By Caroline Humer
April 25 Medical device maker Boston Scientific Corp reported better-than-expected first-quarter results on Thursday, which the company said will put it on the path to return to growth.
Medical device makers have been struggling with weak sales for the last several years as people lost their jobs and health insurance, prompting them to delay medical procedures, and as cash-strapped governments around the world have cut spending on healthcare.
"We continue to be encouraged but not satisfied with our operating performance," Chief Executive Mike Mahoney said in a statement. "We continue to make strong progress on our strategy to return to consistent sales and earnings-per-share growth."
The company had a first-quarter loss of $354 million, including $578 million in charges for a goodwill writedown, costs related to medical equipment lawsuits and a restructuring plan. That compared with a profit of $113 million a year ago.
Excluding one-time charges and other items, it earned 10 cents per share, compared with 9 cents per share predicted by Wall Street, according to Thomson Reuters I/B/E/S.
Boston Scientific's operating margin was considerably better than a year ago, Morningstar analyst Debbie Wang said.
"It suggests to me that perhaps they are doing a little bit better job of keeping the costs under control," Wang said.
Shares rose about 4 cents to $7.40 in New York Stock Exchange trading.
For 2013, the company expects sales to be in a range of down 1.5 percent to up 1.5 percent. Sales will be affected by the weaker yen because of its large business in Japan, it said. The falling yen has affected sales at many global U.S. companies, including other medical equipment makers.
First-quarter sales fell 6 percent to $1.76 billion. Excluding the effects of currency translation, sales would have fallen 4 percent, Boston Scientific said.
Boston Scientific is facing an industry-wide decline in sales of cardiac rhythm management (CRM) products like pacemakers and implantable cardiac defibrillators. They account for about 40 percent of Boston Scientific's sales and fell 5 percent in the quarter.
In addition, sales in the division that includes stents dropped 16 percent in the quarter.
"The weakness that we saw in the CRM business and in their stent business, it's just more of the same. This has been going on for quite a while now. That anemic performance is something that is not going to be solved very quickly," Wang said.
The company, which also makes surgical instruments and other medical devices, has said it will cut more jobs this year in its ongoing restructuring. It has said the restructuring will result in total pretax charges of $300 million to $355 million.
For the year, the company said its results could range from a net loss of 6 cents a share to earnings of 1 cent. Excluding special items, it expects earnings of 65 cents to 70 cents per share.