Good afternoon. My name is Audra, and I will be your conference operator today. At this time, I would like to welcome everyone to Penumbra's Fourth Quarter and Year-End 2023 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. [Operator Instructions] I would like to introduce Ms. Jee Hamlyn-Harris, Investor Relations for Penumbra. Ms. Hamlyn-Harris, you may begin your conference.

Thank you, operator, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the fourth quarter and full year 2023. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, can be viewed under the Investors tab on our company website at www.penumbrainc.com. During the course of this conference call, the company will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality compliance and business trends. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those referenced in our 10-K for the year ended December 31, 2023, which is scheduled to be filed with the SEC on February 22, 2024. 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, certain financial measures are presented on a non-GAAP basis. The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. Non-GAAP operating expenses exclude the amortization of acquired intangible assets and a one-time expense associated with the acquisition of IPR&D and adjusted EBITDA excludes a one-time expense associated with the acquisition of IPR&D and stock compensation. 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 fourth quarter and full year 2023; and Jason Mills, our Executive Vice President of Strategy, will discuss our 2024 guidance. With that, I would like to turn over the call to Adam Elsesser.

Thank you, Jee. Good afternoon. Thank you for joining Penumbra's fourth quarter and full year 2023 conference call. Our total revenues for the fourth quarter were $284.7 million, a year-over-year increase of 28.7% as reported and 27.9% on a constant currency basis. For the full year 2023, our total annual revenues were $1,058.5 million, representing growth of 25% as reported and 24.7% in constant currency over full year 2022. During the fourth quarter, our global thrombectomy business achieved record revenue of $190.8 million, growing 42.4% as reported and 41.6% in constant currency on a year-over-year basis. Our global embolization and access revenue was $93.9 million representing increasing 7.6% as reported and 6.7% in constant currency over the same period a year ago. Our U.S. thrombectomy business continued driving outsized growth increasing 46.4% compared to the same quarter a year ago, driven by continued growth with our computer-assisted vacuum thrombectomy or CAVT products in U.S. vascular thrombectomy. We also delivered more than 20% year-over-year growth in stroke thrombectomy in the U.S. with RED 72 with SENDit technology continuing to set the standard for the market in aspiration catheters and laying the groundwork for Thunderbolt. We expanded our gross margins in the fourth quarter to 65.7%, we expect to continue expanding gross margins in 2024, owing to favorable product mix and increasing productivity. While we are making important investments to sustain strong growth into the future, we're also delivering increasing profitability. We delivered another record quarter of profitability in the fourth quarter. Non-GAAP operating income was $37.4 million, representing 13.1% of revenue. We posted record adjusted EBITDA of $53.4 million or 18.8% of total revenue, and we grew our operating cash balance by $40.3 million sequentially. We expect to expand our operating profitability in 2024 and beyond, all while we pursue the…

Thank you, Adam. Good afternoon, everyone. Today I will discuss the financial results for the fourth quarter and full year of 2023. Financial results on this call for revenue and gross margin are on a GAAP basis, while operating expenses and operating income are on a non-GAAP basis. The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. For the fourth quarter ended December 31, 2023, our total revenues were $284.7 million, an increase of 28.7% reported and 27.9% in constant currency compared to the fourth quarter of 2022. Our geographic mix of sales for the fourth quarter 2023 was 71.5% U.S. and 28.5% international. For the fourth quarter 2023, our U.S. regions reported growth of 29.6%, primarily driven by 46.4% year-over-year growth in U.S. thrombectomy. Our international regions increased 26.4% reported and 23.5% in constant currency. The sequential growth in our total revenue of 5.1% was primarily driven by an increase in our global vascular thrombectomy business of $12.2 million or 10.1%. Moving to revenue by products. Starting this quarter, we are providing new revenue disclosures that better align with our business. As presented in our press release, we are providing detailed revenue results of our thrombectomy business and our embolization and access business, respectively, in the United States, international and globally. Revenue from our global thrombectomy business grew to $190.8 million in the fourth quarter of 2023, an increase of 42.4% reported and 41.6% in constant currency compared to the same period last year. Revenue from our embolization and access business was $93.9 million in the fourth quarter of 2023, an increase of 7.6% reported and – 7.6% reported and 6.7% in constant currency compared to the same period a year ago. Before turning to our income statement,…

