Exhibit 99.1
THORATEC REPORTS 17 PERCENT INCREASE IN REVENUES
Third Consecutive Quarter of Double-Digit Revenue Growth
(PLEASANTON, CA), July 22, 2003 -- Thoratec Corporation (NASDAQ: THOR), a
world leader in products to treat cardiovascular disease, said today that
product revenues in the second quarter of 2003 increased by 17 percent over
those in the second quarter of last year.
Product sales for the quarter ended June 28, 2003 were $36.2 million
versus $31.0 million in the second quarter of 2002.
Cash earnings, which the company defines as net income before taxes and
excluding merger, restructuring and other expenses, and amortization of
purchased intangible assets, were $4.7 million, or $0.08 per share, versus cash
earnings of $2.7 million, or $0.05 per share, in the same period a year ago.
Further information is provided in a table below to reconcile cash earnings as
disclosed in this press release to reported GAAP net income before taxes.
On an as reported basis, Thoratec reported net income of $1.0 million, or
$0.02 per share, compared with a loss of $556,000, or $0.01 per share, in the
same period a year ago.
"This is the third consecutive quarter in which the company experienced
double-digit top line growth versus the comparable quarter. We experienced solid
increases across all product lines, led by our ventricular assist device (VAD)
business," noted D. Keith Grossman, president and chief executive officer of
Thoratec.
"Cardiovascular division revenues increased 19 percent over the same
quarter a year ago, aided by a particularly strong quarter from our HeartMate(R)
LVAS (left ventricular assist systems) that experienced a 21 percent increase in
revenues. At the same time, revenues at our International Technidyne Corporation
(ITC) division grew by 12 percent over the comparable quarter," he continued.
"The impact of our growth is also reflected in the strength of our balance
sheet, as we ended the quarter with nearly $90 million in cash and investments,
an increase of more than $13 million -- or 18 percent -- since the end of fiscal
2002."
For the first six months of 2003, Thoratec reported revenues of $72.2
million, a 19 percent increase over revenues of $60.7 million in the first six
months of fiscal 2002. VAD related revenues year to date are 21 percent higher
than the first six months of last year.
Cash earnings for the first half of 2003 were $10.1 million, or $0.18 per
share, versus cash earnings of $3.2 million, or $0.06 per share, in the same
period last year. Reported net income was $2.4 million, or $0.04 per share,
versus a loss of $2.3 million, or $0.04 per share, in the first six months of
fiscal 2002.
As announced on July 18, Thoratec's ITC subsidiary has entered into an
asset purchase agreement to acquire the IRMA (Immediate Response Mobile
Analysis) point-of-care (POC) diagnostic system intermittent blood gas
monitoring performance product line from Diametrics Medical, Inc. (OTC BB:
DMED). ITC will pay approximately $5 million and assume certain trade payables
related to the assets. The acquisition is subject to a number of conditions,
including approval from Diametrics shareholders, and is expected to close later
this year.
The company said the transaction is expected to be neutral to Thoratec's
previous financial guidance for 2003 and neutral or slightly accretive to cash
earnings in 2004. The IRMA business is currently generating approximately
$5-$10 million of annual revenues.
As was announced on July 14, the Centers for Medicare & Medicaid Services
(CMS) extended for 30 days the due date for its decision regarding coverage for
LVADs (left ventricular assist devices) for Destination Therapy to allow
additional time for agency clearance.
The company said that according to CMS the extension was a result of CMS'
standard review process. Thoratec noted that delays of this type are not unusual
for decisions regarding major procedures and that the due dates for several
other recent coverage decisions had also been extended.
Thoratec said its discussions with CMS continue to be positive and
productive. The company believes that CMS will post its decision within 30 days
and it remains optimistic that CMS will issue a National Coverage Decision for
LVADs for Destination Therapy.
"A significant highlight of the quarter was the FDA granting conditional
approval of the company's IDE (Investigational Device Exemption) to initiate a
feasibility clinical trial in the U.S. for its HeartMate II," Grossman said.
