10-QPeriod: Q1 FY2021

BOSTON SCIENTIFIC CORP Quarterly Report for Q1 Ended Mar 31, 2021

Filed May 6, 2021For Securities:BSX

Summary

Boston Scientific Corporation reported strong financial results for the first quarter of 2021, with a significant increase in net sales and a substantial rebound in net income compared to the same period in 2020. Net sales grew by 8.2% to $2.752 billion, driven by an 5.6% operational growth and the positive impact of foreign currency fluctuations. This growth was observed across most of its key business segments, indicating a recovery from pandemic-related impacts and successful integration of recent acquisitions. The company achieved a net income available to common stockholders of $327 million, or $0.23 per diluted share, a marked improvement from $11 million ($0.01 per diluted share) in Q1 2020. Excluding certain non-GAAP adjustments, adjusted net income available to common stockholders was $524 million, or $0.37 per diluted share, reflecting the underlying strength of the business. The company also successfully completed the divestiture of its Specialty Pharmaceuticals business and made strategic acquisitions, notably Preventice Solutions, Inc., which contributed to the growth in its Cardiac Rhythm Management segment. Boston Scientific maintained a solid financial position with $2.016 billion in cash and cash equivalents and $2.708 billion in working capital as of March 31, 2021. The company is navigating the ongoing COVID-19 pandemic, noting some regions experienced renewed restrictions, but remains optimistic about its long-term fundamentals and ability to manage through challenges.

Financial Highlights

49 data points
Beta

Revenue

$2.75B

67.5% Gross Margin

Net Income

$341.00M

12.4% Net Margin

EPS (Diluted)

$0.23

Total Assets

$30.90B

Cash & Equivalents

$2.02B

Free Cash Flow

$209.00M

Financial Statements
Beta
Revenue$2.75B
Cost of Revenue$894.00M
Gross Profit$1.86B
SG&A Expenses$1.02B
Operating Expenses$1.49B
Operating Income$370.00M
Interest Expense$82.00M
Net Income$341.00M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)1.42B
Shares Outstanding (Diluted)1.43B

Key Highlights

  • 1Net sales increased by 8.2% to $2.752 billion in Q1 2021, up from $2.543 billion in Q1 2020, driven by operational growth and favorable currency movements.
  • 2Net income available to common stockholders rose significantly to $327 million ($0.23 per diluted share) in Q1 2021, from $11 million ($0.01 per diluted share) in Q1 2020.
  • 3Adjusted net income available to common stockholders (a non-GAAP measure) was $524 million ($0.37 per diluted share) for Q1 2021, demonstrating robust underlying performance.
  • 4Completed the divestiture of the Specialty Pharmaceuticals business on March 1, 2021, for approximately $800 million.
  • 5Acquired Preventice Solutions, Inc. on March 1, 2021, for an upfront payment of $925 million, adding mobile cardiac health solutions to its portfolio.
  • 6Gross profit margin slightly decreased to 67.5% from 68.3% year-over-year, primarily due to unfavorable product mix and pricing pressures, partially offset by manufacturing cost reductions.
  • 7The company ended the quarter with $2.016 billion in cash and cash equivalents and maintained compliance with its financial covenants.

Frequently Asked Questions

The primary drivers of the 8.2% increase in net sales to $2.752 billion were operational net sales growth of 5.6%, the positive impact of foreign currency fluctuations (2.6%), and contributions from the acquisition of Preventice Solutions, Inc. The resumption of elective and semi-emergent medical procedures, which had been deferred during the COVID-19 pandemic, also significantly contributed to the sales growth across most business segments.

Profitability significantly improved. Net income available to common stockholders increased substantially from $11 million in Q1 2020 to $327 million in Q1 2021. On an adjusted basis, which excludes certain charges and credits, adjusted net income available to common stockholders was $524 million in Q1 2021, up from $391 million in Q1 2020. This improvement reflects the strong top-line growth and improved operational efficiencies, despite a slight decrease in gross profit margin.

During the first quarter of 2021, Boston Scientific completed two significant corporate actions: the divestiture of its Specialty Pharmaceuticals business for approximately $800 million and the acquisition of Preventice Solutions, Inc. for an upfront cash payment of $925 million. The acquisition of Preventice is expected to enhance the company's Cardiac Rhythm Management business.

The company ended the quarter with a strong liquidity position, holding $2.016 billion in cash and cash equivalents and $2.708 billion in working capital. They also maintained compliance with their financial covenants. Boston Scientific took proactive steps in 2020 to ensure liquidity and manage costs in light of the COVID-19 pandemic and believes its current resources are sufficient to fund operations, investments, and debt obligations for at least the next 12 months.