Penumbra Inc

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 had a strong track record of organic 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

We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, access and immersive healthcare technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline. Our research and development activities are centered around the development of new products and clinical activities designed to support our regulatory submissions and demonstrate the effectiveness of our products.

Current wording

We expect to continue to develop and build our portfolio of products, including our thrombectomy, embolization, and access technologies, while iterating on our currently available products. Generally, when we introduce a next generation product or a new product designed to replace a current product, sales of the earlier generation product or the product replaced decline. Our research and development activities are centered around the development of new products and clinical activities designed to support our regulatory submissions and demonstrate the effectiveness of our products.

Previous wording

We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.

Current wording

We attribute our success to our culture built on cooperation, our highly efficient product innovation process, our disciplined approach to product and commercial development, our deep understanding of our target end markets and our relationships with specialist physicians and other healthcare providers. We believe these factors have enabled us to rapidly innovate in a highly efficient manner.

Previous wording

We sell our products to healthcare providers primarily through our direct sales organization in the United States, most of Europe, Canada and Australia, as well as through distributors in select international markets. We generated revenue of $1,058.5 million, $847.1 million and $747.6 million for the years ended December 31, 2023, 2022 and 2021, respectively. This represents an annual increase of 25.0% and of 13.3%, respectively. We generated income from operations of $73.6 million and $6.1 million for the years ended December 31, 2023 and 2022, respectively, and a loss from operations of $7.5 million for the year ended December 31, 2021.

Current wording

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

Previous wording

In addition, we have experienced and expect to continue to experience meaningful variability in our quarterly revenue, gross profit and gross margin percentage as a result of a number of factors, including, but not limited to: the number of available selling days, which can be impacted by holidays; the mix of products sold; the geographic mix of where products are sold; the demand for our products and the products of our competitors; the timing of or failure to obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory write-offs due to obsolescence; costs, benefits and timing of new product introductions; costs, benefits and timing of the acquisition and integration of businesses and product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates. We may experience quarters in which we have significant revenue growth sequentially followed by quarters of moderate or no revenue growth. Additionally, we may experience quarters in which operating expenses, in particular research and development expenses, fluctuate depending on the stage and timing of product development. For example, during the quarter ended September 30, 2023, we incurred a $18.2 million charge related to acquired in process research and development (“IPR&D”) as a result of an asset acquisition.

Current wording

In addition, we have experienced and expect to continue to experience meaningful variability in our quarterly revenue, gross profit and gross margin percentage as a result of a number of factors, including, but not limited to: the number of available selling days, which can be impacted by holidays; the mix of products sold; the geographic mix of where products are sold; the demand for our products and the products of our competitors; the timing of or failure to obtain regulatory approvals or clearances for products; increased competition; the timing of customer orders; inventory or other asset write-offs or write-downs; costs, benefits and timing of new product introductions; costs, benefits and timing of the acquisition and integration of businesses and product lines we may acquire; the availability and cost of components and raw materials; and fluctuations in foreign currency exchange rates. We may experience quarters in which we have significant revenue growth sequentially followed by quarters of moderate or no revenue growth. Additionally, we may experience quarters in which operating expenses, in particular research and development expenses, fluctuate depending on the stage and timing of product development.

Previous wording

As of December 31, 2023, our net DTA balance on a consolidated basis was $84.1 million, after reduction of a valuation allowance of $24.0 million. We had approximately $21.8 million and $63.2 million of federal and state net operating loss (“NOL”) carryforwards, respectively, available to offset future taxable income as of December 31, 2023. The federal NOL has an indefinite carryforward period but is limited to offset 80% of taxable income in the year utilized. The state NOL carryforwards have various carryover periods and will begin to expire as early as 2035. As of December 31, 2023, we had federal research and development tax credits of $27.1 million which are generally carried forward for 20 years and will begin to expire in 2037. We had California state research and development tax credits of $29.4 million that may be carried forward indefinitely.

Current wording

As of December 31, 2024, our net DTA balance on a consolidated basis was $99.7 million, after reduction of a valuation allowance of $26.6 million. In 2024, we used up all federal net operating loss (“NOL”) carryforwards. We still had approximately $44.6 million of state net operating loss (“NOL”) carryforwards available to offset future taxable income as of December 31, 2024. The state NOL carryforwards have different carryover periods and will begin to expire as early as 2036. As of December 31, 2024, we had federal research and development tax credits of $2.0 million which are carried forward for 20 years and will expire in 2044. We had California state research and development tax credits of $32.6 million that may be carried forward indefinitely.

