Full Press Release Details
MARLBOROUGH, Mass. , April 29, 2020 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX ) generated sales of $2.543 billion during the first quarter of 2020. This represents growth of 2.0 percent on a reported basis, 3.2 percent on an operational 1 basis and a decline of 2.9 percent on an organic 2 basis, all compared to the prior year period. The company reported GAAP earnings of $11 million or $0.01 per share (EPS), compared to GAAP earnings of $424 million or $0.30 per share a year ago, and achieved adjusted earnings per share of $0.28 for the period, compared to $0.35 a year ago.
"During this global pandemic, we are grounded in the urgency of providing important medical products and therapies to those who need them--in particular, many patients with acute needs," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "We continue to balance short-term adjustments to our plans while strengthening our long-term strategy to serve our customers and deliver high performance. I'm confident in our ability to bring meaningful, innovative products to market, and grateful for our team's winning spirit as we navigate the impact of these challenges."
First quarter financial results and recent developments:
| 1. Operational revenue growth excludes the impact of foreign currency fluctuations. |
| 2 . Organic revenue growth excludes the impact of foreign currency fluctuations and sales from the recent acquisitions of Vertiflex, Inc. and BTG plc (BTG), each with no prior year comparable sales. Organic revenue growth also excludes the impact of the divestiture of our global embolic microspheres portfolio, a transaction entered into in connection with obtaining the antitrust clearances required to complete the BTG transaction. |
| 3. We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities. |
| 4. We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices (Medical Devices). As part of our acquisition of BTG on August 19, 2019, we acquired an Interventional Medicine business, which is now included in our Peripheral Interventions operating segment's revenues from the date of acquisition. |
| 5. As part of our acquisition of BTG on August 19, 2019, we acquired a specialty pharmaceuticals business (Specialty Pharmaceuticals). Subsequent to acquisition, Specialty Pharmaceuticals is now a stand-alone operating segment presented alongside our Medical Device reportable segments. Specialty Pharmaceuticals net sales are substantially U.S. based. Our chief operating decision maker (CODM) reviews financial information of our globally managed Specialty Pharmaceuticals operating segment at the worldwide level without further disaggregation into regional results. As such, Specialty Pharmaceuticals net sales are presented globally, and our Medical Devices reportable segments regional net sales results do not include Specialty Pharmaceuticals. |
| 6. Foley, T. R., Waldo, S. W., & Armstrong, E. J. (2015, November 24). Iliofemoral Deep Vein Thrombosis. Retrieved from https://www.acc.org/latest-in-cardiology/articles/2015/11/23/13/39/iliofemoral-deep-vein-thrombosis |
Net sales for the first quarter by business and region:
| Change | |||||||||||||||||
| Three Months Ended March 31, | Reported Basis | Less: Impact of Foreign Currency Fluctuations | Operational Basis | Less: Impact of Recent Acquisitions / Divestitures | Organic Basis | ||||||||||||
| (in millions) | 2020 | 2019 | |||||||||||||||
| Endoscopy | $ | 442 | $ | 440 | 0.5% | (1.0)% | 1.5% | —% | 1.5% | ||||||||
| Urology and Pelvic Health | 332 | 326 | 1.9% | (1.0)% | 2.9% | —% | 2.9% | ||||||||||
| MedSurg | 774 | 766 | 1.1% | (1.0)% | 2.1% | —% | 2.1% | ||||||||||
| Cardiac Rhythm Management | 437 | 491 | (11.0)% | (1.1)% | (9.9)% | —% | (9.9)% | ||||||||||
| Electrophysiology | 74 | 79 | (6.2)% | (1.0)% | (5.2)% | —% | (5.2)% | ||||||||||
| Neuromodulation | 191 | 186 | 2.4% | (0.8)% | 3.2% | 9.8% | (6.6)% | ||||||||||
| Rhythm and Neuro | 703 | 757 | (7.2)% | (1.0)% | (6.2)% | 2.4% | (8.6)% | ||||||||||
| Interventional Cardiology | 633 | 661 | (4.2)% | (1.5)% | (2.7)% | —% | (2.7)% | ||||||||||
| Peripheral Interventions | 392 | 311 | 26.3% | (1.3)% | 27.6% | 29.7% | (2.1)% | ||||||||||
| Cardiovascular | 1,026 | 972 | 5.5% | (1.5)% | 7.0% | 9.5% | (2.5)% | ||||||||||
| Medical Devices 4 | 2,502 | 2,493 | 0.4% | (1.1)% | 1.5% | 4.4% | (2.9)% | ||||||||||
