By Joseph Walker
St. Jude Medical Inc. said market-share gains for its pacemaker
and defibrillator unit should help sales grow by as much as 4.5% in
2014 following two years of flat or declining revenue.
But the medical device maker tempered its outlook for 2014,
saying pricing pressures and other factors would likely weigh
somewhat on results.
The company, based in St. Paul, Minn., forecast per-share
earnings of $3.94 to $3.99 and revenue of $5.6 billion to $5.75
billion for the year, which was roughly in line with the estimates
of analysts polled by Thomson Reuters. Chief Executive Dan Starks
said the company's estimates were designed to be conservative in
light of uncertainties around the effect of the federal health care
law, foreign currency exchange rates and a sluggish global economic
picture that has led to fewer doctor visits and patient
surgeries.
Some investors had been expecting more positive commentary from
the company about the year ahead, said Glenn Novarro, a medical
devices analyst at RBC Capital Markets.
"The investor base wanted to hear a little bit more of an
aggressive tone on EPS and sales growth," Mr. Novarro said. The
device industry as a whole appears to be rebounding from several
challenging quarters as declines in insurer reimbursement and
health-care utilization have stabilized, but industry executives
are still cautious, he said, citing lower-than-expected earnings
guidance from health-care conglomerate Johnson & Johnson on
Tuesday.
Mr. Stark's remarks were part of St Jude's formal presentation
of its fourth-quarter results, which the company first disclosed
last week at the J.P. Morgan Healthcare Conference. Net profit rose
2.5% to $123 million, or 42 cents a share, in the quarter from $120
million, or 39 cents a share, a year earlier. Revenue increased
3.6% to $1.42 billion from $1.37 billion a year earlier.
St. Jude's reported sales of $5.5 billion for the full year in
2013, roughly flat from the prior year. The company's cost of sales
excluding special items rose 5.1% to $1.52 billion last year, up
from $1.44 billion in the prior year, mostly due to the effect of a
new medical-device tax being used to help finance the health-care
law, Chief Financial Officer Donald Zurbay said. In 2012, St.
Jude's sales fell 1.9% to $5.5 billion from $5.61 billion in
2011.
St. Jude has struggled against industrywide pressures, including
pricing pressures from hospitals and insurers, in addition to
regulatory and legal scrutiny of the frequency and necessity of
some surgeries. St. Jude has faced its own share of problems as
well, including controversy over the durability and safety of the
wires, or leads, used to connect its defibrillators to patients'
hearts.
Last January, the U.S. Food and Drug Administration issued a
warning letter to the company after discovering manufacturing
problems at a California facility. St. Jude said on Wednesday that
it had fixed those problems and informed the FDA that the facility
was ready for re-inspection.
Tess Stynes contributed to this article.
Write to Joseph Walker at joseph.walker@wsj.com
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