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Boston Scientific (BSX) Beats on Q4 Earnings, Margins Dip

Zacks Equity Research

Boston Scientific Corporation BSX posted adjusted earnings per share (EPS) of 39 cents in the fourth quarter of 2018, up 14.7% from the year-ago quarter. Earnings surpassed the Zacks Consensus Estimate of 37 cents. Further, adjusted EPS exceeded the company's guided range of 30-32 cents.

Reported EPS for the forth quarter was 27 cents in comparison with loss of 45 cents per share in the year-ago quarter.

Full-year adjusted EPS came in at $1.47, a 16.7% improvement from the year-ago period. This also surpassed the Zacks Consensus Estimate of $1.39 as well as the company-provided guidance of $1.38-$1.40.

Revenues in Detail

Revenues in the fourth quarter were up 6.4% year over year on a reported basis, up 8.2% on an operational basis (at constant exchange rate or CER) and up 7% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions) to $2.56 billion. Revenues exceeded the Zacks Consensus Estimate by 0.11%.

Boston Scientific Corporation Price, Consensus and EPS Surprise

Boston Scientific Corporation Price, Consensus and EPS Surprise | Boston Scientific Corporation Quote

For the year 2018, revenues were $9.82 billion, up 8.6% on a reported basis (up 8% on an operational basis and up 7.2% on an organic basis).

In the fourth quarter, the company achieved 7% growth in the United States on a reported basis (same operationally), 5.1% rise in Europe, Middle East and Africa region (up 9.2%); up 5.2% in the Asia Pacific region (up 7.1%), up 7.2% in Latin America and Canada (up 22.2%) and up 16.8% in the emerging markets (up 27.2%).

Segment Analysis

Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro and MedSurg.

The company generates maximum revenues from Cardiovascular. Sales from its subsegments — Interventional Cardiology and Peripheral Interventions — were $668 million (up 6.1% year over year organically) and $302 million (up 11.2%), respectively in the fourth quarter.

Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected an 1.7% year-over-year increase in organic sales to $488 million in the reported quarter.

Electrophysiology sales went up 8% year over year organically to $81 million.

Neuromodulation sales rose 18.9% year over year organically to $220 million.

Other segments like Endoscopy and Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $458 million (up 6.6% organically) and $342 million (up 5.6%), respectively.


Gross margin in the fourth quarter contracted 52 basis points (bps) year over year to 71.5% due to an 8.3% rise in cost of products sold. Adjusted operating margin contracted 117 bps to 22.4% in the reported quarter.

During the quarter, selling, general and administrative expenses went up 7.6% to $953 million and research and development expenses rose 9.1% to $288 million. Royalty expenses of $18 million remain in line with the previous quarter.


Boston Scientific has provided a guidance for 2019. The company projects revenue growth in the range of 7-9% on a reported basis and around 7-8.5% on an organic basis (at CER, excluding contribution of approximately 110 bps from certain acquisitions with no prior period related net sales). The Zacks Consensus Estimate 2019 revenues is pegged at $10.62 billion.

The company expects adjusted 2019 EPS in the band of $1.53-$1.58. The Zacks Consensus Estimate of $1.57 is within but near to the higher-end of the guided band.

The company also provided its first quarter of 2019 financial outlook. It projects revenue growth in the range of 6%-7% on a reported basis and around 7%-8% on an organic basis.  Adjusted EPS is expected in the band of 35-36 cents. The consensus mark for EPS stands at 37 cents while the same for revenues is at $2.54 billion.

Our Take

Boston Scientific reported a solid fourth quarter with earnings and revenues both ahead of the respective Zacks Consensus Estimate. Growth across all business lines and geographies was promising.

The company is leaving no stone unturned to strengthen its core businesses and invest in new technologies as well as global markets, which accounted for the uptick in sales across all geographies in the fourth quarter.

We are also optimistic about the receipt of FDA approval for its4.50 mm and 5.00 mm diameter SYNERGY Everolimus-Eluting Platinum Chromium Coronary Stent System. This apart, it also got FDA nod for its Vercise Primary Cell and Vercise Gevia Deep Brain

Stimulation (DBS) Systems. As major developments, the company closed the acquisition of Millipede and entered in to an agreement to buy BTG plc.

Zacks Rank & Key Picks

Boston Scientific has a Zacks Rank #3 (Hold).Some better-ranked MedTech stocks that posted solid results in their respective quarters are Varian Medical Systems VAR, AngioDynamics ANGO and CONMED Corp. CNMD.

Varian reported fiscal first-quarter adjusted EPS of $1.06, in line with the Zacks Consensus Estimate. Revenues of $741 million outpaced the consensus mark of $717.9 million. The stock has a Zacks Rank #2.

AngioDynamics’ fiscal second-quarter adjusted EPS of 22 cents exceeded the Zacks Consensus Estimate by a penny. Revenues totaled $91.5 million, which surpassed the consensus estimate by 2.9%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

CONMED delivered fourth-quarter adjusted EPS of 73 cents, in line with the Zacks Consensus Estimate. Revenues of $242.4 million beat the Zacks Consensus Estimate of $229.2 million. The stock carries a Zacks Rank of 2.

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