FRAMINGHAM, Mass., Oct. 30, 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 $68.6 million
for the third quarter ended September 30,
2014, a 25% increase compared to $54.8 million in revenue for the same period of
2013.
During the third quarter, 675 HeartWare® Ventricular
Assist Systems were sold globally, compared to 550 units in the
third quarter of 2013. U.S. revenue, generated through the
sale of 361 units during the third quarter of 2014, was
$39.1 million, a 39% increase from
$28.2 million in the third quarter of
2013. Revenue from international markets was $29.5 million, an increase of 11% from
$26.6 million in the third quarter of
2013.
"Results for the third quarter were quite encouraging, as we
continue building out our global operations," said Doug Godshall, President and Chief Executive
Officer. "On top of our strong commercial results, we
advanced our clinical initiatives, including preparing our request
to commence a CE Mark study of our next-generation MVAD®
System, which we expect to submit for regulatory review later this
year or in early 2015. For the HVAD® System, we
also completed enrollment in our Japan study during the quarter, advanced
enrollment in our U.S. Destination Therapy study and are finalizing
plans to initiate a U.S. IDE study for the Thoracotomy implant
technique later this year.
"As we continue to drive these programs forward, we remain
focused on addressing and remedying the observations raised by FDA
following an inspection at our Miami
Lakes, Florida facility earlier this year," Godshall
added.
For the nine months ended September 30,
2014, revenue increased approximately 33% to $205.2 million, compared to $154.9 million in the first nine months of
2013.
Currency fluctuations offset sequential revenue performance by
approximately $0.8 million, or 1.1
percentage points, compared to the second fiscal quarter of 2014,
yet favorably impacted revenue growth by approximately 0.5 and 1.9
percentage points in the three and nine months ended September 30, 2014, respectively, as compared to
the same periods in 2013.
Gross margin percentage improved to 66.5% in the third quarter
of 2014, as compared to 64.4% in the third quarter of 2013.
The improvement compared to the same period in 2013 primarily
reflects efficiencies associated with increased manufacturing
throughput.
Total operating expenses for the third quarter of 2014 were
$46.4 million, as compared to
$45.8 million in the third quarter of
2013. Total operating expenses for the third quarter of 2014
include a $3.6 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 $29.5 million for the third quarter of 2014, as
compared to $25.9 million in the same
period of 2013. Increased development costs are primarily
attributable to the acquisition of CircuLite, preparations for
human testing of the MVAD® System and associated
peripherals, and increasing clinical activity overall.
Selling, general and administrative expenses were $20.6 million in the third quarter of 2014,
compared to $19.8 million in the
third quarter of 2013. The increase in selling, general and
administrative expenses primarily reflects the acquisition of
CircuLite, the expansion of sales and marketing activities
globally, increased employee expenses and other administrative
expenses.
Net loss for the third quarter of 2014 was $7.4 million, or $0.43 per basic and diluted share, compared to a
net loss of $11.4 million, or a loss
of $0.69 per basic and diluted share,
in the third quarter of 2013. Net loss for the third quarter
of 2014 includes a $3.6 million
reduction in the estimated fair value of the contingent
consideration for the CircuLite acquisition. For the nine
months ended September 30, 2014, the
company recorded a net loss of $18.5
million, or a $1.09 loss per
basic and diluted share, compared to a $37.3
million net loss, or a loss of $2.34 per basic and diluted share, in the first
nine months of 2013.
Non-GAAP net loss for the third quarter of 2014 was $0.64 per basic and diluted share, compared to a
loss of $0.69 per basic and diluted
share in the third quarter of 2013. Non-GAAP net loss for the
nine months ended September 30, 2014
was $1.63 per basic and diluted
share, compared to a loss of $2.33
per basic and diluted share, in the first nine months of
2013. See "Use of Non-GAAP Financial Measures" and
"Reconciliation of GAAP to Non-GAAP Net Loss per Common Share."
At September 30, 2014, HeartWare
had $182 million of cash, cash
equivalents and investments.
