Boston Scientific’s Q2 Shows Organic Sales Growth For First Time in Years

On the face of it, Boston Scientific's second quarter results, announced Thursday appeared to continue a trend of declines in overall sales.

The Natick, Massachusetts company had sales of $1.81 billion in the quarter ended June 30, down from $1.83 billion, in the same quarter of 2012. While sales declined, Boston Scientific showed a profit of $130 million, or 10 cents per diluted share, reversing a loss of $3.58 billion, or $2.51 per share related to a goodwill impairment charge from the second quarter of 2012.

But the real story lay in operating results. Several analysts on the conference call congratulated Michael Mahoney, Boston Scientific's CEO and the management team on a "strong quarter." That was because Boston Scientific showed organic sales growth, from an operational standpoint, for the first time in years. 

In fact, excluding the impact of foreign currency fluctuations and divestitures, the $1.81 billion company garnered in sales in the second quarter represented a 2% growth from the same period in 2012.

As analyst Danielle Antalffy from Leerink Swann pointed out in her research note to investors, this was the first organic sales growth quarter since Q3 of 2009.

The results not only beat expectations of analysts, but that of the guidance that the company itself had provided. Glenn Novarro, senior analyst at RBC Capital Markets, attributed the better-than-expected results to two business segments that performed especially well - cardiovascular and neurmodulation.

In its cardiovascular business, Boston Scientific had sales of $711 million, $20 million higher than the consensus estimate of Wall Street analysts. In neuromodulation the company raked in sales of $111 million, $14 million ahead of the consensus estimate.

Here is a breakdown of Boston Scientific's other business segments:

The company's gross margins improved 2.2% to 70.7% in the second quarter, also a strong showing.

All eyes will be on the rest of the year to judge whether Boston Scientific will be able to continue on this path of sales growth. Executives appear to be confident - management raised guidance for the full year to a range of $7.05 - $7.17 billion, up from the previously announced $6.95 - $7.15 billion. It also raised earnings per share guidance for the full year to 67 - 71 cents compared with the previous guidance of 65 to 70 cents. 

[Photo Credit: iStockphoto.com user draco77]

-- By Arundhati Parmar, Senior Editor, MD+DI
[email protected]