By Dow Jones Business News,
January 22, 2014, 05:58:00 PM EDT
By Joseph Walker
St. Jude Medical Inc. said market-share gains for its pacemaker and defibrillator unit should help sales grow by as
much as 4.5% in 2014 following two years of flat or declining revenue.
But the medical device maker tempered its outlook for 2014, saying pricing pressures and other factors would likely
weigh somewhat on results.
The company, based in St. Paul, Minn., forecast per-share earnings of $3.94 to $3.99 and revenue of $5.6 billion to
$5.75 billion for the year, which was roughly in line with the estimates of analysts polled by Thomson Reuters. Chief
Executive Dan Starks said the company's estimates were designed to be conservative in light of uncertainties around the
effect of the federal health care law, foreign currency exchange rates and a sluggish global economic picture that has
led to fewer doctor visits and patient surgeries.
Some investors had been expecting more positive commentary from the company about the year ahead, said Glenn
Novarro, a medical devices analyst at RBC Capital Markets.
"The investor base wanted to hear a little bit more of an aggressive tone on EPS and sales growth," Mr. Novarro
said. The device industry as a whole appears to be rebounding from several challenging quarters as declines in insurer
reimbursement and health-care utilization have stabilized, but industry executives are still cautious, he said, citing
lower-than-expected earnings guidance from health-care conglomerate Johnson & Johnson on Tuesday.
Mr. Stark's remarks were part of St Jude's formal presentation of its fourth-quarter results, which the company
first disclosed last week at the J.P. Morgan Healthcare Conference. Net profit rose 2.5% to $123 million, or 42 cents a
share, in the quarter from $120 million, or 39 cents a share, a year earlier. Revenue increased 3.6% to $1.42 billion
from $1.37 billion a year earlier.
St. Jude's reported sales of $5.5 billion for the full year in 2013, roughly flat from the prior year. The
company's cost of sales excluding special items rose 5.1% to $1.52 billion last year, up from $1.44 billion in the prior
year, mostly due to the effect of a new medical-device tax being used to help finance the health-care law, Chief
Financial Officer Donald Zurbay said. In 2012, St. Jude's sales fell 1.9% to $5.5 billion from $5.61 billion in 2011.
St. Jude has struggled against industrywide pressures, including pricing pressures from hospitals and insurers, in
addition to regulatory and legal scrutiny of the frequency and necessity of some surgeries. St. Jude has faced its own
share of problems as well, including controversy over the durability and safety of the wires, or leads, used to connect
its defibrillators to patients' hearts.
Last January, the U.S. Food and Drug Administration issued a warning letter to the company after discovering
manufacturing problems at a California facility. St. Jude said on Wednesday that it had fixed those problems and
informed the FDA that the facility was ready for re-inspection.
Tess Stynes contributed to this article.
Write to Joseph Walker at email@example.com
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