Heartware International, (FRA:HIY1) Operating Income : €-38.9 Mil (TTM As of Jun. 2016)

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What is Heartware International, Operating Income?

Heartware International,'s Operating Income for the three months ended in Jun. 2016 was €-5.7 Mil. Its Operating Income for the trailing twelve months (TTM) ended in Jun. 2016 was €-38.9 Mil.

Operating Margin % is calculated as Operating Income divided by its Revenue. Heartware International,'s Operating Income for the three months ended in Jun. 2016 was €-5.7 Mil. Heartware International,'s Revenue for the three months ended in Jun. 2016 was €61.2 Mil. Therefore, Heartware International,'s Operating Margin % for the quarter that ended in Jun. 2016 was -9.26%.

Warning Sign:

Heartware International Inc operating margin has been in 5-year decline. The average rate of decline per year is -56.9%.

Heartware International,'s 5-Year average Growth Rate for Operating Margin % was -56.90% per year.

Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition. Heartware International,'s annualized ROC % for the quarter that ended in Jun. 2016 was -13.32%. Heartware International,'s annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2016 was -60.23%.

Heartware International, Operating Income Historical Data

The historical data trend for Heartware International,'s Operating Income can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Heartware International, Operating Income Chart

Heartware International, Annual Data

Trend

Dec06

Dec07

Dec08

Dec09

Dec10

Dec11

Dec12

Dec13

Dec14

Dec15

Operating Income

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-32.40

-59.13

-34.71

-0.10

-34.19

Heartware International, Quarterly Data
	Sep11	Dec11	Mar12	Jun12	Sep12	Dec12	Mar13	Jun13	Sep13	Dec13	Mar14	Jun14	Sep14	Dec14	Mar15	Jun15	Sep15	Dec15	Mar16	Jun16
Operating Income	Get a 7-Day Free Trial															-6.99	-22.94	3.36	-13.67	-5.66

Heartware International, Operating Income Calculation

Operating Income, is the profit a company earned through operations. All expenses, including cash expenses such as cost of goods sold (COGS), research & development, wages, and non-cash expenses, such as depreciation, depletion and amortization, have been deducted from the sales.

Operating Income for the trailing twelve months (TTM) ended in Jun. 2016 adds up the quarterly data reported by the company within the most recent 12 months, which was €-38.9 Mil.

Heartware International, (FRA:HIY1) Operating Income Explanation

1. Operating Income or EBIT is linked to Return on Capital for both regular definition and Joel Greenblatt's definition.

Heartware International,'s annualized ROC % for the quarter that ended in Jun. 2016 is calculated as:

	ROC % (Q: Jun. 2016 )
=	NOPAT	/	Average Invested Capital
=	Operating Income * ( 1 - Tax Rate % )	/	( (Invested Capital (Q: Mar. 2016 )	+	Invested Capital (Q: Jun. 2016 ))	/ count )
=	-22.656 * ( 1 - -1.85% )	/	( (174.1	+	172.325)	/ 2 )
=	-23.075136	/	173.2125
=	-13.32 %

where

	Invested Capital		(Q: Mar. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	387.32	-	44.209	-	( 169.011	-	max(0, 44.209	-	240.657	+	169.011	))
=	174.1

	Invested Capital		(Q: Jun. 2016 )
=	Total Assets	-	Accounts Payable & Accrued Expense	-	Excess Cash
=	Total Assets	-	Accounts Payable & Accrued Expense	-	( Cash, Cash Equivalents, Marketable Securities	-	max(0, Total Current Liabilities	-	Total Current Assets	+	Cash, Cash Equivalents, Marketable Securities	))
=	382.141	-	44.968	-	( 164.848	-	max(0, 44.968	-	237.8	+	164.848	))
=	172.325

Note: The Operating Income data used here is four times the quarterly (Jun. 2016) data.

