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

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Thank you, operator, and thank you all for joining us on today's call to discuss Penumbra's earnings release for the first quarter of 2024. A copy of the press release and financial tables, which includes a GAAP to non-GAAP reconciliation, can be viewed under the Investors tab on our company website at www.penumbrainc.com.

During the course of this conference call, the company will make forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements regarding our financial performance, commercialization, clinical trials, regulatory status, quality, compliance and business trends.

Actual results could differ materially from those stated or implied by our forward-looking statements due to certain risks and uncertainties, including those referenced in our 10-K for the year ended December 31, 2023, filed with the SEC. .

As a result, we caution you against placing undue reliance on these forward-looking statements, and we encourage you to review our periodic filings with the SEC, including the 10-K previously mentioned, for a more complete discussion of these factors and other risks that may affect our future results or the market price of our stock.

Penumbra disclaims any duty to update or revise our forward-looking statements as a result of new information, future events, developments or otherwise. On this call, financial results for revenue and gross margin are presented on a GAAP basis, while operating expenses, operating income and adjusted EBITDA are presented on a non-GAAP basis.

The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release.

Non-GAAP operating expenses and operating income exclude amortization of acquired intangible assets of $2.4 million in the first quarter of 2024 and 2023 and $4.8 million of nonrecurring litigation-related expenses, including settlement costs and legal fees associated with wage and hour complaints filed against the company in 2023 in the first quarter of 2024.

And adjusted EBITDA excludes such nonrecurring litigation-related expenses and stock compensation expense. Adam Elsesser, Penumbra's Chairman and CEO, will provide a business update.

Maggie Yuen, our Chief Financial Officer, will then discuss our financial results for the first quarter of 2024, and Jason Mills, our Executive Vice President of Strategy, will discuss our 2024 guidance. With that, I would like to turn the call over to Adam Elsesser. .

Thank you, Cecilia. Good afternoon. Thank you for joining Penumbra's First Quarter 2024 Conference Call. Our total revenues for the first quarter were $278.7 million, a year-over-year increase of 15.4% is reported and 15.2% on a constant currency basis. Our U.S.

thrombectomy revenue grew 35.2% compared to the same quarter a year ago to $150.3 million, driven by continued strong market growth and share gain with Lightning Flash and Lightning Bolt 7. International thrombectomy also exceeded our expectations in the first quarter, growing 10.7% year-over-year against the challenging comparison last year.

Overall, we had a strong start to the year and see positive trends in our core markets and our business with our computer-assisted vacuum thrombectomy products in VTE and arterial, and market-leading portfolio in stroke. This reinforces our confidence we can deliver strong growth of 27% to 30% in U.S. thrombectomy and 16% to 20% overall in 2024. .

In addition to our commitment to strong revenue growth, we are also focused on margin expansion and increasing profitability. We are ahead of schedule to deliver 100 to 150 basis points of gross margin expansion in 2024 and are confident we can increase our gross margins to more than 70% within the next 24 to 30 months.

We are also on track to deliver at least 100 to 200 basis points of operating margin expansion this year, inclusive of investments we are making in our U.S. commercial team and market access initiatives, both of which should help us sustain strong growth into the future.

Operating income in the first quarter was $19.3 million, representing 6.9% of revenue, increasing 260 basis points over the same period a year ago. Looking forward, we expect our operating margin expansion to outpace gross margin expansion for the foreseeable future. Notwithstanding the strong growth we have seen in U.S.

thrombectomy over the past few years, clinically significant clot burden is still one of the most undertreated acute issues in health care today.

We are well positioned to expand access to CAVT, and make the treatment of these patients safer, simpler and faster, which we strongly believe and are committed to continually prove accrues to the benefit of patients, physicians and hospital systems. .

Over the past several quarters, we have delineated our strategy to deliver outsized revenue growth in thrombectomy over the near-, medium and long-term through a combination of continued innovation with our CAVT platform, optimizing our commercial team in both the U.S.

and international markets and developing robust clinical and health economic evidence on our CAVT products.

With this collective work, we are confident we will continue to catalyze adoption of CAVT and drive utilization to the majority of the 1.25 million applicable clot patients in the United States each year across the 5 vascular beds we address today.

