HeartWare International, Inc. (HTWR)

[cjgaddy]

7-31-14: HeartWare Reports $70.1mm Q2’14 Revenue; +38% vs. Q2’13

- Record 674 HeartWare® Ventricular Assist Systems (HVAD’s) sold worldwide in Q2
- U.S. revenue of $36.9mm, 47% growth from Q2/2013
- Intl. revenue of $33.2mm, 29% growth from Q2/2013
- Conference call today at 8:00amET
http://ir.heartware.com/phoenix.zhtml?c=187755&p=irol-newsArticle&ID=1953486

FRAMINGHAM, July 31, 2014: Heartware Intl., 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 $70.1mm for Q2 ended June 30, 2014, a 38% increase compared to $50.8mm in revenue for the same period of 2013.

During Q2, 674 HeartWare® Ventricular Assist Systems were sold globally compared to 523 units in Q2 of 2013. U.S. revenue, generated through the sale of 338 units during Q2 of 2014, was $36.9mm, a 47% increase from $25.1mm in Q2 of 2013. Revenue from intl. markets was $33.2mm, an increase of 29% from $25.7mm in Q2 of 2013.

"We are pleased to announce another encouraging quarterly performance, with record sales and more than 300 units in both the U.S. as well as international markets for the second consecutive quarter," said Doug Godshall, President and CEO. "More than 6,000 patients from 40 countries around the globe have received the HeartWare System as a treatment for their advanced heart failure, with patient support extending as long as seven years.

"In addition to our commercial efforts, we continue to make investments to advance our clinical trials, including enrolling the second phase of our destination therapy study in the U.S., moving toward completion of enrollment of our Japan trial and preparing to initiate the clinical evaluation of our next-generation MVAD® System," Godshall said. "As we continue to drive these programs forward, our highest internal priority remains addressing and remedying the observations raised by FDA following an inspection at our Miami Lakes, Florida facility earlier this year."

For the 6 months ended June 30, 2014, revenue increased approximately 36% to $136.6mm, compared to $100.1mm in the first six months of 2013. Currency fluctuations benefitted revenue growth by approximately 3.1 and 2.6 percentage points in the 3 and 6 months ended June 30, 2014, respectively, as compared to the same periods in 2013. Gross margin% improved to 67.3% in Q2 of 2014, as compared to 62.9% in Q2 of 2013. The improvement compared to the same period in 2013 primarily reflects efficiencies associated with increased manufacturing throughput, partially offset by a charge of $1.7mm for the extension of a prior field safety corrective action to replace certain older batteries through a voluntary recall initiated yesterday, July 30, 2014.

Total operating expenses for Q2 of 2014 were $34.2mm, as compared to $41.4mm in Q2 of 2013. Total operating expenses for Q2 of 2014 include a $13.7mm 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 $26.9mm for Q2 of 2014, as compared to $24.2mm in the same period of 2013. Increased development costs are primarily attributable to the acquisition of CircuLite, preparations for human clinical testing for the MVAD® System and associated peripherals, and increasing clinical activity.

Selling, G&A expenses were $20.9mm in Q2 of 2014, compared to $17.2mm in Q2 of 2013. The increase in selling, general and administrative expenses primarily reflects the acquisition of CircuLite, the expansion of sales and marketing activities, increased employee expenses and other administrative expenses. Net income for Q2 of 2014 was $8.4mm, or $0.49 per basic and $0.48 per diluted share, compared to a net loss of $12.9mm, or a loss of $0.79 per basic and diluted share, in Q2 of 2013. Net income for Q2 of 2014 includes a $13.7mm reduction in the estimated fair value of the contingent consideration for the CircuLite acquisition. This non-recurring benefit was the primary factor resulting in positive net income in Q2 of 2014. For the six months ended June 30, 2014, the company recorded a net loss of $11.1mm, or a $0.65 loss per basic and diluted share, compared to a $25.9mm net loss, or a loss of $1.66 per basic and diluted share, in the first six months of 2013. Non-GAAP net loss for Q2 of 2014 was $0.29 per basic and diluted share, compared to a loss of $0.79 per basic and diluted share in Q2 of 2013. Non-GAAP net loss for the six months ended June 30, 2014 was $0.99 per basic and diluted share, compared to a loss of $1.65 per basic and diluted share, in the first six months of 2013. See "Use of Non-GAAP Financial Measures" and "Reconciliation of GAAP to Non-GAAP Net Income per Common Share." At June 30, 2014, HeartWare had $184mm of cash, cash equivalents and investments, an increase from $181mm at the end of the first quarter on March 31, 2014.

Conference Call and Webcast Information
HeartWare will host a conference call on Thursday, July 31, 2014 at 8:00amET to discuss its financial results, highlights from Q2 and the company's business outlook. The call may be accessed by dialing 1-877-407-0789 5 minutes prior to the scheduled start time and referencing "HeartWare." Callers outside the U.S. should dial [phone]. 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.