Heartware Q2 sees losses shrink, beats the street

HeartWare International (NSDQ:HTWR) today released 2nd quarter earnings that beat the Street alongside shrinking losses as the company is slated to be picked up Medtronic (NYSE:MDT) in a $1.1 billion deal.

he Framingham, Mass.-based company, reported losses of $10.9 million, or 62¢ per share, on sales of $68.7 million for the 3 months ended June 30. The street was looking for $57.4 million in revenue, which HeartWare handily topped.

That amounts to a 60.3% decrease in losses as sales shrunk 6.6% compared to the same period in 2015.

Adjusted to exclude 1-time items, losses per share were 43¢. That’s slightly more than half of the 82¢ expectation set out by analysts on Wall Street.

Shares have stayed steady, down less than 1% to trade at $57.88 as of 3:37 p.m. EDT.

“Our solid second quarter performance was highlighted by a strong rebound in sales of the HVAD system in the U.S. and in most international markets. We are proud of the outstanding effort of our field team and are grateful to all of the heart failure specialists, cardiothoracic surgeons and VAD coordinators around the world who continue to demonstrate their enthusiasm and support for HeartWare and the HVAD system. During the 2nd quarter, we made significant progress on our key priorities of pursuing a DT indication for the HVAD System and advancing the MVAD System toward a return to the clinic. We also announced an agreement to be acquired by Medtronic and are looking forward to the close of the acquisition and the tremendous opportunity that we will have as part of the Medtronic organization.  The strengths and resources of the combined company will enable accelerated innovation and pipeline development, while maintaining the exceptionally high standards HeartWare has set for being responsive to our customers and their patients,” CEO Doug Godshall said in prepared remarks.

Late last month, Medtronic agreed to put up $1.1 billion for implantable cardiac pump maker HeartWare International.

The $58-per-share deal, which represents a 93.4% premium over HeartWare’s $29.98 closing price June 24, is slated to close by Oct. 28 (the end of Medtronic’s fiscal 2nd quarter). HeartWare’s 30-day closing average as of June 24 was $30.20 per share.

The deal clears the field of the 2 major cardiac assist device makers, after Medtronic’s cross-town rival, St. Jude Medical (NYSE:STJ), paid $3 billion for Thoratec in October 2015.

HeartWare’s implantable left ventricular assist devices are designed for end-stage heart failure patients, either as a destination therapy until death or as a bridge to heart transplantation.

Medtronic said that although it’s not changing its guidance as a result of the acquisition, “it is expected to provide increased confidence in the company’s ability to deliver on its FY17 revenue growth outlook.” HeartWare’s effect on earnings per share is expected to be zero to minimal for the 1st 2 years and accretive after that, the company said.

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