"This was a major clinical milestone for Thoratec as the HeartMate II is a next
generation design for the treatment of heart failure patients. Including this
study, we will have six distinct ongoing or pending clinical trials or
filings for regulatory approval in our very active product pipeline."
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The HeartMate II safety and early efficacy trial will begin with seven
patients at four centers and will be evaluated initially for use as a bridge to
heart transplantation. The company is currently identifying prospective centers
and enrollment could begin once the centers have the appropriate internal
approvals -- a process that is expected to be completed during the current
quarter. The company plans to utilize 30-day data from the seven patients to
seek approval for an expanded study -- something it hopes can occur by the end
of 2003 or early in 2004. In addition, the company is currently responding to
some routine questions from regulatory authorities in the United Kingdom and
hopes to initiate a separate trial for the HeartMate II there early in the
fourth quarter.
"The HeartMate II incorporates enhanced control software and other
improvements based on our early clinical experience in Europe. It represents a
simple and elegant design and the fact that it is equivalent in size to a D-cell
battery makes it suitable for a wider range of patients, including small adults
and children," said Jeffrey Nelson, president of the company's cardiovascular
division.
Nelson said that the company's European and U.S. clinical trials for the
Thoratec IVAD(TM) (Implantable Ventricular Assist Device) continue to go well
and that the company hopes to receive CE Mark certification, enabling sales of
the device in Europe, soon.
Thirteen patients have been enrolled in the European trial, while 16 have
been implanted in the U.S. study. The company hopes to file a PMA (PreMarket
Approval) Supplement seeking FDA approval later this year. The IVAD is an
implantable version of the highly successful Thoratec(TM) VAD System and its
smaller size, design and construction enable internal placement resulting in
greater comfort, mobility and patient satisfaction. Weighing less than a pound,
it is the smallest implantable pulsatile VAD device.
"We have now accumulated more than 2,100 days in cumulative patient
support with no serious device malfunctions or unanticipated adverse events.
Patients have ranged in age from 16 to 71 years of age with one patient
supported for approximately eight months," Nelson noted.
Thoratec Corporation is a world leader in products to treat cardiovascular
disease with its Thoratec(R) VAD and HeartMate LVAS implanted in more than 5,800
patients suffering from heart failure. Thoratec's product line also includes the
Vectra(R) vascular access graft (VAG) for patients undergoing hemodialysis.
Additionally, its International Technidyne Corporation (ITC) division supplies
blood coagulation testing and skin incision products. Thoratec is headquartered
in Pleasanton, California. For more information, visit the company's web sites
at http://www.thoratec.com or http://www.itcmed.com.
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The portions of this news release that relate to future plans, events or
performance are forward-looking statements. Investors are cautioned that all
such statements involve risk and uncertainties, including risks related to
continuing analysis of the REMATCH trial data, regulatory approval processes,
healthcare reimbursement and coverage policies and acquisition activities.
These factors, and others, are discussed more fully under the heading, "Risk
Factors," in Thoratec's 10-K for the fiscal year ended December 28, 2002, and
other filings with the Securities and Exchange Commission. Actual results,
events or performance may differ materially. These forward-looking statements
speak only as of the date hereof. Thoratec undertakes no obligation to publicly
release the results of any revisions to these forward-looking statements that
may be made to reflect events or circumstances after the date hereof, or to
reflect the occurrence of unanticipated events.
Investor Contact Information: Media Contact Information:
Wayne Boylston April Grefthen/Sheila Rasu
Chief Financial Officer FischerHealth, Inc.