Previous wording

Significant domestic DTAs were generated in recent years, primarily due to excess tax benefits from stock option exercises and vesting of restricted stock, as well as operating expenditures including research and development. We assessed the ability to realize the benefits of our DTAs in each reporting period by evaluating all available positive and negative evidence, objective and subjective in nature, including (1) cumulative results of operations in recent years, (2) sources of recent pre-tax income, (3) estimates of future taxable income, (4) respective carryback and/or carryforward periods of tax attributes available to date, and (5) limitation on NOL utilization against taxable income. 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 DTAs prior to expiration, including our federal research and development tax credit DTAs. Furthermore, due to our substantial profitability increase in recent years, we determined that sufficient future California taxable income will be generated to realize partial benefit of our California DTAs. As a result, we released the valuation allowance against federal research and development tax credit DTAs net of ASC 740-10 reserve and recorded a partial release of our California DTAs, resulting in a $25.5 million income tax benefit recorded as of December 31, 2023. We continue to maintain a valuation allowance against our California tax credit DTAs until new evidence becomes available to justify realization of the asset.

Current wording

As of December 31, 2024, 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 DTAs prior to expiration, including our federal research and development tax credit DTAs.

Previous wording

As of December 31, 2023, we do not maintain valuation allowance against any of our foreign DTAs as we believe, at the required more-likely-than-not level of certainty, that our foreign subsidiaries will generate sufficient future taxable income to realize the benefit of their DTAs in full.

Current wording

We do not maintain valuation allowance against any of our foreign DTAs as we believe, at the required more-likely-than-not level of certainty, that our foreign subsidiaries will generate sufficient future taxable income to realize the benefit of their DTAs in full.

Previous wording

In December 2021, the Organizational for Economic Co-operation and Development (“OECD”) released guidance on the new global minimum tax regime known as Pillar Two. While various countries have adopted or in the process of passing legislation to adopt it, the United States has not yet conformed to Pillar Two as of December 31, 2023. We are currently evaluating the potential global tax implications of this new tax regime.

Current wording

In December 2021, the Organizational 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 process of passing legislation to adopt it, the United States issued an executive order announcing opposition to adopt these rules in January 2025. We have evaluated the tax impact in relevant countries and concluded that there is no impact to our tax provision for the year ended December 31, 2024. We acknowledge potential uncertainties in global implementation of Pillar Two, and will continue to monitor future tax legislation to determine their impact accordingly.

Previous wording

Finite-lived intangible assets are amortized over the estimated economic useful lives of the assets, which is the period during which expected cash flows support the fair value of such intangible assets. We review finite-lived intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If such an event occurs, management determines whether there has been impairment by comparing the anticipated undiscounted future net cash flows to the related asset group’s carrying value. If an asset is considered impaired, the asset will be written down to the determined fair value based on discounted cash flows. We also periodically review the useful lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the underlying intangible asset. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase.

Current wording

Finite-lived intangible assets are amortized over the estimated economic useful lives of the assets, which is the period during which expected cash flows support the fair value of such intangible assets. We review finite-lived intangible assets and other long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We also periodically review the useful lives assigned to our intangible assets to ensure that our initial estimates do not exceed any revised estimated periods from which we expect to realize cash flows from the underlying intangible asset. If a change were to occur in any of the above-mentioned factors or estimates, the likelihood of a material change in our reported results would increase.

Previous wording

Refer to Notes “5. Business Combinations,” “6. Asset Acquisition” and “7. Intangible Assets” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Current wording

Refer to Notes “6. Asset Acquisition” and “7. Intangible Assets” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Previous wording

Revenue increased $211.4 million, or 25.0%, to $1,058.5 million in 2023, from $847.1 million in 2022. The increase in overall revenue was primarily due to an increase in sales of our new and existing thrombectomy and embolization and access products.

Current wording

Revenue increased $136.1 million, or 12.9%, to $1,194.6 million in 2024, from $1,058.5 million in 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 $166.2 million, or 32.5%, to $677.3 million in 2023, from $511.1 million in 2022. This increase was driven by sales of our U.S. vascular thrombectomy products, which increased by 45.2% in the year ended December 31, 2023. This 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. Prices for our thrombectomy products remained substantially unchanged during the period.

