FRAMINGHAM, Mass., July 30, 2015 /PRNewswire/ -- HeartWare
International, Inc. (NASDAQ: HTWR), a leading innovator of less
invasive, miniaturized circulatory support technologies that are
revolutionizing the treatment of advanced heart failure, today
announced total revenue of $73.6
million for the quarter ended June
30, 2015 compared to $70.1
million for the quarter ended June
30, 2014. Currency fluctuations impacted revenue
growth by approximately $6.0 million,
or nine percentage points, during the three months ended
June 30, 2015, as compared to the
same period in 2014. Total revenues increased 13% on a
constant-currency basis compared to the same period in 2014.
During the second quarter, a total of 773 HeartWare
HVAD® Systems were sold globally, which represented an
increase of 15% from 674 units sold in the second quarter of
2014. U.S. revenue, generated through the sale of 391 units
during the second quarter of 2015, was $42.9
million. International revenue, generated through the
sale of 382 units during the second quarter of 2015, was
$30.7 million.
"We are pleased to report another quarter of solid financial
results and achievement of record revenue and units sold during the
second quarter, with particular strength in the U.S. market," said
Doug Godshall, President and Chief
Executive Officer. "In addition to this strong financial
performance, we were pleased to have recently begun patient
enrollment in our MVAD® System CE Mark trial, a
significant accomplishment for the company and an important step
forward for this innovative, new device.
"We also made significant strides operationally during the
quarter. We presented data from our ENDURANCE Destination
Therapy trial of HVAD in which the study achieved the primary
endpoint, we obtained approval to market the HeartWare HVAD System
as a bridge to transplantation in Canada, and we made continued progress with
the supplemental destination therapy study, ENDURANCE 2, which is
currently 98% enrolled, with full enrollment expected to be
completed soon," Mr. Godshall added.
For the six months ended June 30,
2015, total revenue increased approximately five percent to
$143.6 million, compared to
$136.6 million for the same period in
2014. Total revenue increased 13% on a constant-currency
basis compared to the first six months of 2014.
Gross margin percentage declined to 65.7% during the second
quarter of 2015, from 67.3% in the second quarter of 2014.
The net decline included 2.6 percentage points related to
foreign exchange rates changes, which was partially offset by
volume and efficiency improvements.
Total operating expenses for the second quarter of 2015 were
$56.2 million, compared to
$34.2 million for the second quarter
of 2014 and $55.3 million for the
first quarter of 2015. Total operating expenses for the
second quarter of 2015 included a $2.2
million net increase in fair value of the contingent
purchase consideration for CircuLite. This compared to the
second quarter of 2014, in which total operating expenses included
a $13.7 million reduction in the
estimated fair value of the contingent consideration.
Research and development expense was $31.7 million for the second quarter of 2015,
compared to $26.9 million for the
same period in 2014. This increase in R&D expense was
primarily attributable to increased clinical and regulatory
expenses and quality system improvements.
Selling, general and administrative expenses were $22.2 million for the second quarter of 2015,
compared to $20.9 million for the
second quarter of 2014. The increase in SG&A expenses was
primarily attributable to increased employee headcount and other
administrative expenses to support HeartWare's growth.
Other expense for the second quarter of 2015 included a
$16.6 million loss in connection with
the partial extinguishment in May
2015 of the company's 2017 convertible notes.
Net loss for the second quarter of 2015 was $27.4 million, or a loss of $1.59 per basic and diluted share, compared to
net income of $8.4 million, or
$0.49 per basic and $0.48 per diluted share, for the second quarter
of 2014. Non-GAAP net loss for the second quarter of 2015 was
$8.1 million, or a loss of
$0.47 per basic and diluted share,
compared to a non-GAAP net loss of $4.9
million, or a loss of $0.29
per basic and diluted share, for the second quarter of 2014.