2. Joel Greenblatt's definition of Return on Capital:

Heartware International,'s annualized ROC (Joel Greenblatt) % for the quarter that ended in Jun. 2016 is calculated as:

	ROC (Joel Greenblatt) %		(Q: Jun. 2016 )
=	EBIT	/	Average of (Net fixed Assets	+	Net Working Capital)
=	EBIT	/	Average of (Property, Plant and Equipment	+	Net Working Capital)
			Q: Mar. 2016		Q: Jun. 2016
=	EBIT	/	( ( (Property, Plant and Equipment + Net Working Capital)	+	(Property, Plant and Equipment + Net Working Capital) )	/	count )
=	-24.536	/	( ( (13.113 + max(27.437, 0))	+	(12.936 + max(27.984, 0)) )	/	2 )
=	-24.536	/	( ( 40.55	+	40.92 )	/	2 )
=	-24.536	/	40.735
=	-60.23 %

where Working Capital is:

	Working Capital		(Q: Mar. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(26.466	+	38.979	+	6.201)	-	(44.209	+	0	+	0)
=	27.437

	Working Capital		(Q: Jun. 2016 )
=	(Accounts Receivable	+	Total Inventories	+	Other Current Assets)	-	(Accounts Payable & Accrued Expense	+	Defer. Rev.	+	Other Current Liabilities)
=	(34.441	+	33.699	+	4.812)	-	(44.968	+	0	+	0)
=	27.984

When net working capital is negative, 0 is used.

Note: The EBIT data used here is four times the quarterly (Jun. 2016) EBIT data.

3. Operating Income is also linked to Operating Margin %:

Heartware International,'s Operating Margin % for the quarter that ended in Jun. 2016 is calculated as:

Operating Margin %	=	Operating Income (Q: Jun. 2016 )	/	Revenue (Q: Jun. 2016 )
	=	-5.664	/	61.161
	=	-9.26 %

4. Please click Growth Rate Calculation Example (GuruFocus) to see how GuruFocus calculates Wal-Mart Stores Inc (WMT)'s revenue growth rate. You can apply the same method to get the Operating Income growth rate using Operating Income per share data.

Be Aware

Compared with a company's EBITDA margin, Operating Margin can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).

If a company is facing competition, its Operating Margin may decline. Often the Operating Margin declines well before the company's revenue or even profit decline. Therefore, Operating Margin is a very important indicator of whether the company is facing problems.

For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokia's Operating Margin had already been in decline since 2002, although its earnings per share were still rising. Investors who paid attention to Operating Margin would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).

Therefore, Operating Margin is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.

Heartware International, Operating Income Related Terms

Thank you for viewing the detailed overview of Heartware International,'s Operating Income provided by GuruFocus.com. Please click on the following links to see related term pages.

Heartware International, (FRA:HIY1) Business Description

Industry

GURUFOCUS.COM » STOCK LIST » Healthcare » Medical Devices & Instruments » Heartware International, Inc. (FRA:HIY1) » Definitions » Operating Income

Comparable Companies

Traded in Other Exchanges

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Address

Website

http://www.heartware.com

Heartware International Inc was incorporated in Delaware on July 29, 2008 and became the successor issuer to HeartWare Limited, an Australian corporation, on November 13, 2008, as a result of the Australian Court approved redomiciliation of HeartWare Limited from Australia to Delaware. HeartWare is a medical device company engaged in developing implantable blood pumps for the treatment of advanced heart failure. The Company operates one reportable segment which includes the design, manufacture and marketing of medical devices for the treatment of advanced heart failure. The HeartWare Ventricular Assist System, which includes a left ventricular assist device, or blood pump, patient accessories and surgical tools, is designed to provide circulatory support for patients with advanced heart failure. Beyond the HeartWare System, the company is also evaluating its next device, the Miniaturized Ventricular Assist Device. The MVAD is based on the same technology platform as the HeartWare System but adopts an axial flow, rather than a centrifugal flow, configuration and is being developed in multiple configurations. The MVAD designs are currently at the preclinical stage and undergoing animal studies focused on minimally invasive implantation techniques and are each approximately one-third the size of the HVAD Pump. The Company's competitors in the implantable cardiac assist space include Thoratec Corporation, Jarvik Heart, Inc., MicroMed Cardiovascular, Berlin Heart GmbH, and Sunshine Heart, Inc. HEARTWARE, HVAD, MVAD, PAL, CIRCULITE, SYNERGY and various company logos are the trademarks of the Company, in the United States, Europe, Australia and other countries.

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