PEN 10-K & 10-Q changes, risk factors and insider trading

The medical device industry is intensely competitive, subject to rapid change and significantly affected by new product introductions and other market activities of industry participants. We compete with a number of manufacturers and distributors of neuro and vascular devices. Our most notable competitors are Boston Scientific, Medtronic, Stryker (now including Inari Medical, Medtronic, Stryker,Medical), Terumo and several private companies. Most of these competitors are large, well-capitalized companies with longer operating histories and greater resources than us. We also compete with a number of smaller medical device companies that have a single product or a limited range of products. Our competitors may be able to spend more on product acquisition, development, marketing, sales and other product initiatives, or be more focused in their spending and activities, than we can. Some of our competitors have:

We currently produce substantially all of our products at our manufacturing facilities in Alameda and Roseville, California, and, while we have entered into agreements to acquire property in Costa Rica and construct a manufacturing facility and warehouse for our products, we can give no assurance that these facilities will be adequate for our future needs. We may need to expend significant capital resources and further increase the size of our manufacturing capabilities as we grow our business. We could, however, encounter problems related to:

If we are unable to successfully address these challenges, we may not be able to grow our international sales and our results of operations may suffer as a result. For example, certain unique macroeconomic and geopolitical factors, including thosearmed asconflict ain resultvarious parts of the Russian invasion of Ukraine or conditions in the Middle East as a result of the Israel-Hamas conflict,world, may cause instability and volatility in the global financial markets and disruptions within the healthcare industry that may negatively impact our business. In addition, the United States federal government has imposed and/or threatened tariffs on a broad range of goods imported from China, Mexico, Canada and certainseveral other countries, which has resulted in retaliatory tariffs imposed and/or threatened by China and other countries. Additional tariffs imposed by the United States on a broader range of imports,States, or further retaliatory trade measures taken by China or other countries in response, could result in an increase in supply chain costs or other pricing pressures that we may not be able to offset or may otherwise adversely impact our business and results of operations.

We have established a direct sales capability in the United States, most of Europe, CanadaCanada, Australia and Australia,Singapore, which we have complemented with distributors in certain other international markets. Sales to distributors represented 13.2%,10.0%, 16.7%13.2% and 18.7%16.7% of our revenue in 2024,2025, 20232024 and 2022,2023, respectively. Our success outside of the United States, most of Europe, CanadaCanada, Australia and AustraliaSingapore depends largely upon marketing arrangements with distributors, in particular their sales expertise and their relationships with specialist physicians and affiliated hospitals in their geographic areas. Distributors may terminate their relationship with us, sell competitive products or devote insufficient sales efforts or other resources to our products. We do not control our distributors, and they may not be successful in implementing our marketing plans. In addition, many of our distributors initially obtain and maintain foreign regulatory approval for the sale of our products in their respective countries, and their efforts in obtaining and maintaining regulatory approval may not be as robust as we desire or expect. As our business grows, we may seek to expand or otherwise modify our arrangements with our existing distributors and/or retain the services of additional distributors. For example, in December 2020, we entered into an agreement to license the technology for certain of our products to our existing distribution partner in China to permit our partner to manufacture and commercialize such products in China, in exchange for fixed payments upon the transfer of distinct the licensed technology and upon the provision of related regulatory support, as well as, in certain cases, royalty payments on downstream sales of the licensed products, which we expanded to include additional products in February 2022, September 2023 and March 2024. However, there can be no assurances that this arrangement, which is novel for us, or other similar arrangements that we may enter into in the future, will be successful. Our failure to maintain our relationships with our existing distributors or our partner in China, or our failure to recruit and retain additional skilled distributors in existing or new international markets, could have an adverse effect on our operations. If current or future distributors or our partner in China do not perform adequately, or if we lose a significant distributor or our partner in China, we may not be able to maintain existing levels of international revenue or realize expected long term international revenue growth. We have in the past experienced turnover with some of our distributors that has adversely affected sales in the countries in which those distributors operate. Similar occurrences could happen in the future.

We are exposed to the effects of changes in foreign currency exchange rates, and we have not historically hedged our foreign currency exposure. Approximately 22.2%, 24.5%, 28.5%, and 30.2%28.5% of our revenue for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively, were derived from sales in non-U.S. markets, and we expect sales in non-U.S. markets to continue to represent a significant portion of our revenue. For direct sales in our international markets, we are paid by our customers in their local currency, which is primarily euros. For sales to distributors in our international markets, we are paid principally in either U.S. dollars or euros, with some sales being denominated in other currencies. Therefore, when the U.S. dollar strengthens relative to the euro or other local currency, our U.S. dollar reported revenue from non-U.S. dollar denominated sales will decrease, or we will need to increase our non-U.S. dollar denominated prices, which may not be commercially practical. Conversely, when the U.S. dollar weakens relative to the euro or other local currency, our U.S. dollar reported expenses from non-U.S. dollar denominated operating costs will increase. Changes in the relative values of currencies occur regularly and, in some instances, could materially adversely affect our business, results of operations, financial condition or cash flows. For example, during 2022 the U.S. dollar strengthened relative to many local currencies in the non-U.S. markets where we do business, which adversely affected our U.S. dollar reported revenue.

