St. Jude slides in Q1 but expects a big year

St. Jude Medical CEO Dan Starks

St. Jude Medical's ($STJ) struggles continued in the new year, as declining demand for cardiac devices dragged sales down another 4%, but the company's cost-cutting helped it eke out some growth in net income.

The company booked $1.338 billion in revenue in the first quarter, down from $1.395 billion in the same period last year, and that decline is largely due to a prolonged slump for cardiac rhythm management. But despite the overall revenue decline, St. Jude was able to trim about $68 million from its expenses, posting $223 million in net income, a 5% gain.

The whole CRM unit declined 8% on the quarter, with ICD sales dropping 5% and pacemaker revenue plummeting 12%. And things are unlikely to turn around any time soon for the business: CFO John Heinmiller told analysts Wednesday that St. Jude expects CRM revenues to decline 4% in 2013.

Meanwhile, cardiovascular sales dropped 2% and neuromodulation slipped 4%. Only atrial fibrillation grew on the quarter, reporting a 5% revenue increase.

But CEO Dan Starks said St. Jude was prepared for a sluggish first quarter and is counting on a big turnaround for the rest of the year. The company will launch more than 20 new products in 2013, Starks said on a conference call. Among them is a next-generation model of EnligHTN, St. Jude's renal denervation device, which it expects to sell well in Europe. The company also plans to launch an MRI-safe pacer in Japan in Q3 and market the world's first lead-less pacemaker in Europe some time this year, Starks said.

Regulatory hiccups and recall rumors have plagued St. Jude's CRM business over the past year, as manufacturing issues with Durata leads led to an FDA warning letter early this year, and analysts have speculated whether the much-scrutinized lead will be pulled from the market. But Starks said St. Jude remains confident in the device, planning to release more third-party data on its safety and devoting its full attention to addressing the FDA's concerns.

- read St. Jude's results