* 2nd-quarter adjusted EPS beats analyst view by 3 cents
* Stock hits highest level in nearly four years
* Operating revenue rises for first time in years
* Revenue from stents, implantable defibrillators stabilizes
(Adds analyst comments, company comments, financial details,
updates stock price)
By Caroline Humer
July 25 Boston Scientific Corp on
Thursday reported its first quarter of operating revenue growth
in years and beat analyst expectations for second-quarter
profit, pushing up shares to their highest level in nearly four
Like many medical devicemakers, Boston Scientific has
struggled with weak sales for the last several years as U.S.
consumers lost their jobs and health insurance, leading them to
delay medical procedures. Demand also fell as governments around
the world cut spending on healthcare.
On Thursday, the company said revenue, excluding the impact
of foreign exchange and divested businesses, rose 2 percent.
"I can't recall the last time they posted organic revenue
growth," said RBC Capital Markets analyst Glenn Novarro. "The
key here is that most (investors) on the Street did not
anticipate positive revenue growth until later this year or in
Boston Scientific also raised its financial forecast for
2013, saying it anticipates adjusted earnings of 67 to 71 cents
per share compared with previous expectations of 65 to 70 cents
The forecast signals a turnaround under new Chief Executive
Mike Mahoney, who took the job in November 2012. Boston
Scientific had been losing market share for its heart stents and
devices like implantable heart defibrillators. It has
restructured operations and cut jobs to accommodate the changes.
Boston Scientific shares were up 11.1 percent at $10.68 in
early afternoon. The shares earlier in the session rose to
$11.11, the highest level since September 2009. The stock has
gained 91 percent so far this year.
Chief Financial Officer Jeff Capello said he expects pricing
pressure and weak demand for procedures to persist this year,
but cited signs that these trends will moderate.
"We're beginning to improve our global execution in both the
(interventional cardiology) and (cardiac rhythm management)
markets, and we're aiming to grow ... share in the second half
of '13," Capello told analysts on a conference call.
SALES DECLINES FOR HEART DEVICES SLOW
Sales of stents and related products fell about 5 percent to
$520 million in the second quarter, while sales of implantable
defibrillators and pacemakers fell 3 percent, but the rate of
decline for both businesses was slower than in the first
quarter. Sales in neuromodulation, which includes implantable
therapies to manage pain, increased 21 percent.
The company said a new U.S. medical device tax, which went
into effect at the beginning of 2013 as part of President Barack
Obama's healthcare reform law, lowered its profit margin by
about 1 percent in the second quarter. The government collects
an across-the-board tax of 2 percent on sales from medical
The company posted net income of $130 million, or 10 cents a
share, compared with a loss of $3.6 billion, or $2.51 a share, a
year earlier, when it took a $3.6 billion charge to reflect
lower projected long-term growth rates in Europe.
Revenue fell 1 percent to $1.81 billion. Analysts, on
average, expected a decline to $1.78 billion, according to
Thomson Reuters I/B/E/S.
Excluding asset impairment charges, acquisition-related
items, restructuring charges and amortization expenses, Boston
Scientific had adjusted earnings of 18 cents per share, 3 cents
more than analysts expected, according to Thomson Reuters
On that basis, it expects earnings of 14 to 16 cents per
share in the third quarter on sales of $1.7 billion to $1.76
(Reporting by Caroline Humer in New York; editing by Michele
Gershberg, John Wallace, Jeffrey Benkoe and Matthew Lewis)