Thoratec® Reports Third Quarter 2013 Results

                 Thoratec® Reports Third Quarter 2013 Results

- Revenue of $126.4 million for the third quarter of 2013, an increase of 7%
year-over-year

- GAAP net income per diluted share of $0.32, and non-GAAP net income per
diluted share of $0.49

- Company increases guidance for 2013 net income per diluted share to
$1.30-1.35 on a GAAP basis and $1.80-1.85 on a non-GAAP basis, and narrows
full-year revenue guidance to a range of $500 million to $505 million

PR Newswire

PLEASANTON, Calif., Oct. 30, 2013

PLEASANTON, Calif., Oct. 30, 2013 /PRNewswire/ -- Thoratec Corporation
(NASDAQ: THOR), a world leader in device-based mechanical circulatory support
therapies to save, support and restore failing hearts, today reported its
financial results for the third quarter of 2013.

"Thoratec generated strong results during the third quarter, highlighted by
continued growth in our HeartMate II^® and CentriMag^® product lines," said
Gary F. Burbach, President and Chief Executive Officer. "We continue to drive
expansion of the worldwide market for MCS therapy and delivered international
revenue growth of 32% during the quarter," he added.

For the quarter ended September 28, 2013, Thoratec reported revenues of $126.4
million, a seven percent increase over revenues of $117.8 million in the third
quarter of 2012. Net income on a GAAP basis was $18.9 million, or $0.32 per
diluted share, compared with GAAP net income of $24.3 million, or $0.41 per
diluted share, in the same period a year ago. Non-GAAP net income, which is
described later in this press release, was $28.5 million, or $0.49 per diluted
share, compared with non-GAAP net income of $29.2 million, or $0.49 per
diluted share, in the same period a year ago.

For the first nine months of fiscal 2013, revenues were $374.6 million, an
increase of three percent over revenues of $363.2 million in the same period a
year ago. Net income on a GAAP basis was $60.3 million, or $1.03 per diluted
share, compared with GAAP net income of $70.6 million, or $1.18 per diluted
share, in the same period a year ago. Non-GAAP net income was $82.8 million,
or $1.42 per diluted share, compared with non-GAAP net income of $86.6
million, or $1.45 per diluted share, in the same period a year ago.

"We remain solidly on track to achieve our targets for 2013 and continue to
invest in strategies to promote sustainable long term growth, while
strengthening our industry leading position within the field of mechanical
circulatory support," Burbach commented. "Moreover, we look forward to
advancing the therapy through our ongoing global market development
initiatives, as well as the initiation of clinical trials for our exciting
HeartMate III and HeartMate PHP pipeline programs."

Third Quarter and First Nine Months of 2013 Financial Results

Thoratec reported revenues of $126.4 million in the third quarter of 2013, an
increase of seven percent compared to the same quarter last year. The
HeartMate product line contributed $112.8 million, an increase of seven
percent, driven primarily by expansion of our international business and the
Pocket Controller^TM launch, while the CentriMag product line contributed
$10.4 million, an increase of 39 percent.

For the first nine months of 2013, Thoratec reported revenues of $374.6
million, an increase of three percent, compared to the same period last year.
The HeartMate product line contributed $331.4 million to revenues, an increase
of two percent compared to the same period last year, while the CentriMag
product line contributed $32.3 million, an increase of 33 percent.

GAAP gross margin in the third quarter of 2013 was 67.6 percent compared to
69.3 percent in the same quarter last year. The decrease in GAAP gross margin
was due primarily to costs associated with the introduction of the Pocket
Controller and the impact of the U.S. medical device excise tax, which we
recorded for the first time at the beginning of 2013. Non-GAAP gross margin,
described later in this press release, was 69.4 percent compared to 71.4
percent in the same quarter last year.

GAAP operating expenses in the third quarter of 2013 were $63.1 million
compared to $48.9 million in the same quarter last year. The increase in GAAP
operating expenses was due primarily to our product and market development
initiatives, the acquisition of DuraHeart® II, and an increase in estimated
future milestone payments related to our acquisition of Levitronix Medical.
Non-GAAP operating expenses, described later in this press release, were $51.5
million compared to $43.2 million in the same quarter last year.

