UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant
to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): April 30, 2015
HEARTWARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-34256 |
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26-3636023 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(I.R.S. Employer
Identification No.) |
500 Old Connecticut Path
Framingham, MA 01701
(Address of principal executive offices)
Registrants telephone number, including area code:
508.739.0950
Check the appropriate box below
if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ |
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On April 30, 2015, HeartWare International, Inc. (Nasdaq: HTWR), issued a press release announcing financial results for the quarter ended March 31,
2015. A copy of the release is furnished with this report as Exhibit 99.1.
The information in this Item 2.02 of this Current Report on Form 8-K and
Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
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Exhibit
No. |
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Description |
99.1 |
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Press Release issued by HeartWare International, Inc. dated April 30, 2015. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
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HeartWare International, Inc. |
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Date: April 30, 2015 |
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By: |
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/s/ Lawrence J. Knopf |
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Name: |
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Lawrence J. Knopf |
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Title: |
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Senior Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
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Exhibit
No. |
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Description |
99.1 |
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Press Release issued by HeartWare International, Inc. dated April 30, 2015. |
Exhibit 99.1
HEARTWARE INTERNATIONAL REPORTS $70.0 MILLION
IN FIRST QUARTER 2015 REVENUE
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713 HeartWare® Systems sold worldwide in the first quarter of 2015 |
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U.S. revenue increased 25% over first quarter of 2014 to $42.2 million |
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International revenue of $27.8 million; reflects unfavorable currency trends |
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Next-generation MVAD® System targeted for first clinical use in Q2 2015 |
Conference call today at 8:00 a.m. U.S. ET
Framingham, Mass., April 30, 2015 - 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 $70.0 million for the first quarter ended March 31, 2015, a five percent increase compared to $66.5 million in revenue
for the same period of 2014. Currency fluctuations negatively impacted total revenue growth by approximately $5 million, or nearly eight percentage points, in the first quarter of 2015, as compared to the same period in 2014.
Continued U.S. commercial expansion drove the second-largest unit sales quarter for HeartWare, although year-over-year U.S. growth was offset by a
decrease in international unit sales when compared to the exceptionally strong international sales we achieved in the first quarter of 2014, said Doug Godshall, President and Chief Executive Officer. We continue to see enthusiastic
support of the HeartWare® System around the world, with the addition of six international and six U.S. customers during the first quarter, which increases our global customer base to more than
280 hospitals.
During the first quarter of 2015, 713 HeartWare® Ventricular Assist Systems
were sold globally, which represents a seven percent increase from 665 units sold in the first quarter of 2014. During the quarter, U.S. revenue, generated through the sale of 381 units, was $42.2 million, a 25% increase from $33.8 million in the
first quarter of 2014. Revenue from international markets was $27.8 million, a decrease of 15% from $32.7 million in the first quarter of 2014, while international unit sales decreased six percent to 332 units in the first quarter of 2015.
International unit sales decreased primarily in distributor territories, which have a greater tendency to fluctuate on a quarterly basis.
During
the quarter, we continued to advance our clinical trials for the HVAD® System, with enrollment in the supplemental destination therapy study nearing completion; follow-up concluded for our
Japan clinical trial; and commencement of HVAD LATERAL, a trial designed to evaluate a less-invasive thoracotomy implant technique, noted Mr. Godshall. Regarding our pipeline, we recently completed training with investigators and
are eager to commence first implants in the CE Mark study for our next-generation MVAD® System later this quarter, and we plan to submit our Investigational Device Exemption protocol to FDA
for review in the coming weeks.
Earlier this month, at the 35th International Society
for Heart and Lung Transplantation (ISHLT) Annual Meeting, investigators from HeartWares first destination therapy clinical trial cohort, ENDURANCE, announced that the trial successfully achieved the primary endpoint, Mr. Godshall
continued. Complementing this result, the volume and scope of other HVAD data were impressive, as multi-center studies from the U.S. and abroad presented more contemporary, real-world data, demonstrating excellent outcomes with advanced heart
failure patients.
Gross margin percentage improved to 68.5% in the
first quarter of 2015, compared to 65.5% in the first quarter of 2014, reflecting lower cost of goods and efficiencies associated with increased manufacturing throughput.
Total operating expenses for the first quarter of 2015 were $55.3 million, as compared to $60.0 million in the first quarter of 2014.
Research and development expense was $31.3 million for the first quarter of 2015, as compared to $32.6 million for the first quarter of 2014. The net decrease
of $1.3 million for the three months ended March 31, 2015, as compared to the same period in 2014, resulted primarily from a decrease in overall research and development project expenses of $5.0 million, offset by an increase in clinical and
regulatory expenses of $3.7 million, including $2.8 million of incremental outside costs associated with FDA warning letter remediation efforts.
Selling,
general and administrative expenses were $21.9 million for the first quarter of 2015, compared to $24.2 million for the first quarter of 2014. The $2.3 million net decrease included a $0.3 million increase in growth-driven headcount and other
expenses, offset by a $2.6 million reduction in CircuLite restructuring charges.
Net loss for the first quarter of 2015 was $14.5 million, or a loss of
$0.85 per basic and diluted share, compared to a net loss of $19.4 million, or a loss of $1.15 per basic and diluted share, for the first quarter of 2014.
Non-GAAP net loss for the first quarter of 2015 was $9.4 million, or $0.55 per basic and diluted share, compared to a loss of $11.9 million, or $0.70 per
basic and diluted share, for the first quarter of 2014. See Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Non-GAAP Net Loss per Common Share.
