Thoratec Shares Plummet 26% As 2014 Outlook Slashed, Q2 Profit Declines

(RTTNews) - Shares of Thoratec Corp. (THOR) plummeted more than twenty-six percent in extended trading on Wednesday after the medical devices company slashed its earnings and revenue outlook for the full-year 2014.

The company also reported a profit for the second quarter that decreased from last year, reflecting a 10 percent decline in product sales. However, adjusted earnings per share matched analysts' expectations, while quarterly sales missed their estimates.

Thoratec develops medical devices used for mechanical circulatory support for the treatment of heart failure patients.

The company noted that it has realized significant clinical progress in its pipeline opportunities with encouraging starts of CE Mark trials for both HeartMate III and HeartMate PHP, while HeartMate III also received conditional approval from FDA to begin the U.S. trial.

"We are disappointed with the shortfall in our financial results as near-term factors are having a greater than expected negative impact on our business," President and CEO Gary Burbach said in a statement.

The Pleasanton, California-based company reported net income of $17.41 million or $0.30 per share for the second quarter, lower than $23.19 million or $0.40 per share in the prior-year quarter.

Excluded certain items, adjusted net income for the quarter was $24.37 million or $0.43 per share, compared to $30.37 million or $0.52 per share in the year-ago quarter.

On average, 14 analysts polled by Thomson Reuters expected the company to report earnings of $0.43 per share for the quarter. Analysts' estimates typically exclude special items.

Total product sales for the quarter declined 10 percent to $118.06 million from $130.48 million in the same quarter last year, and missed sixteen Wall Street analysts' consensus estimate of $128.27 million.

Domestic sales for the quarter declined to $94.2 million from $98.8 million, and international sales decreased to $23.9 million from $25.4 million in the year-ago quarter.

The HeartMate product line contributed $102.0 million of revenues, 12 percent lower than last year, and the CentriMag product line's revenues grew 14 percent to $13.1 million from last year.

However, gross margin for the quarter expanded 230 basis points to 70.9 percent from last year's 68.6 percent.

Separately, Thoratec said it has entered into a $30 million Accelerated Share Repurchase (ASR) agreement. The ASR will begin in the coming days and complete execution during the third quarter. It is being conducted under the $200 million share repurchase authorization approved by the Board of Directors in December 2013.

Looking ahead for fiscal 2014, Thoratec now projects adjusted earnings in a range of $1.25 to $1.35 per share, on projected revenues between $455 million and $470 million, down from the prior forecast for adjusted earnings in the range of $1.72 to $1.82 per share and revenues between $520 million and $535 million.

Street is currently looking for full-year 2014 earnings of $1.75 per share on annual revenues of $523.42 million.

"However, our confidence in the long-term outlook for our business remains unchanged, and we will focus on executing to realize these opportunities while working diligently on implementing actions to improve near-term results," Burbach added.

THOR closed Wednesday's regular trading session at $32.57, down $0.49 or 1.48% on a volume of 1.31 million shares. The stock plummeted a further $8.55 or 26.25% in after-hours trading.