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Healthcare results reflect slow growth environment

(Reuters) - Medical technology makers CareFusion Corp and St Jude Medical Inc on Monday pre-announced quarterly results that showed a sector still struggling with slow demand from patients reluctant to seek out healthcare.

The results, released ahead of an investor presentation, point to continued pressure on medical procedure volumes as patients shun care due to higher insurance deductibles and co-payments or lack of health coverage, analysts said.

Pricing pressure also is on the rise in some product lines, noted Goldman Sachs analyst David Roman.

"Medtech fundamentals weakened in the second half of 2011," St Jude Chief Executive Daniel Starks said.

However, St Jude's shares rose 3 percent after the company said its results would be in line with expectations, a relief to investors who feared a greater impact from the recall last month of its Riata heart defibrillator lead, analysts said.

Shares of CareFusion slid more than 8 percent after the maker of surgical, respiratory and other hospital products reported weaker-than-expected second-quarter results, citing softness in its procedural solutions unit.

William Blair & Co analyst Ben Andrew downgraded the stock, citing weak pricing in that business.

"We are downgrading CareFusion to market perform from outperform based on ... our expectation that top-line results will remain slow in a difficult macro environment," Andrew said in a note to clients.

CareFusion pegged adjusted earnings from continuing operations at 41 to 45 cents a share on revenue of $910 million to $915 million in the second quarter ended Dec 31, below Andrew's estimate of 47 cents on revenue of $927 million.

CareFusion said it continues to expect full-year revenue growth of 3 percent to 5 percent in fiscal 2012.

St Jude said it was comfortable that its fourth-quarter adjusted earnings per share would be within its previously issued forecast of 83 to 85 cents a share. It expects fourth-quarter sales of $1.4 billion, in line with analysts' estimates and up about 4 percent from a year ago.

However, sales in its biggest business, cardiac rhythm management, fell 4 percent to $728 million during the quarter. Higher sales of atrial fibrillation and neuromodulation products helped offset the weak heart rhythm product sales.

Hospital operator Tenet Healthcare Corp said it expects 2012 adjusted earnings before interest, taxes, depreciation and amortization of $1.2 billion to $1.3 billion, saying it continues to assume patient admissions growth of below 1 percent. It also said pricing pressure is higher today than was assumed a year ago.

It also confirmed its forecast for 2013 adjusted EBITDA of $1.335 billion to $1.535 billion.

CareFusion shares were down $2.20 at $23.27, St Jude rose $1.20 to $35.80 and Tenet shares rose 9 cents to $5.08 on the New York Stock Exchange.

(Reporting by Susan Kelly, editing by Mark Porter)

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