What happened

Shares of Boston Scientific (NYSE:BSX) slipped 10.7% in February, according to data provided by S&P Global Market Intelligence, on concern supply disruptions as well as fewer elective surgery procedures in China would hurt the medical device company's earnings.

With the coronavirus outbreak deepening in China, Boston Scientific faces disruption in the production of some of its devices as factories shut down and workers are quarantined. Since the country's priority is dealing with the current crisis, many elective procedures using Boston Scientific devices may be postponed. So far, more than 80,000 cases of COVID-19, the illness caused by this novel coronavirus, have been confirmed in China.

Surgeons are shown in an operating room as they work.

Image source: Getty Images.

So what

During Boston Scientific's fourth-quarter earnings call last month, the company said it expected a decline in non-emergency medical procedures in China, and supply disruptions. The company also said those issues could result in a $10 million to $40 million negative impact on revenue in the first quarter. Considering those figures, Boston Scientific forecasts first-quarter organic growth of 5% to 7%. Without the coronavirus impact, Boston Scientific said its year-over-year growth rate would be between 6% and 7.5%.

Now what

Like most other companies relying to some degree on China for the supply chain or sales, the duration of the coronavirus outbreak will determine what happens next. If the situation improves in the coming weeks, Boston Scientific should see a rebound in procedure revenue from China as well as a return to normal in the supply chain by the second quarter. If the outbreak lengthens, it may hurt earnings beyond the first quarter. In the earnings call, Boston Scientific predicted full-year organic growth of 6.5% to 8.5% if it's able to compensate later in the year for lost sales in China.

Boston Scientific shares may continue to suffer as the outbreak unfolds, but for long-term investors in healthcare companies, any dip offers a buying opportunity. Boston Scientific has grown revenue for at least the past four years and has the means to continue once this health crisis is over.