10-KPeriod: FY2013

BOSTON SCIENTIFIC CORP Annual Report, Year Ended Dec 31, 2013

Filed February 26, 2014For Securities:BSX

Summary

Boston Scientific Corporation's 2013 10-K filing reveals a year of strategic recalibration, with net sales slightly decreasing year-over-year to $7.143 billion. This dip was influenced by foreign currency fluctuations and the ongoing impact of divested businesses. However, on a constant currency and adjusted basis, the company saw underlying growth driven by its Endoscopy, Neuromodulation, and Peripheral Interventions segments. The company reported a net loss of $121 million for the year, largely due to significant goodwill and intangible asset impairment charges, restructuring costs, and litigation expenses. Despite these headwinds, Boston Scientific demonstrated a commitment to innovation with new product launches and continued investment in research and development, including advancements in coronary stent systems like the Promus PREMIER™ and the SYNERGY™ system. The company also made strides in its structural heart therapy and cardiac rhythm management segments, highlighting a focus on expanding its less-invasive medical device portfolio.

Financial Highlights

53 data points
Beta

Revenue

$7.14B

69.6% Gross Margin

Net Income

-$121.00M

-1.7% Net Margin

EPS (Diluted)

$-0.09

Total Assets

$16.57B

Cash & Equivalents

$217.00M

Free Cash Flow

$865.00M

Financial Statements
Beta
Revenue$7.14B
Cost of Revenue$2.17B
Gross Profit$4.97B
SG&A Expenses$2.67B
Operating Expenses$4.85B
Operating Income$120.00M
Interest Expense$324.00M
Net Income-$121.00M
EPS (Basic)$-0.09
EPS (Diluted)$-0.09
Shares Outstanding (Basic)1.34B
Shares Outstanding (Diluted)1.34B

Key Highlights

  • 1Net sales for 2013 were $7.143 billion, a 1% decrease from 2012, with underlying growth of 2% excluding currency impacts and divested businesses.
  • 2The company reported a net loss of $121 million for 2013, a significant improvement from the $4.068 billion net loss in 2012, mainly due to reduced impairment charges.
  • 3Significant investments in R&D continued, with $861 million spent in 2013, reflecting a commitment to developing next-generation medical technologies.
  • 4The company launched key products, including the Promus PREMIER™ Everolimus-Eluting Platinum Chromium Coronary Stent System in the U.S. and Europe and received CE Mark approval for the Lotus™ Valve System for transcatheter aortic valve replacement.
  • 5Cardiac Rhythm Management (CRM) sales represented 27% of total net sales but saw a slight decrease, influenced by pricing pressures and market dynamics.
  • 6Boston Scientific initiated a '2014 Restructuring plan' aimed at improving operational effectiveness and efficiency, with an estimated annual pre-tax operating expense reduction of $150 million to $200 million by exiting 2015.
  • 7The company maintained investment-grade credit ratings and focused on deleveraging, with total debt remaining stable at around $4.24 billion.

Frequently Asked Questions

Net sales in 2013 were $7.143 billion, a slight decrease from the previous year. This was influenced by unfavorable foreign currency fluctuations and reduced sales from divested businesses. However, excluding these factors, net sales increased by 2%, primarily driven by growth in the Endoscopy ($89 million increase), Neuromodulation ($86 million increase), and Peripheral Interventions ($15 million increase) businesses. This growth was partially offset by a decline in Interventional Cardiology sales.

Boston Scientific reported a net loss of $121 million ($0.09 per share) for 2013. This was an improvement from the substantial net loss of $4.068 billion ($2.89 per share) in 2012. The 2013 results included significant goodwill and intangible asset impairment charges ($423 million goodwill impairment), acquisition- and divestiture-related charges, restructuring and litigation-related charges, debt extinguishment charges, and amortization expenses. Excluding these items, adjusted net income was $991 million, or $0.73 per share.

The company is actively pursuing restructuring and optimization initiatives. In October 2013, it announced a '2014 Restructuring plan' focused on simplifying its manufacturing plant structure, driving operational efficiencies, and streamlining organizational reporting. This plan is expected to reduce annual pre-tax operating expenses by $150 million to $200 million by the end of 2015, with a substantial portion of these savings reinvested in growth initiatives.

The company operates across several key segments: Cardiovascular (Interventional Cardiology and Peripheral Interventions), Rhythm Management (Cardiac Rhythm Management and Electrophysiology), and MedSurg (Endoscopy, Urology and Women's Health, Neuromodulation). Notable developments include the U.S. FDA approval and launch of the Promus PREMIER™ coronary stent system, CE Mark approval and European launch of the Lotus™ Valve System for aortic stenosis, and progress with the WATCHMAN® Left Atrial Appendage Closure device, with expected FDA approval in the first half of 2014. The Neuromodulation business also showed strong growth, driven by the Precision Spectra™ Spinal Cord Stimulator System.