For many months now, analysts who follow medical technology speculated that 2012 might be the year companies finally reached "the bottom" on a couple of years of weak sales in cardiac rhythm management and cardiovascular devices.
On Thursday, Boston Scientific reported third quarter earnings that, combined with other recent reports, show that those numbers still are falling.
In fact, the Natick, Mass.-based company reported a net loss of $725 million, or 52 cents per share, due to charges and slower sales. That compared with a net profit of $142 million -- 9 cents per share -- for the third quarter of 2011.
The loss is because of a non-cash $809 million estimated goodwill impairment charge associated with its U.S. cardiac rhythm management unit and a shrinking U.S. CRM market. That led to lower projected U.S. CRM results compared to forecasts.
Thomas Gunderson, a senior analyst with Piper Jaffray, said cardiac rhythm products, which include pacemakers and defibrillators, are down for multiple companies and "has not stabilized as we thought. It's still easing down towards the bottom, but not at the bottom yet." He said the hope now is that those declines bottom out in early to mid-2013.
For Boston Scientific, which has also lost some market share for heart stents, Gunderson said the expectation was that growth would be accelerating by now with a number of promising new products.
But, he said, "It's hard to accelerate your growth while towing a heavy trailer."
One product that Boston Scientific CEO Hank Kucheman hopes will help unhitch that trailer is its new S-ICD, an implantable defibrillator that does not run wires into the heart. In a conference call with analysts, Kucheman reiterated the belief that the new ICD will not only help the company increase market share but will pull in customers scared of using ICDs because of problems with such wires.
"This has the potential to be the major 'What's next?' in this community," Kucheman said.
Boston Scientific plans to intensify sales of the S-ICD in 2013. The FDA last month approved it for sale in the United States.
Excluding charges, Boston Scientific reported adjusted earnings of $0.16 per share.
Sales for the third quarter of 2012 were $1.74 billion, compared to sales of $1.87 billion for the third quarter of 2011 -- a decrease of 7 percent.
Boston Scientific employs about 5,000 people in Minnesota. Its stock closed at $5.40, down nearly 4 percent.
James Walsh 612-673-7428