FRAMINGHAM, Mass., July 31, 2014 /PRNewswire/ -- HeartWare
International, Inc. (NASDAQ: HTWR), a leading innovator of less
invasive, miniaturized circulatory support technologies that are
revolutionizing the treatment of advanced heart failure, today
announced revenue of $70.1 million
for the second quarter ended June 30,
2014, a 38% increase compared to $50.8 million in revenue for the same period of
2013.
During the second quarter, 674 HeartWare® Ventricular
Assist Systems were sold globally compared to 523 units in the
second quarter of 2013. U.S. revenue, generated through the
sale of 338 units during the second quarter of 2014, was
$36.9 million, a 47% increase from
$25.1 million in the second quarter
of 2013. Revenue from international markets was $33.2 million, an increase of 29% from
$25.7 million in the second quarter
of 2013.
"We are pleased to announce another encouraging quarterly
performance, with record sales and more than 300 units in both the
U.S. as well as international markets for the second consecutive
quarter," said Doug Godshall,
President and Chief Executive Officer. "More than 6,000 patients
from 40 countries around the globe have received the HeartWare
System as a treatment for their advanced heart failure, with
patient support extending as long as seven years.
"In addition to our commercial efforts, we continue to make
investments to advance our clinical trials, including enrolling the
second phase of our destination therapy study in the U.S., moving
toward completion of enrollment of our Japan trial and preparing to initiate the
clinical evaluation of our next-generation MVAD®
System," Godshall said. "As we continue to drive these programs
forward, our highest internal priority remains addressing and
remedying the observations raised by FDA following an inspection at
our Miami Lakes, Florida facility earlier this year."
For the six months ended June 30,
2014, revenue increased approximately 36% to $136.6 million, compared to $100.1 million in the first six months of
2013.
Currency fluctuations benefitted revenue growth by approximately
3.1 and 2.6 percentage points in the three and six months ended
June 30, 2014, respectively, as
compared to the same periods in 2013.
Gross margin percentage improved to 67.3% in the second quarter
of 2014, as compared to 62.9% in the second quarter of 2013.
The improvement compared to the same period in 2013 primarily
reflects efficiencies associated with increased manufacturing
throughput, partially offset by a charge of $1.7 million for the extension of a prior field
safety corrective action to replace certain older batteries through
a voluntary recall initiated yesterday, July
30, 2014.
Total operating expenses for the second quarter of 2014 were
$34.2 million, as compared to
$41.4 million in the second quarter
of 2013. Total operating expenses for the second quarter of
2014 include a $13.7 million
reduction in the estimated fair value of the contingent
consideration for CircuLite, which was acquired by HeartWare in
December 2013.
Research and development expense was $26.9 million for the second quarter of 2014, as
compared to $24.2 million in the same
period of 2013. Increased development costs are primarily
attributable to the acquisition of CircuLite, preparations for
human clinical testing for the MVAD® System and
associated peripherals, and increasing clinical activity.
Selling, general and administrative expenses were $20.9 million in the second quarter of 2014,
compared to $17.2 million in the
second quarter of 2013. The increase in selling, general and
administrative expenses primarily reflects the acquisition of
CircuLite, the expansion of sales and marketing activities,
increased employee expenses and other administrative expenses.
Net income for the second quarter of 2014 was $8.4 million, or $0.49 per basic and $0.48 per diluted share, compared to a net loss
of $12.9 million, or a loss of
$0.79 per basic and diluted share, in
the second quarter of 2013. Net income for the second quarter
of 2014 includes a $13.7 million
reduction in the estimated fair value of the contingent
consideration for the CircuLite acquisition. This
non-recurring benefit was the primary factor resulting in positive
net income in the second quarter of 2014. For the six months
ended June 30, 2014, the company
recorded a net loss of $11.1 million,
or a $0.65 loss per basic and diluted
share, compared to a $25.9 million
net loss, or a loss of $1.66 per
basic and diluted share, in the first six months of 2013.
