01—Abstract
Summary
Summary of the 10-K filed February 23, 2017. Cited figures are marked; the original filing is the authoritative source.
Boston Scientific Corporation (BSX) reported significant net sales growth of 12% in 2016, reaching $8.386 billiona.
This growth was driven by strong performance across its key business segments, notably Urology and Pelvic Health (45%b increase, bolstered by acquisitions) and Interventional Cardiology (12% increase, driven by drug-eluting stents and structural heart products). The company's strategic focus on innovation and market expansion appears to be yielding positive financial results, with adjusted net income showing a substantial increase. However, the report also highlights significant litigation-related charges, particularly from transvaginal surgical mesh cases, which impacted reported net income.
The company continues to invest heavily in research and development, underscoring its commitment to future growth through new product introductions and technological advancements. Despite facing competitive pressures and regulatory complexities inherent in the medical device industry, Boston Scientific demonstrated solid operational execution and revenue generation in 2016.
02—Key points
Key Highlights
- Net sales increased by 12% to $8.386 billion in 2016, driven by strong performance across most business segments.
- Urology and Pelvic Health segment experienced a significant 45% sales increase, largely due to acquisitions.
- Interventional Cardiology sales grew 12%, supported by drug-eluting stents and structural heart devices like the WATCHMAN and Lotus valve systems.
- Reported net income was $347 million ($0.25 per diluted share), but significant litigation-related charges ($804 million pre-tax) impacted profitability.
- Research and Development expenses increased by 5% to $920 million, reflecting continued investment in innovation.
- The company generated $972 million in cash from operating activities, a substantial increase from the prior year.
- Acquisitions played a key role in growth, with notable additions including AMS Portfolio, EndoChoice, and Cosman Medical.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2016, Boston Scientific Corp kept $0.04.
- Revenue$8.39B100.0%
- Cost of revenue−$2.42B28.9%
- Gross profit$5.96B71.1%
- Operating costs−$5.51B65.8%
- Operating income$447.0M5.3%
- Interest, other & tax−$100.0M1.2%
- Net income$347.0M4.1%
Where FY2016 revenue went
$8.39B- SG&A: $3.10B, 37% of revenue
- Cost of revenue: $2.42B, 29% of revenue
- Other operating costs: $2.42B, 29% of revenue
- Net income: $347.0M, 4.1% of revenue
- Interest, other & tax: $100.0M, 1.2% of revenue
Kept 4.1% as net incomeNet income $347.0M · 4.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2016filed February 23, 2017Financial Statements
FY2016 against FY2015
| Line item | FY2016FY2015 | Change |
|---|---|---|
| Revenue | $8.39B$7.48B | +12.2% |
| Cost of Revenue | $2.42B$2.17B | +11.6% |
| Gross Profit | $5.96B$5.30B | +12.4% |
| SG&A Expenses | $3.10B$2.87B | +7.9% |
| Operating Expenses | $5.51B$5.59B | −1.3% |
| Operating Income | $447.00M-$283.00M | +258.0% |
| Interest Expense | $233.00M$284.00M | −18.0% |
| Net Income | $347.00M-$239.00M | +245.2% |
| EPS (Basic) | $0.26$-0.18 | +244.4% |
| EPS (Diluted) | $0.25$-0.18 | +238.9% |
| Shares Outstanding (Basic) | 1.36B1.34B | +1.2% |
| Shares Outstanding (Diluted) | 1.38B1.34B | +2.7% |
05—Questions
Frequently Asked Questions
What was Boston Scientific's overall financial performance in 2016?
In 2016, Boston Scientific reported a 12% increase in net sales, reaching $8.386 billion. The company experienced a net income of $347 million ($0.25 per diluted share). While revenue showed robust growth, reported net income was significantly impacted by substantial litigation-related charges.
Which business segments performed particularly well in 2016?
The Urology and Pelvic Health segment saw the most significant growth with a 45% increase in net sales, largely driven by strategic acquisitions. The Interventional Cardiology segment also performed strongly, with a 12% increase in net sales, supported by key products like drug-eluting stents and structural heart devices.
What are the main risk factors identified by Boston Scientific for 2017?
Key risks highlighted include intense competition and the rapid pace of technological change in the medical device industry, potential declines in market size and average selling prices, healthcare cost containment pressures and regulatory reforms, and the successful integration of acquired businesses. Significant litigation and potential regulatory actions also remain a concern.
How did acquisitions contribute to Boston Scientific's 2016 results?
Acquisitions were a significant driver of growth in 2016. Notable acquisitions included the AMS Portfolio (Urology and Pelvic Health), EndoChoice (Endoscopy), and Cosman Medical (Neuromodulation), which contributed substantial net sales and expanded the company's product portfolios and market reach.
06—Continue