Thoratec Corporation Announces First Quarter Results

Company Reports Results in Line With Previously Announced Guidance



Apr 24, 2001, 01:00 ET from Thoratec Corporation

    PLEASANTON, Calif., April 24 /PRNewswire Interactive News Release/ --
 Thoratec Corporation (Nasdaq:   THOR), a medical device company, today reported
 results for the first quarter of fiscal 2001, during which the company
 completed its merger with Thermo Cardiosystems on February 14, 2001.
     Since the transaction was treated as a reverse merger for accounting
 purposes, reported results reflect all of the former Thermo Cardiosystems
 revenues for the quarter and Thoratec revenues since completion of the
 transaction. For the quarter ended March 31, 2001, Thoratec reported product
 sales of $21.5 million compared with product sales of $19.9 million in the
 first quarter a year ago. Excluding taxes, merger expenses, the write-off of
 in-process research and development and amortization of goodwill and purchased
 intangible assets, the company reported income of $24,000, or $0.00 per share,
 compared with income of $3.0 million, or $0.09 per share, in the same period a
 year ago. Including taxes, merger related expenses, charges and amortization,
 Thoratec reported a loss of $82.2 million, or $1.88 per share.
     On a pro forma basis, which includes all of the original Thoratec revenues
 in the quarter, the company reported product sales of $25.0 million for the
 first quarter of 2001 compared with product sales of $27.5 million in the same
 period a year ago. The company reported a pro forma loss, excluding taxes,
 merger expenses, the write-off of in-process research and development and
 amortization of goodwill and purchased intangible assets, of $235,000, or
 $0.01 per share, versus net income of $3.6 million, or $0.11 of earnings per
 diluted share, a year ago. Including taxes and merger related expenses and
 charges, the company reported a pro forma loss of $83.9 million, or
 $1.92 per share, versus pro forma net income of $2.3 million, or $0.07 of
 earnings per diluted share, in the first quarter of 2000. Due to the reverse
 merger accounting treatment for the transaction, the number of shares used to
 compute diluted earnings increased from approximately 32.2 million in the
 first quarter of 2000 to 43.7 million shares in the first quarter of 2001.
     "These results are in line with the guidance we provided in early April at
 which time we indicated our performance had been impacted by several temporary
 factors," said D. Keith Grossman, president and chief executive officer of
 Thoratec.
     "These factors included lower than expected domestic sales of our
 HeartMate(R) LVAS device due to significant distractions and uncertainties
 among the Thermo Cardiosystems sales force prior to and immediately after the
 closing of the merger. In addition, staffing changes at the FDA impacted the
 timing of the agency's review of our application to market the TLC-II(R)
 Portable VAD Driver in the U.S. We had anticipated receiving approval for the
 device -- which has been approved for sale in Europe for more than
 two years -- and recording initial U.S. revenues from it during the first
 quarter," he added.
     Grossman said the market response to the companies' merger continues to be
 positive. "Our combined customer base has expressed great enthusiasm about our
 broader array of technologies and solutions and there are significant
 opportunities for the cross-selling of our product line. We also believe this
 expanded product line will accelerate our ability to attract new customers.
     "We have completed the integration of our two sales forces and fundamental
 cross training on both product lines. In addition, we recently held our first
 combined sales meeting and the excitement level among our sales and marketing
 teams was very high. As we indicated earlier this month, we have started to
 see some positive trends in the HeartMate business, although we expect to
 continue to see a fair amount of quarter-to-quarter variability in the heart
 transplant sector of our market," he concluded.
     With respect to its non-ventricular assist device business activity, the
 company said its International Technidyne (ITC) division experienced sales
 growth of approximately 5 percent in the quarter. ITC supplies whole-blood
 coagulation testing equipment and related disposables, as well as high quality
 single-use skin-incision devices.
     The company announced earlier this month a stock repurchase program for up
 to $20 million of its common stock. "With $90 million in cash and short-term
 investments at the end of the quarter, we have the financial resources and
 flexibility to enhance shareholder value through this program and make the
 necessary investments in research, development and marketing to grow the
 company," Grossman said.
     "The fundamentals of our business remain sound and our technology provides
 distinct advantages over competing devices. At the same time, we are making
 solid progress in our numerous clinical programs with products that represent
 significant potential market opportunities for the company," Grossman
 continued.
 
