Boston Scientific posts $272 million third-quarter loss

Medical device maker Boston Scientific Corp. swung to a third-quarter loss of $272 million on hefty charges related to acquisitions and asset sales, as the company's top-selling drug-coated stent continued to slump.

Boston Scientific's loss, reported Friday two days after the company announced 2,300 job cuts, equaled 18 cents per share in the July-September period. In the same quarter a year earlier, the Natick, Mass.-based company had a profit of $76 million, or 5 cents per share.

Sales rose just 1 percent from $2.026 billion a year ago to $2.048 billion, but represented a slight turnaround from the previous quarter, when sales dipped 2 percent. However, the latest quarter's sales fell just short of the $2.057 billion consensus estimate of analysts surveyed by Thomson Financial.

The results were clouded by $435 million in expenses related to acquisitions and asset sales. Not counting those items, Boston Scientific's profit in the latest quarter was 20 cents per share, compared with 10 cents per share a year ago.

Shares jumped 66 cents, or 4.8 percent, to $14.51 in morning trading. Shares have traded between $12.11 and $18.69 in the past year.

Global sales of Boston Scientific's Taxus stent fell 22 percent to $448 million from $572 million a year ago. In the U.S., the Taxus sales decline was a steeper 38 percent, offsetting an 11 percent gain overseas.

However, Taxus' U.S. decline fell short of the 44 percent U.S. sales drop that Johnson & Johnson reported on Tuesday for its Cypher stent. Taxus and Cypher are the only drug-coated stents on the U.S. market, though new rivals are expected to emerge soon.

Stent sales at both companies have been hurt by recent research findings that have questioned the devices' safety and effectiveness.

Sales of cardiac-rhythm products such as defibrillators and pacemakers that Boston Scientific acquired as part of its $27 billion buyout of Guidant Corp. rose 13 percent, to $517 million.

Boston Scientific said that market appears to be recovering from a slump driven by recalls and safety warnings, some involving Guidant products.

However, a Boston Scientific rival, Medtronic Inc., warned doctors on Monday that the wires connecting a patient's heart to its implantable defibrillators can break — a problem that has been linked to five deaths.

Boston Scientific President and Chief Executive Jim Tobin said his firm took no joy in a rival's troubles, which he said could produce another market slump.

"This is not going to help restore confidence in the marketplace as a whole," Tobin told analysts on a conference call. "This is not something that has us dancing in the aisles."

Boston Scientific's stock has been damaged by the twin market downturn of stents and heart products, as well as $8 billion in debt, mostly from the Guidant deal.

Tobin characterized the third-quarter results as "something of a turn for us."

Despite recent slow sales for stents and heart-rhythm products, the company enjoyed an 8 percent sales gain from other devices.

To restore the company's financial health, Boston Scientific on Wednesday announced plans to cut 2,300 jobs, or 8 percent of its work force, as part of a larger restructuring.

The company projects a fourth-quarter profit of 14 cents to 19 cents per share, excluding one-time gains and expenses, but a loss of 2 cents to 9 cents per share including such items. Boston Scientific expects sales of $2.05 billion to $2.15 billion.

Next year, the company expects sales growth of 3 percent to 5 percent — excluding the effects of businesses it's selling off — and profit growth of 18 percent to 20 percent.