Conference Call and Webcast Information
HeartWare
will host a conference call on Thursday,
October 30, 2014 at 8:00 a.m.,
U.S. Eastern Daylight Time to discuss its financial results,
highlights from the third 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
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
September
30,
|
|
Nine Months
Ended
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$ 68,608
|
|
$ 54,800
|
|
$ 205,211
|
|
$ 154,875
|
|
Cost of
revenue
|
22,977
|
|
19,529
|
|
68,846
|
|
57,175
|
|
Gross
profit
|
45,631
|
|
35,271
|
|
136,365
|
|
97,700
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
20,584
|
|
19,844
|
|
65,765
|
|
53,548
|
|
Research and
development
|
29,477
|
|
25,930
|
|
88,981
|
|
72,201
|
|
Change in fair value
of contingent consideration
|
(3,620)
|
|
-
|
|
(14,180)
|
|
-
|
|
Total operating
expenses
|
46,441
|
|
45,774
|
|
140,566
|
|
125,749
|
|
|
|
|
|
|
|
|
|
|
Loss from
operations
|
(810)
|
|
(10,503)
|
|
(4,201)
|
|
(28,049)
|
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(6,472)
|
|
(868)
|
|
(13,586)
|
|
(9,214)
|
|
Loss before income
taxes
|
(7,282)
|
|
(11,371)
|
|
(17,787)
|
|
(37,263)
|
|
Provision for income
taxes
|
88
|
|
-
|
|
663
|
|
-
|
|
Net loss
|
$ (7,370)
|
|
$ (11,371)
|
|
$ (18,450)
|
|
$ (37,263)
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share -
|
|
|
|
|
|
|
|
|
basic and diluted
|
$ (0.43)
|
|
$ (0.69)
|
|
$ (1.09)
|
|
$ (2.34)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding -
|
|
|
|
|
|
|
|
|
basic and diluted
|
17,007
|
|
16,439
|
|
16,977
|
|
15,895
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
HEARTWARE
INTERNATIONAL, INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(in
thousands)
(unaudited)
|
|
|
|
September
30,
2014
|
|
December
31,
2013
|
|
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
113,648
|
|
$
162,880
|
Short-term
investments
|
66,617
|
|
37,596
|
Accounts receivable,
net
|
37,428
|
|
28,052
|
Inventories
|
51,835
|
|
40,876
|
Prepaid expenses and
other current assets
|
8,125
|
|
11,205
|
Total current
assets
|
277,653
|
|
280,609
|
Property, plant and
equipment, net
|
19,777
|
|
18,562
|
Other assets,
net
|
131,432
|
|
130,656
|
Total
assets
|
$
428,862
|
|
$
429,827
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
15,458
|
|
$
17,914
|
Other accrued
liabilities
|
38,004
|
|
35,276
|
Total current
liabilities
|
53,462
|
|
53,190
|
Convertible senior
notes, net
|
112,796
|
|
107,125
|
Other long-term
liabilities
|
59,436
|
|
70,905
|
Stockholders'
equity
|
203,168
|
|
198,607
|
Total liabilities and
stockholders' equity
|
$
428,862
|
|
$
429,827
|
|
Reconciliation of
GAAP to Non-GAAP Net Loss per Common Share (unaudited) (see
explanation of adjustments below) (in thousands, except per share
data)
|
|
|
|
Three Months Ended
September 30,
|
|
Nine Months
Ended
September
30,
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
GAAP net
loss
|
|
$ (7,370)
|
|
$ (11,371)
|
|
$ (18,450)
|
|
$ (37,263)
|
|
|
|
|
|
|
|
|
|
GAAP net loss per
common share – basic and diluted
|
|
$ (0.43)
|
|
$ (0.69)
|
|
$ (1.09)
|
|
$ (2.34)
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
Amortization
of purchased intangible assets
|
(a)
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
84
|
|
50
|
|
252
|
|
150
|
-Research
and development
|
|
247
|
|
|
|
721
|
|
|
Acquisition-related contingent consideration adjustments
|
(b)
|
(3,620)
|
|
-
|
|
(14,180)
|
|
-
|
Restructuring
costs
|
(c)
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
(79)
|
|
-
|
|
2,985
|
|
-
|
-Research
and development
|
|
(66)
|
|
-
|
|
1,032
|
|
-
|
Total
adjustments
|
|
(3,434)
|
|
50
|
|
(9,190)
|
|
150
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss
|
|
$ (10,804)
|
|
$ (11,321)
|
|
$ (27,640)
|
|
$ (37,113)
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss per common share – basic and diluted
|
|
$ (0.64)
|
|
$ (0.69)
|
|
$ (1.63)
|
|
$ (2.33)
|
|
|
|
|
|
|
|
|
|
Shares used in
computing non-GAAP adjusted net loss per common share – basic and
diluted
|
|
17,007
|
|
16,439
|
|
16,977
|
|
15,895
|
(a)
|
Represents
amortization of purchased intangible assets related to CircuLite
and WorldHeart during the three and nine months ended September 30,
2014, and WorldHeart during the three and nine months ended
September 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 nine months ended
September 30, 2014, respectively, as follows (in
thousands):
|
|
Q3
|
|
YTD
|
Lease exit charge for
HeartWare's former Massachusetts corporate offices
|
$ (98)
|
|
$ 373
|
|
|
|
|
Charges related to
CircuLite acquisition:
|
|
|
|
Lease
exit charge for former N.J. corporate offices
|
19
|
|
1,709
|
Contract
termination costs
|
-
|
|
688
|
Employee
severance
|
(66)
|
|
618
|
Abandoned fixed assets
|
-
|
|
629
|
Total
|
$ (47)
|
|
$3,644
|
|
|
|
|
Total restructuring
costs
|
$ (145)
|
|
$4,017
|
The terms "non-GAAP adjusted net loss" and "non-GAAP adjusted
net loss per common share" refer to GAAP net loss and GAAP net 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 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.