Penumbra Inc (PEN) 2025 Q3 法說會逐字稿

Ladies and gentlemen, good afternoon. My name is Abby, and I'll be your conference operator today. At this time, I would like to welcome everyone to Penumbra's third-quarter 2025 conference call. (Operator Instructions)

Thank you. And I would now like to introduce Ms. Cecilia Furlong, Business Development and Investor Relations for Penumbra. Ms. Furlong, 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 third quarter of 2025. 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. With me on today's call are Adam Elsesser, Chairman and CEO; Shruthi Narayan, President; and Maggie Yuen, Chief Financial Officer. Also joining us for the Q&A portion of the call is Jason Mills, EVP, Strategy.

During the course of this conference call, the company will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality, compliance and business trends. Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those referenced in our 10-K for the year ended December 31, 2024, filed with the SEC.

As a result, we caution you against placing undue reliance on these forward-looking statements, 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 expenses related to the wind down of our Immersive Healthcare business in the third quarter of 2024 of $5 million and adjusted EBITDA excludes wind-down expenses, stock compensation expense, depreciation and amortization, provision for income taxes and interest income expenses.

And with that, I would like to turn the call over to Adam.

Thank you, Cecilia. Good afternoon. Thank you for joining Penumbra's Third Quarter 2025 Conference Call. In the third quarter, we generated total revenue of $354.7 million, representing underlying year-over-year growth of 17.8% on a reported basis and 16.9% on a constant currency basis. Our strong third quarter results reflect broad-based execution against our strategy and significant progress in further enhancing our competitive technological and market positioning across all franchises.

Total US revenue was $275 million in the third quarter, an increase of 21.5% compared to the third quarter of 2024. Total US thrombectomy sales increased 18.5% year-over-year to $192 million. Our VTE franchise once again led overall corporate growth, delivering 34% year-over-year growth. US embolization across and access revenue of $83 million increased 29.2% year-over-year.

Growth in our embolization and access business exceeded our expectations, reflecting the benefit of a dedicated peripheral embolization sales team alongside our investment in continuous innovation and new product introductions.

Internationally, the work we previously undertook to enhance our long-term market positioning is beginning to play out. We are now operating from a position of portfolio and geographic strength with our commercial execution in the quarter more than offsetting the China growth comp headwinds we continue to face. Total international revenue of $79.7 million increased 6.6% year-over-year or 3% in constant currency.

Below the top line, gross margin of 67.8% expanded 130 basis points over the prior year period, and we delivered operating income of $48.8 million or 13.8% of revenue with our operating expense in the quarter, reflecting the full impact of our embolization sales force build-out. We remain on track and are well-positioned to achieve a gross margin profile of over 70% by the end of 2026 and expect operating margin expansion to outpace gross margin expansion for the foreseeable future as we prioritize delivering profitable growth and an expanding profitability profile.

Turning to our US peripheral business. Our third quarter thrombectomy performance reflected both the clinical benefit and competitive strength of our CAVT technology alongside enhanced commercial focus from our now peripheral thrombectomy dedicated sales force. We delivered the highest sequential quarterly increase in VTE case volume growth to date in 2025. Our US arterial business also delivered another strong performance with the combination of Bolt 7 and Bolt 6X supporting further physician conversion from open surgery or the use of lytics to CAVT.

Penumbra received FDA clearance during the third quarter for both Lightning Bolt 16 and Lightning Flash 3.0. Lightning Bolt 16 brings proprietary modulated aspiration technology to our 16 French system and Flash 3.0 improves the fidelity of the algorithm by updating both the hardware and the software. These new products significantly add to the growing portfolio of advanced CAVT devices, opening up a clear path for us to reach the over 800,000 patients in the US who suffer from VTE and arterial clot with our CAVT technology.

I also want to remind everyone that the core technology in our CAVT products is protected by a robust patent portfolio. We recently secured a victory from the Court of Appeals for the Federal Circuit, which similarly and unanimously affirmed the Patent and Trademark Appeal Board's IPR decisions in validating several competitive patents challenged by Penumbra.

We will continue to vigorously defend all of our patents and IP for our CAVT technology. At the TCT and VIVA conferences, we presented the landmark results from STORM-PE, the prospective multicenter randomized controlled trial evaluating CAVT plus anticoagulation versus anticoagulation alone for the treatment of acute intermediate high-risk PE.

