10-KPeriod: FY2015

BOSTON SCIENTIFIC CORP Annual Report, Year Ended Dec 31, 2015

Filed February 24, 2016For Securities:BSX

Summary

Boston Scientific Corporation (BSX) reported fiscal year 2015 net sales of $7.477 billion, a slight increase of 1% year-over-year. However, excluding the significant negative impact of foreign currency fluctuations ($505 million), net sales grew by a more robust 8%. This growth was driven by strong performance in its Peripheral Interventions, Urology and Pelvic Health (bolstered by the August 2015 acquisition of the American Medical Systems male urology portfolio), and Neuromodulation businesses. The company reported a net loss of $239 million ($0.18 per share) for the year. This loss was substantially impacted by significant non-GAAP adjustments, including substantial litigation-related charges ($1.105 billion), acquisition- and divestiture-related charges, and restructuring costs. Excluding these items, adjusted net income was $1.267 billion ($0.93 per share). The company continues to invest in its strategic imperatives, focusing on strengthening execution, expanding into high-growth adjacencies through strategic acquisitions, driving global expansion, managing costs, and developing key capabilities. The acquisition of the AMS male urology portfolio for $1.616 billion was a key strategic move in 2015, expanding its Urology and Pelvic Health segment. Boston Scientific also made progress in its key product launches and pipeline development, including the WATCHMAN device in the U.S. and its Lotus Valve System in Europe. Financially, the company's debt levels increased to $5.677 billion primarily due to funding acquisitions. While operating cash flow decreased significantly in 2015 due to litigation-related payments, the company maintained its investment-grade credit ratings. Investors should monitor the resolution of ongoing litigation and the company's ability to integrate its recent acquisitions effectively while managing its debt.

Financial Highlights

53 data points
Beta

Revenue

$7.48B

70.9% Gross Margin

Net Income

-$239.00M

-3.2% Net Margin

EPS (Diluted)

$-0.18

Total Assets

$18.13B

Cash & Equivalents

$319.00M

Free Cash Flow

$444.00M

Financial Statements
Beta
Revenue$7.48B
Cost of Revenue$2.17B
Gross Profit$5.30B
SG&A Expenses$2.87B
Operating Expenses$5.59B
Operating Income-$283.00M
Interest Expense$284.00M
Net Income-$239.00M
EPS (Basic)$-0.18
EPS (Diluted)$-0.18
Shares Outstanding (Basic)1.34B
Shares Outstanding (Diluted)1.34B

Key Highlights

  • 1Net sales grew 1% to $7.477 billion, with an 8% increase excluding foreign currency impacts, driven by strong performance in Peripheral Interventions, Urology/Pelvic Health, and Neuromodulation.
  • 2Completed the significant acquisition of the American Medical Systems male urology portfolio for $1.616 billion, strengthening the Urology and Pelvic Health segment.
  • 3Reported a net loss of $239 million, heavily impacted by $1.105 billion in litigation-related charges, among other adjustments.
  • 4Adjusted net income (non-GAAP) was $1.267 billion, demonstrating underlying profitability excluding significant one-time items.
  • 5Operating cash flow decreased significantly in 2015 to $600 million from $1.269 billion in 2014, primarily due to large litigation-related payments.
  • 6Total debt increased to $5.677 billion, largely to fund acquisitions, while maintaining investment-grade credit ratings.
  • 7Continued R&D investment of $876 million, crucial for maintaining a pipeline of new products and technologies.

Frequently Asked Questions

Boston Scientific's net sales grew by 1% to $7.477 billion. Excluding the negative impact of foreign currency fluctuations, net sales increased by 8%. This growth was primarily driven by strong performance in its Peripheral Interventions, Urology and Pelvic Health (significantly boosted by the acquisition of the AMS male urology portfolio), and Neuromodulation businesses. Key product launches like the WATCHMAN device in the U.S. and continued international sales of the Lotus Valve System also contributed positively.

Boston Scientific reported a net loss of $239 million for 2015. This loss was significantly impacted by substantial non-GAAP adjustments, most notably $1.105 billion in litigation-related charges, along with acquisition-related costs, restructuring charges, and amortization expenses. Excluding these significant items, the company's adjusted net income was $1.267 billion, or $0.93 per share. Investors should look at the adjusted figures to understand the underlying operational profitability, while remaining aware of the significant litigation expenses that impacted the reported results.

The company's total debt increased to $5.677 billion, primarily to fund strategic acquisitions like the AMS male urology portfolio. Operating cash flow saw a significant decrease to $600 million in 2015 from $1.269 billion in 2014, largely due to substantial litigation-related payments made during the year. Despite the increase in debt, Boston Scientific maintained its investment-grade credit ratings, indicating continued financial stability.

Key risks and challenges for Boston Scientific include managing significant ongoing litigation and associated charges, successfully integrating recent acquisitions, navigating the competitive medical device market with potential pricing pressures, and dealing with evolving healthcare policies and reimbursement landscapes globally. The company also faces risks related to product development timelines, regulatory approvals, and potential disruptions in its supply chain or manufacturing operations.