At March 31, 2015, HeartWare had approximately $174 million of cash, cash equivalents and investments, compared to approximately $180 million at
December 31, 2014.
Conference Call and Webcast Information
HeartWare will host a conference call on Thursday, April 30, 2015 at 8:00 a.m., U.S. Eastern Time to discuss its financial results, highlights from the
first quarter and the companys 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 Investors section of the companys 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 42 countries. The device is also currently the subject of a U.S.
clinical trial for destination therapy. For additional information, please visit the Companys 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 trademarks of HeartWare, Inc. or its affiliates.
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 Companys operations and increases comparability of its current financial statements to prior periods. Non-GAAP measures should not
be considered a substitute for measures of financial performance in accordance with GAAP, and they should be reviewed in comparison with their most directly comparable GAAP financial results. Reconciliations of HeartWares GAAP to non-GAAP
financial measures are provided at the end of this news 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 managements 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; timing, progress and outcomes of clinical trials; regulatory 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 HeartWares 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)
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Three Months Ended March 31, |
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2015 |
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2014 |
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Revenue, net |
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$ |
70,021 |
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$ |
66,472 |
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Cost of revenue |
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22,040 |
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22,915 |
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Gross profit |
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47,981 |
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43,557 |
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Operating expenses: |
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Selling, general and administrative |
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21,929 |
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24,232 |
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Research and development |
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31,267 |
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32,590 |
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Change in fair value of contingent consideration |
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2,100 |
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3,140 |
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Total operating expenses |
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55,296 |
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59,962 |
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Loss from operations |
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(7,315 |
) |
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(16,405 |
) |
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Other expense, net |
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(6,988 |
) |
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(2,816 |
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Loss before taxes |
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(14,303 |
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(19,221 |
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Income tax (benefit) expense |
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232 |
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223 |
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Net loss |
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$ |
(14,535 |
) |
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$ |
(19,444 |
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Net loss per common share basic and diluted |
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$ |
(0.85 |
) |
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$ |
(1.15 |
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Weighted average shares outstanding basic and diluted |
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17,193 |
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16,934 |
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HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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March 31, 2015 |
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December 31, 2014 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
102,525 |
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$ |
102,946 |
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Short-term investments |
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70,354 |
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75,535 |
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Accounts receivable, net |
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36,566 |
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38,041 |
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Inventories |
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52,356 |
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54,046 |
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Prepaid expenses and other current assets |
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7,259 |
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5,975 |
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Total current assets |
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269,060 |
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276,543 |
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Property, plant and equipment, net |
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17,020 |
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19,036 |
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Other assets, net |
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127,640 |
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128,234 |
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Total assets |
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$ |
413,720 |
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$ |
423,813 |
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
10,674 |
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$ |
13,322 |
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Other accrued liabilities |
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33,671 |
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36,589 |
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Total current liabilities |
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44,345 |
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49,911 |
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Convertible senior notes, net |
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116,871 |
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114,803 |
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Other long-term liabilities |
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52,538 |
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50,565 |
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Stockholders equity |
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199,966 |
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208,534 |
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Total liabilities and stockholders equity |
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$ |
413,720 |
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$ |
423,813 |
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Reconciliation of GAAP to Non-GAAP Net Loss per Common Share (unaudited) (see explanation of
adjustments below)
(in thousands, except per share data)
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Three Months Ended March 31, |
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2015 |
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2014 |
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GAAP net loss |
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$ |
(14,535 |
) |
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$ |
(19,444 |
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GAAP net loss per common share basic and diluted |
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$ |
(0.85 |
) |
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$ |
(1.15 |
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Adjustments: |
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Amortization of purchased intangible assets |
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(a |
) |
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-Selling, general and administrative |
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84 |
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331 |
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-Research and development |
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327 |
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Acquisition-related contingent consideration adjustments |
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(b |
) |
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2,100 |
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3,140 |
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Restructuring costs |
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(c |
) |
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-Selling, general and administrative |
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467 |
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3,026 |
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-Research and development |
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2,164 |
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1,026 |
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Total adjustments |
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5,142 |
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7,523 |
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Non-GAAP adjusted net loss |
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$ |
(9,393 |
) |
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$ |
(11,921 |
) |
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Non-GAAP adjusted net loss per common share - basic and diluted |
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$ |
(0.55 |
) |
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$ |
(0.70 |
) |
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Shares used in computing non-GAAP adjusted net loss per common share - basic and diluted |
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17,193 |
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16,934 |
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(a) |
Represents amortization of purchased intangible assets related to CircuLite and WorldHeart during the quarters ended March 31, 2015 and March 31, 2014. |
(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 quarter ended March 31, 2015 as follows (in thousands): |
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Three Months Ended March 31, |
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2015 |
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2014 |
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Lease exit charge for HeartWares former Massachusetts corporate offices |
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$ |
2 |
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$ |
528 |
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Charges related to CircuLite acquisition: |
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Lease exit charge for former N.J. corporate offices |
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465 |
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1,667 |
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Lease exit charge for Aachen, Germany facility |
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139 |
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Contract termination costs |
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310 |
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688 |
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Employee severance |
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598 |
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562 |
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Abandoned fixed assets |
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1,117 |
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607 |
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Total |
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$ |
2,629 |
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$ |
3,524 |
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Total restructuring costs |
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$ |
2,631 |
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$ |
4,052 |
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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:
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1) |
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. |
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2) |
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. |
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3) |
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. |
# # #
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