St. Jude shows strong sales, but earnings slip in Q2

Twitter icon
Facebook icon
LinkedIn icon
e-mail icon
Google icon

St. Jude Medical’s net earnings have slipped $13 million in acquisition and restructuring charges, but 2011 second quarter sales demonstrate increases, especially in its atrial fibrillation and structural heart units.

The reported net earnings for the second quarter of 2011 were $241 million, which compares to a reported $254 million net earning for the second quarter of 2010. In the second quarter of 2011, St. Jude recorded after-tax charges of $10 million related to the remaining increase in cost of goods sold that resulted from the step up in inventory values required under acquisition accounting associated with the AGA Medical acquisition. In addition, the company recognized $32 million in other after-tax charges, primarily related to restructuring actions initiated during the second quarter to realign certain activities within its cardiac rhythm management (CRM) business. “A key component of these restructuring activities relates to the company’s decision to transition CRM manufacturing out of Sweden,” the financial statement noted.

The St. Paul, Minn.-based company reported overall net sales of $1.45 billion in the second quarter of 2011, an increase of 10 percent compared with the $1.31 billion in the second quarter of 2010.

Commenting on the second quarter, St. Jude’s Chair, President and CEO Daniel J. Starks said the company delivered “record sales during the second quarter. We are making good progress implementing our new growth drivers and diversifying our growth portfolio. Although sales in the U.S. were down 2 percent due primarily to weakness in the U.S. cardiac rhythm management market, international sales increased 23 percent and now represent the majority of our business.”

Total CRM sales, which include ICD and pacemaker products, were $793 million for the second quarter of 2011, a 1 percent increase compared with the second quarter of 2010. Total CRM sales for the second quarter grew 3 percent after adjusting for the one-time benefit of a competitor’s suspension of sales of ICD products in the U.S. during the prior year. Of that total, ICD product sales were $477 million in the second quarter, a 1 percent increase compared with the second quarter of 2010. Second quarter pacemaker sales were $316 million, essentially equal to the second quarter of 2010.

Atrial fibrillation product sales for the second quarter totaled $208 million, an 18 percent increase over the second quarter of 2010.

St. Jude’s sales of neuromodulation products were $104 million in the second quarter of 2011, up 9 percent from the comparable quarter of 2010.

Total cardiovascular sales, which primarily include vascular and structural heart products, were $342 million for the second quarter of 2011, a 35 percent increase over the second quarter of 2010. This division now includes sales from AGA Medical, which St. Jude acquired in November 2010.

Sales of vascular products during the second quarter of 2011 were $189 million, up 14 percent from the comparable quarter of 2010.

Structural heart product sales for the second quarter of 2011 were $153 million, a 74 percent increase over the second quarter of 2010, with the addition of AGA Medical products to the business.

The company expects its consolidated adjusted net earnings for the third quarter of 2011 to be in the range of $0.74 to $0.76 per diluted share and for the full-year to be in the range of $3.25 to $3.30.