Heart-device maker Thoratec (NASDAQ:THOR) reported weak financial results for the second quarter of 2014. Revenues in the second quarter came in at $118.1 million, a 10% decrease compared to revenues of $130.5 million in the same period a year ago. GAAP net income plunged to $17.4 million or $0.30 per diluted share, from $23.2 million or $0.40 per diluted share in the same period last year. Gary F. Burbach, President and CEO of the company, said, "We are disappointed with the shortfall in our financial results as near-term factors are having a greater than expected negative impact on our business."
Thoratec's non-GAAP earnings of $0.43 a share were in line with projections from analysts polled by FactSet, but sales of $118.1 million fell short of forecasts by 8%. Moreover, the company slashed its adjusted EPS guidance to a range of $1.25 to $1.35 from an earlier range of $1.72 to $1.82. The company also revised its revenue guidance lower to a range of $455 million to $470 million from $520 million to $535 million.
In order to instill confidence in investors, Thoratec announced an accelerated share repurchase program. In my original article, I mentioned that Thoratec has tremendous growth prospects in the LVAD market with its unparalleled HeartMate products in the pipeline, including HeartMate III and HeartMate PHP. However, Thoratec management believes that the company's business has been negatively impacted as a result of changed perceptions about pump thrombosis since the late 2013 publication of the New England Journal of Medicine article along with greater scrutiny of clinical outcomes overall. The company's management also believes that the headwind will continue to impact its business longer than expected. I'd now recommend investors to wait on the sidelines and see how things pan out for the company before investing fresh money in the stock. However, I wouldn't advise selling the stock to investors that continue to hold it.
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