UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of the Securities Exchange Act of 1934
Date of report (date of earliest event reported): October 30, 2014
HEARTWARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware | 001-34256 | 26-3636023 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
500 Old Connecticut Path
Framingham, MA 01701
(Address of principal executive offices)
Registrants telephone number, including area code:
508.739.0950
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On October 30, 2014, HeartWare International, Inc. (Nasdaq: HTWR), issued a press release announcing financial results for the quarter ended September 30, 2014. A copy of the release is furnished with this report as Exhibit 99.1.
The information in this Item 2.02 of this Current Report on Form 8-K and Exhibit 99.1 attached hereto shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit No. |
Description | |
99.1 | Press Release issued by HeartWare International, Inc. dated October 30, 2014. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
HeartWare International, Inc. | ||||||
Date: October 30, 2014 | By: | /s/ Lawrence J. Knopf | ||||
Name: Lawrence J. Knopf | ||||||
Title: Senior Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
Exhibit No. |
Description | |
99.1 | Press Release issued by HeartWare International, Inc. dated October 30, 2014. |
Exhibit 99.1
HEARTWARE INTERNATIONAL REPORTS $68.6 MILLION IN THIRD
QUARTER 2014 REVENUE; 25% INCREASE FROM THIRD QUARTER 2013
| Record 675 HeartWare® Ventricular Assist Systems sold worldwide in Q3 |
| U.S. revenue of $39.1 million, 39% growth from third quarter 2013 |
| International revenue of $29.5 million, 11% growth from third quarter 2013 |
Conference call today at 8:00 a.m. U.S. EDT
Framingham, Mass., October 30, 2014 - 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 companys 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 companys 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 Companys 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 Companys 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 HeartWares 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 managements 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. 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 HeartWares 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:
Christopher Taylor
HeartWare International, Inc.
Email: ctaylor@heartware.com
Phone: +1 508 739 0864
- Tables to Follow-
HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(unaudited)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||
Revenue, net |
$ | 68,608 | $ | 54,800 | $ | 205,211 | $ | 154,875 | ||||||||
Cost of revenue |
22,977 | 19,529 | 68,846 | 57,175 | ||||||||||||
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Gross profit |
45,631 | 35,271 | 136,365 | 97,700 | ||||||||||||
Operating expenses: |
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Selling, general and administrative |
20,584 | 19,844 | 65,765 | 53,548 | ||||||||||||
Research and development |
29,477 | 25,930 | 88,981 | 72,201 | ||||||||||||
Change in fair value of contingent consideration |
(3,620 | ) | | (14,180 | ) | | ||||||||||
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Total operating expenses |
46,441 | 45,774 | 140,566 | 125,749 | ||||||||||||
Loss from operations |
(810 | ) | (10,503 | ) | (4,201 | ) | (28,049 | ) | ||||||||
Other expense, net |
(6,472 | ) | (868 | ) | (13,586 | ) | (9,214 | ) | ||||||||
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Loss before income taxes |
(7,282 | ) | (11,371 | ) | (17,787 | ) | (37,263 | ) | ||||||||
Provision for income taxes |
88 | | 663 | | ||||||||||||
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Net loss |
$ | (7,370 | ) | $ | (11,371 | ) | $ | (18,450 | ) | $ | (37,263 | ) | ||||
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Net loss per common share - basic and diluted |
$ | (0.43 | ) | $ | (0.69 | ) | $ | (1.09 | ) | $ | (2.34 | ) | ||||
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Weighted average shares outstanding - basic and diluted |
17,007 | 16,439 | 16,977 | 15,895 | ||||||||||||
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HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, 2014 |
December 31, 2013 |
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ASSETS |
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Current assets: |
||||||||
Cash and cash equivalents |
$ | 113,648 | $ | 162,880 | ||||
Short-term investments |
66,617 | 37,596 | ||||||
Accounts receivable, net |
37,428 | 28,052 | ||||||
Inventories |
51,835 | 40,876 | ||||||
Prepaid expenses and other current assets |
8,125 | 11,205 | ||||||
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Total current assets |
277,653 | 280,609 | ||||||
Property, plant and equipment, net |
19,777 | 18,562 | ||||||
Other assets, net |
131,432 | 130,656 | ||||||
