Heart stent and defibrillator manufacturer Boston Scientific announced late yesterday that it is exploring an IPO of approximately 20% of its endosurgery unit for over $1 billion. The company forecasts the unit will bring in over $1.4 billion in revenue this year. Boston Scientific shares are down approximately 40% since early last year, and the company has been laboring under a $7.2 billion debt burden since its acquisition of Guidant Corp. last April for $27 billion. Boston Scientific's drug-coated stent business has suffered from concerns the devices might cause fatal clotting, the company has come under Congressional and regulatory scrutiny for its aggressive marketing practices, and Guidant's pacemaker business has been plagued by deadly flaws. Boston Scientific has also been issued warning letters by the FDA about quality control. The company hopes spinning off the endosurgery unit will cause Wall Street to value it more fairly. “We’re just not getting credit for how good a business this is,” said CEO James R. Tobin.
Sources: Wall Street Journal, New York Times, Reuters, MarketWatch
Commentary: Biotechs Make Appearances in Best and Worst Lists of WSJ Review • Boston Scientific Addresses Quality Issues at JPMorgan's HealthCare Conference • JNJ, Boston Scientific Heart Stents Are Safe, Says FDA
Stocks/ETFs to watch: Boston Scientific Corp. (NYSE:BSX). Competitors: Johnson & Johnson (NYSE:JNJ), Medtronic Inc. (NYSE:MDT), Conmed Corp. (NASDAQ:CNMD). ETFs: iShares Dow Jones US Medical Devices (NYSEARCA:IHI)
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