Dive Brief:
- Boston Scientific anticipates the novel Wuhan coronavirus outbreak will lower procedure volumes and disrupt supply chains in China, which could result in a $10 million to $40 million negative impact to first quarter sales, the company told analysts on an earnings call Wednesday.
- For the full year, Boston Scientific expects revenue to rise 10% to 12%, leveling out between 6.5% and 8.5% on an organic basis. Organic growth targets for the first quarter are a more tempered 5% to 7%, also taking into consideration the ongoing integration of BTG and pricing headwinds for drug-eluting stents.
- Boston Scientific's complete 2019 results, which at 7.3% organic growth came in at the low end of 7% to 8.5% guidance offered at the outset of the year, were consistent with those released during the J.P. Morgan Healthcare Conference.
Dive Insight:
Boston Scientific exceeded earnings per share expectations during the fourth quarter, in part thanks to a three-cent tax benefit. But weakness in the U.S. cardiac rhythm management (CRM) and electrophysiology businesses contributed to an organic revenue miss.
CEO Mike Mahoney said Wednesday that Boston did not likely lose CRM market share during the quarter, but faced steeper year-over-year comparisons than some competitors. In 2020, the company expects the global CRM market to be flat or decline slightly.
Looking ahead, the coronavirus outbreak is top of mind, with the potential to defer or cancel non-essential procedures in China.
CFO Dan Brennan said no single business line is particularly exposed; given the company's diversified presence in China, all types of procedures are at risk of being delayed. Boston Scientific did not break out China-specific results in its earnings release, but indicated that the Asia-Pacific region approached half a billion dollars in sales during the fourth quarter, and grew almost 10% between 2018 and 2019.
In more positive news in the region, Boston Scientific said it recently received Japanese reimbursement for its Lotus Edge transcatheter aortic valve replacement (TAVR) system. A little more than nine months have passed since FDA approved the device, and management said the device is on track to be used in 150 customers' accounts by the one-year mark. More widespread is its Sentinel cerebral protection device, picked up in the mid-2018 buyout of Claret Medical, which the company estimates is currently used in more than 600 centers across the U.S. and in more than 20% of all U.S. TAVR procedures.
Boston's FDA-cleared and CE-marked single-use duodenoscope, called Exalt D, remained a key talking point, as the company works on a controlled launch during the first quarter and plans to scale up the rollout during the second quarter and further in the second half of the year. The fact that the device received FDA's breakthrough designation could be a tailwind as the company seeks reimbursement, Mahoney said.
Another second half catalyst may be the U.S. launch of the next version of the Watchman left atrial appendage closure device. The company plans to begin a trial in the second half of the year comparing how effective the device is at reducing stroke risk versus direct oral anticoagulants in lower-risk patients with non-valvular atrial fibrillation.
Brennan said Boston Scientific registered $223 million in litigation expenses during the quarter, most of which were related to a dispute with Channel Medsystems. Boston announced its acquisition of the cryoablation device maker in 2017, but has since attempted to back out of the agreement.
Separately, Brennan said in an update that Boston expects to resolve all remaining claims related to its former pelvic mesh products with $115 million in payments in 2020.