| Specialty Pharmaceuticals 5 | 41 | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||
| Net Sales | $ | 2,543 | $ | 2,493 | 2.0% | (1.2)% | 3.2% | 6.1% | (2.9)% |
| Change | |||||||||||||
| Three Months Ended March 31, | Reported Basis | Less: Impact of Foreign Currency Fluctuations | Operational Basis | ||||||||||
| (in millions) | 2020 | 2019 | |||||||||||
| U.S. | $ | 1,452 | $ | 1,403 | 3.5% | —% | 3.5% | ||||||
| EMEA | 552 | 561 | (1.6)% | (2.9)% | 1.3% | ||||||||
| APAC | 409 | 437 | (6.4)% | (1.6)% | (4.8)% | ||||||||
| Latin America and Canada | 89 | 92 | (3.1)% | (6.7)% | 3.6% | ||||||||
| Medical Devices 4 | 2,502 | 2,493 | 0.4% | (1.1)% | 1.5% | ||||||||
| Specialty Pharmaceuticals 5 | 41 | n/a | n/a | n/a | n/a | ||||||||
| Net Sales | $ | 2,543 | $ | 2,493 | 2.0% | (1.2)% | 3.2% | ||||||
| Emerging Markets 3 | $ | 267 | $ | 297 | (10.1)% | (4.7)% | (5.4)% | ||||||
| Amounts may not add due to rounding. Growth rates are based on actual, non-rounded amounts and may not recalculate precisely. | |||||||||||||
| Sales growth rates that exclude the impact of foreign currency fluctuations and/or the impact of recent aforementioned acquisitions / divestitures are not prepared in accordance with U.S. GAAP. |
Guidance for Remainder of 2020
On March 30, 2020 , the company withdrew its sales and EPS guidance for the full year 2020, originally provided on February 5, 2020 . Due to the uncertain scope and duration of the COVID-19 pandemic, timing of global recovery and economic normalization, the company is unable to estimate the overall impacts on its operations and financial results for the remainder of 2020.
Conference Call Information
Boston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. EDT . 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 40 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 business plans and product performance and impact, the timing of the closing of the transaction to divest our commercial Intrauterine Health franchise, and the impact of the COVID-19 outbreak on the Company's results of operations. 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 factors, in some cases, have affected and in the future (together with other factors) 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.
Note : Amounts reported in millions within this press release are computed based on the amounts in thousands. As a result, the sum of the components reported in millions may not equal the total amount reported in millions due to rounding. Certain columns and rows within tables may not add due to the use of rounded numbers. Percentages presented are calculated from the underlying numbers in dollars.
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 press release.
| CONTACT: | ||||
| Media: | Kate Haranis | Investors: | Susie Lisa, CFA | |
| 508-683-6585 (office) | 508-683-5565 (office) | |||
| Media Relations | Investor Relations | |||
| Boston Scientific Corporation | Boston Scientific Corporation | |||
| [email protected] | [email protected] |
| BOSTON SCIENTIFIC CORPORATION | ||||||
| CONDENSED CONSOLIDATED GAAP RESULTS OF OPERATIONS | ||||||
| (Unaudited) | ||||||
| Three Months Ended March 31, | ||||||
| in millions, except per share data | 2020 | 2019 | ||||
| Net sales | $ | 2,543 | $ | 2,493 | ||
| Cost of products sold | 806 | 730 | ||||
| Gross profit | 1,737 | 1,763 | ||||
| Operating expenses: | ||||||
| Selling, general and administrative expenses | 978 | 869 | ||||
| Research and development expenses | 300 | 280 | ||||
| Royalty expense | 12 | 16 | ||||
| Amortization expense | 201 | 160 | ||||
| Intangible asset impairment charges | 198 | 67 | ||||
| Contingent consideration expense (benefit) | (108) | (28) | ||||
| Restructuring charges (credits) | 10 | 6 | ||||
| Litigation-related net charges (credits) | — | (148) | ||||
| 1,591 | 1,222 | |||||
| Operating income (loss) | 146 | 541 | ||||
| Other income (expense): | ||||||
| Interest expense | (88) | (109) | ||||
| Other, net | (36) | 25 | ||||
| Income (loss) before income taxes | 22 | 457 | ||||
| Income tax expense (benefit) | 12 | 33 | ||||
| Net income (loss) | $ | 11 | $ | 424 | ||
| Net income (loss) per common share - basic | $ | 0.01 | $ | 0.31 | ||
| Net income (loss) per common share - assuming dilution | $ | 0.01 | $ | 0.30 | ||
| Weighted-average shares outstanding | ||||||
| Basic | 1,397.4 | 1,387.7 | ||||
| Assuming dilution | 1,413.5 | 1,408.4 |
