Boston Scientific Corp. (NYSE:BSX) regained its footing during the second quarter, despite a damaging hiatus on sales of its implantable cardiac defibrillators that contributed to a 7 percent top-line decline.
The Natick, Mass.-based medical device maker posted net income of $98 million, or 6 cents per diluted share, on sales of $1.93 billion during the three months ended June 30. That compares with net income of $158 million, or 10 cents per diluted share, on sales of $2.07 billion during the same period last year.
Despite the 38 percent bottom-line slide, president and CEO Ray Elliott said he was "proud" of the way the company rebounded from a month-long suspension of ICD sales that began March 15, when Boston Scientific discovered that it had missed a pair of filings with the Food & Drug Administration.
"In CRM, we finished the quarter well ahead of where we expected to be, thanks to exceptional execution by the sales team and everyone else involved in our recovery," Elliott said in prepared remarks.
Sales for BSX’s cardiac rhythm management division in the U.S. were $322 million, down 20.5 percent compared with $405 million during Q2 2009. Leerink Swann analyst Rick Wise, in a research note to clients, called the results "less bad than feared" and said Boston Scientific beat Leerink’s sales estimate by about $55 million. Worldwide sales for the CRM division were $527 million during the quarter, down 13.5 percent compared with $609 million during the same period last year.
"Overall," Wise wrote, "we view BSX’s results as basically encouraging."
That despite slumping numbers for another key BSX business: coronary stents. U.S. sales of drug-eluting and bare-metal stents were down 12.6 percent to $221 million during the quarter, from $253 million a year ago. Worldwide stent sales dropped to $422 million, a 12.8 percent decline from $484 million during Q2 2009.
In a conference call with analysts, Elliott cited pricing pressure, stiff competition and delays in product launches as contributors to the company’s performance.
“We’re not happy with our sales performance,” he said. “We must do a better job executing to our sales plans. … We have been struggling for quite a while.”
Elliott said he expects the company to “get to market types of growth” in the second half of the year, especially as BSX’s new products — 30 alone this year from the recently combined cardiac rhythm management/cardiovascular group — hit the market.
“We’ve got the products,” CFO Jeff Capello added. “We’ve got the sales people. We’ll have to see how that plays out in the back half of the year.”
Boston Scientific slipped in a positive note just before the end of the quarter when it refinanced a looming, $1.75 billion debt payment due next April. The June 23 move involved an upgrade to its $1.75 billion credit line with a pair of new credit arrangements worth $3 billion, which the company used to pay off the $1.75 billion it owes next year.
BSX also raised its full-year guidance to sales of between $7.6 billion and $7.9 billion and adjusted earnings of 54 cents to 62 cents per share. That’s up from its previous earnings estimate of 50 cents to 60 cents per share.
For the third quarter, Boston Scientific predicted net sales of between $1.85 billion and $1.93 billion and adjusted earnings of between 10 cents and 13 cents per share.
BSX shares were down 0.32 percent to $6.25 in early-morning trading.
Material from MedCity News was used in this report.