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Boston Scientific (BSX) Misses Q1 Earnings, Tightens EPS View

Zacks Equity Research

Boston Scientific Corporation BSX posted adjusted earnings per share (EPS) of 35 cents in the first quarter of 2019, up 6.1% from the year-ago quarter. However, the same missed the Zacks Consensus Estimate by a penny. Meanwhile, the figure matched the lower-end of the company’s guided range of 35-36 cents.

Reported EPS in the first quarter was 30 cents compared with earnings of 21 cents per share in the year-ago quarter.

Revenues in Detail

Revenues in the first quarter were up 4.8% year over year on a reported basis, up 7.8% on an operational basis (at constant exchange rate or CER) and up 6.3% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions) to $2.49 billion. Revenues missed the Zacks Consensus Estimate by 1.9%.

Boston Scientific Corporation Price, Consensus and EPS Surprise

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

In the first quarter, the company achieved 7.1% growth in the United States on a reported basis (same operationally), witnessed a 0.3% dip in the Europe, Middle East and Africa region (up 7.9%); up 5.3% in the Asia Pacific region (up 10.1%), up 0.3% in Latin America and Canada (up 7.5%) and up 13.3% in the emerging markets (up 22%).

Segmental 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 $661 million (up 4.8% year over year organically) and $311 million (up 11.2%), respectively, in the first quarter.

Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 2.6% year-over-year increase in organic sales to $491 million in the reported quarter.

Electrophysiology sales went up 10% year over year organically to $79 million.

Neuromodulation sales rose 12.4% year over year organically to $186 million.

Other segments like Endoscopy and Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $440 million (up 8.1% organically) and $326 million (up 4.6%), respectively.


Gross margin in the first quarter contracted 103 basis points (bps) year over year to 70.7% due to an 8.6% rise in cost of products sold.

Adjusted operating margin, however, expanded 11 bps to 23.9% in the reported quarter. During the quarter, selling, general and administrative expenses inched up a nominal 1% to $869 million while research and development expenses rose 7.3% to $280 million. Whereas royalty expenses of $16 million declined 11.1% from the previous quarter.


Boston Scientific has provided an update on its earlier-provided outlook for 2019. The company currently projects revenue growth in the range of 7-8% on a reported basis (from the earlier-provided view of 7-9%) and around 7-8% on an organic basis (from the past projection of 7-8.5%). The Zacks Consensus Estimate for 2019 revenues is pegged at $10.63 billion.

The company has narrowed its 2019 adjusted EPS expectation to a band of $1.54-$1.58 from the former forecast of $1.53-$1.58. The Zacks Consensus Estimate of $1.56 is within the guided band.

The company also provided its second-quarter 2019 financial outlook. It projects revenue growth in the range of 5-7% on a reported basis and around 6-7% on an organic basis.  Adjusted EPS is expected in the band of 37-39 cents. The consensus mark for EPS stands at 39 cents while the same for revenues is $2.67 billion.

Our Take

Boston Scientific endured a lackluster first quarter with both adjusted earnings and revenues missing the Zacks Consensus Estimate. However, growth across all business lines and geographies was promising.

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

We are also optimistic about the company receiving the FDA approval and commencing a controlled launch of the LOTUS Edge Aortic Valve System in Europe. This apart, the company received a nod for the WATCHMAN Left Atrial Appendage Closure (LAAC) Device from the Pharmaceuticals and Medical Devices Agency in Japan and also obtained the CE Mark and initiated a limited market release for the next-generation WATCHMAN FLX LAAC Device in Europe.

Zacks Rank & Key Picks

Boston Scientific has a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are Bio-Rad Laboratories, Inc. BIO, ICU Medical Inc. ICUI and Varian Medical Systems, Inc. VAR.

Bio-Rad is scheduled to release first-quarter 2019 results on May 8. The Zacks Consensus Estimate for the quarterly adjusted EPS is pegged at $1.12 and for revenues, stands at $548.8 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

ICU Medical is scheduled to release first-quarter 2019 results on May 9. The Zacks Consensus Estimate for the period's adjusted EPS is $2.18 and for revenues, $321.1 million. The stock carries a Zacks Rank #2 (Buy).

Varian is slated to release first-quarter 2019 results on Apr 24. The Zacks Consensus Estimate for the quarterly adjusted EPS stands at $1.16. The consensus estimate for revenues is pegged at $779.01 million. The stock has a Zacks Rank of 2.

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