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Boston Scientific Posts a Loss Due to One-time Items; Shares Rise

by Lynn Shapiro, Writer | April 21, 2009
Boston Scientific
Because of one-time charges, Boston Scientific reported a loss of $13 million, or 1 cent per share, for the first quarter ended March 31, versus year-ago profit of $322 million, or 21 cents per share.

But without the one-time items--including spending for job cuts and patent lawsuits for its stents--earnings would have been 19 cents per share, beating analysts' expectations of 12 cents per share on revenue of $2.02 billion, excluding the one-time items.

Because earnings were 7 cents higher than Wall Street predicted, Boston's shares climbed 57 cents, or 6.6 percent, to $9.26 in aftermarket trading on Monday. At the 4PM closing bell, the stock traded at $8.69.

Boston said sales edged down slightly to $2.01 billion. But without the effects of the strong dollar and divestitures, sales would have climbed 4 percent, the company said.

Cardiovascular sales were down slightly due to the effects of currency-exchange rates. The drop also included a small decline in sales of drug-eluting stents to $489 million.

Meanwhile, sales in its cardiac-rhythm business, including pacemakers and defibrillators, climbed 4 percent to $589 million.

Last week, Boston Scientific revealed that one-time charges including a $237 million payment related to a patent infringement suit against Johnson & Johnson's drug-eluting stents would bite into earnings. A federal court ruled that three of its stents infringed upon a J&J patent. The same ruling found that two of J&J stents infringed on a Boston Scientific patent.

Boston also took a $50 million charge related to a separate lawsuit brought by a radiologist who alleged the company's drug-coated stents infringed on his own patent. Those losses were partially offset by a one-time gain of $63 million due to the resolution of a tax problem related to a previously divested business.

In the current quarter ending in June, Boston said it expects adjusted earnings of between 16 cents and 21 cents per share, and net income between 7 cents and 13 cents per share. Analysts expect adjusted earnings of 14 cents per share.

For the year, the company forecast adjusted profit of 80 cents to 90 cents per share, and sales between $8.0 billion and $8.5 billion. Boston cut its full-year estimates for net income to between 46 cents and 57 cents per share, as a result of its current patent litigation expenses.

Analysts predict the Natick, MA, company will earn 58 cents a share on sales of $8.16 billion for the full year.

"We're off to a good start on the year with 4 percent sales growth, excluding divestitures, on a constant currency basis and adjusted EPS at the high end of our guidance range," said Jim Tobin, president and chief executive of the company.

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