Penumbra Inc
For the period ended Sep 30, 2024. Filed Oct 30, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Oct 30, 2024
PEN$319.21-0.6%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-07-30.
0001321732-24-000087
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-10-30.
0001321732-24-000118
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 123 previous paragraphs and 114 current paragraphs.
65 unchanged; 35 reworded; 14 added; 18 removed; 5 previous and 0 current paragraphs rearranged.
Tables are not compared: 17 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (14)
Current report
R&D expenses increased by $4.2 million, or 20.3%, to $25.2 million in the three months ended September 30, 2024, from $21.0 million in the three months ended September 30, 2023. The increase was primarily due to $2.6 million of one-time expenses in connection with the wind down of the Immersive Healthcare business and a $0.8 million increase in personnel-related expenses.
Current report
SG&A expenses increased by $13.8 million, or 11.0%, to $139.7 million in the three months ended September 30, 2024, from $125.9 million in the three months ended September 30, 2023. The increase was primarily due to a $6.9 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, $2.3 million of one-time expenses in connection with the wind down of the Immersive Healthcare business, a $2.1 million increase in other professional services, and a $1.9 million increase in costs related to marketing events. This was partially offset by a $2.4 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.
Current report
Acquired In-Process Research and Development
Current report
There were no acquired IPR&D charges during the three months ended September 30, 2024. During the third quarter of the prior year, we recorded an $18.2 million acquired IPR&D charge in connection with an asset acquisition. Refer to Note “6. Asset Acquisition”to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.
Current report
Provision for income taxes
Current report
Our effective tax rate decreased to 25.8% for the three months ended September 30, 2024, from 30.7% for the three months ended September 30, 2023, primarily due to tax expense associated with the non-deductible acquired in-process research and development expenses in 2023.
Current report
Nine Months Ended September 30, 2024 Compared to the Nine Months Ended September 30, 2023
Current report
Gross margin was 61.9% in the nine months ended September 30, 2024, including a one-time $33.4 million inventory impairment charge to cost of revenue in connection with the impairment of our Immersive Healthcare asset group (refer to Note “4. Impairment and Restructuring Costs of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details), which compares to 64.1% in the nine months ended September 30, 2023. The impact of the one-time $33.4 million charge decreased our gross margin by 3.8 percentage points in the nine months ended September 30, 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. Our manufacturing team will focus on ramping up our volume, while driving our productivity and efficiency for our new product launches expected in the fourth quarter.
Current report
Acquired In-Process Research and Development
Current report
There were no acquired IPR&D charges during the nine months ended September 30, 2024. During the third quarter of the prior year, we recorded an $18.2 million acquired IPR&D charge in connection with an asset acquisition. Refer to Note “6. Asset Acquisition”to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details.
Current report
Share Repurchase Program
Current report
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 expires 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. As of September 30, 2024, the Company had remaining authority to purchase $100.0 million of its common stock under the share repurchase authorization. See Note “11. Share Repurchase Program” to the condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q and “Issuer Purchases of Equity Securities” in Part II, Item 2 of this Quarterly Report on Form 10-Q for more information.
Current report
Net Cash Provided By (Used In) Investing Activities
Current report
Net Cash (Used In) Provided By Financing Activities
Removed paragraphs (18)
Previous report
Our immersive healthcare products fall into one broad product family:
Previous report
•REAL Immersive System - portfolio of products that leverages immersive computer-based technologies to deliver engaging, immersive therapeutics to promote better health, motor function and cognition
Previous report
Non-GAAP Financial Measures
Previous report
In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), the Company uses non-GAAP financial measures such as non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP gross margin. Our management believes the non-GAAP financial measures disclosed are useful to investors in assessing the operating performance of our business and provide meaningful comparisons to prior periods and thus a more complete understanding of our business than could be obtained absent this disclosure. We consider non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP gross margin useful metrics to investors as they eliminate the impact of non-cash inventory charges related to the impairment of our immersive healthcare asset group and allow a more direct comparison of our business performance between periods.