Thank you, Maggie, and good afternoon, everyone. For 2024, we introduced guidance for total revenue in the range of $1,230 million to $1,270 million representing year-over-year growth of 16% to 20% compared to $1,058.5 million in total revenue in 2023. Primarily based on currently forecasted orders from our international distributors and timing of new product launches, we expect global revenue growth in the first half of the year to be in the mid-teens range. Then we 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 guide to U.S. thrombectomy revenue growth in the range of 27% to 30% year-over-year. We expect growth in U.S. thrombectomy to be consistently strong in this range throughout the four quarters of the year. We expect our U.S. embolization and access business to contribute low double digit growth in 2024. And therefore in total, we expect our U.S. business to deliver strong, consistent growth in the 22% to 25% range throughout the year. From a geographical distribution perspective, we expect our U.S. business to represent 73% to 75% of our global revenue in 2024. Outside the United States, we have worked the past two years to expand the foundation for thrombectomy in our international markets with our legacy products and have made significant progress. In 2024, more of our focus will be on regulatory, reimbursement and market access initiatives to bring our CAVT products to patients outside the United States. As we do this work this year, we expect our international thrombectomy revenue in 2024 to grow modestly over 2023 levels. And as these initiatives come through, we expect to accelerate our international thrombectomy growth in 2025. Also on the international front, we are focusing more on driving profitable growth. We plan to continue to be disciplined with our commercial strategy in the near-term for our embolization and access products in certain international markets where prices do not currently reflect the value of our products. At the same time, we are continuing our work with international regulatory and reimbursement agencies with our new products in these areas. In sum, we expect our total international revenue in 2024 to be similar to 2023 levels, and we think our international revenue will accelerate to double digit growth in 2025. As a final thought, as we look beyond the current year, as Adam mentioned, we believe our CAVT products will sustain strong growth for the company over the ensuing years. Operator, we can now open the call for questions for the next 35 or 40 minutes.

Thank you. [Operator Instructions] We’ll go first to Joanne Wuensch at Citi.

Thank you very much for taking the question. I wanted to ask – I’m curious, I’m going to ask two. One, we are hearing about increased payer scrutiny on mechanical thrombectomy. I’m curious how that may or may not be impacting you. And then number two, how do we think about sort of ongoing profitability metrics? I’m finding that comes up more and more on several stocks in medtech, sort of an LRP longer-term view on gross and operating margins. Thank you.

Yes. First of all, thanks for the good questions. We, in fact, have not – on mechanical thrombectomy, particularly as we see it, we have not seen the type of what you’re calling scrutiny. That shows up in other types of procedures that aren’t clot – removing blood clots in the cases. So, we haven’t really seen that. In fact, we saw the opposite this year. In arterial, there were some increases, particularly interesting increases related to hospital outpatient use. So, I think we’re seeing the opposite. As it relates to sort of how we think about profitability, we’ve outlined the beginning on this call, our thoughts and plans around how we want to continue to accelerate that by focusing on certain areas where we’re not seeing the same sort of price value for some of our embolization access business. So we’re going to be disciplined about it. We sort of have, if you will, the luxury of being disciplined about that because we don’t need every last dollar revenue when we have the growth of CAVT in the U.S. and coming to the rest of the world in out years. So, I think you’ll see more and more focus on that without taking away focus on the growth. And I think that’s an important – you’re seeing the beginning of that in the last couple of quarters. And I think you’ll see that continue pretty strong.

Thank you.

Thank you.

And we’ll go next Lei Huang [Wells Fargo Securities, LLC].

This is Lei calling in for Larry Biegelsen from Wells Fargo. Can you hear me okay?

Yes. Hi Lei.