The company's GAAP effective tax rate in the third quarter of 2013 was 17.5
percent versus 27.2 percent a year ago. The decrease in the GAAP effective tax
rate was due primarily to the reduction of reserves related to a prior year's
tax return. The non-GAAP tax rate, which is described later in this press
release, was 22.8 percent versus 29.6 percent in the same period last year.

Cash and investments were $283.0 million as of September 28, 2013, compared to
$270.9 million as of June 29, 2013, and $260.4 million as of December 29,
2012. During the third quarter of 2013 the company used $40.0 million in cash
to fund share repurchase activity.

GUIDANCE

The following statements are based on current expectations. These statements
are forward-looking and actual results may differ materially. For a more
detailed discussion of forward-looking statements, please see the additional
information below.

The company is narrowing guidance for fiscal 2013 revenues to a range of $500
million to $505 million compared with the previous guidance range of $490
million to $510 million. The company is increasing guidance for fiscal 2013
net income per diluted share to a range of $1.30 to $1.35 on a GAAP basis and
$1.80 to $1.85 on a non-GAAP basis. The revised guidance for both GAAP and
non-GAAP net income per diluted share includes approximately $0.05 related to
the tax benefit recorded during the third quarter of 2013, while GAAP guidance
also includes approximately $0.05 of incremental expense related to an
increase in our estimate of future acquisition-related milestone payments.

CONFERENCE CALL/WEBCAST INFORMATION

Thoratec will hold a conference call to discuss its financial results and
operating activities for all interested parties at 1:30 p.m., Pacific Daylight
Time (4:30 p.m., Eastern Daylight Time), today. The teleconference can be
accessed by calling (785) 830-7979, passcode 3911160. Please dial in 10-15
minutes prior to the beginning of the call. The webcast will be available via
the Internet at http://www.thoratec.com. A replay of the conference call will
be available through Thursday, November 7, via http://www.thoratec.com or by
telephone at (719) 457-0820, passcode 3911160.

GAAP TO NON-GAAP RECONCILIATION

Thoratec management evaluates and makes operating decisions using various
measures. These measures are generally based on revenues generated by the
company's products and certain costs of producing those revenues, such as
costs of product sales, research and development and selling, general and
administrative expenses. We use the following measures, which are not
calculated in accordance with Generally Accepted Accounting Principles
("GAAP"): non-GAAP gross profit, non-GAAP gross margin, non-GAAP operating
expenses, non-GAAP tax rate, non-GAAP net income, non-GAAP net income per
diluted share and non-GAAP shares used to compute diluted net income per
share. These are non-GAAP financial measures under Section 101 of Regulation G
under the Securities Exchange Act of 1934, as amended. These non-GAAP
financial measures are calculated by excluding certain GAAP financial items
that we believe have less significance to the day-to-day operation of our
business. The company has outlined below the type and scope of these
exclusions and the limitations on the use of the non-GAAP financial measures
as a result of these exclusions.

Management uses these non-GAAP financial measures for financial and
operational decision making, including in the determination of employee annual
cash incentive compensation, as a means to evaluate period-to-period
comparisons, as well as comparisons to our competitors' operating results.
Management also uses this information internally for forecasting and
budgeting, as it believes that the measures are indicative of Thoratec core
operating results. Management also believes that non-GAAP financial measures
provide useful supplemental information to management and investors regarding
the performance of the company's business operations, provide a greater
transparency with respect to key metrics used by management in its decision
making, facilitate comparisons of results for current periods and guidance for
future periods with our historical operating results, and assist in analyzing
future trends.

Non-GAAP net income consists of GAAP net income, excluding, as applicable, the
tax effected impact of share-based compensation expense, the amortization of
purchased intangible assets, acquisition-related transaction costs,
acquisition-related contingent consideration adjustments, and Levitronix
Medical fair market value (FMV) inventory adjustments related to the
acquisition.

Non-GAAP net income per diluted share is defined as non-GAAP net income
divided by the weighted average number of shares on a fully-diluted basis.

Non-GAAP shares used to compute diluted net income per share consists of GAAP
shares used to compute diluted net income per share adjusted for any
exclusions made in conjunction with the application of the two-class method
for calculating net income per share.