More systems, facilities, processes and management employees are needed to allow us to continue to grow successfully. We are expanding and renovating our existing facilities around the worldworld, but particularlyincluding in Alameda,Alameda and Roseville California, and establishing new manufacturing facilities in Costa Rica, driven by our need to expand the space available for ourproduct manufacturing and product development and testtesting capacities, as well as our need for additional information technology and office space. The expansion and renovation of our facilities entail risks that could cause disruption in the operations of our business. Such risks include potential interruption in data flow; unforeseen construction, scheduling, engineering, environmental, or geological problems; and unanticipated cost increases. To meet anticipated demand for our products, we will also have to continue to buy additional equipment and hire additional research and development and manufacturing employees, including quality control personnel and other personnel involved in the production process. This expansion could result in operating difficulties including, but not limited to, difficulties in hiring the appropriate number of research and development and manufacturing employees, training and managing an increasing number of employees, delays in production and shipments, manufacturing inefficiencies and employees not working at capacity. In addition, at certain times we may need to rely on third party consultants, which may cost more than employees and may create operating inefficiencies and difficulties. If we do not adapt to meet these evolving challenges and if we are unable to manage our growth successfully, it could have a material and adverse effect on our business, results of operations, financial condition or cash flows.

We believe that our future success is highly dependent on the contributions of our executive officers, particularly Adam Elsesser, our chief executive officer and president,officer, as well as our ability to attract and retain highly skilled and experienced sales and marketing, technical and other personnel in the United States and in international markets. Each of these persons’ efforts will be critical to us as we continue to develop our products and business. If we were to lose one or more of our key employees, including to competitors, we may experience difficulties in competing effectively, developing our products and implementing our business strategies.

FDA and other foreign regulatory authorities worldwide also conduct periodic inspections of our facilities to determine compliance with FDA’s QSRQMSR requirements, EU MDR requirements and all comparable foreign regulations. Product approvals or clearances by FDA can be withdrawn, and new product approvals or clearances by FDA and foreign regulatory bodies can be delayed, due to failure to comply with regulatory requirements or the occurrence of unforeseen problems following initial approval or clearance of a product. In addition, state or federal legislation or regulations may impact key manufacturing processes, such as sterilization, which could require expensive and time-consuming changes to our manufacturing processes as well as the need for additional regulatory clearances or approvals. Failure to comply with regulatory requirements or the discovery of previously unknown problems with a product or manufacturer could result in fines, delays or suspensions of regulatory approvals or clearances, seizures or recalls of products (with the attendant expenses and adverse competitive impact), the banning of a particular device, an order to replace or refund the cost of any device previously manufactured or distributed, operating restrictions and criminal prosecution, as well as decreased sales as a result of negative publicity and product liability claims, all of which could have a material adverse effect on our business, results of operation, financial condition or cash flows.

Our global regulatory environment is becoming increasingly stringent and unpredictable, which could increase the time, cost and complexity of obtaining regulatory approvals for our products, as well as the clinical and regulatory costs of supporting those approvals. Many countries that did not have regulatory requirements for medical devices have established such requirements in recent years and other countries have expanded existing regulations. Certain regulators are exhibiting less flexibility by requiring, for example, the collection of local preclinical and/or clinical data prior to approval. While harmonization of global regulations has been pursued, requirements continue to differ significantly among countries. We expect the global regulatory environment to continue to evolve, which could impact our ability to obtain future approvals for our products and increase the cost and time to obtain such approvals. By way ofFor example, the European Union regulatory bodies have instituted EU MDR, which changed many aspects of the existing regulatory framework, such as clinical data requirements, and introduced new ones, such as Unique Device Identification. EU MDR imposes increased compliance obligations for many parts of our business in order to access the EU market. The notified bodies that oversee compliance with EU MDR face uncertainties as EU MDR is enforced, creating risks in several areas, including the CE Marking process, data transparency and application review timetables.

