Boston Scientific Corporation Profit Falls but ICDs Rebound

NATICK, Mass., July 20 /PRNewswire-FirstCall/ -- Boston Scientific Corporation (NYSE: BSX) today announced financial results for the second quarter ended June 30, 2010, as well as guidance for net sales and earnings per share (EPS) for the third quarter and full year 2010.

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

• Achieved sales of $1.928 billion, reporting GAAP earnings of $0.06 per share with adjusted EPS of $0.12
• Maintained leadership position in the global drug-eluting stent (DES) market with 38 percent share worldwide
• Launched the third-generation TAXUS® Element Paclitaxel-Eluting Coronary Stent System in the European Union and other CE Mark countries
• Refinanced 2011 debt maturities and have approximately $1 billion cash on hand
• Increased worldwide Endoscopy sales eight percent
• Initiated the PLATINUM PLUS “all comers” clinical trial comparing the performance of our PROMUS® Element Everolimus-Eluting Coronary Stent System to the Xience Prime Everolimus-Eluting Coronary Stent System

“I am proud of the way the organization executed in a number of key areas during the quarter,” said Ray Elliott, President and Chief Executive Officer of Boston Scientific. “In CRM, we finished the quarter well ahead of where we expected to be, thanks to exceptional execution by the sales team and everyone else involved in our recovery. The continued success of our PROMUS Element rollout in Europe was another example of outstanding execution to go along with a very strong 46 percent U.S. DES market share. Once again, our Endoscopy and Women’s Health businesses turned in excellent results. In all, 44 percent of our sales in the quarter came from new products, a testament to the building strength of our R&D pipeline.”

Net sales for the second quarter of 2010 were $1.928 billion, as compared to net sales of $2.074 billion for the second quarter of 2009, a decrease of seven percent on both a reported and constant currency basis, driven primarily by the cardiac rhythm management (CRM) ship hold and product removal actions in the first quarter.

Worldwide CRM net sales for the second quarter -- on a reported basis -- were as follows:

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

Reported net income for the second quarter of 2010 was $98 million, or $0.06 per share. Reported results included goodwill impairment-related credits; restructuring-related charges; and amortization expense (after-tax) of $92 million, or $0.06 per share, which consisted of:

• a $31 million (on both a pre-tax and after-tax basis) credit related to the finalization of the Company’s goodwill impairment charge recorded in the first quarter;
• $29 million ($41 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; and
• $94 million ($124 million pre-tax) of amortization expense.

Adjusted net income for the second quarter of 2010, excluding these net charges, was $190 million, or $0.12 per share.

Reported net income for the second quarter of 2009 was $158 million, or $0.10 per share. Reported results included intangible asset impairment charges; acquisition- and restructuring-related charges; discrete tax benefits; and amortization expense (after-tax) of $139 million, or $0.10 per share. Adjusted net income for the second quarter of 2009, excluding these net charges, was $297 million, or $0.20 per share.

Guidance for Third Quarter and Full Year 2010

The Company estimates net sales for the third quarter of 2010 of between $1.850 billion and $1.925 billion. Adjusted earnings, excluding restructuring and restructuring-related costs and amortization expense, are estimated to range between $0.10 and $0.13 per share. The Company estimates earnings on a GAAP basis of between $0.01 and $0.05 per share.

The Company is revising estimates for the full year ending December 31, 2010. The Company now estimates net sales for the full year 2010 of between $7.6 billion and $7.9 billion. Adjusted earnings, excluding goodwill and intangible asset impairment net charges, acquisition-related credits, restructuring and restructuring-related costs, and amortization expense, are estimated to range between $0.54 and $0.62 per share. The Company now estimates a net loss on a GAAP basis of between $(0.91) and $(0.81) per share.

Boston Scientific officials will be discussing these results with analysts on a conference call at 8:00 a.m. (ET) Wednesday, July 21. 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 third quarter and full year 2010; our financial performance; new product approvals and sales; regulatory compliance and product removal actions; our market position; cash flow; the effect of our debt refinancing and repayments; write-down of goodwill and other asset impairments; our capacity to fund acquisitions and other investments; 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; 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.