Boston Scientific's second-quarter earnings fell, but not as much as some had feared, as sales of its implanted heart defibrillators recovered from a one-month shipment halt this spring.
The medical device maker stopped US shipments of all of its implantable heart defibrillators, commonly known as ICDs, in mid-March after failing to submit paperwork on manufacturing changes to US regulators. It resumed sales in mid-April after gaining US Food and Drug Administration clearance.
"They are rebounding faster than Wall Street expected," said Edward Jones analyst Aaron Vaughn. "The story coming into the quarter was going to be ICDs. It was a black box. We didn't know how surgeons were going to respond to the shipment halt."
Boston Scientific said its second-quarter net income fell to $98 million, or 6 cents a share, from $158 million, or 10 cents a share, a year ago. Results in the latest quarter included restructuring-related charges and amortisation expense.
Second-quarter sales fell to $1.93 billion from $2.07 billion.
Analysts on average expected the medical device maker to earn 3 cents a share on sales of $1.91 billion.
"Overall the quarter was a little bit better than expected, but I would also note that expectations were extremely low," said Jeff Jonas, a healthcare analyst with Gabelli and Co. "I think this is the bottom, and that we'll see a little bit of improvement from here."
Boston Scientific said worldwide sales of its ICDs, which deliver a shock to restore a racing heartbeat to normal rhythm, declined to $379 million in the second quarter from $454 million in the same period a year ago.
Total cardiac rhythm management division sales, which include pacemakers, fell to $527 million from $609 million.
"In CRM, we finished the quarter well ahead of where we expected to be," Boston Scientific chief executive Ray Elliott said in a statement.
Worldwide sales of stents to treat clogged heart arteries, Boston Scientific's other key product line, declined to $422 million in the quarter from $484 million a year ago as competitor Abbott Laboratories' highly successful stent continues to take market share.
Boston Scientific said it maintained its leadership position in the global drug-eluting stent market with a 38 per cent market share worldwide.
In ICDs, rivals St Jude Medical and Medtronic have enjoyed a windfall in sales due to Boston Scientific's recall woes, and Wall Street is watching to see if some of the market share shifts will be permanent.
Analysts said Boston Scientific's outlook for the year suggests the company expects its ICD sales to continue to recover.
"They are assuming the rebound ramps up throughout the year in the ICD market," Vaughn said.
Boston Scientific forecast net sales for full-year 2010 of between $7.6 billion and $7.9 billion.
It forecast earnings excluding items in a range of 54 cents to 62 cents a share, and a net loss of between 91 cents and 81 cents a share.
In after-hours trading, Boston Scientific shares were up 1.3 per cent from a close of $6.27 yesterday on the New York Stock Exchange.
Reuters