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): February 26, 2015
HEARTWARE INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
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Delaware |
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001-34256 |
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26-3636023 |
(State or other jurisdiction
of incorporation) |
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(Commission
File Number) |
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(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 February 26, 2015, HeartWare International, Inc. (Nasdaq: HTWR), issued a press release announcing financial results for the quarter ended
December 31, 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
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Exhibit
No. |
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Description |
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99.1 |
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Press Release issued by HeartWare International, Inc. dated February 26, 2015. |
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.
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HeartWare International, Inc. |
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Date: February 26, 2015 |
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By: |
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/s/ Lawrence J. Knopf |
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Name: |
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Lawrence J. Knopf |
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Title: |
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Senior Vice President, General Counsel and Secretary |
INDEX TO EXHIBITS
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Exhibit
No. |
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Description |
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99.1 |
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Press Release issued by HeartWare International, Inc. dated February 26, 2015. |
Exhibit 99.1
HEARTWARE INTERNATIONAL REPORTS $73.2 MILLION IN FOURTH
QUARTER 2014 REVENUE; 38% INCREASE FROM FOURTH QUARTER 2013
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U.S. revenue of $41.5 million, up 60% and International revenue of $31.7 million, up 17%, compared to fourth quarter of 2013 |
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Revenue for 2014 increased 34% to $278.4 million, from $207.9 million in 2013 |
Conference call today at 8:00 a.m. U.S. ET
Framingham, Mass., February 26, 2015 - 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 $73.2 million for the fourth quarter ended December 31, 2014, a 38%
increase compared to $53.1 million in revenue for the same period of 2013. For the fiscal year 2014, the company generated revenue of $278.4 million, a 34% increase compared to revenue of $207.9 million in 2013.
During the fourth quarter, 737 HeartWare® Ventricular Assist Systems were sold globally, compared to
524 units in the fourth quarter of 2013. U.S. revenue, generated through the sale of 382 units during the fourth quarter of 2014, was $41.5 million, a 60% increase from $25.9 million in the fourth quarter of 2013. Revenue from international markets,
derived through the sale of 355 units, was $31.7 million, an increase of 17% from $27.1 million in the fourth quarter of 2013. Currency fluctuations offset total revenue performance in the fourth quarter by approximately $1.9 million, or 3.7
percentage points, compared to the fourth quarter of 2013.
With record unit sales in the fourth quarter contributing to more than 2,750 units sold
globally during 2014, as well as the addition of more than 50 hospital centers around the world, we continue to be encouraged by the growing adoption of the HeartWare System, said Doug Godshall, President and Chief Executive Officer.
During the year, we completed enrollment in our Japan bridge-to-transplant study, ramped enrollment in the supplemental cohort of our U.S. Destination Therapy study, advanced our technology pipeline, made significant upgrades to our quality
systems, improved our gross margin, and concluded the year by initiating the submission process for our CE Marking Trial Application for our next-generation MVAD® System.
Looking ahead, 2015 promises to be a busy year as we initiate our MVAD® System CE Marking
trial, file our MVAD trial protocol in the U.S., complete enrollment in our destination therapy trial, present initial clinical data evaluating the HeartWare System as a destination therapy, and advance our HVAD® LATERAL study evaluating the thoracotomy implant technique, Godshall added.
Gross margin
percentage improved to 68.1% in the fourth quarter of 2014, as compared to 63.6% in the fourth quarter of 2013. The improvement compared to the same period in 2013 primarily reflects efficiencies associated with increased manufacturing throughput.
For the year ended December 31, 2014, gross margin improved four points over the same period in 2013.
Total operating expenses for the fourth
quarter of 2014 were $45.8 million, as compared to $53.3 million in the fourth quarter of 2013. Total operating expenses for the fourth quarter of 2014 include
a $9.1 million reduction in the estimated fair value of future contingent consideration payments for CircuLite as a result of the Companys decision to replace CircuLites Synergy micro
pump with a version of HeartWares MVAD for future development and commercialization. Also related to this decision, HeartWare recognized an impairment charge of $2.7 million with respect to in-process R&D acquired from CircuLite in
connection with the 2013 acquisition. Total operating expenses for 2014 were $186.3 million, a four percent increase from the same period in 2013.
Research and development expense was $33.5 million for the fourth quarter of 2014, which compared to $30.3 million in the same period in 2013. The $3.2
million net increase was comprised of a $1.2 million increase in project spending, a $3.0 million increase as a result of FDA warning letter remediation costs, and a decrease of $1.0 million in non-recurring impairment charges compared to the fourth
quarter of 2013.
