By Victoria Stilwell TAKING THE PULSE: The U.S. medical device industry may see stabilized volumes--and possibly some growth--on the back of solid results in the previous period. After volumes showed some signs of stability and even a slight gain last period, investors are looking for the growth momentum to continue. U.S. markets have improved, but the European debt crisis may still dampen revenue growth. The industry at-large has faced challenges as consumers pause on elective surgeries. A 2.3% excise tax on medical device makers is set to take effect in January 2013 after the U.S. Supreme Court upheld the Affordable Care Act. Anticipating the excise tax, several companies have already announced layoffs while others contemplate how to adjust, including implementing measures like price increases, reduced investment in research and development and cost cuts. COMPANIES TO WATCH: St. Jude Medical Inc. (STJ) - reports July 18 Wall Street Expectations: Analysts predict per-share earnings of 87 cents on revenue of $1.43 billion. A year earlier, St. Jude reported a profit of 72 cents a share, or 85 cents excluding restructuring-related charges, on revenue of $1.45 billion. Key Issues: Investors will be looking at how St. Jude's position in the heart market will fare amid numerous safety concerns about cables, or leads, for its implantable defibrillators. The problems involve the Riata lead, a wire that connects defibrillators to heart tissue, that St. Jude stopped selling in 2010. A recent medical study tied a malfunction in Riata to at least 20 deaths, and some doctors have scrutinized the company's newer product, the Durata lead. St. Jude received a report on a Durata lead that broke through its lining, but the company in June said the Durata lead didn't have the same critical flaw of the Riata models. The company determined the lead damage stemmed from an external abrasion from contact with a hardened heart valve or possible lead-to-lead contact. Stryker Corp. (SYK) - reports July 18 Wall Street Expectations: Analysts project earnings of 99 cents a share on revenue of $2.14 billion. A year before, Stryker reported a profit of 79 cents a share, or 90 cents stripping out charges related to acquisition and other items, on revenue of $2.05 billion. Key Issues: A search process for a permanent replacement for former Chief Executive Stephen P. MacMillan--who was forced out partly because of his handling of a relationship with a former flight attendant--may take up to a year, interim CEO Curt Hartman said in June. However, Stryker is continuing with its strategy of diversifying its business. Investors are looking for continued sales increases in the company's hip and knee replacement business amid signs the joint-reconstruction market is strengthening. Edwards Lifesciences Corp. (EW) - reports July 24 Wall Street Expectations: Analysts predict a per-share profit of 65 cents on revenue of $489 million. A year earlier, Edwards Lifesciences reported earnings of 48 cents a share, or 49 cents excluding impacts from heightened collection risks in Greece, a tax benefit and other items, on revenue of $431.2 million. Key Issues: Eyes are on the company's Sapien device, a catheter-delivered valve for patients at high-risk from open-heart surgery complications. A Food and Drug Administration advisory panel in June supported wider use for the devices, which are already approved in the U.S. for patients who aren't good candidates for open-heart surgery. Meanwhile, volatility in Europe has slowed sales there, though the company said in April it expected new product introductions to turn growth positive in Southern Europe in the second half of the year. Medtronic Inc. (MDT) - reports Aug. 21 Wall Street Expectations: Analysts forecast a profit of 85 cents a share on revenue of $4.01 billion. A year earlier, Medtronic reported a per-share profit of 77 cents, or 79 cents excluding acquisition-related charges and other items, on revenue of $4.05 billion. Key Issues: Medtronic Chief Executive Omar Ishrak finished his first year at the company, where he inherited slow growth in important markets like heart rhythm and spine products. The company could face further challenges in its spine segment following controversy on Infuse, a product used in spinal fusion procedures, and Mr. Ishrak said the device's results will be surrounded by uncertainty. Medtronic points to renal denervation--a procedure that affects blood pressure by singeing tissue in the walls of arteries leading to the kidneys--as one of its biggest growth opportunities for the rest of the decade. Boston Scientific Corp. (BSX) - Reporting date to be announced Wall Street Expectations: Analysts polled by Thomson Reuters expect earnings of 10 cents a share on revenue of $1.89 billion. A year earlier, Boston Scientific posted a per-share profit of 10 cents, or 17 cents excluding amortization expense and other items, on revenue of $1.98 billion. Key Issues: Boston Scientific's heart rhythm division--which includes defibrillators and pacemakers--will again be a focus for many investors. The company may pick up market share in defibrillators as St. Jude Medical battles a lingering image problem. Looking at its stent division, Boston Scientific in June gained approval from the Food and Drug Administration for the long sizes of its Promus Element Plus drug-coated stents, used to prop open clogged heart arteries. (The Thomson Reuters financial estimates and year-earlier figures may not be comparable due to one-time items and other adjustments.) Write to Victoria Stilwell at Victoria.Stilwell@dowjones.com
