Boston Sci looks to shake off slump

  • Article by: JAMES WALSH , Star Tribune
  • Updated: February 2, 2012 - 9:09 PM

Fourth-quarter earnings were down 55 percent, but executives pointed to promising new products for 2012 and beyond.

With sales and profits continuing to slump, executives at Boston Scientific are looking to the company's pipeline of new medical devices to restore growth.

The company reported Thursday that fourth-quarter profits were down 55 percent from a year earlier, with sales down 8 percent. But CEO Hank Kucheman spent most of his time on a conference call with analysts talking about dozens of new devices that Natick, Mass.-based Boston Scientific is rolling out around the world. The company employs about 5,000 people in Minnesota.

"Our potential for future success starts with new products," Kucheman said.

In the cardiology, rhythm and vascular division alone, Kucheman said, Boston Scientific is rolling out 24 new products in 2012. The U.S. launch of its Promus Element Plus stent is underway, and Kucheman said the company expects Japan to approve the Promus Element "ahead of schedule."

Analyst Thomas Gunderson of Piper Jaffray & Co. said such efforts are critical to restoring the company's momentum.

"They are counting on their new product pipeline and greater expansion into China and pan-Pacific to help grow the business," Gunderson said.

The question, he added, is whether such growth will be enough to offset falloffs in the company's two biggest businesses -- interventional cardiology and cardiac rhythm management.

Sales were down 7 percent and 15 percent respectively in the fourth quarter in those two core product groups and contributed to the company's overall sales drop. Sales for the quarter were $1.848 billion, down 8 percent from the fourth quarter a year ago.

Net income was $107 million, or 7 cents per share, down 55 percent from a year earlier.

For the year ended Dec. 31, the medical device maker reported sales of $7.622 billion, down 2 percent from 2010. Earnings of $441 million, or 29 cents per share, in 2011 compared with a net loss of $1.065 billion in 2010, which was driven by one-time charges in that year's first quarter.

Excluding a variety of one-time items, net income for 2011's fourth quarter was down 37 percent from a year earlier at $197 million, or 13 cents per share.

But promising trends overseas had Kucheman optimistic about stronger growth ahead. For example, fourth-quarter combined sales in China and India increased by more than 70 percent over the prior year, he said.

Boston Scientific also recently launched several new products in China, including the Promus Element stent and its Altrua pacemakers. In India, Boston Scientific launched the WallFlex stent and Dreamwire Guidewire.

Said Kucheman: "We feel we have the right structure, the right people and a clear path -- supported by products and investment -- that will allow emerging markets to be an important growth driver for us in 2012 and beyond."

Still, the company estimated that sales and earnings for 2012 may decrease again with sales in the range of $7.3 billion to 7.7 billion.

Shares closed Thursday down 25 cents at $5.84.

Staff writer Patrick Kennedy contributed to this report. James Walsh • 612-673-7428

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