MARLBOROUGH, Mass.,
July 28, 2016 /PRNewswire/ -- Boston Scientific
Corporation (NYSE: BSX) generated sales of $2.126 billion during the second quarter ended
June 30, 2016, compared to the company's guidance range for
the quarter of $2.010 to $2.060
billion. This represents growth of 15 percent on a reported
basis and 16 percent on an operational basis (calculated on a
constant currency basis), all compared to the prior year period.
The company reported a GAAP loss of $207
million, or $(0.15) per share,
compared to earnings of $0.08 a year
ago, and achieved adjusted earnings per share of $0.27 for the period, compared to $0.22 a year ago.
"Our strong performance is evidence of the success of our
category leadership strategy," said Mike
Mahoney, chairman and chief executive officer, Boston
Scientific. "Our deep portfolio, commitment to innovation and
high-performance culture are helping us meet the needs of our
customers and patients while sustaining growth and momentum."
Second quarter financial results and recent
developments:
- Reported second quarter sales of $2.126
billion, representing an increase of 15 percent on a
reported basis and 16 percent on an operational basis, all compared
to the prior year period.
- Grew organic revenue 10 percent in the second quarter over the
prior year period. Organic revenue growth excludes the impact of
changes in foreign currency exchange rates and sales from the
acquisition of the American Medical Systems (AMS) male urology
portfolio.
- Reported a GAAP loss of $(0.15)
per share compared to the company's guidance range of $0.12 to $0.15 per share, primarily due to
litigation-related charges. Achieved adjusted earnings per share of
$0.27 compared to the guidance range
of $0.25 to $0.27 per share.
- Achieved second quarter revenue growth in all segments, all
compared to the prior year period:
- MedSurg: 29 percent (29 percent operational and 13 percent
organic)
- Cardiovascular: 13 percent (13 percent operational and
organic)
- Rhythm Management: 4 percent (5 percent operational and
organic)
- Delivered strong regional revenue growth, all compared to the
prior year period:
- U.S.: 15 percent (15 percent operational and 8 percent
organic)
- Europe: 16 percent (14 percent
operational and 9 percent organic)
- AMEA (Asia-Pacific,
Middle East and Africa): 18 percent (18 percent operational
and 16 percent organic)
- Emerging markets:* 8 percent revenue (21 percent operational
and 20 percent organic)
- Received FDA approval for the Precision Montage™ MRI Spinal
Cord Stimulator System, which offers patients suffering from
chronic pain full-body access to magnetic resonance imaging
procedures, as well as customized therapy.
- Presented clinical data from the EFFORTLESS study at the Heart
Rhythm Society's annual Scientific Sessions that demonstrated
positive long-term safety and efficacy outcomes for the
Subcutaneous Implantable Defibrillator (S-ICD) System. Also
presented pre-clinical data for the EMPOWER™ Modular Pacing
System,** which can communicate with the EMBLEM™ S-ICD System,
allowing electrophysiologists to treat life-threatening arrhythmias
with a modular therapy approach.
- Presented three-month data from the 1,000-patient EWOLUTION
registry for the WATCHMAN™ Left Atrial Appendage Closure (LAAC)
Device at the annual EuroPCR Scientific Program in Paris that demonstrated a high success rate of
98.5% in complete left atrial appendage closure. Also unveiled data
from the 1,000-patient RESPOND study, which evaluated the Boston
Scientific Lotus™ Valve*** through 30 days post implant procedure
and established excellent device performance, a strong safety
profile and extremely low rates of paravalvular leak (PVL).
- Expanded offering of MR-conditional products with FDA approval
of the ImageReady™ MR-Conditional Pacing System, including the
INGEVITY™ MRI pacing leads and CE Mark of the EMBLEM MRI S-ICD
System.
- Received FDA approval of the IntellaNav™ XP and the IntellaNav
MiFi™ XP navigation-enabled ablation catheters for the treatment of
patients with Type-I atrial flutter.
- Announced the acquisition of Cosman Medical, a manufacturer of
radiofrequency ablation systems used by physicians to treat
patients with chronic back and neck pain, expanding the company's
Neuromodulation portfolio and offering physicians a wider choice of
non-opioid therapeutic options for treating pain.
- Entered into a contingent Stipulation of Settled Issues with
the U.S. Internal Revenue Service to resolve disputes related to
previously disclosed transfer pricing issues, which is expected to
bring greater certainty to the company's balance sheet and cash
flow outlook.
- Received positive guidance from the National Institute for
Health and Care Excellence (NICE) for the use of the GreenLight
XPS™ Laser Therapy System in the treatment of patients with benign
prostatic hyperplasia, or BPH.
* We define Emerging Markets as including certain countries that
we believe have strong growth potential based on their economic
conditions, healthcare sectors, and our global capabilities.
Currently, we include 20 countries in our definition of Emerging
Markets.
** The EMPOWER Modular Pacing System is currently in development
and not available for use or sale worldwide.
*** In the U.S., the Lotus Valve System is an investigational
device and not available for sale. It is CE marked in the
European Union.
