PENNYSEThe short version
Penumbra, Inc.
Penumbra is a $1.4 billion U.S. medical-device maker that pulls blood clots out of vessels, growing about 17% a year, now under a signed agreement to be bought by Boston Scientific at $374 a share.
From a February-2025 peak of $304 the stock fell 26% to $226 by November, round-tripped by year-end, then jumped on a $374 Boston Scientific takeover — now $321, a merger-arb spread.
Mkt cap $12.6BP/E FY27E 51.8×
$321
Share price
$12.6B
Market cap
0.92%
Adjusted FCF yield
$374
Boston Scientific bid
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Snapshot
Penumbra, Inc. in numbers
Price
$321.19as of 2026-07-31
Mkt cap
$12.6B
12m perf
+27.3%
3m ADV
$124.5M
| Year to Dec (USD) | 2023 | 2024 | 2025 | 2026E | 2027E | 2028E |
|---|---|---|---|---|---|---|
| Sales | – | – | – | 1.6B | 1.8B | 2.0B |
| EBITDA | 100.8M | 33.0M | 206.7M | 281.7M | 362.2M | 423.1M |
| EBIT | 73.6M | 9.3M | 189.2M | 232.2M | 321.5M | 378.3M |
| EBIT margin | – | – | – | 14.6% | 17.8% | 18.5% |
| EPS | 2.32 | 0.36 | 4.52 | 4.75 | 6.20 | 7.31 |
| P/E | 138.4× | 892.2× | 71.1× | 67.7× | 51.8× | 44.0× |
| FCF yield | 0.7% | 1.2% | 1.4% | 1.4% | 1.7% | 2.4% |
Consensus: S&P Capital IQ (CapIQ) · as of 2026-08-03Derived from run data; ratios use the latest price.
IThe business
The business
A pure-play clot-removal device maker selling single-use tools to hospitals
FY2025 revenue by product ($M)
Thrombectomy$947.9M68%
Embolization & access$455.7M32%
FY2025 revenue $1,403.7M, up 17.5% year over year.
- What it makes. Catheters and vacuum systems that remove clots from inside the bloodstream — stroke, pulmonary embolism, deep-vein thrombosis — sold as single-use consumables, about 90% through its own direct sales force.
- Growth chart. Revenue rose roughly fivefold in a decade with no down year, into a large, mostly untreated market: about 200,000 of 700,000 annual U.S. ischemic strokes are thrombectomy-treatable, most untreated today.
- Where it sits. The focused innovator, not the incumbent — its own filing names Boston Scientific, Medtronic, Stryker and Terumo as larger, better-resourced rivals.
Economics
A recent profit turnaround and zero debt — now agreed to be sold at $374
Operating income, FY2022–FY2025 ($M)
FY2024 dipped on a $76.9M impairment; FY2025 gross margin reached 67.1%.
- The turn. Operating income jumped from $6.1M in 2022 to $189.2M in 2025 as revenue scaled over a largely fixed cost base and gross margin recovered to 67.1%.
- Fortress sheet. No borrowings and about $545M of cash and marketable investments — the balance sheet can outlast any operating problem.
- The defining fact. On January 14, 2026 Penumbra signed a definitive merger to be acquired by Boston Scientific at $374 a share, roughly $14.5B enterprise value, expected to close in 2026.
IIIThe story now
The fit
Does not fit the framework (P1 not met); contested: P5
Not met
Year-10 gate (P1)
0.92%
Adj. FCF yield vs 8–9% bar
0.61
Trial P(temporary) — contested
Low
Confidence
- The gate decides it. Year-10 revenue higher is a high-conviction call, but year-10 adjusted free cash flow is not: positive adjusted FCF is only three years old against three larger, consolidating rivals, and a signed $374 takeover removes the standalone decade entirely.
- One exclusion fires. The market-darling screen (X4) hits — roughly 9x revenue and 109x adjusted FCF, a story consensus and an acquirer both love.
- The counter-fact. Operating income ran from $6.1M to $189.2M, the sheet is net cash, and the deal values the equity above any price it has ever traded — that moves the volume question, not the year-10 cash question.
Dislocation
The 2025 drawdown had no trigger, muted volume, and fully round-tripped
Peak-to-trough −25.8%; back above the peak by December 2025.
- No adverse event. The stock fell 25.8% from a $303.76 peak to a $225.54 trough while every quarter beat consensus — multiple compression, not a fear repricing.
- Orderly, not panicked. Peak-leg volume rose only 2.07x its pre-drawdown median; a genuine washout prints a far larger multiple.
- Window closed. The decline round-tripped by year-end and the only dated event that repriced the stock was the opposite of adverse — the Boston Scientific bid.
Damage math
The price-versus-value gap the framework hunts is absent today
Market cap through the episode ($B)
$3.07B erased at the trough against a near-zero near-term earnings hit.
- Numerator near zero. Through the 25.8% fall consensus rose and every quarter beat, so the $3.07B erased at the November trough had almost no earnings basis — a real mispricing, then.
- Already arbitraged. The market marked the stock back above its peak, and Boston Scientific's $374 bid values it 23% above where it peaked before the drawdown.
- The residual. The one live value question is a modest out-year EPS shave — capitalized, roughly $0.3–0.5B, about 2–4% of the current cap.
