Boston Scientific posts 1st shortfall in 4 years

Boston Scientific Corp., the state's largest life-sciences company, posted a $269 million loss in the third quarter, stemming largely from a legal settlement with Israeli stent maker Medinol and declining sales of its flagship Taxus stent, the company said yesterday.

The loss was the first in four years for the Natick device maker.

The company's earnings were depressed by a one-time charge of $598 million to pay for a previously disclosed settlement of a lawsuit with its former business partner, Medinol. The Jerusalem-based firm alleged Boston Scientific had set up a secret factory to steal its technology.

Earnings also suffered from decreasing demand for Taxus, which is responsible for about 40 percent of the company's overall sales.

Taxus, a small mesh tube that leaks a drug to keep coronary arteries open, has seen increased competition from rival manufacturer Johnson & Johnson. The New Jersey company, which makes the Cypher stent, has recovered from initial supply and regulatory problems to chip away steadily at Boston Scientific's markey lead.

In a conference call to investors, chief operating officer Paul LaViolette said five of Boston Scientific's six divisions reported double-digit sales growth over last year's third quarter.

But the runaway success of Taxus, the world's largest-selling medical device, has focused investors' attention closely on the stent market. Worldwide, Boston Scientific's third-quarter stent sales declined to $633 million this year from $686 million last year.

Overall, the company reported $1.5 billion in worldwide sales, up 2 percent from the same quarter last year.

The quarterly loss of 33 cents a share compares with a profit a year earlier of 30 cents a share, or $258 million. Excluding certain costs, Boston Scientific said third-quarter profit was 42 cents a share, missing Thomson Financial's average estimate of 44 cents.

LaViolette said the company hoped to boost its share of the US stent market from about 55 percent to 60 percent by the end of the year, but cut its earnings guidance for the full year to a range of $1.81 to $1.85, down from a July estimate of $1.85 to $2.

The company's stock was not severely affected by the earnings news yesterday, losing 44 cents to close at $23.86. Boston Scientific's finance chief in September had warned investors to expect soft third-quarter stent sales.

In a conference call yesterday, chief executive James Tobin called the results a ''good news/bad news" situation, and said he was optimistic about the company's new Liberte stent, which was introduced in Europe in September.

''I think we're in better shape than most people give us credit for," Tobin said, citing the company's investment in research and expansion plans for the company's nonstent divisions.

Tobin also said he has turned more control of the day-to-day business over to LaViolette, but said he was not stepping down any time soon.

''I plan to be here for some time," he said.

Stephen Heuser can be reached at sheuser@globe.com.