St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for the first quarter ended April 3, 2010.
First Quarter Sales
The Company reported net sales of $1.262 billion in the first quarter of 2010, an increase of 11 percent compared with the $1.134 billion in the first quarter of 2009. Revenue for the first quarter increased 8 percent after adjusting for the impact of foreign currency. Foreign currency translation comparisons increased first quarter sales by approximately $43 million.
Commenting on the first quarter and the Company's growth program, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "First quarter results reflect the benefit of our recent restructuring. Sales met or exceeded the high end of our guidance in three of our four businesses. Operating margin improved by 250 basis points versus the first quarter one year ago. Adjusted earnings per share grew 29%. We entered the second quarter with good momentum and with major new product launches scheduled for the remainder of the year."
Cardiac Rhythm Management (CRM)
Total CRM sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $752 million for the first quarter of 2010, an 11 percent increase compared with the first quarter of 2009. Based on our estimates, the Company believes that approximately $20 to $25 million of sales in the first quarter are attributable to a competitor's suspension of all sales of their ICD products in the United States. On a currency neutral basis, total CRM sales grew 8 percent over the comparable quarter in 2009.
Of that total, ICD product sales were $452 million in the first quarter, a 15 percent increase compared with the first quarter of 2009. ICD revenue grew 12 percent after adjusting for the impact of foreign currency.
First quarter pacemaker sales were $300 million, an increase of 6 percent from the comparable quarter of 2009. Pacemaker revenue growth was 2 percent after adjusting for the impact of foreign currency.
Atrial Fibrillation (AF)
AF product sales for the first quarter totaled $170 million, a 17 percent increase over the first quarter of 2009. On a currency neutral basis, total AF sales grew 12 percent over the comparable quarter in 2009.
Neuromodulation
St. Jude Medical sales of neuromodulation products were $84 million in the first quarter of 2010, up 15 percent from the comparable quarter of 2009. Neuromodulation sales were up approximately 12 percent in the quarter after adjusting for the impact of foreign currency.
Cardiovascular
Total cardiovascular sales, which primarily include vascular closure and heart valve products, were $256 million for the first quarter of 2010, a 7 percent increase over the first quarter of 2009. On a currency neutral basis, total cardiovascular sales grew 3 percent over the comparable quarter in 2009.
Sales of vascular closure products in the first quarter of 2010 were $98 million, consistent with the first quarter of 2009. Vascular closure product sales decreased 3 percent after adjusting for the impact of foreign currency.
Heart valve product sales for the first quarter of 2010 were $86 million, a 6 percent increase over the first quarter of 2009. Heart valve product sales grew 1 percent after adjusting for the impact of foreign currency.
First Quarter Earnings Results
Reported net earnings for the first quarter of 2010 were $239 million, or $0.73 per diluted share. This compares to reported net earnings for the first quarter of 2009 of $201 million, or $0.58 per diluted share. In accordance with GAAP, reported net earnings for the first quarter of 2010 do not include any benefit from the federal research and development tax credit, which has yet to be extended for 2010. Including the benefit of this adjustment, which we continue to expect will be approved later this year, adjusted net earnings for the first quarter 2010 were $245 million, or $0.75 per diluted share. A further reconciliation of the Company's non-GAAP adjusted diluted earnings per share to the Company's GAAP diluted earnings per share is provided in the schedule below.
Second Quarter and Full Year 2010 Sales and Earnings Guidance
During a conference call today, St. Jude Medical will provide its range for revenue expectations for the second quarter and full year by product category.
The Company expects its consolidated earnings for the second quarter of 2010 to be in the range of $0.73 to $0.75 per diluted share and is raising its guidance for the full-year 2010 to be in the range of $2.80 to $2.85. This guidance assumes that the federal research and development tax credit is approved and the benefit is recognized during 2010. A further reconciliation of the Company's quarterly and annual guidance is provided in the schedule below.
Non-GAAP Financial Measures
The Company provides adjusted net earnings and adjusted net earnings per share because St. Jude Medical management believes that in order to properly understand the Company's short-term and long-term financial trends, investors may wish to consider the impact of certain adjustments (such as in-process research and development charges, impairment charges, restructuring charges, litigation charges or litigation reserve adjustments and income tax adjustments). These adjustments result from facts and circumstances (such as business development activities, restructuring activities, asset impairment events or developments, settlements and other developments relating to litigation and resolution of audits by tax authorities) that vary in frequency and impact on the Company's results of operations. St. Jude Medical management uses adjusted net earnings and adjusted net earnings per share to forecast and evaluate the operational performance of the Company as well as to compare results of current periods to prior periods on a consolidated basis.
Non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.
Decoding the genetic roots of stroke and heart attack