UPDATE 3-Boston Scientific posts net loss on charges, slow sales

Thu Oct 18, 2012 10:37am EDT

* Third-quarter net loss 52 cents vs profit 9 cents

* Ex-items, profit 16 cents vs Wall St view of 11 cents

* Sales fall to $1.735 bln from $1.874 bln

Oct 18 (Reuters) - Medical device maker Boston Scientific Corp reported a quarterly net loss due to charges and lower sales in its two largest businesses, and warned of continued weakness in the fourth quarter, when sales usually get a seasonal boost.

Shares tumbled 4.4 percent to $5.37 on the New York Stock Exchange.

The company lost market share in its key heart stent and heart defibrillator markets.

It lowered its 2012 sales outlook to a range of $7.168 billion to $7.243 billion, from $7.2 billion to $7.4 billion. Boston Scientific now expects earnings ranging from 63 cents to 66 cents per share, excluding unusual items, versus 62 cents to 68 cents previously.

"Their results are underwhelming. This company is doing what it always does, which is meandering along. I'm not convinced they have figured out what they need to do next. Their pipeline is not near as strong as their competitors'," said Morningstar analyst Debbie Wang.

In the third quarter, it recorded a net loss of $725 million, or 52 cents per share, compared with a net profit of $142 million, or 9 cents per share, in the year-ago period.

Excluding items, profit was 16 cents per share. On that basis, the average Wall Street estimate was for a profit of 11 cents.

Per-share figures were based on fewer outstanding shares as the company repurchased about 46 million shares under a 2011 repurchase authorization.

Quarterly sales were $1.735 billion, down from $1.874 billion a year ago.

Sales of interventional cardiology products, such as heart stents, fell 20 percent in the quarter, while sales of cardiac rhythm management products, such as pacemakers and implantable defibrillators, dropped 8 percent. Those are the company's two largest businesses, making up more than half of total sales.

Company executives told a conference call they expect continued weakness in the markets for their main cardiology products.

Some of the declines can be blamed on weakness in Europe, said Danielle Antalffy, an analyst with Leerink Swann, noting soft sales of cardiac rhythm management products from competitor St. Jude Medical Inc.

But Boston Scientific clearly has its own problems.

"Their pipeline is filled with mostly me-too products. It's hard to get excited about it," she said.

Third-quarter earnings included goodwill and other intangible asset impairment charges, acquisition- and divestiture-related net credits, restructuring- and litigation-related charges, tax items and amortization expense, of $946 million, or 68 cents per share.

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