The Boston Scientific Fire Sale

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Boston Scientific (BSX) has indicated that it will consider selling two more of its units. Wall St. has speculated that sales of the company’s key products like drug coated stents have fallen so far that the company could have trouble meeting the debt service from the huge loans it took to buy heat device company Guidant.

BSX said that it is looking at selling its cardiac and vascular surgery units, according to The New York Times. Wall St. speculates that sales of the operations could bring in $700 million.

BSX has looked at a potential IPO of one of its units and sales of several others, but the moves will not improve operations. They will only buy the company time. Sales in the June quarter were flat at just over $2 billion and operating income was a modest $280 million. The company’s interest expense was $146 million, so revenue and margins do not have to fall much to cause real trouble.

With the company’s debt well over $8 billion, if BSX cannot get its stent and defibrillator business back on track, the sale of other units won’t matter much in the long run.

Douglas A. McIntyre