By Ransdell Pierson
Oct 24 Boston Scientific Corp, which is
in the midst of an attempted turnaround, reported weak sales of
its heart stents and provided a disappointing fourth-quarter
company sales forecast, sending its shares almost 7 percent
lower on Thursday.
The medical device maker also caused market jitters by
announcing that Jeffrey Capello, its chief financial officer
since early 2010, would resign effective Dec. 31. He will be
replaced by Daniel Brennan, the company's corporate controller.
"It was a bit of a surprise, and the company only said he
has his sights set on bigger opportunities," Morningstar analyst
Debbie Wang said, referring to Capello's planned departure.
Wang speculated that Mike Mahoney, who became chief
executive officer of Boston Scientific last November, is simply
putting together his own team.
"But given how many skeletons have fallen out of the
company's closet, any hint something might go wrong makes
everyone jittery," she said. She was referring to heavy debt
from its $27 billion purchase in 2009 purchase of Guidant Corp,
costly product recalls and declining sales of several of its
products in recent years.
Wang said Capello deserved credit for a number of smart
acquisitions during his term, despite heavy debt inherited from
the company's much-criticized purchase of Guidant.
The medical device maker, which a day earlier announced a
new round of job cuts, reported a narrower third-quarter loss on
flat sales of its array of medical devices.
Global sales of its interventional cardiology products,
primarily heart stents, fell 4 percent to $472 million in the
Sales of its cardiac rhythm management products, including
pacemakers and implantable cardioverter defibrillators (ICDs)
used to shock dangerously irregular heartbeats into a normal
rhythm, rose 1 percent to $464 million.
Medical studies have suggested that stents and cardiac
rhythm technologies, two of the company's biggest franchises,
have been overused, thereby crimping demand for the products.
Mahoney said it was the first time in years that sales of
its heart rhythm products grew, and added that newer heart
rhythm products will bolster the product line.
"We believe we can build momentum there," he said, citing
especially high hopes for a new type of ICD - called the S-ICD
system - that was approved a year ago by U.S. regulators.
The device is implanted below the skin. But unlike other
ICDs, its thin-insulated "lead" wires are not attached to the
heart. Instead, they are threaded up the sternum, under skin and
"It would help patients with poor vascular systems that
cannot have leads in the heart," such as many diabetics, Mahoney
said in an interview.
Boston Scientific forecast sales for the fourth quarter of
$1.78 billion to $1.83 billion, with the top end of the forecast
in line with Wall Street expectations.
"But fourth-quarter sales guidance...does imply that sales
growth isn't expected to accelerate further next quarter and may
even decelerate a bit," Leerink Swann analyst Danielle Antalffy
said in a research note.
The company said it lost $5 million, or nil per share, in
the third quarter. That compared with a net loss of $664
million, or 48 cents per share, in the year-ago period, when the
company took restructuring and litigation charges.
Excluding special items, including for new restructuring
programs and litigation, Boston Scientific earned 10 cents per
share, one cent above the average analyst forecast compiled by
Thomson Reuters I/B/E/S.
Global sales of $1.735 billion matched Wall Street
expectations. Boston Scientific said sales would have risen 4
percent, excluding divested businesses and the impact of the
The company forecast full-year earnings, excluding special
items, of 69 cents to 71 cents per share. It had previously
forecast 67 to 71 cents per share.
Boston Scientific is attempting to rebound from years of
declining revenue, not only caused by product recalls, but
because of lower spending during the global economic downturn.
It has initiated numerous cost-cutting efforts and
leadership changes over the last several years, and on Wednesday
said it will cut up to 1,500 jobs in its latest restructuring
Boston Scientific's shares have more than doubled this year,
after been stuck in the single-digit range for four years. But
shares lost ground late on Thursday, falling 83 cents to $11.46.