Thoratec Corporation (THOR)
Q4 2011 Earnings Call
February 8, 2012 4:30 pm ET
Taylor Harris – Senior Director, Investor Relations & Business Development
Gerhard F. Burbach – President, Chief Executive Officer and Director
Roxanne Oulman – Interim Chief Financial Officer
Danielle Antalffy – Leerink Swann
Matthew Taylor – Barclays Capital
Thomas Gunderson – Piper Jaffray
Lennox Ketner – Bank of America
David Roman – Goldman Sachs
Jayson Bedford – Raymond James
Steven Lichtman – Oppenheimer & Co.
Jason Mills – Canaccord Genuity
Spencer Nam – Thinkequity Llc
Christopher Pasquale – JPMorgan
Larry Biegelsen – Wells Fargo Securities, Llc
Timothy Philosophos – Rodman & Renshaw, LLC
Rajeev Jashnani – UBS
Previous Statements by THOR
» Thoratec's CEO Discusses Q3 2011 Results - Earnings Call Transcript
» Thoratec's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» Thoratec Corp. Q2 2009 Earnings Call Transcript
Thanks, Kevin. Good afternoon, and thank you for joining us today. With me are Gary Burbach, President and Chief Executive Officer; and Roxanne Oulman, the company's Interim Chief Financial Officer. Gary will discuss highlights from the quarter and fiscal year 2011, and then turn to our key operational and strategic objectives for 2012. Roxanne will review the financial results for the quarter and provide an update on guidance for 2012. 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 the 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 file with the Securities and Exchange Commission, such as our annual and quarterly reports on Forms 10-K and 10-Q. We do not undertake any obligation to update or correct any forward-looking statements. Gary?
Gerhard F. Burbach
Thank you, Taylor, and good afternoon. 2011 was another exciting year for Thoratec including solid financial performance, continued development of the market for mechanical circulatory support, the acquisition of the CentriMag and PediMag franchise from Levitronix, and important advances in our broad product pipeline.
Our fourth quarter performance reflects strong momentum for the company as we enter 2012, and strategically, I’m very pleased with the company’s positioning for this year and beyond.
With HeartMate II, CentriMag and PVAD, Thoratec offers proven market leading solutions for the full range of mechanical circulatory support needs. In the coming years, we are planning to aggressively grow the market with these flagship products, while at the same time supplementing our core product portfolio with potential breakthrough technological advances, such as our fully magnetically levitated HeartMate III pump platform, our fully implantable LVAD system, and our percutaneous heart pump.
Supporting all of these efforts is the dedicated team at Thoratec in which we’ve been investing heavily, and which we believe provides an unrivaled foundation to serve and support the broader mechanical circulatory support market.
I’m proud of the Thoratec’s success in 2011, but I’m even more enthusiastic about the opportunity ahead as we seek to continue to penetrate the large addressable population of heart failure patients, advance new technologies and extend our market leadership position.
On today’s call, I’ll provide highlights of the fourth quarter and fiscal year 2011. And in the process, provide some additional operating metrics for our business. I’ll then focus on our key initiatives and outlook for 2012.
With respect to our financial results for the quarter, Thoratec generated revenues of $109.4 million, a 12% increase over revenues of $97.6 million in the fourth quarter of 2010. In terms of geographic breakdown, we reported revenues of $88.2 million in the U.S. versus $78.8 million in the prior year, an increase of 12%. While international revenues were $21.2 million versus $18.8 million a year ago, representing an increase of 13%. The year-over-year impact of foreign exchange was roughly neutral.
For the full year, revenues from continuing operations in 2011 were $422.7 million representing the high end of our previously issued revenue guidance, and a 10% increase relative to revenues of $383 million in 2010. The HeartMate and CentriMag product lines drove growth for the full year and populated revenues grew 13% offsetting more modest growth in non-pump revenues of 5%.
We also continue to demonstrate solid operating leverage with 2011 non-GAAP earnings per share rising $1.56 slightly above the high end of our previous guidance, and representing a 27% increase compared to 2010. We achieved this profitability increase through revenue growth and impressive gross margin expansion of over 300 basis points, while we continue to invest aggressively in our markets and product development initiatives.
Revenue growth in the fourth quarter was also led by our HeartMate and CentiMag product lines partially offset by a decline in sales of PVAD and IVAD. HeartMate revenues in the quarter were $93.8 million versus $83.9 million a year ago for an increase of 12%. Revenues from our acute surgical support line, which includes CentriMag and PediMag were $8.8 million compared with $5.7 million a year ago. This strong performance include a growth in the core U.S. CentriMag business of 10%, as well as approximately $2.5 million of incremental revenues recorded as a result of the transaction completed during the third quarter.
Revenues from the Thoratec product line, the PVAD and IVAD were $6.1 million versus $7.2 million a year ago or a decrease of 15%.
We experienced solid year-over-year unit growth in the quarter selling 917 pumps, an increase of 10% versus 836 pumps in the fourth quarter a year ago. Unit growth was driven by a 13% increase in HeartMate offset by a mid-teens decline in PVAD and IVAD units.
In the U.S. market, we shipped 704 pumps representing a strong 15% increase over 613 pumps a year ago. Internationally, we faced a notably challenging comparison and pump units declined 4% year-over-year from 223 in the fourth quarter of 2010 to 213 in the fourth quarter of 2011.
I should note though that the international decline was driven solely by the PVAD and IVAD franchise, while the HeartMate II franchise grew 8% despite the tough comparison in distributor markets. In fact, excluding European distributor territories international HeartMate II unit growth was 18% for the quarter and 17% for the full year.