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Growing Strong

Originally Published MX May/June 2006


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Progress, as Usual

It's a rare medical device company that can report an 18% increase in quarterly sales--and be disappointed in its results. But such was the case of St. Jude Medical (St. Paul, MN) when it reported preliminary first quarter 2006 sales of approximately $784 million, compared with sales of $664 million in the year-ago period.

The company, which originally forecast quarterly net sales of between $799 million and $839 million, attributed the lower-than-expected revenues to a slowdown in sales of implantable cardioverter-defibrillators (ICDs), which posted a 27% sales increase over the prior-year period but were still below the company's guidance.

Figure 1. Net sales for St. Jude Medical (St. Paul, MN), 2003–2005, broken down by operating segment.
(click to enlarge)

Otherwise, first-quarter revenues for all other St. Jude Medical product categories were expected to meet or exceed the company's forecasts, a trend that falls more closely in line with the company's overall financial performance over the past few years.

In 2005, St. Jude Medical reported net sales of $2.9 billion, a 27% increase over 2004 sales of $2.3 billion. This performance put the company at the top of the list of public medical device companies in terms of greatest year-over-year improvement.

As revenues have continued to grow, St. Jude Medical has been reinvesting in its future. In 2005, its research and development (R&D) expenses totaled $369.2 million, or 12.7% of net sales. This percentage has remained relatively consistent in past years, with St. Jude Medical R&D spending of $281.9 million (12.3%) in 2004 and $241.1 million (12.5%) in 2003.

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