Full Press Release Details
MARLBOROUGH, Mass. , April 28, 2015 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX ) generated sales of $1.768 billion during the first quarter ended March 31, 2015 , compared to the company's guidance range for the quarter of $1.740 to $1.800 billion . This represents 6 percent operational revenue growth (constant currency basis, excluding divested businesses) and flat revenue on a reported basis, all compared to the prior year period. The company achieved adjusted earnings per share of $0.21 for the period, compared to $0.20 a year ago, which represents 6 percent growth, and reported a GAAP loss of $1 million , or $(0.00) per share, compared to earnings per share of $0.10 a year ago. *
"We achieved strong results in the first quarter, and we continue to build global momentum." said Mike Mahoney , president and chief executive officer, Boston Scientific. "In particular, our Interventional Cardiology business, including structural heart, delivered excellent results. We are also excited about bringing new innovation to patients with the recent Food and Drug Administration approvals of the WATCHMAN™ Left Atrial Appendage Closure Device and the EMBLEM™ Subcutaneous Implantable Defibrillator System."
First quarter financial results and recent developments*:
* Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. + Pending CE Mark, not available for use or sale in the U.S.
Worldwide sales for the first quarter:
| Three Months Ended | |||||||||||||||
| March 31, | % Change | ||||||||||||||
| in millions | 2015 | 2014 | As Reported Basis | Less: Impact of Foreign Currency | Constant Currency Basis | ||||||||||
| Interventional Cardiology | $ | 495 | $ | 497 | (0)% | $ | (42) | (8)% | 8% | ||||||
| Peripheral Interventions | 217 | 203 | 7% | (14) | (7)% | 14% | |||||||||
| Cardiovascular | 712 | 700 | 2% | (56) | (8)% | 10% | |||||||||
| Cardiac Rhythm Management | 456 | 466 | (2)% | (29) | (6)% | 4% | |||||||||
| Electrophysiology | 58 | 58 | (1)% | (3) | (7)% | 6% | |||||||||
| Rhythm Management | 514 | 524 | (2)% | (32) | (6)% | 4% | |||||||||
| Endoscopy | 305 | 314 | (3)% | (21) | (7)% | 4% | |||||||||
| Urology and Women's Health | 123 | 125 | (2)% | (6) | (5)% | 3% | |||||||||
| Neuromodulation | 114 | 109 | 4% | (2) | (2)% | 6% | |||||||||
| MedSurg | 542 | 548 | (1)% | (29) | (5)% | 4% | |||||||||
| Subtotal Core Businesses | 1,768 | 1,772 | (0)% | (117) | (6)% | 6% | |||||||||
| Divested Businesses | — | 2 | N/A | — | N/A | N/A | |||||||||
| Worldwide Net Sales | $ | 1,768 | $ | 1,774 | (0)% | $ | (117) | (6)% | 6% | ||||||
| Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. | |||||||||||||||
| Sales growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates are not prepared in accordance with U.S. GAAP. An explanation of the company's use of these non-GAAP financial measures is included in the exhibits attached to this news release. |
On a consolidated GAAP basis, net loss for the first quarter of 2015 was $1 million , or $(0.00) per share. These results included acquisition- and divestiture-, litigation-, and restructuring-related net charges, pension termination charges, and amortization expense, of $287 million (after-tax) or $0.21 per share. Adjusted net income for the first quarter of 2015, excluding these net charges, was $286 million , or $0.21 per share.
On a consolidated GAAP basis, net income for the first quarter of 2014 was $133 million , or $0.10 per share. These results included intangible asset impairment charges, acquisition- and divestiture-related net credits, litigation-related credits, restructuring-related charges, discrete tax items, and amortization expense, of $135 million (after-tax) or $0.10 per share. Adjusted net income for the first quarter of 2014, excluding these net charges, was $268 million , or $0.20 per share.
Guidance for Full Year and Second Quarter 2015
The company now estimates revenue for the full year 2015 to be in a range of $7.225 to $7.375 billion (compared to prior guidance of $7.300 to $7.500 billion ), which versus the prior year period represents change in a range of negative 2 to flat on a reported basis and a growth range of approximately 4 to 6 percent on an operational basis. The company now estimates income on a GAAP basis in a range of $0.32 to $0.38 per share (compared to prior guidance of $0.42 to $0.48 ), and continues to estimate adjusted earnings, excluding acquisition- and divestiture- , litigation-, and restructuring-related charges, pension termination charges, and amortization expense, in a range of $0.88 to $0.92 per share.