Net sales for the
second quarter:
|
|
|
|
|
|
|
Change
|
|
|
|
Three Months
Ended
June 30,
|
|
As Reported
Basis
|
|
Less: Impact of
Foreign Currency
|
|
Constant Currency
Basis
|
|
in
millions
|
2016
|
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interventional Cardiology
|
$
|
579
|
|
$
|
515
|
|
|
13
|
|
%
|
|
$
|
(4)
|
|
1
|
|
%
|
|
12
|
|
%
|
|
|
Peripheral Interventions
|
258
|
|
228
|
|
|
13
|
|
%
|
|
(3)
|
|
(1)
|
|
%
|
|
14
|
|
%
|
|
|
Cardiovascular
|
837
|
|
743
|
|
|
13
|
|
%
|
|
(7)
|
|
0
|
|
%
|
|
13
|
|
%
|
|
|
Cardiac
Rhythm Management
|
477
|
|
460
|
|
|
4
|
|
%
|
|
(5)
|
|
0
|
|
%
|
|
4
|
|
%
|
|
|
Electrophysiology
|
60
|
|
57
|
|
|
5
|
|
%
|
|
(1)
|
|
(1)
|
|
%
|
|
6
|
|
%
|
|
|
Rhythm
Management
|
537
|
|
517
|
|
|
4
|
|
%
|
|
(6)
|
|
(1)
|
|
%
|
|
5
|
|
%
|
|
|
Endoscopy
|
361
|
|
326
|
|
|
11
|
|
%
|
|
(3)
|
|
0
|
|
%
|
|
11
|
|
%
|
|
|
Urology
and Pelvic Health
|
256
|
|
135
|
|
|
89
|
|
%
|
|
(7)
|
|
(1)
|
|
%
|
|
90
|
|
%
|
*
|
|
Neuromodulation
|
135
|
|
122
|
|
|
11
|
|
%
|
|
(1)
|
|
(1)
|
|
%
|
|
12
|
|
%
|
|
|
MedSurg
|
752
|
|
583
|
|
|
29
|
|
%
|
|
(11)
|
|
0
|
|
%
|
|
29
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
$
|
2,126
|
|
$
|
1,843
|
|
|
15
|
|
%
|
|
$
|
(24)
|
|
(1)
|
|
%
|
|
16
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*Urology and
Pelvic Health grew 18% on an organic basis.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth rates are
based on actual, non-rounded amounts and may not recalculate
precisely.
|
|
|
Sales growth rates
that exclude the impact of changes in foreign currency exchange
rates and/or the impact of recent acquisitions with significant
sales 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 second quarter of
2016 was $207 million, or
$(0.15) per share. These results
included acquisition- and divestiture-, litigation-, and
restructuring and restructuring- related net charges and
amortization expense, of $580 million
(after-tax) or $0.42 per share.
Adjusted net income for the second quarter of 2016, excluding these
net charges, was $373 million, or
$0.27 per share.
On a consolidated GAAP basis, net income for the second quarter
of 2015 was $102 million, or
$0.08 per share. These results
included an intangible asset impairment charge, acquisition- and
divestiture-related net charges, restructuring and
restructuring-related net charges, litigation-related net credits,
debt extinguishment charges and amortization expense, of
$192 million (after-tax) or
$0.14 per share. Adjusted net income
for the second quarter of 2015, excluding these net charges, was
$294 million, or $0.22 per share.
Guidance for Full Year and Third Quarter 2016
The company now estimates revenue for the full year 2016 to be
in a range of $8.270 to $8.370
billion (compared to prior guidance of $8.075 to $8.225 billion), which versus the prior
year period represents growth of approximately 11 to 12 percent on
both a reported basis and on an operational basis, and growth of
approximately 8 to 9 percent on an organic basis. The company now
estimates income on a GAAP basis in a range of $0.30 to $0.35 per share (compared to prior
guidance of $0.59 to $0.65 per
share), and now estimates adjusted earnings, excluding acquisition-
and divestiture-, litigation-, and restructuring and
restructuring-related net charges, and amortization expense, in a
range of $1.07 to $1.11 per share
(compared to $1.06 to $1.10 per
share).
The company estimates sales for the third quarter of 2016 to be
in a range of $2.035 to $2.085
billion, which versus the prior year period represents
growth of approximately 8 to 10 percent on both a reported basis
and on an operational basis, and growth of approximately 7 to 9
percent on an organic basis. The company estimates earnings on a
GAAP basis in a range of $0.13 to
$0.15 per share. Adjusted earnings, excluding acquisition-
and divestiture- and restructuring and restructuring-related net
charges and amortization expense, are estimated in a range of
$0.25 to $0.27 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, organic and operational revenue growth rates, GAAP earnings
and adjusted earnings for the third quarter and full year 2016; our
financial performance; our contingent settlement with the U.S.
Internal Revenue Service; 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.
