St. Jude Medical reports net sales of $1.422 billion in fourth quarter 2013

St. Jude Medical, Inc.Jan 22 2014

St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for the fourth quarter and full year ended Dec. 28, 2013.

Fourth quarter highlights:

• Net sales increased by approximately 6 percent on a constant-currency basis over the fourth quarter of 2012
• Completed the acquisition of Nanostim, which adds the world's first leadless pacemaker to the St. Jude Medical product portfolio
• Cardiac Rhythm Management sales increased 5 percent on a constant-currency basis over the fourth quarter of 2012
• Adjusted net earnings per share increased by 8 percent, compared with the fourth quarter of 2012 and 12 percent on a constant-currency basis

Fourth Quarter and Full-Year 2013 Sales

The company reported net sales of $1.422 billion in the fourth quarter of 2013, a 4 percent increase over net sales of $1.372 billion in the fourth quarter of 2012. Unfavorable foreign currency translation comparisons decreased fourth quarter sales by approximately $27 million. On a constant-currency basis, net sales increased by approximately 6 percent over the fourth quarter of 2012.

For the full-year 2013, net sales were $5.501 billion, compared with $5.503 billion in 2012, which is flat with the prior year. Unfavorable foreign currency translation comparisons decreased full-year 2013 sales by about $101 million. On a constant-currency basis, net sales increased 2 percent over the prior year.

Commenting on the company's financial results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "In addition to delivering on our goal to accelerate sales growth throughout the year, we achieved significant EPS leverage with adjusted net earnings per share growing 12 percent on a constant currency basis. In 2014, we will continue to focus on addressing the challenges of today's health care environment by delivering innovative solutions that improve patient outcomes while reducing the economic and clinical burdens of some of the world's most expensive, epidemic diseases."

Cardiac Rhythm Management (CRM)

Total CRM sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $705 million for the fourth quarter of 2013, a 3 percent increase compared with the fourth quarter of 2012. After adjusting for the impact of foreign currency, total CRM sales increased 5 percent. Total CRM product sales for the full-year 2013 were $2.783 billion, down approximately 2 percent from 2012. On a constant-currency basis, total CRM sales declined 1 percent from the prior year.

Of that total, ICD product sales were $442 million in the fourth quarter, a 5 percent increase on a reported and constant-currency basis compared with the fourth quarter of 2012. ICD product sales for the full-year 2013 were $1.741 billion, flat when compared with 2012. On a constant-currency basis, total ICD sales increased 1 percent over the prior year.

Fourth quarter pacemaker sales were $263 million, a 1 percent increase compared with the fourth quarter of 2012. On a constant-currency basis, pacemaker product sales increased 4 percent in the fourth quarter. Total pacemaker sales for 2013 were $1.042 billion, down 6 percent compared with pacemaker sales in 2012. On a constant-currency basis, total pacemaker sales declined 4 percent from the prior year.

Atrial Fibrillation (AF)

AF product sales for the fourth quarter totaled $252 million, a 5 percent increase over the fourth quarter of 2012. On a constant-currency basis, AF product sales increased 8 percent over the fourth quarter of 2012. For the full-year 2013, AF product sales were $957 million, an increase of 7 percent over the prior year. On a constant-currency basis, AF product sales increased 9 percent in 2013.

Cardiovascular

Total cardiovascular sales, which primarily include vascular and structural heart products, were $350 million for the fourth quarter of 2013, a 4 percent increase over the fourth quarter of 2012. On a constant-currency basis, cardiovascular sales increased 7 percent in the fourth quarter. Total cardiovascular product sales for 2013 were $1.335 billion, an increase of 1 percent over the prior year. On a constant-currency basis, cardiovascular product sales increased 3 percent in 2013.

Total structural heart product sales for the fourth quarter of 2013 were $167 million, a 12 percent increase on a constant-currency basis over the fourth quarter of 2012. Total structural heart product sales for 2013 were $631 million, an increase of 3 percent compared with 2012 or 5 percent on a constant-currency basis.

Sales of vascular products in the fourth quarter of 2013 were $183 million, a 2 percent increase on a constant-currency basis over the fourth quarter of 2012. Total vascular product sales for 2013 were $704 million, a 2 percent increase on a constant-currency basis.

Neuromodulation

St. Jude Medical sales of neuromodulation products were $115 million in the fourth quarter of 2013, a 2 percent increase on a reported and constant-currency basis over the prior year. Total neuromodulation product sales for 2013 were $426 million, a 1 percent increase over 2012 sales.

Fourth Quarter and Full-Year Earnings Results

In the fourth quarter, the company recognized after-tax charges of $156 million, or $0.52 per share, primarily relating to continued actions associated with our previously announced restructuring activities. The company also recognized an income tax charge of $15 million, or $0.05 per share, related to adjustments to prior year uncertain tax positions in foreign jurisdictions. Including these items, reported net earnings for the fourth quarter of 2013 were $123 million or $0.42 per share, compared with reported net earnings for the fourth quarter of 2012 of $120 million or $0.39 per share. For the full-year 2013, reported net earnings were $723 million, or $2.49 per share compared with reported EPS of $2.39 for the full-year 2012.

Adjusted net earnings for the fourth quarter of 2013 were $294 million, or $0.99 per share, an 8 percent increase compared with adjusted net earnings for the fourth quarter of 2012 of $0.92 per share. For the full-year 2013, adjusted net earnings were $1.094 billion, or $3.76 per share, an 8 percent increase over adjusted EPS of $3.48 for the full-year 2012. A reconciliation of the company's non-GAAP adjusted net earnings per share to the company's GAAP net earnings per share is provided in the schedules at the end of the press release.

First Quarter and Full-Year 2014 Sales and Earnings Guidance

For the first quarter, St. Jude Medical expects revenue to be in the range of $1.280 billion to $1.360 billion. For the full-year 2014, we expect total revenue to be in the range of $5.600 billion to $5.750 billion. During a conference call today, St. Jude Medical will provide its range for revenue expectations for the first quarter and full-year 2014 by product category.

The company expects its consolidated adjusted net earnings for the first quarter of 2014 to be in the range of $0.94 to $0.96 per share and for full-year 2014 consolidated adjusted net earnings to be in the range of $3.94 to $3.99.

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 acquisition-related costs, restructuring charges, impairment charges, litigation charges or litigation reserve adjustments and income tax adjustments). These adjustments result from facts and circumstances (such as acquisitions, business development activities, restructuring activities, asset impairment events or developments, settlements and other developments relating to litigation, discrete income tax adjustments 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.

The company provides constant-currency sales growth 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 foreign currency translation on net sales. St. Jude Medical management uses constant-currency sales growth to forecast and evaluate the operational performance of the company as well as to compare sales of current periods to prior periods.

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.

Conference Call/Webcast

St. Jude Medical's fourth quarter and full-year 2013 earnings call can be heard live via webcast today beginning at 7 a.m. CST (also archived for 90 days) on the Investor Relations section of our website sjm.com.

St. Jude Medical will also be tweeting live during the call on our Investor Relations Twitter account, @StJudeMedicalIR.

Annual Investor Meeting

The company has scheduled an annual investor meeting for Friday, Feb. 7, 2014, in New York City. Investors must be registered in advance in order to gain entry into the meeting and can email Abbey Nelson, Investor Relations Specialist, at [email protected] for more information. The meeting will take place from approximately 8 a.m. to 12:30 p.m. EST, and the general public can listen to the meeting live on the Investor Relations section of our website sjm.com.