The company estimates sales for the second quarter of 2015 in a range of $1.800 to $1.850 billion . The company estimates earnings on a GAAP basis in a range of $0.09 to $0.11 per share. Adjusted earnings, excluding acquisition- and divestiture-, and restructuring-related charges, and amortization expense, are estimated in a range of $0.20 to $0.22 per share.
Conference Call Information
Boston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. (ET) . The company will webcast the call to interested parties through its website: www.bostonscientific.com . Please see the website for details on how to access the webcast. The webcast will be available for approximately one year on the Boston Scientific website.
About Boston Scientific Boston Scientific transforms lives through innovative medical solutions that improve the health of patients around the world. As a global medical technology leader for more than 35 years, we advance science for life by providing a broad range of high performance solutions that address unmet patient needs and reduce the cost of healthcare. For more information, visit www.bostonscientific.com and connect on Twitter and Facebook .
Cautionary Statement Regarding Forward-Looking Statements This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words like "anticipate," "expect," "project," "believe," "plan," "estimate," "intend" and similar words. These forward-looking statements are based on our beliefs, assumptions and estimates using information available to us at the time and are not intended to be guarantees of future events or performance. These forward-looking statements include, among other things, statements regarding our expected net sales, GAAP and operational revenue growth rates, GAAP earnings and adjusted earnings for the second quarter and full year 2015; our financial performance; our business plans; and our positioning for revenue and earnings growth. If our underlying assumptions turn out to be incorrect, or if certain risks or uncertainties materialize, actual results could vary materially from the expectations and projections expressed or implied by our forward-looking statements. These risks and uncertainties, in some cases, have affected and in the future could affect our ability to implement our business strategy and may cause actual results to differ materially from those contemplated by the statements expressed in this press release. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.
Use of Non-GAAP Financial Information A reconciliation of the company's non-GAAP financial measures to the corresponding GAAP measures, and an explanation of the company's use of these non-GAAP financial measures, is included in the exhibits attached to this news release.
| CONTACT: | |
| Media: | Kelly Leadem |
| 508-683-5543 (office) | |
| Media Relations | |
| Boston Scientific Corporation | |
| [email protected] |
| Investors: | Susie Lisa, CFA |
| 508-683-5565 (office) | |
| Investor Relations | |
| Boston Scientific Corporation | |
| [email protected] |
| BOSTON SCIENTIFIC CORPORATION | ||||||
| CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| in millions, except per share data | 2015 | 2014 | ||||
| Net sales | $ | 1,768 | $ | 1,774 | ||
| Cost of products sold | 520 | 537 | ||||
| Gross profit | 1,248 | 1,237 | ||||
| Operating expenses: | ||||||
| Selling, general and administrative expenses | 668 | 666 | ||||
| Research and development expenses | 192 | 191 | ||||
| Royalty expense | 17 | 40 | ||||
| Amortization expense | 113 | 109 | ||||
| Intangible asset impairment charges | — | 55 | ||||
| Contingent consideration expense (benefit) | 27 | (22) | ||||
| Restructuring charges | 6 | 20 | ||||
| Gain on divestiture | — | (12) | ||||
| Pension termination charges | 8 | — | ||||
| Litigation-related charges (credits) | 193 | (7) | ||||
| 1,224 | 1,040 | |||||
| Operating income (loss) | 24 | 197 | ||||
| Other income (expense): | ||||||
| Interest expense | (60) | (54) | ||||
| Other, net | (15) | 3 | ||||
| Income (loss) before income taxes | (51) | 146 | ||||
| Income tax expense (benefit) | (50) | 13 | ||||
| Net income (loss) | $ | (1) | $ | 133 | ||
| Net income (loss) per common share - basic | $ | (0.00) | $ | 0.10 | ||
| Net income (loss) per common share - assuming dilution | $ | (0.00) | $ | 0.10 | ||
