Recent bad news for heart patients is also bad news for Boston Scientific (NYSE:BSX), makers of a drug-coated stent that recent studies suggest may increase the possibility of blood clots. The effectiveness of stents over medications was also called into question in a March report.

The one-two punch to Boston Scientific's prize product caused sales for these stents to drop from $647 million last year, 2nd quarter to $437 million. Overall, net sales for the company were down slightly from 2006 year/year. However, this year's totals included revenue from Guidant, acquired in April of 2006, which should have pumped up the revenue.

Net income for the quarter was $0.08 EPS, shy of analyst expectations of $0.094. Backing out the costs of the Guidant purchase, which impacted both this quarter and 2006 2nd quarter, and the company realized only $.0.18 EPS compared to $0.31 in 2006.

The Wall Street Journal (subscription required) reported recently that Moody's is considering downgrading BSX's bonds to junk bond status, as the debt burden of the Guidant purchase looms more problematical with the shortfall in anticipated income. The company now expects income for the balance of 2007 to match 2nd quarter performance, far short of the $2.4 billion it projected when announcing the Guidant deal.

Until the company can show us new products that can replace the stent's profitability, or demonstrate sustainable belt-tightening to raise the bottom line, this is a stock I'd approach with trepidation.