     Highlights of the quarter included:
 
     -- TLC-II:  The company anticipates hearing from the FDA soon regarding
        its PMA Supplement to market the device in the U.S. The TLC-II is a
        small, lightweight device used to power the Thoratec(R) Ventricular
        Assist Device (VAD) System. In addition, three patients have now been
        enrolled in a clinical trial involving home discharge of patients being
        supported by the device. The first patient recently received a heart
        transplant and has been discharged from the hospital. The trial will
        involve up to 35 patients at up to 15 hospitals, including both current
        and new centers. When cumulative patient days reach 365 days, the data
        will be submitted to the FDA.
     -- HeartMate II:  In early April, the company announced the first European
        implant of the device, which is an implantable left ventricular assist
        system (LVAS) designed to provide long-term support for heart failure
        patients. The procedure took place in Germany; the first implant of the
        device took place in Israel last year. On Monday, a third patient, a
        41-year-old male diagnosed with idiopathic heart failure in London,
        England, was implanted with the device. The German patient continues to
        move freely around the hospital with the HeartMate II operating in
        automatic mode, a feature unique to this device compared with competing
        rotary-flow technologies. The company is seeking approval to market the
        device as a long-term cardiac support system for critically ill heart
        failure patients, including those not eligible for a heart transplant.
        The company plans to initiate clinical trials in the U.S. later this
        year.
     -- REMATCH:  This is a clinical trial underway with the National Institute
        of Health to compare the use of the HeartMate VE with medical
        management in non-transplant candidates. Currently, 123 patients have
        been enrolled in the study, which calls for up to 140 patients. The
        company is preparing a presubmission proposing how it will analyze
        study data and estimates that enrollment may end sometime in the second
        half of 2001 or the first half of 2002.
     -- IVAD(TM):  In mid-January, the company announced conditional approval
        of its IDE for a new implantable pneumatic ventricular assist device.
        The company is in the process of gaining approval of centers for the
        study. The IVAD, which uses the same internal working components as the
        current Thoratec(R) VAD system blood pump, has an outer housing of a
        titanium alloy suitable for implantation. It weighs less than a pound
        and is approximately half the size of other commercially available
        implantable VAD devices. The proposed trial will involve up to
        30 patients at up to ten centers. Patients may recover in a hospital, a
        medically supervised residence or at home.
     -- Aria(TM):  The company has now enrolled 15 patients in the U.S.
        clinical trial for its Aria coronary artery bypass graft. It has also
        added a sixth approved center, Emory, for Phase I of the study. The
        company now has two-month perfusion scans for 9 patients. Once
        two-month data for 20 of the approved 30 patients has been recorded, it
        will be submitted to the FDA. At that point, Thoratec will file an
        amendment to the approved IDE for additional patient enrollment at up
        to 15 to 20 centers.
 