Previous report
The non-GAAP financial measures included may not be comparable to, similarly titled measures used by other companies. These non-GAAP measures should not be considered in isolation or as alternatives to GAAP measures. We urge investors to review the reconciliation of these non-GAAP financial measures to the most comparable GAAP financial measures set forth below and not to rely on any single financial measure to evaluate our business.
Previous report
The following table presents a reconciliation of the Company’s GAAP cost of revenue, GAAP gross profit and GAAP gross margin to non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP gross margin 1 for the three months ended June 30, 2024:
Previous report
1 See “Non-GAAP Financial Measures” for important information about our use of non-GAAP measures.
Previous report
2 Represents a charge of $33.4 million to cost of revenue in connection with an inventory write-down to net realizable value due to the immersive healthcare asset group impairment during the three months ended June 30, 2024. See Note “4. Impairment of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
Previous report
Gross margin was 54.4% in the three months ended June 30, 2024, including a $33.4 million inventory impairment charge to cost of revenue in connection with the impairment of our immersive healthcare asset group, which compares to 63.8% in the three months ended June 30, 2023. Excluding the $33.4 million charge, non-GAAP gross margin increased by 1.7% percentage points to 65.5% in the three months ended June 30, 2024 compared to GAAP and non-GAAP gross margin of 63.8% in the three months ended June 30, 2023.
Previous report
Six Months Ended June 30, 2024 Compared to the Six Months Ended June 30, 2023
Previous report
The following table presents a reconciliation of the Company’s GAAP cost of revenue, GAAP gross profit and GAAP gross margin to non-GAAP cost of revenue, non-GAAP gross profit and non-GAAP gross margin 1 for the six months ended June 30, 2024 and 2023:
Previous report
1 See “Non-GAAP Financial Measures” for important information about our use of non-GAAP measures.
Previous report
2 Represents a charge of $33.4 million to cost of revenue in connection with an inventory write-down to net realizable value due to the immersive healthcare asset group impairment during the three months ended June 30, 2024. See Note “4. Impairment of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
Previous report
Gross margin was 59.5% in the six months ended June 30, 2024, including a $33.4 million inventory impairment charge to cost of revenue in connection with the impairment of our immersive healthcare asset group, which compares to 63.2% in the six months ended June 30, 2023. Excluding the $33.4 million charge, non-GAAP gross margin increased by 2.1% percentage points to 65.3% in the six months ended June 30, 2024 compared to GAAP and non-GAAP gross margin of 63.2% in the six months ended June 30, 2023.
Previous report
R&D expenses increased by $8.0 million, or 19.4%, to $49.6 million in the six months ended June 30, 2024, from $41.5 million in the six months ended June 30, 2023. The increase was primarily due to a $3.1 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $2.7 million increase in product development and testing costs, and a $1.0 million increase in infrastructure costs.
Previous report
SG&A expenses increased by $35.8 million, or 14.3%, to $286.3 million in the six months ended June 30, 2024, from $250.5 million in the six months ended June 30, 2023. The increase was primarily due to a $13.7 million increase in personnel-related expense driven by an increase in headcount and related expenses to support our growth, a $6.0 million increase in costs related to marketing events, a $5.4 million increase in other professional services, and a $4.8 million increase in non-recurring litigation related expenses, including settlement costs and legal fees, associated with wage and hour complaints filed against the Company in 2023.
Previous report
Impairment Charge
Previous report
Our effective tax rate changed to 22.2% for the six months ended June 30, 2024 from 2.4% for the six months ended June 30, 2023, primarily due to decrease in excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction in 2024.
Reworded paragraphs (35)
Previous wording
Penumbra is a global healthcare company focused on innovative therapies. We design, develop, manufacture and market novel products and have a broad portfolio that addresses challenging medical conditions in markets with significant unmet need. Our team focuses on developing, manufacturing and marketing novel products for use by specialist physicians and healthcare providers to drive improved clinical and health outcomes. We believe that the cost-effectiveness of our products is attractive to our customers.
