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Ischemic Stroke: Ischemic strokes, caused by the blockage of an artery in the brain, represent approximately 87% of strokes, or approximately 700,000 patients annually, in the United States. Of these cases, we estimate that approximately 200,000 are treatable with mechanical thrombectomy, which involves removal of the clot causing the blockage by mechanical means and restoring blood flow to the blocked vessels. Studies have shown that

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Brain Aneurysm: An aneurysm is a weak area in a blood vessel that usually enlarges and is often described as a “ballooning” of the blood vessel. Approximately 1.5% to 5.0% of the general population has or will develop a brain aneurysm and about 6 million people in the United States may currently have a brain aneurysm. If a patient has had an aneurysm, there is a 15% to 20% likelihood that the patient will have one or more additional aneurysms. The primary endovascular procedure for treating unruptured aneurysms uses a repair technique called embolization, in which the aneurysm is packed with coils in a minimally invasive procedure.

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Hemorrhagic Stroke: Hemorrhagic strokes, caused by the sudden rupture of a brain artery that leads to bleeding into or around the brain, represent approximately 13% of strokes, or approximately 100,000 patients annually, in the United States. Brain aneurysms and arteriovenous malformations (“AVM”) can both cause hemorrhagic stroke. According to independent sources, every year 0.5% to 3.0% of people with a brain aneurysm and 1.0% to 3.0% of people with an AVM may suffer from bleeding. According to the AHA and ASA, once a brain aneurysm or an AVM bleeds, the chance of death is 30% to 40% and 10% to 15%, respectively. Intracerebral hemorrhage (“ICH”), a type of hemorrhagic stroke, occurs when a vessel within the brain bursts, allowing blood to leak inside the brain.

•	Peripheral Thrombectomy: There are more than one million incidences of clot in the peripheral vasculature each year in the United States and we estimate that approximately 150,000 are interventionally treated.

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Venous Thromboembolism (“VTE”): Deep Vein Thrombosis, (“DVT”) and Pulmonary Embolism (“PE”) are collectively referred to as VTE. DVT occurs when a blood clot develops in veins deep in the body and PE occurs when a blood clot becomes lodged in the lung. DVT can result in PE if a blood clot in the leg breaks loose and travels to the lungs. According to the Centers for Disease Control and Prevention (“CDC”), up to 900,000 people are affected by VTE each year in the United States, of which we estimate up to 600,000 are incidences of DVT. It is estimated that one-third of people with VTE will have a recurrence within 10 years, and it is estimated that there are more than 100,000 VTE-related deaths in the United States annually. Sudden death is the first symptom in approximately 25% of the patients who have a PE.

◦	Peripheral Arterial Occlusion (“PAO”): PAO occurs when a blood clot develops in major peripheral arteries. We estimate that there are approximately 175,000 incidences of PAO each year in the United States.

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Peripheral Embolization: Coil embolization is used to treat numerous conditions in the peripheral vasculature including aneurysms, hemorrhage, endoleaks and varicoceles. Based on independent market research, there are approximately 45,000 peripheral vascular embolization coil procedures in the United States each year. We estimate that one-third of coils used in the United States are detachable coils, with the remainder being pushable coils.

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•	active extravasations, or the escape of blood into surrounding tissue;

•	selective embolization in patients with visceral aneurysms;

•	exclusion of branches prior to chemoembolization and radioembolization;

•	embolization in patients with gastrointestinal bleeding;

•	embolization of branches prior to stent graft procedures;

•	procedures after stent grafting in patients with persistent type II endoleaks and sac enlargement;

•	treatment of patients with varicocele and pelvic congestion syndrome;

•	high flow arterial venous malformations;

•	post trans intrahepatic shunt placement;

•	balloon retrograde transvenous obliteration; and

•	exclusion of hepatic branches prior to liver resection.

•	Continuous Aspiration Mechanical Thrombectomy Catheters are robust, durable, trackable and suited for the peripheral and coronary anatomy. We have introduced multiple sizes of catheters for use in both the peripheral and coronary vasculature.