Shruthi will provide additional detail on the trial and study outcomes in her prepared remarks. But needless to say, taking into account the medical community's reaction to the data, we are highly optimistic that STORM-PE will act as a major catalyst in positively impacting the treatment of PE while significantly increasing the number of patients receiving intervention with CAVT.

In our US peripheral embolization business, our new Embo dedicated 50-plus member sales team delivered strong 21.2% sequential growth in embolization revenue in the quarter. We believe the team's performance this quarter and the enhanced focus across our comprehensive current coil portfolio represents a new phase of sustainable growth in our US embolization franchise. Shruthi will discuss how the integration of this new team is unfolding.

Shifting to our Neurovascular business. Recent market trends in the macro US stroke market showed a slight decline in the third quarter. Notwithstanding that, our stroke thrombectomy portfolio delivered positive growth and share gain. Historically, new innovation has catalyzed the stroke market, and we are optimistic that with the anticipated introduction of Thunderbolt, we will see a similar dynamic play out. In neuro embolization, the recent interest we've seen in utilizing our Swift coil for MMA embolization continues to translate into extremely strong above-market procedure growth, further contributing to sustainable growth in the US embolization franchise.

Now I'd like to give you an update on Thunderbolt. In October, we submitted thorough responses to all the outstanding questions received from the FDA during the 510(k) review process. We are now in the stage where we address any final questions or provide any required clarifications to our answers. For obvious reasons, we'll be prudent in our discussion today about Thunderbolt. However, we remain excited about the prospect of introducing CAVT to the neurovascular field.

Overall, based on our third quarter performance and reflecting the trends we've seen in our business and our target markets highlighted previously, we are raising our revenue guidance for the year to $1.375 billion to $1.380 billion. We reiterate 20% to 21% year-over-year growth for 2025 for US thrombectomy.

Now I will turn the call over to Shruthi, who will discuss a few details on the expansion of our sales team as well as the STORM-PE trial.

Thank you, Adam. Good afternoon, everyone. Starting off with an update on our recent commercial expansion initiatives. Based on the significant ramp in physician interest in CAVT we experienced throughout 2023 and 2024. Entering 2025, we made the strategic decision to build out an additional peripheral sales team to focus on our embolization business, enabling our existing peripheral sales team to shift exclusive focus to CAVT. Through the first half of 2025, we added over 50 new peripheral embolization sales reps under our existing peripheral sales leadership team.

The build-out and integration went extremely well with the new team fitting seamlessly into our organization. This allowed the team to execute the launch of Ruby XL while also maintaining our momentum in our established portfolio, achieving strong 21.2% sequential growth in embolization revenue in the third quarter.

As we execute the shift in our commercial structure, our existing team helped integrate our new team and supported the transition of embolization case coverage across our accounts. This transition process will taper in the fourth quarter, well-positioning our teams to enter 2026 fully focused on their respective sales objectives, CAVT and embolization.

Turning to STORM-PE. At the TCT conference early last week, Dr. Rob Lookstein presented the study's primary endpoints alongside key safety data. Additional secondary endpoint data, including key physiological and functional outcomes was presented by Dr. Rachel Rosovsky at VIVA earlier this week. The trial proved CAVT superior in reducing right heart strain in intermediate high-risk PE patients with a comparable safety profile to the current standard of care.

In addition, while not powered to show statistical significance on secondary endpoints, the trial data demonstrated statistical significance in favor of CAVT across multiple secondary endpoints. In addition, the initial trial results were published in circulation on Monday.

STORM-PE proved CAVT superior to the current standard of care across the primary as well as multiple secondary endpoints showing CAVT patients recovered earlier and have significant long-term improvement in functional outcomes. The trial also highlighted the ability of the field's most advanced technology to deliver faster procedure and device times, reestablishing the baseline and expectations around acceptable case times.

With procedures in the trial requiring minimal prior experience with Flash ahead of enrolling patients in STORM-PE, the strong results also highlight CAVT's ease of use and exceptional safety profile. The physician feedback across the interventional and non-interventional community has been enthusiastically positive. Since the presentations, we are seeing a shift to CAVT from older mechanical thrombectomy options for PE. We expect to see this continue. We are also working with societies and organizations to disseminate the now published data from STORM-PE to hospitals so they can update their current hospital protocols.

