Unexpectedly strong sales of stents and other products for blocked blood vessels at Boston Scientific Corp. overcame continued weakness in heart-rhythm devices, driving the company to its best quarterly sales growth in a decade.
Boston Scientific, which employs about 5,000 people at facilities in Arden Hills and Maple Grove, posted 8 percent “organic” revenue growth — a measure of growth that excludes the impact of recent acquisitions. The last time Boston Scientific posted that level of organic growth was in 2005.
Company stock popped 11 percent Wednesday, closing at $21.89 per share.
Analysts with JPMorgan wrote in a note to investors that the quarterly performance beyond Wall Street expectations was “high quality,” in that it wasn’t just overall sales that exceeded expectations. Gross margins were up, while administrative expenses, taxes, and research spending as a percentage of sales all fell.
Net income of $202 million during the three months that ended March 31 translated into earnings of 28 cents per share, 4 cents above what analysts had predicted. That profit came on total revenue of $1.96 billion, which was higher than what the company and analysts had projected.
“We’re very excited about our excellent start to 2016,” Chief Executive Mike Mahoney, who was in South Korea during the earnings announcement, told investors during the call.
Boston Scientific’s acquisition of the men’s health division of former Minnesota urology device maker American Medical Solutions helped boost revenue in its medical-surgical division by 26 percent, to $682 million.
The cardiovascular division, which includes stents, medical balloons other devices used to clear blood vessels, grew 11 percent to $790 million.
The rhythm management business, which makes pacemakers and defibrillators, represented the rare sour note in Wednesday’s earnings report. Sales of such heart devices declined 4 percent, to $492 million.
The decline in cardiac rhythm devices was attributed to a “product gap” among devices approved in the U.S.
However, earlier in the week the U.S. Food and Drug Administration granted approval for two MRI-compatible pacemakers and related leads — a highly sought feature in the competitive U.S. market, which should help to close the gap. Boston Scientific also received a key FDA approval for a specialized type of heart-device lead that uses four electrodes in February.
Approval of an MRI-safe implantable defibrillator is still projected for mid-2017.
“We see some brighter days for our CRM business,” Mahoney said Wednesday.
The company raised its guidance for the year.
Boston Scientific now expects full-year revenue for 2016 between $8.075 billion and $8.225 billion, an increase of about $125 million from the guidance issued earlier this year.
Full year earnings are now projected at $1.06 to $1.10 per share, up three cents from the prior outlook. The company projects net income growth of 6 percent to 8 percent on an organic basis for the year.