St. Jude Medical's net sales increase 2% in first quarter 2014

St. Jude Medical, Inc. (NYSE:STJ) today reported sales and net earnings for the first quarter ended March 29, 2014.

First quarter highlights:

• Constant currency sales increased 4 percent and adjusted net earnings per share increased 9 percent on a constant currency basis, demonstrating our continued ability to deliver EPS leverage
• U.S. ICD sales increased 5 percent driven by our leadership position in quadripolar CRT therapy
• The company announced four new CRM product approvals in the U.S., which are expected to accelerate sales in the second half of 2014
• The company announced CE Marking and European launch of its Prodigy™ Chronic Pain System, the first and only implantable neuromodulation system that delivers Burst Technology

First Quarter 2014 Sales

The company reported net sales of $1.363 billion in the first quarter of 2014, a 2 percent increase over net sales of $1.338 billion in the first quarter of 2013. Unfavorable foreign currency translation comparisons decreased first quarter sales by approximately $25 million. On a constant-currency basis, net sales increased by 4 percent over the first quarter of 2013.

Commenting on the company's financial results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, "St. Jude Medical delivered a solid first quarter by meeting or exceeding our expectations in each of our technology platforms. These results reinforce our confidence that we are on track to accelerate sales growth as our product mix shifts to faster growing markets and as we continue to launch new products that improve patient outcomes, ensure the highest quality and lower the costs of treating expensive epidemic diseases."

Cardiac Rhythm Management (CRM)

Total CRM sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $687 million for the first quarter of 2014, a 1 percent increase compared with the first quarter of 2013. After adjusting for the impact of foreign currency, total CRM sales increased 3 percent.

Of that total, ICD product sales were $436 million in the first quarter, a 2 percent increase compared with the first quarter of 2013. On a constant-currency basis, total ICD sales increased 3 percent over the prior year.

First quarter pacemaker sales were $251 million, flat compared with the first quarter of 2013. On a constant-currency basis, pacemaker product sales increased 2 percent in the first quarter.

Atrial Fibrillation (AF)

AF product sales for the first quarter totaled $251 million, an 8 percent increase over the first quarter of 2013. On a constant-currency basis, AF product sales increased 10 percent over the first quarter of 2013.

Cardiovascular

Total cardiovascular sales, which primarily include vascular and structural heart products, were $326 million for the first quarter of 2014, a 1 percent decrease compared to the first quarter of 2013. On a constant-currency basis, cardiovascular sales increased 2 percent in the first quarter.

Total structural heart product sales for the first quarter of 2014 were $154 million, approximately equal compared with the first quarter of 2013. On a constant-currency basis, structural heart sales increased 3 percent.

Sales of vascular products in the first quarter of 2014 were $172 million, a 1 percent increase on a constant-currency basis over the first quarter of 2013.

Neuromodulation

Neuromodulation product sales were $99 million in the first quarter of 2014, flat compared with the first quarter of 2013.

First Quarter Earnings Results

In the first quarter, the company recognized after-tax charges of $25 million, or $0.09 per share, primarily relating to restructuring actions associated with our previously announced organizational changes to combine our operating divisions. This integration will be conducted in a phased approach throughout 2014. Including these items, reported net earnings for the first quarter of 2014 were $249 million or $0.86 per share, compared with reported net earnings for the first quarter of 2013 of $223 million or $0.78 per share.

In accordance with GAAP, reported net earnings for the first quarter 2014 do not include any benefit from the research and development tax credit, which has yet to be extended for 2014. Including the benefit of this adjustment and excluding the first quarter charges, adjusted net earnings for the first quarter of 2014 were $278 million, or $0.96 per share, a 4 percent increase compared with adjusted net earnings for the first quarter of 2013 of $0.92 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.

Second Quarter and Full-Year 2014 Sales and Earnings Guidance

For the second quarter, St. Jude Medical expects revenue to be in the range of $1.380 billion to $1.460 billion. For the full-year 2014, we expect total revenue to be in the range of $5.610 billion to $5.760 billion. During a conference call today, St. Jude Medical will provide its range for revenue expectations for the second quarter and full-year 2014 by product category.

The company expects its consolidated adjusted net earnings for the second quarter of 2014 to be in the range of $0.99 to $1.01 per share and for full-year 2014 consolidated adjusted net earnings to be in the range of $3.95 to $4.00.