St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for the second quarter ended July 2, 2011.
Second Quarter Sales
The Company reported net sales of $1.447 billion in the second quarter of 2011, an increase of 10 percent compared with the $1.313 billion in the second quarter of 2010. Revenue for the second quarter increased 4 percent after adjusting for the impact of foreign currency. Foreign currency translation comparisons increased second quarter sales by approximately $75 million.
Commenting on the second quarter and the Company's growth program, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "St. Jude Medical delivered record sales during the second quarter. We are making good progress implementing our new growth drivers and diversifying our growth portfolio. Although sales in the U.S. were down 2% due primarily to weakness in the U.S. cardiac rhythm management market, international sales increased 23% and now represent the majority of our business."
Cardiac Rhythm Management (CRM)
Total CRM sales, which include ICD and pacemaker products, were $793 million for the second quarter of 2011, a 1 percent increase compared with the second quarter of 2010. Total CRM sales for the second quarter grew 3 percent after adjusting for the one-time benefit of a competitor's suspension of sales of ICD products in the United States during the prior year.
Of that total, ICD product sales were $477 million in the second quarter, a 1 percent increase compared with the second quarter of 2010. Adjusting for the one-time benefit we experienced in the U.S. in the prior year, ICD revenue grew 5 percent this quarter.
Second quarter pacemaker sales were $316 million, essentially equal to the second quarter of 2010.
Atrial Fibrillation (AF)
AF product sales for the second quarter totaled $208 million, an 18 percent increase over the second quarter of 2010.
St. Jude Medical sales of neuromodulation products were $104 million in the second quarter of 2011, up 9 percent from the comparable quarter of 2010.
Total cardiovascular sales, which primarily include vascular and structural heart products, were $342 million for the second quarter of 2011, a 35 percent increase over the second quarter of 2010. This division now includes sales from AGA Medical, Inc., which St. Jude Medical acquired in November 2010.
Sales of vascular products during the second quarter of 2011 were $189 million, up 14 percent from the comparable quarter of 2010.
Structural heart product sales for the second quarter of 2011 were $153 million, a 74 percent increase over the second quarter of 2010, with the addition of AGA Medical products to the business.
Second Quarter Earnings Results
In the second quarter of 2011 the Company recorded after-tax charges of $10 million, or $0.03 per share, related to the remaining increase in cost of goods sold that resulted from the step up in inventory values required under acquisition accounting associated with the AGA Medical acquisition.
In addition, the Company recognized $32 million, or $0.10 per share, in other after-tax charges, primarily related to restructuring actions initiated during the second quarter to realign certain activities within its CRM business. A key component of these restructuring activities relates to the Company's decision to transition CRM manufacturing out of Sweden to more cost-advantaged locations.
Including these items, reported net earnings for the second quarter of 2011 was $241 million, or $0.72 per share. This compares to reported net earnings for the second quarter of 2010 of $254 million, or $0.77 per share. Excluding these items, adjusted net earnings for the second quarter of 2011 were $283 million, or $0.85 per share. 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 schedule at the end of the press release.
Third Quarter and Full Year 2011 Sales and Earnings Guidance
During a conference call today, St. Jude Medical will provide its range for revenue expectations for the third quarter and full year by product category.
The Company expects its consolidated adjusted net earnings for the third quarter of 2011 to be in the range of $0.74 to $0.76 per diluted share and for the full-year to be in the range of $3.25 to $3.30. A further reconciliation of the Company's quarterly and annual guidance is provided in the schedule below.