We fully launched Lightning Flash 2.0 in late April on the heels of outstanding outcomes from the valuation cases done in early April. .

Flash 2.0 is proving in practice what we saw on the bench. The product further optimizes the advantages of CAVT and VTE. We are seeing pent-up demand for Flash 2.0, and coupled with the larger commercial team we've developed over the past 2 quarters, our U.S.

thrombectomy business is in a strong position to continue to catalyze growth for us in these markets in this year and beyond. We're also seeing meaningful progress within our innovation pipeline and are on track to launch three additional CVT products within the next 12 months, at least one of which we expect before the end of 2024. .

Overall, we are committed to continued innovation to augment the utility and reach of CAVT head to toe. In addition to VTE and arterial, stroke will be the next vascular bed we address with CAVT. Enrollment in our THUNDER study is going very well, and we are very encouraged by outcomes and physician engagement.

We now hold nearly 60% market share in the U.S. stroke market and expect to gain more share through 2024, ahead of a Thunderbolt launch, which will further extend our leadership position.

We are also seeing more energy and engagement from large health care systems seeking to work with us as the industry leader on ways to further extend interventional stroke care to many more patients within their networks.

Our proprietary technology portfolio in stroke, our reputation in the field and our scale gives us the unique ability to do this work with health care systems going forward. I'll now turn the call over to Maggie to go over our financial results for the first quarter of 2024. .

Thank you, Adam. Good afternoon, everyone. Today, I will discuss the financial results for the first quarter of 2024. As a reminder, financial results on this call for revenue and gross margin are on a GAAP basis, while operating expenses, operating income and adjusted EBITDA are on a non-GAAP basis.

The corresponding GAAP measures and a reconciliation of GAAP to non-GAAP financial measures are provided in our posted press release. For the first quarter ended March 31, 2024, our total revenues were $278.7 million, an increase of 15.4% reported and 15.2% in constant currency compared to the first quarter of 2023.

Our geographic mix of sales for the first quarter 2024 was 75.2% U.S., and 24.8% international. Our U.S. reported growth of 22%, driven by 35.2% growth in our thrombectomy franchise.

Our international regions declined a modest 0.7%, reflecting a decline in our overall embolization and access product revenue, offset by growth in thrombectomy [indiscernible] in Europe, APAC, Canada and Latin America. .

Moving to revenue by products. Revenue from global thrombectomy business grew to $187.7 million in the first quarter of 2024, an increase of 29.5% reported and 29.3% in constant currency compared to the same period last year. Our U.S.

growth of 35.2% and international growth of 10.7% compared to the same period last year reflects strong momentum in CAVT products. Revenue from our embolization and access business was $91 million in the first quarter of 2024, a decline of 5.7% reported and 6% in constant currency, primarily driven by an overall decline in international markets.

Turning to gross margin. Gross margin for the first quarter of 2024 was 65% compared to 62.6% for the first quarter of 2023.

We delivered 240 basis point improvement, driven by favorable thrombectomy product mix across all regions and strong productivity, partially offset by material cost increases and investment in direct labor capacity for new product launches and higher demand. We are on track to deliver 100 to 150 basis point gross margin expansion in 2024. .

Now on to our non-GAAP operating expenses, non-GAAP operating income and margin, and adjusted EBITDA. Total operating expense for the quarter was $161.8 million or 58.1% of revenue compared to $170.7 million(sic) [ $140.7 million ] or 58.3% of revenue for the same quarter last year.

Our research and development expenses for Q1 2024 were $24.6 million compared to $20 million for Q1 2023. SG&A expenses for Q1 2024 were $137.2 million(sic) [ $144.4 million ] or 49.2% of revenue compared to $120.7 million(sic) [ $123.1 million ] or 50% of revenue for Q1 2023.

With higher seasonality expenditures in the first quarter, we expect continued leverage in our SG&A expenditures as a percentage of revenue. We recorded operating income of $19.3 million or 6.9% of revenue in the first quarter of 2024. The compared to an operating income of $10.4 million or 4.3% of revenue for the same period last year.

We expect to continue operating margin improvement of 100 to 200 basis points throughout 2024. We posted adjusted EBITDA of $37.6 million or 13.5% of total revenue compared to 11.4% in the first quarter last year. Turning to cash flow and balance sheet.