| BOSTON SCIENTIFIC CORPORATION | ||||||||||||||||||||||||||||
| NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||
| (in millions, except per share data) | Cost of Products Sold | SG&A Expenses | R&D Expenses | Operating Income (Loss) | Pre-Tax Income (Loss) | Net Income (Loss) | Impact per Share | |||||||||||||||||||||
| GAAP net income (loss) | $ | 806 | $ | 978 | $ | 300 | $ | 146 | $ | 22 | $ | 11 | $ | 0.01 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 201 | 201 | 180 | 0.13 | |||||||||||||||||||||
| Intangible asset impairment charges | — | — | — | 198 | 198 | 168 | 0.12 | |||||||||||||||||||||
| Acquisition / divestitures-related net charges (credits) | (37) | (28) | (12) | (32) | (23) | (36) | (0.03) | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (15) | (4) | — | 30 | 30 | 25 | 0.02 | |||||||||||||||||||||
| EU MDR implementation costs | (4) | (1) | — | 5 | 5 | 5 | 0.00 | |||||||||||||||||||||
| Deferred tax expenses (benefits) | — | — | — | — | — | 26 | 0.02 | |||||||||||||||||||||
| Discrete tax items | — | — | — | — | — | 13 | 0.01 | |||||||||||||||||||||
| Adjusted net income | $ | 749 | $ | 945 | $ | 288 | $ | 549 | $ | 434 | $ | 391 | $ | 0.28 | ||||||||||||||
| Three Months Ended March 31, 2019 | ||||||||||||||||||||||||||||
| (in millions, except per share data) | Cost of Products Sold | SG&A Expenses | R&D Expenses | Operating Income (Loss) | Pre-Tax Income (Loss) | Net Income (Loss) | Impact per Share | |||||||||||||||||||||
| GAAP net income (loss) | $ | 730 | $ | 869 | $ | 280 | $ | 541 | $ | 457 | $ | 424 | $ | 0.30 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 160 | 161 | 143 | 0.10 | |||||||||||||||||||||
| Intangible asset impairment charges | — | — | — | 67 | 67 | 62 | 0.04 | |||||||||||||||||||||
| Acquisition-related net charges (credits) | (13) | (12) | (8) | 5 | (24) | (22) | (0.02) | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (4) | (2) | — | 12 | 12 | 10 | 0.01 | |||||||||||||||||||||
| Litigation-related net charges (credits) | — | — | — | (148) | (148) | (127) | (0.09) | |||||||||||||||||||||
| Investment impairment charges | — | — | — | — | 1 | 1 | 0.00 | |||||||||||||||||||||
| Adjusted net income | $ | 714 | $ | 855 | $ | 271 | $ | 638 | $ | 527 | $ | 490 | $ | 0.35 | ||||||||||||||
| 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 unaudited condensed consolidated financial statements presented on a GAAP basis, we disclose certain non-GAAP financial measures, including adjusted net income (earnings) and adjusted net income (earnings) per share that exclude certain amounts, operational net sales, which exclude the impact of foreign currency fluctuations and organic net sales, which exclude the impact of foreign currency fluctuations and the impact of recent aforementioned acquisitions and divestitures. These non-GAAP financial measures are not in accordance with generally accepted accounting principles in the United States 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.
To calculate adjusted net income (earnings) and adjusted net income (earnings) per share we exclude certain charges (credits) from GAAP net income. Amounts are presented after-tax 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." Please refer to Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our most recent Annual Report filed on Form 10-K filed with the Securities and Exchange Commission or any Quarterly Report on Form 10-Q that we file thereafter for an explanation of each of these adjustments and the reasons for excluding each item.
The GAAP financial measures most directly comparable to adjusted net income and adjusted net income per share are GAAP net income and GAAP net income per share.
To calculate operational net sales growth rates, which exclude the impact of foreign currency fluctuations, we convert actual net sales from local currency to U.S. dollars using constant foreign currency exchange rates in the current and prior period. To calculate organic net sales growth rates, we remove the impact of recent aforementioned acquisitions with no prior period related net sales from operational net sales. In addition, to calculate organic net sales growth rates, we remove from prior year, sales from product lines that we divested. The GAAP financial measure most directly comparable to operational net sales and organic net sales is 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.
SOURCE Boston Scientific Corporation