| Weighted-average shares outstanding | ||||||
| Basic | 1,333.7 | 1,321.7 | ||||
| Assuming dilution | 1,333.7 | 1,349.2 |
| BOSTON SCIENTIFIC CORPORATION | |||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||||
| As of | |||||||||
| March 31, | December 31, | ||||||||
| in millions, except share data | 2015 | 2014 | |||||||
| (Unaudited) | |||||||||
| ASSETS | |||||||||
| Current assets: | |||||||||
| Cash and cash equivalents | $ | 242 | $ | 587 | |||||
| Trade accounts receivable, net | 1,161 | 1,183 | |||||||
| Inventories | 958 | 946 | |||||||
| Deferred and prepaid income taxes | 339 | 447 | |||||||
| Other current assets | 489 | 443 | |||||||
| Total current assets | 3,189 | 3,606 | |||||||
| Property, plant and equipment, net | 1,458 | 1,507 | |||||||
| Goodwill | 5,896 | 5,898 | |||||||
| Other intangible assets, net | 5,499 | 5,606 | |||||||
| Other long-term assets | 430 | 425 | |||||||
| $ | 16,472 | $ | 17,042 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current liabilities: | |||||||||
| Current debt obligations | $ | 423 | 403 | ||||||
| Accounts payable | 228 | 262 | |||||||
| Accrued expenses | 1,512 | 1,950 | |||||||
| Other current liabilities | 300 | 231 | |||||||
| Total current liabilities | 2,463 | 2,846 | |||||||
| Long-term debt | 3,845 | 3,859 | |||||||
| Deferred income taxes | 963 | 1,214 | |||||||
| Other long-term liabilities | 2,700 | 2,666 | |||||||
| Commitments and contingencies | |||||||||
| Stockholders' equity | |||||||||
| Preferred stock, $.01 par value - authorized 50,000,000 | |||||||||
| shares, none issued and outstanding | |||||||||
| Common stock, $.01 par value - authorized 2,000,000,000 | 16 | 16 | |||||||
| shares - issued 1,587,583,586 shares as of March 31, 2015 | |||||||||
| and 1,575,018,236 shares as of December 31, 2014 | |||||||||
| Treasury stock, at cost - 247,566,270 shares as of March 31, | (1,717) | (1,717) | |||||||
| 2015 and 247,566,270 shares as of December 31, 2014 | |||||||||
| Additional paid-in capital | 16,750 | 16,703 | |||||||
| Accumulated deficit | (8,690) | (8,689) | |||||||
| Accumulated other comprehensive income (loss), net of tax | 142 | 144 | |||||||
| Total stockholders' equity | 6,501 | 6,457 | |||||||
| $ | 16,472 | $ | 17,042 |
| BOSTON SCIENTIFIC CORPORATION | |||||||||||||
| NON-GAAP NET INCOME AND NET INCOME PER COMMON SHARE RECONCILIATIONS | |||||||||||||
| (Unaudited) | |||||||||||||
| Three Months Ended March 31, 2015 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | (51) | $ | 50 | $ | (1) | $ | (0.00) | |||||
| Non-GAAP adjustments: | |||||||||||||
| Acquisition- and divestiture-related net charges (b) | 42 | 1 | 43 | 0.03 | * | ||||||||
| Restructuring and restructuring-related net charges (c) | 22 | (4) | 18 | 0.01 | * | ||||||||
| Pension termination charges | 8 | (3) | 5 | 0.00 | * | ||||||||
| Litigation-related charges | 193 | (70) | 123 | 0.10 | * | ||||||||
| Amortization expense | 113 | (15) | 98 | 0.07 | * | ||||||||
| Adjusted net income | $ | 327 | $ | (41) | $ | 286 | $ | 0.21 | * | ||||
| * | Assumes dilution of 24.0 million shares for the three months ended March 31, 2015 for all or a portion of these non-GAAP adjustments. | ||||||||||||
| Three Months Ended March 31, 2014 | |||||||||||||
| in millions, except per share data | Pre-Tax | Tax Impact (a) | After-Tax | Impact per diluted share | |||||||||
| GAAP net income (loss) | $ | 146 | $ | (13) | $ | 133 | $ | 0.10 | |||||
| Non-GAAP adjustments: | |||||||||||||
| Intangible asset impairment charges | 55 | (6) | 49 | 0.04 | |||||||||
| Acquisition- and divestiture-related net credits (d) | (27) | (1) | (28) | (0.02) | |||||||||
| Restructuring and restructuring-related net charges (e) | 28 | (7) | 21 | 0.01 | |||||||||
| Discrete tax items | — | 2 | 2 | 0.00 | |||||||||
| Litigation-related credits | (7) | 1 | (6) | 0.00 | |||||||||
| Amortization expense | 109 | (12) | 97 | 0.07 | |||||||||
| Adjusted net income | $ | 304 | $ | (36) | $ | 268 | $ | 0.20 | |||||
| (a) Amounts are tax effected at the company's effective tax rate, unless the amount is a significant unusual or infrequently occurring item in accordance with FASB Accounting Standards Codification section 740-270-30, "General Methodology and Use of Estimated Annual Effective Tax Rate." | |||||||||||||
