Boston Scientific returns to profit in 3rd quarter as heart-pacing device sales stand ground

Boston Scientific returns to profit in 3rd qtr

NATICK, Mass — Medical device maker Boston Scientific Corp. returned to a profit in the third quarter, reporting Monday that sales of its heart-shocking implants held up in spite of hospital cutbacks squeezing its competitors.

But the company cut its full-year earnings outlook, noting that market growth has been weaker than expected. Its shares tumbled in after-hours trading.

Boston Scientific said sales for the third quarter rose 3 percent to $2.03 billion on higher revenue for implantable cardiac defibrillators, which control irregular heart rhythms.

Net income for the period was $200 million, or 13 cents per share, compared with a net loss of $62 million, or 4 cents per share, for the same period last year when acquisition costs bogged down profits.

Health care companies are typically seen as resilient to financial downturns, but medical device sales have declined amid cutbacks by both hospitals and patients.

Rival company St. Jude Medical recently reported a decline in sales of the cardiac devices to hospitals. Boston Scientific said its product sales increased 5 percent to $445 million, though growth was still slow.

“So far this year … market growth has not been as strong as expected, but our (cardiac rhythm management) business has continued to grow, and we have not seen the slowdown in hospital stocking described by St. Jude,” said CEO Ray Elliott, in a company statement.

Looking ahead, the company slashed its 2009 earnings outlook to between 75 and 79 cents per share, from prior guidance between 82 to 86 cents. The company also expects revenue between $8.13 billion and $8.23 billion, the lower range of its previous guidance.

Boston Scientific’s shares fell 74 cents, or 7.3 percent, to $9.75 in aftermarket trading.

Defibrillators use powerful electric jolts to correct irregular heart rhythms. The company also sells pacemakers, which use low-voltage electrical currents to keep hearts beating.

Boston Scientific also sells stents, which are mesh-metal tubes that are used to prop open arteries after they have been surgically cleared of plaque. Sales of those devices rose about 1 percent to $452 million.

Two recent studies at a medical device conference showed the company’s Taxus stent was inferior at preventing safety problems compared with those from competitor Abbott Laboratories.

The company said its adjusted earnings, excluding one-time items, was $291 million, or $0.19 per share, in the third quarter.

Analysts surveyed by Thomson Reuters expected expected earnings of 14 cents per share on revenue of $2.04 billion. Such estimates generally exclude one-time events.

For the fourth quarter, Boston Scientific expects earnings between 17 and 21 cents per share on net sales between $2 billion and $2.1 billion.

Analysts expect earnings of 17 cents per share on net income of $2.1 billion.

(This version CORRECTS adjusted earnings to 19 cents a share and $291 million)