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Can Rhythm and Neuro Aid Boston Scientific (BSX) Q2 Earnings?

Boston Scientific CorporationBSX recently renamed the Rhythm Management business as Rhythm and Neuro, which now includes Cardiac Rhythm Management (CRM), Electrophysiology (EP) and Neuromodulation (previously part of the MedSurg segment). This segment emerged as the second largest contributor to Boston Scientific's top line on solid sub-segmental performance in the last reported quarter.

We expect this to get reflected in second-quarter 2018 results, which are scheduled for release on Jul 25 before the market opens.

Click here to know how the company's overall Q2 performance is expected to be.

Key Catalysts

Let us individually study each sub-segment in detail to get a better understanding of the factors expected to drive the top line in the to-be-reported quarter.

CRM

The CRM segment comprises implantable cardioverter defibrillator (ICD), cardiac resynchronization therapy defibrillators (CRT-Ds) and pacemakers. Boston Scientific saw double-digit growth in defibrillator business in the last reported quarter fueled by considerable contributions from the Subcutaneous Implantable Defibrillator (S-ICD).

Also, in the last reported quarter, the company witnessed double-digit growth of the EMBLEM S-ICD and promising uptake of the latest RESONATE platform in Europe and the United States. The platform offers compatibility with the first and only validated heart failure predictive diagnostic in HeartLogic.

Boston Scientific Corporation Price and EPS Surprise

Boston Scientific Corporation Price and EPS Surprise | Boston Scientific Corporation Quote

Management is encouraged by the strong early adoption of this particular platform in Europe to help patients benefit from the programming right at implantation, given the superior longevity of the product.

Furthermore, the company received encouraging response for the advanced Resonate family of ICD and cardiac resynchronization therapy defibrillator (CRT-D) systems featuring the HeartLogic Heart Failure Diagnostic which were launched last September.

Notably, these devices are FDA-approved for conditional use in a magnetic resonance imaging (MRI) environment and help physicians improve heart failure (HF) management through personalized care. Leveraging on the strength in the CRT-D and ICD portfolio, management expects global CRM business to see above-market growth in 2018.

Moreover, Boston Scientific now holds the second largest share in the high-voltage platform. All these are expected to be reflected in the second-quarter 2018 results as well.

However, Brady pacing sales declined slightly as the company faced tough comparisons along with launch of a few competitive products. Further, management expects this softness to continue in the rest of 2018.

Nevertheless, the Zacks Consensus Estimate for CRM revenues of $504 million indicates a rise of 5% from the year-ago quarter.

EP

Boston Scientific witnessed solid contributions from the EP business on higher uptake of the new RHYTHMIA HDx platform in the last reported quarter. Management continues to roll out the HDx platform in Europe and recently launched it in the United States and Japan. Overall, the company continues to expand the toolkit that supports RHYTHMIA HDx, providing ablation technologies that match the excellence of its Mapping System.

In this context, the company expects the full-fledged commercialization of DirectSense technology in Europe and the United States in 2018 followed by a successful initial launch in Europe.

On these positive developments, this sub-segment is expected to continue to strongly contribute to the top line. Further, our estimate for EP revenues of $76 million reflects an increase of 13.4% from a year ago.

Neuromodulation

Revenues from Neuromodulation continued to rise on several product launches, including the WaveWriter Spinal Cord Stim system and Vercise Deep Brain Stimulation (DBS) platforms, in the United States.

Per management, WaveWriter SCS System is the only platform approved by the FDA to simultaneously provide a paresthesia-based and sub-perception therapy for patients suffering from chronic pain. Further, the company witnessed solid contributions from the key geographical regions.

Notably, the recent launches of WaveWriter SCS System and Vercise DBS are expected to continue to drive sales at the Neuromodulation business in second-quarter 2018 as well.

The Zacks Consensus Estimate for Neuromodulation revenues of $181 million indicates a rise of 17.5% from the year-ago quarter

Zacks Rank & Other Stocks to Consider

Boston Scientific carries a Zacks Rank #2 (Buy).

Other top-ranked stocks in the broader medical space are Genomic Health GHDX , Align Technology, Inc. ALGN and Stryker Corporation SYK .

Genomic Health has an expected earnings growth rate of 187.5% for the current quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Align Technology has a projected long-term earnings growth rate of 28.4% and a Zacks Rank of 1.

Stryker has a projected long-term earnings growth rate of 9.7%. The stock carries a Zacks Rank of 2.

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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.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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