low-hanging fruit, early adopters have been picked, and, you know, where are we-
I think-
kinda in that market?
I think that's, there's always a little aspect of that. I think we've gone past that a few years ago, so I don't think it's that. We saw that in the stroke market pretty clearly, way back in the day, where the people that were willing and wanting to treat them sort of did that, and then there was a little bit of plateau as you then continue to grow. I don't think that's what's happening here. I think the most important thing, and it's... You have to remember, the scale of the vascular business is dramatically different than the neuro business. So you have a lot of different people that have a say in that and are part of that chain of getting those patients treated. And I think, I don't think the market's slowed down.
I mean, we're obviously on the VTE side, growing faster than our biggest competitor, 'cause we're taking share and seeing the market grow, which is a good spot to be in, as we move into that. And that's not because of tactics or anything else. That's because the simple fact that with Flash 2.0, we have the best product. And, and the product gets the clot out faster than anything, and it doesn't come with the same safety risk. You don't have cardiac decompensation, you don't have to put in contaminated blood, you don't have blood all over the floor and the drape, and all the other issues. And that's a big deal. That's the thing that slows growth. When referring doctors see issues with their patients they refer, they're hesitating to grow.
So we have to, in order to keep the market growing, make sure that people are moving to a safer product. And it is that simple. I know there's this sort of a desire for everyone to get along and everyone grows together, but, but that's unfortunately not helpful for the growth of the market. Because if you're a pulmonologist and referring your patient, and then they die because of cardiac decompensation, are you gonna be shy about referring those patients? Yeah, obviously. You're gonna think about the risk profile, not something that is happening now with Flash 2.0. So it's critical that we do that work, and I think that work ahead of us in the short term is incredibly motivating for our team, and it's working.
There's a huge reaction and sort of, "Oh, that all makes sense," like, "Okay, I've always wondered why we were doing that." You know, you think about it, the other societies, other groups of physicians, not in interventional, have guidelines about putting in shed blood. Like, you're not supposed to, but all of a sudden it's okay now? Like, no, it's not. The science is well-established. You know, we're not making that up. It's published and out there. And I think it's just to remind people that, okay, now we have a product that doesn't require that, and we're gonna start to see that shift. So in the short term, I think we're in a great position.
And then when you think about the long term, the work that can be done, the data that we've already generated that we'll make public, you know, when it's appropriate, is fairly compelling to hospitals that the procedure that we're talking about, CAVT, whether it's DVT or PE, and we'll add arterial, it's clinically better, and it's much more cost-effective. And when you add those two things together, it lays the groundwork for the next phase of significant growth.
Let's touch on that-
Mm-hmm.
on just the CAV technology.
Mm.
I think, you're the only one that offers that in the market today, I believe.
Yes.
Who do you see coming down, you know, potentially competitive? And then just... I think one of the things is with that technology, it's software iteration, so you can always add a bigger tube. You're not limited by the, just the mechanical-
Yeah
... aspects of it. Do you see... You know, if there's any feedback that we've gotten from the physicians is, "I wish they had a bigger tube-
Yeah.
-for PE.
Yeah.
Is that something... I, I think, you know, if I go back 3-4 years ago, when you're at 12 French, you're like, "Yeah, we don't know if we can get to 16." Now you got a-
Yeah
... 16 French. You know, is that just hard work and software iterations, and you'll get to an 18, a 20, a 22? How should we think about that as, as the future goes?
Yeah, so I think that's a really good question and one that I don't know that there's an exact answer yet. And the reason is this: You say you want a bigger catheter because the perception is you get clot out faster. The question is, and this is what I was alluding to, when you have a large catheter crossing the right heart, you add risk to the procedure that is unnecessary if you don't need it. And so I have yet to hear someone who has a lot of experience with Flash 2.0, for example, say, "I really need a bigger catheter," because it gets the clot out the right way. It's-
Faster.
