By Dow Jones Business News, October 16, 2013, 10:52:00 AM EDT
--St. Jude slightly raises earnings and sales guidance
--Sales of implanted defibrillator sales increase 1% to $418 million, reversing recent negative trends
--Recent FDA inspection at California facility turned up no new problems, company says
(Updated throughout to add details and company comment.)
By Joseph Walker and Tess Stynes
St. Jude Medical Inc.'s ( STJ ) third-quarter earnings rose 49%, boosted in part by increased sales for some of its
For the year, the medical-device maker raised its per-share adjusted earnings estimate to $3.72 to $3.74 on revenue of
$5.39 billion to $5.47 billion, from its previously increased estimate for a per-share profit of $3.70 to $3.73 and
sales between $5.35 billion and $5.48 billion.
St. Jude is attempting to rebound from several difficult quarters when sales were hurt by safety concerns about a
component in its implantable defibrillators and restructuring and other costs weighed on its profits.
In the third quarter, defibrillator sales--representing a third of total revenue--increased 1% to $418 million,
reversing recent negative growth trends. Chief Executive Daniel Starks said the company gained defibrillator market
share against competitors in the U.S. Meanwhile, St. Jude's devices to treat abnormal heartbeats rose 7% to $235
million, continuing as the company's fastest-growing unit.
For the current quarter, the company forecast per-share adjusted earnings of 95 cents to 97 cents on revenue of $1.32
billion to $1.36 billion. Analysts polled by Thomson Reuters most recently expected per-share profit of 96 cents and
revenue of $1.39 billion.
Shares fell 2.2% to $54.16 in early trading Wednesday; the stock is up 50% year-to-date.
Cardiology companies like St. Jude continue to face pricing pressures from hospitals and insurers, in addition to
sluggish procedure growth caused by regulatory and legal scrutiny on the frequency and necessity of some surgeries. St.
Jude in particular has suffered as critics raised doubts about the safety of the Durata lead used in its implantable
The company said that it continues to resolve issues outlined in an FDA warning letter regarding a California facility
where it manufactures some of the Durata leads. During an unannounced FDA inspection of the facility in July, Mr. Starks
said, the FDA found no new problems and "acknowledged our progress" in remediating the letter.
However, the consequences of a separate warning letter continued to hurt its U.S. neuromodulation unit, which had
sales of $76 million, down 5% from the prior year. A Texas facility where quality control issues had been found is ready
for FDA inspection, but could be delayed by the shutdown of the federal government, Mr. Starks said.
"We expect our neuromodulation business in the United States to remain under pressure until the FDA warning lever is
lifted," Mr. Starks said.
St. Jude Medical reported a profit of $262 million in the third quarter, or 90 cents a share, up from $176 million, or
56 cents a share, a year earlier. The company had projected 88 cents to 90 cents. Excluding restructuring-related items,
year-earlier adjusted earnings were 83 cents.
Net sales increased 1% to $1.34 billion, and excluding currency fluctuations revenue was up 3%. Analysts recently
expected $1.32 billion.
Write to Joseph Walker at firstname.lastname@example.org
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