We are required to register with FDA as a device manufacturer and as a result, we are subject to periodic inspection by FDA for compliance with FDA’s QSRQMSR requirements, which requires manufacturers of medical devices to adhere to certain requirements, including testing, quality control and documentation procedures. In addition, the U.S. federal Medical Device Reporting regulations require us to provide information to FDA whenever there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury, or has malfunctioned, and if the malfunction were to recur, it would be likely to cause or contribute to a death or serious injury. Compliance with applicable regulatory requirements is subject to continual review and is rigorously monitored through periodic inspections by FDA. In the European Community, we are required to maintain certain ISO certifications in order to sell products and we undergo periodic inspections by notified bodies to obtain and maintain these certifications. We received certification to ISO 13485:2016 in 2018 and successfully completed our most recent recertificationsurveillance audit in 2024.2025. Compliance with this standard is subject to continual review and is monitored through periodic inspections by our notified body. Some foreign countries, most notably Japan and Brazil, have similar requirements or may require inspections of our manufacturing facilities before approving a product for sale in their country. We participate in the Medical Device Single Audit Program (“MDSAP”) which allows for certification and review of compliance to standards and regulations required in the United States, Canada, Brazil, Australia, and Japan. We received our first MDSAP certification in 2018 and successfully completed our most recent recertificationsurveillance audit in 2024.2025. Some of our suppliers are subject to the same or similar scrutiny. If we or our suppliers fail to adhere to QSR,QMSR, ISO or other regulatory requirements, this could delay production of our products and lead to fines, difficulties in obtaining regulatory clearances or approvals, recalls or other consequences, which could in turn have a material adverse effect on our business, results of operation, financial condition or cash flows.

Our amended and restated certificate of incorporation, our secondthird amended and restated bylaws and Delaware law contain provisions that could discourage another company from acquiring us and may prevent attempts by our stockholders to replace or remove our current management.

Provisions of Delaware law (where we are incorporated), our amended and restated certificate of incorporation and our secondthird amended and restated bylaws may discourage, delay or prevent a merger or acquisition that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace or remove our board of directors. These provisions include:

•establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings; and

Our secondthird amended and restated bylaws designate the state courts located within the state of Delaware (or if no state court located within Delaware has jurisdiction, the federal district court for the District of Delaware) as the exclusive forum for certain disputes between us and our stockholders, which could limit our stockholders’ ability to access a favorable judicial forum for disputes with us or our directors, officers or employees.

Our secondthird amended and restated bylaws designate the state courts located within the state of Delaware (or if no state court located within Delaware has jurisdiction, the federal district court for the District of Delaware), in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as defendants, as the exclusive forum for any derivative action or proceeding brought on our behalf; any action asserting a claim of a breach of fiduciary duty; any action asserting a claim against us arising pursuant to the Delaware General Corporation Law, our amended and restated certificate of incorporation or our secondthird amended and restated bylaws; or any action asserting a claim against us that is governed by the internal affairs doctrine. This forum selection provision will not apply to any causes of action arising under the Securities Act of 1933, as amended (the “Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or, in each case, the rules and regulations thereunder, or for any other claim for which the U.S. federal courts have exclusive jurisdiction. The choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage such lawsuits against us and our directors, officers and other employees. In addition, if a court were to find the choice of forum provision contained in our secondthird amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business and financial condition.

Primarily as a result of net operating losses, stock-based compensation, various accruals and reserves, and tax credits, we maintain foreign and domestic DTAs. DTAs reflect an expected benefit to be realized in the future that may be used to reduce the amount of tax that we would otherwise be required to pay in future periods. DTAs are reduced by a valuation allowance when it is more likely than not that the future realization of all or some of the DTAs will not be achieved. Valuation allowances related to DTAs can be affected by changes to tax laws, statutory tax rates, future taxable income levels and input from our tax advisors or regulatory authorities. At this time, we consider it more likely than not that we will have sufficient taxable income in the future that will allow us to realize the benefits of the domestic DTAs we maintain as of December 31, 2024,2025, exclusive of our California tax credit DTAs. However, it is possible that some of our foreign or domestic DTAs could ultimately expire unused, or future DTAs could be created, due to vesting or settlement of stock awards or other book to tax differences, for which we will not have sufficient taxable income in the future to fully utilize. In such case, a valuation allowance to reduce our DTAs may be required, which would materially increase our tax expense in the period the valuation allowance is recorded and could have a material adverse impact on our financial condition and results of operations.

On August 5, 2024, our Board of Directors approved a share repurchase authorization in the amount of up to $200.0 million, allowing us to repurchase our common stock from time to time at such prices as we deem appropriate through open market purchases, block transactions, privately negotiated transactions, including accelerated share repurchase transactions, or otherwise. The repurchase authorization expiresoriginally expired on July 31, 2025. Under this authorization, we entered into an accelerated share repurchase agreement (“ASR”) with JPMorgan Chase Bank, National Association to repurchase $100.0 million of our common stock during the three months ended September 30, 2024. During the three months ended September 30, 2024, we repurchased an aggregate of 517,763 shares under the ASR at an aggregate cost of $100.4 million, including legal and financial advisor fees of $0.4 million associated with the repurchase. During the three months ended September 30, 2025 and December 31, 2025, the Company’s Board of Directors extended the repurchase authorization for the remaining $100.0 million to December 31, 2025 and December 31, 2026, respectively. As of December 31, 2024,2025, we had remaining authority to purchase $100.0 million of its common stock under the share repurchase authorization. Refer to Note “12. Share Repurchase Program” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

The timing and amount of any future repurchases, if any, will be subject to liquidity, stock price, market and economic conditions, compliance with applicable legal requirements such as Delaware surplus and solvency tests, and other relevant factors. Any failure to repurchase stock after we have announced our intention to do so may negatively impact our reputation and investor confidence in us and may negatively impact our stock price. In addition, under the Merger Agreement, we are not permitted to repurchase shares of our common stock without the prior approval of Boston Scientific Corporation.

