Medical device maker Boston Scientific Corp. has reached settlement agreements with 6,000 women suing for alleged injuries stemming from the company’s pelvic mesh products.
The large, one-time charge to cover the settlements meant the company ended its most recent quarter with a $200 million net loss. Overall, Boston Scientific reported strong sales growth in key divisions and upped its earnings guidance. Investors responded by sending the stock up more than 9 percent.
The company employs about 5,000 people in Minnesota and derives a majority of its revenue from divisions based in the state. Chief Executive Mike Mahoney said in an interview Wednesday that the growth in the most recent quarter stemmed from recently introduced products and expanding sales in international markets.
“I think we’re doing quite well,” Mahoney said. “The analysts love our quarter. The press headlines aren’t as good, but the analysts understand that the underlying performance is very good.”
Boston Scientific has been trying to resolve major litigation this year, including settling a decadelong contract dispute with Johnson & Johnson in February for $600 million and winnowing down more than 30,000 patient-injury claims stemming from products for urinary incontinence and pelvic organ prolapse in women.
On Wednesday, executives said 6,000 of those cases have reached tentative settlement agreements this year. The cost of those settlements was included in a $457 million one-time charge reported on Wednesday, but it wasn’t broken out in a way that would show how individual plaintiffs would be compensated. A group of 3,000 settlements announced in April averaged $40,000 per case.
Boston’s legal reserve stood at $1.6 billion as of Sept. 30, which is more than the company’s anticipated adjusted 2015 cash flow of about $1.3 billion.
The company posted $1.9 billion in total revenue for the three-month period that ended in September, an increase of 2 percent compared to the year-ago quarter. Adjusted earnings came in at 24 cents per share, a penny above what analysts had been anticipating.
For the quarter that will end in December, Boston Scientific is now projecting sales of up to $2 billion and adjusted earnings of 23 to 25 cents per share.
Investors on Wednesday cheered Boston Scientific’s quarterly report, driving up company stock 9.4 percent, to $18.40, despite the net loss.
“The takeaway from the report is a base business growing faster than expected, ahead of important new product launches,” J.P. Morgan Markets analysts wrote in a note to investors.
Although revenue from products like pacemakers, defibrillators and heart stents declined compared with the same quarter last year, sales of urology, electrophysiology and chronic-pain relief devices grew quickly enough to make up the difference. The company said none of its divisions would have posted declines if they hadn’t been impacted by unfavorable international currency fluctuations in the past year.
Meanwhile, Boston Scientific received two approvals from the Food and Drug Administration during the quarter — one for its Synergy absorbable-polymer drug-eluting coronary stent, which it said represents a new category of devices, and another approval to use a bare-metal stent called Innova in arteries in the upper leg.
For the year, the company increased its 2015 revenue guidance by $135 million, to a range of $7.47 billion to $7.51 billion, which would represent growth of 1 to 2 percent for the year if achieved. Such a result would generate estimated earnings of 90 to 92 cents per share for the full year.