St. Jude has slight dip in Q3, lowers guidance

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St. Jude Medical experienced a 2 percent drop in net earnings, despite an increase in sales for the third quarter of 2009, which ended Sept. 30.

The St. Paul, Minn.-based company reported net sales of $1.16 billion in the third quarter of 2009, an increase of 7 percent compared with the $1.08 billion in the third quarter of 2008. Foreign currency translation comparisons decreased third quarter sales by approximately $29 million, according to St. Jude.

Total cardiac rhythm management sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $690 million for the third quarter of 2009, a 2 percent increase over the comparable year-ago period. Of that total, ICD product sales were $389 million in the third quarter, a 2 percent increase compared with the third quarter of 2008. Third quarter pacemaker sales were $301 million, an increase of 1 percent from the comparable quarter of 2008.

For atrial fibrillation, product sales for the third quarter of 2009 totaled $156 million, a 16 percent increase over the 2008  third quarter.

Total cardiovascular sales, which primarily include vascular closure and heart valve products, were $230 million for the third quarter of 2009, an 11 percent increase over the third quarter of 2008. (This product category includes sales of products that St. Jude Medical acquired from Radi Medical Systems in December 2008.)  Sales of vascular closure products in the third quarter of 2009 were $91 million, a 2 percent increase over the third quarter of 2008. Heart valve product sales for the third quarter of 2009 were $80 million, a 3 percent increase compared with the previous year-ago quarter.

“International revenue grew 15 percent in the quarter, but U.S. revenue was lower than expected,” St. Jude’s Chairman, President and CEO Daniel J. Starks said. “Related to our U.S. growth, we have identified approximately 50 U.S. hospitals who did not participate in normal quarter end purchases of cardiac rhythm management devices due to a variety of financial considerations…We are lowering our expectations for our fourth quarter results to accommodate the issues we are experiencing from a limited portion of our customer base in the U.S., but we are confident that our long term growth program is on track.”

In the third quarter, St. Jude recorded pre-tax charges of $57 million, comprised primarily of employee termination costs related to continuing efforts to improve sales and sales support productivity, as well as to streamline manufacturing operations. Including these charges, reported net earnings for the third quarter of 2009 were $167 million, compared with $184 million in the previous year-ago period.

The company said it expects its consolidated earnings for the fourth quarter of 2009 to be in the range of $0.61 to $0.63 per diluted share and for full-year 2009 to be in the range of $2.41 to $2.43 per diluted share. This full-year guidance does not include the impact on earnings per share of the charges recorded in the third quarter of 2009.