•customer response to the introduction of new products or alternative treatments, and the degree to we which we are effective in transitioning customers to our products; and

•fluctuations in foreign currency.currency exchange rates.

Penumbra, the world’s leading thrombectomy company, is focused on developing the most innovative technologies for challenging medical conditions such as ischemic stroke, venous thromboembolism such as pulmonary embolism, and acute limb ischemia. Our broad portfolio, which includes computer assisted vacuum thrombectomy (CAVT), centers on removing blood clots from head-to-toe with speed, safety, and simplicity. Our team focuses on developing, manufacturing and marketing novel products for use by specialist physicians and other healthcare providers to drive improved clinical and health outcomes. We believe that the cost-effectiveness of our products is attractive to our customers.

Since our founding in 2004, we have invested heavily in our product development and commercial expansion that has established the foundation of our global organization. We have successfully developed, obtained regulatory clearance or approval for, and introduced products into the thrombectomy market since 2007, access market since 2008, embolization market since 2011, and neurosurgical market since 2014, and operated in the immersive healthcare market from 2020 until September 2024.2014.

We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, CanadaCanada, Australia and Australia,Singapore, as well as through distributors in select international markets. We generated revenue of $1,194.6$1,403.7 million, $1,058.5$1,194.6 million and $847.1$1,058.5 million for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively. This represents an annual increase of 12.9%17.5% and of 25.0%,12.9%, respectively. We generated income from operations of $9.3$189.2 million, $73.6$9.3 million and $6.1$73.6 million for the years ended December 31, 2024,2025, 20232024 and 2022,2023, respectively.

During the year ended December 31, 2024, we made the strategic decision to wind down and exit our Immersiveimmersive Healthcarehealthcare business, and as a result we incurred $115.3 million in impairment and other charges in connection with this decision. Refer to Note “4. Exit of Immersive Healthcare Business” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more details. During the year ended December 31, 2024, we permanently ceased sales of our Immersiveimmersive Healthcarehealthcare products and related commercial operations. There were no impairment or other charges in connection with the wind down and exit of our immersive healthcare business during the year ended December 31, 2025.

As of December 31, 2024,2025, our net DTA balance on a consolidated basis was $99.7$78.7 million, after reduction of a valuation allowance of $26.6$28.8 million. InThe 2024, we used up all federal net operating loss (“NOL”) carryforwards. We stillCompany had approximately $44.6$43.9 million of state net operating loss (“NOL”) carryforwards available to offset future taxable income as of December 31, 2024.2025. The state NOL carryforwards have different carryover periods and will begin to expire as early as 2036.2037. As of December 31, 2024,2025, we had federal research and development tax credits of $2.0$3.3 million which are carried forward for 20 years and will expire beginning in 2044. We had California state research and development tax credits of $32.6$35.4 million that may be carried forward indefinitely.

As of December 31, 2024,2025, we measured our current DTA balances against estimates of future income based on objectively verifiable operating results from our recent history, and concluded that sufficient future taxable income will be generated to realize the benefits of our federal DTAsDTAs. priorWe continue to expiration,maintain includinga valuation allowance against our federal research and developmentCalifornia tax credit DTAs.DTAs until new evidence becomes available to justify realization of the asset.

In December 2021, the OrganizationalOrganization for Economic Co-operation and Development (“OECD”) released guidance on the new global minimum tax regime known as Pillar Two. Subsequently, safe harbor provisions were introduced to temporarily alleviate administrative compliance burden of multinational enterprises. While various countries have adopted or are in the processAs of passingDecember legislation31, to2025, adopt it, the United States issued an executive order announcing opposition to adopt these rules in January 2025. Wewe have evaluated the tax impact in relevant countries and concluded that there is no impact to our taxincome provision for the year ended December 31, 2024.taxes. We acknowledge potential uncertainties in global implementation of Pillar Two,Two and will continue to monitor future tax legislation to determine their impact accordingly.