Durability
Revenue has risen ten straight years; adjusted cash flow turned positive only three
Adjusted free cash flow, FY2019–FY2025 ($M)
Adjusted FCF = reported FCF less stock comp less 5-yr avg cash acquisitions.
- Volume leg holds. Revenue climbed from $263.3M to $1,403.7M over ten years, a ~20% compound rate into an under-penetrated market — very high conviction it is larger a decade out.
- Cash leg in doubt. Positive adjusted FCF is only three years old, against Boston Scientific, Medtronic, Stryker (now with Inari) and Terumo — all able to outspend Penumbra. Its moat is IP and execution, which the framework treats as weaker than scale or regulatory barriers.
- The rule. Any proper doubt resolves the year-10 gate to not met, and a signed takeover leaves no standalone equity to hold in year 10 regardless.
Self-help
No buyback flywheel: the share count has risen every year on stock comp
33.5M→39.3M
Diluted shares, 2016→2025
$100M
Sole buyback (2024, ~$194/sh)
~109 yrs
Adj. FCF to retire the float
$59.2M
FY2025 stock compensation
- Wrong direction. Diluted shares rose about 1.9% a year on $46–59M of annual stock compensation; a single $100M block in 2024 is the only sizeable repurchase in its public life.
- Absurdity check inverted. It would take about 109 years of adjusted FCF to retire the float at today's price — the opposite of the roughly three-year signature a deep dislocation implies.
- Now frozen. The pending merger bars further buybacks without Boston Scientific's approval, so the lever this pillar measures is off the table.
Diagnosis & clock
Temporary or permanent is contested; the clock is a merger, not a cycle
The trial: temporary vs permanent (P(temporary) 0.61)
| Line | Temporary case | Permanent case |
|---|---|---|
| Core thrombectomy | Re-accelerates on new launches | Decelerated 20% → 16% → 12% |
| Margin | Sales-force build complete; leverage ahead | SG&A above 50%; op income fell in 1H26 |
| Forward curve | Consensus revenue and EPS still rise | Out-year EPS cut 3.5–7.2% |
- Genuinely split. The trial put the probability the post-2024 reset is temporary at 0.61, but the spread is 0.26 and the ruling flips on reading order — 0.42 for the judge who read the temporary brief first, 0.645 for the others.
- A defined payout. Value is re-recognized by the deal closing, not a re-rating: $374, a ceiling, expected in the second half of 2026 after an FTC Second Request extended the timeline.
- Spread, not fear. Analyst targets cluster at the deal price; volatility has collapsed to about 5.7% — a stock pinned to a takeout, not a capitulated compounder.
IVThe price
The price
Adjusted FCF yield of 0.92% sits about an order of magnitude below the bar
Adjusted FCF yield vs the fortress bar (%)
FY2025 adjusted yield
0.9%
3-year average
0.7%
FY2028 consensus
2.4%
- The gap. Adjusted FCF of $115.7M against a $12.6B cap yields 0.92% — 710 to 810 bps below the 8–9% bar a net-cash balance sheet calls for.
- No baseline to jump from. The yield has never crossed 1.1% and was negative for four straight years; Penumbra has traded on a growth multiple its entire public life.
- No path. Even FY2028 consensus free cash flow yields only 2.4% on today's cap — the sell side is not scared, it agrees this is a richly valued growth name.
What you pay
At 109x adjusted cash flow, a re-rating is not a yield proposition
109×
Price to adjusted FCF
~9.0×
Value to revenue
8.7×
FCF rise needed to reach 8%
0.92%
Current adjusted FCF yield
- The arithmetic. To justify today's $12.6B cap at the low end of the 8% bar on yield alone would take roughly $1.0B of adjusted FCF — against $115.7M produced in FY2025, an 8.7x rise.
- Rising conversion is priced. Improving margins on 17%-plus growth are exactly what a 72x-reported, 109x-adjusted FCF multiple already pays for.
- What can swing. The name has fallen 52–63% twice and taken two-plus years to round-trip — but the last recovery was completed by the takeover, not operating re-recognition.
The return on offer
What is left to earn is a 14% merger-arb spread, not a fear discount
$321.19
Price (31 Jul 2026)
$374
Boston Scientific bid
16.4%
Return if the deal closes
H2 2026
Expected close
- The spread. At $321.19 the stock trades 14% below the $374 consideration and returns 16.4% if the deal closes at that value — compensation for deal risk and time, not a repriced value gap.
- Approvals. Stockholders adopted the deal by 99.7%; what remains is regulatory — the FTC Second Request and non-U.S. clearances — plus the sensitivity of the 27% stock leg to Boston Scientific's own price.
- Break case. If the deal fails, the stock plausibly returns toward its undisturbed ~$313 pre-announcement level, or lower.
What to watch
A takeover values it above any price it ever traded, yet the year-10 gate fails and the diagnosis is unsettled.
- 01The Boston Scientific deal breaks or reprices below the current $321 level
- 02FY2026 full-year operating income grows faster than revenue
- 03Thrombectomy growth re-accelerates back above ~16%
- 04revenue declines for a third consecutive year
This distills a fixed fit test built tab by tab; the full workings live in the report.
Compiled from the full report · 2026-08-03 · For information, not investment advice.