Leading medical devices player, Boston Scientific Corporation (BSX) has announced a voluntary recall of its iCross catheters. The catheters are used for intravascular ultrasound (IVUS) imaging for patients about to undergo transluminal coronary interventional procedures.
This recall involves about 29,664 iCross catheters distributed in the US, Puerto Rico, Trinidad, Tobago and the American Virgin Islands. Boston Scientific had no way but to initiate the recall after getting reports of eight occurrences of catheter tip detachments within April 1, 2010 and May 10, 2011.
However, the company confirmed that patients who had undergone treatment with the recalled products would no way be affected since the problem with the catheter occurs during the procedure. Boston Scientific has a solution to the problem, which has been submitted to the US Food and Drug Administration (FDA) for approval.
Boston Scientific has agreed to replace, free of charge, all returned iCross catheters with Atlantis SR Pro catheters, which will operate with its IVUS imaging consoles. The company does not expect this recall to have any material financial impact. The FDA has labeled this action as a Class I recall.
Earlier in the first quarter 2010, the company had to suspend sales of its ICDs and CRTDs after it failed to inform the FDA regarding changes in the manufacturing process of these devices. As a result, Boston Scientific’s CRM segment recorded declining sales apart from the negative impact on market share, which in turn benefited players like Medtronic (MDT) and St Jude Medical (STJ).
We remain concerned about Boston Scientific’s core businesses, CRM and Cardiovascular, which are witnessing significant pricing pressure and loss of market share.
Moreover, having witnessed, a reduction in the estimated size of the US CRM market, the company recorded a $723 million of goodwill impairment charge associated with its US CRM business unit in the last reported quarter. Additionally, economic uncertainty is impacting procedure volume.
Moreover, the sudden decision of Ray Elliott to retire this year will again make the growth path uncertain. However, the company anticipates launching several new products in the coming quarters, which should revive the business to some extent.
Moreover, several acquisitions were made in the recent past to target the areas of unmet medical needs. The restructuring initiatives undertaken should also lead to improvement in bottom line.
We are currently Neutral on the stock, which also corresponds to the Zacks #3 Rank (Hold) in the short term.
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