Thoratec Conference Call Highlights; Shares down 30%

Thoratec

reported its second quarter earnings on Thursday. Shares of the company are down about 30 percent. Below are some key highlights: • Thoratec reported revenues of $118.1 million and non-GAAP earnings per diluted share of $0.43 during the second quarter of 2014. • We are clearly disappointed with this revenue performance and our guidance provision. • At the same time, we remain confident in the positive outlook for our core market and the HeartMate franchise. • Furthermore, the FDA recently approved the addition of information on both the HeartMate II DT post-approval study • Next, increased surgical preference for less invasive VAD implantation is impacting growth in our business, particularly outside the U.S. as many surgeons in Europe have adopted these approaches. • In addition to the less invasive trend, our field team in Europe has experienced significant turnover at both the customer facing and leadership levels. • Outside of Europe, international revenues were also negatively affected by the expected reduction of sales in Japan. • We did realize approximately $1.5 million of HeartMate revenue in Japan during the quarter, an expected reduction compared with the significant first quarter stocking activity. • In the longer term, we continue to believe Japan could become one of the largest international VAD markets. • The third primary factor impacting our outlook is the slowdown in growth among our smaller open heart centers in the U.S. • In terms of geographic breakdown, we reported revenues of $94.2 million in the U.S., a decline of 5% compared with the prior year, while international revenues declined to $23.9 million compared with $31.7 million last year. • Non-GAAP gross margin for the quarter was 72.4%, compared with 70.4% in the second quarter of 2013.