Zacks_Analysts' Blog : BSX Settles DOJ Investigation - Analyst Blog

Boston Scientific Corp. (BSX) recently settled the U.S. Department of Justice (DOJ) investigation pertaining to certain post-market surveys conducted by Guidant Corporation before being acquired by Boston Scientific in 2006. Per the terms of the settlement, Boston Scientific has agreed to pay $22 million to DOJ, which was already being fully accrued. The investigation began in 2005.

Boston has also decided to enter into a Corporate Integrity Agreement (CIA) with the Office of Inspector General for the U.S. Department of Health and Human Services that requires enhancements to certain compliance procedures related to financial arrangements with health care providers. These enhancements are related to Boston’s cardiac rhythm management business which it had acquired from Guidant. 

We think that the expense of $22 million in relation to the DOJ investigation will have minimal impact on Boston’s bottom-line. The company reported a strong third quarter in fiscal 2009. Earnings per share were 19 cents, considerably ahead of the Zacks Consensus Estimate of 14 cents and the year-ago earnings of 16 cents. Total revenues were $2,025 million, an increase of roughly 2% year over year.

Boston Scientific manufactures medical devices and products used in a broad range of interventional medical specialties. The company faces significant competition across its product portfolio. The primary competitors include Johnson & Johnson (JNJ), Medtronic Inc. (MDT), Abbott Laboratories (ABT) and St. Jude Medical Inc. (STJ).

Presently, we have a ‘Neutral’ recommendation on Boston Scientific.