Boston Scientific (NYSE:BSX) swung to a $3.4 billion loss, lowered its year-end guidance and saw its bread and butter businesses drop by double-digit percentage points during a tough 2nd quarter for the medical device company.
The Natick, Mass.-based medical device maker took a massive $3.43 billion non-cash impairment of goodwill to its bottom line, swinging the company to a $3.40 billion net loss on $1.82 billion in sales for the 3-month period ended June 30, compared to a $146 million profit on $1.98 in sales during the same period last year. Excluding those charges the company said it would have posted a $239 million profit for the quarter.
Total sales during the quarter were off about 7.4%, compared to the same period last year, primarily due to soft sales in the company’s ICD business, which was off 16% from the same period last year. BSX’s CRM business was off 10% from the same period last year. And, surprisingly, Boston’s drug-eluting stent business was off 20% worldwide.
"No doubt, this was a tough quarter," BSX CEO Hank Kucheman told investors during the company’s conference call, blaming the soft sales on a myriad of factors including a weakened global economy.
"We believe that the worldwide CRM market will continue to be sluggish in 2012, declining about 3 to 5 % on a constant currency basis" Kucheman told investors". "We have not concluded that we’ve seen the bottom at the CRM market at this point."
To reflect the seriousness of the slump, BSX took the massive non-cash hit to its bottom line due to “slightly lower projected long-term growth rates due to macroeconomic factors and its performance in the European market.”
This is the second time the company has adjusted its goodwill in the past 15 months. In April, 2011 the company recorded a $723 million charge related to the weakening U.S. CRM market.
The company also lowered 2012 sales guidance to $7.2 to $7.4 billion in 2012, down from earlier estimates of $7.35 to $7.65 billion and the The Street’s estimates of $7.46 billion.
Shares of BSX were down 3% on Wall Street in early trading.