Selling, general and administrative expenses were $21.4 million in the fourth quarter of 2014, compared to $23.0 million in the fourth
quarter of 2013 which included approximately $2.9 million of CircuLite acquisition and severance expenses. Net of these prior-year expenses, selling, general and administrative expenses increased as a result of revenue growth.
Net loss for the fourth quarter of 2014 was $0.9 million, or $0.05 per basic and diluted share, compared to a net loss of $22.0 million, or a loss of $1.33
per basic and diluted share, in the fourth quarter of 2013. Net loss for the fourth quarter of 2014 includes the benefit of the $9.1 million contingent consideration fair value adjustment and the $2.7 million in-process R&D charge which are
discussed above. For the fiscal year ended December 31, 2014, the company recorded a net loss of $19.4 million, or a loss of $1.14 per basic and diluted share, compared to a $59.3 million net loss, or a loss of $3.69 per basic and diluted
share, in fiscal year 2013.
Non-GAAP net loss for the fourth quarter of 2014 was $6.9 million, or $0.41 per basic and diluted share, compared to a loss
of $15.2 million, or $0.92 per basic and diluted share in the fourth quarter of 2013. Non-GAAP net loss for 2014 was $34.6 million, or $2.03 per basic and diluted share, compared to a loss of $51.9 million, or $3.23 per basic and diluted share, in
2013. See Use of Non-GAAP Financial Measures and Reconciliation of GAAP to Non-GAAP Net Loss per Common Share.
At
December 31, 2014, HeartWare had $179.7 million of cash, cash equivalents and investments, a $1.8 million reduction from the end of the third quarter 2014.
Conference Call and Webcast Information
HeartWare will
host a conference call on Thursday, February 26, 2015 at 8:00 a.m., U.S. Eastern Time to discuss its financial results, highlights from the fourth 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 41 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 and outcomes of clinical trials, regulatory 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)
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Three Months Ended December 31, |
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Year Ended December 31, |
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2014 |
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2013 |
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2014 |
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2013 |
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Revenue, net |
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$ |
73,209 |
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$ |
53,054 |
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$ |
278,420 |
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$ |
207,929 |
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Cost of revenue |
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23,349 |
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19,293 |
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92,195 |
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76,468 |
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Gross profit |
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49,860 |
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33,761 |
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186,225 |
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131,461 |
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Operating expenses: |
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|
|
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Selling, general and administrative |
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21,412 |
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22,976 |
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87,177 |
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76,524 |
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Research and development |
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33,451 |
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30,281 |
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122,432 |
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|
102,483 |
|
Change in fair value of contingent consideration |
|
|
(9,080 |
) |
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|
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|
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|
(23,260 |
) |
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Total operating expenses |
|
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45,783 |
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53,257 |
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186,349 |
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179,007 |
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Income (loss) from operations |
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4,077 |
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(19,496 |
) |
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|
(124 |
) |
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(47,546 |
) |
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Other expense, net |
|
|
(5,096 |
) |
|
|
(1,926 |
) |
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|
(18,682 |
) |
|
|
(11,298 |
) |
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Loss before taxes |
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|
(1,019 |
) |
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|
(21,422 |
) |
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|
(18,806 |
) |
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|
(58,844 |
) |
Income tax (benefit) expense |
|
|
(103 |
) |
|
|
626 |
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|
|
560 |
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467 |
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Net loss |
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$ |
(916 |
) |
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$ |
(22,048 |
) |
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$ |
(19,366 |
) |
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$ |
(59,311 |
) |
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Net loss per common share - basic and diluted |
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$ |
(0.05 |
) |
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$ |
(1.33 |
) |
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$ |
(1.14 |
) |
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$ |
(3.69 |
) |