Current wording
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 healthcare providers to drive improved clinical and health outcomes. We believe that the cost-effectiveness of our products is attractive to our customers.
Previous wording
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, neurosurgical market since 2014, and immersive healthcare market since 2020.
Current wording
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.
Previous wording
During the three months ended June 30, 2024, we made the strategic decision to explore alternative avenues for our Immersive Healthcare business, and as a result we recorded an impairment charge of $110.3 million related to our immersive healthcare asset group. Refer to Note “4. Impairment of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Form 10-Q for more details.
Current wording
During the nine months ended September 30, 2024, we made the strategic decision to explore alternative avenues for our Immersive Healthcare business, and as a result we recorded an impairment charge of $110.3 million related to our Immersive Healthcare asset group. Refer to Note “4. Impairment and Restructuring Costs of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more details. During the three months ended September 30, 2024, we permanently ceased sales of our Immersive Healthcare products and related commercial operations.
Previous wording
We support healthcare providers, hospitals and clinics in more than 100 countries. In the six months ended June 30, 2024 and 2023, 26.0% and 28.7% 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.
Current wording
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 nine months ended September 30, 2024 and 2023, 25.6% and 28.5% 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.
Previous wording
We generated revenue of $578.1 million and $502.9 million for the six months ended June 30, 2024 and 2023, respectively, an increase of $75.2 million. We generated loss from operations of $68.9 million and income from operations of $25.9 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
We generated revenue of $879.1 million and $773.8 million for the nine months ended September 30, 2024 and 2023, respectively, an increase of $105.3 million. We generated a loss from operations of $33.5 million and income from operations of $38.5 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
Revenue increased $37.9 million, or 14.5%, to $299.4 million in the three months ended June 30, 2024, from $261.5 million in the three months ended June 30, 2023. Overall revenue growth was primarily due to an increase in sales of our new and existing thrombectomy products.
Current wording
Revenue increased $30.1 million, or 11.1%, to $301.0 million in the three months ended September 30, 2024, from $270.9 million in the three months ended September 30, 2023. Overall revenue growth was primarily due to an increase in sales of our existing thrombectomy products.
Previous wording
Revenue from our global thrombectomy products increased $41.0 million, or 25.2%, to $203.5 million in the three months ended June 30, 2024, from $162.5 million in the three months ended June 30, 2023. The increase in our global thrombectomy products was primarily attributable to higher sales volume in the United States as a result of sales of new products and further market penetration of our existing products. This increase was driven by sales of our U.S. thrombectomy products, which increased by 24.9% in the three months ended June 30, 2024. Prices for our thrombectomy products remained substantially unchanged during the period.
Current wording
Revenue from our global thrombectomy products increased $25.1 million, or 14.0%, to $204.1 million in the three months ended September 30, 2024, from $179.1 million in the three months ended September 30, 2023. 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. Sales of our U.S. thrombectomy products increased by 21.2% in the three months ended September 30, 2024. Prices for our thrombectomy products remained substantially unchanged during the period.
Previous wording
Revenue from our global embolization and access products decreased $3.1 million, or 3.1%, to $95.9 million in the three months ended June 30, 2024, from $99.0 million in the three months ended June 30, 2023. The decrease in our global embolization and access products was primarily driven by our international embolization and access products, which decreased by 10.8% in the three months ended June 30, 2024. Prices for our embolization and access products remained substantially unchanged during the period.
Current wording
Revenue from our global embolization and access products increased $5.0 million, or 5.5%, to $96.9 million in the three months ended September 30, 2024, from $91.9 million in the three months ended September 30, 2023. The increase in our global embolization and access products was primarily driven by sales of our U.S. embolization and access products, which increased by 5.3% in the three months ended September 30, 2024. Prices for our embolization and access products remained substantially unchanged during the period.
Previous wording
Revenue from product sales in international markets increased $6.5 million, or 8.7%, to $81.2 million in the three months ended June 30, 2024, from $74.7 million in the three months ended June 30, 2023. Revenue from international sales represented 27.1% and 28.6% of our total revenue for the three months ended June 30, 2024 and 2023, respectively.