For the six months ended June 30,
2015, the company recorded a net loss of $41.9 million, or a loss of $2.43 per basic and diluted share, compared to a
net loss of $11.1 million, or a loss
of $0.65 per basic and diluted share,
for the six months ended June 30,
2014. Non-GAAP net loss for the six months ended June 30, 2015 was $17.5
million, or a loss of $1.02
per basic and diluted share, compared to a non-GAAP net loss of
$16.8 million, or a loss of
$0.99 per basic and diluted share,
for the six months ended June 30,
2014.
Items impacting comparability of operating results for the
three- and six-month periods ended June 30,
2015 to the same periods in 2014 include purchase accounting
amortization, restructuring charges, contingent consideration
adjustments and loss on extinguishment of long-term debt, as
described later in this news release under "Use of Non-GAAP
Financial Measures" and "Reconciliation of GAAP to Non-GAAP Net
Loss per Common Share."
At June 30, 2015, HeartWare had
$252 million of cash, cash
equivalents and investments, which included $76 million in net proceeds from a convertible
note exchange and issuance executed during the second
quarter. In the second quarter, the company had positive
operating cash flow of approximately $5
million.
Conference Call and Webcast Information
HeartWare will
host a conference call on Thursday, July 30,
2015 at 8:00 a.m., U.S.
Eastern Daylight Time to discuss its financial results, highlights
from the second quarter and the company's business outlook.
The call may be accessed by dialing 1-877-407-0789 five minutes
prior to the scheduled start time and referencing
"HeartWare." Callers outside the U.S. should dial
+1-201-689-8562.
A live webcast of the call will also be available in the
Investors section of the company's website
(http://ir.heartware.com/). A replay of the conference call
will be available through the above weblink immediately following
completion of the call.
About HeartWare International
HeartWare International
develops and manufactures miniaturized implantable heart pumps, or
ventricular assist devices, to treat patients suffering from
advanced heart failure. The HeartWare® Ventricular
Assist System features the HVAD® pump, a small
full-support circulatory assist device designed to be implanted
next to the heart, avoiding the abdominal surgery generally
required to implant competing devices. The HeartWare System is
approved in the United States for
the intended use as a bridge to cardiac transplantation in patients
who are at risk of death from refractory end-stage left ventricular
heart failure, has received CE Marking in the European Union and
has been used to treat patients in 46 countries. The device is also
currently the subject of a U.S. clinical trial for destination
therapy. For additional information, please visit the
company's website at www.heartware.com.
HeartWare International, Inc. is a member of the Russell
2000® and its securities are publicly traded on The
NASDAQ Stock Market.
HEARTWARE, HVAD, MVAD, PAL, SYNERGY, CIRCULITE and HeartWare
logos are trademarks of HeartWare, Inc. or its affiliates.
Use of Non-GAAP Financial Measures
HeartWare
management supplements its GAAP financial reporting with certain
non-GAAP financial measures for financial and operational decision
making. For example, we use "non-GAAP adjusted net loss" and
"non-GAAP adjusted net loss per common share" to refer to GAAP loss
per share excluding certain adjustments such as amortization of
intangible assets, impairment charges, purchase accounting and
acquisition-related transaction costs, and restructuring and
severance costs. These are non-GAAP financial measures under
Section 101 of Regulation G under the Securities Exchange Act of
1934, as amended. Management believes that providing this
additional information enhances investors' understanding of the
financial performance of the company's operations and increases
comparability of its current financial statements to prior periods.
Non-GAAP measures should not be considered a substitute for
measures of financial performance in accordance with GAAP, and they
should be reviewed in comparison with their most directly
comparable GAAP financial results. Reconciliations of HeartWare's
GAAP to non-GAAP financial measures are provided at the end of this
news release under "Reconciliation of GAAP to Non-GAAP Net Loss per
Common Share."
