Boston Scientific's ($BSX) 2013 first-quarter numbers--particularly its $354 million net loss--make it painfully clear that the company remains very much in transition, with an uneasy mix of progress and setbacks.
The company made enormous strides boosting its business in emerging markets, generating FDA and CE mark approvals and growing revenue in newer areas such as neuromodulation and endoscopy devices. Another high point: the $100 million that the Massachusetts medical device stalwart used to buy back 13 million shares. But Boston Scientific's interventional cardiology business in particular--drug-eluting stents, catheters, balloons and related products--endured a 16% drop in global sales during the quarter, continuing an ongoing downward trend, though interventional cardiology sales have also declined globally at Boston Scientific's rivals in the face of procedure declines and reimbursement pressures. As well, other Boston Scientific divisions also posted declines or flat results, and the company's revenue gains come even as it sheds legions of employees as part of its reorganization.
What's worse is that Boston Scientific's overall sales are down. Still, the company's $354 million loss for the quarter (versus $113 million in revenue in Q1 2012) must be placed in context. It stems, in part, from one-time expenses relating to acquisitions, restructuring, litigation and "a goodwill impairment charge." What's encouraging is that the company would have made $220 million in net income without those special charges. Interestingly, company president and CEO Mike Mahoney didn't try to spin the results as much as some executives do in this situation.
|Boston Scientific CEO Mike Mahoney|
"We continue to be encouraged but not satisfied with our operating performance," Mahoney said in a statement, though he noted that the results meet guidance, and that Boston Scientific's ongoing revamp continues "to make strong progress."
Overall, the company generated $1.76 billion in net sales during the quarter, down 6% from $1.86 million in the 2012 first quarter. Interventional cardiology sales plunged 16% to $505 million, versus $603 million over the same period last year. Cardiac rhythm management sales declined 5%, from $501 million to $478 million. Neuromodulation revenue grew from $84 million to $89 million year-over-year, reflecting a healthy 6% increase. Endoscopy sales also notched a 3% increase, climbing to $309 million, from $302 million in the fiscal 2012 first quarter.
- read the earnings release