We ended the first quarter with cash, cash equivalents and marketable security balance of $313.5 million and no debt, an increase of $24.3 million driven by operating profitability and improvements in working capital turns. We expect positive operating cash flow trends to continue in 2024.

And now I'd like to turn the call over to Jason to discuss our guidance. .

Thank you, Maggie, and good afternoon, everybody. Strong trends in our U.S. thrombectomy franchise through the first quarter, the recent launch of Lightning Flash 2.0 in the United States, and continued productivity momentum from our expanded U.S. commercial team reinforced our expectation for strong U.S.

thrombectomy and total revenue growth of 27% to 30% and 16% to 20%, respectively, for full year 2024.

Consistent with the cadence commentary we provided on our earnings call in February, we expect global revenue growth in the first half of the year to be in the mid-teens range, primarily based on currently forecasted orders from our international distributors and timing of new product launches.

We then expect growth to accelerate to the high end of our 16% to 20% guidance range or above in the second half of the year. We continue to expect growth in U.S.

thrombectomy to be consistently strong in our guidance range throughout the year, and we now expect growth from our international thrombectomy franchise to be slightly stronger than we conveyed on our last earnings call, mid- to high-single-digit range for full year 2024, compared to flat to modest growth conveyed on our last call.

For our embolization and access business for the full year, we expect mid-single-digit growth in the U.S. and flat internationally. That said, we expect year-over-year growth rates for both U.S.

and international embolization and access businesses to strengthen throughout the year to the low teens range by the fourth quarter from new product launches and increasing productivity from our larger commercial team. Lastly, we continue to expect strong expansion in both gross margin and operating margin in 2024.

We reiterate our guidance for 100 to 150 basis point expansion in gross margin and 100 to 200 basis points expansion in operating margins each quarter on a year-over-year basis as well as for the full year. Operator, we can now open the call to questions. .

[Operator Instructions] Your first question comes from Margaret Kaczor from William Blair. .

Yes, I maybe wanted to ask first just on some of the comments around optimizing the sales team in both the U.S./no U.S., obviously thrombectomy growth in both markets, seems like it's picking up nicely and maybe a little bit stronger, frankly, than what we experienced.

So how much of it is that -- How much of it is it around current market growth and some of the continuation of what you saw last year? And specifically, what metrics are you focused on with regards to those investments? Is it geographies? Is it certain market access? Where are you focused on?.

It's a great series of questions, Margaret. Let me try to break it down and remind everyone, philosophically, we typically hire behind our growth, not ahead of our growth, and I think people have known that. And so we were looking at last year with a huge demand for the new CAVT platform.

And we just didn't have enough people, and we brought them on late in the year, got them up and going, added some more in the first quarter. So we -- the -- this quarter wasn't really the product of a lot of the new people. They're now in place going forward for the second, third and fourth quarter.

And so what really is driving the growth in the first quarter is really just the work that we laid out all of last year around both Lightning Flash and Lightning Bolt and how good they are and how many people are experiencing them and trying them and continuing to do it.

Obviously, we talked about April being the quarter that we started to do Flash 2.0 cases. So that's not in the first quarter number, that's yet to come, obviously. .

Okay. And as it relates to guidance, obviously, a great quarter again. So I'll push on that a little bit more, especially for U.S. thrombectomy. You're on the high end of the range, obviously, an easier comp in the first quarter. So I get that from that perspective.

But on the same token, you have these commercial investments that you're making that should ramp up. You're also -- we're going to see some data that maybe helps the entire market grow a little bit as we go on throughout the year.

Why shouldn't we continue to expect things there, if not even accelerating a little bit?.

Yes, Margaret, it's a great question. As our current guidance obviously reflects already a faster growth as the year progresses. We've taken that into account in this quarter's strong start reinforces our confidence in our business. And our guidance, in particular our U.S.

thrombectomy guidance for the full year reflects both that strength and the momentum from our products and our commercial team. So I think we're in pretty good shape as we think about how the year unfolds. .

The next question comes from Joanne Wuensch from Citi. .

Two questions really. OUS sales look like they are improving or expected to improve throughout the year? Could you please sort of remind us why that may be? And then my second question has to do with margins.