Non-GAAP gross profit and gross margin consist of GAAP gross profit and gross
margin excluding share-based compensation expense, the amortization of
purchased intangible assets, and Levitronix Medical FMV inventory adjustments
related to the acquisition.

Non-GAAP operating expenses consist of GAAP operating expenses excluding
share-based compensation expense, amortization of purchased intangible assets,
acquisition-related transaction costs, and acquisition-related contingent
consideration adjustments.

Non-GAAP tax expense consists of the GAAP tax expense adjusted for the tax
effect of the adjustments from GAAP net income to non-GAAP net income.

Management believes that it is useful in measuring Thoratec's operations to
exclude the amortization of purchased intangible assets. These costs are
primarily fixed at the time of an acquisition and, unlike other fixed costs
that result from ordinary operations, are the result of infrequent and
irregular events.

Because of varying valuation methodologies, subjective assumptions and the
variety of award types that companies can use, Thoratec management believes
that providing non-GAAP financial measures that exclude share-based
compensation allow investors to compare Thoratec's recurring core business
operating results to those of other companies and over multiple periods. The
exclusion also enhances investors' ability to review Thoratec's business from
the same perspective as Thoratec management, which believes that share-based
compensation expense is not directly attributable to the underlying
performance of the company's business operations.

To enable investors to compare Thoratec's recurring core business operating
results to those of other companies and over multiple periods, Thoratec has
excluded Levitronix Medical FMV inventory adjustments related to the
acquisition as they are infrequent in nature.

There are a number of limitations related to the use of non-GAAP financial
measures. First, non-GAAP financial measures exclude some costs, namely
share-based compensation, that are recurring expenses. Second, share-based
compensation is part of an employee's compensation package and as such may be
useful for investors to consider. Third, the components of costs that we
exclude in our non-GAAP financial measures may differ from components that our
peer companies exclude when they report their results from operations.

Non-GAAP financial measures should not be considered as a substitute for
measures of financial performance in accordance with GAAP. However, these
measures may provide additional insight into Thoratec's financial results.
Investors and potential investors are strongly encouraged to review the
reconciliation of non-GAAP financial measures contained within this press
release with their most directly comparable GAAP financial results and not to
rely on any single financial measure to evaluate our business.

The reconciliations of the forward looking non-GAAP financial measures to the
most directly comparable GAAP financial measures in the tables below include
all information reasonably available to Thoratec at the date of this press
release. These tables include adjustments that we can reasonably predict.
Events that could cause the reconciliation to change include acquisitions and
divestitures of business, goodwill and other asset impairments and sales of
marketable equity securities.

The following table includes the GAAP Condensed Consolidated Statements of
Operations for the three and nine month periods ended September 28, 2013 and
September 29, 2012:



THORATEC CORPORATION
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except for per share data)
                      Three Months Ended          Nine Months Ended
                      September 28,  September 29,  September     September
                      2013           2012           28, 2013      29, 2012
Product sales         $        $        $        $     
                       126,444       117,768        374,648     363,196
Cost of product       40,958         36,162         117,031       111,071
sales
Gross profit          85,486         81,606         257,617       252,125
Operating expenses:
Selling, general and  37,679         28,478         107,348       91,692
administrative
Research and          25,469         20,382         71,488        59,886
development
Total operating       63,148         48,860         178,836       151,578
expenses
Income from           22,338         32,746         78,781        100,547
operations
Other income and
(expense):
Interest expense      -              -              (4)           (3)
Interest income and   569            579            1,899         1,401
other
Income before income  22,907         33,325         80,676        101,945
taxes
Income tax expense   (4,003)        (9,070)        (20,413)      (31,396)
Net income            $        $        $        $     
                        18,904       24,255        60,263     70,549
Net income per share
                      $        $        $        $     
Basic                     0.33       0.41                
                                                    1.05          1.20
                      $        $        $        $     
Diluted                   0.32       0.41                 
                                                    1.03          1.18
Shares used to
compute net income
per share:
Basic                 57,427         58,762         57,447        58,645
Diluted               58,234         59,669         58,400        59,609



The following table presents our quarterly revenues by source for the first,
second, and third quarter of fiscal 2013 and thefour quartersof fiscal 2012:



THORATEC CORPORATION
Quarterly Revenue Analysis
(Unaudited)
(in millions)
              Three Months Ended
              September  June   March 30,   December  September  June   March
              28, 2013   29,    2013        29, 2012  29, 2012   30,    31,
                         2013                                    2012   2012
Revenue by
Product Line
                         $                                     $    $  
              $          $       $      $            
HeartMate                                        
                                                       
              112.8            102.9        110.8   105.9           
                         115.7                                   106.2  111.7
CentriMag (1) 10.4       11.5   10.4        11.5      7.5        8.0    8.7
PVAD & IVAD   2.6        2.7    3.8         5.6       3.8        3.8    5.8
Other         0.6        0.6    0.6         0.6       0.6        0.6    0.6
                         $                                     $    $  
              $          $       $      $            
Total                                            
                                                       
              126.4            117.7        128.5   117.8     118.6  
                         130.5                                          126.8
Revenue by
Category
                         $                                     $    $  
              $          $       $      $            
Pump                                             
                                                    
              87.1            84.3         93.0  85.0            
                         93.5                                    85.7   92.6
Non-Pump      38.7       36.4   32.8        34.9      32.2       32.3   33.6
Other         0.6        0.6    0.6         0.6       0.6        0.6    0.6
                         $                                     $    $  
              $          $       $      $            
Total                                            
                                                       
              126.4            117.7        128.5   117.8           
                         130.5                                   118.6  126.8
Revenue by
Geography
                         $                                     $    $  
              $          $       $      $            
United States                                    
                                                    
              99.6            92.3        102.0   97.5           
                         98.8                                    97.1   103.9
International 26.8       31.7   25.4        26.5      20.3       21.5   22.9
                         $                                     $    $  
              $          $       $      $            
Total                                            
                                                       
              126.4            117.7      128.5    117.8           
                         130.5                                   118.6  126.8



The following table presents our quarterly pump units by geography for the
first, second and third quarter of fiscal 2013 and the four quarters of fiscal
2012:

THORATEC CORPORATION
Quarterly Pump Units
(Unaudited)
               Three months ended
Units by       September   June    March   December   September   June   March
Geography      28, 2013    29,     30,     29, 2012   29, 2012    30,    31,
                           2013    2013                           2012   2012
United States  737         770     716     812        781         773    838
International  250         287     219     254        208         212    219
Total (1)      987         1,057   935     1,066      989         985    1,057

(1) Excludes CentriMag and PediMag/PediVAS units



The following table reconciles the specific items excluded from GAAP net
income in the calculation of non-GAAP net income and diluted net income per
share for the periods shown below:

THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Net Income
(Unaudited)
(in thousands, except for per share data)
                            Three Months Ended      Nine Months Ended
Net income reconciliation   September    September    September    September
                            28, 2013     29, 2012     28, 2013     29, 2012
                            $       $       $       $     
Net income on a GAAP basis                            
                            18,904      24,255      60,263      70,549
Share-based compensation
expense:
- Cost of product      586          548          1,773        1,525
sales
- Selling, general     4,373        3,442        12,681       9,829
and administrative
- Research and         1,895        1,576        5,773        4,678
development
Amortization of purchased
intangibles:
- Cost of product      1,721        2,066        5,138        6,209
sales
- Selling, general     741          587          2,241        1,789
and administrative
- Research and         132          83           295          246
development
Acquisition-related
contingent consideration
adjustments:
- Selling, general     3,847        -            3,847        -
and administrative
- Research and         67           -            67           -
development
Levitronix Medical FMV      -            (102)        -            530
inventory adjustments
Acquisition-related         621          -            1,965        -
transaction costs
Income tax effect of        (4,412)      (3,225)      (11,241)     (8,737)
non-GAAP adjustments
Net income on a non-GAAP    $       $       $       $     
basis                                                 
                            28,475      29,230      82,802      86,618
                            Three Months Ended      Nine Months Ended
Diluted net income per      September    September    September    September
share reconciliation        28, 2013     29, 2012     28, 2013     29, 2012
                            $       $       $       $     
Diluted net income per                                
share on a GAAP basis         0.32      0.41               1.18
                                                      1.03
Share-based compensation
expense:
- Cost of product      0.01         0.01         0.03         0.03
sales
- Selling, general     0.08         0.06         0.22         0.16
and administrative
- Research and         0.03         0.03         0.10         0.08
development
Amortization of purchased
intangibles:
- Cost of product      0.03         0.03         0.09         0.10
sales
- Selling, general     0.01         0.01         0.04         0.03
and administrative
- Research and         -            -            -            -
development
Acquisition-related
contingent consideration
adjustments:
- Selling, general     0.07         -            0.07         -
and administrative
- Research and         -            -            -            -
development
Levitronix Medical FMV      -            (0.01)       -            0.01
inventory adjustments
Acquisition-related         0.01         -            0.03         -
transaction costs
Income tax effect of        (0.07)       (0.05)       (0.19)       (0.14)
non-GAAP adjustments
Diluted net income per      $       $       $       $     
share on a non-GAAP basis                             
                              0.49      0.49       1.42    1.45
                            Three Months Ended      Nine Months Ended
                            September    September    September    September
                            28, 2013     29, 2012     28, 2013     29, 2012
Shares used to compute
diluted net income per
share reconciliation
Shares used in calculation
of diluted net income per   58,234       59,669       58,400       59,609
share -- GAAP
Weighted average unvested
restricted stock awards     -            -            -            17
(1)
Shares used in calculation
of diluted net income per   58,234       59,669       58,400       59,626
share -- non-GAAP