Application of the goodwill impairment test requires judgments, including: identification of the reporting units, assigning goodwill to reporting units, a qualitative assessment to determine whether there are any impairment indicators, and determining the fair value of each reporting unit. Qualitative factors may include, but are not limited to, macroeconomic conditions, industry conditions, the competitive environment, changes in the market for our products and services, regulatory and political developments, cost factors, and entity specific factors such as strategies, overall financial performance (both current and projected) and market capitalization. In the fourth quarter of 2025, 2024 and 2023, we performed qualitative assessments for goodwill impairment and determined there were no indicators of impairment. Refer to Note “8. Goodwill” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Cost of Revenue. Cost of revenue consists primarily of the cost of raw materials and components, personnel costs, including stock-based compensation, inbound freight charges, receiving costs, inspection and testing costs, warehousing costs, royalty expense, shipping and handling costs, which are costs incurred to handle products by a third-party shipper to the customers, and other labor and overhead costs incurred in the manufacturing of products. We manufacture substantially all of our products in our manufacturing facilities in Alameda and Roseville, California.

Revenue increased $136.1$209.1 million, or 12.9%,17.5%, to $1,403.7 million in 2025, from $1,194.6 million in 2024, from $1,058.5 million in 2023.2024. Overall revenue growth was primarily due to an increase in sales of our new and existing thrombectomy and embolization and access products.

Revenue from our global embolization and access products decreasedincreased $2.0$76.6 million, or 0.5%,20.2%, to $455.7 million in the year ended December 31, 2025, from $379.1 million in the year ended December 31, 2024, from $381.2 million in the year ended December 31, 2023.2024. The decreaseincrease in our global embolization and access products was primarily drivenattributable byto higher sales volume in the United States as a result of sales of new products and further market penetration of our internationalexisting products. Sales of our U.S. embolization and access products,products which decreasedincreased by 7.6%25.4% in the year ended December 31, 2024, partially offset by a 3.3% increase in sales of our U.S. embolization and access products.2025. Prices for our embolization and access products remained substantially unchanged during the period.

Revenue from sales in international markets decreasedincreased $8.8$19.4 million, or 2.9%,6.6%, to $311.9 million in 2025, from $292.5 million in 2024, from $301.4 million in 2023.2024. Revenue from international sales represented 24.5%22.2% and 28.5%24.5% of our total revenue in 20242025 and 2023,2024, respectively.

Gross margin wasincreased by 3.9 percentage points to 67.1% in 2025. This compares to gross margin of 63.2% in 2024, including a $7.3 million reduction in revenue resulting from the Italian government’s payback provision, which requires medical device companies to make payments to the Italian government for any deficit created by Italian budget overspend on medical devices, andincluded a one-time $33.4 million inventory charge to cost of revenue in connection with the impairment of our Immersiveimmersive Healthcarehealthcare asset group (refer to Note “4. Exit of Immersive Healthcare Business” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information). This compares to gross margin of 64.5% in 2023. The impact of the $7.3 million Italian payback provision and one-time $33.4 million inventory charge decreased our gross margin by 3.02.8 percentage points in 2024. Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies. As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future.

R&D expenses increaseddecreased by $10.4$5.0 million or 12.3%,5.3%, to $89.8 million in 2025, from $94.8 million in 2024, from $84.4 million in 2023.2024. The increasedecrease was primarily due to a $3.3$14.2 million increasedecrease in productexpenses developmentassociated andwith testingour immersive healthcare business. Excluding these costs, $2.6R&D expenses increased by $9.2 million in one-time expenses in connection with the wind down of the Immersive Healthcare business, and a $1.8 million increase in personnel-related expenses driven by an increase in headcount and related expenses2025 to support our continued growth.

SG&A expenses increased by $67.5$89.4 million, or 13.3%,15.6%, to $663.4 million in 2025, from $574.0 million in 2024, from $506.5 million in 2023.2024. The increase was primarily due to a $34.3$74.5 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $10.0$10.4 million increase in costs related to marketing events, and a $9.8$7.7 million increase in othertravel-related professionalexpenses. services.This was partially offset by a $4.8 million decrease in non-recurring litigation related expenses, including settlement costs and legal fees, associated with wage and hour complaints filed against the Company in 2023 and a $4.7 million decrease in amortization expense of finite lived intangible assets acquired in connection with the Sixense acquisition due to the impairment of long-lived assets associated with the immersive healthcare business in the second quarter of 2024.

There were no impairment or other charges related to the immersive healthcare business during the year ended December 31, 2025. During the year ended December 31, 2024, we made the strategic decision to wind down and exit our Immersiveimmersive Healthcarehealthcare business, and as a result we incurred $115.3 million in impairment and other charges in connection with this decision. The Company incurred a $33.4 million charge to cost of revenue for the write-down of Immersiveimmersive Healthcarehealthcare inventory to net realizable value, an impairment charge to long-lived assets consisting of $58.9 million in finite-lived intangible assets and $18.0 million in property and equipment, and severance and other associated costs of $5.0 million included in research and development and sales, general and administrative within the consolidated statement of operations. Refer to Note “4. Exit of Immersive Healthcare Business” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Provision for (benefit from) income taxes

