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Boston Scientific (BSX) Q4 Earnings Miss, Operating Margin Up
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Boston Scientific Corporation (BSX - Free Report) posted adjusted earnings per share (EPS) of 45 cents for the fourth quarter of 2022, in line with the year-ago figure. The figure missed the Zacks Consensus Estimate by 4.3%. The figure matched the lower end of the adjusted earnings per share guidance range of 45-48 cents.
The quarter’s adjustments included certain amortization expenses, litigation-related net charges, acquisition/divestitures-related net charges, and restructuring charges among others.
Reported EPS for the fourth quarter was 9 cents, a 50% rise from the year-ago quarter figure.
Full-year adjusted EPS was $1.71, a 4.9% rise from the year-ago period. This adjusted figure matched the lower end of the company’s guidance of $1.71 to $1.74. However, it missed the Zacks Consensus Estimate by 1.2%.
Fourth-quarter revenues of $3.24 billion improved 3.7% year over year on a reported basis and 8.7% on an operational basis (at a constant exchange rate or CER). Revenues grew 7.1% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line came in line with the Zacks Consensus Estimate. The quarter’s top-line performance also remained within the company’s projection of organic revenue growth of approximately 7-9%.
For 2022, revenues were $12.68 billion, up 6.7% on a reported basis, 11.1% on an operational basis and 8.7% on an organic basis, all compared to the year-ago period. Full-year revenues were also in line with the Zacks Consensus Estimate. The company’s guidance was 9% organic revenue growth for the full year.
Q4 Revenues in Detail
In the fourth quarter, revenues rose 10.5% in the United States on a reported basis (same operationally). Revenues were down 0.8% in the Europe, Middle East and Africa region (up 10.8%) and 4.1% in the Asia Pacific zone (up 15.3%). Revenues increased 14.6% in Latin America and Canada (up 17.7%) and 11.6% in emerging markets (up 23.3%).
Segmental Analysis
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.
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions, were $1.53 billion (up 9.6% year over year organically) and $476 million (up 8.8%), respectively, in the fourth quarter.
Boston Scientific Corporation Price, Consensus and EPS Surprise
Within MedSurg, Endoscopy generated revenues of $571 million, up 7.4% organically. Urology and Urology revenues were $477 million, reflecting organic growth of 11.8%. Neuromodulation within MedSurg reported $249 million in revenues, reflecting a 4.9% rise organically year over year.
Margins
Gross margin in the fourth quarter contracted 13 basis points (bps) year over year to 68.8%. There was a 4.1% rise in the cost of products sold to $1.01 billion.
Selling, general and administrative expenses rose 0.9% to $1.16 billion. Research and development expenses rose 3.1% to $330 million. Royalty expenses of $13 million increased 18.2% year over year. Adjusted operating margin expanded 87 bps to 22.4% in the reported quarter.
2023 Guidance
Boston Scientific provided its full-year and first-quarter 2023 guidance.
Full-year net sales growth is expected in the range of 5-7% on a reported basis. Net sales growth is expected to be in the range of 6-8% on an organic basis. The Zacks Consensus Estimate is currently pegged at $12.68 billion, indicating a 6.7% rise from the 2022 reported figure. Full-year adjusted EPS is expected in the range of $1.86 to $1.93. The Zacks Consensus Estimate of $1.73 remains below the guided range.
For the first quarter of 2023, revenue growth is projected in the range of approximately 3-5% on a reported basis (an increase of 6-8% organically). Adjusted earnings are expected in the range of 42-44 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 44 cents and $3.17 billion, respectively.
Our Take
Boston Scientific fourth-quarter 2022 adjusted earnings missed the Zacks Consensus Estimate while revenues matched the same. The company registered a year-over-year improvement in organic sales, indicating a strong 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 costs are putting pressure on the company’s gross margin.
The 2023 guidance seems bullish, indicating that the company is well-poised to handle the industry-wise trend of currency headwinds and global inflationary pressure.
Zacks Rank and Stocks to Consider
Boston Scientific currently carries a Zacks Rank #3 (Hold).
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
McKesson Corporation (MCK - Free Report) , a Zacks Rank #2 stock, will release third-quarter fiscal 2023 results on Feb 1.
MCK’s long-term historical earnings growth rate is estimated at 10.1%. MCK’s earnings yield of 6.49% compares favorably with the industry’s 4.34%.
Laboratory Corporation of America Holdings or LabCorp (LH - Free Report) will release fourth-quarter 2022 results on Feb 16. The stock carries a Zacks Rank #2.
LabCorp’s long-term historical earnings growth rate is estimated at 26.1%. LabCorp’s earnings yield of 7.02% compares favorably with the industry’s 4.34%.
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Boston Scientific (BSX) Q4 Earnings Miss, Operating Margin Up
Boston Scientific Corporation (BSX - Free Report) posted adjusted earnings per share (EPS) of 45 cents for the fourth quarter of 2022, in line with the year-ago figure. The figure missed the Zacks Consensus Estimate by 4.3%. The figure matched the lower end of the adjusted earnings per share guidance range of 45-48 cents.
