Medical devices company Thoratec Corp. (THOR) reported Thursday a surge in profit for the second-quarter due to a rise in revenues, driven by a strong growth in Europe and the addition of new centers. The company also raised its outlook for the full year of 2010. However the stock lost 13% in the extended hours on the Nasdaq.
Net income surged to $15.95 million or $0.27 per share from $1.83 million or $0.03 per share a year ago.
Income from continuing operations jumped to $17.53 million or $0.29 per share from $2.88 million or $0.05 per share last year.
Special items for the current quarter included, among other things, amorization of intangibles of $2.46 million, impact of ASC 470-20 of $2.0 million. The prior year included amorization of $2.36 million, HeartWare transaction costs of $7.4 million, and impact of ASC 470-20 of $1.85 million.
Excluding special items, adjusted income from continuing operations was $22.4 million or $0.34 per share, compared with $11.6 million or $0.19 per share the prior year.
On average, 15 analysts polled by Thomson Reuters expected earnings per share of $0.32 for the quarter. Analysts' estimates typically exclude special items.
Chief Executive Officer Gary Burbach said, "As has been the case over the past several quarters, our financial performance was driven by continued adoption of the HeartMate II LVAS (Left Ventricular Assist System) for ridge-to-Transplantation (BTT) and Destination Therapy (DT) in both North America and international markets."
Revenues rose 37% to $95.1 million from $69.2 million in the year-ago quarter.
Sixteen Wall Street analysts expected revenues of $95.25 million for the quarter.
Products sales climbed to $95.09 million from $69.22 million.
Gross margin improved to 67.8% from 61.3% a year ago, while adjusted gross margin rose to 68.2% from 61.7%. The increase in gross margin reflects greater worldwide HeartMate II volume and the continued roll out of new HeartMate external peripherals.
The company said that in conjunction with local partner Nipro, it completed enrollment in the six-patient confirmatory trial for the HeartMate II in Japan. Thoratec and Nipro expect to file for regulatory approval in the early part of 2011, with approval expected in early 2012. In addition, the regulatory
authorities in both Australia and Taiwan approved the HeartMate II for commercial use during the quarter, the company added.
Cash and investments at the end of the quarter were $376.3 million, versus $331.6 million a year ago.
Looking ahead, the company raised its outlook for the full year of 2010, and now expects earnings per share from continuing operations of $0.97 - $1.01, and adjusted earnings per share of $1.19 - $1.23. Further, the company expects revenues of $380 million - $385 million.
This compares with the earlier guidance in April, when the company had forecast earnings per share of $0.95 - $1.00, adjusted earnings of $1.14 - $1.19 per share, and revenues of $365 million - $375 million. Also, at that time, the company had expected adjusted full-year profit of $1.23 - $1.28 a share, excluding the impact of a one-time acquisition related charge.
Wall Street analysts are looking out for earnings per share of $1.23, on revenues of $386.89 million for the full year.
The company said the revision is based on contributions from the first half of the year, as well as expectations for ongoing growth in the second half of 2010. The guidance reflects expectations that the company will experience some seasonal softness in the third quarter, which has been typical of the past few years.
THOR closed Thursday's regular trading at $42.54, down $0.30 or 0.70%, on a volume of 1.75 million shares on the Nasdaq. In the after hours, the stock further lost $5.56 or 13.07%.
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