Terms of Penumbra's IPO Set for $101 Million

Medical devices focused company Penumbra has announced the terms of its upcoming IPO. The company describes itself as a specialty interventional therapies company that develops and markets innovative medical devices to treat challenging medical conditions.
According to Renaissance Capital, the California-based based device company intends to offer 3.8 million shares between $25 and $28, raising $101 million. Should Penumbra reach the midpoint of the proposed price range, the company would have a fully diluted market value of $847 million.
Penumbra,  plans to trade on the NYSE under the symbol PEN. J.P. Morgan and Bank of America Merrill Lynch are the joint bookrunners on the deal, which is expected to be priced during the week of September 14.

Company background

Penumbra was founded in 2004, and launched its first product for neurovascular access in the US three years later. In 2008, the company established its direct neuro salesforce in the US and Europe, and launched its first 510(k)-cleared, aspiration-based produced for the treatment of ischemic stroke patients.
More recently, the company launched its first neurovascular coil for the treatment of brain aneurysms in 2011. It launched its first peripheral vascular product in 2013, and added both US and Europe-based salesforces for the product last year.

According to the company’s SEC filing, Penumbra currently has approximately 1,000 employees, and is led by company co-founder Adam Elsesser. Penumbra sells its products directly to hospitals in the US, Europe, Canada and Australia, in addition to using distributors in key international markets.
In 2014, the company experienced a 41.3 percent increase in revenue to reach $125.5 million, as well as $3 million in operating income. During the first half of this year, Penumbra generated $81.3 million in revenue, representing a 41 percent increase over the same period the previous year. 
According to MDDI, the company’s products can be organized into peripheral products that treat vascular diseases in areas other than the brain and heart, and neuro products that use catheter-based technologies to treat brain vascular disorders and diseases. In May, Penumbra received 510(k) clearance from the FDA for the ACE64 thrombectomy technology that removes blood clots and encourages revascularization rates in stroke sufferers.

Increasing number of medical device IPOs

Historically, the medical device and diagnostic industry hasn’t produced a huge number of large IPOs. According to data from Jonathan Norris of Silicon Valley Bank, there were only two IPOs for medical device companies that had raised $25 million or more in venture capital in 2013.
Last year, however, this number increased significantly, with ten venture-backed device companies that had raised at least $25 million announcing IPOs. This trend towards a greater number of IPOs appears to be continuing into 2015, with seven IPOs occurring in the first half of the year alone.
Penumbra’s anticipated IPO marks a continuation of this trend for growing medical device startups.
 
Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.
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