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Indigo Separators are advanced and retracted through the CAT catheter at the proximal margin of the primary occlusion to facilitate clearing of the thrombus from the catheter tip. In the peripheral vasculature, clots often form in long segments and are more resistant to traditional aspiration techniques. The Indigo System with the Separator enables a practitioner to remove a wide range of clot morphology from both peripheral and coronary vasculature.

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•	Penumbra ENGINE or Penumbra Pump MAX is connected to our CAT catheters and provides the aspiration suction force. We developed our proprietary aspiration source as a fully-integrated system specifically for mechanical thrombectomy by aspiration.

•	Neuro: Interventional neuroradiologists, neurosurgeons and interventional neurologists.

•	Vascular: Interventional radiologists, vascular surgeons and interventional cardiologists.

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•	significantly greater name recognition;

•	broader or deeper relations with healthcare professionals, customers, group purchasing organizations, and third-party payors;

•	more established distribution networks;

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•	additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage;

•	greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and

•	greater financial and human resources for product development, sales and marketing and patent litigation.

•	develop innovative, proprietary products that can cost-effectively address significant clinical needs;

•	continue to innovate and develop scientifically advanced technology;

•	obtain and maintain regulatory clearances or approvals;

•	demonstrate efficacy in Penumbra-sponsored and third-party clinical trials and studies;

•	apply technology across product lines and markets;

•	attract and retain skilled research and development and sales personnel; and

•	cost-effectively manufacture and successfully market and sell products.

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•	establishment registration and device listing;

•	the QSR, which requires manufacturers, including third-party manufacturers, to follow stringent design, testing, control, documentation, and other quality assurance procedures during all aspects of the manufacturing process;

•	labeling regulations and the FDA prohibitions against the promotion of products for un-cleared, unapproved or “off-label” uses, and other requirements related to promotional activities;

•	medical device reporting regulations, which require that manufactures report to the FDA if their device may have caused or contributed to a death or serious injury or if their device malfunctioned and the device or a similar device marketed by the manufacturer would be likely to cause or contribute to a death or serious injury if the malfunction were to recur;

•	corrections and removal reporting regulations, which require that manufactures report to the FDA field corrections or removals if undertaken to reduce a risk to health posed by a device or to remedy a violation of the FD&C Act that may present a risk to health; and

•	post market surveillance regulations, which apply to certain Class II or Class III devices when necessary to protect the public health or to provide additional safety and effectiveness data for the device.

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•	warning or untitled letters, fines, injunctions, consent decrees and civil penalties;

•	customer notifications, voluntary or mandatory recall or seizure of our products;

•	operating restrictions, partial suspension or total shutdown of production;

•	delay in processing submissions or applications for new products or modifications to existing products;

•	withdrawing approvals that have already been granted; and

•	criminal prosecution.

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•	our ability to achieve and maintain market acceptance of our products;

•	unanticipated problems and additional costs relating to the development and testing of new products;

•	our ability to introduce, manufacture at scale, build new inventory and commercialize new products;

•	our ability to produce sufficient quantities of our products to meet demand;

•	the impact of competition;

•	the timing and impact of market and regulatory developments;

•	our ability to expand into new markets;

•	pricing pressure from competitors;

•	the availability and adequacy of third-party reimbursement for procedures in which our products are used; and

•	our ability to obtain and maintain adequate intellectual property protection for our products and technologies.

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•	our ability to market and distribute our products effectively;

•	the availability, perceived efficacy and pricing of alternative products from our competitors;

•	the development of new products or alternative treatments by others that render our products and technologies obsolete;

•	the price, quality, effectiveness and reliability of our products;

•	our customer service and reputation;

•	our ability to convince specialist physicians to use our products on their patients; and

•	the timing of market entry of new products or alternative treatments.

•	significantly greater name recognition;

•	broader or deeper relations with healthcare professionals, customers, group purchasing organizations and third-party payors;

•	more established distribution networks;

•	additional lines of products and the ability to offer rebates or bundle products to offer greater discounts or other incentives to gain a competitive advantage;

•	greater experience in conducting research and development, manufacturing, clinical trials, marketing and obtaining regulatory clearance or approval for products; and

•	greater financial and human resources for product development, sales and marketing and patent litigation.

