Business as Usual at St. Jude Medical

St. Jude Medical held its first-quarter 2012 earnings call and reported that earnings this quarter were up 1 percent from the same quarter last year. Company Financial Officer John Heinmiller further noted that “unfavorable foreign currency translations versus last year’s first quarter reduced this quarter’s sales by approximately $7 million.”

Sales for Q1 were at $1.395 billion, up from $1.376 billion for the same period last year. Earnings per share were 86 cents for the first quarter of 2012, an 8 percent increase over adjusted earnings per share of 80 cents in the first quarter of 2011 and above the company’s guidance range of 82-84 cents. The company expects consolidated earnings per share for the second quarter to be in the range of 86 cents to 88 cents. For the full year 2012, it is raising its consolidated earnings per share guidance range to $3.44-$3.49.

Of concern lately to investors and people involved with the company at large is the Riata leads controversy. St. Jude has been grappling with its public image after a study was published recently detailing how its defibrillator lead failures had caused 22 deaths. When the floor was opened for questions, this was the first issue that was raised:

Analyst Michael Weinstein from JP Morgan Chase asked: “I think a lot of people are curious to hear your comments about the health of the business . . . in light of all the issues in the last few weeks surrounding Riata and the debate back and forth between the company and the various constituencies out there. Has that impacted the business over the last few weeks?”

Dan Starks, company president and CEO, said he was willing to share “quite a bit” about the Riata controversy, indicating the company had nothing to hide.

“Business is actually doing very well,” he said, and went on to dispel the notion that St. Jude might be suffering financially in the wake of all the controversy. St. Jude just introduced an implantable cardioverter defibrillator (ICD) in Europe, so its cardiovascular division is proceeding as usual—and in fact, said Starks, the company “actually had a few more active United States ICD accounts in the first quarter of 2012 than [it] did in the first quarter of 2011.”

The company has of late been trying to extricate itself from the scrap over the Riata leads. First accusing industry competitor Medtronic Inc. of rumor-mongering, and then dogging Robert Hauser, M.D., (the doctor who conducted the study) with criticism, it started to back off when news came out that St. Jude had funded Hauser in the past.

Starks made a point of noting that St. Jude was named one of the world’s 50 most admired companies last month by FORTUNE Magazine. With solid earnings and no discernible impact on the business, it seems like St. Jude will be moving past this uncomfortable period relatively soon.