Dive Brief:
- Boston Scientific sustained its steady 2018, beating Wall Street consensus in its latest quarterly results with 8.7% organic sales growth continuing to be driven by its three major segments. Its stock bumped up 1.5% in early morning trading Wednesday.
- MedSurg organic revenue growth of 11% lead Boston’s third quarter compared to last year, followed by its Rhythm and Neuro unit at 8.3% and its Cardiovascular segment posting a bump of 7.2%.
- At the same time, the company narrowed its 2018 sales guidance to between $9.787 billion and $9.827 billion from $9.80 billion to $9.88 billion and its fiscal year earnings per share guidance to $1.38-$1.40 from $1.37-$1.41. Leerink analysts said the measures "likely represents prudent conservatism."
Dive Insight:
The earnings report comes a day after Boston Scientific announced it won a court ruling in Germany that found Edwards Lifesciences’ Sapien 3 Ultra valve infringed on a Boston Scientific-owned patent. Edwards said it plans to appeal the decision, but Boston Scientific is in a position to exclude the Edwards product from the German market potentially.
Jefferies analysts did not think Boston would take that step. "Our sense is that the IP battle between the two companies is more around leverage to negotiate access to different markets rather than forcing competition off in specific geographies," they said in a note.
The company didn't show its cards on the investor call.
"We have really demonstrated in proving our patents out in Germany with S3, including the appeal trial and we're pleased with the results of the Ultra enjoinment with ACURATE's capability. So, we've got some options here and I think we'll continue to play it out," Boston Scientific CEO Mike Mahoney said.
Boston Scientific also said that it has submitted its premarket approval application for its Lotus Edge Aortic Valve System to FDA, including the final technical model. The company has said it anticipates its Lotus Edge Valve System to be commercialized in Europe in Q1 2019 and expects FDA approval to come mid-2019, moves that will boost its efforts to compete in the transcatheter aortic valve replacement market.
Other highlights from the quarter include the closing of its Augmenix acquisition, adding a therapy that aims to reduce the effects of prostate cancer radiotherapy to its portfolio, and FDA approval for its Eluvia Drug-Eluting Vascular Stent System.
The company also closed its acquisition of Claret Medical, adding the Sentinel Cerebral Embolic Protection System that aims to protect the brain during TAVR operations to its portfolio. Sentinel won a New Technology Add-on Payment designation from CMS in August.
Neuromodulation continues to drive organic sales growth for the company: the subunit jumped 23.5% in Q3 following 30.6% growth in Q2. Emerging markets posted operational revenue growth of 19.7%, but headwinds from foreign currency exchange of 8.6% mitigated some of the $30 million jump.
Boston Scientific CEO Mike Mahoney pointed to the company’s diversifying portfolio as a driver of long-term growth on a call with investors.
"Through internal research and tuck-in acquisitions, we continue to bring meaningful innovations to market, enabling our customers to deliver life-changing care to millions of patients around the world," Mahoney said in a statement.
Leerink said that Boston Scientific is well positioned moving into 2019 based on the Lotus PMA and forthcoming relaunch in Europe and the U.S., Eluvia and "a much cleaner balance sheet" which it to be "nimble from an M&A perspective and perhaps get even more aggressive in cash deployment."
"To us, BSX remains one of the strongest and safest 'growth' stories in large-cap MedTech, with top-tier and above-market sales and EPS growth that is likely sustainable for the foreseeable future," the Leerink note said.