Hi, by the way thanks for the question. My question is around the 2024 guidance, the 16% to 20% growth, the mid pointing at 18%. That’s quite a bit of deceleration. And thank you for the color on the breakdown. Can you talk a little bit about how to think about the sales cadence through the year, just given there’s so many different dynamics running through the different segments? And I have a follow-up.

Yes. absolutely, Lei. Let me start by first thing I – we stand by our comment that we made actually at your conference last September when our – and our overall guidance reflects our confidence by projecting that we think 20% growth is achievable. I want to emphasize, though, that we also added a lot more transparency, which you alluded to, by providing guidance of our U.S. thrombectomy business where we project 27% to 30% growth. And that’s probably the most important – the more important number right now since it focuses on our CAVT platform, which is only right now in the U.S. And it also allows us to prepare our international markets in 2024 for our CAVT platform in the future. So we can have similar accelerated growth throughout the world in the following years. And that’s how we’re thinking about the business. And I acknowledge that there’s a lot to digest, because we’ve given you a lot of different numbers and talked about our business in a slightly different way, but it’s also how we’re managing the business. That’s how we see the growth, that’s where the growth is, that’s what the excitement around the opportunity to finally do what we set out to do 20 years ago, which is with this platform, we have visibility. We have the strategy around making sure we can bring this to everyone who has caught their body from head to toe. We’re hearing that from large hospital systems, we’re hearing that from customers, we’re seeing that in the cases. So we’re trying to focus our energies on that opportunity and it takes some discipline because that hasn’t always been the sole focus of the company. So you’re seeing that and how we’re thinking about our international business, our coil [ph] and access business with that focus right now. But again, what we’re thinking about is the other parts of our business matter, but the 27% to 30% growth in U.S. thrombectomy is our focus. And Jason, can follow up.

Yes. Lei, just to follow up on that with respect to the cadence. So a couple of things I just want to repeat and go over again. We commented about that 27% to 30% in U.S. thrombectomy as well as the entire U.S. business at 22% to 25% delivering pretty consistent growth in that range through the year. So the cadence quarterly is primarily based on distributor order timing to which we have very good visibility as well as timing of product launches as well, to which we have, again, really good visibility, we believe. And so as Adam mentioned, we think that the U.S. thrombectomy number is the number to really look at primarily, and we’ve commented also that our international business should accelerate in 2025. We have a high degree of confidence in that as well.

Thanks. That’s helpful. Just a clarification on what you just said, Jason. So U.S. growth overall is pretty consistent so it’s really the O-U.S. where you’re talking about the distributor timing that’s driving the mid-teens growth in first half versus second half at 20% or higher. Is that the best [ph]?

That’s correct. And we have very good visibility into the timing. It’s just how they land throughout the year.

Got it. Thanks. And just for my follow-up, can you talk about your assumptions for the U.S. vascular thrombectomy market growth in terms of what’s assumed in your guidance for both venous and arterial? Thanks.

Yes. We won’t give specific breakdowns between those two, but the assumption – the fundamental basis of that is what I’ve alluded to now for the last month or so or that we saw a notable uptick in our trajectory in late November, and that has been consistent. It didn’t – it wasn’t a onetime event. It went up and it stayed at a different level, which gives us the confidence not only in those projections, but also in the consistency throughout the year. And the reason for that is what we’ve been saying throughout most of 2023, which is we had a lot of new customers, we saw a lot of them come through at the end of the very last days of November and into December, and that’s continued. And I think that momentum is continuing, which is why you hear the confidence we have right now in this platform and in this business. You add into it, the dialogues we’re having with hospital systems and physicians, which is just nothing we’ve ever been able to have before. It gives us an awful lot of confidence that we’re headed in the right direction.

Lei, just to add to that a little bit, in referencing again the U.S. thrombectomy growth of 27% to 30%, that includes VTE arterial, coronary and stroke. And while we’re really excited about cataracts and our stroke portfolios, with those, the growth rates implied for those thrombectomy franchise in the U.S. are lower than that range, VTE and arterial are expected to grow well above that range. Part of that strong growth is market growth, which is healthy. Again, market growth is best observed in arrears, I think, but it’s still healthy growth. And in addition to that, we expect, of course, to add to our share throughout the year.