Over the next year, this will be one of our top priorities. We are executing at a high level across our peripheral and neuro business units and are well-positioned to continue to build off our groundwork to date. As we look towards 2026 and beyond, we remain highly confident in our long-term strategy grounded in meaningful innovation, data generation, and investment in our team, supporting durable, profitable growth and the ability to treat a significant number of patients with our technologies.

I'll now turn the call over to Maggie to go over our financial results for the third quarter of 2025.

Thank you, Shruthi. Good afternoon, everyone. Today, I will discuss the financial results for the third quarter of 2025. 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 third quarter ended September 30, 2025, our total revenues were $354.7 million, an increase of 17.8% reported and 16.9% in constant currency compared to the third quarter of 2024. Our geographic mix of sales for the third quarter of 2025 was 77.5% US and 22.5% international.

Our US region reported growth of 21.5%, driven by 18.5% growth in our thrombectomy franchise and 29.2% growth in embolization and access, driven by our Ruby XL product compared to the same period last year. As we previously shared, due to easing of China's headwind and double-digit growth for the remaining international regions, our international business has returned to growth, increasing by 6.6% reported and 3% in constant currency compared to the same period last year.

Moving to revenue by product. Revenue from our global thrombectomy business grew to $236.4 million in the third quarter of 2025, an increase of 15.8% reported and 15.1% in constant currency compared to the same period last year. The growth was primarily driven by an increased 18.5% increase in our US thrombectomy business.

As expected, our international thrombectomy revenue also increased by 5.6% when compared to the same period last year. Revenue from our embolization and access business was $118.3 million in the third quarter of 2025, an increase of 22% reported and 20.8% in constant currency compared to the same period last year, primarily driven by an increase in US peripheral embolization sales due to the momentum from our successful launch of Ruby XL, combined with strategic investment we made in expanding our US embolization team in the first half of the year.

Gross margin for the third quarter of 2025 is 67.8% compared to 66.5% for the third quarter of 2024. And consistent with our expectations, we delivered sequential gross margin growth of 180 basis points, driven primarily by favorable regional mix, product mix, and productivity improvements. We are very pleased at how quickly the team stabilized our Ruby XL build, of which our Ruby XL product has an accretive impact on our gross margin and the sales model supports a more efficient working capital dynamic. In addition, we are on track to achieve our full year gross margin targets and remain well-positioned to deliver our long-term gross margin profile of 70% by the end of 2026.

Now on to our non-GAAP operating expenses, non-GAAP operating income and margin and adjusted EBITDA. Total operating expense for the quarter was $191.6 million or 54% of revenue, compared to $160 million or 53.1% of revenue for the same quarter last year. Our research and development expenses for Q3 2025 were $22.7 million or 6.4% of revenue compared to $22.6 million or 7.5% of revenue for Q3 2024, which reflects savings of $3.6 million due to our Immersive business wind down, offset by continued investment in product development.

SG&A expenses for Q3 2025 were $168.9 million or 47.6% of revenue compared to $137.4 million or 45.6% of revenue for Q3 2024. As we have stated previously, we have made targeted hires in our commercial and market access teams, which will support customer demand and allow us to capitalize on long-term growth drivers. Sequentially, our SG&A expenses increased by $8.9 million, reflecting the full quarter presence of our embolization sales team investment along with other variable spend.

With this build-out now complete, we are positioned to capture sales and operation leverage in future quarters. We recorded operating income of $48.8 million or 13.8% of revenue compared to an operating income of $40.3 million or 13.4% of revenue for the same period last year. We posted adjusted EBITDA of $66.7 million or 18.8% of total revenue compared to $56.7 million or 18.8% in the third quarter last year.

Turning to cash flow and balance sheet. We ended the third quarter of 2025 with cash, cash equivalents, and marketable security balance of $470.3 million and no debt, which is an increase of $45.7 million sequentially. This increase includes improving working capital ratios in both receivable and inventory turns and strong profitability. We continue to expect positive operating cash flow trends to continue in 2025 and beyond.

Turning to 2025 guidance. As Adam previously stated, we are raising our revenue guidance for the year to $1.375 billion to $1.380 billion. We reiterate 20% to 21% year-over-year growth for 2025 for US thrombectomy. Finally, we remain -- we maintain our previously stated 2025 gross and operating margin expansion guidance.

This concludes our prepared remarks. Operator, we can now open the call to questions.

(Operator Instructions)

Travis Steed, Bank of America.