Forward-Looking Statements
This announcement contains
forward-looking statements that are based on management's beliefs,
assumptions and expectations and on information currently available
to management. All statements that address operating performance,
events or developments that we expect or anticipate will occur in
the future are forward-looking statements, including without
limitation our expectations with respect to the: commercialization
of the HeartWare HVAD System and introduction of the MVAD System;
timing, progress and outcomes of clinical trials; regulatory and
quality compliance; research and development activities and our
ability to take advantage of acquired and pipeline technology.
Management believes that these forward-looking statements are
reasonable as and when made. However, you should not place undue
reliance on forward-looking statements because they speak only as
of the date when made. HeartWare does not assume any obligation to
publicly update or revise any forward-looking statements, whether
as a result of new information, future events or otherwise, except
as may be required by federal securities laws and the rules and
regulations of the Securities and Exchange Commission. HeartWare
may not actually achieve the plans, projections or expectations
disclosed in forward-looking statements, and actual results,
developments or events could differ materially from those disclosed
in the forward-looking statements. Forward-looking statements are
subject to a number of risks and uncertainties, including without
limitation those described in Part I, Item 1A. "Risk Factors" in
HeartWare's Annual Report on Form 10-K filed with the Securities
and Exchange Commission. HeartWare may update risk factors from
time to time in Part II, Item 1A "Risk Factors" in Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, or other filings
with the Securities and Exchange Commission.
Contact:
Christopher Taylor
HeartWare International, Inc.
Email: ctaylor@heartware.com
Phone: +1 508 739 0864
- Tables to Follow-
|
HEARTWARE
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(in thousands, except
per share data)
|
|
(unaudited)
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
Revenue,
net
|
$ 73,569
|
|
$ 70,131
|
|
$ 143,590
|
|
$ 136,603
|
|
Cost of
revenue
|
25,228
|
|
22,955
|
|
47,268
|
|
45,870
|
|
Gross
profit
|
48,341
|
|
47,176
|
|
96,322
|
|
90,733
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
22,247
|
|
20,948
|
|
44,176
|
|
45,180
|
|
Research and
development
|
31,702
|
|
26,913
|
|
62,969
|
|
59,504
|
|
Change in fair value
of contingent consideration
|
2,240
|
|
(13,700)
|
|
4,340
|
|
(10,560)
|
|
Total operating
expenses
|
56,189
|
|
34,161
|
|
111,485
|
|
94,124
|
|
|
|
|
|
|
|
|
|
Income (loss) from
operations
|
(7,848)
|
|
13,015
|
|
(15,163)
|
|
(3,391)
|
|
|
|
|
|
|
|
|
|
Other expense,
net
|
(19,239)
|
|
(4,298)
|
|
(26,228)
|
|
(7,114)
|
|
Loss before
taxes
|
(27,087)
|
|
8,717
|
|
(41,391)
|
|
(10,505)
|
|
Income tax
expense
|
306
|
|
353
|
|
537
|
|
575
|
|
Net income
(loss)
|
$ (27,393)
|
|
$ 8,364
|
|
$ (41,928)
|
|
$ (11,080)
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
common share:
|
|
|
|
|
|
|
|
|
Basic
|
$ (1.59)
|
|
$ 0.49
|
|
$ (2.43)
|
|
$ (0.65)
|
|
Diluted
|
$ (1.59)
|
|
$ 0.48
|
|
$ (2.43)
|
|
$ (0.65)
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding:
|
|
|
|
|
|
|
|
|
Basic
|
17,269
|
|
16,989
|
|
17,232
|
|
16,962
|
|
Diluted
|
17,269
|
|
17,305
|
|
17,232
|
|
16,962
|
|
|
|
|
|
|
|
|
|
HEARTWARE
INTERNATIONAL, INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(in
thousands)
(unaudited)
|
|
|
|
June
30,
2015
|
|
December 31,
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$
181,222
|
|
