HeartWare International Reports Fourth Quarter 2013 Results
- U.S. revenue increased 94% in fourth quarter 2013 to $25.9 million, from
$13.4 million in fourth quarter of 2012
- Revenue for 2013 increased 87% to $208 million from $111 million in 2012,
reflects first year of commercialization in U.S.
- Conference call today at 8:00 a.m. U.S. EST -
FRAMINGHAM, Mass., Feb. 27, 2014
FRAMINGHAM, Mass., Feb. 27, 2014 /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 revenue of $53.1 million for the fourth quarter ended
December 31, 2013, a 62% increase compared to $32.7 million in revenue for the
same period of 2012. For the fiscal year 2013, the company generated revenue
of $207.9 million, an 87% increase compared to revenue of $110.9 million in
fiscal year 2012.
"We experienced strong market adoption of the HeartWare® Ventricular Assist
System during our first full year of U.S. commercialization, with nearly 1,000
units sold and a total of 96 U.S. customers at the close of the year," said
Doug Godshall, President and Chief Executive Officer. "In addition, we
continue to receive enthusiastic support from markets outside of the U.S.,
with the addition of 28 international customers in new and existing markets.
We are proud to have finished the year with 230 customers worldwide, an
increase of nearly 50% in 2013."
During the fourth quarter, 524 HeartWare Systems were sold globally, a 52%
increase from 345 units in the fourth quarter of 2012. U.S. revenue during
the fourth quarter of 2013 was $25.9 million, a 94% increase from $13.4
million in the fourth quarter of 2012. Revenue from international markets,
generated through the sale of 282 units, was $27.1 million, an increase of
approximately 41% from $19.3 million in the fourth quarter of 2012.
"Our strong commercial growth was complemented by advances made in the
clinical development of the HeartWare System," added Mr. Godshall. "During
2013, we initiated enrollment in the U.S. for our supplemental cohort study
for destination therapy, received approval to commence enrollment in our trial
in Japan, and we obtained conditional approval from the FDA for our U.S.
thoracotomy trial. We are eagerly anticipating the upcoming initiation of
first-in-human testing of our next generation MVAD^® pump and Pal™
peripherals, which is expected to precede the commencement of a 63-patient, CE
Mark study at nine international hospital sites.
"The acquisition of CircuLite, developer of the SYNERGY® Circulatory Support
System, in December 2013, provides an opportunity for us to expand our core
business into the partial-support market segment, through the treatment of
heart failure patients who are less sick," Mr. Godshall said. "Our team is
working diligently to make refinements to this device in order to position the
SYNERGY System for re-launch at select European sites and to enhance the
SYNERGY^® Endovascular System when it enters the clinic."
Currency fluctuations benefitted revenue growth by approximately two
percentage points in the fourth quarter, as well as on a full-year basis, in
2013 compared to the same periods in 2012.
Total operating expenses for the fourth quarter of 2013 were $53.3 million, as
compared to $35.4 million in the fourth quarter of 2012. Total operating
expenses included CircuLite's results for the month of December.
Research and development expense was $30.3 million for the fourth quarter of
2013, as compared to $22.2 million in the same period of 2012. Development
costs are primarily attributable to clinical trials and research and
development related to advancing HeartWare's existing products and pipeline
Selling, general and administrative expenses were $23.0 million in the fourth
quarter of 2013, compared to $13.3 million in the fourth quarter of 2012. The
increase in selling, general and administrative expenses reflects expansion of
sales and marketing activities, particularly in the U.S., and an overall
increase in corporate infrastructure to support the company's significant
Net loss for the fourth quarter of 2013 was $22.0 million, or a $1.33 loss per
basic and diluted share, compared to a $21.1 million net loss, or a loss of
$1.46 per basic and diluted share, in the fourth quarter of 2012. The fourth
quarter results included CircuLite's operations for the month of December, as
well as approximately $6.7 million of non-recurring costs as set forth in this
release under "Reconciliation of GAAP to Non-GAAP Net Loss per Share." For
the fiscal year ended December 31, 2013, the company recorded a net loss of
$59.3 million, or a $3.69 loss per basic and diluted share, compared to an
$87.7 million net loss, or a loss of $6.15 per basic and diluted share, in
fiscal year 2012.
Non-GAAP net loss per share for the fourth quarter of 2013 was $0.92 per basic
and diluted share, compared to a loss of $1.46 per basic and diluted share in
the fourth quarter of 2012. Non-GAAP net loss per share for 2013 was $3.24
compared to a loss of $6.07 per basic and diluted share in 2012. See "Use of
Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Net Loss
At December 31, 2013, HeartWare had $201.7 million of cash, cash equivalents
Conference Call and Webcast Information
HeartWare will host a conference call on Thursday, February 27, 2014 at 8:00
a.m., U.S. Eastern Standard Time to discuss its financial results from the
fourth quarter, highlights from the 2013 fiscal year and the company's
business outlook. The call may be accessed by dialing 1-877-941-4774 five
minutes prior to the scheduled start time and referencing "HeartWare."
