Boston Scientific surprised investors Thursday with stronger-than-expected revenue growth of 10 percent during the first quarter, as analysts lauded the medical device manufacturer for another quarter of relatively strong sales.
Based in Massachusetts, Boston Scientific has significant operations in the Twin Cities, including its heart rhythm device unit in Arden Hills for pacemakers and implantable defibrillators.
Sales volume for those devices as well as products used in endoscopy, urology and neurology procedures was surprisingly strong during the quarter, said Mike Mahoney, the company's chief executive, during a conference call with investors Thursday to discuss financial results.
It was the sixth consecutive quarter, Mahoney said, with revenue growth of 10 percent or more. Analysts noted that the "organic" growth rate also was high, meaning revenue excluding the impact of currency exchange and sales from recent acquisitions.
"There is no denying that the [Boston Scientific] growth engine is running on all cylinders," wrote Joshua Jennings, an analyst with Cowen and Co., in a note to investors.
The market reaction Thursday seemed less emphatic, with shares advancing less than 1 percent on the day. Earnings per share fell short of expectations, although analysts attributed the miss to one-time factors.
In February, Boston Scientific announced a recall for one its most promising devices, a next-generation heart valve called Lotus that doctors can implant in patients via a less-invasive procedure.
Wall Street did not fully factor the impact of the recall on earnings estimates, wrote Michael Weinstein, an analyst with JPMorgan Chase, in a note to investors Thursday morning.
"Lotus is a relatively small piece of the business today, but clearly this signifies that [Boston Scientific's] other businesses continue to perform well and have not seemed to lose momentum," wrote Danielle Antalffy, an analyst with Leerink, in a research note.
As of January, Boston Scientific employed more than 7,000 people in Minnesota. In addition to the Arden Hills business in pacemakers and defibrillators, the company makes heart stents at a large operation in Maple Grove.
For the quarter, Boston Scientific said it earned $290 million, up 43 percent from $202 million a year ago. But when adjusted for one-time expenses and benefits, its profit rose 5 percent to $397 million, or 29 cents a share, a penny below the consensus estimate of analysts surveyed by Zacks Equity Research.
Revenue was $2.16 billion, up from $1.96 billion a year ago.
The company increased its estimate for full-year 2017 revenue to a range of $8.8 to $8.9 billion, vs. prior guidance of $8.675 to $8.875 billion. There was no change in guidance on adjusted earnings per share for the year.
On Thursday, Boston Scientific shares closed at $26.18, up 21 cents.
Christopher Snowbeck • 612-673-4744
Twitter: @chrissnowbeck