Non-GAAP net loss for the second quarter of 2014 was
$0.29 per basic and diluted share,
compared to a loss of $0.79 per basic
and diluted share in the second quarter of 2013. Non-GAAP net
loss for the six months ended June 30,
2014 was $0.99 per basic and
diluted share, compared to a loss of $1.65 per basic and diluted share, in the first
six months of 2013. See "Use of Non-GAAP Financial Measures"
and "Reconciliation of GAAP to Non-GAAP Net Income per Common
Share."
At June 30, 2014, HeartWare had
$184 million of cash, cash
equivalents and investments, an increase from $181 million at the end of the first quarter on
March 31, 2014.
Conference Call and Webcast Information
HeartWare will host a conference call on Thursday, July 31, 2014 at 8:00 a.m., U.S. Eastern Daylight Time to discuss
its financial results, highlights from the second quarter and the
company's business outlook. The call may be accessed by
dialing 1-877-407-0789 five minutes prior to the scheduled start
time and referencing "HeartWare." Callers outside the U.S.
should dial +1-201-689-8562.
A live webcast of the call will also be available in the
Investor section of the company's website
(http://ir.heartware.com/). A replay of the conference call
will be available through the above weblink immediately following
completion of the call.
About HeartWare International
HeartWare International develops and manufactures miniaturized
implantable heart pumps, or ventricular assist devices, to treat
Class IIIB / IV patients suffering from advanced heart
failure. The HeartWare® Ventricular Assist System
features the HVAD® pump, a small full-support
circulatory assist device designed to be implanted next to the
heart, avoiding the abdominal surgery generally required to implant
competing devices. The HeartWare System is approved in the United States for the intended use as a
bridge to cardiac transplantation in patients who are at risk of
death from refractory end-stage left ventricular heart failure, has
received CE Marking in the European Union and has been used to
treat patients in 40 countries. The device is also currently the
subject of a U.S. clinical trial for destination therapy. For
additional information, please visit the Company's website at
www.heartware.com.
HeartWare International, Inc. is a member of the Russell
2000® and its securities are publicly traded on The
NASDAQ Stock Market.
HEARTWARE, HVAD, MVAD, PAL, SYNERGY, CIRCULITE and HeartWare
logos are registered trademarks of HeartWare, Inc.
Use of Non-GAAP Financial Measures
HeartWare management supplements its GAAP financial reporting with
certain non-GAAP financial measures for financial and operational
decision making. For example, we use "non-GAAP adjusted net
loss" and "non-GAAP adjusted net loss per common share" to refer to
GAAP loss per share excluding certain adjustments such as
amortization of intangible assets, impairment charges, purchase
accounting and acquisition related transaction costs, and
restructuring and severance costs. These are non-GAAP
financial measures under Section 101 of Regulation G under the
Securities Exchange Act of 1934, as amended. Management
believes that providing this additional information enhances
investors' understanding of the financial performance of the
Company's operations and increases comparability of its current
financial statements to prior periods. Non-GAAP measures
should not be considered as a substitute for measures in accordance
with financial performance in accordance with GAAP, and they should
be reviewed in comparison with their most directly comparable GAAP
financial results. Reconciliations of HeartWare's GAAP to
non-GAAP financial measures are provided at the end of this release
under "Reconciliation of GAAP to Non-GAAP Net Loss per Common
Share."
Forward-Looking Statements
This announcement contains forward-looking statements that are
based on management's beliefs, assumptions and expectations and on
information currently available to management. All statements
that address operating performance, events or developments that we
expect or anticipate will occur in the future are forward-looking
statements, including without limitation our expectations with
respect to the commercialization of the HeartWare®
Ventricular Assist System, progress of clinical trials and
post-approval studies, regulatory status and quality compliance,
research and development activities and our ability to take
advantage of acquired and pipeline technology. Management
believes that these forward-looking statements are reasonable as
and when made. However, you should not place undue reliance
on forward-looking statements because they speak only as of the
date when made. HeartWare does not assume any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as may be required by federal securities laws and the rules and
regulations of the Securities and Exchange Commission.