•	develop innovative, proprietary products that can cost-effectively address significant clinical needs;

•	continue to innovate and develop scientifically advanced technology;

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•	obtain and maintain regulatory clearances or approvals;

•	demonstrate efficacy in Penumbra-sponsored and third-party clinical trials and studies;

•	apply technology across product lines and markets;

•	attract and retain skilled research and development and sales personnel; and

•	cost-effectively manufacture and successfully market and sell products.

•	its inability to develop new products and content;

•	unanticipated problems and additional costs relating to the development and testing of new products;

•	ability to install, set up and service new customers;

•	its ability to achieve and maintain market acceptance;

•	its reliance on technology licensed from Sixense;

•	its possible reliance on a limited number of suppliers for key components of the products it develops;

•	establishing an appropriate program for compliance with regulations related to the privacy and security of individually-identifiable patient information, including but not limited to HIPAA;

•	its ability to introduce, manufacture at scale, build new inventory and commercialize new products;

•	its ability to produce sufficient quantities of products to meet demand;

•	the impact of competition;

•	the timing and impact of market and regulatory developments, including its ability to obtain any required FDA approvals or clearances;

•	its ability to expand into new markets; and

•	its ability to obtain and maintain adequate intellectual property protection for its products and technologies.

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•	capacity constraints;

•	production yields;

•	quality control;

•	equipment availability; and

•	shortages of qualified personnel.

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•	effectively educating hospitals and specialist physicians about the clinical evidence supporting intervention, as well as the use, benefits and cost-effectiveness of our products;

•	improving the speed with which patients are assessed for and receive interventional treatments; and

•	the success of legislative efforts aimed at increasing the likelihood that patients are transported to a hospital or stroke center where interventional treatments are available.

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•	reliance on distributors;

•	varying coverage and reimbursement policies, processes and procedures;

•	difficulties in staffing and managing international operations from which sales are conducted;

•	difficulties in penetrating markets in which our competitors’ products or alternative procedures that do not use our products are more established;

•	reduced protection for intellectual property rights in some countries;

•	export licensing requirements or restrictions, trade regulations and foreign tax laws;

•	fluctuating foreign currency exchange rates;

•	foreign certification, regulatory requirements and legal requirements;

•	lengthy payment cycles and difficulty in collecting accounts receivable;

•	customs clearance and shipping delays;

•	reliance on third-party logistics providers who warehouse and distribute finished products to our international customers;

•	pricing pressure in international markets;

•	political and economic instability;

•	preference for locally produced products

•	higher incidence of corruption or unethical business practices; and

•	uncertainty around a potential reversal or renegotiation of international trade agreements and partnerships and the imposition of tariffs under the administration of U.S. President Donald J. Trump.

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the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it;

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federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government;

•	HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters. A person or entity does not need to have actual knowledge of these statutes or specific intent to violate them;

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HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements;

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the federal physician sunshine requirements under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics, and medical supplies to report annually to the U.S. Department of Health and Human Services information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;

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state and foreign law equivalents of each of the above federal laws, such as foreign and state anti-kickback, anti-benefit and false claims laws, as well as state and foreign laws and regulations governing interactions with healthcare professionals and requiring disclosure of payments and interactions with healthcare professionals and state and foreign laws governing the privacy and security of health information in certain circumstances.

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•	others may be able to develop products that are similar to, or better than, ours in a way that is not covered by the claims of our patents;

•	we might not have been the first to make the inventions covered by our patents or pending patent applications;

•	we might not have been the first to file patent applications for these inventions;

•	any patents that we obtain may not provide us with any competitive advantages or may ultimately be found invalid or unenforceable; or

•	we may not develop additional proprietary technologies that are patentable.