Current wording
Revenue from product sales in international markets decreased $1.4 million, or 1.9%, to $74.7 million in the three months ended September 30, 2024, from $76.1 million in the three months ended September 30, 2023. Revenue from international sales represented 24.8% and 28.1% of our total revenue for the three months ended September 30, 2024 and 2023, respectively.
Previous wording
Gross margin is impacted by product mix, regional mix, start-up costs associated with new product launches, 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.
Current wording
Gross margin increased by 0.9 percentage points to 66.5% in the three months ended September 30, 2024, from 65.6% in the three months ended September 30, 2023. 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. Our manufacturing team will focus on ramping up our volume, while driving our productivity and efficiency for our new product launches expected in the fourth quarter.
Previous wording
We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
Current wording
As a result of the wind down of the Immersive Healthcare business, we expect to create R&D expense savings of approximately $17.0 million per year moving forward. We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
Previous wording
As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments to support the business.
Current wording
As a result of the wind down of the Immersive Healthcare business, we expect to create SG&A expense savings of approximately $23.0 million per year moving forward. As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments to support the business.
Previous wording
Our benefit from income taxes was $14.1 million for the six months ended June 30, 2024, which was primarily due to tax expenses attributable to our worldwide profits and a discrete tax benefit attributable to the impairment charge related to our immersive healthcare asset group. Our provision for income taxes was $0.7 million for the six months ended June 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction.
Current wording
Our provision for income taxes was $10.3 million for the three months ended September 30, 2024, which was primarily due to tax expenses attributable to our worldwide profits. Our provision for income taxes was $4.1 million for the three months ended September 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits and a discrete tax charge resulting from the non-deductible IPR&D charge associated with an asset acquisition, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction.
Previous wording
Revenue increased $75.2 million, or 14.9%, to $578.1 million in the six months ended June 30, 2024, from $502.9 million in the six months ended June 30, 2023. Overall revenue growth was primarily due to an increase in sales of our new and existing thrombectomy products.
Current wording
Revenue increased $105.3 million, or 13.6%, to $879.1 million in the nine months ended September 30, 2024, from $773.8 million in the nine months ended September 30, 2023. Overall revenue growth was primarily due to an increase in sales of our new and existing thrombectomy products.
Previous wording
Revenue from our global thrombectomy products increased $83.7 million, or 27.2%, to $391.2 million in the six months ended June 30, 2024, from $307.5 million in the six months ended June 30, 2023. The increase in our global thrombectomy products was primarily attributable to higher sales volume in the United States as a result of sales of new products and further market penetration of our existing products. This increase was driven by sales of our U.S. thrombectomy products, which increased by 29.8% in the six months ended June 30, 2024. Prices for our thrombectomy products remained substantially unchanged during the period.
Current wording
Revenue from our global thrombectomy products increased $108.8 million, or 22.4%, to $595.3 million in the nine months ended September 30, 2024, from $486.6 million in the nine months ended September 30, 2023. 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. Sales of our U.S. thrombectomy products increased by 26.6% in the nine months ended September 30, 2024. Prices for our thrombectomy products remained substantially unchanged during the period.
Previous wording
Revenue from our global embolization and access products decreased $8.6 million, or 4.4%, to $186.9 million in the six months ended June 30, 2024, from $195.4 million in the six months ended June 30, 2023. The decrease in our global embolization and access products was primarily driven by our international embolization and access products, which decreased by 11.2% in the six months ended June 30, 2024. Prices for our embolization and access products remained substantially unchanged during the period.
Current wording
Revenue from our global embolization and access products decreased $3.5 million, or 1.2%, to $283.8 million in the nine months ended September 30, 2024, from $287.3 million in the nine months ended September 30, 2023. The decrease in our global embolization and access products was primarily driven by our international embolization and access products, which decreased by 6.0% in the nine months ended September 30, 2024, partially offset by a 1.4% increase in sales of our U.S. embolization and access products. Prices for our embolization and access products remained substantially unchanged during the period.
