Source : Medtech Insight
Boston Scientific Corporation is ramping up its manufacturing and commercial activities to pre-pandemic levels after sales trends in June and July show that procedure volumes are recovering.
As most medical procedures for non-COVID-19 patients were cancelled or postponed in March and April, Boston Scientific announced a series of cost-containment measures, including salary reductions and the implementation of a four-day work week for most employees. In April, the company also increased its available liquidity to approximately $2.6bn by signing a new $1.25bn term loan agreement. ("Boston Scientific Sees Grim Q2 But Eyes Growth By Q4 Fueled By Product Launches" "Medtech Insight" )
Since April, Boston Scientific has seen consistent monthly improvements in daily sales trends as the volume of non-emergency procedures recovers around the world, CEO Michael Mahoney reported during a 29 July conference call.
The recovery has allowed the company to return to its regular weekly work schedule and bring production back to pre-pandemic levels at most of its manufacturing facilities. The company is also “accelerating key investments appropriately,” including upgrades to its remote clinical support, training and sales capabilities “to partner with our customers on this path to recovery,” Mahoney said.
“We absolutely believe that we will emerge from the pandemic a stronger company,” he said.
Mahoney said the company’s sales are recovering rapidly because most of its products are for relatively urgent procedures, including many that can be performed in outpatient settings. Boston Scientific has been able to work with physicians to quickly reschedule surgeries and interventions that were postponed at the start of the pandemic when many hospitals stopped most non-emergency procedures to prepare for a possible wave of COVID-19 patients.
“A ‘binary split’ of elective emergent does not clearly reflect clinical practice and we have seen and expect to continue to see a higher rate of recapture of deferred procedures, given the majority of the conditions we treat have a relatively high level of acuity, and thus, generally can't be deferred for extended periods,” Mahoney said.
The company did not provide specific sales and earnings guidance during the call “due to ongoing uncertainty associated with the scope and duration of the COVID-19 pandemic.”
However, Mahoney said that Boston Scientific is maintaining the 2020 outlook it offered in April, expecting that third-quarter sales will be down year-over-year before organic revenue growth returns in the fourth quarter.
"We absolutely believe that we will emerge from the pandemic a stronger company.” – Michael Mahoney Boston Scientific’s worldwide total sales in the second quarter were down about 29% on an organic basis to $2bn. The company’s adjusted earnings per share in the second quarter were $0.08 compared to $0.39 for the second quarter of 2019.
As the company predicted at the end of the first quarter, sales in April were down 47% compared to April of 2019. But, after the “trough” in April, sales were down 24% in May and 17% in June year-over-year on an average daily sales basis, Mahoney said.
Overall, the company’s second-quarter US sales were down 28% from the second quarter of 2019. The recovery has been faster in the US compared to the rest of the world, partly because the initial decline in March and April in the US was so steep. US sales were down 55% in April, but down just 12% year-over-year in June and the upward trend has continued in July across all of Boston Scientific’s businesses, Mahoney said.
Boston Scientific’s revenue from the Asia Pacific region was down 14% year-over-year in the second quarter, but sales in China were up 2% in the quarter. In June, sales in China, Australia, and New Zealand and Korea were all higher than they were in June of 2019. Sales in Europe, the Middle East and Africa were down 26% year-over-year in the quarter, but Mahoney said that sales in six countries in those regions showed growth in June.
Boston Scientific’s second-quarter sales of $2bn exceeded the expectations of Wall Street analysts, providing further evidence that non-emergency procedure volumes may recover to pre-pandemic levels by the end of 2020. ("Edwards Beat Analysts And Its Own Projections in Q2 As TAVR Volumes Recover" "Medtech Insight" )
The consensus prediction of the security analysts that cover Boston Scientific was that the company’s second-quarter sales would be about $1.73bn.
Even as COVID-19 cases are growing in some parts of the US, Boston Scientific’s monthly sales trends support “the view that hospitals are now better-equipped to manage COVID and avoid the broad lockdowns seen in mid-March to mid-May,” SVB Leerink analyst Danielle Antalffy wrote in a 29 July note.