We’ll go next to Bill Plovanic at Canaccord Genuity.

Hey guys, thanks. Good evening and thanks for taking my question. Just some clarity here. So as we look at the U.S. thrombectomy, you launched flash starting early last year, you launched Bolt soon thereafter. So as we go into the first half of the year, it’s actually pretty easy comps as you keep the growth going. It sounds like you’re going to keep the growth going and then in the back half of 2024 at least in the U.S., it’s the sales force changes that really kind of help that growth continue in terms of the market access and all the work you’ve done on that. Am I thinking about that correctly? And then I have a follow-up.

Yes. Hey Bill, it’s Jason. I’ll start and maybe Adam can chime in. We had a really strong first quarter last year with Flash, especially early on with our existing customers, and we actually had quite a bit of success with new customers early in that launch as well. Of course, that continued. So, I don’t know if there are any particular comps to point out that one quarter outweighing another. And that’s why we have pretty good confidence in the consistency with which those grow. The other thing I would point out is launching Lightning Flash 2.0 likely full launch later this quarter really won’t impact things until you get into the second quarter. And the other product launches were not factoring in too much through the year, just to sort of be conservative on that as well.

Okay, thanks. And then just on Thunderbolt, I think some comments you made, I think, earlier in the year, is that now pushing into 2026 in terms of contributing to the U.S. thrombectomy business? And thanks for taking my questions.

Yes, Bill, it’s a great question. Obviously, I’m going to be careful to give any kind of specificity on a trial that’s still ongoing. I think I learned my lesson the last time, so I’m going to resist. The trial is going well, we’re enrolling well, the cases are going well. We said during that time when we were resetting expectations around the timing of Thunderbolt that we have not put in our number for 2024 or 2025 any Thunderbolt revenue. And so that was what we said then, that’s still true whether or not it comes or not, we’ll deal with that at the time. But we’re not counting on Thunderbolt revenue until 2026 anyway, and I said that over a year ago or whenever that last month. So that’s stayed consistent. So this is the growth that we’re talking about is in CAVT, is on – with Flash and Bolt in the new products going forward. And obviously, our stroke growth, which was significant in the fourth quarter, we continue to take share. A lot of that is really just on the extraordinary success continued success of RED 72 with SENDit, which is, as I said, just setting the standard, that is the catheter of choice now. We’ve gained more and more share, and I think it’s setting the table for Thunderbolt because, again, you need that catheter first, and then you can use Thunderbolt afterwards. So again, we remain very optimistic about the sort of one, two punch there with those two products.

Okay. And a point of clarification on international, if I could, are you going to discontinue selling some products in some countries in the first half of this year? Is that what some of the delays and kind of the downdraft in U.S.? And thank for taking my questions.

What we said was that in our embolization and access business, there are certain countries where reimbursement pricing just isn’t commensurate with sort of the value of the product, and we’re not – it’s not a profitable business. So we are using this opportunity, if you will, with the success that we’re having where we don’t need to do that, and they can use products that are more commensurate with what they want to pay for. And so yes, the answer is there are certain areas and countries that, that is true. So, we are going to focus on profitability in those markets.

We’ll take our next question from Robbie Marcus of JPMorgan.

Great. Thanks for taking the questions. I want to ask, and I don’t want to belittle 29% growth at all because it's a great growth rate. But this is the first time you've missed Street numbers since the IPO. And I would say at our conference in January you didn't comment on the quarter, but you did sound pretty robust. So what happened during the quarter that you ended up missing the midpoint of your guidance range and the sell-side numbers?