•	we or our collaborators may initiate litigation or other proceedings against third parties seeking to invalidate the patents held by those third parties or to obtain a judgment that our products or processes do not infringe those third parties’ patents;

•	we or our collaborators may participate at substantial cost in International Trade Commission proceedings to abate importation of products that would compete unfairly with our products;

•	if our competitors file patent applications that claim technology also claimed by us or our licensors, we or our licensors may be required to participate in interference, derivation or opposition proceedings to determine the priority of invention, which could jeopardize our patent rights and potentially provide a third party with a dominant patent position;

•	if third parties initiate litigation claiming that our processes or products infringe their patent or other intellectual property rights, we and our collaborators will need to defend against such proceedings;

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•	if third parties initiate litigation or other proceedings seeking to invalidate patents owned by or licensed to us or to obtain a declaratory judgment that their product or technology does not infringe our patents or patents licensed to us, we will need to defend against such proceedings;

•	we may be subject to ownership disputes relating to intellectual property, including disputes arising from conflicting obligations of consultants or others who are involved in developing our products; and

•	if a license to necessary technology is terminated, the licensor may initiate litigation claiming that our processes or products infringe or misappropriate their patent or other intellectual property rights and/or that we breached our obligations under the license agreement, and we and our collaborators would need to defend against such proceedings.

•	incur substantial monetary liability for infringement or other violations of intellectual property rights, which we may have to pay if a court decides that the product or technology at issue infringes or violates the third party’s rights, and if the court finds that the infringement was willful, we could be ordered to pay treble damages and the third party’s attorneys’ fees;

•	pay substantial damages to our customers or end users to discontinue use or replace infringing technology with non-infringing technology;

•	stop manufacturing, selling, using, exporting or licensing the product or technology incorporating the allegedly infringing technology or stop incorporating the allegedly infringing technology into such product or technology;

•	obtain from the owner of the infringed intellectual property right a license, which may require us to pay substantial upfront fees or royalties to sell or use the relevant technology and which may not be available on commercially reasonable terms, or at all;

•	redesign our products and technology so they do not infringe or violate the third party’s intellectual property rights, which may not be possible or may require substantial monetary expenditures and time;

•	enter into cross-licenses with our competitors, which could weaken our overall intellectual property position;

•	lose the opportunity to license our technology to others or to collect royalty payments based upon successful protection and assertion of our intellectual property against others;

•	find alternative suppliers for non-infringing products and technologies, which could be costly and create significant delay; or

•	relinquish rights associated with one or more of our patent claims, if our claims are held invalid or otherwise unenforceable.

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•	variations in revenue due to the unavailability of specialist physicians who use our products during certain times of the year, such as those periods when there are major conferences on conditions they treat or those periods when high volume users of our products take time off of work;

•	positive or negative media coverage of our products or the procedures or products of our competitors or our industry;

•	publication of clinical trial results or studies by us or our competitors;

•	changes in our sales process due to industry changes, such as changes in the stroke care pathway;

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•	delays in receipt of anticipated purchase orders;

•	delays in customers receiving products;

•	performance of our independent distributors;

•	our ability to obtain further regulatory clearances or approvals;

•	the timing of product development and clinical trial activities, including the pace of enrollment;

•	delays in, or failure of, product and component deliveries by our suppliers;

•	changes in reimbursement policies or levels;

•	the number of procedures performed in any given period using our products, which can sometimes vary significantly between periods;

•	customer response to the introduction of new products or alternative treatments, and the degree to we which we are effective in transitioning customers to our products; and

•	fluctuations in foreign currency.

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•	price and volume fluctuations in the overall stock market from time to time;

•	volatility in the market prices and trading volumes of medical device company stocks;

•	changes in operating performance and stock market valuations of other medical device companies generally, or those in our industry in particular;

•	sales of shares of our common stock by us or our stockholders;

•	failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow our company, or our failure to meet these estimates or the expectations of investors;

•	the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections;

•	announcements by us or our competitors of new products or services;

•	the public’s reaction to our press releases, other public announcements and filings with the SEC;

•	rumors and market speculation involving us or other companies in our industry;

•	actual or anticipated changes in our results of operations or fluctuations in our results of operations;

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•	actual or anticipated developments in our business, our competitors’ businesses or the competitive landscape generally;

•	litigation involving us, our industry or both, or investigations by regulators into our operations or those of our competitors;

•	developments or disputes concerning our intellectual property or other proprietary rights;

•	announced or completed acquisitions of businesses or technologies by us or our competitors;

•	new laws or regulations or new interpretations of existing laws or regulations applicable to our business;

•	changes in accounting standards, policies, guidelines, interpretations or principles;

•	any significant change in our management; and

•	general economic conditions and slow or negative growth of our markets.

