Boston Scientific reported Q1 earnings for the period ending March 31st on April 19th. Throughout the day, shares of BSX traded up 5.8% on EPS results that exceeded management guidance and analyst expectations. BSX reported GAAP EPS of $0.08 and adjusted EPS of $0.15, which exceeded analyst expectations of $0.10. Earnings doubled from the previous period from continued cost cutting and a decrease in restructuring charges. Despite strong earnings, the company reported $1.87 billion in revenues, down $60 million from the previous period, and under performed analyst expectations of $1.90 billion.
Although BSX missed revenue estimates, the company saw positive developments in the cardiac rhythm management (CRM) business, which accounts for 27% of the firm's revenues. The CRM market had been slowing, with Q4 CRM sales dropping 15%. This quarter CRM sales dropped 5%, which was better than expected, and management believes this may be the end of the fall in CRM sales. Additionally, Boston Scientific saw positive developments with the PROMUS Element Platinum stent system, which is key to UASBIG's investment thesis. Clinical trials showed the Element's superior efficacy to both the previous PROMUS offering and Abbott Laboratories' Xience V stent system. The Element stent system has been approved in both Europe and U.S. markets, and should begin to boost the interventional cardiology business this fiscal year. The firm also saw developments in the CRM unit with the release of the INGENIO pacemaker system in Europe.
Going forward, we expect to see an increase in top line revenues driven by the PROMUS Element stent system and a rebound in the CRM division. Additionally, gross margins are expected to increase as the company shifts from marketing the original PROMUS system to the Element system, which commands twice the margins of the previous offering. For the next fiscal quarter, management expects sales of $1.95 billion and adjusted EPS of $0.17.
-Ryan M. Kennedy
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