HeartWare may not actually achieve the plans, projections or
expectations disclosed in forward-looking statements, and actual
results, developments or events could differ materially from those
disclosed in the forward-looking statements. Forward-looking
statements are subject to a number of risks and uncertainties,
including without limitation those described in Part I, Item 1A.
"Risk Factors" in HeartWare's Annual Report on Form 10-K filed with
the Securities and Exchange Commission. HeartWare may update
risk factors from time to time in Part II, Item 1A "Risk Factors"
in Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, or
other filings with the Securities and Exchange Commission.
For further information:
Christopher Taylor
HeartWare International, Inc.
Email: ctaylor@heartware.com
Phone: +1 508 739 0864
- Tables to Follow-
HEARTWARE
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(in thousands, except
per share data)
|
(unaudited)
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$ 70,131
|
|
$ 50,836
|
|
$ 136,603
|
|
$ 100,075
|
Cost of
revenue
|
22,955
|
|
18,866
|
|
45,870
|
|
37,646
|
Gross
profit
|
47,176
|
|
31,970
|
|
90,733
|
|
62,429
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
20,948
|
|
17,217
|
|
45,180
|
|
33,704
|
Research and
development
|
26,913
|
|
24,188
|
|
59,504
|
|
46,330
|
Change in fair value
of contingent consideration
|
(13,700)
|
|
-
|
|
(10,560)
|
|
-
|
Total operating
expenses
|
34,161
|
|
41,405
|
|
94,124
|
|
80,034
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
13,015
|
|
(9,435)
|
|
(3,391)
|
|
(17,605)
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(4,651)
|
|
(3,499)
|
|
(7,689)
|
|
(8,288)
|
Net income
(loss)
|
$ 8,364
|
|
$ (12,934)
|
|
$ (11,080)
|
|
$ (25,893)
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
|
|
|
|
Basic
|
$ 0.49
|
|
$ (0.79)
|
|
$ (0.65)
|
|
$ (1.66)
|
Diluted
|
$ 0.48
|
|
$ (0.79)
|
|
$ (0.65)
|
|
$ (1.66)
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
16,989
|
|
16,370
|
|
16,962
|
|
15,619
|
Diluted
|
17,305
|
|
16,370
|
|
16,962
|
|
15,619
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEARTWARE
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
(unaudited)
|
|
|
|
June 30,
2014
|
|
December 31,
2013
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
146,595
|
|
$
162,880
|
Short-term
investments
|
36,104
|
|
37,596
|
Accounts receivable,
net
|
36,487
|
|
28,052
|
Inventories
|
45,692
|
|
40,876
|
Prepaid expenses and
other current assets
|
7,780
|
|
11,205
|
Total current
assets
|
272,658
|
|
280,609
|
|
|
|
|
Property, plant and
equipment, net
|
19,843
|
|
18,562
|
Other assets,
net
|
129,710
|
|
130,656
|
Total
assets
|
$
422,211
|
|
$
429,827
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
11,794
|
|
$
17,914
|
Other accrued
liabilities
|
35,348
|
|
35,276
|
Total current
liabilities
|
47,142
|
|
53,190
|
Convertible senior
notes, net
|
110,849
|
|
107,125
|
Other long-term
liabilities
|
60,431
|
|
70,905
|
Stockholders'
equity
|
203,789
|
|
198,607
|
Total liabilities and
stockholders' equity
|
$
422,211
|
|
$
429,827
|
|
Reconciliation of
GAAP to Non-GAAP Net Income (Loss) per Common Share (unaudited)
(see explanation of adjustments below) (in thousands, except per
share data)
|
|
|
|
Three Months Ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
GAAP net income
(loss)
|
|
$ 8,364
|
|
$ (12,934)
|
|
$ (11,080)
|
|
$ (25,893)
|
GAAP net income
(loss) per common share:
|
|
|
|
|
|
|
|
|
Basic
|