Yes. What you just said is true. But our Q4 revenue number, it was within our guidance. But obviously it fell just shy the consensus number. However, what led to my excitement at your conference, what's led to excitement every single day since then into now, is the very – sort of fact that and I said it again today, we saw a notable uptick in our trajectory in late November. And that's continued since then, which gives us the visibility, Robbie, and the confidence to guide our U.S. thrombectomy business to see a 27% to 30% growth in the U.S. this year. What's not to like about that? That gives us an extraordinary amount of confidence about 2024 and beyond with the success of this. And we were waiting for this moment. All these new accounts were coming and we saw that sort of moment happen. So what's not to be like? And yes, I acknowledge without a doubt that there's a couple of million dollars short from the consensus still within our guide. But I will assure you our entire team here is totally focused on 2024 and succeeding with this CAVT platform.

Great. And maybe to follow up on a question from before about cadence. The U.S. you said should be within the guidance range pretty much throughout the year. O.U.S. lower at the beginning, higher at the end due to stocking. How do we think about the amount of stocking that we're in the different quarters because when we just look from the outside, we see much more difficult comps in the back part of the year versus the first and higher dollar values. So how do we think about what the amount of stocking is so we could get a sense of underlying volume? Thanks.

Yes, it's a great question. Let me just make sure our terminology is sort of right, if you will. We don't really do stocking, as that word is sort of sometimes considered and used. What we're talking about in most of these international markets, not all because we're direct in parts of Europe and so on, but is really distributor orders. Distributors tend to order. They all are slightly different. Some have different ordering patterns. We've seen this now, they're not linear. They don't order every week. They order most of the time quarter-by-quarter, but sometimes even less than that, and then go sell it. We get those order and those forecasted orders from them. We don't give them numbers. We get those in advance. And from those projected forecasted orders, we then put it into our number. On the thrombectomy side, all of those folks, I should say the vast majority of those folks know that CAVT is coming. So obviously they're going to be careful and not order as much product when they know a better generation is coming, because they don't want to be left with excess inventory. That's just obvious and common sense. So we're taking that into account and being thoughtful about it. The other part of it relates to the coil business, the embolization and access business. And I've already sort of addressed that. This is an opportunity now with us to focus that business in a way that allows us to retain our growth and profitability without really losing anything in the long, long run. So some of those are sort of dipping away are negative, and we're just putting that into a lot of transparency, which again, brings me back to the best measure, is our latest technology and the growth curve that we're having. Because not only are we going to continue to have that for number of years, we think in the U.S., we think that will be replicated in international markets when those products get there, that's sort of a good thing. So we're getting the business ready to go in those international markets where we can have that kind of growth too.

Thanks. And Adam, if I could just sneak in the size of those discontinued country sales. Thanks.

When you add it all, it gets you to the numbers that we were alluding to. I don't think by calling out each country and the size feels right on a public call. Those are great partners and great countries, and I think we can get to the same number without calling them out country by country. But I appreciate the question.

Thanks a lot.

Thanks.

Thanks, Robbie.

We'll move next to Pito Chickering at Deutsche Bank.

Hey, good afternoon. One quick clarification. Just looking at the comments from sort of 3Q of at least 20% growth for 2024. And then guidance today is the only difference between your commentary previously and where we are today is just slower international growth because you're focused on profitability, or is there anything else?

Yes. I think you've got it. That question implies really focusing on both the 27% to 30% growth in U.S. thrombectomy as well as taking that a step further with the entire portfolio of neuro access, embolization, et cetera, at 22% to 25% growth. And yes, the discipline we've talked about here with respect to certain international markets and timing is something we've been working on now for a little while and we've seen a little bit of as well in 2023. So we have pretty good visibility into this. But I think that is the difference that you've noted.

Okay, great. And then can we talk about the sales force for a minute? How many sales guys have you hired? What was the cadence of that hiring throughout the last 12 months? Where is the sales force for this new reps ramping up versus the demand? And do you have the right sales force today in order to meet your 2024 guidance, or do you need to hire more? And then last question, are you seeing any churn of season salesforce because of the new ads or is it looking pretty good?

