Boston Scientific Corporation (BSX) reported first quarter fiscal 2010 earnings per share of 16 cents, comfortably beating the Zacks Consensus Estimate of 8 cents. However, earnings were lower than 19 cents, a year-ago.
Sales
Total revenues in the first quarter decreased 3% year over year to $1,960 million. Cardiac Rhythm Management (CRM) revenues decreased 9% year over year to $538 million. The decline was primarily due to shipment hold and temporary product removals from the market in the first quarter. Implantable cardioverter defibrillator (ICD) sales decreased 12% year over year to $390 million. Pacemaker system sales increased 2% year over year to $148 million.
Cardiovascular revenues declined 5% year over year to $855 million. Total coronary stent system sales declined 9% year over year to $444 million. Endosurgery revenues increased 11% year over year to $372 million.
Boston Scientific maintained its leadership position in the drug-eluting stent market with a 38% global market share. Drug-eluting stent revenues declined roughly 9% year over year to $407 million in the first quarter.
Geographically, the U.S. contributed roughly 54% to total revenues and decreased 9% year over year. International revenues increased 7% year over year.
Boston Scientific witnessed erosion in margins in the first quarter. Gross margin declined 3.6% year over year to 66.2%. Operating margin declined 76.35% year over year to a negative 75.8%. The substantial decline in operating margin was primarily due to goodwill impairment charges associated with the CRM unit that the company recorded in the first quarter.
Balance Sheet
Boston Scientific ended the first quarter fiscal 2010 with cash and cash equivalents of $519 million. The company had an outstanding long-term debt of $5,921 million at the end of the reported quarter.
Guidance
Boston Scientific has provided sales and earnings per share guidance for the second quarter and fiscal 2010. For the second quarter, Boston Scientific expects net sales in the range of $1.825 billion to $1.925 billion. Adjusted earnings per share should be between 6 and 10 cents.
Boston Scientific has lowered its sales and adjusted earnings per share guidance for fiscal 2010. The company now expects net sales in the range of $7.6 billion to $8.0 billion, compared to the previous guidance of $8.1 billion to $8.5 billion. Adjusted earnings per share should be between 50 and 60 cents, versus the prior guidance of 62 to 72 cents.
Boston Scientific manufactures medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).
Presently, we are ‘Neutral’ on Boston Scientific.
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