Congrats on the good quarter. I'll start with Thunderbolt since it's topical. It sounds like you're a lot closer to approval than you were. I assume nothing surprising with the FDA back and forth. But just maybe how you're thinking about the product when it hits the market, how much share you can take and how much -- when investors will see the data from Thunderbolt? Anything else you can share on the FDA process would be helpful if you could have the product approved by year-end or not?

That's great. Thanks, Travis. A lot of nuances to that question. So let me try to cover as much as possible. Let's maybe start with the process and give a little additional color, and then we can talk about at a point in time of what happens subsequently. I know there's been a lot of comments and thoughts around the timing of the process. I want to maybe level set the process and the timing because there's some -- I think, some maybe misunderstanding.

Thunderbolt is a brand-new product. It doesn't -- it's not already approved. It doesn't -- it's not just seeking a new indication. So I know in the past, there's been comparables to products that have been already on the market that have a history, that have safety information that obviously, the FDA sees and collects. And all they're looking for is a new indication. That's a different time period usually, and those can be shorter.

For products that are brand new, those processes, at least in our experience with the neuro division sometimes take a while. For example, this is not fundamentally different timing than our original RED 72 SILVER LABEL, which was an update on an existing product, but it was a new product with some new materials and so on. And it takes a while because the FDA, and I applaud them for this are incredibly thorough.

So there's nothing about this process and timing, but we're feeling at least hopeful and optimistic. Needless to say, without sharing competitive information about what does the launch look like. And obviously, we don't want to do that. We obviously are ready and to launch this product and are excited about it when that time comes that we can do that. So we'll stay optimistic. And again, got to have a little prudence until we have a clearance letter from giving you more sort of detail on that, okay?

Makes a lot of sense. And maybe a follow-up on the STORM-PE secondaries now that those are out earlier this week and you've had a chance to talk to doctors. Curious how you're thinking about kind of the impact to the market and acceleration of the market and the potential to kind of take share given your safety profile on the device.

Yeah. There's a couple of interesting and exciting things that have happened. One, the reaction to the data within the medical community has been really just incredibly positive. I think folks who were at either TCT or VIVA or both saw that, they felt it. The safety -- the endpoints, the primary endpoint and of course, the secondary endpoints are really, really positive and strong and will have a big impact on non-interventionalists as well.

But in addition, the safety profile of the product was really striking, and I think that's led to a number of interventionalists who have not traditionally used our product call and want to start doing cases and have done cases in the last really weeks since last Sunday, with our product really for the first time in multiple cases. So that momentum is exciting as the field moves from the older technology that sort of got the field started to sort of the more modern CAVT technology. And as it relates to the non-interventional community and sort of what that reaction is, which is really core to building this market and growing it, Shruthi maybe can give you some additional comments. She's had a number of conversations with people and can share her perspective.

Yes. Thanks, Adam. So yes, on the non-interventional community, for example, specific conversations with like pulmonologists, hematologists, they're all now very happy that there's validation that right heart recovery then leads to the sort of 6-minute walk test progress that we saw in the functional outcomes. And so they're now doing the work to start updating protocols within their institutions and start to see more and more patients get access to care. That was a comment Dr. Rachel Rosovsky made on the podium right at the end of the presentation.

And now different physicians in the non-interventional community are looking at their own hospital protocols to make those updates. Just since the release of Rachel's presentation on Monday, I've had conversations myself with physicians that have had the same reaction. So I think it's really positive for the field and hopefully, it's going to open up access to care for a lot more patients.

Robbie Marcus, JPMorgan.

Congratulations on a nice quarter. I wanted to touch on margins here. I'll stay away from the revenue questions. And reiterating gross margin and operating margin guide, just wondering how you're thinking about the ability to drive margins. Is it -- is Thunderbolt going to be a big component to get those moving higher versus where you were thinking originally? And how should we be thinking about the impact of tariffs and how that impacted full year '25 margins?

Let me start briefly and then Maggie can address most of this. All of our CAVT products have very, very strong margins. So all of them, whether it's just Thunderbolt or any of the other areas that we've just spent a lot of time talking about have the ability as that mix changes. The other thing is with our newest coil that we launched, that's also accretive. So I think we're feeling pretty good. But Maggie can maybe go through some of the more specifics.

