Medical device firm Boston Scientific (NYSE:BSX) recently regained consciousness, but its recovery remains far from certain. The company still hasn't followed through on the initial hype from last year's acquisition of archrival Guidant.
Boston Scientific's drug-eluting stents (DES) continue to be the company's sickliest product category. It's looking so bad that Boston chose to let its results speak for themselves in three number-stuffed, run-on paragraphs in its second-quarter press release. As with the first-quarter results, I had to resort to my own calculations to realize that total drug-eluting stent sales fell almost 33% for the quarter, as U.S. sales plummeted 42%.
In all fairness, many rival firms, including Johnson & Johnson (NYSE:JNJ), Abbott Labs (NYSE:ABT), and Medtronic (NYSE:MDT), are also currently struggling in the DES business. Boston Scientific is simply the leader in this area. Its traditional coronary stents, which don't include drugs to help prop open arteries and improve blood flow, also struggled, falling almost 27% quarter over quarter. International trends weren't as bad in both stent categories, but they still fell almost 14% in drug-eluting stents, and more than 7% in the coronary stent category. On a positive note, Boston started selling its flagship TAXUS stent in Japan, and saw a nice sales gain in the country.
The cardiac rhythm management (CRM) business, which sells products that help the heart beat properly, saw sales decrease roughly 1% for the quarter. Domestic sales fell more than 6%, but international sales grew almost 10%. For fear of resembling the company's press release, I'll stop with the figures now.
The overall reported sales figures looked decent; Boston acquired Guidant on April 21 last year, meaning that most of the quarterly results still benefited from the acquisition. CEO Jim Tobin summed up the quarter by stating that "both the DES and CRM markets showed signs of stabilizing, but neither has returned to the level we believe they eventually will."
Management continued to be unscientific about exactly when it thinks business will improve. But if trends continue on their current path, especially in the DES business, Boston Scientific will have more than falling sales to worry about. The company took on a hefty debt load to acquire Guidant. During the earnings conference call, management stated that it's in compliance with its debt covenants, with plenty of access to capital. Still, if analysts are even raising the question, I fear there could be trouble on the horizon -- unless sales trends improve, or Boston starts cutting costs soon.
For related Foolishness:
- Boston Scientific Regains Consciousness
- Read This Before the Market Crashes
- The 10 Signs of a Great Growth Stock
- Why You Should Beat Wall Street
Johnson & Johnson is a Motley Fool Income Investor recommendation. Discover the Fool's full list of market-beating dividend dynamos with a free 30-day trial subscription.
Fool contributor Ryan Fuhrmann is long shares of J&J, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.
