With the economy and the stock market in turmoil and consumers cutting back financially as a result, there may be a segment of the Minnesota economy that is foolproof: high-tech medical devices.
That could be good news for local medical technology companies such as St. Jude Medical Inc., the Little Canada maker of heart defibrillators and valves, pacemakers and other devices.
"When we look at the kind of medical devices we're selling, they are used in procedures that oftentimes are treating patients with life-threatening medical disorders," St. Jude Chief Financial Officer John Heinmiller said. "It's not like this is cosmetic surgery, or even elective surgery."
Edward Jones analyst Aaron Vaughn said some patients may defer medical procedures, especially if they have medical insurance with a high deductible or high copays. But sophisticated medical devices may be largely immune from the sway of economic turmoil, he said.
Quarterly results released by St. Jude on Wednesday for the three-month period ended June 28 do not indicate the company's current financial status, but trends appear promising, according to St. Jude Chairman and Chief Executive Daniel Starks. The company increased its annual per-share guidance to a range of $2.28 to $2.33.
More will be known about the state of the industry when Boston Scientific Corp. reports results Tuesday, and Medtronic Inc., the world's largest med-tech company, releases its results Aug. 21.
St. Jude's results for the quarter, during which net income increased 48 percent, were "fantastic," Vaughn said. "They were very solid across the board." St. Jude reported double-digit revenue increases in all of its businesses -- even defibrillators, sales of which have slumped because of a series of industrywide safety recalls in the past two years.
Net income climbed to $201 million, or 58 cents a share, from $134.8 million, or 39 cents a share, a year earlier. Adjusted earnings beat analysts' estimates by 5 cents per share and the company raised its 2008 forecast by 13 cents a share.
The company reported net sales of $1.14 billion in the second quarter, a 20 percent increase over the same period of 2007. Favorable foreign currency translation comparisons increased second-quarter sales by about $64 million,
Sales of pacemakers and implantable cardioverter defibrillators (ICDs) were $712 million for the second quarter, a 20 percent increase compared with the second quarter of 2007.
Of that total, ICD product sales were $406 million in the second quarter, a 24 percent increase compared with the second quarter of 2007. ICDs are $30,000 devices implanted in the chest that shock an errantly beating heart back into rhythm. Second-quarter pacemaker sales were $306 million, an increase of 14 percent.
Sales of products treating atrial fibrillation -- a disorder in which the heart's upper chambers quiver instead of beating effectively, potentially leading to stroke -- totaled $135 million in the second quarter, a 35 percent increase.
St. Jude Medical's sales of neuro-modulation products were $61 million in the second quarter, up 17 percent.
Total sales of cardiovascular products, which include primarily vascular-closure and heart-valve products, were $228 million for the second quarter, a 14 percent increase.
St. Jude expects its earnings for the third quarter to be in the range of 56 to 58 cents per share. The company's stock closed Wednesday at $47.12, up $3.16.
Janet Moore • 612-673-7752