01—Abstract
Summary
Summary of the 10-K filed February 25, 2020. Cited figures are marked; the original filing is the authoritative source.
Boston Scientific Corporation's 2019 10-K filing highlights a year of robust growth, driven significantly by strategic acquisitions, most notably BTG plc.
The company reported net sales of $10.735 billiona, an increase of 9.3% over the prior year, with operational growth of 11.1%. This growth was broadly distributed across its key segments, including Cardiovascular and MedSurg, with notable contributions from product launches and advancements in structural heart therapies and peripheral interventions. The company's financial performance was impacted by various charges and credits, including acquisition-related costs and a significant deferred tax benefit related to intellectual property transfers, resulting in a reported net income of $4.700 billion.
Management, however, emphasizes adjusted net income of $2.234 billionb for a clearer view of underlying operational performance. Boston Scientific's strategic imperatives focus on strengthening category leadership, expanding into high-growth adjacencies, and driving global expansion, supported by continued investment in research and development. The company maintains a strong balance sheet and adequate liquidity, though it navigates an evolving healthcare landscape with pricing pressures and regulatory changes, particularly the upcoming EU MDR implementation.
02—Key points
Key Highlights
- Net sales reached $10.735 billion in 2019, up 9.3% from 2018, with strong operational growth of 11.1%.
- The acquisition of BTG plc in Q3 2019 significantly contributed to growth, particularly in the Peripheral Interventions segment.
- Key product areas like Structural Heart Therapies (WATCHMAN, ACURATE valves) and Peripheral Interventions (Eluvia stent) showed strong performance.
- Reported net income was $4.700 billion, benefiting from a $4.1 billion deferred tax benefit related to intellectual property transfers, while adjusted net income was $2.234 billion.
- The company maintained a strong liquidity position with $1.836 billion in cash provided by operating activities in 2019 and $217 million in cash and cash equivalents at year-end.
- The company continued to invest in R&D, with expenses increasing 6% to $1.174 billion, underscoring its commitment to innovation.
- Total debt increased to $10.008 billion from $7.056 billion in the prior year, largely due to financing activities related to acquisitions.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Boston Scientific Corp kept $0.44.
- Revenue$10.73B100.0%
- Cost of revenue−$3.12B29.0%
- Gross profit$7.62B71.0%
- Operating costs−$6.10B56.8%
- Operating income$1.52B14.1%
- Interest, other & tax$3.18B29.6%
- Net income$4.70B43.8%
Where FY2019 revenue went
$10.73B- SG&A: $3.94B, 37% of revenue
- Cost of revenue: $3.12B, 29% of revenue
- Other operating costs: $2.16B, 20% of revenue
- Operating income: $1.52B, 14% of revenue
Kept 14% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 25, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $10.73B$9.82B | +9.3% |
| Cost of Revenue | $3.12B$2.81B | +10.8% |
| Gross Profit | $7.62B$7.01B | +8.7% |
| SG&A Expenses | $3.94B$3.57B | +10.4% |
| Operating Expenses | $6.10B$5.50B | +10.9% |
| Operating Income | $1.52B$1.51B | +0.8% |
| Interest Expense | $473.00M$241.00M | +96.3% |
| Net Income | $4.70B$1.67B | +181.3% |
| EPS (Basic) | $3.38$1.21 | +179.3% |
| EPS (Diluted) | $3.33$1.19 | +179.8% |
| Shares Outstanding (Basic) | 1.39B1.38B | +0.8% |
| Shares Outstanding (Diluted) | 1.41B1.40B | +0.7% |
05—Questions
Frequently Asked Questions
What was Boston Scientific's revenue growth in 2019, and what were the primary drivers?
Boston Scientific reported net sales of $10.735 billion in 2019, a 9.3% increase compared to 2018. This growth was primarily driven by an operational increase of 11.1%, with contributions from strategic acquisitions, particularly BTG plc, and strong performance across its key product lines, including structural heart therapies and peripheral interventions.
How did the BTG acquisition impact the company's financial results?
The acquisition of BTG plc, completed in the third quarter of 2019, contributed approximately $144 million to the Peripheral Interventions segment's net sales in 2019. It also added the Specialty Pharmaceuticals business as a new operating segment. The acquisition involved significant upfront cash consideration and related financing, impacting the company's debt levels and leading to acquisition-related charges and amortization expenses.
What is the company's outlook on debt and liquidity?
As of December 31, 2019, Boston Scientific had total debt of $10.008 billion, an increase from $7.056 billion in 2018, primarily due to financing acquisitions. The company ended 2019 with $217 million in cash and cash equivalents and reported $1.836 billion in cash provided by operating activities. Management believes its existing liquidity and cash flow are sufficient to fund operations, capital expenditures, and debt obligations.
What were the significant litigation or regulatory matters impacting the company in 2019?
The company continued to manage ongoing product liability litigation, particularly related to transvaginal surgical mesh products, and reached settlement agreements for a substantial portion of these cases. It also reported significant litigation-related charges and credits in its income statement, including a gain from a settlement with Edwards Lifesciences Corporation. The company also noted the upcoming implementation of the European Union Medical Device Regulation (EU MDR), which is expected to incur significant costs over the next three years.
06—Continue