Thoratec Corporation (THOR) sent safety advisory to hospitals regarding the use of its pocket system controller for mini heart pump device, HeartMate II. The Pleasanton, Calif.-based company received reports of four deaths and five patient injuries that happened while switching from primary system controllers to backup system controllers.
Investors reacted negatively to the news, resulting in a 2.7% fall in THOR shares to $36.22 after the market closed yesterday. Meanwhile, shares of the rival heart pump maker, HeartWare International, Inc. (HTWR) rose 0.1%.
HeartMate II left ventricular assist device (:LVAD) is implanted in patients with advanced heart failureto help the heart pump blood. It is connected to an external battery pack and a system controller, which alarms patients if the battery runs down.
THOR started selling the new system controller for the device in Aug 2012 in Europe and in May 2013 in the U.S. It has been prescribed to 2,142 patients since Aug 2012.
THOR revealed that four patients died while struggling to change their controller themselves while five others lost consciousness or suffered decreased blood flow due to difficulty in switching controllers.
However, THOR claimed that the deaths and injuries occurred not due to problems or defects in controllers but due to lack of training. Therefore, it didn’t recall the devices. The company stated that the affected patients may not have received proper training with the new controller and failed to understand its difference from the old controller model.
As a result, THOR advised that all the patients using the new controller and their caregivers should be retrained from using the new controller as they are at a higher risk of experiencing difficulties in the switching process.
THOR posted adjusted earnings of $17.5 million or 30 cents per share for the fourth quarter of 2013, which declined 9.3% from $19.3 million or 6.25% from 32 cents per share in the comparable quarter a year ago. Earnings per share were in line with the Zacks Consensus Estimate.
THOR’s revenues in the quarter dipped marginally by 0.2% to $128.2 million, lagging the Zacks Consensus Estimate of $130.0 million. Revenues from HeartMate product line came in at $111.7 million, reflecting a 5.2% year-over-year increase due to the expansion of its international business.
For fiscal 2014, THOR expects revenues in the range of $520–$535 million. The current Zacks Consensus Estimate of $528 million lies within the guided range. The company also expects adjusted earnings per share of $1.40–$1.50 for the year. The current Zacks Consensus Estimate of $1.28 million lies below the guided range.
Currently, THOR retains a Zacks Rank #3 (Hold). Some better-ranked stocks in the medical instruments sector include Natus Medical Inc. (BABY) and Cynosure, Inc. (CYNO). Both of them carry a Zacks Rank #1 (Strong Buy).
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