The quarter’s adjustments included certain amortization expenses, litigation-related net charges, acquisition/divestitures-related net charges, and restructuring charges among others.
Reported EPS for the fourth quarter was 9 cents, a 50% rise from the year-ago quarter figure.
Full-year adjusted EPS was $1.71, a 4.9% rise from the year-ago period. This adjusted figure matched the lower end of the company’s guidance of $1.71 to $1.74. However, it missed the Zacks Consensus Estimate by 1.2%.
Fourth-quarter revenues of $3.24 billion improved 3.7% year over year on a reported basis and 8.7% on an operational basis (at a constant exchange rate or CER). Revenues grew 7.1% on an organic basis (adjusted for foreign currency fluctuations and certain recent acquisitions and divestments). The top line came in line with the Zacks Consensus Estimate. The quarter’s top-line performance also remained within the company’s projection of organic revenue growth of approximately 7-9%.
For 2022, revenues were $12.68 billion, up 6.7% on a reported basis, 11.1% on an operational basis and 8.7% on an organic basis, all compared to the year-ago period. Full-year revenues were also in line with the Zacks Consensus Estimate. The company’s guidance was 9% organic revenue growth for the full year.
Q4 Revenues in Detail
In the fourth quarter, revenues rose 10.5% in the United States on a reported basis (same operationally). Revenues were down 0.8% in the Europe, Middle East and Africa region (up 10.8%) and 4.1% in the Asia Pacific zone (up 15.3%). Revenues increased 14.6% in Latin America and Canada (up 17.7%) and 11.6% in emerging markets (up 23.3%).
Segmental Analysis
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.
The company generates maximum revenues from Cardiovascular. Sales from its sub-segments, Cardiology and Peripheral Interventions, were $1.53 billion (up 9.6% year over year organically) and $476 million (up 8.8%), respectively, in the fourth quarter.
Boston Scientific Corporation Price, Consensus and EPS Surprise
Boston Scientific Corporation price-consensus-eps-surprise-chart | Boston Scientific Corporation Quote
Within MedSurg, Endoscopy generated revenues of $571 million, up 7.4% organically. Urology and Urology revenues were $477 million, reflecting organic growth of 11.8%. Neuromodulation within MedSurg reported $249 million in revenues, reflecting a 4.9% rise organically year over year.
Margins
Gross margin in the fourth quarter contracted 13 basis points (bps) year over year to 68.8%. There was a 4.1% rise in the cost of products sold to $1.01 billion.
Selling, general and administrative expenses rose 0.9% to $1.16 billion. Research and development expenses rose 3.1% to $330 million. Royalty expenses of $13 million increased 18.2% year over year. Adjusted operating margin expanded 87 bps to 22.4% in the reported quarter.
2023 Guidance
Boston Scientific provided its full-year and first-quarter 2023 guidance.
Full-year net sales growth is expected in the range of 5-7% on a reported basis. Net sales growth is expected to be in the range of 6-8% on an organic basis. The Zacks Consensus Estimate is currently pegged at $12.68 billion, indicating a 6.7% rise from the 2022 reported figure. Full-year adjusted EPS is expected in the range of $1.86 to $1.93. The Zacks Consensus Estimate of $1.73 remains below the guided range.
For the first quarter of 2023, revenue growth is projected in the range of approximately 3-5% on a reported basis (an increase of 6-8% organically). Adjusted earnings are expected in the range of 42-44 cents per share. The current Zacks Consensus Estimate for first-quarter earnings and revenues is pegged at 44 cents and $3.17 billion, respectively.
Our Take
Boston Scientific fourth-quarter 2022 adjusted earnings missed the Zacks Consensus Estimate while revenues matched the same. The company registered a year-over-year improvement in organic sales, indicating a strong 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 costs are putting pressure on the company’s gross margin.
The 2023 guidance seems bullish, indicating that the company is well-poised to handle the industry-wise trend of currency headwinds and global inflationary pressure.
Zacks Rank and Stocks to Consider
Boston Scientific currently carries a Zacks Rank #3 (Hold).
Cardinal Health (CAH - Free Report) , a Zacks Rank #2 (Buy) stock, will release fourth-quarter 2022 results on Feb 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
McKesson Corporation (MCK - Free Report) , a Zacks Rank #2 stock, will release third-quarter fiscal 2023 results on Feb 1.
MCK’s long-term historical earnings growth rate is estimated at 10.1%. MCK’s earnings yield of 6.49% compares favorably with the industry’s 4.34%.
Laboratory Corporation of America Holdings or LabCorp (LH - Free Report) will release fourth-quarter 2022 results on Feb 16. The stock carries a Zacks Rank #2.
LabCorp’s long-term historical earnings growth rate is estimated at 26.1%. LabCorp’s earnings yield of 7.02% compares favorably with the industry’s 4.34%.