|
$ 0.49
|
|
$ (0.79)
|
|
$ (0.65)
|
|
$ (1.66)
|
Diluted
|
|
$ 0.48
|
|
$ (0.79)
|
|
$ (0.65)
|
|
$ (1.66)
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization
of purchased intangible assets
|
(a)
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
84
|
|
50
|
|
168
|
|
100
|
-Research
and development
|
|
247
|
|
-
|
|
474
|
|
-
|
Acquisition-related contingent consideration adjustments
|
(b)
|
(13,700)
|
|
-
|
|
(10,560)
|
|
-
|
Restructuring
costs
|
(c)
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
38
|
|
-
|
|
3,064
|
|
-
|
-Research
and development
|
|
72
|
|
-
|
|
1,098
|
|
-
|
Total
adjustments
|
|
(13,259)
|
|
50
|
|
(5,756)
|
|
100
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss
|
|
$ (4,895)
|
|
$ (12,884)
|
|
$ (16,836)
|
|
$ (25,793)
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss per common share – basic and diluted
|
|
$ (0.29)
|
|
$ (0.79)
|
|
$ (0.99)
|
|
$ (1.65)
|
|
|
|
|
|
|
|
|
|
Shares used in
computing non-GAAP adjusted net loss per common share – basic and
diluted
|
|
16,989
|
|
16,370
|
|
16,962
|
|
15,619
|
|
(a)
Represents amortization of purchased intangible assets related to
CircuLite and WorldHeart during the three and six months ended June
30, 2014, and WorldHeart during the three and six months ended June
30, 2013.
|
(b)
Represents the change in fair value of contingent consideration
associated with the acquisition of CircuLite in December
2013.
|
(c)
Represents certain restructuring costs incurred during the three
and six months ended June 30, 2014, respectively, as follows (in
thousands):
|
|
|
Q2
|
|
YTD
|
Lease exit charge
(recovery) for HeartWare's former Mass. corporate
offices
|
$ (57)
|
|
$ 471
|
|
|
|
|
Charges related to
CircuLite acquisition:
|
|
|
|
Lease
exit charge for former N.J. corporate offices
|
14
|
|
1,690
|
Contract
termination costs
|
-
|
|
688
|
Employee
severance
|
153
|
|
684
|
Abandoned fixed assets
|
-
|
|
629
|
Total
|
$ 167
|
|
$3,691
|
|
|
|
|
Total Restructuring
costs
|
$ 110
|
|
$4,162
|
The terms "non-GAAP adjusted net loss" and "non-GAAP adjusted
net loss per common share" refer to GAAP net income (loss) and GAAP
net income (loss) per common share excluding certain adjustments
such as amortization of purchased intangible assets, impairment
charges, purchase accounting and acquisition-related transaction
costs, and restructuring and severance costs as follows:
- We exclude amortization of purchased intangible assets and
periodic impairment charges related to long-lived assets from this
measure because such charges do not represent what our management
believes are the costs of developing, producing, supporting and
selling our products and the costs to support our internal
operating structure.
- We exclude purchase accounting adjustments and
acquisition-related costs from this measure because they occur as a
result of specific events and are not reflective of our internal
investments and the ongoing costs to support our operating
structure. Purchase accounting adjustments include contingent
consideration fair market value adjustments.
- We exclude restructuring and severance costs from this measure
because they tend to occur as a result of specific events such as
acquisitions, divestitures, repositioning our business or other
unusual events that could make comparisons of long-range trends
difficult and are not reflective of our internal investments and
the costs to support our operating structure.
SOURCE HeartWare International, Inc.