| (b) In the first quarter of 2015, pre-tax acquisition- and divestiture-related net charges were $42 million, of which $4 million was recorded in cost of products sold, $7 million was recorded in selling, general and administrative expenses,$27 million was recorded as contingent consideration expense, and $4 million was recorded as interest expense. | |||||||||||||
| (c) In the first quarter of 2015, pre-tax restructuring charges were $6 million and pre-tax restructuring- related charges were $16 million, of which $8 million was recorded in cost of products sold and $8 million was recorded in selling, general and administrative expenses. | |||||||||||||
| (d) In the first quarter of 2014, pre-tax acquisition- and divestiture-related net credits were $27 million, of which charges of $1 million were recorded in cost of products sold, charges of $5 million were recorded in selling, general and administrative expenses, $22 million was recorded as contingent consideration benefit, $12 million was recorded as gain on divestiture, and charges of $1 million were recorded within Other, net. | |||||||||||||
| (e) In the first quarter of 2014, pre-tax restructuring charges were $20 million and pre-tax restructuring- related charges were $8 million, of which $2 million was recorded in cost of products sold and $6 million was recorded in selling, general and administrative expenses. | |||||||||||||
| An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. |
| BOSTON SCIENTIFIC CORPORATION | |||||||||
| SEGMENT INFORMATION | |||||||||
| (Unaudited) | |||||||||
| Three Months Ended | |||||||||
| SEGMENT NET SALES* | March 31, | ||||||||
| in millions | 2015 | 2014 | Change | ||||||
| Interventional Cardiology | $ | 541 | $ | 501 | 8% | ||||
| Peripheral Interventions | 232 | 204 | 14% | ||||||
| Cardiovascular | 773 | 705 | 10% | ||||||
| Cardiac Rhythm Management | 483 | 464 | 4% | ||||||
| Electrophysiology | 61 | 58 | 6% | ||||||
| Rhythm Management | 544 | 522 | 4% | ||||||
| Endoscopy | 328 | 316 | 4% | ||||||
| Urology and Women's Health | 130 | 126 | 3% | ||||||
| Neuromodulation | 116 | 109 | 6% | ||||||
| MedSurg | 574 | 551 | 4% | ||||||
| Subtotal Core Businesses | 1,891 | 1,778 | 6% | ||||||
| Divested Businesses | — | 2 | N/A | ||||||
| Foreign Currency | (123) | (6) | N/A | ||||||
| Worldwide Net Sales | $ | 1,768 | $ | 1,774 | (0)% | ||||
| Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. | |||||||||
| Three Months Ended | |||||||||
| SEGMENT OPERATING INCOME* | March 31, | ||||||||
| in millions | 2015 | 2014 | |||||||
| Segment operating income | |||||||||
| Cardiovascular | $ | 236 | $ | 171 | |||||
| Rhythm Management | 78 | 66 | |||||||
| MedSurg | 166 | 168 | |||||||
| Operating income allocated to reportable segments | 480 | 405 | |||||||
| Corporate expenses and currency exchange | (82) | (50) | |||||||
| Goodwill and other intangible asset impairment charges; acquisition-, divestiture-, restructuring-, and litigation-related charges and credits; and pension termination charges | (261) | (49) | |||||||
| Amortization expense | (113) | (109) | |||||||
| Operating income (loss) | $ | 24 | $ | 197 | |||||
| *We measure and evaluate our reportable segments based on segment net sales and operating income, excluding the impact of changes in foreign currency and sales from divested businesses. Sales generated from reportable segments and divested businesses, as well as operating results of reportable segments and corporate expenses, are based on internally-derived standard currency exchange rates, which may differ from year to year, and do not include intersegment profits. We exclude from segment operating income certain corporate-related expenses and certain transactions or adjustments that our chief operating decision maker considers to be non-recurring and/or non-operational, such as amounts related to goodwill and other intangible asset impairment charges; acquisition and divestiture-, restructuring- and litigation-related charges and credits; pension termination charges; and amortization expense. Although we exclude these amounts from segment operating income, they are included in reported consolidated operating income (loss) and are included in the reconciliation above. | |||||||||
| An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. |
| BOSTON SCIENTIFIC CORPORATION | |||||||||||||||||||||