I try to write them all down. There's a long list of questions, so let me – if I miss one of the specific ones, please re ask it. As I said in the prepared remarks, most, but not all of the hiring is done. The majority of it is now we're focused on getting them all trained and operated. I will tell you, from years of doing this, this was the most seamless as it related to moving around territories, bringing in new folks than any other expansion we've had. And that's in large part because our team, I think very maturely and sort of as professionals, understood that they will actually benefit more in the long run, as will our patients, by having the ability to focus on less accounts. We had a lot to do. We have very large territories, much larger than our competitors, which is also why we don't give out our salesforce numbers. And that has been part of our advantage. It stays that way. But with all of the work ahead and these two big launches and the growth ahead, we just needed more people. We probably should have done it a day or two earlier. Had that happened, it would have turned out differently, but it's gone really, really well. And it's been a sort of a remarkable sort of integration. The other thing and part of the reason for that is we have attracted the sort of most talented, most seasoned sales reps from other peripheral vascular companies that we've ever attracted. And I think part of that is just on the success of the CAVT products and what they know and hear. So that the professionalism, the ability to move in and pick up quickly has been pretty remarkable. So it's gone well. It obviously takes some effort to train them and get them started and so on. We've had training classes and all that. But in the long run, I think it's been one of the easiest things. As it relates to our current projected growth, this is the team that will get us there. Obviously, as that continues to go and the market access projects that we're working on bear fruit, we might need to evolve that as well. But for now through this year, I think we're in really good shape.

Great. Thanks so much.

Thank you.

We'll take our next question from Matthew O'Brien at Piper Sandler.

Hi, this is Samantha on for Matt. Thank you for taking our question. I guess first I would like to go back and touch on guidance a bit. So I guess the lower end of the revenue guidance is 16%. What does that scenario consider or bake in compared to the top end of the range?

Yes, I'll start and then Adam can join in. Obviously, we have a range for U.S. thrombectomy where there's a low end, and a range for our U.S. business which would contemplate our expectations for what U.S. embolization and access to that also has a low end 27% and 22% respectively. And it's probably hard on a call where we have finite time to go through every detail on what drives the lower, the higher end or above of each one of those numbers. But in every event, it is market growth, it is things like that internationally, I think we have pretty good visibility. But of course, you let the year play out. So I don't think there's anything demonstrable to point out between the lower or upper end. It's just execution at the end of the day.

Great. Thank you so much. And then one thing, I guess one of the bright spots for us this quarter was the EBIT was higher than we were expecting. Where do you kind of see the margins moving in the long term?

I think, yes, we're very pleased with our profitability this year. I mean, it kind of demonstrates that we can scale and continue to invest at the same time. Our gross margin, we're continuing seeing favorable product mix. So we are on track to our longer term 70% plus margin target and pretty sure that will pull through to the bottom line and we'll continue to invest. But I think we are setting up for very good infrastructure to scale.

Thank you.

Thank you.

Thanks.

We'll take our next question from Michael Sarcone at Jefferies.

Hey, good afternoon and thanks for taking my questions. Just for the first one, do you think you can give us an update on the status of the VAC processes that you're working through with Flash or Bolt? We'd just love to get an update there.

Yes, it's a great question. So obviously, the uptick that we saw starting in late November and continuing assumes that a lot more of those customers have come on board and started using the products. So we're just like we said we were on the third quarter, i.e., we're getting through a lot of those. We still have some to go. We're not, obviously, in every account in the country, and we have more coming. But a big bolus of those came in late November and into December, which is what we had hoped for. And now we're seeing the benefit of that. And as we continue, the focus now is, yes, on continuing getting the remainder, but really focuses on moving to getting the physicians up and running and using the product on a regular basis. So it's a really good phase. Some of that administrative part is done and derisk. And now we're just enjoying the early text cases. We get texts from reps and the early cases and how they're all going and pictures of cloud and excitement and so on. So we're moving into that phase, which is a lot more fun than the heavy burden of the administrative load there.

That’s helpful. Thanks. And then just last one for me. Could you give us any more color on the different bells and whistles you've added to the Flash 2.0? I think you said it optimizes the advantages of CAVT, but anything that could help us crystallize that more?

Yes, I think you would frame it the following way. We get more clot out faster with even less blood loss than before.

