St. Jude Medical, Inc. (NYSE: STJ) today reported sales and net earnings for the first quarter ended April 4, 2015.

First quarter 2015 highlights:

• Net sales increased by approximately 5 percent on a constant currency basis compared to the prior year quarter
• CardioMEMS™ HF System sales were approximately $17 million
• U.S. ablation catheter revenue doubled compared to the prior year quarter due to a strong launch of the Company’s FlexAbilityTM and TactiCathTM Quartz Contact Force ablation catheters

First Quarter 2015 Sales

The company reported net sales of $1.345 billion in the first quarter of 2015, a 1 percent decrease compared to net sales of $1.363 billion in the first quarter of 2014. On a constant currency basis, net sales increased by approximately 5 percent compared to the first quarter of 2014.

Commenting on the company’s financial results, St. Jude Medical Chairman, President and Chief Executive Officer Daniel J. Starks said, “St. Jude Medical’s first quarter revenue exceeded previously announced guidance, driven by our growth in atrial fibrillation, neuromodulation and our CardioMEMS technology platform. These results reinforce our confidence that St. Jude Medical is on track to accelerate constant currency sales growth in 2015.”

Cardiac Rhythm Management (CRM)

Total CRM sales, which include implantable cardioverter defibrillator (ICD) and pacemaker products, were $643 million for the first quarter of 2015, a 6 percent decline compared to the prior year quarter. After adjusting for the impact of foreign currency, CRM sales were flat compared to the prior year quarter.

Of that total, ICD product sales were $411 million in the first quarter, a 6 percent decline on a reported basis and flat on a constant currency basis compared to the prior year quarter.

First quarter pacemaker sales were $232 million, an 8 percent decline compared to the prior year quarter. On a constant currency basis, pacemaker product sales decreased 1 percent compared to the prior year quarter.

Atrial Fibrillation (AF)

AF product sales for the first quarter totaled $270 million, a 7 percent increase compared to the prior year quarter. On a constant currency basis, AF product sales increased 15 percent compared to the prior year quarter.

Cardiovascular

Total cardiovascular sales, which primarily include structural heart and vascular products, were $324 million for the first quarter of 2015, flat compared to the prior year quarter. On a constant currency basis, cardiovascular sales increased 7 percent compared to the prior year quarter.

Structural heart product sales for the first quarter of 2015 were $147 million, up 3 percent on a constant currency basis compared to the prior year quarter.

Sales of vascular products in the first quarter of 2015 were $177 million, an 11 percent increase on a constant currency basis compared to the prior year quarter.

Neuromodulation

St. Jude Medical sales of neuromodulation products were $108 million in the first quarter of 2015, a 9 percent increase on a reported basis and a 14 percent increase on a constant currency basis compared to the prior year quarter.

First Quarter Earnings Results

In the first quarter the Company recognized net after-tax credits of $17 million, or $0.06 per diluted share, primarily related to acquisition-related adjustments. Including these items, reported net earnings for the first quarter of 2015 were $262 million or $0.91 per share, compared with reported net earnings for the first quarter of 2014 of $249 million or $0.86 per share. Reported results also include the $16 million after-tax impact, or $0.06 per diluted share, of amortization of intangible assets.

In accordance with GAAP, reported net earnings for the first quarter 2015 do not include any benefit from the federal research and development tax credit, which has yet to be extended for 2015. Including the benefit of this adjustment and excluding the first quarter credits and intangible amortization expense, adjusted net earnings for the first quarter of 2015 were $266 million, or $0.93 per share. A reconciliation of the Company’s non-GAAP adjusted results to the Company’s GAAP reported results is provided in the schedules at the end of the press release.

Second Quarter and Full-Year 2015 Sales and Earnings Guidance

For the second quarter, St. Jude Medical expects revenue to grow in the range of 4 percent to 5 percent on a constant currency basis compared to the second quarter of 2014 with currency negatively impacting second quarter revenue by approximately $125 million to $135 million. For the full-year 2015, we expect total revenue to grow in the range of 4 percent to 5 percent on a constant currency basis with currency negatively impacting full-year 2015 revenue by approximately $385 million to $410 million. During its earnings conference call today, St. Jude Medical will provide an update to its range for revenue expectations for the full-year 2015 by product category.

The company expects its consolidated adjusted net earnings for the second quarter of 2015 to be in the range of $0.99 to $1.01 per share and for full-year 2015 consolidated adjusted net earnings to be in the range of $3.92 to $3.97. A further reconciliation of the company’s quarterly and annual guidance is provided in the schedules at the end of the press release.

