Thoratec first quarter revenues increase 27% to $126.8M

Thoratec Corporation (NASDAQ: THOR), a world leader in device-based mechanical circulatory support therapies to save, support and restore failing hearts, said today that revenues for the first quarter of 2012 were $126.8 million, an increase of 27% versus revenues of $99.5 million in the same period a year ago. 

For the quarter ended March 31, 2012, Thoratec reported net income on a GAAP basis of $25.5 million, or $0.43 per diluted share, versus GAAP net income of $16.5 million, or $0.27 per diluted share, in the first quarter of 2011. Non-GAAP net income, which is described later in this press release, was $30.6 million, or $0.51 per diluted share, in the first quarter of fiscal 2012, versus non-GAAP net income of $21.8 million, or $0.34 per diluted share, in the same period a year ago.

"Thoratec had an excellent first quarter, highlighted by strong growth across both the HeartMate II and CentriMag® product lines," said Gary Burbach, President and Chief Executive Officer. "Our HeartMate II performance was broad-based, with unit growth of 32% in both the U.S. and international markets. Internationally, France and Germany delivered robust results, and in the U.S., the Destination Therapy (DT) indication continued to drive the majority of our growth."

"I am encouraged by the ongoing success of our market development initiatives," Burbach added.  "In particular, we believe our first quarter results reflect continued progress in generating referrals of well-qualified candidates for HeartMate II therapy, as well as in facilitating program expansion across a broad group of centers, including the increasingly important open heart center segment."

The company ended the first quarter of 2012 with 299 HeartMate II centers globally, including 154 in the U.S. and 145 internationally. In the U.S., there are now 109 centers with Joint Commission certification for DT reimbursement.

Thoratec also commented on the initial results from the DT post-approval study, which show encouraging trends toward improvement since the clinical trial. These initial results were presented at the International Society for Heart and Lung Transplantation by Dr. Ulrich Jorde from Columbia University. The DT post-approval study includes the first 247 DT patients enrolled into INTERMACS from 61 U.S. centers following FDA approval.  The study is still ongoing and will reach full two-year follow-up for all patients this Fall. One-year survival for these patients reached 75%, demonstrating continuing improvement relative to the published results from the pivotal trial cohort as well as the DT Continued Access Protocol (CAP).  In terms of critical adverse events, HeartMate II continued to demonstrate a low level of thromboembolic complications, while length of stay, bleeding, and infection are all showing favorable trends relative to the clinical trial.

"HeartMate II continues to deliver excellent real-world clinical outcomes for patients with advanced heart failure, and we were excited to treat our 10,000th patient during the first quarter.  We look forward to building upon this important milestone by continuing to invest in both our market development activities as well as our innovative pipeline of new technologies," Burbach commented.

FINANCIAL HIGHLIGHTS

Thoratec reported revenues of $126.8 million in the first quarter of 2012 versus revenues of $99.5 million in the first quarter of 2011. The HeartMate product line accounted for $111.7 million in revenues versus $87.3 million a year ago, an increase of 28%. Sales of the acute support product line, which includes CentriMag and PediMag®, were $8.7 million compared with $4.4 million a year ago. Of the $8.7 million in revenues this quarter, approximately $2.7 million were incremental revenues recorded as a result of the Levitronix Medical acquisition completed during the third quarter of 2011. The Thoratec® product line, which includes the PVAD and IVAD, accounted for revenues of $5.8 million compared to revenues of $7.3 million a year ago. In the first quarter of 2012, pump sales accounted for $92.6 million compared to sales of $70.8 million a year ago.  Non-pump sales were $33.6 million versus sales of $28.2 million in the first quarter of 2011. The balance of the company's revenues reflects contributions from its graft business. Revenues in the U.S. were $103.9 million versus revenues of $82.5 million a year ago. International revenues in the first quarter of 2012 were $22.9 million versus revenues of $17.0 million a year ago. Foreign exchange rate fluctuations had a negative impact of $0.5 million in the first quarter of 2012 compared to the first quarter of 2011.

GAAP gross margin in the first quarter of 2012 was 69.3 percent versus 68.1 percent a year ago. Non-GAAP gross margin, which is described later in this press release, was 71.6 percent versus 70.5 percent a year ago. The year-over-year increase in gross margin was due to volume-based efficiencies and the contribution from the acquisition of Levitronix Medical.   

Operating expenses on a GAAP basis in the first quarter of 2012 were $50.9 million versus $40.7 million a year ago. On a non-GAAP basis, operating expenses were $45.7 million in the first quarter of 2012 versus $36.8 million a year ago. Non-GAAP operating expenses are described later in this press release.   The year-over-year increase in operating expenses was due primarily to spending on product and market development initiatives, including sales force expansion and the addition of research and development personnel, and the inclusion of Levitronix Medical.

On a GAAP basis, other income was $0.7 million in the first quarter of 2012 versus other expense of $2.1 million in the prior year. On a non-GAAP basis, other income totaled $0.7 million versus other expense of $0.2 million a year ago. Other income and expense on a non-GAAP basis is described later in this press release.

The company's GAAP effective tax rate in the first quarter of 2012 was 32.4 percent versus 34.1 percent a year ago. The non-GAAP tax rate, which is described later in this press release, was 33.1 percent versus 34.1 percent in the first quarter of 2011.

Cash and investments at the end of the first quarter of 2012 were $247.5 million versus $209.5 million at the end of fiscal 2011.

GUIDANCE FOR FISCAL 2012

The following statements are based on current expectations. These statements are forward-looking and actual results may differ materially. For a more detailed discussion of forward-looking statements, please see the additional information below.  The company updated guidance for the full year.

The company expects revenues will be in the range of $452 million to $467 million, reflecting the strong first quarter performance, as well as continued momentum in the Destination Therapy market, driven by the company's market development initiatives. 

Gross margins on a GAAP basis are expected to be in the range of 68.5 to 69.0 percent and 71.0 to 71.5 percent on a non-GAAP basis.

GAAP net income per diluted share is expected to be in the range of $1.24 to $1.34 and non-GAAP net income per diluted share in 2012 is expected to be in the range of $1.62 to $1.72.

SOURCE Thoratec Corporation