Medical device maker Boston Scientific Corp. (BSX) is slated to release its third-quarter results after the markets close Monday. For the quarter, Boston Scientific anticipates GAAP earnings of $0.08 to $0.13 per share, and adjusted earnings of $0.17 to $0.21 per share, on net sales of between $2.0 billion and $2.1 billion.
On average, 23 analysts surveyed by Thomson Reuters expect the company to post earnings of $0.14 per share for the quarter, with estimates ranging between $0.13 and $0.16 per share. Analysts' estimates typically exclude special items. Sales for the quarter are estimated to be $2.041 billion, representing a 3.1% growth from last year.
In the year-ago period, the Natick, Massachusetts-based company had posted net loss of $62 million or $0.04 per share, including charges of $298 million or approximately $0.20 per share, and adjusted net income was $236 million or $0.16 per share on net sales of $1.98 billion.
While announcing the second quarter results back in July, Ray Elliott, President and Chief Executive Officer of Boston Scientific, had said that the company continues to bring a wide range of innovations to market, and that the latest FDA approvals position it well for the remainder of the year and, perhaps more important, provide a springboard into 2010.
For the full year of 2009, the company currently expects GAAP earnings of $0.47 to $0.53 per share, adjusted earnings between $0.82 and $0.86 per share, and net sales of $8.1 billion to $8.4 billion. Earlier, Boston Scientific estimated GAAP earnings of $0.46 to $0.57 per share, adjusted earnings of $0.80 to $0.90 per share, and net sales of $8.0 billion to $8.5 billion. Analysts currently project earnings of $0.56 per share on sales of $8.22 billion for the year. In the year 2008, the company had recorded net loss of $2.072 billion or $1.38 per share, adjusted net income of $1.22 billion or $0.81 per share, on sales of $8.05 billion.
In its preceding second quarter, Boston Scientific had reported net income of $158 million or $0.10 per share, higher than prior year's $98 million or $0.07 per share, driven by higher sales, and the absence of divestiture-related losses and acquisition-related charges, which lowered the year-ago quarter results. Adjusted net income was $297 million or $0.20 per share, compared to $304 million or $0.20 per share in the year-ago quarter. The company's net sales increased 2% to $2.074 billion from $2.024 billion in the second quarter of 2008. Excluding the impact of foreign currency and sales from divested businesses, net sales grew by 7% over the year-ago period. Sales from United States went up 10%, while International sales in the quarter dropped 4% from last year.
At that time, Ray Elliott said, "We delivered sales and earnings at the high end of our guidance range with almost all businesses and regions reporting solid results. The performance of our two largest businesses was particularly impressive, with Cardiovascular achieving mid-teens growth in DES sales and CRM recording its fifth consecutive quarter of double-digit growth in the U.S."
Founded in 1979, Boston Scientific operates as a developer, manufacturer, and marketer of medical devices used in various interventional medical specialties. The company, which has additional offices in Japan and France, markets a variety of medical devices, including ventricular leads, stents and pacemaker systems through direct sales force, and a network of distributors and dealers. Two types of stents are marketed by Boston Scientific - bare metal stent and drug eluting stent.
Boston Scientific reportedly controls about 45% of the U.S. market for drug-coated stents, including a version of Xience which it licenses from Abbott Laboratories (ABT) as Promus. The Promus Stent, a private-labeled Xience V Everolimus-Eluting Coronary Stent System manufactured by Abbott and distributed by Boston Scientific, is currently for sale in the US, Europe and other international markets. Last week, Boston Scientific received approval to sell Promus Stent in Canada.
Meanwhile, peer Abbott's Xience reportedly makes up about 28% of the market, and is gearing for growth. Abbott in early October announced results of a 1,800-patient study comparing its Xience drug-coated stent to Boston Scientific's Taxus Liberte stent, which recorded a lower rate of complications for Xience compared with Taxus.
As per an October 13 report by Ernst & Young, the US and European medical technology industry could face significant challenges as it seeks to maintain long-term momentum, including a stubborn funding drought for early-stage companies and a changing global regulatory and reimbursement environment. In its annual report on the industry's performance, 'Pulse of the industry: medical technology report 2009', Ernst & Young noted that the potential challenges include healthcare reform in the US, which is the world's largest healthcare market, and elsewhere that could have a profound impact, as reimbursement for devices will change significantly in the years ahead.