Risks and uncertainties that may cause such differences include,
among other things: future economic, political, competitive,
reimbursement and regulatory conditions; new product introductions
and the market acceptance of those products; markets for our
products; expected pricing environment; expected procedural
volumes; the closing and integration of acquisitions; clinical
trial results; demographic trends; intellectual property rights;
litigation; financial market conditions; the execution and effect
of our restructuring program; the execution and effect of our
business strategy, including our cost-savings and growth
initiatives; and future business decisions made by us and our
competitors. New risks and uncertainties may arise from time
to time and are difficult to predict. All of these factors are
difficult or impossible to predict accurately and many of them are
beyond our control. For a further list and description
of these and other important risks and uncertainties that may
affect our future operations, see Part I, Item IA - Risk
Factors in our most recent Annual Report on Form 10-K filed
with the Securities and Exchange Commission, which we may update in
Part II, Item 1A - Risk Factors in Quarterly Reports on
Form 10-Q we have filed or will file hereafter. We
disclaim any intention or obligation to publicly update or revise
any forward-looking statement to reflect any change in our
expectations or in events, conditions, or circumstances on which
those expectations may be based, or that may affect the likelihood
that actual results will differ from those contained in the
forward-looking statements. This cautionary statement is
applicable to all forward-looking statements contained in this
press release.
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:
|
Tom
Keppeler
|
|
508-683-6585
(office)
|
|
Media
Relations
|
|
Boston Scientific
Corporation
|
|
tom.keppeler@bsci.com
|
|
Investors:
|
Susan Lisa,
CFA
|
|
508-683-5565
(office)
|
|
Investor
Relations
|
|
Boston Scientific
Corporation
|
|
investor_relations@bsci.com
|
BOSTON SCIENTIFIC
CORPORATION
|
CONDENSED
CONSOLIDATED GAAP RESULTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
|
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
in millions,
except per share data
|
2016
|
2015
|
|
2016
|
2015
|
|
|
|
|
|
|
Net sales
|
$
|
2,126
|
|
$
|
1,843
|
|
|
$
|
4,090
|
|
$
|
3,611
|
|
Cost of products
sold
|
639
|
|
540
|
|
|
1,211
|
|
1,060
|
|
Gross
profit
|
1,487
|
|
1,303
|
|
|
2,879
|
|
2,551
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
Selling, general and
administrative expenses
|
779
|
|
700
|
|
|
1,497
|
|
1,367
|
|
Research and
development expenses
|
222
|
|
220
|
|
|
431
|
|
412
|
|
Royalty
expense
|
20
|
|
18
|
|
|
39
|
|
36
|
|
Amortization
expense
|
135
|
|
116
|
|
|
271
|
|
229
|
|
Intangible asset
impairment charges
|
—
|
|
9
|
|
|
—
|
|
9
|
|
Contingent
consideration expense (benefit)
|
33
|
|
19
|
|
|
37
|
|
46
|
|
Restructuring
charges
|
14
|
|
3
|
|
|
17
|
|
9
|
|
Litigation-related
charges (credits)
|
618
|
|
(1)
|
|
|
628
|
|
192
|
|
Pension termination
charges
|
—
|
|
—
|
|
|
—
|
|
8
|
|
|
1,821
|
|
1,084
|
|
|
2,920
|
|
2,308
|
|
Operating income
(loss)
|
(334)
|
|
219
|
|
|
(41)
|
|
243
|
|
|
|
|
|
|
|
Other income
(expense):
|
|
|
|
|
|
Interest
expense
|
(59)
|
|
(106)
|
|
|
(118)
|
|
(167)
|
|
Other, net
|
(4)
|
|
(8)
|
|
|
(10)
|
|
(22)
|
|
Income
(loss) before income taxes
|
(397)
|
|
105
|
|
|
(169)
|
|
54
|
|
Income tax expense
(benefit)
|
(190)
|
|
3
|
|
|
(164)
|
|
(47)
|
|
Net income
(loss)
|
$
|
(207)
|
|
$
|
102
|
|
|
$
|
(5)
|
|
$
|
101
|
|
|
|
|
|
|
|
Net income (loss)
per common share - basic
|
$
|
(0.15)
|
|
$
|
0.08
|
|
|
$
|
(0.00)
|
|
$
|
0.08
|
|
Net income (loss)
per common share - assuming dilution
|
$
|
(0.15)
|
|
$
|
0.08
|
|
|
$
|
(0.00)
|
|
$
|
0.07
|
|
|
|
|
|
|
|
Weighted-average
shares outstanding
|
|
|
|
|
|
Basic
|
1,357.4
|
|
1,341.3
|
|
|
1,353.9
|
|
1,337.5
|
|
Assuming
dilution
|
1,357.4
|
|
1,361.8
|
|
|
1,353.9
|
|
1,359.7
|
|
BOSTON SCIENTIFIC
CORPORATION
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
As
of
|
|
June
