Thoratec Corp. is the world's leading provider of mechanical
circulatory support ("MCS") systems for advanced heart failure
patients. Despite being flat year-over-year, its 2014-first quarter
earnings and revenues surpassed the Zacks Consensus Estimates on
both earnings and revenue fronts. The company continues to do well
in overseas markets, especially in its HeartMate lineup. However,
Thoratec's unified product line and small size make it risky.
Commercialization of next generation HeartMate III is still some
time away and HeartWare is expected to close the gap. We maintain
our Neutral recommendation on Thoratec and set a target price of
Thoratec Corporation, incorporated in 1976 under the name
Thoratec Laboratories, is headquartered in Pleasanton, California.
The company is a leading provider of mechanical circulatory support
("MCS") systems for victims of advanced heart failure (HF). Heart
failure is a terminal and degenerative condition. While a heart
transplant is considered to be the best solution, only a few
thousand donor hearts are available worldwide each year.
Thoratec provides three main product lines HeartMate, CentriMag,
and PVAD and IVAD. All these products have been cleared by U.S.
Food and Drug Administration ("FDA") and received Conformit Europ
ene ("CE") Mark approval in Europe.
Heartmate (88.4% of revenues in 2013): The company supplies
HeartMate II Left Ventricular Assist Device ("LVAD") under this
product line. This second generation LVAD II is an implantable,
electrically powered, continuous flow device. It consist of a
rotary blood pump that is designed to provide intermediate and
long-term MCS and support a broad range of advanced HF patients. It
has the quality to operate more quietly than pulsatile devices.
CentriMag (8.6%): CentriMag is an extracorporeal full-flow acute
surgical support platform. It incorporates a polycarbonate pump,
based on magnetically levitated bearingless motor technology. The
product has received FDA approval for use up to six hours for
patients requiring short-term extracorporeal circulatory support
during cardiac surgery. It also has CE Mark approval for use up to
30 days for both cardiac and respiratory failures. The company also
offers PediMag and PediVAS extracorporeal full-flow acute surgical
support platforms under this product line. It has a polycarbonate
pump, based on magnetically levitated bearingless motor technology.
It is designed to help pediatric patients with acute surgical
PVAD and IVAD (2.5%): The company supplies Paracorporeal
Ventricular Assist Device ("PVAD") and Implantable Ventricular
Assist Device ("IVAD") under this product line. PVAD is an external
and pulsatile VAD. It provides left, right, and biventricular MCS.
It is a paracorporeal device and FDA approved for
bridge-to-transplant (BTT) therapy. IVAD is an implantable, and
pulsatile VAD and provides left, right or biventricular MCS. It
maintain the same blood flow, valves and blood pumping mechanism as
PVAD, but with an outer housing made of a titanium alloy that makes
it suitable for implantation. It is FDA approved for BTT.
(Remaining 0.5% revenues accounted for Other product sales)
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