) fourth-quarter and 2012 adjusted (excluding one-time items
other than stock-based compensation expenses) earnings per share
of 34 cents and $1.62, respectively, narrowly beat the
corresponding Zacks Consensus Estimates of 33 cents and
Net income from continuing operations dropped to ($14.4)
million (or a loss of 25 cents per share) from $15.3 million (or
25 cents per share).
Revenues rose 17% year over year to $128.5 million in the
fourth quarter, beating the Zacks Consensus Estimate of $119
million. For the year, revenues were $491.7 million, up 16%,
surpassing the Zacks Consensus Estimate of $483 million.
Revenues improved on the back of higher volume of HeartMate II
product line (up 20% year over year in unit terms) as well as the
development of Destination Therapy (DT) in the domestic market in
which Thoratec enjoys market monopoly. Geographically, domestic
sales surged 15.6% year over year to $102 million, while overseas
sales increased 25% to $26.5 million.
By product, HeartMate sales jumped 18.1% to $110.8 million.
Sales of the paracorporeal ventricular assist device (PVAD) and
implantable ventricular assist device (IVAD) declined 8.2% to
$5.6 million, while CentriMag blood pump sales rose 30.7% to
Thoratec pump sales were up 20.2% year over year to $93
million while non-pump revenues ascended 11.5% to $34.9 million.
Unit sales of pumps in the U.S. increased 15.3% year over year to
812 units while overseas sales were up 19.2% to 254 units.
Margins and Expenses
On an adjusted basis, gross margin improved to 71.7% from
71.4% in the prior-year quarter. Adjusted operating expenses shot
up 34% year over year to $57.6 million partly on account of
increased expenditure on product and market development.
The company exited the quarter with cash and investments of
$260.4 million, up 24.3% year over year.
Thoratec has issued its financial forecast for 2013. The company
expects revenues between $490 million and $510 million. The
guidance includes higher sales estimates for the HeartMate II
product line. Gross margin is forecast at 68.5% on reported terms
and about 70.5% on an adjusted basis.
For 2013, earnings per share (on a reported basis) are now
projected in the range of $1.32 to $1.42 while adjusted earnings
are expected in a band of $1.76 and $1.86.
Thoratec enjoys a first-mover advantage in the market it
serves. With HeartMate II, Thoratec enjoys a monopoly in the U.S.
market since it has developed the only device of its kind for the
destination therapy indication (for heart failure patients who
are not eligible for heart transplant). Favorable adoption trend
of the device is expected to support revenue growth moving
forward. However, its dominance in the bridge-to-transplant (BTT)
indication has ended following the FDA approval of
) Ventricular Assist System in Nov 2012.
Despite limited visibility, we are optimistic about Thoratec
successfully expanding its sales on the back of its HeartMate II
product line. The company continues to do well in overseas
markets despite the economic turmoil in Europe. It received
regulatory approval in Japan in the fourth quarter of 2012 to
sell the HeartMate II as a BTT for victims of advanced heart
failure. The commercialization is expected in the latter part of
the first quarter of 2013. .
Thoratec currently retains a Zacks Rank #4 (Sell). We are more
) both of which carry a Zacks Rank #1 (Strong Buy).
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