No patient injuries or product failures have been reported as a result of the latest insulation problem, which involves its QuickSite and QuickFlex left ventricular leads used to connect its CRT devices to the heart, the company said.

The devices use a specialized pacemaker to re-coordinate the action of the right and left ventricles of the heart in patients with congestive heart failure.

St. Jude said it had confirmed 39 cases of the insulation problem - when the conducting material inside the lead wire wears through the outer silicone insulation - out of 171,000 of the QuickSite and QuickFlex leads sold worldwide. It said that translates into 0.02 percent of the leads.

However, the problem may affect as many as 3 to 4 percent of the leads, the company said, based on an analysis of those returned to St. Jude and recent fluoroscopic images of implanted leads still in patients.

Goldman Sachs analyst David Roman estimated that the discontinued QuickSite and QuickFlex leads have combined annual sales of $13 million, or less than 1 percent of expected overall 2012 company sales.

"Nevertheless, we think the announcement will lead to incremental investor concerns about the company's overall lead safety profile," he said in a research note.

Roman, who kept his neutral rating on St. Jude shares, said the setback could have "a cooling effect" on company shares, which have soundly outperformed the broad stock market so far this year based on enthusiasm for its other products.

The medical device maker said it would continue to sell its newer QuickFlex u (micro), or Quartet LV leads, which use a special insulation along their entire length. It said no similar insulation problems have been observed with the more than 65,000 such leads sold since 2008.

St. Jude in late 2010 stopped selling another lead wire called Riata, which was used in a different type of heart device called a defibrillator, also due to insulation failures.

Several months ago, the company recommended that doctors continue to monitor devices and the Riata leads in their patients but said removing or replacing the lead was not recommended. St. Jude said it had received reports that two patients had died and one had suffered a serious injury during procedures to remove Riata leads.

St. Jude's shares fell 4.9 percent, or $2.13, to close at $41.67 on the New York Stock Exchange.

(Reporting By Ransdell Pierson; Editing by Maureen Bavdek and Richard Chang)

• A Permanent Economic Emergency