Why did GAAP EPS fall short of guidance even though adjusted EPS beat?

GAAP EPS of $0.22 came in below the $0.35–0.37 guidance range mainly due to a $276 million intangible asset impairment charge recorded in the quarter. Boston Scientific excludes this and other items such as amortization, acquisition-related charges, and restructuring from adjusted EPS, which came in at $0.62, above the $0.57–0.59 guidance.

What is driving growth in the business?

Cardiovascular drove results, growing 19.0% organically, with Cardiology up 22.0% on strong demand for the FARAPULSE pulsed field ablation system. The U.S. grew 16.9%, and Emerging Markets grew 19.3% operationally. MedSurg was a weaker spot at 7.6% organic growth, with Neuromodulation growing only 3.7% organically.

Did the company change its full-year outlook?

Yes, the full-year 2024 outlook was set at reported net sales growth of 13.5–14.5% and organic growth of 13–14%. Adjusted EPS guidance is $2.38–2.42, and GAAP EPS guidance is $1.34–1.38. The filing does not explicitly state whether this represents a raise from prior guidance, so investors should compare against the company's previous outlook.

What are the key risks or items to watch following this report?

Investors should monitor the impact of the Silk Road Medical acquisition once it closes, the potential for further intangible asset impairments, margin pressure from higher SG&A and R&D spending, and whether Cardiovascular growth can be sustained against competition. Foreign exchange, reimbursement, and regulatory developments are also flagged as risks in the company's forward-looking statements.

How profitable was the company on a GAAP basis compared with last year?

GAAP operating income was $520 million, roughly flat versus $514 million a year earlier, as revenue growth was offset by the impairment charge and higher operating expenses. GAAP net income attributable to common stockholders rose to $324 million from $261 million, helped by a lower income tax expense of $98 million compared with $156 million in the prior-year quarter.

BSX 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed July 24, 2024. Cited figures are marked; the original filing is the authoritative source.

Boston Scientific (BSX) reported second-quarter 2024 results on July 24, 2024 that beat the company's own guidance on both top and bottom lines.

Net sales were $4.120 billion^a, up 14.5% on a reported basis, 16.1% operationally (ex-FX) and 14.7% organically, versus guidance of 10.5–12.5% reported and 10–12% organic. Growth was led by Cardiovascular (up 19.0% organic, with Cardiology up 22.0%), while MedSurg grew a more modest 7.6% organically. The U.S. grew 16.9%, EMEA 16.1% operationally, APAC 13.2% operationally, and Emerging Markets 19.3% operationally.

Adjusted EPS was $0.62^b, above the $0.57–0.59 guidance range, while GAAP EPS was $0.22, well below the $0.35–0.37 guidance range, largely because of an $276 million intangible asset impairment charge. Profitability showed a notable split between GAAP and adjusted results. Gross margin on a GAAP basis was about 69.2% (2,850/4,120), and adjusted gross profit was $2,899 million.

GAAP operating income was $520 million^c, roughly flat year over year, and was pressured by the impairment charge, higher SG&A ($1.446 billion versus $1.354 billion), and R&D growth. Adjusted operating income rose to $1.119 billion from $964 million. Interest expense increased to $77 million from $70 million.

Net income attributable to common stockholders rose to $324 million^d from $261 million. Looking ahead, management raised its full-year 2024 reported net sales growth outlook to 13.5–14.5% and organic growth to 13–14%. Full-year adjusted EPS guidance is $2.38–2.42, while GAAP EPS guidance is $1.34–1.38.

For the third quarter, the company guided to 13–15% growth on both reported and organic bases, with adjusted EPS of $0.57–0.59 and GAAP EPS of $0.36–0.38. Pending the Silk Road Medical acquisition, which is subject to customary closing conditions, investors should monitor integration, further impairment risk, and the company's ability to sustain double-digit growth in Cardiovascular.

02—Key points

Key Highlights

Net sales of $4.120B grew 14.5% reported, 16.1% operational, and 14.7% organic, beating the company's guidance of 10.5–12.5% reported and 10–12% organic.
Cardiovascular was the growth engine at 19.0% organic growth (Cardiology +22.0%, driven by FARAPULSE PFA), while MedSurg grew 7.6% organically.
Adjusted EPS of $0.62 beat the $0.57–0.59 guidance range, up from $0.53 a year earlier; GAAP EPS of $0.22 missed the $0.35–0.37 guidance due to a $276M intangible asset impairment charge.
Full-year 2024 reported net sales growth guidance was set at 13.5–14.5%, with organic growth at 13–14%; adjusted EPS guidance is $2.38–2.42 and GAAP EPS guidance is $1.34–1.38.
Third-quarter 2024 guidance calls for 13–15% growth on both reported and organic bases, with adjusted EPS of $0.57–0.59.
Pending acquisition of Silk Road Medical (Nasdaq: SILK), a carotid artery disease stroke-prevention company, subject to customary closing conditions.
Regulatory and clinical milestones included NMPA approval of FARAPULSE in China, the U.S. launch of the AGENT Drug-Coated Balloon, and positive pivotal MODULAR ATP results for the Modular CRM system.

03—Questions

Frequently Asked Questions

Why did GAAP EPS fall short of guidance even though adjusted EPS beat?
GAAP EPS of $0.22 came in below the $0.35–0.37 guidance range mainly due to a $276 million intangible asset impairment charge recorded in the quarter. Boston Scientific excludes this and other items such as amortization, acquisition-related charges, and restructuring from adjusted EPS, which came in at $0.62, above the $0.57–0.59 guidance.
What is driving growth in the business?
Cardiovascular drove results, growing 19.0% organically, with Cardiology up 22.0% on strong demand for the FARAPULSE pulsed field ablation system. The U.S. grew 16.9%, and Emerging Markets grew 19.3% operationally. MedSurg was a weaker spot at 7.6% organic growth, with Neuromodulation growing only 3.7% organically.
Did the company change its full-year outlook?
Yes, the full-year 2024 outlook was set at reported net sales growth of 13.5–14.5% and organic growth of 13–14%. Adjusted EPS guidance is $2.38–2.42, and GAAP EPS guidance is $1.34–1.38. The filing does not explicitly state whether this represents a raise from prior guidance, so investors should compare against the company's previous outlook.
What are the key risks or items to watch following this report?
Investors should monitor the impact of the Silk Road Medical acquisition once it closes, the potential for further intangible asset impairments, margin pressure from higher SG&A and R&D spending, and whether Cardiovascular growth can be sustained against competition. Foreign exchange, reimbursement, and regulatory developments are also flagged as risks in the company's forward-looking statements.
How profitable was the company on a GAAP basis compared with last year?
GAAP operating income was $520 million, roughly flat versus $514 million a year earlier, as revenue growth was offset by the impairment charge and higher operating expenses. GAAP net income attributable to common stockholders rose to $324 million from $261 million, helped by a lower income tax expense of $98 million compared with $156 million in the prior-year quarter.

04—Continue

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