Friday, January 28, 2011

Boston Scientific Corporation (NYSE: BSX): Q4 Earnings Preview 2010

Boston Scientific Corporation (NYSE: BSX), the world’s second-largest heart-device maker, is scheduled to release its fourth-quarter financial results after the closing bell on Tuesday, February 1, 2011. Analysts, on average, expect the company to report earnings of 10 cents per share on revenue of $1.99 billion. In the year ago quarter, the company reported earnings of 13 cents per share on revenue of $2.08 billion.

Boston Scientific Corporation develops, manufactures, and markets medical devices used in various interventional medical specialties worldwide.

In the preceding third quarter, the Natick, Massachusetts-based company's net income was  $190 million, or 12 cents a share, compared to a loss of $94 million, or 6 cents a share, in the year-earlier period. On an adjusted basis, the company earned 19 cents a share in the latest quarter. Revenue dropped 5% to $1.92 billion from $2.03 billion. Analysts, on average, expected the company to report earnings of 6 cents per share on revenue of $1.91 billion. 

At its last earnings call in October, the company said that it expects fourth-quarter adjusted earnings of 15 cents to 18 cents a share and revenue of $1.93 billion to $2 billion.

Boston Scientific also raised the lower end of its fiscal 2010 revenue guidance. The company msaid that it now expects sales and adjusted EPS of $7.7−$7.8 billion (previous guidance: $7.6−$7.9 billion) and 63–66 cents (54–62 cents), respectively.

Early in January, the company said that a legal settlement will boost fourth-quarter earnings by 5 cents per share. The company said Medinol paid about $104 million pretax in the settlement in December. After tax, the settlement amounts to $77 million, or 5 cents per share. In the lawsuit, Medinol had argued that its patents were infringed by Boston Scientific's Liberte and Taxus stents, which are used to prop open clogged arteries. 

Boston Scientific had been witnessing declining revenues from two of its largest segments – Cardiovascular and Cardiac Rhythm management. However, the company has laid down several strategies such as expanding its product portfolio, selectively reinvesting in the business and concentrating more on non-DES and non-CRM areas to reposition the business. The company has announced several acquisitions and one divestiture in recent month in an effort to reposition its portfolio to drive growth.

Late in October, the company agreed to sell its neurovascular business to Stryker Corp. for $1.5 billion in cash. Proceeds from the sale will be invested in opportunities to expand the company's portfolio in medical devices that are less invasive and reduce refractory drug regimes, said Boston Scientific Chief Executive Ray Elliott, in a statement. The transaction is expected to close before the end of the year. As a result, Boston Scientific said 2011 earnings are expected to be diluted by 4 cents to 6 cents a share. 

Recently, The U.S. Justice Department sued Boston Scientific Corp. and its Guidant units for allegedly knowingly selling defective implantable electronic heartbeat- regulating defibrillators. The department said it alleged that Guidant knew as early as April 2002 that an implantable cardiac device it manufactured and sold contained a potentially life-threatening defect and it knew as early as November 2003 that another device contained a similar defect.

Full Disclosure: None.
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