$
102,946
|
|
Short-term
investments
|
69,574
|
|
75,535
|
|
Accounts receivable,
net
|
35,648
|
|
38,041
|
|
Inventories
|
50,571
|
|
54,046
|
|
Prepaid expenses and
other current assets
|
6,276
|
|
5,975
|
|
Total current
assets
|
343,291
|
|
276,543
|
|
Property, plant and
equipment, net
|
17,005
|
|
19,036
|
|
Other assets,
net
|
130,354
|
|
128,234
|
|
Total
assets
|
$
490,650
|
|
$
423,813
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
$
11,071
|
|
$
13,322
|
|
Other accrued
liabilities
|
32,416
|
|
36,589
|
|
Total current
liabilities
|
43,487
|
|
49,911
|
|
Convertible senior
notes, net
|
186,565
|
|
114,803
|
|
Other long-term
liabilities
|
52,823
|
|
50,565
|
|
Stockholders'
equity
|
207,775
|
|
208,534
|
|
Total liabilities and
stockholders' equity
|
$
490,650
|
|
$
423,813
|
|
Reconciliation to
Constant Currency Revenue Growth (unaudited) (see
explanation below)
|
|
(dollars in
thousands)
|
|
|
Three Months
Ended
June 30,
|
Reported
$ change
|
Reported
% change
|
FX
impact
|
Constant
Currency
$ change
|
Constant
Currency
% change
|
|
|
2015
|
2014
|
|
|
|
|
|
|
Total U.S.
Revenue
|
$42,922
|
$36,945
|
$5,977
|
16.2%
|
-
|
$5,977
|
16.2%
|
|
Total Int'l
Revenue
|
30,647
|
33,186
|
(2,539)
|
-7.7%
|
5,994
|
3,455
|
10.4%
|
|
Total
Revenue
|
$73,569
|
$70,131
|
$3,438
|
4.9%
|
$5,994
|
$9,432
|
13.4%
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
Reported
$ change
|
Reported
% change
|
FX
impact
|
Constant
Currency
$ change
|
Constant
Currency
% change
|
|
|
2015
|
2014
|
|
|
|
|
|
|
Total U.S.
Revenue
|
$85,111
|
$70,733
|
$14,378
|
20.3%
|
-
|
$14,378
|
20.3%
|
|
Total Int'l
Revenue
|
58,479
|
65,870
|
(7,391)
|
-11.2%
|
10,965
|
3,574
|
5.4%
|
|
Total
Revenue
|
$143,590
|
$136,603
|
$6,987
|
5.1%
|
$10,965
|
$17,952
|
13.1%
|
|
|
Constant currency
changes in the tables above reflect the foreign exchange rates in
effect during the three- and six-month periods ended June 30, 2015
and 2014.
|
|
Reconciliation of
GAAP to Non-GAAP Net Loss per Common Share (unaudited) (see
explanation of adjustments below)
|
|
(in thousands,
except per share data)
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income
|
|
$ (27,393)
|
|
$ 8,364
|
|
$ (41,928)
|
|
$ (11,080)
|
|
|
|
|
|
|
|
|
|
|
GAAP net (loss)
income per common share:
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ (1.59)
|
|
$ 0.49
|
|
$ (2.43)
|
|
$ (0.65)
|
|
Diluted
|
|
$ (1.59)
|
|
$ 0.48
|
|
$ (2.43)
|
|
$ (0.65)
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
Amortization
and impairment of purchased intangible assets and
goodwill
|
(a)
|
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
84
|
|
84
|
|
168
|
|
168
|
|
-Research
and development
|
|
327
|
|
247
|
|
654
|
|
474
|
|
Contingent
consideration adjustments
|
(b)
|
2,240
|
|
(13,700)
|
|
4,340
|
|
(10,560)
|
|
Loss on
extinguishment of long-term debt
|
(c)
|
16,588
|
|
—
|
|
16,588
|
|
—
|
|
Restructuring
costs
|
(d)
|
|
|
|
|
|
|
|
|
-Selling,
general and administrative
|
|
(44)
|
|
38
|
|
423
|
|
3,064
|
|
-Research
and development
|
|
49
|
|
72
|
|
2,213
|
|
1,098
|
|
Total
adjustments
|
|
19,244
|
|
(13,259)
|
|
24,386
|
|
(5,756)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss
|
|
$ (8,149)
|
|
$ (4,895)
|
|
$ (17,542)
|
|
$ (16,836)
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net
loss per common share – basic and diluted
|
|
$ (0.47)
|
|
$ (0.29)
|
|
$ (1.02)
|
|
$ (0.99)
|
|
|
|
|
|
|
|
|
|
|
Shares used in
computing non-GAAP adjusted net loss per common share – basic and
diluted
|
|
17,269
|
|
16,989
|
|
17,232
|
|
16,962
|
|
|
|
(a)
|
Represents
amortization of purchased intangible assets related to CircuLite
and World Heart during the three and six months ended June 30, 2015
and 2014.