     Formerly known as Thoratec Laboratories, the company is engaged in the
 research, development, manufacturing and marketing of medical devices for
 circulatory support and vascular graft applications. The Thoratec VAD System
 is the only ventricular assist device that is approved for use both as a
 bridge-to-transplant and for recovery from open-heart surgery and has been
 used in the treatment of more than 1,500 patients. The company is also a
 leader in the research, development and manufacturing of implantable left
 ventricular assist systems (LVAS). Its air-driven and electric HeartMate heart
 assist devices, which are approved for sale in the U.S., Europe and Canada,
 are implanted alongside the natural heart and take over the pumping function
 of the left ventricle for patients whose hearts are too damaged or diseased to
 produce adequate blood flow.
     The company's other products include the Vectra vascular access graft,
 which is used in patients undergoing hemodialysis, and is approved for sale in
 the U.S., Europe and Japan and a number of other foreign countries. Its Aria
 coronary artery bypass graft, which is designed for use by patients having too
 few suitable native blood vessels, is currently in clinical trials in the U.S.
 The company's International Technidyne division supplies whole-blood
 coagulation testing equipment and related disposables, as well as high quality
 single-use skin incision devices. Headquartered in Pleasanton, California, the
 company also has facilities in Woburn and Chelmsford, Massachusetts, Rancho
 Cordova, California and Edison, New Jersey. For more information, visit the
 company's web sites at http://www.thoratec.com or http://www.itcmed.com .
     The portions of this news release that relate to future plans, events or
 performance are forward-looking statements. Investors are cautioned that all
 such statements involve risks and uncertainties, including risks related to
 the merger and benefits thereof, government regulatory approval processes and
 market acceptance of new products. These factors, and others, are discussed
 more fully under the heading of "Risk Factors" in Thoratec's 10-K for the
 fiscal year ended December 30, 2000, and other filings with the Securities and
 Exchange Commission. Actual results, events or performance may differ
 materially. These forward-looking statements speak only as of the date hereof.
 Thoratec undertakes no obligation to publicly release the results of any
 revisions to these forward-looking statements that may be made to reflect
 events or circumstances after the date hereof, or to reflect the occurrence of
 unanticipated events.
 
 
                              THORATEC CORPORATION
 
                      Condensed Consolidated Balance Sheet
                                  (Unaudited)
                 (numbers in thousands, except per share data)
 
                                                     March 2001  December 2000
 
     ASSETS
 
     Current Assets:
     Cash and cash equivalents                         $2,441        $30,236
     Short-term investments available-for-sale         87,122         98,682
     Receivables                                       17,697         15,358
     Inventories                                       27,031         17,381
     Deferred tax asset                                 8,381          3,454
     Prepaid expenses and other                         1,185             74
     Total Current Assets                             143,857        165,185
 
 
     Rental and support equipment                       2,341            403
     Equipment and leasehold improvements - net        17,009          6,681
     Restricted cash                                   45,279             --
     Goodwill                                         101,444             --
     Purchased intangible assets                      207,929             --
     Other Assets                                       4,956          4,416
     TOTAL ASSETS                                    $522,815       $176,685
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current Liabilities:
     Accounts payable                                  $8,053         $3,972
     Accrued compensation                               4,601          4,976
     Deferred distributor revenue                         693             --
     Accrued and Other Liabilities                     10,179          7,030
 
     Total Current Liabilities                         23,526         15,978
     Long term deferred distributor revenue             1,891             --
     Long term deferred tax liability                  77,393             --
     Subordinated convertible debentures               54,838         54,838
     Total Liabilities                                157,648         70,816
 
     Total Shareholders' Equity                       365,167        105,869
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $522,815       $176,685
 
 
                              THORATEC CORPORATION
 
                Condensed Consolidated Statements of Operations
                                  (Unaudited)
                 (numbers in thousands, except per share data)
 
                                                         Three Months Ended
 
                                                        March          March
                                                        2001           2000
 
     Product sales                                    $21,480        $19,929
     Cost of product sales                             10,040          8,160
       Gross profit                                    11,440         11,769
 
     Operating Expenses:
       Research and development                         5,230          4,106
       Selling, general and administrative              7,330          5,855
       Amortization of goodwill                           638             --
       Amort of purchased intangible assets             1,643             --
       In-process research and development             76,858             --
       Merger related costs                             3,540            140
         Total operating expenses                      95,239         10,101
 
     Other operating income                                72             --
     Income (loss) from operations                   (83,727)          1,668
     Interest and other income, net                     1,072          1,210
     Income (loss) before taxes                      (82,655)          2,878
     Income tax expense (benefit)                       (475)          1,108
     Net income (loss)                              $(82,180)         $1,770
 
     Income (loss) per share:
       Basic                                          $(1.88)          $0.06
       Diluted                                        $(1.88)          $0.05
 
     Shares used to compute income (loss) per share:
       Basic                                           43,711         32,163
       Diluted                                         43,711         32,163
 
 
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                http://tbutton.prnewswire.com/prn/11690X78324197
 
