BSX Wraps Up Cameron Health Deal - Analyst Blog


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With the completion of the Cameron Health acquisition, Boston Scientific 's ( BSX ) portfolio now includes subcutaneous implantable cardioverter defibrillator, the S-ICD system. We believe the acquisition will strengthen the company's Cardiac Rhythm Management ("CRM") segment.

The S-ICD system scores over traditional ICDs with respect to placement as the former can be placed beneath the skin and leaves the heart and blood vessels untouched. The traditional ICDs, on the other hand, require thin, insulated wires (leads) to pass through the venous system and into the heart.

The S-ICD system received CE Mark approval in 2009 and ever since approximately 1,300 devices have been implanted in patients globally. The device has yet to receive approval in the US but the prospect looks bright with the advisory panel of the US Food and Drug Administration ("FDA") recommending the approval in April this year. Boston Scientific anticipates FDA approval for the S-ICD System in the first half of 2013.

At a recent conference in Boston, Cameron Health presented positive data of the S-ICD system from a study conducted with 230 patients. The company also announced at the conference that the device met both the primary safety and efficacy endpoints in the investigational device exemption ("IDE") study of 330 patients.

Boston Scientific paid $150 million at closing of the transaction and a potential payment of $150 million is to be made upon FDA approval of the S-ICD System. Over the six-year period, following FDA approval of the device, an additional $1.050 billion of potential payments would be made contingent upon achievement of certain revenue-based milestones. The transaction is expected to dilute the 2012 bottom line (on an adjusted basis) by a penny and almost achieve break-even in 2013.

Boston Scientific's focus on portfolio expansion is inevitable in the face of severe headwinds in its core segments of stents and defibrillators. Other players in the medical devices space such as Medtronic ( MDT ) and St Jude Medical ( STJ ) are also resorting to various alternatives to revive their flagging top line.

We have a Neutral recommendation on Boston Scientific. The stock retains a Zacks #3 Rank (hold) in the short term.

BOSTON SCIENTIF (BSX): Free Stock Analysis Report
MEDTRONIC (MDT): Free Stock Analysis Report
ST JUDE MEDICAL (STJ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Stocks: BSX , MDT , STJ

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