St. Jude Medical Inc. Executive Vice President John Heinmiller has been saying for several quarters that if the Little Canada company's heart rhythm business just made it back to "flat," the medical device maker's revenue would begin to take off.
Was the second quarter of 2013 the turning point? Heinmiller thinks so. On Wednesday, St. Jude said several of its businesses showed gains, including U.S. defibrillator sales, in a second quarter that beat most analysts' estimates.
"From our perspective, we are very encouraged by our results this quarter," Heinmiller said in an interview Wednesday. "We believe our [cardiac rhythm management] business is returning to normalcy, after the pressures of the last couple of years."
Worldwide defibrillator sales of $454 million were down 1 percent compared with the second quarter of 2012 — and flat after adjusting for the impact of foreign currency. But U.S. defibrillator sales were actually up over the second quarter of last year, $270 million, compared with $267 million, surprising some analysts.
Overall, sales of cardiac rhythm management devices, including implanted defibrillators and pacemakers, were $718 million for the second quarter of 2013, a 4 percent decrease compared with the second quarter of 2012, and down 2 percent after adjusting for foreign currency costs. But that was a better-than-expected showing — and it seemed to fuel some optimism about St. Jude moving forward.
In a note Wednesday to investors, Danielle Antalffy of Leerink Swann Research wrote: "This morning, [St. Jude] reported a solid quarter of broad-based outperformance … ahead of us and consensus."
Antalffy added that St. Jude's solid showing implies that it has either gained market share, or that the overall defibrillator market has stabilized. With St. Jude "poised to launch 20-plus new products this year, we expect the company to continue to deliver accelerating sales growth across its businesses as the year progresses."
Reported second-quarter pacemaker sales of $264 million were down 8 percent compared with the same quarter a year ago, and down 6 percent after adjusting for currency costs. But several other areas showed gains.
Sales of products to treat atrial fibrillation totaled $237 million, a 9 percent increase over the second quarter of 2012. Cardiovascular sales were $340 million for the second quarter of 2013, flat compared with the second quarter of 2012, but an increase of 3 percent on a constant currency basis. Total structural heart product sales for the second quarter of 2013 were $162 million, up about 1 percent compared with the second quarter of 2012 — and up 4 percent on a constant currency basis. Sales of vascular products and neuromodulation revenues also were up from the same quarter a year ago.
"During the second quarter, St. Jude Medical made good progress towards accelerating our sales growth on a sustainable basis. Our operating discipline, healthy balance sheet and strong cash flow will continue to allow us to fund disciplined acquisitions and return value to shareholders," said St. Jude Chief Executive Daniel Starks. "We remain confident in our ability to deliver double-digit constant currency growth in 2013 adjusted earnings per share."
St. Jude reported second-quarter adjusted net earnings of $275 million, or 96 cents per share. That compared with second-quarter adjusted net earnings for 2012 of 88 cents per share.
St. Jude officials said they expect consolidated net earnings for the third quarter of 2013 to be in the range of 88 to 90 cents per share and for full-year 2013 consolidated net earnings to now be in the range of $3.70 to $3.73 per share, increasing the lower end of the range by $0.02. The company reported net sales of $1.403 billion in the second quarter of 2013 — slightly less than net sales of $1.410 billion in the second quarter of 2012.
St. Jude's stock rose 5 percent Wednesday, closing at $51.