St. Jude Medical, Inc. (NYSE:STJ), a global medical device company, today reported sales and net earnings for the third quarter ended October 1, 2016.
Third quarter 2016 highlights:
- Net sales of $1.499 billion increased 12 percent as reported, or 2 percent on a comparable constant currency basis.
- International sales increased 13 percent as reported or 8 percent on a comparable constant currency basis, where a full portfolio of products is available.
- Neuromodulation sales increased 17 percent both as reported and on a constant currency basis driven by the most comprehensive product portfolio on the market.
- Atrial fibrillation sales increased 14 percent as reported, or 12 percent on a constant currency basis driven by strong growth across the product portfolio.
- Diluted earnings per share of $0.73 decreased 3 percent as reported. Adjusted earnings per share of $0.99 increased 5 percent on a constant currency basis.
Third Quarter 2016 Sales
The company reported net sales of $1.499 billion in the third quarter of 2016, a 12 percent increase compared to net sales of $1.339 billion in the third quarter of 2015. On a comparable constant currency basis, net sales increased by approximately 2 percent compared to the third quarter of 2015.
Commenting on the company’s financial results, St. Jude Medical President and Chief Executive Officer Michael T. Rousseau said, “Third quarter results continue to confirm that our innovation based growth strategy is on track. As we continue to establish ourselves as the global technology leader in our markets, our focus is on bringing new technology to patients in the fourth quarter and throughout 2017 that will elevate current standards of care while reducing the cost of healthcare. We also remain excited about the Abbott transaction, which we continue to expect to close in the fourth quarter of 2016.”
As previously announced, St. Jude Medical has changed its sales reporting to more closely align with how the company manages the business in five key areas: atrial fibrillation, heart failure, neuromodulation, cardiovascular and traditional cardiac rhythm management. For additional information please see the Form 8-K provided by the company on January 13, 2016.
Atrial Fibrillation (AF)
AF product sales for the third quarter totaled $316 million, a 14 percent increase on a reported basis and a 12 percent increase on a constant currency basis compared to the prior year quarter. Third quarter results were driven by continued strong global TactiCath™ and FlexAbility™ ablation catheter sales and the Ensite Precision Mapping system sales in international markets.
Heart Failure (HF)
HF product sales, which include cardiac resynchronization therapy (CRT) products, HeartMate™ ventricular assist devices and the CardioMEMS™ HF System, totaled $351 million for the third quarter, a 46 percent increase compared to the prior year quarter, primarily due to incremental net sales associated with ventricular assist devices, acquired through our Thoratec acquisition. On a comparable constant currency basis, HF product sales decreased 3 percent compared to the prior year quarter. Third quarter results reflect continued impact of U.S. CRM sales weakness on our CRT products, partially offset by global growth in ventricular assist devices.
St. Jude Medical sales of neuromodulation products were $141 million in the third quarter of 2016, a 17 percent increase on both a reported and constant currency basis compared to the prior year quarter. Neuromodulation growth continues to be driven by the St. Jude Medical BurstDR™ technology offering in international markets, U.S. launch of the Axium™ system as well as the introduction of the Infinity™ DBS system and directional lead in Europe.
Total cardiovascular sales were $313 million for the third quarter of 2016, an increase of 8 percent compared to the prior year quarter. On a comparable constant currency basis, cardiovascular sales increased 7 percent compared to the prior year quarter. Cardiovascular growth was driven by the continued strength of the Portico™ Transcatheter Aortic Valve Implantation System in Europe and our OPTIS™ Integrated System, which uses fractional flow reserve and optical coherence tomography.
Traditional Cardiac Rhythm Management (CRM)
Total CRM sales, which include single and dual chamber implantable cardioverter defibrillator (ICD) and pacemaker products, were $378 million for the third quarter of 2016, a 7 percent decline on both a reported and constant currency basis compared to the third quarter of 2015. Global results continue to be impacted by lower sales in the United States, partially offset by continued adoption of our MRI conditional product portfolio in countries where they are offered.
Third Quarter Earnings Results
In the third quarter the company recognized net after-tax charges of $74 million, or $0.26 per diluted share, primarily related to amortization of intangible assets, product field action costs and litigation costs, and acquisition-related costs. Including these items, reported net earnings for the third quarter of 2016 were $212 million or $0.73 per share, compared with reported net earnings for the third quarter of 2015 of $215 million or $0.75 per share. Excluding these items, adjusted net earnings for the third quarter of 2016 were $286 million or $0.99 per share, compared with adjusted net earnings for the third quarter of 2015 of $277 million or $0.97 per share. A reconciliation of the company’s non-GAAP adjusted results to the company’s GAAP reported results is provided in the schedules at the end of the press release.
Fourth Quarter and Full-Year 2016 Sales and Earnings Guidance
Due to the planned merger with Abbott, St. Jude Medical withdrew financial guidance for the fiscal year 2016.
Conference Call / Webcast
St. Jude Medical’s third quarter earnings call can be heard live via webcast today beginning at 7 a.m. CDT via the St. Jude Medical Investor Relations website (investors.sjm.com). Approximately one hour following the call (and archived for 90 days), a replay will be available on the Investor Events and Presentations webpage in the Investor Relations section of the St. Jude Medical website.
St. Jude Medical will also be tweeting live during the call on our Investor Relations Twitter account, @StJudeMedicalIR.
About St. Jude Medical
St. Jude Medical is a leading global medical device manufacturer and is dedicated to transforming the treatment of some of the world’s most expensive epidemic diseases. The company does this by developing cost-effective medical technologies that save and improve lives of patients around the world. Headquartered in St. Paul, Minn., St. Jude Medical has five major areas of focus that include atrial fibrillation, heart failure, neuromodulation, cardiovascular and traditional cardiac rhythm management. For more information, please visit sjm.com or follow us on Twitter @StJudeMedicalIR.