Yes, yes. Thanks. With the remaining factors, this quarter, you see favorable, especially on a regional mix standpoint since we have seen a lot of US growth, but continued product mix and also the recovery from the operation teams to stabilize our Ruby XL yield improvement and productivity. And for going into Q4, we'll continue to see this trend. I think we'll continue to see sequential improvement from product mix, regional mix, and productivity improvement and also some volume leverage. I think what we have seen in this quarter already reflected some tariff impact. We do not have material impact on tariff, although still a little bit, but the number and trend that we've seen has already reflecting absorbing those headwinds.

Great. Maybe just a quick follow-up. If I zoom in on thrombectomy, US and OUS, but I guess more specifically US here. It's been decelerating throughout the year. I imagine a lot of that has been pressure in the stroke market, offset by really strong venous growth, market growth and Penumbra growth. How do you think about -- is it fair to assume that it will continue to downward trend? Or do you think there might be a stabilization in stroke as we move out to '26 with venous offsetting that and returning it more towards accelerating growth?

Yes. Robbie, thank you. And thanks for -- in the body of your question, sort of highlighting and pointing out the dynamic in the market. You're exactly accurate. Obviously, VTE has led the growth sort of quarter after quarter. And some of that's market growth, obviously, some significant share gain. I think arterial has also been very, very strong. Stroke over the last couple of quarters has definitely been the drag that notwithstanding, we've held our own and used that opportunity to continue to take share. So we're not negative there. We're not seeing a decline in our business. It's just not growing at the same rate, obviously.

Over the course of the many, many years we've been in the stroke market, we have seen this. This happens. This is not new, and you've known that from watching us for many, many years. It doesn't -- it comes in waves. It doesn't happen always linearly. So there's nothing at this moment to be particularly concerned about. I do think having new technology that's very, very novel, not sort of similar to others has usually been a pretty significant catalyst. And so that certainly could help. But even without that, the market typically sort of ebbs and flows a bit, and we would expect that to turn around. The fourth quarter is usually a growth quarter traditionally in terms of the volume that grows. But overall, I'm optimistic about the future. It just comes in these waves.

Larry Biegelsen, Wells Fargo.

Congrats on the nice quarter here, Adam. Adam, I wanted to ask about Embo Access, which was -- in the US, which was extremely strong in Q3. And in fact, worldwide Embo Access grew faster than worldwide thrombectomy. So was there anything you would characterize as onetime in Q3? How much of the strength was Ruby XL versus Swift, which you called out? And going forward, should we expect Embo Access to now outpace thrombectomy? And I had one follow-up.

Yes. It's a great question. We're really -- to answer the immediate question, there was nothing onetime about this quarter. The two things that were really stood out in the US, which was what was driving that -- well, two things around the peripheral part of the business. One, we have a dedicated team for the first time in a while. So their focus is on that. Obviously, over the last few years, our focus with our peripheral team had been split between our coils and our thrombectomy, making it pretty hard to do both well.

So I think that bodes well for our future that the integration, as Shruthi said, was really seamless. And I'll be honest, I was incredibly impressed with every member of that team and the leadership of the sales team for getting to allow that to happen that way. It was -- it's not a normal process to be that seamless and it really was. So I think we're in really good shape. I think what this shows is that there's a huge market and appetite for our very distinctive products that are different than others on the market, and I think that will continue. And I said that in my prepared remarks.

As it relates to the neuro side, I'm really fascinating to watch that. The growth continues to happen there. The number of cases that people are doing in general for MMA embolization has increased notably. And more and more people are moving to our product because of the safety profile of it compared to more traditional means of treatment. So I think we're pretty optimistic about this business. And I think together with the thrombectomy, they both become equal drivers of growth. Obviously, you're going to see a quarter -- the quarter that you launch a product have slightly bigger growth on a sequential basis. But overall, I think going forward, we're not going to be looking at that business is dragging down our growth. I think both Embo and thrombectomy will be an important part of our growth in '26 and beyond.

That's helpful. Adam, one quick one on the guidance. It does look like the guidance implies a deceleration in Q4. So my question is why? And the guidance for the year, 15% to 16% for 2025 has about a 4% headwind from China. So I guess on a reported basis, that 15% to 16%, is there any reason why growth would slow next year?

