Penumbra (PEN) Q3 2025: U.S. Embolization Surges 29%, Unlocking Dual-Engine Growth
Penumbra’s third quarter showcased a decisive shift toward dual-engine growth as U.S. embolization revenue outpaced thrombectomy, propelled by a dedicated sales force and new product launches. Margin expansion and strong cash generation signal operational leverage, while landmark clinical data from STORM-PE positions CAVT for broader adoption heading into 2026. Investors should watch for Thunderbolt’s regulatory progress and the durability of this multi-franchise momentum.
Summary
- Embolization Franchise Outpaces Thrombectomy: Dedicated sales team and RubyXL launch drive sequential U.S. embolization growth.
- Margin Expansion Accelerates: Gross margin and operating leverage improve, supported by mix and productivity gains.
- STORM-PE Data Catalyzes Protocol Shift: Clinical evidence positions CAVT for broader hospital adoption and market expansion.
Performance Analysis
Penumbra delivered broad-based revenue growth, with total revenue rising double digits year-over-year, led by a standout 29% increase in U.S. embolization and access sales. The U.S. market, now representing nearly four-fifths of total sales, continues to drive corporate performance as international headwinds from China moderate and other geographies return to double-digit growth. Notably, the embolization franchise, historically overshadowed by thrombectomy, outpaced global thrombectomy growth this quarter, reflecting both commercial execution and product innovation.
Margin structure improved materially, with gross margin expanding 130 basis points year-over-year and sequential gains from favorable regional and product mix, particularly from the accretive RubyXL platform. Operating expenses rose with the completion of the embolization sales force build-out, but management expects leverage as these investments mature. Cash flow was robust, with $470 million in cash and no debt, underpinned by improved working capital metrics and strong profitability.
- Sales Mix Shift: U.S. embolization now drives growth alongside thrombectomy, signaling a more balanced revenue engine.
- Gross Margin Expansion: Product mix, regional mix, and RubyXL yield improvements support a path toward the 70% target.
- Operating Leverage on Deck: SG&A investments are now largely complete, setting up for future margin expansion.
International growth rebounded as China headwinds eased, and the company reiterated robust U.S. thrombectomy growth guidance, underlining confidence in both core and emerging franchises.
Executive Commentary
"Growth in our embolization and access business exceeded our expectations, reflecting the benefit of a dedicated peripheral embolization sales team alongside our investment in continuous innovation and new product introductions."
Adam Elsesser, Chairman and CEO
"We are very pleased at how quickly the team stabilized our RubyXL build... RubyXL product has an accretive impact on our gross margin and the sales model supports a more efficient working capital dynamic."
Maggie Yuen, Chief Financial Officer
Strategic Positioning
1. U.S. Embolization: Dedicated Focus Unlocks Growth
Penumbra’s decision to build a stand-alone U.S. peripheral embolization sales force proved pivotal. The new team delivered over 21% sequential growth in embolization revenue, driven by the RubyXL launch and a sharpened commercial focus. This structural separation enabled the thrombectomy team to intensify efforts on CAVT, catalyzing growth across both franchises. Management highlighted a seamless integration process, positioning both teams for focused execution in 2026.
2. CAVT Platform: STORM-PE as a Market Catalyst
The STORM-PE trial results, published and presented at major conferences, showed CAVT’s superiority over standard care in treating intermediate high-risk pulmonary embolism (PE). Physician feedback has been “enthusiastically positive,” with early evidence of protocol changes at hospitals and a shift from older mechanical thrombectomy devices to CAVT. Management expects this clinical validation to drive broader adoption, especially as hospitals update protocols and societies disseminate the data.
3. Margin Expansion: Product and Regional Mix Drive Upside
Gross margin expansion was fueled by improved product mix, particularly RubyXL, and stronger U.S. sales. The company remains on track for a 70% gross margin target by end of 2026 and expects operating margin to expand even faster as SG&A investments annualize. Productivity improvements and a more efficient sales model support this outlook, with tariff and China headwinds largely absorbed.
