NATICK, Mass. (
) -- Boston Scientific shares are surging in the after-market on Thursday. The medical device company announced that the U.S. Food and Drug Administration provided clearance for manufacturing changes that it made in its defibrillator line.
Boston Scientific had to pull defibrillators from the market in mid-March when it realized that it had not received approval from the FDA for the manufacturing changes.
While the best-case scenario was that the FDA review process would take 30 days, there was no guarantee of how long the situation would linger. Boston Scientific shares slid after the revelations mid-march lower than what many thought was already a share price trough for the beaten-down medical device company.
Within 24 hours, Boston Scientific will be able to have the defibrillators back on the market, the medical device company said in its statement.
Boston Scientific shares were up close to 7% in the after-market on the news of FDA approval.
The defibrillator fiasco was costing Boston Scientific revenue and market share on a daily basis. Permanent market share loss to competitors
St. Jude Medical
was one of the much-debated topics in the wake of the Boston Scientific misstep.
St. Jude and Medtronic shares were unchanged in the after-market session on Thursday.
Some analysts were also of the opinion that the
cash crunch would even cause Boston Scientific to sell other business units.
Wells Fargo Securities estimated that Boston Scientific might face the loss of $469 million in sales during the next two years as a result of the gains made by competitors in market share.
BMO Capital Markets estimated that for every 30 days that the defibrillators were off the market, Boston Scientific lost $106 million in revenues and two cents of earnings per share.
Boston Scientific CEO Ray Elliott, who has a stellar reputation as a turnaround specialist -- and was the second-highest compensated CEO in the U.S. in 2009, according to a study by Equilar -- has faced criticism since taking over Boston Scientific, made the rare "exclamation point" quote in the release announcing the FDA approval sooner than the worst-case scenarios had predicted.
"We are pleased that the FDA has cleared the manufacturing changes.... We are committed to doing the right thing every time, and we acted voluntarily, swiftly and appropriately to ensure compliance with all regulatory requirements. Our entire sales force is energized and hard at work!" Elliott said.
The extent of the losses in revenue, profit and cash flow that Boston Scientific suffered as a result of the defibrillator suspension will be forthcoming in updated first quarter guidance.
-- Reported by Eric Rosenbaum in New York.
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