Full Press Release Details
MARLBOROUGH, Mass. , Oct. 23, 2019 /PRNewswire/ -- Boston Scientific Corporation (NYSE: BSX ) generated sales of $2.707 billion during the third quarter of 2019. This represents growth of 13.1 percent on a reported basis, 14.2 percent on an operational 1 basis and 9.3 percent on an organic 2 basis, all compared to the prior year period. The company reported GAAP earnings of $126 million or $0.09 per share (EPS), compared to GAAP earnings of $432 million or $0.31 per share a year ago, and achieved adjusted earnings per share of $0.39 for the period, compared to $0.35 a year ago.
"Our third quarter results reflect accelerated growth fueled by several key product launches, excellent regional performance and the broad strength of our core portfolio, and we continue to invest in building a robust pipeline," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "I am proud of our global teams across Boston Scientific who continue to bring forward new clinical solutions that advance science and help improve patient lives."
Third quarter financial results and recent developments:
Net sales for the third quarter by business and region:
| Change | |||||||||||||||||
| Three Months Ended September 30, | Reported Basis | Less: Impact of Foreign Currency Fluctuations | Operational Basis | Less: Impact of Recent Acquisitions / Divestitures | Organic Basis | ||||||||||||
| (in millions) | 2019 | 2018 | |||||||||||||||
| Endoscopy | $ | 486 | $ | 443 | 9.6% | (0.8)% | 10.4% | —% | 10.4% | ||||||||
| Urology and Pelvic Health | 359 | 303 | 18.6% | (0.8)% | 19.4% | 8.9% | 10.5% | ||||||||||
| MedSurg | 845 | 746 | 13.2% | (0.9)% | 14.1% | 3.6% | 10.5% | ||||||||||
| Cardiac Rhythm Management | 478 | 475 | 0.6% | (1.2)% | 1.8% | —% | 1.8% | ||||||||||
| Electrophysiology | 81 | 76 | 5.8% | (1.2)% | 7.0% | —% | 7.0% | ||||||||||
| Neuromodulation | 222 | 189 | 17.5% | (0.8)% | 18.3% | 10.4% | 7.9% | ||||||||||
| Rhythm and Neuro | 780 | 740 | 5.4% | (1.1)% | 6.5% | 2.6% | 3.9% | ||||||||||
| Interventional Cardiology | 700 | 615 | 13.9% | (1.4)% | 15.3% | 0.7% | 14.6% | ||||||||||
| Peripheral Interventions | 311 | 293 | 5.9% | (1.0)% | 6.9% | (1.3)% | 8.2% | ||||||||||
| Cardiovascular | 1,011 | 908 | 11.3% | (1.3)% | 12.6% | —% | 12.6% | ||||||||||
| Interventional Medicine | 48 | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||
| Specialty Pharma | 23 | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||
| BTG Acquisition † | 71 | n/a | n/a | n/a | n/a | n/a | n/a | ||||||||||
| Net Sales | $ | 2,707 | $ | 2,393 | 13.1% | (1.1)% | 14.2% | 4.9% | 9.3% |
| Change | |||||||||||||
| Three Months Ended September 30, | Reported Basis | Less: Impact of Foreign Currency Fluctuations | Operational Basis | ||||||||||
| Geographic Regions (in millions) | 2019 | 2018 | |||||||||||
| U.S. | $ | 1,521 | $ | 1,375 | 10.6% | —% | 10.6% | ||||||
| EMEA | 530 | 498 | 6.3% | (4.5)% | 10.8% | ||||||||
| APAC | 484 | 425 | 13.8% | (0.4)% | 14.2% | ||||||||
| Latin America and Canada | 101 | 94 | 6.9% | (2.2)% | 9.1% | ||||||||
| BTG Acquisition † (Worldwide) | 71 | n/a | n/a | n/a | n/a | ||||||||
| Net Sales | $ | 2,707 | $ | 2,393 | 13.1% | (1.1)% | 14.2% | ||||||
| Emerging Markets 4 (Excluding BTG Acquisition † ) | $ | 310 | $ | 267 | 16.1% | (3.2)% | 19.3% | ||||||
| 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 Full Year and Fourth Quarter 2019
The company estimates revenue growth for the full year 2019, versus the prior year period, to be in a range of approximately 9 to 9.5 percent on a reported basis (compared to prior guidance of 7 to 8 percent), and to be approximately 7.5 percent on an organic basis (compared to prior guidance of 7 to 8 percent). Full year organic guidance excludes the impact of foreign currency fluctuations and contribution of approximately 360 basis points from the acquisitions of Nxthera, Inc., Claret, Augmenix, Vertiflex and BTG, each with no prior period related net sales and the impact of the divestiture of our global embolic microspheres portfolio following the close of the BTG Acquisition. The company now estimates income on a GAAP basis in a range of $0.72 to $0.75 per share (compared to prior guidance of $0.94 to $0.98 per share) and estimates adjusted earnings, excluding certain charges (credits), in a range of $1.55 to $1.58 per share (compared to prior guidance of $1.54 to $1.58 per share).