Previous wording
The following table presents revenue by geographic area, based on our customer’s shipping destination, for the six months ended June 30, 2024 and 2023:
Current wording
The following table presents revenue by geographic area, based on our customer’s shipping destination, for the nine months ended September 30, 2024 and 2023:
Previous wording
Revenue from sales in international markets increased $6.0 million, or 4.2%, to $150.2 million in the six months ended June 30, 2024, from $144.2 million in the six months ended June 30, 2023. Revenue from international sales represented 26.0% and 28.7% of our total revenue for the six months ended June 30, 2024 and 2023, respectively.
Current wording
Revenue from sales in international markets increased $4.6 million, or 2.1%, to $224.9 million in the nine months ended September 30, 2024, from $220.4 million in the nine months ended September 30, 2023. Revenue from international sales represented 25.6% and 28.5% of our total revenue for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
R&D expenses increased by $3.4 million, or 15.8%, to $24.9 million in the three months ended June 30, 2024, from $21.5 million in the three months ended June 30, 2023. The increase was primarily due to a $1.3 million increase in product development and testing costs and a $1.1 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth.
Current wording
R&D expenses increased by $12.3 million, or 19.7%, to $74.8 million in the nine months ended September 30, 2024, from $62.5 million in the nine months ended September 30, 2023. The increase was primarily due to a $4.0 million increase in personnel-related expenses, a $2.9 million increase in product development and testing costs, and $2.6 million in one-time expenses in connection with the wind down of the Immersive Healthcare business.
Previous wording
We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
Current wording
As a result of the wind down of the Immersive Healthcare business, we expect to create R&D expense savings of approximately $17.0 million per year moving forward. We have continued to make investments, and plan to continue to make investments, in the development of our products. As part of our ongoing investment in the development of our products, we may incur additional expenses related to research and development milestones. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of clinical trials and product development, which may include additional personnel-related expenses in conjunction with the launch of new products.
Previous wording
SG&A expenses increased by $14.5 million, or 11.4%, to $141.9 million in the three months ended June 30, 2024, from $127.4 million in the three months ended June 30, 2023. The increase was primarily due to a $7.3 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $3.4 million increase in other professional services, and a $3.0 million increase in costs related to marketing events.
Current wording
SG&A expenses increased by $49.6 million, or 13.2%, to $426.1 million in the nine months ended September 30, 2024, from $376.4 million in the nine months ended September 30, 2023. The increase was primarily due to a $20.6 million increase in personnel-related expense driven by an increase in headcount and related expenses to support our growth, a $8.0 million increase in costs related to marketing events, and a $7.6 million increase in other professional services.
Previous wording
As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments to support the business.
Current wording
As a result of the wind down of the Immersive Healthcare business, we expect to create SG&A expense savings of approximately $23.0 million per year moving forward. As we continue to invest in our growth, we have expanded and may continue to expand our sales, marketing, and general and administrative teams through the hiring of additional employees in critical roles that support our strategic initiatives. In addition, we have experienced in the past, and may continue to experience in the future, variability in expenses incurred due to the timing and costs of investments to support the business.
Previous wording
During the three months ended June 30, 2024, we recorded a $76.9 million impairment charge which was comprised of $58.9 million in finite lived intangible assets and $18.0 million in property and equipment, respectively in connection with the impairment of our immersive healthcare asset group. See Note “4. Impairment of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
Current wording
During the nine months ended September 30, 2024, we recorded a $76.9 million impairment charge which was comprised of $58.9 million in finite lived intangible assets and $18.0 million in property and equipment, respectively, in connection with the impairment of our Immersive Healthcare asset group. See Note “4. Impairment and Restructuring Costs of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
Previous wording
Our benefit from income taxes was $17.7 million for the three months ended June 30, 2024, which was primarily due to tax expenses attributable to our worldwide profits offset by a discrete tax benefit attributable to the impairment charge related to our immersive healthcare asset group. Our provision for income taxes was $0.6 million for the three months ended June 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction.