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Total assets |
$ | 428,862 | $ | 429,827 | ||||
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LIABILITIES AND STOCKHOLDERS EQUITY |
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Current liabilities: |
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Accounts payable |
$ | 15,458 | $ | 17,914 | ||||
Other accrued liabilities |
38,004 | 35,276 | ||||||
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Total current liabilities |
53,462 | 53,190 | ||||||
Convertible senior notes, net |
112,796 | 107,125 | ||||||
Other long-term liabilities |
59,436 | 70,905 | ||||||
Stockholders equity |
203,168 | 198,607 | ||||||
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Total liabilities and stockholders equity |
$ | 428,862 | $ | 429,827 | ||||
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Reconciliation of GAAP to Non-GAAP Net Loss per Common Share (unaudited) (see explanation of adjustments below) (in thousands, except per share data)
Three Months Ended September 30, |
Nine Months Ended September 30, |
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2014 | 2013 | 2014 | 2013 | |||||||||||||||||
GAAP net loss |
$ | (7,370 | ) | $ | (11,371 | ) | $ | (18,450 | ) | $ | (37,263 | ) | ||||||||
GAAP net loss per common share basic and diluted |
$ | (0.43 | ) | $ | (0.69 | ) | $ | (1.09 | ) | $ | (2.34 | ) | ||||||||
Adjustments: |
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Amortization of purchased intangible assets |
(a) | |||||||||||||||||||
-Selling, general and administrative |
84 | 50 | 252 | 150 | ||||||||||||||||
-Research and development |
247 | 721 | ||||||||||||||||||
Acquisition-related contingent consideration adjustments |
(b) | (3,620 | ) | | (14,180 | ) | | |||||||||||||
Restructuring costs |
(c) | |||||||||||||||||||
-Selling, general and administrative |
(79 | ) | | 2,985 | | |||||||||||||||
-Research and development |
(66 | ) | | 1,032 | | |||||||||||||||
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Total adjustments |
(3,434 | ) | 50 | (9,190 | ) | 150 | ||||||||||||||
Non-GAAP adjusted net loss |
$ | (10,804 | ) | $ | (11,321 | ) | $ | (27,640 | ) | $ | (37,113 | ) | ||||||||
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Non-GAAP adjusted net loss per common share basic and diluted |
$ | (0.64 | ) | $ | (0.69 | ) | $ | (1.63 | ) | $ | (2.33 | ) | ||||||||
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Shares used in computing non-GAAP adjusted net loss per common share basic and diluted |
17,007 | 16,439 | 16,977 | 15,895 | ||||||||||||||||
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(a) | Represents amortization of purchased intangible assets related to CircuLite and WorldHeart during the three and nine months ended September 30, 2014, and WorldHeart during the three and nine months ended September 30, 2013. |
(b) | Represents the change in fair value of contingent consideration associated with the acquisition of CircuLite in December 2013. |
(c) | Represents certain restructuring costs incurred during the three and nine months ended September 30, 2014, respectively, as follows (in thousands): |
Q3 | YTD | |||||||
Lease exit charge for HeartWares former Massachusetts corporate offices |
$ | (98 | ) | $ | 373 | |||
Charges related to CircuLite acquisition: |
||||||||
Lease exit charge for former N.J. corporate offices |
19 | 1,709 | ||||||
Contract termination costs |
| 688 | ||||||
Employee severance |
(66 | ) | 618 | |||||
Abandoned fixed assets |
| 629 | ||||||
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Total |
$ | (47 | ) | $ | 3,644 | |||
Total restructuring costs |
$ | (145 | ) | $ | 4,017 | |||
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The terms non-GAAP adjusted net loss and non-GAAP adjusted net loss per common share refer to GAAP net loss and GAAP net loss per common share excluding certain adjustments such as amortization of purchased intangible assets, impairment charges, purchase accounting and acquisition-related transaction costs, and restructuring and severance costs as follows:
1) | We exclude amortization of purchased intangible assets and periodic impairment charges related to long-lived assets from this measure because such 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. |
2) | We exclude purchase accounting adjustments and acquisition-related costs from this measure because they occur as a result of specific events and are not reflective of our internal investments and the ongoing costs to support our operating structure. Purchase accounting adjustments include contingent consideration fair value adjustments. |
3) | We exclude restructuring and severance costs from this measure because they tend to occur as a result of specific events such as acquisitions, 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. |
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