DOW JONES NEWSWIRES
St. Jude Medical Inc.'s (STJ) third-quarter profit fell 9.6% amid soft sales for its heart-rhythm products.
The company, which two weeks ago lowered its third-quarter forecast, cut its full-year earnings outlook and gave a downbeat fourth-quarter view.
St. Jude now expects 2009 earnings of $2.41 to $2.43 a share, down from its prior view of $2.48 to $2.54. It also projects fourth-quarter earnings of 61 cents to 63 cents a share, below the 66-cent average estimate of analysts surveyed by Thomson Reuters.
Chairman and Chief Executive Daniel J. Starks said although international revenue grew 15% in the quarter in constant currency, U.S. revenue was lower than expected. He said about 50 U.S. hospitals refrained from making "normal quarter end purchases of cardiac rhythm management devices due to a variety of financial considerations."
Although the health-care industry has historically resisted recessions, the hospital industry has faced growing numbers of uninsured patients and unpaid patient bills as unemployment climbs.
The profit warning two weeks ago was blamed on slowdowns in hospital restocking, sparking concerns about broader problems for the medical-devices sector. At the time, Starks said "continued pressures" surrounding the Obama administration's health-care reform plans changed purchasing behavior among some hospital customers.
St. Jude's third-quarter earnings fell to $166.9 million, or 48 cents a share, from $184.7 million, or 53 cents, a year earlier. Excluding an 11 cent charge mainly for job-cuts costs in the latest quarter and a 1-cent tax-related gain a year ago, earnings rose to 59 cents a share from 54 cents. The company's forecast two weeks ago was 57 cents to 58 cents.
Sales came in at $1.16 billion, up 7%, as St. Jude disclosed two weeks ago, below Wall Street's then-estimates.
Gross margin fell to 73.6% from 74.7%.
Sales at the heart-rhythm unit, which includes pacemakers and defibrillators, rose 2% to $690 million, or a 5% rise excluding currency changes. St. Jude had said results would be below its July forecast of $700 million to $730 million.
Excluding foreign exchange, ICD and pacemaker sales rose 5% and 4%, respectively.
Sales of devices to treat the rhythm disorder atrial fibrillation, rose 16% to $156 million.
St. Jude shares closed Tuesday at $33.16 and didn't trade premarket. The stock is flat for the year.
-By Mike Barris, Dow Jones Newswires; 212-416-2330; mike.barris@dowjones.com