An ongoing slide in heart device sales snipped quarterly revenue again for St. Jude Medical Inc. even as job cuts and tax credits boosted profits.
Overall, first-quarter sales of $1.34 billion were down slightly compared with last year. That piggybacks on a 2.5 percent sales decline for the fourth quarter of 2012 — and a 2 percent drop for all of 2012 compared with 2011. The maker of pacemakers, heart-shocking defibrillators and other medical devices has been plagued the past few years by recalls of wires for several heart devices. But there also have been sales declines as governments in Europe pay for fewer devices and procedures in the wake of the debt crisis.
Despite this, St. Jude officials on Wednesday said they are confident the declines are behind the Little Canada-based medical technology company, promising that the first quarter will be the last time this year that the numbers don’t climb.
“We expect sales growth to accelerate as we launch more than 20 new products to the market in 2013,” said CEO Daniel Starks.
Those products include the introduction of new pacemakers to Europe and Japan, including a pacemaker that is MRI-compatible, and the European launch of a deep brain stimulation device to treat dystonia — a movement disorder that causes involuntary muscle contractions. Devices that treat the heart, long the bread and butter of St. Jude, are expected to make up less than half St. Jude’s business in 2013.
“What that translates into is we are right on track to accelerate our sales growth as we go through 2013,” said John Heinmiller, St. Jude executive vice president. “We expect this to be [the] low water mark for 2013 and that we will see better growth rates for rest of 2013.”
That growth is expected to carry into 2014, he said.
St. Jude reported first-quarter earnings of $222 million, or 78 cents a share, up 5 percent and slightly beating analysts’ expectations. Adjusted earnings per share were 92 cents a share, 1 cent more than Wall Street analysts had expected.
St. Jude said its adjusted second-quarter earnings for 2013 would be in the range of 93 to 95 cents per share, in line with analysts’ estimate of 94 cents. Adjusted earnings for the year are anticipated to be in the range of $3.68 to $3.73 a share, in line with analysts’ estimate of $3.70.
In a note to investors Wednesday, Leerink Swann analyst Danielle Antalffy called St. Jude’s results “encouraging” and said the company’s non-cardiac rhythm businesses “seem to have stabilized a bit.”
In restructuring moves, St. Jude has eliminated 800 jobs since August of last year.
The company’s stock price was down a little more than 1 percent around noon Wednesday. Through Tuesday, however, the stock is up nearly 40 percent since hitting a four-year low in late November. That’s when an inspection report by the U.S. Food and Drug Administration detailed quality-control issues at a California plant that manufactures the company’s Durata defibrillator lead.