 

SOURCE Thoratec Corporation
    PLEASANTON, Calif., April 24 /PRNewswire Interactive News Release/ --
 Thoratec Corporation (Nasdaq:   THOR), a medical device company, today reported
 results for the first quarter of fiscal 2001, during which the company
 completed its merger with Thermo Cardiosystems on February 14, 2001.
     Since the transaction was treated as a reverse merger for accounting
 purposes, reported results reflect all of the former Thermo Cardiosystems
 revenues for the quarter and Thoratec revenues since completion of the
 transaction. For the quarter ended March 31, 2001, Thoratec reported product
 sales of $21.5 million compared with product sales of $19.9 million in the
 first quarter a year ago. Excluding taxes, merger expenses, the write-off of
 in-process research and development and amortization of goodwill and purchased
 intangible assets, the company reported income of $24,000, or $0.00 per share,
 compared with income of $3.0 million, or $0.09 per share, in the same period a
 year ago. Including taxes, merger related expenses, charges and amortization,
 Thoratec reported a loss of $82.2 million, or $1.88 per share.
     On a pro forma basis, which includes all of the original Thoratec revenues
 in the quarter, the company reported product sales of $25.0 million for the
 first quarter of 2001 compared with product sales of $27.5 million in the same
 period a year ago. The company reported a pro forma loss, excluding taxes,
 merger expenses, the write-off of in-process research and development and
 amortization of goodwill and purchased intangible assets, of $235,000, or
 $0.01 per share, versus net income of $3.6 million, or $0.11 of earnings per
 diluted share, a year ago. Including taxes and merger related expenses and
 charges, the company reported a pro forma loss of $83.9 million, or
 $1.92 per share, versus pro forma net income of $2.3 million, or $0.07 of
 earnings per diluted share, in the first quarter of 2000. Due to the reverse
 merger accounting treatment for the transaction, the number of shares used to
 compute diluted earnings increased from approximately 32.2 million in the
 first quarter of 2000 to 43.7 million shares in the first quarter of 2001.
     "These results are in line with the guidance we provided in early April at
 which time we indicated our performance had been impacted by several temporary
 factors," said D. Keith Grossman, president and chief executive officer of
 Thoratec.
     "These factors included lower than expected domestic sales of our
 HeartMate(R) LVAS device due to significant distractions and uncertainties
 among the Thermo Cardiosystems sales force prior to and immediately after the
 closing of the merger. In addition, staffing changes at the FDA impacted the
 timing of the agency's review of our application to market the TLC-II(R)
 Portable VAD Driver in the U.S. We had anticipated receiving approval for the
 device -- which has been approved for sale in Europe for more than
 two years -- and recording initial U.S. revenues from it during the first
 quarter," he added.
     Grossman said the market response to the companies' merger continues to be
 positive. "Our combined customer base has expressed great enthusiasm about our
 broader array of technologies and solutions and there are significant
 opportunities for the cross-selling of our product line. We also believe this
 expanded product line will accelerate our ability to attract new customers.
     "We have completed the integration of our two sales forces and fundamental
 cross training on both product lines. In addition, we recently held our first
 combined sales meeting and the excitement level among our sales and marketing
 teams was very high. As we indicated earlier this month, we have started to
 see some positive trends in the HeartMate business, although we expect to
 continue to see a fair amount of quarter-to-quarter variability in the heart
 transplant sector of our market," he concluded.
     With respect to its non-ventricular assist device business activity, the
 company said its International Technidyne (ITC) division experienced sales
 growth of approximately 5 percent in the quarter. ITC supplies whole-blood
 coagulation testing equipment and related disposables, as well as high quality
 single-use skin-incision devices.
     The company announced earlier this month a stock repurchase program for up
 to $20 million of its common stock. "With $90 million in cash and short-term
 investments at the end of the quarter, we have the financial resources and
 flexibility to enhance shareholder value through this program and make the
 necessary investments in research, development and marketing to grow the
 company," Grossman said.
     "The fundamentals of our business remain sound and our technology provides
 distinct advantages over competing devices. At the same time, we are making
 solid progress in our numerous clinical programs with products that represent
 significant potential market opportunities for the company," Grossman
 continued.
 