30,
|
|
December
31,
|
in millions,
except share data
|
2016
|
|
2015
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
438
|
|
|
$
|
319
|
|
Trade accounts
receivable, net
|
1,387
|
|
|
1,275
|
|
Inventories
|
981
|
|
|
1,016
|
|
Deferred and prepaid
income taxes
|
78
|
|
|
496
|
|
Other current
assets
|
446
|
|
|
365
|
|
Total current
assets
|
3,330
|
|
|
3,471
|
|
|
|
|
|
Property, plant and
equipment, net
|
1,487
|
|
|
1,490
|
|
Goodwill
|
6,475
|
|
|
6,473
|
|
Other intangible
assets, net
|
5,930
|
|
|
6,194
|
|
Other long-term
assets
|
616
|
|
|
505
|
|
TOTAL
ASSETS
|
$
|
17,838
|
|
|
$
|
18,133
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Current debt
obligations
|
$
|
254
|
|
|
$
|
3
|
|
Accounts
payable
|
284
|
|
|
209
|
|
Accrued
expenses
|
2,236
|
|
|
1,970
|
|
Other current
liabilities
|
408
|
|
|
248
|
|
Total current
liabilities
|
3,182
|
|
|
2,430
|
|
|
|
|
|
Long-term
debt
|
5,173
|
|
|
5,674
|
|
Deferred income
taxes
|
24
|
|
|
735
|
|
Other long-term
liabilities
|
3,239
|
|
|
2,974
|
|
|
|
|
|
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 shares -
|
|
|
|
issued
1,606,264,833 shares as of June 30, 2016 and
|
|
|
|
1,594,213,786 shares
as of December 31, 2015
|
18
|
|
|
16
|
|
Treasury stock, at
cost - 247,566,270 shares as of June 30, 2016
|
|
|
|
and 247,566,270
shares as of December 31, 2015
|
(1,717)
|
|
|
(1,717)
|
|
Additional paid-in
capital
|
16,923
|
|
|
16,860
|
|
Accumulated
deficit
|
(8,934)
|
|
|
(8,927)
|
|
Accumulated other
comprehensive income (loss), net of tax
|
(70)
|
|
|
88
|
|
Total stockholders'
equity
|
6,220
|
|
|
6,320
|
|
TOTAL LIABILITIES
AND STOCKHOLDERS' EQUITY
|
$
|
17,838
|
|
|
$
|
18,133
|
|
BOSTON SCIENTIFIC
CORPORATION
|
NON-GAAP NET INCOME
AND NET INCOME PER COMMON SHARE RECONCILIATIONS
|
(Unaudited)
|
|
|
|
Three Months Ended
June 30, 2016
|
|
in millions,
except per share data
|
|
Pre-Tax
|
|
Tax
Impact
(a)
|
|
After-Tax
|
|
Impact per
Share
|
|
GAAP net income
(loss)
|
|
$
|
(397)
|
|
|
$
|
190
|
|
|
$
|
(207)
|
|
|
$
|
(0.15)
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition- and
divestiture-related net charges (b)
|
|
53
|
|
|
(4)
|
|
|
49
|
|
|
0.04
|
|
*
|
Restructuring and
restructuring-related net charges (c)
|
|
26
|
|
|
(5)
|
|
|
21
|
|
|
0.02
|
|
*
|
Litigation-related
net charges
|
|
618
|
|
|
(224)
|
|
|
394
|
|
|
0.28
|
|
*
|
Amortization
expense
|
|
135
|
|
|
(19)
|
|
|
116
|
|
|
0.08
|
|
*
|
Adjusted net
income
|
|
$
|
435
|
|
|
$
|
(62)
|
|
|
$
|
373
|
|
|
$
|
0.27
|
|
|
|
|
|
|
|
|
|
|
|
|
*Assumes dilution of
17.7 million shares for the three months ended June 30, 2016
for all or a portion of these non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
June 30, 2015
|
|
in millions,
except per share data
|
|
Pre-Tax
|
|
Tax
Impact
(a)
|
|
After-Tax
|
|
Impact per
Share
|
|
GAAP net income
(loss)
|
|
$
|
105
|
|
|
$
|
(3)
|
|
|
$
|
102
|
|
|
$
|
0.08
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Intangible asset
impairment charge
|
|
9
|
|
|
(2)
|
|
|
7
|
|
|
0.01
|
|
|
Acquisition- and
divestiture-related net charges (d)
|
|
49
|
|
|
(7)
|
|
|
42
|
|
|
0.03
|
|
|
Restructuring and
restructuring-related net charges (e)
|
|
16
|
|
|
(2)
|
|
|
14
|
|
|
0.01
|
|
|
Litigation-related
net credits
|
|
(1)
|
|
|
—
|
|
|
(1)
|
|
|
0.00
|
|
|
Debt extinguishment
charges
|
|
45
|
|
|
(16)
|
|
|
29
|
|
|
0.02
|
|
|
Amortization
expense
|
|
116
|
|
|
(15)
|
|
|
101
|
|
|
0.07
|
|
|
Adjusted net
income
|
|
$
|
339
|
|
|
$
|
(45)
|
|
|
$
|
294
|
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 second
quarter of 2016, pre-tax acquisition- and divestiture-related net
charges were $53 million, of which $8 million was recorded in cost
of products sold, $12 million was recorded in selling, general and
administrative expenses, and $33 million was recorded as contingent
consideration expense.
|
|
(c) In the second
quarter of 2016, pre-tax restructuring charges were $14 million and
pre-tax restructuring-related charges were $12 million, of which $7
million was recorded in cost of products sold and $5 million was
recorded in selling, general and administrative
expenses.