All right. Thanks, Adam.

Thanks.

And next, we'll move to Richard Newitter at Truist Securities.

Hi, guys. Thanks for taking the questions. Maybe just on the guidance and the philosophy there, Adam, Jason. The 2024 guide, particularly with respect to the U.S., you're kind of very accountable on the metrics there, the revenue breakdown. Thank you for that. I guess what I'd like to know, going off Robbie's question earlier, what philosophically is your approach to guidance this year, last year and in the fourth quarter? You came close, but it wasn't necessarily upside relative to the guide or the consensus. So how should we think about your approach to this year? And I'm particularly talking about the U.S. thrombectomy numbers because that's where I think you're going to be greater the hardest. Is this aspirational? Is this a floor [ph]? What can you give us in terms of how much cushion is built in? And how you set you up for better expectations in management and execution? Thank you.

So I would comment that we're running out of time on your pun, the fact that our guide is aspirational, and that's the products we sell. I don't think you intended that pun, but I appreciate the effort, if you did. The fact is this, we learned a lot. Last year was a great year for us. We learned a lot, we have not had a year that had the scale of growth and excitement around our product in our company's history. And so it was really hard to figure that out. How do we get the kind of information that can give proper guidance and so on. And we came really close and I'm pretty proud of that, given the scale of growth in the transformational aspect of last year. Obviously, better to hit the number and move on. But in the long run, it is not as important as having the foundation to continue to grow from year-over-year. So we've learned a lot, and I think we're going to be more careful and thoughtful about it. We understand these products better, we understand the rhythm of them, the level of interest. We're further into it. So we have a lot more information. So our philosophy is to not guide aspirationally to use your return, but to really guide with the kind of clarity and information that we've done in the past. And again, I think you'll see that in 2024.

We'll go next to David Rescott at Baird.

Hey guys. Thanks for taking the questions. Two questions. I'll ask them both upfront. First, I heard you call out Flash 2.0. I think maybe specifically, you talked a little bit about expanding to more areas in the body. So just wondering specifically what some of those comments kind of mean? And then should we think about maybe a Bolt 2.0? And then my second question, just on international. It sounds like obviously 2024 is the big investment. I think I heard you call out seeing that accelerate in 2025 to a double-digit range. Just wondering if that growth outlook into 2025 for international is something that would be maybe accretive or just maybe more supportive of the total top line growth of the company? Thank you.

Let me start and then Jason can sort of touch on the question around 2025 and so on. The products, I'm not going to be more specific than I have been about where we think what these products are going to do. What I can tell you is the following. I've had the opportunity to hear about them, to see them, to talk to the folks who are designing them and playing with them. I'm really excited about it. The goal again is simple. We want to be able to go after every kind of clot and as much of the body as we can go. These new products do that, they expand that opportunity to get different types of clots in different parts of the body and sometimes both, sometimes just one of those. That's the goal. And I can't wait. I think we now have understood this platform of CAVT has totally changed how we're thinking about this, what we think we can go after, how we can continue to improve the algorithms. And so the goal here is to be able to go after clot in any part of the body with a lot of confidence that we can get it out and that's what those products bring us even closer to. When those are done, we're not going to be done. We're going to keep adding, we'll keep innovating, we'll keep adding 3.0, 4.0 because that's how great technology works. And I think we're set up for a pretty nice run here.

Yes. And David, thanks for your second question. In my prepared remarks, I talked about the international business, and I mentioned 2025, and you're right. We did say in those prepared remarks that we thought that international revenue could accelerate into the double digits in 2025. And then the next comment that we made was about our CAVT products and sustaining strong growth because the reality is, even hitting our guidance this year in U.S. thrombectomy and doing really well, the market penetration rate we have, the number of patients, we will have helped is still really, really low penetration levels. We will have a long ways to go. So that comment that I made right on the heels of making the comment about international was intended to talk about the fact that this is, as Adam has mentioned several times in the past, growth that can extend over the next ensuing years, a number of years. And so while I'm not going to quantify what we think 2025 looks like yet, we're pretty optimistic about 2024 and beyond.

