On October 23, 2019 Boston Scientific Corporation (NYSE: BSX) reported sales of $2.707 billion during the third quarter of 2019 (Press release, Boston Scientific, OCT 23, 2019, View Source [SID1234542465]). This represents growth of 13.1 percent on a reported basis, 14.2 percent on an operational1 basis and 9.3 percent on an organic2 basis, all compared to the prior year period. The company reported GAAP earnings of $126 million or $0.09 per share (EPS), compared to GAAP earnings of $432 million or $0.31 per share a year ago, and achieved adjusted earnings per share of $0.39 for the period, compared to $0.35 a year ago.
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"Our third quarter results reflect accelerated growth fueled by several key product launches, excellent regional performance and the broad strength of our core portfolio, and we continue to invest in building a robust pipeline," said Mike Mahoney, chairman and chief executive officer, Boston Scientific. "I am proud of our global teams across Boston Scientific who continue to bring forward new clinical solutions that advance science and help improve patient lives."
Third quarter financial results and recent developments:
Reported third quarter sales of $2.707 billion, representing an increase of 13.1 percent on a reported basis, compared to the company’s guidance range of 8 to 10 percent; 14.2 percent on an operational basis; and 9.3 percent on an organic basis, compared to the company’s guidance range of 7.5 to 9 percent, all compared to the prior year period.3
Reported GAAP earnings of $0.09 per share compared to the company’s guidance range of $0.23 to $0.25 per share, due to acquisition-related charges in the quarter primarily associated with the acquisition of BTG plc (BTG Acquisition or BTG). Achieved adjusted earnings per share of $0.39 compared to the guidance range of $0.37 to $0.39 per share.3
Achieved third quarter revenue growth in all segments compared to the prior year period (excludes BTG Acquisition†):
MedSurg: 13.2 percent reported, 14.1 percent operational and 10.5 percent organic
Rhythm and Neuro: 5.4 percent reported, 6.5 percent operational and 3.9 percent organic
Cardiovascular: 11.3 percent reported, 12.6 percent operational and 12.6 percent organic
Reported third quarter revenue growth in all regions, compared to the prior year period (excludes BTG Acquisition†):
U.S.: 10.6 percent reported and operational
EMEA (Europe, Middle East and Africa): 6.3 percent reported and 10.8 percent operational
APAC (Asia-Pacific): 13.8 percent reported and 14.2 percent operational
Emerging Markets4: 16.1 percent reported and 19.3 percent operational
Commenced launch of the WATCHMAN Left Atrial Appendage Closure Device in Japan upon securing positive local reimbursement; surpassed 100,000 patient implants worldwide. Also presented, at the Transcatheter Cardiovascular Therapeutics (TCT) annual scientific symposium, budget implications data confirming that the WATCHMAN device is an affordable stroke risk reduction strategy for Medicare and Medicare beneficiaries compared to warfarin.
Announced at TCT results from the EVOLVE Short DAPT clinical trial that demonstrated that after being treated with the SYNERGY Bioabsorbable Polymer (BP) Stent, a three-month regimen of dual antiplatelet therapy (DAPT) is non-inferior to a 12-month DAPT regimen in certain patients with high bleeding risk. Also announced CE Mark for the SYNERGY MEGATRON Bioabsorbable Polymer Stent which is designed for use in large proximal vessels.
Received from the Centers for Medicare and Medicaid Services continued new technology add-on payment (NTAP) classification for the SENTINEL Cerebral Protection System and an increased add-on payment for FY2020.
Presented at TCT positive data for the LOTUS TAVR System, a mechanically-expanding valve, including a three-year analysis from the REPRISE III study demonstrating significant, sustained improvement in functional and health status following LOTUS valve implantation versus CoreValve systems (Medtronic), and significantly fewer cases of disabling stroke and moderate or greater paravalvular leak versus the CoreValve system–a self-expanding valve. Additionally, a Medicare budget impact analysis demonstrated the mechanically-expanded LOTUS valve is a less costly alternative to self-expanding valves at one year post procedure in high-risk patients with aortic stenosis.
Announced the U.S. Food and Drug Administration (FDA) approval of ImageReady MRI labeling for the Vercise Gevia Deep Brain Stimulation (DBS) System to be used in a full-body magnetic resonance imaging (MRI) environment.5
Completed clinical trial assessing the performance of the EXALT Model D Single-Use Duodenoscope during endoscopic retrograde cholangiopancreatography procedures, with positive results presented at the United European Gastroenterology Week Congress.
Announced the completion of the acquisition of BTG plc pursuant to the previously announced scheme of arrangement. In addition, divested microspheres and bland embolic bead products to Varian Medical Systems, Inc.
1. Operational revenue growth excludes the impact of foreign currency fluctuations.
2. Organic revenue growth excludes the impact of foreign currency fluctuations and sales from the recent acquisitions of Claret Medical, Inc. (Claret), Augmenix, Inc. (Augmenix), Vertiflex, Inc. (Vertiflex) and BTG plc (BTG Acquisition), each with no prior year comparable sales. Organic revenue growth also excludes 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.
3. As the BTG Acquisition had not yet closed, our previously disclosed third quarter guidance did not include the results of BTG.
4. 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. Periodically, we assess our list of Emerging Markets; effective January 1, 2019, we updated our list of Emerging Market countries. We have revised prior year amounts to the current year’s presentation. The revision had an immaterial impact on prior year Emerging Markets sales.
5. 1.5 Tesla MRI conditional when all conditions of use are met.
† For the third quarter of 2019, there have been no changes to our internal reporting structure and, accordingly, we have not revised our segment reporting or geographic presentation. We will continue to integrate the BTG Acquisition into our operations in the fourth quarter and will reassess our operating and reportable segments as well as geographic presentation for any changes related to our internal reporting structure. Our results of operations include the results of BTG following the acquisition date of August 19, 2019. BTG net sales are substantially U.S. based.
Guidance for Full Year and Fourth Quarter 2019
The company estimates revenue growth for the full year 2019, versus the prior year period, to be in a range of approximately 9 to 9.5 percent on a reported basis (compared to prior guidance of 7 to 8 percent), and to be approximately 7.5 percent on an organic basis (compared to prior guidance of 7 to 8 percent). Full year organic guidance excludes the impact of foreign currency fluctuations and contribution of approximately 360 basis points from the acquisitions of Nxthera, Inc., Claret, Augmenix, Vertiflex and BTG, each with no prior period related net sales and the impact of the divestiture of our global embolic microspheres portfolio following the close of the BTG Acquisition. The company now estimates income on a GAAP basis in a range of $0.72 to $0.75 per share (compared to prior guidance of $0.94 to $0.98 per share) and estimates adjusted earnings, excluding certain charges (credits), in a range of $1.55 to $1.58 per share (compared to prior guidance of $1.54 to $1.58 per share).
The company estimates revenue growth for the fourth quarter of 2019, versus the prior year period, to be in a range of approximately 13 to 15 percent on a reported basis and a growth range of approximately 8 to 9 percent on an organic basis. Fourth quarter organic guidance excludes the impact of foreign currency fluctuations and contribution of approximately 600 to 680 basis points from the acquisitions of Vertiflex and BTG, each with no prior period related net sales and the impact of the divestiture of our global embolic microspheres portfolio following the close of the BTG Acquisition. The company estimates earnings on a GAAP basis in a range of $0.22 to $0.25 per share and adjusted earnings, excluding certain charges (credits), in a range of $0.42 to $0.45 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. EDT. 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.