Boston Scientific Swings To 1Q Loss; Shares Climb

Boston Scientific Corp. (BSX) swung to a first-quarter net loss on charges, but shares jumped 8.8% to $9.45 after hours as the results matched the company's guidance.

The medical-device maker predicted second-quarter earnings above Wall Street's expectations, citing "optimism about the growth potential of all our businesses, which are benefiting from our renewed focus on product development and increasing sales profitably,"

Boston Scientific, a major player in the global market for drug-coated stents, is facing the same worry that has broadly weighed on the medical-devices sector this spring - that potential U.S. health-care reform moves could eventually compress prices for those and other products. Still, Standard & Poor's Ratings Services said last month it could raise the company's debt to an investment grade, because of the company's debt repayments and ability to fend off competition in the coated-stent markets.

On Monday, the company reported a net loss of $13 million, or 1 cent a share, compared with net income of $322 million, or 21 cents a share, a year earlier.

The latest results included total charges of $302 million, or 20 cents a share, in line with the company's estimated charge total last week. The prior year's results included a 3-cent restructuring charge, a $114 million gain from sales of five businesses and $143 million in acquisition-related charges. Excluding items, earnings fell to 19 cents a share from 24 cents.

Net sales slid 1.8% to $2.01 billion.

In January, Boston Scientific projected per-share earnings of 15 cents to 20 cents a share on revenue of $1.95 billion to $2.07 billion.

Gross margin narrowed to 69.8% from 71.7%.

"We're off to a good start on the year with 4% sales growth, excluding divestitures, on a constant currency basis and adjusted EPS at the high end of our guidance range," said Chief Executive Jim Tobin.

Boston Scientific estimated U.S. drug-coated stent market share of 50% in the quarter, including 27% for its home-grown Taxus stents and 23% for its Promux stents - profits from the latter devices are shared with Abbott Laboratories (ABT) under a deal linked to the 2006 purchase of Guidant Corp.

Worldwide sales of Boston Scientific's stents, tiny metal scaffolds used to prop open blood vessels, slid 0.2% with revenue up 7.4% in the U.S. and down 7.7% abroad.

Worldwide sales of heart-rhythm management devices including implantable cardioverter defibrillators, or ICDs, grew 4.2%, as U.S. sales rose 11% and sales abroad fell 7.7%.

Looking ahead, Boston Scientific sees second-quarter per-share earnings, excluding items, of 16 cents to 21 cents on revenue of $1.96 billion to $2.08 billion. Analysts polled by Thomson Reuters expected 14 cents and $2.05 billion, respectively.

For the full year, the company affirmed its 2009 forecast of earnings, excluding items, of 80 cents to 90 cents a share on revenue of $8 billion to $8.5 billion. It cut its guidance for earnings, including items, to 46 cents to 57 cents a share, from its January view of 56 cents to 68 cents, because of first-quarter litigation-related charges and tax items.

 
   -By John Kell and Kathy Shwiff, Dow Jones Newswires, 201-938-5285, [e-mail]