Medical device maker Boston Scientific Corp. (BSX), Monday reported a profit for the third quarter, helped by higher sales mainly from the Cardiac Rhythm Management segment. Looking ahead, the company provided fourth quarter earnings outlook, which came-in with Street consensus. The company, however, lowered its fiscal 2009 forecast, which sent its shares down by nearly 7% in after-hours trading.
The Natick, Massachusetts-based company posted net income of $200 million or $0.13 per share for the third quarter of 2009, compared to a net loss of $62 million or $0.04 per share in the prior year quarter.
Result for the latest quarter included litigation-related credits, restructuring and restructuring-related costs and amortization expense of $91 million, or $0.06 per share, compared to $298 million or $0.20 per share a year earlier.
Excluding items, adjusted net income grew to $291 million or $0.19 per share from $236 million or $0.16 per share in the year-ago quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to report earnings of $0.14 per share for the third quarter. Analysts' estimates typically exclude special items.
Third quarter net sales increased 2% to $2.025 billion from $1.978 billion in the third quarter of 2008. Nineteen analysts had a consensus revenue estimate of $2.04 billion for the third quarter. The year-ago sales included sales from divested businesses of $12 million.
Excluding the impact of foreign currency and sales from divested businesses, net sales rose by 3% over a year earlier.
Region wise, U.S. sales for the quarter grew 4% to $1.167 billion, while international sales rose 2% to $856 million on a reported basis, and 3% on a constant currency basis.
The company's two largest markets are CRM (Cardiac Rhythm Management) and DES (Drug Eluting Stents).
Though competition has eroded the global market share of Boston Scientific's drug eluting stents, the company continues to sustain its leadership position. The company maintained leadership position in the worldwide drug-eluting stent market with a 41% share, including a 49% share of the U.S. market and a 47% share of the Japanese market.
CRM group sales increased 6% to $646 million, while Cardiovascular group sales dropped 2% to $846 million for the third quarter.
Endosurgery group sales improved 8% to $374 million, and neurovascular product sales slipped 2% to $85 million over a year earlier.
Operating expenses for the third quarter eased to $1.05 billion from $1.30 billion in the prior year quarter.
During the quarter, Boston Scientific received marketing clearance from the FDA for its Wallflex Biliary RX fully and partially covered stents indicated for palliative treatment of malignant bile duct strictures. The WallFlex Biliary RX Stent System represents the next stage in self-expandable metal stent technology.
The company also received Canadian regulatory approval to sell Promus Everolimus-Eluting Coronary Stent System indicated for the treatment of coronary artery disease in Canada. The approval clears the way for Boston Scientific to launch the Promus Stent immediately in Canada.
The company said the launch of the Promus stent in Canada expands its drug-eluting stent, or DES, portfolio in that market, where the Taxus Liberte Paclitaxel-Eluting Coronary Stent System is already offered. The Promus Stent is currently under sale in the United States, Europe and other international markets.
In July, Boston Scientific received the CE Mark for its LATITUDE Patient Management system. The LATITUDE system remotely monitors patients with implantable cardiac devices, gathering information on both the device and a patient's heart health status. The CE marking confirms that a device has met the European Union consumer safety, health or environmental requirements.
Three days later, on July 16, the FDA approved the company's TAXUS Liberte Long Paclitaxel-Eluting Coronary Stent System, a next-generation drug-eluting stent designed for long lesions. The device was granted CE Mark approval in 2007. In May, the company received FDA approval for TAXUS Liberte Atom Stent for use in vessels as small as 2.25mm in diameter.
Also during the quarter, Boston Scientific agreed to pay $716.3 million to Johnson & Johnson (JNJ) in order 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.
Boston Scientific said the settlement payment is within its existing reserve for the Palmaz-NIR suit and will be made from existing cash on hand.
For the nine-month period of 2009, Boston Scientific reported net income of $345 million or $0.23 per share, compared to $358 million or $0.24 per share in the previous year period.
Adjusted net income fell to $878 million or $0.58 per share from $897 million or $0.60 per share in the same period last year.
Net sales for the period increased to $6.109 billion from $6.048 billion in the prior year period.
For the fourth quarter of 2009, Boston Scientific anticipates GAAP earnings of $0.20 to $0.25 per share, adjusted earnings of $0.17 to $0.21 per share, and net sales of $2.025 billion to $2.125 billion. Analysts currently expect earnings of $0.17 per share on revenue of $2.11 billion for the fourth quarter.
For the full year of 2009, the company now expects GAAP earnings of $0.43 to $0.48 per share, adjusted earnings of $0.75 to $0.79 per share, and net sales of $8.134 billion to $8.234 billion. The Street currently estimate earnings of $0.56 per share on revenue of $8.22 billion for the year 2009.
Earlier, the company estimated GAAP earnings of $0.47 to $0.53 per share, adjusted earnings of $0.82 to $0.86 per share, and net sales of $8.1 billion to $8.4 billion.
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 Laboratories (ABT) on Wednesday reported a 37% surge in profit for the third quarter from last year, aided by strong sales of its arthritis drug Humira and nutritional products. Buoyed by the results, the company raised its adjusted earnings outlook for fiscal year 2009 above analysts' consensus estimate.
Another peer, St. Jude Medical Inc. (STJ) is slated to report third quarter earnings results on October 21. The Street currently estimates earnings of $0.58 per share on revenue of $1.16 billion for the third quarter.
Earlier this month, the St. Paul, Minnesota-based company lowered its adjusted earnings outlook for the third quarter below analysts' consensus estimate, citing lower than expected sales. 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 also said it will record charges for lay off and restructuring in the third quarter.
St. Jude Medical now expects adjusted earnings for the third quarter in the range of $0.57- $0.58 per share, and net sales of $1.16 billion.
Boston Scientific closed Monday's regular trading session at $10.16, up 14 cents or 1.40% on a volume of 31.79 million shares. However, in after-hours, the shares lost 71 cents or 6.99%.
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