Yes. Look, I think we've been pretty clear about learning our lessons on guidance, not getting ahead of ourselves. I do not -- we're obviously not going to give sort of backdoor guidance, if you will, for 2026. I'm not going to do that. We'll give our guidance on the fourth quarter call. But obviously, if you listen carefully and you did to what we've just said about our business and where we stand, we feel particularly good about our -- where we stand, not just this quarter, but for a while to come well into next year and the years beyond.

Joanne Wuensch, Citibank.

I want to dig a little bit into international sales, please. It seems based on your commentary that China headwinds are waning. At what stage are they done? And if we adjusted for said headwinds, what would OUS growth have been this quarter?

Yes. I think pretty much by next year, early next year, a lot of our headwind will be very minimal. We do have some China revenue a little bit this year, but I wouldn't look at it as a headwind for next year. In terms of our international -- rest of the international region growth, we mentioned that other than outside of China, the rest of the international regions are growing in double digits. I think in the prior quarters, sometimes we have highlighted that thrombectomy part of the OUS a lot of time grow in the mid-teens. So that has been kind of our trend throughout this year and still a lot of growth momentum next year.

Vijay Kumar, Evercore.

Congrats on the nice one here. Adam, maybe my first one for you on the STORM-PE. I think in the past, you alluded to STORM-PE is having the potential to change clinical practice. I'm curious now that we've seen the primary and secondary endpoints, is this enough to change practice? Should we start seeing an acceleration in procedures adoption? Or are there any sort of hurdles, if you will, on the adoption of thrombectomy treating PE cases?

Yes. Look, I can only tell you what we have heard in the last week or so, lots and lots of conversations. I will tell you that a number of non-interventionalist. And I think Shruthi alluded to two pulmonologists that she's had personal conversations with and a number of other non-interventionals have indicated to us that they would be leading the effort in their particular hospitals to change the protocols based on this data. So I think the reaction -- the positive reaction to this data has been uniform just across interventionalists, non-interventionalists.

So now the work starts to get protocols in hospitals change. And usually, as we've said, you heard members of our steering committee say, guidelines sort of lag behind practice sometimes. So I think you'll see the behavior and the protocols in hospitals change and guidelines will follow that effort. But it's been really heartening to see the excitement around this and not just with interventionalists, but with non-interventionalists knowing that they now have a very strong alternative for when they know their patients need something more significant. So I think it's a good day for the field and a good moment in time, and we're very optimistic about that.

Understood. And then maybe one P&L question. Gross margins up 180 basis points Q-on-Q, with SG&A growth was quite striking up 25%. Was there any timing benefit on -- or timing impact, if you will, on SG&A OpEx? Or is this number being proactive as you look at that pipeline, some of these new products coming to fruition?

Yes. No, thanks for your question. On the operating expense side, most of the increases that you see is pretty much all from the investment of our embolization team and the commercial team structure. We have pretty much completed the investment or the build-out by the end of this quarter or last quarter. So going forward, we'll start to see more leverage and it will be -- the investment level will be lower than what you have seen earlier in the year.

Brandon Vazquez, William Blair.

I wanted to stay on this STORM-PE train of thought for a minute, but I'll ask this question slightly different, but it sounds like there could be kind of an initial benefit from the current interventionalists performing more mechanical thrombectomy. But one of the other tertiary benefits that might come is really that like smaller hospitals that aren't using any thrombectomy at all today might start performing these procedures. We saw in the data that it was a very low learning curve, a lot of naive users in this trial.

So the question that I'll kind of frame here is like, one, talk to us a little bit about the time lines and your expectations of kind of turning on some of these accounts, how difficult or easy that might be? And then two, once your foot is in the door with PE treatment, are there other venous opportunities now that you've placed the lightning in these smaller hospitals that you could start to go after as well?

Yes. There's a lot to your question. So at a respectful time, I'll try to give you a fairly complete, but brief answer. There's so many layers of opportunity here. There's practices that are not treating everyone, which is the most of them who now will hopefully start to change their internal protocols. There are hospitals that don't really do intervention for PE that -- as you alluded to, that might now take it on. Sometimes that could also have a benefit because once you're doing PE, you really are sort of related to its cousin of DVT treatments.

Some of those places are using our technology for arterial, for example, which is a little bit of a different dynamic. So there's some overlap. All in all, what it does is really put a spotlight on the newest technology, which is CAVT, the speed of those cases, the safety profile of those cases. In the past, as you know, we've talked about and presented really robust data on the health economics of that, which justifies doing this. It's a procedure that is clearly validated not only clinically but also economically. So I think it just really opens the door for a lot of people.