It sounds like you have a little bit more of an increased focus on gross and operating margins? And can you please outline not just gross margin, but throughout the income statement, what levers do you have to pull to get there?.

Yes. Margaret -- Joanne, I'm sorry, it's Jason. I'll take the first one and then Maggie and Adam can take the second one, if that's okay. The international cadence typically does escalate as the year goes on. We also have, in Europe, taking that, for example, our newest red stroke products are just being launched there.

And so you can imagine the cadence of that will -- we expect to improve. And then in the second half of the year, we think in Europe, they're going to get the new CAVT portfolio. In addition to that, around the world, the timing of international orders, as we've talked about, we have pretty good visibility into.

So that's why the guidance -- the comprehensive guidance sort of reflects that cadence for total revenue throughout the year.

Maggie?.

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

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

So, just on the U.S. thrombectomy market, it seems we get a lot of questions on this, obviously, a big driver for you. I was wondering if you could help just parse out how much of that growth is VTE versus arterial.

And then how much of this is ASP versus just pure volume driven? Because my understanding is you have been getting an ASP boost over the last year. I'm just trying to understand just a little more granularity, if we could. .

Yes. I think it's a great question. Let me try to give some color to it. Obviously, our CAVT products drove most of that growth, with Flash continuing to take share and catalyze new adoption. Bolt also continued to perform well on the arterial side.

Also, our stroke business had really strong growth sort of within our guidance range that we've given as stroke continues to see significant gains, and we expect that to continue. If I would sort of think about it, last year, there was some mix between price and volume, obviously. But now we're anniversarying that.

That happened -- we launched Flash at the end of -- the beginning of last 2023. So almost all of this is new business and price isn't really reflective in the growth number. It's really business, both as the market continues to grow and we catalyze adoption and, of course, some share gain. .

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

Sure. It's a great question. As you know, we manufacture all of our products here in California. California, like every state has wage and hour laws. California has an additional aspect of a private attorney general action, which sometimes can make those complicated. We believe very strongly that we have run and follow the rules.

There were some technical violations and we settled those claims pretty quickly for a scale, this is a onetime settlement this captures it all, and we can move on to making our products and doing the things that matter the most. .

Next question comes from Robbie Marcus from JPMorgan. .

Maybe just to start, really good growth in thrombectomy in the quarter. Access and Embo was weaker.

Maybe you could just talk to the trends you're seeing? How much is stocking, destocking versus underlying trends? And how to think about some of the nuances between the different products there moving forward?.

Yes. Robbie, it's Adam. I appreciate very much the question. Obviously, as you know, we broke out the numbers differently, so people could sort of accurately view what I think everyone agrees is what's driving our growth and what's valuing the business.

Obviously, you know that in the U.S., our -- we have market-leading products in both peripheral embo and neuroaxis. And that business is something we're particularly proud of. But we've said, obviously, that what's driving our growth is going to be the thrombectomy. That's where our focus is going to be moving forward.

In addition, on the call in Q4, we specifically called out that we would be leaving certain markets with our embo and access business in international markets where they weren't financially viable for us as product reimbursements changed and moved down over time. So we sort of said that going forward. That's what happened.

We also are particularly proud of the way the thrombectomy business has gone. And remember, in Jason's prepared remarks just today, we did say that we'll expect to see growth in our U.S.

embo and access business as the year progresses and we move with our new larger commercial teams on the thrombectomy side, we'll have the scale and the capacity to focus on multiple things as well as some new launches. We just had one with Midway, which is a neuro access tool at the beginning of this quarter. So the business is strong.

It's just not going to be the thing that drives the growth in an outsized way like our thrombectomy business will. .

Great. Maybe just one extra. As we think about now U.S.

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

You're talking about within the various vascular beds in thrombectomy. Yes, obviously, if you look at our U.S. numbers, the bigger growth came from VTE on the veinous side with Flash. Obviously, now with launch of 2.0, that will continue as the market grows and we catalyze adoption and, of course, take share with that.

The arterial side is continuing to also do well. And stroke did really, really well. We were pleasantly surprised. I think I answered another question earlier just now that our stroke growth was sort of within our range that we put out there, which is pretty significant now having multiple quarters where the stroke business has continued to grow.