Current wording
Our benefit from income taxes was $3.8 million for the nine months ended September 30, 2024, which was primarily due to a discrete tax benefit attributable to the impairment charge related to our Immersive Healthcare asset group, partially offset by tax expenses attributable to our worldwide profits. Our provision for income taxes was $4.8 million for the nine months ended September 30, 2023, which was primarily due to tax expenses attributable to our worldwide profits and a discrete tax charge resulting from the non-deductible IPR&D charge associated with an asset acquisition, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction.
Previous wording
Our effective tax rate changed to 22.7% for the three months ended June 30, 2024, from 2.9% for the three months ended June 30, 2023, primarily due to decrease in excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction in 2024.
Current wording
Our effective tax rate increased to 16.2% for the nine months ended September 30, 2024 from 11.5% for the nine months ended September 30, 2023, primarily due to decrease in excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction in 2024.
Previous wording
As of June 30, 2024, we had $792.8 million in working capital, which included $288.3 million in cash and cash equivalents and $51.4 million in marketable investments. As of June 30, 2024, we held approximately 8.5% of our cash and cash equivalents in foreign entities.
Current wording
As of September 30, 2024, we had $738.6 million in working capital, which included $280.5 million in cash and cash equivalents and $10.5 million in marketable investments. As of September 30, 2024, we held approximately 8.8% of our cash and cash equivalents in foreign entities.
Previous wording
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, impairment charge, inventory write-offs and write-downs, changes in deferred tax balances, and the effect of changes in working capital and other activities).
Current wording
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, acquired in-process research and development, impairment charge, inventory write-offs and write-downs, changes in deferred tax balances, and the effect of changes in working capital and other activities).
Previous wording
Net cash provided by operating activities was $60.9 million during the six months ended June 30, 2024 and consisted of consolidated net loss of $49.2 million and non-cash items of $128.4 million, offset by net changes in operating assets and liabilities of $18.3 million. The change in operating assets and liabilities primarily relates to an increase in inventories of $23.0 million to support our growth and an increase in accounts payable of $5.5 million, due to timing of payments. This was partially offset by a decrease in accounts receivable of $2.0 million due to timing of invoicing and collections, a decrease in prepaid expenses and other current and non-current assets of $2.1 million, and a decrease in accrued expenses and other non-current liabilities of $0.9 million due to timing of payments.
Current wording
Net cash provided by operating activities was $117.4 million during the nine months ended September 30, 2024 and consisted of consolidated net loss of $19.7 million and non-cash items of $151.7 million, offset by net changes in operating assets and liabilities of $14.7 million. The change in operating assets and liabilities primarily relates to an increase in inventories of $46.0 million to support our growth and an increase in accounts payable of $6.0 million, due to timing of payments. This was partially offset by a decrease in accounts receivable of $23.4 million due to timing of invoicing and collections, a decrease in prepaid expenses and other current and non-current assets of $1.7 million, and a decrease in accrued expenses and other non-current liabilities of $0.2 million due to timing of payments.
Previous wording
Net cash provided by operating activities was $30.2 million during the six months ended June 30, 2023 and consisted of consolidated net income of $27.5 million and non-cash items of $41.4 million, offset by net changes in operating assets and liabilities of $38.7 million. The change in operating assets and liabilities primarily relates to an increase in inventories of $25.8 million to support our growth, an increase in accounts receivable of $8.4 million due to timing of receipt of payment, and an increase in prepaid expenses and other current and non-current assets of $5.9 million. This was partially offset by an increase in accrued expenses and other non-current liabilities of $1.6 million.
Current wording
Net cash provided by operating activities was $61.1 million during the nine months ended September 30, 2023 and consisted of consolidated net income of $36.7 million and non-cash items of $86.0 million, offset by net changes in operating assets and liabilities of $61.7 million. The change in operating assets and liabilities primarily relates to an increase in inventories of $46.5 million to support our growth, an increase in accounts receivable of $6.6 million due to timing of invoicing and collections, and an increase in prepaid expenses and other current and non-current assets of $10.3 million. This was partially offset by an increase in accounts payable of $2.1 million due to timing of payments.
