St. Jude Medical offset a drop in sales of pacemakers in the first quarter with gains in other products.
The Little Canada-based company reported first-quarter results Wednesday that beat investors' expectations, and executives also raised their outlook for the rest of the year. St. Jude stock was up 4 percent, to $60.94 a share.
"Traditional CRM is the business that is under pressure," Don Zurbay, the company's chief financial officer, said in reference to cardiac rhythm management devices, which include pacemakers and defibrillators. "We are excited about the momentum and the results in the rest of our businesses."
The company reported adjusted diluted earnings per share of 90 cents for the three months ended April 2, beating analysts' estimates by two cents.
Net profit was $95 million, or 33 cents a share, down from $262 million, or 91 cents a share, a year ago.
The results "were more or less in line with expectations, which will likely be viewed positively in light of the weakness seen in recent quarters," analysts with SunTrust Robinson Humphrey wrote to investors after the earnings figures were announced.
St. Jude executives raised full-year earnings guidance to a range of $4.01 to $4.11 per share, from a range of $3.95 to $4.05 that was given in January. The company said the improvement was related to changes in assumptions around the impacts of foreign currency fluctuations in 2016.
"Our business is really on track or slightly ahead of schedule, and we are benefiting from currency, so that is what is leading us to maintaining our sales guidance for the year and better EPS guidance," Zurbay said.
Sales in the most recent quarter rose 8 percent to $1.45 billion. That was slightly above analysts' estimates, and 2 percent higher than the same quarter last year if the year-ago sales of advanced heart-device maker Thoratec are included in the calculations.
St. Jude acquired Thoratec last October for $3.3 billion in its largest-ever acquisition. Executives said the integration of Thoratec into St. Jude is complete, slightly ahead of schedule.
Worldwide sales of pacemakers and defibrillators, which is St. Jude's second-largest product division by sales, dropped by 7 percent on a constant currency basis to $366 million. They have been hurt by St. Jude's lack of MRI compatibility for heart devices in the U.S. — a situation that is expected to continue.
On Wednesday, St. Jude executives pushed back their forecast approval date for MRI-conditional pacemakers to the second half of this year, creating a $5 million negative sales impact per quarter for the rest of the year. St. Jude's MRI-compatible defibrillator is still projected for U.S. approval in the first half of 2017.
Sales of devices to treat heart failure grew by 2 percent to $374 million in the quarter, and atrial fibrillation device sales climbed 9 percent to $291 million. Neuromodulation, which includes devices that treat pain by stimulating the spinal cord, grew 10 percent to $116 million. Each worldwide sales figure is reported on a constant currency basis.
For the April to June period, St. Jude said it expects revenue to grow 1 to 3 percent, and adjusted earnings to be in the range of $1.05 to $1.07 per share.
Joe Carlson • 612-673-4779
