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 operational1 basis
and 9.3 percent on an organic2 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:
- Reported third quarter sales of $2.707
billion, representing an increase of 13.1 percent on a
reported basis, compared to the company's guidance range of 8 to 10
percent; 14.2 percent on an operational basis; and 9.3 percent on
an organic basis, compared to the company's guidance range of 7.5
to 9 percent, all compared to the prior year
period.3
- Reported GAAP earnings of $0.09
per share compared to the company's guidance range of $0.23 to $0.25 per
share, due to acquisition-related charges in the quarter primarily
associated with the acquisition of BTG plc (BTG Acquisition or
BTG). Achieved adjusted earnings per share of $0.39 compared to the guidance range of
$0.37 to $0.39 per share.3
- Achieved third quarter revenue growth in all segments compared
to the prior year period (excludes BTG
Acquisition†):
-
- MedSurg: 13.2 percent reported, 14.1 percent operational and
10.5 percent organic
- Rhythm and Neuro: 5.4 percent reported, 6.5 percent operational
and 3.9 percent organic
- Cardiovascular: 11.3 percent reported, 12.6 percent operational
and 12.6 percent organic
- Reported third quarter revenue growth in all regions, compared
to the prior year period (excludes BTG
Acquisition†):
-
- U.S.: 10.6 percent reported and operational
- EMEA (Europe, Middle East and Africa): 6.3 percent reported and 10.8 percent
operational
- APAC (Asia-Pacific): 13.8
percent reported and 14.2 percent operational
- Emerging Markets4: 16.1 percent reported and 19.3
percent operational
- Commenced launch of the WATCHMAN™ Left Atrial Appendage
Closure Device in Japan upon
securing positive local reimbursement; surpassed 100,000 patient
implants worldwide. Also presented, at the Transcatheter
Cardiovascular Therapeutics (TCT) annual scientific symposium,
budget implications data confirming that the WATCHMAN device is an
affordable stroke risk reduction strategy for Medicare and Medicare
beneficiaries compared to warfarin.
- Announced at TCT results from the EVOLVE Short DAPT clinical
trial that demonstrated that after being treated with the
SYNERGY™ Bioabsorbable Polymer (BP) Stent, a three-month
regimen of dual antiplatelet therapy (DAPT) is non-inferior to a
12-month DAPT regimen in certain patients with high bleeding risk.
Also announced CE Mark for the SYNERGY MEGATRON™ Bioabsorbable
Polymer Stent which is designed for use in large proximal
vessels.
- Received from the Centers for Medicare and Medicaid Services
continued new technology add-on payment (NTAP) classification for
the SENTINEL™ Cerebral Protection System and an increased
add-on payment for FY2020.
- Presented at TCT positive data for the LOTUS™ TAVR
System, a mechanically-expanding valve, including a
three-year analysis from the REPRISE III study demonstrating
significant, sustained improvement in functional and health status
following LOTUS valve implantation versus CoreValve® systems
(Medtronic), and significantly fewer cases of disabling stroke and
moderate or greater paravalvular leak versus the CoreValve
system--a self-expanding valve. Additionally, a Medicare budget
impact analysis demonstrated the mechanically-expanded LOTUS valve
is a less costly alternative to self-expanding valves at one year
post procedure in high-risk patients with aortic stenosis.
- Announced the U.S. Food and Drug Administration (FDA) approval
of ImageReady™ MRI labeling for the Vercise
Gevia™ Deep Brain Stimulation (DBS) System to
be used in a full-body magnetic resonance imaging (MRI)
environment.5
- Completed clinical trial assessing the performance of the
EXALT™ Model D Single-Use Duodenoscope during endoscopic
retrograde cholangiopancreatography procedures, with positive
results presented at the United European Gastroenterology Week
Congress.
- Announced the completion of the acquisition of BTG plc pursuant
to the previously announced scheme of arrangement. In addition,
divested microspheres and bland embolic bead products to Varian
Medical Systems, Inc.
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 Claret Medical, Inc. (Claret), Augmenix,
Inc. (Augmenix), Vertiflex, Inc. (Vertiflex) and BTG plc (BTG
Acquisition), 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. As the BTG
Acquisition had not yet closed, our previously disclosed third
quarter guidance did not include the results of BTG.
4. 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.
Periodically, we assess our list of Emerging Markets; effective
January 1, 2019, we updated our list of Emerging Market countries.
We have revised prior year amounts to the current year's
presentation. The revision had an immaterial impact on prior year
Emerging Markets sales. 5. 1.5 Tesla MRI
conditional when all conditions of use are met. †
For the third quarter of 2019, there have been no changes to our
internal reporting structure and, accordingly, we have not revised
our segment reporting or geographic presentation. We will continue
to integrate the BTG Acquisition into our operations in the fourth
quarter and will reassess our operating and reportable segments as
well as geographic presentation for any changes related to our
internal reporting structure. Our results of operations include the
results of BTG following the acquisition date of August 19, 2019.
BTG net sales are substantially U.S. based.
|
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
Markets4 (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.
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.
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
|
|
kate.haranis@bsci.com
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BSXInvestorRelations@bsci.com
|
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:
- Acquisition / divestiture-related net charges (credits) or
payments- These adjustments may consist of (a) contingent
consideration fair value adjustments; (b) gains on previously held
investments; (c) due diligence, deal fees, inventory step-up
amortization, integration and exit costs, other fees, and
accelerated compensation expense; and (d) separation costs and
gains primarily associated with the sale of a business or portion
of a business. 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, deal fees,
inventory step-up amortization, integration and exit costs include
legal, tax, severance and other expenses and gains associated with
prior and potential future acquisitions and divestitures can be
highly variable and not representative of ongoing operations. Deal
fees in 2019 included expenses for instruments entered into solely
for the purpose of financing or hedging the BTG Acquisition,
including net interest expense and hedging expenses. Upon the
acquisition closing, we classified these types of expenses and
gains as normal operating costs. Acquisition / divestiture-related
net charges (credits) are excluded 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.
- Medical device regulation charges or payments- These
adjustments represent incremental costs or payments specific to
complying with the new European Union Medical Device Regulation (EU
MDR) for previously registered products. EU MDR is a replacement of
the existing European Medical Devices Directive (MDD) regulatory
framework, and manufacturers of currently marketed medical devices
are required to comply with EU MDR beginning in May 2020. We expect
to incur expenditures in connection with the new registration of
medical devices that previously had been registered under MDD. We
consider the adoption of EU MDR to be a significant change to a
regulatory framework, and therefore, these expenditures are not
considered to be ordinary course expenditures in connection with
regulatory matters. As such, these medical device regulation
charges are excluded 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.
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.
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 the recent aforementioned
acquisitions and divestitures, 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 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, operational net sales and organic net sales, in
addition to the corresponding GAAP financial measures, provides
investors greater transparency to the information used by
management for its 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.
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SOURCE Boston Scientific Corporation