Boston Scientific Corp. reported a wider first-quarter loss after writing off $1.8 billion in costs related to the monthlong recall of its implantable heart defibrillators.
The defibrillators are made by the company's Guidant division in Arden Hills.
The net loss, with the goodwill impairment charge, widened to $1.59 billion, or $1.05 a share, from a loss of $13 million, or 1 cent, in the period a year earlier, the Natick, Mass.-based company said Monday. Earnings excluding some items were 16 cents a share, compared with the average estimate of 8 cents in a survey of 19 analysts. The company also lowered its sales and earnings forecasts for 2010.
Boston Scientific, the second- biggest medical device maker by sales, pulled its implantable cardiac defibrillators from the market March 15 after failing to notify federal regulators of manufacturing changes.
"The big question mark is how much more share loss over the next few years will result from the recall," Sanford C. Bernstein & Co. analyst Derrick Sung said Monday in a telephone interview. "Frankly, I don't think anyone knows."
Boston Scientific cited the recall in lowering its sales forecast for 2010 to a range of $7.6 billion to $8 billion, compared with $8.1 billion to $8.5 billion estimated Feb. 10. The company now estimates a net loss of 88 cents a share to $1 a share, down from its previous guidance of earnings of 37 cents to 49 cents a share. Revenue declined 2.5 percent to $1.96 billion.
The company's management is either being "exceedingly conservative" or it expects a more severe erosion in profits, Sean Lavin, a Lazard Capital Markets analyst, said of the forecast.
Boston Scientific shares declined 27 cents, or 3.8 percent, to $6.79 in after-hours trading after dropping 15 cents to $7.06 at the close. The company's shares have fallen 16 percent in the past 12 months.
Boston Scientific pulled its cardiac defibrillators from warehouses and hospitals on March 15 after disclosing it had failed to gain U.S. Food and Drug Administration approval for manufacturing changes. The FDA allowed sales of its Cognis and Teligen defibrillators to resume on April 15, Boston Scientific said in a statement. The agency found new documentation problems with some older defibrillator models and has not allowed the company to resume sales of those products.
Sales of cardiac-rhythm devices, which include implantable defibrillators and pacemakers, fell 8.7 percent to $538 million, from a year earlier. The decline was in part due to sales lost during the last two weeks in March because of the recall.
Boston Scientific will discuss its quarterly results in a telephone call with analysts Tuesday at 7 a.m. Twin Cities time.
