Boston Scientific Corporation Announces Results for Third Quarter Ended September 30, 2010

NATICK, Mass., Oct. 19 /PRNewswire-FirstCall/ -- Boston Scientific Corporation (NYSE: BSX) today announced financial results for the third quarter ended September 30, 2010, as well as guidance for net sales and earnings per share (EPS) for the fourth quarter and full year 2010.

Third quarter highlights (sales growth rates are at constant currency):

• Achieved sales of $1.916 billion, reporting GAAP earnings of $0.12 per diluted share, with adjusted EPS of $0.19 that exceeded the high end of the Company’s guidance range

• Received FDA approval for an exclusive expanded indication for the Company’s cardiac resynchronization therapy defibrillator systems (CRT-Ds), making Boston Scientific CRT-Ds the only devices approved by the FDA for all classes of heart failure

• Maintained leadership position in the global drug-eluting stent (DES) market with 37 percent share worldwide

• Received CE Mark approval for expanded indications for use of the PROMUS® Element Everolimus-Eluting Coronary Stent System in diabetic and heart attack patients; announced positive results from the PLATINUM clinical program supporting the safety and efficacy of the PROMUS Element Stent

• Resolved FDA corporate warning letter

• Entered into a definitive agreement to acquire Asthmatx, Inc., the developer of a less-invasive procedure for the treatment of severe persistent asthma, the first device-based asthma treatment approved by the FDA

• Increased worldwide Neuromodulation, Endoscopy, and Urology and Women’s Health sales mid to high single digits

“During the quarter we made good progress toward the execution of both our strategic plan and the necessary financial discipline, which resulted in a strong operating performance despite the challenges facing our industry,” said Ray Elliott, President and Chief Executive Officer of Boston Scientific. “These results reflect our recovery from the CRM ship hold and our successful focus on regaining share. We also made progress on our restructuring initiatives and the realignment and diversification of our product portfolio, two essential components of our plan for future growth.”

Net sales for the third quarter of 2010 were $1.916 billion, as compared to net sales of $2.025 billion for the third quarter of 2009, a decrease of five percent on both a reported and constant currency basis.

Worldwide cardiac rhythm management (CRM) net sales for the third quarter -- on a reported basis -- were as follows:

Worldwide coronary stent system net sales for the third quarter -- on a reported basis -- were as follows:

On a GAAP basis, net income for the third quarter of 2010 was $190 million, or $0.12 per diluted share. These results included intangible asset impairment charges, restructuring-related charges, discrete tax items and amortization expense (after-tax) of $106 million, or $0.07 per share, which consisted of:

• $4 million ($5 million pre-tax) of intangible asset impairment charges;
• $14 million ($18 million pre-tax) of restructuring and restructuring-related costs associated with the Company’s 2010 Restructuring plan, Plant Network Optimization program and 2007 Restructuring plan;
• $21 million of discrete tax items related to certain tax positions taken in a prior period; and
• $109 million ($129 million pre-tax) of amortization expense.

Adjusted net income for the third quarter of 2010, excluding these charges, was $296 million, or $0.19 per share.

On a GAAP basis, net loss for the third quarter of 2009 was $94 million, or $0.06 per share. These results included litigation- and restructuring-related net charges and amortization expense (after-tax) of $385 million, or $0.25 per share. Adjusted net income for the third quarter of 2009, excluding these net charges, was $291 million, or $0.19 per share.

“Once again our businesses generated excellent cash flow,” said Elliott. “Going forward we expect our cash flow to provide the capital needed to fund investments in high-growth opportunities that will complement our existing product offerings, as well as consistently reduce our debt obligations.”

Fourth Quarter and Updated Full Year 2010 Guidance

The Company estimates net sales for the fourth quarter of 2010 of between $1.925 billion and $2.000 billion, as compared to net sales of $2.079 billion for the fourth quarter of 2009. Adjusted earnings, excluding restructuring and restructuring-related costs and amortization expense, are estimated to range between $0.15 and $0.18 per share, as compared to adjusted earnings of $0.20 per share in the fourth quarter of 2009. The Company estimates earnings on a GAAP basis of between $0.05 and $0.09 per share, as compared to a net loss of $0.71 per share in the fourth quarter of 2009.

The Company now estimates net sales for the full year 2010 of between $7.729 billion and $7.804 billion, as compared to net sales of $8.188 billion for the full year 2009. Adjusted earnings, excluding goodwill and intangible asset impairment charges, acquisition-related credits, restructuring and restructuring-related costs, discrete tax items and amortization expense are estimated to range between $0.63 and $0.66 per share, as compared to adjusted earnings of $0.78 per share for the full year 2009. The Company estimates a net loss on a GAAP basis of between $0.81 and $0.77 per share, as compared to a net loss of $0.68 per share for the full year 2009.

Boston Scientific officials will be discussing these results with analysts on a conference call at 5:30 p.m. (ET) Tuesday, October 19. The Company will webcast the call to all interested parties through its website: www.bostonscientific.com. Please see the website for details on how to access the webcast. The webcast will be available for one year on the Boston Scientific website.

Boston Scientific is a worldwide developer, manufacturer and marketer of medical devices whose products are used in a broad range of interventional medical specialties. For more information, please visit: www.bostonscientific.com.

Cautionary Statement Regarding Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like “anticipate,” “expect,” “project,” “believe,” “plan,” “estimate,” “intend” and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our expected net sales, GAAP earnings and adjusted earnings for the fourth quarter and full year 2010; our financial performance; new product approvals and sales; regulatory compliance and product removal actions; our market position; cash flow; write-down of goodwill and other asset impairments; our capacity to fund acquisitions and other investments; our ability to reduce our debt obligations; and our restructuring activities. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.

Risks and uncertainties that may cause such differences include, among other things: future economic, competitive, reimbursement and regulatory conditions; new product introductions and the market acceptance of those products; clinical trial results; demographic trends; intellectual property; litigation; financial market conditions; the effect of our goodwill impairment charges and our restructuring initiatives; closing of announced acquisitions and integration of acquired companies; and future business decisions made by us and our competitors. New risks and uncertainties may arise from time to time and are difficult to predict. All of these factors are difficult or impossible to predict accurately and many of them are beyond our control. For a further list and description of these and other important risks and uncertainties that may affect our future operations, see Part I, Item IA -- Risk Factors in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission, which we may update in Part II, Item 1A -- Risk Factors in Quarterly Reports on Form 10-Q we have filed or will file hereafter. We disclaim any intention or obligation to publicly update or revise any forward-looking statement to reflect any change in our expectations or in events, conditions, or circumstances on which those expectations may be based, or that may affect the likelihood that actual results will differ from those contained in the forward-looking statements. This cautionary statement is applicable to all forward-looking statements contained in this press release.

Use of non-GAAP Financial Information

A reconciliation of the Company’s non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the Company’s use of these non-GAAP measures, is included in the exhibits attached to this press release.