Previous wording
Net cash provided by investing activities relates primarily to purchases of marketable and non-marketable investments and capital expenditures, partially offset by proceeds from maturities of marketable investments.
Current wording
Net cash provided by (used in) investing activities relates primarily to purchases of marketable and non-marketable investments, capital expenditures and payments in connection with asset acquisitions, partially offset by proceeds from maturities of marketable investments.
Previous wording
Net cash provided by investing activities was $52.9 million during the six months ended June 30, 2024 and primarily consisted of $71.6 million in proceeds from maturities of marketable investments, net of purchases, partially offset by purchases of capital expenditures of $10.4 million and non-marketable investments of $10.0 million.
Current wording
Net cash provided by investing activities was $88.6 million during the nine months ended September 30, 2024 and primarily consisted of $112.8 million in proceeds from maturities of marketable investments, net of purchases, partially offset by purchases of capital expenditures of $15.8 million and non-marketable investments of $10.0 million.
Previous wording
Net cash provided by investing activities was $4.0 million during the six months ended June 30, 2023 and primarily consisted of $12.8 million in proceeds from maturities of marketable investments, net of purchases, which was partially offset by capital expenditures of $8.2 million.
Current wording
Net cash used in investing activities was $40.4 million during the nine months ended September 30, 2023 and primarily consisted of $27.3 million in purchases of marketable investments, net of proceeds from maturities, capital expenditures of $11.6 million and $1.0 million in payments in connection with an asset acquisition.
Previous wording
Net cash provided by financing activities primarily relates to proceeds from exercises of stock options and issuances of common stock under our employee stock purchase plan, partially offset by payments of employee taxes related to vested restricted stock units and payments towards the reduction of our finance lease obligations.
Current wording
Net cash (used in) provided by financing activities primarily relates to repurchases of our common stock and payments towards the reduction of our finance lease obligations, partially offset by proceeds from exercises of stock options and issuances of common stock under our employee stock purchase plan.
Previous wording
Net cash provided by financing activities was $7.5 million during the six months ended June 30, 2024 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $8.9 million, partially offset by $1.1 million in payments towards finance leases and $0.5 million of payments of employee taxes related to vested restricted stock units.
Current wording
Net cash used in financing activities was $93.1 million during the nine months ended September 30, 2024 and primarily consisted of repurchases of common stock of $100.4 million, including legal and financial advisor fees, and $1.7 million in payments towards finance leases, partially offset by proceeds from the issuance of common stock under our employee stock purchase plan of $8.9 million.
Previous wording
Net cash provided by financing activities was $10.1 million during the six months ended June 30, 2023 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $8.4 million and proceeds from exercises of stock options of $3.8 million, partially offset by $1.0 million of payments of employee taxes related to vested restricted stock units and $1.0 million in payments towards finance leases.
Current wording
Net cash provided by financing activities was $10.3 million during the nine months ended September 30, 2023 and primarily consisted of proceeds from the issuance of common stock under our employee stock purchase plan of $8.4 million and proceeds from exercises of stock options of $4.7 million, partially offset by $1.5 million in payments towards finance leases and $1.1 million of payments of employee taxes related to vested restricted stock units.
Rearranged previous paragraphs (5)
Previous report — wording carried elsewhere
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.
Previous report — wording carried elsewhere
During the six months ended June 30, 2024, we recorded a $76.9 million impairment charge which was comprised of $58.9 million in finite lived intangible assets and $18.0 million in property and equipment, respectively in connection with the impairment of our immersive healthcare asset group. See Note “4. Impairment of Immersive Healthcare Asset Group” to our condensed consolidated financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q for more information.
Previous report — wording carried elsewhere
(Benefit from) provision for income taxes
Previous report — wording carried elsewhere
Net Cash Provided By Investing Activities
Previous report — wording carried elsewhere
Net Cash Provided By Financing Activities