(Recasts with CFO interview)
By Bill Berkrot
July 16 Heart device maker St. Jude Medical Inc
said it has no plans to jump on the consolidation
bandwagon that has swept the healthcare sector in recent months
and is not seeking the type of "inversion" deal increasingly
popular among U.S. companies seeking to lower taxes by re-basing
In the most recent such deal in the medical device sector,
Medtronic Inc last month agreed to buy Covidien
for $43 billion. The move will allow Medtronic to re-domicile to
Ireland to take advantage of low corporate tax rates and to
access cash overseas without having to pay high repatriation
St. Jude's chief financial officer, Don Zurbay, said on
Wednesday the company was open to deals if they fit with the
therapeutic areas that are its focus, such as cardiac care. But
a tax inversion strategy is not a priority.
"It really would have to be a deal that's highly strategic
first, and if those benefits happen to be a part of it, that's
great. But for us, we don't really feel the need," Zurbay said
in a telephone interview, following the company's release of
slightly better-than-expected quarterly results.
"We have a very low tax rate to begin with, so in our
situation I don't think the benefits would be there on the tax
side," he said.
"We've had good success in getting access to most of our
cash over time, so for us it really hasn't been a big topic," he
Medtronic and other companies that have recently announced
mergers have also cited a desire to get bigger in order to offer
a wider array of products to hospital customers looking to cut
costs and the number of vendors with which they do business.
Zurbay said St. Jude has no great desire to do a major
acquisition simply to get bigger.
St. Jude has been mentioned by some investors as a potential
takeover target by others looking to grow.
The company reported higher quarterly earnings and revenue,
largely due to increased sales of its devices to treat abnormal
Sales of implantable cardioverter defibrillators and
pacemakers, St. Jude's biggest product category, rose 2 percent
to $733 million in the second quarter ended June 28.
"The market itself has been flat," Zurbay said. "Our growth
has come mostly from market share gains."
St. Jude, which competes against Medtronic and Boston
Scientific Inc in the space, raised its full-year
adjusted earnings per share forecast range by a cent to $3.96 to
The company is targeting mid-to-high single-digit sales
growth in 2015, fueled by the introduction of new products.
Excluding special items and including a tax benefit,
adjusted earnings for the quarter were $1.02 per share, topping
analysts' average expectations by 2 cents, according to Thomson
Reuters I/B/E/S. Revenue rose 3 percent to $1.45 billion, edging
past Wall Street estimates of $1.44 billion.
St. Jude Medical shares were down 0.4 percent at $67.98 on
the New York Stock Exchange.
(Additional reporting by Shailesh Kuber in Bangalore; Editing
by Sriraj Kalluvila and Leslie Adler)