New Products, Emerging Markets Power Boston Scientific's Best Quarterly Performance In A Decade
Boston Scientific has achieved double-digit growth in four of its seven businesses for a total of 11 percent Q1 growth overall, its best quarterly performance in over a decade, according to senior executives. Analysts attribute the growth in part to the company’s ability to diversify in lesser known markets and the successful launch of several new products.
For the three month period ending on March 31, 2016, Boston Scientific generated $1.96 billion in revenue and netted $202 million in profits, compared to $1 million reported this time last year. The 11 percent increase in overall revenue included a 28 percent surge in medical surgery, 13 percent in interventional cardiology (IC), and 11 percent in endoscopy, according to a press release.
Boston Scientific CEO Michael Mahoney, who came to the company in 2011, was named chairman of the board in a recent executive shakeup following the retirement of co-founder Pete Nicholas. Under Mahoney’s leadership, Boston Scientific has restructured and diversified its portfolio, particularly its cardiovascular offerings, to offset a slowdown in cardiac rhythm management (CRM) devices.
Mahoney attributes strong IC revenues to the successful launch of Synergy, a bioabsorbable polymer drug-eluting stent system, and the recent decision by the Centers for Medicare and Medicaid Services (CMS) regarding Watchman, a left atrial appendage closure device.
Boston Scientific recently presented positive results from an international, real-world registry of patients implanted with the Watchman device. Successful implants of the Watchman device remain very high, said Mahoney, due to Boston Scientific’s controlled rollout and extensive training programs.
“Watchman sales were strong and procedure growth and new account openings were both helped by the finalized national coverage determination,” said Mahoney in an earnings call. “We’re developing additional Watchman capabilities, primarily by adding resources in field clinical support, market development and training courses.”
Strong growth in medical surgery business was driven in part by the success of recent launches in Boston Scientific’s endoscopy segment, including the Spyglass digital DS visualization system and Axios stent for drainage of pancreatic fluid. Mahoney commented that he intends to extend Boston Scientific’s leadership in endoscopy by pursuing commercial capabilities in emerging markets.
As expected, CRM business declined by 3 percent, as Medtronic took the lion’s share of the market. CFO Daniel Brennan commented that the FDA’s regulatory approval of a suite of MRI-safe pacing devices this week likely will boost the division in future quarters.
“We continue to believe rhythm management is on track to delivery an adjusted operating margin of 20 percent by 2017,” said Brennan during the earnings call.
“First quarter results reflect the strength of our portfolio, our ongoing investment in faster growth markets and our globalization efforts,” said Mahoney. “More importantly, we are well positioned to continue our strong performance in 2016 and beyond.”
“They’ve [Boston Scientific} put together a very nice business in some of these lesser known categories,” Raj Denhoy, an analyst at Jefferies & Co., told the Wall Street Journal. Denjoy said he was astonished by the double-digit success, adding “These mature medical device companies just don’t grow that fast.”