Some of that is market, a lot of that still share. And I think that will continue as a nice setup as people get more and more excited about Thunderbolt. .

Next question comes from Larry Biegelsenn from Wells Fargo. .

So Adam, you're counting on international sales of peripheral devices to drive growth next year. And the issue has been, internationally, reimbursement.

So what proof points can you provide that give us confidence that the reimbursement will be in place next year to drive that revenue?.

Yes. I appreciate the question. Let me -- if I -- without being inappropriate, I -- we're not counting on international to drive our growth. I think I've tried to say over and over that our U.S. thrombectomy business is what is going to drive our growth. I think I even said it just in the last question.

So that is what is going to drive our growth, not just this year, but for many, many years, as we continue to catalyze the adoption of that. The conversations we're having, the reaction we're having not just with physicians, but in a larger context is very, very encouraging.

International adds to that, but it is not the centerpiece of our growth going forward. And obviously, it will be slightly -- I won't say -- slower is the wrong term, but it will be less all at once because of what you just said, certain markets, certain countries will have reimbursement already in place.

Some systems have a difference between private and public, where we can start to go on the private side, but public won't come as fast. All of that's taken into account as we look out in the future. But I think we have many, many years of growth being driven in our U.S. thrombectomy business. .

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

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

And so I think we'll leave the exact timing the way it is for now. .

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

Just looking at how the stock is trading in the aftermarket down a little bit. I'm assuming that most people are thinking that the guide for the rest of the year might be a little bit at risk just given tougher comps, but it does look like the thrombectomy business is accelerating on a 2-year stack basis. Even the embo and access in the U.S.

seems like it's pretty good. So just the combination of what you're seeing from a new customer perspective, going deeper in existing accounts? And then this expanded sales force, those folks don't kick in right away. It typically takes a little bit of time.

So just the combination of all those things, can you just give us a sense for what you're really counting on to see this acceleration in the back half as -- or sorry, the last 3 quarters of the year as comps get tougher in the U.S.

business?.

Yes. I really appreciate that question. Just so we can sort of level set. We addressed a lot guidance a lot more comprehensively, both on this call and in the Q4 call, where we laid out the very specifics. As you know, we said we had a lot of visibility with our international distributor orders and partners around the timing of their orders.

And that's the main difference in those rates, together with the work that we already know and see on how our U.S. thrombectomy business is going to grow. We have a lot more predictability around those rates, and they're not dramatically changing those rates throughout the year. We've said that now twice.

So it really came down the change in overall company rate was based on something we talked about last quarter's call and it turned out to be exactly what we said. And again, the focus on what is happening in the U.S.

should be the best confident guide because the rest of that is relatively secure through what we have obtained from our distributor partners for the rest of the year. .

Okay. Appreciate that. And then, Adam, you mentioned these new products that are coming in CAVT and at least one by the end of this year.

Is that a product that's going to be potentially going into a different part of the anatomy than we're accustomed to with Penumbra? Or any kind of just general thoughts on what we should expect from that one specifically. .

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

The next question comes from Mike Sarcone from Jefferies. .

Just to start, do you think you can give us any color on -- in the U.S.

VTE market, what you're viewing as kind of market growth for the quarter?.

It's historically always hard to really piece out market growth, i.e., new patients other than looking at centers that we have had 100% of their business for and see that they've grown. And that's been true. We have seen continued growth for several years now. So that growth continues.

Obviously, particularly in VTE, that growth we've seen, which was really wonderful this year -- this quarter is also some market share, and that's even before Flash 2.0. So we'll wait to finish next quarter and see the effect of that.

But I think it's going to be a combination, as we said in the prepared remarks of some significant share shift as well as some real significant catalyzing of adoption or market growth initiatives. .

And just a follow-up. You've been talking a lot about market access efforts. And I think you previously mentioned working with some of your hospital customers to kind of get data and work hand-in-hand with them to elucidate the benefit of CAVT in different vascular beds.

Do you think you can give us any update on how those efforts are progressing?.

I'm not going to, for obvious reasons, go into specific systems and work that we're doing yet. I want to do the work first and we'll see the benefit of it. And then we can talk about it a little more openly. But I will tell you I'm really optimistic.

