Boston Scientific (BSX) Q2 Earnings Beat, 2021 Guidance Up
Boston Scientific Corporation BSX posted adjusted earnings per share (EPS) of 40 cents for the second quarter of 2021, which marked a 400% surge from the year-ago figure. The figure topped the Zacks Consensus Estimate by 8.1% and also exceeded the adjusted earnings per share guidance range of 36 cents to 38 cents. The quarter’s adjustments include certain amortization expenses, litigation-related charges, acquisition/divestitures-related net charges and investment portfolio net losses among others.
Reported earnings in the second quarter were 12 cents per share against the year-ago loss of 11 cents per share.
Revenues of $3.08 billion in the second quarter improved 53.6% year over year on a reported basis and 49.6% on an operational basis (at constant exchange rate or CER). Revenues grew 52.4% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line exceeded the Zacks Consensus Estimate by 4.4%.
The top line also exceeded second-quarter revenue growth guidance of approximately 46-50% on a reported basis and 44-48% on an organic basis.
Q2 Revenues in Detail
In the second quarter, revenues rose 70.1% in the United States on a reported basis (same operationally). Revenues were up 59.3% in the Europe, Middle East and Africa region (up 47.1%); 27% in the Asia Pacific zone (up 21.1%); 86.1% in Latin America and Canada (up 73.9%) and 33.8% in emerging markets (up 25.8%).
Boston Scientific currently has three global reportable segments: Cardiovascular, Rhythm and Neuro plus MedSurg.
The company generates maximum revenues from Cardiovascular. Sales from its sub segments, namely Interventional Cardiology and Peripheral Interventions were $790 million (up 55.2% year over year organically) and $473 million (up 35.6%), respectively, in the second quarter.
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation price-consensus-eps-surprise-chart | Boston Scientific Corporation Quote
Boston Scientific's Rhythm and Neuro business comprises Cardiac Rhythm Management (CRM), Electrophysiology and Neuromodulation. CRM reflected a 31.2% year-over-year rise in organic sales to $524 million in the reported quarter.
Electrophysiology sales grew 78.7% year over year organically to $95 million.
Neuromodulation sales rose 98% year over year on an organic basis to $247 million.
Other segments like Endoscopy plus Urology and Pelvic Health (under the MedSurg broader group) recorded sales of $551 million (up 54.1% organically) and $397 million (up 70.8%), respectively.
On Mar 1, 2021, Boston Scientific completed the sale of its Specialty Pharmaceuticals segment.
Gross margin in the second quarter expanded 878 basis points (bps) year over year to 69.3%. There was a 19.5% rise in the cost of products sold to $945 million.
Selling, general and administrative expenses rose 40.4% to $1.12 billion. Research and development expenses increased 23.1% to $298 million. Meanwhile, royalty expenses of $12 million increased 50% year over year. Adjusted operating margin improved 1459 bps to 22.8% in the reported quarter.
Based on robust second-quarter results, the company increased its full-year 2021 guidance.
Full-year net sales growth is expected in the range of 21-22% on a reported basis and 19-20% on an organic basis (earlier guidance was expected growth of 16-19% on a reported basis and 15-18% on an organic basis). Adjusted EPS is expected in the range of $1.58-$1.62 (earlier range was $1.53-$1.60). The current Zacks Consensus Estimate for 2021 earnings and revenues is pegged at $1.58 and $11.74 billion, respectively.
For the third quarter of 2021, revenue growth is projected in the range of approximately 12-14% on both reported and organic basis. Adjusted earnings are expected in the range of 39-41 cents per share. The current Zacks Consensus Estimate for third-quarter earnings and revenues is pegged at 40 cents and $2.97 billion, respectively.
Boston Scientific ended the second quarter on an extremely bullish note with adjusted earnings and revenues surpassing the respective Zacks Consensus Estimate as well as the company’s expectations by a wide margin. The company also registered strong sequential and year-over-year improvement in overall financial performance.
Organic revenues at each of its core business segments and geographies were up in the reported quarter. Despite a formidable increase in costs and expenses, the company reported margin expansions in the quarter. The increased full-year 2021 guidance also looks impressive.
Zacks Rank and Stocks to Consider
Boston Scientific currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same space are AMN Healthcare Services Inc AMN, Catalent, Inc. CTLT and Align Technology, Inc. ALGN.
The Zacks Consensus Estimate for AMN Healthcare’s second-quarter 2021 adjusted EPS is currently pegged at $1.47. The consensus estimate for second-quarter revenues is pegged at $829.4 million. The company currently carries a Zacks Rank #2 (Buy).
Catalent currently sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for its fourth-quarter fiscal 2021 adjusted EPS is currently pegged at $1.04. The consensus estimate for fourth-quarter revenues is pegged at $1.13 billion. You can see the complete list of today’s Zacks #1 Rank stocks here.
Align Technology currently carries a Zacks Rank #2. The Zacks Consensus Estimate for its second-quarter 2021 adjusted EPS is currently pegged at $2.56. The consensus estimate for its revenues stands at $937.5 million.
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