•	authorizing the issuance of “blank check” preferred stock without any need for action by stockholders;

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•	requiring supermajority stockholder voting to effect certain amendments to our restated certificate of incorporation and amended and restated bylaws;

•	eliminating the ability of stockholders to call and bring business before special meetings of stockholders;

•	prohibiting stockholder action by written consent;

•	establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted on by stockholders at stockholder meetings;

•	dividing our board of directors into three classes so that only one third of our directors will be up for election in any given year; and

•	providing that our directors may be removed by our stockholders only for cause.

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•	The rate at which we grow our salesforce and the speed at which newly hired salespeople become fully effective can impact our revenue growth or our costs incurred in anticipation of such growth.

•	Our industry is intensely competitive and, in particular, we compete with a number of large, well-capitalized companies. We must continue to successfully compete in light of our competitors’ existing and future products and their resources to successfully market to the specialist physicians who use our products.

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We must continue to successfully introduce new products that gain acceptance with specialist physicians and successfully transition from existing products to new products, ensuring adequate supply. In addition, as we introduce new products and expand our production capacity, we anticipate additional personnel will be hired and trained to build our inventory of components and finished goods in advance of sales, which may cause quarterly fluctuations in our operating results and financial condition.

•	Publications of clinical results by us, our competitors and other third parties can have a significant influence on whether, and the degree to which, our products are used by specialist physicians and the procedures and treatments those physicians choose to administer for a given condition.

•	The specialist physicians who use our products may not perform procedures during certain times of the year, such as those periods when they are at major medical conferences or are away from their practices for other reasons, the timing of which occurs irregularly during the year and from year to year.

•	Most of our sales outside of the United States are denominated in the local currency of the country in which we sell our products. As a result, our revenue from international sales can be significantly impacted by fluctuations in foreign currency exchange rates.

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(1)

Our rent obligations in the table above excludes potential obligations for additional space(s) that may be added to our lease by our landlord in the future. For example, if any space becomes vacant in any of the buildings located in the same business park as our corporate headquarters and manufacturing facilities in Alameda, California through 2025, that space will be added to the lease. The additional space could potentially result in approximately $1.6 million of annual rent expense based on current terms of the lease. The Company has a right of first offer to lease any space that becomes available after such date.

(2)

Our rent obligations in the table above excludes our obligations related to a lease signed during the third quarter of 2018 in Roseville, California, due to uncertainty around the timing of when the lease will commence and payments will be due. The lease is expected to commence upon substantial completion of improvements to the building, which the Company anticipates will be completed within the next two years. The total amount of estimated minimum lease payments over the fifteen year lease term is approximately $40.9 million. Refer to Note “8. Commitments and Contingencies” for more information.

(3)	We lease equipment and automobiles primarily under operating leases.

(4)	Purchase commitments primarily consist of contracts with suppliers to purchase raw materials to be used to manufacture products.

(5)	During the year ended December 31, 2017, we entered into an exclusive technology license agreement that requires us to make future revenue milestone-based payments on sales of products covered by the licensed intellectual property. While the agreement is cancelable, the future payments are estimable and probable as of December 31, 2018. Refer to Note “6. Intangible Assets” for more information.

(6)	Acquisition-related obligations consist of purchase price obligations for the acquisition of Crossmed during the year ended December 31, 2017. The amount due in 1-3 years represents the fair value of contingent consideration related to future cash milestone payments as of December 31, 2018. Refer to Note “5. Business Combination” for more information.

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1.	Financial Statements: The financial statements included in “Index to Consolidated Financial Statements” in Part II, Item 8 are filed as part of this Annual Report on Form 10-K

2.	Exhibits: The exhibits listed in the accompanying index to exhibits are filed or incorporated by reference as part of this Annual Report on Form 10-K.

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