In addition, the FDA is currently considering restricting the types of medtech products eligible for 510(k) marketing clearance, and changes to the approval process could increase the time and expense of bringing new products to market, the report noted. Also, financial and regulatory developments are placing increased strain on the traditional medtech emerging company business model.
Heinrich Christen, Ernst & Young's Medtech Leader for Europe, Middle East, India and Africa, commented, "While the industry faces financing and other challenges, it has successfully used its ingenuity to overcome similar issues in the past. Within this challenging environment, companies will need to be nimble and creative in tackling a host of challenges simultaneously, including: using capital more efficiently, adapting business strategies for a changing regulatory environment, finding new methods to demonstrate product value, and embracing innovation in their business models as much as they do with their products."
As per the report, 2008 revenues for the US and European medical technology industry grew 11%, despite the global recession, while revenue growth flattened out in the first half of 2009.
Scott Sarazen, Markets Leader, Ernst & Young's Global Life Sciences Center, stated, "We expect that the industry's long-term prospects will be bolstered by fundamental trends, including an aging global population, an expanded pool of patients in both emerging markets and traditional geographic strongholds, and new product innovations."
Among peers, diversified healthcare giant Johnson & Johnson (JNJ) last week posted a mere 1.1% rise in profit for the third quarter to $3.35 billion, and per share earnings improved 2.6% to $1.20. Meanwhile, the New Brunswick, New Jersey-based company's sales fell 5.3% to $15.1 billion on weak sales of its prescription drugs Topamax and Risperdal, negatively impacted by generic competition.
Drug and medical device maker Abbott on October 14 reported a 37% surge in third-quarter net earnings to $1.48 billion, or $0.95 per share, aided by strong sales of its arthritis drug Humira and nutritional products. Net sales increased 3.5% to $7.76 billion, and excluding an unfavorable foreign exchange impact of 4.9%, net sales would have increased 8.4%. Abbott Park, Illinois-based Abbott has immensely benefited from the launch of Xience V and has been on an acquisition spree in order to diversify and bolster its product line-up.
For the October-ending second quarter, Wall Street analysts are projecting medical technology company Medtronic, Inc. (MDT) to post earnings of $0.75 per share, on sales of $3.75 billion, higher than prior year's earnings of $0.67 per share and sales of $3.57 billion. In its preceding first quarter, the company had posted a 38% decline in its first-quarter profit to $445 million or $0.40 per share, hurt by charges, while adjusted net earnings rose 9% to $883 million or $0.79 per share, on 6% growth in net sales to $3.93 billion.
Medical device maker St. Jude Medical, Inc. (STJ) is slated to release its third-quarter earnings on Wednesday, October 21. In early October, the St. Paul, Minnesota-based company lowered its adjusted earnings outlook for the quarter, citing lower than expected sales. The maker of cardiovascular and implantable neurostimulation medical devices now expects adjusted earnings per share in a range of $0.57 to $0.58, while analysts project earnings of $0.58 per share. In the prior year, the company had reported adjusted earnings of $0.57 per share.
St. Jude forecasts net sales for the third quarter of approximately $1.16 billion, representing an increase of 7% from $1.08 billion in the year-ago period. Analysts have a consensus revenue estimate for the quarter of $1.16 billion. The company noted that a slowdown in hospital stocking of certain medical devices due to pressures from the economy and health reform negatively impacted its sales for the quarter. The company noted that foreign currency translation comparisons also resulted in lower sales. After adjusting for the impact of foreign currency, revenue for the third quarter increased approximately 10%.
Dan Starks, Chairman, President, and Chief Executive Officer of St. Jude Medical, earlier said, "We believe that macro economic factors coupled with the continued pressures surrounding healthcare reform resulted in changes in purchasing behavior among some of our hospital customers. We will have a further update during our regularly scheduled earnings call in mid-October."
In recent developments, Boston Scientific in late September said that it will pay Johnson & Johnson $716.3 million to settle 14 patent infringement lawsuits involving coronary stents, balloon catheters and other heart devices. Johnson & Johnson's Cordis Corp. unit said the settlement resolves its Palmaz infringement suit relating to Boston Scientific's NIR stent as well as several other cardiology-related cases relating to patents in the Ding, Kastenhofer, Palmaz, and Fontirroche patent families.
BSX is currently trading at $11.00 in the pre-market activity, up $0.98 or 9.78%. In the past 52 weeks, shares have been trading in a range of $5.41 to $11.77.
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