Everyone in interventional has always said, "It's better to use a smaller catheter if it does the same job as a bigger catheter or better." So I am not sure that that's an accurate assumption in the world of people who have already been exposed to actively using Flash 2.0, because then you add that other safety element, which we're trying to avoid. That being said, you know, I don't know. It's early enough in the process, and we'll continue to play and innovate like we've done for 20 years. But I think the key is to continue to limit the safety issues while you're getting the clot out faster than you've ever done before.
Do you see with... You know, we've seen a lot of smaller companies that are coming to market, and they're coming with mechanical, more similar to some of your competitors than the CAVT technology.
Yeah.
You know, as you see those come into accounts, which I'm, whether it's a lot or a little-
Yeah
... do you think that you're more at risk, or would you say the competitors are more at risk? Given just the-
Yeah, I-
the design of the technology, and how do you view that?
I have a lot of respect for the whole medical device field and all the companies that are trying to do something that, that's valuable and helpful for patients. That being said, I think it's a real challenge. If I was running a company that had a catheter and a aspiration source or some gizmo to grab clot, at this stage, I would be pretty anxious running that company, 'cause I think it's gonna be really hard to compete. The computer can do it faster than the human hand can do it. It's just true. I think we inherently know that, and we see it in practice. And, you know, you sort of ran up to the question but didn't ask of other people coming with a computer-assisted version. You know, we have some pretty good patents on that.
We're continuing to add to that portfolio. We've already, you know, filed some IPR actions that we won. We will be extremely aggressive, obviously, in enforcing those patents. It's the first time in 20 years we've had a number of patents to enforce, so we might as well. And so I think it becomes harder to compete going forward. That being said, you know, we certainly understand competition and aren't afraid of it, but I doubt it will happen soon.
... As we look at the thrombectomy business in general, especially on the peripheral side, you think of the, you got the VTE, the arterial, the coronary. How do we think about kind of the growth of those different areas? Because, I mean, you're a broader player.
Yeah
than most, and
Mm-hmm
So when I think a lot of investors bucket all of that into one bucket.
Yeah
and don't really understand
Mm
how diverse it is.
Yeah, it's a very—they're different people typically, not always, doing those different cases. So arterial is still a lot of those cases are done by vascular surgeons. They do open surgery. Some are done by IRs who do thrombolysis. And then, of course, Lightning Bolt 7 has seen a significant growth in its business. I think that will continue as we move into there. Haven't really. There's I know there's three or four companies in that space. You know, we don't see much of them. You know, they're not, you know, a significant competitive threat right now. And I think that the technology will be harder to sort of get a foothold in there. So for us, it's really about the conversion of those patients to the CAVT products.
Again, right now, Lightning Bolt 7 primarily is above the knee. Obviously, there's lots of clots below- the- knee, and that becomes an open field, you know, with CAVT technology going forward. So I think we're in pretty good shape, with where we are on the arterial side. DVT and PE, again, Lightning Flash is sort of opening the minds of people who didn't convert last year with Lightning Flash 1.0. And again, first, we have to get people to convert, and then we get to do the work that I've talked about with market development. There's—I mean, just think about it, you know, if you have a DVT, you know, the number, you know, we're so less than 10% penetrated in people who could-
Mm-hmm
... have a relatively straightforward procedure and go home and be fine, versus wait a month, take anticoagulation-
Mm
... come back, not have it resolved, be too late. All those issues can be resolved by moving that sort of referral pattern to a more upfront approach, and the data on that, as I'm alluding to, is quite compelling, and it's pretty exciting. We just have to get to the point where, you know, we can start that process. I had fun. I went to the first hospital that we tried that out on with this data. I met with the C-suite of the hospital to discuss, you know, here's the data around, you know, looking at that across a large number of hospitals in the country. It's quite compelling. Clinically, it's compelling. That's the first step, obviously.
But from a profit contribution, it's equally compelling, if not more so, and, and that lays the groundwork then for them to do the work to make sure that the patients in their, in their community are getting the best treatment upfront.
