Boston Sci posts 3Q profit despite sales drop

AP News
Posted: Oct 19, 2010 6:40 PM
Boston Sci posts 3Q profit despite sales drop

Shares of medical device maker Boston Scientific jumped Tuesday after the company said it swung to a profit in the third quarter thanks to lower restructuring costs.

The higher earnings came despite a decline in sales of the company's top-selling devices, heart-pacing devices and artery-opening stents.

Company shares rose 17 cents, or 2.85 percent, to $6.14 in after-hours trading.

For the quarter ended Sept. 30, the company earned $190 million, or 12 cents a share. That was a turn around from a net loss of $94 million, or 6 cents a share, in the same period last year. At that time, the company had racked up more than $385 million in restructuring and litigation costs.

Excluding one-time charges, the company would have earned 19 cents per share in the most recent period.

Analysts polled by Thomson Reuters expected earnings per share of 6 cents on revenue of $1.9 billion.

Total company sales fell 5 percent to $1.92 billion during the period.

Boston Scientific's brand is still recovering from a temporary halt in marketing of its best-selling defibrillator implants in March because of a paperwork error. The monthlong suspension came after the company failed to notify federal health authorities within 10 days of making manufacturing changes to the devices.

Boston Scientific makes nearly 15 percent of its revenue from defibrillators, and analysts estimate the company lost 3 percent of its market share to competitors Medtronic and St. Jude Medical during the sales suspension.

Company executives said Tuesday that the shipping hold reduced sales by $28 million during the third quarter.

Defibrillators are surgically implanted in the upper chest, where they monitor the heart for deadly irregular heartbeats and use electrical jolts to shock it back to a normal rhythm.

Sales of the company's cardiac rhythm management devices _ which includes pacemakers as well as defibrillators _ fell 9.5 percent to $550 million in the third quarter. Sales of stents fell more than 12 percent to $396 million during the period. Company executives estimate Boston Scientific controls about 37 percent of the global market for stents, which also includes competitors Abbott Laboratories, Johnson & Johnson and Medtronic Inc.

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Despite the sales declines, Chief Financial Officer Jeff Capello said the company's results point toward future growth.

"Our commercial organization, led by a very strong sales team, continued to do an excellent job executing our recovery plan," said Capello, on a call with analysts. "We were very pleased with the results for the third quarter."

Capello and new Chief Executive Ray Elliot have tried to reposition Boston Scientific by reducing financial risk, cutting 10 percent of the work force and restructuring management. Elliott joined the company as chief executive last year.

The Natick, Mass.-based company has struggled in recent years to make up for slowing sales of its top-selling products, implantable defibrillators and stents, Those products have been hurt by safety concerns, increased competition and hospital belt-tightening.