The company estimates revenue growth for the fourth quarter of 2019, versus the prior year period, to be in a range of approximately 13 to 15 percent on a reported basis and a growth range of approximately 8 to 9 percent on an organic basis. Fourth quarter organic guidance excludes the impact of foreign currency fluctuations and contribution of approximately 600 to 680 basis points from the acquisitions of Vertiflex and BTG, each with no prior period related net sales and the impact of the divestiture of our global embolic microspheres portfolio following the close of the BTG Acquisition. The company estimates earnings on a GAAP basis in a range of $0.22 to $0.25 per share and adjusted earnings, excluding certain charges (credits), in a range of $0.42 to $0.45 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. 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," "aiming" 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, operational and organic revenue growth rates, GAAP earnings and adjusted earnings for the fourth quarter and full year 2019, 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.
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 September 30, | Nine Months Ended September 30, | ||||||||||||
| in millions, except per share data | 2019 | 2018 | 2019 | 2018 | |||||||||
| Net sales | $ | 2,707 | $ | 2,393 | $ | 7,831 | $ | 7,262 | |||||
| Cost of products sold | 777 | 672 | 2,265 | 2,084 | |||||||||
| Gross profit | 1,930 | 1,720 | 5,566 | 5,179 | |||||||||
| Operating expenses: | |||||||||||||
| Selling, general and administrative expenses | 1,012 | 870 | 2,849 | 2,616 | |||||||||
| Research and development expenses | 306 | 289 | 866 | 825 | |||||||||
| Royalty expense | 15 | 17 | 48 | 52 | |||||||||
| Amortization expense | 178 | 148 | 498 | 437 | |||||||||
| Intangible asset impairment charges | — | — | 105 | 35 | |||||||||
| Contingent consideration expense (benefit) | 8 | (13) | (9) | (12) | |||||||||
| Restructuring charges (credits) | 3 | 3 | 10 | 20 | |||||||||
| Litigation-related net charges (credits) | 25 | 18 | (108) | 18 | |||||||||
| 1,547 | 1,333 | 4,258 | 3,992 | ||||||||||
| Operating income (loss) | 383 | 388 | 1,308 | 1,187 | |||||||||
| Other income (expense): | |||||||||||||
| Interest expense | (95) | (58) | (294) | (177) | |||||||||
| Other, net | (197) | 126 | (322) | 116 | |||||||||
| Income (loss) before income taxes | 91 | 456 | 693 | 1,126 | |||||||||
| Income tax expense (benefit) | (35) | 24 | (11) | (159) | |||||||||
| Net income (loss) | $ | 126 | $ | 432 | $ | 704 | $ | 1,285 | |||||
| Net income (loss) per common share - basic | $ | 0.09 | $ | 0.31 | $ | 0.51 | $ | 0.93 | |||||
| Net income (loss) per common share - assuming dilution | $ | 0.09 | $ | 0.31 | $ | 0.50 | $ | 0.92 | |||||
| Weighted-average shares outstanding | |||||||||||||
| Basic | 1,393.1 | 1,382.8 | 1,390.6 | 1,380.0 | |||||||||
| Assuming dilution | 1,412.2 | 1,403.9 | 1,409.7 | 1,399.8 |
| BOSTON SCIENTIFIC CORPORATION | ||||||||||||||||||||||||||||
| NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Three Months Ended September 30, 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) | $ | 777 | $ | 1,012 | $ | 306 | $ | 383 | $ | 91 | $ | 126 | $ | 0.09 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 178 | 176 | 157 | 0.11 | |||||||||||||||||||||
| Acquisition / divestitures-related net charges (credits) | (28) | (60) | (9) | 105 | 304 | 236 | 0.17 | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (9) | (3) | — | 14 | 14 | 12 | 0.01 | |||||||||||||||||||||
