Boston Scientific Corp said on Thursday it was recalling its Lotus range of heart devices, citing reports of problems with the locking mechanism, sending its shares down 7.3 percent in morning trading.
The products are expected to return to the European market and other regions in the fourth quarter, the company said, noting the issue was caused by excess tension in the pin mechanism introduced during the manufacturing process.
The company's Lotus technology is used in transcatheter aortic valve replacement (TAVR), a minimally invasive procedure designed to replace a narrowed aortic valve that fails to open properly.
Boston Scientific had suspended implants of its next-generation Lotus Edge device in Europe last October over similar concerns, but last month said it had found a fix for the issue.
The company has pushed the submission of its marketing application for the device in the United States to the fourth quarter, and expects to launch it in mid-2018.
This should give longer-term holders the confidence that this is a solvable issue and that Boston Scientific is taking a very conservative approach (as suggested by the timeline delay) in getting this right, Evercore ISI's Vijay Kumar said.
In January, the company said it expected to make the submission in May and launch by the end of 2017.
While the delay is no doubt disappointing, the technology continues be a meaningful opportunity over the medium term, Kumar said.
The company is not updating its full-year outlook as a result, but has slightly lowered its structural heart revenue forecast, which translates into a 2 cent impact on its earnings per share, he added.
The TAVR market could potentially exceed $5 billion by 2021, and grow 10 percent to 15 percent for the foreseeable future, Leerink analysts said in a note on Thursday.
Shares of Boston Scientific's two main competitors rose on the announcement. Edwards Lifesciences Corp was up 8.4 percent at $99.99, while Medtronic Plc inched up about 1 percent to $80.41.