Thoratec (NSDQ:THOR) shares lost more than 6% yesterday after the heart pump maker said its operating costs spiked 20%, largely due to ramped-up R&D efforts, and drove a nearly 5% profit slide.
The Pleasanton, Calif.-based medical device company reported profits of $20.8 million, or 35¢ per share, on sales of $118.7 million. That amounts to revenue growth of 6.7% but a bottom-line slide of 4.5%, compared with the same period last year.
CEO Gary Burbach said that, although Thoratec is "very committed to our strategic investments, both in terms of product development as well as market development," the 25% growth rate of its operating expenses during the first 6 months of the year will abate during the 2nd half of 2012 and into 2013.
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"You will see that growth rate come down in the second half of this year, and certainly you can expect that in 2013 the expense growth rate won’t be at that same kind of pace," Burbach told analysts during an August 1 conference call.
Thoratec is anticipating FDA approval for rival HeartWare‘s (NSDQ:HTWR) competing left ventricular assist device for bridge-to-transplant therapy during the 3rd quarter, Burbach said during the call, but is "more optimistic about those dynamics then some of the people on Wall Street." In April, HeartWare won a nod from and FDA advisory panel, which recommended that the watchdog agency approve the BTT indication for the HeartWare medical device.
"[Wall Street is] expecting very rapid ramp up by HeartWare," he said. "We think there are a number of dynamics that will enable us to make that a much slower process. One, most important, being the clinical results, which we think are solidly in favor of HeartMate II. … Even within bridge-to-transplant, not just this year but beyond."
Thoratec boosted its sales and earnings forecast for the rest of the year, based on "the strength of our performance in the 1st half of the year, the underlying momentum in the VAD market, and our confidence in Thoratec’s ongoing competitive position," Burbach said.
The company said it now expects to post sales of $460 million-$470 million this year, up from Thoratec’s Q1 guidance of $452 million-$467 million. Adjusted earnings per share are now pegged at $1.67-$1.73, up from $1.62-$1.72. Analysts on The Street raised their expectations in turn, predicting adjusted EPS of $1.73 for 2012.