Thoratec Corporation (310) 577-7870, ext. 165/151
(925) 847-8600 agrefthen@fischerhealth.com
srasu@fischerhealth.com
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THORATEC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands)
June December
2003 2002
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 57,545 $ 42,044
Short-term available-for-sale investments -- 3,439
Receivables, net 26,433 27,593
Inventories 37,409 38,835
Other current assets 14,318 14,699
---------- ----------
Total Current Assets 135,705 126,610
Property, plant and equipment, net 24,808 24,715
Long-term available-for-sale investments 31,731 30,051
Goodwill 96,492 96,492
Purchased intangible assets 178,235 184,282
Other assets 4,298 6,282
---------- ----------
TOTAL ASSETS $ 471,269 $ 468,432
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,207 $ 6,319
Accrued expenses 10,543 11,111
Accrued restructuring and other -- 1,208
---------- ----------
Total Current Liabilities 15,750 18,638
Long-term deferred tax liability and other 73,001 75,454
---------- ----------
Total Liabilities 88,751 94,092
Shareholders' Equity 382,518 374,340
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 471,269 $ 468,432
========== ==========
THORATEC CORPORATION AND SUBSIDIARIES
Condensed Consolidated Statements of Operations
(Unaudited)
(in thousands, except per share data)
Three Months Ended Six Months Ended
---------------------- --------------------
June June June June
2003 2002 2003 2002
-------- -------- -------- --------
Product sales $ 36,156 $ 31,034 $ 72,218 $ 60,673
Cost of product sales 14,651 13,281 29,542 26,445
-------- -------- -------- --------
Gross profit 21,505 17,753 42,676 34,228
-------- -------- -------- --------
Operating expenses:
Selling, general and administrative 11,169 9,847 21,229 18,566
Research and development 6,279 6,083 12,539 12,985
Amortization of purchased intangible assets 3,096 3,096 6,192 6,192
Merger, restructuring and other costs (67) 506 (124) 827
-------- -------- -------- --------
Total operating expenses 20,477 19,532 39,836 38,570
-------- -------- -------- --------
Income (loss) from operations 1,028 (1,779) 2,840 (4,342)
Interest and other income (expense) -- net 649 854 1,160 485
-------- -------- -------- --------
Income (loss) before taxes 1,677 (925) 4,000 (3,857)
Income tax expense (benefit) 654 (369) 1,560 (1,543)
-------- -------- -------- --------
Net income (loss) $ 1,023 $ (556) $ 2,440 $ (2,314)
======== ======== ======== ========
Net income (loss) per share:
Basic $ 0.02 $ (0.01) $ 0.04 $ (0.04)
======== ======== ======== ========
Diluted $ 0.02 $ (0.01) $ 0.04 $ (0.04)
======== ======== ======== ========
Shares used to compute net income (loss) per share:
Basic 55,394 56,799 55,226 56,725
Diluted 56,891 56,799 56,240 56,725
Reconciliation of Cash Earnings to Net Income Before Taxes
This press release discloses "cash earnings" which is not a financial
measure prepared in accordance with United States Generally Accepted Accounting
Principles ("GAAP"). Management believes that cash earnings can be a useful
measure for investors to evaluate our financial performance by providing the
results of our company's primary business operations, excluding the effects of
charges associated with our merger, restructuring and other activities. However,
this measure should be considered in addition to, and not as a substitute, or
superior to, net income before taxes or other measures of financial performance
prepared in accordance with GAAP. Cash earnings has been reconciled to net
income before taxes, the most directly comparable GAAP financial measure, as
follows:
Three Months Ended Six Months Ended
---------------------- ----------------------
June June June June
2003 2002 2003 2002
-------- -------- -------- --------
Net income (loss) before taxes as reported under GAAP $ 1,677 $ (925) $ 4,000 $ (3,857)
Adjustments to reconcile GAAP net income (loss) before
taxes with cash earnings:
Amortization of purchased intangible assets 3,096 3,096 6,192 6,192
Merger, restructuring and other costs (67) 506 (124) 827
-------- --------- ---------- ---------
Cash earnings $ 4,706 $ 2,677 $ 10,068 $ 3,162
======== ======== ======== ========
Basic and diluted cash earnings per share $ 0.08 $ 0.05 $ 0.18 $ 0.06
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