UPDATE: Boston Scientific Swings To 3Q Profit

Boston Scientific Corp. (BSX) swung to a third-quarter profit, helped by litigation charges last year, but sales declined as the company dealt with market-share pressure and soft market conditions for implantable defibrillators and drug-coated heart stents.

Still, despite declines, sales of both products landed in the high of Boston Scientific's projected ranges. The Natick, Mass., company is feeling less of an impact than it expected from a temporary U.S. defibrillator sales halt this spring and is trying to fight off the impact of unfavorable stent studies.

The company "made good progress toward the execution of both our strategic plan and the necessary financial discipline, which resulted in a strong operating performance despite the challenges facing our industry," said Ray Elliott, Boston Scientific's president and chief executive, in a release.

The company tightened its full-year sales guidance and raised its adjusted earnings forecast following Tuesday's earnings announcement.

Boston Scientific's shares, down 34% on the year as the company deals with slumping sales in top markets and works through a long restructuring effort, rose 3.5% to $6.18 in after-hours trading.

The company reported third-quarter earnings of $190 million, or 12 cents a share, compared with a loss of $94 million, or 6 cents a share, a year ago. Excluding items including litigation-related charges last year, earnings were flat at 19 cents, the company said.

Sales slipped 5.4% to $1.92 billion. Analysts surveyed by Thomson Reuters had forecast earnings of 6 cents per share on sales of $1.91 billion.

Sales of implantable defibrillators--which provide shocks when needed to address potentially deadly heart rhythm distortions--declined nearly 9% to $406 million. U.S. sales were down nearly 11% to $280 million. Still, results were in the high end of the company's projected ranges, helped by the softer-than-expected hit from the spring sales halt.

That event was linked to since-resolved missteps in filing certain paperwork with the Food and Drug Administration. Boston Scientific competes in the defibrillator market with Medtronic Inc. (MDT) and St. Jude Medical Inc. (STJ).

Sales of drug-coated heart stents, tiny devices used to prop open clogged heart arteries, declined 11% to $365 million. U.S. sales slipped about 10%. But again, sales here were at the high end of the company's projections.

The market in general is under pressure from falling product prices, brought on in part by tough competition. Boston Scientific estimate that average selling prices for drug-coated stents declined 10% in the recent quarter.

The company is also facing some of its own challenges, such as fallout from unfavorable medical studies that eroded its market share while benefiting competitor Abbott Laboratories (ABT).

Elsewhere at Boston Scientific, sales of neurovascular devices such as coils used to treat brain aneurysms declined 7% to $79 million. Elliott said strong competition, plus a field action near the end of the quarter, hurt results there.

Sales in the company's neuromodulation business, which includes implantable stimulators used to treat chronic pain, were also $79 million, but up 9%.

Analysts have speculated Boston Scientific could divest the neurovascular and neuromodulation businesses as part of the ongoing restructuring plan. The company hasn't specifically talked about what it might sell or buy, although Elliott has said the company is more likely to make small-scale purchases to add medical-device technology in familiar areas.

In an opening move to realign the portfolio, Boston Scientific announced last month it would buy asthma-treatment company Asthmatx Inc. for up to $443.5 million.

Looking ahead, Boston Scientific tightened its full-year sales forecast to a range of $7.73 billion to $7.8 billion. It also raised its earnings forecast, excluding various items, to a range of 63 cents to 66 cents per share. Including charges and credits, the company now expects a loss on the year of 77 cents to 81 cents a share.

In the fourth quarter, the company sees earnings excluding items of 15 cents to 18 cents per share on sales of $1.93 billion to $2 billion.

-By Jon Kamp, Dow Jones Newswires; 617-654-6728; jon.kamp@dowjones.com

(John Kell contributed to this article.)

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