For Boston Scientific (NYSE:BSX), proving to Wall Street that it’s still capable of growing sales is key to reviving its sagging share price, officials said today.
One way to prove to The Street that the Natick, Mass.-based medical device company hasn’t lost its mojo is its non-stent and non-cardiac rhythm management businesses, incoming CEO Michael Mahoney said during a question-and-answer session at the Morgan Stanley Global Healthcare Investors conference in New York.
Mahoney said that the company’s endoscopy, peripheral intervention and neuromodulation units are experiencing healthy growth, in contrast to the struggles facing the company’s bread-and-butter stent and CRM operations. Boston Scientific will look to continue the growth trend for the non-core business units, he said.
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BSX derives about 42% of its total sales from those 3 units, plus urology/women’s health and electrophysiology, for about $761 million of the $1.83 billion in sales the company reported in its last earnings report. Endoscopy, the largest non-core segment, pulled in about $311 million last quarter, a 4% increase from the prior year. The division is up about 5% to $612 million for the first half of 2012, putting it on track to earn over $1 billion for the year.
“Those are better end markets with less pricing pressure and are growing,” Mahoney said.
“When I first got here those [units] were 25% to 33% of sales,” BSX CFO Jeffrey Capello added. “The mix of the company is changing and those will quickly become a bigger part of the company going forward.”
The news was less rosy when the executives dipped into the CRM and stent units, particularly for the drug-eluting stent business, which was down some 20% in Q2.
Both executives acknowledged that the firm lost market share to Medtronic (NYSE:MDT) and its Resolute DES. Capello said the company closed Q2 2011 with a 51% DES market share, but ended the last quarter at 40%.
Mahoney said the company would be able to “neutralize” its largest competitor’s gains while “returning to growth” with new product launches, saying he’s “very bullish” on Boston Scientific’s future and is focused on building a leaner company.
“There’s a lot of productivity opportunities that have not been exhausted yet,” Mahoney said. He’s slated to take over the corner office in Natick from interim CEO Hank Kucheman in November.
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