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Boston Scientific (BSX) announced Monday it is recalling of all of its implantable heart defibrillators as it didn't notify regulators of manufacturing changes. The company stated that the safety of patients was never in question and it doesn't believe that doctors need to remove the defibrillators from patients. The manufacturing changes are being described as a "documentation problem," and the company said it is working with the Food and Drug Administration to get the problem fixed. Following the news, the stock fell 12.6% to close at $6.80. According to the report, defibrillators made up 15% of BSX's U.S. revenue a year ago. Furthermore, the company stated that this news could have a "material impact" on 2010 earnings.
This isn't the first time BSX has been in trouble with the FDA for failing to report requirements. Back in 2006, the FDA warned BSX about failing to report problems in its devices and prohibited BSX from releasing new products in the U.S. until these problems were corrected. If that wasn't enough, the company was cited for failing to report two deaths in a clinical trial in 2007.
Noble Financial came out this morning and stated that its checks at BSX indicate that the products could return to the market in five days rather than the months some expect. Considering some estimates place the amount of money in sales lost per day at roughly $5 million, a five-day delay would likely be welcomed over a months-long delay.
Meanwhile, Goldman Sachs downgraded BSX to conviction sell from neutral. The downgrade had shares of BSX trading nearly 3% lower before the opening bell. The stock is now positioned below potential support in the $7.30 region. The good news is that the stock may find some support in the $6 region, which acted as support in late 2008 and early 2009.
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