On February 3, 2021 Boston Scientific Corporation (NYSE: BSX) reported that net sales of $2.708 billion during the fourth quarter of 2020 (Press release, Boston Scientific, FEB 3, 2021, View Source [SID1234574562]). This represents a decline of (6.8) percent on a reported basis, (8.3) percent on an operational1 basis and (8.0) percent on an organic2 basis, all compared to the prior year period. Included within organic results is a negative 370 basis point impact associated with the conversion of U.S. WATCHMAN customers to a consignment inventory model and transition to the next-generation WATCHMAN FLX Left Atrial Appendage Closure (LAAC) Device. The company reported GAAP net income available to common stockholders of $138 million or $0.10 per share (EPS), compared to GAAP net income of $3.996 billion or $2.83 per share a year ago and achieved adjusted EPS of $0.23 for the period, compared to $0.46 a year ago. In the fourth quarter of 2019, reported GAAP net income included a net income tax benefit of $4.102 billion or $2.90 per share related to an intra-entity asset transfer of intellectual property.
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For the full year 2020, the company generated net sales of $9.913 billion. This represents a decline of (7.7) percent on a reported basis, (7.8) percent on an operational1 basis and (11.3) percent on an organic2 basis, all compared to the prior year period. Included within organic results is a negative 170 basis point impact associated with the WATCHMAN conversion. The company reported a GAAP net loss available to common stockholders of $(173) million or $(0.12) per share, compared to GAAP net income of $4.700 billion or $3.33 per share a year ago, and delivered full year adjusted EPS of $0.96, compared to $1.58 a year ago. Full year 2019 GAAP EPS included a net income tax benefit of $2.91 per share related to the intra-entity asset transfer of intellectual property discussed above.
"As we look to 2021 and beyond, we are well-positioned given the strength of our global team and our diversified portfolio," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "I’m excited about our outlook for growth—from our category leadership positions to our innovative pipeline and commercial execution—and I am incredibly proud of how Boston Scientific delivered on our mission to transform lives amid the challenges of 2020."
Fourth quarter financial results and recent developments:
Reported GAAP net income available to common stockholders of $0.10 per share and adjusted EPS of $0.23 per share. Included in adjusted EPS is:
a ($0.06) impact associated with the WATCHMAN conversion mentioned above, which is now substantially complete, and
an ($0.07) impact related to the voluntary recall of the LOTUS Edge Aortic Valve System and discontinuation of the LOTUS platform
Generated the following sales growth/(declines) in each reportable segment4, compared to the prior year period:
MedSurg: 1.5 percent reported, 0.1 percent operational and 1.1 percent organic
Rhythm and Neuro: (6.1) percent reported, (7.7) percent operational and organic
Cardiovascular: (12.0) percent reported, (13.5) percent operational and organic
Generated the following regional5 sales declines, compared to the prior year period:
U.S.: (9.2) percent reported and operational
EMEA (Europe, Middle East and Africa): (1.1) percent reported and (5.9) percent operational
APAC (Asia-Pacific): (1.1) percent reported and (5.6) percent operational
Emerging Markets3: (9.9) percent reported and (8.9) percent operational
Received U.S. Food and Drug Administration (FDA) approval for Vercise Genus family of Deep Brain Stimulation Systems, approved for MR conditional use in a magnetic resonance imaging (MRI) environment.
Received FDA approval for WaveWriter Alpha portfolio of Spinal Cord Stimulator Systems, offering expanded personalization based on patient needs to treat multiple areas of chronic pain.
Received FDA Breakthrough Device designation for the AGENT Drug-Coated Balloon (DCB),6 which is designed for percutaneous transluminal coronary angioplasty to treat coronary artery disease. Breakthrough Device designation provides patients more timely access to novel devices that may provide a substantial improvement over existing therapies.
Received FDA approval for the SYNERGY MEGATRON Bioabsorbable Polymer Stent7, the only stent platform that is purpose built for use in large proximal vessels with the ability to expand to 6.0 mm in diameter.
Received FDA approval for the Ranger Drug-Coated Balloon, developed for the treatment of patients with peripheral artery disease in the superficial femoral artery and proximal popliteal artery. Positive 24-month data from the COMPARE trial was also presented at the Leipzig Interventional Course (LINC) congress, demonstrating non-inferiority of the low-dose paclitaxel-coated Ranger DCB (2.0 µg/mm2) compared to the higher dose IN.PACT DCB (Medtronic) balloon (3.5 µg/mm2).
Received approval for the Eluvia Drug-Eluting Vascular Stent System from China’s Center for Medical Device Evaluation and initiated a full launch in the region.
Received FDA clearance for the ORISE ProKnife, a cutting tool designed for endoluminal surgeries for tissue removal and motility disorders of the gastrointestinal tract.
Received Japanese Pharmaceuticals and Medical Devices Agency approval and Japanese National Health Insurance reimbursement approval for the WATCHMAN FLX Left Atrial Appendage Closure (LAAC) Device, with plans to launch later this year, and surpassed 150,000 cumulative WATCHMAN implants worldwide.
Announced the initiation of CHAMPION-AF—a randomized head-to-head trial to study the safety and efficacy of the next-generation WATCHMAN FLX device vs. non-vitamin K antagonist oral anticoagulants outcomes across a broad spectrum of patients with non-valvular atrial fibrillation, to evaluate the technology as a potential first-line therapy.