Callers outside the U.S. should dial +1-480-629-9760.
A live webcast of the call will also be available in the Investor 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.
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 net loss" and "non-GAAP net loss per 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 as a substitute for measures in accordance with
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 release under "Reconciliation of GAAP to Non-GAAP
Net Loss per Share."
About HeartWare International
HeartWare International develops and manufactures miniaturized implantable
heart pumps, or ventricular assist devices, to treat Class IIIB / IV 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 37 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
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
registered trademarks of HeartWare, Inc.
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®
Ventricular Assist System, continued support from international customers,
progress of clinical trials and post-approval studies, regulatory status,
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.
For further information:
HeartWare International, Inc.
Phone: +1 508 739 0864
- Tables to Follow-
HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months Ended Year Ended
December 31, December 31,
2013 2012 2013 2012
Revenue, net $ 53,054 $ 32,662 $ $
Cost of revenue 19,293 16,606 76,468 51,023
Gross profit 33,761 16,056 131,461 59,899
Selling, general and 22,976 13,257 76,524 53,945
Research and development 30,281 22,157 102,483 83,548
Total operating expenses 53,257 35,414 179,007 137,493
Loss from operations (19,496) (19,358) (47,546) (77,594)
Other expense, net (1,926) (1,747) (11,298) (10,124)
Loss before income taxes (21,422) (21,105) (58,844) (87,718)
Provision for income taxes 626 – 467 –
Net loss $ $ $ (59,311) $ (87,718)
Net loss per common share — $ $ $ $
basic and diluted (1.33) (1.46) (3.69) (6.15)
Weighted average shares
outstanding — basic and 16,574 14,451 16,066 14,252
HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
December 31, December 31,
Cash and cash equivalents $ 162,880 $ 85,921
Short-term investments 37,596 16,887
Accounts receivable, net 28,052 25,225
Inventories 40,876 38,443
Prepaid expenses and other current 11,205 5,925
Total current assets 280,609 172,401
Property, plant and equipment, net 18,562 19,380
Goodwill 61,596 1,190
In-process research and development 35,500 2,536
Other intangible assets, net 15,975 5,258
Other assets, net 17,585 5,734
Total assets $ 429,827 $ 206,499
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 17,914 $ 12,024
Other accrued liabilities 35,276 22,020
Total current liabilities 53,190 34,044
Convertible senior notes, net 107,125 100,315
Contingent liabilities 67,000 –
Other long-term liabilities 3,905 3,929
Stockholders' equity 198,607 68,211
Total liabilities and stockholders' $ 429,827 $ 206,499
Reconciliation of GAAP to Non-GAAP Net Loss per Share (unaudited) (see
explanation of adjustments below)
(in thousands except per share data)
Three Months Ended Year Ended
December 31, December 31,
2013 2012 2013 2012
GAAP net loss $ (22,048) $ (21,105) $ $
GAAP EPS – basic and $ $ $ $
diluted (1.33) (1.46) (3.69) (6.15)
impairment of purchased (a) 3,747 21 3,809 35
intangible assets and
Acquisition related (b) 2,349 - 2,849 1,100
Restructuring and (c) 649 - 649 -
Total adjustments 6,745 21 7,307 1,135
Per share effect of $ $ $ $
adjustments - basic and 0.41 0.00 0.45 0.08
Non-GAAP net loss $ (15,303) $ (21,084) $ $ (86,583)
Non-GAAP net loss per $ $ $ $
share - basic and (0.92) (1.46) (3.24) (6.07)
Shares used in
computing non-GAAP loss 16,574 14,451 16,066 14,252
per share - basic and
Represents amortization of purchased intangible assets related to
(a) WorldHeart and CircuLite as well as $3.7 million related to goodwill and
in-process research and development impairment charges related to
WorldHeart during the quarter ended December 31, 2013.
(b) Represents acquisition transaction costs associated with the purchase of
WorldHeart in August 2012 and CircuLite in December 2013.
Represents separation costs incurred in connection with the termination
(c) of certain employees of CircuLite during the quarter ended December 31,
The terms "non-GAAP net loss" and "non-GAAP net loss per share" 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 as follows:
We exclude amortization of purchased intangible assets and periodic
impairment charges related to long-lived assets from this measure because
1) these 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.
We exclude purchase accounting adjustments and acquisition related costs
from this measure because they occur as a result of specific events and are
2) 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.
We exclude restructuring and severance costs from this measure because they
tend to occur as a result of specific events such as acquisitions,
3) 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.
Non-GAAP net loss per share is calculated by subtracting the total per share
effect of these adjustments from GAAP EPS.
SOURCE HeartWare International, Inc.
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