St.Jude’s Earnings Hold Up As Cost Savings Kick In

In short

St. Jude Medical, Inc. has announced preliminary revenue results for the fourth quarter ended Dec. 29, 2012. While revenues still showed a decline compared with the equivalent period a year ago, the decline was less marked than it had been in Q3. And the bottom line held up as cost saving measures played out.

Background

St.Jude is expecting to report net sales of approximately $1.372 billion for the fourth quarter of 2012, down approximately 1 percent from last year’s fourth quarter after adjusting for the negative impact of foreign currency.

Revenue by product group

Cardiac Rhythm Management (CRM)

The picture was little different to Q3 with sales declining 6% year on year (5% with currency effect) to approximately $682 million. This figure comprised implantable cardiac defibrillator (ICD) sales of   approximately $422 million, a 3 percent decrease from the comparable quarter in 2011 and  Pacemaker sales of approximately $260 million, an 11 percent decrease compared with the fourth quarter of 2011.

Atrial Fibrillation (AF)

AF product sales were approximately $239 million, an increase of 10 percent (11% on constant currency basis) over the fourth quarter of 2011.

Cardiovascular

Total cardiovascular sales, which primarily include vascular and structural heart products, were $338 million for the fourth quarter of 2012, a 1 percent decrease from the fourth quarter of 2011. Sales of vascular products in the fourth quarter of 2012 were $186 million, a 2 percent decrease from the comparable quarter in 2011. Structural heart product sales for the fourth quarter of 2012 were $152 million, a 1 percent increase over the fourth quarter of 2011. Total cardiovascular sales for the fourth quarter increased 1 percent after adjusting for the impact of foreign currency.

Neuromodulation

Fourth quarter sales of neuromodulation products were approximately $113 million, a 7 percent decrease (6% on constant currency basis) compared to the fourth quarter of 2011.

Earnings

St. Jude Medical now projects that its fourth quarter adjusted earnings per share will be in the range of $0.90 to $0.92, exceeding the top end of the Company’s previously issued guidance by $0.02 to $0.04. Of note however, adjusted earnings per share for the fourth quarter exclude net charges totaling approximately $0.50 to $0.60 per share, primarily related to ongoing restructuring actions and certain other corporate charges. The Company attributes this over-performance to its sales results along with the implementation of cost savings initiatives during the quarter.

Company comments

Commenting on preliminary fourth quarter 2012 results, Chairman, CEO and President Dan Starks said, “St. Jude Medical’s fourth quarter revenue fell within or exceeded all of our previously announced guidance ranges. These preliminary sales results, combined with our implementation of significant cost savings initiatives in 2012, make us comfortable that we will exceed our previously announced adjusted earnings per share guidance range by $0.02 to $ 0.04 for the fourth quarter.”

Source: St.Jude Medical, Inc., Business Wire