St. Jude Cuts Earnings Forecast as Sales, Profit Slip -- Update
October 21 2015 - 11:49AM
Dow Jones News
By Ezequiel Minaya
St. Jude Medical Inc. cut its full-year earnings forecast and
said sales and profit slid in its latest quarter as the
medical-device maker faced currency headwinds.
While international sales declined 10% to $634 million,
weighting on results, the St. Paul, Minn., company met Wall Street
expectations for earnings while narrowly missing the mark for
revenue.
St. Jude reined in its full-year forecast for adjusted earnings
per share, saying it expects $3.93 to $3.95, compared with its
prior view of $3.96 to $4, a forecast it made in July. The company
also projected fourth-quarter adjusted earnings of $1 to $1.02,
below analysts' expectations of $1.07, according to Thomson
Reuters.
St. Jude said it expects currency impact on revenue in the final
quarter of the year to be between $75 million and $85 million.
St. Jude also expects sales to decline 1% this year, an
improvement over its previous forecast of a decline between 3% and
1%, helped in part by the completed acquisition in October of
Thoratec Corp., a major player in the heart devices global
market.
"The acquisition is extremely important for us," said Don
Zurbay, chief financial officer of St. Jude. "It puts us in a
leadership position in the heart-failure market." He added that
Thoratec has about $500 million in annual sales.
Overall, the company posted a profit of $215 million, or 75
cents a share, down from $238 million, or 82 cents, a year earlier.
Excluding acquisition-related costs and other expenses, adjusted
earnings were 97 cents a share, down from $1.02 a year earlier.
Revenue slipped 2.4% to $1.34 billion.
Analysts surveyed by Thomson Reuters forecast per-share earnings
at 97 cents a share on revenue of $1.35 billion.
Along with competitors Medtronic and Boston Scientific Corp.,
St. Jude has been on the hunt for new markets as sales of its core
business of pacemakers and implanted defibrillators, which
represent nearly half of its total revenue, have declined or
stagnated in recent years.
For the latest quarter, sales in the Cardiac Rhythm Management
division, which includes pacemaker products, dipped 8% to $630
million. Pacemaker sales fell 10%. In the Cardiovascular segment,
sale declined 2%. In the Atrial Fibrillation segment, product sales
totaled $271 million, representing a 7% increase compared with a
year ago.
Earlier this year, St. Jude agreed to pay $3.4 billion in cash
to buy Thoratec, the leading maker of a promising type of heart
pump. According to a recent client note by Wedbush analysts,
Thoratec gave St. Jude an entry into the $750 million Left
Ventricular Assist Device, or LVAD, market.
The analysts also added that St. Jude Medical "has several
ongoing and near-term product launches that we believe should allow
the company to fend off competitive pressures and outpace the
market."
Write to Ezequiel Minaya at ezequiel.minaya@wsj.com
Subscribe to WSJ: http://online.wsj.com?mod=djnwires
(END) Dow Jones Newswires
October 21, 2015 11:34 ET (15:34 GMT)
Copyright (c) 2015 Dow Jones & Company, Inc.
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