St. Jude Lowers Sales View Amid Weakened Defibrillator Market
July 20 2011 - 10:34AM
Dow Jones News
St. Jude Medical Inc. (STJ) lowered its full-year sales outlook
Wednesday amid reduced expectations for the heart-rhythm device
market, which has been pressured by a weak economy, an unfavorable
medical study and a U.S. government investigation.
The St. Paul, Minn., company also raised its full-year sales
forecast for some other products.
St. Jude now believes the global market for heart-rhythm
devices--which includes pacemakers and defibrillators--will
contract about 2% this year, Chief Executive Daniel Starks said on
an earnings call with analysts. This translates to assumptions for
an $11.4 billion global market this year, $500 million less than
St. Jude assumed on its last earnings call in April.
Based on St. Jude's share of the market, where it competes with
Medtronic Inc. (MDT) and Boston Scientific Corp. (BSX), this
reduced outlook translates into $130 million to $135 million less
heart-rhythm sales for St. Jude, Starks said.
Overall, the company now forecasts 2011 sales of $5.61 billion
to $5.73 billion, down from a raised forecast in April for sales of
$5.69 billion to $5.85 billion. While St. Jude lowered its outlook
for heart-rhythm devices, its biggest product franchise, it also
raised sales expectations for atrial fibrillation and
cardiovascular products, which follows increases for both product
lines in April.
The company reported adjusted per-share earnings Wednesday that
were one cent above Wall Street's average expectations, according
to a survey by Thomson Reuters, but it lowered its full-year
earnings guidance by three cents. In addition to reporting new
weakness in heart-rhythm devices--although analysts widely expected
a slowdown there--St. Jude hasn't gotten a key new product approved
as quickly as hoped.
The company is now targeting early fourth-quarter Food and Drug
Administration approval for heart-failure defibrillator systems
featuring its new "quadripolar" lead, or cable that connects the
devices to the heart. The company had previously expected mid-year
approval.
As for heart-rhythm market's malaise, Starks said the U.S.
market "fell into a pothole during the second quarter." He cited a
handful of factors including economic weakness. Also, more St. Jude
customers were contacted by the U.S. Department of Justice in the
second quarter than in prior periods regarding an ongoing
investigation into reimbursement submissions for defibrillators,
Starks said.
St. Jude shares recently traded down 1% to $46.34 early
Wednesday. Shares of Boston Scientific slipped 1% to $7.07 while
Medtronic shares were 8% lower at $36.71.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com
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