HeartWare International

History

2021: Closing sales of heart pumps after a series of reviews of rejected products

In early June 2021, Medtronic announced the cessation of sales of its heart pumps HeartWare Ventricular Assist Device (HVAD) after a series of reviews of defective products. The company notified customers of the need to switch to alternative means of mechanical support of blood circulation. More details here.

2018: Fine of $54.5 million for cheating with the elimination of problems in cardio pumps

On November 16, 2018, Medtronic-based company HeartWare International agreed to pay $54.5 million in compensation for cheating to fix problems in cardio pumps. According to the court order, the manufacturer of medical equipment misled investors about the prospects of MVAD cardio pump and exaggerated the efforts spent on solving the problems that arose with it.

The verdict should be handed down by the US District Court in the Southern District of New York. Lawyers for the group of investors told the district judge that the amount of compensation indicated was approximately 25-66% of the compensation. Lawyers also said they would demand as payment no more than 24% from the penalty fund, which is about $13.1 million, not counting the amount of $400 000 for legal costs. However, lawyers believe that taking into account other risks and significant additional costs and delays that may appear during the long trial, investors will be able to compensate for the damage on good terms.

MVAD system

The trial lasted two years until an agreement was reached between the plaintiffs' attorneys from Bernstein Litowitz Berger & Grossmann and the WilmerHale defense team. The case has moved off the ground thanks to the wave of layoffs - the judge noted that lawyers from the plaintiffs were able to obtain reliable evidence thanks to the testimony of former HeartWare employees.

The transaction is invalid without a court decision, and investors may disagree with the amount that lawyers call. The judge will reach a final decision only after considering all the objections received.

The lawsuit says HeartWare painted an idyllic picture of the prospects for using MVAD cardio pump, although in October 2015 it became known that the company was conducting an in-house investigation into "reports of adverse events in some patients during clinical studies." The disclosure of this information cost the company serious costs: its shares fell in price by 30% in one day. The company also erroneously stated the success of the ongoing measures to identify risks and solve cardiac pump safety problems when it received a warning from regulatory authorities in June 2014.

Lawyers for the company say the trial is compromised, and the charges are based on unlawful statements from former HeartWare employees written retroactively. According to lawyers, these employees simply do not have an idea of ​ ​ the complete picture of what is happening, and the allegations that the company deliberately misled investors are baseless.

However, the district judge said at a hearing in March that statements from former employees were plausible enough and the company could really ignore quality control problems. In particular, Former Employee No. 5 noted that the company's method of work "has not changed" and "we just did the same as before" even after warning regulators.

The judge also noted at the hearing that he considers it unlikely that management is so low on quality control issues, even considering that the HeartWare is headquartered in Massachusetts and the manufacturing division is in Florida. HeartWare managers deliberately dispelled investors' doubts in 2013 and 2014, which led to significant losses for all involved.

The judge said that the evidence of fraud provided by the plaintiffs was "no less convincing" than the arguments that could be made in favor of the defendants.

Representatives of Medtronic did not respond to a request for comment.^[1]

2016: Medtronic buys HeartWare for $1.1 billion

On June 27, 2016, one of the world's largest manufacturers of medical equipment, Medtronic announced the acquisition of HeartWare for $1.1 billion. This deal should help the buyer improve treatment technologies for heart failure patients.

Under the terms of the agreement reached, Medtronic will pay $58 for each share of HeartWare, which is almost double the market value of securities by the close of the exchange on June 24, 2016. The deal, which was approved by the boards of directors of both companies, is planned to be closed in the second financial quarter of Medtronic (to be completed on October 28, 2016). Medtronic reported that the announced acquisition will not affect the company's revenue and profit for the 2017 fiscal year.

Medtronic buys a manufacturer of heart support devices for HeartWare $1.1 billion

According to Bloomberg news agency, the takeover of HeartWare will allow Medtronic to expand the portfolio of diagnostic tools, treatments and services for patients suffering from heart failure. Medtronic estimates the global market for auxiliary ventricular systems (HeartWare specializes in them) used to support cardiac activity at $800 million and predicts growth of this volume by 7-9% in 2016 and 2017.

Heart failure is a clinical syndrome associated with acute or chronic disturbance of the heart and, as a result, insufficient blood supply to organs and tissues. As of June 2016, more than 5 million Americans suffer from this disease.^[2]

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