|
|
(b)
|
Represents the change
in fair value of contingent consideration associated with the
acquisition of CircuLite in December 2013.
|
|
(c)
|
Represents the loss
on extinguishment of 3.5% convertible notes.
|
|
(d)
|
Represents certain
restructuring costs incurred during the three and six months ended
June 30, 2015 and 2014 as follows (in thousands):
|
|
|
|
Three Months
Ended
June
30,
|
|
Six Months
Ended
June
30,
|
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
|
|
Lease exit charge for
HeartWare's
former Massachusetts
corporate offices
|
|
$ (30)
|
|
$ (57)
|
|
$ (28)
|
|
$ 471
|
|
|
|
|
|
|
|
|
|
|
Charges related to
CircuLite acquisition:
|
|
|
|
|
|
|
|
|
|
Lease exit
charge for former
N.J.
corporate
offices
|
|
(14)
|
|
14
|
|
451
|
|
1,690
|
|
Lease exit
charge for Aachen, Germany office
|
|
—
|
|
—
|
|
139
|
|
—
|
|
Contract
termination costs
|
|
29
|
|
—
|
|
340
|
|
688
|
|
Employee
severance
|
|
—
|
|
153
|
|
598
|
|
684
|
|
Abandoned
fixed assets
|
|
20
|
|
—
|
|
1,136
|
|
629
|
|
Total
|
|
35
|
|
167
|
|
2,664
|
|
3,691
|
|
|
|
|
|
|
|
|
|
|
Total restructuring
costs
|
|
$ 5
|
|
$ 110
|
|
$ 2,636
|
|
$ 4,162
|
|
The terms "non-GAAP
adjusted net loss" and "non-GAAP adjusted net loss per common
share" refer to GAAP net loss/income and GAAP net loss/income per
common share excluding certain adjustments such as amortization of
purchased intangible assets, impairment charges, purchase
accounting and acquisition-related transaction costs, and
restructuring and severance costs as follows:
|
|
|
|
|
1)
|
We exclude
amortization of purchased intangible assets and periodic impairment
charges related to long-lived assets from this measure because such
charges do not represent what our management believes are the costs
of developing, producing, supporting and selling our products and
the costs to support our internal operating structure.
|
|
2)
|
We exclude purchase
accounting adjustments and acquisition-related costs from this
measure because they occur as a result of specific events and are
not reflective of our internal investments and the ongoing costs to
support our operating structure. Purchase accounting
adjustments include contingent consideration fair market value
adjustments.
|
|
3)
|
We exclude
restructuring and severance costs from this measure because they
tend to occur as a result of specific events such as acquisitions,
divestitures, repositioning our business or other unusual events
that could make comparisons of long-range trends difficult and are
not reflective of our internal investments and the costs to support
our operating structure.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/heartware-international-reports-736-million-in-second-quarter-2015-revenue-driven-by-strong-global-unit-growth-300121024.html
SOURCE HeartWare International, Inc.