Thoratec topped the forecast on Wall Street and said it expects to release its next-generation HeartMate III and HeartMate PHP cardiac assist devices in Europe later this year, sending share prices up 7.5% to $44.08 apiece since its May 7 earnings release.
HeartWare, which met The Street’s earnings outlook but missed the top-line forecast, is further behind Thoratec with its next-gen MVAD pump. Investors reacted to the April 30 release by sending share prices down -2.1% to $74.11 each.
Thoratec beats The Street, boosts guidance
Thoratec posted profits $10.8 million, or 20¢ per share, on sales of $121.3 million for the 3 months ended March 31, representing declines of -40.9% and -3.5%, respectively, compared with Q1 2014.
Adjusted to exclude 1-time items, earnings per share were 38¢, well ahead of the 26¢ analysts expected. Thoratec also handily beat the top-line expectation for sales of $111.1 million.
"We made additional progress during the 1st quarter with our efforts to stimulate growth including building our team and improving execution. We remain in the early stages with these initiatives and continue to address market challenges, but I believe these efforts will favorably impact our overall market and contribute to the return of strong levels of growth at Thoratec in the future," president & CEO Keith Grossman said in prepared remarks. "We also continue to make progress with HeartMate III and HeartMate PHP as we move closer to commercial launches in Europe later this year, while also realizing advancements with our clinical programs in the U.S."
Thoratec said it now expects to post adjusted EPS of $1.15 to $1.25 this year, up from prior guidance of $1.10 to $1.20, and raised its sales outlook to $465 million to $475 million from $450 million to $460.
HeartWare looks to HeartMate III disruption
HeartWare president & CEO Doug Godshall told analysts during a conference call that the expected European launch for HeartMate III will be disruptive to the overall LVAD market.
"We anticipate that the introduction of HeartMate III may be disruptive to near-term market share trends. In the U.S. as the HeartMate III trial ramps, we expect to see a dampening effect on HVAD versus the transplantation sales, and in Europe, as sites ready for launch of HeartMate III following CE mark approval in mid-2015. Adding to this, we’ve seen some influence of Thoratec distributors managing down their HeartMate II inventories, as was suggested in their 4th-quarter earnings call. In Q1, we felt the impact of more relaxed competitive terms although these occurrences were fairly localized," Godshall said.
HeartWare cut its Q1 losses by 25.2%, reporting losses of -$14.5 million, or -85¢ per share, on sales growth of 5.3% to $70.0 million. Adjusted EPS came in at -55¢, exactly in line with The Street.
"Continued U.S. commercial expansion drove the 2nd-largest unit sales quarter for HeartWare, although year-over-year U.S. growth was offset by a decrease in international unit sales when compared to the exceptionally strong international sales we achieved in the 1st quarter of 2014," Godshall said in a press release. "During the quarter, we continued to advance our clinical trials for the HVAD system, with enrollment in the supplemental destination therapy study nearing completion; follow-up concluded for our Japan clinical trial; and commencement of HVAD Lateral, a trial designed to evaluate a less-invasive thoracotomy implant technique. Regarding our pipeline, we recently completed training with investigators and are eager to commence first implants in the CE Mark study for our next-generation MVAD system later this quarter, and we plan to submit our Investigational Device Exemption protocol to FDA for review in the coming weeks."