Boston Scientific Corp. swung to a loss in its first quarter,
hurt by litigation costs and currency rate fluctuations.
The medical-device maker on Tuesday also said it would pay $119
million to settle nearly 3,000 product liability lawsuits and
claims related to its transvaginal surgical mesh products. More
than 25,000 claims or suits over the devices have been made against
Boston Scientific, the company has said in regulatory filings.
Some patients and doctors alleged that the devices have caused
them pain and discomfort. The company's profits also were hurt by
higher costs related to acquisitions, restructuring and
amortization.
Boston Scientific, based in Marlborough, Mass., cut its sales
outlook for the year, now projecting $7.23 billion to $7.38
billion, down from its previous range of $7.3 billion to $7.5
billion. Adjusted per-share earnings are still expected to be 88 to
92 cents, the company said.
Analysts polled by Thomson Reuters projected 91 cents in
per-share profit on $7.43 billion in revenue.
Shares of Boston Scientific, up 30% over the past year, fell
1.3% in morning trading.
Revenue slipped 0.3% to $1.77 billion, hurt in part by currency
fluctuations that reduced sales by $117 million in the quarter.
Adjusted for currency fluctuations, revenue rose 6%, the company
said, driven by improved sales of its cardiovascular stents, which
prop open diseased arteries, and implanted defibrillators, which
treat irregular heartbeats. In both product categories, Boston
Scientific competes against Medtronic PLC, St. Jude Medical and
others.
Chief Executive Michael Mahoney said the company's sales were
growing faster than the overall market in most of its business
units.
"The important thing is [the] underlying health of the company,"
Mr. Mahoney said in an interview. "When you look at operational
growth, the company grew 6%."
Mr. Mahoney said Boston Scientific continues to contest the
remaining surgical mesh suits against the company, but would
"settle cases at reasonable terms when appropriate."
For the current quarter, the company expects to book adjusted
earnings of 20 cents to 22 cents a share on $1.8 billion to $1.85
billion in revenue. Analysts are forecasting 22 cents in per-share
profit and $1.86 billion in sales.
Boston Scientific has embarked on significant cost-cutting plans
over recent years and has moved to diversify its product portfolio
to make it less dependent on sales of its cardiac devices. Stents
and implantable heart-rhythm devices account for more than half of
the company's sales, and both face growth challenges and high
levels of competition that can pressure prices.
Last month, the company bought Endo International PLC's men's
health business for $1.6 billion, a deal it expects to close in the
third quarter. Meanwhile, the company won U.S. Food and Drug
Administration approval in March for its controversial
stroke-prevention Watchman device. The device, twice declined FDA
approval, is an alternative to blood thinners and another move by
the company to diversify.
At the same time, Boston Scientific has invested in expanding
sales in emerging economies such as China, where a health-care
overhaul has widened access to services and increased demand for
pharmaceuticals and medical devices. Adjusted international sales
rose 7% during the quarter, driven by a 6% gain in Europe and a 7%
rise in the Asia, Middle East and Africa region. The company also
said it entered into a partnership to accelerate physician training
in China.
For the period ended March 31, Boston Scientific booked a loss
of $1 million, down from a profit of $133 million a year earlier.
On a per-share basis, the company broke even after reporting 10
cents in the year-earlier period. Excluding certain items such as
acquisition and divesture-related charges and pension termination
costs, per-share profit rose to 21 cents from 20 cents.
Boston Scientific had projected adjusted per-share earnings of
19 cents to 21 cents and revenue of $1.74 billion to $1.8
billion.
Write to Joseph Walker at joseph.walker@wsj.com and Lisa
Beilfuss at lisa.beilfuss@wsj.com
(Correction: An earlier story misstated the change in Boston
Scientific's revenue.)
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