I personally had the experience at TCT of talking to a cardiologist who runs a very well-known national practice, but their group doesn't typically do PE. It's covered by another specialty in their hospital. And after hearing the data, they were particularly excited about getting in there, helping their colleagues, opening up the coverage capacity pretty dramatically. So -- and that was just one of many, many conversations. So it takes some time. It can't all happen in 1 quarter, but it puts us in a really good spot for 2026.

Okay. And a separate follow-up question here. Forgive me if you guys had kind of gone over these details already before, but this is the first I'm hearing a little bit more of Lightning Flash 3.0. Can you just spend a minute talking about timings for when that goes into a broader launch? How important it is? Where do you think we'll see the benefits of this 3.0 over 2.0?

Yes. So with 3.0, as Adam alluded to on the prepared remarks, it is really a hardware and a software update. And what it does is it really improves the fidelity. And so what that means is these cases, as you saw from STORM-PE, 25-minute device times and really the fastest on the market right now, but Flash 3.0 is going to make it even faster, even better in terms of overall safety profile, blood mitigation, all the things that our physicians have now sort of come to expect. And so this really moves that even further forward by improving those case times even more.

Bill Plovanic, Canaccord.

The first is going to be -- I understand on the guidance, you want to be conservative, but the high end of that guidance is up 2% sequentially. You did up 4.8% and 5.1% in last year and the year before. And I'm just trying to -- is there anything specific that you're concerned about that you're only guiding up 2% and not the 5% that would be in line with the past 2 years?

Not something sort of I look at in all the various way you look at it. I look at what we beat by and what we raise by. And I think that's a pretty solid guide up. We're obviously not going to want to get ahead of ourselves, and there's so much positive work to do over the next period of time. Let's give us a chance to get started. Let's get going. We're only a week into STORM-PE. And I think we'll feel pretty comfortable. We got a couple of products to launch in peripheral and neuro is strong. Bear with us, we'll be good.

All right. And then just a follow-up again on the FDA. I truly appreciate the update, a lot of detail today. My question is, is the FDA requiring any additional testing and/or clinical data from you? Or is this a purely back and forth at this point?

Yes. So again, I want to remain prudent. I was pretty clear about that. The -- we -- what I said in my prepared remarks is we have already answered very thoroughly all the questions that we had received at that point. So that has already been done. They are now in the phase where they can obviously ask for clarifications or additional questions. But -- so I can't tell you what that's going to be yet. But we've been through, obviously, for a period of time here, very, very thorough questions like any new product that they review in the neuro division. So totally appropriate and not totally unexpected.

And is the shutdown impacting their responses? Or are they continuing to work through?

As -- I can't speak to that on a sort of daily basis. But as of now, we have not experienced any sense of delay because of the shutdown. But obviously, that's a process that's in real time and continues. So I can't speak to that what might happen end of this week or next week or what have you.

Michael Sarcone, Jefferies.

There's been a lot of focus on STORM-PE and pulmonary embolism. Your US VTE business continues to grow at a healthy clip. Maybe you can give us kind of the latest and greatest trends on the DVT side of the business and how you're thinking about growth there?

Thanks. That's a great question. So on the DVT side, what we're again seeing is just a positive response to Flash 2.0, we have commented on the VTE segment as a whole growing consistently the past several quarters, and that trend is expected to continue. And you're just going to see physicians as they hear about STORM results start adopting the technology on PE. And if they haven't yet used us on DVT, you're going to see that dynamic play out. So I think it just sets us up really well here for the future. Hopefully, that answers the question.

That does. That's really helpful. And just one quick follow-up there. In the past, you've talked about DVT being a little bit different in that you're focused more on the health economic side and working in collaboration with some hospital accounts. I guess, do you still have a focus there? And are you going to continue to execute on that kind of health economic data on the DVT side?

Absolutely. We're starting to see those results get presented at different conferences, just some of the market access data sets, working with the Vizient and the Premier databases. So the physician community is starting to hear about that. We also have our hospital engagement team that is actively having conversations with different folks within the hospitals to communicate that information. And what you'll also see is, again, the benefit of STORM-PE applies to the overall sort of VTE segment. So you're just going to see more excitement within the hospital to treat these patients. The Level 1 evidence that's now available will help on the DVT side as well.

Pito Chickering, Deutsche Bank.

