Slowing overseas sales hurt St. Jude Medical

St. Jude Health CardioMEMS device.  Image courtesy of St. Jude Health.
St. Jude Medical is counting on its CardioMEMS device to drive growth in 2015. 
Image courtesy of St. Jude Health.

By Ryan Sachetta

St. Jude Medical Inc. shares sagged Wednesday after the medical device maker turned in third quarter earnings that topped forecasts, but also revealed a slowdown in international sales growth.

For the quarter ended September 27, the St. Paul-based company’s net income dropped 9.2 percent to $238 million or 82 cents per diluted share, from $262 million or 90 cents per share a year earlier. Revenues increased to $1.37 billion from $1.34 billion a year earlier.

Excluding an unusual pending item — a delay in a federal tax credit for research and development – St. Jude said adjusted per-share earnings were 97 cents, or a penny above the 96 cents analysts surveyed by Yahoo Finance had been anticipating.

Along with the solid earnings, however, St. Jude offered some unsettling news about its overseas sales, which make up just over half of the company’s overall sales.

“During the third quarter sales growth accelerated in the U.S. due to the strength of our innovation and new products,” said St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks in a prepared statement. “However, sales growth in our international markets was slower than expected.”

Investors weren’t happy with the news.  On a day when the broad market was down by 1.15 percent late in the afternoon, St. Jude shares were down $2.60, or 4.3 percent, at $57.31.

St. Jude’s lineup of high-tech cardiac devices includes the CardioMEMS HF System, which the Federal Drug Administration approved five months ago. The device, which the FDA called “the first permanently implantable wireless system intended to provide pulmonary artery measurements,” is expected to become a “major new growth driver for St. Jude Medical in 2015 and beyond,” CEO Stark told analysts during Wednesday’s conference call.

Morningstar analyst Debbie Wang issued a note Wednesday saying the company’s latest results were “largely consistent with our expectations,” and added that she was “most intrigued by CardioMEMS,” which has the potential to be a “home run” for the company.


Chart by Ryan Sachetta