We believe our current sources of liquidity will be sufficient to meet our liquidity requirements for at least the next 12 months. Our principal liquidity requirements are to fund our operations, expand manufacturing operations which includes, but is not limited to, maintaining sufficient levels of inventory to meet the anticipated demand of our customers, fund research and development activities and fund our capital expenditures. We may also lease or purchase additional facilities to facilitate our growth. For example, onduring Februarythe 14,year ended December 31, 2025, the Company entered into agreements to acquire landproperty in Costa Rica and construct a custom-built manufacturing facility and warehouse for the production of ourmedical productsdevices. (referRefer to Note “20.5. SubsequentBalance EventsSheet Components” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information).information. We expect to continue to make investments as we launch new products, expand our manufacturing operations and information technology infrastructures and further expand into international markets. We may, however, require or elect to secure additional financing as we continue to execute our business strategy. If we require or elect to raise additional funds, we may do so through equity or debt financing, which may not be available on favorable terms, could result in dilution to our stockholders, and could require us to agree to covenants that limit our operating flexibility.

On August 5, 2024, the Company’s Board of Directors approved a share repurchase authorization in the amount of up to $200.0 million, allowing the Company to repurchase its common stock from time to time at such prices as it deems appropriate through open market purchases, block transactions, privately negotiated transactions, including accelerated share repurchase transactions, or otherwise. The repurchase authorization expiresoriginally expired on July 31, 2025. Under this authorization, the Company entered into an accelerated share repurchase agreement (“ASR”) with JPMorgan Chase Bank, National Association to repurchase $100.0 million of the Company’s common stock during the three months ended September 30, 2024. During the three months ended September 30, 2024, the Company repurchased an aggregate of 517,763 shares under the ASR at an aggregate cost of $100.4 million, including legal and financial advisor fees of $0.4 million associated with the repurchase. During the three months ended September 30, 2025 and December 31, 2025, the Company’s Board of Directors extended the repurchase authorization for the remaining $100.0 million to December 31, 2025 and December 31, 2026, respectively. As of December 31, 2024,2025, the Company had remaining authority to purchase $100.0 million of its common stock under the share repurchase authorization. Refer to Note “12. Share Repurchase Program” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Net Cash Provided By (Used In) Operating Activities

Net cash provided by (used in) operating activities consists primarily of net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, acquired in-process research and development, impairment charges, inventory write-offs and write-downs, changes in deferred tax balances, acquired in-process research and development, and the effect of changes in working capital and other activities).

Net Cash Provided By (Used In) Provided By Investing Activities

Net cash provided by (used in) provided by investing activities primarily relates primarily to proceeds from maturities of marketable investments, partially offset by purchases of marketable and non-marketable investments, capital expenditures, and payments in connection with asset acquisitions.acquisitions, partially offset by sales of marketable investments and proceeds from maturities of marketable investments.

Net Cash Provided By (Used In) Provided By Financing Activities

•Neuro thrombectomy - Penumbra System, including Penumbra RED, SENDit, JET, ACE, BMX, and MAX catheters and the 3D Revascularization Device, Penumbra ENGINE and other components and accessoriesaccessories, and THUNDERBOLT Our embolization and access products fall into four broad product families:

•Neuro embolization - Penumbra SMART COIL, Penumbra Coil 400, POD400, PAC400, SwiftPAC CoilCoil, SwiftSET and SwiftSETSwiftMATCH

By pioneering these innovations, we support healthcare providers, hospitals and clinics in more than 100 countries, working to improve patient outcomes and quality of life. In the three months ended MarchJune 31,30, 2026 and 2025, 20.9%21.7% and 20.8%23.2% of our revenue, respectively, was generated from customers located outside of the United States. In the six months ended June 30, 2026 and 2025, 21.3% and 22.0% of our revenue, respectively, was generated from customers located outside of the United States. Our sales outside of the United States are denominated principally in the euro, with some sales being denominated in other currencies. As a result, we have foreign exchange exposure but do not currently engage in hedging.

We generated revenue of $374.8$390.0 million and $324.1$339.5 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, an increase of $50.6 million, and revenue of $764.8 million and $663.6 million for the six months ended June 30, 2026 and 2025, respectively, an increase of $101.2 million. We generated income from operations of $38.2$41.0 million and $40.4$40.8 million for the three months ended MarchJune 31,30, 2026 and 2025, respectively, and income from operations of $79.3 million and $81.2 million for the six months ended June 30, 2026 and 2025, respectively.

