Boston Scientific Corporation BSX posted adjusted earnings per share (EPS) of 47 cents for the first quarter of 2023, up 20.5% from the year-ago figure. The figure also exceeded the Zacks Consensus Estimate by 9.3%. The figure exceeded the company’s adjusted earnings per share guidance range of 42-44 cents.
The quarter’s adjustments included certain amortization expenses, acquisition/divestitures-related net charges, and restructuring charges, among others.
Reported EPS for the first quarter was 21 cents, a 200% rise from the year-ago quarter figure of 7 cents.
First-quarter revenues of $3.39 billion improved 12% year over year on a reported basis and 14.9% on an operational basis (at a constant exchange rate or CER). Revenues grew 14% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 7.9%. The quarter’s top-line performance also exceeded the company’s projection of organic revenue growth of approximately 6-8%.
Q1 Revenues in Detail
In the first quarter, revenues rose 12.7% in the United States on a reported basis (same operationally). Revenues were up 14.2% in the Europe, Middle East and Africa region (up 20%) and up 5.9% in the Asia Pacific zone (up 15.4%). Revenues increased 17.4% in Latin America and Canada (up 20%) and 20.2% in emerging markets (up 26.3%).
Boston Scientific recently reorganized its operational structure and aggregated its core businesses, each of which generates revenues from the sale of Medical Devices, into two reportable segments, MedSurg and Cardiovascular.
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation price-consensus-eps-surprise-chart | Boston Scientific Corporation Quote
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions, were $1.61 billion (up 15.4% year over year organically) and $503 million (up 11.5%), respectively, in the first quarter.
Within MedSurg, Endoscopy generated revenues of $577 million, up 11.5% organically. Urology revenues were $469 million, reflecting organic growth of 15.6%. Neuromodulation within MedSurg reported $234 million in revenues, reflecting a 13.7% rise organically year over year.
Gross margin in the first quarter expanded 87 basis points (bps) year over year to 69.3%. There was an 8.9% rise in the cost of products sold to $1.04 billion.
Selling, general and administrative expenses rose 14.6% to $1.22 billion. Research and development expenses rose 5.6% to $337 million. Royalty expenses of $11 million declined 8.3% year over year. Adjusted operating margin expanded 72 bps to 23.2% in the reported quarter.
Boston Scientific updated its full-year guidance and provided second-quarter 2023 projections.
Full-year net sales growth is expected in the range of 8.5-10.5% on a reported basis (earlier estimate was 5-7% growth). Net sales growth is expected to be in the range of 8-10% on an organic basis (6-8%). The Zacks Consensus Estimate is currently pegged at $13.49 billion, indicating a 6.4% rise from the 2022 reported figure. Full-year adjusted EPS is expected in the range of $1.90 to $1.96 ($1.86 to $1.93). The Zacks Consensus Estimate of $1.90 is in line with the lower end of the guided range.
For the second quarter of 2023, revenue growth is projected in the range of approximately 6.5-8.5% on a reported basis (an increase of 7-9% organically). Adjusted earnings are expected in the range of 48-50 cents per share. The current Zacks Consensus Estimate for second-quarter earnings and revenues is pegged at 48 cents and $3.42 billion, respectively.
Boston Scientific first-quarter 2023 adjusted earnings and revenues exceeded the respective Zacks Consensus Estimate by decent margins. The company registered a strong year-over-year improvement in organic sales, indicating a solid rebound in the legacy business even amid several macroeconomic issues.
Organic revenues at each of its core business segments and geographies were up in the reported quarter. However, mounting operating expenses are putting pressure on the company’s gross margin.
The increased 2023 guidance increases investors’ confidence, indicating that the company is well-poised to handle the industry-wise trend of currency headwinds and global inflationary pressure.
Zacks Rank and Upcoming Releases
Boston Scientific currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Bio-Rad Laboratories BIO, Henry Schein, Inc. HSIC and Avanos Medical, Inc. AVNS.
Bio-Rad Laboratories, carrying a Zacks Rank of 2, at present is slated to release first-quarter 2023 earnings on May 4. BIO has an earnings yield of 3.3% against the industry’s negative yield of 2.9%.
BioRad Laboratories’ earnings surpassed estimates in three of the trailing four quarters and missed the same once, the average surprise being 27.54%.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein, carrying a Zacks Rank #2, is expected to release first-quarter 2023 earnings soon. HSIC has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has gained 22.2% compared with the industry’s 19.7% rise in the past six months.
Avanos, carrying a Zacks Rank #2, is scheduled to release first-quarter 2023 earnings on May 3. AVNS has an estimated growth rate of 1.8% for 2023. AVNS earnings surpassed estimates in all the trailing four quarters, the average beat being 11%.
Avanos has gained 46.3% compared with the industry’s 17.5% rise in the past six months.
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