All right. Thank you.

We'll go next to Mike Matson at Needham & Company.

Yes. Thanks for fitting me in. I guess, first, with the efforts outside the U.S. to get the CAVT products on the market, I just want to understand, I know it probably varies by country and whatnot, but it sounds like, generally, you feel like there's a need to get some reimbursement in place. Is it – or is it just that there's reimbursement there and it's just not enough to cover the cost of the products?

Yes. Mike, that's a good question. We're talking about large geographies, many different countries in Europe that have different reimbursement schemes country-by-country, same in Latin America and Asia Pacific. So each one is obviously very different. There are going to be cases in which reimbursement is there for the most basic sort of catheter and syringe type system, which is not an expensive reimbursement. And then more sophisticated stuff is not yet reimbursed because they've never seen it. They don't know what it is. And we have to go through that effort. And then in other cases, there's really no reimbursement yet for that procedure at all. So it's a little of each. And obviously, we're focusing on some of the larger areas first and then we'll continue to do that effort. Not different just to give some context to what we did in stroke many, many years ago. Stroke was not reimbursed at all. And ironically, still is not in certain countries, and we've been doing that work for the better part of almost 20 years now. So I think we know how to do it. It just takes time, and we want to do it right and make sure because we don't need to rush this because we have the benefit now of growth, particularly in the U.S.

Okay. Got it. And then just as far as the distributor ordering forecast or patterns you're expecting in 2024, I was wondering in the commentary around exiting certain markets and certain product categories due to lower pricing. Is China a factor either of those things either distributor ordering patterns or the markets you're exiting because I know there has been some VBP [ph] over there in the neurovascular area.

Yes, Mike, that's a really important question. I'm glad you asked it. I just want to maybe remind you and everyone else that we have three different buckets of revenue from China. We have license fees, royalties and distribution. So that structure, as you know has sometimes created funny quarter-by-quarter movement that we've talked about over the last couple of years in the past that on a longer-term basis, that same structure has provided us, I think, a lot of protection from some of the current climate in China. So we feel pretty good about it. Going forward, we have a really incredible partner in Genesis. And we believe that our products, particularly the CAVT platform, can ultimately have an important place in the Chinese market. We've got a lot of work to do, but I think we're really set up for that, and we're pretty excited about it.

Okay. Got it. Thank you.

Thank you.

We'll take our final question today from Margaret Kaczor at William Blair.

Hi everyone. This is McCoy [ph] on for Margaret. I appreciate you squeezing me in here. Just to kind of put two questions into one. I know you mentioned the 20% growth in U.S. stroke large part of that obviously SENDit. But as we look towards 2024, do you expect SENDit to be able to bridge that gap within neuro or I guess, how should we think about the rollout in terms of adoption compared to Flash and Bolt, which to your point, might have a longer tailwind? And then to throw in the second? Just any update in terms of Thunder time line on the trial, on the Thunder trial?

Yes. So let me – I'll start with the last one. I sort of answered that question around the Thunderbolt trial. It's going well. Enrollment continued. We aren't counting any of that revenue until 2026. So we've got a ways off, but the trial is going well. So what we did is greater than 20%, not 20%. That business is really strong. And we don't yet have 100% of the market. And so we're going to continue to go after those physicians. Word of mouth is now really strong as people more and more physicians have used it and the platform to get the face of clot. We're seeing more and more conversion to it. So yes, I think 2024 is going to be a good year for our stroke business and so we're going to continue to see some growth there. Obviously, that will continue and get even more when Thunderbolt comes. But in the meantime, it stands as an anticipation of Thunderbolt because, again, you've got to have the gap [ph] there first, then you can use Thunderbolt. So the setup is really kind of perfect for us.

Appreciate it. Thanks for filling me in again.

Yes, thanks.

Thanks.

And that does conclude the question-and-answer session. I'll turn the conference back over to Ms. Hamlyn-Harris.

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 first quarter call.

And this concludes today's conference call. Thank you for your participation. You may now disconnect.