Is Boston Sci still haunted by its $28B Guidant buy?

Boston Scientific's ($BSX) second-quarter earnings torpedoed by a $3.4 billion goodwill impairment write-off, and the company wrote off about $9 billion in goodwill since buying Guidant in 2006.

That's a sign Boston Sci may have vastly overpaid for the company, The Wall Street Journal reports, and the device giant may still be reeling.

The company started writing off heaps of goodwill ever since outbidding Johnson & Johnson ($JNJ) to snag Guidant for $28 billion, the paper says. Boston Sci cited dimming European projections in its $3.4 billion impairment charge, and the company blamed its flagging cardiac unit for 2011's $697 million write-off. The firm said recalls and market conditions were to blame for write-offs of $1.8 billion in 2010, $2.6 billion in 2008 and $552 million in 2007.

The continued write-downs suggest Boston Sci overpaid for Guidant, a company that made implantable cardiac devices. Of course, as the WSJ reports, none of Boston Sci's financial disclosures go into specifics as to how much of the write-downs are related to the acquisition, and a company spokesperson decline to speak on the issue.

However, the buyout dubbed by Forbes as "arguably the second-worst ever" played a part in Boston Sci's goodwill exceeding its market value--$9.8 billion versus $8.6 billion as of March, according to WSJ--and that disparity likely motivated Q2's huge write-off.

But interim CEO Hank Kucheman sees a way forward, he says. In an interview with FierceMedicalDevices after Boston Sci's second-quarter earnings disclosure, Kucheman said the company has followed through on its plans to slim down and sees big gains ahead with pipeline devices like the S-ICD defibrillator and clot-fighting Watchman.

- read the WSJ analysis (sub. req.)

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