A few follow-up, Peter, on US thrombectomy. Can you talk about market share versus market growth in the quarter? And can you quantify how many new accounts you added this quarter and how you see that in the fourth quarter post the STORM trial?

Yeah. Obviously, we have -- there's comparative information out there with other companies. So obviously, a huge chunk of -- this is all before STORM, obviously, came out, but a huge chunk of that was market share. And I think that's known. It's not -- just number of new accounts isn't really the complete way to look at it because obviously, there are number of different physicians within each account.

Some use one product and other uses another. So there's mix between that. So that's not a good measure. But when we look at the people who were using something and switched to us, that has continued all year long, obviously, at the end of last year and all the way through this year.

And really, what was surprising was, I guess, not surprising, but pleasant to see is just in the last week, because of the data and the safety profile as one of the cited reasons for their switch, we saw people who have moved from older technology to newer and all signs are that, that will continue.

So I think it's a combination going forward of continued share shift from older type of technology to the newer CAVT and what will play out, I think, over the next year or so is the increase in the number of patients treated. And I think they're tied. DVT and PE play into each other that way. And I think you're going to see some growth over the next two, three years.

Okay. If I step back and look at market growth, how many PER teams do you think were created this year? And how do the from hospitals look post storm trials? There seem to be a lot of excitement last week at TCT about starting more programs.

Yeah. I think, look, there's two different groups of PER teams. There's the formal PER teams that are also members of the PERT consortium. And then there are lots and lots of sort of local PER teams that aren't -- haven't joined the PERT consortium. Some of the times, smaller hospitals are just newer in the process. What I was very pleased to see is at the beginning of TCT, the PERT Consortium announced a pretty significant effort over the next couple of years to dramatically increase the number of members of their consortium as well as really help get sort of with the most current technology and the idea that these people can be helped in a different way.

So I think there's a lot of energy ready to go and coming out of the TCT meeting and also at VIVA, that was really clear that people are going to have either informal PERT programs, which is a cross-functional group of people caring about these patients differently or formalize them and be part of the PERT consortium. Either way, I think we're seeing a huge change in energy and focus around pulmonary embolism patients.

Ryan Zimmerman, BTIG.

I appreciate that very much. So I'll ask the two questions upfront. We haven't talked much about the interim update on STRIKE-PE out of TCT. And I'm wondering if you can kind of give us your high-level thoughts, Adam, on that. We looked at the data, good kind of RV/LV changes. But I think certainly, there are some other aspects to it that may have stuck out or been on people's minds. I'm curious to kind of get your high-level thoughts.

And then the other question is just directed to Shruthi, which is embolization and access, you talked about it. These markets typically don't grow at the kind of rates that you're seeing. And so is it just the products themselves? Is it higher use of MMA? I'm just curious if you could kind of talk specifically about what is going to drive this durably for the time being.

Yes. Great questions. So on the first one there with STRIKE-PE, just like you commented on, I mean, there's obviously STORM-PE is kind of the highlight right now, but STRIKE-PE certainly confirms the longer-term benefit of CAVT. As you may recall, that study goes out to one year and looks at functional outcomes. Longer term, how do these patients do out to one year. And so it just adds to the overall body of evidence. At VIVA, there was a specific subset presented on just the use of the Flash product in these patients and their follow-up out to one year.

At TCT, there was a data set around the high-risk PE patients and just showing that CAVT can have a real benefit in that patient group. So overall, I think it's just a growing body of evidence in PE. And so I think the -- what you'll start to see is that these PER teams and PE teams across the board are just going to have more of a focus around treating more patients with CAVT.

On your second question, as it relates to the embolization products and that category as a whole, the team now is in place to focus 100% on our embolization products. And while we are market leading, we do not yet have 100% of the market. So I think there is still opportunity to continue to grow that. Our physicians love the way the coils perform. And so the focus just allows our team to be able to go and make sure that the coils are available to everyone.

On top of that, you see MMAs are sort of a newer procedure overall. And as Adam alluded to, there are some of the more traditional options like embolics that have been available, but the coils, the way they perform, our coil specifically have really been -- our physicians have been really been responding well to that. So I think you're seeing here a combination of what we have with the peripheral embolization focus as well as the growing number of procedures in the MMA category.

And that concludes the question-and-answer portion of today's conference call. Ms. Furlong, I will turn the call back over to you.

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 fourth quarter call.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.