HeartWare International's revenue increases 5% to $70.0 million in first quarter 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 35^th International Society for Heart and Lung Transplantation (ISHLT) Annual Meeting, investigators from HeartWare's 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.