01—Abstract
Summary
Summary of the 10-K filed February 26, 2014. Cited figures are marked; the original filing is the authoritative source.
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 billiona.
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 millionb 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.
02—Key points
Key Highlights
- Net sales for 2013 were $7.143 billion, a 1% decrease from 2012, with underlying growth of 2% excluding currency impacts and divested businesses.
- The 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.
- Significant investments in R&D continued, with $861 million spent in 2013, reflecting a commitment to developing next-generation medical technologies.
- The 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.
- Cardiac Rhythm Management (CRM) sales represented 27% of total net sales but saw a slight decrease, influenced by pricing pressures and market dynamics.
- Boston 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.
- The company maintained investment-grade credit ratings and focused on deleveraging, with total debt remaining stable at around $4.24 billion.
03—One dollar
Follow one dollar
For each $1.00 of revenue in FY2013, Boston Scientific Corp lost $0.02.
- Revenue$7.14B100.0%
- Cost of revenue−$2.17B30.4%
- Gross profit$4.97B69.6%
- Operating costs−$4.85B67.9%
- Operating income$120.0M1.7%
- Interest, other & tax−$241.0M3.4%
- Net income−$121.0M1.7%
Where FY2013 revenue went
$7.14B- SG&A: $2.67B, 37% of revenue
- Other operating costs: $2.17B, 30% of revenue
- Cost of revenue: $2.17B, 30% of revenue
- Operating income: $120.0M, 1.7% of revenue
Kept 1.7% as operating incomeOperating income $120.0M · 1.7%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2013filed February 26, 2014Financial Statements
FY2013 against FY2012
| Line item | FY2013FY2012 | Change |
|---|---|---|
| Revenue | $7.14B$7.25B | −1.5% |
| Cost of Revenue | $2.17B$2.35B | −7.4% |
| Gross Profit | $4.97B$4.90B | +1.4% |
| SG&A Expenses | $2.67B$2.54B | +5.5% |
| Operating Expenses | $4.85B$8.77B | −44.7% |
| Operating Income | $120.00M-$3.87B | +103.1% |
| Interest Expense | $324.00M$261.00M | +24.1% |
| Net Income | -$121.00M-$4.07B | +97.0% |
| EPS (Basic) | $-0.09$-2.89 | +96.9% |
| EPS (Diluted) | $-0.09$-2.89 | +96.9% |
| Shares Outstanding (Basic) | 1.34B1.41B | −4.7% |
| Shares Outstanding (Diluted) | 1.34B1.41B | −4.7% |
05—Questions
Frequently Asked Questions
What were the main drivers of Boston Scientific's net sales performance in 2013?
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.
What was the net income/loss for Boston Scientific in 2013, and what factors impacted it?
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.
How is Boston Scientific addressing operational efficiency and cost management?
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.
What are the key product areas and any notable developments mentioned in the report?
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.
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