Current wording

Revenue from our global thrombectomy products increased $138.1 million, or 20.4%, to $815.5 million in 2024, from $677.3 million in 2023. This 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. Sales of our U.S. thrombectomy products increased by 26.8% in the year ended December 31, 2024. Prices for our thrombectomy products remained substantially unchanged during the period.

Previous wording

Revenue from our global embolization and access products increased $45.2 million, or 13.4%, to $381.2 million in the year ended December 31, 2023, from $336.0 million in the year ended December 31, 2022. Prices for our embolization and access products remained substantially unchanged during the period.

Current wording

Revenue from our global embolization and access products decreased $2.0 million, or 0.5%, to $379.1 million in the year ended December 31, 2024, from $381.2 million in the year ended December 31, 2023. The decrease in our global embolization and access products was primarily driven by our international embolization and access products, which decreased by 7.6% in the year ended December 31, 2024, partially offset by a 3.3% 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

Revenue from sales in international markets increased $46.0 million, or 18.0%, to $301.4 million in 2023, from $255.4 million in 2022. Revenue from international sales represented 28.5% and 30.2% of our total revenue in 2023 and 2022, respectively.

Current wording

Revenue from sales in international markets decreased $8.8 million, or 2.9%, to $292.5 million in 2024, from $301.4 million in 2023. Revenue from international sales represented 24.5% and 28.5% of our total revenue in 2024 and 2023, respectively.

Previous wording

Gross margin increased by 1.3% percentage points to 64.5% in 2023, from 63.2% in 2022. 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.

Current wording

Gross margin was 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, and a one-time $33.4 million inventory charge to cost of revenue in connection with the impairment of our Immersive Healthcare 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 3.0 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.

Previous wording

R&D expenses increased by $5.0 million or 6.3%, to $84.4 million in 2023, from $79.4 million in 2022. The increase was primarily due to a $6.4 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, partially offset by a $2.7 million decrease in product development and testing costs.

Current wording

R&D expenses increased by $10.4 million or 12.3%, to $94.8 million in 2024, from $84.4 million in 2023. The increase was primarily due to a $3.3 million increase in product development and testing costs, $2.6 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 expenses to support our growth.

Previous wording

SG&A expenses increased by $56.7 million, or 12.6%, to $506.5 million in 2023, from $449.7 million in 2022. The increase was primarily due to a $38.4 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth and a $8.1 million increase in costs related to marketing events.

Current wording

SG&A expenses increased by $67.5 million, or 13.3%, to $574.0 million in 2024, from $506.5 million in 2023. The increase was primarily due to a $34.3 million increase in personnel-related expenses driven by an increase in headcount and related expenses to support our growth, a $10.0 million increase in costs related to marketing events, and a $9.8 million increase in other professional services.

Previous wording

During the year ended December 31, 2023, we recorded an $18.2 million acquired in-process research and development assets (“IPR&D”) charge in connection with an asset acquisition.

Current wording

There were no acquired IPR&D charges during the year ended December 31, 2024. During the year ended December 31, 2023, we recorded an $18.2 million acquired IPR&D charge in connection with an asset acquisition. Refer to Note “6. Asset Acquisition”to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more information.

Previous wording

Our benefit from income taxes was $11.3 million in 2023, which was primarily due to income taxes imposed on our worldwide profits, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction and tax benefits from releasing the valuation allowance against federal research and development credit DTAs net of ASC 740-10 reserve and recording a partial release of our California DTAs. Our provision for income taxes was $5.9 million in 2022, which was primarily due to income taxes imposed on our worldwide profits, combined with excess tax deficiencies (shortfall) from stock-based compensation attributable to our U.S. jurisdiction as a result of stock price fluctuation. Our effective tax rate was (14.2)% in 2023, compared to 151.4% in 2022. Our change in effective tax rate was primarily attributable to small tax benefits over relatively large worldwide profits for the year ended December 31, 2023, compared to large tax expenses over relatively small worldwide profits for the year ended December 31, 2022.

Current wording

Our provision for income taxes was $6.9 million in 2024, which was primarily due to income taxes imposed on our worldwide profits. Our benefit from income taxes was $11.3 million in 2023, which was primarily due to income taxes imposed on our worldwide profits, offset by excess tax benefits from stock-based compensation attributable to our U.S. jurisdiction and tax benefits from releasing the valuation allowance against federal research and development credit DTAs net of ASC 740-10 reserve and recording a partial release of our California DTAs. Our effective tax rate was 32.9% in 2024, compared to (14.2)% in 2023. Our change in effective tax rate was primarily attributable to excess tax benefits from stock-based compensation and substantial tax benefits recorded from releasing the valuation allowance against federal research and development credits and partial California DTAs in 2023.

