Boston Scientific Corp. wants to be one of the world’s top suppliers of minimally invasive aortic heart valves, with plans to generate more than $1 billion in revenue from two different models of the device. But first it has to get at least one approved for sale in the U.S.
During an earnings call Thursday, Boston Scientific Chief Executive Mike Mahoney said the company plans to submit its on-again/off-again Lotus valve system for U.S. approval by the end of the year, following a manufacturing change to address a glitch with the way that device was being deployed in patients in Europe. The device has been under worldwide recall since February, and had been under more limited recalls before then.
Mahoney also said the company, which employs thousands of Minnesotans at facilities in Arden Hills and Maple Grove, plans to start U.S. testing of a second minimally invasive aortic valve it recently acquired called the Acurate neo AS valve system.
“We believe that our company will be uniquely and ideally positioned to address the needs of physicians and patients with our differentiated TAVR [Transcatheter aortic valve replacement] portfolio,” Mahoney said. Later in the conference call he added, “We’re pleased that we doubled down in that market.”
Overall Boston Scientific posted quarterly sales and earnings that beat Wall Street expectations on Thursday.
In the quarter ended June 30, net sales grew 6 percent, to $2.3 billion, with higher growth in medical surgical supplies offsetting a less-robust 3 percent growth by implantable devices that manage irregular heart beats. Mahoney said the company was proud of its hard-won growth in heart-rhythm devices like pacemakers and defibrillators.
“What’s important for us in CRM is we continue to grow above market,” Mahoney said, referring to the company’s Minnesota-based cardiac rhythm management division. “We expect some challenges in [comparisons to prior-year growth], but we continue to grow faster than the market, which is the kind of the trend for the company.”
Overall, the company reported 32 cents per share in adjusted diluted earnings for the just-completed quarter. That was one penny above analysts’ forecasts and 19 percent higher than the same quarter last year. Quarterly revenue came in nearly $50 million higher than Wall Street projections.
“This morning BSX reported a strong 2Q17 sales beat,” analysts with Leerink Partners wrote Thursday morning, using Boston Scientific’s stock ticker abbreviation. “The key to us in this quarter is the broad-based strength across its businesses despite facing an incrementally tough [comparison to prior-year growth], with BSX delivering outperformance across all business segments vs. consensus.”
Investors appeared unmoved, sending the company’s shares down 1.4 percent on the day, to $27.05.
Boston continues to work toward its long-term goal of clearing significant legal liabilities from its books, including tens of thousands of lawsuits from women who say they were injured by the company’s pelvic mesh products.
Hundreds of thousands of women have sued medical device companies over mesh products use to repair pelvic organ prolapse and treat incontinence, but Boston Scientific has one of the larger burdens in the industry, with an estimated 48,000 actual and expected injury lawsuits.
Although the company denies any wrongdoing and continues to sell pelvic-floor reconstruction products, Chief Financial Officer Dan Brennan said the company is working toward a goal of resolving all remaining claims against it for mesh products in 2018. On Thursday he noted that plaintiffs had agreed to proposed settlement terms in 38,000 of the lawsuits — more than had been expected.
As a result, the company added another $200 million to its legal reserve, which now stands at about $1.8 billion. The legal reserve fund includes money for product liability cases and a sizable potential settlement with the Internal Revenue Service over back taxes.
“We remain committed to reducing the risk on our balance sheet,” Brennan noted Thursday.
Looking ahead, Boston Scientific increased its revenue guidance for the year to a range of $8.89 billion to $8.99 billion for the full year, an increase of about $90 million on both ends of the range, to include the impacts of the recent acquisitions of EndoChoice Holdings and Symetis. The outlook represents expectations for 6 to 8 percent operational growth.
On the bottom line, adjusted earnings per share for the full year are now projected in a range of $1.23 to $1.27 per share, a one penny increase on both ends of the range.