| WORLDWIDE CARDIAC RHYTHM MANAGEMENT (CRM) SALES | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended March 31 | |||||||||||||||||||||
| in millions | U.S. | International | Worldwide | ||||||||||||||||||
| Q1 2015 | Q1 2014 | Q1 2015 | Q1 2014 | Q1 2015 | Q1 2014 | ||||||||||||||||
| Defibrillator systems | $ | 220 | $ | 208 | $ | 115 | $ | 131 | $ | 335 | $ | 339 | |||||||||
| Pacemaker systems | 58 | 62 | 63 | 65 | 121 | 127 | |||||||||||||||
| Total CRM products | $ | 278 | $ | 270 | $ | 178 | $ | 196 | $ | 456 | $ | 466 |
| BOSTON SCIENTIFIC CORPORATION | |||
| INTERNATIONAL NET SALES | |||
| (Unaudited) | |||
| Q1 2015 International Net Sales as compared to Q1 2014 | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales | (7)% | 7% | (14)% |
| Q1 2015 Europe Net Sales as compared to Q1 2014 | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales | (11)% | 6% | (17)% |
| Q1 2015 Asia, Middle East and Africa (AMEA) Net Sales as compared to Q1 2014 | |||
| Estimated | |||
| As Reported | Constant | Impact of | |
| Currency | Currency | Foreign | |
| Basis | Basis | Currency | |
| Percentage change in net sales | (3)% | 7% | (10)% |
An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document.
| BOSTON SCIENTIFIC CORPORATION | ||||||||||||||||||||
| ESTIMATED NON-GAAP NET INCOME PER COMMON SHARE RECONCILIATIONS | ||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||
| Q2 and Full Year 2015 Earnings Per Share Guidance | ||||||||||||||||||||
| Q2 2015 Estimate | Full Year 2015 Estimate | Prior Full Year 2015 Estimate | ||||||||||||||||||
| (Low) | (High) | (Low) | (High) | (Low) | (High) | |||||||||||||||
| GAAP results | $ | 0.09 | $ | 0.11 | $ | 0.32 | $ | 0.38 | $ | 0.42 | $ | 0.48 | ||||||||
| Estimated acquisition and divestiture-related net charges | 0.01 | 0.01 | 0.07 | 0.06 | 0.06 | 0.06 | ||||||||||||||
| Estimated restructuring-related charges | 0.03 | 0.03 | 0.08 | 0.08 | 0.09 | 0.08 | ||||||||||||||
| Estimated amortization expense | 0.07 | 0.07 | 0.28 | 0.28 | 0.28 | 0.28 | ||||||||||||||
| Estimated pension termination charges | — | — | 0.03 | 0.02 | 0.03 | 0.02 | ||||||||||||||
| Litigation-related charges | — | — | 0.10 | 0.10 | — | — | ||||||||||||||
| Adjusted results | $ | 0.20 | $ | 0.22 | $ | 0.88 | $ | 0.92 | $ | 0.88 | $ | 0.92 |
An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document.
Use of Non-GAAP Financial Measures
To supplement our financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States .
The GAAP financial measure most directly comparable to adjusted net income is GAAP net income and the GAAP financial measure most directly comparable to adjusted net income per share is GAAP net income per share. To calculate revenue growth rates that exclude the impact of changes in foreign currency exchange rates, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. The GAAP financial measure most directly comparable to this non-GAAP financial measure and the non-GAAP financial measure that excludes sales from divested businesses is growth rate percentages using net sales on a GAAP basis. Reconciliations of each of these non-GAAP financial measures to the corresponding GAAP financial measure are included in the accompanying schedules.
The following is an explanation of each of the adjustments that management excluded as part of these non-GAAP financial measures for the three months ended March 31, 2015 and 2014, and for the forecasted three month period ending June 30, 2015 and full year ending December 31, 2015 , as well as reasons for excluding each of these individual items:
Adjusted Net Income and Adjusted Net Income per Share:
Revenue Growth Rates Excluding the Impact of Sales from Divested Businesses and/or Changes in Foreign Currency Exchange Rates
Adjusted net income and adjusted net income per share that exclude certain amounts, and revenue growth rates that exclude the impact of sales from divested businesses and/or changes in foreign currency exchange rates, are not in accordance with U.S. GAAP and should not be considered in isolation from or as a replacement for the most directly comparable GAAP financial measures. Further, other companies may calculate these non-GAAP financial measures differently than we do, which may limit the usefulness of those measures for comparative purposes.
SOURCE Boston Scientific Corporation