On January 14, 2026, we entered into the Merger Agreement with Boston Scientific Corporation and Merger Sub, pursuant to which Boston Scientific Corporation has agreed to acquire us in the Merger at an enterprise value of approximately $14.5 billion. Under the terms of the Merger Agreement, which has been approved by the board of directors of each of the Company and Boston Scientific Corporation, the transaction values each share of our common stock at $374 per share, with our stockholders having the right to elect, for each share of our common stock held by them, to receive $374 in cash or 3.8721 shares of Boston Scientific Corporation’s common stock (valued at $374 based on the volume weighted average price of Boston Scientific Corporation’s common stock over the 10 trading days ending January 13, 2026), subject to proration, so that the total transaction consideration is paid approximately 73% in cash and approximately 27% in shares of Boston Scientific’s common stock. The Merger is expected to close by the end of 2026, subject to customary closing conditions, including approval by our stockholders and regulatory approvals. Refer to Note “1. Organization and Description of Business” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

Three Months Ended MarchJune 31,30, 2026 Compared to the Three Months Ended MarchJune 31,30, 2025

Revenue increased $50.6 million, or 15.6%,14.9%, to $374.8$390.0 million in the three months ended MarchJune 31,30, 2026, from $324.1$339.5 million in the three months ended MarchJune 31,30, 2025. Overall revenue growth was primarily due to an increase in sales of our existing thrombectomy products and new and existing embolization and access products.

Revenue from our global thrombectomy products increased $27.4$28.7 million, or 12.1%,12.5%, to $253.9$259.0 million in the three months ended MarchJune 31,30, 2026, from $226.5$230.3 million in the three months ended MarchJune 31,30, 2025. The increase in our global thrombectomy products was primarily attributable to higher sales volume in the United States as a result of further market penetration of our existing products. Prices for our thrombectomy products remained substantially unchanged during the period.

Revenue from our global embolization and access products increased $23.2$21.9 million, or 23.8%,20.0%, to $120.8$131.1 million in the three months ended MarchJune 31,30, 2026, from $97.6$109.2 million in the three months ended MarchJune 31,30, 2025. The increase in our global embolization and access products was primarily attributable to higher sales volume in the United States as a result of further market penetration of our new and existing products. Prices for our embolization and access products remained substantially unchanged during the period.

The following table presents revenue by geographic area, based on our customers’ shipping destinations, for the three months ended MarchJune 31,30, 2026 and 2025:

Revenue from sales in international markets increased $11.1$6.0 million, or 16.5%,7.6%, to $78.4$84.6 million in the three months ended MarchJune 31,30, 2026, from $67.3$78.6 million in the three months ended MarchJune 31,30, 2025. Revenue from international sales represented 20.9%21.7% and 20.8%23.2% of our total revenue for the three months ended MarchJune 31,30, 2026 and 2025, respectively.

Gross margin increased by 1.01.9 percentage points to 67.6%67.9% in the three months ended MarchJune 31,30, 2026, from 66.6%66.0% in the three months ended MarchJune 31,30, 2025, primarily driven by favorable product mix across our regions. Gross margin is impacted by product mix, regional mix, and production initiatives to support demand and create future efficiencies. As such, with favorable product mix, improvement in productivity, and by leveraging our fixed costs on higher volume of new product sales during the year, our gross margin may be positively impacted in the future.

R&D expenses increased by $0.3$2.2 million, or 1.4%,9.4%, to $22.4$25.4 million in the three months ended MarchJune 31,30, 2026, from $22.1$23.2 million in the three months ended MarchJune 31,30, 2025. The increase was primarily due to a $1.6$1.8 million increase in product development and testing costs and a $1.3 million increase in personnel-related expenses, partially offset by a $1.3$0.9 million decrease in other research and development activities primarily related to product development due to the timing of planned investments.

SG&A expenses increased by $39.3$38.5 million, or 25.6%,24.1%, to $192.8$198.5 million in the three months ended MarchJune 31,30, 2026, from $153.5$160.0 million in the three months ended MarchJune 31,30, 2025. The increase was primarily due to a $17.2$11.7 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $9.4$6.9 million increase in acquisition-related expenses primarily attributable to professional services associated with the pending acquisition of our Company by Boston Scientific Corporation, and a $3.1$6.8 million increase in costs related to marketing events.events, and a $2.7 million increase in in travel-related expenses.

Our income tax expense was $9.1$11.4 million or 21.8%24.6% of income before taxes for the three months ended MarchJune 31,30, 2026, compared to $4.6an millionimmaterial amount or 10.6%0.1% of income before taxes for the three months ended MarchJune 31,30, 2025. The change in effective tax rate was primarily due to a decrease in excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction in the current period.

As of MarchJune 31,30, 2026, we had $1,063.7$1,110.3 million in working capital, which included $241.3$205.3 million in cash and cash equivalents and $374.4$453.5 million in marketable investments. As of MarchJune 31,30, 2026, we held approximately 10.8%11.9% of our cash and cash equivalents in foreign entities.