     Highlights of the quarter included:
 
     -- TLC-II:  The company anticipates hearing from the FDA soon regarding
        its PMA Supplement to market the device in the U.S. The TLC-II is a
        small, lightweight device used to power the Thoratec(R) Ventricular
        Assist Device (VAD) System. In addition, three patients have now been
        enrolled in a clinical trial involving home discharge of patients being
        supported by the device. The first patient recently received a heart
        transplant and has been discharged from the hospital. The trial will
        involve up to 35 patients at up to 15 hospitals, including both current
        and new centers. When cumulative patient days reach 365 days, the data
        will be submitted to the FDA.
     -- HeartMate II:  In early April, the company announced the first European
        implant of the device, which is an implantable left ventricular assist
        system (LVAS) designed to provide long-term support for heart failure
        patients. The procedure took place in Germany; the first implant of the
        device took place in Israel last year. On Monday, a third patient, a
        41-year-old male diagnosed with idiopathic heart failure in London,
        England, was implanted with the device. The German patient continues to
        move freely around the hospital with the HeartMate II operating in
        automatic mode, a feature unique to this device compared with competing
        rotary-flow technologies. The company is seeking approval to market the
        device as a long-term cardiac support system for critically ill heart
        failure patients, including those not eligible for a heart transplant.
        The company plans to initiate clinical trials in the U.S. later this
        year.
     -- REMATCH:  This is a clinical trial underway with the National Institute
        of Health to compare the use of the HeartMate VE with medical
        management in non-transplant candidates. Currently, 123 patients have
        been enrolled in the study, which calls for up to 140 patients. The
        company is preparing a presubmission proposing how it will analyze
        study data and estimates that enrollment may end sometime in the second
        half of 2001 or the first half of 2002.
     -- IVAD(TM):  In mid-January, the company announced conditional approval
        of its IDE for a new implantable pneumatic ventricular assist device.
        The company is in the process of gaining approval of centers for the
        study. The IVAD, which uses the same internal working components as the
        current Thoratec(R) VAD system blood pump, has an outer housing of a
        titanium alloy suitable for implantation. It weighs less than a pound
        and is approximately half the size of other commercially available
        implantable VAD devices. The proposed trial will involve up to
        30 patients at up to ten centers. Patients may recover in a hospital, a
        medically supervised residence or at home.
     -- Aria(TM):  The company has now enrolled 15 patients in the U.S.
        clinical trial for its Aria coronary artery bypass graft. It has also
        added a sixth approved center, Emory, for Phase I of the study. The
        company now has two-month perfusion scans for 9 patients. Once
        two-month data for 20 of the approved 30 patients has been recorded, it
        will be submitted to the FDA. At that point, Thoratec will file an
        amendment to the approved IDE for additional patient enrollment at up
        to 15 to 20 centers.
 