There's a lot of understanding in the hospital community over what I think is one of the more important topics, which is people understand that clinically significant clot burden is really one of the most undertreated acute issues in health care. They understand the effect of not treating it. They understand the cost of not treating it.

They understand more importantly than anything, the downside to patients for not doing it. And I think that allows these conversations to be as positive as they've been and get started on the work that we're doing. So I'm -- this quarter more optimistic. I've been personally involved in another -- a bunch of those conversations.

And I'm very, very optimistic. .

The next question comes from Richard Newitter from Truist. .

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

thrombectomy?.

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

So that's where we're going to stick for now. .

Okay. And then similar sort of question on margin, a little over 200 basis points operating margin expansion in 1Q.

Just kind of curious what you'd like to see in terms of trends in the business to get confident in increasing that 100 to 200 basis point range for the year?.

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

So we're pretty confident that we'll continue to see this margin trend expansion. .

Yes. And I'll just add on to that.

We said when we gave the initial guidance for 2024 on the February call, and we reiterated again this quarter that given the cadence of expenses that we traditionally see, we expected that operating margin expansion would be sort of in that 100 to 200 basis point range on a year-over-year basis for each quarter, which would obviously translate into that expansion for the full year.

So it's important to understand sort of the cadence of our operating margins through the year. .

All right.

Are we still there?.

Our next question comes from David Rescott from Baird. .

I wanted to ask, Adam, I heard you mention that Flash 2.0 kind of optimized on some of the advantages of Flash 1.0. So wondering if you can give us a better understanding maybe about what's different in the system? And I heard some of the comments around pent-up demand for the system already.

So just curious on what's baked into maybe that implied Q2 guide versus the full year, relative to those kind of demand comments and if and what and where, maybe Flash 2.0 could open up new opportunities for the company?.

Yes. Well, let me sort of first describe what we're seeing and hearing a lot of, which is obviously, Flash 1.0 did an extraordinary job. It took a great deal of clot out very quickly. What Flash 2.0 does, which is simply a change in algorithm and update in the algorithm, it didn't change the catheter or the catheter size.

The 2.0 removes even more clot, even faster, without having to go to a bigger or less appropriate sized catheter. And I think the field is rallying around that. They're seeing the benefit of it. And as you know, word-of-mouth spreads pretty quick in this field. So we're seeing a lot of interest from folks who might not have wanted to try it in PE.

They might have used Flash 1.0 in DVT. And that level of sort of interest is what I was alluding to. I think everyone continues to look to optimize the treatment for these patients. That's the key. You want to do the three things that matter the most, and we've said it before, but it's safety, speed and simplicity.

And Flash 2.0 really checks those boxes, and that's the reaction that everyone is feeling right now. .

Okay. Great. And then maybe on Thunderbolt and the THUNDER trial. I heard the comments and trying to think maybe a little bit longer term, I believe with [indiscernible], you had been able to maybe leverage some price already, and you discussed that in the past around helping that gain share.

When I think about Thunderbolt, I guess, longer term and the opportunity that's out in the front still, do you still think that there's an ability to maybe command some type of price premium for a premium-priced product longer term when that comes to market?.

Yes. I think if you step back and think about stroke, it's not a lot different from clot in the other parts of the body where the prices of products have risen as technology has developed and become more sophisticated. Right now, in stroke, people use a series of things. They might use aspiration and a stentriever. They might do this and that.

So by the time you're done, we are not going to be more expensive than what a lot of people are already doing. They're just going to be using 100% of the Penumbra products because you don't need all of those ancillary tools when you have one simple system like Thunderbolt. And that's what we saw already.

That's not me hoping and guessing that's what we spent the better part of the year with our CAVT portfolio in the rest of the body, particularly the most sort of closest example would be lightning bolt in the arterial system. The technologies are very, very similar, different sized catheters.

And we've seen, obviously, an extraordinary increase in the usage of that product I think we'll see something similar with stroke.

I think we'll be starting at a little bit different spot than we did with our older technology in the arterial side, which I think ultimately it plays to our benefit because we're starting with a pretty significant dominant position with a lot of competitors. So I think Thunderbolt just helps us going forward. .