(1) The company adopted the two-class method in calculating net income per
share on a GAAP basis, which excludes the weightedaverage unvested restricted
stock awards outstanding of 17,000 for the nine months ended September 29,
2012.



The following table reconciles the specific items excluded from GAAP gross
profit and gross margin in the calculation of non-GAAP gross profit and gross
margin for the periods shown below:



THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Gross Profit
(Unaudited)
(in thousands)
               Three Months Ended            Nine Months Ended
               September       September       September       September
               28, 2013        29, 2012        28, 2013        29, 2012
Gross profit   $           $           $           $    
on a GAAP           67.6%      69.3%       68.8%       69.4%
basis          85,486          81,606          257,617         252,125
Share-based
compensation   586             548             1,773           1,525
expense
Amortization   1,721           2,066           5,138           6,209
of intangibles
Levitronix
Medical FMV    -               (102)           -               530
inventory
adjustments
Gross profit   $           $           $           $    
on a non-GAAP       69.4%      71.4%       70.6%       71.7%
basis          87,793          84,118          264,528         260,389



The following table reconciles the specific items excluded from GAAP operating
expenses in the calculation of non-GAAP operating expenses for the periods
shown below:



THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Operating Expenses
(Unaudited)
(in thousands)
                            Three Months Ended      Nine Months Ended
                            September    September    September    September
                            28, 2013     29, 2012     28, 2013     29, 2012
Operating expenses on a    $       $       $       $     
GAAP basis                                               
                            63,148       48,860       178,836      151,578
Share-based compensation
expense:
- Selling, general     (4,373)      (3,442)      (12,681)     (9,829)
and administrative
- Research and         (1,895)      (1,576)      (5,773)      (4,678)
development
Amortization of purchased
intangibles:
- Selling, general     (741)        (587)        (2,241)      (1,789)
and administrative
- Research and         (132)        (83)         (295)        (246)
development
Acquisition-related contingent
consideration adjustments:
- Selling, general     (3,847)      -            (3,847)      -
and administrative
- Research and         (67)         -            (67)         -
development
Acquisition-related         (621)        -            (1,965)      -
transaction costs
Operating expenses on a    $       $       $       $     
non-GAAP basis                                           
                            51,472       43,172       151,967      135,036



The following table reconciles the GAAP tax expense for the adjustments from
GAAP net income to non-GAAP net income:



THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Tax Expense
(Unaudited)
(in thousands)
                    Three Months Ended             Nine Months Ended
                    September       September        September       September
                    28, 2013        29, 2012         28, 2013        29, 2012
Tax expense on a    $           $            $           $    
GAAP basis               17.5%      27.2%       25.3%      30.8%
                     4,003          9,070          20,413          31,396
Share-based
compensation        3,261           1,694            8,808           6,170
expense
Amortization of
purchased           915             1,007            2,701           3,031
intangibles
Excess compensation
limitations and     (212)           565              (1,231)         (675)
other
Acquisition-related
contingent          209             -                209             -
consideration
adjustments
Levitronix Medical
FMV inventory       -               (41)             -               211
adjustments
Acquisition-related 239             -                754             -
transaction costs
Tax expense on a    $           $            $           $    
non-GAAP basis           22.8%      29.6%       27.7%      31.7%
                     8,415         12,295           31,654          40,133



The following table reconciles the net income per diluted share guidance on a
tax-effected GAAP basis and non-GAAP basis for the periods shown below:



THORATEC CORPORATION
Reconciliation of GAAP to Non-GAAP Forward-Looking Guidance
(Unaudited)
(in thousands, except for per share data)
Net income per diluted share reconciliation  For the Fiscal Year Ended 2013
                                             From             To
Net income per diluted share on a GAAP basis $         $       
                                             1.30            1.35
Acquisition-related contingent consideration 0.05             0.05
adjustments
Acquisition-related transaction costs        0.02             0.02
Share-based compensation expense             0.34             0.34
Amortization of purchased intangibles        0.13             0.13
Tax rate effect on Non-GAAP earnings         (0.04)           (0.04)
Net income per diluted share on a non-GAAP   $         $       
basis                                        1.80            1.85



About Thoratec

Thoratec is the world leader in mechanical circulatory support with the
broadest product portfolio to treat the full range of clinical needs for
patients suffering from advanced heart failure. The company's products include
the HeartMate LVAS and Thoratec VAD, with more than 20,000 devices implanted
in patients suffering from heart failure. Thoratec also manufactures and
markets the CentriMag and PediMag / PediVAS product lines. Thoratec is
headquartered in Pleasanton, California. For more information, visit
www.thoratec.com.

Thoratec, the Thoratec logo, HeartMate and HeartMate II are registered
trademarks of Thoratec Corporation and HeartMate III, HeartMate PHP, IVAD and
Pocket Controller are trademarks of Thoratec Corporation. CentriMag and
PediMag are registered trademarks of Thoratec LLC, and PediVAS is a registered
trademark of Thoratec Switzerland GmbH.

DuraHeart is a registered trademark of Terumo Corporation.

Many of the preceding paragraphs, particularly but not exclusively those
addressing guidance for fiscal 2013 financial results or future performance
contain forward-looking statements within the meaning of Sections 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
These statements can be identified by the words, "believes," "views,"
"expects," "plans," "projects," "hopes," "could," "will," "estimates," and
other similar words. Actual results, events or performance could differ
materially from these forward-looking statements based on a variety of
factors, many of which are beyond Thoratec's control. Therefore, readers are
cautioned not to put undue reliance on these statements. Investors are
cautioned that all such statements involve risks and uncertainties, including
risks related to regulatory approvals, the development of new products,
including development and clinical trial timing, and new markets including
Destination Therapy, the growth of existing markets for our products, customer
and physician acceptance of Thoratec products, changes in the mix of existing
markets for our products and related gross margin for such product sales, the
ability to improve financial performance, the effects of FDA regulatory
requirements, our ability to address quality issues adequately and on a timely
basis without a resulting recall of products or interruption of manufacturing
or shipment of products, the effects of healthcare reimbursement and coverage
policies, the effects of seasonality on Thoratec product sales, the effects of
competition and the effects of any merger, acquisition and divestiture related
activities. Forward-looking statements contained in this press release should
be considered in light these factors and those factors discussed from time to
time in Thoratec's public reports filed with the Securities and Exchange
Commission, such as those discussed under the heading, "Risk Factors," in
Thoratec's most recent annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K and other SEC filings. These forward-looking
statements speak only as of the date hereof. Thoratec undertakes no obligation
to publicly release the results of any revisions to these forward-looking
statements that may be made to reflect events or circumstances after the date
hereof, or to reflect the occurrence of unanticipated events.

SOURCE Thoratec Corporation

Website: http://www.thoratec.com
Contact: Neil Meyer, Director of Investor Relations, Thoratec Corporation,
(925) 738-0029
 
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