10-QPeriod: Q2 FY2019

BOSTON SCIENTIFIC CORP Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 30, 2019For Securities:BSX

Summary

Boston Scientific Corporation (BSX) reported its second quarter and first six months results for 2019. For the three months ended June 30, 2019, net sales increased by 5.6% to $2.631 billion compared to the prior year, driven by operational growth of 8.0% which was partially offset by foreign currency headwinds. Reported net income for the quarter was $154 million ($0.11 per diluted share). Excluding certain charges and credits, adjusted net income was $550 million ($0.39 per diluted share). For the six months ended June 30, 2019, net sales grew 5.2% to $5.124 billion, with operational net sales growth of 7.9%. Reported net income was $578 million ($0.41 per diluted share), while adjusted net income reached $1.040 billion ($0.74 per diluted share). The company highlighted strong performance in its Urology and Pelvic Health business, alongside steady contributions from its Cardiovascular segment. The company also advanced its strategic acquisition pipeline, notably the pending acquisition of BTG plc, which is expected to close in August 2019, and the recent closing of the Vertiflex, Inc. acquisition.

Financial Highlights

50 data points
Beta

Revenue

$2.63B

71.2% Gross Margin

Net Income

$154.00M

5.9% Net Margin

EPS (Diluted)

$0.11

Total Assets

$24.31B

Cash & Equivalents

$123.00M

Free Cash Flow

$201.00M

Financial Statements
Beta
Revenue$2.63B
Cost of Revenue$758.00M
Gross Profit$1.87B
SG&A Expenses$968.00M
Operating Expenses$1.49B
Operating Income$384.00M
Interest Expense$89.00M
Net Income$154.00M
EPS (Basic)$0.11
EPS (Diluted)$0.11
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.41B

Key Highlights

  • 1Net sales for Q2 2019 increased 5.6% to $2.631 billion, with operational growth of 8.0%.
  • 2Reported net income for Q2 2019 was $154 million ($0.11/share), while adjusted net income was $550 million ($0.39/share).
  • 3For the first six months of 2019, net sales increased 5.2% to $5.124 billion, with operational growth of 7.9%.
  • 4Reported net income for the first six months of 2019 was $578 million ($0.41/share), while adjusted net income was $1.040 billion ($0.74/share).
  • 5Urology and Pelvic Health business saw strong growth of 13.0% in Q2 2019, driven by prostate health products.
  • 6The company reported $2.298 billion in restricted cash related to the proposed BTG Acquisition.
  • 7Total debt increased to $9.541 billion as of June 30, 2019, largely due to senior notes offerings.

Frequently Asked Questions

Boston Scientific reported a 5.6% increase in net sales to $2.631 billion for the second quarter of 2019 compared to the prior year. This growth was primarily driven by operational improvements, with an 8.0% increase in operational net sales, partially offset by a negative impact from foreign currency fluctuations. The reported net income was $154 million, or $0.11 per diluted share. On an adjusted basis, excluding certain charges and credits, the net income was $550 million, or $0.39 per diluted share.

Key growth drivers include the Urology and Pelvic Health business, which saw a 13.0% increase in net sales, boosted by prostate health products like the SpaceOAR Hydrogel System and Rezūm System. Other contributing factors include strength in structural heart therapies within Interventional Cardiology (e.g., ACURATE TAVR, Sentinel Cerebral Embolic Protection System, WATCHMAN LAAC Device) and growth in the Endoscopy business, particularly in the biliary and hemostasis franchises. Emerging Markets also showed robust growth of 12.3%.

The proposed acquisition of BTG plc was expected to close in August 2019. The company has secured significant financing for this acquisition, including a $4.300 billion offering of senior notes in February 2019. As of June 30, 2019, remaining proceeds from this offering, amounting to $2.298 billion, were held as restricted cash to finance a portion of the acquisition. The company also has access to delayed draw term loan facilities totaling $2.000 billion specifically for the BTG acquisition, though no amounts were borrowed under these facilities as of the reporting date.

Boston Scientific's total debt increased to $9.541 billion as of June 30, 2019, up from $7.056 billion as of December 31, 2018. This increase is primarily due to the issuance of $4.300 billion in senior notes in February 2019. A portion of these proceeds were used to repay existing debt, while the remainder is earmarked for the BTG acquisition. The company reported compliance with its debt covenants as of June 30, 2019.