|
|
(d) In the second
quarter of 2015, pre-tax acquisition- and divestiture-related net
charges were $49 million, of which $3 million was recorded in cost
of products sold, $7 million was recorded in selling, general and
administrative expenses, $20 million was recorded in research and
development, and $19 million was recorded as contingent
consideration expense.
|
|
(e) In the second
quarter of 2015, pre-tax restructuring charges were $3 million and
pre-tax restructuring- related charges were $13 million, of which
$8 million was recorded in cost of products sold and $5 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.
|
|
|
|
|
|
Six Months Ended
June 30, 2016
|
|
in millions,
except per share data
|
|
Pre-Tax
|
|
Tax
Impact
(a)
|
|
After-Tax
|
|
Impact per
Share
|
|
GAAP net income
(loss)
|
|
$
|
(169)
|
|
|
$
|
164
|
|
|
$
|
(5)
|
|
|
$
|
(0.00)
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Acquisition- and
divestiture-related net charges (b)
|
|
96
|
|
|
(2)
|
|
|
94
|
|
|
0.07
|
|
*
|
Restructuring and
restructuring-related net charges (c)
|
|
38
|
|
|
(10)
|
|
|
28
|
|
|
0.02
|
|
*
|
Litigation-related
net charges
|
|
628
|
|
|
(228)
|
|
|
400
|
|
|
0.29
|
|
*
|
Amortization
expense
|
|
271
|
|
|
(37)
|
|
|
234
|
|
|
0.17
|
|
*
|
Adjusted net
income
|
|
$
|
864
|
|
|
$
|
(113)
|
|
|
$
|
751
|
|
|
$
|
0.55
|
|
|
|
|
|
|
|
|
|
|
|
|
*Assumes dilution of
18.6 million shares for the six months ended June 30, 2016 for
all or a portion of these non-GAAP Adjustments
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2015
|
|
in millions,
except per share data
|
|
Pre-Tax
|
|
Tax
Impact
(a)
|
|
After-Tax
|
|
Impact per
Share
|
|
GAAP net income
(loss)
|
|
$
|
54
|
|
|
$
|
47
|
|
|
$
|
101
|
|
|
$
|
0.07
|
|
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
|
|
Intangible asset
impairment charge
|
|
9
|
|
|
(2)
|
|
|
7
|
|
|
0.01
|
|
|
Acquisition- and
divestiture-related net charges (e)
|
|
91
|
|
|
(5)
|
|
|
86
|
|
|
0.07
|
|
|
Restructuring and
restructuring-related net charges (f)
|
|
37
|
|
|
(6)
|
|
|
31
|
|
|
0.02
|
|
|
Litigation-related
net charges
|
|
192
|
|
|
(70)
|
|
|
122
|
|
|
0.09
|
|
|
Debt extinguishment
charges (d)
|
|
45
|
|
|
(16)
|
|
|
29
|
|
|
0.02
|
|
|
Pension termination
charges
|
|
8
|
|
|
(3)
|
|
|
5
|
|
|
0.00
|
|
|
Amortization
expense
|
|
229
|
|
|
(30)
|
|
|
199
|
|
|
0.15
|
|
|
Adjusted net
income
|
|
$
|
665
|
|
|
$
|
(85)
|
|
|
$
|
580
|
|
|
$
|
0.43
|
|
|
|
|
|
|
|
|
|
|
|
|
(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 second
quarter of 2016, pre-tax acquisition- and divestiture-related net
charges were $96 million, of which $32 million was recorded in cost
of products sold, $27 million was recorded in selling, general and
administrative expenses, and $37 million was recorded as contingent
consideration expense.
|
|
(c) In the second
quarter of 2016, pre-tax restructuring charges were $17 million and
pre-tax restructuring-related charges were $21 million, of which
$12 million was recorded in cost of products sold and $9 million
was recorded in selling, general and administrative
expenses.
|
|
(d) Debt
extinguishment charges are recorded in interest expense.
|
|
(e) In the first half
of 2015, pre-tax acquisition- and divestiture-related net charges
were $91 million, of which $8 million were recorded in cost of
products sold, $13 million was recorded in selling, general and
administrative expense, $20 million was recorded in research and
development, $46 million was recorded as a contingent consideration
expense, and $4 million was recorded as interest
expense.
