|St. Jude Medical CEO Daniel Starks|
St. Jude Medical has been shedding jobs and cutting costs over the past year, and the prolonged restructuring is paying off on the balance sheet: The Minnesota devicemaker boosted its net income by more than 40% in the third quarter despite a middling increase in revenue.
The company took in $252 million in profits in Q3, well above the $176 million it netted in the same period last year. St. Jude has spent hundreds of millions of dollars since 2011 in an effort to slim down and make its operations more efficient, especially in the long-struggling cardiac rhythm management (CRM) business. Now, after hundreds of layoffs and months of consolidation, St. Jude sees a path to more profit growth.
And things are looking rosier on the revenue side, too. St. Jude's net sales came in at $1.3 billion, a roughly 1% increase, led by a 7% jump in atrial fibrillation revenue and a 3% spike in neuromodulation sales. CRM, the company's largest business, slipped 1% to $682 million on the quarter, as a 5% decline in pacemaker sales negated 1% growth in ICDs.
While none of those figures is terribly impressive on its own, modest growth is a step in the right direction for a company long plagued by regulatory woes and flattening demand for its banner products, and CEO Daniel Starks is expecting more positive quarters to come.
"Our third quarter results demonstrate that we are successfully implementing our program to accelerate sales growth on a sustainable basis while strengthening our program with selective and disciplined acquisitions," Starks said.
That M&A push includes Endosense, the electrophysiology outfit St. Jude is buying for up to $331 million, and Nanostim, maker of the first leadless pacemaker, which the company picked up for $123.5 million up front and up to $65 million down the line. St. Jude also has a minority stake in CardioMEMS and its heart failure diagnostic device, and many expect the company to shell out for full ownership if the Champion implant wins FDA approval.
- read St. Jude's full results