* Heart rhythm device sales improve from first quarter
* Company says it has turned the corner on lead wire
* Shares rise 7 percent in morning trading
By Susan Kelly
July 17 St. Jude Medical Inc on
Wednesday posted higher-than-expected quarterly earnings and
revenue as sales of devices to treat abnormal heart rhythms
improved from earlier this year, sending its shares up 7
The company also raised the lower end of its full-year net
earnings forecast and said sales would gain momentum this year
as it rolls out a series of new heart devices.
St. Jude, which competes against Medtronic Inc and
Boston Scientific Inc in selling implantable
cardioverter defibrillators, had lost market share in the past
year due to lingering concerns about problems with the lead
wires that connect the devices to the heart. ICDs monitor and
regulate heart rates via electrical shocks.
The company's Riata defibrillator leads were recalled in
2011 after insulation defects were found. U.S. regulators last
year also raised questions about the design process for a second
lead called the Durata.
St Jude said it believes its current leads are reliable and
have no safety issues.
"We think we've turned the corner and moved past those
pressures," St. Jude Chief Financial Officer Don Zurbay said in
a telephone interview.
Sales of ICDs and pacemakers, the company's biggest product
category, fell 4 percent to $718 million in the second quarter
from a year earlier. The decrease would have been 2 percent if
the impact of foreign currency was excluded.
Analyst Aaron Vaughn of investment firm Mid-Continent
Capital said sales of the company's ICDs and pacemakers had
improved from the first quarter.
"With all of the concerns over the Durata and Riata over the
past year or so, this has got to be considered a good quarter
for them," said Vaughn, whose company does not own St. Jude
St. Jude said its second-quarter net income fell to $115
million, or 40 cents per share, from $244 million, or 78 cents
per share, a year earlier, primarily due to costs from the early
retirement of debt.
Earnings excluding special items were 96 cents per share. On
that basis, analysts on average had expected 94 cents, according
to Thomson Reuters I/B/E/S.
The St. Paul, Minnesota-based company, which also makes
artificial heart valves, devices to treat atrial fibrillation
and neurology products, said net sales declined slightly to
$1.40 billion from $1.41 billion as the U.S. dollar strengthened
against the yen and euro, reducing the value of overseas
Analysts on average had expected sales of $1.36 billion.
Excluding the impact of foreign currency translations,
second-quarter sales increased by about 2 percent from a year
earlier, St. Jude said.
St. Jude said it now expects full-year 2013 net earnings to
be between $3.70 and $3.73 per share, increasing the lower end
of the range by 2 cents.
Shares of St. Jude, which are trading at two-year highs,
rose 7 percent to $51.87 on the New York Stock Exchange.