|
|
(f) In the first half
of 2015, pre-tax restructuring charges were $9 million and pre-tax
restructuring- related charges were $28 million, of which $15
million was recorded in cost of products sold and $13 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)
|
|
SEGMENT NET
SALES*
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
|
in
millions
|
|
2016
|
|
2015
|
|
Change
|
|
2016
|
|
2015
|
|
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interventional Cardiology
|
|
$
|
635
|
|
|
$
|
567
|
|
|
12
|
|
%
|
|
$
|
1,248
|
|
|
$
|
1,108
|
|
|
13
|
|
%
|
Peripheral
Interventions
|
|
278
|
|
|
245
|
|
|
14
|
|
%
|
|
542
|
|
|
477
|
|
|
14
|
|
%
|
Cardiovascular
|
|
913
|
|
|
812
|
|
|
13
|
|
%
|
|
1,790
|
|
|
1,585
|
|
|
13
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cardiac
Rhythm Management
|
|
512
|
|
|
490
|
|
|
4
|
|
%
|
|
983
|
|
|
973
|
|
|
1
|
|
%
|
Electrophysiology
|
|
64
|
|
|
60
|
|
|
6
|
|
%
|
|
128
|
|
|
121
|
|
|
6
|
|
%
|
Rhythm
Management
|
|
576
|
|
|
550
|
|
|
5
|
|
%
|
|
1,111
|
|
|
1,094
|
|
|
1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Endoscopy
|
|
390
|
|
|
352
|
|
|
11
|
|
%
|
|
755
|
|
|
680
|
|
|
11
|
|
%
|
Urology
and Pelvic Health
|
|
270
|
|
|
142
|
|
|
90
|
|
%
|
|
513
|
|
|
272
|
|
|
89
|
|
%
|
Neuromodulation
|
|
139
|
|
|
125
|
|
|
12
|
|
%
|
|
264
|
|
|
241
|
|
|
10
|
|
%
|
MedSurg
|
|
799
|
|
|
619
|
|
|
29
|
|
%
|
|
1,532
|
|
|
1,193
|
|
|
28
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Subtotal Core
Businesses
|
|
2,288
|
|
|
1,981
|
|
|
16
|
|
%
|
|
4,433
|
|
|
3,872
|
|
|
15
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign
Currency
|
|
(162)
|
|
|
(138)
|
|
|
N/A
|
|
|
(343)
|
|
|
(261)
|
|
|
N/A
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Sales
|
|
$
|
2,126
|
|
|
$
|
1,843
|
|
|
15
|
|
%
|
|
$
|
4,090
|
|
|
$
|
3,611
|
|
|
13
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Growth rates are
based on actual, non-rounded amounts and may not recalculate
precisely.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SEGMENT OPERATING
INCOME*
|
|
Three Months
Ended
June 30,
|
|
Six Months
Ended
June 30,
|
in
millions
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
|
|
|
|
|
|
|
|
Cardiovascular
|
|
$
|
294
|
|
|
$
|
247
|
|
|
$
|
593
|
|
|
$
|
483
|
|
Rhythm
Management
|
|
97
|
|
|
78
|
|
|
187
|
|
|
155
|
|
MedSurg
|
|
262
|
|
|
188
|
|
|
502
|
|
|
355
|
|
Operating income
allocated to reportable segments
|
|
653
|
|
|
513
|
|
|
1,282
|
|
|
993
|
|
Corporate expenses
and currency exchange
|
|
(155)
|
|
|
(105)
|
|
|
(290)
|
|
|
(188)
|
|
Intangible asset
impairment charges; acquisition- and divestiture-, restructuring-
and restructuring-related net charges; litigation-related net
charges and credits; and pension termination charges
|
|
(697)
|
|
|
(73)
|
|
|
(762)
|
|
|
(333)
|
|
Amortization
expense
|
|
(135)
|
|
|
(116)
|
|
|
(271)
|
|
|
(229)
|
|
Operating income
(loss)
|
|
$
|
(334)
|
|
|
$
|
219
|
|
|
$
|
(41)
|
|
|
$
|
243
|
|
|
|
|
|
|
|
|
|
|
*We measure and
evaluate our reportable segments based on segment net sales and
operating income, excluding the impact of changes in foreign
currency. Sales generated from reportable segments, 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
intangible asset impairment charges; acquisition and divestiture-,
restructuring- and litigation-related net 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.
|
BOSTON SCIENTIFIC
CORPORATION
|
WORLDWIDE CARDIAC
RHYTHM MANAGEMENT (CRM) SALES BY COMPONENT
|
(Unaudited)
|
|
|
|
Three Months
Ended
June 30,
|
(in
millions)
|
|
2016
|
|
2015
|
Defibrillator
systems
|
|
333
|
|
|
335
|
|
Pacemaker
systems
|
|
144
|
|
|
125
|
|
CRM
products
|
|
$
|
477
|
|
|
$
|
460
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months
Ended
June 30,
|
(in
millions)
|
|
2016
|
|
2015
|
Defibrillator
systems
|
|
644
|
|
|
670
|
|
Pacemaker
systems
|
|
266
|
|
|
246
|
|
CRM
products
|
|
$
|
910
|
|
|
$
|
916
|
|
|
|
|
|
|
|
|
|
|
BOSTON SCIENTIFIC
CORPORATION
|
SEGMENT AND REGIONAL
NET SALES
|
(Unaudited)
|
|
|
Q2 2016 Segment
Net Sales as compared to Q2 2015
|
|
|
MedSurg
|
Cardiovascular
|
Rhythm
Management
|
Total
BSC
|
Percentage change
in net sales, as reported
|
29
|
%
|
13
|
%
|
4
|
%
|
15
|
%
|
Less: Impact of
Foreign Currency Fluctuations
|
0
|
%
|
0
|
%
|
(1)
|
%
|
(1)
|
%
|
Percentage change
in net sales, constant currency
|
29
|
%
|
13
|
%
|
5
|
%
|
16
|
%
|
Less: Impact of AMS
acquisition
|
16
|
%
|
0
|
%
|
0
|
%
|
6
|
%
|
Percentage change
in net sales, organic
|
13
|
%
|
13
|
%
|
5
|
%
|
10
|
%
|
Q2 2016 Regional
Net Sales as compared to Q2 2015
|
|
|
U.S.
