UPDATE: Boston Sci Swings To 3Q Profit Amid Fewer Charges
October 19 2009 - 8:01PM
Dow Jones News
Boston Scientific Corp. (BSX) swung to a third-quarter gain
following a charge-laden period last year, but sales grew less than
Wall Street expected amid some softness in the market for
heart-rhythm devices.
Boston Scientific's report closely follows a weak preliminary
third-quarter release from rival St. Jude Medical Inc. (STJ) that
sparked questions about conditions in the market for implantable
cardioverter defibrillators, or ICDs. Boston Scientific
specifically said Monday that it hasn't seen the slowdown in
hospital-product stocking that St. Jude described, but said the
heart-rhythm market has been softer than expected.
The Natick, Mass., medical-devices company also lowered its
full-year earnings guidance while it tightened its full-year sales
view.
Shares slipped in after-hours trading and were recently down
6.6% at $9.49 after climbing 1.4% during Monday's regular-trading
session.
Boston Scientific posted third-quarter earnings of $200 million,
or 13 cents a share, compared with a loss of $62 million, or 4
cents a share, a year earlier. Earnings landed at the high end of
the range the company projected in July.
Excluding a restructuring charge, amortization expense and a
litigation-related credit, Boston Scientific said earnings were 19
cents a share in the recent period. There was a higher tally of
charges last year.
The charges make it tough to match up against analyst
projections, but Edward Jones analyst Aaron Vaughn said the
earnings were lower than expected, leaving some open questions for
the company's Tuesday-morning conference call.
Sales rose 2.4% to $2.03 billion, within the company's forecast
range but below the average estimate among analysts surveyed by
Thomson Reuters. Sales were buffeted slightly by unfavorable
currency rates.
Among the company's major heart-device markets, ICD sales of
$445 million were up 5.2% from a year ago. While that compares
favorably with sales growth reported by St. Jude and Medtronic Inc.
(MDT) for their most recent quarters (Medtronic is on a fiscal
calendar), it's off the growth pace Boston Scientific set earlier
this year.
President and Chief Executive Ray Elliott said growth in the
heart-rhythm market, which also includes pacemakers, "has not been
as strong as expected" this year. ICDs provide shocks when needed
to address dangerous rhythm patterns.
Combined ICD and pacemaker sales rose 6.3%, or about 8%
excluding the currency impact.
Sales of drug-coated stents that prop open heart arteries rose
3.8% to $411 million, landing within the company's projected
range.
The company's stent business was challenged last month by study
data that showed an Abbott Laboratories (ABT)-made stent
outperforming Boston Scientific's home-grown Taxus devices, and
analysts have cited potential for pressure on Taxus' market share.
Boston Scientific sells a version of the Abbott device, called
Promus, and can recapture that lost share, but it shares Promus
profits with Abbott.
That arrangement wears off in Europe in November, but continues
in the U.S. and Japan through the second quarter of 2012. Boston
Scientific has said that it expects to roll out a new version of
Promus in Europe this quarter to replace the version shared with
Abbott.
Looking ahead, Boston Scientific forecast fourth-quarter
earnings of 20 to 25 cents a share on sales of $2.03 billion to
$2.13 billion.
Including the three already concluded quarters, the company now
sees lower full-year earnings of 43 cents to 48 cents a share,
compared with guidance given in July for 47 cents to 53 cents.
Boston Scientific tightened its sales projection to a range of
$8.13 billion to $8.23 billion.
-By Jon Kamp, Dow Jones Newswires; 617-654-6728;
jon.kamp@dowjones.com