Received Class I designation for the EMBLEM Subcutaneous Implantable Defibrillator System in recently updated American Heart Association and American College of Cardiology guidelines on treating patients with hypertrophic cardiomyopathy.
Received approval from the FDA to begin the early feasibility study in the U.S. for the Millipede Transcatheter Annuloplasty Ring System8, which will assess the safety and feasibility of the system in patients with functional mitral regurgitation.
Announced a definitive agreement to acquire Preventice Solutions, Inc., a privately-held company which offers a full portfolio of mobile cardiac health solutions and services, for a purchase price of $925 million, with up to an additional $300 million in a potential commercial milestone payment. Boston Scientific is currently an investor in Preventice and holds an equity stake of approximately 22 percent, which is expected to result in a net payment of approximately $720 million upon closing and a milestone payment of up to approximately $230 million.
Signed definitive agreement to divest BTG Specialty Pharmaceuticals business to Stark International Lux S.A.R.L. and SERB SAS, affiliates of SERB, for $800 million in cash.
1. Operational revenue growth excludes the impact of foreign currency fluctuations.
2. Organic net sales growth rates exclude the impact of foreign currency fluctuations and net sales from the recent acquisitions of Vertiflex, Inc. and BTG plc (BTG), each with no prior year comparable net sales. Organic net sales growth rates also exclude the impact of the divestiture of our global embolic microspheres portfolio, a transaction entered into in connection with obtaining the antitrust clearances required to complete the BTG transaction, as well as prior period net sales associated with our intrauterine health franchise, which we divested in Q2 2020.
3. We define Emerging Markets as the 20 countries that we believe have strong growth potential based on their economic conditions, healthcare sectors and our global capabilities.
4. We have three historical reportable segments comprised of Medical Surgical (MedSurg), Rhythm and Neuro, and Cardiovascular, which represent an aggregation of our operating segments that generate revenues from the sale of medical devices (Medical Devices). As part of our acquisition of BTG on August 19, 2019, we acquired an Interventional Medicine business, which is now included in our Peripheral Interventions operating segment’s revenues from the date of acquisition.
5. As part of our acquisition of BTG on August 19, 2019, we acquired a specialty pharmaceuticals business (Specialty Pharmaceuticals). Subsequent to acquisition, Specialty Pharmaceuticals is now a stand-alone operating segment presented alongside our Medical Device reportable segments. Specialty Pharmaceuticals net sales are substantially U.S. based. Our chief operating decision maker (CODM) reviews financial information of our globally managed Specialty Pharmaceuticals operating segment at the worldwide level without further disaggregation into regional results. As such, Specialty Pharmaceuticals net sales are presented globally, and our Medical Devices reportable segments regional net sales results do not include Specialty Pharmaceuticals. In Q4 2020, we signed a definitive agreement to sell Specialty Pharmaceuticals. The sale is expected to close in the first half of 2021, pending customary closing conditions.
6. Agent is an investigational device. Limited by Federal law for investigational use only. Not available for sale.
7. Synergy Megatron indicated for use in coronary arteries 3.5mm to 5.0mm in diameter.
8. Millipede is an investigational device. Limited by Federal law for investigational use only. Not available for sale.
Guidance for First Quarter and Full Year 2021
The company estimates revenue growth for the first quarter of 2021, versus the prior year period, to be in a range of approximately 0 to 6 percent on a reported basis and a growth range of approximately (3) to 3 percent on an organic basis. First quarter organic guidance excludes the impact of foreign currency fluctuations and the divestiture of our intrauterine health franchise, which we divested in Q2 2020, and includes net sales of the Specialty Pharmaceuticals business, assuming the previously announced divestiture closes on April 1, 2021. First quarter guidance excludes the previously announced acquisition of Preventice Solutions, Inc. which is projected to close by mid-2021, subject to customary closing conditions. The company estimates earnings on a GAAP basis in a range of $0.05 to $0.11 per share and estimates adjusted earnings, excluding certain charges (credits) in a range of $0.28 to $0.34 per share.
The company estimates revenue growth for the full year 2021, versus the prior year period, to be in a range of approximately 13 to 19 percent on a reported basis and a growth range of approximately 12 to 18 percent on an organic basis. Full year organic guidance excludes the impact of foreign currency fluctuations and the divestiture of our intrauterine health franchise, which we divested in Q2 2020, and includes net sales of the Specialty Pharmaceuticals business through the first quarter of 2021 assuming the previously announced divestiture closes on April 1, 2021. Full year guidance excludes the previously announced acquisition of Preventice Solutions, Inc. which is projected to close by mid-2021, subject to customary closing conditions. The company estimates income on a GAAP basis in a range of $0.72 to $0.82 per share and estimates adjusted earnings, excluding certain charges (credits) in a range of $1.50 to $1.60 per share.
Conference Call Information
Boston Scientific management will be discussing these results with analysts on a conference call today at 8:00 a.m. ET. The company will webcast the call to interested parties through its website: www.bostonscientific.com. Please see the website for details on how to access the webcast. The webcast will be available for approximately one year on the Boston Scientific website.