Guidant Corp., the medical device company that agreed this week to be acquired by Boston Scientific Corp., said Friday its fourth-quarter profit fell 25 percent as a result of highly publicized product recalls that began over the summer.
Net income fell to $78.9 million, or 23 cents per share, for the three months ended Dec. 31 from $104.5 million, or 32 cents per share, a year ago, as sales declined and product recalls and merger expenses continued as Johnson & Johnson sought and failed to get a better deal for the company. Indianapolis-based Guidant reported earnings per share from continuing operations of 25 cents for the latest quarter.
Revenue fell 15 percent to $828.2 million from $968.2 million a year ago, as worldwide sales of implantable heart defibrillators fell 19 percent to $372 million, and worldwide pacemaker sales fell 24 percent to $134 million. Steeper declines were reported in the U.S.
Since June, Guidant has recalled or issued safety advisories for about 88,000 defibrillators and more than 200,000 pacemakers. At least seven deaths have been linked to the faulty devices.
The company faces state and federal regulatory investigations as well as product liability lawsuits. Next month, a Texas jury is expected to begin hearing testimony in the first product liability trial related to the recalls.
Friday's earnings announcement was unexpected, and Guidant spokesman Steve Tragash declined to comment on the financial results.
"I think they're pretty much as expected," said John Putnam, a Stanford Group Co. analyst.
Larry Biegelsen, an analyst at Prudential Equity Group, wrote in a research note that the results showed a "messy quarter due to one-time items."
Analysts surveyed by Thomson Financial expected earnings per share of 34 cents on revenue of $851.3 million.
Guidant accepted a bid Wednesday to be acquired by Natick, Mass.-based Boston Scientific for about $27.2 billion after a furious bidding war with J&J. The deal still needs to be cleared by federal regulators and shareholders at both companies.
For the full year, the company posted net income of $413.9 million, or $1.24 per share, down from $524 million, or $1.63 per share, last year. Revenue fell 6 percent to $3.55 billion from $3.77 billion last year.