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Q3 2013 Earnings Call
October 30, 2013 4:30 pm ET
Gerhard F. Burbach - Chief Executive Officer, President and Executive Director
Taylor C. Harris - Chief Financial Officer, Principal Accounting Officer and Vice President
Matthew O'Brien - William Blair & Company L.L.C., Research Division
David H. Roman - Goldman Sachs Group Inc., Research Division
Matthew Taylor - Barclays Capital, Research Division
Jason R. Mills - Canaccord Genuity, Research Division
Brooks E. West - Piper Jaffray Companies, Research Division
Lawrence Biegelsen - Wells Fargo Securities, LLC, Research Division
Danielle Antalffy - Leerink Swann LLC, Research Division
Christopher T. Pasquale - JP Morgan Chase & Co, Research Division
Previous Statements by THOR
» Thoratec Corporation Discusses Q3 2013 Results (Webcast)
» Thoratec Management Discusses Q2 2013 Results - Earnings Call Transcript
» Thoratec Corp (THOR) Management Discusses Q2 2013 Results (Webcast)
Good afternoon, and thank you for joining us today. With me is Gary Burbach, President and Chief Executive Officer; and Taylor Harris, Vice President and Chief Financial Officer. Gary will discuss highlights from the third quarter and first 9 months of 2013, and Taylor will review the financial results for the quarter, as well as our 2013 outlook. We will then open the call to your questions.
Before turning the call over to Gary, I want to remind you that during the course of today's conference call and the question-and-answer session that follows, we may make projections or other forward-looking statements that are subject to the Safe Harbor provisions of the securities laws regarding future events or financial performance of the company. We caution you that these statements are only predictions and that actual results may differ materially. We also alert you to the risks contained in the documents we filed with the Securities and Exchange Commission, such as our annual and quarterly reports on Form 10-K and Form 10-Q. We do not undertake any obligation to update or correct any forward-looking statements. Gary?
Gerhard F. Burbach
Thank you, Neil and good afternoon. Thoratec generated strong financial and operational results during the third quarter, highlighted by robust growth in HeartMate II internationally, solid competitive performance in the U.S. and continued impressive results from our CentriMag acute product line. We believe the fundamental growth drivers of our core markets remain healthy and we expect our investments and strategies to drive market expansion and introduce exciting next generation devices, will continue to solidify our leadership position going forward. With respect to our financial results for the third quarter, Thoratec generated revenues of $126.4 million, a 7% increase over revenues of $117.8 million in the third quarter of 2012. HeartMate II revenues also increased 7% year-over-year, while CentriMag generated robust growth of 39% compared with the prior year, partially offset by an expected decline in our legacy PVAD product line, which currently represents only 2% of our total revenue.
In terms of geographic breakdown, we reported revenues of $99.6 million in the U.S., an increase of 2% compared with the prior year. Meanwhile, international revenues increased 32% to $26.8 million compared with $20.3 million last year, as we continue to benefit from our Japanese launch, which was the strongest contributor to our international revenue growth compared with the third quarter of 2012. Changes in foreign exchange favorably impacted overall revenue growth for the third quarter by 80 basis points.
Earnings per share on a non-GAAP basis were $0.49, which was unchanged from the third quarter of 2012. Earnings per share benefited from a non-recurring release of tax reserves related to prior periods. Additionally, we used $40 million to repurchase stock during the third quarter, which had a negligible impact on EPS for the current period due to the timing of these purchases. Taylor will discuss these items further in his financial review.
For the first 9 months of 2013, worldwide revenues of $374.6 million increased 3% versus the first 9 months of 2012. Year-to-date, CentriMag revenues increased 33% and HeartMate II revenues grew 2%, while PVAD revenues declined in line with expectations. We continue to see robust international revenue growth with an increase of 30% during the first 9 months of 2013, while U.S. revenues have declined 3% due to expected competitive dynamics.
Earnings on a non-GAAP basis for the first 9 months of 2013 were $1.42, a decrease of 2% compared with the prior year. During the third quarter, we shipped 737 chronic pumps in the U.S. and 250 internationally, for a total of 987 units. Roughly in line with our worldwide volume during the third quarter of 2012.
On a worldwide basis, HeartMate II units increased 1% compared to the third quarter of 2012, with international HeartMate II unit growth of 26%, partially offset by a year-over-year decline in the U.S. International growth was driven predominantly by our launch in Japan, which accounted for approximately 2/3 of our HeartMate II international unit growth, compared with the prior year. As for our acute surgical product line, CentriMag revenues were $10.4 million during the third quarter, an increase of 39% compared with the prior year. The revenue increase was driven by strong worldwide unit growth of 34% compared with the third quarter of 2012. CentriMag growth was also favorably impacted by the ongoing pricing benefit related to the conversion of several European countries from a distribution to a direct selling model, along with the repurchase of inventory units in the prior-year period associated with this conversion. Excluding these factors, worldwide CentriMag revenue increased approximately 30% compared with the prior year. As a reminder, the third quarter was the last period of favorable year-over-year pricing comparisons, resulting from the selling model conversion.