     Formerly known as Thoratec Laboratories, the company is engaged in the
 research, development, manufacturing and marketing of medical devices for
 circulatory support and vascular graft applications. The Thoratec VAD System
 is the only ventricular assist device that is approved for use both as a
 bridge-to-transplant and for recovery from open-heart surgery and has been
 used in the treatment of more than 1,500 patients. The company is also a
 leader in the research, development and manufacturing of implantable left
 ventricular assist systems (LVAS). Its air-driven and electric HeartMate heart
 assist devices, which are approved for sale in the U.S., Europe and Canada,
 are implanted alongside the natural heart and take over the pumping function
 of the left ventricle for patients whose hearts are too damaged or diseased to
 produce adequate blood flow.
     The company's other products include the Vectra vascular access graft,
 which is used in patients undergoing hemodialysis, and is approved for sale in
 the U.S., Europe and Japan and a number of other foreign countries. Its Aria
 coronary artery bypass graft, which is designed for use by patients having too
 few suitable native blood vessels, is currently in clinical trials in the U.S.
 The company's International Technidyne division supplies whole-blood
 coagulation testing equipment and related disposables, as well as high quality
 single-use skin incision devices. Headquartered in Pleasanton, California, the
 company also has facilities in Woburn and Chelmsford, Massachusetts, Rancho
 Cordova, California and Edison, New Jersey. For more information, visit the
 company's web sites at http://www.thoratec.com or http://www.itcmed.com .
     The portions of this news release that relate to future plans, events or
 performance are forward-looking statements. Investors are cautioned that all
 such statements involve risks and uncertainties, including risks related to
 the merger and benefits thereof, government regulatory approval processes and
 market acceptance of new products. These factors, and others, are discussed
 more fully under the heading of "Risk Factors" in Thoratec's 10-K for the
 fiscal year ended December 30, 2000, and other filings with the Securities and
 Exchange Commission. Actual results, events or performance may differ
 materially. These forward-looking statements speak only as of the date hereof.
 Thoratec undertakes no obligation to publicly release the results of any
 revisions to these forward-looking statements that may be made to reflect
 events or circumstances after the date hereof, or to reflect the occurrence of
 unanticipated events.
 
 
                              THORATEC CORPORATION
 
                      Condensed Consolidated Balance Sheet
                                  (Unaudited)
                 (numbers in thousands, except per share data)
 
                                                     March 2001  December 2000
 
     ASSETS
 
     Current Assets:
     Cash and cash equivalents                         $2,441        $30,236
     Short-term investments available-for-sale         87,122         98,682
     Receivables                                       17,697         15,358
     Inventories                                       27,031         17,381
     Deferred tax asset                                 8,381          3,454
     Prepaid expenses and other                         1,185             74
     Total Current Assets                             143,857        165,185
 
 
     Rental and support equipment                       2,341            403
     Equipment and leasehold improvements - net        17,009          6,681
     Restricted cash                                   45,279             --
     Goodwill                                         101,444             --
     Purchased intangible assets                      207,929             --
     Other Assets                                       4,956          4,416
     TOTAL ASSETS                                    $522,815       $176,685
 
 
     LIABILITIES AND SHAREHOLDERS' EQUITY
 
     Current Liabilities:
     Accounts payable                                  $8,053         $3,972
     Accrued compensation                               4,601          4,976
     Deferred distributor revenue                         693             --
     Accrued and Other Liabilities                     10,179          7,030
 
     Total Current Liabilities                         23,526         15,978
     Long term deferred distributor revenue             1,891             --
     Long term deferred tax liability                  77,393             --
     Subordinated convertible debentures               54,838         54,838
     Total Liabilities                                157,648         70,816
 
     Total Shareholders' Equity                       365,167        105,869
     TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY      $522,815       $176,685
 
 
                              THORATEC CORPORATION
 
                Condensed Consolidated Statements of Operations
                                  (Unaudited)
                 (numbers in thousands, except per share data)
 
                                                         Three Months Ended
 
                                                        March          March
                                                        2001           2000
 
     Product sales                                    $21,480        $19,929
     Cost of product sales                             10,040          8,160
       Gross profit                                    11,440         11,769
 
     Operating Expenses:
       Research and development                         5,230          4,106
       Selling, general and administrative              7,330          5,855
       Amortization of goodwill                           638             --
       Amort of purchased intangible assets             1,643             --
       In-process research and development             76,858             --
       Merger related costs                             3,540            140
         Total operating expenses                      95,239         10,101
 
     Other operating income                                72             --
     Income (loss) from operations                   (83,727)          1,668
     Interest and other income, net                     1,072          1,210
     Income (loss) before taxes                      (82,655)          2,878
     Income tax expense (benefit)                       (475)          1,108
     Net income (loss)                              $(82,180)         $1,770
 
     Income (loss) per share:
       Basic                                          $(1.88)          $0.06
       Diluted                                        $(1.88)          $0.05
 
     Shares used to compute income (loss) per share:
       Basic                                           43,711         32,163
       Diluted                                         43,711         32,163
 
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X78324197
 
 SOURCE  Thoratec Corporation