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  "documentTitle": "St. Jude Medical (STJ)",
  "authorId": "51_Muddy_Waters",
  "authorName": "Carson C. Block",
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  "presentationDate": "2016-08-25 00:00:00",
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  "notes": "The slide outlines specific adjustments to management guidance for various segments (CRM, Heart Failure, AF, Cardiovascular, Neuromodulation) and financial metrics (Margins, SG&A, R&D, Capex) to reflect a stress-test scenario.",
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      "text": "Longer dated revenue growth rates of 12% in 2019E and 8% in 2020E, margins, capex and tax rates recover to 2015 levels and remain relatively stable.",
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      "text": "Atrial Fibrillation Segment Growth: Management 2016 guidance is in the 10% to 11% growth range. In this scenario, the CRM network slow down also impacts the AF segment, and we assume 8% growth through 2018 in this segment.",
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      "text": "Traditional CRM Segment Decline: Traditional CRM segment (25% of 2015 Total Revenues) drops to zero for eight quarters and then starts coming back in 2018 and beyond.",
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      "text": "Neuromodulation Segment Growth: Management 2016 guidance, is in the 7% to 9% range. We think growth moves to 5% with technology security concerns in this segment.",
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      "text": "SG&A: Management 2016 guidance range of 31.3% to 31.8%, however we think the percentage moves higher over an eight quarter period and closer to 33%.",
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      "text": "Capital Expenditures: Capex as a percent of sales is expected to increase to 5% from a historical range of 3% to 4% for an eight quarter time period and return to historical ranges thereafter.",
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      "text": "Other Expenses and Interest Expenses: Management guidance for 2016 of ~$155 million to $165 million, primarily driven by interest expense on our outstanding debt.",
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      "text": "Assuming no foreign currency fluctuations.",
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      "text": "Tax Rate: For full year 2016, we continue to expect the effective tax rate to be in the range of 15.5% to 16.5%.",
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      "text": "Working Capital: Working capital remains flat at zero.",
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      "text": "Assumes debt maturities are refinanced in the market at the moment at the same rate.",
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      "text": "Gross Margins: Management 2016 guidance, of 69.0% to 69.5%, however we think margins will be impacted by lower ASPs and pressure from the CRM segment and thus assume 67% gross margin until 2Q18E.",
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      "text": "Cardiovascular Segment Growth: According to management, the Cardiovascular segment is expected to grow 1% to 3% for 2016. In this scenario, the Merlin@home issues also negatively impact this segment and thus moves growth to zero percent.",
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      "text": "Heart Failure Segment Decline: Approximately 78% of the Heart Failure segment (20% of 2015 Total Revenues) comes from CRT-D and CRT-P cardiac devices, which are also connected to the Merlin@home device.",
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      "text": "R&D: R&D is expected to remain in the 12.5% to 13% of sales range in our model and where management has been guiding for 2016. R&D moves to 17% for an eight quarter period to leave the expense level relatively flat with 2015's R&D spend levels.",
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