|
Europe
|
AMEA
|
Emerging
Markets
|
Percentage change
in net sales, as reported
|
15
|
%
|
16
|
%
|
18
|
%
|
8
|
%
|
Less: Impact of
Foreign Currency Fluctuations
|
0
|
%
|
2
|
%
|
0
|
%
|
(13)
|
%
|
Percentage change
in net sales, constant currency
|
15
|
%
|
14
|
%
|
18
|
%
|
21
|
%
|
Less: Impact of AMS
acquisition
|
7
|
%
|
5
|
%
|
2
|
%
|
1
|
%
|
Percentage change
in net sales, organic
|
8
|
%
|
9
|
%
|
16
|
%
|
20
|
%
|
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 COMMON SHARE
RECONCILIATIONS
|
(Unaudited)
|
|
|
Q3 and Full Year
2016 Estimated Revenue Growth Rates
|
|
|
Q3 2016
Estimate
|
|
Full Year 2016
Estimate
|
|
(Low)
|
(High)
|
|
(Low)
|
(High)
|
Estimated GAAP
sales growth
|
8
|
%
|
10
|
%
|
|
11
|
%
|
12
|
%
|
Less: Estimated
Impact of Foreign Currency Fluctuations
|
0
|
%
|
0
|
%
|
|
0
|
%
|
0
|
%
|
Estimated sales
growth, constant currency
|
8
|
%
|
10
|
%
|
|
11
|
%
|
12
|
%
|
Less: Impact of AMS
acquisition
|
1
|
%
|
1
|
%
|
|
3
|
%
|
3
|
%
|
Estimated sales
growth, organic
|
7
|
%
|
9
|
%
|
|
8
|
%
|
9
|
%
|
Q3 and Full Year
2016 EPS Guidance
|
|
|
Q3 2016
Estimate
|
|
Full Year 2016
Estimate
|
|
Prior Full Year
2016 Estimate
|
|
(Low)
|
(High)
|
|
(Low)
|
(High)
|
|
(Low)
|
(High)
|
GAAP
results
|
$
|
0.13
|
|
$
|
0.15
|
|
|
$
|
0.30
|
|
$
|
0.35
|
|
|
$
|
0.59
|
|
$
|
0.65
|
|
|
|
|
|
|
|
|
|
|
Estimated acquisition
and divestiture-related net charges
|
0.01
|
|
0.01
|
|
|
0.08
|
|
0.08
|
|
|
0.06
|
|
0.05
|
|
Estimated
restructuring and restructuring-related charges
|
0.02
|
|
0.02
|
|
|
0.06
|
|
0.05
|
|
|
0.07
|
|
0.06
|
|
Estimated
amortization expense
|
0.09
|
|
0.09
|
|
|
0.34
|
|
0.34
|
|
|
0.34
|
|
0.34
|
|
Litigation-related
charges
|
—
|
|
—
|
|
|
0.29
|
|
0.29
|
|
|
0.00
|
|
0.00
|
|
|
|
|
|
|
|
|
|
|
Adjusted
results
|
$
|
0.25
|
|
$
|
0.27
|
|
|
$
|
1.07
|
|
$
|
1.11
|
|
|
$
|
1.06
|
|
$
|
1.10
|
|
|
|
|
|
|
|
|
|
|
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 (earnings) and adjusted net income (earnings)
per share that exclude certain amounts, and adjusted net sales that
exclude the impact of changes in foreign currency exchange rates
and/or the impact of recent acquisitions with significant sales.
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 adjusted net sales 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
constant currency growth rate and/or growth rates excluding the
impacts of recent acquisitions with significant sales 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.
Management uses these supplemental non-GAAP financial measures
to evaluate performance period over period, to analyze the
underlying trends in our business, to assess our performance
relative to our competitors, and to establish operational goals and
forecasts that are used in allocating resources. In addition,
management uses these non-GAAP financial measures to further its
understanding of the performance of our operating segments. With
the exception of the impact of recent acquisitions with significant
sales, the adjustments excluded from our non-GAAP financial
measures are consistent with those excluded from our operating
segments' measures of net sales and profit or loss. These
adjustments are excluded from the segment measures that are
reported to our chief operating decision maker that are used to
make operating decisions and assess performance.
We believe that presenting adjusted net income and adjusted net
income per share that exclude certain amounts, and adjusted net
sales that exclude the impact of changes in foreign currency
exchange rates and/or the impact of recent acquisitions with
significant sales, in addition to the corresponding GAAP financial
measures, provides investors greater transparency to the
information used by management for its financial and operational
decision-making and allows investors to see our results "through
the eyes" of management. We further believe that providing this
information assists our investors in understanding our operating
performance and the methodology used by management to evaluate and
measure such performance.
