US medical device maker Guidant, the object of a recent bidding wrangle between Boston Scientific and Johnson & Johnson from which the former emerged victorious, turned in a disappointing set of results for the fourth quarter of 2005, as profits were eaten into by several high-profile pacemaker and defibrillator recalls over the last year.
The group posted net income of $78.9 million, or $0.23 per share, marking a 25% drop from the $104.5 million, or $0.32 a share, generated for the year-ago period. And a similar picture was seen for the full year, with net income was falling 21% to $413.9 million, or $1.24 per share.
Revenue slid 15% to $828.2 million, dragged down by ailing sales of Guidant’s implantable heart defibrillators, down 19% to $372 million, and its pacemakers, falling 24% to $134 million. Poorer performances were also booked for coronary stents and angioplasty devices, both slipping 6% to $117 million and $113 million, respectively. On the plus side, turnover of carotid and biliary surgical systems inched up 2% to $92 million. For the full year, sales dropped 6% to $3.55 billion.
Since the summer of last year, Guidant has recalled or issued safety bulletins for around 88,000 of its defibrillators and for over 200,000 of its pacemakers. This, and the associated looming regulatory investigations and product liability lawsuits, has caused many industry observers to question the firm’s $27 billion price tag, which Boston Scientific will pay if the merger goes ahead as planned.
Guidant’s shares fell 2.1% to close at $73.72 on the New York Stock Exchange after the results were released on Friday. But the disappointing performance was also bad news for Boston Scientific, which saw its stock slip 6.6% to close at $21.63, as a bout of frenzied trading during the day reflected waning confidence in the proposed marriage of the two companies, as well as news that the US Food and Drug Administration has warned Boston Scientific over 'serious' compliance problems at its manufacturing plants.