A long-brewing tax settlement with the IRS and across-the-board organic sales growth propelled medical device maker Boston Scientific Corp. past analysts' profit forecasts Wednesday.
The Massachusetts-based company, which employs thousands in Arden Hills and Maple Grove making devices for the heart and blood vessels, reported sales that grew by 8 percent organically and adjusted earnings that hit 41 cents per share for the second quarter.
The adjusted earnings figure was 7 cents above Wall Street consensus expectations, but roughly 6 cents of which stemmed from a one-time $82 million noncash benefit that was recognized during the second quarter, when the IRS and Boston Scientific finalized a settlement over back taxes for 2001-2010.
The company had an adjusted tax rate of negative 3.8 percent during the quarter, Chief Financial Officer Dan Brennan said during a conference call with investors Wednesday.
Excluding the tax settlement, Boston Scientific would have recorded earnings of 35 cents per share in the quarter, which still beat consensus expectations by a penny.
Brennan said the noncash benefit from the tax settlement will be invested within the company to lower future tax rates below the 15 percent global tax rate that is projected for 2019 and beyond.
All told, Boston Scientific recorded adjusted net income of $568 million on $2.49 billion in revenue during the second quarter. That meant adjusted income was up 28 percent over last year.
"Our strong sales and EPS growth in the second quarter were fueled by our global team, robust portfolio and diversified business," Chief Executive Mike Mahoney said in a news release.
The fastest-growing division was neuromodulation, which makes devices that treat pain by applying electrical current to nerves in various ways. Neuromodulation sales grew 31 percent to $202 million, primarily due to the U.S. launch of the implantable Spectra WaveWriter spinal-cord stimulator. That helped offset slower growth in devices to correct abnormal heart rhythms, which accounted for $494 million in sales in the quarter, or 1 percent growth.
Sales of endoscopes and urology products grew at 9 percent to $751 million in the quarter, and sales of cardiovascular devices grew 6 percent to $965 million.
Boston Scientific narrowed its revenue guidance for the full year, with revenue expected in a range of $9.8 billion to $9.88 billion, representing 6 percent to 7 percent organic growth. The company maintained its guidance for earnings in the range of $1.37 to $1.41 per share.
On Tuesday, Boston Scientific urged shareholders to reject a "mini-tender" offer from TRC Capital Corp. for $31.90 a share.
A securities filing from Boston Scientific said TRC had made an unsolicited offer for up to 3 million shares of Boston Scientific stock at 4.4 percent below the closing price on the last day of trading before the offer was announced.
Boston Scientific said shareholders who already tendered have an Aug. 14 deadline to withdraw from the offer.
The company's shares closed at $34.32 Wednesday.