Considering the second-quarter results, Wells Fargo analyst Larry Biegelsen predicted Boston Scientific’s full 2020 revenue will be nearly $10bn – about $600m more than he predicted a quarter ago. Wells Fargo also raised Boston Scientific’s projected 2020 earnings per share from $0.91 to $1.01.
Revenue for Boston Scientific’s cardiovascular business was down about 25% in the quarter, on an organic basis, to $834m. Sales of interventional cardiology devices were down 29% while peripheral intervention revenue was down 17% on an organic basis, but revenue for both businesses has been trending upward since May.
Mahoney highlighted the performance of Boston Scientific’s WATCHMAN left-atrial appendage closure device for prevention of stroke in patients with atrial fibrillation, with a “healthy mix” of both new patients and patients originally scheduled to undergo the implant procedure in March and April. The company is now planning to launch the next-generation version of the device, WATCHMAN FLX, in the US in the second half of the year after the US Food and Drug Administration approved a premarket approval supplement for it on 21 July. ("HRS 2020 Boston Scientifics NextGen LAAC Device Hits Targets In PINNACLE FLX Trial" "Medtech Insight" )
Boston Scientific is also continuing to roll out its LOTUS Edge transcatheter aortic valve replacement (TAVR) system in the US and is already seeing “strong utilization within existing accounts,” Mahoney said. The pandemic made it difficult for the company to open new accounts during the quarter, as the travel restrictions and physical distancing precautions impaired physician training, but the sales results in June and July are “encouraging.”
The company plans to launch LOTUS Edge in Japan in the second half of 2020 and is sponsoring the REPRISE IV trial of LOTUS Edge in patients at intermediate risk during surgery. Meanwhile, the US pivotal trial of Boston Scientific’s ACURATE neo2 TAVR system continued during the quarter and the company is planning a limited market release of that system in the second half of 2020.
Sales for Boston Scientific’s MedSurg division – which includes endoscopy, urology and pelvic health devices – were $576m in the second quarter, representing a 28% decline on an organic basis.
Mahoney said procedures to treat kidney stones and benign prostatic hyperplasia have been leading a faster-than-expected recovery for the MedSurg business. He predicted MedSurg will likely have “one of the faster potential recovery curves” in 2020, because these procedures cannot be safely delayed for more than a few months.
The launch of the EXALT D single-use duodenoscope in the US and Europe has been slower than planned due to the pandemic, but the renewed emphasis on infection prevention caused by COVID-19 has increased interest in the device, he said. Sales of EXALT D will also get a boost from the new Medicare pass-through payment for single-use endoscopes enacted by the Centers for Medicare and Medicaid Services. ("Boston Scientifics SingleUse Duodenoscope Hits European Markets After US Clearance" "Medtech Insight" )
The company recently began a limited launch of the SpyGlass Discover digital catheter for both diagnostic and therapeutic applications during endoscopic procedures in the pancreaticobiliary system. Boston Scientific will fully launch SpyGlass Discover in the second half of 2020 and plans to launch one single-use endoscope per year in the next few years to take advantage of the “multi-billion-dollar market opportunity” for these devices, he said.
Mahoney also highlighted the recent decision by the UK’s National Institute of Health and Care Excellence to recommend Boston Scientific’s Rezūm minimally invasive device as a cost-effective treatment for benign prostatic hyperplasia. ("UKs NICE Recommends Boston Scientifics Rezum Steam Treatment For BPH" "Medtech Insight" )
Boston Scientific’s cardiac rhythm and neurology businesses reported sales of $525m in the second quarter, representing a 33% decline on an organic basis, but sales across these businesses trended upward in the second half of the quarter.
Mahoney pointed out that electrophysiology sales were hit particularly hard during the quarter – down 39% year-over-year – because cardiac ablation procedures to treat arrhythmias can often be safely deferred for a few months. Revenue from this division is also beginning to rebound, led by several new products including the POLARx cryoablation catheter and DIRECTSENSE force-sensing ablation catheter.
Boston Scientific’s neuromodulation revenues were down 40% in the quarter. Many spinal cord stimulation and deep brain stimulation procedures can be deferred, so Boston Scientific’s neuromodulation revenues were down 84% year-over-year in April, but have been trending much closer to pre-pandemic levels in the last few weeks, Mahoney said.
By Reed Miller