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How Will the Lotus Recall Affect BSX’s 2017 Performance?

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Nov. 20 2020, Updated 9:30 p.m. ET

BSX initiates fixes for the defect

Boston Scientific (BSX) recalled its Lotus Valve systems in February 2017 due to manufacturing defects. The company has begun implementing the necessary fixes, and it expects to relaunch the product in the Europe and other international markets in 4Q17.

According to Boston Scientific, “The reported issue – inability to fully lock and release the device – occurs during the procedure, and as such, there are no safety concerns for patients who already have an implanted Lotus Valve.”

The premarket approval application for the Lotus Edge is expected to be filed with the FDA by 4Q17 and approved by mid-2018. For details on the Lotus Edge valve system, read Boston Scientific’s Lotus Edge Valve System Gets Approval in Europe.

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Impact on BSX’s 2017 performance

Despite the recently announced fixes being implemented, the recall developments are expected to impact Boston Scientific’s growth in 2017. The recall had an impact on the company’s 1Q17 performance, as we can see in the chart above. For more details on BSX’s 1Q17 performance, read Your Highlights of Boston Scientific’s 1Q17 Earnings.

Boston Scientific’s stunted growth is expected to benefit its competitors Edwards Lifesciences (EW), Medtronic (MDT), and Abbott Laboratories (ABT) and provide them with the opportunity to gain market share.

Though Boston Scientific has maintained its 2017 guidance despite its Lotus devices’ being recalled, it lowered its structural heart sales guidance by $50 million. The impact on its EPS (earnings per share) is expected to be ~$0.02.

Investors interested in gaining exposure to Boston Scientific while avoiding company-specific risks can invest in the Vanguard Total Stock Market ETF (VTI). VTI holds ~0.15% of its total holdings in BSX.

Next, let’s discuss the recent approval of Boston Scientific’s Resonate defibrillators in the United States.

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