Shares of Boston Scientific (NYSE:BSX) hit the lowest level in almost 20 years as investors fled following a tough earnings report and lowered 2012 forecasts.
BSX shares were trading around $4.79 apiece as of about 2 p.m. on Thursday, a level not seen since 1995. Shares did rebound slightly before closing at $4.97, down nearly 7% from yesterday’s closing bid of $5.33. You’d have to go back to February 22, 1995 for the last time the stock closed at these levels.
The sell-off was not a surprise as earlier in the day, the Natick, Mass.-based device maker reported that it had 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 the 2nd quarter.
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And the medical device company isn’t expecting a rebound anytime soon, interim CEO Hank Kucheman told Bloomberg today. Growth is expected to resume next year on strength in emerging markets and new product launches, he said.
"Our challenge is to stabilize those businesses here in the second half of 2012," Kucheman told the news service. "As we move into 2013 and beyond, our strategic investments will hit the top line of our enterprise in a meaningful way."
BSX took a massive $3.43 billion non-cash impairment of goodwill to its bottom line in Q2, swinging the company to a $3.40 billion net loss on $1.82 billion in sales for the 3-month period ended June 30. That 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.
Sales during the quarter were weak – off about 7.4%, compared to the same period last year, primarily due to soft sales in the company’s flagship ICD, CRM and stent businesses.
ICD sales were off 16% from Q2 2011, the CRM business was off 10%, 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.
In particular, he said that the CRM market has not hit bottom yet, confirming what St. Jude Medical (NYSE:STJ) CEO Daniel Starks suggested last week during the company’s earnings report.
"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.