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|
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Weighted average shares outstanding - basic and diluted |
|
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17,037 |
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|
16,574 |
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|
|
16,992 |
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|
16,066 |
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HEARTWARE INTERNATIONAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
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December 31, 2014 |
|
|
December 31, 2013 |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
102,946 |
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$ |
162,880 |
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Short-term investments |
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|
75,535 |
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|
37,596 |
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Accounts receivable, net |
|
|
38,041 |
|
|
|
28,052 |
|
Inventories |
|
|
54,046 |
|
|
|
40,876 |
|
Prepaid expenses and other current assets |
|
|
5,975 |
|
|
|
11,205 |
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|
|
|
|
|
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Total current assets |
|
|
276,543 |
|
|
|
280,609 |
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Property, plant and equipment, net |
|
|
19,036 |
|
|
|
18,562 |
|
Other assets, net |
|
|
128,234 |
|
|
|
130,656 |
|
|
|
|
|
|
|
|
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Total assets |
|
$ |
423,813 |
|
|
$ |
429,827 |
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS EQUITY |
|
|
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Current liabilities: |
|
|
|
|
|
|
|
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Accounts payable |
|
$ |
13,322 |
|
|
$ |
17,914 |
|
Other accrued liabilities |
|
|
36,589 |
|
|
|
35,276 |
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|
|
|
|
|
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Total current liabilities |
|
|
49,911 |
|
|
|
53,190 |
|
Convertible senior notes, net |
|
|
114,803 |
|
|
|
107,125 |
|
Other long-term liabilities |
|
|
50,565 |
|
|
|
70,905 |
|
Stockholders equity |
|
|
208,534 |
|
|
|
198,607 |
|
|
|
|
|
|
|
|
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|
Total liabilities and stockholders equity |
|
$ |
423,813 |
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|
$ |
429,827 |
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|
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|
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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)
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|
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|
|
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|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
|
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|
2014 |
|
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2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
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|
GAAP net loss |
|
|
|
|
|
$ |
(916 |
) |
|
$ |
(22,048 |
) |
|
$ |
(19,366 |
) |
|
$ |
(59,311 |
) |
|
|
|
|
|
|
GAAP net loss per common share basic and diluted |
|
|
|
|
|
$ |
(0.05 |
) |
|
$ |
(1.33 |
) |
|
$ |
(1.14 |
) |
|
$ |
(3.69 |
) |
|
|
|
|
|
|
Adjustments: |
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|
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|
|
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|
|
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|
|
|
|
|
|
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Amortization and impairment of purchased intangible assets and goodwill |
|
|
(a |
) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Selling, general and administrative |
|
|
|
|
|
|
84 |
|
|
|
28 |
|
|
|
337 |
|
|
|
28 |
|
-Research and development |
|
|
|
|
|
|
2,998 |
|
|
|
3,806 |
|
|
|
3,719 |
|
|
|
3,868 |
|
Acquisition-related transaction costs |
|
|
(b |
) |
|
|
|
|
|
|
2,349 |
|
|
|
|
|
|
|
2,849 |
|
Contingent consideration adjustments |
|
|
(c |
) |
|
|
(9,080 |
) |
|
|
|
|
|
|
(23,260 |
) |
|
|
|
|
Restructuring costs |
|
|
(d |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
-Selling, general and administrative |
|
|
|
|
|
|
(22 |
) |
|
|
649 |
|
|
|
2,962 |
|
|
|
649 |
|
-Research and development |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,032 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total adjustments |
|
|
|
|
|
|
(6,020 |
) |
|
|
6,832 |
|
|
|
(15,210 |
) |
|
|
7,394 |
|
|
|
|
|
|
|
Non-GAAP adjusted net loss |
|
|
|
|
|
$ |
(6,936 |
) |
|
$ |
(15,216 |
) |
|
$ |
(34,576 |
) |
|
$ |
(51,917 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted net loss per common share basic and diluted |
|
|
|
|
|
$ |
(0.41 |
) |
|
$ |
(0.92 |
) |
|
$ |
(2.03 |
) |
|
$ |
(3.23 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used in computing non-GAAP adjusted net loss per common share basic and diluted |
|
|
|
|
|
|
17,037 |
|
|
|
16,574 |
|
|
|
16,992 |
|
|
|
16,066 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Represents amortization of purchased intangible assets related to CircuLite and WorldHeart. |
(b) |
Represents transaction costs associated with the acquisition of CircuLite in December 2013. |
(c) |
Represents the change in fair value of contingent consideration associated with the acquisition of CircuLite in December 2013. |
(d) |
Represents certain restructuring costs, as follows (in thousands): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended December 31, |
|
|
Year Ended December 31, |
|
|
|
2014 |
|
|
2013 |
|
|
2014 |
|
|
2013 |
|
|
|
|
|
|
Lease exit charge for HeartWares former Massachusetts corporate offices |
|
$ |
(13 |
) |
|
|
|
|
|
$ |
359 |
|
|
|
|
|
|
|
|
|
|
Charges related to CircuLite acquisition: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lease exit charge for former N.J. corporate offices |
|
|
16 |
|
|
|
|
|
|
|
1,730 |
|
|
|
|
|
Contract termination costs |
|
|
|
|
|
|
|
|
|
|
688 |
|
|
|
|
|
Employee severance |
|
|
(25 |
) |
|
|
649 |
|
|
|
588 |
|
|
|
649 |
|
Abandoned fixed assets |
|
|
|
|
|
|
|
|
|
|
629 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total |
|
|
(9 |
) |
|
|
649 |
|
|
|
3,635 |
|
|
|
649 |
|
|
|
|
|
|
Total restructuring costs |
|
$ |
(22 |
) |
|
$ |
649 |
|
|
$ |
3,994 |
|
|
$ |
649 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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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