Oct. 19 (Bloomberg) -- Boston Scientific Corp., the world's biggest maker of drug-coated heart stents, said profit beat analysts' estimates as sales of the artery-opening devices fell less than expected. The stock gained the most since August.

Third-quarter earnings were $299 million, or 20 cents a share, excluding the costs of selling a division. That beat the 9-cent average of 15 analysts in a Bloomberg survey. Write-offs from the sale contributed to a net loss of $272 million, or 18 cents a share. Revenue rose.

Chief Executive Officer James R. Tobin is divesting assets and firing workers to reduce expenses after safety concerns hurt sales of two of the company's biggest products. The third-quarter sales showed some recovery in both stents and implantable cardiac defibrillators.

``Things seem to be turning around for them a bit,'' said Jan Wald, a Boston-based analyst at Stanford Group, in an interview. ``It's clear now that Johnson & Johnson lost share to Boston Scientific'' in drug-coated stents.

Boston Scientific gained 57 cents, or 4.1 percent, to $14.42 at 4 p.m. in New York Stock Exchange composite trading, the biggest one-day gain since Aug. 9. The Natick, Massachusetts- based company fell 7.8 percent this week through yesterday.

`A Better Feel'

``This quarter had a better feel to it,'' Tobin said on a conference call. ``Our attention is now clearly on revenue growth driven by new device and lead technologies that are based on a revamped quality system.''

The company recorded a charge of $435 million as it wrote off $352 million of goodwill from the planned sale of its auditory and drug pump businesses and accounted for $75 million of research and development from the acquisition of Remon Medical Technologies Inc.

Total sales rose 1.1 percent to $2.05 billion, close to the $2.06 billion average of 16 analysts surveyed by Bloomberg. In the third quarter of 2006, Boston Scientific had net income of $76 million, or 5 cents a share.

Worldwide sales of drug-coated stents dropped 22 percent to $448 million, the company said in a statement. U.S. sales fell 38 percent to $240 million. J&J reported a 44 percent drop earlier this week in its U.S. sales of the same type of stent. Boston Scientific's Taxus and J&J's Cypher are the only drug-coated heart stents sold in the U.S.

Blood Clots

Demand for drug-coated stents by U.S. doctors fell after researchers in September 2006 found a link between the stents and potentially fatal clots. Drug coatings are intended to retard tissue growth that can reclog a cleared artery. Heart specialists say models without drug coatings, costing about $800, are safer for the sickest patients than the coated versions, which cost about $2,100.

Cardiologists are ``beginning to clearly understand the superior efficacy and at least comparable safety of drug-eluting stents versus bare following a year of costly controversy,'' chief operating officer Paul LaViolette said on today's conference call.

Boston Scientific said revenue from implantable cardiac defibrillators rose 18 percent to $372 million in the third quarter. Sales of the matchbox-sized devices, which cost about $30,000 and shock a faltering heart back into a normal rhythm, are recovering after a recall hurt global demand. Total cardiac rhythm management sales rose 16 percent to $517 million.

Loss Projection

Boston Scientific projected a fourth-quarter loss of 2 to 9 cents a share, without accounting for any gains or losses from selling business units. Adjusted earnings, excluding some charges, will be 14 to 19 cents a share, the company said.

This week Boston Scientific said it will eliminate 2,300 positions worldwide, or 13 percent of its non-manufacturing workforce. The job cuts will lead to pretax charges of $450 million to $475 million, or 20 to 22 cents a share, the company said Oct. 17. Costs of as much as $300 million will be booked in the fourth quarter.

The restructuring is needed to ``catch up'' with the scale of a business that has grown via acquisitions, and to adjust to the ``volatility'' of its products, Tobin said.

The move is in addition to the sale of units representing about $550 million in sales this year, which will reduce headcount by an additional 2,000, the company said.

Off the Ratings Watch

Standard & Poor's Ratings Services removed Boston Scientific from negative credit watch, where the company was placed Aug. 3, and cited ``more aggressive cost-cutting efforts.''

Boston Scientific entered the market for defibrillators when it spent $27.5 billion outbidding Johnson & Johnson for Guidant Corp. in April 2006. The previous year, Guidant recalled 109,000 faulty defibrillators linked to seven deaths, spurring lawsuits and leading to sanctions from the U.S. Food and Drug Administration.

The agency cleared Boston Scientific six months ago to propose new electronic devices. The company won European approval this month of its first new implantable heart defibrillator since acquiring Guidant.

To contact the reporter on this story: Beth Jinks in New York at bjinks1@bloomberg.net

Last Updated: October 19, 2007 16:10 EDT