01—Abstract
Summary
Summary of the 10-K filed February 20, 2018. Cited figures are marked; the original filing is the authoritative source.
Boston Scientific Corporation (BSX) reported significant progress in its 2017 fiscal year, demonstrating robust revenue growth driven by strong performance across its diverse product portfolio.
The company's strategic imperatives, including strengthening category leadership and expanding into high-growth adjacencies, appear to be yielding positive results, as evidenced by increases in net sales across multiple business segments like Interventional Cardiology, Peripheral Interventions, and MedSurg. Acquisitions, such as Symetis SA and EndoChoice Holdings, Inc., also contributed to this growth, with ongoing integration efforts expected to further enhance market position. Financially, BSX navigated a complex market, managing expenses effectively while continuing to invest in research and development.
While the company reported a net income of $104 milliona ($0.08 per diluted share) on a GAAP basis, adjusted net income (excluding certain charges and credits) was significantly higher at $1.752 billion ($1.26 per diluted share), highlighting the impact of significant non-recurring items, including litigation-related charges and the Tax Cuts and Jobs Act. The company maintained investment-grade credit ratings and demonstrated strong cash flow from operations, supporting its liquidity and capital resource needs. Investors should note the substantial ongoing litigation reserves and the company's strategic focus on innovation and market expansion.
02—Key points
Key Highlights
- Net sales increased by 7.9% to $9.048 billion in 2017, driven by growth in key segments like Interventional Cardiology, Peripheral Interventions, and MedSurg.
- Acquisitions, including Symetis SA and EndoChoice Holdings, Inc., contributed to revenue growth and portfolio expansion.
- GAAP net income was $104 million ($0.08 per diluted share), while adjusted net income (excluding certain charges) was $1.752 billion ($1.26 per diluted share), indicating significant non-recurring items impacting reported net income.
- Research and Development expenses increased by 8% to $997 million, underscoring the company's commitment to innovation and future growth.
- The company maintained investment-grade credit ratings, with cash provided by operating activities reaching $1.426 billion, demonstrating solid cash flow generation.
- Significant litigation-related charges were recorded, with reserves totaling $1.612 billion as of December 31, 2017, highlighting a key risk factor.
- The company's strategic focus includes strengthening category leadership and expanding into high-growth adjacencies, supported by investments in R&D and strategic acquisitions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2017, Boston Scientific Corp kept $0.01.
- Revenue$9.05B100.0%
- Cost of revenue−$2.59B28.7%
- Gross profit$6.46B71.3%
- Operating costs−$5.17B57.1%
- Operating income$1.28B14.2%
- Interest, other & tax−$1.18B13.1%
- Net income$104.0M1.1%
Where FY2017 revenue went
$9.05B- SG&A: $3.29B, 36% of revenue
- Cost of revenue: $2.59B, 29% of revenue
- Other operating costs: $1.88B, 21% of revenue
- Interest, other & tax: $1.18B, 13% of revenue
- Net income: $104.0M, 1.1% of revenue
Kept 1.1% as net incomeNet income $104.0M · 1.1%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2017filed February 20, 2018Financial Statements
FY2017 against FY2016
| Line item | FY2017FY2016 | Change |
|---|---|---|
| Revenue | $9.05B$8.39B | +7.9% |
| Cost of Revenue | $2.59B$2.42B | +7.0% |
| Gross Profit | $6.46B$5.96B | +8.3% |
| SG&A Expenses | $3.29B$3.10B | +6.3% |
| Operating Expenses | $5.17B$5.51B | −6.3% |
| Operating Income | $1.28B$447.00M | +187.5% |
| Interest Expense | $229.00M$233.00M | −1.7% |
| Net Income | $104.00M$347.00M | −70.0% |
| EPS (Basic) | $0.08$0.26 | −69.2% |
| EPS (Diluted) | $0.08$0.25 | −68.0% |
| Shares Outstanding (Basic) | 1.37B1.36B | +0.9% |
| Shares Outstanding (Diluted) | 1.39B1.38B | +1.1% |
05—Questions
Frequently Asked Questions
What was Boston Scientific's overall financial performance in 2017?
In 2017, Boston Scientific reported a net sales increase of 7.9% to $9.048 billion. While GAAP net income was $104 million ($0.08 per diluted share), adjusted net income, which excludes significant charges like litigation expenses and the impact of the Tax Cuts and Jobs Act, was $1.752 billion ($1.26 per diluted share). The company generated $1.426 billion in cash from operations and maintained investment-grade credit ratings.
Which business segments drove the revenue growth in 2017?
Revenue growth was driven by strong performance across several segments. The Interventional Cardiology segment grew 6.1%, Peripheral Interventions grew 6.8%, Rhythm Management grew 2.5%, and the MedSurg segment (primarily Endoscopy and Urology and Pelvic Health) showed robust growth of 12.4% and 11.8% respectively. Acquisitions also contributed to this growth.
What is the impact of litigation on Boston Scientific's financial results?
Boston Scientific has significant ongoing litigation, particularly related to transvaginal surgical mesh products. The company recorded litigation-related net charges of $285 million in 2017 and maintains substantial legal reserves totaling $1.612 billion as of December 31, 2017. These legal matters represent a material risk and can impact financial results, cash flows, and debt covenant compliance.
How is the company investing in future growth?
Boston Scientific is investing in future growth through its strategic imperatives, which include strengthening category leadership and expanding into high-growth adjacencies. This is demonstrated by a consistent investment in research and development, which increased by 8% to $997 million in 2017. The company also pursues strategic acquisitions to enhance its product portfolio and market reach.
06—Continue