HeartWare Reports $68.6 Million In Third Quarter 2014 Revenue; 25% Increase From Third Quarter 2013
FRAMINGHAM, Mass., Oct. 30, 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 $68.6 million for the third quarter ended September 30, 2014, a 25% increase compared to $54.8 million in revenue for the same period of 2013.
During the third quarter, 675 HeartWare® Ventricular Assist Systems were sold globally, compared to 550 units in the third quarter of 2013. U.S. revenue, generated through the sale of 361 units during the third quarter of 2014, was $39.1 million, a 39% increase from $28.2 million in the third quarter of 2013. Revenue from international markets was $29.5 million, an increase of 11% from $26.6 million in the third quarter of 2013.
"Results for the third quarter were quite encouraging, as we continue building out our global operations," said Doug Godshall, President and Chief Executive Officer. "On top of our strong commercial results, we advanced our clinical initiatives, including preparing our request to commence a CE Mark study of our next-generation MVAD® System, which we expect to submit for regulatory review later this year or in early 2015. For the HVAD® System, we also completed enrollment in our Japan study during the quarter, advanced enrollment in our U.S. Destination Therapy study and are finalizing plans to initiate a U.S. IDE study for the Thoracotomy implant technique later this year.
"As we continue to drive these programs forward, we remain focused on addressing and remedying the observations raised by FDA following an inspection at our Miami Lakes, Florida facility earlier this year," Godshall added.
For the nine months ended September 30, 2014, revenue increased approximately 33% to $205.2 million, compared to $154.9 million in the first nine months of 2013.
Currency fluctuations offset sequential revenue performance by approximately $0.8 million, or 1.1 percentage points, compared to the second fiscal quarter of 2014, yet favorably impacted revenue growth by approximately 0.5 and 1.9 percentage points in the three and nine months ended September 30, 2014, respectively, as compared to the same periods in 2013.
Gross margin percentage improved to 66.5% in the third quarter of 2014, as compared to 64.4% in the third quarter of 2013. The improvement compared to the same period in 2013 primarily reflects efficiencies associated with increased manufacturing throughput.
Total operating expenses for the third quarter of 2014 were $46.4 million, as compared to $45.8 million in the third quarter of 2013. Total operating expenses for the third quarter of 2014 include a $3.6 million reduction in the estimated fair value of the contingent consideration for CircuLite, which was acquired by HeartWare in December 2013.
Research and development expense was $29.5 million for the third quarter of 2014, as compared to $25.9 million in the same period of 2013. Increased development costs are primarily attributable to the acquisition of CircuLite, preparations for human testing of the MVAD® System and associated peripherals, and increasing clinical activity overall.
Selling, general and administrative expenses were $20.6 million in the third quarter of 2014, compared to $19.8 million in the third quarter of 2013. The increase in selling, general and administrative expenses primarily reflects the acquisition of CircuLite, the expansion of sales and marketing activities globally, increased employee expenses and other administrative expenses.
Net loss for the third quarter of 2014 was $7.4 million, or $0.43 per basic and diluted share, compared to a net loss of $11.4 million, or a loss of $0.69 per basic and diluted share, in the third quarter of 2013. Net loss for the third quarter of 2014 includes a $3.6 million reduction in the estimated fair value of the contingent consideration for the CircuLite acquisition. For the nine months ended September 30, 2014, the company recorded a net loss of $18.5 million, or a $1.09 loss per basic and diluted share, compared to a $37.3 million net loss, or a loss of $2.34 per basic and diluted share, in the first nine months of 2013.
Non-GAAP net loss for the third quarter of 2014 was $0.64 per basic and diluted share, compared to a loss of $0.69 per basic and diluted share in the third quarter of 2013. Non-GAAP net loss for the nine months ended September 30, 2014 was $1.63 per basic and diluted share, compared to a loss of $2.33 per basic and diluted share, in the first nine months of 2013. See "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Net Loss per Common Share."
At September 30, 2014, HeartWare had $182 million of cash, cash equivalents and investments.
Conference Call and Webcast Information
HeartWare will host a conference call on Thursday, October 30, 2014 at 8:00 a.m., U.S. Eastern Daylight Time to discuss its financial results, highlights from the third 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 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.
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 40 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 registered trademarks of HeartWare, Inc.
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 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 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® Ventricular Assist System, progress of clinical trials and post-approval studies, regulatory status 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.
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