There are two things I'd like to add to that. On the last point he made about the market access programs we have, there was a lot more we put in the prepared remarks, this last call, so I would encourage people to go back and look at our words. We talked a lot about it. The quality of those data are important because anyone can do assessments, but it takes a lot more effort and, you know, comprehensiveness from a team perspective to do it, propensity match, high quality, to do it right, so that the hospitals see the data in the light that they need to see it to change practice. The other thing is about, you know, the market question.
If you take a step back and look at the complexion of our markets, there is a significant bandwidth across the three specialties, in radiologists, interventional cardiologists, and vascular surgeons. They obviously need to see the clinical evidence, which we're providing them. They also need a system they can rely on from a safety standpoint. Speed is very important, but the third S, we haven't talked about in this session is simplicity. The more simple, and simplicity requires significant innovation to get there. Profile, as you know, in interventional med tech has always been the thing. It's harder to innovate in profile to get it to do better work at a lower profile. That's where the innovation is. That's what obviously we've, he was alluding to.
So, but the complexion of the market, from the standpoint of the bandwidth and the provider community, is there to service the rest of the market that we're not currently penetrated into, which is quite a lot.
I think, you know, you talked about arterial and you're above the knee and going below- the- knee. Is that a smaller catheter, or is that a software change? And it sounds like that might be one of the three remaining, if I can poke a little there.
It's both in terms of changes, and I don't think you have to poke. I think it's pretty clear that lots of people have clot below their knee, and taking it out the old-fashioned way has worked up till now, but it's not the same as doing it with CAVT.
Again, an area that profile matters.
Yep. And we have about a minute left, and I just wanted to get to China, and then just the whole immersive health. In China, a lot of dynamics going on, different revenue streams. Just simply, what needs to happen to get through this? I mean, I think, you know, the guidance and where are we, and when do we-
China, look, we have a great partner in China. Genesis has done an amazing job. We have two different, you know, fundamental revenue streams. I think our business is gonna be in a good shape long term. Obviously, the Chinese economy is not in the same shape that it had been. That happens, you know, it doesn't usually stay that way forever, and I think we'll be in pretty good shape with the main, you know, our sort of flagship products under a distribution deal going forward. So I really don't think it's a significant thing in the long run, especially as you then sort of look at the comps differently. I think we're in pretty good shape. Immersive, you alluded to, it's a simple thing.
We have an opportunity that we didn't have when we first started that, which is looking out at the million-plus people in the U.S., plus the rest of those, the comparative numbers across the world, where we honestly feel we have the tools that are better than, you know, ever to go after and help those patients, and that has to be our primary focus. And Immersive Healthcare still... the products still work. We take a lot of pride in helping the veterans particularly, and the rest of the patients we've helped. But there is no clear pathway to sort of a financially viable model right now. And so we have to focus on the thing that can help the most patients in the short term and in the mid term.
I think to finish up, 'cause we're out of time, it's just, you know, with the recent changes in guidance, with everything going on, obviously, the stock's pulled back. You announced the buyback. What do you think investors are missing?
Look, I don't wanna begin to question, you know, what they're missing. I think I'll answer that question by saying what we think we are. There's a lot of moving parts. We're in a moment of transformation. We went from a company that did one thing to a company that's doing a few other things, and then last year, we launched products that were fairly transformable. I mean, different than even, I think, performed better than we had even hoped. And we have high expectations. So now we're in a moment where we can't just talk about it. We have to start to show that we can do that work. So I'm not sure anyone's missing anything.
I think the work we have to do is ahead of us, and I have a huge amount of confidence, I always have, that we can go do that work. I've also said, you know, it's gonna take time, and it, it's, you know, just like stroke, it's not a straight line. But the clarity in which we can see that from the conversations we're having in the field daily is giving us that confidence. And so we're just gonna keep going. And look, I think we should end on the most important thing.
At the end of the day, in my 20-some-odd years in this field, and I think most people would agree, the best products ultimately are what is adopted and drive a change in the way people are treated, and we are now sitting in a situation where we have those best products. But now we have to show it. And so, you know, let's agree that maybe in a year or two, we'll not have to answer that question because we'll have shown it.
Perfect finish. Thank you.