Thoratec Beats on Earnings, Revenues - Analyst Blog

Thoratec Corporation THOR posted flat adjusted earnings of 33 cents per share for the 2014-first quarter compared with the year-ago level but beat the Zacks Consensus Estimate by 6 cents.

Adjusted earnings edged down 1.8% to $19.2 million from $19.5 million in the comparable quarter a year ago. Since the earnings announcement, shares of the company dipped 3.7%.

THOR's revenues in the quarter rose 6.8% to $125.7 million, surpassing the Zacks Consensus Estimate of $124.0 million. Revenues from the U.S. upped 3.6% to $95.6 million while the same from international business grew 18.5% to $30.1 million.

Revenues from the flagship HeartMate product line came in at $110.0 million, reflecting a 6.9% year-over-year increase due to the expansion of its international business. Revenues from CentriMag were $13.0 million, up 25.0% from the year-ago level. However, revenues from PVAD and IVAD fell 39.5% to $2.3 million in the quarter.

Adjusted gross profit rose 27.0% to $86.7 million from $84.4 million a year ago. However, adjusted gross margin declined 270 basis points (bps) to 69.0% from 71.7% in the first quarter of 2013. The decrease was attributable to inventory-related charges and manufacturing variances, partially offset by favorable product mix.

Adjusted operating income went up 9.0% to $28.3 million from $25.9 million a year ago. Adjusted operating margin rose 50 bps to 22.5% from 22.0% in the first quarter of 2013.

THOR had cash and investments of $108.7 million as of Mar 29, 2014, down from $139.1 million as of Dec 28, 2013. During the quarter under study, the company utilized $13.5 million in cash to finance share repurchase.

For fiscal 2014, THOR expects revenues in the range of $520–$535 million. The current Zacks Consensus Estimate of $531 million lies within the guided range. Adjusted gross margin is expected to be 70.7% for the year.

THOR also expects adjusted earnings per share (excluding stock based compensation) of $1.39–$1.49 for the year. The current Zacks Consensus Estimate of $1.32 million lies below the guided range.

THOR develops, manufactures and markets proprietary medical devices used for circulatory support, vascular graft, blood coagulation and skin incision applications. The company currently markets the Thoratec Ventricular Assist Device System (called Thoratec VAD System or VAD System) and the HeartMate Left Ventricular Assist System (called HeartMate LVAS) in the U.S. and internationally for use as a bridge to heart transplant.

Currently, THOR retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instruments sector include Accuray Inc. ARAY, Masimo Corp. MASI, and Natus Medical Inc. BABY. All of them carry a Zacks Rank #2 (Buy).