St. Jude Medical ($STJ) eked out a tiny increase in net sales during its first quarter that ended March 31 versus last year, beating expectations, according to financial results released April 18. But declining ICD and pacemaker sales continued to disappoint.
Separately, St. Jude CEO Daniel Starks said during the earnings call that company executives are working with the journal HeartRhythm to address concerns over a study it published that concluded that the devicemaker's Riata defibrillator leads have caused more deaths than Medtronic's ($MDT) Quattro Secure offering.
Overall, St. Jude booked just under $1.4 billion in net sales during the quarter, versus almost $1.38 billion in the quarter last year. That's up just 1%, or 2% on a currency neutral basis, the company noted. St. Jude's net earnings for the quarter hit $212 million, or 67 cents per share, down from $233 million, or 71 cents per share. Starks put a positive spin on the news, saying the numbers "exceeded expectations for sales and adjusted earnings per share."
The company's cardiac rhythm management (CRM) division continued to struggle. Implantable cardioverter defibrillator sales dipped 3%, to $450 million, and pacemaker sales declined 4%, to $285 million. St. Jude took after-tax charges of $29 million, generally connected to ongoing efforts to streamline its CRM business, including shutting down operations in Sweden. Starks said he expects to improve momentum with such products as the Unify Quadra ICDs, which gained FDA approval along with the Quartet left ventricular quadripolar pacing lead.
Vascular products also dropped 2%, to $181 million. But atrial fibrillation product sales soared 13%, to $221 million during the quarter, and neuromodulation product sales also grew by double-digits to $103 million, up 12% versus the year-earlier period.
One of the first conference call questions involved whether St. Jude might be hurt by the controversy generated by Dr. Robert Hauser's study in the journal HeartRhythm. St. Jude execs have said the study unfairly painted the Riata leads as causing more deaths than Medtronic's Quattro Secure leads. (Riata leads have been off the market since 2010 and were subsequently recalled due to a high rate of insulation failures.) St. Jude has unsuccessfully demanded a retraction, and Hauser, the journal and Medtronic continue to support the study. Starks reemphasized St. Jude's belief that Hauser's study "contained important errors." But, he added, it remains important for the company "to continue to inform patients with the most accurate information we can, [and we] are now working with HeartRhythm to address this issue in a way that will be most helpful for patients--it is important for us to do so."
- here's the earnings release