Boston Scientific Merger Shy in Busy Period of M&A Deals

Nancy Crotti

July 29, 2014

2 Min Read
Boston Scientific Merger Shy in Busy Period of M&A Deals

Like the kid on the playground who watches others hop on and off the spinning merry-go-round, Boston Scientific says it will sit out the current whirl of medtech mergers.

Following last week's second-quarter earnings report, president and CEO Michael Mahoney told analysts that the Natick, MA-based company would continue to grow its business organically, with the possibility of a few "tuck-in" acquisitions to contribute to that growth.

The company reported Q2 revenues of $1.87 billion, a 4% increase over the same period of 2013, narrowly beating analysts' estimates. Its quarterly earnings of $4 million, or 21 cents per share (adjusted to exclude one-time items), was up from 18 cents a share a year ago.

Mahoney called other medtech companies' merger activity "interesting news" that does not affect its 2014 outlook or strategic plan. Medtronic's proposed $43-billion acquisition of Covidien has provoked a great deal of interest, including from competitors such as CR Bard and from the federal government, which, unsurprisingly, is not happy about Medtronic's plan to move its headquarters to Ireland.

"I think what's important for investors and employees is that the company is delivering today. We are building momentum and we have a strategic plan that's compelling. It's attainable," Mahoney said in a transcript provided by Seeking Alpha. "We play in very big markets, well in excess of $30 billion, and we have ample opportunity to grow share in those businesses."

To be the clinical leader in treating widespread diseases,"we will continue to provide tuck-in acquisitions and the right innovation bets to be really clinically differentiated and have scale in those specific disease states," Mahoney added.

In November 2013, Boston Scientific acquired the electrophysiology segment of CR Bard for $275 million. Product lines acquired include diagnostic catheters, cardiac catheter ablation technology, cardiac mapping devices, therapeutic catheters and cardiovascular recording equipment. In total, Boston Scientific says the deal will give it access to a market with a total cap of $2.5 billion.

The company also announced plans in May to acquire Bayer AG's Interventional Division for $415 million, but it was hardly the largest medical device acquisition announced so far in 2014.

This follows a bumpy 2013, in which the company announced two rounds of layoffs of about 1000 employees and further federal scrutiny of its defibrillator business.

Nancy Crotti a contributor to MPMN and Qmed.

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About the Author(s)

Nancy Crotti

Nancy Crotti is a frequent contributor to MD+DI. Reach her at [email protected].

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