Boston Scientific’s (NYSE:BSX) stock jumped in morning trading today as the company nearly doubled Wall Street’s expectations for its 1st quarter earnings amid dwindling cardiac rhythm management sales.
The Natick, Mass.-based med-tech titan posted profits of $113 million, or 8¢ per diluted share, which is more than twice the $46 million, or 3¢ per share, earned during the same period last year. Excluding 1-time charges, the company posted earnings of 15¢ per share, nearly doubling analysts’ 8¢ forecasts for the quarter.
The news generated a flurry of activity on The Street, where BSX shares were up 7% to $5.93 as of about 10 a.m. today.
The company’s bottom line swelled but overall sales decreased, especially in CRM and inverventional cardiology.
Boston Scientific reported revenues of $1.87 billion during the 3 months ended March 31, a 3% decline from the $1.93 billion posted for the same period last year.
Particularly hard hit was the device maker’s CRM division, where sales were down 10% to $501 million. Interventional cardiology lost 5%, coming to $603 million for the quarter.
The decline was partially offset by 5% growth in Boston Scientific’s endoscopy business, 8% growth in peripheral interventions and 8% growth in neuromodulation, according to the latest earnings report.
Boston Scientific isn’t the only device giant facing dwindling CRM sales. In a Q1 earnings report, released yesterday, St. Jude Medical (NYSE:STJ) posted a 4% decrease in worldwide CRM, a 3% decrease in ICDs and a 4% decline in pacemakers.
Both companies are expected to figure large in next month’s annual meeting of the Heart Rhythm Society, but for very different reasons.
The foofaraw over St. Jude’s recalled Riata defibrillator leads is slated for top billing, according to a pair of Leerink Swann analysts citing the views of a "prominent high-volume electrophysiologist."
"The physician noted that doctors at his hospital – a high-volume quaternary referral center – had already cut back on their STJ device usage, in an effort to be extra cautious and stay away from any potential device performance controversies. This specific physician’s concern appears to be with ‘inside-out abrasion’ and ‘short circuiting,’ which he suggested could occur with the older generation STJ leads but not with competitors’ products," wrote Leerink analysts Rick Wise and Miroslava Minkova in a note to investors. "This physician seemed to also have an overall positive view on BSX’s new Incepta, Punctua, and Energen devices. He emphasized he felt BSX had ‘excellent ICD leads’ – positioning BSX well amid the current lead-related controversies."
Boston Scientific could also benefit from the leadless ICD technology it agreed to acquire last month along with Cameron Health in a deal worth up to $1.35 billion. The S-ICD device is slated for a review by the FDA’s circulatory devices panel April 26.
The company predicted full-year sales of between $7.35-$7.65 billion, with earnings in the range of 25¢-38¢ per share and adjusted earnings of 60¢-70¢. For Q2, the company expects revenues in the range of $1.85-$1.95 billion, with earnings between 6¢-9¢ per share and adjusted earnings of 14¢-17¢.
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