Thoratec Earnings Beat but Fall Y/Y - Analyst Blog

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Thoratec Corporation ( THOR ) posted adjusted earnings of $26.0 million or 44 cents per share for the third quarter of the year, surpassing the Zacks Consensus Estimate of 29 cents. However, adjusted earnings fell 3.2% from $26.9 million or 2.2% from 45 cents in the comparable quarter a year ago.

Reported earnings per share decreased about 22.0% to $18.9 million or 32 cents in the quarter from $24.3 million or 41 cents in the 2012-quarter.

Adjusted earnings excluded amortization of purchased intangibles, acquisition-related contingent consideration adjustments and acquisition-related transaction costs in the 2013 quarter, and amortization of purchased intangibles and Levitronix Medical FMV inventory adjustments in the 2012 quarter.

Revenues in the quarter rose 7.4% to $126.4 million, exceeding the Zacks Consensus Estimate of $121.0 million. Thanks to the company's HeartMate product line that contributed $112.8 million to overall revenues, reflecting a 7% year-over-year increase due to the expansion of its international business and the launch of Pocket Controller.

Revenues from CentriMag product line surged 38.7% to $10.4 million but the same from PVADTM and IVADTM product line plunged 31.6% to $2.6 million in the quarter.

Gross income rose 4.4% to $87.2 million from $83.6 million a year ago. Nevertheless, adjusted gross margin declined 200 basis points (bps) to 69.0% from 71.0% in the third quarter of 2012. The decrease was attributable to costs associated with the introduction of the Pocket Controller and the impact of the U.S. medical device excise tax.

Adjusted operating income went down 16.7% to $29.5 million from $35.4 million a year ago. However, adjusted operating margin fell 670 bps to 23.3% from 30.0% in the third quarter of 2012.

Thoratec Corporation had cash and investments of $283.0 million as of Sep 28, 2013, up from $270.9 million as of Jun 29, 2013, and $260.4 million as of Dec 29, 2012. During the quarter under study, the company utilized $40.0 million in cash to finance share repurchase.

THOR narrowed its fiscal 2013 revenue guidance to a range of $500-$505 million from the previous range of $490-$510 million. The current Zacks Consensus Estimate of $501 million falls within the guided range.

However, the company raised its non-adjusted earnings per share guidance to a range of $1.30 to $1.35 from the earlier range of $1.23-$1.33. The revised guidance includes approximately 5 cents of incremental expense related to increase in future acquisition-related milestone payments.

Thoratec Corporation develops, manufactures and markets proprietary medical devices used for circulatory support, vascular graft, blood coagulation and skin incision applications. The company currently markets the Thoratec Ventricular Assist Device System (called Thoratec VAD System or VAD System) and the HeartMate Left Ventricular Assist System (called HeartMate LVAS) in the U.S. and internationally for use as a bridge to heart transplant. THOR has also developed small diameter vascular grafts for use in hemodialysis access and coronary artery bypass surgery. Currently, it retains a Zacks Rank #4 (Sell).

While we avoid THOR, stocks that are currently performing well in the medical instruments industry include Cynosure, Inc. ( CYNO ), CryoLife, Inc. ( CRY ) and Natus Medical Inc. ( BABY ). All of them carry a Zacks Rank #1 (Strong Buy).

NATUS MEDICAL (BABY): Free Stock Analysis Report

CRYOLIFE INC (CRY): Free Stock Analysis Report

CYNOSURE INC-A (CYNO): Free Stock Analysis Report

THORATEC CORP (THOR): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: BABY , CRY ,

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