10-QPeriod: Q1 FY2019

BOSTON SCIENTIFIC CORP Quarterly Report for Q1 Ended Mar 31, 2019

Filed April 29, 2019For Securities:BSX

Summary

Boston Scientific Corporation reported strong financial results for the first quarter of 2019, showcasing robust revenue growth and improved profitability. Net sales increased by 4.8% to $2.493 billion, driven by strong operational performance across key segments, particularly in Urology and Pelvic Health and Peripheral Interventions, partially offset by foreign currency headwinds. The company demonstrated effective cost management, leading to a significant increase in net income to $424 million, up from $298 million in the prior year quarter. This performance highlights the company's ability to execute its strategic initiatives and navigate competitive market dynamics. Operationally, the company continues to invest in research and development and pursue strategic acquisitions, such as the proposed acquisition of BTG plc, which is expected to close mid-year 2019. The company also addressed significant litigation matters, including a substantial settlement payment received from Edwards Lifesciences Corporation. Despite some ongoing legal challenges, such as those related to transvaginal surgical mesh products, Boston Scientific appears to be managing these effectively through accruals and settlements. The company also highlighted its financial flexibility with substantial cash reserves and access to credit facilities.

Financial Highlights

50 data points
Beta

Revenue

$2.49B

70.7% Gross Margin

Net Income

$424.00M

17.0% Net Margin

EPS (Diluted)

$0.30

Total Assets

$23.80B

Cash & Equivalents

$139.00M

Free Cash Flow

$287.00M

Financial Statements
Beta
Revenue$2.49B
Cost of Revenue$730.00M
Gross Profit$1.76B
SG&A Expenses$869.00M
Operating Expenses$1.22B
Operating Income$541.00M
Interest Expense$109.00M
Net Income$424.00M
EPS (Basic)$0.31
EPS (Diluted)$0.30
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net sales increased by 4.8% year-over-year to $2.493 billion.
  • 2Net income significantly improved to $424 million, up from $298 million in Q1 2018.
  • 3Operational net sales growth was 7.8%, indicating strong underlying business performance despite foreign currency impacts.
  • 4The company received a significant one-time settlement payment of $180 million from Edwards Lifesciences Corporation.
  • 5The acquisition of Millipede, Inc. closed in January 2019, and the proposed acquisition of BTG plc is on track to close mid-year 2019.
  • 6Total debt increased to $9.228 billion, largely due to a substantial senior notes offering in February 2019 to fund strategic initiatives, including the BTG acquisition.

Frequently Asked Questions

The primary driver of the revenue increase was strong operational net sales growth of 7.8%, particularly in segments like Urology and Pelvic Health and Peripheral Interventions. This growth was partially offset by a negative impact of foreign currency fluctuations.

Boston Scientific has established a product liability accrual for known and estimated future cases and claims related to its transvaginal surgical mesh products. They have also entered into master settlement agreements in principle to resolve a substantial number of these cases, with a significant portion already settled. The company continues to assess potential future liabilities.

The proposed acquisition of BTG plc is progressing and is expected to be effective in mid-year 2019. Regulatory reviews are ongoing, including from the U.S. Federal Trade Commission. Boston Scientific has secured significant financing for this acquisition.

Total debt increased significantly to $9.228 billion as of March 31, 2019, primarily due to a $4.300 billion senior notes offering completed in February 2019. A portion of these proceeds are earmarked for the proposed BTG Acquisition, while other proceeds were used to repay existing senior notes and a term loan.