On August 5, 2024, the Company’s Board of Directors approved a share repurchase authorization in the amount of up to $200.0 million, allowing the Company to repurchase its common stock from time to time at such prices as it deems appropriate through open market purchases, block transactions, privately negotiated transactions, including accelerated share repurchase transactions, or otherwise. The repurchase authorization originally expired on July 31, 2025. Under this authorization, the Company entered into an accelerated share repurchase agreement (“ASR”) with JPMorgan Chase Bank, National Association to repurchase $100.0 million of the Company’s common stock during the three months ended September 30, 2024. During the three months ended September 30, 2024, the Company repurchased an aggregate of 517,763 shares under the ASR at an aggregate cost of $100.4 million, including legal and financial advisor fees of $0.4 million associated with the repurchase. During the three months ended September 30, 2025 and December 31, 2025, the Company’s Board of Directors extended the repurchase authorization for the remaining $100.0 million to December 31, 2025 and December 31, 2026, respectively. As of MarchJune 31,30, 2026, the Company had remaining authority to purchase $100.0 million of its common stock under the share repurchase authorization.

The following table summarizes our cash and cash equivalents, marketable investments and selected working capital data as of MarchJune 31,30, 2026 and December 31, 2025:

Net cash provided by operating activities consists primarily of net income adjusted for certain non-cash items (including depreciation and amortization, stock-based compensation expense, inventory write-offs and write-downs, and changes in deferred tax balances,balances), and the effect of changes in working capital and other activities).activities.

Net cash provided by operating activities was $49.0$133.1 million during the threesix months ended MarchJune 31,30, 20252026 and consisted of consolidated net income of $39.2$67.4 million andmillion, non-cash items of $19.7$38.5 million, offset byand net changes in operating assets and liabilities of $10.0$27.2 million. The change in operating assets and liabilities primarily relates to an increase in accrued expenses and other non-current liabilities of $34.8 million and an increase in accounts payable of $10.4 million. This was partially offset by an increase in inventories of $10.8$14.3 million to support our growth, aan decreaseincrease in accounts payablereceivables of $0.3$2.5 million, and an increase in prepaid expenses and other current and non-current assets of $0.1$1.1 million. This was partially offset by an increase in accrued expenses and other non-current liabilities of $0.6 million and a decrease in accounts receivables of $0.5 million due to timing of invoicing and collections.

Net cash used in investing activities relates primarily to purchases of marketable investments, partially offset by proceeds from maturities and sales of marketable investments, and capital expenditures.

Net cash used in investing activities was $30.6$121.7 million during the threesix months ended MarchJune 31,30, 2026 and primarily consisted of purchases of marketable investments, net of proceeds from maturities,maturities and sales of $16.0marketable investments, of $93.5 million and capital expenditures of $13.7$27.2 million including investments related to the construction of our Costa Rica manufacturing facility.

Net cash used in investing activities was $0.5$16.1 million during the threesix months ended MarchJune 31,30, 2025 and primarily consisted of capital expenditures of $13.5$29.0 million, partially offset by $13.0 million in proceeds from maturities of marketable investments.

Net Cash (Used In) Provided By Financing Activities

Net cash (used in) provided by financing activities primarily relates to proceeds from the issuance of common stock under our employee stock purchase plan and exercises of stock options, partially offset by payments of employee taxes related to vested restricted stock units and payments towards the reduction of our finance lease obligations, offset by proceeds from exercises of stock options.obligations.

Net cash usedprovided inby financing activities was $1.9$7.1 million during the threesix months ended MarchJune 31,30, 2026 and primarily consisted of $9.7 million in proceeds from the issuance of common stock under our employee stock purchase plan, partially offset by $1.3 million in payments of employee taxes related to vested restricted stock units and $0.6$1.2 million in payments towards finance leases.

Net cash provided by financing activities was $2.7$17.5 million during the threesix months ended MarchJune 31,30, 2025 and primarily consisted of $4.0$10.7 million in proceeds from exercises of stock options,options and proceeds from the issuance of common stock under our employee stock purchase plan of $8.9 million, partially offset by $0.6$1.3 million in payments towards finance leases and $0.4$0.5 million of payments of employee taxes related to vested restricted stock units.

During the three months ended March 31, 2025, the Company entered into agreements to acquire property in Costa Rica and construct a manufacturing facility and warehouse for the production of medical devices. During the threesix months ended MarchJune 31,30, 2026, the estimated cost of the project increased by approximately $28 million, primarily attributable to scope and budget refinements associated with evolving design requirements. Refer to Note “4. Balance Sheet Components” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

During threesix months ended MarchJune 31,30, 2026, the Company entered into an Agreement and Plan of Merger among the Company, Boston Scientific Corporation, a Delaware corporation (“Parent”), and Pinehurst Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of Parent (“Merger Sub”), pursuant to which Merger Sub will merge with and into the Company, with the Company surviving as a wholly owned subsidiary of Parent. Refer to Note “1. Organization and Description of Business” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.

There have been no other material changes to our contractual obligations and commitments as of MarchJune 31,30, 2026 from those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.