Previous wording

As of December 31, 2023, we had $764.3 million in working capital, which included $167.5 million in cash and cash equivalents and $121.7 million in marketable investments. As of December 31, 2023, we held approximately 14.5% of our cash and cash equivalents in foreign entities.

Current wording

As of December 31, 2024, we had $792.8 million in working capital, which included $324.4 million in cash and cash equivalents and $15.7 million in marketable investments. As of December 31, 2024, we held approximately 7.9% of our cash and cash equivalents in foreign entities.

Previous wording

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. 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.

Current wording

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, on February 14, 2025, the Company entered into agreements to acquire land in Costa Rica and construct a custom-built manufacturing facility and warehouse for the production of our products (refer to Note “20. Subsequent Events” to our consolidated financial statements in Part II, Item 8 of this Form 10-K for more 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.

Previous wording

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, inventory write-offs and write-downs, changes in deferred tax balances, acquired in-process research and development expensed in connection with an asset acquisition, and the effect of changes in working capital and other activities).

Current wording

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, and the effect of changes in working capital and other activities).

Previous wording

Net cash provided by operating activities was $9.5 million in 2021 and consisted of net income of $2.6 million and non-cash items of $73.6 million offset by net changes in operating assets and liabilities of $66.7 million. The change in operating assets and liabilities includes an increase in inventories of $51.6 million to support our revenue growth, an increase in accounts receivable of $21.3 million, an increase in prepaid expenses and other current and non-current assets of $13.0 million, and a decrease in accounts payable of $1.6 million. This was partially offset by an increase in accrued expenses and other non-current liabilities of $17.1 million primarily as a result of the growth in our business activities and proceeds of $3.7 million received related to lease incentives from operating leases.

Current wording

Net cash provided by operating activities was $168.5 million in 2024 and consisted of net income of $14.0 million and non-cash items of $178.2 million offset by net changes in operating assets and liabilities of $23.8 million. The change in operating assets and liabilities includes an increase in inventories of $65.7 million to support our revenue growth, a decrease in accounts receivable of $26.6 million due to timing of invoicing and collections, an increase in accrued expenses and other non-current liabilities of $14.1 million primarily as a result of the growth in our business activities, and an increase in accounts payable of $4.2 million. This was partially offset by an increase in prepaid expenses and other current and non-current assets of $2.9 million.

Previous wording

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

Current wording

Net cash provided by (used in) investing activities 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.

Previous wording

Net cash used in investing activities was $21.7 million in 2021 and primarily consisted of capital expenditures of $21.2 million and purchases of marketable investments, net of proceeds from maturities and sales, of $3.1 million. This was partially offset by $2.9 million cash acquired in connection with the Sixense acquisition.

Current wording

Net cash provided by investing activities was $77.6 million in 2024 and primarily consisted of proceeds from maturities of marketable investments, net of purchases, of $107.7 million, partially offset by capital expenditures of $21.2 million and non-marketable investments of $10.0 million.

Previous wording

Net Cash (Used In) Provided By Investing Activities

Current wording

Net Cash (Used In) Provided By Financing Activities

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, payments towards the reduction of our finance lease obligations and payments of employee taxes related to vested restricted stock units, partially offset by proceeds from issuances of common stock under our employee stock purchase plan and exercises of stock options.

Previous wording

The Company is also subject to certain royalty obligations under a license agreement with amounts due thereunder fluctuating depending on sales levels. Royalty expense included in cost of sales for the years ended December 31, 2023, 2022 and 2021 was $2.6 million, $2.5 million and $2.3 million, respectively. For more information on these royalty obligations, refer to Note “11. Commitments and Contingencies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K.

Current wording

The Company is also subject to certain royalty obligations under a license agreement with amounts due thereunder fluctuating depending on sales levels. Royalty expense included in cost of sales for the years ended December 31, 2024, 2023 and 2022 was $2.6 million, $2.6 million and $2.5 million, respectively. For more information on these royalty obligations, refer to Note “10. Commitments and Contingencies” to our consolidated financial statements in Part II, Item 8 of this Form 10-K.