Moody's Investors Service yesterday cut its rating for Boston Scientific Corp. to junk territory, citing the medical device maker's disappointing second-quarter results and other factors.
On Friday, Boston Scientific posted lower-than-expected quarterly profit as sales of its drug-eluting heart stents, its flagship product line, fell 32 percent. Stents are tiny tubular devices that prop open diseased heart arteries.
Moody's cut Boston Scientific's rating two notches to "Ba2," two levels below investment grade, from "Baa3," the lowest investment-grade ranking.
Boston Scientific's outlook is negative, which means Moody's may cut the rating again in the next 12 to 18 months.
Moody's rating actions also reflect uncertainty over asset sales and the potential for regulatory and litigation matters to hamper liquidity.
"It has been -- and continues to be -- our practice to maintain a sound financial position to support our long-term objectives," said Paul Donovan, a spokesman for Boston Scientific. He also noted that the Moody's downgrade alone will not mean an increased interest rate.
Boston Scientific also said yesterday it's considering selling its fluid-management unit to cut costs.
A sale would include operations in Glens Falls, N.Y., and Tullamore, Ireland, the Natick company said in a statement. The business makes products used in angioplasty, the surgical repair of blood vessels.
The number of angioplasty procedures, in which a balloon-tipped catheter is inflated to reopen a clogged blood vessel, fell 2 percent in the second quarter, according to BMO Capital Markets analyst Joanne Wuensch. Boston Scientific officials last week said plans were underway to "reduce expenses and head count."