Guidant posts record sales quarter: sales increase 12 percent, earnings per share increase 35 percent to $0.40

Business Wire, April 16, 1996

INDIANAPOLIS--(HealthWire)--April 16, 1996--Guidant Corp. (NYSE and PSE: GDT) today announced first quarter net sales of $252.1 million, a 12 percent increase over the first quarter 1995 and a record for the company. Net income and earnings per share increased 35 percent to $28.5 million and $0.40, respectively, when compared to the first quarter 1995 net income and earnings per share.

Three Months Ended March 31, 1996

"Guidant has kicked off the new year in an exciting fashion," Ronald W. Dollens, Guidant president and chief executive officer, commented. "Strong customer response to the newly introduced VENTAK(R) MINI(TM) product line, the smallest and most technologically advanced anti-tachycardia defibrillator device on the market, along with continued growth in our VIGOR(R) bradycardia pacing products, drove excellent performance in cardiac rhythm management. First quarter introductions of the front-line ACS CONCORDE(TM) and the high pressure ACS ENDURA(TM) Coronary Dilatation Catheters in the over-the-wire segment solidify Guidant as the leader in product performance and breadth in the vascular intervention segment. In addition, the ACS MULTI-LINK(TM) Coronary Stent System is doing very well in Europe and will be enhanced by the recent launch of the RX Delivery System. Minimally invasive surgery is continuing to grow rapidly fueled by the success of the ORIGIN TACKER(TM) Surgical System line. With the addition of these new products, we believe that Guidant now holds its strongest technology position ever in each of its major segments."

Cardiac rhythm management sales of $133.8 million represented a 29 percent increase from the first quarter 1995, with record defibrillator sales and strong pacing products revenue growth. The introduction of the VENTAK MINI has re-established Guidant as the leader in implantable defibrillators.

Worldwide vascular intervention sales decreased 6 percent in the first quarter compared to the same period in 1995. The atherectomy segment, down 61 percent from last year, continued to impact sales performance. Angioplasty growth of 3 percent was positively affected by increasing sales in Japan, strong stent sales in Europe and growing sales in guide wires and accessories. Inventory adjustment programs affected dilatation catheter sales in the U.S.

First quarter sales of minimally invasive surgery products were a record $11.4 million, a 65 percent increase over the first quarter 1995, again led by the ORIGIN TACKER Surgical System.

Operating income of $61.8 million represented a 21 percent increase over last year. Gross profit of 69.5 percent improved by 1 percentage point despite inclusion of obsolescence charges in cardiac rhythm management due to early release of the VENTAK MINI. Manufacturing cost declines continued to benefit from manufacturing efficiencies. First quarter operating expense grew at a rate less than sales, with research and development growing by 8 percent to $36.0 million, and sales, marketing and administrative expenses increasing 11 percent to $77.3 million. Several new product launches in the quarter along with expenses associated with direct operations internationally contributed to the growth in sales and marketing expense.

Operating income growth, increased royalty income, and a lower effective tax rate (39.5 percent in 1996 versus 40.9 percent in 1995) contributed to net income and earnings per share growth of 35 percent compared to the first quarter of 1995.

Chairman of the Board, James M. Cornelius, commented, "We are pleased with this quarter's results which yielded Guidant's highest sales growth so far. These sales and the level of profitability are a reflection of our employees' efforts and commitment to leadership in this industry."

A leader in the medical device industry, Guidant Corp. provides innovative, cost-effective products and services to the global cardiology and minimally invasive surgery marketplaces. -0-