Conference Call / Webcast

St. Jude Medical’s first quarter earnings call can be heard live via webcast today beginning at 7 a.m. CDT via the St. Jude Medical Investor Relations website (investors.sjm.com). Approximately one hour following the call (and archived for 90 days), a replay will be available on the Investor Events and Presentations webpage in the Investor Relations section of the St. Jude Medical website.

St. Jude Medical will also be tweeting live during the call on our Investor Relations Twitter account, @StJudeMedicalIR.

About St. Jude Medical

St. Jude Medical is a global medical device manufacturer dedicated to transforming the treatment of some of the world’s most expensive epidemic diseases. The company does this by developing cost-effective medical technologies that save and improve lives of patients around the world. Headquartered in St. Paul, Minn., St. Jude Medical has four major clinical focus areas that include cardiac rhythm management, atrial fibrillation, cardiovascular and neuromodulation. For more information, please visit sjm.com or follow us on Twitter @StJudeMedicalIR.

Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that involve risks and uncertainties. Such forward-looking statements include the expectations, plans and prospects for the Company, including potential clinical successes, anticipated regulatory approvals and future product launches, and projected revenues, margins, earnings and market shares. The statements made by the Company are based upon management’s current expectations and are subject to certain risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These risks and uncertainties include market conditions and other factors beyond the Company’s control and the risk factors and other cautionary statements described in the Company’s filings with the SEC, including those described in the Risk Factors and Cautionary Statements sections of the Company’s Annual Report on Form 10-K for the fiscal year ended January 3, 2015. The Company does not intend to update these statements and undertakes no duty to any person to provide any such update under any circumstance.

Non-GAAP Financial Measures

The company provides the following non-GAAP financial measures because St. Jude Medical management believes that in order to properly understand the company’s short-term and long-term financial trends, investors may wish to consider the impact of certain adjustments discussed below. St. Jude Medical management uses these non-GAAP financial measures to forecast and evaluate the operational performance of the company as well as to compare results of current periods to prior periods on a consolidated basis.

• Adjusted earnings before noncontrolling interest and income taxes
• Adjusted income taxes and adjusted effective tax rate
• Adjusted net earnings before noncontrolling interest
• Adjusted net loss attributable to noncontrolling interest
• Adjusted net earnings attributable to St. Jude Medical, Inc.
• Adjusted diluted net earnings per share attributable to St. Jude Medical, Inc. and adjusted diluted EPS growth rate
• Adjusted constant currency diluted net earnings per share attributable to St. Jude Medical, Inc. and adjusted constant currency diluted EPS growth rate

The adjustments made to GAAP financial measures result from facts and circumstances that vary in frequency and impact on the Company’s results of operations. The following is an explanation of each of the adjustments that management excludes in calculating its non-GAAP measures.

Restructuring activities – These amounts represent severance costs and other termination benefits, inventory write-offs primarily associated with discontinued product lines, fixed asset write-offs related to assets no longer expected to be utilized and other restructuring costs.

Acquisition-related costs – These amounts consist of contingent consideration fair value adjustments, acquired inventory step-up amortization, other transaction costs and integration costs.

Product field action costs and litigation costs – These amounts primarily relate to inventory write-off and disposal costs, additional warranty and patient monitoring costs, and estimated legal costs for outstanding legal matters associated with product field actions.

Legal settlements – These amounts consist of losses that are probable and reasonably estimable, gains related to favorable resolutions of litigation matters and probable insurance recoveries.

Amortization of intangible assets – These amounts represent the non-cash amortization expenses we recognized for definite-lived intangible assets.

R&D credit – These amounts represent the impact of the federal research and development tax credit to present comparative periods assuming that the tax credit had been enacted in all periods presented.

Foreign currency impact – These amounts represent the impact to net sales and adjusted diluted net earnings per share attributable to St. Jude Medical, Inc. after translating net sales and the consolidated statement of earnings at comparable prior period foreign currency exchange rates.

The company also provides constant currency sales growth and constant currency adjusted EPS growth because St. Jude Medical management believes that in order to properly understand the Company’s short-term and long-term financial trends, investors may wish to consider the impact of foreign currency translation on net sales and adjusted EPS. St. Jude Medical management uses constant currency sales growth and constant currency adjusted EPS growth to forecast and evaluate the operational performance of the company as well as to compare sales and adjusted EPS of current periods to prior periods.

Non-GAAP financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. Investors should consider non-GAAP measures in addition to, and not as a substitute for, or superior to, financial performance measures prepared in accordance with GAAP.