Boston Scientific weathered ongoing COVID-19 and macroeconomic pressures in the second quarter, leading the company to raise its 2022 forecast for organic revenue growth.
CEO Michael Mahoney said on a Wednesday earnings call that the company now expects more “durable and consistent procedural growth” for the remainder of 2022. “We had just tremendous growth in each region,” Mahoney said.
The CEO specifically called out China, where the company grew sales by 9% despite the country implementing lockdowns due to rising COVID-19 cases. Boston Scientific still expects the region to grow sales by double digits this year.
The company raised its forecast for organic revenue growth in 2022 to a range of 8% to 9%, up from a range of 6.5% to 8.5%. Although, Boston Scientific lowered its forecast for reported revenue growth to a range of 6.5% to 7.5%, down from a range of 7% to 9%.
CFO Daniel Brennan told investors that Boston Scientific is raising anticipated headwinds from the economic downturn this year by $75 million, increasing total headwinds expected from 2022 to $375 million more than pre-pandemic levels.
The increased hit is primarily driven by increased materials, freight and labor costs, as well as inefficiencies in manufacturing plants because of problems with availability of materials, said Brennan. He said that macroeconomic impacts are expected to continue into 2023, but did not give specific projections.
Sales are being hurt by hospital staffing shortages, which reduce the number of procedures that can be performed. Mahoney said that staffing shortages may be a bit better now, but they are “still a big issue” that is not going away in the near term.
“It’s not going to be an overnight fix,” Mahoney said. “A staffing shortage rebound … is not baked into our second-half guidance. We assume that the staffing shortage will be with us for a while.”
Stifel analysts wrote in a Wednesday note that the medtech company outperformed their expectations and the second quarter was “as good as can reasonably be expected in this complex operating environment.” They added that the company’s 2022 guidance is encouraging.
Boston Scientific forecasts third quarter sales growth in the range of 6% to 8% on a reported basis compared to the prior year’s quarter.
J.P. Morgan analysts had similar comments, writing that “today’s report met/exceeded our bullish expectation … despite continued macro and currency headwinds.”
Shares of Boston Scientific rose 6.4% to $40.40 in morning trading on Wednesday.