Boston Scientific reports $1.6 billion first-quarter loss

April 26, 2010 by MassDevice staff

Boston Scientific Corp. executives predict its recent defibrillator glitch could undercut sales this year by $500 million and reduce 2010 earnings by as much as $2 billion.

A self-imposed hold on two of its best-selling defibrillators last month helped rip a $1.8 billion hole in the bottom line at Boston Scientific Corp. (NYSE:BSX) during the first three months of 2010.

The company also said that the month-long suspension of U.S. sales for its Cognis and Teligen defibrillators could result in as much as $500 million in lost sales during 2010 and reduce adjusted earnings this year by at least $180 million.

The Natick, Mass.-based medical device colossus late Monday announced a net loss of $1.6 billion, or $1.05 a share, on $1.96 billion in sales for the January-to-March fiscal period. The results include a $1.85 billion write-down of goodwill connected with its cardiac rhythm management division and $65 million in restructuring costs, which eventually will see the CRM and the cardiovascular operations at Boston Scientific merged into a single unit.

Company officials are scheduled to discuss the quarter and their outlook for the rest of 2010 in a conference call beginning at 8 a.m. April 27.

In prepared remarks, CEO Ray Elliott said the hold on Cognis and Teligen sales that began March 15 had an obvious effect on both revenues and net income. Overall, the CRM unit recorded $538 million in first-quarter sales, down from $589 million a year ago and due almost entirely to a $66 million drop in comparable U.S. sales of implantable cardiac defibrillators during the latest period.

The company voluntarily stopped all ICD shipments and pulled its inventory from the field after discovering that it had failed to properly notify U.S. regulators of changes to its manufacturing process and added a new parts supplier for the Cognis, Teligen and similar product lines. Sales resumed April 15.

Boston Scientific officials also sharply reduced their estimates for sales and earnings from prior guidance released in February. They said they now expect full-year revenues of between $7.6 billion to $8 billion, down from the previous range of $8.1 billion to $8.5 billion. Adjusted earnings — which do not include goodwill write-downs, amortization, restructuring and asset impairment charges — likely will be off about 12 cents per share, to a new range of between 50 cents and 60 cents per share.

The net loss for the year, they said, should be between $1.3 billion to $1.5 billion, or between 88 cents and $1 per share. The firm earlier had been expecting a profit as high as $740 million in 2010.