4. Thunderbolt Approval: Regulatory Progress and Market Readiness
The neurovascular Thunderbolt device remains in FDA review, with management emphasizing the thoroughness of the process typical for new neuro products. Penumbra is prepared for launch upon approval, and leadership expressed optimism about Thunderbolt’s potential to catalyze the stroke thrombectomy market, although timing remains uncertain.
5. International Recovery: China Headwinds Fading
International growth rebounded to mid-single digits, with double-digit gains outside China. Management expects China headwinds to become minimal in early 2026, setting up for more normalized OUS growth and diversified revenue streams.
Key Considerations
Penumbra’s Q3 marks a strategic inflection, with both embolization and thrombectomy franchises now contributing meaningfully to growth. Margin expansion and clinical data momentum create a foundation for sustained performance, but execution on new product launches and protocol adoption will determine the durability of these gains.
Key Considerations:
- Sales Force Realignment: Dedicated embolization and thrombectomy teams enable targeted growth but require continued integration and focus to maximize productivity.
- Clinical Data Impact: STORM-PE’s positive reception is driving hospital protocol changes, but the pace of market adoption depends on execution and education efforts.
- Margin Leverage: With the sales force build-out complete, future quarters should see improved operating leverage as revenue scales.
- Regulatory Timing: Thunderbolt approval is a key swing factor for neurovascular growth, but regulatory timelines remain unpredictable.
- International Normalization: Easing China headwinds will allow true underlying growth to surface in OUS markets starting in 2026.
Risks
Key risks include potential delays in FDA approval for Thunderbolt, slower-than-expected protocol adoption for CAVT following STORM-PE, and competitive responses in both the thrombectomy and embolization markets. While China headwinds are fading, global macro volatility and reimbursement dynamics could still impact future growth and margin expansion. Management’s margin and growth targets assume continued positive mix and productivity trends, which may not materialize if market conditions shift.
Forward Outlook
For Q4 2025, Penumbra guided to:
- Full-year revenue of $1.375 to $1.38 billion
- U.S. thrombectomy growth of 20% to 21% for 2025
For full-year 2025, management maintained guidance for:
- Gross margin expansion toward 70% by end of 2026
- Operating margin growth to outpace gross margin gains
Management highlighted confidence in multi-franchise growth, the durability of margin expansion, and the opportunity to leverage recent sales force investments for operational efficiency in 2026 and beyond.
Takeaways
Penumbra’s Q3 results signal a new era of balanced growth, with embolization emerging as a second engine alongside thrombectomy. Margin expansion, strong cash flow, and a robust pipeline set the stage for continued outperformance, but the pace of protocol adoption and regulatory approvals will be critical watchpoints.
- Embolization Ascends: Dedicated sales focus and RubyXL launch have transformed embolization into a primary growth driver, reducing reliance on thrombectomy alone.
- Margin Momentum: Product and regional mix, coupled with operational efficiency, are driving margin expansion ahead of schedule.
- Clinical and Regulatory Catalysts: STORM-PE data is fueling hospital protocol changes, while Thunderbolt’s FDA review remains a key forward lever for neurovascular growth.
Conclusion
Penumbra’s third quarter underscores the company’s strategic transition to a dual-growth model, powered by both embolization and thrombectomy. With solid execution, expanding margins, and clinical validation, the company is well positioned for 2026, though investors should monitor regulatory and adoption milestones closely.
Industry Read-Through
Penumbra’s results offer a clear signal to the broader interventional and neurovascular device space: Dedicated sales specialization and rapid product iteration can unlock new growth in established markets. Clinical trial data remains a key lever for shifting hospital protocols and expanding addressable markets, particularly as payors and providers increasingly demand evidence-based differentiation. Competitors in thrombectomy and embolization must contend with Penumbra’s dual-franchise momentum and margin discipline, while the STORM-PE protocol shift may accelerate broader adoption of advanced aspiration and clot removal technologies across hospital systems. The fading China headwinds also suggest that other medtech firms could see more normalized international growth as macro volatility recedes.