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

So I wanted to just ask one with Lightning Flash 2.0, you've incorporated software into the CAVT products.

So is this sort of an opportunity to iterate on the product faster? In other words, could you -- could we expect to see 3.0, 4.0, et cetera, maybe over a year or something like that as you continue to improve the software?.

Yes, it's a great question. The premise is accurate. Obviously, with software that there's the possibility of faster iterations than hardware catheters and all the testing is very thorough, but it's a slightly different thing. That being said, so the -- can we continue to improve this. Probably, we're weeks into the launch, and it's going really well.

So we haven't yet identified weaknesses that we have to fix. And I think that's a high-class problem for us to have or to improve. But over the course of the sheer volume of work we're going to do over the next year, I'm sure we will continue to make changes and improve.

Obviously, the products that I alluded to, the 3 new CAVT products are not another version of the same ones. So there are newer products that cover different things than just improving Lightning Flash to 3.0. But yes, conceptually, that's possible. .

Okay. Got it. And then, Adam, I think it was you that made a comment about optimizing the commercial team in the prepared remarks.

So I just wanted to see if you could elaborate on that? What that means, I guess?.

Yes. So our philosophy has always been that we don't want the commercial team to lead the selling. We want the products to be wanted and then we have to have enough people to do the work and support those products.

And we have always had what I consider the best commercial team ever assembled, and we've been extraordinarily proud of our commercial team for many, many years. We just had so much to do last year between the launch of both Flash and Bolt at the same time, the -- our peripheral embolization business, which is, again, market-leading technology.

And on all these new customers that we talked about for a big chunk of last year. So we need more people to do the work. Those people are now here. They're on board. We were able to hire some of the best folks we could. So I think we have really -- today, an optimized size team. As this continues, could we -- would we add to it? Sure.

It's not impossible, but it's certainly not in our plans anytime soon as we continue to go through this year. I think we got the team we need to drive the kind of growth we're talking about and serve the patients and physicians that we need to serve this year. .

[Operator Instructions] Our next question comes from Shagun Singh from RBC Capital. .

So Adam, you're targeting 16% to 20% growth here in '24 versus your initial directional outlook of plus 20%.

I was just wondering, is there a pathway for you to return to that plus 20% growth? And what could potentially be the drivers of it? Is it Flash 2.0? Is it the new product that you alluded to that we could see this year? And then really, the question is how should we think about growth longer term for Penumbra.

Is there a plus 20% base case on the horizon? And then just as a follow-up, on Q2. Just wondering if there's any color you can provide prior to today's call? Consensus was looking at 302 for sales and $0.61 for EPS. Any color would be great. .

Yes. Let me start on the first part. We've always looked sort of our philosophy around guidance is pretty straightforward. We look and take into account all the information we have at the time we give our guidance, and that has been our approach for some time.

So I'm not going to sort of deviate from that and sort of guess what could happen here or there. Obviously, we are extremely happy with where the business is. We feel an awful lot of excitement and momentum around the products that we've added to this field, and we're very proud of it.

I think we'll leave like the guessing of guidance for a future time beyond what we've said. That also being said, and this is not meant as a comment around guidance, it's meant around a comment of the work we have ahead. I also said in the prepared remarks that there's 1.25 million people in the U.S.

alone who have clot in their body that we should consider doing something about and are potentially now more able to do something about than we've ever been in the past. And obviously, that lays out the work we have to do, and that will obviously impact our future thoughts around how the business will grow.

But it's premature to do that, and we're going to focus on what we're doing right now. .

Yes. And Shagun, to your second question, we reiterated today sort of the cadence of revenue growth we expect through the balance of the year. And we said the same thing on the initial guidance call in February. We're the first part of the year, we expect it to be in the mid-teens range. Today, you obviously saw us report growth of a little over 15%.

And we said that the second half of the year, we would see at the top end of the range or above. And part of that is the visibility we have in the international cadence. And of course, we've talked a lot about our U.S. thrombectomy business, and the commercial team and products, Flash 2.0 among them there.

So I think you have -- we try to be comprehensive in my prepared remarks to give you the components of the business to set up your models. But happy to take any follow-ups, if that's not enough. .

There are no further questions at this time. Ms. Furlong, I 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 second quarter call..