| Litigation-related net charges (credits) | — | — | — | 25 | 25 | 19 | 0.01 | |||||||||||||||||||||
| Investment impairment charges | — | — | — | — | 1 | 1 | 0.00 | |||||||||||||||||||||
| Medical device regulation charges | (2) | — | — | 2 | 2 | 2 | 0.00 | |||||||||||||||||||||
| Discrete tax items | — | — | — | — | — | (2) | (0.00) | |||||||||||||||||||||
| Adjusted net income | $ | 738 | $ | 949 | $ | 297 | $ | 707 | $ | 613 | $ | 550 | $ | 0.39 | ||||||||||||||
| Three Months Ended September 30, 2018 | ||||||||||||||||||||||||||||
| (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) | $ | 672 | $ | 870 | $ | 289 | $ | 388 | $ | 456 | $ | 432 | $ | 0.31 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 148 | 148 | 132 | 0.09 | |||||||||||||||||||||
| Acquisition-related net charges (credits) | (9) | (19) | (29) | 44 | (98) | (107) | (0.08) | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (10) | (2) | — | 15 | 15 | 12 | 0.01 | |||||||||||||||||||||
| Litigation-related net charges (credits) | — | — | — | 18 | 18 | 14 | 0.01 | |||||||||||||||||||||
| Investment impairment charges | — | — | — | — | 3 | 3 | 0.00 | |||||||||||||||||||||
| Adjusted net income | $ | 653 | $ | 849 | $ | 261 | $ | 613 | $ | 542 | $ | 485 | $ | 0.35 | ||||||||||||||
| An explanation of the company's use of these non-GAAP financial measures is provided at the end of this document. |
| BOSTON SCIENTIFIC CORPORATION | ||||||||||||||||||||||||||||
| NON-GAAP NET INCOME AND NET INCOME PER SHARE RECONCILIATIONS | ||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||
| Nine Months Ended September 30, 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) | $ | 2,265 | $ | 2,849 | $ | 866 | $ | 1,308 | $ | 693 | $ | 704 | $ | 0.50 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 498 | 498 | 444 | 0.31 | |||||||||||||||||||||
| Intangible asset impairment charges | — | — | — | 105 | 105 | 97 | 0.07 | |||||||||||||||||||||
| Acquisition / divestitures-related net charges (credits) | (60) | (100) | (24) | 174 | 505 | 391 | 0.28 | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (18) | (9) | — | 38 | 38 | 31 | 0.02 | |||||||||||||||||||||
| Litigation-related net charges (credits) | — | — | — | (108) | (108) | (96) | (0.07) | |||||||||||||||||||||
| Investment impairment charges | — | — | — | — | 3 | 3 | 0.00 | |||||||||||||||||||||
| Medical device regulation charges | (2) | — | — | 2 | 2 | 2 | 0.00 | |||||||||||||||||||||
| Discrete tax items | — | — | — | — | — | 16 | 0.01 | |||||||||||||||||||||
| Adjusted net income | $ | 2,185 | $ | 2,740 | $ | 841 | $ | 2,016 | $ | 1,736 | $ | 1,590 | $ | 1.13 | ||||||||||||||
| Nine Months Ended September 30, 2018 | ||||||||||||||||||||||||||||
| 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) | $ | 2,084 | $ | 2,616 | $ | 825 | $ | 1,187 | $ | 1,126 | $ | 1,285 | $ | 0.92 | ||||||||||||||
| Non-GAAP adjustments to net income (loss): | ||||||||||||||||||||||||||||
| Amortization expense | — | — | — | 437 | 437 | 380 | 0.27 | |||||||||||||||||||||
| Intangible asset impairment charges | — | — | — | 35 | 35 | 31 | 0.02 | |||||||||||||||||||||
| Acquisition-related net charges (credits) | (23) | (52) | (51) | 114 | (68) | (79) | (0.06) | |||||||||||||||||||||
| Restructuring and restructuring-related net charges (credits) | (33) | (5) | — | 58 | 58 | 47 | 0.03 | |||||||||||||||||||||
