Boston Scientific Sees First-Quarter Earnings Surge

It was revealed on Thursday that Boston Scientific BSX saw a boost in first-quarter earnings, thanks to fewer charges despite the fact that revenue declined with the market tough for heart-rhythm products. The medical device maker forecast per-share earnings of 14 cents to 17 cents for the current quarter, on revenue of $1.85 billion to $1.95 billion. Much like the competing companies, Boston Scientific is looking to cut costs as it struggles with weak sales. In March, the company agreed to acquire Cameron Health, hoping that the new approach will help boost sales. As for the numbers, BSX reported a profit of $113 million, or 8 cents per share, compared to $46 million, or 3 cents per share, the previous year. Revenue fell 3.1% to $1.87 billion. Sales of Cardiac rhythm management products fell 10% while interventional cardiology sales fell 5%. Endoscopy sales saw an increase of 5.2%, while peripheral intervention revenue increased 8%. Following the report, shares in BSX closed on Wednesday at $5.54. The stock has fallen 21% in the past year. On Monday, Piper Jaffray stated in a research report that it believed BSX will likely report in line or below its revenue estimate of $1.84B (consensus: $1.86B) as the cardiac rhythm management and cardiology businesses face heavier competition. Specifically, it believes the earlier-than-expected launch of MDT's Resolute drug-eluting stent (DES), which launched in 1Q12 but had been factored into 2Q12 guidance by BSX, likely takes share away from the Promus and Taxus platforms in the US (US stent sales account for ~10% of total revenues). In addition, Piper expected Resolute to be an overhang for BSX's cardiology business for the next two to three quarters. It believed top-line weakness will be offset by cost-cutting initiatives and restructuring programs, as well as the ongoing share buyback program, and it does not expect a miss on the bottom line. That same day, Oppenheimer said that for the first quarter, it is in line with the Street on both sales and EPS. Its estimates assume $405M in global stent sales (-1% y/y), $367M in global ICDs (-12% y/y) and $134M in global pacemakers sales (-6% y/y) for the quarter. BSX is in the midst of new product cycles in both its cardiac rhythm management (CRM) and stent franchises. However, market pressure and competition on these two segments (70% of sales) remains high and thus we still forecast -10% and -3% growth for the two in 1Q.