The following is an explanation of each of the adjustments that
management excluded as part of these non-GAAP financial measures
for the three and six months ended June 30, 2016 and 2015, and
for the forecasted three month period ending September 30, 2016 and full year ending
December 31, 2016, as well as reasons for excluding each of
these individual items:
Adjusted Net Income and Adjusted Net Income per
Share:
- Intangible asset impairment charges - This amount represents
write-downs of certain intangible asset balances in the first half
of 2015. We review intangible assets subject to amortization
quarterly to determine if any adverse conditions exist or a change
in circumstances has occurred that would indicate impairment and
test our indefinite-lived intangible assets at least annually for
impairment. If we determine the carrying value of the amortizable
intangible asset is not recoverable or we conclude that it is more
likely than not that the indefinite-live asset is impaired,
we will write the carrying value down to fair value in the period
identified. We exclude the impact of impairment charges from
management's assessment of operating performance and from our
operating segments' measures of profit and loss used for making
operating decisions and assessing performance. Accordingly,
management has excluded intangible asset impairment charges for
purposes of calculating these non-GAAP financial measures to
facilitate an evaluation of our current operating performance and a
comparison to our past operating performance.
- Acquisition- and divestiture-related net charges (credits) -
These adjustments may consist of (a) contingent consideration fair
value adjustments; (b) gains on previously held investments; (c)
purchased and/or funded in-process research and development
expenses incurred outside of a business combination; and (d) due
diligence, other fees, inventory step up amortization, and
integration and exit costs. The contingent consideration
adjustments represent accounting adjustments to state contingent
consideration liabilities at their estimated fair value. These
adjustments can be highly variable depending on the assessed
likelihood and amount of future contingent consideration payments.
Due diligence, other fees, inventory step-up amortization, and
integration and exit costs include legal, tax, severance and other
expenses associated with prior and potential future acquisitions
that can be highly variable and not representative of ongoing
operations. Accordingly, management excluded these amounts for
purposes of calculating these non-GAAP financial measures to
facilitate an evaluation of our current operating performance and a
comparison to our past operating performance.
- Restructuring and restructuring-related net charges (credits) -
These adjustments represent severance and other direct costs
associated with our restructuring programs. These costs are
excluded by management in assessing our operating performance, as
well as from our operating segments' measures of profit and loss
used for making operating decisions and assessing performance.
Accordingly, management excluded these costs for purposes of
calculating these non-GAAP financial measures to facilitate an
evaluation of our current operating performance and a comparison to
our past operating performance.
- Litigation-related net charges (credits) - These adjustments
include certain significant product liability and other
litigation-related charges and credits. These amounts are excluded
by management in assessing our operating performance, as well as
from our operating segments' measures of profit and loss used for
making operating decisions and assessing performance. Accordingly,
management excluded these amounts for purposes of calculating these
non-GAAP financial measures to facilitate an evaluation of our
current operating performance and a comparison to our past
operating performance.
- Debt extinguishment charges - This item represents premiums,
accelerated amortization of debt issuance costs and investor
discount costs net of interest rate hedge gains related to the
early extinguishment of $1.0 billion
of public senior notes during the second quarter of 2015. These
adjustments are not expected to recur and do not reflect expected
ongoing operating results. Accordingly, management excluded these
amounts for purposes of calculating these non-GAAP financial
measures to facilitate an evaluation of our current operating
performance and a comparison to our past operating
performance.
- Pension termination charges - This item represents charges
associated with the termination of the Guidant Retirement Plan, a
frozen defined benefit plan. These charges are not expected to
recur after 2015 and do not reflect expected ongoing operating
results. Accordingly, management has excluded these amounts for
purposes of calculating these non-GAAP financial measures to
facilitate an evaluation of our current operating performance and a
comparison to our past operating performance.
- Amortization expense - We record intangible assets at
historical cost and amortize them over their estimated useful
lives. Amortization expense is excluded from management's
assessment of operating performance and is also excluded from our
operating segments' measures of profit and loss used for making
operating decisions and assessing performance. Accordingly,
management has excluded amortization expense for purposes of
calculating these non-GAAP financial measures to facilitate an
evaluation of our current operating performance and a comparison to
our past operating performance.
Adjusted Net Sales Excluding the Impact of Changes in Foreign
Currency Exchange Rates and/or the Impact of Recent Acquisitions
with Significant Sales
- The impact of changes in foreign currency exchange rates is
highly variable and difficult to predict. The impact of recent
acquisitions with significant sales in the current period and no
prior period equivalent may distort our presentation of organic
growth. Accordingly, management excludes the impact of changes in
foreign currency exchange rates and/or the impacts of recent
acquisitions with significant sales for purposes of reviewing the
net sales and growth rates to facilitate an evaluation of our
current operating performance and a comparison to our past
operating performance.
Adjusted net income and adjusted net income per share that
exclude certain amounts, and adjusted net sales that exclude the
impact of changes in foreign currency exchange rates and/or the
impacts of recent acquisitions with significant sales, 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.
Logo - http://photos.prnewswire.com/prnh/20160203/329537LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/boston-scientific-announces-results-for-second-quarter-2016-300305254.html
SOURCE Boston Scientific Corporation