| Litigation-related net charges (credits) | — | — | — | 18 | 18 | 14 | 0.01 | |||||||||||||||||||||
| Investment impairment charges | — | — | — | — | 7 | 7 | 0.01 | |||||||||||||||||||||
| Discrete tax items | — | — | — | — | — | (177) | (0.13) | |||||||||||||||||||||
| Adjusted net income | $ | 2,027 | $ | 2,559 | $ | 775 | $ | 1,849 | $ | 1,613 | $ | 1,508 | $ | 1.08 | ||||||||||||||
| 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 REVENUE NON-GAAP GROWTH RATES AND NON-GAAP NET INCOME PER SHARE RECONCILIATIONS |
| (Unaudited) |
Q4 and Full Year 2019 Estimated Revenue Growth Rates
| Q4 2019 Estimate | Full Year 2019 Estimate | ||||
| (Low) | (High) | (Low) | (High) | ||
| Estimated GAAP sales growth | 13% | 15% | 9% | 9.5% | |
| Less: Estimated impact of foreign currency fluctuations and the aforementioned acquisitions and divestitures | 5% | 6% | 1.5% | 2% | |
| Estimated sales growth, organic* | 8% | 9% | 7.5% | 7.5% | |
| *Q4 2019 Estimate excludes contribution of approximately 600 to 680 basis points from the aforementioned acquisitions and divestitures. Full Year 2019 Estimate excludes contribution of approximately 360 basis points from the aforementioned acquisitions and divestitures. |
Q4 and Full Year 2019 Earnings per Share Guidance
| Q4 2019 Estimate | Full Year 2019 Estimate | ||||||||||||
| (Low) | (High) | (Low) | (High) | ||||||||||
| GAAP results | $ | 0.22 | $ | 0.25 | $ | 0.72 | $ | 0.75 | |||||
| Estimated amortization expense | 0.13 | 0.13 | 0.44 | 0.44 | |||||||||
| Estimated acquisition / divestitures-related net charges (credits) | 0.06 | 0.06 | 0.33 | 0.33 | |||||||||
| Estimated other adjustments | 0.01 | 0.01 | 0.06 | 0.06 | |||||||||
| Adjusted results | $ | 0.42 | $ | 0.45 | $ | 1.55 | $ | 1.58 |
Prior Guidance Estimate - Q3 2019 and Full Year 2019 Revenue Growth Rates
| Q3 2019 Estimate | Prior Full Year 2019 Estimate | ||||
| (Low) | (High) | (Low) | (High) | ||
| Estimated GAAP sales growth | 8% | 10% | 7% | 8% | |
| Less: Estimated impact of foreign currency fluctuations and the aforementioned acquisitions | 0.5% | 1% | —% | —% | |
| Estimated sales growth, organic* | 7.5% | 9% | 7% | 8% | |
| *Q3 2019 Estimate excluded contribution of approximately 180 basis points from the aforementioned acquisitions, each with no prior year comparable sales. Prior Full Year 2019 Estimate excluded contribution of approximately 140 basis points from the aforementioned acquisitions, each with no prior year comparable sales. |
Prior Guidance Estimate - Q3 2019 and Full Year 2019 Earnings per Share
| Q3 2019 Estimate | Prior Full Year 2019 Estimate | ||||||||||||
| (Low) | (High) | (Low) | (High) | ||||||||||
| GAAP results | $ | 0.23 | $ | 0.25 | $ | 0.94 | $ | 0.98 | |||||
| Estimated amortization expense | 0.10 | 0.10 | 0.41 | 0.41 | |||||||||
| Estimated acquisition-related net charges (credits) | 0.02 | 0.02 | 0.14 | 0.14 | |||||||||
| Estimated other adjustments | 0.02 | 0.02 | 0.05 | 0.05 | |||||||||
| Adjusted results | $ | 0.37 | $ | 0.39 | $ | 1.54 | $ | 1.58 |
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 for an explanation of each of these adjustments and the reasons for excluding each item. The following is an explanation of each incremental or revised adjustment type that management excluded as part of these non-GAAP financial measures, since our most recent Annual Report on Form 10-K, as well as the reason 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